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AGNC Investment (AGNC) Beats on Q4 Net Spread and Dollar Roll
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AGNC Investment Corp.’s (AGNC - Free Report) fourth-quarter 2022 net spread and dollar roll income per common share (excluding estimated "catch-up" premium amortization costs) of 74 cents per share beat the Zacks Consensus Estimate of 67 cents. The bottom line declined from 75 cents in the prior-year quarter. Our estimate for the same was pegged at 57 cents.
Adjusted net interest and dollar roll income (excluding catch-up premium amortization) was $451 million, rising from the quarter-ago number of $440 million.
The company reported a fourth-quarter comprehensive income per common share of $1.17 against the prior-year quarter’s loss of 31 cents.
Inside the Headlines
Net interest income of $25 million plunged 89.9% year over year.
AGNC Investment's average asset yield on its portfolio was 3.14% in the fourth quarter, up from 1.98% in the prior-year quarter.
In the reported quarter, the combined weighted average cost of funds, inclusive of the interest rate swap, was 0.94% against the total benefit of 0.02% in the prior-year quarter.
The average net interest spread (excluding catch-up premium amortization) was 2.74%, up from 2.15% reported in the prior-year quarter.
AGNC Investment’s tangible net book value "at risk" leverage ratio was 7.8 as of Dec 31, 2022, compared with 7.6 in the prior-year quarter.
In the fourth quarter, the company's investment portfolio bore a weighted average actual constant prepayment rate (CPR) of 6.8%, down from 18.6% in the prior-year quarter.
As of Dec 31, 2022, tangible net book value per share (BVPS) was $9.84, down from $15.75 as of Dec 31, 2021.
The annualized economic loss on tangible common equity for the company in the reported quarter was 12.3%. This included a dividend per share of 36 cents and an increase of 76 cents in tangible net BVPS.
As of Dec 31, 2022, the company’s investment portfolio aggregated $59.5 billion. This included $39.5 billion of Agency mortgage-backed securities, $18.6 million of net to-be-announced mortgage position and $1.4 billion of credit risk transfer and non-Agency securities.
As of Dec 31, 2022, AGNC Investment’s cash and cash equivalents totaled $1.02 billion, up from $976 million as of Sep 30, 2022.
Dividend Update
In the fourth quarter, AGNC Investment announced a dividend of 12 cents per share each for October, November and December. Notably, the company declared $12 billion in common stock dividends or $45.76 per common share since its initial public offering in May 2008 through fourth-quarter 2022.
Conclusion
In the fourth quarter, rising asset yields aided the results. In a bid to navigate the monetary policy transition, the company has defensively positioned itself with prudent asset-selection efforts and timely portfolio adjustment. Going forward, investments in agency MBS will drive attractive risk-adjusted returns.
Also, mortgage rates increased on a sequential basis, limiting refinancing activities in the quarter. This likely reduced the CPR levels for the company.
AGNC Investment Corp. Price, Consensus and EPS Surprise
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AGNC Investment (AGNC) Beats on Q4 Net Spread and Dollar Roll
AGNC Investment Corp.’s (AGNC - Free Report) fourth-quarter 2022 net spread and dollar roll income per common share (excluding estimated "catch-up" premium amortization costs) of 74 cents per share beat the Zacks Consensus Estimate of 67 cents. The bottom line declined from 75 cents in the prior-year quarter. Our estimate for the same was pegged at 57 cents.
Adjusted net interest and dollar roll income (excluding catch-up premium amortization) was $451 million, rising from the quarter-ago number of $440 million.
The company reported a fourth-quarter comprehensive income per common share of $1.17 against the prior-year quarter’s loss of 31 cents.
Inside the Headlines
Net interest income of $25 million plunged 89.9% year over year.
AGNC Investment's average asset yield on its portfolio was 3.14% in the fourth quarter, up from 1.98% in the prior-year quarter.
In the reported quarter, the combined weighted average cost of funds, inclusive of the interest rate swap, was 0.94% against the total benefit of 0.02% in the prior-year quarter.
The average net interest spread (excluding catch-up premium amortization) was 2.74%, up from 2.15% reported in the prior-year quarter.
AGNC Investment’s tangible net book value "at risk" leverage ratio was 7.8 as of Dec 31, 2022, compared with 7.6 in the prior-year quarter.
In the fourth quarter, the company's investment portfolio bore a weighted average actual constant prepayment rate (CPR) of 6.8%, down from 18.6% in the prior-year quarter.
As of Dec 31, 2022, tangible net book value per share (BVPS) was $9.84, down from $15.75 as of Dec 31, 2021.
The annualized economic loss on tangible common equity for the company in the reported quarter was 12.3%. This included a dividend per share of 36 cents and an increase of 76 cents in tangible net BVPS.
As of Dec 31, 2022, the company’s investment portfolio aggregated $59.5 billion. This included $39.5 billion of Agency mortgage-backed securities, $18.6 million of net to-be-announced mortgage position and $1.4 billion of credit risk transfer and non-Agency securities.
As of Dec 31, 2022, AGNC Investment’s cash and cash equivalents totaled $1.02 billion, up from $976 million as of Sep 30, 2022.
Dividend Update
In the fourth quarter, AGNC Investment announced a dividend of 12 cents per share each for October, November and December. Notably, the company declared $12 billion in common stock dividends or $45.76 per common share since its initial public offering in May 2008 through fourth-quarter 2022.
Conclusion
In the fourth quarter, rising asset yields aided the results. In a bid to navigate the monetary policy transition, the company has defensively positioned itself with prudent asset-selection efforts and timely portfolio adjustment. Going forward, investments in agency MBS will drive attractive risk-adjusted returns.
Also, mortgage rates increased on a sequential basis, limiting refinancing activities in the quarter. This likely reduced the CPR levels for the company.
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.
Earnings Release Dates of Other REITs
We now look forward to the earnings releases of Annaly Capital Management, Inc. (NLY - Free Report) and Starwood Property Trust (STWD - Free Report) .
Annaly is scheduled to report quarterly figures on Feb 8. NLY currently carries a Zacks Rank of 3.
Starwood Property Trust is scheduled to report quarterly figures on Mar 1. STWD currently carries a Zacks Rank of 3.