MFA Financial Inc (MFA) 2012 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the MFA Financial, Inc. first quarter 2012 earnings call. At this time, all participants are in a listen-only mode. Later we'll conduct a question and answer session. (Operator Instructions). As a reminder, this conference is being recorded.

I would now like to turn the call over to Alexandra Giladi. Please go ahead.

Good morning. The information discussed on this conference call today may contain or refer to forward-looking statements regarding MFA Financial, Inc, which reflect management's belief, expectations and assumptions as to MFA's future performance and operations. When used, statements that are not historical in nature, including those containing words such as will, believe, expect, anticipate, estimate, plan, continue, intend, should, could, would, may, or similar expressions are intended to identify forward-looking statements. All forward-looking statements speak only as of the date on which they are made.

These types of statements are subject to various known and unknown risks, uncertainties, assumptions an other factors, included but not limited to those relating to changes in interest rates and the market value of MFA's investment securities, changes in the prepayment rates on the loans securing MFA's investment securities, MFA's ability to borrow to finance its assets, implementation of or changes in government regulations or programs affecting MFA's business,MFA's ability to maintain its qualification as a real estate investment trust for federal income tax purposes, MFA's ability to maintain its exemption from registration under the Investment Company Act of 1940, andrisks associated with investing in real estate related assets, including changes in business conditions and the general economy.

These and other risks, uncertainties and factors, including those described in MFA's annual report of Form 10-K for the year ended December 31, 2011, and other reports that it may file from time to final with the Securities and Exchange Commission, could cause MFA's actual results to differ materially from those projected, expressed or implied in any forward-looking statements they make. For additional information regarding MFA's use of forward-looking statements, please see the relative disclosure in the press release announcing MFA's first quarter 2012 financial results. Thank you for your time.

I would now like to turn this call over to Stewart Zimmerman, MFA's Chief Executive Officer.

Good morning, and welcome to MFA's first quarter 2012 earnings call. With me are Bill Gorin, President; Stephen Yarad, Chief Financial Officer; Ron Freydberg, Executive Vice President; Craig Knutson, Executive Vice President; Hal Schwartz, Senior Vice President and General Counsel; Kathleen Hanrahan, Senior Vice President and Chief Accounting Officer; [Goodmunder Chris-Johnson], Vice President.

Today we announced financial results for the first quarter ended March 31, 2012. Recent financial results [and other recent] highlights for MFA include the following. Our first quarter net income per common share of $0.23 [and] core earnings per common share $0.21. Book value per common share increased to $7.49 at the end of the first quarter, versus $6.74 at 2011 year-end, due primarily to price appreciation within our non-agency portfolio.

At April 30, 2012, we paid our first quarter 2012 dividend of $0.24 per share of common stock to shock holders of record as of April 4, 2012. In the first quarter we added multiyear non-agency MBS financing, including an expanded collateralized financing arrangement and a resecuritization, reducing our reliance on short-term repurchase arrangements for non-MBA.

We increased the $500 million in existing collateralized financing arrangement that provides three year financing, again for non-agency mortgage-backed securities. As part of a resecuritization, $186 million senior bonds rated AAA by DBRS were issued to third party investors by our trust. These bonds, with a average life of 1.9 years, were priced at a 2.75% yield.

At quarter end, our debt to equity ratio, including the liabilities underlying our linked transactions, was 3.5 to 1. Our agency portfolio had an average amortized cost of 102.8% of par as of March 31, and generated a 3.15% yield in the first quarter. Our non-agency portfolio had an average amortized cost 73.1% of cost as of March 31, 2012, andgenerated a loss adjusted yield of 6.92% in the first quarter. In the first quarter, book value per share increased by approximately 11% due primarily to appreciation within our non-agency portfolio.

While housing fundamentals remain weak, we believe we've appropriated factored into this into our cash flow projections and credit reserve estimates. These underlying mortgage loans were originated on average more than five years ago, so that we have access of more than 60 months of payment history. In the first quarter we continued to add multiyear financing that serves to reduce our reliance on short-term purchase arrangements for non-agency mortgage-backed securities. While this financing is incrementally more expensive than short-term repo financing by approximately 100 to 150 basis points, we believe that certainty of the committed terms outweighs the additional costs.

I thank you for your continued interest in MFA Financial, and at this time I would like to open the call for questions.

Operator?

