New York Mortgage Trust, Inc. (Nasdaq: NYMT) (“NYMT,” the
“Company,” “we,” “our” or “us”) today reported results for the
three and nine months ended September 30, 2018.
Summary of Third Quarter 2018:
- Earned net income attributable to common stockholders of $28.0
million, or $0.21 per share (basic), and comprehensive income to
common stockholders of $18.2 million, or $0.14 per share.
- Earned net interest income of $19.6 million and portfolio net
interest margin of 255 basis points.
- Recognized book value per common share of $5.72 at
September 30, 2018, a decrease of less than 1% from June 30,
2018, resulting in an economic return of 2.8% for the quarter and
an annualized economic return of 7.1% for the nine months ended
September 30, 2018.
- Declared third quarter dividend of $0.20 per common share that
was paid on October 26, 2018.
- Issued 14,375,000 shares of common stock through an
underwritten public offering and 2,443,487 shares of common stock
under our at-the-market equity offering program, resulting in total
net proceeds to the Company of $101.2 million.
- Acquired residential and multi-family credit assets totaling
$161.5 million.
- Sold residential mortgage loans, including distressed
residential mortgage loans, for aggregate proceeds of approximately
$30.1 million.
Management Overview
Steven Mumma, NYMT’s Chairman and Chief
Executive Officer, commented: "The Company had a solid
quarter of earnings and book value, with GAAP earnings of $0.21 per
common share and book value at $5.72, down $0.04 from the previous
quarter. The Company delivered a 2.8% economic return for the
quarter and a 7.1% annualized economic return for the nine months
ended September 30, 2018. The Company raised a total of $101.2
million in common equity during the quarter at an average net price
of $6.02, or approximately 4% accretive to our June 30, 2018 book
value.
The Company’s net interest margin improved 16
basis points to 255 basis points from the previous quarter.
The improvement is largely attributable to our continued focus on
credit sensitive assets in both residential and multi-family,
adding $161.5 million during the quarter. The Company
continues to see improved valuations for multi-family assets, with
our multi-family CMBS contributing $12.3 million in
unrealized gains during the quarter. The Company also
benefited from a $3.6 million recovery in one of our multi-family
joint venture equity investments which had been previously
written down.
The Company sold distressed loans for total
proceeds of $30.1 million in the quarter and anticipates more sales
in the fourth quarter. The previously announced
internalization of the single family residential credit
strategy progressed nicely during the quarter with the addition of
11 employees, bringing the total number of new hires year-to-date
to 12 employees. We continue to work towards a mutual early
termination of our external management agreement and anticipate a
final transition strategy for those services by the end of the
year.
As we look at the fourth quarter of 2018, our
pipeline for new investments is strong, with over $390 million in
purchases or commitments to purchase credit assets, including
securities and loans. We believe the addition of our new team
of residential credit professionals, together with our existing
team, has us well positioned for 2019. Consistent with
our approach in recent years, we will continue to focus on credit
assets as we believe these assets give us the best balance of risk
and return."
Capital Allocation
The following tables set forth our allocated
capital by investment type at September 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 September 30, 2018 (dollar amounts
in thousands):
|
Capital Allocation at September 30, 2018: |
| |
AgencyRMBS(1) |
|
Multi-Family (2) |
|
DistressedResidential (3) |
|
Other (4) |
|
Total |
| Carrying Value |
$ |
1,055,433 |
|
|
$ |
947,851 |
|
|
$ |
474,717 |
|
|
$ |
145,228 |
|
|
$ |
2,623,229 |
|
| Liabilities |
|
|
|
|
|
|
|
|
|
|
Callable(5) |
(852,325 |
) |
|
(278,334 |
) |
|
(141,396 |
) |
|
(35,830 |
) |
|
(1,307,885 |
) |
|
Non-Callable |
— |
|
|
(29,870 |
) |
|
(23,727 |
) |
|
(101,504 |
) |
|
(155,101 |
) |
|
Convertible |
— |
|
|
— |
|
|
— |
|
|
(130,251 |
) |
|
(130,251 |
) |
| Hedges (Net) (6) |
8,760 |
|
|
— |
|
|
— |
|
|
— |
|
|
8,760 |
|
| Cash (7) |
10,554 |
|
|
1,992 |
|
|
7,478 |
|
|
45,744 |
|
|
65,768 |
|
| Goodwill |
— |
|
|
— |
|
|
— |
|
|
25,222 |
|
|
25,222 |
|
| Other |
2,123 |
|
|
(8,816 |
) |
|
18,783 |
|
|
(33,143 |
) |
|
(21,053 |
) |
| Net Capital
Allocated |
$ |
224,545 |
|
|
$ |
632,823 |
|
|
$ |
335,855 |
|
|
$ |
(84,534 |
) |
|
$ |
1,108,689 |
|
| % of Capital
Allocated |
20.2 |
% |
|
57.1 |
% |
|
30.3 |
% |
|
(7.6 |
)% |
|
100.0 |
% |
| |
|
|
|
|
|
|
|
|
|
|
Net Interest Income- Three Months Ended September 30,
2018: |
| Interest Income |
$ |
7,479 |
|
|
$ |
19,668 |
|
|
$ |
6,058 |
|
|
$ |
1,899 |
|
|
$ |
35,104 |
|
| Interest Expense |
(4,860 |
) |
|
(4,047 |
) |
|
(2,182 |
) |
|
(4,412 |
) |
|
(15,501 |
) |
| Net Interest Income
(Expense) |
$ |
2,619 |
|
|
$ |
15,621 |
|
|
$ |
3,876 |
|
|
$ |
(2,513 |
) |
|
$ |
19,603 |
|
| |
|
|
|
|
|
|
|
|
|
|
Portfolio Net Interest Margin - Three Months Ended
September 30, 2018 |
| Average Interest
Earning Assets (8) |
$ |
1,121,180 |
|
|
$ |
681,040 |
|
|
$ |
456,240 |
|
|
$ |
140,960 |
|
|
$ |
2,399,420 |
|
| Weighted Average Yield
on Interest Earning Assets (9) |
2.67 |
% |
|
11.55 |
% |
|
5.31 |
% |
|
5.39 |
% |
|
5.85 |
% |
| Less: Average Cost of
Funds (10) |
(2.22 |
)% |
|
(5.04 |
)% |
|
(4.96 |
)% |
|
(4.19 |
)% |
|
(3.30 |
)% |
| Portfolio Net Interest
Margin (11) |
0.45 |
% |
|
6.51 |
% |
|
0.35 |
% |
|
1.20 |
% |
|
2.55 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 exclude 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
$260.8 million of distressed residential mortgage loans, $112.5
million of distressed residential mortgage loans, at fair value,
and $98.2 million of Non-Agency RMBS.(4) Other includes
residential mortgage loans held in securitization trusts amounting
to $60.5 million, residential second mortgage loans, at fair value
of $69.4 million, investments in unconsolidated entities amounting
to $13.5 million and mortgage loans held for sale and mortgage
loans held for investment totaling $2.0 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
$56.5 million in residential collateralized debt
obligations(5) Includes repurchase
agreements.(6) Includes derivative assets and variation
margin.(7) Includes $7.5 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-RateRMBS |
|
Agency ARMs |
|
ResidentialSecuritizedLoans |
| September 30, 2018 |
|
7.3 |
% |
|
14.6 |
% |
|
23.1 |
% |
| 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 |
% |
| |
|
|
|
|
|
|
|
|
|
Third Quarter Earnings Summary
For the quarter ended September 30, 2018,
we reported net income attributable to common stockholders of $28.0
million as compared to $23.8 million in the quarter ended June 30,
2018.
