1. AGNC posted a $(0.17) net loss per share for Q2 2025. 2. Tangible net book value dropped 5.3% to $7.81 per common share. 3. Dividends declared were $0.36 per common share for the quarter. 4. Macroeconomic factors led to increased interest rate volatility and wider mortgage spreads. 5. Management remains optimistic about future investments in Agency MBS.
AGNC reported a significant net loss and declining book value, impacted by wider mortgage spreads, which is usually negative for valuations. Historical precedents show similar declines in financial performance lead to bearish sentiment.
The financial results directly evaluate AGNC's overall health, affecting stock price through market perception and investor sentiment.
The immediate negative financial results could impact investor sentiment and lead to selling pressure. However, management's outlook suggests potential stabilization may occur in the near future.
"Following the administration's 'Liberation Day' tariff announcement in early April, financial markets repriced significantly to reflect greater governmental policy risk and its potentially adverse impact on the economy and monetary policy. Interest rate volatility also increased notably, and investor sentiment turned sharply negative," said Peter Federico, the Company's President, Chief Executive Officer and Chief Investment Officer. "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%.
"Looking ahead, we continue to have a favorable outlook for levered and hedged Agency MBS investments. Mortgage spreads to benchmark rates remain elevated by historical standards and range-bound, an extremely favorable return environment. Supply dynamics remain in balance with demand, and bank participation in the Agency MBS markets appears poised to increase following the adoption of anticipated regulatory changes. Finally, and perhaps most importantly, 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 activities."
"AGNC's -1.0% economic return on tangible common equity in the second quarter was comprised of $0.36 of dividends per common share and a $(0.44) decline in tangible net book value per common share, driven by moderately wider mortgage spreads to benchmark rates," said Bernice Bell, the Company's Executive Vice President and Chief Financial Officer. "AGNC's net spread and dollar roll income was $0.38 per common share for the second 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. Finally, AGNC concluded the second quarter with tangible 'at risk' leverage of 7.6x and a substantial liquidity position of $6.4 billion of unencumbered cash and Agency MBS, which constituted 65% of our tangible equity."
As of June 30, 2025, the Company's tangible net book value per common share was $7.81 per share, a decrease of -5.3% for the quarter compared to $8.25 per share as of March 31, 2025. The Company's tangible net book value per common share excludes $526 million, or $0.50 and $0.55 per share, of goodwill as of June 30 and March 31, 2025, respectively.
As of June 30, 2025, the Company's investment portfolio totaled $82.3 billion, comprised of:
The Company accounts for TBA securities and other forward settling securities as derivative instruments and recognizes TBA dollar roll income in other gain (loss), net on the Company's financial statements. As of June 30, 2025, such positions had a fair value of $8.3 billion and a GAAP net carrying value of $101 million reported in derivative assets/(liabilities) on the Company's balance sheet, compared to $7.5 billion and $44 million, respectively, as of March 31, 2025.
The Company's weighted average projected CPR for the remaining life of its Agency securities held as of June 30, 2025 decreased to 7.8% from 8.3% as of March 31, 2025. The Company's weighted average CPR for the second quarter was 8.7%, compared to 7.0% for the prior quarter.
The weighted average cost basis of the Company's investment portfolio was 101.2% of par value as of June 30, 2025. The Company's investment portfolio generated net premium amortization cost of $(30) million, or $(0.03) per common share, for the second quarter, which includes a "catch-up" premium amortization benefit of $11 million, or $0.01 per common share, due to a decrease in the Company's CPR projections for certain securities acquired prior to the second quarter. This compares to net a premium amortization cost for the prior quarter of $(39) million, or $(0.04) per common share, including a "catch-up" premium amortization (cost) of $(2) million, or less than $(0.01) per common share.
The Company's average asset yield on its investment portfolio, excluding the TBA position, was 4.89% for the second quarter, compared to 4.78% for the prior quarter. Excluding "catch-up" premium amortization, the Company's average asset yield was 4.83% for the second quarter, compared to 4.80% for the prior quarter. Including the TBA position and excluding "catch-up" premium amortization, the Company's average asset yield for the second quarter was 4.87%, unchanged from the prior quarter.
For the second quarter, the weighted average interest rate on the Company's repurchase agreements was 4.44%, compared to 4.45% for the prior quarter. For the second quarter, the Company's TBA position had an implied financing cost of 4.29%, compared to 4.34% for the prior quarter. Inclusive of interest rate swaps, the Company's combined weighted average cost of funds for the second quarter was 2.86%, compared to 2.75% for the prior quarter.
The Company's annualized net interest spread, including the TBA position and interest rate swaps and excluding "catch-up" premium amortization, for the second quarter was 2.01%, compared to 2.12% for the prior quarter.
