New York Mortgage Trust, Inc. (Nasdaq: NYMT) (“NYMT,” the
“Company,” “we,” “our” or “us”) today reported results for the
three and six months ended June 30, 2018.
Summary of Second Quarter 2018:
- Net income attributable to common stockholders of $23.8
million, or $0.21 per share (basic), and comprehensive income to
common stockholders of $17.2 million, or $0.15 per share.
- Net interest income of $17.5 million and portfolio net interest
margin of 239 basis points.
- Book value per common share of $5.76 at June 30, 2018, a
decrease of less than 1% from March 31, 2018, resulting in an
economic return of 2.9% for the quarter and an annualized economic
return of 5.3% for the six months ended June 30, 2018.
- Declared second quarter dividend of $0.20 per common share that
was paid on July 26, 2018.
- Issued and sold 12,145,144 shares of common stock, resulting in
net proceeds to the Company of $73.8 million, under our
at-the-market equity offering
program.
Subsequent Developments:
The Company announced today that it had begun
the process to internalize the management of its distressed
residential loan strategy as part of an effort to expand its
capabilities in self managing, sourcing and creating single family
residential credit assets. The Company has recently hired ten
investment professionals to build and expand its single family
residential credit asset platform. The Company expects
that the single family residential credit team will ultimately be
comprised of 15 to 20 professionals in total. The Company believes
the internalization of the management of the distressed residential
loans, as well as expanded capabilities in sourcing and originating
will strengthen the Company’s ability to capitalize on future
credit investment opportunities.
In connection with the internalization, the
Company notified Headlands Asset Management, the external manager
of its distressed residential loan portfolio, that it will allow
its management agreement with the manager to expire on June 30,
2019. This represents a continuation of steps taken in
recent years by the Company to fully internalize its investment
portfolio management. In May 2016, the Company announced the
internalization of its multi-family credit investment platform
through the acquisition of RiverBanc LLC. During the second
quarter, the Company completely exited out of its Agency IO
strategy, which had been managed externally prior to January 1,
2018.
Management Overview
Steven Mumma, NYMT’s Chairman and Chief Executive Officer,
commented: "The Company delivered another quarter of stable
earnings and book value, with GAAP EPS of $0.21 per common share
and book value at $5.76, down $0.03 from the previous quarter.
Multi-Family continued to be the significant contributor during the
quarter, with both net interest income and unrealized gains
increasing from the prior quarter. The Company was opportunistic in
raising capital through its at-the-market equity offering program
raising approximately $73.8 million during the quarter, resulting
in $0.03 accretion to overall book value.
As the Company has grown in recent years, we
have taken steps to internalize the investment management of our
various investment portfolios. In May 2016, we acquired our
external manager for our multi-family credit investments and during
the quarter, we exited our Agency IO portfolio, which had been
externally managed. We are pleased to announce that we have begun
the process to internalize the management of our distressed
residential loan strategy. As part of an effort to expand our
capabilities in self managing, sourcing and creating single family
residential credit assets, we have added ten investment
professionals to our single family residential credit investment
team.
In connection with this internalization, we
provided Headlands notice that we intend to cause our management
agreement with them to expire when its term ends in June
2019. Headlands has been a valued and trusted partner and
advisor to us since 2010 and we are grateful for their many
contributions to our growth.
We believe that internalization of all our
credit investing functions, including both multi-family and single
family residential, will strengthen the Company's ability to
identify and secure future investment opportunities in this key
strategic area."
Capital Allocation
The following tables set forth our allocated
capital by investment type at June 30, 2018, our interest
income and interest expense by investment type, and the weighted
average yield, average cost of funds and portfolio net interest
margin for our average interest earning assets (by investment type)
for the three months ended June 30, 2018 (dollar amounts in
thousands):
Capital Allocation at June 30, 2018: |
|
Agency RMBS(1) |
|
Multi-Family (2) |
|
Distressed Residential (3) |
|
Other (4) |
|
Total |
Carrying Value |
$ |
1,101,344 |
|
|
$ |
875,563 |
|
|
$ |
445,353 |
|
|
$ |
154,405 |
|
|
$ |
2,576,665 |
|
Liabilities |
|
|
|
|
|
|
|
|
|
Callable(5) |
(874,917 |
) |
|
(295,294 |
) |
|
(164,149 |
) |
|
(37,834 |
) |
|
(1,372,194 |
) |
Non-Callable |
— |
|
|
(29,628 |
) |
|
(31,398 |
) |
|
(107,198 |
) |
|
(168,224 |
) |
Convertible |
— |
|
|
— |
|
|
— |
|
|
(129,738 |
) |
|
(129,738 |
) |
Hedges (Net) (6) |
10,543 |
|
|
— |
|
|
— |
|
|
— |
|
|
10,543 |
|
Cash (7) |
11,015 |
|
|
15,000 |
|
|
5,423 |
|
|
58,973 |
|
|
90,411 |
|
Goodwill |
— |
|
|
— |
|
|
— |
|
|
25,222 |
|
|
25,222 |
|
Other |
2,512 |
|
|
(8,219 |
) |
|
17,305 |
|
|
(28,082 |
) |
|
(16,484 |
) |
Net Capital
Allocated |
$ |
250,497 |
|
|
$ |
557,422 |
|
|
$ |
272,534 |
|
|
$ |
(64,252 |
) |
|
$ |
1,016,201 |
|
% of Capital
Allocated |
24.6 |
% |
|
54.9 |
% |
|
26.8 |
% |
|
(6.3 |
)% |
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
Net Interest Income- Three Months Ended June 30,
2018: |
Interest Income |
$ |
7,851 |
|
|
$ |
18,280 |
|
|
$ |
5,110 |
|
|
$ |
1,796 |
|
|
$ |
33,037 |
|
Interest Expense |
(4,644 |
) |
|
(4,090 |
) |
|
(2,467 |
) |
|
(4,336 |
) |
|
(15,537 |
) |
Net Interest Income
(Expense) |
$ |
3,207 |
|
|
$ |
14,190 |
|
|
$ |
2,643 |
|
|
$ |
(2,540 |
) |
|
$ |
17,500 |
|
|
|
|
|
|
|
|
|
|
|
Portfolio Net Interest Margin - Three Months Ended June 30,
2018 |
Average Interest
Earning Assets (8) |
$ |
1,167,278 |
|
|
$ |
639,637 |
|
|
$ |
453,407 |
|
|
$ |
142,975 |
|
|
$ |
2,403,297 |
|
Weighted Average Yield
on Interest Earning Assets (9) |
2.69 |
% |
|
11.43 |
% |
|
4.51 |
% |
|
5.02 |
% |
|
5.50 |
% |
Less: Average Cost of
Funds (10) |
(2.02 |
)% |
|
(4.69 |
)% |
|
(4.87 |
)% |
|
(3.99 |
)% |
|
(3.11 |
)% |
Portfolio Net Interest
Margin (11) |
0.67 |
% |
|
6.74 |
% |
|
(0.36 |
)% |
|
1.03 |
% |
|
2.39 |
% |
(1) Includes Agency fixed-rate RMBS and Agency
ARMs.(2) The Company, through its ownership of certain
securities, has determined it is the primary beneficiary of the
Consolidated K-Series and has consolidated the Consolidated
K-Series into the Company’s condensed consolidated financial
statements. Carrying Value and Average Interest Earning
Assets for the quarter excludes all Consolidated K-Series assets
other than those securities actually owned by the Company. Interest
income amounts represent interest income earned by securities that
are actually owned by the Company. A reconciliation of net capital
allocated to and net interest income from multi-family investments
is included below in “Additional Information.”(3) Includes
$290.6 million of distressed residential mortgage loans, $96.9
million of distressed residential mortgage loans, at fair value and
$54.1 million of Non-Agency RMBS.(4) Other includes
residential mortgage loans held in securitization trusts amounting
to $66.0 million, residential second mortgage loans, at fair value
of $72.3 million, investments in unconsolidated entities amounting
to $13.3 million and mortgage loans held for sale and mortgage
loans held for investment totaling $2.8 million. Mortgage loans
held for sale and mortgage loans held for investment are included
in the Company’s accompanying condensed consolidated balance sheets
in receivables and other assets. Other non-callable liabilities
consist of $45.0 million in subordinated debentures and
$62.2 million in residential collateralized debt
obligations.(5) Includes repurchase
agreements.(6) Includes derivative assets and variation
margin.(7) Includes $5.4 million in deposits held in our
distressed residential securitization trusts to be used to pay down
outstanding debt. These deposits are included in the Company’s
accompanying condensed consolidated balance sheets in receivables
and other assets.(8) Our Average Interest Earning Assets is
calculated each quarter based on daily average amortized
cost.(9) Our Weighted Average Yield on Interest Earning Assets
was calculated by dividing our annualized interest income for the
quarter by our Average Interest Earning Assets for the
quarter.(10) Our Average Cost of Funds was calculated by
dividing our annualized interest expense for the quarter by our
average interest bearing liabilities, excluding our subordinated
debentures and convertible notes, which generated interest expense
of approximately $0.7 million and $2.7 million, respectively, for
the quarter. Our Average Cost of Funds includes interest expense on
our interest rate swaps.(11) Portfolio Net Interest Margin is
the difference between our Weighted Average Yield on Interest
Earning Assets and our Average Cost of Funds, excluding the
weighted average cost of subordinated debentures and convertible
notes.
Prepayment History
The following table sets forth the constant
prepayment rates (“CPR”) for selected asset classes, by quarter,
for the quarterly periods indicated.
Quarter Ended |
|
Agency Fixed-Rate RMBS |
|
Agency ARMs |
|
Residential SecuritizedLoans |
June 30, 2018 |
|
5.9 |
% |
|
16.3 |
% |
|
20.1 |
% |
March 31, 2018 |
|
5.4 |
% |
|
10.2 |
% |
|
10.8 |
% |
December 31, 2017 |
|
6.3 |
% |
|
12.9 |
% |
|
22.1 |
% |
September 30, 2017 |
|
12.8 |
% |
|
9.4 |
% |
|
18.2 |
% |
June 30, 2017 |
|
9.6 |
% |
|
16.5 |
% |
|
16.8 |
% |
|
|
|
|
|
|
|
|
|
|
Second Quarter Earnings Summary
For the quarter ended June 30, 2018, we
reported net income attributable to common stockholders of $23.8
million as compared to $23.7 million in the quarter ended March 31,
2018.
We generated net interest income of $17.5
million and a portfolio net interest margin of 239 basis points for
the quarter ended June 30, 2018 as compared to net interest
income of $19.8 million and a portfolio net interest margin of 286
basis points for the quarter ended March 31, 2018. The $2.3
million decrease in net interest income in the second quarter was
primarily due to lower net interest income generated by our
distressed residential portfolio. Our distressed residential
portfolio experienced a decrease in asset yield of 174 basis points
and an increase in cost of funds of 42 basis points, which resulted
in a decline in net interest margin of $2.4 million in this
portfolio as compared to the prior quarter. The decline in
net interest margin in the Company's distressed residential
portfolio is mainly attributable to changes in expected cash flows
resulting from greater loan sale activity in the second quarter as
compared to the first quarter of 2018.
For the quarter ended June 30, 2018, we
recognized other income of $20.0 million as compared to other
income of $21.0 million in the quarter ended March 31, 2018.
The change in other income is primarily comprised of the
following:
- An increase in net unrealized gains on multi-family loans and
debt held in securitization trusts of $4.5 million.
- An increase in realized gains on residential mortgage loans,
including distressed residential mortgage loans of $3.1
million.
- An increase in net realized loss on investment securities and
related hedges of $5.2 million resulting from the final liquidation
of our Agency IO portfolio, partially offset by an increase in
unrealized loss recovery of $4.7 million previously recognized on
these assets and included in the net unrealized gain on investment
securities and related hedges as discussed below.
- An increase in net unrealized gain on investment securities and
related hedges of $0.9 million primarily consisting of a $4.7
million increase in gain from our Agency IO portfolio offset by a
$3.8 million increase in unrealized loss from our interest rate
swaps accounted for as trading instruments for accounting
purposes.
- A decrease in other income of $3.8 million, which is due to a
$2.1 million impairment loss recognized on the real estate
development property owned through the Company's 50% interest in an
entity that owns and develops land and residential homes in Kiawah
Island, SC. The Company's $2.1 million impairment loss is
partially offset by the $1.0 million non-controlling interest share
of the loss. In addition, the first quarter activity included a
$2.3 million gain recognized by a consolidated variable interest
entity from the sale of its multi-family apartment property in
March 2018.
The following table details the general and
administrative expenses for the quarters ended June 30, 2018
and March 31, 2018 respectively (dollar amounts in thousands):
|
|
Three Months Ended |
General and Administrative Expenses |
|
June 30, 2018 |
|
March 31, 2018 |
Salaries, benefits and
directors’ compensation |
|
$ |
3,173 |
|
|
$ |
2,556 |
|
Base management and
incentive fees |
|
809 |
|
|
833 |
|
Other general and
administrative expenses |
|
2,103 |
|
|
2,100 |
|
Total
general and administrative expenses |
|
$ |
6,085 |
|
|
$ |
5,489 |
|
The increase in general and administrative
expenses is primarily related to the annual awards in equity
compensation paid to the board of directors in the second
quarter.
The following table sets out the operating
expenses related to our distressed residential mortgage loans and
the operating real estate and real estate held for sale in
consolidated variable interest entities for the quarters ended
June 30, 2018 and March 31, 2018, respectively (dollar amounts
in thousands):
|
|
Three Months Ended |
Operating Expenses |
|
June 30, 2018 |
|
March 31, 2018 |
Expenses related to
distressed residential mortgage loans |
|
$ |
1,811 |
|
|
$ |
1,603 |
|
Expenses related to
operating real estate and real estate held for sale in consolidated
variable interest entities |
|
873 |
|
|
1,606 |
|
Total
operating expenses |
|
$ |
2,684 |
|
|
$ |
3,209 |
|
|
The decrease in operating expenses in the second
quarter can be primarily attributed to a decrease in expenses
related to our operating real estate and real estate held for
sale in consolidated variable interest entities due to the sale of
a multi-family apartment property in the prior quarter.
The results of operations applicable to the
operating real estate and real estate held for sale in consolidated
variable interest entities included in the Company's condensed
consolidated statements of operations for the three months ended
June 30, 2018 are as follows (dollar amounts in thousands):
|
|
Three Months EndedJune 30, 2018 |
Income from operating
real estate and real estate held for sale in consolidated variable
interest entities |
|
$ |
1,253 |
|
Expenses related to
operating real estate and real estate held for sale in consolidated
variable interest entities |
|
(873 |
) |
Net
income from operating real estate and real estate held for sale in
consolidated variable interest entities |
|
380 |
|
Net income from
operating real estate and real estate held for sale in consolidated
variable interest entities attributable to non-controlling
interest |
|
(274 |
) |
Net
income from operating real estate and real estate held for sale in
consolidated variable interest entities attributable to Company's
common stockholders |
|
$ |
106 |
|
Analysis of Changes in Book Value
The following table analyzes the changes in book
value of our common stock for the quarter ended June 30, 2018
(amounts in thousands, except per share):
|
Quarter Ended June 30, 2018 |
|
Amount |
|
Shares |
|
Per Share(1) |
Beginning
Balance |
$ |
649,046 |
|
|
112,117 |
|
|
$ |
5.79 |
|
Common stock issuance,
net(2) |
74,540 |
|
|
12,196 |
|
|
|
Balance after share
issuance activity |
723,586 |
|
|
124,313 |
|
|
5.82 |
|
Dividends declared |
(24,863 |
) |
|
|
|
(0.20 |
) |
Net change in
accumulated other comprehensive income: |
|
|
|
|
|
Investment securities (3) |
(6,525 |
) |
|
|
|
(0.05 |
) |
Net
income attributable to Company's common stockholders |
23,769 |
|
|
|
|
0.19 |
|
Ending
Balance |
$ |
715,967 |
|
|
124,313 |
|
|
$ |
5.76 |
|
(1) Outstanding shares used to calculate book value per
share for the ending balance is based on outstanding shares as of
June 30, 2018 of 124,312,846.(2) Includes amortization of
stock based compensation.(3) The $6.5 million decrease related
to investment securities is primarily due to a decline in the value
of the Agency RMBS portfolio for the three months ended June 30,
2018.
Conference Call
On Friday, August 3, 2018 at 9:00 a.m., Eastern
Time, New York Mortgage Trust's executive management is scheduled
to host a conference call and audio webcast to discuss the
Company’s financial results for the three and six months ended
June 30, 2018. The conference call dial-in number is (877)
312-8806. The replay will be available until Friday, August 10,
2018 and can be accessed by dialing (855) 859-2056 and entering
passcode 4545709. A live audio webcast of the conference call
can be accessed via the Internet, on a listen-only basis, at the
Company's website at http://www.nymtrust.com. Please allow
extra time, prior to the call, to visit the site and download the
necessary software to listen to the Internet broadcast.
Second quarter 2018 financial and operating data
can be viewed in the Company’s Quarterly Report on Form 10-Q for
the quarter ended June 30, 2018, which is expected to be filed
with the Securities and Exchange Commission on or about August 9,
2018. A copy of the Form 10-Q will be posted at the Company’s
website as soon as reasonably practicable following its filing with
the Securities and Exchange Commission.
