BETHESDA, Md., July 29 /PRNewswire-FirstCall/ -- American Capital
Agency Corp. ("AGNC" or the "Company") (NASDAQ:AGNC) today reported
net income for the second quarter of 2009 of $30.4 million, or
$2.02 per share. SECOND QUARTER 2009 HIGHLIGHTS -- Declared a
dividend of $1.50 per common share -- $1.98 per share of taxable
income -- $0.79 per share of undistributed taxable income as of
June 30, 2009 -- Net income of $30.4 million, or $2.02 per common
share -- $1.48 per share excluding $0.18 of amortization expense
related to terminated swaps and $0.72 per share of other income --
39.8% annualized return on average stockholders' equity for the
quarter -- 3.55% average net interest rate spread for the quarter
-- $2.6 billion agency securities portfolio at fair value as of
June 30, 2009 -- 7.7x(1) leverage as of June 30, 2009 -- $20.76
book value per common share as of June 30, 2009, an increase of 8%,
or $1.50 per share, from March 31, 2009 -- Effective July 1, 2009,
completed organizational changes, transitioning certain dedicated
employees to AGNC's management company "Our results for the quarter
benefited from several factors, including slower than expected
prepayment speeds, a larger investment portfolio, lower funding
costs and improved valuations on higher coupon agency securities,"
commented Gary Kain, Chief Investment Officer of AGNC. "While AGNC
was well positioned entering the quarter for the significant
volatility we witnessed in the market, we continue to actively
manage our portfolio to maintain the optimal balance between
stockholder returns and the protection of book value. To that end,
through the second quarter of 2009, we are pleased to have provided
our stockholders with $2.35 per common share in dividends as well
as $3.56 per share increase in book value since December 31, 2008,
resulting in an economic return(2) of approximately 34% for the six
months ended June 30, 2009 and an annualized economic return of
approximately 69%." SECOND QUARTER 2009 DIVIDEND DECLARATION On
June 22, 2009, the Board of Directors of the Company declared a
second quarter 2009 dividend of $1.50 per common share to record
holders as of July 2, 2009, which was paid on July 27, 2009. Since
its May 2008 initial public offering, AGNC has paid a total of
$72.9 million in dividends, or $4.86 per common share. After paying
the dividend for second quarter 2009, AGNC had approximately $0.79
per share of undistributed taxable income. INVESTMENT PORTFOLIO As
of June 30, 2009, the Company's investment portfolio totaled $2.6
billion of agency securities at fair value, comprised of $1.2
billion of fixed rate agency securities, $1.3 billion of adjustable
rate agency securities and $0.1 billion of collateralized mortgage
obligations ("CMOs") backed by adjustable rate agency securities.
As of June 30, 2009, AGNC's investment portfolio was comprised of
40% 30-year fixed rate securities, 3% 40-year fixed rate
securities, 2% 15-year fixed rate securities, 50% adjustable rate
securities and 5% CMOs backed by adjustable rate agency securities.
CAPITAL GAINS During the quarter, AGNC generated $9.5 million in
net realized gains, or $0.64 per common share, from the sale of
agency securities as a result of actively managing its investment
portfolio. AGNC will continue to manage its balance sheet by
assessing the entire agency securities landscape to balance
stockholder returns and book value preservation. ASSET YIELDS, COST
OF FUNDS AND NET INTEREST RATE SPREAD During the quarter, the
annualized weighted average yield on average earning assets was
5.35% and the annualized average cost of funds was 1.80%, including
0.50% of amortization expense associated with the termination of
interest rate swaps, which resulted in a net interest rate spread
of 3.55%. Excluding the amortization expense, the net interest rate
spread was 4.05%. As of June 30, 2009, the weighted average yield
on earning assets was 4.78% and the weighted average cost of funds
was 1.82%, including 0.63% of amortization expense associated with
the termination of interest rate swaps, which resulted in a net
interest rate spread of 2.96% as of June 30, 2009. Excluding the
amortization expense, the net interest rate spread was 3.59% as of
June 30, 2009. The actual constant prepayment rate ("CPR") for the
Company's portfolio held in the second quarter was 17%, which was
down from 20% in the first quarter of 2009. The Company's projected
CPR for the remaining life of its investments as of June 30, 2009
was 21%. This reflects a drop from 31% as of March 31, 2009, which
resulted in a positive "catch-up" adjustment to interest income of
$2.2 million, or $0.15 per share, in the second quarter. The
weighted average cost basis of the investment portfolio was 103.1%
as of June 30, 2009. The amortization of premiums (net of any
accretion of discounts) on the investment portfolio for the quarter
was $3.1 million, or $0.20 per common share. The unamortized net
premium as of June 30, 2009 was $79.2 million. LEVERAGE AND HEDGING
ACTIVITIES As of June 30, 2009, the Company's $2.6 billion
investment portfolio was financed with $2.3 billion of repurchase
agreements and $0.3 billion of equity capital, resulting in a
leverage ratio of 7.5x. When adjusted for the net liability for
agency securities not yet settled, the leverage ratio was 7.7x as
of June 30, 2009. Of the $2.3 billion borrowed under repurchase
agreements as of June 30, 2009, $1.1 billion had original
maturities of 30 days or less, $1.0 billion had original maturities
greater than 30 days and less than 60 days and the remaining $0.2
billion had original maturities of 61 days or more. As of June 30,
2009, the Company had repurchase agreements with 18 counterparties,
with no more than 9% of stockholders' equity at risk with a single
counterparty. The Company's swap positions as of June 30, 2009
totaled $950 million in notional amount at an average fixed pay
rate of 2.09%, an average receive rate of 0.32% and a weighted
average maturity of 3.0 years. During the quarter, AGNC entered
into eight interest rate swaps with a combined notional amount of
$600 million, an average term of approximately 30 months and a
weighted average fixed pay rate of 1.69%. Additionally, during the
quarter the Company terminated five interest rate swaps with a
combined notional amount of $350 million and a weighted average
remaining term of 11 months, realizing a loss of $10.0 million,
which will be amortized into interest expense for GAAP and taxable
income over the remaining original life of the terminated swaps. In
the quarter, the Company recognized $2.7 million, or $0.18 per
common share, in amortization expense associated with the
termination of interest rate swaps (included in interest expense on
the income statement). Since December 31, 2008, the Company has
terminated interest rate swaps with a total combined notional
amount of $550 million, realizing a loss of $16.5 million, of which
$3.0 million has already been amortized into GAAP and taxable
income. The remaining $13.5 million of this realized loss will be
amortized into GAAP and taxable income over the next four quarters.
As of June 30, 2009, the Company's book value per common share was
$20.76, or $1.50 higher than the March 31, 2009 book value per
common share of $19.26 and $3.56 higher than the December 31, 2008
book value per common share of $17.20. The Company's book value
fully reflects all costs associated with the termination of
interest rate swaps. Financial highlights for the quarter are as
follows: AMERICAN CAPITAL AGENCY CORP. CONSOLIDATED BALANCE SHEETS
(in thousands) June 30, March 31, December 31, 2009 2009 2008
-------- --------- ------------ (unaudited) (unaudited) Assets:
Agency securities, at fair value (including pledged assets of
$2,535,249, $2,060,748, and $1,522,001, respectively) $2,631,893
$2,257,474 $1,573,383 Cash and cash equivalents 69,226 53,774
56,012 Restricted cash 5,203 25,168 18,692 Interest receivable
14,005 10,474 7,851 Derivative assets, at fair value 3,257 - -
Receivable for agency securities sold 73,505 38,148 - Principal
payments receivable 6,291 - - Other assets 392 257 387 --- --- ---
Total assets $2,803,772 $2,385,295 $1,656,325 ========== ==========
========== Liabilities: Repurchase arrangements $2,346,875
$1,849,473 $1,346,265 Payable for agency securities purchased
110,872 207,220 - Accrued interest payable 1,213 1,428 3,664
Derivative liabilities, at fair value 9,839 24,441 29,277 Dividend
payable 22,507 12,754 18,006 Due to Manager 607 665 714 Accounts
payable and other liabilities 416 353 248 --- --- --- Total
liabilities 2,492,329 2,096,334 1,398,174 --------- ---------
--------- Stockholders' equity: Preferred stock, $0.01 par value;
10,000 shares authorized, 0 shares issued and outstanding,
respectively - - - Common stock, $0.01 par value; 150,000 shares
authorized, 15,005 shares issued and outstanding, respectively 150
150 150 Additional paid-in capital 285,932 285,924 285,917 Retained
earnings (accumulated deficit) 9,106 1,247 (2,310) Accumulated
other comprehensive income (loss) 16,255 1,640 (25,606) ------
----- ------- Total stockholders' equity 311,443 288,961 258,151
------- ------- ------- Total liabilities and stockholders' equity
$2,803,772 $2,385,295 $1,656,325 ========== ========== ==========
AMERICAN CAPITAL AGENCY CORP. CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited) (in thousands, except per share data) Three months
ended ------------------ June 30, March 31, December 31, 2009 2009
2008 -------- --------- ------------ Interest income: Interest
income $31,690 $22,351 $17,132 Interest expense 9,585 8,129 10,331
----- ----- ------ Net interest income 22,105 14,222 6,801 ------
------ ----- Other income: Gain from sale of agency securities, net
9,530 4,818 5 Gain (loss) from derivative instruments, net 1,226
(358) 6,286 ----- ---- ----- Total other income 10,756 4,460 6,291
Expenses: Management fees 939 903 927 General and administrative
expenses 1,556 1,468 1,213 ----- ----- ----- Total expenses 2,495
2,371 2,140 ----- ----- ----- Net income $30,366 $16,311 $10,952
======= ======= ======= Net income per common share - basic and
diluted $2.02 $1.09 $0.73 Weighted average number of common shares
outstanding - basic and diluted 15,005 15,005 15,005 Dividends
declared per common share $1.50 $0.85 $1.20 AMERICAN CAPITAL AGENCY
CORP. KEY PORTFOLIO CHARACTERISTICS* (unaudited) (in thousands,
except per share data) Three months ended ------------------ June
30, March 31, December 31, 2009 2009 2008 -------- ---------
------------ Average agency securities $2,367,303 $1,738,321
$1,604,087 Average total assets $2,676,006 $1,968,190 $1,662,882
Average repurchase agreements $2,139,402 $1,537,798 $1,355,267
Average stockholders' equity $305,866 $274,278 $263,970 Fixed rate
agency securities - as of period end $1,203,261 $1,387,278
$1,573,383 Adjustable rate agency securities - as of period end
$1,307,430 $870,196 $- CMO agency securities - as of period end
$121,202 $- $- Average asset yield (1) 5.35% 5.13% 4.24% Average
cost of funds (2) 1.30% 2.03% 3.05% Average cost of funds -
terminated swap amortization expense (3) 0.50% 0.08% 0.00% Average
net interest rate spread (4) 3.55% 3.02% 1.19% Net return on
average equity (5) 39.82% 24.12% 16.46% Leverage (average during
the period) (6) 7.0:1 5.6:1 5.1:1 Leverage (as of period end) (7)
7.7:1 7.0:1 5.2:1 Annualized expenses % of average assets (8) 0.37%
0.49% 0.51% Annualized expenses % of average equity (9) 3.27% 3.51%
3.22% Book value per common share as of period end (10) $20.76
$19.26 $17.20 * All percentages are annualized. (1) Weighted
average asset yield for the period was calculated by dividing our
average interest income on agency securities less average
amortization of premiums and discounts by our average agency
securities. (2) Weighted average cost of funds for the period was
calculated by dividing our total interest expense by our weighted
average repurchase agreements. Total interest expense excludes
amortization expense related to the fair value of terminated swaps
during the periods presented. (3) Represents amortization expense
associated with the termination of interest rate swaps of $2.7
million in the second quarter of 2009, $0.3 million in the first
quarter of 2009 and $0.0 million for the fourth quarter of 2008.
(4) Average net interest rate spread for the period was calculated
by subtracting our weighted average cost of funds, net of interest
rate swaps and terminated swap amortization expense, from our
weighted average asset yield. (5) Net return on average
stockholders' equity for the period was calculated by dividing our
net income by our average stockholders' equity. (6) Leverage during
the period was calculated by dividing our average repurchase
agreements outstanding by our average stockholders' equity. (7)
Leverage at period end was calculated by dividing the amount
outstanding under our repurchase agreements and net liabilities for
unsettled agency securities by our total stockholders' equity at
period end. (8) Annualized expenses as a % of average total assets
was calculated by dividing our total expenses by our average total
assets. (9) Annualized expenses as a % of average stockholders'
equity was calculated by dividing our total expenses by our average
stockholders' equity. (10) Book value per common share was
calculated by dividing our total stockholders' equity by our number
of common shares outstanding. STOCKHOLDER CALL AGNC invites
stockholders, prospective stockholders and analysts to attend the
AGNC stockholder call on July 30, 2009 at 11:00 am ET. The
stockholder call can be accessed through a live webcast at
http://www.agnc.com/ or by dialing (800) 230-1951 (U.S. domestic)
or +1 (612) 234-9959 (international). Please advise the operator
you are dialing in for the AGNC stockholder call. A slide
presentation will accompany the call and will be available at
http://www.agnc.com/. Select the Q2 2009 Earnings Presentation link
to download and print the presentation in advance of the
Stockholder Call. An archived audio of the stockholder call
combined with the slide presentation will be made available on our
website after the call on July 30, 2009. In addition, there will be
a phone recording available from 2:00 pm ET on July 30, 2009 until
11:59 pm ET on August 13, 2009. If you are interested in hearing
the recording of the presentation, please dial (800) 475-6701 (U.S.
domestic) or +1 (320) 365-3844 (international). The access code for
both domestic and international callers is 107213. For further
information or questions, please do not hesitate to call our
Investor Relations Department at (301) 968-9300 or send an email to
. ABOUT AGNC AGNC is a REIT that invests exclusively in agency
pass-through securities and collateralized mortgage obligations for
which the principal and interest payments are guaranteed by a U.S.
Government agency or a U.S. Government-sponsored entity. The
Company is externally managed and advised by an affiliate of
American Capital, Ltd. ("American Capital"). For further
information, please refer to http://www.agnc.com/. ABOUT AMERICAN
CAPITAL American Capital is a publicly traded private equity firm
and global asset manager. American Capital, both directly and
through its asset management business, originates, underwrites and
manages investments in middle market private equity, leveraged
finance, real estate and structured products. Founded in 1986,
American Capital has $11 billion(3) in capital resources under
management and ten offices in the U.S., Europe and Asia. For
further information, please refer to
http://www.americancapital.com/. FORWARD LOOKING STATEMENTS This
press release contains forward-looking statements. Forward-looking
statements are based on estimates, projections, beliefs and
assumptions of management of the Company at the time of such
statements and are not guarantees of future performance.
Forward-looking statements involve risks and uncertainties in
predicting future results and conditions. Actual results could
differ materially from those projected in these forward-looking
statements due to a variety of factors, including, without
limitation, changes in interest rates, changes in the yield curve,
changes in prepayment rates, the availability and terms of
financing, changes in the market value of our assets, general
economic conditions, market conditions, conditions in the market
for agency securities, and legislative and regulatory changes that
could adversely affect the business of the Company. Certain factors
that could cause actual results to differ materially from those
contained in the forward-looking statements, are included in the
Company's periodic reports filed with the Securities and Exchange
Commission ("SEC"). Copies are available on the SEC's website,
http://www.sec.gov/. The Company disclaims any obligation to update
or revise any forward-looking statements based on the occurrence of
future events, the receipt or new information, or otherwise. (1)
Leverage calculated as total repurchase agreements outstanding plus
payable for agency securities purchased but not yet settled less
receivable for agency securities sold but not yet settled over
total stockholders' equity as of June 30, 2009. (2) Economic return
equals $5.91 per share ($2.35 per share of dividends in first and
second quarter 2009 plus $3.56 per share increase in book value
from $17.20 as of December 31, 2008 to $20.76 per share as of June
30, 2009) divided by $17.20 per share (book value as of December
31, 2008). (3) As of March 31, 2009. CONTACT: Investors - (301)
968-9300 Media - (301) 968-9400 DATASOURCE: American Capital Agency
Corp. CONTACT: Investors, +1-301-968-9300, or Media,
+1-301-968-9400, both of American Capital Agency Corp. Web Site:
http://www.agnc.com/
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