Financial Data and Key Metrics Changes - The company's book value increased to $11.13 per share at December 31, 2025, compared to $11.04 per share at September 30, 2025, resulting in a quarterly economic return of +3.9% [13] - Comprehensive income for the quarter was $50.4 million or $0.48 per share, with net interest and servicing income decreasing due to MSR sales and lower float income [13][14] - The total economic return on book value for the full year 2025 was -12.6%, but excluding a litigation settlement expense, the return was +12.1% [8] Business Line Data and Key Metrics Changes - The company settled on the sale of an additional $10 billion UPB of MSR, increasing total third-party subservicing to $40 billion at year-end compared to $30 billion at the end of the third quarter [11] - The direct-to-consumer (DTC) platform funded $94 million in first and second liens, a 90% increase from the third quarter [11] Market Data and Key Metrics Changes - The mortgage finance landscape shifted in 2025, emphasizing the need for scale in origination efforts [5][6] - The nominal spread for current coupon RMBS tightened by 30 basis points to 114 basis points of the swap curve, indicating a positive response to declining interest rate volatility [18] Company Strategy and Development Direction - The merger with United Wholesale Mortgage (UWM) is expected to double the size of the MSR portfolio to a pro forma $400 billion, positioning the combined company for accelerated growth [6][12] - The company aims to leverage UWM's expertise in capital markets and asset management while enhancing servicing capabilities through RoundPoint [6] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence that the merger with UWM will yield significant benefits and enhance competitive positioning in the market [12] - The administration's commitment to lower mortgage rates is anticipated to stimulate increased mortgage and origination activity in 2026 [8] Other Important Information - The company ended the quarter with over $800 million in cash and repaid $261.9 million of convertible senior notes on their maturity date [15] - The portfolio at December 31, 2025, was valued at $13.2 billion, with $9 billion in settled positions and $4.2 billion in TBAs [17] Q&A Session Summary Question: How is the merger affecting portfolio construction? - Management confirmed that they are operating as an independent company and managing the portfolio as usual, with changes driven by market assessments [30] Question: What is the current book value? - The book value is up about 1.5%-2% as of January 30, 2026 [31] Question: How is leverage being managed in the current market? - The company has become more defensive and reduced leverage slightly due to current market conditions and spread movements [36] Question: What are the chances of an LLPA or guarantee fee reduction at the GSEs? - There is a reasonable chance for changes in the LLPA grid, but the market is still digesting the potential impacts [39] Question: How is the MSR market performing? - The interest in the MSR market remains strong, with no notable changes in bank activity observed [40] Question: What is the prospective return outlook? - Spreads have tightened since the end of December, which may marginally affect return potential [44]

Financial Data and Key Metrics Changes - The company's book value per share increased by 5% from $19.25 in the prior quarter to $20.21 as of December 31, 2025 [23] - Economic return for Q4 was 8.6%, bringing the full-year economic return to 20.2% [23][24] - Earnings Available for Distribution (EAD) per share rose by $0.01 to $0.74, exceeding the dividend for the quarter [24] - Economic leverage ratio decreased to 5.6x, down from the previous quarter [25] Business Line Data and Key Metrics Changes - Agency portfolio ended 2025 at $93 billion, increasing by nearly $6 billion quarter-over-quarter and $22 billion year-over-year [9] - Residential credit portfolio reached $8 billion, up $1.1 billion quarter-over-quarter [13] - Mortgage Servicing Rights (MSR) portfolio increased to $3.8 billion, a $280 million increase quarter-over-quarter [17] Market Data and Key Metrics Changes - Fixed income markets showed strong performance, with the U.S. aggregate bond index registering the highest total return since 2020 [7] - The yield curve steepened as short-term yields fell while long-term yields rose modestly [7] - Swap spreads widened due to a shift from Quantitative Tightening to balance sheet expansion by the Fed [8] Company Strategy and Development Direction - The company aims to increase capital allocation to residential credit and MSR while maintaining agency as the anchor of the portfolio [21][77] - The non-QM market is expected to grow, providing competitive advantages in loan selection and execution [20] - The company plans to remain patient and opportunistic in capital allocation, focusing on diversified housing finance strategies [22] Management's Comments on Operating Environment and Future Outlook - The macroeconomic environment remains solid, with the labor market showing signs of softness but limited layoffs [5][6] - Management expressed confidence in the durability of the swaps market as a hedge and the overall strength of the diversified housing finance model [32][21] - Risks include global fiscal issues and potential complacency in asset markets, which could lead to increased volatility [60][61] Other Important Information - The company raised $560 million of common equity in Q4, totaling $2.9 billion for the year [9] - The efficiency ratio improved to 1.31% for Q4, with a full-year ratio of 1.42% [27] Q&A Session Summary Question: Update on mark-to-market book values - The book value was up 4%, inclusive of dividend accrual, with a slight increase noted after the call [30] Question: Portfolio returns and comfort level with dividends - The company expects mid-teens returns and feels confident about the dividend's safety for 2026 [31][32] Question: MSR portfolio insulation from lower interest rates - The company is set up to be active in the current coupon MSR market and expects origination to pick up [36][40] Question: Impact of G-fee cuts on prepayment environment - A G-fee cut on purchase loans is seen as appropriate, but broad cuts could damage the MBS market [46] Question: Attractiveness of raising capital in different spread environments - Wider spreads are more attractive for raising capital, but current stability provides confidence [51][52] Question: Risks that could change the low-risk environment - Global fiscal issues and asset market euphoria are noted as significant risks [60][61] Question: Opportunities in low-coupon MBS - The valuation on low-coupon MBS is tight, and better ways to manage risk are available [67] Question: Likelihood of GSE portfolio caps being increased - Uncertainty remains regarding the increase of portfolio caps, with no clear answer available [82]

