NYMT - Earnings call transcript Q1 2019 | New York Mortgage Trust, Inc.

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Operator

Good morning ladies and gentlemen and thank you for standing by. Welcome to New York Mortgage Trust, First Quarter 2019 Results Conference Call.

During today's presentation all parties will be in a listen-only mode.

Following the presentation the conference will be open for questions. [Operator Instructions]. recorded May being XXXX. is conference on XX, Tuesday, This Trust's New XXXX A with Mortgage first press release yesterday. York quarter released results was press on The available website is www.nymtrust.com. at the company's release

of be the are inform certain today's may in a not you forward-looking Events section this that website. Presentations conference statements within are the the & we historical XXXX. like time Additionally, live management the call can would call be statements hosting which which deemed of Litigation accessed company's At during Private the of made Reform webcast me to of Act meanings Securities

will Although Mortgage risks that attained. cause York assumptions, and in on in Factors actual expectations reflected could reasonable in materially Release differ the Press results detailed any from Commission. expectations Securities forward-looking company's it are can New time-to-time assurance from the be believes are and with Exchange yesterday's no expectations based Trust and statements give to that its filings that

Now sir. time, and Please Steve Officer. host, Chief Executive to Mumma, begin like at introduce I Chairman this your would

Steve Mumma

Thank Jason you, as will the our for of $X.XX posting morning per of operator. first be earnings you company share also Serrano The this GAAP $X.XX speaking the morning. President earnings solid on the start and per share for delivered thank being Good for basic call. year, everyone and comprehensive quarter.

record margin over The a company million interest XXX income, points for billion. a interest raising margin basis company increase a approximately net the the common our The an prior quarter, market XX.X% the net to per securities, sold the of generating two X.X% of accretive investment or in The the XX% in net early gain Our of company, equity company XX in gain expanded of from annualized objectives, prior of for increase an credit the $X.X of we basis completed capitalization single wholly-owned ended quarter, offerings the economic $XX.X quarter, $X.XX, our $X.X million company's net loss bringing million. proceeds income company an portfolio and basis. equity increase a quarter over $X.X the book value was efficiently on with total resulting points, capital improvement and million first million, of interest the and interest acquisition by $XXX and both $XXX return adding of a approximately common at quarter, assets, billion. to total share two first in Consistent quarter, of previous net quarter end company the the in X.X% investment opportunistically deployed resulting first which neither $XX.X multi-family these into during realized to a quarter. common

both up over we common invested of including and between As equally residential $X.X our of but XX% told XX% of almost billion credit had stock capital loan XX, billion, XXXX our of March total and preferred XXXX. strategies. March We invested strategies, credit $X.X and capital in had approximately XX, assets from related multi-family

to the President; but our newly investments, ratio $XXX our be to great December. quarter an appointed importantly, of million benefited was impact of and X.Xx earnings of in credit now with the career not conservatively to was total quarter, managed. debt company’s Jason? introduce was person much ratio Jason fourth quarter the extensive the a also more funded to Serrano, would company’s only a successful X.Xx tightening like were full I which leverage addition team. leverage and spurred Our approximately for our spread common equity to continues the during equality The debt and from by

Jason Serrano

on be Steve to and pleased to Steve the today. morning. table After listening of Thanks good many this for side I’m quarters,

a marked simply dimensions my believe to a buy As priority the Family the it's be but Trust that further to forward assets. to market monitor highest with the York spectrum, providing immediately part I With third loan a barriers a at compete yield with return, extremely market of for hire a we folks asset this to plan, NYMT With human say protection. of the competitive lower into value to we certain brought downside to Mortgage market look and at credit of of competition. that markets, the To is and stated in capital, additional signs slowing, that’s execute platform I'm deep in to onboard. across avoid variety showing factors. into subsectors our sacrificed here on order that New is rather help or company. honored different also decades with We success, than we niche along began developed firm's Release, outsized while and to developing great over recently and closely areas in and see Press credit number complexity a Today’s for excited residential economy price building party search with sourcing opportunities truly Instead returns approach, to technology competition order depend to earlier credit on the developing imperative or aggregation new entry multi-dimensional can notably identify against in plan high manage limits classes investments in on limited network need seeking I'm seek internalize holdings. we data residential due stretching operational large all pleased where we two we this for broader

to be the $XXX expect comprised period $XXX million a purchased typically slower reduce cost. management residential the this XXXX. credit, transition we in of fourth the quarter million to single $XXX adding $XXX credit invested in which multi-family markets, is million and family second of to We a assets quarter residential overall help of the will Also fully quarter, of which in end for the completed by this million

we the second fund over expect opportunities this diverse quarter Additionally healthy pipeline year. we new of and created to of investment that

