AGNC

Annaly Capital Management, Inc.'s NLY third-quarter 2026 earnings available for distribution (EAD) per average common share of 80 cents beat the Zacks Consensus Estimate of 77 cents. The figure increased from 73 cents in the year-ago quarter. NLY's net interest income (NII) and net interest margin improved year over year in the reported quarter. The increase in EAD and stronger net interest income were encouraging. However, a decline in book value per common share (BVPS), higher funding costs and a GAAP net loss were concerning. Net loss available to common stockholders was $1.04 billion compared with net income of $791.3 million in the year-ago period. NII was $543.6 million in the reported quarter, which missed the Zacks Consensus Estimate of $596 million. The figure increased significantly from the year-ago quarter. Net interest spread (excluding the premium amortization adjustment, or PAA) was 1.42% in the third quarter, down from 1.50% in both the prior-year and prior quarters. Annaly's BVPS was $17.86 as of Sept. 30, 2026, down from $19.25 in the prior-year quarter. At the end of the reported quarter, the company's economic capital ratio was 14.2%, down from 14.8% in the year-ago quarter. The weighted average experienced constant prepayment rate was 9.6%, compared with 8.6% in the year-ago quarter. Annaly generated an annualized EAD return on average equity of 15.86% in the third quarter, up from 14.70% in the prior-year quarter. The company's total portfolio was $106.5 billion in the quarter, including a $91.8 billion Agency portfolio. The Residential Credit portfolio was $10.4 billion, while the mortgage servicing rights (MSR) portfolio increased to $4.3 billion in market value. Annaly's leverage increased in the quarter, with GAAP leverage at 8.0X, up from 7.1X in the year-ago quarter. Economic leverage rose to 5.9X from 5.7X in the prior-year period. The company reported total stockholders' equity of $15.8 billion as of quarter-end, down from $16.9 billion in the previous quarter. Liquidity remained important amid volatility in fixed-income markets. Annaly ended the quarter with $8.5 billion in total assets available for financing, including $4.2 billion in cash and unencumbered Agency mortgage-backed securities (MBS). The company maintained $8.3 billion in warehouse capacity across its Residential Credit and MSR businesses, including $2.8 billion of committed capacity. Annaly also issued 12 securitizations totaling a record $7.4 billion through its Residential Credit Group during the quarter. Against a challenging fixed-income market backdrop, NLY continued actively managing its hedge portfolio, primarily adding Treasury futures to offset market-driven extension and maintain a disciplined risk posture. The company ended the quarter with a hedge ratio of 100%, up from 92% in the year-ago quarter and 97% in the previous quarter. Funding costs increased during the quarter. Average GAAP costs of interest-bearing liabilities rose six basis points sequentially to 4.34%, while average economic costs increased seven basis points to 4.03%. Net interest margin, excluding PAA, was 1.69%, compared with 1.70% in the third quarter of 2025 and 1.76% in the previous quarter. The average yield on interest-earning assets, excluding PAA, was 5.45%, compared with 5.46% in both the year-ago and prior quarters. GAAP net interest margin improved to 1.54%, up marginally from the prior-year quarter. A key highlight for income-focused investors was that earnings again exceeded the common dividend. Annaly declared a quarterly common stock cash dividend of 75 cents per share, unchanged from the previous quarter and up from 70 cents in the year-ago period. EAD of 80 cents per share provided 1.07X coverage of the declared dividend. The company also continued raising equity capital to support its investment strategy. Annaly raised $757 million through its at-the-market sales program during the quarter, which it characterized as accretive. The capital-raising activity supports the company's ability to pursue investment opportunities across its Agency, Residential Credit and MSR strategies. Annaly's third-quarter results benefited from higher net interest income, improved GAAP net interest margin and stronger EAD per share. Earnings continued to cover the common dividend, while active hedging, liquidity management and equity issuance supported the company's investment strategy. However, the decline in book value per share, higher funding costs and increased leverage remain key concerns. The substantial GAAP net loss also highlights the impact of market-driven investment valuation changes on reported results.G Going forward, Annaly's performance will likely remain sensitive to interest-rate movements, mortgage prepayment trends and financing costs. Its ability to maintain dividend coverage while preserving book value and managing leverage will be important for sustaining shareholder returns. Annaly Capital Management Inc price-consensus-eps-surprise-chart | Annaly Capital Management Inc Quote NLY currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. ARMOUR Residential REIT's ARR third-quarter 2026 results reflected distributable earnings available to common stockholders of 71 cents per share, which missed the Zacks Consensus Estimate of 73 cents. ARR's net interest income increased to $83.7 million from $38.5 million in the prior-year quarter. However, the company reported a GAAP net loss of $2.26 per common share against net income of $1.49 per share in the year-ago quarter. Book value per common share declined to $14.55 from $17.49 in the year-ago period. AGNC Investment Corp.'s AGNC third-quarter 2026 results reflected net spread and dollar roll income of 37 cents per common share, which missed the Zacks Consensus Estimates of 39 cents. The company reported a net loss of $1.17 per common share and a 16.9% sequential decline in tangible net book value per comon share to $7.13. Higher interest rates and weakness in the Agency mortgage-backed securities market pressured performance. However, AGNC maintained liquidity of $6.3 billion in unencumbered cash and Agency MBS and raised $992 million through its at-the-market common stock offering program. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Annaly Capital Management Inc (NLY) : Free Stock Analysis Report AGNC Investment Corp. (AGNC) : Free Stock Analysis Report ARMOUR Residential REIT, Inc. (ARR) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

AGNC Investment (NASDAQ:AGNC) is coming off a very challenging quarter. The mortgage REIT's earnings and book value both declined during the third quarter, and it posted a negative economic return on tangible common equity. Surging interest rates drove down its share price, sending its dividend yield up to 16.5%. That sky-high yield suggests the payout is on shaky ground. Despite all that, CEO Peter Federico proclaimed on the third-quarter earnings conference call that "I would say that our dividend continued to be well-aligned with the economics of our business." Here's a look at the conflicting metrics clouding the sustainability of its high-yielding monthly dividend. Missed AI's "Act 1"? Act 2 Could Be 14x Bigger. Most investors think they missed the AI boat because they didn't buy Nvidia in 2005. But according to our analysts, we're only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout. Continue » Image source: The Motley Fool. AGNC Investment faced significant pressure during the quarter as surging interest rates weighed heavily on Agency MBS investments. They were the worst-performing fixed-income sector in the Bloomberg U.S. Aggregate Bond Index during the quarter. The poor performance of Agency MBS drove the mortgage REIT to report a $1.45-per-share decline (16.9%) in its tangible net book value per share, which ended the quarter at $7.13. The mortgage REIT also reported a -12.7% economic return on common equity in the quarter. Meanwhile, its net spread and dollar roll income per share came in at $0.37. That's dangerously close to the $0.36 per share in dividends it paid during the period ($0.12 each month). It was the third straight quarterly decline in spread income, which was $0.42 per share in the first quarter. For a typical REIT, the earnings deterioration would be worrisome. However, earnings aren't what drives AGNC Investment's dividend sustainability. CEO Peter Federico discussed the metric that matters more on the call. In response to an analyst's question about his thoughts on the appropriate dividend level in the current environment, he stated, "You've heard me say this before, but the first thing I look at is what is our total cost to capital." He noted that the company "ended the quarter probably somewhere right around 19%-ish as a total cost to capital." He then ran through how this compares to the economics of its business. Federico noted that its existing portfolio generated $0.37 per share of spread income in the third quarter, which was around a 20% return on equity at its lower book value. Meanwhile, he stated that the company can currently generate about a 19% return on equity on new investments, which also aligns with its cost of capital. This drives his view that "our dividend continued to be well-aligned with the economics of our business." Challenging market conditions in the third quarter weighed on AGNC's income and book value. However, it can still generate a high enough return on both its existing portfolio and new investments to cover its cost of capital, including its dividend. That suggests the payout remains safe, at least for now. If its returns start falling below its costs, that would put its dividend at risk. This showcases the risks of investing in AGNC. It currently offers a very high dividend yield due to its high-risk profile. That's the trade-off investors need to be comfortable with before buying the mortgage REIT for income. Before you buy stock in AGNC Investment Corp., consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and AGNC Investment Corp. wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $350,756!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,363,905!* Now, it's worth noting Stock Advisor's total average return is 922% — a market-crushing outperformance compared to 213% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of October 22, 2026. Matt DiLallo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Is AGNC Investment's 16.5%-Yielding Dividend Still Safe? Its Earnings Are Declining, But the CEO Just Said Another Metric Matters More. was originally published by The Motley Fool