About New York Mortgage Trust
New York Mortgage Trust, Inc. is a Maryland
corporation that has elected to be taxed as a real estate
investment trust for federal income tax purposes (“REIT”). NYMT is
an internally managed REIT in the business of acquiring, investing
in, financing and managing mortgage-related and residential
housing-related assets and targets multi-family CMBS, direct
financing to owners of multi-family properties through preferred
equity and mezzanine loan investments, residential mortgage loans,
including second mortgages and loans sourced from distressed
markets, non-Agency RMBS, Agency RMBS and other mortgage-related
and residential housing-related investments. Headlands Asset
Management, LLC provides investment management services to the
Company with respect to certain of its distressed residential
loans. For a list of defined terms used from time to time in
this press release, see “Defined Terms” below.
Defined Terms
The following defines certain of the commonly
used terms in this press release: “RMBS” refers to residential
mortgage-backed securities comprised of adjustable-rate, hybrid
adjustable-rate, fixed-rate, interest only and inverse interest
only, and principal only securities; “Agency RMBS” refers to RMBS
representing interests in or obligations backed by pools of
residential mortgage loans issued or guaranteed by a federally
chartered corporation ("GSE"), such as the Federal National
Mortgage Association (“Fannie Mae”) or the Federal Home Loan
Mortgage Corporation (“Freddie Mac”), or an agency of the U.S.
government, such as the Government National Mortgage Association
(“Ginnie Mae”); "Non-Agency RMBS" refers to RMBS backed by
performing, re-performing and non-performing mortgage loans;
“Agency ARMs” refers to Agency RMBS comprised of adjustable-rate
and hybrid adjustable-rate RMBS; "Agency fixed-rate RMBS" refers to
Agency RMBS comprised of fixed-rate RMBS; “IOs” refers collectively
to interest only and inverse interest only mortgage-backed
securities that represent the right to the interest component of
the cash flow from a pool of mortgage loans; “Agency IOs” refers to
an IO that represents the right to the interest component of cash
flow from a pool of residential mortgage loans issued or guaranteed
by a GSE, or an agency of the U.S. government; “POs” refers to
mortgage-backed securities that represent the right to the
principal component of the cash flow from a pool of mortgage loans;
“ARMs” refers to adjustable-rate residential mortgage loans;
“residential securitized loans” refers to prime credit quality ARMs
held in securitization trusts; “distressed residential mortgage
loans” or "distressed residential loans" refers to pools of
performing and re-performing fixed-rate and adjustable-rate, fully
amortizing, interest-only and balloon, seasoned mortgage loans
secured by first liens on one- to four-family properties; “CMBS”
refers to commercial mortgage-backed securities comprised of
commercial mortgage pass-through securities, as well as IO or PO
securities that represent the right to a specific component of the
cash flow from a pool of commercial mortgage loans; “multi-family
CMBS” refers to CMBS backed by commercial mortgage loans on
multi-family properties; “multi-family securitized loans” refers to
the commercial mortgage loans included in the Consolidated
K-Series; “CDO” refers to collateralized debt obligation; “CLO”
refers to collateralized loan obligation; and "Consolidated
K-Series” refers to Freddie Mac- sponsored multi-family loan
K-Series securitizations, of which we, or one of our special
purpose entities, own the first loss PO securities and certain IO
and/or mezzanine securities issued by them.
Additional Information
We determined that the Consolidated K-Series
were variable interest entities and that we are the primary
beneficiary of the Consolidated K-Series. As a result, we are
required to consolidate the Consolidated K-Series’ underlying
multi-family loans including their liabilities, income and expenses
in our condensed consolidated financial statements. We have elected
the fair value option on the assets and liabilities held within the
Consolidated K-Series, which requires that changes in valuations in
the assets and liabilities of the Consolidated K-Series be
reflected in our condensed consolidated statements of
operations.
A reconciliation of our net capital allocated to
multi-family investments to our condensed consolidated financial
statements as of June 30, 2018 is set forth below (dollar
amounts in thousands):
Multi-family loans held
in securitization trusts, at fair value |
$ |
9,345,360 |
|
Multi-family CDOs, at
fair value |
(8,838,841 |
) |
Net carrying value |
506,519 |
|
Investment securities
available for sale, at fair value |
134,614 |
|
Total CMBS, at fair
value |
641,133 |
|
Preferred equity
investments, mezzanine loans and investments in unconsolidated
entities |
217,111 |
|
Real estate under
development (1) |
20,337 |
|
Real estate held for
sale in consolidated variable interest entities |
29,502 |
|
Mortgages and notes
payable in consolidated variable interest entities |
(32,520 |
) |
Financing arrangements,
portfolio investments |
(295,294 |
) |
Securitized debt |
(29,628 |
) |
Cash and other |
6,781 |
|
Net Capital in
Multi-Family |
$ |
557,422 |
|
(1) Included in the Company’s accompanying condensed
consolidated balance sheets in receivables and other assets.
A reconciliation of our net interest income in
multi-family investments to our condensed consolidated financial
statements for the three months ended June 30, 2018 is set
forth below (dollar amounts in thousands):
|
Three Months EndedJune 30, 2018 |
Interest income,
multi-family loans held in securitization trusts |
$ |
85,629 |
|
Interest income,
investment securities, available for sale (1) |
2,474 |
|
Interest income,
preferred equity investments and mezzanine loans (1) |
4,862 |
|
Interest expense,
multi-family collateralized debt obligation |
(74,686 |
) |
Interest income,
Multi-Family, net |
18,279 |
|
Interest expense,
investment securities, available for sale |
(3,365 |
) |
Interest expense,
securitized debt |
(724 |
) |
Net interest income,
Multi-Family |
$ |
14,190 |
|
(1) Included in the Company’s accompanying
condensed consolidated statements of operations in interest income,
investment securities and other.
Cautionary Statement Regarding
Forward-Looking Statements
When used in this press release, in future
filings with the Securities and Exchange Commission (“SEC”) or in
other written or oral communications, statements which are not
historical in nature, including those containing words such as
“believe,” “expect,” “anticipate,” “estimate,” “plan,” “continue,”
“intend,” “should,” “would,” “could,” “goal,” “objective,” “will,”
“may” or similar expressions, are intended to identify
“forward-looking statements” within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended ("Exchange Act"), and,
as such, may involve known and unknown risks, uncertainties and
assumptions.
Forward-looking statements are based on the
Company’s beliefs, assumptions and expectations of its future
performance, taking into account all information currently
available to it. These beliefs, assumptions and expectations are
subject to risks and uncertainties and can change as a result of
many possible events or factors, not all of which are known to the
Company. If a change occurs, the Company’s business, financial
condition, liquidity and results of operations may vary materially
from those expressed in its forward-looking statements. The
following factors are examples of those that could cause actual
results to vary from the Company’s forward-looking statements:
changes in interest rates and the market value of the Company’s
investments; changes in credit spreads; changes in the long-term
credit ratings of the U.S., Fannie Mae, Freddie Mac, and Ginnie
Mae; market volatility; changes in the prepayment rates on the
mortgage loans underlying the Company’s investment securities;
increased rates of default and/or decreased recovery rates on the
Company's assets; delays in identifying and acquiring the Company’s
targeted assets; the Company’s ability to borrow to finance its
assets and the terms thereof; changes in governmental laws,
regulations or policies affecting the Company’s business; the
Company’s ability to maintain its qualification as a REIT for
federal tax purposes; the Company’s ability to maintain its
exemption from registration under the Investment Company Act of
1940, as amended; and risks associated with investing in real
estate assets, including changes in business conditions and the
general economy. These and other risks, uncertainties and factors,
including the risk factors described in the Company’s reports filed
with the SEC pursuant to the Exchange Act, could cause the
Company’s actual results to differ materially from those projected
in any forward-looking statements it makes. All forward-looking
statements speak only as of the date on which they are made. New
risks and uncertainties arise over time and it is not possible to
predict those events or how they may affect the Company. Except as
required by law, the Company is not obligated to, and does not
intend to, update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise.
For Further Information
CONTACT: |
|
|
AT THE COMPANY |
|
|
|
Kristine R.
Nario-Eng |
|
|
|
Chief Financial
Officer |
|
|
|
Phone: (646)
216-2363 |
|
|
|
Email:
KNario@nymtrust.com |
FINANCIAL TABLES FOLLOW
|
NEW YORK MORTGAGE TRUST, INC. AND
SUBSIDIARIES |
CONDENSED CONSOLIDATED BALANCE
SHEETS |
(Dollar amounts in thousands, except share
data) |
|
|
June 30, 2018 |
|
December 31, 2017 |
|
(unaudited) |
|
|
ASSETS |
|
|
|
Investment securities,
available for sale, at fair value (including
pledged securities of $976,113 and $1,076,187, as of June 30,
2018 and December 31, 2017, respectively, and $50,134 and $47,922
held in securitization trusts as of June 30, 2018 and December 31,
2017, respectively) |
$ |
1,290,015 |
|
|
$ |
1,413,081 |
|
Residential mortgage
loans held in securitization trusts, net |
66,047 |
|
|
73,820 |
|
Residential mortgage
loans, at fair value |
169,197 |
|
|
87,153 |
|
Distressed residential
mortgage loans, net (including $105,851 and $121,791 held in
securitization trusts as of June 30, 2018 and December 31, 2017,
respectively) |
290,645 |
|
|
331,464 |
|
Multi-family loans held
in securitization trusts, at fair value |
9,345,360 |
|
|
9,657,421 |
|
Derivative assets |
10,543 |
|
|
10,101 |
|
Cash and cash
equivalents |
84,717 |
|
|
95,191 |
|
Investment in
unconsolidated entities |
53,671 |
|
|
51,143 |
|
Preferred equity and
mezzanine loan investments |
176,741 |
|
|
138,920 |
|
Real estate held for
sale in consolidated variable interest entities |
29,502 |
|
|
64,202 |
|
Goodwill |
25,222 |
|
|
25,222 |
|
Receivables and other
assets |
99,213 |
|
|
108,567 |
|
Total Assets
(1) |
$ |
11,640,873 |
|
|
$ |
12,056,285 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
Liabilities: |
|
|
|
Financing arrangements,
portfolio investments |
$ |
1,179,961 |
|
|
$ |
1,276,918 |
|
Financing arrangements,
residential mortgage loans |
192,233 |
|
|
149,063 |
|
Residential
collateralized debt obligations |
62,198 |
|
|
70,308 |
|
Multi-family
collateralized debt obligations, at fair value |
8,838,841 |
|
|
9,189,459 |
|
Securitized debt |
61,026 |
|
|
81,537 |
|
Mortgages and notes
payable in consolidated variable interest entities |
32,520 |
|
|
57,124 |
|
Accrued expenses and
other liabilities |
83,155 |
|
|
82,126 |
|
Subordinated
debentures |
45,000 |
|
|
45,000 |
|
Convertible notes |
129,738 |
|
|
128,749 |
|
Total
liabilities (1) |
10,624,672 |
|
|
11,080,284 |
|
Commitments and
Contingencies |
|
|
|
Stockholders'
Equity: |
|
|
|
Preferred stock, $0.01
par value, 7.75% Series B cumulative redeemable, $25 liquidation
preference per share, 6,000,000 shares authorized, 3,000,000 shares
issued and outstanding |
72,397 |
|
|
72,397 |
|
Preferred stock, $0.01
par value, 7.875% Series C cumulative redeemable, $25 liquidation
preference per share, 4,140,000 shares authorized, 3,600,000 shares
issued and outstanding |
86,862 |
|
|
86,862 |
|
Preferred stock, $0.01
par value, 8.00% Series D Fixed-to-Floating Rate cumulative
redeemable, $25 liquidation preference per share, 5,750,000 shares
authorized and 5,400,000 shares issued and outstanding |
130,496 |
|
|
130,496 |
|
Common stock, $0.01 par
value, 400,000,000 shares authorized, 124,312,846 and 111,909,909
shares issued and outstanding as of June 30, 2018 and December 31,
2017, respectively |
1,243 |
|
|
1,119 |
|
Additional paid-in
capital |
825,960 |
|
|
751,155 |
|
Accumulated other
comprehensive (loss) income |
(25,450 |
) |
|
5,553 |
|
Accumulated
deficit |
(75,541 |
) |
|
(75,717 |
) |
Company's stockholders'
equity |
1,015,967 |
|
|
971,865 |
|
Non-controlling
interest in consolidated variable interest entities |
234 |
|
|
4,136 |
|
Total
equity |
1,016,201 |
|
|
976,001 |
|
Total
Liabilities and Stockholders' Equity |
$ |
11,640,873 |
|
|
$ |
12,056,285 |
|
(1) Our condensed consolidated balance
sheets include assets and liabilities of consolidated variable
interest entities ("VIEs") as the Company is the primary
beneficiary of these VIEs. As of June 30, 2018 and
December 31, 2017, assets of consolidated VIEs totaled
$9,663,179 and $10,041,468, respectively, and the liabilities of
consolidated VIEs totaled $9,027,733 and $9,436,421,
respectively.
|
NEW YORK MORTGAGE TRUST, INC. AND
SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(Dollar amounts in thousands, except per share
data) |
(unaudited) |
|
|
For the ThreeMonths Ended June
30, |
|
For the SixMonths Ended June 30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
INTEREST INCOME: |
|
|
|
|
|
|
|
Investment securities and other |
$ |
16,990 |
|
|
$ |
10,199 |
|
|
$ |
33,248 |
|
|
$ |
20,000 |
|
Multi-family loans held in securitization trusts |
85,629 |
|
|
75,752 |
|
|
170,721 |
|
|
137,056 |
|
Residential mortgage loans |
2,384 |
|
|
1,365 |
|
|
4,571 |
|
|
2,607 |
|
Distressed residential mortgage loans |
2,720 |
|
|
6,665 |
|
|
8,074 |
|
|
12,703 |
|
Total
interest income |
107,723 |
|
|
93,981 |
|
|
216,614 |
|
|
172,366 |
|
|
|
|
|
|
|
|
|
INTEREST EXPENSE: |
|
|
|
|
|
|
|
Investment securities and other |
10,477 |
|
|
5,805 |
|
|
20,127 |
|
|
11,374 |
|
Convertible notes |
2,652 |
|
|
2,615 |
|
|
5,301 |
|
|
4,590 |
|
Multi-family collateralized debt obligations |
74,686 |
|
|
66,873 |
|
|
149,165 |
|
|
120,805 |
|
Residential collateralized debt obligations |
475 |
|
|
239 |
|
|
886 |
|
|
575 |
|
Securitized debt |
1,243 |
|
|
2,171 |
|
|
2,574 |
|
|
4,286 |
|
Subordinated debentures |
690 |
|
|
570 |
|
|
1,310 |
|
|
1,110 |
|
Total
interest expense |
90,223 |
|
|
78,273 |
|
|
179,363 |
|
|
142,740 |
|
|
|
|
|
|
|
|
|
NET INTEREST
INCOME |
17,500 |
|
|
15,708 |
|
|
37,251 |
|
|
29,626 |
|
|
|
|
|
|
|
|
|
OTHER INCOME
(LOSS): |
|
|
|
|
|
|
|
Recovery
of (provision for) loan losses |
437 |
|
|
(300 |
) |
|
395 |
|
|
(112 |
) |
Realized
(loss) gain on investment securities and related hedges, net |
(8,654 |
) |
|
1,114 |
|
|
(12,076 |
) |
|
(109 |
) |
Realized
gain on distressed residential mortgage loans at carrying value,
net |
2,021 |
|
|
2,364 |
|
|
1,248 |
|
|
14,335 |
|
Net gain
(loss) on residential mortgage loans at fair value |
97 |
|
|
— |
|
|
(70 |
) |
|
— |
|
Unrealized gain (loss) on investment securities and related hedges,
net |
12,606 |
|
|
(1,051 |
) |
|
24,298 |
|
|
495 |
|
Unrealized gain on multi-family loans and debt held in
securitization trusts, net |
12,019 |
|
|
1,447 |
|
|
19,564 |
|
|
2,831 |
|
Income
from operating real estate and real estate held for sale in
consolidated variable interest entities |
1,253 |
|
|
2,316 |
|
|
3,379 |
|
|
2,316 |
|
Other
income |
228 |
|
|
2,282 |
|
|
4,223 |
|
|
5,121 |
|
Total
other income |
20,007 |
|
|
8,172 |
|
|
40,961 |
|
|
24,877 |
|
|
|
|
|
|
|
|
|
GENERAL, ADMINISTRATIVE
AND OPERATING EXPENSES: |
|
|
|
|
|
|
|
General
and administrative expenses |
5,276 |
|
|
5,065 |
|
|
9,932 |
|
|
9,952 |
|
Base
management and incentive fees |
809 |
|
|
(109 |
) |
|
1,642 |
|
|
2,969 |
|
Expenses
related to distressed residential mortgage loans |
1,811 |
|
|
2,218 |
|
|
3,414 |
|
|
4,457 |
|
Expenses
related to operating real estate and real estate held for sale in
consolidated variable interest entities |
873 |
|
|
4,415 |
|
|
2,479 |
|
|
4,415 |
|
Total
general, administrative and operating expenses |
8,769 |
|
|
11,589 |
|
|
17,467 |
|
|
21,793 |
|
|
|
|
|
|
|
|
|
INCOME FROM OPERATIONS
BEFORE INCOME TAXES |
28,738 |
|
|
12,291 |
|
|
60,745 |
|
|
32,710 |
|
Income tax (benefit)
expense |
(13 |
) |
|
442 |
|
|
(92 |
) |
|
1,680 |
|
NET INCOME |
28,751 |
|
|
11,849 |
|
|
60,837 |
|
|
31,030 |
|
Net loss (income)
attributable to non-controlling interest in consolidated variable
interest entities |
943 |
|
|
2,487 |
|
|
(1,526 |
) |
|
2,487 |
|
NET INCOME ATTRIBUTABLE
TO COMPANY |
29,694 |
|
|
14,336 |
|
|
59,311 |
|
|
33,517 |
|
Preferred stock
dividends |
(5,925 |
) |
|
(3,225 |
) |
|
(11,850 |
) |
|
(6,450 |
) |
