MITT - Earnings call transcript Q1 2020 | AG Mortgage Investment Trust, Inc.

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Operator

Good morning and welcome to the AG Mortgage Investment Trust First Quarter 2020 Earnings Call. My name is Brandon and I'll be your operator for today. At this time all participants are in a listen-only mode. [Operator Instructions] Please note, this conference is being recorded. And I will now turn the call over to Raul Moreno.

sir. begin, may You

Raul Moreno

Good earnings and Investment call Brandon. first Trust, to quarter XXXX for morning you, welcome everyone the Inc. Thank AG Mortgage

on uncertainties, contain Company's MD&A begin, to conference actual call statements. of the statements results SEC Factors are we differ please and and certain that outlined SEC today's information our Before section statements these risks in you most in to materially and earnings our forward-looking Risk note We regarding made during call are filings. statements. encourage forward-looking discussed may our release, subject Any which forward-looking the today's read recent disclosure from our in earnings may contained filings. in the presentation

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

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

David Roberts

previous markets announced reaction and and stages our did to swift. of and Raul. Good that residential at in most two-way Agency sellers receive was margin notably our prices our least-worst portion assets We met morning. distressed MITT’s most using prudently securities rising RMBS. the Agency At Thank both trades market instead to The were forbearance you, MITT in were we of in of and not repo loans, few the we we portfolio calls lenders of and commercial, The tide of that point, evaporated, from believed lenders. the became would disrupted as and and discount seek our margin a a however, AG of Accordingly, calls and seize number place repo long for largest take lenders those collateral. to sell began we from RMBS. reserves crisis were margin Normal calls a small calls. meet overwhelming. agreed, sell, repo portfolio. our the huge represented initial a levels. whole that cash March certain COVID elected a as every agreement even from Most could, our of the The of selling would the aspect

filings, to a In negotiated As our subsidiary order the repo made wholly agreements. owned key subordinated the million Gordon, Manager, of forbearances, element loan induce as a our we negotiations. detailed three X-K direct forbearance Angelo many $XX to lenders in agree two to our

its reimbursement of defer well both agreed Manager payments until As also to XXth fees MITT expense of September this year. and management

are lenders. six to sales, did a and We and majority days of paid much has current two-month off two margin our sold lower forbearance leverage. could so pleased the to MITT the the lenders. forbearance, unmet with exited exit we down arrangements the meet We could previously repo these during remaining and smaller our After prior of ago so our our consolidated period to with agreements reinstated Immediately we we and forbearance. this financing portfolio related we all calls, announce assets, that bilateral

value our took of markets, share. losses. those deficiency who collateral. lenders MITT also per sold seized equity substantial dislocation during Company a began in of $XX.XX a in and portfolio, downsizing our progress claims the We substantial time severe with had made common The settling year In mostly with book

been share. $X.XX X-K, Xth share was we I per per April than XXst analysis, note of book the per our XXth estimate our that XXth. value was $X.XX our May through the Based was book on as of share losses in our estimated April common internal higher from have in of not per common sales. substantially reported that it May as that we range preliminary As we our in share majority on realized value a to range

Going forward, to either dividends preferred we selected through not liquidity continuing on future. Based and reducing stock anticipate common debt do our foreseeable anticipate current Company, or the paying asset conditions for for raise on sales. we our

will improve T.J. evaluating effort will Durkin. plans value various I'll listening for now per the for book we share. of time, work strategy the go-forward we business. market. take creativity call to We our are you Whatever Thank the and turn cooperation choose, That hard to and over

T.J. Durkin

fourth you, I'll along of as investment non-QM XXst in ordinary March February March, you to stood and of where were the through walk May it MITT with MITT briefly somewhat David. months the priced and Thank February, funds, its portfolio portfolio. Prior managed terms Angelo securitization. January net managing In Gordon XXst. on other

fixed And the into to more repo had largely of way fixed market U.S. funding liquidity. the happened market to deep returned entire April, of the losing as the very late their well. book However, the evaporate markets. treasuries assets the to most their widened such Ultimately, started Agency multiple sell agency we This quickly stepped credit levels times were MBS basis completely asset It's late extreme liquidity also experience GFC, our delever importantly, the the income normal. even into liquidity course stabilize volatility, not March, all fears the in price having the seen market, agency were markets, and raise order quickly. into crossed normal began by as of as market, the our but Fed has And plumbing the forced illiquid. since March to unfortunately, throughout over made and and as the to liquid COVID as classes, domestic in income began in

residential X/XX, After the representing billion X.X positioning Turning all removed and interest rate of we remains seven. XX% had true today. turns We our as of to portfolio The that our commercial. of presentation, leverage. on value whole approximately of pool, XX% hedges, fair economic our sale and page was approximately Agency of a $X.X

mentioned, post-quarter-end David build portfolio in fashion liquidity. delever to our an and As continued orderly we

