AG Mortgage Investment Trust ((MITT)) has held its Q1 earnings call. Read on for the main highlights of the call.
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The recent earnings call for AG Mortgage Investment Trust (MITT) painted a picture of stability amidst market challenges. The sentiment during the call was generally positive, highlighting the company’s ability to maintain its book value, increase dividends, and capitalize on growth opportunities in the home equity securitization market. Despite facing market volatility and spread widening, MITT demonstrated resilience in navigating macroeconomic shifts.
Stable Book Value and Dividend Increase
MITT’s book value remained stable, moving slightly from $10.64 to $10.65. The company also announced an increase in its quarterly dividend to $0.20 per share, marking a 5.3% rise. This stability and dividend growth underscore MITT’s commitment to delivering value to its shareholders.
Strong Liquidity Position
The company maintained a robust liquidity position, with approximately $133 million in liquidity. This included $116 million in cash and $17 million in unencumbered Agency RMBS, providing MITT with the flexibility to navigate market uncertainties.
Home Equity Securitization Growth
MITT made significant strides in the home equity sector by partnering with a nonbank mortgage originator to issue a $500 million home equity securitization. Additionally, the company acquired $130 million of home equity loans from various nonbank originators, highlighting its strategic focus on this growing market.
Economic Return and Earnings Growth
The company reported a 2% economic return on equity and GAAP net income available to common shareholders of $6.2 million, or $0.21 per share. Earnings available for distribution (EAD) also increased to $0.20 per share, reflecting MITT’s ability to generate consistent earnings growth.
Market Volatility Impact
Market volatility in March and April led to spread widening, resulting in an estimated 3% decline in book value through April. Despite these challenges, MITT’s strategic initiatives helped mitigate some of the adverse impacts.
Challenges in Commercial Mortgage Loans
A legacy commercial mortgage loan set to mature required pre-negotiated forbearance. While this presents a challenge, MITT anticipates a positive resolution by 2025.
Securitization Market Challenges
The securitization market faced challenges with spreads widening by 50 to 75 basis points, impacting retained securities. This highlights the broader market pressures affecting MITT’s securitization activities.
Forward-Looking Guidance
Looking ahead, MITT remains focused on maintaining a stable book value and increasing its dividend. The company aims to capitalize on growth in the home equity sector, with a $500 million securitization and additional loan acquisitions. Arc Home, MITT’s mortgage originator, achieved breakeven with a significant increase in lock volumes. The firm also reported a 5% increase in net interest income, indicating a positive outlook for future earnings.
In summary, AG Mortgage Investment Trust’s earnings call conveyed a sense of stability and strategic growth amidst market challenges. The company’s ability to maintain its book value, increase dividends, and expand in the home equity sector were key highlights. While market volatility posed challenges, MITT’s strong liquidity position and strategic initiatives provide a solid foundation for future growth.