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American Capital Mortgage Investment Corp's CEO Discusses Q2 2012 Results - Earnings Call Transcript

Importantly these offerings were executed in a manner that is supportive of shareholder value creation. We remain committed to exercising the same discipline going forward with respect to both equity offerings and the management of the business.

Looking ahead we feel really good about how MTG is positioned. The current landscape is one where interest rates were at rapid lows, the yield curve is considerably flatter and where many market participants starting to become more optimistic about the housing market.

Against this back drop of both our agency and non-agency assets should continue to provide attractive risk-adjusted returns across a range of different economic scenarios. Along these lines, performance quarter to date has been very strong. So we currently have a good tailwind behind book value at this point.

With that let's review the highlights for the quarter on slide 2. Net income which incorporates both realized and unrealized gains and losses on both assets and hedges was a $1.15 per share. Net spread income which excludes $0.35 of investment-related gains came in at $0.80 per share. The decline in net spread income during the quarter was a function of number of different factors including faster prepayment projections and higher swap costs, new purchases at lower yields and lower average leverage.

The bottom line though is the relative size of our mid-quarter equity raise does make quarter-over-quarter comparisons somewhat less instructive. Taxable net income totaled $0.89 on average shares of $28.1 million for the quarter. Now as you know we paid a dividend of $0.90 and since the dividend was paid on ending shares, our undistributed taxable income dropped to $0.11 as of June 30.

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