AG Mortgage Investment Trust, Inc. Reports First Quarter 2020 Results
FIRST QUARTER 2020 FINANCIAL SNAPSHOT
-
$(14.98) of Net Income/(Loss) per diluted common share(1) -
$2.63 Book Value per share(1) as ofMarch 31, 2020 versus$17.61 as ofDecember 31, 2019 -
$1.6 billion Investment Portfolio with a 3.3x Economic Leverage Ratio as ofMarch 31, 2020 as compared to the$4.4 billion and 4.1x, respectively, as ofDecember 31, 2019 (2)(3)(4) -
$1.2 billion of financing arrangements as ofMarch 31, 2020 (a) as compared to the$3.5 billion as ofDecember 31, 2019 (a) -
Duration gap was approximately 2.63 years as of
March 31, 2020 (5) - We are not disclosing Core Earnings, a non-GAAP financial measure, for the first quarter of 2020, as we determined that this measure, as we have historically calculated it, would not appropriately capture the materially negative economic impact of the COVID-19 pandemic on our business, liquidity, results of operations, financial condition, and ability to make distributions to our stockholders. As financial markets stabilize, we will evaluate whether core earnings or other non-GAAP financial measures would help both management and investors evaluate our operating performance for future periods.
(a) Financing arrangements are shown gross of
IMPACT OF COVID-19 PANDEMIC
- Beginning in mid-March, the global pandemic associated with COVID-19 and related economic conditions caused financial and mortgage-related asset markets to come under extreme duress, resulting in credit spread widening, a sharp decrease in interest rates and unprecedented illiquidity in repurchase agreement financing and MBS markets. The illiquidity was exacerbated by inadequate demand for MBS among primary dealers due to balance sheet constraints.
- These events, in turn, resulted in falling prices of our assets and increased margin calls from our repurchase agreement counterparties. In order to satisfy the margin calls, the Company sold a significant portion of its investments resulting in a material adverse impact on book value, earnings and financial position.
-
The change in book value from
December 31, 2019 toMarch 31, 2020 is comprised of:-
Realized and unrealized losses of
$(2.91) per share(1) on our Agency portfolio -
Realized and unrealized losses of
$(8.15) per share(1) on our Residential portfolio -
Realized and unrealized losses of
$(4.34) per share(1) on our Commercial portfolio -
Other income of
$0.42 per share(1)
-
Realized and unrealized losses of
-
Book Value per share(1) as of
April 30, 2020 was estimated to be in the range of$1.80 to$1.90 -
In an effort to manage the Company's portfolio through this unprecedented turmoil in the financial markets and improve liquidity, the Company executed the following measures:
- In March of 2020, we sold our entire 30 year fixed rate Agency MBS Portfolio
- In March of 2020, unwound entire interest rate swap portfolio
-
Since
March 23, 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 - Based on current circumstances it is our intention to suspend quarterly dividends on common and preferred stock for the foreseeable future in order to conserve capital and improve our liquidity position
-
Manager made subordinated loans totaling
$20 million to the Company -
Manager deferred payment of management fees and expense reimbursements through
September 30, 2020 -
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, reduced exposure to various counterparties and brought the number of counterparties with debt outstanding down from 30 as of
December 31, 2019 to 18 as ofMarch 31, 2020 and 6 as ofMay 31, 2020
-
As of
May 31, 2020 :-
Investment portfolio of approximately
$1 billion (a)(b), consisting of 78% residential investments(c) and 22% commercial investments -
Debt obligations of approximately
$710 million (d)(e), net of approximately$25 million of cash posted as collateral to its financing counterparties, of which approximately$280 million (e) are recourse repurchase obligations, approximately$410 million (e) are non-recourse debt obligations and approximately$20 million are subordinated debt obligations -
Cash and cash equivalents of approximately
$45 million
-
Investment portfolio of approximately
(a) Based on our preliminary analysis,
(b) Investment portfolio does not include the Company's
(c) For purposes of the presentation of the
(d) Debt obligations include all financing arrangements, securitized debt and subordinated debt.
(e)
MANAGEMENT REMARKS
"Immediately prior to and during the two month period of our forbearance, we sold the majority of our assets, paid off the related financing, and consolidated our remaining repo arrangements down to six lenders," Roberts added. "In downsizing our portfolio, mostly during a time of severe dislocation in our markets, MITT took substantial losses. The Company began the year with a common equity book value of
KEY STATISTICS
($ in millions) |
|
|
Investment portfolio(2) (3) |
|
|
Financing arrangements(3) |
|
1,231.2 |
Total Economic Leverage(4) |
|
1,175.5 |
Stockholders’ equity |
|
358.7 |
GAAP Leverage Ratio |
|
3.1x |
Economic Leverage Ratio(4) |
|
3.3x |
Book value, per share(1) |
|
|
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 |
|
|
|
2.3% |
|
|
|
5.0% |
Residential Investments |
|
1,285.0 |
|
79.3% |
|
244.9 |
|
68.3% |
Commercial Investments |
|
298.5 |
|
18.4% |
|
95.8 |
|
26.7% |
Total |
|
|
|
100.0% |
|
|
|
100.0% |
Note: The chart above includes fair value of
DIVIDEND
On
On
STOCKHOLDER CALL
The Company invites stockholders, prospective stockholders and analysts to participate in MITT’s first 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 Q1 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, changes in interest rates, changes in the yield curve, changes in prepayment rates on the loans we own that underlie our investment securities, increases in default rates or delinquencies and/or decreased recovery rates on our assets, our ability to make distributions to our stockholders in the future, our ability to maintain our qualification as a REIT for federal tax purposes, our ability to maintain our exemption from registration under the Investment Company Act of 1940, as amended, the availability and terms of financing, changes in the fair value of our assets, including negative changes resulting in margin calls relating to the financing of our assets, 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, Non-Agency RMBS and CMBS securities, Excess MSRs and loans, conditions in the real estate market, 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, economic leverage ratio, which are calculated by including or excluding depreciation and amortization, unconsolidated investments in affiliates, TBAs, and
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Assets |
|
|
|
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Real estate securities, at fair value: |
|
|
|
||||||
Agency - |
$ |
23,132 |
|
|
|
$ |
2,315,439 |
|
|
Non-Agency - |
186,797 |
|
|
717,470 |
|
|
|||
CMBS - |
129,626 |
|
|
416,923 |
|
|
|||
Residential mortgage loans, at fair value - |
766,960 |
|
|
417,785 |
|
|
|||
Commercial loans, at fair value - |
158,051 |
|
|
158,686 |
|
|
|||
Investments in debt and equity of affiliates |
119,212 |
|
|
156,311 |
|
|
|||
Excess mortgage servicing rights, at fair value |
14,066 |
|
|
17,775 |
|
|
|||
Cash and cash equivalents |
92,299 |
|
|
81,692 |
|
|
|||
Restricted cash |
41,400 |
|
|
43,677 |
|
|
|||
Other assets - |
27,093 |
|
|
21,905 |
|
|
|||
Assets held for sale - Single-family rental properties, net |
— |
|
|
154 |
|
|
|||
Total Assets |
$ |
1,558,636 |
|
|
|
$ |
4,347,817 |
|
|
|
|
|
|
||||||
Liabilities |
|
|
|
||||||
Financing arrangements |
$ |
969,857 |
|
|
|
$ |
3,233,468 |
|
|
Securitized debt, at fair value |
197,182 |
|
|
224,348 |
|
|
|||
Dividend payable |
— |
|
|
14,734 |
|
|
|||
Other liabilities |
32,266 |
|
|
24,675 |
|
|
|||
Liabilities held for sale - Single-family rental properties, net |
666 |
|
|
1,546 |
|
|
|||
Total Liabilities |
1,199,971 |
|
|
3,498,771 |
|
|
|||
Commitments and Contingencies |
|
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|
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Stockholders’ Equity |
|
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|
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Preferred stock - |
|
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8.25% Series A Cumulative Redeemable Preferred Stock, 2,070 shares issued and outstanding ( |
49,921 |
|
|
49,921 |
|
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|||
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 |
327 |
|
|
327 |
|
|
|||
Additional paid-in capital |
662,486 |
|
|
662,183 |
|
|
|||
Retained earnings/(deficit) |
(576,605 |
) |
|
(85,921 |
) |
|
|||
Total Stockholders’ Equity |
358,665 |
|
|
849,046 |
|
|
|||
|
|
|
|
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Total Liabilities & Stockholders’ Equity |
$ |
1,558,636 |
|
|
|
$ |
4,347,817 |
|
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Three Months Ended |
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Net Interest Income |
|
|
|
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Interest income |
$ |
40,268 |
|
|
|
$ |
41,490 |
|
|
Interest expense |
19,971 |
|
|
|
22,094 |
|
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||
Total Net Interest Income |
20,297 |
|
|
|
19,396 |
|
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Other Income/(Loss) |
|
|
|
||||||
Net realized gain/(loss) |
(151,143 |
) |
|
|
(20,583 |
) |
|
||
Net interest component of interest rate swaps |
923 |
|
|
|
1,781 |
|
|
||
Unrealized gain/(loss) on real estate securities and loans, net |
(313,897 |
) |
|
|
46,753 |
|
|
||
Unrealized gain/(loss) on derivative and other instruments, net |
5,686 |
|
|
|
(10,086 |
) |
|
||
Foreign currency gain/(loss), net |
1,649 |
|
|
|
— |
|
|
||
Other income |
3 |
|
|
|
414 |
|
|
||
Total Other Income/(Loss) |
(456,779 |
) |
|
|
18,279 |
|
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|
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Expenses |
|
|
|
||||||
Management fee to affiliate |
2,149 |
|
|
|
2,345 |
|
|
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Other operating expenses |
2,342 |
|
|
|
3,781 |
|
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Equity based compensation to affiliate |
88 |
|
|
|
126 |
|
|
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Excise tax |
(815 |
) |
|
|
92 |
|
|
||
Servicing fees |
579 |
|
|
|
371 |
|
|
||
Total Expenses |
4,343 |
|
|
|
6,715 |
|
|
||
|
|
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|
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Income/(loss) before equity in earnings/(loss) from affiliates |
(440,825 |
) |
|
|
30,960 |
|
|
||
|
|
|
|
||||||
Equity in earnings/(loss) from affiliates |
(44,192 |
) |
|
|
(771 |
) |
|
||
Net Income/(Loss) from Continuing Operations |
(485,017 |
) |
|
|
30,189 |
|
|
||
Net Income/(Loss) from Discontinued Operations |
— |
|
|
|
(1,034 |
) |
|
||
Net Income/(Loss) |
(485,017 |
) |
|
|
29,155 |
|
|
||
|
|
|
|
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Dividends on preferred stock |
5,667 |
|
|
|
3,367 |
|
|
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|
|
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|
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Net Income/(Loss) Available to Common Stockholders |
$ |
(490,684 |
) |
|
|
$ |
25,788 |
|
|
|
|
|
|
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Earnings/(Loss) Per Share - Basic |
|
|
|
||||||
Continuing Operations |
$ |
(14.98 |
) |
|
|
$ |
0.87 |
|
|
Discontinued Operations |
— |
|
|
|
(0.03 |
) |
|
||
Total Earnings/(Loss) Per Share of Common Stock |
$ |
(14.98 |
) |
|
|
$ |
0.84 |
|
|
|
|
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Earnings/(Loss) Per Share - Diluted |
|
|
|
||||||
Continuing Operations |
$ |
(14.98 |
) |
|
|
$ |
0.87 |
|
|
Discontinued Operations |
— |
|
|
|
(0.03 |
) |
|
||
Total Earnings/(Loss) Per Share of Common Stock |
$ |
(14.98 |
) |
|
|
$ |
0.84 |
|
|
|
|
|
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Weighted Average Number of Shares of Common Stock Outstanding |
|
|
|
||||||
Basic |
32,749 |
|
|
|
30,551 |
|
|
||
Diluted |
32,749 |
|
|
|
30,581 |
|
|
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 granted to our Manager and our independent directors under our equity incentive plans as of quarter-end. Book value is calculated using stockholders’ equity less net proceeds of our 8.25% Series A Cumulative Redeemable Preferred Stock (
(2) The investment portfolio at period end is calculated by summing the net carrying value of our Agency RMBS, any long positions in TBAs, Residential Investments, Commercial Investments, and where applicable, 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/20200612005113/en/
Investor Relations
(212) 692-2110
ir@agmit.com
Source: