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AG Mortgage Investment Trust, Inc. (MITT)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 was operationally solid: book value rose 0.6% to $10.64, quarterly economic ROE was 2.4%, GAAP diluted EPS was $0.30, and EAD per diluted share was $0.18, with a $0.19 dividend declared .
  • Portfolio rotation toward Home Equity Loans continued; management highlighted “strong execution gains” from HEL activity, prudent leverage (economic 1.4x), and ample liquidity of $136.9mm, positioning MITT for continued securitization and asset allocation in early 2025 .
  • Arc Home turned profitable in December and January, with management expecting Arc to move from a modest EAD drag to neutral/positive contributor in 2025; deployable capital of $75–$100mm is expected from maturing CRE positions, refinancing roll-offs, and rotation, supporting earnings power .
  • Wall Street (S&P Global) consensus estimates were unavailable at the time of this analysis, so we cannot quantify beats/misses; catalysts include sustained pipeline, continued securitizations, and dividend progression (raised to $0.20 in Q1 2025) .

What Went Well and What Went Wrong

What Went Well

  • Book value protection and growth: BV per share increased to $10.64 (+0.6%), with a 2.4% economic ROE; CEO: “strong performance… increasing book value and achieving a 2.4% quarterly economic return on equity” .
  • HEL-led execution gains with lower leverage: Q4 performance benefited from “strong execution gains related to Home Equity Loan investment activity,” with economic leverage down to 1.4x and Q4 liquidity at $136.9mm for reinvestment .
  • Strategic support from TPG/Angelo Gordon and WMC acquisition: CEO emphasized manager-backed scale and flexibility; “WMC acquisition… has been a resounding success” and continued growth initiatives .

What Went Wrong

  • EAD still below dividend run-rate: Q4 EAD was $0.18/share vs $0.19 dividend; CFO noted Arc Home contributed a ~$0.02/share EAD loss in Q4 (improving to profitability in Dec) .
  • Interest rate volatility pressuring mark-to-market: Unrealized losses on the investment portfolio offset by hedge gains; management highlighted elevated rate volatility impact on NII/NIM and EAD trajectory .
  • Preferreds switching to floating raised funding costs; management flagged increased cost headwind and ongoing efforts to offset it via improved financing terms and rotation into higher-ROE assets .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Interest Income ($USD Millions)$99.8 $107.5 $105.7
Net Interest Income ($USD Millions)$16.4 $15.0 $17.4
GAAP Diluted EPS ($USD)$(0.02) $0.40 $0.30
EAD per Diluted Share ($USD)$0.21 $0.17 $0.18
Net Interest Margin (%)0.7% 0.6% 0.8%
Book Value per Share ($USD)$10.63 $10.58 $10.64
Quarterly Economic ROE (%)(0.2)% 3.9% 2.4%
Dividend per Common Share ($USD)$0.19 $0.19 $0.19

Segment breakdown – Q4 2024 investment portfolio:

AssetAsset FMV ($mm)Yield %Financing Carrying Value ($mm)Cost of Funds %Equity ($mm)ROE %
Securitized Non-Agency Loans$6,044.6 5.7% $5,762.3 5.2% $282.3 17.0%
Securitized RPL/NPL Loans$153.1 6.6% $132.4 4.1% $20.7 26.4%
Agency-Eligible Loans$102.1 6.6% $95.7 5.5% $6.5 23.4%
Home Equity Loans$104.0 9.9% $87.4 6.5% $16.6 26.2%
Non-Agency RMBS$143.3 10.7% $79.6 5.3% $63.7 16.9%
Agency RMBS (IO)$21.0 10.4% $2.0 5.3% $19.0 10.6%
Legacy WMC Commercial Loans$67.0 10.0% $47.2 7.5% $19.8 15.9%
Legacy WMC CMBS$52.8 16.7% $20.4 6.3% $32.4 26.5%

KPIs and operating metrics:

KPIQ2 2024Q3 2024Q4 2024
Liquidity ($mm)$180.2 $119.7 $136.9
GAAP Leverage Ratio (x)12.2x 11.8x 11.6x
Economic Leverage Ratio (x)2.5x 1.5x 1.4x
Net Interest Component of Swaps ($mm)$2.367 $2.180 $1.170
Loan Purchases (FMV, $mm)$423.2 $524.9 $511.7
UPB Securitized ($mm)$309.8 $751.5 $359.7
Arc Home Originations ($mm)$604.0 $681.6 $756.0

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Common DividendQ4 2024$0.19 (Q3 declaration) $0.19 declared Maintained
Common DividendQ1 2025$0.19 (Q4) $0.20 declared (Mar 17, 2025) Raised
Securitization CadenceH2 2024 → Q1 2025Expect 1–2 more deals by YE 2024 Executed GCAT in Q4; additional securitization in Feb 2025 Maintained activity
Arc Home EAD Trajectory2024 → 2025Q3: (~$0.02) drag Q4: (~$0.02) drag; Arc profitable Dec/Jan; trending to neutral/positive Improving

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3)Current Period (Q4)Trend
Home Equity Loans (HEL)Initiated HEL pipeline; expected attractive ROEs; $136.9mm HEL FMV and ~200mm pipeline in Q3 “Strong execution gains” from HEL; continued rotation; HEL FMV $104.0mm in Q4 Expanding allocation; positive
Securitization StrategyTwo agency-eligible investor securitizations in Q3; programmatic issuer track record Executed GCAT securitization in Q4; remained active with another in Feb 2025 Sustained cadence
Leverage & FinancingDeleveraging Q3 to 1.5x; swapped agency RMBS for convert payoff; NIM 0.6% Economic leverage 1.4x; NIM 0.8%; improved terms on warehouse lines Lower risk, better funding
Arc HomeQ3: EAD drag (~$0.02), profitable in September; MSR sale to improve liquidity Profitable in December and January; expected to trend to neutral/positive EAD Improving contribution
Dividend CoverageQ3 EAD $0.17 vs $0.19 dividend; management targeting higher ROE rotation Q4 EAD $0.18 vs $0.19 dividend; December/January Arc profitability supports coverage in 2025 Nearing coverage; constructive
Macro/Rate VolatilityQ2–Q3 noted elevated rate volatility; mark-to-market impacts; hedging Hedge gains offset investment portfolio unrealized losses; book value protected Well-managed volatility

Management Commentary

  • CEO: “MITT was able to deliver strong performance… increasing book value and achieving a 2.4% quarterly economic return on equity… [and] leverage the support and power of our external manager, TPG… [WMC] has been a resounding success” .
  • CFO: “Increase in value is primarily driven by gains on… home equity loans, coupled with gains on portfolio hedges due to rising benchmark rates, offsetting unrealized mark-to-market losses… GAAP net income… ~$8.8mm or $0.30 per share… EAD of $0.18 per share” .
  • CIO: “MITT advantage” via TPG Angelo Gordon access, expertise, and resources; agile allocation across non-agency credit and HEL with robust underwriting and attractive ROEs .

Q&A Highlights

  • Deployable capital: $75–$100mm of equity expected from CRE maturities ($20–$25mm), roll-off of inefficient financings ($25–$30mm), and additional rotation (~$30–$50mm) .
  • Leverage and preferreds: Corporate leverage ratios are comfortable; acknowledged increased preferred cost after floating reset and plans to offset via financing improvements .
  • Asset allocation: Leaning more into HEL vs non-QM given first-mover advantages and large addressable market; continued value in non-QM .
  • Dividend coverage: Arc Home moved to neutral in Dec/Jan; rotation into ~20% ROE opportunities expected to support composite EAD above dividend over time .
  • Funding terms: Warehouses improving; securitization market terms more central to pipeline activation than warehouse alone .

Estimates Context

  • S&P Global consensus estimates (EPS and revenue) were unavailable at the time of this analysis due to data access limitations, so we cannot provide beat/miss comparisons or quantify estimate deltas. Values would ordinarily be retrieved from S&P Global; however, they were not available for this report.

Key Takeaways for Investors

  • Book value resilience and prudent leverage (economic 1.4x) underpin capital protection amid rate volatility; Q4 BV rose to $10.64 (+0.6%) with 2.4% economic ROE .
  • Rotation into HEL is a core driver of near-term earnings power; HEL yields/ROEs are compelling (HEL yield ~9.9%; ROE ~26.2%), supporting future EAD growth .
  • Arc Home’s profitability inflection (Dec/Jan) and expected neutral-to-positive EAD contribution reduce a key earnings headwind to dividend coverage in 2025 .
  • Continued programmatic securitization cadence and improved warehouse/funding terms support pipeline monetization and risk-managed leverage, with liquidity of $136.9mm .
  • Dividend policy is constructive: Q4 held at $0.19; increased to $0.20 in Q1 2025, reflecting confidence in earnings trajectory .
  • Without reliable Street estimates, trading setups hinge on narrative momentum: HEL growth, Arc Home profitability, and capital rotation are the key near-term catalysts.
  • Monitoring preferred cost impacts and the pace of rotation into higher-ROE buckets will indicate the sustainability of EAD coverage of the dividend .