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Introduction & Market Context
AG Mortgage Investment Trust Inc . (NYSE:MITT) presented its second quarter 2025 financial results on August 1, revealing a challenging quarter with negative earnings per share but an increased dividend. The company continues its strategic transformation into a pure-play residential mortgage REIT, focusing on non-agency residential loan securitizations.
The presentation, led by CEO T.J. Durkin, CIO Nicholas Smith, and CFO Anthony Rossiello, highlighted the company’s commitment to generating attractive risk-adjusted returns through a credit-first mindset despite current headwinds.
MITT’s stock closed at $7.56 on July 31, 2025, down 1.56% for the day, and is currently trading within its 52-week range of $5.625 to $7.95.
Quarterly Performance Highlights
AG Mortgage reported mixed financial results for Q2 2025, with a negative earnings per share of $(0.05), a significant decline from the $0.20 EPS reported in Q1 2025. Despite this downturn, the company increased its quarterly dividend by 5.0% to $0.21 per share.
The company’s book value per share decreased from $10.65 in Q1 2025 to $10.39 in Q2 2025, representing a 2.4% decline. Net interest income for the quarter was $18.5 million, while Earnings Available for Distribution (EAD) per share came in at $0.18, below the dividend payout.
As shown in the following financial position summary:
The investment portfolio stood at $7.3 billion at quarter-end, with total equity of $536.4 million and liquidity of $89.7 million. The economic leverage ratio remained conservative at 1.3x, while the investment portfolio yield was 6.0% against a cost of funds of 5.4%. However, the economic return on equity was negative at (0.5)%.
Strategic Initiatives
AG Mortgage continues to execute its focused mission of becoming a pure-play residential mortgage REIT. The company has been actively rotating capital away from legacy commercial investments, with approximately $30 million reallocated to target residential assets year-to-date.
The company’s presentation highlighted its successful securitization strategy, having securitized over $2 billion in unpaid principal balance (UPB) in 2025 year-to-date. This activity includes strong execution gains on Home Equity Loan and Agency-Eligible securitizations.
The company’s strategic approach is illustrated in the following slide:
A significant development is AG Mortgage’s acquisition of an additional 21.4% interest in Arc Home on August 1, 2025, bringing its total ownership to 44.6%. Management expects this transaction to be accretive to EAD in 2026, with minimal book value dilution of approximately 2%.
The company’s securitization activity remains robust, with the following growth trend:
Since 2021, AG Mortgage has acquired over $9 billion of residential mortgage loans and executed 25 securitizations. In Q2 2025 alone, the company securitized $331.4 million UPB of loans and purchased $444.9 million FMV of new loans. The current pipeline stands at $1.2 billion UPB, indicating continued growth potential.
Portfolio Composition
AG Mortgage’s investment portfolio remains predominantly focused on residential mortgages, with securitized loans representing the largest portion. The loan portfolio maintains strong credit metrics, with high FICO scores and low loan-to-value ratios.
The detailed breakdown of the loan portfolio shows:
Non-Agency loans comprise 77.6% of the equity invested, with an unpaid principal balance of $6.7 billion. These loans have an average FICO score of 765, a current LTV of 60%, and a 90+ days delinquency rate of just 1.4%. Home Equity Loans, representing a growing segment of the portfolio, have an unpaid principal balance of $301.7 million with an average FICO of 751 and zero delinquencies.
The company continues to reduce its exposure to legacy commercial investments, which now represent only 1.7% of the investment portfolio and 13.0% of total equity:
These commercial investments include hotel loans ($42.8 million fair value) that matured in May 2025 and retail property loans ($22.1 million fair value), with a weighted average unlevered yield of 16.8%.
Forward-Looking Statements
Looking ahead, AG Mortgage maintains a strong pipeline in Home Equity and Agency-Eligible Loans, with $1.2 billion in potential acquisitions. The company’s subsidiary, Arc Home, saw a 23% increase in lock volume from Q1 2025, reaching $757.4 million in Q2.
Management expects the increased ownership in Arc Home to enhance earnings potential as the subsidiary scales and expands its product offerings. The company also plans to replace high-cost legacy WMC financing in July 2025, which should improve overall financing costs.
Despite the negative earnings in Q2, the company’s increased dividend signals management’s confidence in future performance. However, investors should note the discrepancy between current earnings and dividend payouts, which may raise questions about sustainability if performance doesn’t improve in coming quarters.
The company’s Q2 performance represents a step back from Q1 2025, when it reported positive EPS of $0.20. The transition toward becoming a pure-play residential mortgage REIT continues, but the negative economic ROE of (0.5)% highlights ongoing challenges in generating the attractive risk-adjusted returns the company aims to deliver.
Full presentation:
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