AGNC Investment just posted its Q3 2026 report and the stock jumped 4.3% on the day to US$8.80. For a mortgage real estate investment trust, that is a strong one day move right after earnings, especially given the headline economic loss of US$1.28 per common share as agency mortgage backed securities were hit hard by rate volatility. Investors are cheering the bounce after a three month slide of roughly 18%. The market is treating this quarter as a painful balance sheet hit that might clear the way for better returns on new mortgage backed securities, even though the reported loss shows how much strain higher yields are still putting on book value and capital. If you like the high yield from AGNC Investment but are concerned about potential book value declines when interest rate volatility increases, you can compare that trade-off with other income ideas in the 8 dividend fortresses. - Total Revenue (Q3 2026 vs. Q3 2025): US$1,329 million loss vs. US$836 million in revenue (swung to a loss of roughly 259%) - Net Income, excl. extra items (Q3 2026 vs. Q3 2025): US$1,402 million loss vs. US$764 million profit (shifted to a loss of about 283%) - Basic EPS (Q3 2026 vs. Q3 2025): loss of US$1.17 per share vs. earnings of US$0.73 per share (earnings per share moved lower by roughly US$1.90) - Trailing 12 month Total Revenue (to Q3 2026 vs. to Q3 2025): US$236 million vs. US$956 million (fell about 75%) Ask Charlie what AGNC thinks drives those 18–20% ROE targets. Bulls in AGNC Investment can point to one clear thing. The stock rose about 4% on the day of a very weak quarter, which suggests investors were prepared for pain and are already looking past it. Management kept the US$0.36 quarterly equivalent dividend and reported US$0.37 of net spread and dollar roll income per share, so recent cash earnings still cover the payout. The big economic loss and book value hit come from mark to market moves, not from coupons on agency mortgage backed securities suddenly drying up. The other side of the story is blunt. AGNC Investment recorded a US$1,402 million loss on an adjusted basis and total revenue swung from US$836 million to a US$1,329 million loss. Tangible book value per share dropped 16.9% in one quarter to US$7.13 and leverage edged higher to 7.9x tangible equity. That is exactly the pattern bearish investors worry about in a rate spike, where funding a high dividend coincides with dilution from US$992 million of new equity and a shrinking capital cushion. After a quarter where AGNC Investment funded a high dividend while book value dropped and dilution increased, it helps to ask whether this pressure on the balance sheet is an isolated rough patch or a sign of deeper structural fragility. Review the independent risk analysis for AGNC Investment which shows 3 important warning signs AGNC Investment recently showed how quickly sentiment can shift when income and book value move. The real opportunity is researching stocks that could be undervalued before sentiment and pricing adjust. - Company 1 - 26% below our estimate - target AI data center, networking and defense demand using heavier capex and acquisitions that must earn strong returns. - Company 2 - 48% below our estimate - manage a large infrastructure backlog as labor and technology spending change how major public contracts influence profitability. - Company 3 - 33% below our estimate - tighten margins with operational programs and aftermarket expansion while integrating a valves acquisition into higher value power and nuclear projects. That is three of the list. See every one of the 34 undervalued companies on it → This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include AGNC. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Image source: The Motley Fool. Tuesday, Oct. 20, 2026 - President, Chief Executive Officer and Chief Investment Officer-Peter Federico - Executive Vice President and Chief Financial Officer-Bernice Bell - Executive Vice President, Strategy and Corporate Development-Sean Reid - Investor Relations-Katie Wisecarver Operator: Good morning, and welcome to the AGNC Investment Corp third quarter 2026 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 question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Katie Wisecarver in Investor Relations. Please go ahead. Katie Wisecarver: Thank you all for joining AGNC Investment Corp's third quarter 2026 earnings call. Before we begin, I'd like to review the Safe Harbor statement. This conference call and corresponding slide presentation contains statements that, to the extent they are not recitations of historical fact, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All forward-looking statements are intended to be subject to the safe harbor protection provided by the Reform Act. Actual outcomes and results could differ materially from those forecasted due to the impact of many factors beyond the control of AGNC. All forward-looking statements included in this presentation are made only as of the date of this presentation and are subject to change without notice. Certain factors that could cause actual results to differ materially from those contained in the forward-looking statements are included in AGNC's periodic reports filed with the Securities and Exchange Commission. Copies are available on the SEC's website at sec.gov. We disclaim any obligation to update our forward-looking statements unless required by law. Participants on the call include Peter Federico, President, Chief Executive Officer and Chief Investment Officer, Bernice Bell, Executive Vice President and Chief Financial Officer, and Sean Reid, Executive Vice President, Strategy and Corporate Development. With that, I'll turn the call over to Peter Federico. Peter Federico: Good morning, and thank you all for joining our third quarter earnings conference call. Fixed income markets experienced significant pressure in the third quarter, particularly in the final weeks of September, as a confluence of adverse conditions caused bond market sentiment to turn decidedly bearish, interest rates to move sharply higher, and interest rate volatility to spike. Periods of instability in the Treasury market often drive more pronounced weakness in the Agency MBS market. This was indeed the case in the third quarter as Agency MBS was the worst-performing fixed income sector. As a result of the underperformance of our asset class, AGNC's economic return in the third quarter was negative 12.7%. The challenging fixed income environment in the third quarter was driven by a number of negative catalysts, including substantial monetary policy uncertainty, mixed inflation data, the crowding out effect of historically high corporate debt issuance, heightened geopolitical risk, elevated energy prices associated with the Middle East conflict, and stronger than expected domestic economic growth. In a typical quarter, the impact of any one of these factors would have likely been considerable. Collectively, they led to historically poor quarterly fixed income and Agency MBS returns. Monetary policy was perhaps the most significant negative catalyst. At the Jackson Hole Symposium in August, Chairman Warsh signaled a more restrictive monetary policy stance. Consistent with that message, the Fed raised the federal funds rate by 25 basis points at the September meeting, the first increase since 2023. Although the Chairman characterized the September rate hike as simply removing a dose of accommodation, the market's interpretation and subsequent repricing of monetary policy were much more dramatic. In late February, the Fed funds futures reflected the expectation of three rate cuts by year end, consistent with the Fed's own projections and its gradual progression toward a neutral policy stance. Following the September rate hike, however, the market priced in four rate hikes by the middle of 2027. In total, the expected path of monetary policy increased by about 200 basis points over a very short time period. In effect, over a six-month period, monetary policy expectations pivoted from a fixed income-friendly view that the Fed would provide additional accommodation by year end to the belief that the Fed had embarked on a full tightening cycle. Against this backdrop, the yield on the 10-year Treasury increased 82 basis points over the course of the quarter, with 54 basis points of that move coming in September alone. A quarterly increase of that magnitude has occurred just on four other occasions over the last 30 years. This Treasury market weakness spread to other fixed income asset classes, as evidenced by the negative 3.5% total return of the Bloomberg U.S. Aggregate Bond Index in the third quarter. When Treasury yields rise sharply, as they did in the third quarter, it is not unusual for Agency MBS to experience greater weakness. This is evidenced in the performance of the Bloomberg Agency MBS Index, which posted a negative total return