AG Mortgage Funding Belief (MITT) Q2 2021 Earnings Name Transcript

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AG Mortgage Funding Belief (NYSE:MITT)
Q2 2021 Earnings Name
Jul 30, 2021, 8:30 a.m. ET

Contents:

  • Ready Remarks
  • Questions and Solutions
  • Name Members

Ready Remarks:

Operator

Welcome to AG Mortgage Funding Belief second-quarter 2021 earnings name. My identify is Sylvia, and I will be your operator for in the present day’s name. [Operator instructions] Please be aware that this convention is being recorded. I’ll now flip the decision over to Jenny Neslin.

Jenny, you could start.

Jenny NeslinBasic Counsel and Secretary

Thanks, Sylvia. Good morning, everybody, and welcome to the second-quarter 2021 earnings name for AG Mortgage Funding Belief. With me on the decision in the present day are David Roberts, our chairman and CEO; and T.J. Durkin, our president; Nick Smith, our chief funding officer; and Anthony Rossiello, our chief monetary officer.

Earlier than we start, please be aware that the knowledge mentioned in in the present day’s name might comprise forward-looking statements. Any forward-looking statements made throughout in the present day’s name are topic to sure dangers and uncertainties, that are outlined in our SEC filings, together with beneath the headings cautionary assertion relating to forward-looking statements, threat elements and administration’s dialogue and evaluation. The corporate’s precise outcomes might differ materially from these statements. We encourage you to learn the disclosure relating to forward-looking statements contained in our SEC filings, together with our most just lately filed Kind 10-Ok for the 12 months ended December 31, 2020, and our first-quarter 10-Q.

Besides as required by regulation, we aren’t obligated and don’t intend to replace or to evaluate or revise any forward-looking statements, whether or not on account of new data, future occasions or in any other case. Through the name in the present day, we’ll discuss with sure non-GAAP monetary measures. Please discuss with our SEC filings for reconciliations to essentially the most comparable GAAP measures. We may even reference the earnings presentation that was posted to our web site this morning.

To view the slide presentation, flip to our web site, www.agmit.com, and click on on the hyperlink for the second-quarter 2021 earnings presentation on the house web page within the investor presentation part. Once more, welcome to the decision, and thanks for becoming a member of us in the present day. With that, I might like to show the decision over to David.

David RobertsChairman and Chief Govt Officer

Thanks very a lot, Jenny, and good morning to all people. Since our final name, AG Mortgage Funding Belief has made nice progress in our transition to an organization centered on residential mortgage origination and securitization. On the purchase aspect of our enterprise, within the second quarter, we bought $446 million of non-QM loans from our affiliate, Arc Dwelling, in addition to third events. In June, we accomplished a non-QM securitization of $224 million, elevating non mark-to-market, non-recourse financing on these belongings.

Moreover, Arc Dwelling doubled its manufacturing of non-QM loans throughout this quarter to $376 million. Going ahead, we intend for our enterprise mannequin to be fueled primarily by non-QM and different residential origination adopted by securitizations on a quarterly or extra frequent foundation. On the promote aspect of our enterprise, we’ve bought all of our CMBS and sure RMBS positions all through the quarter and subsequent to quarter finish, supporting our continued transition. We even have good cause to imagine we’re progressing towards being paid off on our two remaining industrial actual property loans.

The CMBS gross sales have resulted in favorable beneficial properties throughout and subsequent to quarter finish, and potential payoffs of the industrial loans are anticipated to be favorable to our second-quarter remarks. These accomplished and anticipated gross sales present ample liquidity to fund continued growth of our go-forward enterprise mannequin. When it comes to our monetary outcomes for the quarter, our guide worth elevated by 3%, pushed by earnings of $0.70 per share. That is after accounting for the declared second-quarter dividend of $0.21 per share.

