New York Mortgage Trust, Inc. (Nasdaq:NYMT) (“NYMT,” the “Company,”
“we,” “our” or “us”) today reported results for the three and
twelve months ended December 31, 2017.
Summary of Fourth Quarter 2017:
- Net income attributable to common stockholders of $24.6
million, or $0.22 per share (basic), and comprehensive income to
common stockholders of $21.0 million, or $0.19 per share.
- Net interest income of $15.0 million and portfolio net interest
margin of 239 basis points.
- Book value per common share of $6.00 at December 31, 2017,
delivering an economic return of 2.5% for the quarter ended
December 31, 2017.
- Issued 5.4 million shares of 8.00% Series D Fixed-to-Floating
Rate Cumulative Redeemable Preferred Stock ("Series D Preferred
Stock") resulting in total net proceeds of approximately $130.5
million after deducting underwriting fees, commissions and offering
expenses.
- Sold distressed residential mortgage loans for aggregate
proceeds of approximately $37.6 million, which resulted in a
net realized gain, before income taxes, of approximately $6.2
million.
- Purchased CMBS securities, including a first loss PO security
issued by Freddie Mac-sponsored multi-family K-Series
securitizations, for an aggregate gross purchase price of $58.7
million.
- Purchased Agency-fixed rate RMBS for a gross purchase price of
approximately $788.7 million.
- Declared fourth quarter dividend of $0.20 per common share that
was paid on January 25, 2018.
Highlights for Full Year 2017:
- Net income attributable to common stockholders in 2017 of $76.3
million, or $0.68 per share (basic).
- Net interest income of $58.0 million and portfolio net interest
margin of 273 basis points.
- Delivered economic return of 10.9% for the year ended December
31, 2017.
- Declared aggregate 2017 dividends of $0.80 per common
share.
- Issued $138.0 million aggregate principal amount of
convertible notes in a public offering resulting in net proceeds to
the Company of approximately $127.0 million.
- Purchased CMBS securities, including two first loss PO
securities issued by Freddie Mac-sponsored multi-family K-Series
securitizations, for an aggregate gross purchase price of
approximately $171.2 million.
- Funded in aggregate $60.3 million of preferred equity
investments in owners of multi-family properties.
- Sold distressed residential mortgage loans for aggregate
proceeds of approximately $179.7 million resulting in a net
realized gain, before income taxes, of approximately $28.0
million.
Management Overview
Steven Mumma, NYMT's Chairman and Chief Executive Officer,
commented: “the Company had a good fourth quarter, generating $24.6
million in net income and delivering a 2.5% economic return. We
benefited from continued credit spread tightening in our
multi-family portfolio and solid execution in our distressed
residential loan portfolio. The improved changes in credit spreads
increased the valuation on our multi-family CMBS by $13.7 million,
while our distressed residential loan strategy generated $6.2
million of realized gains on sales, before taxes, for the quarter,
bringing the distressed residential loan portfolio’s contribution
for the year to $28.0 million, up $11.3 million from the previous
year.
In October, the Company completed a $135 million offering of its
Series D Preferred Stock, which we believe will be accretive to our
common stockholders. We invested approximately $52.3 million of the
offering proceeds in structured multi-family property investments,
with the balance of the proceeds invested in our Agency RMBS
strategy. The Company was able to purchase a Freddie Mac K-Series
first loss PO security and certain related IO securities for
approximately $36.7 million in October, even though competition for
credit assets continued to be very competitive. This is the second
Freddie Mac K-Series investment we completed this year, bringing
our 2017 investments in these securities to $102.1 million. The
Company also expanded investment in its second lien program during
the quarter, adding approximately $11.3 million of new loans. As
mortgage rates rise, we expect this volume to increase further.
We expect to begin a non-QM first lien program during the first
half of this year. We believe both the first lien non-QM and second
lien programs will deliver more attractive returns in the current
interest rate environment. The Company has approximately 78% of its
capital allocated to credit strategies, which we believe will
enable us to better manage the current interest rate environment.
The Company is well positioned with liquidity and capital to
continue to build its credit strategy into 2018.”
