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AGNC Investment (AGNC) Beats on Q2 Net Spread and Dollar Roll

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AGNC Investment Corp. (AGNC - Free Report) reported second-quarter 2021 net spread and dollar roll income (excluding estimated catch-up premium amortization costs) of 76 cents per share, beating the Zacks Consensus Estimate of 64 cents. Also, the reported figure improved from the second-quarter 2020 number of 58 cents.

Adjusted net interest and dollar roll income (excluding catch-up premium amortization) was $446 million, surpassing the Zacks Consensus Estimate of $337.9 million. The reported figure also improved from the year-ago figure of $372 million.

Net interest income of $232 million declined 21.4% from the prior-year quarter’s $295 million.

The company reported a second-quarter comprehensive loss per common share of 97 cents against the prior quarter’s income of $1.33.

As of Jun 30, 2021, its tangible net book value per share (“BVPS”) was $16.39, down 7.5% from $17.72 as of Mar 31, 2021. Nonetheless, it compares favorably with BVPS of $14.92 as of Jun 30, 2020.

The economic loss on tangible common equity for the company in the reported quarter was 5.5%. This included a dividend per share of 36 cents and a decrease of $1.33 in tangible net BVPS.

Inside the Headlines

As of Jun 30, 2021, the company’s investment portfolio aggregated $87.5 billion. This included $58.1 billion of Agency mortgage backed securities, $27.4 billion of to-be-announced (TBA) securities, and $2 billion of credit risk transfer and non-Agency securities.

Inclusive of its net TBA position and net payable/ (receivable) for unsettled securities, AGNC Investment’s tangible net book value "at risk" leverage ratio was 7.9X as of Jun 30, 2021, compared with 7.7X in the prior quarter.

For the June-end quarter, the company's investment portfolio bore a weighted average actual constant prepayment rate of 25.7%, up from 24.6% witnessed in first-quarter 2021.

Excluding the net TBA position, AGNC Investment's average asset yield on its portfolio, excluding the net TBA position, was 1.73 % in the second quarter, significantly down from 3.78% recorded in the previous quarter.

For the June-end quarter, the combined average cost of funds, inclusive of interest rate swap costs, was 0.06%, up from 0.02% witnessed in the previous quarter.

Average net interest spread (excluding catch-up premium amortization) was 2.09%, up from 2% reported in the prior quarter.

As of Jun 30, 2021, AGNC Investment’s cash and cash equivalents totaled $947 million, down from $1.02 billion as of Dec 31, 2020.

Dividend Update

In the second quarter, AGNC Investment announced a dividend of 12 cents per share each for April, May and June. Notably, the company announced $10.8 billion in common stock dividends or $43.60 per common share since its initial public offering in May 2008 through second-quarter 2021.

AGNC Investment Corp. Price, Consensus and EPS Surprise

 

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 #3 (Hold). 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) , Arbor Realty Trust, Inc. (ABR - Free Report) and Chimera Investment Corporation (CIM - Free Report) , which are scheduled to release their results on Jul 28, Jul 30 and Aug 4, respectively.