AG Mortgage Investment Trust, Inc. Reports Third Quarter 2020 Results
THIRD QUARTER 2020 FINANCIAL SNAPSHOT
-
$0.44 of Net Income per diluted common share(1)- Record high quarterly profitability at Arc Home driven by strong origination volumes and gain on sale margins
-
$3.34 Book Value per share(1) as ofSeptember 30, 2020 , compared to$2.75 as ofJune 30, 2020 -
Book Value per share(1) would be
$0.31 and$0.17 lower after deduction of the accumulated and unpaid preferred dividends outstanding as ofSeptember 30, 2020 andJune 30, 2020 , respectively
-
Book Value per share(1) would be
-
$1.1 billion Investment Portfolio and 0.9x Economic Leverage Ratio as ofSeptember 30, 2020 as compared to$1.0 billion and 0.8x, respectively, as ofJune 30, 2020 (2)(3)(4) -
$242.8 million of MTM recourse financing and$476.0 million of non-MTM non-recourse financing as ofSeptember 30, 2020 as compared to$278.7 million of MTM recourse financing and$409.6 million of non-MTM non-recourse financing as ofJune 30, 2020 (a)-
At
September 30, 2020 , had total liquidity of$82.4 million inclusive of$44.6 million of cash and$37.8 million of unencumbered agency fixed rate securities as compared to total liquidity of$68.2 million as ofJune 30, 2020
-
At
-
Capital Activity
- Exchanged 516,300 shares of common stock for 103,260 shares of preferred stock in the public Exchange Offer
-
Utilized ATM program to issue approximately 0.4 million shares of common stock for net proceeds of approximately
$1.2 million -
Issued 1.4 million shares of common stock to the Manager in satisfaction of deferred base management fees of approximately
$4.3 million -
Shares issued to the Manager were valued at
$3.15 per share based on estimated book value per share as ofAugust 31, 2020
-
Shares issued to the Manager were valued at
(a) As of
MANAGEMENT REMARKS
"We are pleased with our Company’s progression during the third quarter as we continue to focus on creating earnings power while maintaining adequate liquidity and increasing book value for our shareholders," said Chief Executive Officer,
"During the quarter, we were active in the market acquiring Agency whole pools and residential loans as well as completing two securitizations, inclusive of our second rated Non-QM deal in 2020, further transitioning our financing to non-MTM non-recourse from MTM recourse and lowering our cost of funds. We also continued to maintain a low Economic Leverage Ratio of 0.9x, compared to 0.8x at the end of the second quarter," noted Chief Investment Officer,
THIRD QUARTER 2020 ACTIVITY AND FINANCING UPDATE
-
Asset Activity
-
Alongside other
Angelo Gordon funds, sold our Ginnie Mae Excess MSR portfolio generating proceeds of approximately$8.5 million , representing our ~45% ownership in the portfolio -
Opportunistically sold one commercial loan for proceeds of
$2.7 million , releasing unfunded commitments of approximately$22.6 million -
Executed the sale of certain CMBS for proceeds of
$36.5 million -
Acquired an RPL/NPL residential mortgage loan portfolio for
$60.2 million , which was simultaneously incorporated into the RPL/NPL securitization described below -
Purchased
$250.1 million of 30 Year Fixed Rate agency securities
-
Alongside other
-
Financing Activity
-
Participated in a rated Non-QM securitization alongside other
Angelo Gordon funds, which termed out repo financing into lower cost, fixed rate, long-term financing related to Non-QM loans with a fair value of$226.0 million - Maintained exposure to the securitization through an interest in the subordinated tranches
-
Securitized RPL/NPL residential mortgage loans with a fair value of
$199.6 million , entering into new lower cost, fixed rate long-term financing, returning$3.3 million of equity to MITT- Maintained exposure to the securitization through an interest in the subordinated tranches
-
Resolved and settled all deficiency claims with lenders as of
August 10th
-
Participated in a rated Non-QM securitization alongside other
ARC HOME UPDATE
-
MITT, alongside other
Angelo Gordon funds, owns Arc Home(6), a fully licensed mortgage originator -
Record profitability in the third quarter of
$29.5 million , up from$16.9 million in second quarter-
Resulted in income of
$13.4 million for MITT
-
Resulted in income of
- Continued to experience record Agency Mortgage Loan Lock and Funding volumes in the third quarter of 2020
($ in millions) |
2019 FY |
|
2020 Q1 |
|
2020 Q2 |
|
2020 Q3 |
|
|
|
|
|
|
|
|
Funding Dollars |
1,573 |
|
415 |
|
854 |
|
1,253 |
-
Gross production margins remained at historic highs during the quarter contributing to strong operating performance
- Began to experience some normalization of margins as the industry continues to build capacity to meet demand
-
Re-entered the Non-QM market during the third quarter
- Expect modest near-term production volumes of Non-QM loans
- Securitization market for Non-QM loans has returned to pre-COVID levels
- Opportunistically sold its GNMA MSR portfolio
KEY STATISTICS
($ in millions, except per share data) |
|
|
Investment portfolio(2) (3) |
|
|
Financing arrangements(3) |
|
349.5 |
Total Economic Leverage(4) |
|
347.7 |
Stockholders’ equity |
|
390.5 |
GAAP Leverage Ratio |
|
1.8x |
Economic Leverage Ratio(4) |
|
0.9x |
Book value, per share(1) |
|
|
Duration gap(5) |
|
1.39 |
INVESTMENT PORTFOLIO
The following summarizes the Company’s investment portfolio as of
($ in millions) |
|
Fair Value |
|
Percent of Fair
|
|
Allocated
|
|
Percent of Equity |
Agency RMBS(a) |
|
|
|
22.7% |
|
|
|
15.2% |
Residential Investments(a) |
|
690.2 |
|
61.6% |
|
236.9 |
|
60.7% |
Commercial Investments |
|
177.1 |
|
15.7% |
|
94.1 |
|
24.1% |
Total |
|
|
|
100.0% |
|
|
|
100.0% |
(a) As of |
DIVIDEND
The Company announced today that its Board of Directors (the "Board") has approved, and the Company has declared and set apart for payment on
In accordance with the terms of its Series A Preferred Stock, the Board approved and the Company declared a cash dividend of
In accordance with the terms of its Series B Preferred Stock, the Board approved and the Company declared a cash dividend of
In accordance with the terms of its Series C Preferred Stock, the Board approved and the Company declared a cash dividend of
Dividends for the Series A Preferred Stock, the Series B Preferred Stock, and the Series C Preferred Stock are payable on
As of
STOCKHOLDER CALL
The Company invites stockholders, prospective stockholders and analysts to participate in MITT’s third 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 Q3 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 and Commercial Investments; legislative and regulatory actions by the
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 - |
$ |
250,123 |
|
$ |
2,315,439 |
|
||
Non-Agency - |
43,271 |
|
717,470 |
|
||||
CMBS - |
54,228 |
|
416,923 |
|
||||
Residential mortgage loans, at fair value - |
429,648 |
|
417,785 |
|
||||
Commercial loans, at fair value - |
122,880 |
|
158,686 |
|
||||
Investments in debt and equity of affiliates |
138,689 |
|
156,311 |
|
||||
Excess mortgage servicing rights, at fair value |
3,526 |
|
17,775 |
|
||||
Cash and cash equivalents |
44,592 |
|
81,692 |
|
||||
Restricted cash |
5,108 |
|
43,677 |
|
||||
Other assets |
9,159 |
|
21,905 |
|
||||
Assets held for sale - Single-family rental properties, net |
— |
|
154 |
|
||||
Total Assets |
$ |
1,101,224 |
|
$ |
4,347,817 |
|
||
|
|
|
|
|||||
Liabilities |
|
|
|
|||||
Financing arrangements |
$ |
225,504 |
|
$ |
3,233,468 |
|
||
Securitized debt, at fair value |
358,986 |
|
224,348 |
|
||||
Payable on unsettled trades |
105,016 |
|
— |
|
||||
Dividend payable |
— |
|
14,734 |
|
||||
Other liabilities |
20,944 |
|
24,675 |
|
||||
Liabilities held for sale - Single-family rental properties, net |
305 |
|
1,546 |
|
||||
Total Liabilities |
710,755 |
|
3,498,771 |
|
||||
Commitments and Contingencies |
|
|
|
|||||
Stockholders’ Equity |
|
|
|
|||||
Preferred stock - |
|
|
|
|||||
8.25% Series A Cumulative Redeemable Preferred Stock; 2,027 and 2,070 shares issued and outstanding at |
48,888 |
|
49,921 |
|
||||
8.00% Series B Cumulative Redeemable Preferred Stock; 4,569 and 4,600 shares issued and outstanding at |
110,541 |
|
111,293 |
|
||||
8.000% Series C Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock, 4,571 and 4,600 shares issued and outstanding at |
110,533 |
|
111,243 |
|
||||
Common stock, par value |
361 |
|
327 |
|
||||
Additional paid-in capital |
673,105 |
|
662,183 |
|
||||
Retained earnings/(deficit) |
(552,959) |
|
(85,921) |
|
||||
Total Stockholders’ Equity |
390,469 |
|
849,046 |
|
||||
|
|
|
|
|||||
Total Liabilities & Stockholders’ Equity |
$ |
1,101,224 |
|
$ |
4,347,817 |
|
Consolidated Statements of Operations (Unaudited) (in thousands, except per share data) |
|||||||
|
Three Months Ended |
||||||
|
|
|
|
||||
Net Interest Income |
|
|
|
||||
Interest income |
$ |
9,717 |
|
|
$ |
40,735 |
|
Interest expense |
4,357 |
|
|
21,887 |
|
||
Total Net Interest Income |
5,360 |
|
|
18,848 |
|
||
|
|
|
|
||||
Other Income/(Loss) |
|
|
|
||||
Net realized gain/(loss) |
(14,431) |
|
|
(16,132) |
|
||
Net interest component of interest rate swaps |
(13) |
|
|
2,179 |
|
||
Unrealized gain/(loss) on real estate securities and loans, net |
19,495 |
|
|
11,726 |
|
||
Unrealized gain/(loss) on derivative and other instruments, net |
1,970 |
|
|
3,258 |
|
||
Foreign currency gain/(loss), net |
(10) |
|
|
667 |
|
||
Other income |
— |
|
|
210 |
|
||
Total Other Income/(Loss) |
7,011 |
|
|
1,908 |
|
||
|
|
|
|
||||
Expenses |
|
|
|
||||
Management fee to affiliate |
1,698 |
|
|
2,346 |
|
||
Other operating expenses |
5,929 |
|
|
6,062 |
|
||
Restructuring related expenses |
1,345 |
|
|
— |
|
||
Equity based compensation to affiliate |
— |
|
|
76 |
|
||
Excise tax |
— |
|
|
186 |
|
||
Servicing fees |
540 |
|
|
416 |
|
||
Total Expenses |
9,512 |
|
|
9,086 |
|
||
|
|
|
|
||||
Income/(loss) before equity in earnings/(loss) from affiliates |
2,859 |
|
|
11,670 |
|
||
|
|
|
|
||||
Equity in earnings/(loss) from affiliates |
17,187 |
|
|
(564) |
|
||
Net Income/(Loss) from Continuing Operations |
20,046 |
|
|
11,106 |
|
||
Net Income/(Loss) from Discontinued Operations |
— |
|
|
(1,057) |
|
||
Net Income/(Loss) |
20,046 |
|
|
10,049 |
|
||
|
|
|
|
||||
Gain on Exchange Offer, net |
539 |
|
|
— |
|
||
Dividends on preferred stock (1) |
(5,563) |
|
|
(3,720) |
|
||
|
|
|
|
||||
Net Income/(Loss) Available to Common Stockholders |
$ |
15,022 |
|
|
$ |
6,329 |
|
|
|
|
|
||||
Earnings/(Loss) Per Share - Basic |
|
|
|
||||
Continuing Operations |
$ |
0.44 |
|
|
$ |
0.22 |
|
Discontinued Operations |
— |
|
|
(0.03) |
|
||
Total Earnings/(Loss) Per Share of Common Stock |
$ |
0.44 |
|
|
$ |
0.19 |
|
|
|
|
|
||||
Earnings/(Loss) Per Share - Diluted |
|
|
|
||||
Continuing Operations |
$ |
0.44 |
|
|
$ |
0.22 |
|
Discontinued Operations |
— |
|
|
(0.03) |
|
||
Total Earnings/(Loss) Per Share of Common Stock |
$ |
0.44 |
|
|
$ |
0.19 |
|
|
|
|
|
||||
Weighted Average Number of Shares of Common Stock Outstanding |
|
|
|
||||
Basic |
34,422 |
|
|
32,736 |
|
||
Diluted |
34,422 |
|
|
32,748 |
|
(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 Agency RMBS, Residential Investments, Commercial Investments, and where applicable, 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, where applicable, (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 recourse financing arrangements recorded within "Investments in debt and equity of affiliates" 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/20201106005231/en/
Investor Relations
(212) 692-2110
ir@agmit.com
Source: