Release Date: January 30, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Can you provide an update on how the book has performed so far this quarter? A: William Greenberg, President and CEO, responded that it has been a reasonably quiet quarter, with an estimated total return up between 1.5% and 2% as of the previous night.
Q: How does the lower leverage level impact your view on earnings power, and what would be the normalized range for earnings? A: Nicholas Letic, Vice President and CIO, explained that the debt to economic ratio is just one measure of return potential. The central tendency and range of returns remain supportive of the dividend, similar to prior quarters. The leverage affects components of debt to equity, but other risks like mortgage spread risk have increased to a more normal range.
Q: Does your earnings power outlook reflect the cost of volatility? A: William Greenberg clarified that the earnings power outlook is based on static spreads and does not reflect the cost of volatility.
Q: Could you expand on your outlook for agency MBS spreads this year and the allocation to MSRs versus MBS? A: William Greenberg noted that mortgage spreads have shown a more controlled response since November, with a more predictable Fed path. The net supply and demand for mortgages seem balanced, and the RV of mortgages looks favorable. The MSR allocation is expected to remain steady, with no material changes anticipated.
Q: What are the main differences between the EAD and the static return range provided on slide 14? A: William Greenberg explained that the return potential on slide 14 is based on a mark-to-market basis at quarter-end, reflecting the static yields to the forward curve. EAD is asynchronous, reflecting purchase prices of assets bought long ago, creating timing differences in portfolio management.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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