−Removed: partnering with well-established non-profit organizations and through Annaly’s corporate giving, employee volunteerism and our employee charity match program.
−Removed: Regulatory Requirements
−Removed: The financial services industry is subject to extensive regulation and supervision, and changes to regulations and supervisory practices are continuously being considered by regulators and policy makers worldwide.
−Removed: We continue to assess our business, risk management and compliance practices to conform to developments in the regulatory environment.
−Removed: We have elected, organized and operated in a manner that qualifies us to be taxed as a REIT under the Internal Revenue Code of 1986, as amended and regulations promulgated thereunder (the “Code”).
−Removed: So long as we qualify for taxation as a REIT, we generally will not be subject to U.S.
−Removed: federal income tax on our taxable income that is distributed to our stockholders.
−Removed: Furthermore, substantially all of our assets, other than our taxable REIT subsidiaries (“TRSs”), consist of qualified REIT real estate assets (of the type described in Section 856(c)(5) of the Code).
−Removed: We regularly monitor our investments and the income from these investments and, to the extent we enter into hedging transactions, we monitor income from our hedging transactions as well, so as to ensure at all times that we maintain our qualification as a REIT, our exemption from registration under the Investment Company Act and our exemption from registration as a commodity pool operator ("CPO") with the U.S.
−Removed: Commodity Futures Trading Commission ("CFTC").
−Removed: Arcola is a member of FINRA, an SEC registered broker-dealer and is subject to regulations of the securities business that include but are not limited to trade practices, use and safekeeping of funds and securities, capital structure, recordkeeping and conduct of directors, officers and employees.
−Removed: As a self-clearing, registered broker-dealer, Arcola is required to maintain minimum net capital by the SEC and FINRA.
−Removed: Arcola consistently operates with capital in excess of its regulatory capital requirements as defined by SEC Rule 15c3-1.
−Removed: We have a subsidiary that is registered with the SEC as an investment adviser under the Investment Advisers Act.
−Removed: As a result, we are subject to the anti-fraud provisions of the Investment Advisers Act and to fiduciary duties derived from these provisions that apply to our relationships with that subsidiary’s clients.
−Removed: These provisions and duties impose restrictions and obligations on us with respect to our dealings with our subsidiary’s clients, including, for example, restrictions on agency, cross and principal transactions.
+Added: transactions.
Our registered investment adviser subsidiary is subject to periodic SEC examinations and other requirements under the Investment Advisers Act and related regulations primarily intended to benefit advisory clients.
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We have submitted a claim for the relief set forth in the no-action relief entitled “No-Action Relief from the Commodity Pool Operator Registration Requirement for Commodity Pool Operators of Certain Pooled Investment Vehicles Organized as Mortgage Real Estate Investment Trusts” and believe we meet the criteria for such relief set forth therein.
−Removed: ANNALY CAPITAL MANAGEMENT, INC.
−Removed: AND SUBSIDIARIES
We operate in a highly competitive market for investment opportunities.
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• We have adopted an enhanced director refreshment policy, which provides that an independent director may not stand for re-election at the next annual meeting of stockholders taking place at the end of his or her term following the earlier of his or her:
−Removed: (i) 15th anniversary of service on our Board or (ii) 73rd birthday.
+Added: 15th anniversary of service on our Board or (ii) 73rd birthday.
• We have adopted a Code of Business Conduct and Ethics, which sets forth the basic principles and guidelines for resolving various legal and ethical questions that may arise in the workplace and in the conduct of our business.
1 unchanged sentence
• We have adopted Corporate Governance Guidelines which, in conjunction with the charters of our Board committees, provide the framework for the governance of our company.
−Removed: • We have procedures by which any of our employees, officers or directors may raise concerns
−Removed: confidentially about our company’s conduct, accounting, internal controls or auditing matters with the Chair of the Board, the independent directors, or the Chair of the Audit Committee or through our whistleblower phone hotline or e-mail inbox.
+Added: • We have procedures by which any of our employees, officers or directors may raise concerns confidentially about our company’s conduct,
+Added: ANNALY CAPITAL MANAGEMENT, INC.
+Added: AND SUBSIDIARIES
+Added: accounting, internal controls or auditing matters with the Chair of the Board, the independent directors, or the Chair of the Audit Committee or through our whistleblower phone hotline or e-mail inbox.
