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SEC Filings

10-Q
AGNC INVESTMENT CORP. filed this Form 10-Q on 08/05/2016
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fees, Board of Director fees, insurance expense and general overhead expense. For the three and six months ended June 30, 2016, our general and administrative expenses also included compensation costs of our wholly-owned captive broker-dealer subsidiary, Bethesda Securities, LLC, and $9 million of non-recurring transaction costs associated with our acquisition of ACMM.
Our total annualized operating expense as a percentage of our average stockholders' equity was 2.08% and 1.59% for the three months ended June 30, 2016 and 2015, respectively, and 1.89% and 1.57% for the six months ended June 30, 2016 and 2015, respectively. Excluding non-recurring transaction costs, our total annualized operating expense as a percentage of our average stockholders equity was 1.61% and 1.65% for the three and six months ended June 30, 2016, respectively. We expect our total annualized operating expenses to be reduced for subsequent fiscal periods as a result of the Internalization.

Dividends and Income Taxes  
For the three months ended June 30, 2016 and 2015, we had estimated taxable income available to common stockholders of $73 million and $115 million (or $0.22 and $0.33 per common share), respectively, and for the six months ended June 30, 2016 and 2015, we had estimated taxable income available to common stockholders of $147 million and $281 million (or $0.44 and $0.80 per common share), respectively.
As a REIT, we are required to distribute annually 90% of our ordinary taxable income to maintain our status as a REIT and all of our taxable income to avoid federal and state corporate income taxes. We can treat dividends declared by September 15 and paid by December 31 as having been a distribution of our taxable income for our prior tax year ("spill-back provision"). Income as determined under GAAP differs from income as determined under tax rules because of both temporary and permanent differences in income and expense recognition. The primary differences are (i) unrealized gains and losses associated with interest rate swaps and other derivatives and securities marked-to-market in current income for GAAP purposes, but excluded from taxable income until realized or settled, (ii) timing differences, both temporary and potentially permanent, in the recognition of certain realized gains and losses and (iii) temporary differences related to the amortization of premiums and discounts on investments. Furthermore, our estimated taxable income is subject to potential adjustments up to the time of filing our appropriate tax returns, which occurs after the end of our fiscal year.
The following is a reconciliation of our GAAP net income to our estimated taxable income for the three and six months ended June 30, 2016 and 2015 (dollars in millions):
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
Net income (loss)
$
(135
)
 
$
512

 
$
(907
)
 
$
260

Estimated book to tax differences:
 
 
 
 
 
 
 
Premium amortization, net
20

 
(55
)
 
75

 
(29
)
Realized gain/loss, net
391

 
(39
)
 
484

 
(152
)
Net capital loss/(utilization of net capital loss carryforward)
(99
)
 
121

 
(198
)
 
6

Unrealized gain/loss, net
(106
)
 
(417
)
 
698

 
210

Other
9

 

 
9

 

Total book to tax differences
215

 
(390
)
 
1,068

 
35

Estimated REIT taxable income
80

 
122

 
161

 
295

Dividend on preferred stock
7

 
7

 
14

 
14

Estimated REIT taxable income available to common stockholders
$
73

 
$
115

 
$
147

 
$
281

Weighted average number of common shares outstanding - basic and diluted
331.0

 
352.1

 
332.7

 
352.5

Estimated REIT taxable income per common share - basic and diluted
$
0.22

 
$
0.33

 
$
0.44

 
$
0.80

 
 
 
 
 
 
 
 
Beginning cumulative non-deductible net capital loss
$
585

 
$
646

 
$
684

 
$
761

Utilization of net capital loss carryforward
(99
)
 
121

 
(198
)
 
6

Ending cumulative non-deductible net capital loss
$
486

 
$
767

 
$
486

 
$
767

Ending cumulative non-deductible net capital loss per ending common share
$
1.47

 
$
2.20

 
$
1.47

 
$
2.20

As of June 30, 2016, we had $0.5 billion (or $1.47 per common share) of net capital loss carryforwards, which can be carried forward and applied against future net capital gains through fiscal year 2018.

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