AG Mortgage Investment Trust, Inc. Reports First Quarter 2024 Results

NEW YORK–(BUSINESS WIRE)–AG Mortgage Investment Trust, Inc. (“MITT,” “we,” the “Company,” or “our”) (NYSE: MITT) today reported financial results for the quarter ended March 31, 2024.

FIRST QUARTER 2024 FINANCIAL HIGHLIGHTS

• $10.84 Book Value per share as of March 31, 2024 compared to $10.46 as of December 31, 2023⁽¹⁾
• $10.58 Adjusted Book Value per share as of March 31, 2024 compared to $10.20 as of December 31, 2023⁽¹⁾
  • Increase of 3.7% from December 31, 2023
  • Quarterly economic return on equity of 5.5%⁽²⁾
• $0.55 of Net Income/(Loss) Available to Common Stockholders per diluted common share during the first quarter 2024⁽³⁾
• $0.21 of Earnings Available for Distribution (“EAD”) per diluted common share during the first quarter 2024⁽³⁾
• $0.18 dividend per common share declared in the first quarter 2024

MANAGEMENT REMARKS

“The first quarter marks the first full quarter of earnings results following our acquisition of WMC and paints a clear picture of the compelling benefits. We grew our book value approximately 3.7% quarter over quarter while paying our 18 cent dividend and producing a 5.5% Economic Return on Equity for the quarter,” said TJ Durkin, Chief Executive Officer and President. “Completing the WMC acquisition was another substantial step in further positioning MITT as a premier pure play residential mortgage REIT, and we have confidence in our ability to continue to deliver on strong earnings off the investment portfolio while seeking ways to continue enhancing scale and G&A efficiencies.”

INVESTMENT, FINANCING, AND CAPITAL MARKETS HIGHLIGHTS

• $6.2 billion Investment Portfolio as of March 31, 2024 compared to $5.9 billion as of December 31, 2023⁽⁴⁾
  • Purchased $285.3 million of Non-Agency and Agency-Eligible Loans
  • Purchased $127.7 million of Agency RMBS
  • Executed strategic sales of $19.3 million of Non-Agency RMBS
    • Includes $16.8 million of Non-Agency RMBS sold from the legacy portfolio acquired from Western Asset Mortgage Capital Corporation (“WMC”)
  • As of the date of this release, have an acquisition pipeline of $283.9 million pull-through adjusted unpaid principal balance from Arc Home and third-party originators⁽⁵⁾
• $5.8 billion of financing as of March 31, 2024 compared to $5.6 billion as of December 31, 2023⁽⁴⁾
  • $5.0 billion of non-recourse financing and $0.8 billion of recourse financing as of March 31, 2024
  • Executed a rated Agency-Eligible Loan securitization of $377.5 million of unpaid principal balance during the first quarter 2024, converting recourse financing with mark-to-market margin calls to non-recourse financing without mark-to-market margin calls
  • Issued $34.5 million principal amount of 9.500% senior notes due 2029 in a public offering generating net proceeds of approximately $32.8 million
  • Repurchased $7.1 million of principal amount of outstanding 6.75% convertible senior notes due 2024 assumed in the WMC acquisition
• 10.8x GAAP Leverage Ratio and 1.4x Economic Leverage Ratio as of March 31, 2024
• 0.8% Net Interest Margin⁽⁶⁾
• $140.3 million of total liquidity as of March 31, 2024
  • Consisted of $100.3 million of cash and cash equivalents and $40.0 million of unencumbered Agency RMBS

INVESTMENT PORTFOLIO

The following summarizes the Company’s Investment Portfolio as of March 31, 2024⁽⁴⁾ ($ in millions):

(a) Total cost of funds related to the financing on our investment portfolio and our unsecured notes is 5.3%. The cost of funds shown above includes the cost or benefit from our interest rate hedges. Total cost of funds as of March 31, 2024 excluding the cost or benefit of our interest rate hedges would be 5.4%.

(b) As of March 31, 2024, includes $23.9 million of Residential Investments that are included in the “Investments in debt and equity of affiliates” line item on our consolidated balance sheet. These Residential Investments include $16.5 million of Non-QM Securities and $7.4 million of Re/Non-Performing Securities.

