"The year 2013 was a difficult year for all fixed income markets, with the agency MBS market being one of the worst performing sectors," said AGNC's Chief Investment Officer Gary Kain. "In the face of challenging market conditions and extreme interest rate volatility, particularly in the middle of the year, we prioritized risk management over short-term returns."
As a result of rising mortgage rates and broader uncertainty surrounding Federal Reserve policy, all mortgages REITs faced difficult a difficult year in 2013, and AGNC was no different. The company said its net book value per share fell by approximately 5% over the fourth quarter, to stand at $23.93. In total for 2013 its book value per common share fell from $31.64 to $23.93, a decrease of almost 25%.
Kain continued on a brighter note when looking ahead to 2014, saying, "given the decline in interest rates and the strong performance of agency MBS in January, we have already seen a meaningful increase in our book value."
In 2013, AGNC repurchased $934 million of common stock, and it reduced its common shares outstanding by 7% in the third quarter. However, its 356 million shares outstanding are above the approximately 339 million shares outstanding at the end of December 2012.
The company also highlighted that it will continue to maintain its share repurchases as long as its "common stock trades at meaningful discounts to our net book value, providing us an additional tool to generate long-term value for our shareholders."
In fact, Chief Financial Officer John Erickson concluded the release by noting that AGNC remains "committed to our stock repurchase program under the right market conditions and our Board of Directors has authorized us to increase our share repurchases up to another $1 billion." As a result, the company now has $2 billion in approved authorization for share repurchases.