• We have adopted an Insider Trading Policy that prohibits our directors, officers and employees, as well as those of our subsidiaries from buying or selling our securities on the basis of material nonpublic information and prohibits communicating material nonpublic information about our company to others.
−Removed: Our Insider Trading Policy prohibits our directors, officers and employees, from (1) holding our stock in a margin account as eligible collateral, or otherwise pledging our stock as collateral for a loan, or (2) engaging in any hedging transactions with respect to our equity securities held by them.
−Removed: • Our executive officers are subject to two clawback policies, one that covers financial restatements and a second for misconduct.
−Removed: • Our executive officers are subject to stock ownership guidelines and holding restrictions.
+Added: Our Insider Trading Policy prohibits our directors, officers and employees, from (1) holding our stock in a margin account as eligible collateral,
+Added: or otherwise pledging our stock as collateral for a loan, or (2) engaging in any hedging transactions with respect to our equity securities held by them.
+Added: • Our executive officers are subject to two clawback policies, one that covers financial restatements and another that covers misconduct.
+Added: • Our executive officers and directors are subject to stock ownership guidelines and holding restrictions.
• Stockholders holding 25% of our common stock have the right to call a special meeting.
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Subject to the limitations of applicable securities and state corporation laws, we can return capital by making purchases of our own capital stock or through payment of dividends.
−Removed: ANNALY CAPITAL MANAGEMENT, INC.
−Removed: AND SUBSIDIARIES
Available Information
33 unchanged sentences
• Our use of leverage may result in margin calls and defaults and force us to sell assets under adverse market conditions.
−Removed: • We may exceed our target leverage ratios.
−Removed: • We may not be able to achieve our optimal leverage.
−Removed: • Failure to procure or renew funding on favorable terms, or at all, would adversely affect our results and financial condition.
−Removed: • Failure to effectively manage our liquidity would adversely affect our results and financial condition.
+Added: • We may exceed our overall Company target leverage ratios.
+Added: • We may not be able to consistently achieve our optimal leverage.
+Added: • Failure to procure or renew funding on favorable terms, or at all, affects our results and financial condition.
+Added: • Effectively managing our liquidity affects our results and financial condition.
• Volatile market conditions for our assets can result in contraction in liquidity for those assets and the related financing.
−Removed: • An increase in the interest payments on our borrowings relative to the interest we earn on our interest earning assets may adversely affect our profitability.
−Removed: • Differences in timing of interest rate adjustments on our interest earning assets and our borrowings may adversely affect our profitability.
+Added: • An increase in the interest payments on our borrowings relative to the interest we earn on our interest earning assets adversely affects our profitability.
+Added: • Differences in timing of interest rate adjustments on our interest earning assets and our borrowings affect our profitability.
• It may be uneconomical to “roll” our TBA dollar roll transactions or we may be unable to meet margin calls on our TBA contracts.
−Removed: • Our use of derivatives may expose us to counterparty and liquidity risks.
+Added: • Our use of derivatives exposes us to counterparty and liquidity risks.
• Securitizations expose us to additional risks.
−Removed: • Our use of non-recourse securitizations may expose us to risks which could result in losses to us.
−Removed: • Counterparties may require us to enter into covenants that restrict our investment strategy.
+Added: • Our use of non-recourse securitizations exposes us to risks which could result in losses to us.
+Added: • Counterparties may require us to enter into restrictive covenants.
• We may be unable to profitably execute or participate in future securitization transactions.
1 unchanged sentence
• Our charter does not permit ownership of over 9.8% in number of shares or value of our common stock or any class of our preferred stock.
−Removed: • Provisions contained in Maryland law may have anti-takeover effects, potentially preventing investors from receiving a “control premium” for their shares.
+Added: • Provisions contained in Maryland law have anti-takeover effects, potentially preventing investors from receiving a “control premium” for their shares.
• We have not established a minimum dividend payment level and cannot assure stockholders of our ability to pay dividends in the future.
2 unchanged sentences
• Accounting rules related to certain of our transactions are highly complex and involve significant judgment and assumptions.
−Removed: Our application of GAAP may produce financial results that fluctuate from one period to another.
−Removed: • New laws may be passed affecting the relationship between Fannie Mae, Freddie Mac and the federal government.
−Removed: • We may be subject to liability for potential violations of truth-in-lending or other similar consumer protection laws and regulations.
−Removed: • We may not be able to maintain compliance with laws and regulations applicable to our Residential Credit and MSR businesses, including through the manner in which we oversee the compliance obligations of our third party service providers.
