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, 2017.
Summary of Third Quarter 2017:
- Basic net income attributable to common stockholders of $24.6
million, or $0.22 per share, and comprehensive income to common
stockholders of $25.5 million, or $0.23 per share.
- Net interest income of $13.3 million and portfolio net interest
margin of 281 basis points.
- Book value per common share of $6.05 at September 30,
2017, delivering an economic return of 3.8% for the quarter and an
annualized economic return of 11.3% for the nine months ended
September 30, 2017.
- Sold distressed residential mortgage loans for aggregate
proceeds of approximately $65.2 million, which resulted in a
net realized gain, before income taxes, of approximately $7.3
million.
- Received proceeds of approximately $41.5 million on sales of
CMBS investment securities, realizing a gain of approximately $4.9
million.
- Received proceeds of $25.7 million from the redemption of three
joint venture investments, in connection with the sale of the
underlying properties of these joint ventures, realizing income of
approximately $3.7 million.
- Received $6.2 million in proceeds for the payoff of a mezzanine
loan, realizing income of approximately $1.3 million.
- Declared third quarter dividend of $0.20 per common share that
was paid on October 25, 2017.
Subsequent Events
On October 13, 2017, the Company closed on an
underwritten public offering of 5,400,000 shares of the Company's
8.00% Series D Fixed-to-Floating Rate Cumulative Redeemable
Preferred Stock, including 400,000 shares issued pursuant to the
exercise of the underwriters' over-allotment option. The net
proceeds to the Company from the issuance of its Series D Preferred
Stock amounts to approximately $130.4 million after deduction of
underwriting discounts and commissions and estimated offering
expenses.
The Company used substantially all of the net
proceeds from the issuance of the Series D Preferred Stock to
purchase $58.7 million in multi-family CMBS, to fund a $4.7 million
preferred equity investment and the remainder to purchase Agency
RMBS.
Management Overview
Steven Mumma, NYMT's Chairman and Chief Executive
Officer, commented: “The Company delivered a 3.8% economic return
for the third quarter and an 11.3% annualized economic return for
the first nine months of the year. The Company had GAAP
earnings of $0.22 per share and comprehensive earnings of $0.23 per
share for the third quarter. As of September 30, 2017, the
Company’s book value per common share was $6.05, up $0.03 from the
previous
quarter.
The credit markets continued their improvement from
the second quarter into the third quarter with spreads in many
markets tightening to levels not seen since before the financial
crisis. In light of the run up in valuations on certain
credit assets, the Company elected to opportunistically sell
approximately $42 million in CMBS, a number of which had been
acquired by the Company during the prior twelve months, for a
realized gain of approximately $4.9 million. In addition to the
sales of these multi-family securities, the Company also
exited three multi-family joint ventures for total proceeds of
approximately $26 million, realizing income of $3.7 million.
The Company’s distressed loan portfolio also contributed nicely to
the Company’s results for the quarter, with loan sales generating a
pre-tax gain of $7.3 million. The Company used a substantial
portion of the net sales proceeds generated during the quarter to
acquire or fund additional investments, including $44 million in
residential loans and $35 million in preferred equity
investments.
Subsequent to quarter end, on October 13, 2017, the
Company issued $135 million of its 8% Series D Fixed-to-Floating
Rate Cumulative Redeemable Preferred Stock, which will lower our
average long-term cost of capital. The Company has invested
approximately $63 million of the proceeds into multi-family
investments, including a first loss Freddie Mac K series
securitization, making this security the second Freddie Mac first
loss security acquired by the Company in 2017, with the balance
going into our Agency MBS strategy. We continue to believe
that our portfolio is well-positioned to adapt to changing interest
rate and economic market conditions."
Capital Allocation
The following tables set forth our allocated
capital by investment type at September 30, 2017, 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 interest earning assets (by investment type) for the
three months ended September 30, 2017 (dollar amounts in
thousands):
Capital Allocation at September 30, 2017: |
|
Agency RMBS |
|
Agency IOs |
|
Multi-Family (1) |
|
Distressed Residential (2) |
|
Other (3) |
|
Total |
Carrying Value |
$ |
377,316 |
|
|
$ |
40,641 |
|
|
$ |
723,170 |
|
|
$ |
535,520 |
|
|
$ |
136,304 |
|
|
$ |
1,812,951 |
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
Callable |
(329,263 |
) |
|
(26,048 |
) |
|
(204,220 |
) |
|
(188,817 |
) |
|
(20,517 |
) |
|
(768,865 |
) |
Non-Callable |
— |
|
|
— |
|
|
(28,946 |
) |
|
(69,425 |
) |
|
(121,867 |
) |
|
(220,238 |
) |
Convertible |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(128,273 |
) |
|
(128,273 |
) |
Hedges (Net) (4) |
750 |
|
|
7,045 |
|
|
— |
|
|
— |
|
|
— |
|
|
7,795 |
|
Cash (5) |
3,775 |
|
|
13,283 |
|
|
11,263 |
|
|
12,882 |
|
|
86,923 |
|
|
128,126 |
|
Goodwill |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
25,222 |
|
|
25,222 |
|
Other |
1,109 |
|
|
4,925 |
|
|
(5,385 |
) |
|
12,501 |
|
|
(23,863 |
) |
|
(10,713 |
) |
Net Capital
Allocated |
$ |
53,687 |
|
|
$ |
39,846 |
|
|
$ |
495,882 |
|
|
$ |
302,661 |
|
|
$ |
(46,071 |
) |
|
$ |
846,005 |
|
% of Capital
Allocated |
6.3 |
% |
|
4.7 |
% |
|
58.7 |
% |
|
35.8 |
% |
|
(5.5 |
)% |
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest Income- Three Months Ended September 30,
2017: |
Interest Income |
$ |
1,623 |
|
|
$ |
308 |
|
|
$ |
15,279 |
|
|
$ |
5,807 |
|
|
$ |
1,335 |
|
|
$ |
24,352 |
|
Interest Expense |
(1,184 |
) |
|
(170 |
) |
|
(2,744 |
) |
|
(3,091 |
) |
|
(3,843 |
) |
|
(11,032 |
) |
Net Interest
Income |
$ |
439 |
|
|
$ |
138 |
|
|
$ |
12,535 |
|
|
$ |
2,716 |
|
|
$ |
(2,508 |
) |
|
$ |
13,320 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio Net Interest Margin - Three Months Ended
September 30, 2017 |
Average Interest
Earning Assets (6) |
$ |
396,588 |
|
|
$ |
56,735 |
|
|
$ |
536,537 |
|
|
$ |
531,050 |
|
|
$ |
126,848 |
|
|
$ |
1,647,758 |
|
Weighted Average Yield
on Interest Earning Assets (7) |
1.64 |
% |
|
2.17 |
% |
|
11.39 |
% |
|
4.37 |
% |
|
4.21 |
% |
|
5.91 |
% |
Less: Average Cost of
Funds (8) |
(1.37 |
)% |
|
(2.35 |
)% |
|
(4.46 |
)% |
|
(4.28 |
)% |
|
(2.57 |
)% |
|
(3.10 |
)% |
Portfolio Net Interest
Margin (9) |
0.27 |
% |
|
(0.18 |
)% |
|
6.93 |
% |
|
0.09 |
% |
|
1.64 |
% |
|
2.81 |
% |
(1) 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 consolidated financial
statements. 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.”(2) Includes $369.7
million of distressed residential mortgage loans, $28.0 million of
distressed residential mortgage loans, at fair value and $133.0
million of Non-Agency RMBS.(3) Other includes our
residential mortgage loans held in securitization trusts amounting
to $79.9 million, residential mortgage loans, at fair value of
$41.5 million, investments in unconsolidated entities amounting to
$11.2 million and mortgage loans held for sale and mortgage loans
held for investment totaling $3.5 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. Non-callable liabilities consist
of $45.0 million in subordinated debentures and $76.9
million in residential collateralized debt obligations.
(4) Includes derivative assets, derivative liabilities,
payable for securities purchased and restricted cash posted as
margin.(5) Includes $8.9 million held in overnight
deposits in our Agency IO portfolio to be used for trading purposes
and $12.9 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.(6) Our Average Interest Earning Assets is
calculated each quarter based on daily average amortized cost of
the interest earning assets in our investment
portfolio.(7) 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.(8) 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 $0.6 million and $2.6 million, respectively, for
the quarter. Our Average Cost of Funds includes interest expense on
our interest rate swaps and amortization of premium on our
swaptions.(9) 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 actual constant
prepayment rates (“CPR”) for selected asset classes, by quarter,
for the quarterly periods indicated.
Quarter Ended |
|
Agency ARMs |
|
Agency Fixed-Rate RMBS |
|
Agency IOs |
|
Residential Securitizations |
|
Total Weighted Average |
September 30, 2017 |
|
9.4 |
% |
|
12.8 |
% |
|
17.4 |
% |
|
18.2 |
% |
|
14.9 |
% |
June 30, 2017 |
|
16.5 |
% |
|
9.6 |
% |
|
17.5 |
% |
|
16.8 |
% |
|
14.7 |
% |
March 31, 2017 |
|
8.3 |
% |
|
10.6 |
% |
|
15.9 |
% |
|
5.1 |
% |
|
12.6 |
% |
December 31, 2016 |
|
21.7 |
% |
|
12.3 |
% |
|
19.4 |
% |
|
11.1 |
% |
|
16.9 |
% |
September 30, 2016 |
|
20.7 |
% |
|
10.0 |
% |
|
18.2 |
% |
|
15.9 |
% |
|
16.1 |
% |
June 30, 2016 |
|
17.6 |
% |
|
10.2 |
% |
|
15.6 |
% |
|
17.8 |
% |
|
14.6 |
% |
March 31, 2016 |
|
13.5 |
% |
|
7.9 |
% |
|
14.7 |
% |
|
14.8 |
% |
|
12.7 |
% |
December 31, 2015 |
|
16.9 |
% |
|
8.5 |
% |
|
14.6 |
% |
|
31.2 |
% |
|
14.7 |
% |
September 30, 2015 |
|
18.6 |
% |
|
10.5 |
% |
|
18.0 |
% |
|
8.9 |
% |
|
15.1 |
% |
Third Quarter Earnings Summary
For the quarter ended September 30, 2017, we
reported net income attributable to common stockholders of $24.6
million as compared to $11.1 million in the quarter ended June 30,
2017. The $13.5 million increase is primarily due to increased
sales activity in our distressed residential loan portfolio,
realized gains on sale of CMBS investments and income recognized on
our joint venture investments and mezzanine loans.