of 4.25% in the third quarter. Moreover, on a duration match basis, Agency MBS underperformed U.S. Treasuries by nearly 120 basis points. Since 2010, the Agency MBS index has underperformed Treasuries by a wider margin in only two other quarters. Those two periods were the third quarter of 2022, when the Fed raised short-term rates by 150 basis points and was rapidly reducing its balance sheet, and the third quarter of 2011, when the S&P 500 index dropped 14% and 10-year Treasury yields fell below 2%. Despite this more challenging environment, there are a number of reasons to be optimistic about the outlook for Agency MBS. First, the return profile of Agency MBS is considerably more attractive at current valuation levels. At quarter end, the yield on a new production current coupon Agency MBS was close to 6.5%, which, for a security backed by the support of the U.S. government, should be appealing to a wide range of investors. For hedged investors, the return opportunity is also compelling, with the spread between current coupon Agency MBS and benchmark rates ending the quarter near the upper end of a multi-year trading range at about 135 basis points to Treasuries and 165 basis points to swaps. Lastly, Agency MBS look increasingly attractive relative to investment-grade corporate debt. Second, mortgage cash flows have become more stable. When interest rates increase, the duration of Agency MBS also increases. This is the extension risk inherent in mortgage-backed securities. At a certain rate level, however, mortgage durations plateau and become relatively insensitive to further rate increases. Given the magnitude of the rate move in the third quarter, that inflection point has largely been reached, meaning the vast majority of the duration extension in the mortgage universe has already occurred. Prepayment risk for Agency MBS has also diminished. A simple measure of prepayment risk is the percentage of outstanding mortgage-backed securities that have a 50-basis-point refinance incentive. With the primary mortgage rate meaningfully above the average note rate of the mortgage universe, less than 2% of the outstanding mortgage universe has a 50-basis-point refinance incentive. Moreover, if mortgage rates were to drop by a full percentage point, the refinanceable population would increase to only 10% of the outstanding universe. In summary, the aggregate cash flows of the mortgage universe are more stable today because extension risk is minimal and prepayment options are further out of the money. Finally, the technicals for Agency MBS continue to point to favorable performance once interest rate volatility subsides. With the primary mortgage rate near 7.5% and favorable year-end seasonality, the supply of new Agency MBS for the remainder of this year and into next year should be materially lower than previously anticipated. At the same time, the demand for Agency MBS should remain steady due to heavy bond fund inflows, the finalization of bank capital rules, the reemergence of the GSEs, and an uptick from other investors as they seek to take advantage of attractive return opportunities in the Agency MBS market. Taken together, these conditions should benefit Agency MBS performance over time. That said, interest rate volatility and macroeconomic uncertainty are likely to remain elevated over the near term, and Agency MBS performance will likely remain sensitive to that backdrop. With that, I'll now turn the call over to Bernice Bell, our Chief Financial Officer, to review our financial results in greater detail. Bernice Bell: Thank you, Peter. For the third quarter, AGNC reported a comprehensive loss of $1.28 per common share. Our economic return on tangible common equity was -12.7% for the quarter, consisting of $0.36 of dividends declared per common share and a $1.45 decline in tangible net book value per share due to the underperformance of our mortgage assets relative to our interest rate hedges. As of last Friday, our tangible net book value per common share was up 3% since quarter end, or a little over 2% net of our October dividend accrual. During the quarter, AGNC was added to the S&P MidCap 400 index, an important milestone for the company and a testament to the scale that AGNC has attained over our 18-year history. The announcement and subsequent index rebalancing activity drove significant trading volume in our common stock. We took advantage of this outsized liquidity to issue $992 million of common stock through our at-the-market offering program at a significant premium to tangible net book value. Our access to capital at attractive levels enabled us to maintain our leverage profile within a reasonable band while growing our asset portfolio by $2.5 billion on a cost basis at wider spread levels. Even with this growth, leverage increased only modestly to 7.9 times tangible equity at quarter end from 7.4 times as of Q2. In addition, our liquidity position remained strong throughout the quarter, ending with $6.3 billion of unencumbered cash and Agency MBS, representing 57% of tangible equity. Turning to earnings, net spread and dollar roll income was $0.37 per common share for the quarter, down $0.03 from Q2. The decrease primarily reflects two factors. A 14-basis-point decline in our net interest spread as higher funding costs more than offset higher asset yields, and a slight earnings drag from capital raised but not yet deployed. Lastly, the average projected life CPR of our portfolio declined nearly two points to 6.7% at quarter end, consistent with higher rates. Actual CPRs for the quarter fell to 8.2% from 13% in the prior quarter. With that, I'll turn the call back over to Peter to discuss our portfolio. Peter Federico: Thank you, Bernie. The underperformance of Agency MBS was fairly uniform across the coupon stack in the third quarter. As measured by the Bloomberg Agency MBS Index, the negative excess return by coupon ranged from 110 to 140 basis points. Middle coupons, which were widely held, marginally underperformed as lower coupons benefited from a lack of supply and bond fund inflows, and higher coupons benefited from sharply reduced prepayment risk. At quarter end, the market value of our asset portfolio totaled $94 billion. During the quarter, we purchased $2 billion of primarily intermediate coupon specified pools. We also shifted the coupon composition of our portfolio somewhat higher, given the more attractive yield profile of this segment of the market. As a result, the weighted average coupon on our portfolio increased to 5.13%. Through purchases and portfolio repositioning, the percentage of assets with favorable prepayment characteristics increased to 83%. A common misconception regarding specified pools is that these securities only provide a benefit in faster prepayment environments. Certain pools, however, can provide both call protection in declining rate scenarios, and importantly, extension protection in rising rate scenarios through seasoning and faster borrower turnover. Our hedge portfolio, excluding receiver options, totaled $86 billion at quarter end, an increase of more than $12 billion from the prior quarter, driven primarily by the addition of longer-term Treasury-based hedges. This hedge portfolio repositioning reflects our decision to offset nearly all of the asset duration extension that we experienced during the quarter as it occurred. Through these actions, our duration gap at quarter end was little changed at 0.8 years. Moreover, at current rate levels, the duration of our asset portfolio is close to fully extended, and as such, relatively insensitive to further rate increases. With that, we will now open the call up to your questions. Operator: We will now begin the question and answer session. To ask a question, you may press star then one on your touch tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Crispin Love with Piper Sandler. Please go ahead. Crispin Love: Thank you. Good morning. Peter Federico: Good morning. Crispin Love: Peter, during your prepared remarks you called out, good morning. You called out Treasury market instability in the third quarter. Just compare that to what you've seen so far in October. The 10-year yield is down. Would you still say that there is instability but perhaps even broader than Treasury markets, given the macro, what we've seen in fixed income markets, especially for tech companies related to AI financing in recent days and some perceived flight to quality, which could actually help you guys? Peter Federico: Yeah, there's a lot there, Crispin. First off, I think you're absolutely right to sort of identify a shift that may be appearing now post quarter end. Obviously, I talked about the fact that for a good part of the third quarter, the sell-off was sort of contained, and there really wasn't that much damage, if you will, to the bond market. Really, it sort of unraveled in the last two weeks of September. There was obviously some positioning that had to take place, repositioning of portfolios, maybe some forced transactions, not specific to MBS, but just in general in the rates market. Given that 54 basis point move in the 10-year Treasury, that's always going to happen. But since quarter end, I would say that perhaps we're starting to see the market in what I would kind of define as a consolidation phase, in meaning that the market has to trade at this new range for some period of time. People need to be comfortable with what the upper end of the range is and what the lower end of the range is. Obviously, when we ended September with the 10-year Treasury at 5.30-ish percent, the question was, is the upper end of the range 5.75 or is it ultimately 6? I think the important trading behavior that we've seen since quarter end is that we've bumped up against that 5.30, 5.35 range probably on four, maybe even on five occasions. Often in that same day, it bounced off that level and ended the day lower. I think that was a really good sign for the market. As you point out today, we're back to maybe 5.15 or so this morning. So our expectation is perhaps we're starting to see the new range, and maybe that new range might be something like 4.90-5.40. You're right, though, to point out that there are a lot of other macroeconomic forces, not the least of which might be what's happening overseas, instability in foreign bond markets, and particularly in the French bond market. That was one of the catalysts that I think that ultimately started the rally back in the U.S. With respect to corporate issuance, or not corporate issuance, but maybe AI. We did have some big transactions go through at the end of the third quarter. Importantly, I think what we started to see after those transactions, that Paramount transaction in particular, that was like a $45 billion transaction. We did start to see some of those tranches widen materially after issuance. Maybe that is also a sign that ultimately corporate issuance in the fourth quarter may not be quite as high. The market may not have as much capacity to absorb all of that flow that we might see. In fact, when you look at the amount of corporate issuance, it was sizable in the third quarter at a little over $200 billion. It was actually less than what was in the second quarter. It is going to be really interesting to see going forward. Again, there is a lot of moving pieces, but I am somewhat optimistic with what we are starting to see now with the Treasury market starting to perhaps find a new range. I will pause there and let you have a follow-up. Crispin Love: Great. Thank you, Peter. I appreciate all the color there. Then just on return expectations. Last quarter, you talked about 15%-17%. A lot has happened since then. Just curious if you can give us an update on kind of return expectations today, especially after kind of the heavy issuance in the- Peter Federico: Yeah Crispin Love: ATM in the quarter. Thank you. Peter Federico: Yeah. Sure. I ended my prepared remarks, the first part of them, with really the outlook for Agency MBS, and I really do believe that the outlook for Agency MBS is really strong. We just have to get through all of this other macro uncertainty, and ultimately, I think those underlying conditions will really flow through. It really starts with the return profile. When we have seen mortgages at these levels in the past, they have historically been good buying opportunities for both levered and importantly, unlevered buyers. I really do expect rotation into fixed income from unlevered buyers. I pointed out that the current coupon at 6.5% is really attractive. I expect fixed income flows to be heavy. In fact, I think it was the first week of October, we had $25 billion in fixed income inflow. So unlevered returns are really attractive. The return on the index, the yield is at a little over 6% or thereabout 6% right now. So I think you're going to see unlevered money. On a levered basis, when you look at where those spreads are, I quoted spreads at 135 and 165 basis points to swaps in Treasury. That's across the curve. That was at the end of the quarter. They're a little bit lower than that today. But when you take those levels, you have to sort of make two adjustments when I do the calculation for what our expected return is. One is we have to have the right mix of swaps in Treasuries. Typically we use about an 80/20 mix as kind of our long-run average. So you would weight those two things 80/20. But then importantly, you also have to make a duration adjustment because looking at a current coupon MBS to the curve like I just described, would not be duration neutral. There's actually a benefit because the hedge portfolio is too long of a duration for a current coupon. That's probably worth around 10 basis points. So you put all those together. If spreads were at 135 and 165, you would average those, make those adjustments. I think that would be a net spread of around 170 basis points after making the duration adjustment. Lever that return the way we typically would operate with leverage at around mid seven and seven and a half range. Add to it where current coupon yields are, which are now well above six and a quarter today, six and a half at the end. You're going to get an expected ROE right around 19, maybe a little bit above. So I would say expected returns are in the 18%-20% range based on where mortgages are trading today. I really do believe that mortgages look compelling relative to corporates as well. Crispin Love: Great. Thank you, Peter. Really appreciate you digging into the detail there. Peter Federico: Sure. Operator: Thank you. The next question comes from Marissa Lobo with UBS. Please go ahead. Peter Federico: Good morning, Marissa. Marissa Lobo: Good morning. Thank you. You've laid out a pretty constructive fundamental backdrop for mortgages, yet spreads remain near the wide end of the range. What do you think isn't priced correctly today? Is it excessive compensation for rate volatility or something else? Peter Federico: Yeah, I think that what often happens is that when you have this big move in rates, it is very common. In fact, it happens probably every time you have a move of that size in Treasury rates. The mortgage market is going to feel the pressure more. It is the spread product that people can trade. So it is kind of a victim of its own liquidity. When things move like that, and I talked about the duration extension. There was unwinding of mortgage positions due to duration extension, which was significant. Mortgage durations moved on average almost a full year in the quarter. So there is going to be some natural rebalancing due to that. We also heard of structured mortgage trades, some cap trades that there were some forced liquidations there where a cap came into the money, maybe was not expected for a mortgage cash flow that was converted into a floating rate security. Those things naturally happen, and so the mortgage market feels the pressure of that. The other thing that happens is that liquidity just generally goes down in that environment. So small transactions have the effect of moving mortgage spreads more than they otherwise should. And once that stops, it just generally stops, and it stops pretty sharply, and you can have convexity buying just as quickly as you had convexity selling. The other thing that sort of takes time is when the mortgage rate moves as sharply as it did, and now up at 7.5%, you do not see the full benefit of the supply side reduction for some period of time. We are starting to see that right now. A dealer put out yesterday that they expect daily originations now to be down into the $1.5 billion range. I think they were actually in that range just yesterday. But we have not seen that level of daily originations in a long time. Just a couple of months ago, that was in a $3 billion and $3.5 billion range. So it takes a little time for the market to recover from those forced transactions, illiquidity, and ultimately the fundamentals will start to show back up. So it will take time, but I think it will occur. Marissa Lobo: Okay. Thank you for that. And you highlighted the role that the ATM played in maintaining leverage while allowing you to grow into wider spreads. How should we think about that playbook if the premium to book narrows from here, and does that hurdle your additional deployment charge? Peter Federico: Well, certainly the level of the premium does factor into our consideration, and as Bernie mentioned, it was really fortunate for us. It was a confluence of positive factors that led to our sort of larger issuance, particularly the inclusion into the S&P 500. That created a one-time demand for our stock that was probably in the $1.5 billion range. So it was very substantial, and we were very proud to have joined the S&P 400. It was a great accomplishment for our company. Unfortunately, it came in a difficult quarter. But it did allow us a lot of flexibility. And in certain markets, we're going to be able to use that ATM. As Bernie mentioned, it gave us great risk management flexibility, and then ultimately, it's going to give us great investment capacity going forward. But yes, as you point out, the level going forward will certainly dictate whether we use it more or less and also the market conditions. But right now we're in a really strong position, ending a really difficult, volatile quarter with leverage below eight and, as Bernie mentioned, really strong liquidity position. We got a lot of flexibility going forward. We just need market conditions to stabilize. Marissa Lobo: Okay. Thank you for the answers. Peter Federico: Sure. Thank you, Marissa. Operator: Thank you. The next question comes from Doug Harter with BTIG. Please go ahead. Peter Federico: Morning, Doug. Doug Harter: Thanks. Good morning. Can you talk about your leverage outlook just given your viewpoint on the attractiveness of mortgages? Are you comfortable at this level? Could it go up? Does it drift back down? Just how are you thinking about those? Peter Federico: Yeah. I've talked about this before. The way we sort of approach our leverage, and this is important, this is one of the reasons why we ended the quarter where we did, is we started the quarter, if you recall, with leverage in the low sevens. And our expectation when we set our leverage level, we're always thinking about what will that leverage be when the market moves positively and when the market moves adversely like it did. And when we do our projections, we say, what will happen if rates move against us and