AGNC Q1 2020 Earnings Report
Key Takeaways
AGNC Investment Corp. reported a comprehensive loss per common share of $(3.61). The company's tangible net book value per common share decreased by $(4.04) to $13.62. Despite market challenges, the company took actions to manage risk, maintaining leverage and liquidity at normal operating levels.
Comprehensive loss per common share was $(3.61).
Net spread and dollar roll income per common share was $0.57, excluding estimated catch-up premium amortization cost.
Tangible net book value per common share decreased to $13.62.
Economic return on tangible common equity was -20.2%.
AGNC
AGNC
Forward Guidance
AGNC believes liquidity concerns will give way to fundamental performance metrics, with prepayments and funding being key determinants of prospective returns. AGNC feels uniquely positioned given their asset composition. Attractive risk-adjusted returns for AGNC are expected over the intermediate term.
Positive Outlook
- Market conditions have continued to improve since quarter end.
- The Fed’s asset acquisitions have provided ongoing support to both Agency MBS and the broader financial markets.
- Tangible net book value per common share has increased approximately 8% in April.
- Higher coupon specified pool position has already outperformed generic Agency MBS and hedges to date in April.
- Assets provide a particularly attractive earnings profile in light of reduced prepayment expectations and greater stability of cash flows relative to generic Agency MBS.
Challenges Ahead
- Market conditions were extremely challenging in March.
- The speed and severity of the financial market dislocations were unprecedented by historical standards.
- Economic return in the first quarter was negative 20%.
- Credit and operational headwinds should persist for the foreseeable future.
- Meaningful disruptions to the mortgage origination and refinance process are likely.