ANNALY CAPITAL MANAGEMENT INC 10-K

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock began trading publicly on October 8, 1997 and is traded on the New York Stock Exchange under the trading symbol “NLY.” As of January 30, 2026, we had 718,386,976 shares of common stock issued and outstanding which were held by approxima tely 650,445 beneficial holders. The equity compensation plan information called for by Item 201(d) of Regulation S-K is set forth in Item 12 of Part III of this Form 10-K under the heading “Equity Compensation Plan Information.” Dividends We intend to pay quarterly dividends and to distribute to our stockholders all or substantially all of our taxable income in each year (subject to certain adjustments) consistent with the distribution requirements applicable to REITs. This will enable us to qualify for the tax benefits accorded to a REIT under the Code. We have not established a minimum dividend payment level and our ability to pay dividends may be adversely affected by factors beyond our control. In addition, unrealized changes in the estimated fair value of available-for-sale investments may have a direct effect on dividends. All distributions will be made at the discretion of our Board and will depend on our earnings, our financial condition, maintenance of our REIT status and such other factors as our Board may deem relevant from time to time. See also Item 1A. “Risk Factors.” No dividends can be paid on our common stock unless we have paid full cumulative dividends on our preferred stock. From the date of issuance of our preferred stock through December 31, 2025, we have paid full cumulative dividends on our preferred stock. Share Performance Graph The following graph and table set forth certain information comparing the yearly percentage change in cumulative total return on our common stock to the cumulative total return of the Standard & Poor’s Composite 500 stock Index or S&P 500 Index, and a select group of peers operating within the mortgage REIT industry, or Performance Peer Group. The comparison is for the five-year period ended December 31, 2025 and assumes the reinvestment of dividends. The graph and table assume that $100 was invested in our common stock, the S&P 500 Index and the Performance Peer Group on the last trading day of the initial year shown in the graph. In previous filings, we included the Bloomberg Mortgage REIT Index, or BBG REIT Index, in the share performance graph and table. As a result of the discontinuation of the BBG REIT Index in 2024, we replaced the BBG REIT Index with the Performance Peer Group. The Performance Peer Group represents a group of mortgage REIT peers used by the Management Development and Compensation Committee of our Board of Directors to evaluate our performance and to inform certain elements of our executive compensation program. We believe that companies included in the Performance Peer Group have portfolios and investment strategies that most closely resemble our focus on residential mortgage assets. Companies comprising the Performance Peer Group include Adamas Trust, Inc., AGNC Investment Corp., ARMOUR Residential REIT, Inc., Chimera Investment Corporation, Dynex Capital, Inc., Ellington Financial Inc., Invesco Mortgage Capital, Inc., MFA Financial, Inc., Orchid Island Capital, Inc., Redwood Trust, Inc., Rithm Capital Corp., and Two Harbors Investment Corp. The cumulative total return of the Performance Peer Group was weighted according to the respective issuer's stock market capitalization at the beginning of the performance period. 44 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters And Issuer Purchases Of Equity Securities Five-Year Share Performance 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 12/31/2025 Annaly Capital Management, Inc. 100 103 81 85 91 128 S&P 500 Index 100 129 105 133 166 196 Performance Peer Group 100 117 83 97 103 122 The information in the share performance graph and table has been obtained from sources believed to be reliable, but neither the accuracy nor completeness can be guaranteed. The historical information set forth above is not necessarily indicative of future performance. Accordingly, we do not make or endorse any predictions as to future share performance. The above performance graph and related information shall not be deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C under the Securities Exchange Act or to the liabilities of Section 18 of the Securities Exchange Act, and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act, except to the extent that we specifically incorporate it by reference into such a filing. Share Repurchase In January 2025, we announced that our Board authorized the repurchase of up to $1.5 billion of our outstanding shares of common stock through December 31, 2029 (the “Common Stock Repurchase Program”). The Common Stock Repurchase Program replaces our previous $1.5 billion share repurchase