BETHESDA, Md., July 29,
2013 /PRNewswire/ -- American Capital Agency Corp. ("AGNC" or
the "Company") (Nasdaq: AGNC) today reported comprehensive loss for
the second quarter of 2013 of $(936)
million, or $(2.37) per common
share, and net book value of $25.51
per common share. Economic return for the period, defined as
dividends on common shares plus the change in net book value per
common share, was a loss of $(2.37)
per common share, (8.2)% for the quarter, or (32.9)% on an
annualized basis.
SECOND QUARTER 2013 FINANCIAL HIGHLIGHTS
- $(2.37) comprehensive loss per
common share, comprised of:
- $4.61 net income per common
share
- $(6.98) other comprehensive loss
("OCI") per common share
- Includes net unrealized losses on investments marked-to-market
through OCI
- $1.15 net spread and dollar roll
income per common share, comprised of:
- Interest income, net of cost of funds (including interest rate
swaps) and operating expenses
- $0.49 per common share of
estimated net carry income (also known as "dollar roll income")
associated with purchases of agency mortgage backed securities
("MBS") on a forward-settlement basis through the "to-be-announced"
("TBA") dollar roll market
- Includes $0.14 per common share
of estimated "catch-up" premium amortization benefit due to change
in projected constant prepayment rate ("CPR") estimates
- $1.04 estimated taxable income
per common share
- $1.05 dividend per common share
declared on June 18, 2013
- $1.07 estimated undistributed
taxable income per common share as of June
30, 2013
- Decreased $(0.01) per common
share from $1.08 per common share as
of March 31, 2013, or $(5) million from $430
million as of March 31, 2013
to $425 million as of June 30, 2013
- $25.51 net book value per common
share as of June 30, 2013
- Decreased $(3.42) per common
share, or (11.8)%, from $28.93 per
common share as of March 31, 2013
- Driven primarily by wider spreads in the broader mortgage
backed securities market
- (8.2)% economic loss on common equity for the quarter, or
(32.9)% annualized
- Comprised of $1.05 dividend per
common share and $(3.42) decrease in
net book value per common share
OTHER SECOND QUARTER HIGHLIGHTS
- $91.7 billion investment
portfolio as of June 30, 2013
- Includes $14.5 billion net TBA
mortgage position as of June 30,
2013
- 8.4x average "at risk" leverage during the quarter
- 5.9x average leverage during the quarter excluding net TBA
mortgage position
- 8.5x "at risk" leverage as of June 30,
2013
- 7.0x leverage excluding net TBA Mortgage position as of
June 30, 2013
- Approximately 8.0x "at risk" leverage as of July 26, 2013
- 11% actual portfolio CPR for the quarter
- 11% actual portfolio CPR for the month of July 2013
- 7% average projected portfolio life CPR as of June 30, 2013
- Excludes TBA mortgage position
- 1.86% annualized net interest rate spread and TBA dollar roll
income for the quarter
- Includes 37 bps of estimated TBA dollar roll income
- Includes 29 bps of "catch-up" premium amortization benefit due
to change in projected CPR estimates
- 1.59% net interest rate spread and TBA dollar roll income as of
June 30, 2013
- 1.24% excluding net TBA mortgage position as of June 30, 2013
- 0.3 million shares of common stock repurchased during the
quarter
"The second quarter was characterized by extreme volatility in
both interest rates and mortgage spreads," commented Gary Kain, President and Chief Investment
Officer. "In response, we remained highly disciplined with
respect to our risk management activities. We reduced
the size of our asset portfolio, adjusted our asset composition to
be more consistent with a higher rate environment, and materially
increased the duration of our hedges. As a result of these
actions and evolving market conditions, our exposure to higher
rates is lower than it has been in years and our 'pay-up' risk is
now minimal."
John Erickson, Chief Financial
Officer and Executive Vice President, commented, "Despite what has
been a very challenging year for both ourselves as managers and for
our shareholders, when one steps back and evaluates our overall
performance since QE3 we are reassured by the fact that we have
been able to produce a positive economic return (dividends plus
change in net book value per common share) of 3.1% over the last
twelve months despite significant market volatility."
NET BOOK VALUE
As of June 30, 2013, the Company's
net book value per common share was $25.51, or $(3.42)
lower than the March 31, 2013 net book value per common share
of $28.93, primarily due to wider
interest rate spreads in the broader mortgage backed securities
market relative to benchmark interest rates such as U.S. Treasury
and swap rates.
INVESTMENT PORTFOLIO
As of June 30, 2013, the
Company's investment portfolio totaled $91.7
billion of agency securities, including $14.5 billion of net TBA mortgage positions, at
fair value.
TBA dollar roll transactions are a form of off-balance sheet
financing of agency MBS. The price differential between agency MBS
purchased for a forward settlement date through a TBA dollar roll
transaction and the price of agency MBS for settlement in the
current month is referred to as the "price drop". The price
drop is the economic equivalent of the net interest carry (interest
income less implied financing cost), also referred to as "dollar
roll income," on the agency MBS earned during the roll period.
Given the attractive terms available in the dollar roll market, the
Company maintained an average net forward TBA position of
$28.9 billion (cost basis) during the
quarter.
The Company accounts for TBA dollar roll positions as derivative
instruments and recognizes dollar roll income in other income
(loss), net on the Company's financial statements. As of
June 30, 2013, the Company's net TBA mortgage portfolio had a
fair value and cost basis of approximately $14.5 billion and $15.3
billion, respectively, and a net carrying value of
$(771) million reported in derivative
assets/(liabilities) on the Company's balance sheet.
As of June 30, 2013, the Company's investment portfolio was
comprised of $90.4 billion of
fixed-rate securities, inclusive of the net TBA position;
$0.7 billion of adjustable-rate
securities; and $0.6 billion of
collateralized mortgage obligations ("CMOs"), including principal
and interest-only strips. As of June 30, 2013, the
Company's fixed-rate mortgage assets were comprised of $31.4 billion ≤ 15-year securities, $0.5 billion 20-year fixed-rate securities,
$44.1 billion 30-year fixed-rate
securities, $7.2 billion 15-year net
TBA securities and $7.3 billion
30-year net TBA securities, at fair value.