Capital Allocation
The following tables set forth our allocated
capital by investment type at December 31, 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 average interest earning assets (by investment type)
for the three months ended December 31, 2017 (dollar amounts
in thousands):
Capital Allocation at December 31, 2017: |
|
Agency RMBS(1) |
|
Multi-Family (2) |
|
Distressed Residential (3) |
|
Other (4) |
|
Total |
Carrying Value |
$ |
1,169,535 |
|
|
$ |
816,805 |
|
|
$ |
474,128 |
|
|
$ |
140,325 |
|
|
$ |
2,600,793 |
|
Liabilities |
|
|
|
|
|
|
|
|
|
Callable |
|
(928,823 |
) |
|
(309,935 |
) |
|
(161,277 |
) |
|
(25,946 |
) |
|
(1,425,981 |
) |
Non-Callable |
|
— |
|
|
(29,164 |
) |
|
(52,373 |
) |
|
(115,308 |
) |
|
(196,845 |
) |
Convertible |
|
— |
|
|
— |
|
|
— |
|
|
(128,749 |
) |
|
(128,749 |
) |
Hedges (Net) (5) |
|
10,763 |
|
|
— |
|
|
— |
|
|
— |
|
|
10,763 |
|
Cash (6) |
|
12,365 |
|
|
2,145 |
|
|
9,615 |
|
|
81,407 |
|
|
105,532 |
|
Goodwill |
|
— |
|
|
— |
|
|
— |
|
|
25,222 |
|
|
25,222 |
|
Other |
|
961 |
|
|
(4,651 |
) |
|
15,673 |
|
|
(26,717 |
) |
|
(14,734 |
) |
Net Capital
Allocated |
$ |
264,801 |
|
|
$ |
475,200 |
|
|
$ |
285,766 |
|
|
$ |
(49,766 |
) |
|
$ |
976,001 |
|
% of Capital
Allocated |
|
27.1 |
% |
|
48.7 |
% |
|
29.3 |
% |
|
(5.1 |
)% |
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
Net Interest Income- Three Months Ended December 31,
2017: |
Interest Income |
$ |
6,083 |
|
|
$ |
16,570 |
|
|
$ |
4,424 |
|
|
$ |
1,432 |
|
|
$ |
28,509 |
|
Interest Expense |
|
(3,352 |
) |
|
(3,358 |
) |
|
(2,737 |
) |
|
(4,022 |
) |
|
(13,469 |
) |
Net Interest Income
(Expense) |
$ |
2,731 |
|
|
$ |
13,212 |
|
|
$ |
1,687 |
|
|
$ |
(2,590 |
) |
|
$ |
15,040 |
|
|
|
|
|
|
|
|
|
|
|
Portfolio Net Interest Margin - Three Months Ended December
31, 2017 |
Average Interest
Earning Assets (7) |
$ |
971,707 |
|
|
$ |
596,701 |
|
|
$ |
480,711 |
|
|
$ |
126,447 |
|
|
$ |
2,175,566 |
|
Weighted Average Yield
on Interest Earning Assets (8) |
|
2.50 |
% |
|
11.11 |
% |
|
3.68 |
% |
|
4.53 |
% |
|
5.24 |
% |
Less: Average Cost of
Funds (9) |
|
(1.68 |
)% |
|
(4.49 |
)% |
|
(4.56 |
)% |
|
(3.22 |
)% |
|
(2.85 |
)% |
Portfolio Net Interest
Margin (10) |
|
0.82 |
% |
|
6.62 |
% |
|
(0.88 |
)% |
|
1.31 |
% |
|
2.39 |
% |
(1) Includes Agency fixed-rate RMBS, Agency ARMs and Agency
IOs.(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 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.”(3) Includes $331.5 million of distressed residential
mortgage loans, $36.9 million of distressed residential mortgage
loans, at fair value and $101.9 million of Non-Agency RMBS.(4)
Other includes $73.8 million of residential mortgage loans held in
securitization trusts, $50.2 million of residential second
mortgages, at fair value, $12.6 million of investments in
unconsolidated entities and $3.5 million of mortgage loans held for
sale and mortgage loans held for investment. Mortgage loans held
for sale and mortgage loans held for investment are included in the
Company’s accompanying consolidated balance sheets in receivables
and other assets. Non-callable liabilities consist of $45.0
million in subordinated debentures and $70.3 million in
residential collateralized debt obligations. (5) Includes
derivative assets and restricted cash posted as margin.(6) Includes
$0.5 million held in overnight deposits relating to our Agency IO
investments and $9.6 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 consolidated balance sheets in receivables and other
assets.(7) Our Average Interest Earning Assets is calculated