Each per share numbers are on a post-split foundation. Core earnings for the quarter have been roughly breakeven. Nevertheless, the definition we use for core earnings doesn’t seize necessary components of our go-forward enterprise technique. Particularly, core earnings don’t embody MITT share of the acquire that Arc Dwelling acknowledges when it sells loans to us, nor does it embody earnings that MITT acknowledges after we securitize the loans bought from each Arc Dwelling and third events.

As I discussed earlier than, the gross sales of economic belongings have and are anticipated to proceed to extend our liquidity. This comes on the short-term price of decreased internet curiosity margin. However extra importantly, in the long run, this liquidity will allow us to proceed rising our origination securitization technique, a technique, we imagine, presents a superior threat reward to AG Mortgage Funding Belief and its shareholders. For our dividend coverage going ahead, we will probably be wanting most intently at these earnings metrics that almost all precisely mirror the evolution of our enterprise technique.

And as we at all times do in our dividend coverage, we’ll contemplate not solely the present quarter however our outlook for earnings over the intermediate time period. Thanks very a lot. And with that, I’ll flip it over to T.J. Durkin.

T.J. DurkinPresident

Thanks, David, and good morning, everybody. To dig a bit deeper into the corporate’s exercise throughout the quarter, we have been lively in buying $446 million of non-QM loans throughout the quarter from 5 originators, together with our mortgage affiliate, Arc Dwelling, which originated $376 million throughout the quarter with MITT buying roughly 50% of that manufacturing. MITT contributed loans into two securitizations throughout the quarter, and we intend to be very disciplined with reference to the pacing of our securitizations to de-risk our warehouse strains. In different asset courses, we proceed to prudently eliminate non-core belongings and repositioning to MITT’s forward-looking technique by promoting CMBS and different RMBS securities the place we have no management or entry to the underlying complete loans.

Through the quarter, we additionally decreased our publicity to company MBS as we thought the premise had reached some extent the place additional tightening was unlikely. Subsequent to quarter-end, we bought the remaining CMBS positions and a slight acquire from Q2 marks, producing gross proceeds of $34 million, or roughly $15 million of fairness proceeds. And transferring on to our capital exercise throughout the quarter, we efficiently utilized our ATM program to lift $3.1 million of recent capital by issuing 226,634 shares at a median value of $14.21 per share adjusting for the cut up. We additionally accomplished our fifth trade with a most well-liked holder, exchanging 240,861 shares of most well-liked for 429,802 shares of frequent.

This brings our cumulative most well-liked to frequent trade notional at roughly $51 million of par worth. And lastly, we accomplished a one-for-three reverse inventory cut up, which went efficient July 22 with the last word aim of lowering volatility within the inventory value into the long run. Now, turning to slip six. Our funding portfolio grew barely over the quarter based mostly on the rotation I beforehand talked about out of company MBS and CMBS into non-QM complete loans.

Turning to slip seven. We made progress growing our allocation to non-QM by practically doubling the honest worth as a share of our funding portfolio from 19% to 37% this quarter. Additionally, given the power within the housing market, we’re seeing strong efficiency with regard to our land-related financing, and we anticipate lot takedowns to run this asset class off organically over the approaching 12 to 18 months whereas we earn a wholesome yield. On slide eight, we current our CMBS and industrial actual property publicity.

As beforehand talked about, subsequent to quarter finish, we exited the only asset, single borrower CMBS securities for gross proceeds of $33.7 million. Presently, MITT solely has two remaining industrial actual property loans left beneath our industrial designation, and we needed to supply some extra element in the present day. Industrial mortgage Ok is a primary lien building mortgage to a just lately accomplished and absolutely opened vacation spot resort in Occasions Sq.. The mortgage continued making curiosity funds throughout COVID, however its unique maturity date was due in Might of this 12 months.

MITT’s mortgage publicity is an element of a bigger consortium and is actively engaged with the lender group on working towards a productive decision within the close to time period. Nevertheless, we will not assure such decision will happen. We’re very snug with our foundation within the completed product. Industrial mortgage L is a totally drawn mortgage to a resort situated off the Magnificent Mile in Downtown Chicago.

