Javelin Mortgage Investment Corp. Reports Q4 2015 ROE of 11.6% From Core Income of $3.5 Million or $0.29 Per Common Share, Ne...
10 Marzo 2016 - 1:46AM
JAVELIN Mortgage Investment Corp. (NYSE:JMI) (“JAVELIN” or the
“Company”) today announced financial results for the quarter ended
December 31, 2015.
Q4 2015 Highlights and Financial
Information
- Q4 2015 Key Results:
- $3.5 million ($0.29 per Common share) Core Income including
drop income (as defined below), which represents an annualized
return of 11.6% based on stockholders’ equity at the beginning
of the quarter.
- $0.27 per Common share dividends for Q4 at the rate of $0.09
per month
- $5.2 million ($0.44 per Common share) net income under
Generally Accepted Accounting Principles (“GAAP”)
- 3.46% average yield on assets and 2.11% average net
interest margin
- 5.23% annualized average principal repayment rate (“CPR”)
on Agency Securities
- 11,913,000 weighted average Common shares
- At December 31, 2015:
- $112.4 million ($9.47 per Common share) stockholders’
equity
- 6.69 to 1 “leverage” (debt to stockholders’ equity)
- $25.0 million of liquidity in cash and unpledged securities
(22.23% of stockholder’s equity)
- 11,866,691 Common shares outstanding
- Additional updated information on the Company’s investment,
financing and hedge positions can be found in JAVELIN’s most recent
“Company Update.” JAVELIN posts unaudited and unreviewed Company
Updates each month on www.javelinreit.com.
Q4 2015 Results
Core Income, Including Drop IncomeCore Income,
including drop income, for the quarter ended December 31,
2015, was approximately $3.5 million. “Core Income” represents a
non-GAAP measure and is defined as net income excluding impairment
losses, gains or losses on sales of securities and early
termination of derivatives, unrealized gains or losses on
derivatives and certain non-recurring expenses, inclusive of drop
income. Core Income may differ from GAAP net income,
which includes the unrealized gains or losses of the Company’s
derivative instruments and the gains or losses on Agency Securities
and Non-Agency Securities.
The Company may enter into to be announced (“TBA”) dollar roll
transactions that generate “drop income.” Drop income is defined as
the difference in price between two TBA contracts with the same
terms but different settlement dates. Drop income is the economic
equivalent of the assumed net interest spread (yield less financing
costs) and is calculated as the difference between the spot price
for regular settlement and the forward settlement price on trade
date.
GAAP Net IncomeFor the purposes
of computing GAAP net income, the change in fair value of the
Company’s derivatives is reflected in current period net income,
while the change in fair value of its Agency Securities is
reflected in its statement of comprehensive income (loss). GAAP net
income for Q4 2015 was approximately $5.2 million.
DividendsThe Company paid
dividends of $0.09 per Common share of record for each month of Q4
2015, resulting in payments of approximately $3.2 million. The
Company had estimated ordinary taxable REIT income available to pay
dividends of $2.8 million in Q4 2015. Our board of directors
determines our Common share dividend rate based upon our REIT
requirements and other relevant considerations. Dividends in excess
of taxable REIT income for the year (including any amounts carried
forward from prior years) will generally be treated as non-taxable
return of capital to Common stockholders. Approximately 19.5% of
Common dividends paid in 2015 represented a non-taxable return of
capital.
PortfolioAs of
December 31, 2015, the Company’s Agency Securities portfolio
consisted of fixed rate Fannie Mae and Freddie Mac mortgage
securities valued at approximately $0.6 billion on a trade date
basis. The Company’s Non-Agency Securities portfolio was valued at
$0.2 billion at quarter end. During Q4 2015, the annualized yield
on average assets was 3.46%, and the annualized cost of funds on
average liabilities (including realized cost of hedges) was 1.35%,
resulting in a net interest margin of 2.11%.
Portfolio Financing, Leverage and
Interest Rate HedgesAs of December 31, 2015, the
Company financed its portfolio with approximately $0.8 billion
of borrowings under repurchase agreements. The Company’s
leverage ratio was 6.69 to 1 (7.06 to 1, including TBA Agency
Securities purchased forward). As of December 31, 2015, the
Company’s liquidity totaled $25.0 million, consisting of $16.0
million of cash plus approximately $9.0 million of unpledged
Securities (including Securities received as collateral). As of
December 31, 2015, the Company’s repurchase Agreements had a
weighted average maturity of approximately 24 days.
The Company had a hedge ratio of 76.0% based on
a notional amount of $571.3 million (of which $300.0 million become
effective within six months) of various maturities of interest rate
swap contracts with a weighted average swap rate of 1.64%.
Regulation G ReconciliationCore
Income represents a non-GAAP measure and is defined as net income
excluding impairment losses, gains or losses on sales of securities
and early termination of derivatives, unrealized gains or losses on
derivatives and U.S. Treasury Securities and certain other
non-recurring expenses, inclusive of drop income. The Company
believes that Core Income is useful to investors because it is
related to the amount of dividends the Company may distribute.
However, because Core Income is an incomplete measure of the
Company’s financial performance and involves differences from net
income computed in accordance with GAAP, Core Income should be
considered as supplementary to, and not as a substitute for, the
Company’s net income computed in accordance with GAAP as a measure
of the Company’s financial performance.
The following table reconciles the Company’s
results from operations to Core Income for the quarter ended
December 31, 2015:
|
Core Income (in
thousands) |
GAAP net income |
$ |
5,195 |
|
Book to tax
differences: |
|
Changes in interest
rate contracts |
(4,095 |
) |
Non-Agency
Securities |
2,089 |
|
Loss on sale of
Securities |
(41 |
) |
TBA drop income |
321 |
|
Other |
1 |
|
Total |
$ |
3,470 |
|
Common StockAs of
December 31, 2015, there were 11,866,691 Common shares
outstanding.
JAVELIN Mortgage Investment
Corp.JAVELIN is a Maryland corporation that invests
primarily in fixed rate Agency and fixed rate and hybrid adjustable
rate non-Agency residential mortgage-backed securities. JAVELIN is
externally managed and advised by ARMOUR Capital Management LP, an
investment advisor registered with the Securities and Exchange
Commission (“SEC”). JAVELIN Mortgage Investment Corp. has elected
to be taxed as a REIT under the Code for U.S. Federal income tax
purposes.
Safe HarborThis press release
includes “forward-looking statements” within the meaning of the
safe harbor provisions of the United States Private Securities
Litigation Reform Act of 1995. Actual results may differ from
expectations, estimates and projections and, consequently, you
should not rely on these forward-looking statements as predictions
of future events. Words such as “expect,” “estimate,” “project,”
“budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,”
“will,” “could,” “should,” “believes,” “predicts,” “potential,”
“continue,” and similar expressions are intended to identify such
forward-looking statements. These forward-looking statements
involve significant risks and uncertainties that could cause the
actual results to differ materially from the expected results.
Additional information concerning these and other risk factors are
contained in the Company’s most recent filings with the SEC. All
subsequent written and oral forward-looking statements concerning
the Company are expressly qualified in their entirety by the
cautionary statements above. The Company cautions readers not to
place undue reliance upon any forward-looking statements, which
speak only as of the date made. The Company does not undertake or
accept any obligation or undertaking to release publicly any
updates or revisions to any forward-looking statements to reflect
any change in their expectations or any change in events,
conditions or circumstances on which any such statement is based,
except as required by law.
Additional Information and Where to Find
ItInvestors, security holders and other interested persons
may find additional information regarding the Company at the SEC's
website at www.sec.gov, or the Company website
www.javelinreit.com, or by directing requests to: JAVELIN
Mortgage Investment Corp., 3001 Ocean Drive, Suite 201, Vero Beach,
Florida 32963, Attention: Investor Relations.
CONTACT: investors@javelinreit.com
James R. Mountain
Chief Financial Officer
JAVELIN Mortgage Investment Corp.
(772) 617-4340
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