AGNC Reports $1.82 Earnings and $22.23 Book Value Per Share
THIRD QUARTER 2009 HIGHLIGHTS
$95 million (approximate net proceeds) raised in an August equity offering- 4.3 million shares at
$23.30 per share
- 4.3 million shares at
$1.40 per share dividend declared$1.89 per share of taxable income$0.90 per share of undistributed taxable income as ofSeptember 30, 2009
$1.82 per share of net income- Including
$0.73 per share of other income
- Including
- 32.9% annualized return on average stockholders' equity ("ROE") for the quarter
- 20.8% ROE, net of other income
- 2.68% average net interest rate spread for the quarter
$3.4 billion agency securities portfolio at fair value as ofSeptember 30, 2009 - 31% increase from
June 30, 2009
- 31% increase from
- Proactively repositioned investment portfolio to lock-in current valuations and diversify exposure
- 7.3x(1) leverage as of
September 30, 2009 $22.23 book value per share as ofSeptember 30, 2009 , an increase of 7%, or$1.47 per share, fromJune 30, 2009 - Established a Dividend Reinvestment Plan and Direct Stock Purchase Plan
"This was another strong quarter for AGNC with continued book value appreciation,
In
THIRD QUARTER 2009 DIVIDEND DECLARATION
On
INVESTMENT PORTFOLIO
As of
In the quarter, AGNC reduced its exposure to higher coupon securities while increasing its holdings of lower coupon hybrid ARM and fixed-rate securities. The changing portfolio composition was a reaction to the continued strong price performance of higher coupon securities as market prepayment assumptions and risk premiums continue to decline, coupled with the increased risk of GSE buyouts(2) on many types of these seasoned securities. Given the combination of these factors, AGNC felt that an over-allocation to higher coupon securities backed by certain types of collateral was no longer warranted. Examples of specific portfolio actions taken by AGNC this quarter were to:
- Sell a significant amount of higher coupon securities that AGNC believes have a relatively high risk of prepayments related to GSE buyouts;
- Lower the weighted average coupon on its hybrid ARM portfolio by 54 basis points from
June 30, 2009 to 5.43% as ofSeptember 30, 2009 ; and - Increase the percentage of hybrid ARM securities with coupons less than 5.0% from 2% as of
June 30, 2009 to 20% as ofSeptember 30, 2009 and lower the percentage of hybrid ARM securities with coupons greater than 6.0% from 51% as ofJune 30, 2009 to 20% as ofSeptember 30, 2009 .
OTHER INCOME, NET
During the quarter, AGNC produced
ASSET YIELDS, COST OF FUNDS AND NET INTEREST RATE SPREAD
During the quarter, the annualized weighted average yield on average earning assets was 4.38% and the annualized average cost of funds was 1.70%, including 0.54% of amortization expense associated with the termination of interest rate swaps, which resulted in a net interest rate spread of 2.68%. As of
The actual constant prepayment rate ("CPR") for the Company's portfolio held in the third quarter was 19%. The Company's projected CPR for the remaining life of its investments as of
The weighted average cost basis of the investment portfolio was 103.5% of par as of
LEVERAGE AND HEDGING ACTIVITIES
As of
The Company's swap positions as of
During the quarter, the Company recognized
As of
Financial highlights for the quarter are as follows:
AMERICAN CAPITAL AGENCY CORP.
CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30, December 31, September 30,
2009 2008 2008
---- ---- ----
(unaudited) (unaudited)
Assets:
Agency securities, at fair
value (including pledged
assets of $3,189,782 ,
$1,522,001 , and $1,500,362 ,
respectively) $3,438,127 $1,573,383 $1,624,060
Cash and cash equivalents 103,626 56,012 17,031
Restricted cash 9,656 18,692 18,914
Interest receivable 20,330 7,851 8,375
Derivative assets, at fair value - - 2,935
Receivable for agency
securities sold 84,857 - 53,531
Principal payments receivable 22,705 - -
Other assets 805 387 613
--- --- ---
Total assets $3,680,106 $1,656,325 $1,725,459
========== ========== ==========
Liabilities:
Repurchase arrangements $2,949,010 $1,346,265 $1,434,363
Payable for agency
securities purchased 254,305 - -
Accrued interest payable 1,433 3,664 1,875
Derivative liabilities, at
fair value 17,493 29,277 5,114
Dividend payable 27,050 18,006 15,005
Due to Manager 619 714 482
Accounts payable and other
accrued liabilities 669 248 758
--- --- ---
Total liabilities 3,250,579 1,398,174 1,457,597
--------- --------- ---------
Stockholders' equity:
Preferred stock, $0.01 par
value; 10,000 shares authorized,
0 shares issued and outstanding,
respectively - - -
Common stock, $0.01 par
value; 150,000 shares
authorized, 19,322, 15,005
and 15,005 shares issued
and outstanding, respectively 193 150 150
Additional paid-in capital 380,944 285,917 285,910
Retained earnings
(accumulated deficit) 13,293 (2,310) 4,744
Accumulated other comprehensive
income (loss) 35,097 (25,606) (22,942)
------ ------- -------
Total stockholders'
equity 429,527 258,151 267,862
------- ------- -------
Total liabilities and
stockholders' equity $3,680,106 $1,656,325 $1,725,459
========== ========== ==========
AMERICAN CAPITAL AGENCY CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per share data)
For the Period
from May 20, 2008
(date operations
Three Months Ended Nine Months commenced)
September 30, Ended through
----------------- September 30, September 30,
2009 2008 2009 2008
---- ---- ---- ----
Interest income:
Interest income $32,793 $28,071 $86,834 $37,995
Interest expense 11,551 11,009 29,265 14,606
------ ------ ------ ------
Net interest
income 21,242 17,062 57,569 23,389
------ ------ ------ ------
Other income, net:
Gain (loss) from
sale of agency
securities, net 16,070 (162) 30,418 69
(Loss) gain from
derivative
instruments, net (3,435) 4,340 (2,567) 4,557
------ ----- ------ -----
Total other
income, net 12,635 4,178 27,851 4,626
Expenses:
Management fees 1,166 915 3,008 1,317
General and
administrative
expenses 1,474 1,424 4,498 2,298
----- ----- ----- -----
Total expenses 2,640 2,339 7,506 3,615
----- ----- ----- -----
Net income $31,237 $18,901 $77,914 $24,400
======= ======= ======= =======
Net income per
common share -
basic and diluted $1.82 $1.26 $4.95 $1.63
Weighted average number
of common shares
outstanding -
basic and diluted 17,191 15,005 15,741 15,005
Dividends declared
per common share $1.40 $1.00 $3.75 $1.31
AMERICAN CAPITAL AGENCY CORP.
KEY PORTFOLIO CHARACTERISTICS*
(unaudited)
(in thousands, except per share data)
For the Period
from May 20, 2008
(date operations
Three Months Ended Nine Months commenced)
September 30, Ended through
----------------- September 30, September 30,
2009 2008 2009 2008
---- ---- ---- ----
Average agency
securities,
at cost $2,992,151 $2,028,771 $2,365,925 $1,888,135
Average total
assets,
at cost $3,263,632 $2,073,893 $2,477,227 $1,938,623
Average
repurchase
agreements $2,693,851 $1,795,218 $2,127,918 $1,649,826
Average
stockholders'
equity $376,229 $264,985 $319,165 $267,800
Fixed-rate
agency securities,
at fair value -
as of period
end $1,272,407 $1,624,060 $1,272,407 $1,624,060
Adjustable-rate
agency securities,
at fair value -
as of period
end $1,904,184 $- $1,904,184 $-
CMO agency
securities,
at fair value -
as of period
end $261,536 $- $261,536 $-
Average asset
yield (1) 4.38% 5.50% 4.89% 5.50%
Average cost
of funds (2) 1.16% 2.45% 1.42% 2.41%
Average cost
of funds -
terminated swap
amortization
expense (3) 0.54% N/A 0.42% N/A
Average net
interest rate
spread (4) 2.68% 3.05% 3.05% 3.09%
Net return on
average equity (5) 32.94% 28.30% 32.64% 24.82%
Leverage (average
during the period)(6) 7.2:1 6.8:1 6.7:1 6.2:1
Leverage (as of
period end)(7) 7.3:1 5.4:1 7.3:1 5.4:1
Annualized expenses
% of average
assets (8) 0.32% 0.45% 0.41% 0.51%
Annualized expenses
% of average
equity (9) 2.78% 3.50% 3.14% 3.68%
Book value per common
share as of period
end (10) $22.23 $17.85 $22.23 $17.85
* All percentages are annualized.