Yes, sir, thank you. (Operator Instructions). Our first question goes to the line of Bose George of KPW. Please go ahead.

Hey, guys. Good morning.

Hey, Bose.

First question is, given the increase in non-agency prices during the quarter, just wanted to get your thoughts on the level of interest in non agencies versus agencies.

Craig?

Bose, we still like the non-agencies, so yes, they've tightened during the quarter. That being said, I think they gapped out wide in December, so we think they offer loss adjusted to yields in the sixes, depending the bond might be low sixes or low sixes. So we still think it's an attractive asset class with the various forms of leverage that we have. It still provides a good return.

Bose, one of the things we try and let folks better understand is the fact that with the two complimentary assets classes, meaning both agency and non-agency, we really have a choice. So the ideal is when we continue to see good value in the non-agency sectors, those are assets that we'll continue to purchase. And conversely, onthe agency side, as we've seen value, and hopefully that comes to light during this call, we will continue to purchase those.

Okay, great. Then just switching to the dividend. There was a $0.03 gap between the core EPS and dividend. I know taxable EPS is higher, but just curious how to think about that. And also, I guess, a related question. You have $1 billion of pretty high costs swaps rolling off, so is it reasonable to think that the core EPS gets upside from that?

I guess two parts to that question. As we said before, taxable income is exceeding core income, because for taxable income we can't assume the impact of losses that haven't occurred yet that infact will occur over the next 25 years on our non-agency assets. The differential between taxable and core will be narrowing, so taxable should still exceed core, but they should be more similar in the future. That's question number one.

Question number two, you're right. The cost of funds for non-agencies should trend down over the course of the year, which is a positive. I'm sorry, on agency. Agency financing should trend down over the course of the year, but what we try to emphasize to you is that we continue to increase the term of our non-agency financing, which will increase the costs of funds on the non-agency. So all together for the Company, I don't see a big change, but it's not that interest rates are going up on us, and that's why cost of funds are going up. We are strategically increasing the terms of our non-agency funding. So they should -- one will be going down, one will be going up.

Okay, great, thanks. It definitely makes sense that you're doing that with the funding. Thanks.

Thank you.

Thank you. And next we'll go to the line of Steve Delaney from JMP Securities. Please go ahead.

Thank you. Good morning, everyone.

Good morning, Steve.

The non-agency portfolio is now up to $4.4 billion in terms of face value. I was wondering is there a way to estimate your capacity to continue to add non-agency or MBS with the existing capital base or with simply a reallocation of equity from agency to non-agency?

Steve, actually the face amount of the non-agencies is a little over $6 billion. It's $4.4 billion amortize cost and $4.5 billion market value.

My bad, Craig, I picked up the wrong number.

That's okay. It's really the market value that you need to focus on. As you know, we have at least 55% of our assets in agency whole pools.

Right.

So it's really the market value numbers that you look at to determine where we might be limited. I'm not sure exactly where we are, but I think right now we're well over 60%.

Yes.

Whole pool agencies. We still have obviously some room there.

So, Steve, right now we are not at all limited. Craig, in the month of April were we acquiring non-agencies?

We were. We probably -- we added close to 400 in the first quarter. We probably added more than 200 in the April and first few days of May.

So with the cash we have, we can grow both the agencies and non-agencies at the same time.

Okay, got it. And those 400 and 200, are those net additions, or are those gross? I know the payoffs aren't very large, so I assume there's probably --

Those are gross additions. Actually, that brings up a good point. One other thing that you need to keep in mind, which makes it a little bit more complicated to do that 55% test. The AAA securities on the resecuritizations that have been sold to third party investors, those actually get backed out, so those do not count as bad assets, because those have been sold.

Exactly.

And just so you know, our pay downs on the non-agencies, they run approximately $50 million a month or so. Although the majority of that are on bonds that have been resecuritized, so we actually don't get that cash. But in terms of the balance sheet, that $50 million runs off a month.

Craig, could you comment just on general liquidity in the market for the non-agency MBS as far as like weekly trading volumes? And I guess specifically, some of that is subprime and that's not your thing, so more into prime [ashaltey] category, what you're seeing in flows and whether trading volumes are trending higher, trending slower? Kind of what you've seen since the beginning of the year?

Steve, I would say that trading volumes are still pretty good. They've been a little bit choppy this year, so there's been, as I'm sure you know, there's been a lot of large sales taking place, but then around those large sales you'll get pockets of smaller trades. It's not a completely fluid market where an equal amount of bonds trade single everyday, so in that sense it's spotty. But the liquidity is still good, there's ample supplies. As we've just said, we've been able to add significant product in the first quarter and even in the last month or so.

Steve, it's Stewart. I think that's an important piece of this puzzle, is that we are seeing the right assets to purchase. Again, that is an important piece of our strategy.

Exactly. That's kind of where I was going is, whatyour appetite was and what the potential was based on what the market is showing you.

And just lastly, Maiden III is out there. I realize that's not your asset class, it's more CDO and a lot commercial stuff, but obviously any time dealers are facing potential overhang, it can affect markets. Have you seen impact on any price pressure or people backing away any because of this Maiden III out there?

We really haven't, Steve. In fact, as ironic has it sounds, I think these large program trades, the Maiden Lane II trades that we've seen in this part of the year, have actually strengthened the market. So there's been more interest in larger trades, and again, same thing for this one. You're right, there's CDO's with a lot of commercials. There actually are some -- there is residential products in those, but it's not clear that those bonds can be extracted from the CDOs, if they can, it's possibly something we might have interest in, but it's not clear that those can be, that the CDO's can be liquidated at this point.

Right, understood. Thank you, gentlemen. Appreciate the comments.

Thanks, Steve.

Thank you. Next to the line of Jason Arnold from RBC Capital Markets. Please go ahead.

Good morning. Just had a quick question for you on the non-agency prepay end the equation. It looked like it ticked up a little bit here this quarter. I was just wondering if you could share your thoughts there and kind of prospectively on the non-agencies prepays in particular.

Jason, there is a seasonality to this. It went from 13 to [13.9], so there's no real information there.

Okay. But obviously, I guess a good thing given that there's probably still some rate resets and things like that, to actually see prepays pick up in that segment, I guess, contrary to non -- or to agency side, right?

Yes. But remember, though, on the non-agency side, we certainly like the asset and, yes, we have a fairly significant discount, but we've modeled that I think at a very -- at a rate in terms of prepays that very benign.

Okay.

But again, if that were to pick up, you can do the math. It's pretty good for us.

Yes, absolutely. Just one quick follow-up on a swap question that Bose asked. Where are you typically adding on new swaps where the old ones are rolling off? Is it in the three-year range or ballpark there?

We have actually not added swaps this year, because we really haven't added any interest rate risks on the asset side.

Okay. Like I guess prospectively as the additional whatever $800 million roll off, would you kind of continue that line of thought and not add as much on the new swaps?

Incrementally your add interest rate risk to the portfolio, you would have to hedge that out, but right now we believe there's very little interest rate risk within our portfolio. Our central thesis is that non-agencies are not correlated with the treasuries and probably inverse correlate the treasuries.

As Bill said, if we buy longer duration assets, which will be more or less on the agency side, it's something that we would consider.

Makes sense. Okay, perfect. Thanks, guys.

Thank you.

Next we'll go to the line of Douglas Harter from Credit Suisse. Please go ahead.

Thanks. I was wondering if you could talk about your appetite or your philosophy about continuing to add more longer term financing on the non-agency side?

I'll do it from 25,000 feet. We want to continue to do that. We think it's in the best interest of the portfolio, but Craig, you want to handle some of the detail?

Sure. Doug, as you know, we've done a lot of stuff to address the longer term financing on the non-agencies. We've done four resecuritizations, and it shouldn't surprise as we accumulate more collateral and as market conditions permit to see more of those.

As far as the three-year, what we've looked at, at additions to there-year financing. We've done some repo that go out 12 months and more, so we'll continue to add those when they're cost-effective. I don't think it's realistic to expect we won't have any repo of less than 12 months, but we've significantly reduced our relines on repo of less than 12 months. Obviously, there's some costs associated with that, but we think that the benefit and the surety of financing is certainly worth that cost.

In addition, as you I you know, Doug, our last resecuritization was fixed rate, so probably our next resecuritization would also look at a fixed rate alternate. So it's higher cost and longer term.

Just on, that could you talk a little bit about the health of the resecuritization market right now?

Sure. It's still at this point limited to one rating agency, which is DBRS, which makes it admittedly more difficult to do resecuritizations. The market is not as deep for a single rated DBRS only AAA as it would be if we had other rating agencies involved. That being said, we've done -- the last three deals that we've done have been DBRS only. While not as efficient as it could be, it's still very viable for us.

It's funny, it's actually an advantage to us. If there were multiple rating agencies for the resecuritizations, the execution might be better, but there would be more people competing for the non-agency MBS to begin. So we would rather buy the assets at a lower price, do the resecuritizations now with one rating agency. If other agencies reenter, that will just be to our benefit.

Great, thank you.

Thank you.

Thank you. Next we'll go to the line of Jason Weaver from Sterne, Agee. Please go ahead.

Good morning, guys, thanks for taking my questions.

Good morning.

Just wanted to get your macro thoughts as it affects non-agency markets right now. Seems like last year's downdraft was really concurrent with the high pitch of EU stress. And nowthat the talk has resurfaced, how do you think about technical risks here?

So going back to last year, the headline news was Greece, for example, so that was a downward trend. That an Maiden Lane was adownward trend. And why did that impact non-agencies more than high-yield assets? The theory was the European banks held the assets, they would have to shrink, and they would have to sell the assets.

Here, that's not the same situation. While the bank still faced capitalization issues, because of the financing provided to them under the LTRO, it doesn't look like there's any pressure for them to sell these relatively high yielding assets.

Fair enough. Just one more, maybe tinier detail. I'm curious where you're seeing severity trends on your own portfolio moving and how you're thinking about that right now?

So severities are, give or take, are probably around 50%. They might be in the low 50s. We really haven't seen those change all that much. You have to keep in mind that severities are largely a function of how long these loans sit in the pipeline. Because there's been various publicized legal and regulatory issues with respect to servicing and servicing foreclosed loans, the pipelines have actually -- the time periods have lengthened over the last year, year and a half or so.

So I think severities are much more of a function of the state where the property is located -- so loans in Florida could typically sit in foreclosure three years, and you'll clearly see higher severities there. But also in general how long these pipelines are. I think to look at severities as a top line number is really a little bit misleading. When we look at any bond and we look at the loans in the bonds, we look at how long the loans that are delinquent have been delinquent, how long they've been in the pipeline. And we can predict pretty accurately what those severities will look like just based on how long the loans have been in there.

Craig, would you say that the severities we've seen have pretty much in line with what we've modeled?

Yes, andI do think over time, as these foreclosure pipelines get narrowed down, that you will see some improvements in severities, but that could easily be a couple of years out.

Got you. And in addition to the timeline, the things that I was hearing from different market strategist revolve around the LTVs that are -- were in the pipeline and became today's liquidation were much higher than those in the delinquency pipeline now. Do you have any prospective there?

Yes, I think that's right, especially to the extent that you had strategic defaults. Strategic defaults that two years ago were 150 mark to market LTVs, I think, yes, that's the case. That a lot of those loans that were really underwater were the early loans through the pipeline, if you will.

Okay, thanks a lot, guys.

Thank you.

Thank you. (Operator Instructions). and now we'll go to the line of Arren Cyganovich from Evercore. Please go ahead.

Thanks. Could you talk about whether or not the increase in the non-agency prices, has it been more of a technical issue, or are you seeing any fundamental improvement in the underlying mortgage assets?

That's a good question, and it what's we asked ourselves last year over certainly the last six months of the year, is are the price declines due to fundamental or technical?I think our conclusion and pretty much the overall conclusion was is that they were based on technicals. I would say honestly that so far this year the price improvement is more technical than it is fundamental.

There are some pockets of, whether I say good news or not necessarily bad news, there's are some pockets of those if you look at housing price data. There's an article that I read in the paper a week or two ago about bidding wars for houses and various localities where inventories are very low. So the housing data, while I won't say it's all positive, it's mixed. It's not all bad any more, but I still haven't seen people adjusting assumptions fundamentally on cash flows in the future.

Okay, that's helpful. And then maybe in terms of you're adding a little bit more duration on the non-agency funding side. Are you doing that from a concern about the repo risks in general, or is it more a longer term view of having more diverse and safe funding?

The latter. We like the ideal of having the certainty of the funding, and I think as Craig and I think Bill said it also, it's a little more expensive, and that's find. But having the certainty of the funding we think much more outweighs the costs.

Okay. Lastly on the agency side, the CPRs ticked down in the first quarter. Do you have any ideal where you think CPRs will be go be going in the near term?

I'll turn it over to Goodmunder.

Hi, this is Goodmunder. The CPR for the fourth quarter was 19.4, and you're right, it ticked down to 17.9 in the third quarter. Going forward, I think it will be in the same zip code. I wouldn't expect a whole lot of change changes there.

Thank you very much.

Thank you.

Thank you. Next to the line of Chris Donat from Sandler O'Neill. Please go ahead.

Hi, everyone, it's Chris Donat here.

Hi, Chris.

Just to revisit the issue of the portfolio and the mix of agencies and non-agencies. In terms of the market value, non-agencies have crept up to nearly 40% of the portfolio. Is there a bound as you look at the complimentary nature of the portfolio, or would you go 50/50 in terms of the mix?

We are probably continuing to reallocate a little bit more towards the non-agency. There is no one absolute strategic number. As we mentioned, there are certain regulatory constraints, but then you have to adjust for the securitizations. So you just can't look at the gross amount on the balance sheet. So I think you're going to see us continue to grow more rapidly on the non-agency side.

Okay. More of a small point here, but just looking at the compensation level, I imagine there's some seasonal issues there, but it picked up a little over $2 million from the fourth quarter. Just any comments on if that's one-type stuff there?

Yes, I think the number is more consistent with the first three quarters of last year, and in the fourth quarter we actually had a reversal of the bonus accrual. So the bonus [is payment] -- so you should just compare the fourth to the first.

Okay, got it. Thank you.

Thank you.

Thank you. Next we'll go to the line of Daniel Furtado from Jefferies. Please go ahead.

Good morning, everybody. Thank you for the opportunity.

Hi, Danny.

Good morning. Do you mind telling me if there's any significant differences, structurally or otherwise, in the most recent securitization, or is it relatively from a structure prospective unchanged from the last couple?

So that's actually a did question, Dan. The structure is more the less the same as the prior two resecuritizations. So it's DBRS, they only rate bonds down to single A, so we get a AAA, a AA, a A and a non-rated class. But there was one improvement in the last transaction, and that was that we got more AAA. SoI think we got approximately 43% AAAs in our last transaction, which was up about 37% in the two before that. So that obviously is a good thing, because we had more AAAs that we could sell.

I think that's not necessarily because we had different collateral than we had before. I just think that the rating agencies have constantly gone back to recalibrate models, and they look at the economic data just like we do, and we found in particular on more seasoned collateral that we were getting slightly better levels.

Got you. So collateral performance is expected to be better by the rating agency, which is driving the level slightly different. Excellent. And then --

Dan, and then one other thing, too. We mentioned this before, butthe AAA that was sold was a fixed rate rather than a floating rate, and that was because the market acceptance of a fixed rate was better than a floating rate. AndI think that's largely due to folks view on interest rates. So if your view is that interest rates are really going to stay low through the end of 2014 or so, then I think the buyer basis is more reluctant to pay up to buy a floating rate security if it has a two-year average life.

Understood. It makes perfect sense. Thanks for the detail there. Second question in the non-agency space, are you noticing kind of a -- any type of rotation within the space here towards more liquid, easier to finance securities? The ideal being that as peoples expectations for performance and recovery levels increases, investors want to get the more liquid securities to lever them more aggressively than we've seen in the past? Or are you not noticing that type of shift in the market?

It's not really material. I don't think that one type of security is necessarily easier to finance than another. That being said, there is often a slight pay up for larger block size. So the larger trades tend to get more interest. I don't know that's that it's necessarily because they're better. It's just that the larger trades get more interest, and therefore they end up trading a little bit higher.

But we try to keep in mind an ROE strategy as we look at assets. So we because we have a number of resecuritizations, we have a pretty good sense if not an exact sense of where these splits will come in on bonds. And we have various sources of funding, as you know, right?We have some term funding. So when we look at bonds, we don't just look at the yield on the bonds, we look at what we can do with that bond around our capital structure and what ROE we can produce.

Understood. Thanks a lot for the time, everybody.

Thank you.

Thank you. Next we'll go to the line of Alan Straus from Schroders. Please go ahead.

[While not that] significant, what did you do with the proceeds from the debt offering?

So the proceeds were about $90-some-odd million, which went into our cash, which already was about $400 million. As we mentioned, we bought at least $200 million of non-agencies since the start of the quarter.

It's fungible. So again, whether we buy securities or basically --

It's primarily gone into non-agency assets.

And have you brought the cash balances down even further?

