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AGNC Investment (AGNC) Beats on Q4 Net Spread and Dollar Roll
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AGNC Investment Corp. (AGNC - Free Report) reported fourth-quarter 2021 net spread and dollar roll income per common share (excluding estimated "catch-up" premium amortization costs) of 75 cents per share, beating the Zacks Consensus Estimate of 66 cents. The reported figure remained flat with the fourth-quarter 2020 figure.
Adjusted net interest and dollar roll income (excluding catch-up premium amortization) was $440 million, surpassing the Zacks Consensus Estimate of $418 million. The reported figure, however, declined from the quarter-ago number of $443 million.
The company reported a fourth-quarter comprehensive loss per common share of 31 cents against the prior-year quarter’s income of $1.16.
For 2021, net spread and dollar roll income per common share (excluding estimated "catch-up" premium amortization costs) of $3.02 per share surpassed the Zacks Consensus Estimate of $2.92. Also, adjusted net interest and dollar roll income (excluding catch-up premium amortization) was $1.79 billion, outpacing the Zacks Consensus Estimate of $1.76 billion.
Inside the Headlines
Net interest income of $247 million declined 11.5% sequentially.
AGNC Investment's average asset yield on its portfolio, excluding the net to-be-announced (TBA) position, was 2.30% in the fourth quarter, up from 2.28% recorded in the prior-year quarter.
For the December-end quarter, the combined weighted average cost of funds, inclusive of interest rate swap, was a net benefit of 0.02%, compared with a net benefit of 0.03% witnessed in the previous quarter.
The average net interest spread (excluding catch-up premium amortization) was 2.15%, down from 2.19% reported in the prior-quarter.
AGNC Investment’s tangible net book value "at risk" leverage ratio was 7.6X as of Dec 31, 2021, compared with 8.5X in the prior-year quarter.
For the December-end quarter, the company's investment portfolio bore a weighted average actual constant prepayment rate of 18.6%, down from 27.6% witnessed in fourth-quarter 2020.
As of Dec 31, 2021, its tangible net book value per share (“BVPS”) was $15.75, down 4% from $16.41 as of Sep 30, 2021. Also, it compares unfavorably with BVPS of $16.71 as of Dec 31, 2020.
The economic loss on tangible common equity for the company in the reported quarter was 1.8%. This included a dividend per share of 36 cents and a decrease of 66 cents in tangible net BVPS.
As of Dec 31, 2021, the company’s investment portfolio aggregated $82 billion. This included $79.7 billion of Agency mortgage-backed securities and TBA securities, and $2.3 billion of credit risk transfer and non-Agency securities.
As of Dec 31, 2021, AGNC Investment’s cash and cash equivalents totaled $998 million, down from $1.01 billion as of Dec 31, 2020.
Capital Deployment Activities
In the fourth quarter, AGNC Investment announced a dividend of 12 cents per share each for October, November and December. Notably, the company declared $11.2 billion in common stock dividends or $44.32 per common share since its initial public offering in May 2008 through fourth-quarter 2021.
The company repurchased 2.7 million shares for $42 million under its $1-billion buyback plan expiring on Dec 31, 2022.
Conclusion
In the fourth quarter, mortgage rates increased marginally on a sequential basis, limiting refinancing activities in the quarter. This likely reduced constant prepayment rate for AGNC Investment. However, the shift in the Fed’s stance on monetary policy led to higher interest rate volatility. This resulted in the dismal performance of Agency mortgage-backed securities in the fourth quarter.
AGNC Investment Corp. Price, Consensus and EPS Surprise
We now look forward to the earnings releases of other mortgage REITs like Annaly Capital Management, Inc. (NLY - Free Report) , Invesco Mortgage Capital (IVR - Free Report) and Starwood Property Trust (STWD - Free Report) , which are scheduled to release their results on Feb 9, Feb 17 and Feb 25, respectively.
Annaly and Starwood Property carry a Zacks Rank of 2 (Buy), while Invesco Mortgage carries a Zacks Rank of 3 (Hold) at present.
The Zacks Consensus Estimate for fourth-quarter earnings of Annaly and Starwood Property have remained unchanged at 26 cents and 52 cents, respectively, over the past month. The Zacks Consensus Estimate for Invesco Mortgage’s fourth-quarter 2021 earnings has remained unchanged at 10 cents over the past month.