(1) Weighted average asset yield for the period was calculated by
dividing the Company's total interest income on agency securities
less amortization of premiums and discounts by the Company's weighted
average agency securities.
(2) Weighted average cost of funds for the period was calculated by
dividing the Company's total interest expense by the Company's
weighted average repurchase agreements. Total interest expense
excludes amortization expense related to the fair value of
terminated swaps during the periods presented.
(3) Represents amortization expense associated with the termination of
interest rate swaps of $3.7 million in the third quarter of 2009 and
$6.7 million in the first nine months of 2009.
(4) Average net interest rate spread for the period was calculated by
subtracting the Company's weighted average cost of funds, net of
interest rate swaps and terminated swap amortization expense, from
the Company's weighted average asset yield.
(5) Net return on average stockholders' equity for the period was
calculated by dividing the Company's net income by the Company's
average stockholders' equity.
(6) Leverage during the period was calculated by dividing the Company's
average repurchase agreements outstanding for the period by the
Company's average stockholders' equity.
(7) Leverage at period end was calculated by dividing the amount
outstanding under the Company's repurchase agreements and net
liabilities for unsettled agency securities by the Company's total
stockholders' equity at period end.
(8) Annualized expenses as a % of average total assets was calculated by
dividing the Company's total expenses by the Company's average total
assets.
(9) Annualized expenses as a % of average stockholders' equity was
calculated by dividing the Company's total expenses by the Company's
average stockholders' equity.
(10) Book value per share was calculated by dividing the Company's total
stockholders' equity by the Company's number of shares outstanding.
N/A -- Not applicable.
DIVIDEND REINVESTMENT PLAN AND DIRECT STOCK PURCHASE PLAN
During the quarter, AGNC established a Dividend Reinvestment Plan ("DRIP") and Direct Stock Purchase Plan ("DSPP") to provide prospective investors and existing stockholders with a convenient and economical method to purchase shares of our common stock. By participating in the plan, investors may purchase additional shares of common stock by reinvesting some or all of the cash dividends received on shares of our common stock. Investors may also make optional cash purchases of shares of our common stock subject to certain limitations detailed in the plan prospectus. To review the plan prospectus, please visit our Investor Relations website at www.AGNC.com.
STOCKHOLDER CALL
AGNC invites stockholders, prospective stockholders and analysts to attend the AGNC stockholder call on
A slide presentation will accompany the call and will be available at www.AGNC.com. Select the Q3 2009 Earnings Presentation link to download and print the presentation in advance of the Stockholder Call.
An archived audio of the stockholder call combined with the slide presentation will be made available on our website after the call on
For further information or questions, please do not hesitate to call our Investor Relations Department at (301) 968-9300 or send an email to [email protected].
ABOUT AGNC
AGNC is a REIT that invests exclusively in agency pass-through securities and collateralized mortgage obligations for which the principal and interest payments are guaranteed by a
ABOUT AMERICAN CAPITAL
FORWARD LOOKING STATEMENTS
This press release contains forward-looking statements. 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. Forward-looking statements involve risks and uncertainties in predicting future results and conditions. Actual results could differ materially from those projected in these forward-looking statements due to a variety of factors, including, without limitation, changes in interest rates, changes in the yield curve, changes in prepayment rates, the availability and terms of financing, changes in the market value of our assets, general economic conditions, market conditions, conditions in the market for agency securities, and legislative and regulatory changes that could adversely affect the business of the Company. Certain factors that could cause actual results to differ materially from those contained in the forward-looking statements, are included in the Company's periodic reports filed with the
(1) Leverage calculated as total repurchase agreements outstanding plus payable for agency securities purchased but not yet settled less receivable for agency securities sold but not yet settled divided by total stockholders' equity as of
(2) A
(3) As of
CONTACT:
Investors - (301) 968-9300
Media - (301) 968-9400
SOURCE: