New York Mortgage Trust Reports First Quarter 2006 Results
Page 5
Exhibit 99.1
New York Mortgage Trust Reports First Quarter 2006 Results
| · | Consolidated net loss of $0.10 per share for the three months ended March 31, 2006 as compared to a net loss of $0.49 per share for the immediate preceding quarter ended December 31, 2005 and $0.00 per share for the first quarter of 2005. |
| · | REIT (Mortgage Portfolio Management segment) earnings of $0.11 per share for the three months ended March 31, 2006 as compared to a net loss of $0.30 per share for the immediate preceding quarter ended December 31, 2005 and earnings of $0.24 per share for the first quarter of 2005. |
| · | Mortgage Lending segment net loss of $0.21 per share for the three months ended March 31, 2006 as compared to a net loss of $0.19 per share for the immediate preceding quarter ended December 31, 2005 and a net loss of $0.24 per share for the first quarter of 2005. |
| · | REIT Portfolio and Mortgage Lending segment earnings were both affected by items not expected to recur in the foreseeable future. |
| · | Board of Directors declared first quarter 2006 cash dividend of $0.14 per share and anticipates maintaining such payout for future 2006 quarters. |
NEW YORK, NY May 8, 2006 - New York Mortgage Trust, Inc. (NYSE: NTR), a self-advised residential mortgage finance company organized as a real estate investment trust (“REIT”), today reported results for the three months ended March 31, 2006.
Comparison of the Quarters Ended March 31, 2006 and 2005
| · | Quarterly origination volume of $605.6 million for the first quarter of 2006 as compared to $672.5 million for the first quarter of 2005. |
| · | Consolidated net loss of $1.8 million for the three months ended March 31, 2006 as compared to a net loss of $8.7 million for the immediate preceding quarter ended December 31, 2005 and $38,000 for the first quarter of 2005. |
| · | REIT (Mortgage Portfolio Management segment) earnings of $2.0 million for the three months ended March 31, 2006 as compared to a loss of $5.4 million for the immediately preceding quarter ended December 31, 2005 and earnings of $4.3 million for the first quarter of 2005. |
| · | On March 30, 2006 the Company completed its fourth securitization of $277.4 million of high credit quality, first-lien adjustable-rate mortgage (ARM) loans and which will reduce borrowing costs and improve the liquidity of the investment portfolio. |
First Quarter Results
For the first quarter of 2006, the Company’s Mortgage Portfolio Management segment (REIT operations exclusive of its taxable REIT subsidiaries) reported revenues of $2.5 million and net income of $2.0 million, or $0.11 per share.
The Company’s Mortgage Lending segment (the Company’s wholly owned taxable REIT subsidiaries or “TRS”) reported revenues of $7.0 million and a net loss of $3.8 million and combined with the net income from the Company’s Mortgage Portfolio Management segment results in a consolidated net loss of $1.8 million.
Comments from Management
“While we were disappointed with our first quarter financial results, they were not unexpected given the challenges that persist in the mortgage industry at present. Fortunately though, as a result of the repositioning of our REIT portfolio during the first three months of 2006, we have been able to improve our REIT earnings potential and stabilize our quarterly dividend at $0.14 for 2006. Though our loan origination volume in our mortgage banking subsidiary fell approximately 9.9% in the first quarter of 2006 as compared to the first quarter of 2005, the decrease we experienced compares favorably to the overall industry decline of 20.3% predicted by the Mortgage Bankers Association for the comparable period. Additionally, during the last 60 days we have experienced an approximate 30% increase in loan origination volumes over our January and February volumes and expect that this favorable trend will enable us to show significant improvements in our TRS earnings in future quarters with a targeted breakeven in the TRS by the third quarter of this year,” Steven B. Schnall, Chairman, President and Co-Chief Executive Officer, commented.
Mr. Schnall further commented, “With the exception of two first quarter items, which we do not expect will recur in the foreseeable future, both our portfolio and our mortgage banking segments showed solid improvements in financial performance from Q4 2005 to Q1 2006. And though we are reporting a consolidated loss of $0.10 for Q1 2006, when adjusting our earnings for these two items, we experienced an approximate break-even for the quarter. This performance represents forward progress and earnings momentum in both segments and we expect that this trend will continue into the second quarter and beyond. These two items were as follows. First, as previously disclosed, we made a decision during Q1 2006 to rebalance our portfolio via the sale of low yielding MBS purchased in 2004. The impairment charge on this planned sale of assets in Q1 2006 was recognized in our REIT Portfolio segment in Q4 2005 and was based upon an estimated value of those securities as of December 31, 2005. Between December 31, 2005 and the time that we disposed of the securities in March of 2006, these securities suffered an additional loss of value of approximately $960,000 due to a further deterioration in the market during that time. Thus, this additional $960,000 loss associated with our portfolio repositioning was realized in Q1 2006. Note that while these assets served as collateral on repo debt, the interest rate hedges on such debt were not liquidated so that we can better maintain our portfolio margins in the coming quarters. Second, our TRS Q1 2006 results include a $773,000 loss incurred in connection with our first REMIC securitization. This loss on securitization was attributable primarily to an unfavorable quarter-end market execution and to a lack of scale in the size of the securitization. This lack of scale sufficient to gain cost efficiency in our securitization executions is yet another reason why we have decided to temporarily suspend the aggregation of loans for securitization. We do not expect to incur such losses in the foreseeable future.”
Michael I. Wirth, Chief Financial Officer, added, “The first quarter results for our Mortgage Lending segment reflect the anticipated seasonal decline in mortgage loan origination volume coupled with continued pricing pressure on premiums earned on loans sold to third parties. Both of our operating segments also continue to feel the impact of compressed net interest margins - this is particularly true for our Mortgage Portfolio Management segment which has over $1.2 billion invested in mortgage securities and loans held in securitization trusts. During the quarter, we did see a slight improvement in net interest margins to 71 basis points which was an improvement over the 62 basis points from the immediately preceding fourth quarter of 2005. Currently, our net duration gap between the average lives of assets to liabilities is approximately 10 months; a slight decline, or improvement, from the fourth quarter of 2005. During the quarter we completed our fourth mortgage loan securitization. As with our past securitizations, we have maintained a high credit quality standard - the average borrower credit score on loans in our portfolio is 736 with an average LTV of 69.4% and we do not invest in negative amortization or option ARM loans. Indicative of the credit strength of our portfolio is the fact that loan delinquencies only represent 0.49% of portfolio value.”
Mr. Wirth added, “The financial results of our Mortgage Lending segment were also impacted by a 40% reduction in gain on sale premiums for the first quarter of 2006 relative to the first quarter of 2005. Despite these negative market factors, the Mortgage Lending segment shows first quarter 2006 net earnings improvement of approximately $500,000 as compared to the first quarter of 2005. It should also be noted that various cost cutting initiatives undertaken in the first quarter of 2006 were implemented in the latter half of the quarter so the full impact of such expense reductions is not included in first quarter financial results.”
A breakdown of the Company’s loan originations by payment stream for the quarter ended March 31, 2006 follows:
MORTGAGE LOAN ORIGINATION SUMMARY
For the Quarter Ended March 31, 2006
(Dollar amounts in thousands) | Number of Loans | Par Amount | % of Total | |||||||
Payment Stream | ||||||||||
Fixed Rate | ||||||||||
| FHA/VA | 142 | $ | 22,865 | 3.8 | % | |||||
| Conventional Conforming | 1,339 | 229,573 | 37.9 | % | ||||||
| Conventional Jumbo | 103 | 65,849 | 10.9 | % | ||||||
| Total Fixed Rate | 1,584 | 318,287 | 52.6 | % | ||||||
ARMs | ||||||||||
| FHA/VA | 2 | 436 | 0.0 | % | ||||||
| Conventional | 921 | 286,891 | 47.4 | % | ||||||
| Total ARMs | 923 | 287,327 | 47.4 | % | ||||||
| Total | 2,507 | $ | 605,614 | 100.0 | % | |||||
Loan Purpose | ||||||||||
| Conventional | 2,363 | $ | 582,312 | 96.2 | % | |||||
| FHA/VA | 144 | 23,302 | 3.8 | % | ||||||
| Total | 2,507 | $ | 605,614 | 100.0 | % | |||||
Documentation Type | ||||||||||
| Full Documentation | 1,392 | $ | 333,539 | 55.1 | % | |||||
| Stated Income | 302 | 86,834 | 14.3 | % | ||||||
| Stated Income/Stated Assets | 185 | 42,044 | 6.9 | % | ||||||
| No Documentation | 191 | 48,550 | 8.0 | % | ||||||
| No Ratio | 74 | 16,021 | 2.6 | % | ||||||
| Other | 363 | 78,626 | 13.1 | % | ||||||
| Total | 2,507 | $ | 605,614 | 100.0 | % | |||||
A breakdown by credit quality of the Company’s loan originations for first quarter 2006 follows:
Number of Loans | Aggregate Principal Balance ($ in millions) | Percentage Of Total Principal | Weighted Average Interest Rate | Average Principal Balance | Weighted Average | |||||||||||||||||
LTV | FICO | |||||||||||||||||||||
| ARM | 921 | $ | 286.9 | 47.4 | % | 6.71 | % | $ | 311,499 | 71.8 | 706 | |||||||||||
| Fixed-rate | 1,442 | 295.4 | 48.8 | % | 7.06 | % | 204,870 | 73.3 | 712 | |||||||||||||
Subtotal-non-FHA | 2,363 | $ | 582.3 | 96.2 | % | 6.89 | % | $ | 246,429 | 72.5 | 709 | |||||||||||
| FHA - ARM | 2 | $ | 0.4 | 0.0 | % | 5.57 | % | $ | 218,325 | 93.0 | 646 | |||||||||||
| FHA - fixed-rate | 142 | 22.9 | 3.8 | % | 6.13 | % | 161,022 | 92.7 | 650 | |||||||||||||
| Subtotal - FHA | 144 | 23.3 | 3.8 | % | 6.12 | % | 161,818 | 92.7 | 650 | |||||||||||||
| Total ARM | 923 | 287.3 | 47.4 | % | 6.71 | % | 311,297 | 71.8 | 705 | |||||||||||||
| Total fixed-rate | 1,584 | 318.3 | 52.6 | % | 6.99 | % | 200,939 | 74.7 | 708 | |||||||||||||
Total Originations | 2,507 | $ | 605.6 | 100.0 | % | 6.86 | % | $ | 241,569 | 73.3 | 707 | |||||||||||
| Purchase mortgages | 1,599 | $ | 346.9 | 57.3 | % | 7.00 | % | $ | 216,918 | 77.3 | 721 | |||||||||||
| Refinancings | 764 | 235.4 | 38.9 | % | 6.71 | % | 308,195 | 65.5 | 690 | |||||||||||||
Subtotal-non-FHA | 2,363 | $ | 582.3 | 96.2 | % | 6.89 | % | $ | 246,429 | 72.5 | 709 | |||||||||||
| FHA - purchase | 70 | $ | 12.3 | 2.0 | % | 6.07 | % | $ | 175,043 | 96.4 | 655 | |||||||||||
| FHA - refinancings | 74 | 11.0 | 1.8 | % | 6.17 | % | 149,308 | 88.7 | 645 | |||||||||||||
| Subtotal - FHA | 144 | 23.3 | 3.8 | % | 6.12 | % | 161,818 | 92.7 | 650 | |||||||||||||
| Total purchase | 1,669 | 359.2 | 59.3 | % | 6.97 | % | 215,162 | 78.0 | 719 | |||||||||||||
| Total refinancings | 838 | 246.4 | 40.7 | % | 6.69 | % | 294,164 | 66.5 | 688 | |||||||||||||
Total Originations | 2,507 | $ | 605.6 | 100.0 | % | 6.86 | % | $ | 241,569 | 73.3 | 707 | |||||||||||
Note: FHA originations are Streamlined Refinance mortgages with low average balances. All FHA loans are and will continue to be sold or brokered to third party investors.
Investment Activity
As of March 31, 2006, the Company’s portfolio of investment securities totaled $485.5 million and had a weighted average purchase price of $100.46. Approximately 12% of the securities purchased are backed by 3/1 hybrid adjustable rate mortgages, 61% are backed by 5/1 hybrid adjustable rate mortgages and the remaining 27% comprised of short reset floating rate securities. In addition, loans held in securitization trusts totaled $740.5 million and had an average purchase price of $100.67. Approximately 39% of loans held in the portfolio have interest rate resets of less than 24 months, 12% with resets between 24 months and 36 months and the remaining 49% with resets greater than 36 months. The investment securities and the loans held in securitization trusts are financed in part with debt totaling $1.1 billion.
The net interest margin on the Company’s mortgage portfolio investments for the three-month period ended March 31, 2006 averaged 71 basis points up from 62 basis points in the fourth quarter of 2005. This increase in spreads is reflective of slower prepayment speeds on the Company’s securities portfolio relative to the prior quarter. As of quarter end, the Company had not yet reinvested the proceeds of lower yielding securities in order to reposition the portfolio to maintain spreads through the end of the year.
The following table summarizes the Company’s investment portfolio of residential mortgage-backed securities and loans owned at March 31, 2006, classified by relevant categories:
Par Value | Coupon | Carrying Value | Yield | ||||||||||
| Agency REMIC floaters | $ | 125,754,740 | 6.13 | % | $ | 125,928,197 | 6.14 | % | |||||
| Private label floaters | 3,980,579 | 5.47 | % | 3,980,579 | 5.67 | % | |||||||
| Private label ARMs | 334,076,727 | 4.83 | % | 329,901,132 | 5.77 | % | |||||||
| NYMT retained securities | 26,542,972 | 5.67 | % | 25,673,360 | 7.27 | % | |||||||
| Loans held in securitization trusts | 735,625,517 | 5.24 | % | 740,546,209 | 5.96 | % | |||||||
| Total | $ | 1,225,980,535 | 5.23 | % | $ | 1,226,029,477 | 5.95 | % | |||||
Conference Call
On Tuesday, May 9, 2006 at 9:00 a.m. Eastern time, New York Mortgage Trust's executive management will host a conference call and audio webcast highlighting the Company's first quarter financial results. The conference call dial-in number is 303-262-2131. A live audio webcast of the conference call can be accessed via the Internet, on a listen-only basis, at http://www.earnings.com or at the Investor Relations section of 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. The online archive of the webcast will be available for approximately 90 days.
About New York Mortgage Trust
New York Mortgage Trust, Inc., a real estate investment trust (REIT), is engaged in the origination of and investment in residential mortgage loans throughout the United States. The Company, through its wholly owned taxable REIT subsidiary, The New York Mortgage Company, LLC (NYMC), originates a broad spectrum of residential loan products with a focus on high credit quality, or prime, loans. In addition to prime loans, NYMC also originates jumbo loans, alternative-A loans, sub-prime loans and home equity or second mortgage loans through its retail and wholesale origination branch network. The Company's REIT portfolio is comprised of securitized, high credit quality, adjustable and hybrid ARM loans, the majority of which, over time, will be originated by NYMC. As a REIT, the company is not subject to federal income tax provided that it distributes at least 90% of its REIT income to shareholders.
New York Mortgage Trust Reports First Quarter 2006 Results
Page 10
For Further Information
| AT THE COMPANY | AT FINANCIAL RELATIONS BOARD |
| Michael I. Wirth, Chief Financial Officer | Joe Calabrese (General) 212-827-3772 |
| Phone: 212-634-2342 | Julie Tu (Analysts) 212-827-3776 |
| Email: mwirth@nymtrust.com |
This news release contains forward-looking statements that predict or describe future events or trends. The matters described in these forward- looking statements are subject to known and unknown risks, uncertainties and other unpredictable factors, many of which are beyond the Company's control. The Company faces many risks that could cause its actual performance to differ materially from the results predicted by its forward- looking statements, including, without limitation, the possibilities that a rise in interest rates may cause a decline in the market value of the Company's assets, a decrease in the demand for mortgage loans may have a negative effect on the Company's volume of closed loan originations, prepayment rates may change, borrowings to finance the purchase of assets may not be available on favorable terms, the Company may not be able to maintain its qualification as a REIT for federal tax purposes, the Company may experience the risks associated with investing in real estate, including changes in business conditions and the general economy, and the Company's hedging strategies may not be effective. The reports that the Company files with the Securities and Exchange Commission contain a fuller description of these and many other risks to which the Company is subject. Because of those risks, the Company's actual results, performance or achievements may differ materially from the results, performance or achievements contemplated by its forward-looking statements. The information set forth in this news release represents management's current expectations and intentions. The Company assumes no responsibility to issue updates to the forward-looking matters discussed in this news release.
FINANCIAL TABLES FOLLOW
NEW YORK MORTGAGE TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollar amounts in thousands, except per share data)
(unaudited)
For the Three Months Ended March 31, | |||||||
2006 | 2005 | ||||||
| REVENUE: | |||||||
| Interest income: | |||||||
| Investment securities and loans held in securitization trusts | $ | 17,584 | $ | 12,863 | |||
| Loans held for investment | — | 1,661 | |||||
| Loans held for sale | 5,042 | 2,593 | |||||
| Total interest income | 22,626 | 17,117 | |||||
| Interest expense: | |||||||
| Investment securities and loans held in securitization trusts | 14,079 | 8,620 | |||||
| Loans held for investment | — | 1,144 | |||||
| Loans held for sale | 3,315 | 1,848 | |||||
| Subordinated debentures | 885 | 78 | |||||
| Total interest expense | 18,279 | 11,690 | |||||
| Net interest income | 4,347 | 5,427 | |||||
| Other income (loss): | |||||||
| Gain on sales of mortgage loans | 4,070 | 4,321 | |||||
| Brokered loan fees | 2,777 | 2,000 | |||||
| Loss on sale of current period securitized loans | (773 | ) | — | ||||
| Gain on sale of securities and related hedges | — | 377 | |||||
| Realized loss on investment securities | (969 | ) | — | ||||
| Miscellaneous income | 119 | 114 | |||||
| Total other income | 5,224 | 6,812 | |||||
| EXPENSES: | |||||||
| Salaries, commissions and benefits | 6,341 | 7,143 | |||||
| Brokered loan expenses | 2,168 | 1,519 | |||||
| Occupancy and equipment | 1,326 | 2,135 | |||||
| Marketing and promotion | 787 | 1,400 | |||||
| Data processing and communications | 661 | 518 | |||||
| Office supplies and expenses | 605 | 573 | |||||
| Professional fees | 1,281 | 744 | |||||
| Travel and entertainment | 182 | 215 | |||||
| Depreciation and amortization | 565 | 343 | |||||
| Other | 367 | 377 | |||||
| Total expenses | 14,283 | 14,967 | |||||
| LOSS BEFORE INCOME TAX BENEFIT | (4,712 | ) | (2,728 | ) | |||
| Income tax benefit | 2,916 | 2,690 | |||||
| NET LOSS | $ | (1,796 | ) | $ | (38 | ) | |
| Basic and diluted loss per share | $ | (0.10 | ) | $ | 0.0 | ||
| Weighted average shares outstanding-basic and diluted | 17,967,482 | 17,797,375 | |||||
NEW YORK MORTGAGE TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands)
March 31, | |||||||
2006 | December 31, | ||||||
(unaudited) | 2005 | ||||||
ASSETS | |||||||
| Cash and cash equivalents | $ | 5,549 | $ | 9,056 | |||
| Restricted cash | 3,287 | 5,468 | |||||
| Investment securities - available for sale | 485,483 | 716,482 | |||||
| Receivable for securities sold | 197,856 | — | |||||
| Due from loan purchasers | 101,201 | 121,813 | |||||
| Escrow deposits - pending loan closings | 2,947 | 1,434 | |||||
| Accounts and accrued interest receivable | 17,219 | 14,866 | |||||
| Mortgage loans held for sale | 114,254 | 108,271 | |||||
| Mortgage loans held in securitization trusts | 740,546 | 776,610 | |||||
| Mortgage loans held for investment | — | 4,060 | |||||
| Prepaid and other assets | 18,683 | 16,505 | |||||
| Derivative assets | 10,741 | 9,846 | |||||
| Property and equipment, net | 7,010 | 6,882 | |||||
| TOTAL ASSETS | $ | 1,704,776 | $ | 1,791,293 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
| LIABILITIES: | |||||||
| Financing arrangements, portfolio investments | $ | 1,056,744 | $ | 1,166,499 | |||
| Financing arrangements, loans held for sale/for investment | 210,046 | 225,186 | |||||
| Collateralized debt obligations | 220,532 | 228,226 | |||||
| Due to loan purchasers | 1,631 | 1,652 | |||||
| Accounts payable and accrued expenses | 15,645 | 22,794 | |||||
| Subordinated debentures | 45,000 | 45,000 | |||||
| Derivative liabilities | 585 | 394 | |||||
| Payable for securities purchased | 60,000 | — | |||||
| Other liabilities | 890 | 584 | |||||
| Total liabilities | 1,611,073 | 1,690,335 | |||||
| COMMITMENTS AND CONTINGENCIES | |||||||
| STOCKHOLDERS’ EQUITY : | |||||||
| Common stock, $0.01 par value, 400,000,000 shares authorized, 18,191,996 shares issued and 17,918,618 outstanding at March 31, 2006 and 18,258,221 shares issued and 17,984,843 outstanding at December 31, 2005 | 182 | 183 | |||||
| Additional paid-in capital | 104,995 | 107,573 | |||||
| Accumulated other comprehensive (loss)/income | (971 | ) | 1,910 | ||||
| Accumulated deficit | (10,503 | ) | (8,708 | ) | |||
| Total stockholders’ equity | 93,703 | 100,958 | |||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 1,704,776 | $ | 1,791,293 | |||
SELECTED SEGMENT REPORTING
(Dollar amounts in thousands)
For the Three Months Ended March 31, 2006 | ||||||||||
Mortgage Portfolio Management Segment | Mortgage Lending Segment | Total | ||||||||
| Total revenue | $ | 2,536 | $ | 7,035 | $ | 9,571 | ||||
| Total expense | 495 | 10,872 | 11,367 | |||||||
| Net income (loss) | $ | 2,041 | $ | (3,837 | ) | $ | (1,796 | ) | ||
| Total assets | $ | 1,452,567 | $ | 252,209 | $ | 1,704,776 | ||||
For the Three Months Ended March 31, 2005 | ||||||||||
Mortgage Portfolio Management Segment | Mortgage Lending Segment | Total | ||||||||
| Total revenue | $ | 5,137 | $ | 7,102 | $ | 12,239 | ||||
| Total expense | 836 | 11,441 | 12,277 | |||||||
| Net income (loss) | $ | 4,301 | $ | (4,339 | ) | $ | (38 | ) | ||