NLYHIGH SIGNALFINANCIAL10-K

NLY achieved exceptional performance with net income doubling to $2.0B while dramatically reversing credit losses from $147.6M provision to $145.1M recovery, alongside substantial balance sheet expansion.

The 198% swing from credit loss provisions to recoveries indicates either significant improvement in credit quality or favorable market conditions in NLY's mortgage portfolio. Combined with doubled net income and 31% asset growth, this suggests the company is capitalizing effectively on interest rate environment changes and mortgage market opportunities.

Comparing 2026-02-12 vs 2025-02-13View on EDGAR →
FINANCIAL ANALYSIS

NLY demonstrated remarkable financial performance with net income doubling to $2.0B and a dramatic 198% reversal in credit losses from provisions to recoveries, while total assets expanded 31% to $135.6B funded by proportional liability growth. The company increased dividend payments by 26% to $1.9B despite operating cash flow declining 79% to $693M, suggesting strong earnings quality beyond cash generation. However, the sharp decline in operating cash flow alongside massive balance sheet expansion and the shift from credit provisioning to recovery warrants close monitoring of underlying asset quality and funding sustainability.

FINANCIAL STATEMENT CHANGES
Provision for Credit Losses
P&L
-198.3%
$147.6M→-$145.1M

Provisions reduced 198.3% — improving credit quality or reserve release boosting reported earnings.

Net Income
P&L
+102.3%
$1.0B→$2.0B

Net income grew 102.3% — bottom-line growth signals improving overall business health.

Operating Cash Flow
Cash Flow
-79.1%
$3.3B→$692.9M

Operating cash flow fell 79.1% — earnings quality concerns; investigate working capital changes and non-cash items.

Total Liabilities
Balance Sheet
+31.5%
$90.9B→$119.4B

Liabilities grew 31.5% — significant increase in debt or obligations, assess impact on financial flexibility.

Total Assets
Balance Sheet
+31%
$103.6B→$135.6B

Asset base grew 31% — expansion through organic growth, acquisitions, or capital deployment.

Stockholders Equity
Balance Sheet
+27.6%
$12.6B→$16.1B

Equity base grew 27.6% — retained earnings accumulation or equity issuance strengthening the balance sheet.

Dividends Paid
Cash Flow
+26%
$1.5B→$1.9B

Dividend payments increased 26% — management confidence in sustained cash generation.

Total Debt
Balance Sheet
-12.4%
$490.6M→$429.6M

Debt reduced 12.4% — deleveraging strengthens balance sheet and reduces financial risk.

Cash & Equivalents
Balance Sheet
-10.4%
$1.6B→$1.4B

Cash decreased 10.4% — monitor burn rate and upcoming capital needs.

LANGUAGE CHANGES
NEW — 2026-02-12
PRIOR — 2025-02-13
ADDED
Management's Discussion and Analysis of Financial Condition and Results of Operations 48 Item 7A.
We have created multiple strategic and capital partnerships across our investment groups including the following: Annaly Residential Credit Group has established relationships with key mortgage loan originators and aggregators including well-known money center banks, allowing us to efficiently source proprietary originations suited to our risk 2 ANNALY CAPITAL MANAGEMENT, INC.
In addition, our wholly-owned subsidiary Onslow Bay Financial LLC ( Onslow Bay ) partners directly with mortgage technology companies to enhance the operations of our correspondent channel.
Annaly Mortgage Servicing Rights Group has established relationships with leading sub-servicing and recapture partners, allowing us to build and maintain a durable and high-quality MSR portfolio and benefit from our partners operational capabilities to enhance returns.
Our portfolio composition and capital allocation at December 31, 2025 and 2024 were as follows: December 31, 2025 December 31, 2024 Asset Classes Percentage of Portfolio Capital Allocation (2) Percentage of Portfolio Capital Allocation (2) Agency (1)(2) 89% 62% 87% 59% Residential Credit (2) 7% 19% 9% 22% MSR (2) 4% 19% 4% 19% (1) Includes to-be-announced forward contracts ( TBAs ).
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REMOVED
Management's Discussion and Analysis of Financial Condition and Results of Operations 49 Item 7A.
We have created multiple strategic and capital partnerships across our investment groups including the following: 2 ANNALY CAPITAL MANAGEMENT, INC.
BUSINESS Annaly Residential Credit Group has established relationships with key mortgage loan originators and aggregators including well-known money center banks, allowing us to efficiently source proprietary originations suited to our risk parameters.
Our portfolio composition and capital allocation at December 31, 2024 and 2023 were as follows: December 31, 2024 December 31, 2023 Asset Classes Percentage of Portfolio Capital Allocation (2) Percentage of Portfolio Capital Allocation (2) Agency (1)(2) 87% 59% 88% 61% Residential Credit (2) 9% 22% 9% 21% MSR (2) 4% 19% 3% 18% (1) Includes to-be-announced forward contracts ( TBAs ).
At December 31, 2024, we had $65.7 billion of repurchase agreements outstanding.
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