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AGNC Investment (AGNC) Q2 Earnings Beat Estimates, NII Rises

AGNC Investment Corp. AGNC reported second-quarter 2020 net spread and dollar-roll income (excluding estimated catch-up premium amortization cost) of 58 cents per share, beating the Zacks Consensus Estimate of 46 cents. Moreover, the reported figure was higher than the prior-quarter figure of 49 cents per share.

Adjusted net interest and dollar roll income (excluding catch-up premium amortization) was $372 million, surpassing the Zacks Consensus Estimate of $33.9 million. The reported figure also improved from the year-ago number of $295 million.

Net interest income (NII) of $295 million grew from the prior-year quarter’s $123 million.

The company reported second-quarter comprehensive income per common share of $1.60 as against comprehensive loss per common share of 15 cents reported in the prior-year quarter.

Also, as of Jun 30, 2020, its tangible net book value per share was $14.92, up 9.5% from $13.62 as of Mar 31, 2020. However, it compares unfavorably with the tangible net book value per share of $16.58 as of Jun 30, 2019.

The economic loss on tangible common equity for the company during the reported quarter was 12.2%. This included a dividend per share of 36 cents and an increase of $1.30 in tangible net book value per share.

Inside the Headlines

As of Jun 30, 2020, the company’s investment portfolio aggregated $97.7 billion. This included $75.8 billion of Agency mortgage backed securities (MBS), $20.5 billion of to-be-announced (TBA) securities, and $1.3 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 9.2X as of Jun 30, 2020, as compared to 9.4X in the prior quarter.

For the March-end quarter, the company's investment portfolio bore a weighted average constant prepayment rate (CPR) of 19.9%, up from 12.2% witnessed in first-quarter 2020.

Excluding net TBA position, AGNC Investment's average asset yield on its portfolio, excluding the net TBA position, was 2.39% in the second quarter, up from 2.01% recorded in the previous quarter.

For the June-end quarter, combined average cost of funds inclusive of interest rate swap costs came in at 0.88%, down from 1.67% witnessed in the previous quarter.

Average net interest spread (excluding catch- up premium amortization), came in at 1.68%, up from the 1.30% reported in the prior quarter.

Also, as of Jun 30, 2020, AGNC Investment’s cash and cash equivalents totaled $859 million, up from $831 million as of Dec 31, 2019.

Dividend Update and Share Repurchase

During the second quarter, AGNC Investment announced a monthly dividend of 12 cents per share each for April, May and June. Notably, the company announced $10.1 billion in common stock dividends or $42.16 per common share since its initial public offering in May 2008 through second-quarter 2020.

AGNC Investment's board of directors authorized the company to repurchase up to $1 billion of its shares of common stock through Dec 31, 2020.  During the April-June period, the company repurchased 12.2 million shares or $147 million of its common stock for an average price of $11.99 per share. As of Jun 30, it had $750 million of common stock remaining available for buyback.

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.

Earnings Releases of Other REITs

Digital Realty Trust DLR is slated to release second-quarter earnings on Jul 30.

Healthcare Trust of America, Inc. HTA will report quarterly numbers on Aug 6.

National Storage Affiliates Trust NSA is set to report quarterly numbers on Aug 6.

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