We generated net interest income of $19.6
million and a portfolio net interest margin of 255 basis points for
the quarter ended September 30, 2018 as compared to net
interest income of $17.5 million and a portfolio net interest
margin of 239 basis points for the quarter ended June 30,
2018. The $2.1 million increase in net interest income in the
third quarter was primarily due to a $1.2 million increase in net
interest income generated by our distressed residential portfolio
and a $1.4 million increase in net interest income generated by our
multi-family portfolio. Net interest income generated by our
Agency RMBS portfolio decreased by $0.6 million primarily due to a
decrease in average interest earning assets and an increase in
funding costs for that portfolio during the quarter.
The main components of other income for the
quarters ended September 30, 2018 and June 30, 2018, respectively,
are detailed in the following table (dollar amounts in
thousands):
| |
|
Three Months Ended |
|
Other Income (Loss) |
|
September 30,2018 |
|
June 30, 2018 |
| Recovery of loan
losses |
|
$ |
840 |
|
|
$ |
437 |
|
| Realized gain (loss) on
investment securities and related hedges, net |
|
299 |
|
|
(8,654 |
) |
| Realized gain on
distressed residential mortgage loans at carrying value, net |
|
1,806 |
|
|
2,021 |
|
| Net gain on residential
mortgage loans at fair value |
|
643 |
|
|
97 |
|
| Unrealized gain on
investment securities and related hedges, net |
|
2,275 |
|
|
12,606 |
|
| Unrealized gain on
multi-family loans and debt held in securitization trusts, net |
|
12,303 |
|
|
12,019 |
|
| Income from operating
real estate and real estate held for sale in consolidated variable
interest entities |
|
1,380 |
|
|
1,253 |
|
| Other income |
|
4,757 |
|
|
228 |
|
| Total
other income |
|
$ |
24,303 |
|
|
$ |
20,007 |
|
|
|
|
|
|
|
|
|
|
|
For the quarter ended September 30, 2018,
we recognized other income of $24.3 million primarily comprised of
the following:
- Unrealized gain of $12.3 million on our Consolidated K-Series
investments due to continued tightening of credit spreads from the
previous quarter.
- Total net gain of $2.4 million from our residential mortgage
loans, including distressed residential mortgage loans, primarily
generated by sales during the period.
- Other income of $4.8 million primarily related to a $3.6
million valuation recovery from a joint venture equity investment
and $1.2 million in income from other equity investments.
- Unrealized gain of $2.3 million from our interest rate swaps
accounted for as trading instruments.
The change in net realized gain on investment
securities and related hedges of $9.0 million and the decrease in
net unrealized gain on investment securities and related hedges of
$10.3 million from the previous quarter can be primarily attributed
to the final liquidation of our Agency IO portfolio in the quarter
ended June 30, 2018.
The following table details the general and
administrative expenses for the quarters ended September 30,
2018 and June 30, 2018 respectively (dollar amounts in
thousands):
| |
|
Three Months Ended |
|
General and Administrative Expenses |
|
September 30,2018 |
|
June 30, 2018 |
| Salaries, benefits and
directors’ compensation |
|
$ |
4,219 |
|
|
$ |
3,173 |
|
| Base management and
incentive fees |
|
844 |
|
|
809 |
|
| Other general and
administrative expenses |
|
1,977 |
|
|
2,103 |
|
| Total
general and administrative expenses |
|
$ |
7,040 |
|
|
$ |
6,085 |
|
|
|
|
|
|
|
|
|
|
|
The change in general and administrative
expenses is primarily related to the increase in salaries and
benefits due to the increase in employee headcount as part of the
internalization of our single family residential credit
strategy. We expect the increase to be offset by a decrease
in base management and incentive fees upon expiration of our
external management agreement.