Instantly following the preliminary COVID shutdown, we accomplished a modification with the sponsor in September of 2020, turning off the money coupon and letting the deferred curiosity accumulate. Nevertheless, we didn’t accrue curiosity earnings throughout this quarter — throughout this era. In trade for the curiosity deferral, we acquired a further $2.1 million of fairness. We stay in shut contact with the sponsor and have seen working metrics proceed to enhance into the bigger reopening.

On slide 9, you’ll be able to see we proceed to have the ability to create an company MBS guide with higher prepayment efficiency because of our measurement and selectiveness when buying specified swimming pools. A discount in companies was solely based mostly on relative worth, not based mostly on efficiency. We’ll proceed to make use of company MBS to soak up extra liquidity when at prudent valuations and to fulfill our ’40 act exams. And lastly, in June, we entered into an settlement to promote all our remaining extra MSRs, which we’ll settle throughout the third quarter.

With that, I will flip the decision over to Nick.

Nick SmithChief Funding Officer

Thanks, T.J., and good morning, everybody. Turning to slip 10. 12 months to this point, we have acquired over $650 million of non-QM loans with over $250 million acquired from our affiliate Arc Dwelling. In July, we elevated our uncommitted warehouse capability to $1.1 billion to accommodate future acquisitions whereas concurrently terming out roughly $224 million of non mark-to-market and non-recourse debt.

We additionally securitized roughly $171 million of non-QM loans alongside different Angelo Gordon funds inside an unconsolidated three way partnership. The remaining belongings held on this three way partnership are primarily retained curiosity from different prior — or from prior securitizations. The tables on this web page present the continued delinquency curing over the previous 12 months for our non-QM portfolio, together with collateral traits of our present borrower base. Subsequent to quarter finish, we additionally entered into agreements to accumulate GSE-eligible nonowner-occupied swimming pools.

In reference to these acquisitions, we added $500 million of uncommitted warehouse capability particularly for GSE-eligible loans. We anticipate these credit to proceed to supply engaging risk-adjusted returns and sit up for including further sellers and capability. Shifting on to slip 11. This web page offers a high-level abstract of the efficiency of our credit-sensitive mortgage positions over the previous 12 months.

As you’ll be able to see, this portfolio has benefited from robust housing tailwinds and traditionally low mortgage charges. Prepayment speeds have elevated considerably and roughly 75% of the debtors that acquired COVID-related help are both contractually present or making funds on a loss mitigation plan. Over the previous 12 months, roughly 30% of the portfolio has been liquidated by way of a mix of opportunistic mortgage gross sales, voluntary and involuntary prepayments. Turning to slip 12.

As talked about in earlier quarters, Arc Dwelling, our licensed mortgage origination affiliate, continues to profit from being one of many first originators to reenter the non-QM enterprise. The tables beneath clearly present the good thing about these early investments as Arc Dwelling’s non-QM volumes offset declines in company volumes and was in a position to mitigate margin compression throughout the quarter. Mark-to-market losses in Arc Dwelling’s MSR portfolio pushed by decrease nominal yields and a full flattening of the curve generated pre-tax internet losses of $3.7 million leading to $2.7 million of losses from MITT, which doesn’t embody $1.4 million of beneficial properties acknowledged by Arc Dwelling in reference to its mortgage mortgage gross sales to MITT. With that, I will flip it over to Anthony.

Anthony RossielloChief Monetary Officer

Thanks, Nick, and good morning. Earlier than offering an replace on the second quarter, I needed to reiterate that we accomplished a one-for-three reverse inventory cut up submit quarter finish, which turned efficient on July 22. This decreased our frequent shares excellent from roughly 48.5 million to 16.2 million. In consequence, you will notice that we adjusted all frequent share and per share metrics inside our press launch, earnings presentation and 10-Q on a retroactive foundation to mirror the reverse cut up for all durations introduced.

With that being stated, throughout the first quarter, we reported internet earnings obtainable to frequent stockholders of roughly $10.9 million or $0.70 per absolutely diluted share. Earnings throughout the quarter have been pushed by mark-to-market beneficial properties on residential and industrial belongings inside our portfolio, together with realized beneficial properties from the gross sales of sure RMBS and CMBS. These beneficial properties have been offset by mark-to-market losses inside our rate of interest swap portfolio pushed by the decline in rates of interest throughout the quarter, in addition to the beforehand talked about loss from our 45% fairness methodology funding in Arc Dwelling, ensuing from mark-to-market losses on its MSR portfolio. Working bills elevated barely from the primary quarter.

Nevertheless, this was attributable to transaction bills associated to the non-QM securitization that occurred in June. On slide 14, we offer a reconciliation of our guide worth per frequent share, which elevated by $0.41 throughout the quarter. This enhance displays our present quarter earnings offset by the popular and customary dividends declared throughout the second quarter. And you may additionally see the will increase associated to a most well-liked inventory trade transaction entered into throughout the quarter, in addition to internet proceeds raised from issuing frequent inventory by way of our ATM program approximating $3 million.

As mentioned on our earlier earnings name, we additionally disclosed adjusted guide worth per frequent share of $14.72, which is computed based mostly on complete fairness much less your complete liquidation desire of our most well-liked inventory. Turning to slip 15. We disclosed a reconciliation of GAAP internet earnings to core earnings for the second quarter, the place you will notice core earnings was breakeven for the quarter. One merchandise to notice is that core earnings doesn’t embody $1.4 million of beneficial properties Arc Dwelling acknowledged throughout the quarter on loans bought to us.

Lastly, we ended the quarter with complete liquidity of $71 million, which is inclusive of $64 million of money, and $7 million of unlevered company RMBS. This enchancment in liquidity from the primary quarter was a results of the beforehand talked about two non-QM securitizations transacted together with the sale proceeds on our MBS portfolio offset by the acquisition exercise to develop our non-QM portfolio. This concludes our ready remarks, and we’d now wish to open the decision for questions. Operator?

Questions & Solutions:

Operator

[Operator instructions] And our first query comes from Doug Harter from Credit score Suisse.

Doug HarterCredit score Suisse — Analyst

Thanks. Are you able to simply speak in regards to the degree of competitors type of within the QM market in the present day and the way that — how returns nonetheless look in the present day versus type of the early days the place Arc was one of many first movers?

Nick SmithChief Funding Officer

In fact. There definitely is extra competitors. That being stated, capability has returned to the market as form of company stuff has run off or refis have runoff, and we nonetheless see loads of alternative to purchase these belongings and others at engaging ranges. And we do not see that altering within the close to future.

Doug HarterCredit score Suisse — Analyst

Acquired it. After which may you simply evaluate the relative attractiveness of returns of type of non-QM versus nonowner-occupied loans and type of which is a extra engaging alternative in the present day?

Nick SmithChief Funding Officer

We see them pretty comparable. If something, within the non-QM aspect, lots of these positions are investor properties already and so they’re pretty equally priced. On the company aspect, we simply — it is a type of issues the place we anticipate that to be opportunistic and to be form of fascinating alternative for the approaching years, and we anticipate pricing to come back out and in, and we’ll clearly hold the relative worth between the 2 merchandise in thoughts.

Doug HarterCredit score Suisse — Analyst

Acquired it. After which only one type of accounting query. You talked about that there was the detrimental MSR mark at Arc Properties. What was the scale of that? And I suppose how would the profitability of Arc have seemed in the event you excluded the online MSR mark?

Anthony RossielloChief Monetary Officer

The web MSR mark was down about 4 million for the quarter. So if you consider pulling that out from earnings, you’d in all probability be round plus 2 million — 2 to three million throughout the quarter with out the MSR markdown.

Doug HarterCredit score Suisse — Analyst

Nice. After which so even in the event you stripped out the 1.4 million of beneficial properties, I suppose, the contribution to you’ll be, I suppose, nearer to barely constructive to nearer to breakeven versus the 2 level — or versus the loss you talked about?

Anthony RossielloChief Monetary Officer

That is right. One clarification of the mark-to-market loss that I discussed was pre our 45% share. In order that $4 million, we’d solely get 45% of that.

Doug HarterCredit score Suisse — Analyst

OK. That is smart. Thanks very a lot.

Operator

Subsequent query comes from Bose George from KBW.

Bose GeorgeKBW — Analyst

Good morning. Truly, simply first, only a clarification. You talked about that the mid-quarter earnings does not embody the gross sales of the Arc Properties to MITT. Are you able to simply remind me what from Arc is included within the core earnings?

Anthony RossielloChief Monetary Officer

Their working enterprise, which is their acquire on sale on the companies and the non-QM that aren’t bought to us are included in core.

Bose GeorgeKBW — Analyst

And is there — like, when it comes to what you purchase from them, is that share going to stay secure as a result of it looks as if if it will increase, you nearly type of harm your core earnings, proper, as a result of it will not rely?

Anthony RossielloChief Monetary Officer

Yeah, that is right. It has remained secure. We now have purchased roughly 50% of the manufacturing from non-QM from them, however your pondering is right.

Bose GeorgeKBW — Analyst

OK. Nice. After which in the event you simply — form of wanting ahead, I suppose what are type of the issues that have to occur to get to a extra no matter normalized core quantity? I imply, clearly, from an financial return, your returns are good, however I really feel like lots of people deal with core. So simply what’s the easiest way to type of take into consideration that?

David RobertsChairman and Chief Govt Officer

That is David Robert answering that. I believe the easiest way to consider that is that this quarter, and in all chance, the subsequent few quarters, we’re in a transition to the brand new enterprise mannequin or to the go ahead, I ought to say, enterprise mannequin. So it is a mixture of the 2. We have legacy belongings that we’re rotating into first money after which into our origination securitization enterprise, and that is going to take a while.

Bose GeorgeKBW — Analyst

OK. That is smart. Nice. Thanks.

Operator

Our subsequent query comes from Trevor Cranston from JMP Securities.

Trevor CranstonJMP Securities — Analyst

Hey. Thanks, good morning. I needed to make clear one thing on the industrial loans, and thanks for all the extra element on these. Within the ready feedback, I believe you made the remark that you just have been hopeful that there could possibly be a payoff on these within the close to time period.

I simply needed to make clear, was that remark associated to each of the loans? Or was that perhaps extra directed towards the development mortgage particularly?

T.J. DurkinPresident

Yeah. I imply, I’d say it is extra — it is clearly, we’re working with the borrower on the maturity subject on that mortgage particularly. I believe clearly on the opposite mortgage, we absolutely anticipate that popping out of the modification interval, it would stay contractually present, and so they may pursue different financing choices at that time.

Trevor CranstonJMP Securities — Analyst

OK. And might you remind us when that interval ends?

T.J. DurkinPresident

Yeah. It was a one-year modification from final September. So it would finish this September.

Trevor CranstonJMP Securities — Analyst

OK, bought it. After which, on the GSE non-owner — GSE-eligible non-owner-occupied loans, are you able to perhaps discuss that chance somewhat bit extra and assist us consider type of what the potential market measurement is there relative to the form of extra conventional non-QM alternative?

Nick SmithChief Funding Officer

Yeah, definitely. So traditionally, the availability of — or origination of investor properties through the GSEs or Fannie and Freddie has ranged from roughly 75 to 95 billion a 12 months. It isn’t had — it does not have practically form of the identical form of cyclical impacts. So if something, if this refi comes off, primarily, you are reducing your denominator of different nonowner acquired belongings.

