20. SEGMENTS The Company operates in three reportable segments further described in the “Description of Business” Note. The accounting policies applied to the segments are the same as those described in the summary of significant accounting policies, with the exception of allocations between segments related to net interest income and other comprehensive income (loss), which are reflected in Other income (loss), and allocations between segments related to investment balances, which are presented net of associated financings in Total Assets. These allocations are made to reflect the economic hedging relationship between investments within different operating segments. Activities that are not directly attributable or not allocated to any of the three current operating segments (such as investments in commercial mortgage-backed securities, preferred stock dividends and corporate existence costs) are reported under Corporate and Other as reconciling items to the Company’s consolidated financial statements. The tables below summarize the result of operations and total assets by segment that are provided to the Chief Operating Decision Maker (CODM), which is the Company’s Operating Committee. Comprehensive income is the measure of segment profit or loss that is determined in accordance with the measurement principles used in measuring the corresponding amounts in the consolidated financial statements and is a key determinant of the Company’s economic return (computed as the change in stockholders’ equity attributable to common shareholders plus common stock dividends declared divided by the prior period’s stockholders’ equity attributable to common shareholders), a measure which is used by the CODM to evaluate segment results and is one of the factors considered in determining capital allocation among the segments. The following table presents the results of operations of the Company’s reportable operating segments for the years ended December 31, 2023 and 2022: December 31, 2023 Agency Residential Credit MSR Corporate & Other Consolidated (dollars in thousands) Interest income $ 2,772,963 $ 930,232 $ — $ 28,386 $ 3,731,581 Interest expense 3,096,245 728,273 — 18,447 3,842,965 Net interest income (323,282) 201,959 — 9,939 (111,384) Servicing and related income — — 364,157 — 364,157 Servicing and related expense — — 37,652 — 37,652 Net servicing income — — 326,505 — 326,505 Other income (loss) (1,824,323) 171,678 13,975 (12,921) (1,651,591) Less: Total general and administrative expenses 58,852 49,021 29,872 24,808 162,553 Income (loss) before income taxes (2,206,457) 324,616 310,608 (27,790) (1,599,023) Income taxes 1,629 17,121 21,070 (386) 39,434 Net income (loss) (2,208,086) 307,495 289,538 (27,404) (1,638,457) Less: Net income (loss) attributable to noncontrolling interest — 4,714 — — 4,714 Net income (loss) attributable to Annaly (2,208,086) 302,781 289,538 (27,404) (1,643,171) Dividends on preferred stock — — — 141,676 141,676 Net income (loss) available (related) to common stockholders (2,208,086) 302,781 289,538 (169,080) (1,784,847) Unrealized gains (losses) on available-for-sale securities 580,680 — — — 580,680 Reclassification adjustment for net (gains) losses included in net income (loss) 1,792,816 — — — 1,792,816 Other comprehensive income (loss) 2,373,496 — — — 2,373,496 Comprehensive income (loss) 165,410 307,495 289,538 (27,404) 735,039 Comprehensive income (loss) attributable to noncontrolling interests — 4,714 — — 4,714 Comprehensive income (loss) attributable to Annaly $ 165,410 $ 302,781 $ 289,538 $ (27,404) $ 730,325 Noncash investing and financing activities: Receivable for unsettled trades 2,709,398 — 826 — 2,710,224 Payable for unsettled trades 3,232,941 10 16,438 — 3,249,389 Net change in unrealized gains (losses) on available-for-sale securities, net of reclassification adjustment 2,373,496 — — — 2,373,496 Dividends declared, not yet paid — — — 325,052 325,052 Total assets Total assets $ 71,167,416 $ 19,149,003 $ 2,578,644 $ 332,173 $ 93,227,236 ANNALY CAPITAL MANAGEMENT, INC. AND SUBSIDIARIES Financial Statements F-34
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