AG Mortgage Investment Trust, Inc. Reports Fourth Quarter Earnings
AG Mortgage Investment Trust, Inc. Reports Fourth Quarter Earnings
NEW YORK--(BUSINESS WIRE)-- AG Mortgage Investment Trust, Inc. ("MITT" or the "Company") (NYS: MITT) today reported core earnings of $19.8 million and net income available to common stockholders of $14.6 million for the quarter ended December 31, 2012. AG Mortgage Investment Trust, Inc. is an actively managed REIT that opportunistically invests in a diversified risk-adjusted portfolio of Agency RMBS, Non-Agency RMBS, ABS, CMBS, commercial loans and other real estate related assets. A reconciliation of core earnings to net income appears at the end of this press release.
See footnotes at the end of this press release
- Net income available to common stockholders of $0.62 per share (6) for the quarter and $7.18 per share for the year
- Core Earnings of $0.85 per share for the quarter and $3.48 per share for the year
- Net realized gains of $0.66 per share for the quarter and $1.62 per share for the year
- $0.80 per share common dividend declared for the quarter and $2.97 per share for the year
- $2.15 per share of undistributed taxable income (1)
- Increase of $0.96 per share from September 30, 2012
- $23.47 net book value per share as of December 31, 2012 (1), net of the fourth quarter dividend
- $2.95 per share increase from $20.52 as of December 31, 2011
- 31.4% return on stock in 2012
- Raised approximately $91.2 million of gross proceeds through a common stock offering during the quarter
- 49% of warrants outstanding exercised as of December 31, 2012
- $4.9 billion investment portfolio value as of December 31, 2012 (2) (4)
- 77.8% Agency RMBS investment portfolio
- 22.2% credit investment portfolio, comprised of Non-Agency RMBS, ABS, CMBS, and commercial loan assets
- 2.15% net interest margin as of December 31, 2012 (3)
- 5.26x leverage as of December 31, 2012 (2) (7)
- 7.8% constant prepayment rate ("CPR") for the fourth quarter on the Agency RMBS investment portfolio (5)
- 6.4% CPR for the year
- Increased interest rate swap notional by $325.0 million
- 65% hedge ratio as of quarter end, increased from 53% as of September 30, 2012
- New investment in securitized pool of legacy whole loans
"A highlight since our last call was MITT's investment in two proprietary transactions sourced through the Angelo, Gordon platform, one a commercial real estate loan that closed in January 2013 and the other a portfolio of residential whole loans," said David Roberts, Chief Executive Officer. "Our ability to source, negotiate, and analyze these purchases demonstrates the depth of the resources provided to MITT by the Angelo, Gordon platform. We believe this platform is a long term distinguishing advantage for MITT and its shareholders."
"Over the course of the fourth quarter we accomplished several key investment goals that we believe position MITT to continue to deliver strong future results for its shareholders," said Jonathan Lieberman, Chief Investment Officer. "First, we continued to grow our allocation to credit securities with attractive risk-adjusted returns. Second, we increased our interest rate hedge ratio based upon an expectation that interest rates were likely to rise over the short-term, a view that has in fact played out. Third, we also executed upon our plan to lengthen the original tenor of our repo maturities. Finally, we were very pleased to have announced subsequent to year-end, that Angelo, Gordon & Co., the parent of the Company's external manager, appointed Jason Biegel as Managing Director and the head of its Residential Whole Loan platform. In this role at Angelo, Gordon, he will have primary responsibility for building out a residential whole loan platform that will enable the Company to expand its investments in residential whole loans, mortgage servicing rights and other similar assets. We believe this expansion will allow us to further drive shareholder value."
KEY STATISTICS (2)
Weighted Average at
December 31, 2012
Weighted Average for
the Quarter Ended
December 31, 2012
|Leverage ratio (7)||5.26x||6.02x|
|Swap ratio (8)||65%||59%|
|Yield on investment portfolio (9)||3.38%||3.37%|
|Cost of funds (10)||1.23%||1.11%|
|Net interest margin (3)||2.15%||2.26%|
|Management fees (11)||1.26%||1.43%|
|Other operating expenses (12)||1.12%||1.26%|
|Book value, per share (1)||$||23.47|
|Dividend, per share||$||0.80|
The following summarizes the Company's investment portfolio as of December 31, 2012 (2):
|15-Year Fixed Rate||$||1,177,320,487||$||46,922,089||$||1,224,242,576||$||1,248,210,196||2.97||%||2.08||%|
|20-Year Fixed Rate||137,858,353||6,696,803||144,555,156||148,124,694||3.68||%||2.78||%|
|30-Year Fixed Rate||1,998,807,425||116,173,790||2,114,981,215||2,143,738,095||3.63||%||2.75||%|
|* Equity residual investments with a zero coupon rate are excluded from this calculation.|
As of December 31, 2012, the weighted average yield on the Company's investment portfolio was 3.38% and its weighted average cost of funds was 1.23%. This resulted in a net interest margin of 2.15% as of December 31, 2012. (3)
The Company had net realized gains of $15.5 million, or $0.66 per share, during the quarter ended December 31, 2012. Of this amount, $10.9 million, or $0.46 per share, was from sales of Agency RMBS and TBAs, $3.8 million, or $0.16 per share, was from the sales of credit investments and $0.8 million, or $0.04 per share, was from the transfer of securities previously accounted for as derivatives through linked transactions. The Company had year-to-date net realized gains of $29.5 million, or $1.62 per share. Of this amount, $20.3 million, or $1.11 per share, was from sales of Agency RMBS and TBAs, $6.1 million, or $0.34 per share, was from sales of credit investments, $3.4 million, or $0.19 per share was from the transfer of securities previously accounted for as derivatives through linked transactions and $(0.3) million, or $(0.02) per share, was from the net settlement of interest rate swaps.
The CPR for the Agency RMBS investment portfolio was 7.8% for the fourth quarter, and 8.4% for the month of December 2012. The 2012 CPR on the Agency RMBS investment portfolio was 6.4%. (5)
The weighted average cost basis of the Agency RMBS investment portfolio, excluding interest-only securities, was 105.1% as of December 31, 2012. The amortization of premiums (net of any accretion of discounts) on these securities for the fourth quarter of 2012 was $(6.5) million, or $(0.28) per share. The Company recorded year-to-date premium amortization of $(17.4) million, or $(0.95) per share. The unamortized net Agency RMBS premium as of December 31, 2012 was $171.4 million.
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. The Company recorded a zero cent retrospective adjustment as a result of the projected cash flows on its bonds. Since the cost basis of the Company's Agency RMBS securities, excluding interest-only securities, exceeds the underlying principal balance by 5.1% as of December 31, 2012, slower actual and projected prepayments can have a meaningful positive impact, while faster actual or projected prepayments can have a meaningful negative impact on the Company's asset yields.
We have also entered into "to-be-announced" ("TBA") positions to facilitate the future purchase of Agency RMBS. Under the terms of these TBAs, the Company agrees to purchase, for future delivery, Agency RMBS with certain principal and interest specifications and certain types of underlying collateral, but the particular Agency RMBS to be delivered are not identified until shortly before (generally two days) the TBA settlement date. At December 31, 2012, we had $40.0 million net notional amount of TBA positions with a net weighted average purchase price of 104.5%. As of December 31, 2012, our TBA portfolio had a net weighted average yield at purchase of 2.36% and a net weighted average settlement date of March 12, 2013. We have recorded derivative liabilities of $0.1 million reflecting TBA positions.
LEVERAGE AND HEDGING ACTIVITIES
The investment portfolio is financed with repurchase agreements as of December 31, 2012 as summarized below:
|30 Days or Less||$||2,525,200,001||0.83%||15.3||60.2%|
|Greater than 90 Days||337,178,271||1.30%||125.7||8.0%|
|Total / Weighted Average||$||4,193,763,272||0.78%||36.9||100.0%|
The Company has entered into repurchase agreements with 30 counterparties. We continue to rebalance our exposures to counterparties, add new counterparties and extend original maturities. We increased our original maturity to 87 days as of December 31, 2012 from 79 days as September 30, 2012.
We have entered into interest rate swap agreements to hedge our portfolio. The Company's swaps as of December 31, 2012 are summarized as follows:
|Interest Rate Swaps|
Average Years to
* These figures include forward starting swaps with a total notional of $100.0 million and a weighted
average start date of April 2, 2013. Weighted average rates shown are inclusive of rates corresponding to
the terms of the swap as if the swap were effective as of December 31, 2012.
** Approximately 5% of our receive float interest rate swap notionals reset monthly based on one-month
LIBOR and 95% of our receive float interest rate swap notionals reset quarterly based on three-month
The primary differences between taxable income and GAAP net income include (i) unrealized gains and losses associated with investment and derivative portfolios which 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 December 31, 2012, the Company had undistributed taxable income of approximately $2.15 per share, including the effects of dividends.
On December 6, 2012, the Company's board of directors declared the fourth quarter dividend of $0.80 per share of common stock that was paid on January 28, 2013 to stockholders of record as of December 18, 2012.
On November 16, 2012, the Company declared a dividend of $0.51563 per share of Series A preferred stock and a partial quarterly dividend of $0.44 per share of Series B preferred stock. The partial period for the Series B preferred stock began on the initial issuance date and ended on December 16, 2012. The preferred distributions were paid on December 17, 2012 to stockholders of record as of November 30, 2012.
The Company invites stockholders, prospective stockholders and analysts to attend MITT's fourth quarter earnings conference call on March 6, 2013 at 10:00 am Eastern Time. The stockholder call can be accessed by dialing (888) 424-8151 (U.S. domestic) or (847) 585-4422 (international). Please enter code number 8846814#.
A presentation will accompany the conference call and will be available on the Company's website at www.agmit.com. Select the Q4 2012 Earnings Presentation link to download and print the presentation in advance of the stockholder call.
An audio replay of the stockholder call combined with the presentation will be made available on our website after the call. The replay will be available until midnight on March 20, 2013. If you are interested in hearing the replay, please dial (888) 843-7419 (U.S. domestic) or (630) 652-3042 (international). The conference ID number is 8732511#.
For further information or questions, please contact Lisa Yahr, the Company's Head of Investor Relations, at (212) 692-2282 or firstname.lastname@example.org.
ABOUT AG MORTGAGE INVESTMENT TRUST, INC.
AG Mortgage Investment Trust, Inc. is a real estate investment trust that invests in, acquires and manages a diversified portfolio of residential mortgage assets, other real estate-related securities and financial assets. AG Mortgage Investment Trust, Inc. is externally managed and advised by AG REIT Management, LLC, a subsidiary of Angelo, Gordon & Co., L.P., an SEC-registered investment adviser that specializes in alternative investment activities.
Additional information can be found on the Company's website at www.agmit.com.
ABOUT ANGELO, GORDON & CO.
Angelo, Gordon & Co. was founded in 1988 and has approximately $25 billion under management. Currently, the firm's investment disciplines encompass five principal areas: (i) distressed debt and leveraged loans, (ii) real estate, (iii) mortgage-backed securities and other structured credit, (iv) private equity and special situations and (v) a number of hedge fund strategies. Angelo, Gordon & Co. employs over 280 employees, including more than 100 investment professionals, and is headquartered in New York, with associated offices in Amsterdam, Chicago, Los Angeles, London, Hong Kong, Seoul, Shanghai, Sydney and Tokyo.
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 future dividends, the credit component of our portfolio book valve, deploying capital, the preferred stock offering and repurchase agreements. 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 RMBS, Non-Agency RMBS, ABS and CMBS 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 filings with the Securities and Exchange Commission ("SEC"). Copies are available free of charge on the SEC's website, http://www.sec.gov/. The Company does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based.
|AG Mortgage Investment Trust, Inc. and Subsidiaries|
|Consolidated Balance Sheets|
|December 31, 2012||December 31, 2011|
|Real estate securities, at fair value:|
|Agency - $3,536,876,135 and $1,186,149,842 pledged as collateral, respectively||$||3,785,867,151||$||1,263,214,099|
|Non-Agency - $529,455,020 and $47,227,005 pledged as collateral, respectively||568,858,645||58,787,051|
|ABS - $33,937,097 and $4,526,620 pledged as collateral, respectively||33,937,097||4,526,620|
|CMBS - $148,307,262 and $2,747,080 pledged as collateral, respectively||148,365,887||13,537,851|
|Commercial loans receivable, at fair value||2,500,000||-|
|Linked transactions, net, at fair value||44,246,169||8,787,180|
|Cash and cash equivalents||149,594,782||35,851,249|
|Receivable on unsettled trades||96,310,999||-|
|Derivative assets, at fair value||-||1,428,595|
|Due from broker||884,605||341,491|
|Due from affiliates||-||104,994|