AGNC's 11.6% economic return in the fourth quarter drove our impressive full-year economic return of 22.7%. Even more noteworthy, AGNC's total stock return in 2025 was 34.8% with dividends reinvested, nearly double the performance of the S&P 500. On our third quarter earnings call in 2023, we expressed our belief that a durable and attractive investment environment for AGNC was emerging as mortgage spreads began to stabilize at historically attractive return levels. Moreover, during that same time period, AGNC shareholders have experienced a total stock return of nearly 60%, or 23% on an annualized basis.
Turning back to 2025, the Bloomberg Aggregate Agency Index was the best-performing fixed income sector in the fourth quarter and for the year produced a total return of 8.6%. On the demand side of the equation, however, the investor base today is more diversified and positioned to expand, with GSE purchases potentially consuming about half of this year's supply. At the same time, bank, money manager, foreign investor, and REIT demand should all remain strong. Pulling this all together, the underlying fundamental and technical backdrop for Agency mortgage-backed securities continues to be favorable and supportive of our positive outlook.
As Peter mentioned, our full-year economic return was 22.7%, reflecting our monthly dividend totaling $1.44 per common share and a $0.47 increase in tangible net book value per share. As of late last week, our tangible net book value per common share was up about 4% for January, or 3% net of our monthly dividend accrual. The average projected life CPR of our portfolio increased 100 basis points to 9.6% at quarter end from 8.6% in the prior quarter due to lower mortgage rates. Our asset portfolio totaled $95 billion at quarter end, up about $4 billion from the prior quarter as we fully deployed our new capital that we raised during the quarter.
| Metric | Period | Current guidance |
|---|---|---|
| Net spread and dollar roll income | Forward | Moderate tailwind from lower funding costs, rate cuts, and greater swap-hedge mix |
| Expected ROE at current spreads | 2026 | ~13%-15%, possibly a touch above depending on hedge mix |
| Current-coupon spread to swaps | Current | New range ~120-160bps, currently ~135bps |
| Current-coupon spread to Treasuries | Current | New range ~90-130bps, currently ~110bps |
| Duration gap | Forward | ~0.5 year today; typically 0.25-0.75 year, likely to widen if rates stay/rise |
| Net new Agency MBS supply / private-sector absorption | 2026 | ~$200B net new supply; ~$400B for private sector to absorb, similar to prior two years |
| Metric | YoY | Note |
|---|---|---|
| Economic return (tangible common equity) | 22.7% full-year 2025; 11.6% in Q4 | Lower interest rate volatility and mortgage spreads tightening to benchmark rates |
| Tangible net book value per share | +$0.47 full year; +$0.60 in Q4 | Tighter mortgage spreads and lower rate volatility; up ~4% in January (3% net of dividend) |
| Net spread and dollar roll income | Flat at $0.35/share | Included $0.01 non-recurring year-end incentive comp expense; short-term variable funding retained |
| At-risk leverage | 7.2x at Q4 end vs 7.6x at Q3 end; Q4 average 7.4x vs 7.5x | Leverage allowed to come down consistent with spread tightening |
| Portfolio CPR | Projected life 9.6% vs 8.6%; actual 9.7% vs 8.3% | Lower mortgage rates increased prepayment expectations |
| Asset portfolio size | $95B, up ~$4B from prior quarter | Full deployment of newly raised capital |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Mortgage spread regime | Held within a ~3-year range that drove strong prior-year results | Broke into a new tighter range; upside of the range now more capped by policy focus on affordability | — |
| Hedge mix / swap spreads | 59% swap-based hedges in duration dollars; hedge ratio 77% | 70% swap-based and likely higher; swap spreads widened on SLR revision and repo easing, favoring swaps | — |
| GSE / policy backdrop | GSE reform uncertainty weighed on Agency MBS early in the year | Treasury/FHFA focus on spread stability and affordability; GSEs deploying portfolio capacity, ~$200B MBS purchase | — |
| Interest rate volatility | Elevated volatility hurt MBS in the tightening cycle | Volatility trended lower (10-yr in ~25bps Q4 range); expected to stay generally low into 2026 | — |
| Demand base for Agency MBS | Market dominated by money managers a year or two ago | More diversified base — GSEs, banks, money managers, foreign, REITs; demand could outpace supply in 2026 | — |
| Capital issuance | ~$2B accretively raised in 2025; $356M in Q4 | No quarter-to-date issuance (blackout); future issuance opportunistic, no urgency to grow | — |