So since January of 2000 we’ve put up a 15.2% annual return, that’s assuming reinvestment of dividends. So we are pretty proud of that.So, this is what we call our asset allocation table and this is how we look at the company. So yes, we are invested in Agency and Non-Agency RMBS and so you could look across our entire company and look at our balance sheet and say it looks like you are about three-and-a half times levered. But the reality is we think it makes more sense to split out the two businesses solely for the purposes of equity allocation and leverage. So you can see the first column here is Agency MBS, and then you can see that debt to equity ratio is 6.87. So again, probably fairly typically on our space, six to seven or six to eight times leverage is what you typically see on Agencies. On the Non-Agency side, you can see that our debt to equity ratio is a little less than two times. So again, three-and-a half maybe is the whole company, but – and so that would be people to say, you are lower leveraged than most other REITS. We really think that you have to split out the two different components. But if you look across the bottom at the yield on average earning assets, and this is for the first quarter of this year, you can see that in Agencies, our average yield on interest earning assets was 3.15, which is actually pretty high and is extraordinarily high if you consider the fact that we don’t own any 30-year of fixed rate mortgages. The primary reason for that is that many of those are older securities that we bought some time ago that have generated higher yields. However, the next line that average cost of funds on our Agency you see is 1.71, that’s actually very high and the primary reason for that is again, we have a legacy book and we have a legacy book of interest rate flops and many of those interest rate flops that are at very high cost rates will be rolling off.
So somewhat uniquely we think that our cost of funds on our agency portfolio will decrease over the next twelve months or so, which is somewhat unusual on our space. Now, obviously at the same time, to the expense that we replace run off on the Agencies, we are not buying new securities that yield 3.15. So we think that while the assets that we add will obviously come on at lower yield, the funding cost somewhat uniquely will decrease for us.On the Non-Agency side, you can see that the yield in the first quarter on the Non-Agency portfolio was 6.92%, so close to 7% yield. Our average cost of funds there a little over 2% for a net interest rate spread of about 4.75%. So on the Agency side, we have a balanced portfolio of hybrid ARMs, it were approximately 75% hybrid ARMs and about 25%, 15 year fixed. Our overall premium exposure is quite low, our average amortized cost of our agency portfolio is 102.8%, and we believe that we have limited exposure to HARP 2.0, or HARP 3.0 or 4.0 or whatever we see there. Most of the hybrid securities that we own that are HARP eligible, so that’s 3 June of 2009 are interest only. So the underlying mortgages are not amortizing principal. So the purpose really of HARP is to push these forward into a 30-year fully amortizing mortgages, and because of those 30-year mortgages are fully amortizing, in most cases the payment is actually -- even though the rate is lower, the payment is actually higher than the payment that these borrowers are making now on these interest only loans. So again, that is our observation that the payment that the borrower makes is typically more important than the interest rate associated with the mortgage. Read the rest of this transcript for free on seekingalpha.com