Financial Data and Key Metrics Changes - AGNC reported comprehensive income of $0.89 per common share for Q4 2025, with an economic return on tangible common equity of 11.6% for the quarter, driven by lower interest rate volatility and tighter mortgage spreads [11] - The full-year economic return was 22.7%, reflecting a monthly dividend totaling $1.44 per common share and a $0.47 increase in tangible net book value per share [11] - As of late January, tangible net book value per common share was up about 4% for January, or 3% net of monthly dividend accrual [11] - The company ended Q4 with leverage of 7.2x tangible equity, down from 7.6x at the end of Q3 [11] Business Line Data and Key Metrics Changes - Average leverage for Q4 was 7.4 times, compared to 7.5 times in Q3 [12] - Net spread and dollar roll income remained unchanged at $0.35 per common share, which includes a penny per share of expense related to year-end incentive compensation accrual adjustments [12] - The average projected life CPR of the portfolio increased 100 basis points to 9.6% at quarter end from 8.6% in the prior quarter [14] Market Data and Key Metrics Changes - The Bloomberg Aggregate Agency Index was the best-performing fixed income sector in Q4, producing a total return of 8.6% for the year [6] - Agency MBS outperformed the Treasury Index by 2.3 percentage points, or 36% in 2025 [7] - The funding market for Agency MBS improved in response to the Fed increasing the size of its balance sheet and improving the functionality of its standing repo program [9] Company Strategy and Development Direction - AGNC is positioned to generate compelling, risk-adjusted returns with a substantial yield component for shareholders, leveraging favorable macro themes and a well-balanced supply and demand outlook for Agency MBS [10] - The company shifted its hedge mix toward a greater proportion of interest rate swaps, which is consistent with the current more accommodative monetary policy environment [13] - The company plans to operate with a greater share of swap-based hedges, particularly as short-term rates near the Fed's long-run neutral rate [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in a durable and attractive investment environment as mortgage spreads began to stabilize at historically attractive return levels [5] - The favorable performance of Agency MBS was attributed to the Fed's shift in monetary policy, lower interest rate volatility, and the resolution of uncertainties regarding GSE reform [8] - Management anticipates that the underlying fundamental and technical backdrop for Agency mortgage-backed securities will remain favorable and supportive of a positive outlook [10] Other Important Information - The company issued $356 million of common equity through its at-the-market offering program at a significant premium to tangible book value per share, bringing total accretive common equity issuances for the year to approximately $2 billion [14] - The asset portfolio totaled $95 billion at quarter end, up about $4 billion from the prior quarter [16] Q&A Session Summary Question: Can you talk about where you see spreads currently versus where you saw it in the fourth quarter? - Management indicated that mortgage spreads have entered a new range, with current coupon spreads to swaps in the 120-160 basis point range, and current coupon to Treasuries around 90-130 basis points [22][23] Question: How do you think about the risk or potential benefit that could get you to the high end or low end of those ranges? - Management noted that actions from the GSEs and potential changes in the Fed's balance sheet could positively impact spreads, while certain proposals could have negative consequences [39][40] Question: What would you do to address the affordability questions? - Management acknowledged the administration's efforts and suggested that maintaining spread stability is crucial for market participation [48] Question: How do you gauge your positivity on the investing environment right now for agency MBS? - Management expressed that while spreads are lower, they remain attractive by historical standards, and the upper end of the spread range is more certain than in previous years [52] Question: Would you adjust any of the hedges if the refi market was really going to accelerate? - Management indicated that asset selection and coupon composition will be critical in a rising prepayment environment, and they have strategies in place to manage prepayment risk [90][93]

Financial Data and Key Metrics Changes - AGNC reported comprehensive income of $0.89 per common share for Q4 2025, with an economic return on tangible common equity of 11.6% for the quarter, driven by a $0.60 increase in tangible net book value per share [12][5] - The full-year economic return was 22.7%, reflecting a total monthly dividend of $1.44 per common share and a $0.47 increase in tangible net book value per share [12][5] - As of late January, tangible net book value per common share was up about 4% for January, or 3% net of monthly dividend accrual [12] Business Line Data and Key Metrics Changes - Average leverage for Q4 was 7.4x, down from 7.5x in the previous quarter, with a leverage of 7.2x at the end of Q4 [12][13] - Net spread and dollar roll income remained unchanged at $0.35 per common share for the quarter [12][13] - The average projected life CPR of the portfolio increased to 9.6% at quarter end from 8.6% in the prior quarter, with actual CPRs averaging 9.7% for the quarter [12][15] Market Data and Key Metrics Changes - The Bloomberg Aggregate Agency Index was the best-performing fixed income sector in Q4, producing a total return of 8.6% for the year [7] - Agency MBS outperformed the Treasury Index by 2.3 percentage points, or 36% in 2025 [7][8] - The demand for Agency MBS is expected to remain strong, with GSE purchases potentially consuming about half of the year's supply [11] Company Strategy and Development Direction - AGNC is positioned to generate compelling, risk-adjusted returns with a substantial yield component for shareholders, focusing on the favorable macro themes for Agency mortgage-backed securities [11] - The company plans to maintain a greater share of swap-based hedges in its hedge mix, particularly as short-term rates approach the Fed's long-run neutral rate [17] - The strategy includes opportunistically shifting the hedge mix toward a greater proportion of interest rate swaps to benefit from additional rate cuts [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in a durable and attractive investment environment as mortgage spreads stabilize at historically attractive levels [6][9] - The favorable macroeconomic backdrop is expected to continue, with potential further actions by the administration to improve housing affordability [10] - Management highlighted the importance of spread stability for generating attractive returns and indicated that the current environment is more favorable compared to previous years [53] Other Important Information - The company issued $356 million of common equity through its at-the-market offering program at a significant premium to tangible book value per share, bringing total accretive common equity issuances for the year to approximately $2 billion [15] - The asset portfolio totaled $95 billion at quarter end, up about $4 billion from the prior quarter, with 76% of assets having favorable prepayment attributes [17] Q&A Session Summary Question: Can you talk about where you see spreads currently versus where you saw it in the fourth quarter? - Management indicated that mortgage spreads have entered a new range, with current coupon spreads to swaps in the 120-160 basis point range, and current coupon to Treasuries around 110 basis points [22][24] Question: How do you think about the risk or potential benefit that could get you either to the high end or low end of those ranges? - Management noted that actions from the GSEs and potential changes in the Fed's balance sheet could positively impact spreads, while certain proposals could have negative consequences [38][40] Question: What would you do to address the affordability questions? - Management emphasized the importance of maintaining spread stability and suggested that the GSEs should focus on decisions based on the economics of the mortgage market [48][49] Question: How do you gauge your positivity on the investing environment right now for Agency MBS? - Management expressed that while spreads are lower, they remain attractive by historical standards, and the current environment is more stable than in previous years [51][53] Question: Would you adjust any of the hedges if it looked like the refi market was really going to accelerate? - Management indicated that asset selection and the composition of the portfolio will be critical in a rising prepayment environment, and they would consider adjusting hedges accordingly [90][92]

AGNC Investment (NasdaqGS:AGNC) Q4 2025 Earnings call January 27, 2026 08:30 AM ET Speaker7Good morning, and welcome to the AGNC Investment Corp.'s Fourth Quarter 2025 shareholder call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch-tone phone. To withdraw your questi ...

Industry Overview - The current banking environment is influenced by challenging interest rates, increased competition for deposits, and a focus on balance sheet resilience [1] - Higher interest rates have pressured the market value of securities portfolios, leading to unrealized losses, while core operating performance remains resilient [1] Company Highlights Security Federal Corporation (SFDL) - SFDL has a diversified balance sheet with total assets of $1.61 billion as of September 30, 2025, including $789.3 million in investment securities and $678.1 million in net loans [3] - The company reported net income of $9.4 million for the first nine months of 2025, a significant increase from the previous year, driven by higher net interest income and a reversal of provision for credit losses [3][4] - SFDL has a strong deposit base of $1.37 billion, positioning it well for stable earnings as rate pressures normalize [4][5] Bank of the James Financial Group (BOTJ) - BOTJ reported total assets of $1.02 billion at the end of the third quarter of 2025, with net loans of $653.3 million, supported by a diversified revenue stream [6] - The company generated net income of $6.3 million for the first nine months of 2025, demonstrating resilience in a competitive rate environment [6][7] - BOTJ's stable asset base and improving capital position position it for moderate, sustainable growth [7] Community Bancorp (CMTV) - CMTV is the largest of the three institutions, with total assets of $1.23 billion as of September 30, 2025, and a substantial loan portfolio of $951.9 million [8] - The company achieved net income of $12.3 million for the first nine months of 2025, reflecting higher net interest income and improved operating leverage [9] - CMTV's strong earnings growth and improving credit trends position it to outperform smaller peers as operating conditions stabilize [10] Conclusion - SFDL, BOTJ, and CMTV exemplify how community and regional banks can remain resilient in a volatile banking environment, benefiting from solid asset foundations, prudent credit management, and earnings stability [11]

Core Viewpoint - The Global X SuperDividend ETF (SDIV) offers a high dividend yield of 9.7%, significantly higher than other ETFs, but faces sustainability issues due to its reliance on mortgage REITs and high payout ratios [3][4][5]. Group 1: Dividend Yield Comparison - SDIV's yield of 9.7% is more than triple the 2.5% yield from the Vanguard High Dividend Yield ETF (VYM) and over double the 3.7% yield from the Schwab U.S. Dividend Equity ETF (SCHD) [3]. - The fund tracks 100 of the highest-yielding equities globally, with a focus on mortgage REITs, Brazilian companies, and emerging markets [3]. Group 2: Fund Structure and Performance - SDIV has a 0.58% expense ratio, which is nearly ten times higher than that of VYM and SCHD, indicating higher costs associated with managing the fund [4]. - The fund's portfolio turnover rate is 93%, suggesting frequent trading that may negatively impact returns [4]. Group 3: Dividend Sustainability Concerns - The monthly dividend has decreased from $0.255 in early 2023 to $0.19, marking a 25% reduction, which highlights structural challenges within the fund [4]. - Key holdings in SDIV, particularly mortgage REITs, exhibit unsustainable payout ratios, such as Annaly Capital Management with a 122% payout ratio and AGNC Investment with a 215% payout ratio [5][6]. - The reliance on high leverage and sensitivity to interest rate fluctuations makes mortgage REITs vulnerable, as their book values can decline rapidly [6]. Group 4: Comparison with Other Investment Options - The high yield of SDIV is primarily driven by mortgage REITs with payout ratios exceeding 200%, which raises concerns about the sustainability of these dividends [7]. - In contrast, the JPMorgan Equity Premium Income ETF (JEPI) offers a more sustainable yield of 8.2% through covered calls on quality U.S. stocks, with payout ratios like Broadcom's at 61% [7].

Leading economist Mohamed El-Erian is calling for sweeping reforms at the Federal Reserve, warning that the central bank’s credibility is at risk following a prolonged period of policy missteps and internal dysfunction in recent years.Fed Admits To Making MistakesEl-Erian, the Chief Economist at Allianz, said that the current focus when it comes to the Fed is on the short-term, such as whether to cut rates in December, or who will be the next Fed Chair, which he said misses the broader point, while appearin ...

Financial Data and Key Metrics Changes - For Q3 2025, the company reported net income of $0.53 per share compared to a loss of $0.29 in Q2 2025 [5] - Book value increased to $7.33 as of September 30 from $7.21 on June 30 [5] - Total return for Q3 was 6.7%, a significant improvement from negative 4.7% in Q2 [5] - Average portfolio balance rose to $7.7 billion in Q3 from $6.9 billion in Q2 [5] - Liquidity improved to 57.1% at September 30, up from 54% at June 30 [5] Business Line Data and Key Metrics Changes - The average coupon of the portfolio increased from 5.45% to 5.53% [30] - Effective yield rose from 5.38% to 5.51% [30] - Net interest spread expanded from 2.43% to 2.59% [30] - 20% of the portfolio is now backed by credit-impaired borrowers, with significant exposure to Florida and New York pools [30] Market Data and Key Metrics Changes - The Treasury curve steepened slightly during the quarter, reflecting market expectations of Federal Reserve rate cuts due to labor market deterioration [7][9] - The current coupon mortgage spread to the 10-year Treasury halved from 200 basis points in May 2023 to 100 basis points [11] - The mortgage market remains attractive, with strong demand despite tight credit spreads [10] Company Strategy and Development Direction - The company maintains a conservative leverage posture while focusing on high coupon specified pools to enhance income stability [30][43] - The strategy includes a heavy tilt towards call-protected specified pools to insulate against adverse payment behavior [30] - The company is positioned to benefit from potential Federal Reserve rate cuts and the anticipated end of quantitative tightening [44] Management's Comments on Operating Environment and Future Outlook - Management noted a potential crossroads for the economy, with labor market weakness prompting possible Federal Reserve rate cuts, while also observing resilience in consumer spending and government stimulus [45][46] - The company expects to adjust hedges to lock in lower funding costs and prepare for potential rate hikes following expected cuts [47] Other Important Information - The company raised $152 million in equity capital during the quarter, which was fully deployed into high-quality specified pools [28][41] - The weighted average price of the portfolio was over $101, indicating a premium position [72] Q&A Session Summary Question: Any macro factors that might change overall risk positioning? - Management indicated that if the Federal Reserve continues to cut rates, they might consider increasing leverage to benefit from the low-rate environment [50][52] Question: View on payouts upside potential with refi momentum? - Management noted that payouts have increased sharply recently, but they do not expect to return to the high levels seen in 2020 or 2021 [54][55] Question: Scenarios for dollar roll specialness returning? - Management expressed skepticism about the return of dollar roll specialness, citing the Federal Reserve's focus on buying Treasuries and bills rather than mortgages [61] Question: Supply and availability for longer-dated repo? - Management mentioned that spreads for longer-dated repo are currently too wide, but they are opportunistically looking to lock in favorable terms [63][64] Question: Percentage of portfolio covered with call protection? - Almost 100% of the portfolio has some form of call protection, which is expected to mitigate risks in a declining rate environment [71]

Group 1 - The S&P 500 has reached its 23rd record high this year, indicating a positive shift in market sentiment as concerns that previously suppressed valuations are fading [1] - The Federal Reserve is expected to begin easing monetary policy, with GDP growth projected to increase from 1% this year to 2% next year, suggesting a pro-cyclical environment [2] - Interest rate volatility is at its lowest since 2022, creating an ideal environment for asset allocators to take on more risk in their portfolios [4] Group 2 - The probability of a recession over the next 12 months is estimated to be between 20% and 25%, supporting expectations of double-digit earnings growth next year [5] - Consumer spending, which constitutes 70% of the US economy, is expected to receive a boost from recent fiscal policies and lower federal funds rates [5] - The labor market is described as stagnant, with job creation decreasing from an average of over 200,000 jobs per month last year to about 75,000 this year, indicating potential challenges for the Federal Reserve [8][10] Group 3 - The 10-year Treasury note is highlighted as a significant factor for consumers, especially with $7 trillion in money market funds facing reinvestment risks [7] - Initial jobless claims have remained relatively stable, averaging 227,000 this year, which presents a complex situation for the Federal Reserve [9][10] - The outlook for both equities and credit remains positive, with expectations of double-digit earnings growth and 2% GDP growth next year [11]