spreads move against us? What will that do to our leverage? And are we comfortable with leverage at that point? Because obviously, as a levered investor, what we're trying to do when we set our leverage level is set it at a range such that when the market does come under pressure, we are not forced to adjust our asset portfolio. That was in fact the case in the third quarter. Importantly, we did not have to adjust our asset portfolio. In fact, we were able to add assets during the quarter. Going forward, I would just say there's no change to that framework. We have plenty of capacity to operate at higher leverage should the market push us there. We have plenty of liquidity, plenty of capacity from a risk management perspective. But I think it goes back to making sure that you enter these periods with the right leverage, and I think we did enter this period with the right leverage. There's going to be some natural movement up and down as spreads widen and tighten. Doug Harter: Got it. I guess, is there appetite to kind of proactively add to leverage, add more assets in this environment? Peter Federico: Sure. Doug Harter: Is it kind of keep flexible for the risk position? Peter Federico: Yeah. It goes back to really my answer to the first question. There is definitely capacity to take leverage up opportunistically. It really just depends on when we see enough signs of stability that we feel like the macroeconomic backdrop is more conducive of that position. We obviously had to prioritize for some period of time, risk management over opportunity. That is just a prudent thing to do in environments like these when there is that much uncertainty about what the forces are at play. But once we gain confidence, and maybe we are starting to gain confidence, although there is still a lot of macroeconomic uncertainty, at least the rate market is giving us some confidence that there could be an opportunity, yes, to take advantage of these levels. Ultimately, I expect that is going to be the case. Doug Harter: Great. Appreciate the answers. Thanks, Peter. Peter Federico: Sure. Thank you, Doug. Operator: Thank you. The next question comes from Bose George with KBW. Please go ahead. Peter Federico: Morning, Bose. Bose, we can't hear you. You might be on mute. Operator: Hello, Bose. Please go ahead. Again, your line is open. All right then, we'll go to the next questioner. The next questioner is Trevor Cranston with Citizens JMP Securities. Please go ahead. Peter Federico: Good morning, Trevor. Trevor Cranston: Hey. Hey, Peter. Good morning. Follow-up question on your comments on marginal ROEs. Peter Federico: Yeah. Trevor Cranston: I guess if you look at the current dividend level on book value is around 20%. Peter Federico: Yeah. Trevor Cranston: I was curious if you could kind of give us an update on your thoughts around the appropriate dividend level and if the Fed hikes that are currently priced into the market were to materialize, does that kind of incrementally change anything with your views on the dividend? Thanks. Peter Federico: Yeah. I'll start with the latter part first, and the answer is no, it doesn't with the Fed moves. First off, our expectation is not that four rate hikes will be realized. But if they were to be realized, it would not have that meaningful of an impact. As Bernie mentioned, our hedge ratio was significant. We've added a lot of hedges. When I look at our hedge ratio, I look at it adjusted for our receiver swap option position. On that basis, our hedge ratio was 97%. It essentially means when that's close to 100%, that we have very little exposure to short-term rate movements at all of our debt is synthetically hedged. From that perspective, with respect to ROE and dividend, I would say that our dividend continued to be well-aligned with the economics of our business. You've heard me say this before, but the first thing I look at is what is our total cost to capital. Obviously, given the amount of movement we had in rates and spreads, our total cost to capital, as you would expect, didn't increase during the quarter, not because the dollar of the numerator increased, but predominantly because of the denominator, the book value going down. It ended the quarter probably somewhere right around 19%-ish as a total cost to capital. Then you ask how does the economics of our business, what is the economics of our existing portfolio? Our existing portfolio generated $0.37 of net spread and dollar roll income on an ROE basis. That's around a 20% return. Obviously, given the dividend, it's consistent with the book value dividend yield of around 20%. The new book of business, that goes back to the ROE I talked about. A new book of business comes on at around 19%. That also is aligned with our total cost to capital. There is good alignment still. The other thing that I would say is in a quarter when you have this amount of volatility and this amount of movement, we don't hyper-focus on any one quarter in terms of the long run alignment. I think the long run economics are still aligned. There is a lot of moving pieces that drive these numbers. They will change rapidly quarter to quarter. But I think the long run fundamental alignment is still there. Trevor Cranston: Yeah. Okay, that's helpful. Thank you. Operator: Thank you. The next question comes from Hong Zhang with JP Morgan. Please go ahead. Hong Zhang: Yeah. Hey, this is Hong on for Rick. I guess just on your hedging activity- Peter Federico: Yeah Hong Zhang: you moved the hedging ratio up pretty meaningfully this quarter. I guess, is this more of a tactical move given volatility, or is this kind of more structural change in how you view risk? Peter Federico: Well, it's a good question. I would say it's more tactical in that because of the way the rates moved and trended, the long-term rates during the quarter, it was a quarter where delta hedging was really important. As we talked about at the beginning in our prepared remarks, I mentioned that our duration gap was essentially unchanged at 0.8 years. We started the quarter at 0.7 years. Our mortgage duration is extended by a full year. So we essentially offset all of that mortgage duration because we wanted to maintain our duration gap where it was, and that meant that we had to add hedges. So I would say that was tactical in that, of course, if rates were to go the other direction, we would likely then take those hedges back off. So it was in response to the movement in the mortgage market. The other thing I would say about hedging, and I think this is really important, is that we made a very conscious decision to end the quarter with a duration gap that was similar to the previous quarter and a positive duration gap of 0.8 years. You look at, we show this in our sensitivity table. I think this is really informative about the duration extension left in the mortgage market. Our duration sensitivity table shows that if rates were to go up 100 basis points per year, our duration would only extend 0.4 years. If rates move 50 basis points, it's only 0.2 years. So it's essentially saying that our portfolio is nearly fully extended. That same applies for the mortgage universe, by the way. The mortgage universe duration, someone showed me this morning, has a positive convexity today for the first. There's only been three other occasions in the last 30 years where the index has had positive convexities. That means the mortgage universe is fully extended. On the flip side, though, when you look at our duration sensitivity table, we do have more exposure to rate rally. Obviously, mortgage durations are not going to move when rates go up, but they are going to shorten. It shows that our duration would shorten by about a year. So we want to operate with a positive duration gap because from a risk management perspective, the prudent risk management action is to have a long duration gap in the event that mortgages rally. We also obviously have some options in our position that give us some down rate protection as well. So that's the way we're looking at it from a risk management perspective in terms of our duration gap and our interest rate risk management. Hong Zhang: Got it. And if I look at your net TBA exposure, it declined- Peter Federico: Yes Hong Zhang: pretty significantly quarter-over-quarter. Peter Federico: Yeah. Hong Zhang: I guess could you walk us through what the main driver of that was and how you expect to use the TBA market from here? Peter Federico: Yeah. First off, with respect to the TBA going forward, I would expect that there's not. When you look at dollar roll specialness and the benefit of TBA funding versus on-balance-sheet funding, that has compressed recently. On some coupons, I would describe it as being back to the historical norm of maybe 10 to 20 basis points of specialness. Not that much meaningful in terms of TBA specialness relative to on-balance-sheet funding. That would say all other things equal, there will probably be less TBA going forward. In the quarter. Hong Zhang: Got it. Peter Federico: In the quarter, we did bring it down opportunistically, and there were two factors that drove us bringing it down. One was we rotated out of TBA into specified pools because there were some attractive opportunities to acquire specified pools at attractive payups, at least what we believe are attractive payups. The other was that because of the funding differential, we actually ended up taking delivery of some of our TBA position to take advantage of better funding in the repo market versus the TBA market. Those two things together ended up bringing our TBA balance down. Hong Zhang: Got it. Thanks. Have a great week. Peter Federico: Sure. Thank you. You too. Operator: Thank you. The next question comes from