AGNC Investment Q4 Earnings Call Highlights

Core Viewpoint - AGNC Investment reported an exceptional performance in 2025, with significant economic returns and outperformance compared to broader equity markets, driven by favorable macroeconomic conditions and tighter mortgage-backed securities (MBS) spreads [3][5][21]. Financial Performance - The Bloomberg Aggregate Agency Index achieved a total return of 8.6% in 2025, outperforming the Treasury Index by 2.3 percentage points [1]. - AGNC generated a full-year economic return of 22.7%, with a fourth-quarter economic return of 11.6% [2][5]. - The total stock return for AGNC in 2025 was 34.8% with dividends reinvested, nearly double the performance of the S&P 500 [2][5]. Portfolio and Risk Positioning - AGNC's asset portfolio reached approximately $95 billion, with leverage decreasing to 7.2 times tangible equity [5][8]. - The liquidity position was reported at $7.6 billion, representing 64% of tangible equity [8]. - The hedge ratio stood at 77%, with swap-based hedges increasing to 70% of duration dollars [5][9]. Market Conditions and Outlook - Management indicated that mortgage spreads have entered a new range of approximately 120–160 basis points versus swaps and 90–130 basis points versus Treasuries, supporting expected returns of 13%–15% [4][17]. - The company anticipates a moderate tailwind to net spread and dollar roll income from lower funding costs following recent rate cuts [10]. - AGNC expects net new agency MBS supply in 2026 to be around $200 billion, with GSE purchases potentially consuming about half of the year's supply [19]. Capital Activity - AGNC issued $356 million of common equity through its at-the-market program during the fourth quarter, significantly above tangible book value per share [17][18]. - Future equity issuance will be opportunistic and driven by economic conditions rather than a desire for growth [18]. Dividend Coverage - The company reported a normalized net spread and dollar roll income of $0.35 per share for the quarter, with a return on equity of approximately 16% based on tangible book value [15][16].