Apollo Residential Mortgage, Inc. Reports Third Quarter 2013 Financial Results
(firmenpresse) - NEW YORK, NY -- (Marketwired) -- 11/06/13 -- Apollo Residential Mortgage, Inc. (the "Company") (NYSE: AMTG) today reported financial results for the three and nine month periods ended September 30, 2013.
Reported operating earnings(1) of $11.4 million, or $0.36 per common share, for the quarter ended September 30, 2013. Reported net income allocable to common stock and participating securities of $8.2 million, or $0.25 per common share, for the quarter ended September 30, 2013;
$3.4 billion RMBS portfolio at September 30, 2013 consisted of Agency RMBS with an estimated fair value of $2.3 billion and non-Agency RMBS with an estimated fair value of $1.1 billion;
RMBS and securitized mortgage loan portfolio had a 2.6% effective net interest rate spread and a 14.0% effective levered asset yield(1) at September 30, 2013;
Quarter end leverage multiple of 3.8x at September 30, 2013;
Declared a $0.40 per common share quarterly dividend;
Book value per common share at September 30, 2013 was $18.50; and
Subsequent to quarter end, the Board of Directors authorized the repurchase of up to $50 million of the Company's outstanding shares of common stock.
(1) Reflects a non-GAAP" financial measure (i.e., a measure that is not calculated in accordance with U.S. Generally Accepted Accounting Principles. See "Reconciliations of Non-GAAP Financial Measures" ) in this press release.
"Given the ongoing volatility in the fixed income markets during the third quarter, AMTG continued to rebalance the Company's portfolio," said Michael Commaroto, Chief Executive Officer of the Company. "Throughout the quarter, we opportunistically deployed capital into non-Agency RMBS and continued to reduce leverage. As a result, at quarter end, our portfolio equity was allocated 43% to non-Agency RMBS and securitized mortgage loans, 47% to Agency RMBS and 10% to cash and our leverage ratio was 3.8x. Our operating earnings this quarter reflect the time lag associated with reinvesting the proceeds from the sale of our Agency RMBS into non-Agency RMBS and therefore, we believe they are not indicative of the potential earnings power of our investment portfolio with our current equity allocation. As interest rates continue to fluctuate, AMTG will remain focused on expanding our footprint in the non-Agency market and exploring additional credit-related strategies."
The Company reported operating earnings of $11.4 million, or $0.36 per common share, for the three months ended September 30, 2013, as compared to operating earnings of $16.2 million, or $0.67 per common share, for the three months ended September 30, 2012. Net income allocable to common stock and participating securities for the three months ended September 30, 2013 was $8.2 million, or $0.25 per common share, as compared to net income allocable to common stock and participating securities of $70.4 million, or $2.91 per common share for the three months ended September 30, 2012.
For the nine months ended September 30, 2013, the Company reported operating earnings of $49.4 million, or $1.65 per common share, as compared to operating earnings of $38.1 million, or $2.05 per common share, for the nine months ended September 30, 2012. Net loss allocable to common stock and participating securities for the nine months ended September 30, 2013 was $66.1 million, or $2.22 per common share, as compared to net income allocable to common stock and participating securities of $116.9 million, or $6.28 per common share, for the nine months ended September 30, 2012.
The difference between operating earnings and net income/(loss) allocable to common stockholders, its closest GAAP measure, primarily reflects that operating earnings excludes the following: (i) net unrealized gains/losses on investments; (ii) net changes in the fair value of derivative instruments and net realized gains/losses on the termination of derivative instruments; and (iii) net realized gains/losses from sales of investments. Reconciliations of operating earnings to net income/(loss) allocable to common stockholders for the three and nine months ended September 30, 2013 and September 30, 2012, respectively, are set forth in Tables 6 and 7 of this press release.
The following table sets forth additional detail regarding the Company's investments as of September 30, 2013:
Note: The Company applies trade-date accounting. Included in the above table are unsettled purchases with an aggregate cost of $91 at September 30, 2013, with an estimated fair value of $92 at such date.
(1) A portion of the purchase discount on non-Agency RMBS is not expected to be recognized as interest income, and is instead viewed as a credit discount. At September 30, 2013, our non-Agency RMBS had gross discounts of $300,964 which included credit discounts of $123,681 and other-than-temporary impairments ("OTTI") of $5,554.
(2) Amortized cost is reduced by unrealized losses that are classified as OTTI. The Company recognized OTTI of $2,747 and $7,699 for the three and nine months ended September 30, 2013, respectively.
(3) Weighted average yield at the date presented incorporates estimates for future prepayment assumptions on all RMBS and loss assumptions on non-Agency RMBS.
(4) Agency IOs and Agency IIOs have no principal balance and bear interest based on a notional balance. The notional balance is used solely to determine interest distributions on interest-only class of securities. At September 30, 2013, the Company's Agency IOs had a notional balance of $429,204 and the Company's Agency IIOs had a notional balance of $155,676.