In order that denominator goes decrease, that 7% cap that is been instituted within the newest PSPA or modification with Fannie and Freddie, the belief is that that can form of normalize and that extra will probably be larger. So if — clearly, if the quantity goes to 12%, it’s a must to resolve for that extra of seven%. That being stated, even previous to this, portion of GSE loans truly finest anticipate and supplied engaging returns for buyers like ourselves. And our expectation is as originators get extra acquainted with promoting to the personal markets away from Fannie and Freddie that this house may develop.

Now, precisely how a lot of form of the general market, we’ll in the end see, there’s lots of elements that go into it. However at the very least it is a respectable sized notional.

Trevor CranstonJMP Securities — Analyst

Acquired it. OK. That is very useful. After which last item, I believe you famous that you just guys had a brief TBA place within the second quarter.

Are you able to say how massive that place is and in the event you’re nonetheless carrying that into the third quarter?

Anthony RossielloChief Monetary Officer

The place measurement is 130 million notional on the TBA that went on at quarter-end.

Trevor CranstonJMP Securities — Analyst

All proper. Thanks.

Operator

Our subsequent query comes from Jason Stewart from JonesTrading.

Jason StewartJonesTrading — Analyst

Hey. Good morning. A few follow-ups. On industrial mortgage, is the mark at 6 30 at 86% of half reflective of the coupon or your confidence within the payoffs?

T.J. DurkinPresident

Properly, the mark — we use third-party distributors to assist us decide the mark. So it is 86% of par, which is a $51 million notional.

Jason StewartJonesTrading — Analyst

So is your pondering up to date that you’ll get a full par payoff at September 30 when the modification interval is over?

T.J. DurkinPresident

Properly, no. At September 30, their coupon will flip again on. And I believe we’ll see what pricing distributors, how they view this form of modifications which can be all beginning to expire, if you’ll, proper? We’re type of attending to that time within the calendar from a 12 months in the past. So I haven’t got any certainty into how they’re going to have a look at that, however we’d anticipate that based mostly on our conversations that the mortgage will begin money paying come This fall.

Jason StewartJonesTrading — Analyst

OK. So not essentially a payoff, however it will likely be turned again on. OK, bought it. After which in the event you can replace us on guide worth quarter to-date, in the event you do not thoughts.

Anthony RossielloChief Monetary Officer

Yeah. Guide worth quarter-to-date was up 3%, roughly, and that was primarily pushed by among the mark-to-market beneficial properties that we have been speaking about within the resi and industrial portfolio, in addition to among the realized beneficial properties by way of the gross sales that we talked about throughout the quarter.

David RobertsChairman and Chief Govt Officer

Was your — I am sorry, was your query about this third quarter that we’re in now? Or was it wanting again to the third quarter?

Jason StewartJonesTrading — Analyst

Yeah, David, to the most recent level obtainable.

David RobertsChairman and Chief Govt Officer

Yeah, we’re not — we’re simply going to stay with what we have reported.

Jason StewartJonesTrading — Analyst

OK. After which on the Arc MSR, after we have a look at that portfolio, are you able to give us any element when it comes to what SATO seems like or perhaps like what a plus 50 or 100 transfer within the charges market seems like for the valuation of that MSR?

T.J. DurkinPresident

Properly, simply to be clear, so we bought the third-party bought MSR. So the volatility going ahead will probably be decrease. And I’d say we’re not, at this level, actually reporting like SATO or shifts. The aim is actually to cut back that volatility in that enterprise and actually have them centered on the origination aspect.

Jason StewartJonesTrading — Analyst

OK. OK. Final one for me then. I suppose I perceive form of the rationale for the TBA form of given valuations within the house, however how does that match into the general hedging technique? And what’s your propensity to hold that place going ahead?

Nick SmithChief Funding Officer

That is Nick. So a part of the TBA quick is the contemplation that we’ll be promoting debt off of the just lately acquired GSE positions. And when you consider whenever you promote that debt, it is benchmarked versus TBA. So whenever you truly go promote that debt to 3rd events available in the market, your benchmark is TBA since you’re promoting loans backed by company collateral.

So it is actually only a hedge just like different hedges we placed on in opposition to non-QM loans.

T.J. DurkinPresident

So Jason, yeah, I imply principally the pricing conference for conventional non-QM debt is off of swaps. After which for AAA seniors on the agency-eligible, it will likely be benchmarked off TBAs.

Jason StewartJonesTrading — Analyst

OK. Thanks for taking the questions. Respect it.

Operator

Our subsequent query comes from Eric Hagen from BTIG.

Eric HagenBTIG — Analyst

Thanks. Good morning. Hope you guys are effectively. Inside the debt and fairness of associates, are you able to give a snapshot of what the stability sheet seems like there, together with the quantity of capital that is sitting at Arc Dwelling?

Anthony RossielloChief Monetary Officer

Certain. In that line merchandise, Arc House is roughly $51 million of fairness in that stability after which we even have roughly $30 million funding in a three way partnership the place we traditionally acquired non-QM. For those who recall, we’re now buying the non-QM instantly into the REIT. After which the opposite asset in there’s roughly $80 million of the land-related financing that T.J.

talked about earlier.

Eric HagenBTIG — Analyst

Acquired it. OK. That is useful. After which on the non-QM securitizations, how a lot leverage are you guys making use of to the retained tranches to get to the return profile that you just outlined within the deck?

Nick SmithChief Funding Officer

Someplace between one and a half to 2 and a half turns.

Eric HagenBTIG — Analyst

OK. And are these mark-to-market, refill?

Nick SmithChief Funding Officer

Appropriate.

Eric HagenBTIG — Analyst

Proper. All proper. Thanks.

Operator

Our subsequent query comes from Jim DeLisle from Seven Canyon [ph].

Unknown speaker

Good morning, of us. The MSI, I am presuming that Arc continues to hold some MSR on its self-generated portfolio.

Anthony RossielloChief Monetary Officer

Yeah, that is right.

Unknown speaker

And that may be within the $50 million or so line merchandise you simply referenced to Eric Hagen.

Anthony RossielloChief Monetary Officer

It is embedded inside — the way in which that we account for it’s we convey — we present the online fairness that we personal of Arc, we do not look by way of into Arc Dwelling’s stability sheet inside our financials, however the asset can be flowing up into that internet fairness.

Unknown speaker

Proper. Are you able to give us some understanding as to what share of that $50 million carrying worth of your holding of Arc is represented by the MSR of their self-generated portfolio?

T.J. DurkinPresident

Jim, we do not have that quantity in entrance of us, however we are able to look into that.

Unknown speaker

Nice. Thanks very a lot. That is my solely query.

Operator

We now have no additional questions presently. I will now flip the decision over to our host for closing remarks.

Jenny NeslinBasic Counsel and Secretary

Thanks, Sylvia. And thanks for — to everybody for becoming a member of the decision in the present day. Take pleasure in the remainder of your weekend.

Operator

[Operator signoff]

Period: 35 minutes

Name members:

Jenny NeslinBasic Counsel and Secretary

David RobertsChairman and Chief Govt Officer

T.J. DurkinPresident

Nick SmithChief Funding Officer

Anthony RossielloChief Monetary Officer

Doug HarterCredit score Suisse — Analyst

Bose GeorgeKBW — Analyst

Trevor CranstonJMP Securities — Analyst

Jason StewartJonesTrading — Analyst

Eric HagenBTIG — Analyst

Unknown speaker

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This text represents the opinion of the author, who might disagree with the “official” advice place of a Motley Idiot premium advisory service. We’re motley! Questioning an investing thesis — even one in all our personal — helps us all suppose critically about investing and make choices that assist us turn out to be smarter, happier, and richer.

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