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10-K
AGNC INVESTMENT CORP. filed this Form 10-K on 02/27/2014
Entire Document
 


For further details regarding our use of derivative instruments and related activity refer to Notes 2 and 5 of our consolidated financial statements in this Form 10-K.  

Management Fees and General and Administrative Expenses
We incurred management fees of $113 million and $55 million during fiscal years 2012 and 2011, respectively; the period-over-period increase was primarily a function of our follow-on equity raises.
General and administrative expenses were $31 million and $19 million during fiscal years 2012 and 2011, respectively. Our general and administrative expenses primarily consisted of prime broker fees, information technology costs, accounting fees, legal fees, Board of Director fees, insurance expense and general overhead expense.
Our total operating expense as a percentage of our average stockholders' equity on an annualized basis was 1.52% and 1.77% for fiscal years 2012 and 2011, respectively, due to improved operating leverage.  

Dividends and Income Taxes  
For fiscal years 2012 and 2011, we had estimated taxable income available to common shareholders of $2.1 billion and $1.0 billion (or $6.87 and $6.70 per common share), respectively. The following is a reconciliation of our GAAP net income to our estimated taxable income for fiscal years 2012 and 2011 (dollars in millions).
 
Fiscal Year
 
2012
 
2011
Net income
$
1,277

 
$
770

Estimated book to tax differences:
 
 
 
Premium amortization, net
51

 
57

Realized loss, net
159

 
71

Unrealized loss , net
574

 
133

Other
38

 
(3
)
Total book to tax differences
822

 
258

Estimated REIT taxable income
2,099

 
1,028

Dividend on preferred stock
10

 

Estimated REIT taxable income available to common shareholders
$
2,089

 
$
1,028

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

 
153.3

Estimated REIT taxable income per common share - basic and diluted
$
6.87

 
$
6.70

During fiscal years 2012 and 2011, we declared common dividends of $5.00 and $5.60 per common share, respectively. During fiscal year 2012, we declared dividends on our Series A Preferred Stock of $1.056 per preferred share, which excludes the preferred stock dividend of $0.50 per share declared on December 17, 2012 with a record date of January 1, 2013, which is treated as a fiscal year 2013 dividend for income tax purposes. We did not have preferred stock outstanding prior to fiscal year 2012.
We distributed all of our 2012 and 2011 REIT taxable income in a timely manner so that we were not subject to any federal or state income tax for those fiscal years. However, as a REIT, we were still subject to a nondeductible federal excise tax of 4% to the extent that the sum of (i) 85% of our ordinary taxable income, (ii) 95% of our capital gains and (iii) any undistributed taxable income from the prior year exceeds our dividends declared in such year and paid by January 31 of the subsequent year. For fiscal years 2012 and 2011, we accrued federal excise tax of $25 million and $2 million, respectively.
For fiscal year 2012, we recorded an income tax benefit of $6 million and, for fiscal year 2011, we recorded an income tax provision of $4 million, attributable to our TRS, at the combined federal and state corporate statutory tax rate of 39.5%, which is included in our net income tax provision on our accompanying consolidated statements of comprehensive income.


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