As of September 30, 2013, the average cost basis of the Company's Agency RMBS portfolio, excluding Agency IOs and Agency IIOs, was 108.0% of par value and the average cost basis of the Company's non-Agency RMBS portfolio was 77.8% of par value.
The Agency RMBS pass-through securities portfolio experienced prepayments at an average one month constant prepayment rate ("CPR") over the quarter ended September 30, 2013 of 6.3%. Including Agency IOs and Agency IIOs securities, the Agency RMBS portfolio experienced prepayments at an average one month CPR of 6.7% over the quarter ended September 30, 2013.
At September 30, 2013, the Company had master repurchase agreements with 23 counterparties and had outstanding borrowings with 17 counterparties totaling $2.9 billion.
The following table sets forth the Company's borrowings at September 30, 2013:
(1) Includes $27,014 of repurchase borrowings collateralized by non-Agency RMBS acquired in connection with the Company's securitization transaction from a consolidated variable interest entity ("VIE") at September 30, 2013 that is eliminated from our consolidated balance sheet.
(2) Securitized debt, which represents non-recourse senior securities sold to third parties in connection with a securitization transaction, has a final contractual maturity of May 2047. Weighted average remaining maturity represents the estimated final maturity of the security based on the final projected repayment of principal. The actual maturity of the securitized debt may differ significantly from this estimate given that actual interest collections, mortgage prepayments and/or losses on liquidation of mortgages may differ significantly from those expected.
The Company's derivative instruments consisted of the following at September 30, 2013:
The following table summarizes the average fixed-pay rate and average maturity for the Company's Swaps at September 30, 2013:
At September 30, 2013, the Company's Swaptions had an aggregate notional amount of $1.2 billion. The following table presents information about the Company's Swaptions at September 30, 2013:
The Company's book value per common share at September 30, 2013 was $18.50 as compared to book value per common share of $18.63 at June 30, 2013.
Subsequent to quarter end, the Board of Directors authorized the repurchase of up to $50 million of the Company's outstanding shares of common stock.
Purchases made pursuant to the stock repurchase program will be made in either the open market or in privately negotiated transactions on a periodic basis as permitted by applicable securities laws. The timing, pricing and manner of any purchases will be determined by the Company in light of market conditions, available investment alternatives and capital availability.
The Company will be hosting a conference call to discuss its financial results on Thursday, November 7, 2013 at 9:00 a.m. Eastern Time. Members of the public who are interested in participating in the Company's third quarter earnings teleconference call should dial from the U.S., (877) 445-0818, or from outside the U.S., (724) 498-0351, shortly before 9:00 a.m. and reference the Apollo Residential Mortgage, Inc. Teleconference Call (number 79625205). Please note the teleconference call will be available for replay beginning at 12:00 p.m. on Thursday, November 7, 2013, and ending at midnight on Thursday, November 14, 2013. 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 79625205.
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 is a real estate investment trust that invests in and manages residential mortgage-backed securities 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 approximately $113 billion of assets under management at June 30, 2013.
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, 2012 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, except as required by law.
Included in this press release are disclosures about the Company's "operating earnings," "operating earnings per common share," "effective cost of funds," "effective interest expense," "effective levered asset yield" and "effective net interest rate spread" which measures constitute non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. The Company believes that the non-GAAP financial measures presented, when considered together with GAAP financial measures, provide information that is useful to investors in understanding the Company's 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) certain 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. Operating earnings is a non-GAAP financial measure that is used by the Company to assess its business results.
To determine the effective cost of funds, interest expense is adjusted to include the net interest component related to 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. Therefore, the Company presents the effective cost of funds to reflect interest expense as adjusted to include a portion of the realized loss (i.e., the interest expense component) for Swaps.
The Company believes that the presentation of effective cost of funds is useful for investors as it presents the Company's borrowing costs as viewed by management. The Company believes that the non-GAAP measures presented provide investors, and other readers of this press release with meaningful information to assess the performance of the Company's ongoing business and believe it is useful supplemental information for both management and investors in evaluating the Company's financial results. The primary limitation associated with operating earnings as a measure of the Company's financial performance over any period is that such measure excludes, except for the net interest component of Swaps, the effects of net realized and unrealized gains and losses from investments and realized and unrealized gains and losses from derivative instruments. In addition, the Company's presentation of operating earnings may not be comparable to similarly-titled measures of other companies, who may use different definitions or calculations for such term. As a result, operating earnings should not be considered as a substitute for GAAP net income as a measure of the Company's financial performance or the Company's liquidity under GAAP.
A reconciliation of the GAAP items discussed above to their non-GAAP measures for the three and nine months ended September 30, 2013 and the three and nine months ended September 30, 2012, are presented in the tables below.
The following table reconciles net income/(loss) allocable to common stockholders with operating earnings for the three months ended September 30, 2013 and September 30, 2012, respectively:
The following table reconciles net income/(loss) allocable to common stockholders with operating earnings for the nine months ended September 30, 2013 and September 30, 2012, respectively:
The following table reconciles the effective cost of funds with interest expense for the three and nine months ended September 30, 2013:
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Datum: 06.11.2013 - 15:30 Uhr
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