AG Mortgage Investment Trust, Inc. Reports Full Year and Fourth Quarter 2020 Results
Q4 2020 PERFORMANCE AND HIGHLIGHTS
-
$1.16 of Net Income per diluted common share(1) for Q4 2020, as compared to$0.44 for Q3 2020 -
$0.22 of Core Earnings per share(1) for Q4 2020 -
$4.13 Book Value per share and$3.94 Adjusted Book Value per share as ofDecember 31, 2020 as compared to$3.34 and$3.08 as ofSeptember 30, 2020 , respectively(1)- Adjusted Book Value gives effect to the liquidation preference of our preferred stock which does not reflect underwriting discounts and offering expenses incurred at issuance
-
Increase from
September 30, 2020 primarily due to mark-to-market gains on our Credit Investments and income generated at Arc Home
-
Fourth Quarter Capital Activity
-
Reinstated common dividend by declaring
$0.03 per share paid inJanuary 2021 -
Declared and paid
$14.9 million of accrued and unpaid preferred dividends during the quarter -
Redeemed 1.3 million shares of preferred stock in exchange for 4.6 million shares of common stock and
$8.0 million of cash in two separate privately negotiated exchange offers -
Utilized ATM program to raise approximately
$2.4 million in net proceeds through issuance of approximately 0.7 million shares of common stock
-
Reinstated common dividend by declaring
-
Transactions Subsequent to Quarter End
-
Sold two commercial real estate loans in February for total proceeds of
$74.5 million , releasing unfunded commitments of approximately$28.8 million as ofDecember 31, 2020 -
Purchased
$322.8 million of 2.0% and 2.5% fixed rate agency whole pools -
Purchased or entered into agreements to purchase
$73.4 million of Non-QM Loans,$27.8 million of which were sourced from Arc Home
-
Sold two commercial real estate loans in February for total proceeds of
MANAGEMENT REMARKS
"I am pleased with our performance during the fourth quarter of 2020 as we continued to execute on our goals of increasing book value while also maintaining strong liquidity," said
"We are excited to report that Arc Home finished 2020 with 136% year over year growth in origination volume delivering another strong quarter of performance for the Company," said
PORTFOLIO UPDATE
Fourth Quarter Portfolio Update
-
$1.4 billion Investment Portfolio and 1.5x Economic Leverage Ratio as ofDecember 31, 2020 , as compared to$1.1 billion and 0.9x, respectively, as ofSeptember 30, 2020 (2),(3),(4)- Investment portfolio and leverage increase driven by Agency RMBS purchases during the fourth quarter
-
$580.1 million of MTM recourse financing and$466.3 million of non-MTM non-recourse financing as ofDecember 31, 2020 , as compared to$242.8 million and$476.0 million , respectively, as ofSeptember 30, 2020 (a)-
At
December 31, 2020 , MITT had total liquidity of$54.2 million inclusive of$47.9 million of cash and$6.3 million of unencumbered agency fixed rate securities, as compared to total liquidity of$82.4 million as ofSeptember 30, 2020
-
At
January Portfolio Update
-
As of
January 31, 2021 , we had an investment portfolio of approximately$1.6 billion , consisting of approximately 44% Agency RMBS, 44% Residential Investments, and 12% Commercial Investments -
As of
January 31, 2021 , our MTM recourse financing and Economic Leverage Ratio increased to approximately$0.9 billion and 2.2x,(4) respectively -
Book Value per share and Adjusted Book Value per share as of
January 31, 2021 are estimated to be in the range of$4.35 to$4.45 and$4.15 to$4.25 , respectively(1)
(a) As of
ARC HOME UPDATE
-
MITT, alongside other
Angelo Gordon funds, owns Arc Home,(7) a fully licensed mortgage originator. MITT indirectly owns approximately 44.6% of Arc Home - Arc Home achieved 136% growth in origination volume in 2020
-
Arc Home generated net income of
$49.2 million in 2020 and$20.7 million in the fourth quarter-
Resulted in net income of
$10.4 million for MITT in the fourth quarter
-
Resulted in net income of
-
Angelo Gordon 's investment in Arc Home generated$14.5 million of liquidity, of which$6.5 million was distributed to MITT - The table below provides a summary of Arc Home's performance throughout 2020 compared to 2019:
|
|
2019 FY |
|
2020 Q1 |
|
2020 Q2 |
2020 Q3 |
2020 Q4 |
2020 FY |
|||||||||
Origination Volume |
|
|
|
|
|
|
|
|
|
|||||||||
|
|
2.2 |
|
|
0.9 |
|
|
1.4 |
|
1.6 |
|
1.4 |
|
5.3 |
|
|||
Funding Dollars $B |
|
1.6 |
|
|
0.4 |
|
|
0.9 |
|
1.3 |
|
1.2 |
|
3.8 |
|
|||
Funding by Channel(a) |
|
|
|
|
|
|
|
|
|
|||||||||
Retail/Direct |
|
20.7 |
% |
|
37.2 |
% |
|
35.8 |
% |
32.5 |
% |
27.0 |
% |
32.0 |
% |
|||
Wholesale |
|
34.1 |
% |
|
34.7 |
% |
|
35.2 |
% |
34.3 |
% |
38.7 |
% |
35.9 |
% |
|||
Correspondent |
|
45.2 |
% |
|
28.1 |
% |
|
29.0 |
% |
33.2 |
% |
34.3 |
% |
32.0 |
% |
|||
Funding By Product(a) |
|
|
|
|
|
|
|
|
|
|||||||||
Conventional |
|
62.7 |
% |
|
58.3 |
% |
|
84.8 |
% |
84.7 |
% |
78.6 |
% |
79.8 |
% |
|||
Government |
|
34.5 |
% |
|
22.8 |
% |
|
15.0 |
% |
14.7 |
% |
13.9 |
% |
15.4 |
% |
|||
Non-Agency |
|
2.8 |
% |
|
18.9 |
% |
|
0.2 |
% |
0.6 |
% |
7.5 |
% |
4.8 |
% |
|||
Gain on Sale Margin |
|
145bps |
|
(8bps) |
|
337bps |
356bps |
353bps |
310bps |
(a) Represents the weighted average based on quarterly funding dollars for 2019 and 2020
KEY STATISTICS
($ in millions) |
|
|
||
Investment portfolio(2) |
|
$ |
1,395.6 |
|
Financing arrangements(3) |
|
680.8 |
|
|
Total Economic Leverage(3) |
|
629.7 |
|
|
Stockholders’ equity |
|
409.7 |
|
|
GAAP Leverage Ratio |
|
2.4x |
||
Economic Leverage Ratio(4) |
|
1.5x |
||
Book value, per share(1) |
|
$ |
4.13 |
|
Adjusted book value, per share(1) |
|
$ |
3.94 |
|
Dividend, per share(1) |
|
$ |
0.03 |
|
Duration Gap(5) |
|
0.58 |
|
INVESTMENT PORTFOLIO
The following summarizes the Company’s investment portfolio as of
($ in millions) |
|
Fair Value |
|
Percent of
|
|
Allocated
|
|
Percent of
|
Agency RMBS(a) |
|
|
|
37.4% |
|
|
|
19.7% |
Residential Investments(a) |
|
691.5 |
|
49.5% |
|
229.2 |
|
56.0% |
Commercial Investments |
|
182.3 |
|
13.1% |
|
99.6 |
|
24.3% |
Total |
|
|
|
100.0% |
|
|
|
100.0% |
(a) As of
DIVIDEND
On
On
STOCKHOLDER CALL
The Company invites stockholders, prospective stockholders and analysts to participate in MITT’s fourth 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 Q4 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 following on
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 our 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; 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
Additional information concerning these and other risk factors are contained in our filings with the
Consolidated Balance Sheets (Unaudited) (in thousands, except per share data) |
|||||||
|
|
|
|
||||
Assets |
|
|
|
||||
Real estate securities, at fair value: |
|
|
|
||||
Agency - |
$ |
518,352 |
|
|
$ |
2,315,439 |
|
Non-Agency - |
38,406 |
|
|
717,470 |
|
||
CMBS - |
56,788 |
|
|
416,923 |
|
||
Residential mortgage loans, at fair value - |
435,441 |
|
|
417,785 |
|
||
Commercial loans, at fair value - |
111,549 |
|
|
158,686 |
|
||
Commercial loans held for sale, at fair value |
13,959 |
|
|
— |
|
||
Investments in debt and equity of affiliates |
150,667 |
|
|
156,311 |
|
||
Excess mortgage servicing rights, at fair value |
3,158 |
|
|
17,775 |
|
||
Cash and cash equivalents |
47,926 |
|
|
81,692 |
|
||
Restricted cash |
14,392 |
|
|
43,677 |
|
||
Other assets |
9,407 |
|
|
21,905 |
|
||
Assets held for sale - Single-family rental properties, net |
— |
|
|
154 |
|
||
Total Assets |
$ |
1,400,045 |
|
|
$ |
4,347,817 |
|
|
|
|
|
||||
Liabilities |
|
|
|
||||
Financing arrangements |
$ |
564,047 |
|
|
$ |
3,233,468 |
|
Securitized debt, at fair value |
355,159 |
|
|
224,348 |
|
||
Dividend payable |
1,243 |
|
|
14,734 |
|
||
Payable on unsettled trades |
51,136 |
|
|
— |
|
||
Other liabilities |
18,755 |
|
|
24,675 |
|
||
Liabilities held for sale - Single-family rental properties, net |
— |
|
|
1,546 |
|
||
Total Liabilities |
990,340 |
|
|
3,498,771 |
|
||
Commitments and Contingencies |
|
|
|
||||
Stockholders' Equity |
|
|
|
||||
Preferred stock - |
|
|
|
||||
8.25% Series A Cumulative Redeemable Preferred Stock, 1,817 and 2,070 shares issued and
|
43,808 |
|
|
49,921 |
|
||
8.00% Series B Cumulative Redeemable Preferred Stock, 4,165 and 4,600 shares issued and
|
100,762 |
|
|
111,293 |
|
||
8.000% Series C Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock, 3,883 and 4,600
|
93,908 |
|
|
111,243 |
|
||
Common stock, par value |
414 |
|
|
327 |
|
||
Additional paid-in capital |
688,871 |
|
|
662,183 |
|
||
Retained earnings/(deficit) |
(518,058) |
|
|
(85,921) |
|
||
Total Stockholders' Equity |
409,705 |
|
|
849,046 |
|
||
|
|
|
|
||||
Total Liabilities & Stockholders' Equity |
$ |
1,400,045 |
|
|
$ |
4,347,817 |
|
Consolidated Statements of Operations (Unaudited) (in thousands, except per share data) |
|||||||||||
|
Three Months Ended
|
|
Three Months Ended
|
|
Year Ended
|
||||||
Net Interest Income |
|
|
|
|
|
||||||
Interest income |
$ |
11,171 |
|
|
$ |
48,534 |
|
|
$ |
74,525 |
|
Interest expense |
4,004 |
|
|
23,097 |
|
|
36,945 |
|
|||
Total Net Interest Income |
7,167 |
|
|
25,437 |
|
|
37,580 |
|
|||
|
|
|
|
|
|
||||||
Other Income/(Loss) |
|
|
|
|
|
||||||
Net realized gain/(loss) |
661 |
|
|
13,403 |
|
|
(256,522) |
|
|||
Net interest component of interest rate swaps |
(179) |
|
|
1,976 |
|
|
731 |
|
|||
Unrealized gain/(loss) on real estate securities and loans, net |
25,304 |
|
|
(17,812) |
|
|
(159,466) |
|
|||
Unrealized gain/(loss) on derivative and other instruments, net |
(8,550) |
|
|
17,355 |
|
|
(10,347) |
|
|||
Foreign currency gain/(loss), net |
45 |
|
|
(3,179) |
|
|
1,528 |
|
|||
Other income |
2 |
|
|
342 |
|
|
6 |
|
|||
Total Other Income/(Loss) |
17,283 |
|
|
12,085 |
|
|
(424,070) |
|
|||
|
|
|
|
|
|
||||||
Expenses |
|
|
|
|
|
||||||
Management fee to affiliate |
1,656 |
|
|
2,734 |
|
|
7,181 |
|
|||
Other operating expenses |
3,260 |
|
|
4,988 |
|
|
14,513 |
|
|||
Restructuring related expenses |
251 |
|
— |
|
|
10,200 |
|||||
Equity based compensation to affiliate |
— |
|
|
74 |
|
|
163 |
|
|||
Excise tax |
— |
|
|
67 |
|
|
(815) |
|
|||
Servicing fees |
539 |
|
|
416 |
|
|
2,224 |
|
|||
Total Expenses |
5,706 |
|
|
8,279 |
|
|
33,466 |
|
|||
|
|
|
|
|
|
||||||
Income/(loss) before equity in earnings/(loss) from affiliates |
18,744 |
|
|
29,243 |
|
|
(419,956) |
|
|||
|
|
|
|
|
|
||||||
Equity in earnings/(loss) from affiliates |
21,942 |
|
|
6,929 |
|
|
(1,629) |
|
|||
Net Income/(Loss) from Continuing Operations |
40,686 |
|
|
36,172 |
|
|
(421,585) |
|
|||
Net Income/(Loss) from Discontinued Operations |
305 |
|
|
(1,132) |
|
|
666 |
|
|||
Net Income/(Loss) |
40,991 |
|
|
35,040 |
|
|
(420,919) |
|
|||
|
|
|
|
|
|
||||||
Gain on Exchange Offers, net |
10,035 |
|
|
— |
|
|
10,574 |
|
|||
|
|
|
|
|
|
||||||
Dividends on preferred stock (a) |
(3,652) |
|
|
(5,667) |
|
|
(20,549) |
|
|||
|
|
|
|
|
|
||||||
Net Income/(Loss) Available to Common Stockholders |
$ |
47,374 |
|
|
$ |
29,373 |
|
|
$ |
(430,894) |
|
|
|
|
|
|
|
||||||
Earnings/(Loss) Per Share - Basic |
|
|
|
|
|
||||||
Continuing Operations |
$ |
1.15 |
|
|
$ |
0.93 |
|
|
$ |
(12.26) |
|
Discontinued Operations |
0.01 |
|
|
(0.03) |
|
|
0.02 |
|
|||
Total Earnings/(Loss) Per Share of Common Stock |
$ |
1.16 |
|
|
$ |
0.90 |
|
|
$ |
(12.24) |
|
|
|
|
|
|
|
||||||
Earnings/(Loss) Per Share - Diluted |
|
|
|
|
|
||||||
Continuing Operations |
$ |
1.15 |
|
|
$ |
0.93 |
|
|
$ |
(12.26) |
|
Discontinued Operations |
0.01 |
|
|
(0.03) |
|
|
0.02 |
|
|||
Total Earnings/(Loss) Per Share of Common Stock |
$ |
1.16 |
|
|
$ |
0.90 |
|
|
$ |
(12.24) |
|
|
|
|
|
|
|
||||||
Weighted Average Number of Shares of Common Stock Outstanding |
|
|
|
|
|
||||||
Basic |
40,683 |
|
|
32,742 |
|
|
35,191 |
|
|||
Diluted |
40,683 |
|
|
32,759 |
|
|
35,191 |
|
(a) The three months ended
NON-GAAP FINANCIAL MEASURE
This press release contains Core Earnings, a non-GAAP financial measure. Our presentation of Core Earnings may not be comparable to similarly-titled measures of other companies, who may use different calculations. This non-GAAP measure should not be considered a substitute for, 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.
We define Core Earnings, a non-GAAP financial measure, as Net Income/(Loss) available to common stockholders excluding (i) (a) unrealized gains/(losses) on real estate securities, loans, derivatives and other investments, inclusive of our investment in
A reconciliation of GAAP Net Income/(loss) available to common stockholders to Core Earnings for the three months ended
|
|
Three Months Ended
|
|
Three Months Ended
|
|
Year Ended
|
||||||
Net Income/(loss) available to common stockholders |
|
$ |
47,374 |
|
|
$ |
29,373 |
|
|
$ |
(430,894) |
|
Add (Deduct): |
|
|
|
|
|
|
||||||
Net realized (gain)/loss |
|
(661) |
|
|
(13,403) |
|
|
256,522 |
|
|||
Unrealized (gain)/loss on real estate securities and
|
|
(25,304) |
|
|
17,812 |
|
|
159,466 |
|
|||
Unrealized (gain)/loss on derivative and other
|
|
8,550 |
|
|
(17,355) |
|
|
10,347 |
|
|||
Gains from Exchange Offers, net |
|
(10,035) |
|
|
— |
|
|
(10,574) |
|
|||
Equity in (earnings)/loss from affiliates |
|
(21,942) |
|
|
(6,929) |
|
|
1,629 |
|
|||
Net interest income and expenses from equity
|
|
11,409 |
|
|
2,008 |
|
|
38,025 |
|
|||
Foreign currency (gain)/loss, net |
|
(45) |
|
|
3,179 |
|
|
(1,528) |
|
|||
Net (income)/loss from discontinued operations |
|
(305) |
|
|
1,132 |
|
|
(666) |
|
|||
Transaction related expenses and deal related
|
|
61 |
|
|
907 |
|
|
(613) |
|
|||
Dollar roll income |
|
— |
|
|
153 |
|
|
322 |
|
|||
Core Earnings |
|
$ |
9,102 |
|
|
$ |
16,877 |
|
|
$ |
22,036 |
|
|
|
|
|
|
|
|
||||||
Core Earnings, per Diluted Share |
|
$ |
0.22 |
|
|
$ |
0.52 |
|
|
$ |
0.63 |
|
(a) For the three months ended
Footnotes
(1) Diluted per share figures are calculated using weighted average outstanding shares in accordance with GAAP. Per share figures are calculated using a denominator of all outstanding common shares including vested shares issued to our Manager and our independent directors under our equity incentive plans as of quarter-end. As 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, 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) We allocate our equity by investment using the fair value of our investment portfolio, less any associated leverage, inclusive of any long TBA position (at cost). We allocate all non-investment portfolio related assets and liabilities to our investment portfolio categories based on the characteristics of such assets and liabilities in order to sum to stockholders' equity per the consolidated balance sheets. Our 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.
(7) We invest in
View source version on businesswire.com: https://www.businesswire.com/news/home/20210219005118/en/
Investor Relations
(212) 692-2110
ir@agmit.com
Source: