AGNC Investment Corp (AGNCO) 2015 Q1 法說會逐字稿

Good morning and welcome to the American Capital Agency first-quarter 2015 shareholder call.

(Operator Instructions) Please note this event is being recorded.

I would now like to turn the conference call over to Ms. Katie Wisecarver in Investor Relations.

Ms. Wisecarver, the floor is yours, ma'am.

Thank you, Mike, and thank you all for joining American Capital Agency's first-quarter 2015 earnings call.

Before we begin, I'd like to review the Safe Harbor statement.

This conference call and corresponding slide presentation contain 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 such 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 forecast 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 the risk factors section of AGNC's periodic reports filed with the Securities and Exchange Commission.

Copies are available on the SEC's website at www.sec.gov.

We disclaim any obligation to update our forward-looking statements unless required by law.

An archive of this presentation will be available on our website, and the telephone recording can be accessed through May 12 by dialing 877-344-7529 or 412-317-0088, and the conference ID number is 10063169.

To view the slide presentation, turn to our website, agnc.com, and click on the Q1 2015 earnings presentation link in the upper right corner.

Select the webcast option for both slides and audio or click on the link in the conference call section to view the streaming slide presentation during the call.

Participants on the call today include Malon Wilkus, Chair and Chief Executive Officer; Sam Flax, Director, Executive Vice President, and secretary; John Erickson, Director, Chief Financial Officer, and Executive Vice President; Gary Kain, President and Chief Investment Officer; Chris Kuehl, Senior Vice President, Mortgage Investments; Peter Federico, Senior Vice President and Chief Risk Officer; and Bernie Bell, Vice President and Controller.

With that, I'll turn the call over to Gary Kain.

Thanks, Katie; and good morning to everyone on the call, and thank you for your continued interest in AGNC.

2015 got off to an extremely volatile start.

I can't remember a quarter with more two-way volatility in interest rates in my 25-plus years in the business.

We started off the year with a 50 basis point rally in January, which saw the 10-year Treasury go from 2.17% at year-end to 1.64% on January 30.

We then witnessed a complete reversal of this move in just over one month, with the 10-year peaking at just under 2.25% on March 6. So a couple of months into the year, we experienced both a 50 basis point rally and a 60 basis point sell-off.

That wasn't the end of it, though, as we closed the quarter with a 31 basis point rally that brought the 10-year yield back down to 1.93% at quarter-end.

Now, we discussed on our Q4 earnings call that we believed it was prudent to take a more conservative approach to our positioning the portfolio in light of the rally we experienced in the fourth quarter, the strong performance of Agency MBS, and our view that interest rate volatility was likely to remain high.

More specifically, we highlighted that toward the end of Q4, we reduced our position in higher-coupon generic MBS; lowered our duration exposure; and were operating with relatively low leverage.

These moves allowed us to comfortably manage the portfolio throughout the quarter without having to make major adjustments to our position and without experiencing significant intra-quarter swings in our book value.

Looking ahead, we remain concerned that the tug-of-war between global economic headwinds and a Fed that would like to raise rates during 2015 is likely to continue; and that, as a result, interest rate volatility could remain elevated for the next several quarters.

In response, we anticipate continuing to prioritize risk management over incremental returns in the near term.

Consistent with this defensive mindset, we decided to make a modest reduction in our monthly dividend to $0.20 per share from $0.22.

The reality is that there is a cost to a considerably more conservative position, and we want to be transparent about that.

It is important to keep in mind that the $0.20 per share dividend still translates to approximately an 11% dividend yield, based on yesterday's closing stock price.

With that as the introduction, if we turn to slide 4, I will briefly touch on a few of the Q1 results.

First, despite the volatility and a relatively small duration gap, we were able to generate an economic return of 1.7% for the quarter or 7.1% annualized, based on the combination of $0.66 per share in dividends and the small decline of $0.21 per share in our book value.

Our net spread income for the quarter totaled $0.70, inclusive of dollar roll income and excluding $0.05 of catch-up amortization cost.

The decline from the run rate of the last few quarters is a function of a number of factors, including lower leverage; a smaller dollar roll position; reduced duration gap; and somewhat faster prepayment estimates.

Now, to this point, lowering leverage and reducing our duration gap were proactive decisions management chose to make.

If we were to become more constructive on one or both of these, then the impact on earnings per share could be meaningful.

