Print Page     Close Window     

SEC Filings

10-K
AGNC INVESTMENT CORP. filed this Form 10-K on 02/27/2013
Entire Document
 


The period-over-period increase in our adjusted net interest expense was largely attributable to the increase in our investment portfolio and the corresponding increase in our average repurchase agreements and other debt balances outstanding and a higher cost of funds. Our higher cost of funds was reflective of higher repurchase agreement financing ("repo") rates and a higher ratio of interest rate swaps outstanding to repurchase agreements and other debt, which was partially offset by a decrease in the weighted average pay rate on our interest rate swaps. Our higher repo cost is primarily a function of higher repo rates in the market and extending the average original days-to-maturity of our repo funding to 181 days as of December 31, 2012 from 90 days as of December 31, 2011.
The following is a summary of the impact of changes from fiscal year 2012 to fiscal year 2011 in the principal elements of our total adjusted net interest expense and cost of funds (in millions):
Fiscal Year 2012 vs. Fiscal Year 2011
 
 
 
Due to Change in Average (1)
 
Increase
 
Volume
 
Interest Rate
Repurchase agreement and other debt interest expense
$
216

 
$
142

 
$
74

Periodic interest rate swap costs (2)
228

 
241

 
(13
)
Total adjusted net interest expense and cost of funds
$
444

 
$
383

 
$
61

____________________
1.
Variances that are the combined effect of volume and yield, but cannot be separately identified, are allocated to the volume and yield variances based on their respective relative amounts.
2.
Includes amounts recognized in interest expense and in gain (loss) on derivatives and other securities in our consolidated statements of comprehensive income. Change due to interest rate reflects impact of change in the weighted average fixed pay rate, net of change in the weighted average receive rate.
Net Spread Income
The table below presents a reconciliation of our net interest income (the most comparable GAAP financial measure) to our net spread income (a non-GAAP financial measure) for fiscal year 2012 and 2011 (dollars in millions).
 
Fiscal Year
 
2012
 
2011
Net interest income
$
1,597

 
$
824

Other periodic interest costs of interest rate swaps, net
252

 
35

Adjusted net interest income
1,345

 
789

  Operating expenses
144

 
74

Net spread income
1,201

 
715

Dividend on preferred stock
10

 

Net spread income available to common shareholders
$
1,191

 
$
715

Weighted average number of common shares outstanding - basic and diluted
303.9

 
153.3

Net spread income per common share - basic and diluted
$
3.92

 
$
4.66

The period-over-period decline in net spread income per common share is primarily a function of margin compression due to lower asset yields and higher cost of funds.
Gain on Sale of Agency Securities, Net  
The following table is a summary of our net gain on sale of agency MBS for fiscal year 2012 and 2011 (in millions): 

48


© AGNC Investment Corp All Rights Reserved