Apollo Residential Mortgage, Inc. Reports First Quarter 2012 Financial Results
53% Increase in Operating Earnings per Share
(firmenpresse) - NEW YORK, NY -- (Marketwire) -- 05/08/12 -- Apollo Residential Mortgage, Inc. (the "Company") (NYSE: AMTG) today reported Operating Earnings (a non-GAAP financial measure as defined below) of $8.0 million, or $0.78 per share, for the three months ended March 31, 2012. Net income for the same period was $20.1 million or $1.95 per share. The difference between Operating Earnings and net income was due primarily to net realized gains recognized from the sale of residential mortgage-backed securities ("RMBS") as well as unrealized gains on the value of the Company's RMBS portfolio at quarter end. A reconciliation of Operating Earnings to net income is set forth in this press release.
Increased Operating Earnings per share by 53% on a sequential quarter basis;
Realized net gains of $6.8 million, or $0.66 per share, from the sale of $390.9 million of RMBS;
$1.3 billion RMBS portfolio at March 31, 2012 consisted of Agency RMBS with an estimated fair value of $1.2 billion and non-Agency RMBS with an estimated fair value of $179 million;
RMBS portfolio had a 2.9% blended net interest spread and a 20.5% levered asset yield(1) at March 31, 2012;
Fixed-Rate Agency RMBS portfolio experienced prepayments at a three month average constant prepayment rate ("CPR") of 5%; Including adjustable rate RMBS and Agency Derivatives, the Agency RMBS portfolio experienced prepayments at a three month average CPR of 6%;
Declared a $0.75 per share quarterly dividend for stockholders of record as of March 31, 2012; and
Book value per share at March 31, 2012 was $21.09 as compared to $19.92 at December 31, 2011, a 6% increase.
(1) Levered asset yield is calculated as net interest spread multiplied by 1 + the leverage (debt/equity) multiple.
"This was the first complete quarter the Company has been fully invested since our initial public offering and we believe our strong financial performance reflects the quality of our Agency and non-Agency asset selection, as well as the benefits of our financing strategy," said Stuart Rothstein, Chief Financial Officer of the Company. "Significantly, our book value per share increased 6% on a sequential basis over last quarter, primarily driven by realized as well as unrealized gains from our portfolio."
The following table sets forth additional detail regarding the Company's portfolio as of March 31, 2012:
(1) Includes unsettled purchases with an aggregate cost of $93 and estimated fair value of $102 at March 31, 2012.
(2) Amortized cost includes unrealized losses of $971 that have been reclassified pursuant to GAAP.
(3) Net weighted average coupon is presented net of servicing and other fees.
(4) Weighted average yield incorporates future prepayment and loss assumptions, as applicable.
(5) Agency Derivatives include interest only securities and inverse interest only securities.
The Company's fixed-rate Agency RMBS portfolio experienced prepayments at a three month average CPR of 5%. Including adjustable rate RMBS and Agency Derivatives, the Agency RMBS portfolio experienced a three month average CPR of 6%.
The Company's non-Agency RMBS investments consist primarily of seasoned, sub-prime securities. The weighted average cost basis of the Company's non-Agency RMBS portfolio was 68% of par as of March 31, 2012.
Commenting on the Company's portfolio, Michael Commaroto, the Company's Chief Executive Officer, said: "We believe we have constructed a well-diversified portfolio of both Agency and non-Agency securities. As we grow and manage our Agency portfolio, we continue to focus on securities we expect will provide us with the best protection against prepayments and with the least amount of premium over generic securities. Consistent with this emphasis, as spreads continued to tighten throughout the first quarter, we moved down in coupon by selling some of our Agency 5.0% and all of our Agency 5.5% RMBS and purchased Agency 4.0% and Agency 4.5% RMBS. In addition, we sold some of our hybrid adjustable rate RMBS. As a result of these sales, as well as additional sales in our non-Agency portfolio, we realized net gains of $6.8 million, or $0.66 per share in the first quarter."
Mr. Commaroto continued: "With respect to our non-Agency portfolio, we continue to invest in RMBS with significant credit enhancement in the form of structural subordination or perceived equity in the underlying property value. In the event credit enhancement is not available, we seek to invest in RMBS trading at a deep enough discount such that we believe we are adequately compensated for the moderate increase in risk profile."
At March 31, 2012, the Company had outstanding borrowings with 14 counterparties totaling $1.2 billion and had entered into master repurchase agreements with 18 counterparties representing over $4 billion of potential funding capacity.
The following table sets forth the Company's borrowings as of March 31, 2012:
(1) The effective cost of funds for the period presented is a non-GAAP financial measure. See the accompanying Reconciliation of non-GAAP Financial Measures.
The Company's book value per share at March 31, 2012 was $21.09, an increase of $1.17 or 6% from the per share book value of $19.92 at December 31, 2011.
The following table sets forth the factors causing the increase in the Company's book value per share from December 31, 2011 to book value per share at March 31, 2012:
On April 20, 2012, the Company completed a follow-on public offering of 13.9 million shares of common stock at a price of $18.00 per share, resulting in net proceeds to the Company of $249.5 million. The Company deployed the proceeds into Agency RMBS with an aggregate purchase price of approximately $1.4 billion and non-Agency RMBS with an aggregate purchase price of approximately $90.1 million as of April 30, 2012.
The Company will be hosting a conference call to discuss its financial results on Wednesday, May 9, 2012 at 10:00 a.m. Eastern Time. Members of the public who are interested in participating in the Company's first quarter earnings teleconference call should dial from the U.S., (877) 706-7548, or from outside the U.S., (706) 902-2150, shortly before 10:00 a.m. and reference the Apollo Residential Mortgage, Inc. Teleconference Call (number 71495775). Please note the teleconference call will be available for replay beginning at 12:00 p.m. on Wednesday, May 9, 2012, and ending at midnight on Wednesday, May 16, 2012. To access the replay, callers from the U.S. should dial (855) 859-2056 and callers from outside the U.S. should dial (404) 537-3406, and enter conference identification number 71495775.
The conference call will also be available on the Company's website at . To listen to a live broadcast, please go to the site at least 15 minutes prior to the scheduled start time in order to register, download and install any necessary audio software. A replay of the call will also be available for 30 days on the Company's website.
The Company provides a supplemental information package to offer more transparency into its financial results and make its reporting more informative and easier to follow. The supplemental package is available in the investor relations section of the Company's website at .
Apollo Residential Mortgage, Inc. (NYSE: AMTG) is a real estate investment trust that invests in, finances and manages residential mortgage-backed securities, residential mortgage loans and other residential mortgage assets throughout the United States. The Company is externally managed and advised by ARM Manager, LLC, a Delaware limited liability company and an indirect subsidiary of Apollo Global Management, LLC (NYSE: APO), a leading global alternative investment manager with $75 billion of assets under management at December 31, 2011.
Additional information can be found on the Company's website at .
Certain statements contained in this press release constitute forward-looking statements as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and such statements are intended to be covered by the safe harbor provided by the same. Forward-looking statements are subject to substantial risks and uncertainties, many of which are difficult to predict and are generally beyond the Company's control. These forward-looking statements include information about possible or assumed future results of the Company's business, financial condition, liquidity, results of operations, plans and objectives, including information about the ability of the Company to generate attractive returns while attempting to mitigate risk. When used in this release, the words "believe," "expect," "anticipate," "estimate," "plan," "continue," "intend," "should," "may" or similar expressions, are intended to identify forward-looking statements. Statements regarding the following subjects, among others, may be forward-looking: the return on equity; the yield on investments; the ability to borrow to finance assets; and risks associated with investing in real estate assets, including changes in business conditions and the general economy. For a further list and description of such risks and uncertainties, see the Company's Annual Report on Form 10-K for the year ended December 31, 2011 and other reports filed by the Company with the Securities and Exchange Commission. The forward-looking statements, and other risks, uncertainties and factors are based on the Company's beliefs, assumptions and expectations of its future performance, taking into account all information currently available to the Company. Forward-looking statements are not predictions of future events. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
This press release contains disclosures related to the Company's Operating Earnings, Operating Earnings per common share, and Effective Cost of Funds for the three months ended March 31, 2012, which constitutes non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. The Company's management believes these non-GAAP financial measures presented in this press release, when considered together with GAAP financial measures, provide information that is useful to investors in understanding period-over-period operating results. An analysis of any non-GAAP financial measures should be made in conjunction with results presented in accordance with GAAP.
Operating Earnings and Operating Earnings per common share presented exclude, as applicable: (i) realized and unrealized gains and losses recognized through earnings; (ii) non-cash equity compensation; (iii) one time events pursuant to changes in GAAP; and (iv) certain other non-cash charges. Effective Cost of Funds includes the net interest component related to the Company's swaps. While the Company has not elected hedge accounting for its swaps, such derivative instruments are viewed by the Company as an economic hedge against increases in future market interest rates.
The Company believes that the non-GAAP measures it presents provide investors with a useful measure to assess the performance of the Company's ongoing business and useful supplemental information to both management and investors in evaluating our financial results. A reconciliation of the GAAP items discussed above to their non-GAAP measures for the three months ended March 31, 2012, are as follows:
The following table reconciles Operating Earnings with net income for the three months ended March 31, 2012 and December 31, 2011 (dollar amounts in thousands except share and per share data):
The following table reconciles the Effective Cost of Funds with interest expense for the three months ended March 31, 2012 (dollar amounts in thousands):
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Datum: 08.05.2012 - 14:05 Uhr
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News-ID 1112067
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