They're not appreciatively different than at the end of the quarter.

Thank you.

You're welcome.

Thank you. Next we'll go to the line of Mike Widner from Stifel Nicolaus. Please go ahead.

Good morning, guys.

Good morning, Mike.

So most of my real questions have been answered, so I'll give you guys a couple of real big picture questions. I guess really just starting with the asset mix. You made some references to ROEs. On the non-agency side of the portfolio, a couple of years ago that was a great place where you could put unlevered cash and get mid-teens returns, and that's obviously changed over the last couple of years. And really just looking over the last few years, there's been a fairly dramatic tightening of spreads for putting money to work there.

Just looking at you guys, I think the spreads on the non-agency business -- and granted the funding is different -- but the spreads are down 185 basis points year-over-year. And so to continue get the mid-teens there, we're obviously moving higher in leverage. You guys had a slight, at least if I look at the ratings on the assets, a slight drift lower in terms of the credit ratings and the assets. By and large, you have to work harder and harder and take on more leverage, arguably take on a little more risk to get the same kind of returns.

Then I look on the agency side of the portfolio and, I don't want to say -- the ROEs you're getting there are kind of much lower than what we're seeing in the pure agency REIT sector as an average. And so I don't know -- I mean, not that I'm arguing with or criticizing with what you're doing, but wondering if you would give some big picture commentary on that general trend. Working harder and harder to generate returns in a shrinking asset class, where more and more capital being put to work and more people battling out for the same bunch of so-called toxic assets, while you've got a multi-trillion dollar asset class that -- most peers are generating the same kind of ROEs that you're generating on the non-agency side. So anyway, I'll leave it at that and --

We don't know which part to refute first, but I'll take a shot. Let's start with the agencies, because that's simple letter. In terms of our agency yields, I believe our agency yields are very competitive, especially when you take into account we have no 30-year fixed rate. So the agency yield is in excess of 30%, and you know the comps better than I do --

No, but I mean -- but just let me step back. The ROEs, at if I go by what you're publishing, pre-expenses you're still kind of 12-ish, 11.5-ish ROE range on that segment. Then add overhead expenses. That's clearly a lower ROE than pretty much anybody in the agency [space] --

Yes, I agree, butwhat -- ROE is your yield less cost of funds, gives you the spread, then your return on the assets plus your leverage multiple. So I have to go in order. So I'm going to address the ROE. But in theagencies, as I said, the agency yield itself is comparable to everyone else's.

Our cost of funds on agencies higher. We have an older portfolio, and we have older hedges, which we told you is significantly running off during the course of the year. [Such that] the costs of funds on our agencies will go down, and our interest rate spread should not deteriorate, and depending on prepay speeds and reinvestments, we might actually have interest rate increase over the course of the year, which I think will be pretty unique on the agency side.

On the non-agencies, you talk about it becoming more competitive. In fact, the most competitive time for non-agencies was over a year ago. It would have been February of the prior year. Yields actually have gone up on non-agencies. They're higher now than they were a year ago -- [and] last February's -- so it's been a very good buying opportunity.

I've said this before, initially when we started buying non-agencies, the question always was is it too soon, and then for the last two years the question has always been, is it too late. And it wasn't too soon, and westill think when you compare the risk reward tradeoff, the fact that it negates the prepayment risks, the fact that we believe there's not interest rate risks in these assets, incremental investments with a six handle we find very attractive.

The forms of financing have changed. You're right, initially there was no leverage, it was a high ROE without leverage. Then there was a ROE with leverage, which was short-term repo. We're not stretching to generate ROEs. That's one thing that MFA has never done. We're comfortable using these longer terms of leverage. We'll pay up for it, and even if the spread is a little bit less, we're more comfortable with the forms of leverage we're using.

So in no way are we stretching for ROE targets. It just so happens the two investment classes we're invest inning generate high ROEs, and we're happy with what we're do.

Well, I appreciate that. You guys are certainly doing it in a unique way, so you bring something different to the space there. Appreciate the comments.

Sure.

Thank you.

Thank you. And next to the line of [Steven Eisman] from [Emors]. Please go ahead.

Hi, guys l all of my questions have been asked. Just wanted to sayimpressive growth in book value, and have a nice weekend.

Steve, thank you very much.

Currently, we have no further questions. Please continue.

On that note, I want to thank everybody for participating. We look forward to speaking with you next quarter.

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