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AG Mortgage Investment Trust, Inc. Reports Fourth Quarter Earnings

Stocks in this article: MITT

The Company had net realized gains of $15.5 million, or $0.66 per share, during the quarter ended December 31, 2012. Of this amount, $10.9 million, or $0.46 per share, was from sales of Agency RMBS and TBAs, $3.8 million, or $0.16 per share, was from the sales of credit investments and $0.8 million, or $0.04 per share, was from the transfer of securities previously accounted for as derivatives through linked transactions. The Company had year-to-date net realized gains of $29.5 million, or $1.62 per share. Of this amount, $20.3 million, or $1.11 per share, was from sales of Agency RMBS and TBAs, $6.1 million, or $0.34 per share, was from sales of credit investments, $3.4 million, or $0.19 per share was from the transfer of securities previously accounted for as derivatives through linked transactions and $(0.3) million, or $(0.02) per share, was from the net settlement of interest rate swaps.

The CPR for the Agency RMBS investment portfolio was 7.8% for the fourth quarter, and 8.4% for the month of December 2012. The 2012 CPR on the Agency RMBS investment portfolio was 6.4%. (5)

The weighted average cost basis of the Agency RMBS investment portfolio, excluding interest-only securities, was 105.1% as of December 31, 2012. The amortization of premiums (net of any accretion of discounts) on these securities for the fourth quarter of 2012 was $(6.5) million, or $(0.28) per share. The Company recorded year-to-date premium amortization of $(17.4) million, or $(0.95) per share. The unamortized net Agency RMBS premium as of December 31, 2012 was $171.4 million.

Premiums and discounts associated with purchases of the Company's securities are amortized or accreted into interest income over the estimated life of such securities, using the effective yield method. The Company recorded a zero cent retrospective adjustment as a result of the projected cash flows on its bonds. Since the cost basis of the Company's Agency RMBS securities, excluding interest-only securities, exceeds the underlying principal balance by 5.1% as of December 31, 2012, slower actual and projected prepayments can have a meaningful positive impact, while faster actual or projected prepayments can have a meaningful negative impact on the Company's asset yields.

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