For example, depending on market conditions and other factors, an extra turn of leverage or an additional one-year duration gap could each add approximately $0.10 per share per quarter to our net spread income.

As I indicated earlier, and as is depicted on slide 5, our March 31 leverage declined to 6.4 times, which is our lowest level since 2008.

Again, while there is a cost to lower leverage, we believe this approach is prudent in today's environment.

Now I'd like to turn the call over to Chris to discuss the market conditions on slide 6 in the portfolio.

Thanks, Gary.

Turning to slide 6, you can see in the top right panel that 5- and 10-year swap rates had more or less a parallel shift lower by 24 and 26 basis points, respectively, during the quarter.

While this was a significant move in rates, what it does not show is the extreme intra-quarter interest rate volatility that Gary just discussed.

Mortgages performed reasonably well given the rate move, with the exception of TBA thirty-year 4s, which underperformed quite significantly relative to other coupons.

15-year MBS also did well, especially 15-year 3s, after closing the fourth quarter on a weaker note relative to 30s.

For example, you can see that relative to the 5-year Treasury note, which was up in price but by more than 1 point during the first quarter, 30-year 4s increased in price by less than 0.25 point, while 15-year 3s increased in price by nearly 1 point, despite the fact that they are generally thought of as having similar durations.

Let's now turn to slide 7. As we discussed on the call last quarter, the increase in both interest rate volatility and prepayment uncertainty warranted, in our view, a more balanced and lower-risk investment portfolio.

And given the changes that we made during the fourth quarter, we were well positioned to weather the extreme moves in rates that we have experienced over the last several months without having to bet that the rate moves were temporary.

As you can see in the top left chart, the investment portfolio was $66.2 billion as of March 31, down from $71.5 billion at the start of the quarter.

Our mix of 15-year and 30-year MBS was unchanged as of quarter-end, with 15-year MBS representing 37% of the portfolio.

I'd like to point your attention to the fact that our 30-year holdings included a significant position in Ginnie Mae pass-throughs as of March 31, as noted in the footnote on the bottom of this slide.

As you may know, Ginnie Mae securities carry an explicit full faith and credit government guarantee, and because of that they enjoy certain bank regulatory capital and liquidity ratio benefits.

Ginnie Maes are also the investment of choice for many overseas investors.

And given these benefits, they have historically traded with a significant premium on average to conventional Fannie Mae and Freddie Mac securities.

However, in the first week of this year, the White House and HUD jointly announced that the annual insurance premium, which is equivalent to a guarantee fee, would be lowered from 130 basis points to 80 basis points effective January 26.

The announcement took the market by surprise, raising significant prepayments and supply concerns for the sector.

As a result, Ginnie Mae prices were down significantly in relation to conventional MBS.

Generally speaking, since Ginnie Mae pass-throughs typically trade with a significant premium to conventional MBS, they are not an attractive REIT asset for the simple reason that the bank capital and liquidity ratio benefits do not apply to our rate; nor are the repo funding terms any more attractive relative to conventional MBS.

That said, the price correction following the announcement was an overreaction in our view, and we were comfortable establishing a position.

As of March 31, our 30-year Ginnie Mae TBA holdings were approximately $3.7 billion, down from an intra-quarter peak of $4.6 billion.

I'll now turn the call over to Peter Federico to discuss funding and risk management.

Thanks, Chris.

I'll begin with our financing summary on slide 8. Our repo funding cost was unchanged during the quarter at 41 basis points.

Consistent with the shift in our asset composition toward a greater share of on-balance-sheet pools relative to off-balance-sheet TBAs, our repo balance increased $6 billion to $54 billion at quarter-end.

During the quarter we adjusted the maturity profile of our funding somewhat by increasing our share of longer-term repo.

In particular we added about $1.5 billion of funding, with maturities ranging from three years to five years -- and, as a result, increased the average days to maturity of our repo funding from 143 days to 164 days at quarter-end.

We are pleased to announce today that AGNC's captive insurance subsidiary has recently been approved as a member of the Federal Home Loan Bank of Des Moines.

The Federal Home Loan Bank system has proven to be a reliable source of liquidity to the US housing finance system, even in times of great financial stress.

We sought membership with the Federal Home Loan Bank of Des Moines given their size, credit quality, and experience in providing financing for Agency MBS.

The membership process took longer than originally anticipated, given the self-imposed moratorium initiated by the Federal Home Loan Banks themselves and due to FHFA's Notice of Proposed Rulemaking.

