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AGNC Investment (AGNC) Q4 Earnings Miss Estimates, NII Dips

Zacks Equity Research

AGNC Investment Corp. AGNC reported fourth-quarter 2018 net spread and dollar-roll income (excluding estimated catch-up premium amortization benefit) of 53 cents per share, missing the Zacks Consensus Estimate of 61 cents. Moreover, it came in lower than the prior-year figure of 62 cents per share.

Further, the company reported fourth-quarter comprehensive loss per common share of 90 cents against comprehensive income per common share of 3 cents recorded in the prior quarter. Net interest income (NII) of $186 million came in lower than the prior-quarter figure of $188 million.

Also, as of Dec 31, 2018, the company’s tangible net book value per share came in at $16.56, down from $19.69 as of Dec 31, 2017.

The economic return on tangible common equity for the company during the reported quarter was a negative 5%. This included dividend per share of 54 cents and a drop of $1.44 in tangible net book value per share.

For full-year 2018, net spread and dollar-roll income (excluding estimated catch-up premium amortization benefit) of $2.35 missed the Zacks Consensus Estimate of $2.44. NII for the year was $776 million.

Inside the Headlines

As of Dec 31, 2018, the company’s investment portfolio aggregated $91.6 billion. This included $82.7 billion of agency mortgage backed securities, $7.3 billion of to-be-announced (TBA) securities and $1.6 billion of credit risk transfer.

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 9x as of Dec 31, 2018, compared with8.2x as of Sep 30, 2018.

For the October-December quarter, the company's investment portfolio bore a weighted average constant prepayment rate of 7.4%, down from 9.7% witnessed in the last reported quarter.

Excluding net TBA position, AGNC Investment's average asset yield came in at nearly 3.13% for the quarter under review, up from 3.11% recorded in the previous quarter.

For the fourth quarter, combined average cost of funds inclusive of interest rate swap costs came in at 2.09%, an increase from 1.88% witnessed in the previous quarter.

Combined annualized net interest spread (excluding estimated catch- up premium amortization benefit), came in at 1.17%, down from 1.30% reported in the last quarter.

Also, as of Dec 31, 2018, AGNC Investment’s cash and cash equivalents totaled $921 million, down from $1.07 billion as of Sep 30, 2018.

Dividend Update

In the quarter under review, AGNC Investment announced monthly dividends of 18 cents per share for October, November and December. Notably, the company announced a total of $8.5 billion in common stock dividends or $39.32 per common share since its initial public offering in May 2008 through fourth-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 Chimera Investment Corporation CIM, Annaly Capital Management, Inc. NLY and Starwood Property Trust STWD. While Chimera Investment and Annaly will report fourth-quarter figures on Feb 13, Starwood Property is scheduled to release on Feb 28.

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