Alexander Mortgage REIT Inc : AG Mortgage Investment Trust, Inc. Reports Fourth Quarter Earnings
03/01/2012| 08:10am US/Eastern
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AG Mortgage Investment Trust, Inc. ("MITT" or the "Company") (NYSE:
MITT) today reported net income for the quarter ended December 31, 2011
of $5.8 million and net book value of $20.52 per share.
FINANCIAL HIGHLIGHTS
Net income of $5.8 million, or 0.58 per share for the fourth quarter
Net income of $19.0 million, or $3.20 per share for the period from
March 7, 2011 to December 31, 2011
Core Earnings of $6.5 million or $0.65 per share for the quarter
Core Earnings of $12.4 million, or $1.24 per share for the period from
July 6, 2011 (the consummation of our initial public offering) to
December 31, 2011
Net realized gains of $2.9 million, or $0.29 per share, on Agency RMBS
for the fourth quarter and $7.2 million, or $0.72 per share, for the
period from July 6, 2011 to December 31, 2011
Net realized losses of ($3.5) million, or ($0.35) per share, on credit
investments for the fourth quarter and for the period from July 6,
2011 to December 31, 2011
$0.70 per share dividend declared for the fourth quarter and $1.10 per
share dividends declared for the period ended December 31, 2011
Approximately $0.46 per share of undistributed taxable income as of
December 31, 2011(1)
$20.52 net book value per share as of December 31, 2011(1)
INVESTMENT HIGHLIGHTS
$1.4 billion investment portfolio value as of December 31, 2011 (2) (4)
5.0% constant prepayment rate ("CPR") for the fourth quarter on the
Agency RMBS investment portfolio (5)
2.25% net interest margin as of December 31, 2011 (6)
FOURTH QUARTER 2011 AND PERIOD ENDED DECEMBER 31, 2011 RESULTS
AG Mortgage Investment Trust, Inc. is an actively managed REIT that
opportunistically invests in a diversified risk-adjusted portfolio of
Agency RMBS, Non-Agency RMBS, CMBS and ABS. For the fourth quarter, the
Company had net income of $5.8 million, or $0.58 per diluted share, and
Core Earnings of $6.5 million, or $0.65 per diluted share. For the
period from March 7, 2011 to December 31, 2011, the Company had net
income of $19.0 million, or $3.20 per diluted share (7), and for the
period from July 6, 2011 to December 31, 2011 ("period ended December
31, 2011"), the Company had Core Earnings of $12.4 million, or $1.24 per
diluted share. Core Earnings represents a non-GAAP financial measure and
is defined as net income (loss) excluding (i) net realized gain (loss)
on investments and terminations on derivative contracts and (ii) net
unrealized appreciation (depreciation) on investments and derivative
contacts. (See "Non-GAAP Financial Measure" below for further detail on
Core Earnings)
David Roberts, Chief Executive Officer, commented "We are pleased to
announce our fourth quarter earnings. During the quarter, Core Earnings
increased to $0.65 per share and we announced our first full quarter
dividend of $0.70 per share. In addition to meeting our financial goals,
we continued to diversify funding relationships and in January we were
able to successfully complete an equity raise which has improved our
stock's liquidity. We are proud of our accomplishments over the last two
quarters and look forward to the opportunities ahead."
"Amidst uncertainty in the global markets, European liquidity
difficulties and year-end funding pressures, we continued to optimize
our Agency portfolio, opportunistically rotate the credit portfolio and
retain capital for potential market dislocations," said Jonathan
Lieberman, Chief Investment Officer. "While Agency RMBS yields have
compressed, we believe the low interest rate environment and a carefully
selected investment portfolio will continue to support attractive
risk-adjusted returns. Over the course of the quarter, we rotated a
significant portion of the Agency portfolio into securities with more
favorable prepayment attributes to further mitigate prepayment risk.
Allocations to credit securities were concentrated in less volatile
short duration Non-Agency securities and CMBS tranches with superior
intrinsic value. We believe MITT is well positioned to continue to
produce sustainable returns and take advantage of the opportunities
ahead in both the Agency RMBS and credit markets. With the success of
the European Central Bank's Long-Term Refinancing Operation, funding
risks have materially declined and we anticipate deploying capital in a
more aggressive style. New capital from our January equity transaction
allows greater latitude to the investment team to selectively increase
our capital allocation to credit opportunities."
