AG Mortgage Investment Trust (MITT) 2 Aug 242024 Q2 Earnings call transcript

Good day, and thank you for standing by. Welcome to the AG Mortgage Investment Trust, Inc.

Second Quarter 2024 Earnings Conference Call.

[Operator Instructions]

Please be advised that today's conference is being recorded. turn the over company. to General Jenny like for Counsel now the to call Neslin, I'd Please ahead. go

Thank you. Investment Officer. Chief Good Durkin, Chief Second on Quarter Investment morning, call our everyone, and Earnings the Anthony Nick for welcome CEO Call Officer; and AG Smith, are and Financial Mortgage today Trust. President; me XXXX With T.J. to our the our Rossiello,

made discussed outlined statements. uncertainties, could we begin, statements today's Before Any today's forward-looking under may contain which SEC that subject information please are Statement. including call in the and forward-looking headings to in during call risks Cautionary the filings, note certain our are

Statements, statements most recently actual ended to time SEC encourage forward-looking from new events subsequent Analysis. not you December our Factors differ do our and contained and update of filings the XXXX, including statements. Discussion The law, not results statements, we or regarding disclosure any the in events We whether Regarding read intend result required company's otherwise. for or obligated year or XX, our forward-looking and materially Risk filed Management may from XX-K Form forward-looking to -- SEC. a as are and revise to future reports filed Except as review by to information, time with subsequent the these

comparable to most non-GAAP Please refer measures. the financial measures. to today, certain filings During to call SEC for refer the reconciliations will we our GAAP

on for for Again, the posted QX view our today. over slide our the like on and the welcome presentation website, to and that, I'd We to us will the page. turn that the call thank the call, home this website presentation, also reference link To you With morning. to earnings TJ. to presentation click joining to XXXX the earnings turn was www.agmit.com

our from we $XX.XX recent With the financials, too on second a of July's saw equity an of merger. breakeven our XX, roughly it as our lower economic of quarter. the adjusted MITT's producing financial I'm strategy give to you, value. business $XX.XX, and of our Jenny. report through to modestly estimate early compelling which position to core book book Thank quarter value show return being June excited benefits execution continued move for Walking

on notably, increase voted the June dividend to XX, More $X.XX Board our share. unanimously X.X% per to

per we $XX.X income, earned quarter, previously set negative share of per dividend newly our the interest by earnings declared During EAD $X.XX net share, million and $X.XX of covering of $X.XX.

considering upcoming when our the unsecured investment-grade cover of million to year. of than the maturity WMC for successfully happy of were was issued during us debt One efficiently acquisition from notes, more unsecured focus XX, the September with the addressing maturity another QX met notes quarter, the convertible report $XX.X to going forward. of coming corporate materially debt due the $XX key structure areas more million We the out this XXXX. with senior a advantageous million of positions replacing issuance notes impending of on $XX Effectively senior we convertible their

invested a to order these leverage of of strong we result cash, excess proceeds risk-adjusted generate these and holding issuances short-term Agency modest in using have a As returns. bond only RMBS avoid to into portion

company convertible would level. to normal September, return will in of ended liquidity company than As at a X.X the the higher $XXX of moderately repayment result, historical notes levels leverage anticipate the the of maturity post at with million We of and leverage quarter more turns. we

as into the into merger equity returning loans. residential strategy be result significant mortgage inclusion Russell $XX acquisition the XXXX million to year WMC XXXX In originated of been rotated December our approximately end, quarter improving excited company. power step are X closing Russell assets through I critical to base we (sic) have already see liquidity. of the the on in $XX June of in of broadening of One of both market the stated I'll is the core Like last the million our XX. newly to and call [ show Nick. is our benefits investor a I monetized, this team now over investor very and ] the of last believe We turn quarter, the combined

Thanks, TJ.

housing, remains mortgage the levels credit spreads a and saw themes various modestly volatility, borrower in lower-rated of recent parts tighter outperformance outperformance Elevated continuation increase loan The of resilient of we end year. with over team X% of The quarter-over-quarter during securitizations delinquency with quarters. XX only quarter, modest quarter. continued interest out portfolio X low approximately residential at we've rate rate and basis pointed improvement stack. residential of This of the last a executed of capital the points the the an our and since

nation's remain private transaction next inaugural securitization Freddie one the co-sponsor. an second The the was of the to X and largest the active the eligible as the acted where originators we Fannie past Through rest a and issue from quarters. at to mortgage year, label quarter pace we of throughout backed investor loans the expect quarter by and of similar

to on home. Moving ARC

in of growth to capital residential the We Most year's business, to we generates peak with rates, are continued mortgage quarter origination expect along we interest Arc excited developing subsequent agreed end. for deployed sale Home settled that ample to Arc the that core in sell new compelling of its announce market. portfolio in end and liquidity MSR April. at to opportunistically opportunities Home's This be this

scale adding As needed on see you to profitable. can be grew quarter-over-quarter, Page the volumes X, considerably to

Additionally, that become residential durable, has and improve liquidity additional only have likely optimistic as these increases that Arc mortgage is for of margins room capital. not modest are the enters pocket non-EMC to a in market Home well-publicized games loans has seen recently

Now turn to I'd like over call to Anthony. the

ourselves Thank to and distribution dividend. growing strong maturity, positioning positive available and address in the momentum increasing its It note its investment generating second earnings securitization upcoming common good and morning. in increasing convertible the you, for Nick, activity the portfolio, continued while quarter,

During X% approximately from share, the share of and our of book $XX.XX book $XX.XX value decreased our March. quarter, by value per adjusted per

the common $X.XX considering was When to or investment by EAD by decline was earnings our dividend generated $XXX,XXX was net approximately return loss portfolio our recorded loss earned We on roughly of quarterly dividends expenses was breakeven. quarter-over-quarter. by $X.XX This $X.XX a our Net offset gains Home, share. exceeded for second in income, and improve of interest from share, modest our a $X.XX per GAAP preferred per partially share. $X.XX per common interest continued inclusive book mark-to-market contributed per our operating losses dividend, hedge economic EAD offset on which of Arc We quarter. value shareholders of unrealized available driven of share of portfolio, the The our investment on exceeding Home. which $X.XX, Arc and generating $X.XX to

by Our residential acquiring million to billion $X.X RMBS. million investment through loans approximately increased mortgage $XXX and portfolio $XXX XX% of of Agency

active returning markets, mentioned million further in finance. capital $XXX the mark-to-market sold quarter for securitization As to profile our July, reducing and We in our $XX financed lines, with were the were exposure earlier, risk of million ended managing on loans which we reinvestment. warehouse of

end relating the convertible portfolio, funding September. Agency was quarter be to leverage in maturity anticipate will turns, connection with we RMBS note in one which of X.X the economic removed ratio Our with at approximately turn the

total of quarter for million unencumbered our million, RMBS. with the we $XX cash open million liquidity of and $XXX This prepared call of Agency now Operator? like and Lastly, approximately questions. concludes to remarks, consisting $XXX of ended we the

[Operator Instructions]

with UBS. Doug Harter first will question from come Our

of Can rotation? Agency talk you'd assets you it about to differential time and into rotate RMBS your core that the take return the think what kind will you of make frame you out of think as kind of

think it sequencing. some kind Yes, of about look, I

think we excess take -- rates, address obviously the sort not probably will rotating of you there. agency quarters probably to the X -- today leverage that. the that September probably if about look using in and want more the using sheet of we we're think then than at I kind have to that So of We're X kind post note balance half convertible liquidity, liquidity on the with I X

So stop an of some carry. earn kind it's gap interim to

applicable. the think are ROEs I So not

teens I that's high we part I going And where origination it plan call think as forward. we're of side, market. the targeting the on mid, the see would ROEs gross new

guess I you mean, I with, just taking And are lower leverage.

Just taking rates, interest of book you're how the that given agencies, kind value in today? kind of think risk the should days we about on like large moves especially the on

running I we're of think I -- mean I consistent perspective, think, less ratios, strategy duration we in terms mean just from I I Yes. cetera. et our a probably said, hedge leverage got like a

fully be So agency levered a muted it REIT. should versus

does Or kind that Arc-MSR up. Makes within sense. freed to sale, ARC? And stay distributed capital of just that net? then up Does the on gets that get that of extra some

it's Doug, Good morning Nick.

our And with So management our capital. be along the company. appropriate moment, a expect there at Comps the to evaluated we team capitalization of likely management return has of team, the