We, like hundreds of other interested parties, submitted a comment letter in support of maintaining the eligibility of captive insurance companies as Federal Home Loan Bank members.

Mortgage REITs are permanent capital vehicles that are mandated by law to invest in real estate related assets.

From this perspective we believe the mission of mortgage REITs, FHFA, and the Federal Home Loan Banks are perfectly aligned.

And we are hopeful that the membership eligibility for captive insurance companies who are in the business of providing liquidity to the US housing finance system is maintained.

On slide 9 we provide a summary of our hedge position.

At quarter-end our hedge portfolio totaled just over $49 billion and covered 78% of our repo and other debt balance.

In response to the drop in interest rates experienced during the quarter, we chose to terminate $3.5 billion of our receiver swaptions at a gain of $13 million.

We replaced the down rate protection provided by these options with intermediate and longer-term treasuries.

As a result our treasury position switch shifted from a short position of $2.9 billion at year-end to a long position of just under $1 billion at the end of the first quarter.

On slide 10 we summarize our duration gap and our duration gap sensitivity.

As Gary mentioned, given the uncertain global interest rate environment, we have chosen to operate with a lower risk profile, which included limited limiting our exposure to interest rate changes by minimizing our duration gap.

Consistent with this approach, our duration gap at the end of the first quarter was 2/10 of a year long.

With that, I'll turn to call back over to Gary.

Thanks, Peter.

And before I open up the call to questions, I want to expand on the current interest rate landscape and how it has impacted AGNC's performance.

On slide 11 the graph on the top left highlights the volatility I touched on in my opening remarks.

The large two-sided rate swings stand out, but so does the continuation of a five-quarter trend lower in rates.

It is really pretty amazing that a little over a year ago, the yield on the 10-year Treasury was at 3%, and the consensus was that rates were only headed higher.

Today the 10-year yield is less than 2%.

Moreover, in the midst of this rally, the unemployment rate has declined from 6.7% at the end of 2013 to 5.5% today.

The Fed ended QE3 over six months ago and now seems intent on trying to begin to raise rates later in 2015.

Yet today, the consensus view on rates is more balanced -- despite the rally, the stronger data, and the Fed.

Why?

A big part of that answer relates to the information summarized on the table to the right.

US rates have certainly not trended lower in isolation, and most market participants attribute the bulk of the rally in US rates to what is happening globally, and in Europe in particular.

Weak global growth and deflationary forces have led to substantial quantitative easing on the part of the ECB and the Japanese Central Bank.

The combination of these forces have pushed some overseas sovereign yields to what would have been thought of as impossible levels just a few years ago.

If you look at the table to the right, you can see what has happened to 1-, 5-, and 10-year rates in some relevant countries.

In the interest of time, let me focus on the 5-year rates for a moment.

And let me start at the top, with Switzerland.

No, that is not a typo; and yes, you do have to pay the Swiss government 40 basis points for the privilege of lending them money for five years.

In Germany you have to pay them 10 basis points, while French and Japanese 5-year rates were yielding just north of zero as of March 31.

Against this backdrop, US rates look very attractive to global fixed-income investors, especially when coupled with the view that the dollar is likely to hold its own or strengthen.

This is a key reason why many participants are convinced that US rates are unlikely to rise much, even if the Fed does tighten in 2015.

When you couple this technical support with a more fundamental view that there are significant headwinds on the inflation front -- such as the negative implications of a stronger dollar, low energy prices, and the implications of global competition and technological advances on the US wage picture -- a reasonable case can actually be made for even lower US rates.

That said, what makes this environment so difficult is the tug-of-war between these arguments and a US economy which has clearly made substantial progress on the employment front, and a Fed that wants to start to normalize rates.

In addition, it is also reasonable to believe that the massive global stimulus currently being supplied, coupled with soaring asset prices, will kick in and at least temporarily boost global growth and take some pressure off the dollar.

If that happens or is believed to be happening, then a spike higher in rates, given the Fed's stance, is quite possible.

We believe this conundrum has been a key driver of the recent volatility, where the market tends to overshoot in either direction.

When you couple this with an overall decline in bond market liquidity, partially as a result of the regulatory environment and partially due to the outsized central bank activities, you get an environment where idiosyncratic risk is elevated.

Now if we turn to slide 12, I want to conclude today's prepared remarks with the good news.