−Removed: • Changes in laws or regulations governing our operations or our failure to comply with those laws or regulations may adversely affect our business.
−Removed: • The increased focus on ESG and climate change issues by investors, governmental bodies and other stakeholders, as well as existing and proposed laws and regulations related to these topics, may adversely affect our business and financial results and damage our reputation.
−Removed: • We are subject to complex and evolving laws, regulations, rules, standards and contractual obligations regarding data privacy and security, which could increase the cost of doing business, compliance risks and potential liability.
+Added: Our application of GAAP produces financial results that fluctuate from one period to another.
+Added: • Any new laws modifying the relationship between Fannie Mae, Freddie Mac and the federal government could affect our business model or business operations.
+Added: • The Truth in Lending Act or other similar consumer protection laws and regulations expose an owner of whole mortgage loans and mortgage servicing rights to potential civil and administrative liability.
+Added: • Our Residential Credit and MSR businesses are subject to complex and evolving legal and regulatory requirements, including how we oversee and are responsible for the actions of our third-party service providers, which exposes us to increased compliance, legal, and regulatory risk.
+Added: • Changes in laws or regulations governing our operations or our failure to comply with those laws or regulations affects our business.
+Added: • The focus on environmental, social, and governance and climate change issues by some investors, governmental bodies and other stakeholders, as well as existing and proposed laws and regulations related to these topics, and any divergence in the approach to these subjects by investors, governmental bodies and other stakeholders, affects our business, financial results and reputation.
+Added: • We are subject to complex and evolving laws, regulations, rules, standards and contractual obligations regarding data privacy and security, which increases the cost of doing business, compliance risks and potential liability.
• We are subject to risks and liabilities in connection with sponsoring, investing in and managing new funds and other investment accounts, including potential regulatory risks.
4 unchanged sentences
• Distributions to tax-exempt investors may be classified as unrelated business taxable income.
−Removed: • We may choose to pay dividends in our own stock.
+Added: • We have flexibility to pay dividends in our own stock.
• Our TRSs cannot constitute more than 20% of our total assets.
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• Complying with REIT requirements may cause us to forgo otherwise attractive opportunities and may force us to liquidate otherwise attractive investments.
−Removed: • Liquidation of assets may jeopardize our REIT qualification or create additional tax liability for us.
ANNALY CAPITAL MANAGEMENT, INC.
AND SUBSIDIARIES
+Added: • Liquidation of assets may jeopardize our REIT qualification or create additional tax liability for us.
• The failure of assets subject to repurchase agreements to qualify as real estate assets could adversely affect our ability to remain qualified as a REIT.
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Counterparty Risks
−Removed: • The soundness of our counterparties and other financial institutions could adversely affect us.
+Added: • The soundness of our counterparties and other financial institutions affects us.
• We are subject to counterparty risk and may be unable to seek indemnity or require counterparties to repurchase residential whole loans if they breach representations and warranties, which could cause us to suffer losses.
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• We may experience declines in the market value of our assets.
−Removed: • Investments in MSR may expose us to additional risks.
+Added: • Investments in MSR expose us to additional risks.
• A prolonged economic slowdown or declining real estate values could impair the assets we may own.
−Removed: • An increase in interest rates may adversely affect the market value of our interest earning assets and, therefore, also our book value.
+Added: • An increase in interest rates adversely affects the market value of our interest earning assets and, therefore, also our book value.
• Actions by the Federal Reserve may affect the price and returns of our assets.
• We invest in securities that are subject to mortgage credit risk.
−Removed: • Our investments in real estate and other securities are subject to changes in credit spreads as well as available market liquidity, which could adversely affect our ability to realize gains on the sale of such investments.
+Added: • Our investments in real estate and other securities are subject to changes in credit spreads as well as available market liquidity, which affect our ability to realize gains on the sale of such investments.
• Geographic concentration exposes investors to greater risk of default and loss.
−Removed: • Inadequate property insurance coverage could have an adverse impact on our operating results.
+Added: • Inadequate property insurance coverage impacts on our operating results.
• Our assets may become non-performing or sub-performing assets in the future.
2 unchanged sentences
• When we foreclose on an asset, we may come to own the property securing the loan.
−Removed: • Proposals to acquire mortgage loans by eminent domain may adversely affect the value of our assets.
+Added: • Proposals to acquire mortgage loans by eminent domain affect the value of our assets.
