The following is a summary of the Annaly Capital Management, Inc. (NLY) Q3 2024 Earnings Call Transcript:

Financial Performance:

• Annaly Capital Management reported a strong economic return of 4.9% for Q3 and 10.5% year-to-date, with earnings available for distribution once again exceeding the dividend.

• The book value per share increased from $19.25 to $19.54. Gains on the agency MBS portfolio contributed $4.30 per share, while the residential credit portfolio added $0.24 per share.

• Increases in book value and reductions in interest rate volatility contributed to positive outcomes.

Business Progress:

• Agency MBS portfolio grew by over $4 billion and residential credit market value increased by $535 million, driven by growth in the correspondent platform.

• The company executed six securitizations totaling $3.3 billion, underlining strength in the residential credit segment.

• Announced a subservicing partnership with Rocket Mortgage, enhancing the potential of the MSR business.

Opportunities:

• The market's outlook appears favorable for Agency MBS owing to a steeper yield curve and potential for increased bank demand with Fed's cutting cycle.

• Continued record production volumes in residential credit, with strong credit characteristics, provide potential for growth.

• Enhanced partnerships, like that with Rocket Mortgage, offer opportunities to improve competitiveness in MSR acquisitions.

Risks:

• High interest rate volatility and geopolitical uncertainties, including potential impacts from the U.S. presidential election, could affect market conditions and portfolio performance.

• Though exposure has been managed, the portfolio's higher-average coupon and prepayment concerns continue to pose a risk.

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