AGNC Investment (AGNC) Tops on Q3 Net Spread and Dollar Roll
AGNC Investment Corp.’s AGNC third-quarter 2023 net spread and dollar roll income per common share (excluding estimated "catch-up" premium amortization costs) of 65 cents beat the Zacks Consensus Estimate of 57 cents. However, the bottom line declined from 84 cents in the prior-year quarter.
Adjusted net interest and dollar roll income (excluding estimated "catch-up" premium amortization costs) of $499 million moved down from $514 million in the quarter-ago period.
The company reported a third-quarter comprehensive loss per common share of $1.02 compared with the prior-year quarter’s loss of $2.01.
Inside the Headlines
Net interest income was negative $53 million against $177 million in the year-ago quarter. The Zacks Consensus Estimate was pegged at $310.2 million.
AGNC Investment's average asset yield on its portfolio was 4.26 % in the third quarter, up from 3.09% in the prior-year quarter.
The combined weighted average cost of funds, inclusive of interest rate swap, was 1.17% compared with 0.34% in the year-ago quarter.
The average net interest spread (excluding estimated "catch-up" premium amortization costs) was 3.03%, up from the 2.97% reported in the year-earlier quarter.
As of Sep 30, 2023, AGNC’s average tangible net book value "at risk" leverage ratio was 7.5 compared with 8.1 in the prior-year quarter.
In the third quarter, the company's investment portfolio bore an average actual constant prepayment rate of 7.1%, down from 9.2% in the previous-year quarter.
As of Sep 30, 2023, tangible net book value per common share (BVPS) was $8.08, down from $9.08 as of Sep 30, 2022.
The economic return on tangible common equity was negative 10.1%. This included a dividend per share of 36 cents and a decrease of 1.31 cents in tangible net BVPS.
As of Sep 30, 2023, the company’s investment portfolio aggregated $59.3 billion. This included $55.9 billion of Agency mortgage-backed securities, $2.4 million of net to-be-announced mortgage position, and $1.1 billion of credit risk transfer and non-Agency securities.
As of Sep 30, 2023, AGNC Investment’s cash and cash equivalents totaled $493 million, down from $1.01 billion as of Dec 31, 2022.
Dividend Update
In the third quarter, AGNC Investment announced a dividend of 12 cents per share each for July, August and September. Notably, management declared $12.6 billion in common stock dividends or $46.84 per common share since its initial public offering in May 2008 through third-quarter 2023.
Conclusion
In the third quarter, increasing asset yields supported 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.
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.
Performance and Upcoming Releases Dates of Other REITs
Annaly Capital Management, Inc. NLY reported third-quarter earnings available for distribution (EAD) per average share of 66 cents, which surpassed the Zacks Consensus Estimate of 65 cents. The figure declined from $1.06 in the year-ago quarter.
NLY registered year-over-year declines in book value per share (BVPS) and margin, while the average yield on interest-earning assets improved.
We now look forward to the earnings releases of Invesco Mortgage Capital Inc. IVR. The company is slated to post quarterly results on Nov 6.
Over the past month, the Zacks Consensus Estimate for IVR’s quarterly earnings has been unchanged at $1.47 per share, suggesting a marginal rise from the prior-year reported figure.
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