What changed in this filing

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Item 1. Business

2023-02-27 compared with 2022-02-23 · 37 added, 38 removed, 166 unchanged (31% of the section changed)

14 unchanged sentences

It is our intention to distribute 100% of our taxable income within the time limits prescribed by the Internal Revenue Code, which may extend into the subsequent taxable year.

We are internally managed with the principal objective of providing our stockholders with attractive risk-adjusted returns through a combination of monthly dividends and tangible net book value accretion.

We are internally managed with the principal objective of providing our stockholders with favorable long-term returns on a risk-adjusted basis through attractive monthly dividends.

We generate income from the interest earned on our investments, net of associated borrowing and hedging costs, and net realized gains and losses on our investment and hedging activities.

2 unchanged sentences

Our investment strategy is intended to:

• generate attractive risk-adjusted returns for our stockholders through monthly dividend distributions and tangible net book value accretion;

• generate attractive risk-adjusted returns for our stockholders through monthly dividend distributions;

• manage an investment portfolio consisting primarily of Agency securities;

18 unchanged sentences

• Credit Risk Transfer ("CRT") Securities.

CRT securities are risk sharing instruments that transfer a portion of the risk associated with credit losses within pools of conventional residential mortgage loans from the GSEs and/or third- parties to private investors.

CRT securities are risk sharing instruments that transfer a portion of the risk associated with credit losses within pools of conventional residential mortgage loans from the GSEs and/or third-

parties to private investors.

Full repayment of the original principal balance of CRT securities is not guaranteed by the GSE or other third-party;

21 unchanged sentences

Our financing rates are primarily impacted by short-term benchmark rates and liquidity in the Agency repo and short-term funding markets.

The amount of leverage that we utilize depends on market conditions, our assessment of risk and returns and our ability to borrow sufficient funds to acquire mortgage securities.

The amount of leverage that we utilize depends on market conditions, our assessment of risk and returns and our ability to borrow sufficient funds on favorable terms to acquire mortgage securities.

We generally expect our leverage to be within six to twelve times the amount of our tangible stockholders' equity, but under certain conditions we may operate at leverage levels outside of this range.

1 unchanged sentence

We finance a portion of our investments through our wholly-owned captive broker-dealer subsidiary, Bethesda Securities, LLC ("BES").

BES is a member of the Fixed Income Clearing Corporation ("FICC") and has direct access to bilateral and triparty repo funding as a Financial Industry Regulatory Authority ("FINRA") member broker-dealer.

BES is a member of the Fixed Income Clearing Corporation ("FICC") and has direct access to bilateral and tri-party repo funding as a Financial Industry Regulatory Authority ("FINRA") member broker-dealer.

As an eligible institution, BES also raises repo funding through the General Collateral Finance ("GCF") Repo service offered by the FICC, with the FICC acting as the central counterparty.

Thus, through BES, we have greater depth and diversity of funding than solely through traditional bilateral repo, while also lowering our funding cost, reducing our collateral requirements and limiting our counterparty exposure.

We also finance the acquisition of Agency RMBS by entering into TBA dollar roll transactions through which we sell a TBA contract for current month settlement and simultaneously purchase a similar TBA contract for a forward settlement date.

Prior to the forward settlement date, we may choose to roll the position to a later date by entering into an offsetting TBA position, net settling the paired off positions for cash, and simultaneously entering into a similar TBA contract for a forward settlement date.

The TBA contract purchased for the forward settlement date is priced at a discount to the TBA contract sold for settlement/pair off in the current month.

The difference (or discount) is referred to as the "price drop" and is the economic

equivalent of net interest carry income (interest income less implied financing cost) on the underlying Agency RMBS over the roll period, which is commonly referred to as "dollar roll income." We recognize TBA contracts as derivative instruments on our consolidated financial statements at their net carrying value, which is their fair value less the purchase price to be paid or received under the TBA contract.

Consequently, dollar roll transactions represent a form of off-balance sheet financing.

We also finance the acquisition of Agency RMBS by entering into TBA dollar roll transactions through which we simultaneously sell a TBA contract for the current month's settlement date and purchase a similar TBA contract for a forward month's settlement date.

The TBA contract purchased for the forward settlement date is typically priced at a discount to the TBA contract sold for the current month.

The discount, or "price drop", is the economic equivalent of interest income on the underlying Agency RMBS, less an implied financing cost, between the current month and forward month settlement dates.

Hence the discount or price drop from rolling TBA positions forward is commonly referred to as "TBA dollar roll income." We recognize TBA contracts as derivative instruments on our consolidated financial statements at their net carrying value, which is their fair value less the purchase price to be paid or received under the TBA contract.

Consequently,

dollar roll transactions represent a form of off-balance sheet financing.

In evaluating our overall leverage, we consider both our on-balance sheet and off-balance sheet financing.

33 unchanged sentences

however, we treat these as qualifying income for this purpose based on an opinion of legal counsel.

The treatment of interest income from other real estate securities depends on their specific tax structure.

The treatment of interest income from other real estate

securities depends on their specific tax structure.

Income and gains from instruments that we use to hedge the interest rate risk associated with our borrowings incurred, or to be incurred, to acquire real estate assets will generally be excluded from both gross income tests, provided that specified requirements are met.

13 unchanged sentences

Regulatory Requirements of our Captive Broker-Dealer Subsidiary

BES as a member of the FICC and FINRA is subject to ongoing membership and regulatory requirements of the securities business that include but are not limited to trade practices, use and safekeeping of funds and securities, capital structure, recordkeeping and conduct of directors, officers and employees.

BES is subject to ongoing membership and regulatory requirements as a member of the FICC and FINRA and as a registered broker-dealer that include but are not limited to trade practices, use and safekeeping of funds and securities, capital structure, recordkeeping and conduct of directors, officers and employees.

Additionally, as a self-clearing, registered broker-dealer, BES is subject to minimum net capital requirements.

Thus, our ability to access triparty repo funding through the FICC's GCF Repo service, which represents a significant portion of our total borrowing capacity, is reliant on BES' ability to continually meet FINRA and FICC regulatory and membership requirements.

Thus, our ability to access tri-party repo funding through the FICC's GCF Repo service, which represents a significant portion of our total borrowing capacity, is reliant on BES' ability to continually meet FINRA and FICC regulatory and membership requirements.

Human Capital Management

13 unchanged sentences

Employee t erminations include voluntary and involuntary terminations.

Terminations during 2019 were primarily associated with the termination of MTGE Investment Corp.’s management services agreement with our subsidiary MTGE Management, LLC due to the sale of MTGE Investment Corp.

to a third party in 2018.

Employee Communications and Engagement

We recognize the importance of ongoing open communication and engagement with our employees, and we greatly value their input.

We regularly engage with our employees in a variety of ways through ongoing direct engagement with each member of our staff, anonymous employee surveys and regular town hall meetings.

Our anonymous employee surveys are an important component of our employee engagement that provide a means of assessing job satisfaction and specific concerns of our employees.

We regularly engage with our employees in a variety of ways through ongoing direct engagement with each member of our staff, anonymous annual employee surveys and regular town hall meetings.

Our anonymous employee surveys

are an important component of our employee engagement that provide a means of assessing job satisfaction, engagement, and specific concerns of our employees.

To enhance the candor and comfort of our employees, we use outside vendors that provide verbatim comments and analysis of engagement levels on an anonymous basis.

In 2021, AGNC received the Great Place to Work™ certification.

In 2021, AGNC received the Great Place to Work™ certification in recognition of employee engagement efforts.

The prestigious certification was based entirely on feedback from employees through an extensive anonymous survey about their experiences working at AGNC, during which 98% of our employees said AGNC is a great place to work.

3 unchanged sentences

Our Code of Ethics and Conduct ("Code of Conduct") applies to all directors, officers and employees and provides clear expectations and guidance to facilitate appropriate decisioning.

Our Code of Conduct covers topics such as compliance with securities laws, conflicts of interest, giving and receiving gifts, discrimination, harassment, privacy, appropriate use of Company assets, protecting confidential information, and reporting Code of Conduct violations (including through an anonymous hotline).

All employees are required to affirm their understanding of these standards on at least an annual basis.

In 2022, we conducted mandatory compliance training on the Code of Conduct, insider trading, whistleblower protections and anti-harassment.

Our executive officers and human resources department maintain "open door" policies, and any form of retaliation for bona fide reporting of Code of Conduct violations is expressly prohibited.

Employee Development

We have a number of policies and programs to further the professional development of our employees, including our professional certification and continuing education policy.

This includes reimbursement for any supervisor-approved courses for our employees.

We also maintain a "Lunch and Learn" series and a formal mentoring program for employees to receive direct one-on-one career guidance and cross-functional experience across various operations.

We have a number of policies and programs to further the professional development of our employees.