program, which expired on December 31, 2024. No shares were repurchased with respect to the Common Stock Repurchase Program during the year ended December 31, 2025. Purchases made pursuant to the Common Stock Repurchase Program will be made in either the open market or in privately negotiated transactions from time to time as permitted by securities laws and other legal requirements. The timing, manner, price and amount of any repurchases will be determined by us in our discretion and will be subject to economic and market conditions, stock price, applicable legal requirements and other factors. The authorization does not obligate us to acquire any particular amount of common stock and the program may be suspended or discontinued at our discretion without prior notice. 45 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters And Issuer Purchases Of Equity Securities In January 2025, we announced that our Board authorized a repurchase plan for all of our existing outstanding Preferred Stock (as defined below, the “Preferred Stock Repurchase Program”). Under the terms of the plan, we are authorized to repurchase up to an aggregate of 63,500,000 shares of Preferred Stock, comprised of up to (i) 28,800,000 shares of our 6.95% Series F Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock, par value $0.01 per share (the “Series F Preferred Stock”), (ii) 17,000,000 shares of our 6.50% Series G Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock, par value $0.01 per share (the “Series G Preferred Stock”), and (iii) 17,700,000 shares of our 6.75% Series I Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock, par value $0.01 per share (the “Series I Preferred Stock”, and together with Series F Preferred Stock and Series G Preferred Stock, the “Preferred Stock”). The aggregate liquidation value of the Preferred Stock that may be repurchased by us pursuant to the Preferred Stock Repurchase Program, as of December 31, 2024, was approximately $1.6 billion. The Preferred Stock Repurchase Program replaces our previous repurchase plan for all of our existing outstanding Preferred Stock, which expired on December 31, 2024. The Preferred Stock Repurchase Program became effective on January 1, 2025, and will expire on December 31, 2029. No shares were repurchased with respect to the Preferred Stock Repurchase Program during the year ended December 31, 2025. Purchases made pursuant to the Preferred Stock Repurchase Program will be made in either the open market or in privately negotiated transactions from time to time as permitted by securities laws and other legal requirements. The timing, manner, price and amount of any repurchases will be determined by us in our discretion and will be subject to economic and market conditions, stock price, applicable legal requirements and other factors. The authorization does not obligate us to acquire any particular amount of Preferred Stock and the program may be suspended or discontinued at our discretion without prior notice. 46 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 6. Selected Financial Data ITEM 6. [Reserved] 47 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 7. Management’s Discussion and Analysis ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS All references to “Annaly,” “we,” “us,” or “our” mean Annaly Capital Management, Inc. and all entities owned by us, except where it is made clear that the term means only the parent company. Refer to the section titled “Glossary of Terms” located at the end of this Item 7 for definitions of commonly used terms in this annual report on Form 10-K. This section of our Form 10-K generally discusses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024. Discussions of 2023 items and year-to-year comparisons between 2024 and 2023 that are not included in this Form 10-K can be found in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our annual report on Form 10-K for the year ended December 31, 2024. 48 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 7. Management’s Discussion and Analysis INDEX TO ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Page Overview 50 Business Environment 50 Economic Environment 52 Income Tax Reform 53 Results of Operations 53 Net Income (Loss) Summary 54 Non-GAAP Financial Measures 55 Earnings Available for Distribution, Earnings Available for Distribution Attributable to Common Stockholders, Earnings Available for Distribution Per Average Common Share and Annualized EAD Return on Average Equity 55 Premium Amortization Expense 57 Economic Leverage and Economic Capital Ratios 57 Interest Income (excluding PAA), Economic Interest Expense and Economic Net Interest Income (excluding PAA) 58 Experienced and Projected Long-term CPR 59 Average Yield on Interest Earning Assets (excluding PAA), Net Interest Spread (excluding PAA), Net Interest Margin (excluding PAA), and Average Economic Cost of Interest Bearing Liabilities 60 Economic