AGNC Investment (AGNC) Q3 Earnings Top Estimates, BVPS Rises

AGNC Investment Corp. AGNC reported third-quarter 2020 net spread and dollar-roll income (excluding estimated catch-up premium amortization costs) of 81 cents per share, beating the Zacks Consensus Estimate of 57 cents. Moreover, the reported figure was higher than the prior-quarter figure of 59 cents.

Adjusted net interest and dollar roll income (excluding catch-up premium amortization) was $494 million, surpassing the Zacks Consensus Estimate of $374 million. The reported figure also improved from the year-ago number of $353 million.

Net interest income (NII) of $302 million grew from the prior-year quarter’s $119 million.

The company reported third-quarter comprehensive income per common share of $1.28 compared with the prior-year quarter’s figure of 42 cents.

Also, as of Sep 30, 2020, its tangible net book value per share (“BVPS”) was $15.88, up 6.4% from $14.92 as of Jun 30, 2020. However, it compares unfavorably with BVPS of $16.55 as of Sep 30, 2019.

The economic loss on tangible common equity for the company during the reported quarter was 8.8%. This included a dividend per share of 36 cents and an increase of 96 cents in BVPS.

Inside the Headlines

As of Sep 30, 2020, the company’s investment portfolio aggregated $97.6 billion. This included $66.9 billion of Agency mortgage backed securities (MBS) and $29.5 billion of to-be-announced (TBA) securities as well as $1.2 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 8.8X as of Sep 30, 2020, as compared with 9.2X in the prior quarter.

For the September-end quarter, the company's investment portfolio bore a weighted average actual constant prepayment rate (CPR) of 24.3%, up from 19.9% witnessed in second-quarter 2020.

Excluding net TBA position, AGNC Investment's average asset yield on its portfolio, excluding the net TBA position, was 2.28% in the third quarter, down from 2.39% recorded in the previous quarter.

For the September-end quarter, combined average costs of funds, inclusive of interest rate swap costs, were 0.15%, down from 0.88% witnessed in the previous quarter.

Average net interest spread (excluding catch-up premium amortization), was 2.15%, up from 1.68% reported in the prior quarter.

Also, as of Sep 30, 2020, AGNC Investment’s cash and cash equivalents totaled $857 million, up from $831 million as of Dec 31, 2019.

Dividend Update and Share Repurchase

During the third quarter, AGNC Investment announced a monthly dividend of 12 cents per share each for July, August and September. Notably, the company announced $10.3 billion in common stock dividends or $42.52 per common share since its initial public offering in May 2008 through third-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 July-September period, the company repurchased 11 million shares or $154 million of its common stock for an average price of $13.95 per share.

Moreover, the stock repurchase program was terminated on Oct 22, 2020, by the company's board of directors and replaced with a new plan to repurchase up to $1 billion of common stock through Dec 31, 2021.

AGNC Investment currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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

We now look forward to the earnings releases of other REITs like Lexington Realty Trust LXP, National Storage Affiliates Trust NSA and Ventas, Inc. VTR. While Lexington Realty and National Storage Affiliates are slated to report third-quarter earnings on Nov 5, Ventas will release earnings on Nov 6.

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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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