AG Mortgage Investment Trust(MITT) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) Unaudited Q1 2025 financial statements report total assets at $7.32 billion, with net income available to common stockholders at $6.2 million, a decrease from Q1 2024 due to lower other income Consolidated Balance Sheets Total assets increased to $7.32 billion as of March 31, 2025, driven by securitized residential mortgage loans, with total liabilities also growing to $6.78 billion and stockholders' equity remaining stable at $543.9 million Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $7,323,220 | $6,913,609 | | Securitized residential mortgage loans, at fair value | $6,542,243 | $6,197,678 | | Residential mortgage loans, at fair value | $269,238 | $220,217 | | Cash and cash equivalents | $115,549 | $118,662 | | Total Liabilities | $6,779,350 | $6,370,186 | | Securitized debt, at fair value | $5,836,691 | $5,491,967 | | Financing arrangements | $806,554 | $742,108 | | Total Stockholders' Equity | $543,870 | $543,423 | Consolidated Statements of Operations Q1 2025 net income decreased to $11.5 million, resulting in $6.2 million ($0.21 per diluted share) available to common stockholders, primarily due to a significant reduction in total other income Quarterly Operating Results (in thousands, except per share data) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Total Net Interest Income | $18,849 | $17,179 | | Total Other Income/(Loss) | $1,549 | $10,811 | | Total Expenses | $10,106 | $9,137 | | Net Income/(Loss) | $11,477 | $20,890 | | Net Income/(Loss) Available to Common Stockholders | $6,173 | $16,304 | | Diluted EPS | $0.21 | $0.55 | Consolidated Statements of Stockholders' Equity Total stockholders' equity slightly increased to $543.9 million by March 31, 2025, driven by $11.5 million net income, largely offset by $11.2 million in common and preferred dividends - In Q1 2025, the company declared a common dividend of $0.20 per share, an increase from the $0.18 per share declared in Q1 2024[18] Changes in Stockholders' Equity (Q1 2025, in thousands) | Description | Amount | | :--- | :--- | | Balance at January 1, 2025 | $543,423 | | Net Income/(Loss) | $11,477 | | Common dividends declared | ($5,932) | | Preferred dividends declared | ($5,306) | | Balance at March 31, 2025 | $543,870 | Consolidated Statements of Cash Flows Q1 2025 saw a net cash decrease of $9.4 million, with $12.0 million from operations, $314.7 million used in investing, and $293.4 million provided by financing activities Net Cash Flow Summary (in thousands) | Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash from operating activities | $11,997 | $11,972 | | Net cash used in investing activities | ($314,725) | ($248,231) | | Net cash from financing activities | $293,377 | $227,320 | | Net change in cash | ($9,351) | ($8,939) | Notes to Consolidated Financial Statements (unaudited) Notes detail the company's organization, accounting policies, financial instruments, and portfolio composition, operating as a single segment, with subsequent events including a dividend and a loan default - The company is a residential mortgage REIT focused on acquiring and securitizing newly-originated non-agency residential mortgage loans, primarily sourced through its affiliate Arc Home, in which it holds a 44.6% interest[25] - The company operates as a single reportable segment named 'Loans and Securities', reflecting its integrated management approach to its investment portfolio[31][239] - Subsequent to the quarter end, a borrower defaulted on the maturity of three Legacy WMC Commercial Loans (Loan A, B, and C) on May 6, 2025, with a short-term forbearance agreement being negotiated[243] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management reported Q1 2025 book value of $10.65 per share and EAD of $0.20 per diluted share, increasing the common dividend to $0.20 per share, with robust investment activity including a $423.3 million securitization, and maintaining economic leverage at 1.6x and GAAP leverage at 12.4x Q1 2025 Financial Highlights | Metric | Value | | :--- | :--- | | Book Value per share | $10.65 | | Net Income per diluted common share | $0.21 | | Earnings Available for Distribution (EAD) per diluted common share | $0.20 | | GAAP Leverage Ratio | 12.4x | | Economic Leverage Ratio | 1.6x | | Common Dividend Declared | $0.20 | - The company executed a rated securitization of Agency-Eligible Loans with a total unpaid principal balance of $423.3 million, converting recourse financing to non-recourse, non-mark-to-market financing[256] - The company's investment strategy focuses on acquiring and securitizing newly-originated residential mortgage loans, sourced through its affiliate Arc Home and other third-party partners, utilizing TPG Angelo Gordon's securitization platform[258] - Market conditions in Q1 2025 saw wider RMBS spreads and a 14% QoQ increase in primary RMBS market activity to $39 billion, with the Non-QM sector showing the sharpest growth[274][275] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company faces interest rate, liquidity, and credit risks, managing interest rate exposure with a 1.38-year duration gap and mitigating liquidity risk with cash reserves, while a 75 bps rate rise could decrease GAAP equity by 2.8% - The company's primary market risks are identified as interest rate, liquidity, real estate, credit, prepayment, basis, and capital markets risk[425] - The company's total portfolio duration was 1.38 years as of March 31, 2025, indicating its sensitivity to interest rate changes[433][434] Interest Rate Sensitivity Analysis (as of March 31, 2025) | Change in Interest Rates (bps) | Change in Fair Value as a % of GAAP Equity | Change in Fair Value as a % of Assets | % Change in Projected Net Interest Income | | :--- | :--- | :--- | :--- | | 75 | (2.8)% | (0.2)% | 0.1% | | 50 | (1.8)% | (0.1)% | 0.2% | | 25 | (0.9)% | (0.1)% | 0.1% | | (25) | 0.9% | 0.1% | (0.1)% | | (50) | 1.7% | 0.1% | (0.3)% | | (75) | 2.5% | 0.2% | (0.5)% | Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, ensuring timely and accurate information reporting, with no material changes to internal control over financial reporting identified during the quarter - The company's principal executive officer and principal financial officer concluded that disclosure controls and procedures were effective as of March 31, 2025[457] - There were no changes in the company's internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, such controls[458] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is not a party to any litigation or legal proceedings that would materially adversely affect its financial condition or results of operations - The company is not currently involved in any material legal proceedings[459] Item 1A. Risk Factors No new risk factors are presented in this report, with reference made to those previously disclosed in the Annual Report on Form 10-K for 2024 and subsequent filings - The report refers readers to the Risk Factors section of the company's Annual Report on Form 10-K for the year ended December 31, 2024[460] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities were reported during the period - None[461] Item 3. Defaults Upon Senior Securities No defaults upon senior securities were reported during the period - None[462] Item 4. Mine Safety Disclosures This item is not applicable to the company - None[463] Item 5. Other Information Stockholders approved the 2025 Equity Incentive Plan and other proposals, including director elections and auditor ratification, at the Annual Meeting on May 5, 2025 - Stockholders approved the Company's 2025 Equity Incentive Plan at the Annual Meeting on May 5, 2025[464] - All six director nominees were elected, the appointment of Deloitte & Touche LLP was ratified, and executive compensation was approved on an advisory basis at the 2025 Annual Meeting[465] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including articles of incorporation, bylaws, indentures, and Sarbanes-Oxley certifications - The report includes a list of exhibits filed, such as the 2025 Equity Incentive Plan and Sarbanes-Oxley certifications[468][469]