AG Mortgage Investment Trust, Inc. Reports Second Quarter 2020 Results
SECOND QUARTER 2020 FINANCIAL SNAPSHOT
-
$(0.08) of Net Income/(Loss) per diluted common share(1) -
$2.75 Book Value per share(1) as ofJune 30, 2020 , compared to an estimated range of$1.80 to$1.90 atApril 30, 2020 and$2.63 as ofMarch 31, 2020 -
$278.7 million of MTM recourse financing and$409.6 million of non-MTM non-recourse financing as ofJune 30, 2020 as compared to$1.2 billion of MTM recourse financing and$197.2 million of non-MTM non-recourse financing as ofMarch 31, 2020 (a)-
Cash of
$68.2 million as ofJune 30, 2020
-
Cash of
-
$1.0 billion Investment Portfolio with a 0.8x Economic Leverage Ratio as ofJune 30, 2020 as compared to$1.6 billion and 3.3x, respectively, as ofMarch 31, 2020 (2)(3)(4) -
Issued approximately 1.4 million shares of common stock for net proceeds of approximately
$4.8 million through our ATM program(b)
(a) As of
(b) Of the 1.4 million shares issued and
MANAGEMENT REMARKS
"We are pleased with how the second quarter ended for MITT," said Chief Executive Officer,
"During the quarter, we were able to transition some of our financing away from mark-to-market, recourse financing. We ended the quarter with an Economic Leverage Ratio of 0.8x, compared with 3.3x at the end of the first quarter," Chief Investment Officer,
(a) MITT owns approximately 44.6% of Arc Home.
SECOND QUARTER 2020 ACTIVITY AND FINANCING UPDATE
-
Activity
-
From
March 23, 2020 throughJune 30, 2020 , sold residential and commercial mortgage assets generating proceeds of approximately$1 billion , comprised of approximately$725 million of residential investments,$250 million of commercial investments and$45 million of Agency MBS collateralized mortgage obligations - Did not declare quarterly dividends on our common or preferred stock and, based on current conditions for the Company, we do not anticipate paying dividends on our common or preferred stock for the foreseeable future
-
Manager made secured loans totaling
$20 million to the Company, of which$10 million was repaid when due subsequent to quarter end -
Manager deferred payment of management fees and expense reimbursements through
September 30, 2020 -
Subsequent to quarter end, sold certain CMBS positions for proceeds of approximately
$24.4 million
-
From
-
Financing Update
-
Entered into multiple forbearance agreements with financing counterparties beginning on
April 10th ; exited forbearance onJune 10th having satisfied all outstanding margin calls -
Through asset sales and repo consolidation, reduced the number of counterparties with debt outstanding down from 30 as of
December 31, 2019 to 18 as ofMarch 31, 2020 and 6 as ofJune 30, 2020 -
As of
August 10th , MITT has resolved and settled all deficiency claims with lenders -
Participated in a term securitization alongside another
Angelo Gordon fund in June which refinanced previously securitized primarily re-performing mortgage loans into a new lower cost, fixed rate long-term financing, returning$6.3 million of equity to MITT- MITT maintained exposure to the securitization through an interest in the subordinated tranches
-
Subsequent to quarter end, participated in rated Non-QM securitization alongside other
Angelo Gordon funds, which termed out repo financing into lower cost, fixed rate, long-term financing
-
Entered into multiple forbearance agreements with financing counterparties beginning on
ARC HOME UPDATE
-
MITT, alongside other
Angelo Gordon funds, owns Arc Home, a fully licensed mortgage originator -
Record profitability in the second quarter of
$16.9 million - Experienced record high Agency Mortgage Loan Lock and Funding volumes in the second quarter of 2020
($ in millions) |
2019FY Actual |
|
2020Q1 Actual |
|
2020Q2 Actual |
|
|
|
|
|
|
Funding Dollars |
1,573 |
|
415 |
|
854 |
-
Historically wide gross production margins are projected to generate significant operating income
- Expect gross margins to begin to normalize when mortgage origination operations industry-wide catch up with the volume of the refinance wave currently driven by historically low mortgage loan interest rates
-
Re-entered the Non-QM market in
July 2020 - Retained Non-QM human capital throughout the crisis, enabling a quick re-entrance into the marketplace to take advantage of the significant long-term opportunity
- Expect modest near-term production volumes of non-QM loans
- Securitization market for Non-QM loans has returned to pre-COVID levels
Note: MITT owns approximately 44.6% of Arc Home.