Interest Expense and Average Economic Cost of Interest Bearing Liabilities 61 Other Income (Loss) 62 General and Administrative Expenses 62 Return on Average Equity 63 Unrealized Gains and Losses - Available-for-Sale Investments 63 Financial Condition 64 Residential Securities 64 Contractual Obligations 67 Commitments and Contractual Obligations with Unconsolidated Entities 67 Capital Management 67 Stockholders’ Equity 68 Capital Stock 68 Leverage and Capital 69 Risk Management 70 Risk Appetite 70 Governance 70 Description of Risks 72 Liquidity and Funding Risk Management 72 Funding 72 Excess Liquidity 74 Maturity Profile and Interest Rate Sensitivity 75 Stress Testing 76 Liquidity Management Policies 76 Investment/Market Risk Management 76 Credit Risk Management 77 Counterparty Risk Management 78 Operational Risk Management 78 Compliance, Regulatory and Legal Risk Management 80 Critical Accounting Estimates 80 Valuation of Financial Instruments 80 Residential Securities 80 Residential Mortgage Loans 81 MSR 81 Interest Rate Swaps 81 Revenue Recognition 82 Consolidation of Variable Interest Entities 82 Use of Estimates 82 Glossary of Terms 83 49 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 7. Management’s Discussion and Analysis Overview We are a leading diversified capital manager with investment strategies across mortgage finance. Our principal business objective is to generate net income for distribution to our stockholders and optimize our returns through prudent management of our diversified investment strategies. We are an internally-managed Maryland corporation founded in 1997 that has elected to be taxed as a REIT. Our common stock is listed on the New York Stock Exchange under the symbol “NLY.” We use our capital coupled with borrowed funds to invest primarily in real estate related investments, earning the spread between the yield on our assets and the cost of our borrowings and hedging activities. Our three investment groups are primarily comprised of the following: Investment Groups Description Annaly Agency Group Invests in Agency mortgage-backed securities (“MBS”) collateralized by residential mortgages which are guaranteed by Fannie Mae, Freddie Mac or Ginnie Mae and complementary investments within the Agency market, including Agency commercial MBS. Annaly Residential Credit Group Invests primarily in non-Agency residential whole loans and securitized products within the residential and commercial markets. Annaly Mortgage Servicing Rights Group Invests in mortgage servicing rights (“MSR”), which provide the right to service residential mortgage loans in exchange for a portion of the interest payments made on the loans. For a full discussion of our business, refer to the section titled “Business Overview” of Part I, Item 1. “Business” and see the Note titled "Segments" in the Notes to the Consolidated Financial Statements included in Item 15. "Exhibits, Financial Statement Schedules." Business Environment The year 2025 saw a meaningful shift in U.S. policy by the second Trump Administration, though the economy saw less impact in aggregate than many had expected early in the year. The Trump Administration pushed changes in several different areas, most notably tariffs on U.S. goods imports, which led to $288 billion in U.S. customs revenues in 2025, nearly three times the average customs revenues of prior years. In addition, Congress passed the One Big Beautiful Bill Act (“OBBB”), effectively extending the majority of the 2017 Tax Cuts and Jobs Act provisions, while offering some additional benefits, including an elimination of taxes on tips and Social Security for some taxpayers. The tax reform passage has buoyed business sentiment and is expected to support investment growth and consumption, mainly through higher tax refunds in the first part of 2026. Finally, the Administration strictly enforced immigration laws and drove efforts to deport more immigrants without proper documentation, which appears to have been one of the factors weighing on the labor market. U.S. employment growth slowed meaningfully in 2025, while the unemployment rate rose slightly to 4.4%. U.S. economic growth, however, remained robust, with the economy growing 2.5% at a seasonally adjusted annualized rate (“SAAR”) in the first three quarters, above expectations for growth coming into the year. Growth was once again driven by consumption, as consumers showed little pause amid declining sentiment and higher prices from tariffs. Of note, the tariff pass-through to consumers has been slower than most economists expected, though goods inflation increased over the year. Aggregate inflation, as measured by the Consumer Price Index excluding food and energy prices, has moderated somewhat over the course of 2025, with the year-over-year (“yoy”) rate falling from 3.21% to 2.65%. Meanwhile, the housing market remained relatively weak as measured by aggregate activity levels, with