Jason Weaver with JonesTrading. Please go ahead. Peter Federico: Good morning. Jason Weaver: Hey. Good morning, guys. Thank you. On the capital raise, can you speak to the timing of the deployments during the quarter and when you might be fully deployed, if not already? Peter Federico: We are not fully deployed already, and I cannot speak of the timing of it. That will be market and opportunity-driven. I will have to tell you that after the fact, not before the fact. We wouldn't want to say that before the fact. Jason Weaver: Right. I was also asking during the quarter when you raised the $992 million. When was that pretty much Peter Federico: Oh, when was that raise? Jason Weaver: Yeah. Peter Federico: You can sort of judge for yourself in that you could figure out the average dollar price of that capital. And the average dollar price, I do not know exactly, but it was a little over $10. What was it? $10.17, Sean just told me. $10.17. So that gives you an indication where it was raised. You can also look at, Sean, what was the inclusion date of the. You can also look at that two-week period around when the S&P 400 inclusion date was. But so the $10.17 give you an idea of when that capital was raised. Jason Weaver: Got it. And if I may, with the index inclusion, that seems to expand the shareholder base quite a bit. Do you expect that to have a material beneficial impact on your cost of capital and how you use the ATM going forward? Peter Federico: Well, it definitely can. There's no doubt about it. I mean, the fact that just the inclusion required an additional $1.5 billion of demand for our stock says everything you need to know. It is certainly positive. There'll certainly be more buyers of our stock because we are in the S&P 400 on a go-forward basis. There's only 1,500 companies in the S&P universe. So we're really happy with that. And obviously it will be a new source of demand for our stock. Anytime anybody buys the S&P 400, they're buying some share of AGNC stock, which is great. Jason Weaver: Got it. Well, thank you for that. Peter Federico: Sure. Operator: Thank you. The next question comes from Jason Stewart with Compass Point. Please go ahead. Peter Federico: Morning, Jason. Jason Stewart: Hey, good morning. Jason asked some of my question. I guess more of it was on the drag on earnings from the deployment of the capital during the third quarter. Peter Federico: Yeah. Jason Stewart: If you could quantify that. I guess the second part of that question goes into, what are you looking for? Are you looking for more macro stability? Are you looking for more GSE participation? What markers are you looking for to fully deploy that capital? Peter Federico: Sure. First off, on the drag, Bernie mentioned it was slight. I would say it's maybe in the neighborhood of a penny, since we deployed essentially $2 billion, maybe 20%-25% of the capital, something like that. So it was about a penny. On a go-forward basis, I would say that obviously what will first be important is establishing confidence in the new Treasury range. So that will be one. Obviously we're going to get some more information on monetary policy. I just think the amount of uncertainty around monetary policy has really been challenging for the market over the last four months or so. We'll have a Fed meeting coming up. We'll have another one in December. Economic data and inflation data is obviously going to have a big impact on that. I expect the Fed to be on hold at this next meeting and then possibly raise again in December. Any sort of change in monetary policy outlook will be important for us. With respect to the GSEs, we don't know what their purchase activity was in September yet. That's not yet been reported. I do expect to see that there will be some portfolio growth that had occurred in the month of September. The GSEs really can play, and I think do play a really important role in the market now. If you go back to look at the GSE portfolios from April to August, they were essentially unchanged. In the first quarter, they grew at a pace of around $12 billion a month, or $35 billion-$36 billion in the first quarter. It would not surprise me to see the GSEs acquire mortgages at a similar pace in the fourth quarter as they did back in the first quarter. Because when you look at where mortgage spreads are at the upper end of this sort of multi-year range, it is a great opportunity for the GSEs, it's great for taxpayers, and ultimately having them participate in the market when the market needs it from a liquidity perspective, really strengthens the mortgage market. I think that it's likely that they did buy in September, and it's likely that they're going to buy going forward. It's really beneficial to the U.S. housing finance system that they do that. I expect them to be active in the fourth quarter. Jason Stewart: Okay. Thanks, Peter. Peter Federico: Sure. Operator: Thank you. Our last question comes from the line of Bose George with KBW. Please go ahead. Bose George: Hey, guys. Good morning. Peter Federico: Bose, good to get you back. Bose George: Thank you. Thanks. On the hedges, can you talk about just the current mix of swaps versus Treasury hedges and what your thoughts are just on the current level of swap spreads? Peter Federico: Yes. When we have a market like we did in the third quarter and we're very active in delta hedging, we do tend to delta hedge more in Treasuries. In fact, it was almost exclusively in Treasuries. As a result of that, our hedge composition shifted down. I think at the end of the quarter, we were in high fifties, maybe 58, maybe 60% of swaps versus Treasuries. That's lower than our long run average. When I talked about our ROE, for example, going forward, I use usually a mix of 80-20. That would say that over time, I would expect that hedge composition to shift back up toward a greater share of swap-based hedge. Obviously, they have better carry profile to them. But often the first move that we make, we rotate into Treasuries, and then ultimately we rotate out of Treasuries into swaps as market conditions change and we kind of get a feel for what the new run rate is of our hedge portfolio. So I would expect more swaps going forward. Said another way, for example, when we acquire mortgages on a go-forward base, they will likely be hedged 100% swaps. Bose George: Okay, great. That's all for me. Thanks. Peter Federico: Great. Thank you. Operator: Thank you. We have now completed the question and answer session. I'd like to turn the call back over to Peter Federico for concluding remarks. Peter Federico: Again, appreciate everybody participating on our call this morning, and we look forward to speaking to you again at the end of the year. Operator: Thank you for joining the call. You may now disconnect. Before you buy stock in AGNC Investment Corp., consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and AGNC Investment Corp. wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $376,696!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,333,920!* Now, it's worth noting Stock Advisor's total average return is 925% — a market-crushing outperformance compared to 212% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of October 20, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. AGNC (AGNC) Q3 2026 Earnings Call Transcript was originally published by The Motley Fool

AGNC Investment Corp. AGNC faced significant mortgage market pressure in the third quarter of 2026 as rising Treasury yields and widening mortgage spreads weighed on portfolio valuations and tangible book value. Management maintained a constructive longer-term outlook for Agency mortgage-backed securities (MBS), citing attractive valuations, improving prepayment fundamentals and resilient demand. However, elevated interest rate volatility and higher funding costs remain important challenges. Peter Federico, president, CEO and chief investment officer, highlighted the sharp deterioration in fixed-income market conditions during September. Agency MBS underperformed other major bond sectors as Treasury market instability drove mortgage spreads wider. Despite the difficult quarter, Federico emphasized that Agency MBS valuations have become more attractive. Mortgage spreads are approaching the upper end of their multi-year trading range, improving potential returns on new investments. Management also identified favorable supply-demand dynamics. Mortgage originations remain constrained by elevated borrowing rates, while investor demand has demonstrated resilience. The company reported a 16.9% sequential decline in tangible net book value per common share to $7.13 from $8.58. Its economic return on tangible common equity was negative 12.7%, compared with positive 6.7% in the second quarter. Bernice Bell, executive vice president and chief financial officer, attributed the negative economic return to the $1.45 decline in tangible book value, partially offset by $0.36 in quarterly dividends. AGNC Investment reported third-quarter 2026 earnings of $0.37 per share, falling short of the Zacks Consensus Estimate of $0.39. Revenues of $402 million also missed the consensus estimate of $428.40 million. AGNC Investment Corp. price-consensus-eps-surprise-chart | AGNC Investment Corp. Quote Funding economics weakened during the quarter as the company's combined weighted average cost of funds increased to 3.09% from 2.89% in the preceding quarter. The annualized net interest spread narrowed to 1.86% from 2.00%, despite the average asset yield, excluding catch-up premium amortization and including TBA positions, increasing to 4.95% from 4.89%. Lower prepayment expectations provided some support. The projected portfolio constant prepayment rate declined to 6.7% from 8.6%, reflecting reduced refinancing incentives as mortgage rates increased. AGNC Investment increased its tangible net book value at-risk leverage to 7.9 times from 7.4 times sequentially. Its investment portfolio totaled $94.4 billion at September-end. The company also expanded its interest rate hedging coverage. Interest rate swaps, Treasury positions and other hedges represented 90% of funding liabilities, compared with 73% at June-end. These adjustments accompanied increased market volatility. AGNC finished September with $6.3 billion of unencumbered cash and Agency MBS, representing 57% of tangible equity. Capital deployment remained an important strategic consideration. AGNC Investment raised $992 million through at-the-market common stock offerings, issuing 97.6 million shares during the quarter. Bell noted that the company's inclusion in the S&P MidCap 400 generated elevated trading volumes, enabling equity issuance at a substantial premium to tangible net book value. During the previous quarter's analyst discussion, Federico told BTIG that capital issuance decisions depend on investment returns and prevailing stock-market conditions. He emphasized maintaining flexibility rather than following a predetermined issuance schedule. Management's outlook remains centered on the relative attractiveness of Agency MBS valuations and the benefits of reduced prepayment exposure. Federico emphasized that improving fundamentals could support mortgage performance once Treasury market volatility subsides. Meanwhile, elevated leverage, compressed interest spreads and recent book value erosion underscore the importance of portfolio positioning and liquidity management as market conditions evolve. AGNC currently carries a Zacks Rank #3 (Hold), indicating a neutral near-term earnings-revision outlook. Its Value Score of B reflects relatively favorable valuation characteristics, while its Growth and Momentum Scores of D point to less attractive growth prospects and price momentum. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. The company's VGM Score of C indicates a moderate combined assessment across value, growth and momentum factors. This combination falls short of the strongest Zacks Rank and Style Score pairings, generally represented by a Zacks Rank #1 or 2 (Buy) alongside an A or B Style Score. The Zacks Rank remains subject to change as analysts revise their earnings estimates following the latest quarterly results. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report AGNC Investment Corp. (AGNC) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. - The negative 12.7% economic return was driven by a 'confluence of adverse conditions' in the third quarter, including a 200-basis-point pivot in monetary policy expectations and a 54-basis-point spike in 10-year Treasury yields in September alone. - Agency MBS underperformed Treasuries by nearly 120 basis points on a duration-matched basis, a level of underperformance seen only twice before since 2010. - Management attributes the asset class weakness to its role as a 'victim of its own liquidity,' where it serves as the primary spread product for investors to trade during periods of forced rebalancing and duration extension. - The portfolio's duration gap remained stable at 0.8 years as management proactively added $12 billion in hedges to offset nearly all asset duration extension as it occurred. - Strategic inclusion in the S&P MidCap 400 index provided a unique liquidity window, allowing the company to raise $992 million in common stock at a significant premium to tangible net book value. - Management shifted the portfolio toward higher coupons and specified pools, with 83% of assets now possessing favorable prepayment characteristics to provide both call and extension protection. - Management projects attractive expected ROEs in the 18% to 20% range for new investments, citing current coupon yields near 6.5% and spreads at the upper end of multi-year ranges. - The portfolio is considered 'nearly fully extended,' meaning duration is now relatively insensitive to further rate increases, which management believes limits future downside from extension risk. - Supply technicals are expected to improve as primary mortgage rates near 7.5% should materially lower new Agency MBS originations for the remainder of the year and into 2027. - Future capital deployment of the $6.3 billion in unencumbered liquidity will be contingent on the market establishing a new Treasury trading range and gaining clarity on the Fed's restrictive policy path. - The company anticipates steady demand for Agency MBS driven by bond fund inflows, the finalization of bank capital rules, and the potential reemergence of GSE purchase activity. - Prepayment risk is characterized as historically low, with less than 2% of the outstanding mortgage universe currently having a 50-basis-point refinance incentive. - Net interest spread declined 14 basis points as higher funding costs more than offset higher asset yields, alongside a slight earnings drag from capital raised but not yet deployed. - Management noted that while the market has priced in four rate hikes by mid-2027, AGNC's 97% hedge ratio (adjusted for receiver options) synthetically protects the portfolio from short-term rate movements. - TBA exposure was reduced as 'specialness' compressed toward historical norms of 10 to 20 basis points, prompting a rotation into specified pools and on-balance-sheet funding. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. - Management believes the market is entering a 'consolidation phase' with a potential new 10-year Treasury range of 4.90% to 5.40%. - Recent trading behavior showed the 10-year yield bouncing off the 5.30%-5.35% level multiple times, which management views as a constructive sign of a ceiling. - AGNC entered the volatile period with leverage in the low sevens specifically to avoid forced asset sales during market stress. - Management confirmed they have the capacity and appetite to proactively increase leverage once they see more definitive signs of macroeconomic stability. - The current dividend is viewed as well-aligned with the 19%-20% economics of both the existing portfolio and new investment opportunities. - Management does not 'hyper-focus' on single-quarter volatility, emphasizing that long-run fundamental alignment remains intact despite book value fluctuations. - Management expects the GSEs to be active buyers in the fourth quarter, potentially matching the $12 billion per month pace seen in early 2026. - GSE participation at current wide spread levels is viewed as beneficial for the housing finance system and a key source of market liquidity.

AGNC Investment (NASDAQ:AGNC) had a rough third quarter. Interest rates surged, causing fixed-income investors to turn very bearish. As a result, the mortgage REIT posted a negative 12.7% economic return during the period, while its spread income declined for the third straight quarter. However, it wasn't all bad news. The company did capitalize on an opportunity to raise nearly $1 billion in equity capital at a significant premium to its book value. Meanwhile, returns on Agency MBS (its investment focus) remain strong. Missed AI's "Act 1"? Act 2 Could Be 14x Bigger. Most investors think they missed the AI boat because they didn't buy Nvidia in 2005. But according to our analysts, we're only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout. Continue » Here's a closer look at the quarter and whether the mortgage REIT is a buy after its earnings report. Image source: The Motley Fool. There weren't many positives in AGNC's third-quarter financial results. The mortgage REIT's net spread and dollar roll income declined from $0.40 per share in the second quarter to $0.37 per share in the third quarter. That's just above the $0.36 per share it paid in dividends ($0.12 monthly dividend). It was the third straight quarterly decline ($0.42 per share in the first quarter). Meanwhile, its tangible net book value per share tumbled 16.9% to $7.13. That's due to a -12.7% economic return during the period and the $0.36 per share in dividends it paid. Its leverage ratio also increased significantly (from 7.4x at the end of the second quarter to 7.9x at the end of the third quarter). That's above its 7.0x to 7.5x target range. The company battled very challenging market conditions. CEO Peter Federico stated in the earnings press release that, "Fixed income markets experienced significant pressure in the third quarter, particularly in the final weeks of September, as fixed income investor sentiment turned decidedly bearish, interest rates increased sharply, and interest rate volatility spiked." That hit Agency MBS investments hard, as they were the worst-performing sector in the Bloomberg U.S. Aggregate Bond Index during the quarter. Since Agency MBS is the company's sole investment focus, this underperformance drove the -12.7% economic return on tangible common equity. While the third quarter was a rough period for the Agency MBS market and AGNC Investments, there were a couple of positives worth pointing out for the REIT. For example, even though its net spread income declined to $0.37 per share, that still covered its dividend. Further, this metric alone doesn't determine the sustainability of its dividend (it was below the payout in the third and fourth quarters of 2025 at $0.35 per share). What matters more is the returns it can earn on its leveraged MBS investments. Federico noted in the third-quarter earnings release that despite the challenging conditions, "there are a number of reasons for optimism with respect to the outlook for Agency MBS once volatility in the Treasury market subsides." The biggest is that the return profile of Agency MBS is "more attractive