TPG Mortgage Investment Trust, Inc.

continued strength in our earnings available for distribution, or EAD. This performance was supported by earnings growth at our home, despite a volatile quarter, which resulted in our EAD once again exceeding our increased dividend level. Reflecting this ongoing improvement in earnings, we announced our fourth dividend increase since the beginning of 2025, raising our quarterly dividend to $0.24 per share. Moving to our financial results, Book value decreased 4.9% to $9.97 per share, resulting in a negative 2.6% economic return when considering our $0.24 dividend. We reported a gap net loss of approximately $8.7 million, or $0.27 per share, entirely driven by net unrealized losses on our investment portfolio, which were partially offset by gains on our hedge portfolio and investment in our home. Overall, these unrealized losses reflect the March macroeconomic volatility, which drove rates higher and caused spreads to widen. Despite these unrealized losses, which have begun to retrace in April, the company's operating performance remains strong, delivering durable net interest income, earnings growth at our comb, and a controlled expense load, all of which supported our increased dividend and demonstrate the embedded value of our strategy. Specifically, EAD of 26 cents per share increased from the prior quarter and fully covered our 24-cent dividend. Net interest income, including hedge income, was 67 cents, which exceeded 45 cents of operating expenses and preferred dividends to generate net earnings of 22 cents per share. Our column contributed an additional 4 cents to EAD, driven by continued strength in origination volumes and improved gain-on-sale margins. While the performance of our investment portfolio and ARC Home delivered a double-digit ROE on book value, we see meaningful upside as we optimize the balance sheet. Specifically, the deployment of liquidity from unlevered home equity loans and the resolution of non-accrual commercial loans represent clear catalysts to deploy capital into higher-yielding residential investments, further enhancing shareholder returns. Lastly, we ended the quarter with approximately $100 million consisting of $49 million in cash, $50 million of committed financing on unlevered home equity loans, and $1 million of unencumbered agency RMBS. This concludes our prepared remarks, and we now like to open the call for questions. Operator?

Thank you. At this time, if you would like to ask a question, please press star 1 on your telephone keypad now. To withdraw yourself from the queue, you may press star 2. Again, to ask a question, that is star 1 on your telephone keypad. One moment while we queue. We'll take our first question from Doug Harder with BTIG. Your line is open. Please go ahead.

Thanks. Can you talk about your thoughts on continuing to increase the dividend versus some ability to retain some capital, just given your commentary that you expect further upside in earnings power?

T.J. Yeah, Doug. It's T.J. Good to hear from you. I think we're running fairly conservative economic leverage. So in terms of having excess liquidity for margin call risk, I think we've done a good job of alleviating a cash drag. And then as we think about growing earnings power, continuing to rotate the equity out of the CRE loans, which I'm happy to talk about, and then other capital rotation from potentially calling season deals, et cetera. So I mean, I think we see a pretty linear path of how to rotate capital without needing to reserve a ton for other purposes.

Brian, it's just as you think about that increased earnings power, how do you think about how much of that kind of gets passed through the dividend versus how much of that could be retained to support future growth?

I mean, I think we're looking to continue to pass that through to our shareholders in the form of the dividend and then satisfy the retest.

Great. Appreciate that. And TJ, if I could take you up on your offer to kind of talk a little bit more about the CRE loans and kind of how we should think about the timing of resolution there and freeing up that capital.

Yes, I think big picture, we're making good progress on the remaining assets. It's taking longer than any of us would like. I think this is evidence. The progress is evidence. We've been able to extend our facility with our lender out six months. So we have clean financing through September this year. From an asset perspective, I would really sort of break it up into three distinct situations. The retail asset sale process is moving along nicely. We would hope to have much more detailed information to share with you on next quarter's call. And then two of the four hotel assets have a signed LOI, and we're progressing accordingly, albeit behind probably where the retail asset process is. And then I think the last two hotel assets are going to be behind that and take a bit longer. And we're working, you know, through those locations and hope to have them sort of wrapped up by the end of this year, but it may drift into 27 for the last two.