each quarter based on daily average amortized cost.(8) 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.(9) 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.(10) 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 Fixed-RateRMBS |
|
Agency ARMs |
|
Agency IOs |
|
Residential Securitizations |
December 31, 2017 |
|
6.3 |
% |
|
12.9 |
% |
|
17.8 |
% |
|
22.1 |
% |
September 30, 2017 |
|
12.8 |
% |
|
9.4 |
% |
|
17.4 |
% |
|
18.2 |
% |
June 30, 2017 |
|
9.6 |
% |
|
16.5 |
% |
|
17.5 |
% |
|
16.8 |
% |
March 31, 2017 |
|
10.6 |
% |
|
8.3 |
% |
|
15.9 |
% |
|
5.1 |
% |
December 31, 2016 |
|
12.3 |
% |
|
21.7 |
% |
|
19.4 |
% |
|
11.1 |
% |
September 30, 2016 |
|
10.0 |
% |
|
20.7 |
% |
|
18.2 |
% |
|
15.9 |
% |
June 30, 2016 |
|
10.2 |
% |
|
17.6 |
% |
|
15.6 |
% |
|
17.8 |
% |
March 31, 2016 |
|
7.9 |
% |
|
13.5 |
% |
|
14.7 |
% |
|
14.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter Earnings Summary
For the quarter ended December 31, 2017, we
reported net income attributable to common stockholders of $24.6
million as compared to $24.6 million in the quarter ended September
30, 2017.
We generated net interest income of $15.0
million and a portfolio net interest margin of 239 basis points for
the quarter ended December 31, 2017 as compared to net
interest income of $13.3 million and a portfolio net interest
margin of 281 basis points for the quarter ended September 30,
2017. The $1.7 million increase in net interest income in the
fourth quarter was primarily driven by an increase in average
interest earning assets in our Agency RMBS and multi-family
portfolios funded, in substantial part, by capital raised in our
Series D Preferred Stock offering in October 2017. Our net
interest margin decreased 42 basis points due primarily to an
increase in the portion of our interest earning assets that are
invested in Agency RMBS and a decline in net margin generated by
our distressed residential portfolio.
For the quarter ended December 31, 2017, we
recognized other income of $25.2 million as compared to other
income of $24.9 million in the quarter ended September 30,
2017. The increase in other income of $0.3 million is
primarily driven by:
- An increase in net unrealized gains on multi-family loans and
debt held in securitization trusts of $11.3 million primarily due
to tightening of credit spreads on our multi-family CMBS acquired
during the year.
- A decrease in realized gains on investment securities and
related hedges of $4.1 million due to reduced CMBS sales.
- A decrease in other income of $5.4 million, which is primarily
due to income recognized from redemptions/payoffs of joint venture
investments and a mezzanine loan during the quarter ended September
30, 2017 that was not replicated during the fourth quarter.
- A decrease in realized gains on distressed residential mortgage
loans of $1.7 million resulting from lower sales activity during
the fourth quarter.
The following table details the general and
administrative expenses for the quarters ended December 31, 2017
and September 30, 2017, respectively (dollar amounts in
thousands):
|
|
Three Months Ended |
General and Administrative Expenses |
|
December 31, 2017 |
|
September 30, 2017 |
Salaries, benefits and
directors’ compensation |
|
$ |
2,415 |
|
|
$ |
2,456 |
|
Base management and
incentive fees |
|
163 |
|
|
1,386 |
|
Other general and
administrative expenses |
|
1,747 |
|
|
1,786 |
|
Total
general and administrative expenses |
|
$ |
4,325 |
|
|
$ |
5,628 |
|
|
|
|
|
|
|
|
|
|
The decrease in general and administrative
expenses in the fourth quarter can be primarily attributed to a
decrease in incentive fee expense on our distressed residential
loan strategy due to lower sales activity during the fourth
quarter.
The following table details 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
December 31, 2017 and September 30, 2017, respectively (dollar
amounts in thousands):
|
|
Three Months Ended |
Operating Expenses |
|
December 31, 2017 |
|
September 30, 2017 |
Expenses related to
distressed residential mortgage loans |
|
$ |
2,064 |
|
|
$ |
2,225 |
|
Expenses related to
operating real estate and real estate held for sale in consolidated
variable interest entities |
|
1,899 |
|
|
3,143 |
|
Total
operating expenses |
|
$ |
3,963 |
|
|
$ |
5,368 |
|
|
|
|
|
|
|
|
|
|
During the third quarter of 2017, one of the
multi-family apartment properties that are consolidated in the
Company's financial statements in accordance with GAAP was
reclassified from operating real estate held in consolidated
variable interest entities to real estate held for sale in
consolidated variable interest entities. Accordingly, no
depreciation and amortization expense was recognized in the fourth
quarter, contributing to the decrease in total operating expenses
of $1.4 million.
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 consolidated
statements of operations for the three months ended December 31,
2017 are as follows (dollar amounts in thousands):
|
|
Three Months Ended December 31,
2017 |
Income from operating
real estate and real estate held for sale in consolidated variable
interest entities |
|
$ |
2,535 |
|
Expenses related to
operating real estate and real estate held for sale in consolidated
variable interest entities |
|
(1,899 |
) |
Net
income from operating real estate and real estate held for sale in
consolidated variable interest entities |
|
636 |
|
Net income from
operating real estate and real estate held for sale in consolidated
variable interest entities attributable to non-controlling
interest |
|
(238 |
) |
Net
income from operating real estate and real estate held for sale in
consolidated variable interest entities attributable to Company's
common stockholders |
|
$ |
398 |
|
|
|
|
|
|
Analysis of Changes in Book Value
The following table analyzes the changes in book
value of our common stock for the quarter ended December 31,
2017 (amounts in thousands, except per share):
|
Quarter Ended December 31, 2017 |
|
Amount |
|
Shares |
|
Per Share(1) |
Beginning
Balance |
$ |
677,053 |
|
|
111,854 |
|
|
$ |
6.05 |
|
Common stock issuance,
net |
717 |
|
|
56 |
|
|
|
Preferred stock
issuance, net |
130,496 |
|
|
|
|
|
Preferred stock
liquidation preference |
(135,000 |
) |
|
|
|
|
Balance after share
issuance activity |
673,266 |
|
|
111,910 |
|
|
6.01 |
|
Dividends declared |
(22,382 |
) |
|
|
|
(0.20 |
) |
Net change in
accumulated other comprehensive income: |
|
|
|
|
|
Hedges |
(19 |
) |
|
|
|
— |
|
Investment securities |
(3,632 |
) |
|
|
|
(0.03 |
) |
Net
income attributable to Company's common stockholders |
24,632 |
|
|
|
|
0.22 |
|
Ending
Balance |
$ |
671,865 |
|
|
111,910 |
|
|
$ |
6.00 |
|
(1) Outstanding shares used to calculate book value per share
for the ending balance is based on outstanding shares as of
December 31, 2017 of 111,909,909.
Conference Call
On Wednesday, February 21, 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 twelve months
ended December 31, 2017. The conference call dial-in number is
(877) 312-8806. The replay will be available until Wednesday,
February 28, 2018 and can be accessed by dialing (855) 859-2056 and
entering passcode 3385846. 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.
Full year 2017 financial and operating data can
be viewed in the Company’s Annual Report on Form 10-K for the year
ended December 31, 2017, which is expected to be filed with
the Securities and Exchange Commission on or about March 1, 2018. A
copy of the Form 10-K 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 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, 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 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 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 consolidated statements of operations.
A reconciliation of our net capital allocated to
multi-family investments to our consolidated financial statements
as of December 31, 2017 is set forth below (dollar amounts in
thousands):
Multi-family loans held
in securitization trusts, at fair value |
$ |
9,657,421 |
|
Multi-family CDOs, at
fair value |
(9,189,459 |
) |
Net carrying value |
467,962 |
|
Investment securities
available for sale, at fair value |
141,420 |
|
Total CMBS, at fair
value |
609,382 |
|
Preferred equity
investments, mezzanine loans and investments in unconsolidated
entities |
177,440 |
|
Real estate under
development (1) |
22,904 |
|
Real estate held for
sale in consolidated variable interest entities |
64,202 |
|
Mortgages and notes
payable in consolidated variable interest entities |
(57,124 |
) |
Financing arrangements,
portfolio investments |
(309,935 |
) |
Securitized debt |
(29,164 |
) |
Cash and other |
(2,505 |
) |
Net Capital in
Multi-Family |
$ |
475,200 |
|
(1) Included in the Company’s accompanying consolidated balance
sheets in receivables and other assets.
A reconciliation of our net interest income in
multi-family investments to our consolidated financial statements
for the three months ended December 31, 2017 is set forth
below (dollar amounts in thousands):
|
Three Months Ended December 31,
2017 |
Interest income,
multi-family loans held in securitization trusts |
$ |
83,881 |
|
Interest income,
investment securities, available for sale (1) |
2,400 |
|
Interest income,
mezzanine loan and preferred equity investments (1)
|
4,119 |
|
Interest expense,
multi-family collateralized debt obligation |
(73,830 |
) |
Interest income,
Multi-Family, net |
16,570 |
|
Interest expense,
investment securities, available for sale |
(2,645 |
) |
Interest expense,
securitized debt |
(713 |
) |
Net interest income,
Multi-Family |
$ |
13,212 |
|
(1) Included in the Company’s accompanying
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; 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 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 relationship with its external manager; 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
Emily StillerControllerPhone: (980) 224-4186Email:
estiller@nymtrust.com
NEW YORK MORTGAGE TRUST, INC. AND
SUBSIDIARIESCONSOLIDATED BALANCE
SHEETS(Dollar amounts in thousands, except share
data)
|
December 31, 2017 |
|
December 31, 2016 |
|
(unaudited) |
|
|
ASSETS |
|
|
|
Investment securities,
available for sale, at fair value (including
pledged securities of $1,076,187 and $690,592, as of December
31, 2017 and December 31, 2016, respectively and $47,922 and
$43,897 held in securitization trusts as of December 31, 2017 and
December 31, 2016, respectively) |
$ |
1,413,081 |
|
|
$ |
818,976 |
|
Residential mortgage
loans held in securitization trusts, net |
73,820 |
|
|
95,144 |
|
Residential mortgage
loans, at fair value |
87,153 |
|
|
17,769 |
|
Distressed residential
mortgage loans, net (including $121,791 and $195,347 held in
securitization trusts as of December 31, 2017 and December 31,
2016, respectively) |
331,464 |
|
|
503,094 |
|
Multi-family loans held
in securitization trusts, at fair value |
9,657,421 |
|
|
6,939,844 |
|
Derivative assets |
846 |
|
|
150,296 |
|
Cash and cash
equivalents |
95,191 |
|
|
83,554 |
|
Investment in
unconsolidated entities |
51,143 |
|
|
79,259 |
|
Preferred equity and
mezzanine loan investments |
138,920 |
|
|
100,150 |
|
Real estate held for
sale in consolidated variable interest entities |
64,202 |
|
|
— |
|
Goodwill |
25,222 |
|
|
25,222 |
|
Receivables and other
assets |
117,822 |
|
|
138,323 |
|
Total Assets
(1) |
$ |
12,056,285 |
|
|
$ |
8,951,631 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
Liabilities: |
|
|
|
Financing arrangements,
portfolio investments |
$ |
1,276,918 |
|
|
$ |
773,142 |
|
Financing arrangements,
residential mortgage loans |
149,063 |
|
|
192,419 |
|
Residential
collateralized debt obligations |
70,308 |
|
|
91,663 |
|
Multi-family
collateralized debt obligations, at fair value |
9,189,459 |
|
|
6,624,896 |
|
Securitized debt |
81,537 |
|
|
158,867 |
|
Mortgages and notes
payable in consolidated variable interest entities |
57,124 |
|
|
1,588 |
|
Derivative
liabilities |
— |
|
|
498 |
|
Payable for securities
purchased |
— |
|
|
148,015 |
|
Accrued expenses and
other liabilities |
82,126 |
|
|
64,381 |
|
Subordinated
debentures |
45,000 |
|
|
45,000 |
|
Convertible notes |
128,749 |
|
|
— |
|
Total
liabilities (1) |
11,080,284 |
|
|
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 |
|
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 issued and outstanding |
130,496 |
|
|
— |
|
Common stock, $0.01 par
value, 400,000,000 shares authorized, 111,909,909 and 111,474,521
shares issued and outstanding as of December 31, 2017 and December
31, 2016, respectively |
1,119 |
|
|
1,115 |
|
Additional paid-in
capital |
751,155 |
|
|
748,599 |
|
Accumulated other
comprehensive income |
5,553 |
|
|
1,639 |
|
Accumulated
deficit |
(75,717 |
) |
|
(62,537 |
) |
Company's stockholders'
equity |
971,865 |
|
|
848,075 |
|
Non-controlling
interest in consolidated variable interest entities |
4,136 |
|
|
3,087 |
|
Total
equity |
976,001 |
|
|
851,162 |
|
Total
Liabilities and Stockholders' Equity |
$ |
12,056,285 |
|
|
$ |
8,951,631 |
|
(1) Our 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 December 31, 2017 and December 31, 2016, assets of
consolidated VIEs totaled $10,041,468 and $7,330,872, respectively,
and the liabilities of consolidated VIEs totaled $9,436,421 and
$6,902,536, respectively.
NEW YORK MORTGAGE TRUST, INC. AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF
OPERATIONS(Dollar amounts in thousands, except per
share data)(unaudited)
|
For the Three Months Ended December
31, |
|
For the Years Ended December 31, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
INTEREST INCOME: |
|
|
|
|
|
|
|
Investment securities and other |
$ |
14,194 |
|
|
$ |
8,081 |
|
|
$ |
43,909 |
|
|
$ |
33,696 |
|
Multi-family loans held in securitization trusts |
83,881 |
|
|
61,767 |
|
|
297,124 |
|
|
249,191 |
|
Residential mortgage loans |
1,954 |
|
|
1,066 |
|
|
6,117 |
|
|
3,770 |
|
Distressed residential mortgage loans |
2,310 |
|
|
7,475 |
|
|
18,937 |
|
|
32,649 |
|
Total
interest income |
102,339 |
|
|
78,389 |
|
|
366,087 |
|
|
319,306 |
|
|
|
|
|
|
|
|
|
INTEREST EXPENSE: |
|
|
|
|
|
|
|
Investment securities and other |
8,212 |
|
|
5,356 |
|
|
25,344 |
|
|
17,764 |
|
Convertible notes |
2,633 |
|
|
— |
|
|
9,852 |
|
|
— |
|
Multi-family collateralized debt obligations |
73,830 |
|
|
54,771 |
|
|
261,665 |
|
|
222,553 |
|
Residential collateralized debt obligations |
485 |
|
|
308 |
|
|
1,463 |
|
|
1,246 |
|
Securitized debt |
1,543 |
|
|
2,608 |
|
|
7,481 |
|
|
11,044 |
|
Subordinated debentures |
596 |
|
|
532 |
|
|
2,296 |
|
|
2,061 |
|
Total
interest expense |
87,299 |
|
|
63,575 |
|
|
308,101 |
|
|
254,668 |
|
|
|
|
|
|
|
|
|
NET INTEREST
INCOME |
15,040 |
|
|
14,814 |
|
|
57,986 |
|
|
64,638 |
|
|
|
|
|
|
|
|
|
OTHER INCOME
(LOSS): |
|
|
|
|
|
|
|
Recovery
of loan losses |
1,288 |
|
|
177 |
|
|
1,739 |
|
|
838 |
|
Realized
(loss) gain on investment securities and related hedges, net |
(62 |
) |
|
(8,978 |
) |
|
3,888 |
|
|
(3,645 |
) |
Realized
gain on distressed residential mortgage loans at carrying value,
net |
5,025 |
|
|
2,875 |
|
|
26,049 |
|
|
14,865 |
|
Net gain
on residential mortgage loans at fair value |
961 |
|
|
— |
|
|
1,678 |
|
|
— |
|
Unrealized gain on investment securities and related hedges,
net |
268 |
|
|
8,664 |
|
|
1,955 |
|
|
7,070 |
|
Unrealized gain on multi-family loans and debt held in
securitization trusts, net |
13,688 |
|
|
692 |
|
|
18,872 |
|
|
3,032 |
|
Income
from operating real estate and real estate held for sale in
consolidated variable interest entities |
2,535 |
|
|
— |
|
|
7,280 |
|
|
— |
|
Other
income |
1,515 |
|
|
2,245 |
|
|
13,552 |
|
|
19,078 |
|
Total
other income |
25,218 |
|
|
5,675 |
|
|
75,013 |
|
|
41,238 |
|
|
|
|
|
|
|
|
|
GENERAL, ADMINISTRATIVE
AND OPERATING EXPENSES: |
|
|
|
|
|
|
|
General
and administrative expenses |
4,162 |
|
|
3,535 |
|
|
18,357 |
|
|
15,246 |
|
Base
management and incentive fees |
163 |
|
|
1,303 |
|
|
4,517 |
|
|
9,261 |
|
Expenses
related to distressed residential mortgage loans |
2,064 |
|
|
2,382 |
|
|
8,746 |
|
|
10,714 |
|
Expenses
related to operating real estate and real estate held for sale in
consolidated variable interest entities |
1,899 |
|
|
— |
|
|
9,457 |
|
|
— |
|
Total
general, administrative and operating expenses |
8,288 |
|
|
7,220 |
|
|
41,077 |
|
|
35,221 |
|
|
|
|
|
|
|
|
|
INCOME FROM OPERATIONS
BEFORE INCOME TAXES |
31,970 |
|
|
13,269 |
|
|
91,922 |
|
|
70,655 |
|
Income tax expense |
1,169 |
|
|
375 |
|
|
3,355 |
|
|
3,095 |
|
NET INCOME |
30,801 |
|
|
12,894 |
|
|
88,567 |
|
|
67,560 |
|
Net (income) loss
attributable to non-controlling interest in consolidated variable
interest entities |
(184 |
) |
|
3 |
|
|
3,413 |
|
|
(9 |
) |
NET INCOME ATTRIBUTABLE
TO COMPANY |
30,617 |
|
|
12,897 |
|
|
91,980 |
|
|
67,551 |
|
Preferred stock
dividends |
(5,985 |
) |
|
(3,225 |
) |
|
(15,660 |
) |
|
(12,900 |
) |
NET INCOME ATTRIBUTABLE
TO COMPANY'S COMMON STOCKHOLDERS |
$ |
24,632 |
|
|
$ |
9,672 |
|
|
$ |
76,320 |
|
|
$ |
54,651 |
|
|
|
|
|
|
|
|
|
Basic earnings per
common share |
$ |
0.22 |
|
|
$ |
0.09 |
|
|
$ |
0.68 |
|
|
$ |
0.50 |
|
Diluted earnings per
common share |
$ |
0.21 |
|
|
$ |
0.09 |
|
|
$ |
0.66 |
|
|
$ |
0.50 |
|
Weighted average shares
outstanding-basic |
111,871 |
|
|
109,911 |
|
|
111,836 |
|
|
109,594 |
|
Weighted average shares
outstanding-diluted |
131,565 |
|
|
109,911 |
|
|
130,343 |
|
|
109,594 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NEW YORK MORTGAGE TRUST, INC. AND
SUBSIDIARIESSUMMARY OF QUARTERLY
EARNINGS(Dollar amounts in thousands, except per
share data)(unaudited)
|
For the Three Months Ended |
|
December 31, 2017 |
|
September 30, 2017 |
|
June 30, 2017 |
|
March 31, 2017 |
|
December 31, 2016 |
Net interest
income |
$ |
15,040 |
|
|
$ |
13,320 |
|
|
$ |
15,708 |
|
|
$ |
13,918 |
|
|
$ |
14,814 |
|
Total other income |
25,218 |
|
|
24,918 |
|
|
8,172 |
|
|
16,705 |
|
|
5,675 |
|
Total general,
administrative and operating expenses |
8,288 |
|
|
10,996 |
|
|
11,589 |
|
|
10,204 |
|
|
7,220 |
|
Income from operations
before income taxes |
31,970 |
|
|
27,242 |
|
|
12,291 |
|
|
20,419 |
|
|
13,269 |
|
Income tax expense |
1,169 |
|
|
507 |
|
|
442 |
|
|
1,237 |
|
|
375 |
|
Net income |
30,801 |
|
|
26,735 |
|
|
11,849 |
|
|
19,182 |
|
|
12,894 |
|
Net (income) loss
attributable to non-controlling interest in consolidated variable
interest entities |
(184 |
) |
|
1,110 |
|
|
2,487 |
|
|
— |
|
|
3 |
|
Net income attributable
to Company |
30,617 |
|
|
27,845 |
|
|
14,336 |
|
|
19,182 |
|
|
12,897 |
|
Preferred stock
dividends |
(5,985 |
) |
|
(3,225 |
) |
|
(3,225 |
) |
|
(3,225 |
) |
|
(3,225 |
) |
Net income attributable
to Company's common stockholders |
24,632 |
|
|
24,620 |
|
|
11,111 |
|
|
15,957 |
|
|
9,672 |
|
Basic earnings per
common share |
$ |
0.22 |
|
|
$ |
0.22 |
|
|
$ |
0.10 |
|
|
$ |
0.14 |
|
|
$ |
0.09 |
|
Diluted earnings per
common share |
$ |
0.21 |
|
|
$ |
0.21 |
|
|
$ |
0.10 |
|
|
$ |
0.14 |
|
|
$ |
0.09 |
|
Weighted average shares
outstanding - basic |
111,871 |
|
|
111,886 |
|
|
111,863 |
|
|
111,721 |
|
|
109,911 |
|
Weighted average shares
outstanding - diluted |
131,565 |
|
|
131,580 |
|
|
111,863 |
|
|
126,602 |
|
|
109,911 |
|
|
|
|
|
|
|
|
|
|
|
Book value per common
share |
$ |
6.00 |
|
|
$ |
6.05 |
|
|
$ |
6.02 |
|
|
$ |
6.08 |
|
|
$ |
6.13 |
|
Dividends declared per
common share |
$ |
0.20 |
|
|
$ |
0.20 |
|
|
$ |
0.20 |
|
|
$ |
0.20 |
|
|
$ |
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 |
|
Dividends declared per
preferred share on Series D Preferred Stock |
$ |
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):
|
Agency RMBS |
|
Multi-Family |
|
Distressed Residential |
|
Other |
|
Total |
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 |
% |
|
|
|
|
|
|
|
|
|
|
At March 31,
2017 |
|
|
|
|
|
|
|
|
|
Carrying
value |
$ |
481,960 |
|
|
$ |
733,383 |
|
|
$ |
645,455 |
|
|
$ |
132,266 |
|
|
$ |
1,993,064 |
|
Net
capital allocated |
$ |
133,070 |
|
|
$ |
501,133 |
|
|
$ |
285,708 |
|
|
$ |
(67,165 |
) |
|
$ |
852,746 |
|
Three Months
Ended March 31, 2017 |
|
|
|
|
|
|
|
|
|
Average
interest earning assets |
$ |
529,485 |
|
|
$ |
457,943 |
|
|
$ |
661,738 |
|
|
$ |
120,372 |
|
|
$ |
1,769,538 |
|
Weighted
average yield on interest earning assets |
1.97 |
% |
|
11.31 |
% |
|
4.69 |
% |
|
3.73 |
% |
|
5.53 |
% |
Less:
Average cost of funds |
(1.23 |
)% |
|
(4.55 |
)% |
|
(3.71 |
)% |
|
(2.81 |
)% |
|
(2.83 |
)% |
Portfolio
net interest margin |
0.74 |
% |
|
6.76 |
% |
|
0.98 |
% |
|
0.92 |
% |
|
2.70 |
% |
|
|
|
|
|
|
|
|
|
|
At December 31,
2016 |
|
|
|
|
|
|
|
|
|
Carrying
value |
$ |
529,250 |
|
|
$ |
628,522 |
|
|
$ |
671,272 |
|
|
$ |
127,359 |
|
|
$ |
1,956,403 |
|
Net
capital allocated |
$ |
134,054 |
|
|
$ |
394,401 |
|
|
$ |
260,575 |
|
|
$ |
62,132 |
|
|
$ |
851,162 |
|
Three Months
Ended December 31, 2016 |
|
|
|
|
|
|
|
|
|
Average
interest earning assets |
$ |
562,802 |
|
|
$ |
377,751 |
|
|
$ |
673,639 |
|
|
$ |
121,761 |
|
|
$ |
1,735,953 |
|
Weighted
average yield on interest earning assets |
1.20 |
% |
|
12.36 |
% |
|
5.48 |
% |
|
3.37 |
% |
|
5.44 |
% |
Less:
Average cost of funds |
(1.28 |
)% |
|
(5.54 |
)% |
|
(3.64 |
)% |
|
(2.48 |
)% |
|
(2.81 |
)% |
Portfolio
net interest margin |
(0.08 |
)% |
|
6.82 |
% |
|
1.84 |
% |
|
0.89 |
% |
|
2.63 |
% |
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