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
September 30, 2018 and June 30, 2018, respectively (dollar
amounts in thousands):
| |
|
Three Months Ended |
|
Operating Expenses |
|
September 30,2018 |
|
June 30, 2018 |
| Expenses related to
distressed residential mortgage loans |
|
$ |
2,117 |
|
|
$ |
1,811 |
|
| Expenses related to
operating real estate and real estate held for sale in consolidated
variable interest entities |
|
755 |
|
|
873 |
|
| Total
operating expenses |
|
$ |
2,872 |
|
|
$ |
2,684 |
|
|
|
|
|
|
|
|
|
|
|
The increase in operating expenses in the third
quarter can be primarily attributed to our distressed residential
loan strategy, including due diligence expenses for loan purchases
and appraisal costs related to loan sales.
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
September 30, 2018 are as follows (dollar amounts in
thousands):
| |
|
Three Months EndedSeptember 30,
2018 |
| Income from operating
real estate and real estate held for sale in consolidated variable
interest entities |
|
$ |
1,380 |
|
| Expenses related to
operating real estate and real estate held for sale in consolidated
variable interest entities |
|
(755 |
) |
| Net
income from operating real estate and real estate held for sale in
consolidated variable interest entities |
|
625 |
|
| Net income from
operating real estate and real estate held for sale in consolidated
variable interest entities attributable to non-controlling
interest |
|
(517 |
) |
| Net
income from operating real estate and real estate held for sale in
consolidated variable interest entities attributable to Company's
common stockholders |
|
$ |
108 |
|
|
|
|
|
|
|
Analysis of Changes in Book Value
The following table analyzes the changes in book
value of our common stock for the quarter ended September 30,
2018 (amounts in thousands, except per share):
| |
Quarter Ended September 30, 2018 |
| |
Amount |
|
|
Shares |
|
Per Share(1) |
| |
|
|
|
|
|
|
|
|
|
|
| Beginning
Balance |
$ |
715,967 |
|
|
124,313 |
|
|
$ |
5.76 |
|
| Common stock issuance,
net(2) |
101,795 |
|
|
16,902 |
|
|
|
|
| Balance after share
issuance activity |
817,762 |
|
|
141,215 |
|
|
5.79 |
|
| Dividends declared |
(28,243 |
) |
|
|
|
(0.20 |
) |
| Net change in
accumulated other comprehensive income: |
|
|
|
|
|
|
Investment securities (3) |
(9,874 |
) |
|
|
|
(0.07 |
) |
| Net income attributable
to Company's common stockholders |
28,048 |
|
|
|
|
0.20 |
|
| Ending
Balance |
$ |
807,693 |
|
|
141,215 |
|
|
$ |
5.72 |
|
(1) Outstanding shares used to calculate book value per
share for the ending balance is based on outstanding shares as of
September 30, 2018 of 141,214,528.(2) Includes
amortization of stock based compensation.(3) The $9.9 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 September 30, 2018.
Conference Call
On Tuesday, November 6, 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 nine months ended
September 30, 2018. The conference call dial-in number is
(877) 312-8806. The replay will be available until Tuesday,
November 13, 2018 and can be accessed by dialing (855) 859-2056 and
entering passcode 3993317. 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.
Third quarter 2018 financial and operating data
can be viewed in the Company’s Quarterly Report on Form 10-Q for
the quarter ended September 30, 2018, which is expected to be
filed with the Securities and Exchange Commission on or about
November 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 September 30, 2018 is set forth below (dollar
amounts in thousands):
| Multi-family loans held
in securitization trusts, at fair value |
$ |
10,070,834 |
|
| Multi-family CDOs, at
fair value |
(9,504,313 |
) |
| Net carrying value |
566,521 |
|
| Investment securities
available for sale, at fair value |
133,511 |
|
| Total CMBS, at fair
value |
700,032 |
|
| Preferred equity
investments, mezzanine loans and investments in unconsolidated
entities |
228,562 |
|
| Real estate under
development (1) |
22,185 |
|
| Real estate held for
sale in consolidated variable interest entities |
29,558 |
|
| Mortgages and notes
payable in consolidated variable interest entities |
(32,486 |
) |
| Financing arrangements,
portfolio investments |
(278,334 |
) |
| Securitized debt |
(29,870 |
) |
| Cash and other |
(6,824 |
) |
| Net Capital in
Multi-Family |
$ |
632,823 |
|
(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 September 30, 2018 is
set forth below (dollar amounts in thousands):
|
|
Three Months EndedSeptember
30, 2018 |
| Interest income,
multi-family loans held in securitization trusts |
$ |
86,458 |
|
| Interest income,
investment securities, available for sale (1) |
2,481 |
|
| Interest income,
preferred equity investments and mezzanine loans (1) |
5,874 |
|
| Interest expense,
multi-family collateralized debt obligation |
(75,145 |
) |
| Interest income,
Multi-Family, net |
19,668 |
|
| Interest expense,
investment securities, available for sale |
(3,317 |
) |
| Interest expense,
securitized debt |
(730 |
) |
| Net interest income,
Multi-Family |
$ |
15,621 |
|
(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; the Company's ability to identify and
acquire its targeted assets, including assets in its investment
pipeline; 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
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
SHEETS(Dollar amounts in thousands, except share
data)
|
|
September 30, 2018 |
|
December 31, 2017 |
|
|
(unaudited) |
|
|
|
ASSETS |
|
|
|
| Investment securities,
available for sale, at fair value (including
pledged securities of $899,065 and $1,076,187, as of September
30, 2018 and December 31, 2017, respectively, and $51,751 and
$47,922 held in securitization trusts as of September 30, 2018 and
December 31, 2017, respectively) |
$ |
1,287,188 |
|
|
$ |
1,413,081 |
|
| Residential mortgage
loans held in securitization trusts, net |
60,459 |
|
|
73,820 |
|
| Residential mortgage
loans, at fair value |
181,910 |
|
|
87,153 |
|
| Distressed residential
mortgage loans, net (including $96,493 and $121,791 held in
securitization trusts as of September 30, 2018 and December 31,
2017, respectively) |
260,837 |
|
|
331,464 |
|
| Multi-family loans held
in securitization trusts, at fair value |
10,070,834 |
|
|
9,657,421 |
|
| Derivative assets |
8,760 |
|
|
10,101 |
|
| Cash and cash
equivalents |
57,471 |
|
|
95,191 |
|
| Investment in
unconsolidated entities |
43,736 |
|
|
51,143 |
|
| Preferred equity and
mezzanine loan investments |
198,277 |
|
|
138,920 |
|
| Real estate held for
sale in consolidated variable interest entities |
29,558 |
|
|
64,202 |
|
| Goodwill |
25,222 |
|
|
25,222 |
|
| Receivables and other
assets |
102,659 |
|
|
108,567 |
|
| Total Assets
(1) |
$ |
12,326,911 |
|
|
$ |
12,056,285 |
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
Liabilities: |
|
|
|
| Financing arrangements,
portfolio investments |
$ |
1,130,659 |
|
|
$ |
1,276,918 |
|
| Financing arrangements,
residential mortgage loans |
177,226 |
|
|
149,063 |
|
| Residential
collateralized debt obligations |
56,504 |
|
|
70,308 |
|
| Multi-family
collateralized debt obligations, at fair value |
9,504,313 |
|
|
9,189,459 |
|
| Securitized debt |
53,597 |
|
|
81,537 |
|
| Mortgages and notes
payable in consolidated variable interest entities |
32,486 |
|
|
57,124 |
|
| Accrued expenses and
other liabilities |
88,186 |
|
|
82,126 |
|
| Subordinated
debentures |
45,000 |
|
|
45,000 |
|
| Convertible notes |
130,251 |
|
|
128,749 |
|
| Total
liabilities (1) |
11,218,222 |
|
|
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, 141,214,528 and 111,909,909
shares issued and outstanding as of September 30, 2018 and December
31, 2017, respectively |
1,412 |
|
|
1,119 |
|
| Additional paid-in
capital |
927,585 |
|
|
751,155 |
|
| Accumulated other
comprehensive (loss) income |
(35,323 |
) |
|
5,553 |
|
| Accumulated
deficit |
(75,736 |
) |
|
(75,717 |
) |
| Company's stockholders'
equity |
1,107,693 |
|
|
971,865 |
|
| Non-controlling
interest in consolidated variable interest entities |
996 |
|
|
4,136 |
|
| Total
equity |
1,108,689 |
|
|
976,001 |
|
| Total
Liabilities and Stockholders' Equity |
$ |
12,326,911 |
|
|
$ |
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 September 30, 2018 and
December 31, 2017, assets of consolidated VIEs totaled
$10,381,126 and $10,041,468, respectively, and the liabilities of
consolidated VIEs totaled $9,680,332 and $9,436,421,
respectively.
