AG Mortgage Investment Trust Inc (MITT) Q4 2024 Earnings Call Highlights: Strong Book Value ...

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Mon, Apr 21, 2025, 2:35 PM 4 min read

Book Value Increase: 0.6% increase from $10.58 to $10.64 in Q4 2024.
Quarterly Dividend: $0.19 per share.
Economic Return on Equity (Q4 2024): 2.4%.
Economic Return on Equity (Full Year 2024): 11.7%.
Quarterly Dividend Increase (2024): 5.6% earlier in the year.
Economic Leverage: Reduced from 2.7 turns to 1.4 turns.
Investment Portfolio Growth: 13% increase to $6.7 billion.
Book Value Increase (Year-over-Year): 4.3%.
Earnings Available for Distribution (EAD): $0.76 per share for 2024.
GAAP Net Income (Q4 2024): $8.8 million or $0.30 per share.
EAD (Q4 2024): $0.18 per share.
Net Interest Income: $0.66 per share.
Operating Expenses and Preferred Dividends: $0.46 per share.
Arc Home Contribution to EAD: Loss of $0.02 per share.
Agency Eligible Loans Acquired (Q4 2024): $359 million.
Home Equity Loans Acquired (Q4 2024): $153 million.
Home Equity Loans Sold (Q4 2024): $185 million.
Economic Leverage Ratio (End of Q4 2024): 1.4 turns.
Total Liquidity (End of Q4 2024): $137 million.

Warning! GuruFocus has detected 4 Warning Signs with MITT.

Release Date: March 03, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

AG Mortgage Investment Trust Inc (NYSE:MITT) reported a 0.6% increase in book value during the fourth quarter, reflecting strong financial performance.
The company delivered an 11.7% economic return on equity for the full year 2024, showcasing effective execution of its business strategy.
MITT successfully increased its quarterly dividend by 5.6% earlier in the year, indicating confidence in its financial stability.
The acquisition of WMC has been a success, increasing MITT's market cap by over 45% and contributing to a total stockholder return of more than 50%.
MITT's strategic partnership with TPG Angelo Gordon provides access to substantial resources and expertise, enhancing its competitive advantage in the residential mortgage finance sector.

Negative Points

The company faces ongoing challenges from volatile and turbulent market conditions, which could impact future performance.
Arc Home, a subsidiary of MITT, contributed a loss of $0.02 to earnings available for distribution (EAD) in the fourth quarter, although it showed signs of improvement.
The cost of preferred shares has increased due to rolling to floating rates, potentially impacting overall profitability.
MITT's economic leverage ratio slightly declined to 1.4 turns, which, while low historically, may limit aggressive growth opportunities.
The securitization and financing markets for non-QM and home equity loans remain competitive, requiring careful navigation to maintain profitability.

Q & A Highlights

Q: How would you characterize your excess capital and deployable capital? A: Nicholas Smith, Chief Investment Officer, explained that they expect $20 million to $25 million of equity capital returns from CRE positions maturing later this year. Additionally, inefficient financings from the WMC acquisition will release another $25 million to $30 million of equity. In total, they anticipate $75 million to $100 million of equity that could be rotated or newly deployed in the coming year.

Q: What are your thoughts on corporate leverage and the level of preferred stock? A: T. Durkin, CEO, stated that they are comfortable with the current leverage ratios and have been managing the company with these ratios for some time. They are actively monitoring the market, especially after the recent preferred deal, and believe they have shown good performance in managing the overall leverage ratio to the common.

Q: Can you discuss the relative attractiveness of non-QM versus home equity today and how the securitization and financing markets compare? A: Nicholas Smith noted that home equity is relatively new with a large addressable market, offering a first-mover advantage. Non-QM continues to grow and offers relative value, but they are currently leaning more towards home equity.

Q: What are your thoughts on the preferred stock given the increased costs from rolling to floating rates? A: T. Durkin mentioned that they were prepared for the floating rate switch and have other financings coming this year that will help offset the increased floating rate costs. They are looking at it at a corporate level and have incorporated the floating rate switch into their model.

Q: What are your high-level thoughts on origination volume in Arc Home into 2025? A: Nicholas Smith believes Arc Home's business model is more immune to broader market conditions, particularly in non-QM and non-agency markets, which are growing. They expect continued growth for Arc Home, supported by investments in the company's growth and resilience against interest rate changes.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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