As of June 30, 2013, the Company's fixed-rate mortgage
assets, inclusive of the net TBA position, had a weighted average
coupon of 3.42%, comprised of a weighted average coupon of 3.08%
for ≤ 15-year fixed-rate securities, 3.89% for 20-year fixed-rate
securities, 3.73% for 30-year fixed-rate securities, 3.08% for
15-year net TBA securities and 3.27% for 30-year net TBA
securities.
As of June 30, 2013, 60% of the Company's fixed-rate
mortgage assets, inclusive of net TBA mortgage positions, were
comprised of securities backed by lower loan balance mortgages and
loans originated under the U.S. Government sponsored Home
Affordable Refinance Program ("HARP"), which have favorable
prepayment attributes and, therefore, a lower risk of prepayment
relative to generic agency securities. The Company defines lower
loan balance securities as pools backed by original loan balances
of up to $150,000 and HARP securities
as pools backed by 100% refinance loans with original
loan-to-values of ≥ 80%. As of June 30, 2013, the
weighted average "pay-up" measured across the Company's fixed-rate
mortgage asset portfolio was approximately 0.24% over the
corresponding generic TBA price.
CONSTANT PREPAYMENT RATES
The actual CPR for the
Company's investment portfolio during the second quarter was 11%,
largely unchanged from the prior quarter of 10%. The most
recent CPR published in July 2013 for
the Company's portfolio held as of June 30, 2013 was
11%. The weighted average projected CPR for the remaining
life of all of the Company's agency securities held as of
June 30, 2013 was 7%, a decrease from 9% as of March 31,
2013, driven by higher interest rates and wider mortgage spreads.
The Company's net TBA dollar roll position is not included in the
CPR calculations above.
The Company amortizes or accretes premiums and discounts
associated with purchases of agency securities into interest income
using the effective yield method over the estimated life of such
securities, incorporating both actual repayments to date and
projected CPRs over the remaining life of the security. The
weighted average cost basis of the Company's investment portfolio
was 105.2% of par value as of June 30, 2013; therefore, faster
actual or projected prepayments can have a meaningful negative
impact, while slower actual or projected prepayments can have a
meaningful positive impact, on the Company's asset
yields.
Net premium amortization on the Company's investment portfolio
for the second quarter was $(98)
million, or $(0.25) per common
share, compared to $(134) million, or
$(0.38) per common share, for the
first quarter. The change in the Company's weighted average
projected CPR estimate resulted in recognition of approximately
$55 million, or $0.14 per common share, of "catch-up" premium
amortization benefit during the second quarter, compared to
approximately $32 million, or
$0.09 per common share, of "catch-up"
premium amortization benefit during the first quarter. The
unamortized net premium balance as of June 30, 2013 was
$3.9 billion.
ASSET YIELDS, COST OF FUNDS AND NET INTEREST RATE
SPREAD
The Company's average asset yield on its agency
security portfolio for the second quarter was 2.92%, compared to
2.80% for the first quarter. Excluding the impact of
"catch-up" premium amortization benefit recognized during the
current and prior quarter due to changes in projected CPR
estimates, the annualized weighted average yield on the Company's
agency security portfolio was 2.63% for the current quarter,
compared to 2.64% for the prior quarter. The Company's
average asset yield reported as of June 30, 2013 was 2.71%, a
4 bps decrease from 2.75% as of March 31, 2013.
The Company's average cost of funds (derived from the cost of
repurchase agreements, other debt and interest rate swaps)
increased 15 bps to 1.43% for the second quarter, from 1.28% for
the first quarter, due to higher average swap costs associated with
entering into longer dated swaps during the quarter. The
Company's average cost of funds as of June 30, 2013 increased
15 bps to 1.47% from 1.32% as of March 31, 2013.
The Company's average net interest rate spread for the second
quarter was 1.49%, a decrease of 3 bps from the first quarter of
1.52%. Including estimated TBA dollar roll income, the
Company's average net interest rate spread for the second quarter
was 1.86%, largely unchanged from 1.87% during the first
quarter. The Company's average net spread income for the
second quarter includes 29 bps of "catch-up" premium amortization
benefit due to changes in projected CPR estimates, compared to 16
bps of "catch-up" premium amortization benefit during the first
quarter. As of June 30, 2013, the Company's average net
interest rate spread was 1.24%, or 1.59% inclusive of net TBA
dollar roll positions, compared to 1.43%, or 1.71% inclusive of net
TBA dollar roll positions, as of March 31, 2013.
LEVERAGE
As of June 30,
2013, $70.3 billion of the
Company's repurchase agreements were used to fund acquisitions of
agency securities ("agency repo"), while the remainder, or
$2.1 billion, was used to fund
purchases of U.S. Treasury securities and are not included in the
Company's leverage measurements. The Company's leverage ratio
as of June 30, 2013 was 7.0x. Inclusive of off-balance
sheet TBA financing, the Company's "at risk" leverage ratio as of
June 30, 2013 was 8.5x. The Company's average leverage
for the quarter was 5.9x, or 8.4x inclusive of off-balance sheet
TBA financing.
As of June 30, 2013, the Company's
agency repo agreements had a weighted average interest rate of
0.45%, compared to 0.47% as of March
31, 2013. As of June 30, 2013, the Company's
agency repo agreements had original maturities consisting of:
- $6.1 billion of one month or
less;
- $28.2 billion from one to three
months;
- $16.2 billion from three to six
months;
- $5.7 billion from six to nine
months;
- $8.4 billion from nine to twelve
months;
- $2.5 billion from twelve to
twenty-four months;
- $2.6 billion from twenty-four to
thirty-six months; and
- $0.6 billion of greater than
thirty-six months.
The Company's agency repo agreements had a weighted average
original maturity of 188 days as of June 30, 2013, compared to
183 days as of March 31, 2013. As of June 30, 2013,
the Company's agency repo agreements had a weighted average
remaining days to maturity of 119 days, compared to 118 days as of
March 31, 2013.
"Despite the sharp rise in interest rates and the
underperformance of mortgage backed securities during the quarter
our access to attractive funding remained uninterrupted," commented
Peter Federico, Senior Vice
President and Chief Risk Officer. "The average 'haircut' on our
repo borrowings remained unchanged and our average repo rate even
declined by a couple of basis points during the quarter."
HEDGING ACTIVITIES
The Company's interest rate swap
positions as of June 30, 2013 totaled $55.7 billion in notional amount and had an
average fixed pay rate of 1.61%, a weighted average receive rate of
0.26% and a weighted average maturity of 5.2 years. During
the quarter, the Company increased its swap position by
$10.1 billion, while $5.7 billion of the Company's shorter duration
swaps were terminated during the quarter. The new swap
agreements entered into during the quarter have an average maturity
of approximately 9.3 years from June 30, 2013 and a weighted
average fixed pay rate of 2.08%. The Company enters into
swaps with longer maturities with the intention of protecting its
net book value and longer term earnings potential against the
impact of rising interest rates.
The Company utilizes interest rate swaptions to mitigate
exposure to larger, more rapid increases in interest rates.
During the quarter, the Company added $3.2
billion in notional amount of payer swaptions at a cost of
$(76) million, while $2.4 billion of payer swaptions from previous
quarters expired or were terminated resulting in net realized
losses of $(11) million. As of
June 30, 2013, the Company had $23.8
billion of notional value in payer swaptions outstanding at
a market value of $842 million and a
cost basis of $483 million, with an
average option term of 1.3 years and an average underlying interest
rate swap term of 8.4 years.
The Company also utilizes short positions in U.S. Treasury
securities and futures to mitigate exposure to increases in
interest rates. As of June 30, 2013, the Company had a
net short position of $6.3 billion
market value in U.S. Treasury securities and short position of
$3.1 billion market value in U.S.
Treasury futures. As of June 30, 2013, 101% of the
Company's outstanding balance of repurchase agreements, other debt
and net TBA dollar roll position was hedged through interest rate
swaps, swaptions and net short Treasury positions, an increase from
94% as of March 31, 2013.
OTHER INCOME (LOSS), NET
During the second quarter,
the Company recorded a net gain of $1.5
billion in other income (loss), net, or $3.69 per common share, compared to a net loss of
$(124) million, or $(0.35) per common share for the prior
quarter. Other income (loss), net for the second quarter was
comprised of:
- $1,240 million of net unrealized
gains on interest rate swaps and termination fee income (excludes
$48 million of unrealized gains
recognized in OCI);
- $(105) million of other interest
rate swap periodic interest costs;
- $454 million of net gains on
interest rate swaptions;
- $427 million of net gains from
U.S. Treasury short positions;
- $195 million of TBA dollar roll
income;
- $(767) million of net losses on
TBA mortgage positions and forward settling securities; and
- $17 million of net realized gains
on sales of agency securities.
The increase in other income (loss), net was largely a function
of the large upward move in benchmark interest rates during the
second quarter, and resulting hedge gains, compared to a modest
rise in rates during the prior quarter.
OTHER COMPREHENSIVE INCOME (LOSS)
During the second
quarter, the Company recorded an other comprehensive loss of
$(2.8) billion, or $(6.98) per common share, primarily comprised of
net unrealized losses on agency securities due to the combination
of higher interest rates and wider spreads in the broader mortgage
backed securities market.
ESTIMATED TAXABLE INCOME
Estimated taxable income for
the second quarter was $1.04 per
common share, or $3.57 lower than
GAAP net income per common share. The primary differences
between tax and GAAP net income are (i) unrealized gains and losses
associated with interest rate swaps and other derivatives and
securities marked-to-market in current income for GAAP purposes,
but excluded from taxable income until realized or settled, (ii)
temporary differences related to the amortization of premiums paid
on investments and (iii) timing differences in the recognition of
certain realized gains and losses.
SECOND QUARTER 2013 DIVIDEND DECLARATIONS
On
June 18, 2013, the Board of Directors of the Company declared
a second quarter dividend on its common stock of $1.05 per share, compared to $1.25 per share declared in the prior quarter,
which was paid on July 26, 2013 to common stockholders of
record as of June 28, 2013. Since its May 2008 initial public offering, the Company has
paid a total of $3.7 billion in
common dividends, or $26.16 per
common share.
On June 19, 2013, the Board of Directors of the Company
declared a second quarter dividend on its 8.000% Series A
Cumulative Redeemable Preferred Stock ("Series A Preferred Stock")
of $0.50 per share. The dividend was
paid on July 15, 2013 to preferred stockholders of record as
of July 1, 2013.
The Company had approximately $425
million of estimated undistributed taxable income as of
June 30, 2013, or $1.07 per
common share, net of dividends declared, but without adjustment for
future quarterly dividends not yet declared on the Company's Series
A Preferred Stock.
FINANCIAL STATEMENTS, OPERATING PERFORMANCE AND PORTFOLIO
STATISTICS
The following measures of operating performance
include net spread income and estimated taxable income, which are
Non-GAAP financial measures. Please refer to "Use of Non-GAAP
Financial Information" later in this release for further discussion
of non-GAAP measures.
AMERICAN CAPITAL
AGENCY CORP.
|
CONSOLIDATED BALANCE
SHEETS
|
(in millions, except
per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
March 31,
|
|
December
31,
|
|
September
30,
|
|
June 30,
|
|
2013
|
|
2013
|
|
2012
|
|
2012
|
|
2012
|
|
(unaudited)
|
|
(unaudited)
|
|
|
|
(unaudited)
|
|
(unaudited)
|
Assets:
|
|
|
|
|
|
|
|
|
|
Agency securities, at
fair value (including pledged securities of $71,261,
$70,094,
$79,966, $83,600, and $71,809,
respectively)
|
$
|
75,926
|
|
|
$
|
74,874
|
|
|
$
|
83,710
|
|
|
$
|
88,020
|
|
|
$
|
76,378
|
|
Agency securities
transferred to consolidated variable interest entities,
at
fair value
(pledged securities)
|
1,281
|
|
|
1,421
|
|
|
1,535
|
|
|
1,620
|
|
|
1,544
|
|
U.S. Treasury
securities (including pledged securities of $2,569)
|
3,671
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Cash and cash
equivalents
|
2,923
|
|
|
2,826
|
|
|
2,430
|
|
|
2,569
|
|
|
2,099
|
|
Restricted
cash
|
1,216
|
|
|
499
|
|
|
399
|
|
|
369
|
|
|
302
|
|
Derivative assets, at
fair value
|
1,876
|
|
|
480
|
|
|
301
|
|
|
292
|
|
|
64
|
|
Receivable for
securities sold (including pledged securities of $1,338,
$484, $0, $1,466,
and $2,674,
respectively)
|
2,070
|
|
|
734
|
|
|
—
|
|
|
2,326
|
|
|
2,877
|
|
Receivable under
reverse repurchase agreements
|
9,430
|
|
|
12,291
|
|
|
11,818
|
|
|
6,712
|
|
|
1,274
|
|
Other
assets
|
270
|
|
|
244
|
|
|
260
|
|
|
269
|
|
|
244
|
|
Total
assets
|
$
|
98,663
|
|
|
$
|
93,369
|
|
|
$
|
100,453
|
|
|
$
|
102,177
|
|
|
$
|
84,782
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
Repurchase
agreements
|
$
|
72,451
|
|
|
$
|
66,260
|
|
|
$
|
74,478
|
|
|
$
|
79,254
|
|
|
$
|
69,540
|
|
Debt of consolidated
variable interest entities, at fair value
|
783
|
|
|
862
|
|
|
937
|
|
|
1,008
|
|
|
954
|
|
Payable for
securities purchased
|
3,167
|
|
|
259
|
|
|
556
|
|
|
1,311
|
|
|
2,198
|
|
Derivative
liabilities, at fair value
|
1,544
|
|
|
1,217
|
|
|
1,264
|
|
|
1,562
|
|
|
1,250
|
|
Dividends
payable
|
420
|
|
|
499
|
|
|
427
|
|
|
430
|
|
|
384
|
|
Obligation to return
securities borrowed under reverse
|
9,931
|
|
|
12,548
|
|
|
11,763
|
|
|
7,265
|
|
|
1,269
|
|
repurchase
agreements, at fair value
|
Accounts
payable and other accrued liabilities
|
87
|
|
|
82
|
|
|
132
|
|
|
74
|
|
|
51
|
|
Total
liabilities
|
88,383
|
|
|
81,727
|
|
|
89,557
|
|
|
90,904
|
|
|
75,646
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
|
|
|
Preferred stock -
$0.01 par value; 10.0 shares authorized:
|
|
|
|
|
|
|
|
|
|
8.000% Series A
Cumulative Redeemable Preferred Stock; 6.9 shares
issued and outstanding;
liquidation preference of $25 per share ($173)
|
167
|
|
|
167
|
|
|
167
|
|
|
167
|
|
|
167
|
|
Common stock - $0.01
par value; 600.0 shares authorized:
|
|
|
|
|
|
|
|
|
|
396.2, 396.5,
338.9, 341.6, and 304.8 shares issued and outstanding,
respectively
|
4
|
|
|
4
|
|
|
3
|
|
|
3
|
|
|
3
|
|
Additional paid-in
capital
|
11,255
|
|
|
11,261
|
|
|
9,460
|
|
|
9,536
|
|
|
8,296
|
|
Retained earnings
(deficit)
|
852
|
|
|
(557)
|
|
|
(289)
|
|
|
(672)
|
|
|
(328)
|
|
Accumulated other comprehensive (loss) income
|
(1,998)
|
|
|
767
|
|
|
1,555
|
|
|
2,239
|
|
|
998
|
|
Total stockholders'
equity
|
10,280
|
|
|
11,642
|
|
|
10,896
|
|
|
11,273
|
|
|
9,136
|
|
Total liabilities and
stockholders' equity
|
$
|
98,663
|
|
|
$
|
93,369
|
|
|
$
|
100,453
|
|
|
$
|
102,177
|
|
|
$
|
84,782
|
|
|
|
|
|
|
|
|
|
|
|
Net book value per
common share
|
$
|
25.51
|
|
|
$
|
28.93
|
|
|
$
|
31.64
|
|
|
$
|
32.49
|
|
|
$
|
29.41
|
|
AMERICAN CAPITAL
AGENCY CORP.
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
(in millions, except
per share data)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
June 30,
|
|
March 31,
|
|
December
31,
|
|
September
30,
|
|
June 30,
|
2013
|
|
2013
|
|
2012
|
|
2012
|
|
2012
|
Interest
income:
|
|
|
|
|
|
|
|
|
|
Interest
income
|
$
|
545
|
|
|
$
|
547
|
|
|
$
|
570
|
|
|
$
|
520
|
|
|
$
|
504
|
|
Interest
expense (1)
|
131
|
|
|
140
|
|
|
147
|
|
|
139
|
|
|
120
|
|
Net interest
income
|
414
|
|
|
407
|
|
|
423
|
|
|
381
|
|
|
384
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(loss), net:
|
|
|
|
|
|
|
|
|
|
Gain
(loss) on sale of agency securities, net
|
17
|
|
|
(26)
|
|
|
353
|
|
|
210
|
|
|
417
|
|
Gain
(loss) on derivative instruments and other securities, net
(1)
|
1,444
|
|
|
(98)
|
|
|
89
|
|
|
(460)
|
|
|
(1,029)
|
|
Total
other income (loss), net
|
1,461
|
|
|
(124)
|
|
|
442
|
|
|
(250)
|
|
|
(612)
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
Management
fees
|
37
|
|
|
33
|
|
|
31
|
|
|
32
|
|
|
28
|
|
General and
administrative expenses
|
9
|
|
|
9
|
|
|
9
|
|
|
8
|
|
|
8
|
|
Total
expenses
|
46
|
|
|
42
|
|
|
40
|
|
|
40
|
|
|
36
|
|
Income (loss)
before income tax provision (benefit)
|
1,829
|
|
|
241
|
|
|
825
|
|
|
91
|
|
|
(264)
|
|
Income tax provision
(benefit)
|
—
|
|
|
10
|
|
|
15
|
|
|
5
|
|
|
(3)
|
|
Net income
(loss)
|
1,829
|
|
|
231
|
|
|
810
|
|
|
86
|
|
|
(261)
|
|
Dividend on preferred
stock
|
3
|
|
|
3
|
|
|
3
|
|
|
3
|
|
|
3
|
|
Net income (loss)
available (attributable) to common shareholders
|
$
|
1,826
|
|
|
$
|
228
|
|
|
$
|
807
|
|
|
$
|
83
|
|
|
$
|
(264)
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
1,829
|
|
|
$
|
231
|
|
|
$
|
810
|
|
|
$
|
86
|
|
|
$
|
(261)
|
|
Other
comprehensive (loss) income:
|
|
|
|
|
|
|
|
|
|
Unrealized (loss)
gain on available-for-sale securities, net
|
(2,813)
|
|
|
(837)
|
|
|
(734)
|
|
|
1,190
|
|
|
689
|
|
Unrealized gain on derivative instruments, net
(1)
|
48
|
|
|
49
|
|
|
50
|
|
|
51
|
|
|
52
|
|
Other
comprehensive (loss) income
|
(2,765)
|
|
|
(788)
|
|
|
(684)
|
|
|
1,241
|
|
|
741
|
|
Comprehensive
(loss) income
|
(936)
|
|
|
(557)
|
|
|
126
|
|
|
1,327
|
|
|
480
|
|
Dividend on preferred
stock
|
3
|
|
|
3
|
|
|
3
|
|
|
3
|
|
|
3
|
|
Comprehensive
(loss) income (attributable) available to common
shareholders
|
$
|
(939)
|
|
|
$
|
(560)
|
|
|
$
|
123
|
|
|
$
|
1,324
|
|
|
$
|
477
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding -
|
396.4
|
|
|
356.2
|
|
|
340.3
|
|
|
332.8
|
|
|
301.0
|
|
basic and
diluted
|
Net income (loss)
per common share - basic and diluted
|
$
|
4.61
|
|
|
$
|
0.64
|
|
|
$
|
2.37
|
|
|
$
|
0.25
|
|
|
$
|
(0.88)
|
|
Comprehensive
(loss) income per common share - basic and diluted
|
$
|
(2.37)
|
|
|
$
|
(1.57)
|
|
|
$
|
0.36
|
|
|
$
|
3.98
|
|
|
$
|
1.58
|
|
Estimated REIT
taxable income per common share -
|
$
|
1.04
|
|
|
$
|
0.50
|
|
|
$
|
1.93
|
|
|
$
|
1.36
|
|
|
$
|
1.62
|
|
basic and diluted
(2)
|
Dividends declared
per common share
|
$
|
1.05
|
|
|
$
|
1.25
|
|
|
$
|
1.25
|
|
|
$
|
1.25
|
|
|
$
|
1.25
|
|
AMERICAN CAPITAL
AGENCY CORP.
|
RECONCILIATION OF
GAAP NET INTEREST INCOME TO NET SPREAD AND DOLLAR ROLL
INCOME(2)
|
(in millions, except
per share data)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
June 30,
|
|
March 31,
|
|
December
31,
|
|
September
30,
|
|
June 30,
|
|
2013
|
|
2013
|
|
2012
|
|
2012
|
|
2012
|
Interest
income
|
$
|
545
|
|
|
$
|
547
|
|
|
$
|
570
|
|
|
$
|
520
|
|
|
$
|
504
|
|
Interest
expense:
|
|
|
|
|
|
|
|
|
|
Repurchase agreements and other debt
|
83
|
|
|
91
|
|
|
97
|
|
|
88
|
|
|
68
|
|
Interest
rate swap periodic costs(1)
|
48
|
|
|
49
|
|
|
50
|
|
|
51
|
|
|
52
|
|
Total interest
expense
|
131
|
|
|
140
|
|
|
147
|
|
|
139
|
|
|
120
|
|
Net interest
income
|
414
|
|
|
407
|
|
|
423
|
|
|
381
|
|
|
384
|
|
Other
interest rate swap periodic costs (3)
|
105
|
|
|
84
|
|
|
77
|
|
|
74
|
|
|
62
|
|
Adjusted net interest
income
|
309
|
|
|
323
|
|
|
346
|
|
|
307
|
|
|
322
|
|
Operating expenses
|
46
|
|
|
42
|
|
|
40
|
|
|
40
|
|
|
36
|
|
Net spread
income
|
263
|
|
|
281
|
|
|
306
|
|
|
267
|
|
|
286
|
|
Dividend
on preferred stock
|
3
|
|
|
3
|
|
|
3
|
|
|
3
|
|
|
3
|
|
Net spread income
available to common shareholders
|
$
|
260
|
|
|
$
|
278
|
|
|
$
|
303
|
|
|
$
|
264
|
|
|
$
|
283
|
|
TBA
dollar roll income
|
195
|
|
|
142
|
|
|
98
|
|
|
—
|
|
|
—
|
|
Net spread and dollar
roll income available to common shareholders
|
$
|
455
|
|
|
$
|
420
|
|
|
$
|
401
|
|
|
$
|
264
|
|
|
$
|
283
|
|
Weighted average
number of common shares outstanding - basic and
diluted
|
396.4
|
|
|
356.2
|
|
|
340.3
|
|
|
332.8
|
|
|
301.0
|
|
Net spread income per
common share - basic and diluted
|
$
|
0.66
|
|
|
$
|
0.78
|
|
|
$
|
0.89
|
|
|
$
|
0.79
|
|
|
$
|
0.94
|
|
Net spread and dollar
roll income per common share - basic and diluted
|
$
|
1.15
|
|
|
$
|
1.18
|
|
|
$
|
1.18
|
|
|
$
|
0.79
|
|
|
$
|
0.94
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AMERICAN CAPITAL
AGENCY CORP.
|
RECONCILIATION OF
GAAP NET INCOME TO ESTIMATED TAXABLE
INCOME(2)
|
(in millions, except
per share data)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
June 30,
|
|
March 31,
|
|
December
31,
|
|
September
30,
|
|
June 30,
|
2013
|
|
2013
|
|
2012
|
|
2012
|
|
2012
|
Net income
(loss)
|
$
|
1,829
|
|
|
$
|
231
|
|
|
$
|
810
|
|
|
$
|
86
|
|
|
$
|
(261)
|
|
Book to tax
differences:
|
|
|
|
|
|
|
|
|
|
Premium
amortization, net
|
(75)
|
|
|
(34)
|
|
|
(19)
|
|
|
55
|
|
|
43
|
|
Realized
(gain) loss, net
|
(15)
|
|
|
(53)
|
|
|
(16)
|
|
|
167
|
|
|
54
|
|
Unrealized (gain) loss, net
|
(1,324)
|
|
|
30
|
|
|
(121)
|
|
|
128
|
|
|
647
|
|
Other
|
(1)
|
|
|
6
|
|
|
6
|
|
|
20
|
|
|
9
|
|
Total book to tax
differences
|
(1,415)
|
|
|
(51)
|
|
|
(150)
|
|
|
370
|
|
|
753
|
|
Estimated REIT
taxable income
|
414
|
|
|
180
|
|
|
660
|
|
|
456
|
|
|
492
|
|
Dividend
on preferred stock
|
3
|
|
|
3
|
|
|
3
|
|
|
3
|
|
|
3
|
|
Estimated REIT
taxable income available to common shareholders
|
$
|
411
|
|
|
$
|
177
|
|
|
$
|
657
|
|
|
$
|
453
|
|
|
$
|
489
|
|
Weighted average
number of common shares outstanding - basic and
diluted
|
396.4
|
|
|
356.2
|
|
|
340.3
|
|
|
332.8
|
|
|
301.0
|
|
Estimated REIT
taxable income per common share - basic and diluted
|
$
|
1.04
|
|
|
$
|
0.50
|
|
|
$
|
1.93
|
|
|
$
|
1.36
|
|
|
$
|
1.62
|
|
Estimated cumulative
undistributed REIT taxable income per common share
(4)
|
$
|
1.07
|
|
|
$
|
1.08
|
|
|
$
|
2.21
|
|
|
$
|
1.52
|
|
|
$
|
1.61
|
|
AMERICAN CAPITAL
AGENCY CORP.
|
KEY
STATISTICS*
|
(in millions, except
per share data)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
June 30,
|
|
March 31,
|
|
December
31,
|
|
September
30,
|
|
June 30,
|
Key Balance Sheet
Statistics:
|
2013
|
|
2013
|
|
2012
|
|
2012
|
|
2012
|
Fixed-rate agency
securities, at fair value - as of period end
|
$
|
75,910
|
|
|
$
|
74,829
|
|
|
$
|
83,635
|
|
|
$
|
87,882
|
|
|
$
|
75,732
|
|
Adjustable-rate
agency securities, at fair value - as of period end
|
$
|
694
|
|
|
$
|
794
|
|
|
$
|
891
|
|
|
$
|
992
|
|
|
$
|
1,072
|
|
CMO agency
securities, at fair value - as of period end
|
$
|
141
|
|
|
$
|
157
|
|
|
$
|
173
|
|
|
$
|
191
|
|
|
$
|
568
|
|
Interest-only strips
agency securities, at fair value - as of period end
|
$
|
236
|
|
|
$
|
272
|
|
|
$
|
292
|
|
|
$
|
307
|
|
|
$
|
276
|
|
Principal-only strips
agency securities, at fair value - as of period end
|
$
|
226
|
|
|
$
|
243
|
|
|
$
|
254
|
|
|
$
|
268
|
|
|
$
|
274
|
|
Total agency
securities, at fair value - as of period end
|
$
|
77,207
|
|
|
$
|
76,295
|
|
|
$
|
85,245
|
|
|
$
|
89,640
|
|
|
$
|
77,922
|
|
Total agency
securities, at cost - as of period end
|
$
|
78,834
|
|
|
$
|
75,088
|
|
|
$
|
83,193
|
|
|
$
|
86,850
|
|
|
$
|
76,352
|
|
Total agency
securities, at par - as of period end (5)
|
$
|
74,966
|
|
|
$
|
71,253
|
|
|
$
|
78,788
|
|
|
$
|
82,435
|
|
|
$
|
72,683
|
|
Average agency
securities, at cost
|
$
|
74,816
|
|
|
$
|
78,009
|
|
|
$
|
80,932
|
|
|
$
|
81,500
|
|
|
$
|
74,007
|
|
Average agency
securities, at par (5)
|
$
|
70,851
|
|
|
$
|
73,922
|
|
|
$
|
76,710
|
|
|
$
|
77,519
|
|
|
$
|
70,549
|
|
Net TBA portfolio -
as of period end, at fair value
|
$
|
14,514
|
|
|
$
|
27,283
|
|
|
$
|
12,870
|
|
|
NM
|
|
NM
|
Net TBA portfolio -
as of period end, at cost
|
$
|
15,285
|
|
|
$
|
27,294
|
|
|
$
|
12,775
|
|
|
NM
|
|
NM
|
Net TBA portfolio -
as of period end, carrying value
|
$
|
(771)
|
|
|
$
|
(11)
|
|
|
$
|
95
|
|
|
NM
|
|
NM
|
Average net TBA
portfolio, at cost
|
$
|
28,904
|
|
|
$
|
17,892
|
|
|
$
|
13,069
|
|
|
NM
|
|
NM
|
Average repurchase
agreements and other debt
|
$
|
66,060
|
|
|
$
|
70,591
|
|
|
$
|
74,649
|
|
|
$
|
75,106
|
|
|
$
|
67,997
|
|
Average stockholders'
equity (6)
|
$
|
11,256
|
|
|
$
|
10,843
|
|
|
$
|
11,177
|
|
|
$
|
10,602
|
|
|
$
|
9,071
|
|
Net book value per
common share as of period end (7)
|
$
|
25.51
|
|
|
$
|
28.93
|
|
|
$
|
31.64
|
|
|
$
|
32.49
|
|
|
$
|
29.41
|
|
Leverage - average
during the period (8)
|
5.9:1
|
|
6.5:1
|
|
6.7:1
|
|
7.1:1
|
|
7.5:1
|
Leverage - average
during the period, including net TBA position
|
8.4:1
|
|
8.2:1
|
|
7.8:1
|
|
NM
|
|
NM
|
Leverage - as of
period end (9)
|
7.0:1
|
|
5.7:1
|
|
7.0:1
|
|
7.0:1
|
|
7.6:1
|
Leverage - as of
period end, including net TBA position
|
8.5:1
|
|
8.1:1
|
|
8.2:1
|
|
NM
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
Key Performance
Statistics:
|
|
|
|
|
|
|
|
|
|
Average coupon
(10)
|
3.63
|
%
|
|
3.68
|
%
|
|
3.77
|
%
|
|
3.81
|
%
|
|
3.96
|
%
|
Average asset yield
(11)
|
2.92
|
%
|
|
2.80
|
%
|
|
2.82
|
%
|
|
2.55
|
%
|
|
2.73
|
%
|
Average cost of funds
(12)
|
(1.43)
|
%
|
|
(1.28)
|
%
|
|
(1.19)
|
%
|
|
(1.13)
|
%
|
|
(1.08)
|
%
|
Average net interest
rate spread (13)
|
1.49
|
%
|
|
1.52
|
%
|
|
1.63
|
%
|
|
1.42
|
%
|
|
1.65
|
%
|
Average net interest
rate spread, including estimated TBA dollar roll income
(14)
|
1.86
|
%
|
|
1.87
|
%
|
|
1.84
|
%
|
|
NM
|
|
NM
|
Average coupon - as
of period end
|
3.56
|
%
|
|
3.73
|
%
|
|
3.69
|
%
|
|
3.77
|
%
|
|
3.86
|
%
|
Average asset
yield - as of period end
|
2.71
|
%
|
|
2.75
|
%
|
|
2.61
|
%
|
|
2.61
|
%
|
|
2.81
|
%
|
Average cost of funds
- as of period end (15)
|
(1.47)
|
%
|
|
(1.32)
|
%
|
|
(1.22)
|
%
|
|
(1.11)
|
%
|
|
(1.19)
|
%
|
Average net interest
rate spread - as of period end
|
1.24
|
%
|
|
1.43
|
%
|
|
1.39
|
%
|
|
1.50
|
%
|
|
1.62
|
%
|
Average net interest
rate spread - as of period end, including estimated TBA dollar
roll
income
(14)
|
1.59
|
%
|
|
1.71
|
%
|
|
1.61
|
%
|
|
NM
|
|
NM
|
Average actual CPR
for securities held during the period
|
11
|
%
|
|
10
|
%
|
|
10
|
%
|
|
9
|
%
|
|
10
|
%
|
Average forecasted
CPR - as of period end
|
7
|
%
|
|
9
|
%
|
|
11
|
%
|
|
14
|
%
|
|
12
|
%
|
Total premium
amortization, net
|
$
|
(98)
|
|
|
$
|
(134)
|
|
|
$
|
(153)
|
|
|
$
|
(219)
|
|
|
$
|
(196)
|
|
Expenses % of average
total assets - annualized
|
0.19
|
%
|
|
0.18
|
%
|
|
0.16
|
%
|
|
0.17
|
%
|
|
0.18
|
%
|
Expenses % of average
stockholders' equity - annualized
|
1.64
|
%
|
|
1.57
|
%
|
|
1.42
|
%
|
|
1.50
|
%
|
|
1.59
|
%
|
Net comprehensive
(loss) income return on average common equity - annualized
(16)
|
(34.0)
|
%
|
|
(21.3)
|
%
|
|
4.4
|
%
|
|
50.4
|
%
|
|
21.5
|
%
|
Dividends declared
per common share
|
$
|
1.05
|
|
|
$
|
1.25
|
|
|
$
|
1.25
|
|
|
$
|
1.25
|
|
|
$
|
1.25
|
|
Economic (loss)
return on common equity - annualized (17)
|
(32.9)
|
%
|
|
(18.7)
|
%
|
|
4.9
|
%
|
|
58.6
|
%
|
|
22.1
|
%
|
*Except as noted below, average numbers for each period are
weighted based on days on the Company's books and records. All
percentages are annualized.
NM = Not meaningful. Prior to the fourth quarter of 2012, the
Company's net TBA position primarily consisted of short TBAs used
for hedging purposes.
- The Company voluntarily discontinued hedge accounting under
GAAP for interest rate swaps as of September
30, 2011. Accumulated other comprehensive loss ("OCI")
on the Company's de-designated interest rate swaps as of
September 30, 2011 is being amortized
on a straight-line basis over the remaining swap terms into
interest expense. All other periodic interest costs,
termination fees and mark-to-market adjustments associated with
interest rate swaps are reported in other income (loss), net
pursuant to GAAP.
- Table includes non-GAAP financial measures. Refer to "Use
of Non-GAAP Financial Information" for additional discussion of
non-GAAP financial measures.
- Other interest rate swap periodic costs represent periodic
interest costs on the Company's interest rate swap portfolio in
excess of amounts reclassified from accumulated OCI into interest
expense. Other interest rate swap periodic costs does not include
termination fees or mark-to-market adjustments associated with
interest rate swaps.
- Estimated cumulative undistributed REIT taxable income as of
period end is net of common and preferred dividends declared during
the period, without adjustment for future quarterly dividends not
yet declared on the Company's Series A Preferred Stock.
Amount divided by total common shares outstanding as of each period
end.
- Agency securities at par value excludes the underlying
unamortized principal balance ("UPB") of the Company's
interest-only securities.
- Average stockholders' equity calculated as the average
month-ended stockholders' equity during the quarter.
- Net book value per common share calculated as total
stockholders' equity, less the Company's Series A Preferred Stock
liquidation preference of $25 per
preferred share, divided by the number of common shares outstanding
as of period end.
- Leverage during the period was calculated by dividing the daily
weighted average agency repurchase agreements and other debt
outstanding for the period by the average stockholders' equity for
the period. Leverage excludes U.S. Treasury repurchase
agreements.
- Leverage at period end was calculated by dividing the sum of
the amount outstanding under agency repurchase agreements, net
receivable / payable for unsettled agency securities and other debt
by total stockholders' equity at period end. Leverage excludes U.S.