As residential selective investments vacancy and levels and rates, I'll historically I expect low single-family to not quarterly build we historical on inventory an demand to results these it to lows however mentioned excellent back to and across continue interest you pass quarter. multi-family with metrics, improving mention capital low record slow credit housing the rental in opportunity comp earnings earlier, down, believe and we that for provides invest Steve. in rates, first With to this at

Steve Mumma

Thank available at presentation. you. will end of be for the questions the Jason

generated from of increase quarter $XX.X basis our $XX.X prior margin income. and net a quarter, GAAP XX% points interest So prior through earnings the let’s of million performance million XX the net go an income in first comprehensive income portfolio net had We quarter. We for million, from of the $XX.X net basis points for and increase quarter. of the an in XXX

previous billion We driver company, assets quarter, our not investment million from XX% to with average an rapid expect approximately margin. and increasing $XXX average We $XXX the quarter the net second the assets XX%, securities a the main strategy. $X.X allocated margin. but investment further the of needs. equity allocation Our net earnings for core agency and is for $X in the earning billion in would the in focus for had provide increase This million quarter to does total liquidity was totaled increase increase in interest by interest

net which Realized comprehensive for net million. held repayment debt to had $X.X of we two consolidated outstanding were significant which a a the freed collateral. of the gain margin. period. million from during investments, portion $XXX approximately that XXXX including credit other and million swaps comprised interest million and offset secondary recognize rate of gains a have at of the rates. primarily million of $XX.X income approximately to million result continue $X.X fair of second contributions other rallying had CMBS of was gains value, the multi-family We instruments. to had was in investments. rally our the loss $XX in net interest re-securitization. costs our invest million. Californian’s quarter, a was income, $X.X of realized We that a loss company Like a away also multi-family of net during rate our from realized by gain of $XX.X unrealized million total reversal net of $X.X first Of of eliminated our related tightening loans for the in million $XX resulted – trading distressed loss in unrealized quarter. the gains spreads on of had corresponding a We unrealized which unrealized on K-Series our overall income residential $XX and company for of for an to included from interest at the million of by resulting as sold We in extinguishment the debt of We gains notes million gain XX%, We we gains million our sale these $X.X $X.X notes up approximately driven approximately This all of gains

net a redemption in related the equity $X.X that by $X.X gain consolidated on sale on non-controlling million to businesses, venture required by from expenses after controlled variable gain of $XX,XXX. other million mostly The apartment offset including us. our interest the investments, joint and million This other is our is gains a of [inaudible] the investment preferred $X.X totaled effect multi-family a income equity company $X.X results a multi-family only million a given and of entity interest in recognized unrealized gain in gain of and

$X.XX management ended the the dividend compared million of million decrease previous $X.X no would our company at is primarily in a this as We quarter. quarter external March administrative in as process fees stock, company more the March quarter. the fees the to ninth level. general is our second management distressed quarter XXXX XX, our a we share $X.X to exiting had related declared management row of per anticipate after a the common in decrease certain residential in and The of In of For expenses XXXX in the loans.

required performance. a have leverage in the manner investing, the minimal credit $X.X and market timely in to your base, of which is team deployed term more in well raised billion improved our markets, value leader equity months appreciate the than operating continued believe that to of common be and approximately Moreover teams multi-family our in residential more in drag with company Over $XXX over shareholders. find capital conservative all with multi-family profile long residential and access was an We relatively our nine to investment positioned support. course to capital deliver our than continues we the Xx year, last of investments. We on million substantially credit our past collectively

thereafter available on filed Our website. if XX-Q may this to I week XX for will up Jason be answer Operator, on any about now the our open May please questions be questions. available of and SEC could listeners or be with you and have. will will

Operator

Instructions] first [Operator KBW. you. Eric Hagen of question comes from Thank Our

is open. line Your

Eric Hagen

Thank the are you on making? you, comments, good morning. kind technology of you Per – of just that can the shed kinds some investment light what opening

Jason Serrano

what’s speaking loans investment and assets know there, trillion. Sure, so about are that mortgage know out you the market through know go that spectrum basically you lacking the is analytics you you mortgage outstanding including mortgage generally the know automations residential entire can entire $XX in market of

investment find to So enquire we data that through and into we done market fitting the pools for is reverse do aggregate the so continue what data, loan sift we bonds our and can have that opportunities. or take

it's market more all assess harnessing to a of with basically So technology data the whole. form having a using

Eric Hagen

or That’s pace And commercial either in forward, credit remain should sales how Well, credit of their at segment, of loan assuming of the we range the the residential about in right Thanks. that Thank form distress fairly going tight you. that’s excellent! now. spreads kind great. just think

Steve Mumma

were sold Eric in Yeah, say of of were securities. They XXXX. first one all that two we purchased the first I had we the would securities that in back three multi-family

asset than those, to they sense felt for very a the yield. like party So and agreement so with time XXX% to their lot those thought aggressive, them less of had had management made in We investments we the a they spent as We in at had – shared maturity. of – saw entirety, control we that go them. just because aggressive owned both it the own those more less time to of very a we majority you know we own

we combining thought spent that’s them strategies. economic more provide they they total so to value us, think so them, their liquidity exit And – the by for investment it I to generated for of removed and asset amount time it those an that into was the relative on create we time

opportunistic They asset, away as yield looking out the get a that. are from portfolio. consider obviously level So either you prepaid a we know we're we assets on us sell a aggressive reverse or multi-family being inquiry to not looking very openly will if particular

to our know newly and we about distress relates across it loan As you loans have $X business, originated. of billion

I large some create strategy that think will doing distressed, have you portion to amount loans in loans to sales. a every of discounted involves quarter out monetize be to to want know we're be by capture value manage you we're we trying are going going Primarily for asset those the sale. putting that of that and and to it value loans

into we’re and the $XXX million of the quarter. as loans to $XXX $XXX expect expect million would quarter, of selling trying also time know go – At loans, accumulate loans future. probably as you a you So I would million we sell a $XXX we’re same between to to million

the quarter, portfolio, up goal to that's hit control have always it timing that's predictable of and in will terms will of So now the sales loans through clearly periodically we but think complete quarters. be generating as more us the the and the may not we goal in I of our that sales be every all the

Jason Serrano

And organic through whether as it’s assets of just through as sales add recovery pool well. the I’ll also program the that, of refinancing well, the a working include or portfolio securitizations also could

the be as So organically broader well could selling it as market. to

Eric Hagen

and outlook leverage from What look the market, you for are year? guess are more you don't What are MPL both mind. comfortable MPL if does kind One guys the you guess of space. in nodes Thanks. RPL, the supply I seeing market I color. the this helpful how like current yields market in that's using, Yeah, that much in specifically me in

Jason Serrano

Right.

are uses different to speaking like for definition very RPL, terminology RPL RPL I’d on you that really first of market loan to. depending So an what the define the who

on focus through believe had better corrected have, we and recently and of So you affordable kind what issues payment we know loans. some be know are loans are you servicing that can more

a re-performing So be loans in that time, to self-performing call it’s that term. truly we not near but loan at point in in re-performing where loan this we case that a the expect

to So to you $XX end, market, billion supply. know that broader we you about $XX know billion the are expecting

and MPLs on loans. You know that would just RPLs

sub-sector we focusing or a what However, are to that bring loan a a current of stated, where time. we on look bar a is either asset and can class to to securitized monetized over

contractually becomes market performing to So you we loan to to seeing returns market, it know return borrower look double asset end, where know generate of then you sell we're months. to the the that being is, where you the take liquidity a to believe projection – on obligation based XX loan in the the occurring we a for and a re-performing loans or are can this able get class know digit that on

in levered returns you fit. the but market stated XX% looking rate see XX% from a returns, to is know have earlier down the we know digit as returns on we leverage are the know deploy well that we're if to then you double anywhere line you advance optionality the loan securitize roughly So the and again – to

Steve Mumma

over in sellers And mean and sense, to billion transactions including out Eric are $XX sell the a just give standpoint, we you sales the I other we mean banks, I quarter. from in agencies a marketplace. supply of first well

– Jason's us MPL loans we really to don't looking you $XXX you think very try million further loans to what know be you at to So Jason’s the a in million quarter, loans. you if we know accumulate point acquire $XXX focus to are trying and on know that about selective we to

generate ways period looking are at total cash a double those to at We monetize levered cash and loans in a on that basis return. that time of flows we're digital results over looking a rate of flows

Eric Hagen

you. gentlemen. Thank color That's really helpful

Steve Mumma

Great.

Operator

question next Laws Thank Raymond comes you. of And from our Stephen James.

open. is line Your

Stephen Laws

Hi, an capital. questions. know, good raising I start Steve my with active was to guess morning, you taking for quarter first that thanks

active know and at if the can think Q mean your good the financial had maybe look quarterly. very and sure did versus ATM But look I estimates. should deals haven't a you're the you not I'm the you during chance quarter. talk about how about January You two results February we with I yet. my

efficiency capital know You there were fully the capital raises? talk were about Were pockets capital of just under-utilizing first deployed how your quarter? you the the you during multiple when deployment quarter? given during the you your base Can

Steve Mumma

Yes.

end easiest ended look look in its total best total we assets, sort raise So at mean you where that indication in of at at capital, the the the if $X.X of quarter portfolio our and of that you of February, is it gives $X.X indication deploying average the billion March. end earning think into we if or assets billion, the period assets, at indication for were funding I I an capital you the it mostly

that know the we see that quarter, you the of of second and partially dollars, So margin minimum deployment would that pure but you felt that mostly in benefit why about a terms fully of fact the was increase invested XX% quarter being at that's of in getting capital an benefit the just going the of net from benefit quarter. I know to said were first full expect of in the of for you

and you pre-allocated I we're commitments already delay. a pretty there partially investing we You so capital, raise into one mean I a to have to know is pipeline aggressive anytime so raising of capital extent. try say would

and that commitment to we of And in are so for least basis. good what we it can idea timely a terms we of have buy XX% $XXX with a we million, at probably going of on the rest assets raise then put of in spoken if that

Stephen Laws

helpful color, as agency asset the come assume Do Great, interest allocated liquidity. flat returns place, aren’t there? that agency about flatter differently You I is bit as Steve. more portfolio in I environment? lot the you in you much are your thanks to attractive curve the assets you I we agency seeing and but RMBS, those there a much around they the about, of about low that on ago little spread. that were not hedges talk mentioned firm’s XX% any the given curve current know this assume through the use you are six class got it’s portfolio we margin know and of that’s net asset of months I’d only capital the even in assets, of certainly I Thinking are believe that RMBS. but when now and that a know portfolio how can operate risk pretty in taking for in class. and narrow part returns in environment

Steve Mumma

disclose Yeah, our it’s you look portfolio at thing misleading when investment, in it when misleading, investments in sense the about the various to total. because go think our one that know we look somewhat we we

look portfolio, that at leveraging that low. Xx we each total and we an so and conclusion are rate silos these you so return we're of investment, looks the looking look very only return a the come of around agency to silo While the at at as when you

us just silo on that more looks am on want on of otherwise at doing, have. putting other portfolio we we levered are look the other meet levered delivering total the liquid asset because may we costs where agency the to silos, that really under arrangements portfolio. on And it focus return less that column I the of because lease out that available collateral But the like flexibility I and and return it's so at term we've leverage margin financing less lower the so come contribution to from is the lower and total holistically gives entire across focusing the focus rate in way each individual and categories, primarily so but so the company, agency company what having is, portfolio, look get places longer does stuff more

multi-family total – we think necessary running it know in we also you return really is when component don’t types look when drag but of look you investments portfolio, at our a the are of residential. a it's you the So certain

Stephen Laws

it, less I lot a guess Right lot to it’s cash for if and a having so of you’re Ag

Steve Mumma

Yes, that’s right.

Stephen Laws

from like normalized Steve, question Last How it things you got now? want It quarter largely do and think full the seems run a internalization completed. headcount expenses. operating Have G&A rate? you've we where about

here? So $XX.X I thoughts around around you million believe the for know any how moves from it's quarter. first G&A

Steve Mumma

and consider Yeah, $X.X are the that’s other look the know including expenses, G&A, you all I G&A million talking that's the at we G&A. we have, the when I what actually but all if you about of well about G&A, think so really

quarter to and by So fees anticipate you away the quarter. go would the management in decrease the second third

about I think right probably we've added. salary the is rate run benefits the

would employees from load a to point help have XX made doubled finance to and the we’ve capital our the – internalizing We total year expanded as kind investment accounting as in XX we've in the we the the about take ago. in of That by we a don’t or the will we from last commitment added same business, decreasing increase our company percentage time expand – on we’ve have technology, to employee significant of of to over today, the of through the professionals RPL year growth want months to the going in comment from group activities, Jason's increase almost least increase sure. goes to see capital base for be but try to business and expenses at I had it expect I this a increases opportunistically

million a I So would expect rate around talking in consider minus you XXX, quarter so G&A. would know I run this what $X somewhere the you're

it the is in expenses as business. other control category, money a then just consolidated have, because of you the an related It know business of reported that be item our business entity, that to costs $XXX,XXX expense we're and took to look $X and at the relating expense, a the the business loan that we loans, line other the million part in that’s we that return The total expense in one that's property. variable more multi-family we over to and as but of

I of property It’s there. little on very of the and where gone the that really be to we face think financials. company drop to them in exposure something They off are we expenses. just from of an so a the those second accounting put will that will quarter, expenses have requirement the have

Stephen Laws

Understood, great. Thanks Steve. the very for much comment

Steve Mumma

Good.

Operator

you. Christopher next Thank Nolan Ladenburg of Thalmann. our question comes from And

Your open. line is

Christopher Nolan

Steve. the Hi Jason strategy for of the in economy influence slowing. company? your How comments earlier was the that you indicated that sort does

Jason Serrano

the Certainly! we looking look looking When a in slowdown. at downside provide for investors; for assets we markets, credit market are we are protection that

is So on that one protecting ways leverage doing the on total type asset. the you of of are yourself taking the of

operational there so that helpful with sides kind financial is there leverage, expectation. both leverage, of is living So is

well So levels to looking as lower in LTVs, finance into leverage at looking as you arrangements, financial know as case the have to with know that loans peers multi-family and take lower or to lower market you well. entering LTVs

So you our know various when know across that's lower look our functions you the than is market and I of overall our that the have we expected. book, one on of positions outstanding peers leverage you and think

slowdown. know seeing where looking of the you of but really is a you'll and the market those in is you into at, results consideration it – slowdowns both we benefited One know expecting numbers, in taking some

Christopher Nolan

adjusted still question to X.Xx I expect quarter that to about leverage up equity last debt And Steve leverage holding that? Is I to increase on a to NYMT. or you to recall Xx that there recall. for as basis is update saying an follow on then And an

Steve Mumma

Xx. mean X.Xx, look, target is I right. That’s our

we so opportunistically Xx that add right makes added we’ll we add added to that We ratio leverage so it are now as that investments. Chris. to equity harder just and capital, stilling capital; it continue at equity We've capital much increase

would So that portfolio the leverage X.Xx realms company we X.Xx know run, increase our safety in. tolerance within well within from well to we operate ratios can can and be still we you and our of

Christopher Nolan

it X% equity your look And as is incremental we still or sort you you forward? above. price going the in of going or of do to terms opportunistic Any be change sort Steve, book are stock about quarters? you of of were know in Where for price roughly, X% guys past basis seems the in strategy races

Steve Mumma

we if I properly available place stock we is market and investment, where at our an to a get and those an sense would do on at returns something kind from those it look can trading raise, line investments up think and Look, consider considered. makes what always that’s we of what's the in point accretive

Christopher Nolan

Okay, Thank you. that’s for if me.

Operator

Instructions]. [Operator you Thank

of question Nomura. Your comes next from Matt Howlett

Your line is open.

Matt Howlett

Jason. and Steve Hey

Steve Mumma

how Matt, are you doing?

Jason Serrano

morning. Good

Matt Howlett

Good, good thanks, morning.

like is loans. lean about you color residential into? side, Just much and it little the moving loans. that performing it more on of securities flip what asset talk now more that residential of little And now Could terms part of each bought sounds maybe and off a is how and classes programs, some returns, if are some consisted you second multi-family on because RPLs right just and more you new can about or the or – on trade programs like the the bit other XXX know maybe bucket I you in talk of what’s the

Jason Serrano

with the of start I latter Well, question. part your

across model we book entire we need is assets, to of flip We to have mandate our business that are to whether markets, looking not we at opportunities it’s pool If we an invest a say in it’s look at in. the second credit because requirements operational no an or to that continue adding non-QM, have where fill a to of assets investing. section running. don’t for We area there

sector desire and we where know all there we we see see these to fit no is markets you opportunity, So the where another. moving versus are in going so one

have You sourcing. know do I XX years’ said our, again experience though and early we in as

flows every over return the see We know about no way this kind a just across spectrum, access is of that do there we of opportunity and we of are have beta you we but there. to kind because part market allocating see

and you the XXX that as have offerings of as the we market, across on from what and down of of lenders separate Freddie HELOC’s Fannie non-accume becoming failed rates in very our basically available current is harder, where little rate looking come lean million When and some and that run to are at was purchased first portfolios broad. well first purchased we kind discounts. Obviously more in new aggressive kind we bought that origination have production. criteria at loans that we performing which at did look is lean space, that the so the the quarter, market primarily know been assets So looking at you second

Steve Mumma

of we investment, space multi-family there portion know space we it managed is are Yeah, leverage Xx you that that, asset really to In to that investment form then Xx loans, in at about certain are know are residential may think times mean leverage. Xx it. making adding in do some two a a transaction the has are to returns classes, whereas improve about get you and a has and where either leverage it further we on In issue a you the right. when credit credit where originated return adding think you the of if the investments cases assets. we looking same it, on to an And something it's versus probably making to differently many it residential maybe have no the on Xx we're rules with that the be extent was I different we originated, you something on newly multi-family, some kind those asset newly to just but of some

Matt Howlett

Strategically second companies make New mean, a the more a fully You about to continue picture – operating Right of for think forward? York question, company just and this Mortgage how the is build internalized new investments I in then bigger quarter. in Trust. do sort you going you you where area style team.

mean next I Just stage picture of is bigger company. in the the a evolution

Steve Mumma

built resources. we’ve think look, from capacity almost professional strong today. I human the Yeah are and we asset doubled capital XX We’ve –

just models. look purchase opportunistically an always will a focus at company. I we don't the we think I to would platform origination on new think given history of businesses at

it and know we that may something not you with. be there are would at are is consider that However businesses we looking aligned currently other

option to Mortgage prudent has So very other look possible well invest management York it’s historically looking. areas is in and think I where done I always people investing New at think aren’t where every from on Trust

now to that and us have company available under to more stones. look more the continue professionals we allow to will So to do we

Jason Serrano

also buy add these institutions companies When in market for there's And that today's opportunities providers. need or that into I’ll have us down to know the an origination shortage survive. that you originators bonds or no for to look lower lot despite you of service given you’re have in the aggregator the rates – driver’s volume or of even are your you seat a asset come

at walk be So would you able are given this to entire and those not across prudent point actually we that one entities to to acquire know end assets that the it into of market. attract

So when entity. you you're know own you much become, service pretty now an an that hold provider originator efficient into particular or

market market the from and doesn't can us we go So assets perceive as the fact in we source the whole, competitor as because their a space. a like that

Matt Howlett

a Right. Guys, of a That lot. sense. makes thanks lot

Steve Mumma

Thanks Matt.

Operator

time there to Ms. no closing like I'd back questions. are Steve to And at this further over Thank comments. the for turn Mumma you. call

Steve Mumma

being you call. operator, on day! speaking you, forward quarter thank the and Have a for about earnings to We second everyone our in August. Thank great look

Operator

today's your Ladies and conference. gentlemen, participation thank in you for

disconnect. may a day! Everyone wonderful have You now

New York Mortgage Trust (NYMT) 7 May 192019 Q1 Earnings call transcript