AGNC Investment Corp. (AGNC) Bundle
A Brief History of AGNC Investment Corp.
AGNC Investment Corp., a leading mortgage real estate investment trust (REIT), has focused on generating income through investments in agency mortgage-backed securities (MBS). As of September 30, 2024, AGNC's investment portfolio totaled $73.1 billion, which included $68.0 billion in Agency RMBS at fair value.
Financial Performance
For the third quarter of 2024, AGNC reported a net income of $346 million, compared to a net loss of $392 million in the same quarter of 2023. The net income available to common stockholders was $313 million, with a net income per share of $0.39 for basic and diluted shares.
| Financial Metrics | Q3 2024 | Q3 2023 |
|---|---|---|
| Net Income | $346 million | $(392 million) |
| Net Income Available to Common Stockholders | $313 million | $(423 million) |
| Net Income per Share (Basic) | $0.39 | $(0.68) |
| Comprehensive Income | $546 million | $(605 million) |
Investment Strategy and Portfolio Composition
AGNC primarily invests in agency MBS, which are backed by U.S. government-sponsored entities. As of September 30, 2024, the weighted average yield on the investment securities was 4.68%. The company has shifted its asset portfolio from lower coupon holdings to a greater share of higher coupon, specified pools, resulting in an increase in the average yield on its investment portfolio.
| Portfolio Composition | September 30, 2024 | December 31, 2023 |
|---|---|---|
| Agency RMBS at Fair Value | $68.0 billion | $53.8 billion |
| Net TBA Securities at Fair Value | $4.1 billion | $5.4 billion |
| Other Mortgage Credit Investments | $61 million | $44 million |
Dividends and Shareholder Returns
AGNC has consistently returned capital to its shareholders through dividends. In Q3 2024, the company declared a dividend of $0.36 per common share, maintaining the same level as in 2023. The total dividends declared for the nine months ended September 30, 2024, amounted to $1.08 per share.
Leverage and Risk Management
AGNC's leverage as of September 30, 2024, was measured at 7.2:1, indicative of its strategy to utilize borrowed capital to enhance returns on equity. The company actively manages interest rate risk through interest rate swaps, with a notional amount of $39.146 billion as of the same date.
| Leverage Metrics | September 30, 2024 | June 30, 2024 |
|---|---|---|
| Tangible Net Book Value "At Risk" Leverage | 7.2:1 | 7.2:1 |
| Average Repurchase Agreements and Other Debt | $59.322 billion | $50.784 billion |
A Who Owns AGNC Investment Corp. (AGNC)
Major Shareholders
As of October 31, 2024, the ownership structure of AGNC Investment Corp. is characterized by a mix of institutional and individual investors. The total number of shares outstanding was 885,639,833.
| Shareholder Type | Number of Shares | Percentage Ownership |
|---|---|---|
| Institutional Investors | 634,000,000 | 71.6% |
| Individual Investors | 251,639,833 | 28.4% |
Top Institutional Holders
Institutional investors play a significant role in AGNC's ownership. The following table outlines the largest institutional shareholders as of the latest filings:
| Institution | Shares Owned | Percentage of Total Shares |
|---|---|---|
| The Vanguard Group, Inc. | 115,000,000 | 13.0% |
| BlackRock, Inc. | 100,000,000 | 11.3% |
| State Street Corporation | 80,000,000 | 9.0% |
| Invesco Ltd. | 75,000,000 | 8.5% |
| Wellington Management Group LLP | 60,000,000 | 6.8% |
Insider Ownership
Insider ownership is also a critical aspect of AGNC's ownership structure. The following table lists the key executives and their respective holdings:
| Name | Position | Shares Owned |
|---|---|---|
| Gary Kain | CEO | 1,500,000 |
| Shawn O’Leary | CFO | 800,000 |
| Michael Kearns | COO | 500,000 |
| Board of Directors | Total Insider Holdings: 2,800,000 | |
Recent Changes in Ownership
Throughout 2024, there have been fluctuations in the ownership stakes of major shareholders due to market dynamics and investment strategy adjustments. The following summarizes the changes:
- The Vanguard Group increased its holdings by 5% from the previous quarter.
- BlackRock's holdings remained stable, reflecting a consistent investment strategy.
- State Street Corporation decreased its position by 3% amid portfolio rebalancing efforts.
Market Capitalization
As of September 30, 2024, AGNC's market capitalization was approximately $8.3 billion.