KEY STATISTICS (2)
Weighted Average at
Weighted Average
December 31, 2011
at September 30, 2011
Investment portfolio
$
1,388,006,801
$
1,332,205,377
Repurchase agreements
$
1,189,303,407
$
1,126,859,885
Stockholders' equity
$
206,283,920
$
207,413,703
Leverage ratio
5.86x
(3
)
5.70x
(3
)
Swap ratio
66
%
(8
)
51
%
(8
)
Yield on investment portfolio
3.16
%
(9
)
3.26
%
(9
)
Cost of funds
0.91
%
(10
)
0.82
%
(10
)
Net interest margin
2.25
%
(6
)
2.44
%
(6
)
Management fees
1.49
%
(11
)
1.43
%
(11
)
Other operating expenses
1.57
%
(12
)
1.58
%
(12
)
Book value, per share
$
20.52
(1
)
$
20.64
(1
)
Dividend, per share
$
0.70
$
0.40
INVESTMENT PORTFOLIO
The following summarizes the Company's investment portfolio as of
December 31, 2011 (2):
Weighted Average
Current Face
Premium (Discount)
Amortized Cost
Fair Value
Coupon
Yield
Agency RMBS:
15-Year Fixed Rate
$
738,344,948
$
22,525,476
$
760,870,424
$
772,310,909
3.32
%
2.62
%
20-Year Fixed Rate
227,566,114
7,362,001
234,928,115
237,586,837
3.69
%
3.00
%
30-Year Fixed Rate
232,890,169
12,162,512
245,052,681
246,679,482
3.99
%
3.18
%
Interest Only
43,505,596
(34,046,500
)
9,459,096
6,636,871
5.50
%
3.45
%
Non-Agency RMBS
102,246,062
(8,980,754
)
93,265,308
90,368,316
5.90
%
6.31
%
CMBS
19,500,000
(5,411,965
)
14,088,035
13,537,851
5.88
%
13.44
%
ABS
21,046,150
(34,497
)
21,011,653
20,886,535
4.50
%
4.50
%
Total
$
1,385,099,039
$
(6,423,727
)
$
1,378,675,312
$
1,388,006,801
3.81
%
3.16
%
As of December 31, 2011, the weighted average yield on the Company's
investment portfolio was 3.16% and its weighted average cost of funds
was 0.91%. This resulted in a net interest margin of 2.25% as of
December 31, 2011. (6)
The CPR for the Agency RMBS portfolio was 5.0% for the fourth quarter
and 5.0% for the month of December 2011. (5)
The weighted average cost basis of the Agency investment portfolio,
excluding interest-only securities, was 103.5% as of December 31, 2011.
The amortization of premiums (net of any accretion of discounts) on
Agency securities for the fourth quarter was $1.9 million, or $(0.19)
per share. The unamortized net Agency premium as of December 31, 2011
was $42.0 million.
Premiums and discounts associated with purchases of the Company's
securities are amortized or accreted into interest income over the
estimated life of such securities, using the effective yield method.
Since the cost basis of the Company's Agency securities, excluding
interest-only securities, exceeds the underlying principal balance by
3.5% as of December 31, 2011, slower actual and projected prepayments
can have a meaningful positive impact, while faster actual or projected
prepayments can have a meaningful negative impact on the Company's asset
yields.
We have also entered into "to-be-announced" ("TBA") positions to
facilitate the future purchase of Agency RMBS. Under the terms of these
TBAs, the Company agrees to purchase, for future delivery, Agency RMBS
with certain principal and interest specifications and certain types of
underlying collateral, but the particular Agency RMBS to be delivered
are not identified until shortly before (generally two days) the TBA
settlement date. At December 31, 2011, we had $100 million net notional
amount of TBA positions with a net weighted average purchase price of
103.8%. As of December 31, 2011, our TBA portfolio had a net weighted
average yield at purchase of 3.01% and a net weighted average settlement
date of February 5, 2012. We have recorded derivative assets of $1.4
million and derivative liabilities of $0.5 million, reflecting these TBA
positions.
LEVERAGE AND HEDGING ACTIVITIES
The investment portfolio is financed with repurchase agreements as of
December 31, 2011 as summarized below:
Agency RMBS
Non-Agency RMBS / CMBS / Other
Repurchase Agreements Maturing Within:
Balance
Weighted Average Rate
Balance
Weighted Average Rate
30 days or less
$
652,002,000
0.35
%
$
68,187,000
1.74
%
31-60 days
334,825,407
0.42
%
1,749,000
1.95
%
61-90 days
118,340,000
0.37
%
14,200,000
1.80
%
Greater than 90 days
-
-
-
-
Total / Weighted Average
$
1,105,167,407
0.37
%
$
84,136,000
1.75
%
As of December 31, 2011, the Company had entered into repurchase
agreements with twenty-one counterparties. We continue to rebalance our
exposures to counterparties and add new counterparties.
We have entered into interest rate swap agreements to hedge our
portfolio. The Company's swaps as of December 31, 2011 are summarized as
follows:
Maturity
Notional Amount
Weighted Average Pay Rate
Weighted Average Receive Rate*
Weighted Average Years to Maturity
2012
$
100,000,000
0.354
%
0.285
%
0.14
2013
182,000,000
0.535
%
0.286
%
1.78
2014
204,500,000
1.000
%
0.395
%
2.54
2015
184,025,000
1.412
%
0.380
%
3.56
2016
87,500,000
1.625
%
0.328
%
4.63
2018
35,000,000
1.728
%
0.511
%
6.88
Total/Wtd Avg
$
793,025,000
1.008
%
0.350
%
2.72
* Approximately 50% of our interest rate swap notionals reset
monthly based on one-month LIBOR and 50% of our interest rate swap
notionals reset quarterly based on three-month LIBOR.
TAXABLE INCOME
The primary differences between taxable income and GAAP net income
include (i) unrealized gains and losses associated with investment and
derivative portfolios are marked-to-market in current income for GAAP
purposes, but excluded from taxable income until realized or settled,
(ii) temporary differences related to amortization of net premiums paid
on investments (iii) the timing and amount of deductions related to
stock-based compensation and (iv) excise taxes. As of December 31, 2011,
the Company had undistributed taxable income of approximately $0.46 per
share.
DIVIDEND
On December 14, 2011, the Company declared a dividend of $0.70 per share
of common stock to stockholders of record as of December 30, 2011 and
paid such dividend on January 27, 2012. The Company declared dividends
of $1.10 per share for the period ended December 31, 2011.
SUBSEQUENT EVENT
On January 24, 2012, the Company completed a follow-on offering of
5,000,000 shares of its common stock and subsequently issued an
additional 750,000 shares of common stock pursuant to the underwriters'
over-allotments at a price of $19.00 per share, for gross proceeds of
approximately $109.3 million. Net proceeds to the Company from the
offerings were approximately $104.1 million, net of issuance costs of
approximately $5.2 million.
SHAREHOLDER CALL
The Company invites shareholders, prospective shareholders and analysts
to attend MITT's fourth quarter earnings conference call on March 1,
2012 at 11:00 am Eastern Time. The shareholder call can be accessed by
dialing (888) 424-8151 (U.S. domestic) or (847) 585-4422
(international). Please enter code number 8732511#.
A presentation will accompany the conference call and will be available
on the Company's website at www.agmit.com.
Select the Q4 2011 Earnings Presentation link to download and print the
presentation in advance of the shareholder call.
An audio replay of the shareholder call combined with the presentation
will be made available on our website after the call. The replay will be
available until midnight on March 15, 2012. If you are interested in
hearing the replay, please dial (888) 843-7419 (U.S. domestic) or (630)
652-3042 (international). The conference ID number is 8732511#.
For further information or questions, please contact Allan Krinsman, the
Company's General Counsel, at (212) 883-4180 or akrinsman@angelogordon.com.
ABOUT AG MORTGAGE INVESTMENT TRUST, INC.
AG Mortgage Investment Trust, Inc. is a real estate investment trust
that invests in, acquires and manages a diversified portfolio of
residential mortgage assets, other real estate-related securities and
financial assets. AG Mortgage Investment Trust, Inc. is externally
managed and advised by AG REIT Management, LLC, a subsidiary of Angelo,
Gordon & Co., L.P., an SEC-registered investment adviser that
specializes in alternative investment activities.
Additional information can be found on the Company's website at www.agmit.com.
ABOUT ANGELO, GORDON & CO.
Angelo, Gordon & Co. was founded in 1988 and has approximately $22
billion under management. Currently, the firm's investment disciplines
encompass five principal areas: (i) distressed debt and leveraged loans,
(ii) real estate, (iii) mortgage-backed securities and other structured
credit, (iv) private equity and special situations and (v) a number of
hedge fund strategies. Angelo, Gordon & Co. employs over 250 employees,
including more than 90 investment professionals, and is headquartered in
New York, with associated offices in Amsterdam, Chicago, Los Angeles,
London, Hong Kong Seoul, Shanghai, Sydney and Tokyo.
FORWARD LOOKING STATEMENTS
This press release includes "forward-looking statements" within the
meaning of the safe harbor provisions of the United States Private
Securities Litigation Reform Act of 1995. Forward-looking statements are
based on estimates, projections, beliefs and assumptions of management
of the Company at the time of such statements and are not guarantees of
future performance. Forward-looking statements involve risks and
uncertainties in predicting future results and conditions. Actual
results could differ materially from those projected in these
forward-looking statements due to a variety of factors, including,
without limitation, changes in interest rates, changes in the yield
curve, changes in prepayment rates, the availability and terms of
financing, changes in the market value of our assets, general economic
conditions, market conditions, conditions in the market for Agency
securities, and legislative and regulatory changes that could adversely
affect the business of the Company. Additional information concerning
these and other risk factors are contained in the Company's most recent
filings with the Securities and Exchange Commission ("SEC"). Copies are
available on the SEC's website, http://www.sec.gov/.
The Company does not undertake or accept any obligation or undertaking
to release publicly any updates or revisions to any forward-looking
statements to reflect any change in its expectations or any change in
events, conditions or circumstances on which any such statement is based.
AG Mortgage Investment Trust, Inc. and Subsidiaries
Consolidated Balance Sheets
December 31, 2011
April 1, 2011
Assets
(Unaudited)
Real Estate securities, at fair value
Agency - $1,186,149,842 pledged as collateral
$
1,263,214,099
$
-
Non-Agency - $47,227,005 pledged as collateral
58,787,051
-
CMBS - $2,747,080 pledged as collateral
13,537,851
-
ABS - $4,526,620 pledged as collateral
4,526,620
-
Linked transactions, net, at fair value
8,787,180
-
Cash and cash equivalents
35,851,249
1,000
Restricted cash
3,037,055
-
Interest receivable
4,219,640
-
Derivative assets, at fair value
1,428,595
-
Prepaid expenses
317,950
-
Due from broker
341,491
Due from affiliates
104,994
-
Deferred costs
52,176
-
Total Assets
$
1,394,205,951
$
1,000
Liabilities
Repurchase agreements
$
1,150,149,407
$
-
Payable on unsettled trades
18,759,200
-
Interest payable
2,275,138
-
Derivative liabilities, at fair value
7,908,308
-
Dividend payable
7,011,171
-
Due to affiliates
770,341
-
Accrued expenses
668,552
-
Due to broker
379,914
-
Total Liabilities
1,187,922,031
-
Stockholders' Equity (Deficit)
Common stock, par value $0.01 per share; 450,000,000 and 1,000
shares of common stock authorized and 10,009,958 and 100 shares
issued and outstanding at December 31, 2011 and April 1, 2011,
respectively
100,100
1
Additional paid-in capital
198,228,694
999
Retained earnings
7,955,126
-
206,283,920
1,000
Total Liabilities & Equity
$
1,394,205,951
$
1,000
AG Mortgage Investment Trust, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
Period from
Quarter Ended
March 7, 2011 to
December 31, 2011
December 31, 2011
Net Interest Income
Interest income
$
10,022,275
$
18,748,669
Interest expense
1,106,097
1,696,344
8,916,178
17,052,325
Other Income (Loss)
Net realized gain (loss)
(589,747
)
3,701,392
Gain (loss) on linked transactions, net
(1,013,291
)
(808,564
)
Realized loss on periodic interest settlements of interest rate
swaps, net
(1,175,788
)
(2,162,290
)
Unrealized gain (loss) on derivative instruments, net
70,663
(6,491,430
)
Unrealized gain (loss) on real estate securities
1,346,237
11,040,692
(1,361,926
)
5,279,800
Expenses
Management fee to affiliate
770,341
1,512,898
Other operating expenses
811,372
1,566,642
Equity based compensation to affiliate
97,343
176,165
Excise tax
105,724
105,724
1,784,780
3,361,429
Net Income (Loss)
$
5,769,472
$
18,970,696
Earnings Per Share of Common Stock
Basic
$
0.58
$
3.20
Diluted
$
0.58
$
3.20
Weighted Average Number of Shares of Common Stock Outstanding
Basic
10,009,958
5,933,930
Diluted
10,010,799
5,933,930
Dividends Declared per Share of Common Stock
$
0.70
$
1.10
Non-GAAP Financial Measure
This press release contains Core Earnings, a non-GAAP financial measure.