George will Our from next question KBW. with come Bose

to holding see there? you're continue third we be pressure with mean, a up it in wanted trend the I to actually about you'll deploying capital? downward just ask trend I liquidity the as in the first Or could EAD quarter, little should

guess, maturity. avoiding a kind we're But ROE basis, would quarter, I of interim working I you towards right, of some question. will But Yes. prospective get a September if kind mean think normalized look about interim. drag on I through it I I to thinking your is more understand and that this portfolio. creating you're mean, think in like of the logic will, of certainly it the I it cash

give that I but to No, just the on us book guess, before then can earlier update today, quarter of noise this week? sense. you an yes, makes And value date,

produced value haven't It's too a early. yet. [indiscernible] We book

with Cranston question will from next come Our JMP. Trevor Citizens

general you best first are and focused give agency obviously, of bit kind on you're the where the in loan what of markets guess Can the seeing quarter opportunities this market. question, I color for securitization was on eligible today? a in seeing you activity securitization little the guys

certainly. Yes,

of credit and buyers. levered prudent longer Obviously, higher obviously, non-QM moment, But returning the just the one rather lowest non-AG on we see mid-capital a nonagency array those wider no we space, continue we the deploy REIT, asset. opportunities. sort sort could of believe part it's focus of So to as the that of and sort buyers change. at capital best origination homes cost to being than the focused In

somewhat opportunities added morning, transactions Some acted think, attention this in of be space of to the are, co-issue we've along to close I of space. there. one those well actually counterintuitively, in also expect eligible sort with another and that the mentioned actually paying other equity agency We're price home I opportunities later those positions script

kind value of look of I guess portfolio [indiscernible]? that But don't appreciate July. duration for June you you I helpful. about as the what That's you when XX, can you of the update a positioning have think talk book net overall at

don't think published have anything I we of sort ever.

Our next with Brad from question Piper will Sandler. Capuzzi come

for talk appreciate I all less bid I Can on mentioned commentary. call, there just you about the be still seeing? demand. know to securitizations you're the tends than you last supply the

you color helpful. be on that would just If any what can you're seeing, shed

by Yes. It's sort of sector sector.

I less supply in non-QM think sort little bit sold Trevor's in loans more if money, as get question that I space, space. answering spoke been to earlier real anything, of a there's

is has increase you debt outlets prime pressure. that valve, is been maybe an done if which today, of space as The There the nonsecuritization to to that will, out just as other no of better issuance. market late jumbo So some been has of there's widened sectors. relative under release

the and general, stack. residential been market But healthy in the up has credit down across

in assets sitting space, at local have standpoint. that non-QM any And a anything, been truly tights. So historical marginal the from the in mentioned we're previously widening if

a posting XXXX on would I there? origination need appreciate before to what type color then volumes give see out XXXX environment we as exit a rate trending strong in you see play into XQ, scenario for a you of the after we view see quarter where ARCom normalized there. And more and you and

our deviate more rather gains I previously of think that and a from efficient, Yes. look from a forecast, obviously, and sort than going conditions. we're forecast, MBA sort have the more competitive to just lot We've market don't being been -- MBA ton at said of of you can

would also So as lot is be Arc relying money there's going how of upon. to think I you of to a given as Home much businesses, seasonality much expect, these purchase

expect. seen sort similar. what we seasonally adjust think the think should And would you trends you've were are if be I But of where that's today, to you I

better, we're We're trying look, So efficient. still bigger, still growth mode. more be in to

be So condition it still but trajectory is up, that highly will seasonal.

Our will with question from next come Hagen BTIG. Eric

Eric This is Jake Katsikas for Hagen.

about the the a know guys it? a hearing in kind would you there it you RMBS back some maybe leverage Agency for in lead talked guys of that First raise be to you leverage one, color portfolio? Just And portfolio. just to things I little, going target range if but some just would have helpful.

Yes.

if we past materially next economic of would expect to returning X, smaller leverage fast quarter, the one agencies I kind think we've in at we of X the the that through to the been forward running of over hand kind and quarters. company be

stop carry So the this earn interim the some proceeds bond an we to gap offering. just is cash raised on from

in And have for speeds to if how portfolio? other translate spreads a would portfolio. the then accelerate? increase, to much non-QM how one, Do could that turning guys my prepayment sense to estimate the they or or And you earnings were

Yes.

our our presentations way even on is it or curve like far securitized expected it's we're entering if the majority as X%, Obviously, very vast well rates loan speeds conforming protected event. convexity are, the the fairly any where book which and of of at prepayment if efficiencies look of sort money, you convexity from can book, this and think X%, coupon, in So the money. and you of out of market. business event this about the is out focused you see But inverted the

management Thank I'll queue. showing this closing time, turn in additional further back no for the you. to call At questions any remarks. or I'm

questions. Well, to and and for next thank it for you greatly to joining with forward us appreciate you again everyone your quarter. speaking look We

AG the Inc. Investment conclude Trust, does This you. Thank Mortgage

Earnings XXXX Call. Conference Quarter Second

this a wonderful have time, at You and day. your line disconnect may