at current valuation levels, as mortgage spreads to benchmark rates are approaching the upper end of their multi-year trading range." He also noted that the fundamentals for Agency MBS investments are more favorable today than they were at the start of the third quarter. These factors help support a constructive outlook for Agency MBS investments. Finally, AGNC Investment capitalized on an opportunity to raise additional equity capital at an attractive level during the quarter. The REIT was added to the S&P MidCap 400 Index during the quarter. That announcement and the subsequent index rebalancing drove higher trading volumes in its stock, which the company capitalized on by issuing $992 million of additional equity during the quarter at a significant premium to its tangible net book value per share. That provided it with additional liquidity to capitalize on the currently attractive Agency MBS market. At its core, AGNC Investment is a leveraged bet on the mortgage market. Its use of leverage increases its returns, thereby raising its risk profile. When conditions become more challenging, as they were in the third quarter, its leverage puts pressure on its stock price and earnings. If you want to make a leveraged bet on the mortgage market, buying AGNC Investment after its earnings report could yield a high total return from its lucrative monthly dividend and the potential for a recovery in its earnings and stock price as the market normalizes. However, the quarter also clearly demonstrates that the REIT isn't the best investment for more risk-averse investors seeking a bankable passive income stream. Before you buy stock in AGNC Investment Corp., consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and AGNC Investment Corp. wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $376,696!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,333,920!* Now, it's worth noting Stock Advisor's total average return is 925% — a market-crushing outperformance compared to 212% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of October 20, 2026. Matt DiLallo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Is AGNC Investment Corp a Buy After Its Latest Earnings Report? was originally published by The Motley Fool

- Interested in AGNC Investment Corp.? Here are five stocks we like better. - AGNC reported a difficult third quarter: comprehensive loss was $1.28 per share, while economic return on tangible common equity was negative 12.7% as rising Treasury yields and widening MBS spreads reduced book value. - Mortgage-market valuations improved despite volatility. Agency MBS yields and spreads became more attractive, with AGNC estimating 18%–20% returns on equity for newly purchased assets, although interest-rate and macroeconomic risks remain. - AGNC strengthened its capital and repositioned its portfolio: it raised $992 million in common equity, expanded assets by $2.5 billion, increased specified-pool holdings, and expanded hedges to $86 billion while maintaining a nearly unchanged duration gap. - 3 Dividend Stocks Under $50 That Pay You to Wait Out Inflation AGNC Investment (NASDAQ:AGNC) reported a comprehensive loss of $1.28 per common share for the third quarter of 2026, as a sharp rise in Treasury yields and widening mortgage-backed securities spreads pressured the company's portfolio. The company's economic return on tangible common equity was negative 12.7% during the quarter, consisting of $0.36 per share in declared dividends and a $1.45 decline in tangible net book value per share, Chief Financial Officer Bernie Bell said. Bell attributed the book-value decline to the underperformance of AGNC's mortgage assets relative to its interest-rate hedges. → Berkshire Just Backed This Little-Known Stock—Should You Chase It? - 3 Ultra-High Dividend Yield Stocks for the New Year As of the Friday before the earnings call, tangible net book value per common share had risen 3% from the end of the quarter, or slightly more than 2% after accounting for the October dividend accrual, Bell said. President, Chief Executive Officer and Chief Investment Officer Peter Federico said fixed-income markets deteriorated significantly late in the quarter amid monetary-policy uncertainty, mixed inflation data, high corporate debt issuance, geopolitical risks, elevated energy prices and stronger-than-expected domestic economic growth. → These 3 Green Stocks Have a Growth Story That Goes Far Beyond Washington - 6 Mortgage REITS: How Badly Could Rising Rates Hurt Them? Fed Chairman Warsh's signal of a more restrictive policy stance at the August Jackson Hole Symposium, followed by a 25-basis-point federal funds rate increase in September, prompted a substantial market repricing, Federico said. Market expectations shifted from three rate cuts by year-end earlier in the year to four rate hikes by mid-2027 following the September meeting. The 10-year Treasury yield rose 82 basis points during the quarter, including a 54-basis-point increase in September. The Bloomberg U.S. Aggregate Bond Index returned negative 3.5% in the period, while the Bloomberg Agency MBS Index posted a negative 4.25% total return. On a duration-matched basis, Agency MBS underperformed Treasuries by nearly 120 basis points, Federico said. → Broadcom's CEO Sees Years of AI Demand But Warns of a Bigger Threat to the Boom "Since 2010, the Agency MBS Index has underperformed Treasuries by a wider margin in only two other quarters," Federico said. Despite the quarter's market weakness, Federico said Agency MBS valuations and cash-flow characteristics have improved. At quarter-end, new-production current-coupon Agency MBS yielded close to 6.5%, while current-coupon MBS spreads were about 135 basis points to Treasuries and 165 basis points to swaps. He said extension risk has diminished because mortgage durations have largely reached an inflection point at current rate levels. Prepayment risk has also decreased: Less than 2% of the outstanding mortgage universe had a 50-basis-point refinancing incentive, according to Federico. Even if mortgage rates declined by 100 basis points, the refinanceable share of the market would rise to only about 10%. Federico also pointed to reduced expected Agency MBS supply as primary mortgage rates remained near 7.5%, as well as anticipated demand from bond funds, banks, government-sponsored enterprises and other investors. Still, he cautioned that Agency MBS performance could remain sensitive to elevated interest-rate volatility and macroeconomic uncertainty in the near term. During the question-and-answer session, Federico said AGNC's expected return on equity for newly purchased mortgage assets was approximately 18% to 20% at prevailing mortgage valuations. He said that estimate assumed spreads around 135 basis points to Treasuries and 165 basis points to swaps, along with leverage in the mid-7x range. AGNC was added to the S&P MidCap 400 Index during the quarter. Bell said the related index rebalancing activity created significant trading volume in the company's shares, enabling AGNC to issue $992 million of common stock through its at-the-market offering program at what he described as a significant premium to tangible net book value. The proceeds helped the company maintain its leverage profile while expanding its asset portfolio by $2.5 billion on a cost basis at wider spreads. Leverage increased to 7.9 times tangible equity at quarter-end, from 7.4 times at the end of the second quarter. AGNC ended the period with $6.3 billion of unencumbered cash and Agency MBS, equal to 57% of tangible equity. Net spread and dollar roll income was $0.37 per common share, down $0.03 from the previous quarter. Bell said the decline reflected a 14-basis-point decrease in net interest spread as higher funding costs outweighed higher asset yields, along with a modest drag from capital that had been raised but not yet deployed. AGNC's asset portfolio had a market value of $94 billion at quarter-end. The company purchased $2 billion of primarily intermediate-coupon specified pools during the quarter and shifted the portfolio toward higher coupons, increasing its weighted average coupon to 5.13%. Federico said 83% of portfolio assets had favorable prepayment characteristics following the purchases and repositioning. He noted that specified pools can provide both call protection when rates fall and extension protection when rates rise. AGNC increased its hedge portfolio, excluding receiver options, by more than $12 billion from the prior quarter to $86 billion, largely through longer-term Treasury-based hedges. The company added hedges to offset mortgage-duration extension as rates rose, leaving its duration gap nearly unchanged at 0.8 years at quarter-end. Federico said the company may opportunistically increase leverage if market stability improves, but it had prioritized risk management during the volatile quarter. He also said AGNC would likely use more swap-based hedges over time after relying heavily on Treasury hedges for delta hedging during the quarter. AGNC Investment Corp. is a real estate investment trust (REIT) that invests primarily in residential mortgage pass-through securities and collateralized mortgage obligations for which principal and interest payments are guaranteed by a U.S. government-sponsored enterprise or a U.S. government agency. These investments are commonly referred to as agency mortgage-backed securities. The company seeks to generate income through the difference between the yield on its investment portfolio and its borrowing costs, while managing interest-rate, prepayment and other market risks. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "AGNC Investment Q3 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for October 2026.