existing home sales averaging 4.1 million annualized units per month in 2025, essentially in line with 2024 activity levels, while new home sales remained subdued. In an environment of modest increases in supply, but continued challenged affordability, home prices were little changed for the U.S. in aggregate, rising 0.10% yoy according to Zillow albeit with meaningful regional disparities. For example, many southern and western states saw continued rise in supply on top of already elevated inventory levels, leading to larger declines in home prices. Meanwhile central states typically saw steadier inventory levels and therefore enjoyed price appreciation above the national average. Similar to 2024, when the Fed lowered the Federal Funds Target Rate (“Fed Funds Rate”) in the second half of the year, a weaker labor market and rangebound inflation allowed the Fed to further reduce monetary policy rates. With the Fed Funds Rate reaching a range of 3.50-3.75% at the December Federal Open Market Committee (“FOMC”) meeting, officials have signaled a more gradual approach going forward, waiting for additional economic data to lower the rate further. Regarding its balance sheet policy, the Fed ended the $2.4 trillion decline in its securities portfolio in December 2025 by announcing purchases of Treasury bills starting at $40 billion per month. The purchases are designed to maintain a stable ratio of reserves to nominal gross domestic product (“GDP”) of around 10% and alleviate funding rate volatility, which had occurred around quarter end and Treasury security settlement dates. Fixed income markets ultimately saw a rangebound trading environment that allowed for strong returns, with the Bloomberg Aggregate U.S. Bond Market Index registering a 7.3% total return in 2025, the strongest annual return since 2020. The stellar 50 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 7. Management’s Discussion and Analysis performance was driven by the 75 basis points (“bps”) of Fed rate cuts that resulted in (i) interest rates close to levels at which monetary policy is no longer deemed restrictive, (ii) robust fixed income fund flows, and (iii) declining interest rate volatility, which has returned to levels not seen since 2021. Markets initially saw a spike in volatility following the Trump Administration’s April tariff announcement that were surprising both in scale and charged rates. However, softer tariff implementation than initially threatened, legal challenges, less volatile economic data than in recent years, and more predictable monetary policy ultimately led to a gradual and meaningful decline in implied and realized volatility between May 2025 and the end of the year. Meanwhile, Treasury yields declined across nearly all maturities – with yields falling between 77 bps in 2-year Treasuries and 40 bps in 10-year Treasuries – apart from the 30-year Treasury bond, which saw a modest rise in yields. The yield changes were primarily driven by expectations for easier monetary policy. The market and economic environment were beneficial to Annaly’s portfolio and strategy, helping the company deliver a 20.2% aggregate economic return for the year, including a 5.5% book value gain. The strong economic return was achieved while maintaining conservative leverage over the course of the year, with economic leverage increasing modestly to 5.6x on December 31, 2025 from 5.5x a year earlier. Given strong investor demand for mortgage REITs, Annaly was able to raise $2.6 billion in common equity capital through its at-the-market sales program at accretive levels and issued a Series J preferred stock in what marked the first sizeable non-rated preferred stock issuance in several years. Most of the capital was allocated to the Agency business, which saw portfolio assets rise by $22.3 billion yoy to $92.9 billion on December 31, 2025. In line with the asset growth, the Agency business saw its capital allocation increase marginally from 59% on December 31, 2024 to 62% a year later. Annaly’s Agency MBS portfolio benefited from meaningful tailwinds throughout most of 2025 as Agency MBS supply and demand moved into much better balance. For one, the slow housing market activity reduced MBS supply relative to recent years. Meanwhile, demand broadened across investors as demonstrated by mortgage REIT equity raises and strong collateralized mortgage obligation creation. Mutual fund inflows remained strong as well, maintaining money managers as the anchor buyer. Finally, the Government-sponsored enterprises (“GSEs”) added to their retained portfolios for the first time in many years, a factor that was boosted further early in 2026 by the Administration’s directive to the GSEs to buy $200 billion in Agency MBS to support housing affordability. Our Agency MBS investment activity focused on deploying capital raised primarily in higher coupon specified pool collateral, which offered attractive prospective returns and protection against potential higher prepayment speeds. Annaly’s holdings of 5.0% and higher coupon specified pools rose by $17.7 billion notional over the course of the year, while some of the increase was offset by smaller balances in to-be-announced (“TBA”) securities in these coupons. In addition, the Agency commercial mortgage-backed security portfolio grew by $3.2 billion market value, nearly doubling on the year, as Agency CMBS offered an attractive substitute for lower coupons, while trading at more attractive valuations for most of the year. Annaly’s residential credit business grew its portfolio by $1.0 billion in market value over the course of 2025, while the business represents 19% of the firm’s capital on December 31, 2025. Growth in the portfolio focused nearly entirely on our asset creation strategy, as the portfolio reduced its holdings of third-party securities by $589 million over the course of the year. Meanwhile, holdings of retained Onslow Bay securities grew $990 million over the same period. Annaly’s wholly-owned subsidiary Onslow Bay priced 29 securitizations for an aggregate $15.2 billion, and settled $18 billion of whole loans, representing a 38% increase in both loan acquisitions and securitization volumes yoy. These securitizations further cemented Onslow Bay’s position as the largest non-bank issuer of Prime Jumbo and Expanded Credit MBS. Among the securitizations issued in 2025, five were private transactions in which Onslow Bay tailored securities to meet our partners’ target durations. In addition, OBX introduced a number of innovative deal structures, which have since been adopted by numerous other market participants. Despite the high volumes, the underlying credit quality of Onslow Bay’s loan production is little changed, as the aggregate borrowers’ original FICO score was 761 and the original loan-to-value ratio was 67%. Finally, we also continued to grow our MSR business, increasing the portfolio by 15% yoy to $3.8 billion in market value, or 19% of the firm’s equity capital on December 31, 2025. Notably, our acquisitions made us the second largest buyer of conventional MSR in 2025, onboarding nearly $60 billion in unpaid principal balance throughout the year, and ranked as the sixth largest non-bank Agency servicer. Bulk supply remained ample in 2025, and we expect the pace of activity to continue in 2026 due to rising origination volumes coupled with compressed gain on sale margins necessitating MSR sales from mortgage originators. In addition to the bulk channel, we focused on expanding our flow purchase capabilities and are now active across all GSE platforms, providing access to current coupon MSR, which we plan to purchase opportunistically. Finally, we further expanded our strong network of subservicing and recapture partners and are well-positioned to deepen our role as a preferred partner to the originator and servicer community. Our MSR valuation multiple was relatively rangebound over the course of the year, increasing marginally during the fourth quarter given the steeper yield curve, modest spread tightening and lower volatility. Finally, fundamental performance within the MSR portfolio continues to be strong – benefitting from declining subservicing costs driven by industry consolidation and ongoing technological innovation – and cash flows remain durable. The portfolio paid 4.6% Constant Prepayment Rate 51 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 7. Management’s Discussion and Analysis (“CPR”) in Q4, unchanged quarter-over-quarter, while serious delinquencies remain relatively muted at 55 bps. With a weighted average note rate of 3.28%, our portfolio is still 250 bps out of the money to refinance. Economic Environment Through the third quarter of 2025, the U.S. economy has continued to perform strongly with real GDP rising by 2.5% SAAR. Moreover, economic activity indicators suggest the growth momentum persisted in the fourth quarter. This would mark a fourth consecutive year of robust economic growth, following a 2.8% yoy increase in real GDP in 2024 and a 2.7% average annual gain since 2022 despite elevated interest rates as well as high policy uncertainty in 2025. The U.S. economic resilience continues to be driven by high personal spending levels as consumers have benefitted from healthy real income growth, albeit at a slower pace than last year, and robust financial market performance. Nominal personal consumption expenditures rose at an average of 4.8% SAAR per month through November, slightly below the 6.4% on average in 2024. Moreover, slower price gains resulted in stronger inflation-adjusted spending thus far in 2025 than in 2024. In addition, private nonresidential investment was robust at 6.5% SAAR while net trade has offered a rare boost to headline growth through the third quarter of 2025. The labor market weakened gradually throughout 2025 given an anticipated slowdown in labor supply. However, labor demand also slowed, with employers adding 584,000 jobs, compared to employment growth of 2.6 million and 2.0 million in 2023 and 2024, respectively. Thus, the supply and demand for labor remained in a fragile balance. The unemployment rate ended the year at 4.4%, increasing 0.3 percentage points compared to a year earlier. This increase has been driven by a faster increase in the labor force than the employed, suggesting the lower hiring is not solely a function of the reduction to labor supply from immigration. Job openings trended lower but remained above pre-pandemic averages, while layoffs stayed low. As a result of the softer labor market, wage growth, as measured by the Employment Cost Index, decelerated from a pace of 3.8% yoy at the end of 2024 to a still healthy 3.5% yoy at the end of the third quarter of 2025. Inflation was little changed on a yoy rate in 2025 and progress towards the Fed’s 2% target remained slow. The headline Personal Consumption Expenditure Chain Price Index, the Fed’s preferred inflation gauge, measured 2.8% yoy in November 2025, essentially unchanged from the 2.7% yoy pace in December 2024. The core measure, which does not include price changes in food and energy sectors, measured 2.8% yoy as of November – slightly slower than at the end of 2024. Despite the firmness in the overall rate, there were some positive developments. Service sector inflation continued to slow, with core services in the Consumer Price Index falling from 4.4% yoy in December 2024 to 3.0% yoy at the end of 2025. The moderation in service sector inflation was driven by housing due to slower rent growth and home price appreciation. However, this was offset by an uptick in core goods inflation which rose from -0.5% yoy in December 2024 to 1.4% yoy in December 2025. The rise has been driven by tariffs, which have increased the prices of goods, most of which are imported. Of note, the passthrough of the tariffs has been uneven and more muted than initially expected. U.S. Treasury yields moved lower across the curve in 2025 as the Fed continued along its gradually dovish policy path, cutting the target range for the Fed Funds Rate by 75 bps in the second half of the year. The 2‑year Treasury yield ended the year 77 bps lower, while the yield on the 10‑year Treasury note declined 40 bps to 4.17%. This dynamic resulted in a meaningful steepening of the yield curve, as longer‑term rates continued to incorporate a term premium reflecting the elevated level of Treasury supply. Meanwhile, market‑based measures of inflation expectations remained well‑anchored throughout the year. In addition, interest rate volatility declined significantly, contributing to a tightening of the mortgage basis, or the spread between the 30‑year Agency MBS coupon and the 10‑year U.S. Treasury rate, which ended the year 39 bps tighter. The following table below presents interest rates and spreads at each date presented: As of December 31, 2025 2024 2023 30-Year mortgage current coupon 5.04% 5.83% 5.25% Mortgage basis 87 bps 126 bps 137 bps 10-Year U.S. Treasury rate 4.17% 4.57% 3.88% OIS SOFR Swaps 1-Month 3.67% 4.32% 5.35% 6-Month 3.58% 4.25% 5.15% 52 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Item 7. Management’s Discussion and Analysis Income Tax Reform On July 4, 2025, H.R. 1, also known as the One Big Beautiful Bill Act (the “OBBB”), was signed into law. The OBBB makes material changes to U.S. tax law, including some provisions that affect the taxation of REITs and their investors. In particular, the OBBB (i) permanently extends the 20% deduction for “qualified REIT dividends” for individuals and other non-corporate taxpayers under Section 199A of the Code and (ii) increases the percentage limit under the REIT asset test applicable to taxable REIT subsidiaries from 20% to 25% for taxable years beginning after December 31, 2025. The results of the OBBB changes are not expected to have a material effect on the Company’s financial operations or related disclosures. Results of Operations The results of our operations are affected by various factors, many of which are beyond our control. Certain of such risks and uncertainties are described herein (see “Special Note Regarding Forward-Looking Statements” above) and in Part I, Item 1A. “Risk Factors”. This Management Discussion and Analysis section contains analysis and discussion of financial results computed in accordance with U.S. generally accepted accounting principles (“GAAP”) and non-GAAP measurements. To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we provide non-GAAP financial measures to enhance investor understanding of our period-over-period operating performance and business trends, as well as for assessing our performance versus that of industry peers. Refer to the “Non-GAAP Financial Measures” section for additional information. 53 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES