AG Mortgage Investment Trust(US:MITT)2024-11-06 22:10Financial Performance - Net Income available to common stockholders is $0.40 per diluted common share, with Earnings Available for Distribution (EAD) at $0.17 per diluted common share[218]. - Net income available to common stockholders was $11,924,000, a significant increase from a loss of $6,751,000 in the prior year, representing a turnaround of $18,675,000[258]. - Net income available to common stockholders for the nine months ended September 30, 2024, was $27,567, an increase of $22,894 from $4,673 in 2023[285]. - Interest income increased to $107,456,000 for the three months ended September 30, 2024, up from $64,211,000 in the same period of 2023, representing a growth of 67.1%[258]. - Total net interest income rose to $14,950,000, compared to $11,519,000 in the prior year, marking an increase of 29.1%[258]. - Interest income rose to $302,843 for the nine months ended September 30, 2024, up by $120,041 from $182,802 in the prior year[285]. - Total net unrealized gain for the nine months ended September 30, 2024, was $20,488, compared to a loss of $257 for the same period in 2023[296]. - The net unrealized loss for the nine months ended September 30, 2024, was $(20,488) thousand, compared to a gain of $257 thousand for the same period in 2023[309]. Investment Portfolio - The company acquired Western Asset Mortgage Capital Corporation, increasing its investment portfolio by $1.2 billion, primarily consisting of Securitized Non-Agency Loans[227]. - The fair value of investments purchased during Q3 2024 totaled $575.986 million, while proceeds from sales amounted to $706.881 million[219]. - As of September 30, 2024, the total investment portfolio amounted to $6,972,893, with a net interest margin of 5.93%[318]. - The weighted average yield of the company's investment portfolio based on fair value was 6.00% as of September 30, 2024[318]. - The weighted average amortized cost of the GAAP investment portfolio increased to $6,837 million as of September 30, 2024, up by $2,012 million from $4,825 million in 2023[287]. - The weighted average yield on the GAAP investment portfolio improved to 5.93% from 5.21%, an increase of 0.72%[261]. - The total residential investments in the portfolio were valued at $6,826,354, with a net interest margin of 5.79%[317]. - Securitized non-agency loans had an amortized cost of $6,235,950 and a fair value of $6,052,165, yielding 5.60%[317]. Dividends and Stockholder Equity - The company declared a dividend of $0.19 per common share[218]. - The company declared common stock dividends of $0.56 and preferred stock dividends of $1.54689, $1.50, and $1.50 for Series A, B, and C Preferred Stock, respectively, during the nine months ended September 30, 2024[359]. - Approximately 9.2 million shares of common stock were issued to former WMC common stockholders, who now own about 31% of the combined company's equity following the merger[238]. - The book value per common share increased to $10.58 as of September 30, 2024, up from $10.20 at the end of 2023[252]. Leverage and Financing - The GAAP Leverage Ratio is 11.8x, and the Economic Leverage Ratio is 1.5x[218]. - The leverage ratio for the total investment portfolio was 1.5x, indicating the company's economic leverage[318]. - Economic leverage, a non-GAAP metric, was $831,969 with a leverage ratio of 1.5x as of September 30, 2024[355]. - The cost of funds related to the financing on the investment portfolio was 5.25%, including a benefit of 0.08% from interest rate hedges[318]. Market Conditions - The S&P CoreLogic Case-Shiller U.S. National Home Price Index rose by 5% year-to-date and year-over-year, with forecasts for 2024 and 2025 averaging +3.5% and +3%, respectively[246]. - The effective mortgage rate outstanding was 3.92% as of June 2024, significantly lower than prevailing rates, indicating a potential "lock-in effect" among homeowners[247]. - Total existing home listings rose to 1.35 million in August 2024, the highest level since Q4 2020, although new listings remain below pre-pandemic levels[248]. - RMBS spreads tightened during Q3 2024, with senior and mezzanine Non-QM tranches tightening by 5 basis points and subordinate BB rated tranches tightening by 20 basis points[244]. - The Federal Reserve lowered the target range for the Federal Funds Rate by 50 basis points to 4.75% to 5.00% on September 18, 2024, marking the first decline in four years[243]. Management and Governance - The management agreement with TPG Angelo Gordon remains unchanged following the acquisition by TPG, ensuring continuity in management[240]. - The cumulative adjusted net income hurdle for the Manager's incentive fee is based on an 8% return on an equity hurdle base of $341.5 million[382]. - The Company has not incurred any incentive fee expense during the three and nine months ended September 30, 2024 and 2023[383]. - The Board of Directors authorized a stock repurchase program in 2023 to repurchase up to $15.0 million of common stock, with the full amount remaining available for repurchase[369]. Compliance and Risk Management - The company is organized to qualify as a REIT, requiring it to distribute at least 90% of its ordinary taxable income to stockholders[400]. - If the company fails to qualify as a REIT, it may face U.S. federal income tax at regular corporate rates, adversely affecting its operations and ability to pay distributions[401]. - The company is exposed to market risks including interest rates, liquidity, and credit, which have heightened due to inflation and rising mortgage rates[406]. - Interest rate risk is managed through monitoring interest rates, structuring financing arrangements, and using derivative instruments[407]. - The company's operating results depend on the difference between yields on investments and borrowing costs, which may narrow in a rising interest rate environment[408].