Financial Data and Key Metrics Changes - AGNC reported a comprehensive loss of $0.13 per common share for Q2 2025, with an economic return on tangible common equity of negative 1% [17] - The tangible net book value per share declined by $0.44, while dividends declared per common share were $0.36 [17] - Quarter-end leverage increased slightly to 7.6x tangible equity from 7.5x in Q1, with average leverage rising to 7.5x from 7.3x [17][18] Business Line Data and Key Metrics Changes - Net spread and dollar roll income decreased to $0.38 per common share, primarily due to the timing of capital deployment and higher swap costs [19] - The average projected life CPR of the portfolio declined to 7.8% from 8.3% in Q1, while actual CPRs averaged 8.7% for the quarter, up from 7% in the prior quarter [20] Market Data and Key Metrics Changes - Agency mortgage-backed securities (MBS) spreads widened, with the current coupon spread to treasury and swap benchmarks ending the quarter wider by 7 and 14 basis points respectively [10] - The net supply of new MBS is expected to be about $200 billion this year, at the low end of most forecasts [11] Company Strategy and Development Direction - The company maintains a positive outlook for agency MBS, driven by manageable supply, anticipated regulatory changes, and stabilizing spreads [24] - AGNC is focused on maintaining sufficient liquidity to navigate financial market volatility and is opportunistically deploying capital raised during the quarter [9][18] Management's Comments on Operating Environment and Future Outlook - Management noted that the financial market stress in April led to a negative investor sentiment, but markets recovered towards the end of the quarter [6][9] - The company expects banks and foreign demand for agency MBS to grow, with seasonal supply patterns for MBS issuance improving as they enter Q3 [10] Other Important Information - The company raised just under $800 million of common equity through its At the Market Offering Program at a significant premium to tangible net book value [18] - The weighted average coupon of the asset portfolio increased to 5.13% during the quarter, with 81% of assets having positive prepayment attributes [22] Q&A Session Summary Question: Insights on the attractive environment for agency MBS - Management indicated a favorable outlook for agency MBS, with the potential for raising additional capital or increasing leverage depending on market conditions [27][30] Question: Core earnings trajectory and dividend levels - Management discussed the alignment of net spread and dollar roll income with portfolio economics, estimating returns in the high teens [37][40] Question: Capital deployment progress and coupon preferences - Management confirmed that about $1 billion worth of mortgages were purchased recently, favoring higher coupon specified pools with favorable prepayment characteristics [48][49] Question: Optimal size of the company and market capacity constraints - Management emphasized growth is not for its own sake but to benefit existing shareholders, while being mindful of market capacity constraints [55][59] Question: Balance between swap hedges and treasury futures - Management indicated a preference for a balanced mix of swaps and treasuries, with a current overweight in swaps due to expected stability in swap spreads [64][66] Question: Impact of changes in credit scoring on prepayment environment - Management acknowledged that changes in credit scoring could lead to higher prepayments but deemed the impact not significant from an investor perspective [106][109] Question: Risks associated with lower rates and rapid repayments - Management recognized the risk of a more efficient market leading to quicker prepayments but noted that significant rate drops would be necessary for widespread refinancing [112][115]