American Capital Agency (AGNC) Reports Q2 Loss Per Share of $0.97

(Updated) American Capital Agency (NASDAQ: AGNC) reported Q2 Comprehensive EPS of ($0.97), versus $2.43 reported last year. Net spread and dollar roll income was $0.60 vs the consensus of $0.64.

"The second quarter was challenging for the entire fixed income market and agency MBS were clearly no exception," said Gary Kain, President and Chief Investment Officer. "Global economic uncertainty, particularly in Europe and China, continued to clash with the growing probability that the Federal Reserve will soon begin to raise short term interest rates. This time, however, unlike the first quarter, the resulting volatility led to higher rates and a steepening of the yield curve. Against this backdrop, AGNC's book value was negatively impacted by both the rate move and a significant widening in agency MBS spreads."

"While we are clearly not pleased with AGNC's economic return during the second quarter, we do feel good about recognizing the unfavorable risk/return landscape and entering the quarter with the lowest leverage we have employed since 2008," continued Mr. Kain. "Moreover, our conservative risk profile gives us significant capacity to take advantage of attractive opportunities as they arise, thereby meaningfully enhancing the long term earnings profile of our portfolio. To this point, now that MBS spreads are more reasonable and rates are higher, further increases in either rates or spreads are likely to present a compelling investment environment for us to return to a more normal risk profile with higher leverage and a larger duration gap."

Malon Wilkus, Chair and Chief Executive Officer, commented, "With our stock trading at meaningful discounts to our net book value during the second quarter, we repurchased approximately 1% of our outstanding shares of common stock at an average price of $19.86 per share. Accretion from share repurchases can be material when markets overreact to short term concerns, driving stock valuations to relatively extreme price/book discounts, and we expect to continue to take advantage of these opportunities."

For earnings history and earnings-related data on American Capital Agency (AGNC) click here.

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