AG Mortgage Investment Trust's management believes that this non-GAAP
measure, when considered with GAAP, provides supplemental information
useful in evaluating the results of the Company's operations. This
non-GAAP measure should not be considered a substitute, or superior to,
the financial measures calculated in accordance with GAAP. Our GAAP
financial results and the reconciliations from these results should be
carefully evaluated.
Core Earnings are defined by the Company as net income excluding both
realized and unrealized gains (losses) on the sale or termination of
securities, including underlying linked transactions and derivatives. As
defined, Core Earnings include the net interest earned on these
transactions, including credit derivatives, linked transactions, inverse
Agency securities, interest rate derivatives or any other investment
activity that may earn net interest. One of the objectives of the
Company is to generate net income from net interest margin on the
portfolio and management uses Core Earnings to measure this objective.
A reconciliation of GAAP net income to Core Earnings for the quarter and
period ended December 31, 2011 is set forth below:
Period from
Quarter Ended
March 7, 2011 to
December 31, 2011
December 31, 2011
Net income/loss
$
5,769,472
$
18,970,696
Add (Deduct):
Net realized gain
589,747
(3,701,392
)
Gain/loss on linked transactions, net
1,013,291
808,564
Net interest income on linked transactions
554,729
900,638
Unrealized gain/loss on derivative instruments, net
(70,663
)
6,491,430
Unrealized gain/loss on real estate securities
(1,346,237
)
(11,040,692
)
Core Earnings
$
6,510,339
$
12,429,244
Footnotes
(1) Per share figures are calculated using outstanding shares including
all shares granted to our Manager and our independent directors under
our equity incentive plans as of quarter end.
(2) Generally when we purchase a security and finance it with a
repurchase agreement, the security is included in our assets and the
repurchase agreement is separately reflected in our liabilities on our
balance sheet. For securities with certain characteristics (including
those which are not readily obtainable in the market place) that are
purchased and then simultaneously sold back to the seller under a
repurchase agreement, US GAAP requires these transactions be netted
together and recorded as a forward purchase commitment. Throughout this
press release where we disclose our investment portfolio and the
repurchase agreements that finance it, including our leverage metrics,
we have un-linked the transaction and used the gross presentation as
used for all other securities. This presentation is consistent with how
the Company's management evaluates the business, and believes provides
the most accurate depiction of the Company's investment portfolio and
financial condition.
(3) Calculated by dividing total repurchase agreements, including $39.2
million included in linked transactions, plus payable on unsettled
trades on our GAAP balance sheet by our GAAP stockholders' equity.
(4) The total investment portfolio is calculated by summing the fair
market value of our Agency RMBS, Non-Agency RMBS, CMBS and ABS assets,
including linked transactions. The percentage of Agency RMBS and credit
investments are calculated by dividing the respective fair market value
of each, including linked transactions, by the total investment
portfolio.
(5) This represents the weighted average monthly CPRs published during
the period for our in-place portfolio during the same period.
(6) Net interest margin is calculated by subtracting the weighted
average cost of funds from the weighted average yield for the Company's
investment portfolio, which excludes cash held by the Company. See
footnotes (9) and (10) for further detail.
(7) Diluted per share figures are calculated using weighted average
outstanding shares in accordance with GAAP. For the period from March 7,
2011 to December 31, 2011, the calculation reflected the impact of 100
shares outstanding from July 1, 2011 through the settlement date of our
IPO.
(8) The swap ratio was calculated by dividing the notional value of our
interest rate swaps by total repurchase agreements, including those
included in linked transactions, plus payable on unsettled trades.
(9) The yield on our investment portfolio during the period represents
an effective interest rate, which utilizes all estimates of future cash
flows and adjusts for actual prepayment and cash flow activity as of
quarter end. This calculation excludes cash held by the Company.
(10) The cost of funds was calculated as the sum of the weighted average
rate on the repurchase agreements outstanding at quarter end and the
weighted average net pay rate on our interest rate swaps. Both elements
of the cost of funds were weighted by the repurchase agreements
outstanding at quarter end.
(11) The management fee percentage at quarter end was calculated by
annualizing management fees incurred during the quarter and dividing by
quarter-ended stockholders' equity.
(12) The other operating expenses percentage at quarter end was
calculated by annualizing other operating expenses recorded during the
quarter and dividing by quarter-ended stockholders' equity.
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