AG Mortgage Investment Trust(MITT) - 2024 Q4 - Earnings Call Transcript

Financial Performance - The company reported a book value increase of 0.6% from $10.58 to$10.64 per share, with a quarterly dividend of $0.19 and an economic return on equity of 2.4$6.7 billion, with six securitizations executed and home equity loans incorporated into the product mix [25][26] - The company acquired $359 million of agency-eligible loans and$153 million of home equity loans during Q4, offset by the sale of $185 million of home equity loans [29] Market Data and Economic Environment - The economic leverage ratio at the end of the quarter was 1.4 turns, slightly down from 1.5 turns in September, indicating prudent management of leverage exposure [30] - The company ended the quarter with total liquidity of approximately$137 million, consisting of $119 million in cash and$18 million in unencumbered agency RMBS [30] Company Strategy and Competitive Position - The company emphasizes a disciplined securitization strategy and has been able to rotate asset allocations effectively, focusing on non-agency credit and home equity lending [11][24] - The management highlighted the importance of TPG Angelo Gordon's resources, which provide significant advantages in access to capital and expertise in the residential finance sector [14][20] Management Commentary on Future Outlook - Management expressed confidence in the company's ability to grow and protect book value despite challenging market conditions, with a focus on dynamic execution and seizing growth opportunities [9][11] - The company expects continued growth in its investment portfolio and resilience in its business model, particularly in the face of fluctuating interest rates [54] Other Important Information - Arc Home, a subsidiary, is transitioning to profitability after facing challenges, with recent investments in talent expected to drive further growth [22][25] - The company is actively monitoring the market for preferred equity financing and is comfortable with its current leverage ratios [36] Q&A Session Summary Question: How would you characterize your excess capital? - Management indicated that deployable capital could range from $75 million to$100 million, with various positions maturing and inefficient financings rolling off [34] Question: Thoughts on corporate leverage and preferred equity? - Management is comfortable with current leverage ratios and has been monitoring the market for new preferred deals [36] Question: Relative attractiveness of non-QM versus home equity? - Management believes home equity presents a large addressable market and is leaning more towards it, while non-QM continues to grow [40][41] Question: Expectations for origination volume in Arc Home? - Management expects continued growth in Arc Home's business model, which is seen as more resilient than the broader mortgage market [54] Question: Current thoughts on the dividend? - Management is in a transitional phase regarding EAD contributions from Arc Home and expects a positive contribution moving into 2025 [58]