These include our professional certification and continuing education policy, reimbursement for any supervisor-approved courses for our employees, and memberships to organizations, such as the Mortgage Bankers Association, which includes free access to educational webinars.

We also conduct periodic "Lunch and Learn" seminars and offer a formal mentoring program for employees to receive direct one-on-one career guidance and cross-functional experience across various operations.

Our employees also have the opportunity to lead and/or participate in employee-led initiatives, such as our employee-led Volunteerism & Community Outreach Committee, which is responsible for implementing and leading new volunteer opportunities, as well as identifying ways the Company can have a positive impact on the community.

These initiatives have advanced unique and professional skill sets throughout the organization.

2 unchanged sentences

We strive to have a diverse workforce and an inclusive and welcoming work environment that is free from wrongful discrimination.

We have long maintained policies against discrimination and harassment in our workplace, and we periodically conduct workplace trainings and workshops attended by all employees related to these topics.

Although we have a relatively small workforce and low turnover rate, our recruitment and hiring practices attempt to ensure the diversity of applicant pools for posted job openings.

1 unchanged sentence

As of December 31, 2022, 39% of our employees were women and 31% were ethnically diverse.

Our Board also strives to maintain diversity and inclusion among its directors.

As of December 31, 2021, three of our nine directors were women and two directors were ethnically diverse.

Compensation and Benefits

7 unchanged sentences

We provide our employees with access to flexible, comprehensive and convenient medical coverage intended to meet their needs and the needs of their families.

In addition to standard medical coverage, we offer employees dental and vision coverage, health savings and flexible spending accounts, paid time off,

employee assistance programs, voluntary short-term and long-term disability insurance, term life insurance and other benefits.

We also believe in the long-term financial wellness of our employees, and to foster maximum savings rates by our employees we offer a 401(k) Savings Plan and Company matching contributions of 100% up to 6% of each employee’s eligible compensation, subject to IRS limits.

COVID-19 and Workforce Safety

In addition to standard medical coverage, we offer employees dental and vision coverage, health savings and flexible spending accounts, paid time off, parental leave and adoption assistance, voluntary short-term and long-term disability insurance, term life insurance, employee assistance

programs, and other benefits.

We also believe in the long-term financial wellness of our employees, and to foster maximum savings rates by our employees we offer a 401(k) Savings Plan with Company matching contributions of 100% up to 6% of each employee’s eligible compensation, subject to IRS limits.

Workforce Safety;

and Hybrid Work Model

To protect the health and safety of our workforce, during the COVID-19 pandemic (the "Pandemic" or "COVID-19"), we shifted to a fully remote work-from-home environment prior to any jurisdiction’s mandate to do so.

We also instituted a survey in mid-2020 to understand our employees' perspective during the extreme circumstances brought about by the Pandemic, including work-from-home environment and resource issues, employee mental health and wellbeing, child-care considerations and similar matters.

We used their feedback to inform decisions regarding matters such as implementing flexible work schedules, providing additional resources and equipment to improve our employees work from home experience, and demonstrating flexibility with respect to the timing and manner of eventual office re-openings.

Finally, we hosted regular town hall meetings to ensure sufficient company-wide communication with our workforce during this time.

Employee survey results indicated that 100% of our employees believe we responded to the COVID-19 outbreak very well or extremely well.

These approaches continued in 2021.

Mid-year, we commenced a gradual return to in-office work, with employees having the choice to work in the office subject to safety protocols or to continue working remotely.

Going forward, when conditions permit, we expect to implement a hybrid model through which employees will be able to split hours between the office and remote work.

Based in part on employee survey results conducted after the onset of the Pandemic, in 2021, we commenced a gradual return to in-office work, with employees having the choice to work in the office subject to safety protocols or to continue working remotely.

In 2022, we implemented a hybrid model through which employees are able to split hours between the office and remote work.

We hold regular town hall meetings (typically quarterly) to ensure sufficient company-wide communication with our workforce in light of our hybrid working model.

Our success depends, in large part, on our ability to acquire assets at favorable spreads over our borrowing costs.

2 unchanged sentences

Our executive offices are located at Two Bethesda Metro Center, 12 th Floor, Bethesda, MD 20814 and our telephone number is (301) 968-9315.

We make available our Annual Reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to such reports as well as our Code of Ethics and Conduct on our internet website at www.AGNC.com as soon as reasonably practical after such material is electronically filed with or furnished to the SEC.

These reports are also available on the SEC internet website at www.sec.gov .

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business