We've already discussed why we feel it's prudent to be conservative with our positioning in light of the heightened volatility in global rates markets.

But I also need to stress how manageable this volatility has actually been for our portfolio.

AGNC's decision to start reporting monthly NAV estimates beginning last October provides investors with significant insight into our intra-quarter performance.

As the gray bars on the top left graph show, our book value has not changed by more than 1% from the prior month's NAV in any of the last six months, even against the backdrop of the substantial interest rate volatility we just discussed.

This result wouldn't be possible if we were running large duration or curve positions.

The blue line on the graph on the right is even more important.

It shows that we have seen steady and consistent growth in our economic returns over the past six months.

It was only one month which didn't produce positive economic returns, and in that month the economic return was essentially flat.

Additionally, in February, when interest rates spiked, we had our best monthly return during this six-month period.

The bottom line is while there has been a great deal of volatility in the markets, the Agency ABS market is not even close to being at the eye of any potential storm, like it was in 2013.

And, yes, the rate picture is cloudy; but it is also very manageable with the right combination of prudent portfolio positioning and active management.

So with that, let me open up the lines to questions.

(Operator Instructions) Joel Houck, Wells Fargo.

So if we stick to slide 12 here, is the message that -- you know, given the uncertainty, you are running a tighter book, therefore returns are going to be stable?

But what you give up, I think, is the higher alpha from higher interest rate volatility.

Because if you look at the history of AGNC, it's usually that -- the big swings is when AGNC has taken advantage of that.

So I guess the question is: is that kind of the strategy changing because of the uncertainty in the environment?

Or is it just a function of -- the Company is so large right now that it's more difficult to be nimble and take advantage of rate volatility like we've seen in the past?

A very good question, Joel.

And I would say it's the former.

Look, as you mentioned, we take a lot of pride in the alpha or the performance that we've been able to generate over an extended period of time -- over a six-year period.

But there are times, practically speaking, where the way you can, in a sense, add value to your shareholders is by reducing the volatility of returns rather than, in a sense, trying to get extra returns.

So what I would say is: this is very much a temporary position related to kind of the interest rate environment that we discussed.

It's also related to the pricing of Agency mortgages and so forth.

And it's an environment where we feel the right approach for our shareholders is to minimize volatility, see what develops over the next three to six months, and then react from there.

Again, very easy to increase direction duration gap; to increase leverage; and if those opportunities present themselves, we are not at all taking -- we want to move to a more normal position.

We just feel this is the right place to be right now.

All right.

Thank you.

Doug Harter, Credit Suisse.

Thanks.

Gary, I was hoping you could shed some light on how you are thinking about what would be kind of a -- what would have to happen in the macro environment for you to want to go to sort of that more normal risk position?

Great question.

So I think the short answer is there are a lot of different outcomes that could create -- that could allow us, in a sense, to move back to a more normal risk position -- on either, let's say, the duration front or the leverage front, or both, for that matter.

Go through a couple of examples -- if it turns out that while the Fed obviously would like to raise rates, there are a lot of questions as to whether the inflation picture and for that matter the economy are really going to allow that to happen; and if it becomes clear that that's not going to happen, and we rally further, it is likely that mortgage will widen, and some due to prepayment exposure and production.

That would probably lead us to be very willing to take up leverage, and that could happen relatively quickly.

Alternatively, if we kind of go in the other direction, where the global economic forces kind of weaken or strengthen, and kind of the deflationary forces weaken, and we end up at higher interest rates, it's very likely that we would be willing, at least first, to increase our duration gap.

Because our mindset is that it's very likely in that scenario that that move is somewhat temporary.

So I think it's likely that we'd be willing to increase our duration gap meaningfully if that were to happen.

And then depending on the performance of mortgages -- if mortgages were to weaken in that environment, then we would love to take leverage up as well.

It's very possible that they will actually perform relatively well, in which case the increasing leverage scenario may take a little longer.

Lastly, if we just kind of grind in one direction or the other, but we reduce some of those two-sided uncertainty, then I think you will see movements kind of either way back toward over time a more normal position.

So again, we look at this as being a reaction to kind of the current environment.

And I think there are a number of ways where that position can change.

And just to clarify, the $0.10 quarterly number -- that was for either leverage or duration?

Yes.

They are not exactly the same, and it's obviously going to be dependent on the shape of the yield curve, obviously, as to how much you pick up with duration.

And it's going to matter whether or not you are going to use TBAs, in which case it would be noticeably more than the $0.10.

So I don't want to -- I mean, that's just a very rough approximation.

I think that the leverage number is probably biased a little higher in terms of maybe more than $0.10.

And then the one-year duration gap, again, is very dependent on the yield curve.

But it's probably in that ZIP Code.

Great.

Thanks, Gary.

Matthew Howlett, UBS.

Gary, what was the argument against potentially further deleveraging and just repurchasing stock for the time being?

You guys have done that before.

In this environment what would be the case against it versus sort of this -- I didn't see any buybacks this quarter, but what would be the case against it?

I guess -- let me start by saying -- you mentioned deleveraging.

Stock buybacks would actually be increasing leverage, essentially.

If we were repurchasing stock, everything else being equal, our leverage would actually go up.

Right.

I mean as selling assets.

Right.

And obviously, we -- as we have disclosed, we were taking leverage in the other direction.

But just big picture, we look at a lot of factors with respect to stock buybacks.

And we do see this environment as different than a little over a year ago.

If you look at the environment a year ago, the mortgages -- we had just come out of the taper tantrum.

Mortgages were in our minds oversold relatively cheap; interest rates -- again, the 10-year was at 3%; the yield curve was steeper.

It was -- we felt the rates market was oversold, as well.

It was a -- not only were you at an attractive price-to-book, but you also had very attractive underlying asset valuations.

So when you piece that whole thing together, this environment is somewhat different than the environment we saw a year ago.

Right.

I follow that, but -- I know you didn't say it, but let's just presume that mortgages are rich today, given the stimulus, that the Fed is still reinvesting.

Would there be a case for then just sort of selling those back to them and returning capital via buybacks versus a dividend?

Just -- I mean, we've seen REITs -- it's enormously accretive long-term for a REIT to buy back its shares.

We've seen this done before, and it seems like shareholders come out the other side rewarded with it.

Just looking at it, do you look at a rich/cheap analysis?

I mean, I'm just trying to -- with the stock [pool] 20% below book, that's the reason why I really am digging on the question.

Look, I think we understand -- and as you mentioned, we did repurchase a fair amount of shares a year and a half ago.

I think we understand that equation.

But I do think, again, price-to-book is an important factor.

It's not the only factor in the equation.

And with respect to selling mortgages -- in a sense, by delevering we are doing that.

We are selling mortgages into the market at these valuations, essentially, given the reduction in the balance sheet and the price-to-book ratio -- I'm sorry, in the reduction in the leverage ratio.

Got you.

Fair enough.

Thanks, Gary.

Jim Young, West Family Investments.

Hi, Gary.

Could you talk about your -- the relationship with the Des Moines Federal Home Loan Bank?

How do you see this relationship developing over time?

And how would you expect to access the funding?

This is Peter -- I'll be happy to answer that question.

Again, we are pleased to become a member of the Federal Home Loan Bank of Des Moines.

We would view this as a very valuable source of financing, particularly in times of stress.

We also look at it as a very beneficial diversification to our funding base.

It's likely not going to be a source of funding that we use sort of every day, but it is something that we are very pleased to have.

And we also want to point out that there's still a process underway with FHFA as to whether or not the eligibility will be maintained.

So we are not approaching this as a permanent source of financing yet, but we are very hopeful that it does become one.

Okay.

And secondly, with respect to the share buyback question -- Gary, you had mentioned that price-to-book is one parameter, but you look at others.

What are those two or three other factors that are most important in the overall analysis?

Because, again, at this significant discount to book, it does seem to make sense to buy back stock.

Sure.

First off, again, we absolutely look at the overall interest rate environment.

As we have talked about, we look at the valuation of our underlying assets as well, and kind of our views about that.

We think about the likely drivers of kind of changes in valuations, both to the instruments and, for that matter, to the stock and so forth.

So there are a host of different things that we look at.

We obviously also have other constraints with respect to share buybacks, such as (technical difficulty) window periods.

It's not just a simple trading or investment decision.

It's not executed the same way.

It's a different decision-making process.

Brock Vandervliet, Nomura Securities.

Just with respect to dollar roll, I'm just trying to get a sense -- you know, some of the companies have been very tactical in their approach to it.

Is your current exposure kind of the new normal we can expect going forward?

No, I don't think it's a new normal.

It's also a function of the reduction in leverage.

Obviously, TBAs are the most liquid.

If you are going to reduce your balance sheet, that's a logical place to start.

But what we've always stressed with the dollar roll and TBA position is that it's a trade-off between knowing the underlying characteristics of the pool versus the funding advantages in the dollar roll market.

And those trade-offs change, but I think even in today's environment there are definitely opportunities on the dollar roll front.

And we haven't moved away or abandoned that.

I think it's more a function of that we did feel it was important to move the coupons around of our position, but we also -- we are reducing leverage, and so it was sort of a natural outcome from that.

Okay.

Thank you.

And just as a related question, is there anything you would call out with respect to cost of funds?

Just for modeling this going forward -- there was a fair amount of movement in your cost of funds this quarter.

If you could just speak to those dynamics, that would be helpful.

Thank you.

Yes, Brock, this is Peter.

I would say the biggest move in our cost of funds this quarter was the balance sheet allocation between on-balance-sheet and off-balance-sheet.

So that's really going to drive -- that's going to be the significant driver as to how much we fund on-balance-sheet versus off-balance-sheet.

If you look at our hedge ratio, it is up a little bit.

It's at 78%, up 2% for the quarter.

But we've been operating at the sort of hedge ratio now for a while.

So I would expect us to maintain the sort of hedge composition for your modeling purposes.

Okay.

Thank you.

Mike Widner, KBW.

Good morning, guys.

I think one thing you haven't touched on too much was just the pre-pay protected stuff in the portfolio.

And you had mentioned kind of what your thoughts were on prepaid protection premiums in past quarters.

And with the portfolio sort of being more heavily concentrated in that stuff today, I'm wondering what your view is?

The you still think those are good buys?

Would you be adding to that or potentially reducing that exposure?

Sure.

So in the current environment, it's still not clear whether or not you should be more concerned about call risk or extension risk.

And at the same time, the highest-quality specified pools are relatively fully valued.

If you look on slide 24 in the appendix, you can see that around 50% of our holdings are in higher-quality specified pools.

But we also have positions in pools that have low or negligible pay-ups that, still, we expect to perform very well and more in line with sort of the respective cohorts, but far better than the cheapest to deliver securities.

And those -- in addition to decent performance from a cash flow perspective, those positions also provide a fair amount of flexibility.

For example, if rolls spike, we could be opportunistic and deliver those pools in and take advantage of attractive financing rates.

Okay.

I appreciate those comments.

And I guess just related to that, how did the CPRs across the portfolio look in the April data, you know, this most recent month, relative to kind of what you saw in 1Q on average?

On slide 7 we do give you the most recent release.

Speeds were definitely higher during the quarter overall, just given the lower driving rates.

But the prepayment speeds you can see on our holdings were very well contained relative to the universe, without any real surprises.

At this point we've seen sort of the peak speeds from this -- you know, kind of the lows in this rate cycle over the last couple of months.

Next month's speeds should probably be around 10% slower, just given higher driving rates.

But also, the composition of the portfolio will vary.

And it's actually probably migrating to something that's favorable on that front, too.

So I think there are a lot of moving parts.

Yes.

No, clearly, a lot of moving parts.

And sorry I missed the extra April data on slide 7. But that answered my questions.

And congrats on the FHLB membership, by the way.

John Carmichael, Investor.

Gary, how are you doing?

Congratulations on the FHL and BB membership.

Thank you.

I'm assuming that you guys like your existing portfolio, and so that sort of raises, again, the issue about share buybacks, and why you wouldn't be wanting to add runoff to your own portfolio?

That's my only question.

I guess -- we've had a couple of questions on share repurchases.

I'm not sure what else I can add to the answers that I provided earlier.

Thank you.

We have now completed the question-and-answer session.

I would now like to turn the conference back over to Gary Kain for any closing remarks.

Sir?

I'd like to thank everyone for their participation on the call, and we look forward to talking to you next quarter.

And we thank you, sir -- to the rest of the management team for your time also today.

The conference call is now concluded.

An archive of this presentation will be available on AGNC's website, and a telephone recording of this call can be accessed through May 12, 2015, by dialing 877-344-7529 using the conference ID 10063169.

Again, that is 877-344-7529, conference ID 10063169.

Again, we thank you all for attending today's presentation.

At this time you may disconnect your lines.

Thank you and take care, everyone.