AGNC Investment Corp is a real estate investment trust that invests in agency residential mortgage-backed securities. The firm's asset portfolio includes residential mortgage pass-through securities and collateralized mortgage obligations guaranteed by U.S. Government-sponsored enterprises or agencies.
Performance Overview
AGNC Investment Corp (AGNC, Financial) reported a comprehensive loss of $(0.13) per common share for Q2 2024, which includes a net loss of $(0.11) per common share and other comprehensive loss (OCI) of $(0.02) per common share. This performance fell short of analyst estimates, which projected earnings per share of $0.37 and revenue of $36.87 million.
The company declared dividends of $0.36 per common share for the quarter, maintaining its commitment to shareholder returns despite the challenging market conditions.
Financial Highlights
| Metric | Q2 2024 | Q1 2024 |
|---|---|---|
| Net Spread and Dollar Roll Income per Common Share | $0.53 | $0.58 |
| Tangible Net Book Value per Common Share | $8.40 | $8.84 |
| Economic Return on Tangible Common Equity | -0.9% | 5.7% |
| Investment Portfolio | $66.0 billion | $61.0 billion |
Key Metrics and Analysis
AGNC's tangible net book value per common share decreased by 5.0% to $8.40 from $8.84 in the previous quarter. The company's investment portfolio grew to $66.0 billion, primarily composed of $59.7 billion in Agency MBS and $5.3 billion in net forward purchases/sales of Agency MBS in the TBA market.
The company's leverage ratio increased to 7.4x from 7.1x in Q1 2024, reflecting a moderate rise in leverage. Despite this, AGNC maintained significant liquidity, ending the quarter with $5.3 billion in unencumbered cash and Agency MBS, representing 65% of its tangible equity.
Management Commentary
"The strong fixed income sector momentum that began in the fourth quarter of 2023 abated in the second quarter, as the Federal Reserve (the Fed) and market participants analyzed economic data for indications that the economy was slowing and inflation moderating," said Peter Federico, the Company's President and Chief Executive Officer.
"AGNC generated an economic return on tangible common equity of -0.9% during the quarter, comprised of $0.36 of dividends per common share and a $(0.44) decline in tangible net book value per common share," said Bernice Bell, the Company's Executive Vice President and Chief Financial Officer.
Income Statement and Balance Sheet Highlights
AGNC reported a net interest expense of $(3) million for Q2 2024, compared to $(30) million in Q1 2024. The company recorded a net loss of $(21) million in other gains (losses), net, primarily due to $(115) million in net realized losses on sales of investment securities and $(261) million in net unrealized losses on investment securities measured at fair value through net income.
As of June 30, 2024, AGNC's total assets were valued at $79.7 billion, up from $71.9 billion at the end of Q1 2024. The company's total liabilities increased to $71.0 billion from $63.3 billion in the previous quarter.
Conclusion
AGNC Investment Corp (AGNC, Financial) faced a challenging second quarter, missing analyst estimates and reporting a comprehensive loss. However, the company maintained its dividend payout and increased its investment portfolio, demonstrating resilience in a volatile market. Investors will be closely monitoring AGNC's performance in the coming quarters as it navigates the current economic landscape.
Explore the complete 8-K earnings release (here) from AGNC Investment Corp for further details.
