AGNC Investment (AGNC) Beats on Q2 Net Spread and Dollar Roll

AGNC Investment Corp. AGNC reported second-quarter 2021 net spread and dollar roll income (excluding estimated catch-up premium amortization costs) of 76 cents per share, beating the Zacks Consensus Estimate of 64 cents. Also, the reported figure improved from the second-quarter 2020 number of 58 cents.

Adjusted net interest and dollar roll income (excluding catch-up premium amortization) was $446 million, surpassing the Zacks Consensus Estimate of $337.9 million. The reported figure also improved from the year-ago figure of $372 million.

Net interest income of $232 million declined 21.4% from the prior-year quarter’s $295 million.

The company reported a second-quarter comprehensive loss per common share of 97 cents against the prior quarter’s income of $1.33.

As of Jun 30, 2021, its tangible net book value per share (“BVPS”) was $16.39, down 7.5% from $17.72 as of Mar 31, 2021. Nonetheless, it compares favorably with BVPS of $14.92 as of Jun 30, 2020.

The economic loss on tangible common equity for the company in the reported quarter was 5.5%. This included a dividend per share of 36 cents and a decrease of $1.33 in tangible net BVPS.

Inside the Headlines

As of Jun 30, 2021, the company’s investment portfolio aggregated $87.5 billion. This included $58.1 billion of Agency mortgage backed securities, $27.4 billion of to-be-announced (TBA) securities, and $2 billion of credit risk transfer and non-Agency securities.

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 7.9X as of Jun 30, 2021, compared with 7.7X in the prior quarter.

For the June-end quarter, the company's investment portfolio bore a weighted average actual constant prepayment rate of 25.7%, up from 24.6% witnessed in first-quarter 2021.

Excluding the net TBA position, AGNC Investment's average asset yield on its portfolio, excluding the net TBA position, was 1.73 % in the second quarter, significantly down from 3.78% recorded in the previous quarter.

For the June-end quarter, the combined average cost of funds, inclusive of interest rate swap costs, was 0.06%, up from 0.02% witnessed in the previous quarter.

Average net interest spread (excluding catch-up premium amortization) was 2.09%, up from 2% reported in the prior quarter.

As of Jun 30, 2021, AGNC Investment’s cash and cash equivalents totaled $947 million, down from $1.02 billion as of Dec 31, 2020.

Dividend Update

In the second quarter, AGNC Investment announced a dividend of 12 cents per share each for April, May and June. Notably, the company announced $10.8 billion in common stock dividends or $43.60 per common share since its initial public offering in May 2008 through second-quarter 2021.

AGNC Investment Corp. Price, Consensus and EPS Surprise

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.

We now look forward to the earnings releases of other mortgage REITs like Annaly Capital Management, Inc. NLY, Arbor Realty Trust, Inc. ABR and Chimera Investment Corporation CIM, which are scheduled to release their results on Jul 28, Jul 30 and Aug 4, respectively.

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