(c) Fair value on interest rate swaps represents the sum of the net fair value of interest rate swaps and the margin posted on interest rate swaps as of March 31, 2024. Yield on interest rate swaps represents the net receive/(pay) rate as of March 31, 2024. The impact of the net interest component of interest rate swaps on cost of funds is included within the respective investment portfolio asset line items.

(d) Includes $78.5 million of 6.75% convertible senior unsecured notes due September 2024 assumed by MITT’s subsidiary in the WMC acquisition and $32.8 million of MITT’s 9.500% senior unsecured notes due 2029.

FINANCING PROFILE

The following summarizes the Company’s financing as of March 31, 2024⁽⁴⁾ ($ in millions):

(a) Includes financing on the retained tranches from securitizations issued by the Company and consolidated in the “Securitized residential mortgage loans, at fair value” line item on the Company’s consolidated balance sheets. Additionally, includes financing on Non-Agency RMBS included in the “Real estate securities, at fair value” and “Investments in debt and equity of affiliates” line items on the Company’s consolidated balance sheets.

(b) Includes financing on Commercial loans and CMBS included in the “Commercial loans, at fair value” and “Real estate securities, at fair value” line items, respectively, on the Company’s consolidated balance sheets.

(c) Includes $78.5 million of 6.75% convertible senior unsecured notes due September 2024 assumed by MITT’s subsidiary in the WMC acquisition and $32.8 million of MITT’s 9.500% senior unsecured notes due 2029.

(d) Total Cost of Funds shown includes the cost or benefit from the Company’s interest rate hedges. Total Cost of Funds as of March 31, 2024 excluding the cost or benefit of our interest rate hedges would be 5.4%.

(e) The borrowing capacity under our residential mortgage loan warehouse financing arrangements is uncommitted by the lenders.

ARC HOME⁽⁵⁾

• Arc Home originated $337.8 million of residential mortgage loans during the first quarter 2024
  • MITT purchased loans with an unpaid principal balance of $79.8 million during the first quarter 2024 from Arc Home
• Cash of $10.9 million, along with Arc Home’s $85.7 million mortgage servicing right portfolio that is largely unlevered, provides Arc Home with a strong financial position to manage the current dynamics in the mortgage origination market
• Arc Home generated an after-tax net loss of $(0.3) million in the first quarter 2024 primarily resulting from losses related to Arc Home’s lending and servicing operations, offset by unrealized gains in the fair value of Arc Home’s mortgage servicing right portfolio
  • MITT’s portion of the after-tax net income was $(0.1) million, prior to removing any gains on loans acquired by MITT from Arc Home which approximated $0.2 million during the first quarter 2024^(a)
• As of March 31, 2024, the fair value of MITT’s investment in Arc Home was calculated using a valuation multiple of 0.89x book value

(a) MITT eliminates any gains or losses on loans acquired by MITT from Arc Home from the “Equity in earnings/(loss) from affiliates” line item and decreases or increases the cost basis of the underlying loans accordingly resulting in unrealized gains or losses, which are recorded in the “Net unrealized gains/(losses)” line item on the Company’s consolidated statement of operations.

BOOK VALUE ROLL-FORWARD⁽¹⁾

The below table provides a summary of our first quarter 2024 activity impacting book value as well as a reconciliation to adjusted book value ($ in thousands, except per share data).

DIVIDENDS

The Company announced that on May 2, 2024 its Board of Directors (the “Board”) declared second quarter 2024 preferred stock dividends as follows:

In accordance with the terms of its 8.25% Series A Cumulative Redeemable Preferred Stock (the “Series A Preferred Stock”), the Board declared a quarterly cash dividend of $0.51563 per share on its Series A Preferred Stock;

In accordance with the terms of its 8.00% Series B Cumulative Redeemable Preferred Stock (the “Series B Preferred Stock”), the Board declared a quarterly cash dividend of $0.50 per share on its Series B Preferred Stock; and

In accordance with the terms of its 8.000% Series C Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock (the “Series C Preferred Stock”), the Board declared a quarterly cash dividend of $0.50 per share on its Series C Preferred Stock.

The above dividends for the Series A Preferred Stock, the Series B Preferred Stock, and the Series C Preferred Stock are payable on June 17, 2024 to preferred shareholders of record on May 31, 2024.

On March 15, 2024, the Board declared a first quarter dividend of $0.18 per share of common stock that was paid on April 30, 2024 to common stockholders of record as of March 29, 2024.

On February 16, 2024, the Board declared a quarterly dividend of $0.51563 per share on the Series A Preferred Stock, $0.50 per share on the Series B Preferred Stock, and $0.50 per share on the Series C Preferred Stock. The dividends were paid on March 18, 2024 to preferred stockholders of record as of February 29, 2024.

STOCKHOLDER CALL

The Company invites stockholders, prospective stockholders, and analysts to participate in MITT’s first quarter earnings conference call on Friday, May 3, 2024 at 8:30 a.m. Eastern Time.

To participate in the call by telephone, please dial (888) 632-3384 at least five minutes prior to the start time. International callers should dial (785) 424-1794. The Conference ID is MITTQ124. To listen to the live webcast of the conference call, please go to https://event.on24.com/wcc/r/4577047/1D9DB8A1E5AB02B0C4BCBCC321009FB1 and register using the same Conference ID.

A presentation will accompany the conference call and will be available prior to the call on the Company’s website, www.agmit.com, under “Presentations” in the “News & Presentations” section.

For those unable to listen to the live call, an audio replay will be available on May 3, 2024 through 9:00 a.m. Eastern Time on June 3, 2024. To access the replay, please go to the Company’s website at www.agmit.com.

ABOUT AG MORTGAGE INVESTMENT TRUST, INC.

AG Mortgage Investment Trust, Inc. is a residential mortgage REIT with a focus on investing in a diversified risk-adjusted portfolio of residential mortgage-related assets in the U.S. mortgage market. AG Mortgage Investment Trust, Inc. is externally managed and advised by AG REIT Management, LLC, a subsidiary of Angelo, Gordon & Co., L.P., a diversified credit and real estate investing platform within TPG.

Additional information can be found on the Company’s website at www.agmit.com.

ABOUT TPG ANGELO GORDON

Founded in 1988, Angelo, Gordon & Co., L.P. (“TPG Angelo Gordon”) is a diversified credit and real estate investing platform within TPG. The platform currently manages approximately $78 billion* across a broad range of credit and real estate strategies. For more information, visit www.angelogordon.com.

*TPG Angelo Gordon’s currently stated assets under management (“AUM”) of approximately $78 billion as of December 31, 2023 reflects fund-level asset-related leverage. Prior to May 15, 2023, TPG Angelo Gordon calculated its AUM as net assets under management excluding leverage, which resulted in TPG Angelo Gordon AUM of approximately $53 billion as of December 31, 2022. The difference reflects a change in TPG Angelo Gordon’s AUM calculation methodology and not any material change to TPG Angelo Gordon’s investment advisory business. For a description of the factors TPG Angelo Gordon considers when calculating AUM, please see the disclosure at www.angelogordon.com/disclaimers/.

