AG Mortgage Investment Trust, Inc. Reports Second Quarter Earnings
FINANCIAL HIGHLIGHTS
-
Net income of
$44.9 million , or$2.85 per share -
Core Earnings of
$13.5 million or$0.86 per share-
$0.15 per share increase during the quarter -
includes
($0.05) per share of retrospective adjustment resulting from the lower interest rate environment
-
-
Net realized gains of
$7.6 million , or$0.48 per share -
$0.70 per share dividend -
Approximately
$1.17 per share of undistributed taxable income as ofJune 30, 2012 (1)-
$0.74 per share increase during the quarter
-
-
$21.78 net book value per share as ofJune 30, 2012 (1)-
$2.15 per share increase during the quarter, net the$0.70 dividend declared
-
- 20.0% return to investors who participated in the IPO (2)
- 27.6% annualized return on stock
- 14.5% return on equity during the quarter (3)
-
Completed a
$45.0 million 8.25% perpetual preferred offering
INVESTMENT HIGHLIGHTS
-
$2.7 billion investment portfolio value as ofJune 30, 2012 (4) (6) -
2.55% net interest margin as of
June 30, 2012 (5) -
6.79x leverage as of
June 30, 2012 (4) (9) - 83.6% Agency RMBS investment portfolio (6)
- 16.4% credit investment portfolio, comprising Non-Agency RMBS, ABS and CMBS assets (6)
- 5.5% constant prepayment rate (“CPR”) for the second quarter on the Agency RMBS investment portfolio (7)
SECOND QUARTER 2012 RESULTS
“We’re extremely pleased with our second quarter performance as the
investment team achieved our objectives of increased book value while
delivering an attractive dividend for our shareholders” said
“With respect to the composition of our portfolio we have been very
pleased with the actual prepayments experienced by our overall Agency
book” said
SUBSEQUENT EVENT
On
“After the end of the quarter we raised
KEY STATISTICS (4)
Weighted Average at |
Weighted Average for the |
||||||||
Investment portfolio | $ | 2,690,440,528 | $ | 2,561,561,211 | |||||
Repurchase agreements | $ | 2,355,239,040 | $ | 2,272,295,879 | |||||
Stockholders' equity | $ | 344,202,616 | $ | 329,475,936 | |||||
Leverage ratio (9) | 6.79x | 6.90x | |||||||
Swap ratio (10) | 50 | % | 52 | % | |||||
Yield on investment portfolio (11) | 3.54 | % | 3.31 | % | |||||
Cost of funds (12) | 0.99 | % | 0.95 | % | |||||
Net interest margin (5) | 2.55 | % | 2.36 | % | |||||
Management fees (13) | 1.39 | % | 1.45 | % | |||||
Other operating expenses (14) | 0.88 | % | 0.92 | % | |||||
Book value, per share (1) | $ | 21.78 | |||||||
Dividend, per share | $ | 0.70 |
INVESTMENT PORTFOLIO
The following summarizes the Company’s investment portfolio as of
Weighted Average |
||||||||||||||||
Current Face |
Premium |
Amortized Cost | Fair Value | Coupon | Yield | |||||||||||
Agency RMBS: | ||||||||||||||||
15-Year Fixed Rate | $ | 718,433,236 | $ | 22,534,927 | $ | 740,968,163 | $ | 761,444,679 | 3.21 | % | 2.43 | % | ||||
20-Year Fixed Rate | 267,032,664 | 9,993,509 | 277,026,173 | 283,090,665 | 3.60 | % | 2.74 | % | ||||||||
30-Year Fixed Rate | 1,010,458,768 | 47,782,201 | 1,058,240,969 | 1,074,609,528 | 3.73 | % | 3.00 | % | ||||||||
ARM | 39,356,792 | 1,672,664 | 41,029,456 | 41,054,499 | 2.96 | % | 2.13 | % | ||||||||
Interest Only | 481,251,064 | (391,876,102 | ) | 89,374,962 | 89,693,016 | 6.11 | % | 8.57 | % | |||||||
Non-Agency RMBS | 419,933,685 | (49,421,551 | ) | 370,512,134 | 371,702,981 | 4.73 | % | 6.32 | % | |||||||
ABS | 13,500,000 | (740 | ) | 13,499,260 | 13,509,441 | 6.59 | % | 6.59 | % | |||||||
CMBS | 57,625,261 | (2,915,219 | ) | 54,710,042 | 55,335,719 | 4.18 | % | 6.86 | % | |||||||
Total | $ | 3,007,591,470 | $ | (362,230,311 | ) | $ | 2,645,361,159 | $ | 2,690,440,528 | 4.13 | % | 3.54 | % |
As of
The Company had net realized gains of
The CPR for the Agency RMBS portfolio was 5.5% for the second quarter
and 5.1% for the month of
The weighted average cost basis of the Agency investment portfolio,
excluding interest-only securities, was 104.0% as of
Premiums and discounts associated with purchases of the Company's
securities are amortized or accreted into interest income over the
estimated life of such securities, using the effective yield method.
Since the cost basis of the Company's Agency securities, excluding
interest-only securities, exceeds the underlying principal balance by
4.0% as of
LEVERAGE AND HEDGING ACTIVITIES
The investment portfolio is financed with repurchase agreements as of
Repurchase Agreements Maturing Within: | Balance |
Weighted |
Weighted |
|||||||
30 Days or Less | $ | 1,981,862,947 | 0.63 | % | 16.1 | |||||
31-60 Days | 192,397,981 | 0.46 | % | 48.4 | ||||||
61-90 Days | 11,846,000 | 0.92 | % | 69.8 | ||||||
Greater than 90 Days | 169,132,112 | 0.80 | % | 270.4 | ||||||
Total / Weighted Average | $ | 2,355,239,040 | 0.63 | % | 37.3 |
Currently, the Company entered into repurchase agreements with 26 counterparties. We continue to rebalance our exposures to counterparties and add new counterparties.
On
We have entered into interest rate swap agreements to hedge our
portfolio. The Company’s swaps as of
Interest Rate Swaps | ||||||||||||||
Maturity | Notional Amount | Weighted Average Pay Rate |
Weighted |
Weighted |
||||||||||
2013 | $ 42,000,000 | 0.562% | 0.241% | 1.07 | ||||||||||
2014 | 204,500,000 | 1.000% | 0.453% | 2.04 | ||||||||||
2015 | 334,025,000 | 1.131% | 0.495% | 2.88 | ||||||||||
2016 | 307,500,000 | 1.157% | 0.433% | 3.77 | ||||||||||
2017 | 60,000,000 | 1.184% | 0.530% | 4.61 | ||||||||||
2018 | 120,000,000 | 1.608% | 0.481% | 5.89 | ||||||||||
2019 | 115,000,000 | 1.750% | 0.469% | 6.78 | ||||||||||
2022 | 20,000,000 | 0.468% | 1.753% | 9.97 | ||||||||||
Total/Wtd Avg | $1,203,025,000 | 1.194% | 0.482% | 3.78 |
* Approximately 13% of our receive float interest rate swap notionals reset monthly based on one-month LIBOR and 87% of our receive float interest rate swap notionals reset quarterly based on three-month LIBOR. |
TAXABLE INCOME
The primary differences between taxable income and GAAP net income
include (i) unrealized gains and losses associated with investment and
derivative portfolios are marked-to-market in current income for GAAP
purposes, but excluded from taxable income until realized or settled,
(ii) temporary differences related to amortization of net premiums paid
on investments, (iii) the timing and amount of deductions related to
stock-based compensation, and (iv) excise taxes. As of
DIVIDEND
On
SHAREHOLDER CALL
The Company invites shareholders, prospective shareholders and analysts
to attend 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 2012 Earnings Presentation link to download and print the presentation in advance of the shareholder call.
An audio replay of the shareholder call combined with the presentation
will be made available on our website after the call. The replay will be
available until midnight on
For further information or questions, please contact
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. 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, changes in interest rates, changes in the yield
curve, changes in prepayment rates, the availability and terms of
financing, changes in the market value of our assets, general economic
conditions, market conditions, conditions in the market for Agency
securities, and legislative and regulatory changes that could adversely
affect the business of the Company. Additional information concerning
these and other risk factors are contained in the Company's most recent
filings with the
AG Mortgage Investment Trust, Inc. and Subsidiaries | ||||||
Consolidated Balance Sheets | ||||||
(Unaudited) | ||||||
June 30, 2012 | December 31, 2011 | |||||
Assets | ||||||
Real Estate securities, at fair value | ||||||
Agency - $2,138,181,777 and $1,186,149,842 pledged as collateral, respectively | $ | 2,249,892,387 | $ | 1,263,214,099 | ||
Non-Agency - $122,992,984 and $47,227,005 pledged as collateral, respectively | 149,897,715 | 58,787,051 | ||||
ABS - $13,509,441 and $4,526,620 pledged as collateral, respectively | 13,509,441 | 4,526,620 | ||||
CMBS - $11,557,506 and $2,747,080 pledged as collateral, respectively | 11,557,506 | 13,537,851 | ||||
Linked transactions, net, at fair value | 44,074,905 | 8,787,180 | ||||
Cash and cash equivalents | 17,457,490 | 35,851,249 | ||||
Restricted cash | 2,303,178 | 3,037,055 | ||||
Interest receivable | 8,341,685 | 4,219,640 | ||||
Receivable on unsettled trades | 141,814,687 | - | ||||
Derivative assets, at fair value | - | 1,428,595 | ||||
Other assets | 35,826 | 711,617 | ||||
Due from affiliates | - | 104,994 | ||||
Total Assets | $ | 2,638,884,820 | $ | 1,394,205,951 | ||
Liabilities | ||||||
Repurchase agreements | $ | 2,133,730,466 | $ | 1,150,149,407 | ||
Payable on unsettled trades | 123,670,601 | 18,759,200 | ||||
Interest payable | 752,036 | 613,803 | ||||
Derivative liabilities, at fair value | 23,413,215 | 9,569,643 | ||||
Dividend payable | 11,042,972 | 7,011,171 | ||||
Due to affiliates | 1,196,383 | 770,341 | ||||
Accrued expenses | 822,531 | 668,552 | ||||
Due to broker | 54,000 | 379,914 | ||||
Total Liabilities | 2,294,682,204 | 1,187,922,031 | ||||
Stockholders' Equity | ||||||
Common stock, par value $0.01 per share; 450,000,000 shares of common stock authorized and 15,769,674 and 10,009,958 shares issued and outstanding at June 30, 2012 and December 31, 2011, respectively | 157,697 | 100,100 | ||||
Additional paid-in capital | 302,304,109 | 198,228,694 | ||||
Retained earnings | 41,740,810 | 7,955,126 | ||||
344,202,616 | 206,283,920 | |||||
Total Liabilities & Equity | $ | 2,638,884,820 | $ | 1,394,205,951 |
AG Mortgage Investment Trust, Inc. and Subsidiaries | |||||||||||||||||||
Consolidated Statements of Operations | |||||||||||||||||||
(Unaudited) | |||||||||||||||||||
Three Months Ended | Period from March 7, 2011 | Six Months Ended | Period from March 7, 2011 | ||||||||||||||||
June 30, 2012 | to June 30, 2011 | June 30, 2012 | to June 30, 2011 | ||||||||||||||||
Net Interest Income | |||||||||||||||||||
Interest income | $ | 17,883,008 | $ | - | $ | 31,879,636 | $ | - | |||||||||||
Interest expense | 2,450,017 | - | 4,277,431 | - | |||||||||||||||
15,432,991 | - | 27,602,205 | - | ||||||||||||||||
Other Income | |||||||||||||||||||
Net realized gain | 7,552,780 | - | 9,981,800 | - | |||||||||||||||
Gain on linked transactions, net | 3,364,972 | - | 6,804,157 | - | |||||||||||||||
Realized loss on periodic interest settlements of interest rate swaps, net | (2,132,414 | ) | - | (3,590,364 | ) | - | |||||||||||||
Unrealized loss on derivative instruments, net | (10,575,768 | ) | - | (13,421,647 | ) | - | |||||||||||||
Unrealized gain on real estate securities, net | 33,593,211 | - | 32,837,659 | - | |||||||||||||||
31,802,781 | - | 32,611,605 | - | ||||||||||||||||
Expenses | |||||||||||||||||||
Management fee to affiliate | 1,196,383 | - | 2,245,677 | - | |||||||||||||||
Other operating expenses | 760,915 | 15,818 | 1,574,239 | 15,818 | |||||||||||||||
Equity based compensation to affiliate | 104,771 | - | 192,100 | - | |||||||||||||||
Excise tax | 255,925 | - | 333,578 | - | |||||||||||||||
2,317,994 | 15,818 | 4,345,594 | 15,818 | ||||||||||||||||
Net Income | $ | 44,917,778 | $ | (15,818 | ) | $ | 55,868,216 | $ | (15,818 | ) | |||||||||
Earnings Per Share of Common Stock | |||||||||||||||||||
Basic | $ | 2.85 | NM | $ | 3.73 | NM | |||||||||||||
Diluted | $ | 2.85 | NM | $ | 3.73 | NM | |||||||||||||
Weighted Average Number of Shares of Common Stock Outstanding | |||||||||||||||||||
Basic | 15,769,674 | NM | $ | 14,974,655 | NM | ||||||||||||||
Diluted | 15,772,853 | NM | $ | 14,976,123 | NM | ||||||||||||||
Dividends Declared per Share of Common Stock | $ | 0.70 | $ | - | $ | 1.40 | $ | - | |||||||||||
NM = not meaningful |
NON-GAAP FINANCIAL MEASURE
This press release contains Core Earnings, a non-GAAP financial measure. AG Mortgage Investment Trust’s management believes that this non-GAAP measure, when considered with GAAP, provides supplemental information useful in evaluating the results of the Company’s operations. This non-GAAP measure should not be considered a substitute, or superior to, the financial measures calculated in accordance with GAAP. Our GAAP financial results and the reconciliations from these results should be carefully evaluated.
Core Earnings are defined by the Company as net income excluding both realized and unrealized gains (losses) on the sale or termination of securities, including underlying linked transactions and derivatives. As defined, Core Earnings include the net interest earned on these transactions, including credit derivatives, linked transactions, inverse Agency securities, interest rate derivatives or any other investment activity that may earn net interest. One of the objectives of the Company is to generate net income from net interest margin on the portfolio and management uses Core Earnings to measure this objective.
A reconciliation of GAAP net income to Core Earnings for the three and
six months ended
Three Months Ended | Period from March 7, 2011 | Six Months Ended | Period from March 7, 2011 | |||||||||||||
June 30, 2012 | to June 30, 2011 | June 30, 2012 | to June 30, 2011 | |||||||||||||
Net Income | $ | 44,917,778 | $ | (15,818 | ) | 55,868,216 | $ | (15,818 | ) | |||||||
Add (Deduct): | ||||||||||||||||
Net realized gain | (7,552,780 | ) | - | (9,981,800 | ) | - | ||||||||||
Gain on linked transactions, net | (3,364,972 | ) | - | (6,804,157 | ) | - | ||||||||||
Net interest income on linked transactions | 2,506,916 | - | 3,944,171 | - | ||||||||||||
Unrealized loss on derivative instruments, net | 10,575,768 | - | 13,421,647 | - | ||||||||||||
Unrealized gain on real estate securities, net | (33,593,211 | ) | - | (32,837,659 | ) | - | ||||||||||
Core Earnings | $ | 13,489,499 | $ | (15,818 | ) | $ | 23,610,418 | $ | (15,818 | ) | ||||||
Core Earnings, per Dilutive Share | $ | 0.86 | NM | $ | 1.58 | NM | ||||||||||
NM = not meaningful |
Footnotes
(1) Per share figures are calculated using outstanding shares including all shares granted to our Manager and our independent directors under our equity incentive plans as of quarter end.
(2) Return to investors is calculated by taking the change in investment value divided by original cost. Original cost is equal to the Initial Public Offering price (“IPO price”) and the change in investment value is equal to the change from our IPO price to the closing price on the last business day of the current quarter plus dividends declared.
(3) Return on equity during the quarter is calculated by dividing net income at quarter end by stockholders’ equity at the beginning of the quarter.
(4) Generally when we purchase a security and finance it with a repurchase agreement, the security is included in our assets and the repurchase agreement is separately reflected in our liabilities on our balance sheet. For securities with certain characteristics (including those which are not readily obtainable in the market place) that are purchased and then simultaneously sold back to the seller under a repurchase agreement, US GAAP requires these transactions be netted together and recorded as a forward purchase commitment. Throughout this press release where we disclose our investment portfolio and the repurchase agreements that finance it, including our leverage metrics, we have un-linked the transaction and used the gross presentation as used for all other securities. This presentation is consistent with how the Company’s management evaluates the business, and believes provides the most accurate depiction of the Company’s investment portfolio and financial condition.
(5) Net interest margin is calculated by subtracting the weighted average cost of funds from the weighted average yield for the Company’s investment portfolio, which excludes cash held by the Company. See footnotes (11) and (12) for further detail.
(6) The total investment portfolio is calculated by summing the fair market value of our Agency RMBS, Non-Agency RMBS, ABS and CMBS assets, including linked transactions. The percentage of Agency RMBS and credit investments are calculated by dividing the respective fair market value of each, including linked transactions, by the total investment portfolio.
(7) This represents the weighted average monthly CPRs published during the quarter for our in-place portfolio during the same period.
(8) Diluted per share figures are calculated using weighted average outstanding shares in accordance with GAAP.
(9) The leverage ratio during the quarter was calculated by dividing our daily weighted average repurchase agreements, including those included in linked transactions, for the period by the weighted average stockholders’ equity for the period. The leverage ratio at quarter end was calculated by dividing total repurchase agreements, including repurchase agreements accounted for as linked transactions, plus the net payable/receivable on unsettled trades on our GAAP balance sheet by our GAAP stockholders’ equity.
(10) The swap ratio during the quarter was calculated by dividing our daily weighted average swap notionals, excluding forward starting swaps and including receive fixed swap notionals as negative values, for the period by our daily weighted average repurchase agreements, including those included in linked transactions. The swap ratio at quarter end was calculated by dividing the notional value of our interest rate swaps by total repurchase agreements, including those included in linked transactions, plus the net payable/receivable on unsettled trades.
(11) The yield on our investment portfolio represents an effective interest rate, which utilizes all estimates of future cash flows and adjusts for actual prepayment and cash flow activity as of quarter end. The yield on our investment portfolio during the quarter was calculated by annualizing interest income for the quarter and dividing by our daily weighted average securities held. This calculation excludes cash held by the Company.
(12) The cost of funds during the quarter was calculated by annualizing the sum of our interest expense and our net pay rate of our interest rate swaps, and dividing by our daily weighted average repurchase agreements for the period. The cost of funds at quarter end was calculated as the sum of the weighted average rate on the repurchase agreements outstanding at quarter end and the weighted average net pay rate on our interest rate swaps. Both elements of the cost of funds at quarter end were weighted by the repurchase agreements outstanding at quarter end.
(13) The management fee percentage during the quarter was calculated by annualizing the management fees incurred during the quarter and dividing by the weighted average stockholders’ equity for the quarter. The management fee percentage at quarter end was calculated by annualizing management fees incurred during the quarter and dividing by quarter-ended stockholders’ equity.
(14) The other operating expenses percentage during the quarter was calculated by annualizing the other operating expenses incurred during the quarter and dividing by our weighted average stockholders’ equity for the quarter. The other operating expenses percentage at quarter end was calculated by annualizing other operating expenses recorded during the quarter and dividing by quarter-ended stockholders’ equity.
Source:
Lisa Yahr, Head of Investor Relations, 212-692-2282
lyahr@angelogordon.com.