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AGNC Investment (AGNC) Tops on Q3 Net Spread and Dollar Roll
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AGNC Investment Corp. (AGNC - Free Report) reported a third-quarter 2022 net spread and dollar roll income per common share (excluding estimated "catch-up" premium amortization costs) of 84 cents per share, beating the Zacks Consensus Estimate of 71 cents. The reported figure improved from 75 cents in third-quarter 2021.Our estimate for the same was pegged at 67 cents.
Adjusted net interest and dollar roll income (excluding catch-up premium amortization) was $489 million, rising from the quarter-ago number of $443 million.
The company reported a third-quarter comprehensive loss per common share of $2.01 against the prior-year quarter’s income of 37 cents.
Inside the Headlines
Net interest income of $177 million jumped 36.6% year over year but missed the Zacks Consensus Estimate of $289.1 million. Our estimate for the same was pegged at $289.2 million.
AGNC Investment's average asset yield on its portfolio was 3.09% in the third quarter, up from 2.30% in the prior-year quarter.
For the third quarter, the combined weighted average cost of funds, inclusive of the interest rate swap, was 0.50% against the total benefit of 0.03% in the prior-year quarter.
The average net interest spread (excluding catch-up premium amortization) was 2.81%, up from 2.19% reported in the prior-year quarter.
AGNC Investment’s tangible net book value "at risk" leverage ratio was 8.1X as of Sep 30, 2022, compared with 7.5X in the prior-year quarter.
For the third quarter, the company's investment portfolio bore a weighted average actual constant prepayment rate (CPR) of 9.2%, down from 22.5% in third-quarter 2021.
As of Sep 30, 2022, its tangible net book value per share (“BVPS”) was $9.08, down 20.5% from $11.43 as of Jun 30, 2022. Also, it compares unfavorably with BVPS of $16.41 as of Sep 30, 2021.
The annualized economic loss on tangible common equity for the company in the reported quarter was 17.4%. This included a dividend per share of 36 cents and a decrease of $2.35 in tangible net BVPS.
As of Sep 30, 2022, the company’s investment portfolio aggregated $61.5 billion. This included $41.9 billion of Agency mortgage-backed securities, $17.9 million of net to-be-announced mortgage position, and $1.7 billion of credit risk transfer and non-Agency securities.
As of Sep 30, 2022, AGNC Investment’s cash and cash equivalents totaled $976 million, up from $906 million as of Jun 30, 2022.
Dividend Update
In the third quarter, AGNC Investment announced a dividend of 12 cents per share each for July, August and September. Notably, the company declared $11.8 billion in common stock dividends or $45.40 per common share since its initial public offering in May 2008 through third-quarter 2022.
Conclusion
In the third 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 marginally 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
Image: Bigstock
AGNC Investment (AGNC) Tops on Q3 Net Spread and Dollar Roll
AGNC Investment Corp. (AGNC - Free Report) reported a third-quarter 2022 net spread and dollar roll income per common share (excluding estimated "catch-up" premium amortization costs) of 84 cents per share, beating the Zacks Consensus Estimate of 71 cents. The reported figure improved from 75 cents in third-quarter 2021.Our estimate for the same was pegged at 67 cents.
Adjusted net interest and dollar roll income (excluding catch-up premium amortization) was $489 million, rising from the quarter-ago number of $443 million.
The company reported a third-quarter comprehensive loss per common share of $2.01 against the prior-year quarter’s income of 37 cents.
Inside the Headlines
Net interest income of $177 million jumped 36.6% year over year but missed the Zacks Consensus Estimate of $289.1 million. Our estimate for the same was pegged at $289.2 million.
AGNC Investment's average asset yield on its portfolio was 3.09% in the third quarter, up from 2.30% in the prior-year quarter.
For the third quarter, the combined weighted average cost of funds, inclusive of the interest rate swap, was 0.50% against the total benefit of 0.03% in the prior-year quarter.
The average net interest spread (excluding catch-up premium amortization) was 2.81%, up from 2.19% reported in the prior-year quarter.
AGNC Investment’s tangible net book value "at risk" leverage ratio was 8.1X as of Sep 30, 2022, compared with 7.5X in the prior-year quarter.
For the third quarter, the company's investment portfolio bore a weighted average actual constant prepayment rate (CPR) of 9.2%, down from 22.5% in third-quarter 2021.
As of Sep 30, 2022, its tangible net book value per share (“BVPS”) was $9.08, down 20.5% from $11.43 as of Jun 30, 2022. Also, it compares unfavorably with BVPS of $16.41 as of Sep 30, 2021.
The annualized economic loss on tangible common equity for the company in the reported quarter was 17.4%. This included a dividend per share of 36 cents and a decrease of $2.35 in tangible net BVPS.
As of Sep 30, 2022, the company’s investment portfolio aggregated $61.5 billion. This included $41.9 billion of Agency mortgage-backed securities, $17.9 million of net to-be-announced mortgage position, and $1.7 billion of credit risk transfer and non-Agency securities.
As of Sep 30, 2022, AGNC Investment’s cash and cash equivalents totaled $976 million, up from $906 million as of Jun 30, 2022.
Dividend Update
In the third quarter, AGNC Investment announced a dividend of 12 cents per share each for July, August and September. Notably, the company declared $11.8 billion in common stock dividends or $45.40 per common share since its initial public offering in May 2008 through third-quarter 2022.
Conclusion
In the third 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 marginally 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 #2 (Buy). 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 Oct 26. NLYcurrently carries a Zacks Rank of 3 (Hold).
Starwood Property Trust is scheduled to report quarterly figures on Nov 9. STWD currently carries a Zacks Rank of 3.