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AGNC Investment (NASDAQ:AGNC) Q2 earnings fell short of the average analyst estimate as tariff news roiled markets in the spring. While most markets have bounced back, agency mortgage-backed securities (“MBS”) did not.
Q2 net spread and dollar roll income per share of $0.38, missing the average analyst estimate of $0.41, fell from $0.44 in Q1 and $0.53 in last year’s Q2.
The current quarter excludes $0.01 per share of estimated “catch-up” premium amortization due to change in projected constant prepayment rate (“CPR”) estimates.
Tangible net book value of $7.81 per common share at June 30, 2025, dropped from $8.25 at March. 31, 2025. Economic return on tangible common equity declined to -1.0% from +2.4% in the previous quarter. Q2 2025 economic return is comprised of $0.36 dividends per common share and a -$0.44 decrease in tangible net book value per common share.
AGNC Investment (NASDAQ:AGNC) stock slipped 1.4% in after-hours trading.
“Although most asset class valuations retraced the April losses and ultimately increased quarter-over-quarter, agency MBS were an exception, as spreads to benchmark rates widened moderately during the second quarter. As a result of this underperformance, AGNC’s economic return for the second quarter was -1.0%,” said CEO and Chief Investment Officer Peter Federico.
Investment portfolio totaled $82.3B as of June 30, 2025, vs. $78.9B as of March 31, 2025.
The REIT’s annualized net interest spread, including the TBA position and interest rate swaps excluding “catch-up” premium amortization, was 2.01% vs. 2.12% in Q1.
Its fixed-rate agency mortgage-backed securities and TBA securities’ weighted average coupon at 5.13% at June 30, 2025, vs. 5.03% at March 31, 2025.
AGNC’s (AGNC) CPR for Q1 was 8.7% vs. 7.0% in the prior quarter.
“As a result of our risk management positioning and ample liquidity at the end of the first quarter, AGNC was able to navigate the substantial financial market volatility in April with our portfolio intact, and we opportunistically added assets at attractive levels using accretive capital raised through our At-the-Market program” Executive Vice President and Chief Financial Officer Bernice Bell said
During the quarter, AGNC (AGNC) issued 92.6M common shares through its at-the-market offerings for net proceeds of $799M.
Supply dynamics are in balance and banks’ participation in agency MBS appears poised to increase due to regulatory changes, CEO Federico said. Finally, “the administration has reiterated its intent to preserve agency MBS’ pristine credit profile and to maintain or reduce current mortgage spreads to benchmark rates. Collectively, we believe these dynamics provide a very positive backdrop for AGNC’s investment activitie.”
Conference call on July 22 at 8:30 AM ET.