AGNC Investment Corp. Q1 2026 Earnings Call Summary

1Key Financial Results and Metrics

Comprehensive Loss: Reported a comprehensive loss of $0.18 per common share.

Economic Return: Negative 1.6% on tangible common equity, driven by a $0.50 decrease in tangible net book value per share and $0.36 in dividends declared.

Tangible Net Book Value: Increased approximately 6% in April, recovering from the first quarter decline.

Leverage: Ended the quarter with leverage at 7.4x tangible equity, slightly up from 7.2x in Q4.

Liquidity Position: Maintained a strong liquidity position with $7 billion in unencumbered cash and Agency MBS, representing 60% of tangible equity.

Net Spread and Dollar Roll Income: Increased to $0.42 per common share, up $0.07 from the previous quarter.

2Strategic Updates and Business Highlights

Agency MBS Performance: Strong performance in January and February due to government directives; however, performance weakened in March due to geopolitical tensions.

Portfolio Adjustments: Focused on low coupon specified pools, with a weighted average coupon decline to 4.95% from 5.12%.

Hedging Strategy: Increased hedge portfolio notional balance to $64 billion, with a focus on shorter-term pay fixed swaps.

Capital Management: Issued $401 million of common equity at a premium to tangible net book value, enhancing capital management strategy.

3Forward Guidance and Outlook

Market Conditions: Despite increased geopolitical risks, the return profile for Agency MBS is viewed as attractive, with spreads expected to tighten over time.

Demand Outlook: Anticipated increase in demand for Agency MBS from money managers and banks due to favorable capital requirements.

Potential Actions: The administration may take further actions to improve housing affordability, which could positively impact mortgage performance.

4Bad News, Challenges, or Points of Concern

Geopolitical Risks: The ongoing conflict in the Middle East has led to increased interest rate volatility and uncertainty in Fed rate cuts.

Economic Return: The negative economic return in Q1 reflects the challenges posed by wider mortgage spreads.

Market Volatility: Continued uncertainty regarding short-term interest rates and geopolitical developments could impact future performance and leverage decisions.

5Notable Q&A Insights

Return Comparisons: Management indicated that returns are expected to be in the 15% to 17% range, aligning with total cost of capital.

TBA Positioning: The improvement in TBA implied financing levels has created new opportunities for the company, which had been constrained in recent years.

Hedging Comfort: Management expressed comfort with the current hedge ratio, indicating a neutral stance while monitoring market conditions.

Equity Raise Timing: The timing of capital raises was influenced by unexpected volatility, resulting in a faster pace than initially anticipated, which was beneficial for existing shareholders. Overall, AGNC remains cautiously optimistic about the future, with a focus on leveraging favorable market conditions while navigating the challenges posed by geopolitical risks and economic uncertainties.