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American Capital Mortgage Investment Corp. Watches Earnings Swing From $27 Million Loss to $49 Million Gain

American Capital Mortgage Investment (NASDAQ: MTGE  ) reported it recognized net income of $0.95 per share, or $49 million in the first quarter of 2014, a dramatic shift from the loss of $0.56 per share, or $27 million seen in the first quarter of 2013.

"2013 was a challenging year for the mortgage market and we are pleased to see 2014 begin on a positive footing," noted the CFO of American Capital Mortgage Investment, John Erickson, in the announcement. "We believe that the actions we took during 2013, from repositioning our portfolio to shrinking our capital base through the repurchase of our common stock, helped drive our performance this quarter and positions us well for the remainder of 2014."

The biggest reason behind the gains at American Capital Mortgage Investment resulted from a significant swing in the value of its position in agency securities, which swung from a loss of $79 million in the first quarter of last year to a gain of $68 million this year. In total, the realized and unrealized valuation of its securities swung from a total loss of $64 million in the first quarter of last year to a gain of $27 million this year.

As a result of the boost from its income, American Capital Mortgage Investment was able to grow its book value from $21.47 at the end of 2013, to $21.78 in the most recent quarter, a gain of 1.4%.

In total, its investment portfolio of mortgage-backed securities stood at $6.7 billion at the end of the first quarter, ahead of the $5.9 billion portfolio it held in the fourth quarter of 2013. However, it still remained well below the portfolio of $11.8 billion in the first quarter of 2013.

"We remain focused on our core objective of delivering attractive risk adjusted returns to our shareholders over the long term and are optimistic about how our portfolio is positioned given current market conditions. To this point, the second quarter is off to a strong start, with both agency and non-agency assets performing well," added the President and CEO of American Capital Mortgage Investment, Gary Kain, in the announcement. "Additionally, we continue to broaden our investment capabilities with the integration of Residential Credit Solutions and have started acquiring MSR investments."

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Patrick Morris

After a few stints in banking and corporate finance, Patrick joined the Motley Fool as a writer covering the financial sector. He's scaled back his everyday writing a bit, but he's always happy to opine on the latest headline news surrounding Berkshire Hathaway, Warren Buffett and all things personal finance.

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9/2/2015 3:11 PM
MTGE $15.18 Down -0.04 -0.23%
American Capital M… CAPS Rating: ****