Great. Appreciate it. Thank you.

Thank you. We'll move next to Marissa Lobo with UBS. Your line is open.

Thank you. Good morning. Could you give us some more information on the flexibility exercise call ride, how much of that time required remains to be executed? You know, how do you feel about the current rate? Yes.

Thanks for the question, Marisa. So, as we've stated in previous prepared remarks and Q&A historically, A lot of that has to do with outright levels of spreads and interest rates. Obviously, over the last quarter, we saw retracement to higher rates, higher volatility, higher spreads. Into the beginning of this quarter, obviously, we've gotten a good amount of that back, maybe not completely in the front end of the curve. All these elements play into what the economics on calling transactions. We're not going to hold out for every last penny. but we'll look for a stabilization of the market, which is happening pretty quickly. So, you know, hopefully we have good news in the coming quarters on actually executing on them and then sort of the path forward from there. If that answers your question.

That does. Thank you. And could you also expand on the opportunity in agency-eligible loans? You know, what is your outlook there for volume and aggregation in your terms?

On the agency eligible side, we've done a decent amount of this issuance in previous years, previous quarters. A lot of our focus has really been more on higher returning opportunities in the non-agency and home equity space. There's still compelling opportunities, although less compelling in our view. You know, there have been new market participants that have entered that space with lower cost of capital, which maybe makes it a little bit less interesting to ourselves. That being said, I do expect to see others continue to grow and participate in that marketplace.

Thank you. Appreciate the call.

Thank you. We'll move on now to Crispin Love with Piper Sandler. Your line is now open.

Crispin Love Thank you. Good morning. I have a follow-up on earnings power and ROEs. You're generating, I think, roughly 10 percent core ROEs today. I'm curious where you think that could trend, what ROE targets are attainable, and over what timeframe, as R continues to be a larger contributor to EAD, and as you rotate capital into higher, returning REZI investments as the WMC investments mature?

Nick Wigginton Yeah. So, if you – thanks for the question, and thanks for dialing in. So, this is Nick. When you think about, you know, growing the ROE of the company, it's going to be derived from three primary sources, which we've, you know, said over previous quarters. Really, you know, the returning of equity capital in the commercial book, growing ROEs at our home, and then the calls. All of that gives us line of sight into sort of achieving the ROEs that are being achieved across the broader business, as we just have disclosed, and the earning presentation um and and that's really the path path towards is really just taking those pockets um and redeploying capital obviously in our home side that's less of a redeployment story um and but we believe that there's strong momentum there and we expect we expect that to continue

Okay, great. And then just on ARC Home, can you discuss a little bit what you've seen so far in the second quarter, just high-level trends, volumes, mortgage rates peaked around quarter end, have improved a bit since then. So getting into a little bit of a seasonally more conducive environment for mortgage, but still a little bit of a challenging factor. So just curious where you stand right now on ARC Home and trends you're seeing.

Yeah, normalizing for the seasonality, maybe slightly below budget, but it's still early. You know, we're still seeing, you know, gains. So maybe that just speaks to the ambition of the budget, of our ambition of our budget there. So there has been a lot of healing. The gain on sales have been healthy. And the expectation is that the budgeted volumes will normalize and achieve what we originally penciled out. So, you know, early signs are good for Q2. And as you alluded to, obviously, you know, seasonally, this is an important part of the year for them.

Great. I appreciate it. Thank you for taking my question.

Thank you. We'll move next to Bose George with KBW. Your line is open.

Thank you. Good morning. This is Frankie Labete on for Bose. I just wanted to start with a follow-up on the commercial discussion. Do you think we could expect additional marks on some of the sales? I know you said they're continuing to be ongoing, but any color there would be great.

Yeah, so I think as we continue to go through the sales process, get more information from the market, I think we're generally reflecting that in the current valuation. So barring surprises, I would say the answer is no.

Okay, great. Then pivoting to the home equity, you know, you scaled it nicely for the past few quarters. Trying to think about how large can that get as a percentage of your portfolio? And then, you know, you know 29% ROEs, Is that – are those returns still available on new production today? And where's the best risk-adjusted returns in that market today? Thanks.

Yeah. Thanks, Frank. So, this market has expanded pretty, you know, with a good pace, call it 25 percent a year, really in earnest since, call it, 23. We expect that pace to continue or to accelerate. We expect it to be – the largest non-agency sort of, or securitized product non-agency sector in this, you know, at some point this year, if not next. So we still think there's a lot of runway for the opportunity. From a return standpoint, while there is increased competition, it's not nearly as competitive as other segments of the non-AC market. And that's despite its performance having been a standout versus the broader non-AC market. So we still continue to see a good amount of opportunity in this segment. And from a deployable capital standpoint, we don't have any concerns on being able to recycle capital into this segment for MIT.

Thank you.

Thank you. And we'll take our next question from Trevor Cranston with Citizens. Your line is now open.

Trevor Cranston Thanks. There's been some reports about you know, increasing delinquency levels in some of the recent vintage non-QM product. Can you guys comment specifically on, you know, your non-QM segment of the portfolio if you guys are seeing any sort of deterioration in performance or just an update there would be great. Great. Thanks.

Yeah. So, One, the sort of underperformance of non-QM is less relevant to MIT, given our transitioning over to other segments, you know, over two years ago. You know, most notably, really, the agency-eligible segment and then the home equity segment. Our agency-eligible book is performing better than Prime Jumbo, which is shocking to say out loud, but that's a fact. And then our home equity segment, the delinquencies are, you know, less than a quarter of the delinquencies of the broader non-QM market, which is where most of the concern is. MIT as a vehicle is inflated versus sort of the underperformance versus underwrite. You know, we still are constructed broadly in the non-QM space, but I think it's worth noting that generally our credit selection has been tighter than the broader universe, which is driving some of that outperformance. So, you know, we don't view our book as a comp versus other folks. You know, over the years, like, there's been some you know, degradation and performance for various reasons. We don't we don't see MIT as being exposed to that.

Okay, great. Appreciate the comments. Thank you. Thank you. And once again, if you would like to ask a question, please press the star then one on your telephone keypad now. We'll move on to Jason Weaver with Jones Trading. Your line is open.

Hi, guys. Good morning. I was just curious about the 9.5 notes of 29. Those are obviously the most expensive part of the capital stack right now. It's three years out, but I believe they've become callable relatively shortly. And with your EAD coverage, tell us how you're thinking about maybe doing a refinancing, tender, partial pay down. Any thoughts there?

Yeah, no, I mean, we're always evaluating the entire capital structure. To your point, they are coming callable. There's two separate notes that were issued not too far away from each other, and they'll be coming up later this year. To the extent rates in the market move in the right direction, we'll certainly be looking to explore refinancing or delivering those.

Got it. Thanks. Then on just overall purchase activity, your volume this quarter was well below the fourth quarter, I think $87 million versus $284 million or so. Is that more of a strategic or a timing issue over time? Were you waiting for wider spreads to get involved, or can you talk about that a bit?

Yeah. It's a little more complicated than that. So while the portfolio decreased by gap basis, it's really because the structures of the most recent transactions result in the company not consolidating these deals. Had we consolidated those deals, we actually would have had modest growth. So I think there's a little bit of form over substance given those nuances.

All right, that makes sense. Thank you for that caller.

Thank you. At this time, there are no further questions in queue. And I'll turn the meeting back to our hosts for any closing comments.

Thank you to everyone for joining us this morning and for your questions. We appreciate it and look forward to speaking with you again next quarter. Have a great day.

Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.