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AGNC Investment Corp.’s AGNC first-quarter 2023 net spread and dollar roll income per common share (excluding estimated “catch-up” premium amortization costs) of 70 cents per share beat the Zacks Consensus Estimate of 61 cents. The bottom line declined from 72 cents in the prior-year quarter. Our estimate for the same was pegged at 55 cents.
Adjusted net interest and dollar roll income (excluding catch-up premium amortization) was $493 million, rising from the quarter-ago number of $423 million.
The company reported a first-quarter comprehensive loss per common share of 7 cents compared with the prior-year quarter’s loss of $2.23.
Inside the Headlines
Net interest income (NII) was negative $98 million against $448 million in the year-ago quarter. NII also missed the Zacks Consensus Estimate of $299.3 million.
AGNC Investment’s average asset yield on its portfolio was 2.93 % in the first quarter, down from 3.55% in the prior-year quarter.
In the reported quarter, the combined weighted average cost of funds, inclusive of the interest rate swap, was 1.02 % compared with 0.09% in the prior-year quarter.
The average net interest spread (excluding catch-up premium amortization) was 2.88%, up from 2.19% reported in the prior-year quarter.
AGNC Investment’s tangible net book value “at risk” leverage ratio was 7.7 as of Mar 31, 2023, compared with 7.8 in the prior-year quarter.
In the first quarter, the company’s investment portfolio bore a weighted average actual constant prepayment rate of 5.2%, down from 14.5% in the prior-year quarter.
As of Mar 31, 2023, tangible net book value per share (BVPS) was $9.41, down from $13.12 as of Mar 31, 2022.
The economic loss on tangible common equity for the company in the reported quarter was 0.7%. This included a dividend per share of 36 cents and a decrease of 43 cents in tangible net BVPS.
As of Mar 31, 2023, the company’s investment portfolio aggregated $56.8 billion. This included $45.1 billion of Agency mortgage-backed securities, $10.4 million of net to-be-announced mortgage position, and $1.3 billion of credit risk transfer and non-Agency securities.
As of Mar 31, 2023, AGNC Investment’s cash and cash equivalents totaled $975 million, down from $1.01 billion as of Dec 31, 2022.
Dividend Update
In the first quarter, AGNC Investment announced a dividend of 12 cents per share each for January, February and March. Notably, the company declared $12.2 billion in common stock dividends or $46.12 per common share since its initial public offering in May 2008 through first-quarter 2023.
Conclusion
In the first quarter, declining asset yields hindered 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 sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Earnings Release Dates of Other REITs
We now look forward to the earnings releases of Annaly Capital Management, Inc. NLY and Starwood Property Trust STWD.
Annaly is scheduled to report quarterly figures on Apr 25. Over the past month, the Zacks Consensus Estimate for NLY’s quarterly earnings has moved marginally north to 74 cents, implying a 33.9% fall from the prior-year reported number.
Starwood Property Trust is scheduled to report quarterly figures on May 4. Over the past month, the Zacks Consensus Estimate for STWD’s quarterly earnings has been unchanged, implying a 35.5% fall from the prior-year reported number.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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