AG Mortgage Investment Trust(US:MITT)2023-02-23 17:03Financial Data and Key Metrics Changes - The company recorded a loss of $3.12 in earnings per share for the year, with a declared dividend of $0.81 per share [6] - Adjusted book value improved by 3% from $10.68 to $11.03 per share, with an estimated further increase of 3% to 4% in January [7][10] - The company generated $67.6 million of net interest margin (NIM) during the year [6] - The economic leverage ratio declined to approximately 1.3x, with recourse debt accounting for about 16% of the aggregate [56] Business Line Data and Key Metrics Changes - The securitization issuance in the fourth quarter outpaced the acquisition of new loans, indicating a strategic focus on managing aggregation risk [30][31] - The weighted average mark-to-market loan-to-value (LTV) ratio of the underlying residential home loans is approximately 66%, with less than 100 basis points in the 60-plus day delinquent population across a $4 billion portfolio [32] Market Data and Key Metrics Changes - The company experienced a modest recovery in book value during the fourth quarter, attributed to unrealized mark-to-market gains due to credit spread tightening [39] - The market conditions are expected to remain volatile, with modest volume increases anticipated as the impact of current factors wears off [18] Company Strategy and Development Direction - The management team emphasized a disciplined approach to financing and risk management, avoiding undue risks during market volatility [24] - The company plans to leverage its liquidity to capitalize on opportunities in the higher interest rate environment [27][28] - There is a focus on maintaining credit standards despite lower origination volumes, as home prices are expected to decline [52] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the earnings power of the portfolio despite significant unrealized losses [4][29] - The outlook for 2023 is cautiously optimistic, with expectations of returning to profitability [18][9] - Management acknowledged the challenges posed by the current economic backdrop but remains focused on executing their strategy [28] Other Important Information - The company repurchased approximately 2.7 million shares at a weighted average price of $6.82, creating a 7% accretion for shareholders [5][40] - The company has approximately $87 million in liquidity, which has increased to about $120 million following recent securitization [62] Q&A Session Summary Question: How much of the $120 million liquidity is available for investments? - The company estimates that $40 million to $50 million will be maintained as operational cash, leaving significant liquidity for investments [64] Question: What is the health of financing subordinates in the current market? - The company expects that as underlying securitizations are leveraged, the availability of additional financing will increase over time [66] Question: What is the current run rate earnings power of the portfolio? - The management indicated that quarter-to-quarter earnings may be choppy, but they are focusing on long-term earnings potential [69] Question: How does the company view capital deployment versus stock buybacks? - The company is conscious of maintaining liquidity while also considering accretive stock buybacks depending on stock price [70] Question: What opportunities does the company see in the current market? - The company is exploring opportunities in prime second liens and home equity lines of credit, given the current market conditions [80]