• Subordinated tranches of non-Agency mortgage-backed securities are subordinate in right of payment to more senior securities.
2 unchanged sentences
Operational and Cybersecurity Risks
−Removed: • Inaccurate models or the data used by models may expose us to risk.
−Removed: • We are highly dependent on information systems and networks, many of which are operated by third parties, and any failure of these systems or networks could materially and adversely affect our business.
−Removed: • Cyberattacks or other information security breaches could adversely affect our business, reputation and financial condition.
+Added: • Reliance on inaccurate models or the data used by models exposes us to risk.
+Added: • We are highly dependent on information systems and networks, many of which are operated by third parties.
+Added: • Cyberattacks or other information security breaches of our Company’s, service providers’ or counterparties’ systems or networks affect our business, reputation and financial condition.
+Added: • We may utilize artificial intelligence, which could expose us to liability and affect our business.
• We depend on third party service providers, including mortgage loan servicers and sub-servicers, for a variety of services related to our business.
• Our investments in residential whole loans subject us to servicing-related risks.
−Removed: • The performance of loans underlying our MSR related assets may be adversely affected by the performance of the related mortgage servicer.
−Removed: • An increase or decrease in prepayment rates may adversely affect our profitability.
+Added: • The performance of loans underlying our MSR related assets is affected by the performance of the related mortgage servicer.
+Added: • We are subject to prepayment rate risk.
• We are subject to reinvestment risk.
2 unchanged sentences
• Some of our investments, including those related to non-prime loans, involve credit risk.
−Removed: • If we are unable to attract, motivate and retain qualified talent, including our key personnel, it could materially and adversely affect us.
+Added: • Any inability to attract, motivate and retain qualified talent, including our key personnel, affects us.
• The market price and trading volume of our shares of common stock may be volatile.
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The risks associated with leverage are more acute during periods of economic slowdown or recession.
−Removed: Because of our leverage, we may incur substantial losses if our borrowing costs increase, and we may be unable to execute our investment strategy if leverage is unavailable or is unavailable on attractive terms.
+Added: Because of our leverage, we have in the past and may in the future incur substantial losses if our borrowing costs increase, and we may be unable to execute our investment strategy if leverage is unavailable or is unavailable on attractive terms.
The reasons our borrowing costs may increase or our ability to borrow may decline include, but are not limited to, the following:
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Our use of leverage may result in margin calls and defaults and force us to sell assets under adverse market conditions.
−Removed: Because of our leverage, a decline in the value of our interest earning assets may result in our lenders initiating margin calls.
+Added: Because of our leverage, a decline in the value of our interest earning assets has in the past and may in the future result in our lenders initiating margin calls.
A margin call means that the lender requires us to pledge additional collateral to re-establish the ratio of the value of the collateral to the amount of the borrowing.
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Bankruptcy Code and to liquidate the collateral under these agreements without delay.
−Removed: We may exceed our target leverage ratios.
−Removed: We generally expect to maintain an economic leverage ratio of less than 10:1.
+Added: We may exceed our overall Company target leverage ratios.
+Added: We generally expect to maintain an overall Company economic leverage ratio of less than 10:1.
However, we are not required to stay below this economic leverage ratio.
We may exceed this ratio by incurring additional debt without increasing the amount of equity we have.
−Removed: For example, if we increase the amount of borrowings under our master repurchase agreements with our existing or new counterparties or the market value of our portfolio declines, our economic leverage ratio would increase.
+Added: For example, if we increase the amount of borrowings under our master repurchase agreements or other borrowing arrangements with our existing or new counterparties or the market value of our portfolio declines, our economic leverage ratio would increase.
If we increase our economic leverage ratio, the adverse impact on our financial condition and results of operations from the types of risks associated with the use of leverage would likely be more severe.
Our target economic leverage ratio is set for the portfolio as a whole, rather than separately for each asset type.
−Removed: The economic leverage ratio on Agency mortgage-backed securities may exceed the target ratio for the portfolio as a whole.
+Added: The economic leverage ratio on Agency mortgage-backed securities has in the past and may in the future exceed the target ratio for the portfolio as a whole.
Because credit assets are generally less levered than Agency mortgage-backed securities, at a given economic leverage ratio an increased allocation to credit assets generally means an increase in economic leverage on Agency mortgage-backed securities.
The economic leverage on our Agency mortgage-backed securities is the primary driver of the risk of being unable to meet margin calls discussed above.
−Removed: We may not be able to achieve our optimal leverage.
+Added: We may not be able to consistently achieve our optimal leverage.
We use leverage as a strategy to increase the return to our investors.
−Removed: However, we may not be able to achieve our desired leverage if we determine that the leverage would expose us to excessive risk;
−Removed: our lenders do not make funding available to us at acceptable rates;
−Removed: or our lenders require that we provide additional collateral to cover our borrowings.
+Added: However, we may not be able to consistently achieve our desired leverage if we determine that the leverage would expose us to excessive risk, our lenders do not make funding available to us at acceptable rates, or our lenders require that we provide additional collateral to cover our borrowings.
+Added: Failure to procure or renew funding on favorable terms, or at all, affects our results and financial condition.
ANNALY CAPITAL MANAGEMENT, INC.
AND SUBSIDIARIES
−Removed: Failure to procure or renew funding on favorable terms, or at all, would adversely affect our results and financial condition.
One or more of our lenders could be unwilling or unable to provide us with financing.
−Removed: This could potentially increase our financing costs and reduce our liquidity.
−Removed: Furthermore, if any of our potential lenders or existing lenders is unwilling or unable to provide us with financing or if we are not able to renew or replace maturing borrowings, we could be forced to sell our assets at an inopportune time when prices are depressed.
−Removed: Our business, results of operations and financial condition may be materially adversely affected by disruptions in the financial markets.
−Removed: We cannot assure you that, under such extreme conditions, these markets will remain an efficient source of financing for our assets.
+Added: This potentially increases our financing costs and reduces our liquidity.
+Added: Furthermore, if any of our potential lenders or existing lenders are unwilling or unable to provide us with financing or if we are not able to renew or replace maturing borrowings, we could be forced to sell our assets at an inopportune time when prices are depressed.
+Added: Our business, results of operations and financial condition have in the past and may in the future be materially affected by disruptions in the financial markets.
+Added: We cannot assure you that these markets will remain an efficient source of financing for our assets.
If our strategy is not viable, we will have to find alternative forms of financing for our assets, which may not be available.
4 unchanged sentences
To the extent we are not able to raise additional funds through the issuance of additional equity or borrowings, our growth will be constrained.
−Removed: Failure to effectively manage our liquidity would adversely affect our results and financial condition.
+Added: Effectively managing our liquidity affects our results and financial condition.
Our ability to meet cash needs depends on many factors, several of which are beyond our control.
2 unchanged sentences
unwillingness or inability of any of our potential lenders to provide us with or renew financing, margin calls, additional capital requirements applicable to our lenders, a disruption in the financial markets or declining confidence in our creditworthiness or in financial markets in general.
−Removed: These conditions could force us to sell our assets at inopportune times or otherwise cause us to potentially revise our strategic business initiatives.
+Added: These conditions have in the past and may in the future force us to sell our assets at inopportune times or otherwise cause us to potentially revise our strategic business initiatives.
Volatile market conditions for our assets can result in contraction in liquidity for those assets and the related financing.
1 unchanged sentence
Significant adverse changes in financial market conditions can result in a deleveraging of the global financial system and the forced sale of large quantities of mortgage-related and other financial assets.
−Removed: Concerns over economic recession, pandemic diseases, geopolitical issues including events such as the war in Ukraine, trade wars, unemployment, inflation, government actions to combat inflation, rising interest rates, the availability and cost of financing, the mortgage market, the repurchase agreement market and a declining real estate market or prolonged government shutdown may contribute to increased volatility and diminished expectations for the economy and markets.
+Added: Concerns over economic recession, pandemic diseases, geopolitical issues, trade wars, unemployment, inflation, government actions to combat inflation, rising interest rates, the availability and cost of financing, the mortgage market, the repurchase agreement market, a declining real estate market or prolonged government shutdown may contribute to increased volatility and diminished expectations for the economy and markets.
For example, as a result of the financial crises beginning in the summer of 2007 and through the subsequent credit and housing crisis, many traditional mortgage investors suffered severe losses in their residential mortgage portfolios and several major market participants failed or were impaired, resulting in a significant contraction in market liquidity for mortgage-related assets.
This illiquidity negatively affected both the terms and availability of financing for all mortgage-related assets.
−Removed: Further increased volatility and deterioration in the markets for mortgages and mortgage-related assets as well as the broader financial markets may adversely affect the performance and market value of our Agency mortgage-backed securities.
+Added: Volatility and deterioration in the markets for mortgages and mortgage-related assets as well as the broader financial markets may adversely affect the performance and market value of our Agency mortgage-backed securities.
If these conditions exist, institutions from which we seek financing for our investments may tighten their lending standards or become insolvent, which could make it more difficult for us to obtain financing on favorable terms or at all.
Our profitability and financial condition may be adversely affected if we are unable to obtain cost-effective financing for our investments.
−Removed: An increase in the interest payments on our borrowings relative to the interest we earn on our interest earning assets may adversely affect our profitability.
+Added: An increase in the interest payments on our borrowings relative to the interest we earn on our interest earning assets adversely affects our profitability.
We generally earn money based upon the spread between the interest payments we earn on our interest earning assets and the interest payments we must make on our borrowings.
−Removed: If the interest payments on our borrowings increase relative to the interest we earn on our interest earning assets, our profitability may be adversely affected.
+Added: Our profitability is affected if the interest payments on our borrowings increase relative to the interest we earn on our interest earning assets.
A significant portion of our assets are longer-term, fixed-rate interest earning assets, and a significant portion of our borrowings are shorter-term, floating-rate borrowings.
2 unchanged sentences
AND SUBSIDIARIES
−Removed: Differences in timing of interest rate adjustments on our interest earning assets and our borrowings may adversely affect our profitability.
+Added: Differences in timing of interest rate adjustments on our interest earning assets and our borrowings affect our profitability.
We rely primarily on short-term borrowings to acquire interest earning assets with long-term maturities.
4 unchanged sentences
Treasury securities, as published by the Federal Reserve Board.
−Removed: • Secured Overnight Financing Rate.
+Added: • Secured Overnight Financing Rate (“SOFR”).
A measure of the cost of borrowing cash overnight collateralized by U.S.
−Removed: Treasury securities, as published by the Federal Reserve Bank of New York.
+Added: Treasury securities, as
+Added: published by the Federal Reserve Bank of New York.
A benchmark based on Secured Overnight Financing Rate futures, administered by CME Group.
14 unchanged sentences
If we roll our TBA dollar roll positions when they have a negative carry, the positions would decrease net income and amounts available for distributions to shareholders.
−Removed: There may be situations in which we are unable or unwilling to roll our TBA dollar roll positions.
+Added: There have in the past and may in the future be situations in which we are unable or unwilling to roll our TBA dollar roll positions.
The TBA transaction could have a negative carry or otherwise be uneconomical, we may be unable to find counterparties with whom to trade in sufficient volume, or we may be required to collateralize the TBA positions in a way that is uneconomical.
4 unchanged sentences
Margin calls on TBA positions or failure to roll TBA positions could have the effects described in the liquidity risks described above.
−Removed: Our use of derivatives may expose us to counterparty and liquidity risks.
+Added: Our use of derivatives exposes us to counterparty and liquidity risks.
Most swaps that we enter into must be executed on a Swap Extension Facility and/or be cleared by a Derivatives Clearing Organization (“DCO”), both of which are regulated by the CFTC.
−Removed: DCOs are subject to regulatory oversight and use extensive risk management processes, which result in additional expenses and collateral requirements for our swaps relative to uncleared swaps.
+Added: DCOs are subject to regulatory oversight and use extensive risk management processes, which result in expenses and collateral requirements for our swaps.
We access the DCO through several Futures Commission Merchants (“FCMs”).
−Removed: For any cleared swap, we bear the credit risk of both the DCO and the relevant FCM, in the form of potential late or unrecoverable payments, potential difficulty
+Added: For any cleared swap, we bear the credit risk of both the DCO and the relevant FCM, in the form of potential late or unrecoverable payments, potential difficulty or delay in accessing collateral that we have posted, and potential loss of any positive market value of the swap position.
+Added: In the event of a default by the DCO or FCM, we also bear market risk, if the asset or liability being hedged is no longer effectively hedged.
ANNALY CAPITAL MANAGEMENT, INC.
AND SUBSIDIARIES
−Removed: or delay in accessing collateral that we have posted, and potential loss of any positive market value of the swap position.
−Removed: In the event of a default by the DCO or FCM, we also bear market risk, if the asset or liability being hedged is no longer effectively hedged.
We also bear fees for use of the DCO and Swap Execution Facility, as well as risks associated with trade errors.
