Workflow
AG Mortgage Investment Trust(MITT) - 2024 Q4 - Annual Report
MITTAG Mortgage Investment Trust(MITT)2025-03-04 22:17
Transcript
Slide

Acquisition and Mergers - The company completed the acquisition of Western Asset Mortgage Capital Corporation (WMC) on December 6, 2023, merging it into a wholly owned subsidiary[300]. - The company increased its investment portfolio by 1.2billionthroughtheacquisitionofWMCinDecember2023,primarilyconsistingofSecuritizedNon−AgencyLoans[357].−ThebargainpurchasegainfromtheWMCacquisitionwasrecordedat1.2 billion through the acquisition of WMC in December 2023, primarily consisting of Securitized Non-Agency Loans[357]. - The bargain purchase gain from the WMC acquisition was recorded at 30.2 million, reflecting the difference between the fair value of net assets acquired and the consideration paid[333]. - The company assumed liabilities of 1.1billionthroughtheacquisitionofWMC,whichincludedsecuritizeddebtandconvertibleseniorunsecurednotes[394].FinancialPerformance−Thenetincomeavailabletocommonstockholderswas1.1 billion through the acquisition of WMC, which included securitized debt and convertible senior unsecured notes[394]. Financial Performance - The net income available to common stockholders was 1.23 per diluted common share for the year ended December 31, 2024[305]. - For the year ended December 31, 2024, net income available to common stockholders was 36,384,000,comparedto36,384,000, compared to 35,440,000 for the year ended December 31, 2023[354]. - Earnings available for distribution (EAD) for the year ended December 31, 2024, was 22,577,000,significantlyhigherthan22,577,000, significantly higher than 8,274,000 for the year ended December 31, 2023[354]. - Net interest income increased to 65,892,000fortheyearendedDecember31,2024,comparedto65,892,000 for the year ended December 31, 2024, compared to 47,829,000 in 2023, reflecting a change of 18,063,000[319].−Interestincomeroseto18,063,000[319]. - Interest income rose to 408,495,000 in 2024 from 260,329,000in2023,anincreaseof260,329,000 in 2023, an increase of 148,166,000, primarily due to the WMC acquisition and increased weighted average yield[319][321]. - Total net interest income for the year ended December 31, 2024, was 3,575,000,comparedto3,575,000, compared to 5,190,000 for the year ended December 31, 2023[346]. Dividends and Stockholder Returns - The company declared a dividend of 0.75percommonsharefortheyear,increasingthequarterlydividendfrom0.75 per common share for the year, increasing the quarterly dividend from 0.18 to 0.19,representinga5.60.19, representing a 5.6% increase[305]. - The company declared common stock dividends of 0.75 per share and preferred stock dividends ranging from 2.00to2.00 to 2.233117 during the year ended December 31, 2024[410]. Investment Portfolio - The investment portfolio for the year ended December 31, 2024, included purchases totaling 2,396,812,000andsalesamountingto2,396,812,000 and sales amounting to 965,196,000[302]. - Total investment portfolio amounted to 7,063,632,withafairvalueof7,063,632, with a fair value of 6,702,026 and a yield of 6.03% as of December 31, 2024[371]. - Securitized non-agency loans totaled 6,388,631withafairvalueof6,388,631 with a fair value of 6,044,597 and a yield of 5.68%[371]. - The total residential investments reached 6,917,457,withafairvalueof6,917,457, with a fair value of 6,561,240 and a yield of 5.89%[371]. Interest Rates and Financing - The Federal Reserve lowered the target range for the Federal Funds Rate by 100 basis points in 2024, ending at 4.25% to 4.50%[307]. - The effective mortgage rate outstanding increased slightly to 4.02% as of December 2024, reflecting a rise of approximately 72 basis points since March 2022[311]. - The cost of funds related to the financing of the investment portfolio was 5.24%, including a benefit of 0.05% from interest rate hedges[363]. - Interest expense rose to 342,603,000in2024from342,603,000 in 2024 from 212,500,000 in 2023, an increase of 130,103,000duetohigherfinancingcosts[319][324].ExpensesandCosts−Totalexpensesdecreasedto130,103,000 due to higher financing costs[319][324]. Expenses and Costs - Total expenses decreased to 34,951,000 in 2024 from 38,672,000in2023,areductionof38,672,000 in 2023, a reduction of 3,721,000[319]. - The company incurred transaction-related expenses of 3,310,000fortheyearendedDecember31,2024,downfrom3,310,000 for the year ended December 31, 2024, down from 11,233,000 for the year ended December 31, 2023[354]. - Non-investment related expenses for the year ended December 31, 2024, were 5.715million,comparedto5.715 million, compared to 5.095 million in 2023[437]. Equity and Stockholder Equity - Total stockholders' equity was reported at 543,423,reflectingaleverageratioof11.6x[371].−GAAPleveragewasreportedat543,423, reflecting a leverage ratio of 11.6x[371]. - GAAP leverage was reported at 6,319.227 million, resulting in a leverage ratio of 11.6x against stockholders' equity of 543.423million[405].−Economicleverage,anon−GAAPmeasure,was543.423 million[405]. - Economic leverage, a non-GAAP measure, was 777.726 million, with a leverage ratio of 1.4x[405]. Cash Flow and Liquidity - Cash provided by operating activities increased to 55.839million,upfrom55.839 million, up from 28.134 million in the previous year[417]. - Cash used in investing activities rose to 713.131million,primarilyduetoincreasedpurchaseactivity[418].−Cashprovidedbyfinancingactivitieswas713.131 million, primarily due to increased purchase activity[418]. - Cash provided by financing activities was 670.287 million, attributed to the issuance of securitized debt and senior unsecured notes[419]. - As of December 31, 2024, the company had liquidity of 136.9million,consistingof136.9 million, consisting of 118.7 million in cash and 18.2millioninunencumberedAgencyRMBS[412].ComplianceandRegulatoryMatters−Thecompanymustdistributeatleast9018.2 million in unencumbered Agency RMBS[412]. Compliance and Regulatory Matters - The company must distribute at least 90% of ordinary taxable income to qualify as a REIT, impacting its ability to make distributions to stockholders[468]. - Failure to qualify as a REIT could result in U.S. federal income tax at regular corporate rates, adversely affecting operations and distributions[469]. - The company conducts operations to maintain exempt status under the Investment Company Act, ensuring compliance with the 40% Test[472]. Valuation and Fair Value Measurements - The company has significant unobservable inputs in fair value measurements, particularly the book value multiple, which can significantly affect fair value[452]. - The assets of securitization entities are primarily comprised of residential mortgage loans, with ongoing reassessments of consolidation conclusions[464]. - Goodwill is calculated as the excess of consideration transferred over the net assets acquired, representing estimated future economic benefits[465]. Management and Incentives - The company recorded management fees payable of 2.3 million and 1.5millionasofDecember31,2024,and2023,respectively[431].−Theannualincentivefeeissetat151.5 million as of December 31, 2024, and 2023, respectively[431]. - The annual incentive fee is set at 15% of cumulative adjusted net income exceeding an 8% return on a base of 341.5 million, with no incentive fee expense incurred for the years ended December 31, 2024, and 2023[432]. - The company granted an aggregate of 130,000 restricted shares of common stock to certain employees of the Manager under the 2020 Equity Incentive Plan, vesting in three annual installments starting January 2026[441].