BETHESDA, Md., Oct. 20 /PRNewswire-FirstCall/ -- American Capital
Agency Corp. ("AGNC" or the "Company") (NASDAQ:AGNC) today reported
net income for the third quarter of 2009 of $31.2 million, or $1.82
per share and book value of $22.23 per share. THIRD QUARTER 2009
HIGHLIGHTS -- $95 million (approximate net proceeds) raised in an
August equity offering -- 4.3 million shares at $23.30 per share --
$1.40 per share dividend declared -- $1.89 per share of taxable
income -- $0.90 per share of undistributed taxable income as of
September 30, 2009 -- $1.82 per share of net income -- Including
$0.73 per share of other income -- 32.9% annualized return on
average stockholders' equity ("ROE") for the quarter -- 20.8% ROE,
net of other income -- 2.68% average net interest rate spread for
the quarter -- $3.4 billion agency securities portfolio at fair
value as of September 30, 2009 -- 31% increase from June 30, 2009
-- Proactively repositioned investment portfolio to lock-in current
valuations and diversify exposure -- 7.3x(1) leverage as of
September 30, 2009 -- $22.23 book value per share as of September
30, 2009, an increase of 7%, or $1.47 per share, from June 30, 2009
-- Established a Dividend Reinvestment Plan and Direct Stock
Purchase Plan "This was another strong quarter for AGNC with
continued book value appreciation, $1.40 dividend, and
undistributed taxable income that now totals $0.90 per share.
During the quarter prepayments remained benign and funding costs
remained low," commented Gary Kain, Chief Investment Officer of
AGNC. "The market landscape continues to evolve, and we remain
focused on positioning the portfolio to meet these changes while
generating attractive risk-adjusted returns for our stockholders."
AUGUST 2009 COMMON EQUITY OFFERING In August 2009, AGNC completed
its first common equity offering since its May 2008 initial public
offering. The Company raised total net proceeds of approximately
$95 million, after underwriting discounts and offering expenses,
through the issuance of 4.3 million common shares, including the
over-allotment, at a price of $23.30 per share. The offering was
accretive to September 30, 2009 book value by $0.28 per share.
THIRD QUARTER 2009 DIVIDEND DECLARATION On September 22, 2009, the
Board of Directors of the Company declared a third quarter 2009
dividend of $1.40 per share to stockholders of record as of October
2, 2009, to be paid on October 27, 2009. Since its May 2008 initial
public offering, AGNC has paid or declared a total of $100.0
million in dividends, or $6.26 per share. After adjusting for the
third quarter 2009 accrued dividend, AGNC had approximately $0.90
per share outstanding of undistributed taxable income as of
September 30, 2009. INVESTMENT PORTFOLIO As of September 30, 2009,
the Company's investment portfolio totaled $3.4 billion of agency
securities at fair value, comprised of $1.3 billion of fixed-rate
agency securities, $1.9 billion of adjustable-rate agency
securities and $0.2 billion of collateralized mortgage obligations
("CMOs") backed by fixed and adjustable-rate agency securities. As
of September 30, 2009, AGNC's investment portfolio was comprised of
32% 30-year fixed-rate securities, 3% 40-year fixed-rate
securities, 2% 15-year fixed-rate securities, 55% adjustable-rate
securities and 8% CMOs backed by fixed and adjustable-rate agency
securities. In the quarter, AGNC reduced its exposure to higher
coupon securities while increasing its holdings of lower coupon
hybrid ARM and fixed-rate securities. The changing portfolio
composition was a reaction to the continued strong price
performance of higher coupon securities as market prepayment
assumptions and risk premiums continue to decline, coupled with the
increased risk of GSE buyouts(2) on many types of these seasoned
securities. Given the combination of these factors, AGNC felt that
an over-allocation to higher coupon securities backed by certain
types of collateral was no longer warranted. Examples of specific
portfolio actions taken by AGNC this quarter were to: -- Sell a
significant amount of higher coupon securities that AGNC believes
have a relatively high risk of prepayments related to GSE buyouts;
-- Lower the weighted average coupon on its hybrid ARM portfolio by
54 basis points from June 30, 2009 to 5.43% as of September 30,
2009; and -- Increase the percentage of hybrid ARM securities with
coupons less than 5.0% from 2% as of June 30, 2009 to 20% as of
September 30, 2009 and lower the percentage of hybrid ARM
securities with coupons greater than 6.0% from 51% as of June 30,
2009 to 20% as of September 30, 2009. OTHER INCOME, NET During the
quarter, AGNC produced $12.6 million in other income, net, or $0.73
per share, as a result of actively managing its investment
portfolio. AGNC will continue to evaluate new investment
opportunities throughout the agency securities market and
proactively assess its current holdings in an effort to balance
stockholder returns and book value preservation. ASSET YIELDS, COST
OF FUNDS AND NET INTEREST RATE SPREAD During the quarter, the
annualized weighted average yield on average earning assets was
4.38% and the annualized average cost of funds was 1.70%, including
0.54% of amortization expense associated with the termination of
interest rate swaps, which resulted in a net interest rate spread
of 2.68%. As of September 30, 2009, the weighted average yield on
earning assets was 4.13% and the weighted average cost of funds was
1.68%, including 0.48% of amortization expense associated with the
termination of interest rate swaps, which resulted in a net
interest rate spread of 2.45% as of September 30, 2009. The actual
constant prepayment rate ("CPR") for the Company's portfolio held
in the third quarter was 19%. The Company's projected CPR for the
remaining life of its investments as of September 30, 2009 was 17%.
This reflects a drop from 21% as of June 30, 2009. The weighted
average cost basis of the investment portfolio was 103.5% of par as
of September 30, 2009. The amortization of premiums (net of any
accretion of discounts) on the investment portfolio for the quarter
was $9.4 million, or $0.55 per share. The unamortized net premium
as of September 30, 2009 was $112.8 million. LEVERAGE AND HEDGING
ACTIVITIES As of September 30, 2009, the Company's $3.4 billion
investment portfolio was financed with $2.9 billion of repurchase
agreements and $0.4 billion of equity capital, resulting in a
leverage ratio of 6.9x. When adjusted for the net liability for
agency securities not yet settled, the leverage ratio was 7.3x as
of September 30, 2009. Of the $2.9 billion borrowed under
repurchase agreements as of September 30, 2009, $1.3 billion had
original maturities of 30 days or less, $0.9 billion had original
maturities greater than 30 days and less than or equal to 60 days
and the remaining $0.7 billion had original maturities of 61 days
or more. As of September 30, 2009, the Company had repurchase
agreements with 18 counterparties, with no more than 6% of
stockholders' equity at risk with a single counterparty. The
Company's swap positions as of September 30, 2009 totaled $1.4
billion in notional amount at an average fixed pay rate of 2.02%, a
weighted average receive rate of 0.25% and a weighted average
maturity of 2.8 years. During the quarter, AGNC entered into six
interest rate swaps with a combined notional amount of $450
million, an average term of approximately 36 months and a weighted
average fixed pay rate of 1.88%. During the quarter, the Company
recognized $3.7 million, or $0.22 per share, in amortization
expense associated with the termination of interest rate swaps
(included in interest expense on the income statement). As of
September 30, 2009, there remained $9.9 million of realized losses
associated with the prior termination of interest rate swaps that
will be amortized into GAAP and taxable income over the next three
quarters. The Company did not terminate any interest rates swaps
during the third quarter of 2009. As of September 30, 2009, the
Company's book value per share was $22.23, or $1.47 higher than the
June 30, 2009 book value per share of $20.76 and $5.03 higher than
the December 31, 2008 book value per share of $17.20. The Company's
book value fully reflects all costs associated with the termination
of interest rate swaps. Financial highlights for the quarter are as
follows: AMERICAN CAPITAL AGENCY CORP. CONSOLIDATED BALANCE SHEETS
(in thousands) September 30, December 31, September 30, 2009 2008
2008 ---- ---- ---- (unaudited) (unaudited) Assets: Agency
securities, at fair value (including pledged assets of $3,189,782,
$1,522,001, and $1,500,362, respectively) $3,438,127 $1,573,383
$1,624,060 Cash and cash equivalents 103,626 56,012 17,031
Restricted cash 9,656 18,692 18,914 Interest receivable 20,330
7,851 8,375 Derivative assets, at fair value - - 2,935 Receivable
for agency securities sold 84,857 - 53,531 Principal payments
receivable 22,705 - - Other assets 805 387 613 --- --- --- Total
assets $3,680,106 $1,656,325 $1,725,459 ========== ==========
========== Liabilities: Repurchase arrangements $2,949,010
$1,346,265 $1,434,363 Payable for agency securities purchased
254,305 - - Accrued interest payable 1,433 3,664 1,875 Derivative
liabilities, at fair value 17,493 29,277 5,114 Dividend payable
27,050 18,006 15,005 Due to Manager 619 714 482 Accounts payable
and other accrued liabilities 669 248 758 --- --- --- Total
liabilities 3,250,579 1,398,174 1,457,597 --------- ---------
--------- Stockholders' equity: Preferred stock, $0.01 par value;
10,000 shares authorized, 0 shares issued and outstanding,
respectively - - - Common stock, $0.01 par value; 150,000 shares
authorized, 19,322, 15,005 and 15,005 shares issued and
outstanding, respectively 193 150 150 Additional paid-in capital
380,944 285,917 285,910 Retained earnings (accumulated deficit)
13,293 (2,310) 4,744 Accumulated other comprehensive income (loss)
35,097 (25,606) (22,942) ------ ------- ------- Total stockholders'
equity 429,527 258,151 267,862 ------- ------- ------- Total
liabilities and stockholders' equity $3,680,106 $1,656,325
$1,725,459 ========== ========== ========== AMERICAN CAPITAL AGENCY
CORP. CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (in
thousands, except per share data) For the Period from May 20, 2008
(date operations Three Months Ended Nine Months commenced)
September 30, Ended through ----------------- September 30,
September 30, 2009 2008 2009 2008 ---- ---- ---- ---- Interest
income: Interest income $32,793 $28,071 $86,834 $37,995 Interest
expense 11,551 11,009 29,265 14,606 ------ ------ ------ ------ Net
interest income 21,242 17,062 57,569 23,389 ------ ------ ------
------ Other income, net: Gain (loss) from sale of agency
securities, net 16,070 (162) 30,418 69 (Loss) gain from derivative
instruments, net (3,435) 4,340 (2,567) 4,557 ------ ----- ------
----- Total other income, net 12,635 4,178 27,851 4,626 Expenses:
Management fees 1,166 915 3,008 1,317 General and administrative
expenses 1,474 1,424 4,498 2,298 ----- ----- ----- ----- Total
expenses 2,640 2,339 7,506 3,615 ----- ----- ----- ----- Net income
$31,237 $18,901 $77,914 $24,400 ======= ======= ======= ======= Net
income per common share - basic and diluted $1.82 $1.26 $4.95 $1.63
Weighted average number of common shares outstanding - basic and
diluted 17,191 15,005 15,741 15,005 Dividends declared per common
share $1.40 $1.00 $3.75 $1.31 AMERICAN CAPITAL AGENCY CORP. KEY
PORTFOLIO CHARACTERISTICS* (unaudited) (in thousands, except per
share data) For the Period from May 20, 2008 (date operations Three
Months Ended Nine Months commenced) September 30, Ended through
----------------- September 30, September 30, 2009 2008 2009 2008
---- ---- ---- ---- Average agency securities, at cost $2,992,151
$2,028,771 $2,365,925 $1,888,135 Average total assets, at cost
$3,263,632 $2,073,893 $2,477,227 $1,938,623 Average repurchase
agreements $2,693,851 $1,795,218 $2,127,918 $1,649,826 Average
stockholders' equity $376,229 $264,985 $319,165 $267,800 Fixed-rate
agency securities, at fair value - as of period end $1,272,407
$1,624,060 $1,272,407 $1,624,060 Adjustable-rate agency securities,
at fair value - as of period end $1,904,184 $- $1,904,184 $- CMO
agency securities, at fair value - as of period end $261,536 $-
$261,536 $- Average asset yield (1) 4.38% 5.50% 4.89% 5.50% Average
cost of funds (2) 1.16% 2.45% 1.42% 2.41% Average cost of funds -
terminated swap amortization expense (3) 0.54% N/A 0.42% N/A
Average net interest rate spread (4) 2.68% 3.05% 3.05% 3.09% Net
return on average equity (5) 32.94% 28.30% 32.64% 24.82% Leverage
(average during the period)(6) 7.2:1 6.8:1 6.7:1 6.2:1 Leverage (as
of period end)(7) 7.3:1 5.4:1 7.3:1 5.4:1 Annualized expenses % of
average assets (8) 0.32% 0.45% 0.41% 0.51% Annualized expenses % of
average equity (9) 2.78% 3.50% 3.14% 3.68% Book value per common
share as of period end (10) $22.23 $17.85 $22.23 $17.85 * All
percentages are annualized. (1) Weighted average asset yield for
the period was calculated by dividing the Company's total interest
income on agency securities less amortization of premiums and
discounts by the Company's weighted average agency securities. (2)
Weighted average cost of funds for the period was calculated by
dividing the Company's total interest expense by the Company's
weighted average repurchase agreements. Total interest expense
excludes amortization expense related to the fair value of
terminated swaps during the periods presented. (3) Represents
amortization expense associated with the termination of interest
rate swaps of $3.7 million in the third quarter of 2009 and $6.7
million in the first nine months of 2009. (4) Average net interest
rate spread for the period was calculated by subtracting the
Company's weighted average cost of funds, net of interest rate
swaps and terminated swap amortization expense, from the Company's
weighted average asset yield. (5) Net return on average
stockholders' equity for the period was calculated by dividing the
Company's net income by the Company's average stockholders' equity.
(6) Leverage during the period was calculated by dividing the
Company's average repurchase agreements outstanding for the period
by the Company's average stockholders' equity. (7) Leverage at
period end was calculated by dividing the amount outstanding under
the Company's repurchase agreements and net liabilities for
unsettled agency securities by the Company's total stockholders'
equity at period end. (8) Annualized expenses as a % of average
total assets was calculated by dividing the Company's total
expenses by the Company's average total assets. (9) Annualized
expenses as a % of average stockholders' equity was calculated by
dividing the Company's total expenses by the Company's average
stockholders' equity. (10) Book value per share was calculated by
dividing the Company's total stockholders' equity by the Company's
number of shares outstanding. N/A -- Not applicable. DIVIDEND
REINVESTMENT PLAN AND DIRECT STOCK PURCHASE PLAN During the
quarter, AGNC established a Dividend Reinvestment Plan ("DRIP") and
Direct Stock Purchase Plan ("DSPP") to provide prospective
investors and existing stockholders with a convenient and
economical method to purchase shares of our common stock. By
participating in the plan, investors may purchase additional shares
of common stock by reinvesting some or all of the cash dividends
received on shares of our common stock. Investors may also make
optional cash purchases of shares of our common stock subject to
certain limitations detailed in the plan prospectus. To review the
plan prospectus, please visit our Investor Relations website at
http://www.agnc.com/. STOCKHOLDER CALL AGNC invites stockholders,
prospective stockholders and analysts to attend the AGNC
stockholder call on October 21, 2009 at 11:00 am ET. The
stockholder call can be accessed through a live webcast, free of
charge, at http://www.agnc.com/ or by dialing (877) 569-8701 (U.S.
domestic) or +1 (574) 941-7382 (international). Please provide the
operator with the conference ID number 36505533. 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 http://www.agnc.com/.
Select the Q3 2009 Earnings Presentation link to download and print
the presentation in advance of the Stockholder Call. An archived
audio of the stockholder call combined with the slide presentation
will be made available on our website after the call on October 21,
2009. In addition, there will be a phone recording available from
2:00 pm ET on October 21, 2009 until 11:59 pm ET on November 4,
2009. If you are interested in hearing the recording of the
presentation, please dial (800) 642-1687 (U.S. domestic) or +1
(706) 645-9291 (international). The conference ID number for both
domestic and international callers is 36505533. For further
information or questions, please do not hesitate to call our
Investor Relations Department at (301) 968-9300 or send an email to
. ABOUT AGNC AGNC is a REIT that invests exclusively in agency
pass-through securities and collateralized mortgage obligations for
which the principal and interest payments are guaranteed by a U.S.
Government agency or a U.S. Government-sponsored entity. The
Company is externally managed and advised by an affiliate of
American Capital, Ltd. ("American Capital"). For further
information, please refer to http://www.agnc.com/. ABOUT AMERICAN
CAPITAL American Capital is a publicly traded private equity firm
and global asset manager. American Capital, both directly and
through its asset management business, originates, underwrites and
manages investments in middle market private equity, leveraged
finance, real estate and structured products. Founded in 1986,
American Capital has $11 billion(3) in capital resources under
management and nine offices in the U.S., Europe and Asia. For
further information, please refer to
http://www.americancapital.com/. FORWARD LOOKING STATEMENTS This
press release contains forward-looking statements. Forward-looking
statements are based on estimates, projections, beliefs and
assumptions of management of the Company at the time of such
statements and are not guarantees of future performance.
Forward-looking statements involve risks and uncertainties in
predicting future results and conditions. Actual results could
differ materially from those projected in these forward-looking
statements due to a variety of factors, including, without
limitation, changes in interest rates, changes in the yield curve,
changes in prepayment rates, the availability and terms of
financing, changes in the market value of our assets, general
economic conditions, market conditions, conditions in the market
for agency securities, and legislative and regulatory changes that
could adversely affect the business of the Company. Certain factors
that could cause actual results to differ materially from those
contained in the forward-looking statements, are included in the
Company's periodic reports filed with the Securities and Exchange
Commission ("SEC"). Copies are available on the SEC's website,
http://www.sec.gov/. The Company disclaims any obligation to update
or revise any forward-looking statements based on the occurrence of
future events, the receipt or new information, or otherwise. (1)
Leverage calculated as total repurchase agreements outstanding plus
payable for agency securities purchased but not yet settled less
receivable for agency securities sold but not yet settled divided
by total stockholders' equity as of September 30, 2009. (2) A U.S.
Government agency or U.S. Government-sponsored entity may buyout
loans in underlying mortgage pools of agency securities for a
variety of reasons, including loan modifications, seriously
delinquent loans, foreclosure sales as well as other reasons. These
GSE buyouts effectively increase prepayments. (3) As of June 30,
2009. CONTACT: Investors - (301) 968-9300 Media - (301) 968-9400
DATASOURCE: American Capital Agency Corp. CONTACT: Investors,
+1-301-968-9300, or Media, +1-301-968-9400 Web Site:
http://www.agnc.com/
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