Treasury repurchase agreements.
- Weighted average coupon for the period was calculated by
dividing the total coupon (or cash) interest income on agency
securities by average agency securities held at par.
- Weighted average asset yield for the period was calculated by
dividing the total interest income on agency securities (coupon
interest less amortization of premiums and discounts) by the
average amortized cost of agency securities held.
- Cost of funds includes repurchase agreements, other debt and
interest rate swaps, but excludes swap termination fees and costs
associated with other supplemental hedges such as swaptions and
short treasury or TBA positions. Weighted average cost of funds for
the period was calculated by dividing the total cost of funds by
the average repurchase agreements and other debt outstanding, less
repurchase agreements for treasury securities, for the period.
- Net interest rate spread for the period was calculated by
subtracting the average cost of funds from the average asset
yield.
- Estimated TBA dollar roll income is net of short TBAs used for
hedging purposes. Dollar roll income excludes the impact of other
supplemental hedges, and is recognized in gain (loss) on derivative
instruments and other securities, net.
- Cost of funds as of period end includes repurchase agreements
and other debt outstanding, plus the impact of interest rate swaps
in effect as of each period end and forward starting swaps becoming
effective, net of swaps expiring, within three months of each
period end, but excludes costs associated with other supplemental
hedges such as swaptions and short treasury or TBA
positions.
- Net comprehensive (loss) income return on average common equity
for the period was calculated by dividing comprehensive (loss)
income (attributable) available to common shareholders by average
common equity.
- Economic (loss) return on common equity represents the sum of
the change in net asset value per common share and dividends
declared on common stock during the period over the beginning net
asset value per common share.
STOCKHOLDER CALL
AGNC invites stockholders,
prospective stockholders and analysts to attend the AGNC
stockholder call on July 30, 2013 at 8:30 am ET. The stockholder call can be
accessed through a live webcast, free of charge, at
www.AGNC.com or by dialing (888) 317-6016 (U.S. domestic) or
(412) 317-6016 (international). Please advise the operator you are
dialing in for the American Capital Agency stockholder call.
If you do not plan on asking a question on the call and have access
to the internet, please take advantage of the webcast.
A slide presentation will accompany the call and will be
available at www.AGNC.com. Select the Q2 2013 Earnings
Presentation link to download and print the presentation in advance
of the Stockholder Call.
An archived audio of the shareholder call combined with the
slide presentation will be made available on the AGNC website after
the call on July 30, 2013. In addition, there will be a
phone recording available from 11:00 am
ET July 30, 2013 until 9:00 am
ET August 14, 2013. If you are
interested in hearing the recording of the presentation, please
dial (877) 344-7529 (U.S. domestic) or (412) 317-0088
(international). The conference number is 10031377.
For further information, please contact Investor Relations at
(301) 968-9300 or IR@AGNC.com.
ABOUT AMERICAN CAPITAL AGENCY CORP.
American Capital
Agency Corp. is a real estate investment trust ("REIT") that
invests 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 American Capital AGNC Management, LLC, an
affiliate of American Capital, Ltd. For further information,
please refer to www.AGNC.com.
ABOUT AMERICAN CAPITAL, LTD.
American Capital (Nasdaq:
ACAS) 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, energy & infrastructure and structured
products. American Capital manages $21
billion, including assets on its balance sheet and fee
earning assets under management by affiliated managers, with
$112 billion of total assets under
management (including levered assets). Through an affiliate,
American Capital manages publicly traded American Capital Agency
Corp. (Nasdaq: AGNC) with approximately $10
billion of net book value and American Capital Mortgage
Investment Corp. (Nasdaq: MTGE) with approximately $1 billion of net book value. From its eight
offices in the U.S. and Europe,
American Capital and its affiliate, European Capital, will consider
investment opportunities from $10 million to
$750 million. For further information, please refer to
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 the Company's 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, 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.
USE OF NON-GAAP FINANCIAL INFORMATION
In addition to
the results presented in accordance with GAAP, this release
includes certain non-GAAP financial information, including net
spread income, estimated taxable income and certain financial
metrics derived from non-GAAP information, such as estimated
undistributed taxable income, which the Company's management uses
in its internal analysis of results, and believes may be
informative to investors.
Net spread income consists of adjusted net interest income, less
total operating expenses. Adjusted net interest income is
interest income less interest expense (or "GAAP net interest
income"), less other periodic interest rate swap interest costs
reported in other income (loss), net.
Estimated taxable income is pre-tax income calculated in
accordance with the requirements of the Internal Revenue Code
rather than GAAP. Estimated taxable income differs from GAAP
income because of both temporary and permanent differences in
income and expense recognition. Examples include (i) unrealized
gains and losses associated with interest rate swaps and other
derivatives and securities marked-to-market in current income for
GAAP purposes, but excluded from estimated taxable income until
realized or settled, (ii) temporary differences related to the
amortization of premiums paid on investments and (iii) timing
differences in the recognition of certain realized gains and
losses. Furthermore, estimated taxable income can include certain
information that is subject to potential adjustments up to the time
of filing of the appropriate tax returns, which occurs after the
end of the calendar year of the Company.
The Company believes that these non-GAAP financial measures
provide information useful to investors because net spread income
is a financial metric used by management and investors and
estimated taxable income is directly related to the amount of
dividends the Company is required to distribute in order to
maintain its REIT tax qualification status. The Company also
believes that providing investors with net spread income, estimated
taxable income and certain financial metrics derived based on such
estimated taxable income, in addition to the related GAAP measures,
gives investors greater transparency to the information used by
management in its financial and operational decision-making.
However, because net spread income and estimated taxable income are
an incomplete measure of the Company's financial performance and
involve differences from net income computed in accordance with
GAAP, net spread income and estimated taxable income should be
considered as supplementary to, and not as a substitute for, the
Company's net income computed in accordance with GAAP as a measure
of the Company's financial performance. In addition, because not
all companies use identical calculations, the Company's
presentation of net spread income and estimated taxable income may
not be comparable to other similarly-titled measures of other
companies.
CONTACT:
Investors - (301) 968-9300
Media - (301) 968-9400
SOURCE American Capital Agency Corp.