NET INCOME ATTRIBUTABLE
TO COMPANY'S COMMON STOCKHOLDERS |
$ |
23,769 |
|
|
$ |
11,111 |
|
|
$ |
47,461 |
|
|
$ |
27,067 |
|
|
|
|
|
|
|
|
|
Basic earnings per
common share |
$ |
0.21 |
|
|
$ |
0.10 |
|
|
$ |
0.42 |
|
|
$ |
0.24 |
|
Diluted earnings per
common share |
$ |
0.20 |
|
|
$ |
0.10 |
|
|
$ |
0.40 |
|
|
$ |
0.24 |
|
Weighted average shares
outstanding-basic |
115,211 |
|
|
111,863 |
|
|
113,623 |
|
|
111,792 |
|
Weighted average shares
outstanding-diluted |
135,164 |
|
|
111,863 |
|
|
133,470 |
|
|
111,792 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NEW YORK MORTGAGE TRUST, INC. AND
SUBSIDIARIES |
SUMMARY OF QUARTERLY EARNINGS |
(Dollar amounts in thousands, except per share
data) |
(unaudited) |
|
|
For the Three Months Ended |
|
June 30,2018 |
|
March 31,2018 |
|
December 31, 2017 |
|
September 30, 2017 |
|
June 30,2017 |
Net interest
income |
$ |
17,500 |
|
|
$ |
19,752 |
|
|
$ |
15,040 |
|
|
$ |
13,320 |
|
|
$ |
15,708 |
|
Total other income |
20,007 |
|
|
20,953 |
|
|
25,218 |
|
|
24,918 |
|
|
8,172 |
|
Total general,
administrative and operating expenses |
8,769 |
|
|
8,698 |
|
|
8,288 |
|
|
10,996 |
|
|
11,589 |
|
Income from operations
before income taxes |
28,738 |
|
|
32,007 |
|
|
31,970 |
|
|
27,242 |
|
|
12,291 |
|
Income tax (benefit)
expense |
(13 |
) |
|
(79 |
) |
|
1,169 |
|
|
507 |
|
|
442 |
|
Net income |
28,751 |
|
|
32,086 |
|
|
30,801 |
|
|
26,735 |
|
|
11,849 |
|
Net loss (income)
attributable to non-controlling interest in consolidated variable
interest entities |
943 |
|
|
(2,468 |
) |
|
(184 |
) |
|
1,110 |
|
|
2,487 |
|
Net income attributable
to Company |
29,694 |
|
|
29,618 |
|
|
30,617 |
|
|
27,845 |
|
|
14,336 |
|
Preferred stock
dividends |
(5,925 |
) |
|
(5,925 |
) |
|
(5,985 |
) |
|
(3,225 |
) |
|
(3,225 |
) |
Net income attributable
to Company's common stockholders |
23,769 |
|
|
23,693 |
|
|
24,632 |
|
|
24,620 |
|
|
11,111 |
|
Basic earnings per
common share |
$ |
0.21 |
|
|
$ |
0.21 |
|
|
$ |
0.22 |
|
|
$ |
0.22 |
|
|
$ |
0.10 |
|
Diluted earnings per
common share |
$ |
0.20 |
|
|
$ |
0.20 |
|
|
$ |
0.21 |
|
|
$ |
0.21 |
|
|
$ |
0.10 |
|
Weighted average shares
outstanding - basic |
115,211 |
|
|
112,018 |
|
|
111,871 |
|
|
111,886 |
|
|
111,863 |
|
Weighted average shares
outstanding - diluted |
135,164 |
|
|
131,761 |
|
|
131,565 |
|
|
131,580 |
|
|
111,863 |
|
|
|
|
|
|
|
|
|
|
|
Book value per common
share |
$ |
5.76 |
|
|
$ |
5.79 |
|
|
$ |
6.00 |
|
|
$ |
6.05 |
|
|
$ |
6.02 |
|
Dividends declared per
common share |
$ |
0.20 |
|
|
$ |
0.20 |
|
|
$ |
0.20 |
|
|
$ |
0.20 |
|
|
$ |
0.20 |
|
Dividends declared per
preferred share on Series B Preferred Stock |
$ |
0.48 |
|
|
$ |
0.48 |
|
|
$ |
0.48 |
|
|
$ |
0.48 |
|
|
$ |
0.48 |
|
Dividends declared per
preferred share on Series C Preferred Stock |
$ |
0.49 |
|
|
$ |
0.49 |
|
|
$ |
0.49 |
|
|
$ |
0.49 |
|
|
$ |
0.49 |
|
Dividends declared per
preferred share on Series D Preferred Stock |
$ |
0.50 |
|
|
$ |
0.50 |
|
|
$ |
0.51 |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Allocation Summary
The following tables set forth our allocated
capital by investment type as well as the weighted average yield on
interest earning assets, average cost of funds and portfolio net
interest margin for our interest earning assets for the periods
indicated (dollar amounts in thousands):
|
AgencyRMBS |
|
Multi-Family |
|
Distressed Residential |
|
Other |
|
Total |
At June 30,
2018 |
|
|
|
|
|
|
|
|
|
Carrying
value |
$ |
1,101,344 |
|
|
$ |
875,563 |
|
|
$ |
445,353 |
|
|
$ |
154,405 |
|
|
$ |
2,576,665 |
|
Net
capital allocated |
$ |
250,497 |
|
|
$ |
557,422 |
|
|
$ |
272,534 |
|
|
$ |
(64,252 |
) |
|
$ |
1,016,201 |
|
Three Months
Ended June 30, 2018 |
|
|
|
|
|
|
|
|
|
Average
interest earning assets |
$ |
1,167,278 |
|
|
$ |
639,637 |
|
|
$ |
453,407 |
|
|
$ |
142,975 |
|
|
$ |
2,403,297 |
|
Weighted
average yield on interest earning assets |
2.69 |
% |
|
11.43 |
% |
|
4.51 |
% |
|
5.02 |
% |
|
5.50 |
% |
Less:
Average cost of funds |
(2.02 |
)% |
|
(4.69 |
)% |
|
(4.87 |
)% |
|
(3.99 |
)% |
|
(3.11 |
)% |
Portfolio
net interest margin |
0.67 |
% |
|
6.74 |
% |
|
(0.36 |
)% |
|
1.03 |
% |
|
2.39 |
% |
|
|
|
|
|
|
|
|
|
|
At March 31,
2018 |
|
|
|
|
|
|
|
|
|
Carrying
value |
$ |
1,161,445 |
|
|
$ |
836,353 |
|
|
$ |
461,305 |
|
|
$ |
150,461 |
|
|
$ |
2,609,564 |
|
Net
capital allocated |
$ |
251,405 |
|
|
$ |
500,813 |
|
|
$ |
282,561 |
|
|
$ |
(83,992 |
) |
|
$ |
950,787 |
|
Three Months
Ended March 31, 2018 |
|
|
|
|
|
|
|
|
|
Average
interest earning assets |
$ |
1,208,900 |
|
|
$ |
612,357 |
|
|
$ |
467,898 |
|
|
$ |
136,135 |
|
|
$ |
2,425,290 |
|
Weighted
average yield on interest earning assets |
2.64 |
% |
|
11.43 |
% |
|
6.25 |
% |
|
4.81 |
% |
|
5.68 |
% |
Less:
Average cost of funds |
(1.82 |
)% |
|
(4.51 |
)% |
|
(4.45 |
)% |
|
(3.25 |
)% |
|
(2.82 |
)% |
Portfolio
net interest margin |
0.82 |
% |
|
6.92 |
% |
|
1.80 |
% |
|
1.56 |
% |
|
2.86 |
% |
|
|
|
|
|
|
|
|
|
|
At December 31,
2017 |
|
|
|
|
|
|
|
|
|
Carrying
value |
$ |
1,169,535 |
|
|
$ |
816,805 |
|
|
$ |
474,128 |
|
|
$ |
140,325 |
|
|
$ |
2,600,793 |
|
Net
capital allocated |
$ |
264,801 |
|
|
$ |
475,200 |
|
|
$ |
285,766 |
|
|
$ |
(49,766 |
) |
|
$ |
976,001 |
|
Three Months
Ended December 31, 2017 |
|
|
|
|
|
|
|
|
|
Average
interest earning assets |
$ |
971,707 |
|
|
$ |
596,701 |
|
|
$ |
480,711 |
|
|
$ |
126,447 |
|
|
$ |
2,175,566 |
|
Weighted
average yield on interest earning assets |
2.50 |
% |
|
11.11 |
% |
|
3.68 |
% |
|
4.53 |
% |
|
5.24 |
% |
Less:
Average cost of funds |
(1.68 |
)% |
|
(4.49 |
)% |
|
(4.56 |
)% |
|
(3.22 |
)% |
|
(2.85 |
)% |
Portfolio
net interest margin |
0.82 |
% |
|
6.62 |
% |
|
(0.88 |
)% |
|
1.31 |
% |
|
2.39 |
% |
|
|
|
|
|
|
|
|
|
|
At September
30, 2017 |
|
|
|
|
|
|
|
|
|
Carrying
value |
$ |
417,957 |
|
|
$ |
723,170 |
|
|
$ |
535,520 |
|
|
$ |
136,304 |
|
|
$ |
1,812,951 |
|
Net
capital allocated |
$ |
90,526 |
|
|
$ |
495,882 |
|
|
$ |
305,668 |
|
|
$ |
(46,071 |
) |
|
$ |
846,005 |
|
Three Months
Ended September 30, 2017 |
|
|
|
|
|
|
|
|
|
Average
interest earning assets |
$ |
453,323 |
|
|
$ |
536,537 |
|
|
$ |
531,050 |
|
|
$ |
126,848 |
|
|
$ |
1,647,758 |
|
Weighted
average yield on interest earning assets |
1.70 |
% |
|
11.39 |
% |
|
4.37 |
% |
|
4.21 |
% |
|
5.91 |
% |
Less:
Average cost of funds |
(1.44 |
)% |
|
(4.46 |
)% |
|
(4.28 |
)% |
|
(2.57 |
)% |
|
(3.10 |
)% |
Portfolio
net interest margin |
0.26 |
% |
|
6.93 |
% |
|
0.09 |
% |
|
1.64 |
% |
|
2.81 |
% |
|
|
|
|
|
|
|
|
|
|
At June 30,
2017 |
|
|
|
|
|
|
|
|
|
Carrying
value |
$ |
449,437 |
|
|
$ |
749,643 |
|
|
$ |
568,273 |
|
|
$ |
133,488 |
|
|
$ |
1,900,841 |
|
Net
capital allocated |
$ |
110,497 |
|
|
$ |
508,068 |
|
|
$ |
290,414 |
|
|
$ |
(65,536 |
) |
|
$ |
843,443 |
|
Three Months
Ended June 30, 2017 |
|
|
|
|
|
|
|
|
|
Average
interest earning assets |
$ |
485,194 |
|
|
$ |
529,285 |
|
|
$ |
621,936 |
|
|
$ |
123,711 |
|
|
$ |
1,760,126 |
|
Weighted
average yield on interest earning assets |
1.65 |
% |
|
11.10 |
% |
|
5.91 |
% |
|
3.96 |
% |
|
6.16 |
% |
Less:
Average cost of funds |
(1.30 |
)% |
|
(4.28 |
)% |
|
(4.29 |
)% |
|
(2.13 |
)% |
|
(3.04 |
)% |
Portfolio
net interest margin |
0.35 |
% |
|
6.82 |
% |
|
1.62 |
% |
|
1.83 |
% |
|
3.12 |
% |
|
|
|
|
|
|
|
|
|
|
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