AGNC Reports Third-Quarter Results, Book Value Falls 16.9%
AGNC reported third-quarter adjusted EPS of 37 cents, in line with estimates, while revenue of $402 million missed the $448.4 million consensus. Tangible book value fell 16.9% from the prior quarter to $7.13 per share, and the company recorded a negative 12.7% economic return on tangible common equity.
AGNC Investment Corp. shares were lower in premarket trading on Tuesday after the company released its third-quarter results on Monday. Adjusted EPS was 37 cents, in line with estimates, while revenue of $402 million was below the $448.4 million analyst consensus. Tangible net book value was $7.13 per common share as of Sept.
30, 2026, a 16.9% decline from $8.58 at the end of the previous quarter. AGNC reported a negative 12.7% economic return on tangible common equity for the quarter. CFO Bernice Bell attributed the return to 36 cents in dividends per share and a $1.45 decrease in tangible book value per share. Net spread and dollar roll income was 37 cents per common share, compared with 40 cents in the prior quarter.
AGNC's investment portfolio totaled $94.4 billion as of Sept. 30, including $91.4 billion in Agency mortgage-backed securities (MBS). The company also cited $93.8 billion in Agency MBS and to-be-announced (TBA) securities; 30-year fixed-rate securities represented 94% of the portfolio. The weighted average coupon on fixed-rate Agency MBS and TBA securities rose to 5.13% from 5.04% in June.
AGNC’s projected prepayment rate over the remaining life of its Agency securities declined to 6.7% from 8.6%, while the actual prepayment rate fell to 8.2% from 13%. The annualized net interest spread, excluding catch-up premium amortization, narrowed to 1.86% from 2.00%. AGNC’s combined weighted average cost of funds, including interest rate swaps, climbed to 3.09% from 2.89%. Its quarter-end at-risk leverage ratio increased to 7.9x from 7.4x, and its average leverage ratio was 7.6x.
Hedges covered 90% of funding liabilities, up from 73% in June, or 97% excluding option-based hedges, compared with 82% previously. As of Sept. 30, AGNC’s pay-fixed interest rate swaps had $74.6 billion in notional value. Its net short U.S.
Treasury position was $11.1 billion, and receiver swaptions totaled $6.3 billion. Unencumbered cash and Agency MBS amounted to $6.3 billion, equivalent to 57% of tangible equity. AGNC raised $992 million in net proceeds through the issuance of 97.6 million common shares. Bell said AGNC benefited from increased trading volumes and issued shares through its at-the-market offering program at a significant premium to tangible book value.
The company also joined the S&P MidCap 400 Index during the quarter. AGNC President and CEO Peter Federico said rising interest rates and heightened volatility weighed on fixed-income markets in the third quarter. Agency MBS was the weakest-performing sector of the Bloomberg U.S. Aggregate Bond Index.
Federico said a recovery may be possible as mortgage spreads near the upper end of their multiyear range, refinancing risk declines and supply-demand conditions remain balanced. The company's quarterly conference call is scheduled for today at 8:30 AM. AGNC Investment shares were down 0.85% at $8.36 in premarket trading on Tuesday. The stock was at a new 52-week low, according to Pro data.