This the improve market see started in has we markets quarter-end, continuing seeing structured return the secondary and broader recover to the issue and market asset as to are prices well. credit and new market

of expect As leverage. of seen approximately this we turn investment we've run X/XX, of With a portfolio comprised $X billion recourse of XX% portfolio, residential around commercial. and to XX%

liquidity and Our $XX equivalents million approximately that point. was cash at cash of

financing estimates, obtain markets delinquency ahead, of fundamentals, Looking in we continue With to out, much numbers industry there's to We nonrecourse security. risk the term for whole as loan investment note long believe or is but we real the underlying much go. among slightly data open. longer will mortgage still story for there and industries forbearance data in that securitization to take regards way the will indicate line better to a debt more post-COVID early our look estate play performing estate commercial remain to than as different real commercial are residential idiosyncratic comprising

the pace is you. mortgage Arc in the second and volume originator rally Home in rates mortgage our Thank taking I'll advantage record the call for origination turn on quarter. is currently of Brian. over Lastly,

Brian Sigman

fully reported quarter, $XX.XX net for diluted Overall, loss stockholders the $XXX million common to a share. of we fourth Thank T.J. per you, or

$X.XX in historically first for do asset this of economic stockholders’ decreased disclose markets. We and at the book $XX.XX decreased our primarily pandemic it earnings calculated appropriately mortgage December not at impact XX% to quarter were we not by value core associated losses quarter. on of first we March XXst. Total equity have a reflect directly that the XXst COVID-XX Our with financial COVID-XX determined as pandemic the result that global did related XXXX, as from The caused of results. the measure

As for investors resulting our reduction March as would for in earnings on ratio economic X.X evaluate a counterparties. our times financial assets decrease increased our stabilize, financing markets our periods. prices to a sold measures of well margin of these XXst. in of In The investment was to margin evaluate XXst December performance duress order operating financial as portion times management non-GAAP portfolio, calls, calls whether at we help X.X satisfy future leverage at the other will our and market the of both, we or core

Additionally, had our with lowered we In outstanding March of we as second from XX the to restructure XXst number consolidate continued sheet, debt of XXst. our quarter, counterparties debt December balance XX we counterparties. and delever as the a to our

would questions. I recourse able entirely As like in cash will the debt, and with for we lenders restructuring, of open At call concludes part forbearance prepared partner had our our equivalents. $XX liquidity and with exited then of only That we to we May XXst, approximately to the reduce look the to remarks. future. six million cash of Operator? were now

Operator

now We'll question-and-answer the Harter. begin And from session. Instructions] Doug Credit Thank we [Operator have you. Suisse,

Doug Harter

you if of there is kind wondering kind make what any to to concessions about just of and was that could out the days kind were to other from you out get able of -- being I forbearance to that led conditions had get of forbearance? talk ago what

David Roberts

T.J.?

T.J. Durkin

were Yes. Sure, portfolio up Doug. I throughout of delevering multiple until month. a March I mean, this the factors. combination mean, we it was

some -- just obviously We which helps -- condensed extent, much back easier; liquidity operationally mentioned, David well. made also We coming are market as exiting that Brian mentioned to also lastly, lenders, the building as way. or the and

of combination things. those all a So, there's

Doug Harter

And to be portfolio the mentioned any you of where to or that continue reduce be kind the sense stabilize? to that you assets you then, magnitude looking able there look of and sort of kind would might delevers, size of would

T.J. Durkin

think leverage run this don't I at or rate a to ready stable point is. ties No, where we're long-term ratio say

Doug Harter

that lastly, issue the for value? above all then the have well you’re of to me, trading you ATM do book ability the given And

T.J. Durkin

Could repeat question? you sorry. that I'm

Doug Harter

to value? you well equity you use trading at-the-market above program, are that have book the guys Do ability given issuance the

T.J. Durkin

different We really out then presenting us. have review this, options of on up and till we'll afterwards, the getting are forbearance been to all available focused that now

Operator

go From ahead. KBW, Eric Hagen. we have Please

Eric Hagen

on the I'll side. asset start with one

reflect in during us portfolio portfolio, of what a any mark-to-market current the give first June, breakdown you weeks can even like changes the just right looks just the On now? to couple

T.J. Durkin

Yes. listen, been high June’s a at market. in a level, month mean, I constructive the

at level this commercial. I don't to prepared update think we at jut point, quarter-end. between We for classes high residential for broke breakdown sub-asset you the have a we it think, of terms X/XX. in out I the out anything laid

Eric Hagen

mean, or of guess, would between breakdown I of general and you resi but that guide want to to? on the guess, at end you just comment, I I can't that realize loans side. us securities I kind any the commercial sort -- be and indication it can May, there see is a of sense be you Okay. helpful, to

T.J. Durkin

have that We don't prepared now.

Brian Sigman

detail more subsequent I think, XX-Q, X/XX able to the be and you'll a see the little in -- obviously on see Eric, you’ll events.

there presentation better a it be just large So, earnings probably, that the file this loan especially today. we’re talked little residential sale able with that than later think And from to bit the you'll we've will that to I way about posted release. going we in the now, make

David Roberts

Eric transparent, going not trying we're of I -- to so. any we're any well terms give would between the that say of be disseminating sort in also to precedent we're that trying to sort be quarters, as but of details set

Eric Hagen

appreciate say filed that. Q be this is going Did can I to you're that you afternoon?

David Roberts

the That’s expectation. Yes.

Eric Hagen

on And subject that cost being funding repo? of and repo? expect mark-to-market the calls? on One are repo on what's the reinstatement Okay. you the side assets all to or margin that funded What those daily reinstated there. are two the And currently are the

T.J. Durkin

Sure. combination or the daily of side. between mark-to-market. way There way different majority a loan so to warehouses The as business funding we that isn't types on somewhat regular the them of as well one rate have repo. [Technical returned Difficulty] just are asset mean, I security regular

Eric Hagen

the Okay. to of margin? really commercial repo about the that and portfolio, mark-to-market is credit what of resi is portfolio the most mark-to-market, in the the But, of or frequency applied the bulk

T.J. Durkin

Yes.

on as mark-to-market. and And So, and facility. do we whole commercial well as securities loan it’s residential do commercial daily have residential

Operator

From have go Please Trevor Cranston. we JMP Securities ahead.

Trevor Cranston

tier some Can if for in to or time? the you non-mark-to-market the if financing their you're repo fairly something seen you to the as forbearance, repo remaining assets. that question could guys place of you longer on comfortable on think being establishing now go facilities of continue explore, intending with for forward, facilities. move that towards say out Follow-up long a remain is you're period that companies something remaining We've term you're

T.J. Durkin

No.

what think based to something on the loan practical we on is year-end. definitely pursue probably a I least at where the side whole in that will security side, we're seeing bit it's than continue more on

Trevor Cranston

prepared you you that are deficiency the from claims clarify in if forbearance mentioned deficiency a remarks, weren't And remaining any repo amount of that just done Can I the significant settling outstanding there think agreement? you had claims. in work lenders

T.J. Durkin

believe of Yes. claims. majority There be do we deficiency the outstanding we to -- we two solved what them. have But,

Brian Sigman

Yes. later up And they quarter. after came the

forward of XXth, to settle those. to is -- Obviously, that be. settled when we still of to in see the Q, for you'll are open. you we guesses we see And were there. think March will would book reflective at value disclosed that two are April there book the at in that kind estimates that were they the -- accrued So, put the taken two value best into we were And what April our take remain our part But XXst. it think XXth estimate we that then, was what it

Operator

go Jones From Jason ahead. Please we Stewart. Trading, have

Jason Stewart

there's is $X.XX that post appreciate substantial but Does of a that pretty complexity $X.XX lot executed? include range in loan was this, I X/XX. the sale to the

Brian Sigman

you Yes. at the point, of in the diligence But filed the we takes It chance some time. a way But actually those was then agree of has time. buyer -- you the at that that types loan -- on you due to advance. price the of into -- enter kind agreement kind settle,

maybe that But, to we would we subject the that price be, there knew into take able a account. to So fallout point, little at the were sales what extent was. to

Jason Stewart

items the that for book or sale, forbearance already that executing? range you any planned had portfolio your includes on and executed So, other value on loan estimate includes -- settlement

Brian Sigman

into the month knew There I lot. our we mean, into -- opposed to end baked a to the was Well, what of as off assumptions are It was the it seemed lot It cycle. at a obviously, end definitely the But, there. best of of we it. knowledge was went quarter. -- time of

a So, have were we something price, that certain extent certainly that to at we at the we knew a would couple into price. selling number days later marketed

Operator

we Robb, Golding. Christofferson have Brad

Brad Golding

still of to return I'm the the whack of down of preferreds common there's shareholders? about net here. $X.X entity? going didn't shut to slide this is And obviously on clearly question that raise can’t just ratio clearly common at But capital looking support a expense the viable And of the value statement. base. of million expenses. Is I the The the income this it you asset to operational know out answer forward. about time want to just is kind or capital

David Roberts

David Roberts, I'll take that.

Brad Golding

while. Hi David. Thank Nice. Nice. Haven’t you. talked for a

David Roberts

in reducing to steps question. we reducing comments, first As and as with leverage. guess to our of in we to that do is, had two portfolio a said, been I'd to forbearance and of take good that One it number we I exit -- repeat our terms focus repo detailed, the response has

over So, that focus the months. has really been the few past

we do remarks, prepared various for in that really We I not we until could forbearance. plans said are, And business. out were my the as evaluating go-forward of

the the the we’re shareholders. options. certainly forbearance, be communicate for we've determined strategy we market, we'll once of all And Now, looking our will at to various that out best

So, point. it's at question, a but one good this preliminary a

Brad Golding

Okay.

by holders. want or and fairly Just, would for either I'm for don't somewhat but capital decisions would now crisis make preferred or has market to to raise I the there's for lack be have preferreds. or shared structural somewhat -- anything, it an protect pull the existential the clearly of value concerned is And quickly, these you first appears stable, remaining there obviously that entity think grow because I to to support plug, the sound the to preachy and the

So, you. thank

David Roberts

Thank you.

Operator

a we KBW, Please go have Eric Hagen. ahead. follow-up from From

Eric Hagen

your ownership is just affiliates slightly us of follow-up. remind you remember think if the Can I remind you remainder than in the for that percentage I what guys the Thanks the it’s you what the us Creek your own? Arc for Red Can But, half, less Home, stake think, taking I correctly, stake. affiliates. of it's there? ownership is

Brian Sigman

It's Sure. Brian.

we To The of on mortgage actually been the service, a managed entity. quite fee. asset that Obviously, We are under So, an by I about, as just of slightly at Angelo of your are rest talked think mortgage they is originator. owned question MITT entity Arc for they’ve And other residential is XX% Creek, Home, own Gordon. our that they funds Red Red subsidiary Angelo manager, second loans management by Gordon. busy. Creek

own service So at percentage to them use And a have not to extent MITT would those we Red does that we Creek. loan resident mortgage of MITT, any fees.

Eric Hagen

that Okay. the of -- the Home Arc with your Arc And asset -- is value value of your asset of of for Home, you can essentially net up the amount share your remind correct? is ownership your net us share shows that

Brian Sigman

Eric. right, That's Yep.

So, -- -- own about would with I that it’s million X/X. else we think, value only that value. And we that's we was up conjunction the like at anything our of just so, share $XX or else, in pick anybody

Eric Hagen

Yes. Thank for clarifying you that.

Brian Sigman

Yes. problem. No

David Roberts

the we -- think, top there's follow-up we we Stewart. quick Jason hour. But, I from quick a -- at have are of there's almost if operator a the see

question. ahead for last go So, the

Operator

Jason?

Jason Stewart

or people around more us detail for sale, for there leaves two a us Thank you into points just estimate that guess substantially nature center to the new higher big intra-quarter is get lower. that walking estimates you. but Is a the back of putting terms the one lot the value, value? provide what all including things have of could exiting to and including in completely range, to to Brian, of than forbearance, book not room it happened appreciate these, the any maybe book you're loan I

David Roberts

a a a give lot And the up not not going the do feel I'm comfortable To to time estimating. We with to that It’s did the simply of that on we with have David. all question. takes we moving pieces range range. portfolio. that purposely with did answer come

our range higher. to we able not saying, did what the and And, substantially signal we based estimating what was So, that's that wanted was do. were felt carefully, we we to we words comfortable chose that on exactly the what

Jason Stewart

you. Thank Okay.

David Roberts

welcome. You’re

Well, Okay. everyone. thank you

you out If and terms number. reach questions can Relations Investor your weren't our questions answered, ask your calling in of

So, you. thank

Operator

concludes joining. and you conference. Thank Thank Ladies for gentlemen, you. this today's

may now disconnect. You

AG Mortgage Investment Trust (MITT) 12 Jun 202020 Q1 Earnings call transcript