The Company recognized net spread and dollar roll income (a non-GAAP financial measure) for the second quarter of $0.38 per common share, compared to $0.44 per common share for the prior quarter. Net spread and dollar roll income excludes $0.01 and less than $(0.01) per common share of estimated "catch-up" premium amortization benefit / (cost) for the second quarter and prior quarter, respectively.
The Company's cost of funds, net interest rate spread and net spread and dollar income excludes the impact of the Company's U.S. Treasury hedges and other supplemental interest rate hedges. For additional information regarding the Company's U.S. Treasury hedges, please refer to the schedule of Key Statistics included in this release.
As of June 30, 2025, $66.0 billion of repurchase agreements, $8.2 billion of net TBA dollar roll positions (at cost) and $0.1 billion of other debt were used to fund the Company's investment portfolio. The remainder, or approximately $3.2 billion, of the Company's repurchase agreements was used to fund short-term purchases of U.S. Treasury securities ("U.S. Treasury Repo") and is not included in the Company's leverage measurements. Inclusive of its TBA position and net payable/(receivable) for unsettled investment securities, the Company's tangible net book value "at risk" leverage ratio was 7.6x as of June 30, 2025, compared to 7.5x as of March 31, 2025. The Company's average "at risk" leverage ratio for the second quarter was 7.5x tangible net book value, compared to 7.3x for the prior quarter.
As of June 30, 2025, the Company's repurchase agreements used to fund its investment portfolio ("Investment Securities Repo") had a weighted average interest rate of 4.49%, compared to 4.47% as of March 31, 2025, and a weighted average remaining maturity of 16 days, compared to 19 days as of March 31, 2025. As of June 30, 2025, $34.7 billion, or 53%, of the Company's Investment Securities Repo was funded through the Company's captive broker-dealer subsidiary, Bethesda Securities, LLC.
As of June 30, 2025, interest rate swaps, U.S. Treasury positions, swaptions and other interest rate hedges equaled 89% of the Company's outstanding balance of Investment Securities Repo, TBA position and other debt, compared to 91% as of March 31, 2025.
As of June 30, 2025, the Company's pay fixed interest rate swap position totaled $45.1 billion in notional amount, had an average fixed pay rate of 2.10%, an average floating receive rate of 4.44% and an average maturity of 5.0 years, compared to $47.8 billion, 1.91%, 4.40% and 5.0 years, respectively, as of March 31, 2025.
As of June 30, 2025, the Company had a net short U.S. Treasury position of $20.0 billion, net payer swaptions totaling $1.9 billion and a two-year swap equivalent long SOFR futures position of $1.2 billion outstanding, compared to $15.7 billion, $1.9 billion and $1.2 billion, respectively, as of March 31, 2025.
For the second quarter, the Company recorded a net loss of $(274) million in other gain (loss), net, or $(0.27) per common share, compared to a net loss of $(81) million, or $(0.09) per common share, for the prior quarter.
During the second quarter, the Company recorded other comprehensive income of $48 million, or $0.05 per common share, consisting of net unrealized gains on the Company's Agency securities recognized through OCI, compared to $93 million, or $0.10 per common share, of other comprehensive income for the prior quarter.
During the second quarter, the Company declared dividends of $0.12 per share to common stockholders of record as of April 30, May 30, and June 30, 2025, totaling $0.36 per share for the quarter. Since its May 2008 initial public offering through the second quarter of 2025, the Company has declared a total of $14.7 billion in common stock dividends, or $49.36 per common share.
The following measures of operating performance include net spread and dollar roll income; economic interest income; economic interest expense; and the related per common share measures and financial metrics derived from such information, which are non-GAAP financial measures. Please refer to "Use of Non-GAAP Financial Information" later in this release for further discussion of non-GAAP measures.
(in millions, except per share data)
$102,021
$7.81
(unaudited)
June 30,2025
1,017.3
$(0.17)
June 30,2025
$(130)
$388
For further information, please contact Investor Relations at (301) 968-9300 or [email protected].
Founded in 2008, AGNC Investment Corp. (Nasdaq: AGNC) is a leading investor in Agency residential mortgage-backed securities (Agency MBS), which benefit from a guarantee against credit losses by Fannie Mae, Freddie Mac, or Ginnie Mae. We invest on a leveraged basis, financing our Agency MBS assets primarily through repurchase agreements, and utilize dynamic risk management strategies intended to protect the value of our portfolio from interest rate and other market risks.
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Forward-looking statements are based on estimates, projections, beliefs and assumptions of management of the Company at the time of such statements and are not guarantees of future performance.
In addition to the results presented in accordance with GAAP, the Company's results of operations discussed in this release include certain non-GAAP financial information, including "net spread and dollar roll income"; "economic interest income" and "economic interest expense"; and the related per common share measures and certain financial metrics derived from such non-GAAP information, such as "cost of funds" and "net interest spread."
Investors - (301) 968-9300 Media - (301) 968-9303
SOURCE AGNC Investment Corp.