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 related to dividends, book value, adjusted book value, our investments, our business and investment strategy, investment returns, return on equity, liquidity, financing, taxes, our assets, our interest rate sensitivity, and our views on certain macroeconomic trends and conditions, among others. Forward-looking statements are based on estimates, projections, beliefs and assumptions of management of our 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, our ability to drive earnings power and enhance G&A efficiencies to make MITT a more scaled and profitable pure-play residential mortgage REIT; failure to realize the anticipated benefits and synergies of the WMC acquisition, including whether we will achieve the savings and accretion expected within the anticipated timeframe or at all; our ability to continue to opportunistically rotate capital through sales of legacy WMC or other non-core assets; whether market conditions will improve in the timeline anticipated or at all; our ability to continue to grow our residential investment portfolio; our acquisition pipeline; our ability to invest in higher yielding assets through Arc Home, other origination partners or otherwise; our levels of liquidity, including whether our liquidity will sufficiently enable us to continue to deploy capital within the residential whole loan space as anticipated or at all; the impact of market, regulatory and structural changes on the market opportunities we expect to have, and whether we will be able to capitalize on such opportunities in the manner we anticipate; the impact of market volatility on our business and ability to execute our strategy; our trading volume and liquidity; our portfolio mix, including levels of Non-Agency and Agency mortgage loans; our ability to manage warehouse exposure as anticipated or at all; our levels of leverage, including our levels of recourse and non-recourse financing; our ability to repay or refinance corporate leverage; our ability to execute securitizations, including at the pace anticipated or at all; our ability to achieve our forecasted returns on equity on warehoused assets and post-securitization, including whether such returns will support earnings growth; changes in our business and investment strategy; our ability to grow our adjusted book value; our ability to predict and control costs; changes in inflation, interest rates and the fair value of our assets, including negative changes resulting in margin calls relating to the financing of our assets; the impact of credit spread movements on our business; the impact of interest rate changes on our asset yields and net interest margin; changes in the yield curve; the timing and amount of stock issuances pursuant to our ATM program or otherwise; the timing and amount of stock repurchases, if any; our capitalization, including the timing and amount of preferred stock repurchases or exchanges, if any; expense levels, including levels of management fees; changes in prepayment rates on the loans we own or that underlie our investment securities; our distribution policy; Arc Home’s performance, including its liquidity position and ability to manage current dynamics of the mortgage origination market; Arc Home’s origination volumes; the composition of Arc Home’s portfolio, including levels of MSR exposure; levels of leverage on Arc Home’s MSR portfolio; our percentage allocation of loans originated by Arc Home; increased rates of default or delinquencies and/or decreased recovery rates on our assets; the availability of and competition for our target investments; our ability to obtain and maintain financing arrangements on terms favorable to us or at all; changes in general economic or market conditions in our industry and in the finance and real estate markets, including the impact on the value of our assets; conditions in the market for Residential Investments and Agency RMBS; our levels of EAD; market conditions impacting commercial real estate; legislative and regulatory actions by the U.S. Department of the Treasury, the Federal Reserve and other agencies and instrumentalities; regional bank failures; our ability to make distributions to our stockholders in the future; our ability to maintain our qualification as a REIT for federal tax purposes; and our ability to qualify for an exemption from registration under the Investment Company Act of 1940, as amended. Additional information concerning these and other risk factors are contained in our filings with the Securities and Exchange Commission (“SEC”), including those described in Part I – Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as such factors may be updated from time to time in our filings with the SEC. Copies are available free of charge on the SEC’s website, http://www.sec.gov/. All forward looking statements in this press release speak only as of the date of this press release. We undertake no duty to update any forward-looking statements to reflect any change in our expectations or any change in events, conditions or circumstances on which any such statement is based. All financial information in this press release is as of March 31, 2024, unless otherwise indicated.

NON-GAAP FINANCIAL INFORMATION

In addition to the results presented in accordance with GAAP, this press release includes certain non-GAAP financial results and financial metrics derived therefrom, including Earnings Available for Distribution, investment portfolio, financing arrangements, and Economic Leverage Ratio, which are calculated by including or excluding unconsolidated investments in affiliates as described in the footnotes to this press release. Our management team believes that this non-GAAP financial information, when considered with our GAAP financial statements, provides supplemental information useful for investors to help evaluate our financial performance. However, our management team also believes that our definition of EAD has important limitations as it does not include certain earnings or losses our management team considers in evaluating our financial performance. Our presentation of non-GAAP financial information may not be comparable to similarly-titled measures of other companies, who may use different calculations. This non-GAAP financial information should not be considered a substitute for, or superior to, the financial measures calculated in accordance with GAAP. Our GAAP financial results and the reconciliations of the non-GAAP financial measures included in this press release to the most directly comparable financial measures prepared in accordance with GAAP should be carefully evaluated.

Contacts

AG Mortgage Investment Trust, Inc.
Investor Relations

(212) 692-2110

[email protected]

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