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AGNC Investment (AGNC) Beats on Q4 Net Spread and Dollar Roll
AGNC Investment Corp. (AGNC - Free Report) reported fourth-quarter 2021 net spread and dollar roll income per common share (excluding estimated "catch-up" premium amortization costs) of 75 cents per share, beating the Zacks Consensus Estimate of 66 cents. The reported figure remained flat with the fourth-quarter 2020 figure.
Adjusted net interest and dollar roll income (excluding catch-up premium amortization) was $440 million, surpassing the Zacks Consensus Estimate of $418 million. The reported figure, however, declined from the quarter-ago number of $443 million.
The company reported a fourth-quarter comprehensive loss per common share of 31 cents against the prior-year quarter’s income of $1.16.
For 2021, net spread and dollar roll income per common share (excluding estimated "catch-up" premium amortization costs) of $3.02 per share surpassed the Zacks Consensus Estimate of $2.92. Also, adjusted net interest and dollar roll income (excluding catch-up premium amortization) was $1.79 billion, outpacing the Zacks Consensus Estimate of $1.76 billion.
Inside the Headlines
Net interest income of $247 million declined 11.5% sequentially.
AGNC Investment's average asset yield on its portfolio, excluding the net to-be-announced (TBA) position, was 2.30% in the fourth quarter, up from 2.28% recorded in the prior-year quarter.
For the December-end quarter, the combined weighted average cost of funds, inclusive of interest rate swap, was a net benefit of 0.02%, compared with a net benefit of 0.03% witnessed in the previous quarter.
The average net interest spread (excluding catch-up premium amortization) was 2.15%, down from 2.19% reported in the prior-quarter.
AGNC Investment’s tangible net book value "at risk" leverage ratio was 7.6X as of Dec 31, 2021, compared with 8.5X in the prior-year quarter.
For the December-end quarter, the company's investment portfolio bore a weighted average actual constant prepayment rate of 18.6%, down from 27.6% witnessed in fourth-quarter 2020.
As of Dec 31, 2021, its tangible net book value per share (“BVPS”) was $15.75, down 4% from $16.41 as of Sep 30, 2021. Also, it compares unfavorably with BVPS of $16.71 as of Dec 31, 2020.
The economic loss on tangible common equity for the company in the reported quarter was 1.8%. This included a dividend per share of 36 cents and a decrease of 66 cents in tangible net BVPS.
As of Dec 31, 2021, the company’s investment portfolio aggregated $82 billion. This included $79.7 billion of Agency mortgage-backed securities and TBA securities, and $2.3 billion of credit risk transfer and non-Agency securities.
As of Dec 31, 2021, AGNC Investment’s cash and cash equivalents totaled $998 million, down from $1.01 billion as of Dec 31, 2020.
Capital Deployment Activities
In the fourth quarter, AGNC Investment announced a dividend of 12 cents per share each for October, November and December. Notably, the company declared $11.2 billion in common stock dividends or $44.32 per common share since its initial public offering in May 2008 through fourth-quarter 2021.
The company repurchased 2.7 million shares for $42 million under its $1-billion buyback plan expiring on Dec 31, 2022.
Conclusion
In the fourth quarter, mortgage rates increased marginally on a sequential basis, limiting refinancing activities in the quarter. This likely reduced constant prepayment rate for AGNC Investment. However, the shift in the Fed’s stance on monetary policy led to higher interest rate volatility. This resulted in the dismal performance of Agency mortgage-backed securities in the fourth quarter.
AGNC Investment Corp. Price, Consensus and EPS Surprise
AGNC Investment Corp. price-consensus-eps-surprise-chart | AGNC Investment Corp. Quote
AGNC Investment currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
We now look forward to the earnings releases of other mortgage REITs like Annaly Capital Management, Inc. (NLY - Free Report) , Invesco Mortgage Capital (IVR - Free Report) and Starwood Property Trust (STWD - Free Report) , which are scheduled to release their results on Feb 9, Feb 17 and Feb 25, respectively.
Annaly and Starwood Property carry a Zacks Rank of 2 (Buy), while Invesco Mortgage carries a Zacks Rank of 3 (Hold) at present.
The Zacks Consensus Estimate for fourth-quarter earnings of Annaly and Starwood Property have remained unchanged at 26 cents and 52 cents, respectively, over the past month. The Zacks Consensus Estimate for Invesco Mortgage’s fourth-quarter 2021 earnings has remained unchanged at 10 cents over the past month.