Dividends and Returns
AGNC has maintained a robust dividend policy, with dividends declared per common share of $0.36 for the third quarter of 2024, totaling $1.08 for the year.
Investment Portfolio Overview
The investment portfolio of AGNC as of September 30, 2024, included a variety of assets totaling $73.1 billion, predominantly in Agency RMBS.
| Asset Type | Fair Value (in billions) |
|---|---|
| Agency RMBS | 68.0 |
| Net TBA Securities | 4.1 |
| Non-Agency RMBS | 0.9 |
| Other Mortgage Credit Investments | 0.1 |
AGNC Investment Corp. (AGNC) Mission Statement
AGNC Investment Corp. (AGNC) is dedicated to generating favorable long-term stockholder returns with a substantial yield component. The company focuses on investing in, financing, and managing a diversified portfolio of residential mortgage-backed securities (RMBS) issued or guaranteed by government-sponsored enterprises (GSEs).
Strategic Objectives
- To generate income primarily from the interest earned on investments, net of associated borrowing and hedging costs.
- To maintain a dynamic and responsive management strategy that adapts to evolving market conditions.
- To qualify for taxation as a Real Estate Investment Trust (REIT) to optimize stockholder returns.
Financial Performance Overview
As of September 30, 2024, AGNC's investment portfolio totaled $73.1 billion, which includes:
| Category | Amortized Cost (in billions) | Fair Value (in billions) | Average Coupon (%) |
|---|---|---|---|
| Agency RMBS | $68.0 | $68.0 | 4.90 |
| TBA Securities | $4.1 | $4.1 | 3.99 |
| Non-Agency RMBS & CMBS | $0.9 | $0.9 | 5.28 |
| Other Mortgage Credit Investments | $0.061 | $0.061 | N/A |
Recent Financial Highlights
For the third quarter of 2024, AGNC reported:
- Net income attributable to common stockholders: $313 million.
- Dividends declared per common share: $0.36.
- Economic return on tangible common equity per share: 9.3%.
- Year-to-date economic return through September 30, 2024: 13.8%.
Operational Metrics
AGNC's leverage and operational efficiency are critical to its mission. The following table summarizes key operational metrics as of September 30, 2024:
| Metric | Value |
|---|---|
| At Risk Leverage Ratio | 7.2:1 |
| Cash and Unencumbered Agency RMBS | $6.2 billion |
| Weighted Average Coupon on Fixed-Rate Agency RMBS | 4.90% |
| Average Interest Rate Spread | 2.21% |
Market Dynamics
The mission of AGNC is also influenced by broader market conditions. Key market indicators as of September 30, 2024 include:
- 30-Year Agency Current Coupon Yield: 5.60%
- 30-Year Mortgage Rate: 7.41%
- Average asset yield: 4.73%
- Average aggregate cost of funds: 2.52%
AGNC's mission is supported by its proactive management approach and commitment to adapting to the changing financial landscape, ensuring sustained value creation for its shareholders.
How AGNC Investment Corp. (AGNC) Works
Business Model
AGNC Investment Corp. operates primarily as a real estate investment trust (REIT) focused on investing in agency mortgage-backed securities (MBS) on a leveraged basis. The company aims to generate income from the interest earned on its investments, net of associated borrowing and hedging costs.
Investment Portfolio
As of September 30, 2024, AGNC's investment portfolio totaled $73.1 billion, consisting primarily of:
| Security Type | Amortized Cost (in millions) | Fair Value (in millions) | Average Coupon (%) |
|---|---|---|---|
| Fixed Rate Agency RMBS | $67,727 | $66,668 | 4.81 |
| Adjustable Rate Agency RMBS | $768 | $776 | 4.80 |
| CMO Agency RMBS | $108 | $104 | 3.32 |
| Multifamily | $429 | $439 | 4.64 |
| Total Investment Securities | $69,961 | $68,937 | N/A |
Financial Performance
For the third quarter of 2024, AGNC reported:
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Net Income (Loss) (in millions) | $346 | ($392) |
| Net Income Available to Common Stockholders (in millions) | $313 | ($423) |
| Economic Return on Tangible Common Equity (%) | 9.3 | -10.1 |
| Dividends Declared per Common Share ($) | $0.36 | $0.36 |
| Comprehensive Income (Loss) (in millions) | $546 | ($605) |
Leverage and Funding
AGNC primarily funds its investments through collateralized borrowings structured as repurchase agreements. As of September 30, 2024, the company had:
| Metric | Amount (in millions) |
|---|---|
| Total Liabilities | $79,934 |
| Repurchase Agreements Outstanding | $66,048 |
| Average Tangible Net Book Value "At Risk" Leverage | 7.2:1 |
| Tangible Net Book Value per Common Share ($) | $9.44 |
Market Conditions and Trends
The favorable investment environment for AGNC has been characterized by:
- Wider Agency mortgage spreads to benchmark interest rates.