−Removed: Because the standardized swaps available on Swap Execution Facilities and cleared through DCOs are not as customizable as uncleared swaps, we may bear additional basis risk from hedge positions that do not exactly reflect the interest rate risk on the asset being hedged.
+Added: Because the standardized swaps available on Swap Execution Facilities and cleared through DCOs are not fully customizable, we may bear basis risk from hedge positions that do not exactly reflect the interest rate risk on the asset being hedged.
Futures transactions are subject to risks analogous to those of cleared swaps, except that for futures transactions we bear a higher risk that collateral we have posted is unavailable to us if the FCM defaults.
19 unchanged sentences
The inability to securitize our portfolio could adversely affect our performance and our ability to grow our business.
−Removed: Our use of non-recourse securitizations may expose us to risks which could result in losses to us.
+Added: Our use of non-recourse securitizations exposes us to risks which could result in losses to us.
We utilize non-recourse securitizations of our assets in mortgage loans, especially loans that we originate, when they are available.
−Removed: Prior to any such financing, we may seek to finance assets with relatively short-term facilities until a sufficient portfolio is accumulated.
+Added: Prior to any such financing, we have in the past sought and may in the future seek to finance assets with relatively short-term facilities until a sufficient portfolio is accumulated.
As a result, we would be subject to the risk that we would not be able to acquire, during the period that any short-term facilities are available, sufficient eligible assets to maximize the efficiency of a securitization.
4 unchanged sentences
If we are unable to obtain and renew short-term facilities or to consummate securitizations to finance our assets on a long-term basis, we may be required to seek other forms of potentially less attractive financing or to liquidate assets at an inopportune time or price.
−Removed: To the extent that we are unable to obtain
+Added: To the extent that we are unable to obtain financing for our assets, and to the extent that we retain such assets in our portfolio, our returns on investment and earnings will be negatively impacted.
ANNALY CAPITAL MANAGEMENT, INC.
AND SUBSIDIARIES
−Removed: financing for our assets, to the extent that we retain such assets in our portfolio, our returns on investment and earnings will be negatively impacted.
−Removed: Counterparties may require us to enter into covenants that restrict our investment strategy.
−Removed: If or when we obtain debt financing, lenders (especially in the case of credit facilities) may impose restrictions on us that would affect our ability to incur additional debt, make certain allocations or acquisitions, reduce liquidity below certain levels, make distributions to our stockholders, or redeem debt or equity securities, and may impact our flexibility to determine our operating policies and strategies.
−Removed: We may sell assets or reduce leverage at an inopportune time to avoid breaching these restrictions.
−Removed: If we fail to meet or satisfy any of these covenants, we would be in default under these agreements, and our lenders could elect to declare outstanding amounts due and payable, terminate their commitments, require the posting of additional collateral and enforce their interests against existing collateral.
−Removed: We may also be subject to cross-default and acceleration rights and, with respect to collateralized debt, the posting of additional collateral and foreclosure rights upon default.
+Added: Counterparties may require us to enter into restrictive covenants.
+Added: Certain lenders and counterparties impose restrictions on us that would affect our ability to incur additional debt, make certain allocations or acquisitions, allow liquidity or stockholders’ equity to fall below certain levels, increase leverage, make distributions to our stockholders, or redeem debt or equity securities, and may impact our flexibility to determine our operating policies and strategies.
+Added: In some situations, these restrictions could be breached due to changes in the market value of our assets or liabilities.
+Added: One way to avoid breaching certain of these restrictions is to sell assets or reduce leverage at an inopportune time.
+Added: Failing to meet or satisfy any of these covenants is a default under these agreements, and our lenders or counterparties could elect to declare outstanding amounts due and payable, terminate their commitments, require the posting of additional collateral and enforce their interests against existing collateral.
+Added: A default under one agreement can trigger cross-default rights under other agreements.
A default and resulting repayment acceleration could significantly reduce our liquidity, which could require us to sell our assets to repay amounts due and outstanding.
13 unchanged sentences
The price that investors in mortgage-backed securities will pay for securities issued in our securitization transactions also has a significant impact on the profitability of the transactions to us, and these prices are impacted by numerous market forces and factors.
−Removed: In addition, the underwriter(s) or placement agent(s) we select for securitization transactions, and the terms of their engagement, can also impact the profitability of our securitization transactions.
+Added: In addition, the underwriter(s) or placement agent(s) we select for securitization transactions, and the terms of their engagement, impacts the profitability of our securitization transactions.
Also, transaction costs incurred in executing transactions impact the profitability of our securitization transactions and any liability that we may incur, or may be required to reserve for, in connection with executing a transaction can cause a loss to us.
13 unchanged sentences
The ownership limit may have the effect of delaying, deferring or preventing a change in control and, therefore, could adversely affect our stockholders’ ability to realize a premium over the then-prevailing market price for our stock in connection with a change in control.
−Removed: Provisions contained in Maryland law may have anti-takeover effects, potentially preventing investors from receiving a “control premium” for their shares.
−Removed: Provisions contained in our charter and bylaws, as well as the Maryland General Corporation Law (the “MGCL”), may have anti-takeover effects that delay, defer or prevent a takeover attempt, which may prevent stockholders from receiving a “control premium” for their shares.
+Added: Provisions contained in Maryland law have anti-takeover effects, potentially preventing investors from receiving a “control premium” for their shares.
+Added: Provisions contained in our charter and bylaws, as well as the Maryland General Corporation Law (the “MGCL”), have anti-takeover effects that could delay, defer or prevent a takeover attempt, which may prevent stockholders from receiving a “control premium” for their shares.
For example, these provisions may defer or prevent tender offers for our common stock or purchases of large blocks of our common stock, thereby limiting the opportunities for our stockholders to receive a premium for their common stock over then-prevailing market prices.
26 unchanged sentences
Generally, the cumulative net income we report over the life of an asset will be the same for GAAP and tax purposes, although the timing of this income recognition over the life of the asset could be materially different.
−Removed: Differences exist in the accounting for GAAP net income and REIT taxable income that can lead to significant variances in the amount and timing of when income and losses are recognized under these two measures.
+Added: Differences exist in the accounting for GAAP net income and REIT taxable income that have in the past and may in the future lead to significant variances in the amount and timing of when income and losses are recognized under these two measures.
Due to these differences, our reported GAAP financial results could materially differ from our determination of taxable income.
1 unchanged sentence
Accounting rules related to certain of our transactions are highly complex and involve significant judgment and assumptions.
−Removed: Our application of GAAP may produce financial results that fluctuate from one period to another.
+Added: Our application of GAAP produces financial results that fluctuate from one period to another.
Accounting rules for valuations of investments, mortgage loan sales and securitizations, investment consolidations, acquisitions of real estate and other aspects of our operations are highly complex and involve significant judgment and assumptions.
These complexities could lead to a delay in preparation of financial information and the delivery of this information to our stockholders.
−Removed: Changes in accounting interpretations or assumptions could impact our financial statements and our ability to prepare our financial statements in a timely fashion.
+Added: Changes in accounting interpretations or assumptions have in the past and may in the future impact our financial statements and our ability to prepare our financial statements in a timely fashion.
Our inability to prepare our financial statements in a timely fashion in the future would likely adversely affect our share price significantly.
3 unchanged sentences
If we were to liquidate a particular asset, the realized value may be more than or less than the amount at which such asset was recorded.
−Removed: Accordingly, the value of our common shares could be adversely affected by our determinations regarding the fair value of our investments, whether in the applicable period or in the future.
+Added: Accordingly, the value of our common shares has in the past and may in the future be adversely affected by our determinations regarding the fair value of our investments, whether in the applicable period or in the future.
Additionally, such valuations may fluctuate over short periods of time.
1 unchanged sentence
For example, changes in fair value of certain instruments are reflected in GAAP net income (loss) while others are reflected in Other comprehensive income (loss).
−Removed: New laws may be passed affecting the relationship between Fannie Mae, Freddie Mac and the federal government.
+Added: Any new laws modifying the relationship between Fannie Mae, Freddie Mac and the federal government could affect our business model or business operations.
The interest and principal payments we expect to receive on the Agency mortgage-backed securities in which we invest are guaranteed by Fannie Mae, Freddie Mac or Ginnie Mae.
1 unchanged sentence
Principal and interest payments relating to the securities issued by Fannie Mae and Freddie Mac are only guaranteed by each respective Agency.
−Removed: In September 2008, Fannie Mae and Freddie Mac were placed into the conservatorship of the FHFA, their federal regulator, pursuant to its powers under The Federal Housing Finance Regulatory Reform Act of 2008, a part of the Housing and
ANNALY CAPITAL MANAGEMENT, INC.
1 unchanged sentence
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.