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AGNC Investment (AGNC) Q3 Earnings Meet Estimates, NII Climbs

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AGNC Investment Corp. AGNC reported third-quarter 2018 net spread and dollar-roll income (excluding estimated catch-up premium amortization benefit) of 61 cents per share, meeting the Zacks Consensus Estimate. However, the figure came in lower than the prior-year tally of 62 cents per share.

Further, the company reported third-quarter comprehensive income per common share of three cents, way below the 34 cents of comprehensive income recorded in the prior quarter.

Also, as of Sep 30, 2018, the company’s tangible net book value per share came in at $18, down from $19.78 as of Sep 30, 2017.

The economic return on tangible common equity for the company during the reported quarter was 0.7%. This included dividend per share of 54 cents and a drop of 41 cents in tangible net book value per share.

Net interest income (NII) of $188 million came in higher than the prior-quarter figure of $177 million.

Inside the Headlines

As of Sep 30, 2018, the company’s investment portfolio aggregated $81.8 billion. This included 70.9 billion of agency mortgage backed securities (MBS), $9.4 billion of to-be-announced (TBA) securities and $1.5 billion of credit risk transfer (CRT).

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 8.2x as of Sep 30, 2018, against 8.3x as of Jun 30, 2018.

For the Jul-Sep quarter, the company's investment portfolio bore a weighted average constant repayment rate (CPR) of 6.8%, down from 9.7% witnessed in the last reported quarter.

Excluding net TBA position, AGNC Investment's average asset yield came in at nearly 3.11% for the quarter under review, up from 2.99% recorded in the previous quarter.

For the third quarter, combined average cost of funds inclusive of interest rate swap costs, came in at 1.88%, an increase from 1.67% witnessed in the previous quarter.

Annualized net interest spread, including TBA dollar-roll income (excluding estimated catch- up premium amortization benefit), for the quarter came in at 1.30%, down from 1.35% reported in the last quarter.

Also, as of Sep 30, 2018, AGNC Investment’s cash and cash equivalents totaled around $1.07 billion, up from $863 million as of Jun 30, 2018.

Dividend Update

In the quarter under review, AGNC Investment announced monthly dividends of 18 cents per share for July, August and September. Notably, the company had announced a total of $8.2 billion in common stock dividends or $38.78 per common share, since its initial public offering in May 2008, through third-quarter 2018.

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.

AGNC Investment Corp. Price, Consensus and EPS Surprise

AGNC Investment Corp. Price, Consensus and EPS Surprise | AGNC Investment Corp. Quote

We now look forward to the earnings releases of other REITs like Ladder Capital Corp LADR, Starwood Property Trust STWD and Ares Commercial Real Estate Corporation ACRE. While Starwood Property will report Q3 figures on Nov 9, Ladder Capital and Ares Commercial are scheduled to release their quarterly numbers on Nov 1 and Oct 30, respectively.

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