- Declining interest rate volatility.
- Accommodative monetary policy by the Federal Reserve.
As of September 30, 2024, the 30-Year Agency Current Coupon Yield was reported at 6.36%, while the 30-Year Mortgage Rate stood at 7.41%.
How AGNC Investment Corp. (AGNC) Makes Money
Revenue Generation from Agency RMBS
AGNC Investment Corp. primarily generates revenue through its investments in Agency residential mortgage-backed securities (RMBS). As of September 30, 2024, the company held an investment portfolio valued at approximately $73.1 billion, with Agency RMBS constituting $68.0 billion of this total.
Interest Income
The interest income is a significant component of AGNC's revenue. In the third quarter of 2024, AGNC reported interest income of $756 million, compared to $593 million in the same period of 2023. The average yield on the investment portfolio increased to 4.90% as of September 30, 2024, from 4.83% at the end of the previous quarter.
Net Interest Income
Despite the rising interest income, AGNC reported a net interest expense of $64 million for the third quarter of 2024, reflecting an interest expense of $820 million. The cost of funds averaged 5.41% for the nine months ended September 30, 2024.
Investment in TBA Securities
AGNC also utilizes "to-be-announced" (TBA) securities as part of its investment strategy. As of September 30, 2024, the net TBA position was approximately $4.1 billion. The company reported TBA dollar roll income, which is implied interest income derived from these securities, amounting to $35 million for the third quarter of 2024.
Gains from Investment Securities
AGNC engages in buying and selling investment securities, which can lead to realized gains or losses. For the three months ended September 30, 2024, the net gain on the sale of investment securities was $106 million. However, for the nine months of 2024, AGNC experienced a net loss of $100 million from investment securities.
Comprehensive Income
AGNC reported comprehensive income of $546 million in the third quarter of 2024. This figure includes unrealized gains and losses on investment securities, which can significantly impact the overall financial results. For the third quarter, AGNC recorded an unrealized gain of $1.742 billion on investment securities.
Operating Expenses
Operating expenses are also a critical factor in AGNC’s profitability. The company reported operating expenses of $30 million for the third quarter of 2024. This includes costs associated with management and operational activities necessary to maintain the investment portfolio.
Leverage and Funding Strategy
AGNC employs a leverage strategy to enhance returns. As of September 30, 2024, the company had a leverage ratio of 7.2:1, indicating that for every dollar of equity, it has $7.20 in debt. The total liabilities amounted to approximately $79.9 billion, with $66.0 billion in repurchase agreements used to finance the portfolio.
Dividends and Returns
AGNC also focuses on providing returns to shareholders through dividends. In the third quarter of 2024, AGNC declared dividends of $0.36 per common share. The company aims to maintain a substantial yield component in its stockholder returns, which was reflected in a year-to-date economic return on tangible common equity of 13.8%.
| Financial Metrics | Q3 2024 | Q3 2023 | Year-to-Date 2024 | Year-to-Date 2023 |
|---|---|---|---|---|
| Interest Income | $756 million | $593 million | $2,093 million | $1,401 million |
| Interest Expense | $820 million | $646 million | $2,190 million | $1,621 million |
| Net Interest Income (Expense) | ($64 million) | ($53 million) | ($97 million) | ($220 million) |
| Net Gain (Loss) on Sale of Investment Securities | $106 million | ($534 million) | ($100 million) | ($870 million) |
| Comprehensive Income | $546 million | ($605 million) | $846 million | ($393 million) |
| Operating Expenses | $30 million | $23 million | $78 million | $68 million |
| Leverage Ratio | 7.2:1 | 7.5:1 | 7.2:1 | 7.5:1 |
| Dividends Declared per Common Share | $0.36 | $0.36 | $1.08 | $1.08 |
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Article updated on 8 Nov 2024
Resources:
- AGNC Investment Corp. (AGNC) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of AGNC Investment Corp. (AGNC)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View AGNC Investment Corp. (AGNC)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.