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AGNC Investment (NASDAQ: AGNC) posted better-than-expected earnings in the fourth quarter as the Agency Mortgage Securities market improved, increasing the company’s book value per share.
Tangible net book value per common share of $9.84 on December 31, 2022 increased from $9.08 on September 30. AGNC’s economic return on tangible common equity in the quarter turned to a positive 12.3% versus -17.4% in the third quarter. However, AGNC (AGNC) stock down 1.1% in trading outside working hours. That’s after AGNC shares are up 13% since January 1st.
Net spread and dollar earnings per share of $0.74 in the fourth quarter, beating the consensus of $0.65, down from $0.84 in the third quarter. The figure excludes $-0.01 per share of estimated “catch-up” premium amortization expense due to the change in projected constant receipt rate (CPR) estimates. Includes $0.11 per common share of dollar income related to the company’s average net debt position of $19.0 billion in agency mortgage-backed securities in the to-be-announced (TBA) market.
AGNC’s ( AGNC ) annual net interest spread, including TBA positions and interest rate swaps and excluding catch-up premium amortization, was 2.74% for Q4 versus 2.81% in Q3.
“Fixed income markets stabilized during the quarter and investor sentiment improved as volatility and monetary policy uncertainty began to subside,” said AGNC ( AGNC ) President and CEO Peter Federico. “Against this backdrop, Agency MBS spreads to benchmark rates have been reduced from historically broad levels, fueling a significant improvement in our tangible net book value per common share during the quarter, both of which continued in January.”
Cash and unencumbered agency MBS totaled ~$4.3 billion as of December 31, 2022, up/down from ~$3.6 billion as of September 30.
AGNC’s ( AGNC ) weighted average portfolio CPR was 6.8% in the fourth quarter versus 9.2% in the third quarter.
The weighted average predicted CPR for the remaining life of agency securities held on December 31, 2022 increased to 7.4% from 7.0% on September 30.
Conference call Jan. 31 at 8:30 a.m. ET.
Previously, AGNC Investment’s ( AGNC ) non-GAAP EPS of $0.93 beat $0.27