Kwarkot
AGNC Investment's (NASDAQ:AGNC) earnings continued to drop in Q4 2023 as the Federal Reserve's interest rate hikes of the past two years widened spreads on the securities AGNC holds. Still, its Q4 earnings came in slightly better than expected. And the mortgage REIT's management sees better days ahead.
Q4 net spread and dollar roll income per share of $0.60, vs. the $0.59 consensus, fell from $0.65 in Q3 and $0.74 in Q4 2022.
AGNC stock slid 2.8% in after-hours trading.
In the past two years, the Federal Reserve engaged in aggressive monetary policy tightening, which ratcheted interest rates significantly higher. "Agency MBS (mortgage-backed securities) spreads widened by more than 100 basis points, and interest rates and interest rate volatility moved sharply higher," said AGNC President and CEO Peter Federico.
"Today, we believe many of the factors that drove these adverse conditions are largely behind us," he added. "Historically attractive and stable agency MBS spreads combined with declining interest rate volatility create a compelling investment environment for AGNC and form the basis for our positive investment outlook."
The most recent quarter's earnings include $0.01 per share of dollar roll income associated with the company's $5.0B average net long position in agency mortgage-backed securities in the "to-be-announced" market and excludes $0.05 per share of estimated "catch-up premium amortization benefit due to change in projected constant prepayment rate estimates.
Tangible net book value per common share of $8.70 at Dec. 31, 2023 increased from $8.08 at Sept. 30, 2023. Economic return on tangible common equity climbed to 12.1% in the quarter, compared with -10.1% in the prior quarter.
Q4 net interest income of -$26M compared with -$53M in Q3.
The REIT's annualized net interest spread including the TBA position and interest rate swaps, excluding "catch-up" premium amortization, was 3.08% vs. 3.03% in Q3.
Its fixed-rate Agency MBS and TBA securities' weighted average coupon was 4.83% at Dec. 31, 2023 vs. 4.71% at Sept. 30.
During the quarter, AGNC (AGNC) issued 46.3M common shares through its at-the-market offerings for net proceeds of $376M.
Conference call on Jan. 23 at 8:30 AM ET.
Earlier, AGNC Investment non-GAAP EPS of $0.60 beats by $0.01.