KEY STATISTICS
($ in millions, except per share data) |
|
|
Investment portfolio(2) (3) |
|
|
Financing arrangements(3) |
|
469.2 |
Total Economic Leverage(4) |
|
278.7 |
Stockholders’ equity |
|
365.4 |
GAAP Leverage Ratio |
|
1.3x |
Economic Leverage Ratio(4) |
|
0.8x |
Book value, per share(1) |
|
|
Duration gap(5) |
|
2.28 |
INVESTMENT PORTFOLIO
The following summarizes the Company’s investment portfolio as of
($ in millions) |
|
Fair Value |
|
Percent of Fair Value |
|
Allocated Equity(7) |
|
Percent of Equity |
Residential Investments(a) |
|
|
|
77.6% |
|
|
|
69.4% |
Commercial Investments |
|
214.3 |
|
22.4% |
|
111.6 |
|
30.6% |
Total |
|
|
|
100.0% |
|
|
|
100.0% |
(a) Residential Investments includes fair value of
STOCKHOLDER CALL
The Company invites stockholders, prospective stockholders and analysts to participate in MITT’s second quarter earnings conference call on
A presentation will accompany the conference call and will be available on the Company’s website at www.agmit.com. Select the Q2 2020 Earnings Presentation link to download the presentation in advance of the stockholder call.
For those unable to listen to the live call, an audio replay will be available promptly following the conclusion of the call on
For further information or questions, please e-mail ir@agmit.com.
ABOUT
Additional information can be found on the Company’s website at www.agmit.com.
ABOUT
FORWARD LOOKING STATEMENTS
This press release includes "forward-looking statements" within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995 related to dividends, book value, our investments, our business and investment strategy, investment returns, return on equity, liquidity, financing, taxes, our assets, our interest rate sensitivity, and our views on certain macroeconomic trends and conditions, among others. Forward-looking statements are based on estimates, projections, beliefs and assumptions of management of the Company at the time of such statements and are not guarantees of future performance. Forward-looking statements involve risks and uncertainties in predicting future results and conditions. Actual results could differ materially from those projected in these forward-looking statements due to a variety of factors, including, without limitation, the uncertainty and economic impact of the COVID-19 pandemic and of responsive measures implemented by various governmental authorities, businesses and other third parties; changes in our business and investment strategy; our ability to predict and control costs; changes in interest rates and the fair value of our assets, including negative changes resulting in margin calls relating to the financing of our assets; changes in the yield curve; changes in prepayment rates on the loans we own or that underlie our investment securities; increased rates of default or delinquencies and/or decreased recovery rates on our assets; our ability to obtain and maintain financing arrangements on terms favorable to us or at all, particularly in light of the current disruption in the financial markets; changes in general economic conditions, in our industry and in the finance and real estate markets, including the impact on the value of our assets; conditions in the market for Agency RMBS, Residential Investments, including Non-Agency RMBS, CRTs, Non-
NON-GAAP FINANCIAL INFORMATION
In addition to the results presented in accordance with GAAP, this press release includes certain non-GAAP financial results and financial metrics derived therefrom, including investment portfolio, financing arrangements, and economic leverage ratio, which are calculated by including or excluding depreciation and amortization, unconsolidated investments in affiliates, TBAs, and
Consolidated Balance Sheets (Unaudited)
(in thousands, except per share data)
|
|
|
|
||||
Assets |
|
|
|
||||
Real estate securities, at fair value: |
|
|
|
||||
Agency - |
$ |
— |
|
|
$ |
2,315,439 |
|
Non-Agency - |
45,817 |
|
717,470 |
|
|||
CMBS - |
86,654 |
|
416,923 |
|
|||
Residential mortgage loans, at fair value - |
379,822 |
|
417,785 |
|
|||
Commercial loans, at fair value - |
127,685 |
|
158,686 |
|
|||
Investments in debt and equity of affiliates |
122,929 |
|
156,311 |
|
|||
Excess mortgage servicing rights, at fair value |
12,294 |
|
17,775 |
|
|||
Cash and cash equivalents |
68,150 |
|
81,692 |
|
|||
Restricted cash |
1,084 |
|
43,677 |
|
|||
Other assets |
11,163 |
|
21,905 |
|
|||
Assets held for sale - Single-family rental properties, net |
— |
|
154 |
|
|||
Total Assets |
$ |
855,598 |
|
|
$ |
4,347,817 |
|
|
|
|
|
||||
Liabilities |
|
|
|
||||
Financing arrangements |
$ |
251,098 |
|
|
$ |
3,233,468 |
|
Securitized debt, at fair value |
198,974 |
|
224,348 |
|
|||
Dividend payable |
— |
|
14,734 |
|
|||
Due to affiliates |
31,396 |
|
5,226 |
|
|||
Other liabilities |
8,446 |
|
19,449 |
|
|||
Liabilities held for sale - Single-family rental properties, net |
306 |
|
1,546 |
|
|||
Total Liabilities |
490,220 |
|
3,498,771 |
|
|||
Commitments and Contingencies |
|
|
|
||||
Stockholders’ Equity |
|
|
|
||||
Preferred stock - |
|
|
|
||||
8.25% Series A Cumulative Redeemable Preferred Stock, 2,070 shares issued and outstanding ( |
49,921 |
|
49,921 |
|
|||
8.00% Series B Cumulative Redeemable Preferred Stock, 4,600 shares issued and outstanding ( |
111,293 |
|
111,293 |
|
|||
8.000% Series C Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock, 4,600 shares issued and outstanding ( |
111,243 |
|
111,243 |
|
|||
Common stock, par value |
338 |
|
327 |
|
|||
Additional paid-in capital |
666,127 |
|
662,183 |
|
|||
Retained earnings/(deficit) |
(573,544) |
|
(85,921) |
|
|||
Total Stockholders’ Equity |
365,378 |
|
849,046 |
|
|||
|
|
|
|
||||
Total Liabilities & Stockholders’ Equity |
$ |
855,598 |
|
|
$ |
4,347,817 |
|
|
|||||||
|
Three Months Ended |
||||||
|
|
|
|
||||
Net Interest Income |
|
|
|
||||
Interest income |
$ |
13,369 |
|
|
$ |
40,901 |
|
Interest expense |
8,613 |
|
|
23,030 |
|
||
Total Net Interest Income |
4,756 |
|
|
17,871 |
|
||
|
|
|
|
||||
Other Income/(Loss) |
|
|
|
||||
Net realized gain/(loss) |
(91,609) |
|
|
(27,510) |
|
||
Net interest component of interest rate swaps |
— |
|
|
1,800 |
|
||
Unrealized gain/(loss) on real estate securities and loans, net |
109,632 |
|
|
43,165 |
|
||
Unrealized gain/(loss) on derivative and other instruments, net |
(9,453) |
|
|
(10,839) |
|
||
Foreign currency gain/(loss), net |
(156) |
|
|
— |
|
||
Other income |
1 |
|
|
216 |
|
||
Total Other Income/(Loss) |
8,415 |
|
|
6,832 |
|
||
|
|
|
|
||||
Expenses |
|
|
|
||||
Management fee to affiliate |
1,678 |
|
|
2,400 |
|
||
Other operating expenses |
4,482 |
|
|
3,807 |
|
||
Restructuring related expenses |
7,104 |
|
|
— |
|
||
Equity based compensation to affiliate |
75 |
|
|
73 |
|
||
Excise tax |
— |
|
|
186 |
|
||
Servicing fees |
566 |
|
|
416 |
|
||
Total Expenses |
13,905 |
|
|
6,882 |
|
||
|
|
|
|
||||
Income/(loss) before equity in earnings/(loss) from affiliates |
(734) |
|
|
17,821 |
|
||
|
|
|
|
||||
Equity in earnings/(loss) from affiliates |
3,434 |
|
|
2,050 |
|
||
Net Income/(Loss) from Continuing Operations |
2,700 |
|
|
19,871 |
|
||
Net Income/(Loss) from Discontinued Operations |
361 |
|
|
(1,193) |
|
||
Net Income/(Loss) |
3,061 |
|
|
18,678 |
|
||
|
|
|
|
||||
Dividends on preferred stock (1) |
5,667 |
|
|
3,367 |
|
||
|
|
|
|
||||
Net Income/(Loss) Available to Common Stockholders |
$ |
(2,606) |
|
|
$ |
15,311 |
|
|
|
|
|
||||
Earnings/(Loss) Per Share - Basic |
|
|
|
||||
Continuing Operations |
$ |
(0.09) |
|
|
$ |
0.50 |
|
Discontinued Operations |
0.01 |
|
|
(0.03) |
|
||
Total Earnings/(Loss) Per Share of Common Stock |
$ |
(0.08) |
|
|
$ |
0.47 |
|
|
|
|
|
||||
Earnings/(Loss) Per Share - Diluted |
|
|
|
||||
Continuing Operations |
$ |
(0.09) |
|
|
$ |
0.50 |
|
Discontinued Operations |
0.01 |
|
|
(0.03) |
|
||
Total Earnings/(Loss) Per Share of Common Stock |
$ |
(0.08) |
|
|
$ |
0.47 |
|
|
|
|
|
||||
Weighted Average Number of Shares of Common Stock Outstanding |
|
|
|
||||
Basic |
32,859 |
|
|
32,709 |
|
||
Diluted |
32,859 |
|
|
32,737 |
|
(1) The three months ended
Footnotes
(1) Diluted per share figures are calculated using weighted average outstanding shares in accordance with GAAP. Accumulated and unpaid preferred stock dividends of
(2) The investment portfolio at period end is calculated by summing the net carrying value of our Residential Investments, Commercial Investments, and where applicable, Agency RMBS, any long positions in TBAs, and ABS Investments, including securities and mortgage loans owned through investments in affiliates, exclusive of
(3) Generally, when we purchase an investment and finance it, the investment is included in our assets and the financing is reflected in our liabilities on our consolidated balance sheet as either "Financing arrangements" or "Securitized debt, at fair value." Throughout this press release where we disclose our investment portfolio and the related financing, we have presented this information inclusive of (i) securities and mortgage loans owned through investments in affiliates that are accounted for under GAAP using the equity method and (ii) long positions in TBAs, which are accounted for as derivatives under GAAP. The related financing includes financing of
(4) The Economic Leverage Ratio is calculated by dividing total Economic Leverage, including any net TBA position, by our GAAP stockholders’ equity at quarter-end. Total Economic Leverage at quarter-end includes financing arrangements inclusive of financing arrangements through affiliated entities, exclusive of any financing utilized through
(5) The Company estimates duration based on third-party models. Different models and methodologies can produce different effective duration estimates for the same securities. Duration does not include our equity interest in
(6) The Company invests in
(7) The Company allocates its equity by investment using the fair value of its investment portfolio, less any associated leverage, inclusive of any long TBA position (at cost). The Company allocates all non-investment portfolio related assets and liabilities to its investment portfolio categories based on the characteristics of such assets and liabilities in order to sum to stockholders' equity per the consolidated balance sheets. The Company's equity allocation method is a non-GAAP methodology and may not be comparable to the similarly titled measure or concepts of other companies, who may use different calculations and allocation methodologies.
View source version on businesswire.com: https://www.businesswire.com/news/home/20200810005198/en/
Investor Relations
(212) 692-2110
ir@agmit.com
Source: