AGNC Investment (AGNC) risk factors, FY2024 10-K

Risks Related to Our Investment and Portfolio Management Activities

1. 01Spread risk is inherent to our business as a levered investor in Agency RMBS
2. 02Interest rate and spread volatility represent significant risks to our business, potentially affecting our liquidity, increasing our costs, and impacting our ability to manage risks effectively
3. 03which may require us to post additional collateral, thereby reducing our unencumbered liquidity, limiting resources available for operational needs and further margin obligations
4. 04The Fed’s participation in the Agency mortgage market could have an adverse effect on our Agency RMBS investments
5. 05Our active portfolio management strategy may expose us to greater losses and lower returns than compared to passive strategies
6. 06A decline in the fair value of our assets may adversely affect our financial condition and make it costlier to finance our assets
7. 07Changes in prepayment rates may adversely affect the return on our investments
8. 08Prepayment rates are difficult to predict, and market conditions and other factors impacting mortgage origination channels may disrupt the historical correlation between interest rate changes and prepayment trends
9. 09The analytical models and third-party data that we rely on to manage our portfolio and conduct our business objectives may be incorrect, misleading or incomplete
10. 10The fair value of our investments may not be readily determinable or may be materially different from the value that we ultimately realize upon their disposal
11. 11The mortgage loans referenced by our CRT securities or that underlie our non-Agency securities may be or could become subject to delinquency or foreclosure, which could result in investment losses
12. 12Private mortgage insurance may not cover losses on loans referenced by our CRT securities and underlying our non-Agency RMBS
13. 13Changes in credit spreads may adversely affect our profitability
14. 14We may be unable to acquire desirable investments due to competition, a reduction in the supply of new production Agency RMBS having the specific attributes we seek, and other factors
15. 15We may change our targeted investments, investment guidelines and other operational policies without stockholder consent

Risks Related to Our Financing and Hedging Activities

1. 16Our strategy involves the use of significant leverage, which increases the risk that we may incur substantial losses
2. 17We may be unable to procure or renew funding on favorable terms, or at all
3. 18Our borrowing costs may increase at a faster pace than the yield on our investments
4. 19It may be uneconomical to roll our TBA dollar roll transactions, and we may be required to take physical delivery of the underlying securities and fund our obligations with cash or other financing sources
5. 20Our funding and derivative agreements subject us to margin calls that could result in defaults and force us to sell assets under adverse market conditions or through foreclosure
6. 21Our repurchase agreements and agreements governing certain derivative instruments may contain financial and nonfinancial covenants subjecting us to the risk of default
7. 22Our rights under repurchase and derivative agreements in the event bankruptcy or insolvency may be limited
8. 23Our funding and derivative agreement counterparties may not fulfill their obligations to us as and when due
9. 24Our hedging strategies may be ineffective

Risks Related to Our Business Operations

1. 25Our executive officers and other key personnel are critical to our success and the loss of any executive officer or key employee may materially adversely affect our business
2. 26We are highly dependent on information systems and third-party service providers to conduct our operations, and system failures, cybersecurity incidents or failure of our providers to fulfill their obligations to us could significantly disrupt our ability to operate our business

Risks Related to Our Taxation as a REIT

1. 27Our failure to qualify as a REIT would have adverse tax consequences
2. 28REIT distribution requirements could adversely affect our ability to execute our business plan
3. 29We may choose to pay dividends in our own stock, in which case stockholders may be required to pay income taxes in excess of cash dividends received
4. 30Even if we remain qualified for taxation as a REIT, we may nonetheless be subject to certain federal, state and local taxes on our income and assets, including the following items. Any of these or other taxes we may incur would decrease cash available for distribution to our stockholders
5. 31Complying with REIT requirements may cause us to liquidate or forgo attractive investment opportunities
6. 32Complying with REIT requirements may limit our ability to hedge effectively and may cause us to incur tax liabilities
7. 33Uncertainty exists with respect to the treatment of our TBAs for purposes of the REIT asset and income tests
8. 34Qualifying as a REIT involves highly technical and complex provisions of the Internal Revenue Code
9. 35The tax on prohibited transactions could limit our ability to engage in certain transactions
10. 36Distributions to tax-exempt investors may be classified as unrelated business taxable income
11. 37Federal housing finance reform and potential changes to the Federal conservatorship of Fannie Mae and Freddie Mac or to laws or regulations affecting the relationship between the GSEs and the U.S. Government may adversely affect our business
12. 38Failure to satisfy regulatory requirements of our captive broker-dealer subsidiary could result in our inability to access tri-party repo funding through the FICC’s GCF Repo service and could be harmful to our business operations
13. 39Loss of our exemption from regulation pursuant to the Investment Company Act would adversely affect us
14. 40New legislation or administrative or judicial action could make it more difficult or impossible for us to remain qualified as a REIT or it could otherwise adversely affect REITs and their stockholders

Risks Related to Our Common Stock

1. 41The market price and trading volume of our common stock may be volatile
2. 42We have not established a minimum dividend payment level and may be unable to pay dividends in the future
3. 43Our certificate of incorporation generally does not permit ownership of more than 9.8% of our common or capital stock and attempts to acquire amounts above this limit will be ineffective unless an exemption is granted by our Board of Directors