We generated net interest income of $13.3 million
and a portfolio net interest margin of 281 basis points for the
quarter ended September 30, 2017 as compared to net interest
income of $15.7 million and a portfolio net interest margin of 312
basis points for the quarter ended June 30, 2017. The
decrease in net interest income was primarily driven by a decrease
in net interest income of approximately $2.7 million from our
distressed residential portfolio due to a decrease in average
interest earning assets in the third quarter.
For the quarter ended September 30, 2017, we
recognized other income of $24.9 million as compared to other
income of $8.2 million in the quarter ended June 30, 2017.
The increase in other income of $16.7 million is primarily driven
by:
- An increase in realized gains on distressed residential
mortgage loans of $4.3 million resulting from increased sales
activity.
- An increase in other income of $4.6 million, which is primarily
due to income recognized from redemption of three of the Company's
joint venture investments and a mezzanine loan payoff during the
period.
- An increase in realized gain on investment securities and
related hedges primarily due to an increase in realized gains from
the sale of CMBS during the quarter.
- An increase in net unrealized gains on multi-family loans and
debt held in securitization trusts of $0.9 million primarily due to
a tightening of credit spreads on multi-family CMBS acquired by us
during the year.
The following table details the general and
administrative expenses incurred during the third quarter of 2017
and the second quarter of 2017 (dollar amounts in thousands):
|
|
Three Months Ended |
General and Administrative Expenses |
|
September 30, 2017 |
|
June 30, 2017 |
Salaries, benefits and
directors’ compensation |
|
$ |
2,456 |
|
|
$ |
2,920 |
|
Base management and
incentive fees |
|
1,386 |
|
|
(109 |
) |
Other general and
administrative expenses |
|
1,786 |
|
|
2,145 |
|
Total
general and administrative expenses |
|
$ |
5,628 |
|
|
$ |
4,956 |
|
Total general and administrative expenses for the
third quarter of 2017 were approximately $5.6 million as compared
to total general and administrative expenses of approximately $5.0
million for the second quarter of 2017. The increase in
general and administrative expenses can be primarily attributed to
the incentive fee expense on our distressed residential loan
strategy due to increased sales activity during the third quarter
of 2017 as compared to the second quarter of 2017.
The following table details the operating expenses
related to our distressed residential mortgage loans and the
consolidated multi-family apartment properties during the third
quarter of 2017 and the second quarter of 2017 (dollar amounts in
thousands):
|
|
Three Months Ended |
Operating Expenses |
|
September 30, 2017 |
|
June 30, 2017 |
Expenses on distressed
residential mortgage loans |
|
$ |
2,225 |
|
|
$ |
2,218 |
|
Expenses related to
operating real estate and real estate held for sale in consolidated
variable interest entities |
|
3,143 |
|
|
4,415 |
|
Total
operating expenses |
|
$ |
5,368 |
|
|
$ |
6,633 |
|
Total operating expenses for the third quarter of
2017 were $5.4 million as compared to $6.6 million for the second
quarter of 2017. The decrease in total operating expenses of
$1.3 million is primarily attributable to non-recognition of
depreciation and amortization expense in the third quarter due to
the reclassification of the two multi-family apartment properties
that are consolidated in the Company's financial statements in
accordance with GAAP from operating real estate held in
consolidated variable interest entities to real estate held for
sale in consolidated variable interest entities.
