Annaly Capital Management Reports $130.3 Million Net Income in Q1 2025

Annaly Capital Management, Inc. reported a net income of $130.3 million for the first quarter of 2025, translating to $0.15 per share, a significant decrease from the $465.2 million, or $0.85 per share, recorded in the same period last year. The decline in profitability was primarily attributed to unfavorable changes in net gains and losses on derivatives, which amounted to a loss of $977.9 million compared to a gain of $1.4 billion in the prior year. However, the company saw improvements in net interest income, which rose to $220.0 million from a loss of $6.5 million, and net servicing income, which increased to $126.3 million from $102.9 million.

Total assets for Annaly increased to $105.1 billion as of March 31, 2025, up from $103.6 billion at the end of 2024. This growth was driven by increases in various asset categories, including a $2.5 billion rise in securitized residential whole loans and a $604.9 million increase in securities. The company's total liabilities also rose to $92.0 billion, up from $90.9 billion, largely due to an increase in repurchase agreements and debt issued by securitization vehicles.

In terms of strategic developments, Annaly continued to expand its investment portfolio, particularly in Agency mortgage-backed securities (MBS), which grew by $4.4 billion in market value during the quarter. The company raised approximately $495 million in equity through an at-the-market stock sale program, which facilitated these investments. Additionally, Annaly executed six securitization transactions totaling $3.1 billion during the quarter, including its first securitization of home equity line of credit loans.

Operationally, Annaly's residential credit portfolio ended the quarter at $6.6 billion, reflecting a modest decline as the company sold third-party securities early in the quarter. The company maintained a conservative approach to its hedge positions, adjusting its allocation between Treasuries and swaps to manage interest rate exposure effectively. The weighted average coupon rate of the mortgage servicing rights portfolio rose slightly to 3.23%, while the company continued to focus on low note rate MSR acquisitions.

Looking ahead, Annaly's management expressed optimism about the company's ability to navigate the current economic environment, characterized by ongoing market volatility and regulatory changes. The company plans to maintain its conservative leverage ratios and continue to seek opportunities for growth in its investment strategies while managing risks associated with interest rates and credit exposure.