TPG Mortgage Investment Trust Inc (MITT) Earnings

Management highlights

- Strategic Acquisition of Cherry Hill Mortgage Investment Corporation - The company entered a definitive agreement to acquire Cherry Hill, a transformative transaction that will increase the combined company's market capitalization by ~36%, create an equity capital base of ~$750 million, and improve stock liquidity and trading volumes. - TPG (MIT's manager) is contributing ~$20 million in direct cash, with MIT adding ~$15 million from its balance sheet, for an attractive 30% cash-to-stock consideration mix. Expected annual G&A cost synergies range from $7 million to $9 million. - Cherry Hill's complementary portfolio of mortgage servicing rights (MSR), agency RMBS, and low WAC MSR adds a new diversified revenue stream, delivers durable predictable cash flows, complements MIT's core residential strategy, and contributes to earnings immediately. The transaction is expected to close in Q4 2026. - Q2 2026 Core Operational and Financial Performance - Despite a challenging interest rate environment driven by inflation concerns and Fed policy uncertainty, MIT delivered stable performance: book value per share increased from $9.97 to $10.00, generating a 2.7% economic return inclusive of the $0.24 dividend. GAAP net income was ~$9.1 million, or $0.29 per share, while EAD hit $0.24 per share, fully covering the declared dividend. - MIT maintained a disciplined leverage profile, with Q-over-Q economic leverage increasing by only 0.1 turns to 1.8 turns, ending the quarter with $112 million in liquidity (ample dry powder for future growth). The company completed two residential securitizations in Q2 with an aggregate balance over $750 million, and purchased an additional $70 million of HELOCs ahead of a planned Q3 securitization. - Legacy Commercial Portfolio Resolution Progress - The sale process for the legacy retail commercial exposure has selected a buyer, with closing expected by the end of 2026. Two of the four remaining hospitality exposures are on track to be resolved by the end of Q3 2026, all in line with current carrying values. The remaining two hospitality assets are being repositioned and will be remarketed in 2027. - Aggregate annual incremental EAD from recycling resolved legacy commercial capital into core residential strategies is expected to hit 20 cents per share, with 5 cents in incremental short-term EAD from the 2026 resolutions, and more than 15 cents per annum additional EAD from the 2027 resolutions. - Core Strategy Growth - MIT is prioritizing capital rotation into higher-yielding home equity and non-agency residential credit, which offers attractive risk-adjusted returns. Year-over-year non-agency issuance has grown nearly 50%, while the home equity segment has seen 150% annualized growth, and MIT holds an early mover advantage in this fast-growing segment.

Guidance

- The strategic acquisition of Cherry Hill is expected to close in the fourth quarter of 2026, and is projected to be accretive to EAD in 2027. - MIT expects to issue over $1.25 billion across three home equity securitizations in the third quarter of 2026. - Incremental EAD from recycling legacy commercial capital will start to add to earnings beginning in Q3 2026, accelerating through 2027, with total aggregate annual incremental EAD of 20 cents per share once all legacy positions are resolved and capital is redeployed. - Post-acquisition, proforma economic leverage for the combined company will settle at approximately 2.9 turns, maintaining MIT's conservative leverage profile relative to industry peers, with ample post-close liquidity to pursue further growth opportunities. - Management expects clear line of sight to stronger return on equity (ROE), higher EAD, and continued dividend growth for the full year 2026, building on 5 cumulative dividend increases (33% cumulative growth) since the 2023 WMC acquisition.

Segment performance

1. Core Residential Investment Strategies: The total investment portfolio stood at $7.7 billion in Q2 2026, down from $8.1 billion in Q1 2026 due to securitized loan paydowns. The portfolio is primarily allocated to high-quality agency-eligible, non-QM, and home equity loans. Earnings available for distribution (EAD) from the portfolio was $0.20 per share, contributing 83.3% of total Q2 EAD. The segment generated high teen return on equity (ROE). 2. Arc Home: Arc Home contributed an additional $0.04 per share to Q2 EAD, accounting for 16.7% of total Q2 EAD. The segment distributed $6.6 million in excess capital to TPG MIT in Q2, grew origination volumes, and reached multi-year high funding volumes, with early progress on newly launched home equity offerings. 3. Legacy Commercial Loans: Legacy commercial loan exposure remains on non-accrual status, acting as an ongoing earnings headwind. The segment received $3.5 million in payments during Q2, which reduced the portfolio's cost basis and supported de-levering. Resolutions of legacy commercial positions will unlock roughly $30 million in capital for reinvestment.

Risks & headwinds

- All forward-looking statements related to acquisition closing timelines, future earnings growth, legacy portfolio resolutions, and market performance are subject to material risks and uncertainties that could cause actual results to differ materially, as detailed in the company's SEC filings (including risk factor disclosures). - The current macroeconomic environment faces ongoing challenges from renewed inflation concerns and sustained uncertainty around Federal Reserve interest rate policy, which creates market volatility that can impact portfolio valuations. - Increased competition across the broader non-agency residential mortgage market may compress returns over time. - The strategic acquisition carries inherent integration risks, and realization of projected cost synergies and earnings accretion is not guaranteed.

Analyst Q&A

• Q: What is MIT's plan for Cherry Hill's MSR and agency portfolio after the acquisition closes? Will it be kept as is or adjusted? /

  A: Management states the portfolio will be optimized over time, consistent with MIT's existing capital rotation strategy. Some portions of the portfolio will be retained, while other portions will be rotated into other assets to align with MIT's core return priorities. This approach matches the strategy MIT already uses for its existing portfolio.

• Q: Leaving aside the Cherry Hill acquisition, how do you expect your core asset mix to evolve over the next year? Will home equity become a much larger share? /

  A: Management confirms home equity will continue to be the fastest-growing segment of MIT's portfolio. The company sees a sustainable competitive advantage and greater relative value in home equity compared to other asset classes, so it expects this segment's share of the portfolio to continue growing over the coming year.

• Q: Have risk-adjusted returns on home equity investments remained stable, despite the high level of market activity and new production in the space? /

  A: Management acknowledges that the broader non-agency residential market has become more competitive, but does not share further updated commentary on return trends before the question concludes.