NEW YORK MORTGAGE TRUST, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(Dollar amounts in thousands, except per
share data)(unaudited)
| |
For the ThreeMonths Ended
September 30, |
|
For the NineMonths Ended
September 30, |
| |
2018 |
|
2017 |
|
2018 |
|
2017 |
| INTEREST INCOME: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Investment securities
and other |
$ |
17,021 |
|
|
$ |
9,716 |
|
|
$ |
50,269 |
|
|
$ |
29,716 |
|
|
Multi-family loans held in securitization trusts |
86,458 |
|
|
76,186 |
|
|
257,179 |
|
|
213,242 |
|
|
Residential mortgage loans |
2,844 |
|
|
1,556 |
|
|
7,415 |
|
|
4,163 |
|
|
Distressed residential mortgage loans |
3,926 |
|
|
3,924 |
|
|
12,000 |
|
|
16,627 |
|
| Total
interest income |
110,249 |
|
|
91,382 |
|
|
326,863 |
|
|
263,748 |
|
| |
|
|
|
|
|
|
|
| INTEREST EXPENSE: |
|
|
|
|
|
|
|
|
Investment securities and other |
10,548 |
|
|
5,759 |
|
|
30,673 |
|
|
17,132 |
|
|
Convertible notes |
2,669 |
|
|
2,630 |
|
|
7,971 |
|
|
7,220 |
|
|
Multi-family collateralized debt obligations |
75,145 |
|
|
67,030 |
|
|
224,310 |
|
|
187,835 |
|
|
Residential collateralized debt obligations |
462 |
|
|
403 |
|
|
1,348 |
|
|
978 |
|
|
Securitized debt |
1,110 |
|
|
1,651 |
|
|
3,684 |
|
|
5,937 |
|
|
Subordinated debentures |
712 |
|
|
589 |
|
|
2,023 |
|
|
1,699 |
|
| Total
interest expense |
90,646 |
|
|
78,062 |
|
|
270,009 |
|
|
220,801 |
|
| |
|
|
|
|
|
|
|
| NET INTEREST
INCOME |
19,603 |
|
|
13,320 |
|
|
56,854 |
|
|
42,947 |
|
| |
|
|
|
|
|
|
|
| OTHER INCOME
(LOSS): |
|
|
|
|
|
|
|
| Recovery
of loan losses |
840 |
|
|
563 |
|
|
1,235 |
|
|
452 |
|
| Realized
gain (loss) on investment securities and related hedges, net |
299 |
|
|
4,059 |
|
|
(11,778 |
) |
|
3,951 |
|
| Realized
gain on distressed residential mortgage loans at carrying value,
net |
1,806 |
|
|
6,689 |
|
|
3,054 |
|
|
21,024 |
|
| Net gain
on residential mortgage loans at fair value |
643 |
|
|
717 |
|
|
573 |
|
|
717 |
|
|
Unrealized gain on investment securities and related hedges,
net |
2,275 |
|
|
1,192 |
|
|
26,574 |
|
|
1,687 |
|
|
Unrealized gain on multi-family loans and debt held in
securitization trusts, net |
12,303 |
|
|
2,353 |
|
|
31,867 |
|
|
5,184 |
|
| Income
from operating real estate and real estate held for sale in
consolidated variable interest entities |
1,380 |
|
|
2,429 |
|
|
4,759 |
|
|
4,746 |
|
| Other
income |
4,757 |
|
|
6,916 |
|
|
8,981 |
|
|
12,037 |
|
| Total
other income |
24,303 |
|
|
24,918 |
|
|
65,265 |
|
|
49,798 |
|
| |
|
|
|
|
|
|
|
| GENERAL, ADMINISTRATIVE
AND OPERATING EXPENSES: |
|
|
|
|
|
|
|
| General
and administrative expenses |
6,196 |
|
|
4,242 |
|
|
16,129 |
|
|
14,196 |
|
| Base
management and incentive fees |
844 |
|
|
1,386 |
|
|
2,486 |
|
|
4,355 |
|
| Expenses
related to distressed residential mortgage loans |
2,117 |
|
|
2,225 |
|
|
5,531 |
|
|
6,682 |
|
| Expenses
related to operating real estate and real estate held for sale in
consolidated variable interest entities |
755 |
|
|
3,143 |
|
|
3,234 |
|
|
7,558 |
|
| Total
general, administrative and operating expenses |
9,912 |
|
|
10,996 |
|
|
27,380 |
|
|
32,791 |
|
| |
|
|
|
|
|
|
|
| INCOME FROM OPERATIONS
BEFORE INCOME TAXES |
33,994 |
|
|
27,242 |
|
|
94,739 |
|
|
59,954 |
|
| Income tax (benefit)
expense |
(454 |
) |
|
507 |
|
|
(547 |
) |
|
2,187 |
|
| NET INCOME |
34,448 |
|
|
26,735 |
|
|
95,286 |
|
|
57,767 |
|
| Net (income) loss
attributable to non-controlling interest in consolidated variable
interest entities |
(475 |
) |
|
1,110 |
|
|
(2,001 |
) |
|
3,597 |
|
| NET INCOME ATTRIBUTABLE
TO COMPANY |
33,973 |
|
|
27,845 |
|
|
93,285 |
|
|
61,364 |
|
| Preferred stock
dividends |
(5,925 |
) |
|
(3,225 |
) |
|
(17,775 |
) |
|
(9,675 |
) |
| NET INCOME ATTRIBUTABLE
TO COMPANY'S COMMON STOCKHOLDERS |
$ |
28,048 |
|
|
$ |
24,620 |
|
|
$ |
75,510 |
|
|
$ |
51,689 |
|
| |
|
|
|
|
|
|
|
| Basic earnings per
common share |
$ |
0.21 |
|
|
$ |
0.22 |
|
|
$ |
0.63 |
|
|
$ |
0.46 |
|
| Diluted earnings per
common share |
$ |
0.20 |
|
|
$ |
0.21 |
|
|
$ |
0.60 |
|
|
$ |
0.45 |
|
| Weighted average shares
outstanding-basic |
132,413 |
|
|
111,886 |
|
|
119,955 |
|
|
111,824 |
|
| Weighted average shares
outstanding-diluted |
152,727 |
|
|
131,580 |
|
|
140,044 |
|
|
129,931 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
NEW YORK MORTGAGE TRUST, INC. AND
SUBSIDIARIESSUMMARY OF QUARTERLY
EARNINGS(Dollar amounts in thousands, except per
share data)(unaudited)
| |
For the Three Months Ended |
| |
September 30, 2018 |
|
June 30,2018 |
|
March 31,2018 |
|
December 31,2017 |
|
September 30,2017 |
| Net interest
income |
$ |
19,603 |
|
|
$ |
17,500 |
|
|
$ |
19,752 |
|
|
$ |
15,040 |
|
|
$ |
13,320 |
|
| Total other income |
24,303 |
|
|
20,007 |
|
|
20,953 |
|
|
25,218 |
|
|
24,918 |
|
| Total general,
administrative and operating expenses |
9,912 |
|
|
8,769 |
|
|
8,698 |
|
|
8,288 |
|
|
10,996 |
|
| Income from operations
before income taxes |
33,994 |
|
|
28,738 |
|
|
32,007 |
|
|
31,970 |
|
|
27,242 |
|
| Income tax (benefit)
expense |
(454 |
) |
|
(13 |
) |
|
(79 |
) |
|
1,169 |
|
|
507 |
|
| Net income |
34,448 |
|
|
28,751 |
|
|
32,086 |
|
|
30,801 |
|
|
26,735 |
|
| Net (income) loss
attributable to non-controlling interest in consolidated variable
interest entities |
(475 |
) |
|
943 |
|
|
(2,468 |
) |
|
(184 |
) |
|
1,110 |
|
| Net income attributable
to Company |
33,973 |
|
|
29,694 |
|
|
29,618 |
|
|
30,617 |
|
|
27,845 |
|
| Preferred stock
dividends |
(5,925 |
) |
|
(5,925 |
) |
|
(5,925 |
) |
|
(5,985 |
) |
|
(3,225 |
) |
| Net income attributable
to Company's common stockholders |
28,048 |
|
|
23,769 |
|
|
23,693 |
|
|
24,632 |
|
|
24,620 |
|
| Basic earnings per
common share |
$ |
0.21 |
|
|
$ |
0.21 |
|
|
$ |
0.21 |
|
|
$ |
0.22 |
|
|
$ |
0.22 |
|
| Diluted earnings per
common share |
$ |
0.20 |
|
|
$ |
0.20 |
|
|
$ |
0.20 |
|
|
$ |
0.21 |
|
|
$ |
0.21 |
|
| Weighted average shares
outstanding - basic |
132,413 |
|
|
115,211 |
|
|
112,018 |
|
|
111,871 |
|
|
111,886 |
|
| Weighted average shares
outstanding - diluted |
152,727 |
|
|
135,164 |
|
|
131,761 |
|
|
131,565 |
|
|
131,580 |
|
| |
|
|
|
|
|
|
|
|
|
| Book value per common
share |
$ |
5.72 |
|
|
$ |
5.76 |
|
|
$ |
5.79 |
|
|
$ |
6.00 |
|
|
$ |
6.05 |
|
| 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 |
|
|
$ |
0.50 |
|
|
$ |
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 |
|
DistressedResidential |
|
Other |
|
Total |
| At September 30,
2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Carrying value |
$ |
1,055,433 |
|
|
$ |
947,851 |
|
|
$ |
474,717 |
|
|
$ |
145,228 |
|
|
$ |
2,623,229 |
|
| Net
capital allocated |
$ |
224,545 |
|
|
$ |
632,823 |
|
|
$ |
335,855 |
|
|
$ |
(84,534 |
) |
|
$ |
1,108,689 |
|
| Three Months
Ended September 30, 2018 |
|
|
|
|
|
|
|
|
|
| Average
interest earning assets |
$ |
1,121,180 |
|
|
$ |
681,040 |
|
|
$ |
456,240 |
|
|
$ |
140,960 |
|
|
$ |
2,399,420 |
|
| Weighted
average yield on interest earning assets |
2.67 |
% |
|
11.55 |
% |
|
5.31 |
% |
|
5.39 |
% |
|
5.85 |
% |
| Less:
Average cost of funds |
(2.22 |
)% |
|
(5.04 |
)% |
|
(4.96 |
)% |
|
(4.19 |
)% |
|
(3.30 |
)% |
| Portfolio
net interest margin |
0.45 |
% |
|
6.51 |
% |
|
0.35 |
% |
|
1.20 |
% |
|
2.55 |
% |
| |
|
|
|
|
|
|
|
|
|
| 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 |
% |
| |
|
|
|
|
|
|
|
|
|
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