The results of operations applicable to the
consolidated multi-family apartment properties included in the
Company's condensed consolidated statements of operations for the
three months ended September 30, 2017 are as follows (dollar
amounts in thousands):
|
|
Three Months Ended September 30,
2017 |
Income from operating
real estate and real estate held for sale in consolidated variable
interest entities |
|
$ |
2,429 |
|
Expenses related to
operating real estate and real estate held for sale in consolidated
variable interest entities |
|
3,143 |
|
Net loss
from operating real estate and real estate held for sale in
consolidated variable interest entities |
|
(714 |
) |
Net loss from operating
real estate and real estate held for sale in consolidated variable
interest entities attributable to non-controlling interest |
|
1,108 |
|
Net
income from operating real estate and real estate held for sale in
consolidated variable interest entities attributable to Company's
common stockholders |
|
$ |
394 |
|
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,
2017 (amounts in thousands, except per share):
|
Quarter Ended September 30, 2017 |
|
Amount |
|
Shares |
|
Per Share(1) |
Beginning
Balance |
$ |
673,381 |
|
|
111,891 |
|
|
$ |
6.02 |
|
Common stock issuance,
net |
577 |
|
|
(37 |
) |
|
|
Balance after share
issuance activity |
673,958 |
|
|
111,854 |
|
|
6.02 |
|
Dividends declared |
(22,371 |
) |
|
|
|
(0.20 |
) |
Net change in
accumulated other comprehensive income: |
|
|
|
|
|
Hedges |
(176 |
) |
|
|
|
— |
|
Investment securities |
1,022 |
|
|
|
|
0.01 |
|
Net
income attributable to Company's common stockholders |
24,620 |
|
|
|
|
0.22 |
|
Ending
Balance |
$ |
677,053 |
|
|
111,854 |
|
|
$ |
6.05 |
|
(1) Outstanding shares used to calculate
book value per share for the ending balance is based on outstanding
shares as of September 30, 2017 of 111,854,023.
Conference Call
On Friday, November 3, 2017 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, 2017. The conference call dial-in number is
(877) 312-8806. The replay will be available until Friday, November
10, 2017 and can be accessed by dialing (855) 859-2056 and entering
passcode 5597269. 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 2017 financial and operating data can
be viewed in the Company’s Quarterly Report on Form 10-Q for the
quarter ended September 30, 2017, which is expected to be
filed with the Securities and Exchange Commission on or about
November 7, 2017. 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 financial assets and targets residential
mortgage loans, including second mortgages and loans sourced from
distressed markets, multi-family CMBS, direct financing to owners
of multi-family properties through mezzanine loans and preferred
equity investments, other commercial and residential real
estate-related investments, Non-Agency RMBS and Agency RMBS. The
Midway Group, L.P. and Headlands Asset Management, LLC provide
investment management services to the Company with respect to
certain of its asset classes. 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 prime
jumbo mortgage loans and re-performing and non-performing 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” refers to pools of performing, re-performing and to a lesser
extent non-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 six separate Freddie Mac-sponsored multi-family
loan K-Series securitizations in which the Company owns certain
securities.
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, 2017 is set forth below (dollar
amounts in thousands):
Multi-family loans held
in securitization trusts, at fair value |
$ |
8,399,334 |
|
Multi-family CDOs, at
fair value |
(7,990,619 |
) |
Net carrying value |
408,715 |
|
Investment securities
available for sale, at fair value |
123,183 |
|
Total CMBS, at fair
value |
531,898 |
|
Mezzanine loan,
preferred equity investments and investments in unconsolidated
entities |
162,639 |
|
Real estate under
development (1) |
21,877 |
|
Real estate held for
sale in consolidated variable interest entities |
64,097 |
|
Mortgages and notes
payable in consolidated variable interest entities |
(57,342 |
) |
Financing arrangements,
portfolio investments |
(204,220 |
) |
Securitized debt |
(28,946 |
) |
Cash and other |
5,879 |
|
Net Capital in
Multi-Family |
$ |
495,882 |
|
(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, 2017 is
set forth below (dollar amounts in thousands):
|
Three Months Ended September 30,
2017 |
Interest income,
multi-family loans held in securitization trusts |
$ |
76,186 |
|
Interest income,
investment securities, available for sale (1) |
2,463 |
|
Interest income,
mezzanine loan and preferred equity investments (1) |
3,660 |
|
Interest expense,
multi-family collateralized debt obligation |
67,030 |
|
Interest income,
Multi-Family, net |
15,279 |
|
Interest expense,
investment securities, available for sale |
2,036 |
|
Interest expense,
securitized debt |
708 |
|
Net interest income,
Multi-Family |
$ |
12,535 |
|
(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
securities; changes in credit spreads; the impact of the downgrade
of 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 borrow to
finance its assets and the terms thereof; changes in governmental
laws, regulations or policies affecting the Company’s business;
changes in the Company's relationships with its external managers;
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. NarioChief Financial OfficerPhone: (646)
216-2363Email: knario@nymtrust.com
FINANCIAL TABLES FOLLOW
NEW YORK MORTGAGE TRUST, INC. AND
SUBSIDIARIES |
CONDENSED CONSOLIDATED BALANCE
SHEETS |
(Dollar amounts in thousands, except share
data) |
|
|
September 30, 2017 |
|
December 31, 2016 |
|
(unaudited) |
|
|
ASSETS |
|
|
|
Investment securities,
available for sale, at fair value (including $46,623 and $43,897
held in securitization trusts as of September 30, 2017 and December
31, 2016, respectively, and pledged securities of $493,632 and
$690,592, as of September 30, 2017 and December 31, 2016,
respectively) |
$ |
674,161 |
|
|
$ |
818,976 |
|
Residential mortgage
loans held in securitization trusts, net |
79,875 |
|
|
95,144 |
|
Residential mortgage
loans, at fair value |
69,512 |
|
|
17,769 |
|
Distressed residential
mortgage loans, net (including $133,972 and $195,347 held in
securitization trusts as of September 30, 2017 and December 31,
2016, respectively) |
369,651 |
|
|
503,094 |
|
Multi-family loans held
in securitization trusts, at fair value |
8,399,334 |
|
|
6,939,844 |
|
Derivative assets |
182,115 |
|
|
150,296 |
|
Receivable for
securities sold |
1,261 |
|
|
— |
|
Cash and cash
equivalents |
101,904 |
|
|
83,554 |
|
Investment in
unconsolidated entities |
51,268 |
|
|
79,259 |
|
Mezzanine loan and
preferred equity investments |
122,578 |
|
|
100,150 |
|
Real estate held for
sale in consolidated variable interest entities |
64,097 |
|
|
— |
|
Goodwill |
25,222 |
|
|
25,222 |
|
Receivables and other
assets |
123,944 |
|
|
138,323 |
|
Total Assets
(1) |
$ |
10,264,922 |
|
|
$ |
8,951,631 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
Liabilities: |
|
|
|
Financing arrangements,
portfolio investments |
$ |
608,304 |
|
|
$ |
773,142 |
|
Financing arrangements,
residential mortgage loans |
160,562 |
|
|
192,419 |
|
Residential
collateralized debt obligations |
76,867 |
|
|
91,663 |
|
Multi-family
collateralized debt obligations, at fair value |
7,990,619 |
|
|
6,624,896 |
|
Securitized debt |
98,371 |
|
|
158,867 |
|
Mortgages and notes
payable in consolidated variable interest entities |
57,342 |
|
|
1,588 |
|
Derivative
liabilities |
467 |
|
|
498 |
|
Payable for securities
purchased |
181,718 |
|
|
148,015 |
|
Accrued expenses and
other liabilities |
71,394 |
|
|
64,381 |
|
Subordinated
debentures |
45,000 |
|
|
45,000 |
|
Convertible notes |
128,273 |
|
|
— |
|
Total
liabilities (1) |
9,418,917 |
|
|
8,100,469 |
|
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 |
|
Common stock, $0.01 par
value, 400,000,000 shares authorized, 111,854,023 and 111,474,521
shares issued and outstanding as of September 30, 2017 and December
31, 2016, respectively |
1,119 |
|
|
1,115 |
|
Additional paid-in
capital |
750,438 |
|
|
748,599 |
|
Accumulated other
comprehensive income |
9,203 |
|
|
1,639 |
|
Accumulated
deficit |
(77,966 |
) |
|
(62,537 |
) |
Company's stockholders'
equity |
842,053 |
|
|
848,075 |
|
Non-controlling
interest in consolidated variable interest entities |
3,952 |
|
|
3,087 |
|
Total
equity |
846,005 |
|
|
851,162 |
|
Total
Liabilities and Stockholders' Equity |
$ |
10,264,922 |
|
|
$ |
8,951,631 |
|
(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, 2017 and
December 31, 2016, assets of consolidated VIEs totaled
$8,799,352 and $7,330,872, respectively, and the liabilities of
consolidated VIEs totaled $8,255,541 and $6,902,536,
respectively.
NEW YORK MORTGAGE TRUST, INC. AND
SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(Amounts in thousands, except per share
data) |
(unaudited) |
|
|
For the Three Months Ended September
30, |
|
For the Nine Months Ended September
30, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
INTEREST INCOME: |
|
|
|
|
|
|
|
Investment securities and other |
$ |
9,716 |
|
|
$ |
8,587 |
|
|
$ |
29,716 |
|
|
$ |
25,612 |
|
Multi-family loans held in securitization trusts |
76,186 |
|
|
62,126 |
|
|
213,242 |
|
|
187,427 |
|
Residential mortgage loans |
1,556 |
|
|
947 |
|
|
4,163 |
|
|
2,705 |
|
Distressed residential mortgage loans |
3,924 |
|
|
7,865 |
|
|
16,627 |
|
|
25,173 |
|
Total
interest income |
91,382 |
|
|
79,525 |
|
|
263,748 |
|
|
240,917 |
|
|
|
|
|
|
|
|
|
INTEREST EXPENSE: |
|
|
|
|
|
|
|
Investment securities and other |
5,759 |
|
|
4,598 |
|
|
17,132 |
|
|
12,409 |
|
Convertible notes |
2,630 |
|
|
— |
|
|
7,220 |
|
|
— |
|
Multi-family collateralized debt obligations |
67,030 |
|
|
55,359 |
|
|
187,835 |
|
|
167,783 |
|
Residential collateralized debt obligations |
403 |
|
|
322 |
|
|
978 |
|
|
937 |
|
Securitized debt |
1,651 |
|
|
3,209 |
|
|
5,937 |
|
|
8,436 |
|
Subordinated debentures |
589 |
|
|
519 |
|
|
1,699 |
|
|
1,528 |
|
Total
interest expense |
78,062 |
|
|
64,007 |
|
|
220,801 |
|
|
191,093 |
|
|
|
|
|
|
|
|
|
NET INTEREST
INCOME |
13,320 |
|
|
15,518 |
|
|
42,947 |
|
|
49,824 |
|
|
|
|
|
|
|
|
|
OTHER INCOME
(LOSS): |
|
|
|
|
|
|
|
Recovery
of (provision for) loan losses |
563 |
|
|
(26 |
) |
|
452 |
|
|
661 |
|
Realized
gain on investment securities and related hedges, net |
4,059 |
|
|
2,306 |
|
|
3,951 |
|
|
5,333 |
|
Realized
gain on distressed residential mortgage loans, net |
6,689 |
|
|
6,416 |
|
|
21,024 |
|
|
11,990 |
|
Net gain
on residential mortgage loans at fair value |
717 |
|
|
— |
|
|
717 |
|
|
— |
|
Unrealized gain (loss) on investment securities and related hedges,
net |
1,192 |
|
|
1,563 |
|
|
1,687 |
|
|
(1,594 |
) |
Unrealized gain on multi-family loans and debt held in
securitization trusts, net |
2,353 |
|
|
738 |
|
|
5,184 |
|
|
2,340 |
|
Income
from operating real estate and real estate held for sale in
consolidated variable interest entities |
2,429 |
|
|
— |
|
|
4,746 |
|
|
— |
|
Other
income |
6,916 |
|
|
5,635 |
|
|
12,037 |
|
|
16,833 |
|
Total
other income |
24,918 |
|
|
16,632 |
|
|
49,798 |
|
|
35,563 |
|
|
|
|
|
|
|
|
|
Base
management and incentive fees |
1,386 |
|
|
1,453 |
|
|
4,355 |
|
|
7,958 |
|
Expenses
related to distressed residential mortgage loans |
2,225 |
|
|
2,398 |
|
|
6,682 |
|
|
8,332 |
|
Expenses
related to operating real estate and real estate held for sale in
consolidated variable interest entities |
3,143 |
|
|
— |
|
|
7,558 |
|
|
— |
|
Other
general and administrative expenses |
4,242 |
|
|
4,854 |
|
|
14,196 |
|
|
11,711 |
|
Total
general, administrative and operating expenses |
10,996 |
|
|
8,705 |
|
|
32,791 |
|
|
28,001 |
|
|
|
|
|
|
|
|
|
INCOME FROM OPERATIONS
BEFORE INCOME TAXES |
27,242 |
|
|
23,445 |
|
|
59,954 |
|
|
57,386 |
|
Income tax expense |
507 |
|
|
163 |
|
|
2,187 |
|
|
2,720 |
|
NET INCOME |
26,735 |
|
|
23,282 |
|
|
57,767 |
|
|
54,666 |
|
Net loss (income)
attributable to non-controlling interest in consolidated variable
interest entities |
1,110 |
|
|
(14 |
) |
|
3,597 |
|
|
(12 |
) |
NET INCOME ATTRIBUTABLE
TO COMPANY |
27,845 |
|
|
23,268 |
|
|
61,364 |
|
|
54,654 |
|
Preferred stock
dividends |
(3,225 |
) |
|
(3,225 |
) |
|
(9,675 |
) |
|
(9,675 |
) |
NET INCOME ATTRIBUTABLE
TO COMPANY'S COMMON STOCKHOLDERS |
$ |
24,620 |
|
|
$ |
20,043 |
|
|
$ |
51,689 |
|
|
$ |
44,979 |
|
|
|
|
|
|
|
|
|
Basic earnings per
common share |
$ |
0.22 |
|
|
$ |
0.18 |
|
|
$ |
0.46 |
|
|
$ |
0.41 |
|
Diluted earnings per
common share |
$ |
0.21 |
|
|
$ |
0.18 |
|
|
$ |
0.45 |
|
|
$ |
0.41 |
|
Weighted average shares
outstanding-basic |
111,886 |
|
|
109,569 |
|
|
111,824 |
|
|
109,487 |
|
Weighted average shares
outstanding-diluted |
131,580 |
|
|
109,569 |
|
|
129,931 |
|
|
109,487 |
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
September 30, 2017 |
|
June 30, 2017 |
|
March 31, 2017 |
|
December 31, 2016 |
|
September 30, 2016 |
Net interest
income |
$ |
13,320 |
|
|
$ |
15,708 |
|
|
$ |
13,918 |
|
|
$ |
14,814 |
|
|
$ |
15,518 |
|
Total other income |
24,918 |
|
|
8,172 |
|
|
16,705 |
|
|
5,675 |
|
|
16,632 |
|
Total general,
administrative and operating expenses |
10,996 |
|
|
11,589 |
|
|
10,204 |
|
|
7,220 |
|
|
8,705 |
|
Income from operations
before income taxes |
27,242 |
|
|
12,291 |
|
|
20,419 |
|
|
13,269 |
|
|
23,445 |
|
Income tax expense |
507 |
|
|
442 |
|
|
1,237 |
|
|
375 |
|
|
163 |
|
Net income |
26,735 |
|
|
11,849 |
|
|
19,182 |
|
|
12,894 |
|
|
23,282 |
|
Net loss (income)
attributable to non-controlling interest in consolidated variable
interest entities |
1,110 |
|
|
2,487 |
|
|
— |
|
|
3 |
|
|
(14 |
) |
Net income attributable
to Company |
27,845 |
|
|
14,336 |
|
|
19,182 |
|
|
12,897 |
|
|
23,268 |
|
Preferred stock
dividends |
(3,225 |
) |
|
(3,225 |
) |
|
(3,225 |
) |
|
(3,225 |
) |
|
(3,225 |
) |
Net income attributable
to Company's common stockholders |
24,620 |
|
|
11,111 |
|
|
15,957 |
|
|
9,672 |
|
|
20,043 |
|
Basic earnings per
common share |
$ |
0.22 |
|
|
$ |
0.10 |
|
|
$ |
0.14 |
|
|
$ |
0.09 |
|
|
$ |
0.18 |
|
Diluted earnings per
common share |
$ |
0.21 |
|
|
$ |
0.10 |
|
|
$ |
0.14 |
|
|
$ |
0.09 |
|
|
$ |
0.18 |
|
Weighted average shares
outstanding - basic |
111,886 |
|
|
111,863 |
|
|
111,721 |
|
|
109,911 |
|
|
109,569 |
|
Weighted average shares
outstanding - diluted |
131,580 |
|
|
111,863 |
|
|
126,602 |
|
|
109,911 |
|
|
109,569 |
|
|
|
|
|
|
|
|
|
|
|
Book value per common
share |
$ |
6.05 |
|
|
$ |
6.02 |
|
|
$ |
6.08 |
|
|
$ |
6.13 |
|
|
$ |
6.34 |
|
Dividends declared per
common share |
$ |
0.20 |
|
|
$ |
0.20 |
|
|
$ |
0.20 |
|
|
$ |
0.24 |
|
|
$ |
0.24 |
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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):
|
Agency RMBS |
|
Agency IOs |
|
Multi-Family |
|
Distressed Residential |
|
Other |
|
Total |
At September
30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
Carrying
value |
$ |
377,316 |
|
|
$ |
40,641 |
|
|
$ |
723,170 |
|
|
$ |
535,520 |
|
|
$ |
136,304 |
|
|
$ |
1,812,951 |
|
Net
capital allocated |
$ |
53,687 |
|
|
$ |
39,846 |
|
|
$ |
495,882 |
|
|
$ |
302,661 |
|
|
$ |
(46,071 |
) |
|
$ |
846,005 |
|
Three Months
Ended September 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
Average
interest earning assets |
$ |
396,588 |
|
|
$ |
56,735 |
|
|
$ |
536,537 |
|
|
$ |
531,050 |
|
|
$ |
126,848 |
|
|
$ |
1,647,758 |
|
Weighted
average yield on interest earning assets |
1.64 |
% |
|
2.17 |
% |
|
11.39 |
% |
|
4.37 |
% |
|
4.21 |
% |
|
|
5.91 |
% |
Less:
Average cost of funds |
(1.37 |
)% |
|
(2.35 |
)% |
|
(4.46 |
)% |
|
(4.28 |
)% |
|
(2.57 |
)% |
|
|
(3.10 |
)% |
Portfolio
net interest margin |
0.27 |
% |
|
(0.18 |
)% |
|
6.93 |
% |
|
0.09 |
% |
|
1.64 |
% |
|
|
2.81 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
At June 30,
2017 |
|
|
|
|
|
|
|
|
|
|
|
Carrying
value |
$ |
397,213 |
|
|
$ |
52,224 |
|
|
$ |
749,643 |
|
|
$ |
568,273 |
|
|
$ |
133,488 |
|
|
$ |
1,900,841 |
|
Net
capital allocated |
$ |
57,466 |
|
|
$ |
56,410 |
|
|
$ |
508,068 |
|
|
$ |
287,035 |
|
|
$ |
(65,536 |
) |
|
$ |
843,443 |
|
Three Months
Ended June 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
Average
interest earning assets |
$ |
418,998 |
|
|
$ |
66,196 |
|
|
$ |
529,285 |
|
|
$ |
621,936 |
|
|
$ |
123,711 |
|
|
$ |
1,760,126 |
|
Weighted
average yield on interest earning assets |
1.65 |
% |
|
1.68 |
% |
|
11.10 |
% |
|
5.91 |
% |
|
3.96 |
% |
|
|
6.16 |
% |
Less:
Average cost of funds |
(1.22 |
)% |
|
(2.10 |
)% |
|
(4.28 |
)% |
|
(4.29 |
)% |
|
(2.13 |
)% |
|
|
(3.04 |
)% |
Portfolio
net interest margin |
0.43 |
% |
|
(0.42 |
)% |
|
6.82 |
% |
|
1.62 |
% |
|
1.83 |
% |
|
|
3.12 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
At March 31,
2017 |
|
|
|
|
|
|
|
|
|
|
|
Carrying
value |
$ |
420,124 |
|
|
$ |
61,836 |
|
|
$ |
733,383 |
|
|
$ |
645,455 |
|
|
$ |
132,266 |
|
|
$ |
1,993,064 |
|
Net
capital allocated |
$ |
68,156 |
|
|
$ |
68,135 |
|
|
$ |
501,133 |
|
|
$ |
282,487 |
|
|
$ |
(67,165 |
) |
|
$ |
852,746 |
|
Three Months
Ended March 31, 2017 |
|
|
|
|
|
|
|
|
|
|
|
Average
interest earning assets |
$ |
441,013 |
|
|
$ |
88,472 |
|
|
$ |
457,943 |
|
|
$ |
661,738 |
|
|
$ |
120,372 |
|
|
$ |
1,769,538 |
|
Weighted
average yield on interest earning assets |
1.72 |
% |
|
3.24 |
% |
|
11.31 |
% |
|
4.69 |
% |
|
3.73 |
% |
|
|
5.53 |
% |
Less:
Average cost of funds |
(1.16 |
)% |
|
(1.77 |
)% |
|
(4.55 |
)% |
|
(3.71 |
)% |
|
(2.81 |
)% |
|
|
(2.83 |
)% |
Portfolio
net interest margin |
0.56 |
% |
|
1.47 |
% |
|
6.76 |
% |
|
0.98 |
% |
|
0.92 |
% |
|
|
2.70 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
At December 31,
2016 |
|
|
|
|
|
|
|
|
|
|
|
Carrying
value |
$ |
441,472 |
|
|
$ |
87,778 |
|
|
$ |
628,522 |
|
|
$ |
671,272 |
|
|
$ |
127,359 |
|
|
$ |
1,956,403 |
|
Net
capital allocated |
$ |
59,846 |
|
|
$ |
76,880 |
|
|
$ |
394,401 |
|
|
$ |
257,903 |
|
|
$ |
62,132 |
|
|
$ |
851,162 |
|
Three Months
Ended December 31, 2016 |
|
|
|
|
|
|
|
|
|
|
|
Average
interest earning assets |
$ |
462,229 |
|
|
$ |
100,573 |
|
|
$ |
377,751 |
|
|
$ |
673,639 |
|
|
$ |
121,761 |
|
|
$ |
1,735,953 |
|
Weighted
average yield on interest earning assets |
1.36 |
% |
|
0.49 |
% |
|
12.36 |
% |
|
5.48 |
% |
|
3.37 |
% |
|
|
5.44 |
% |
Less:
Average cost of funds |
(1.22 |
)% |
|
(1.70 |
)% |
|
(5.54 |
)% |
|
(3.64 |
)% |
|
(2.48 |
)% |
|
|
(2.81 |
)% |
Portfolio
net interest margin |
0.14 |
% |
|
(1.21 |
)% |
|
6.82 |
% |
|
1.84 |
% |
|
0.89 |
% |
|
|
2.63 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
At September
30, 2016 |
|
|
|
|
|
|
|
|
|
|
|
Carrying
value |
$ |
479,359 |
|
|
$ |
86,343 |
|
|
$ |
561,207 |
|
|
$ |
679,873 |
|
|
$ |
126,841 |
|
|
$ |
1,933,623 |
|
Net
capital allocated |
$ |
59,482 |
|
|
$ |
87,845 |
|
|
$ |
413,943 |
|
|
$ |
258,659 |
|
|
$ |
43,151 |
|
|
$ |
863,080 |
|
Three Months
Ended September 30, 2016 |
|
|
|
|
|
|
|
|
|
|
|
Average
interest earning assets |
$ |
491,843 |
|
|
$ |
118,945 |
|
|
$ |
341,637 |
|
|
$ |
686,122 |
|
|
$ |
122,825 |
|
|
$ |
1,761,372 |
|
Weighted
average yield on interest earning assets |
1.55 |
% |
|
4.11 |
% |
|
12.55 |
% |
|
5.48 |
% |
|
3.01 |
% |
|
|
5.49 |
% |
Less:
Average cost of funds |
(0.58 |
)% |
|
(3.98 |
)% |
|
(6.55 |
)% |
|
(3.45 |
)% |
|
(2.39 |
)% |
|
|
(2.67 |
)% |
Portfolio
net interest margin |
0.97 |
% |
|
0.13 |
% |
|
6.00 |
% |
|
2.03 |
% |
|
0.62 |
% |
|
|
2.82 |
% |
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