NYMT - Earnings call transcript Q2 2019 | New York Mortgage Trust, Inc.

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Operator

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the New York Mortgage Trust Second Quarter 2019 Results Conference Call. [Operator Instructions] This conference is being recorded on Tuesday, August 6, 2019.

A press release with New York Mortgage Trust second quarter 2019 results was released yesterday. The press release is available on the company's website at www.nymtrust.com.

a in of section the company's hosting you call of are website. accessed can Events we live today's webcast which the Additionally, and Presentations

certain me time of are which XXXX. Reform of may statements inform would the this forward-looking historical during like deemed the At you conference management not that Act within statements be call Private made the Litigation to meaning Securities

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

Now would at Steve and CEO. to please Mumma, Chairman introduce, this go ahead. I Steve, like time,

Steven Mumma

thank Jason share be of being morning deliver the you, in everyone, for for company continues per generating on operator. solid also per earnings comprehensive will $X.XX you $X.XX second president to results call. and GAAP the speaking me. quarter. our The earnings morning, Good of with Thank share this Serrano,

return XXXX, with of quarters share of $X.XX total an for value X.X%, two first XX.X%. quarter. companies represents results XX, of the for Book which return March of When XX, XXXX, per a the at return June resulting X.X% unchanged common an XXXX economic total in from economic annualized combining generate financial

to XX.X%. the comprehensive dividends $X.XX We our earnings by had months per XX, paid of June exceeding XXXX, For share common six ended date

and our June $XXX in remained portfolio $X.X total active credit during sensitive at sourcing closing more on than bringing team million XXXX. billion Our investment to assets, XX, the second investment quarter,

continued fund our and a equity a market portion at activity, million second equity during offering markets this on of the a offering Company utilizing program. total follow opportunistically common see quarter the both raising of the to access $XXX.X capital investment To in the

value. All that were levels book executed our to of which at were creative

we of increasing to approximately July fourth million, on the by overall capitalization costs issuing $X.X the basis. addition, a benefits to offering fixed company options our shares, capital growth our raising markets. total bringing XX to our capital completed our expense In million. overnight $XXX.X It lowers on relative Its year, access and XXnd, the credit million reduces our

to portfolio have current speak Like the now strategies. thoughts market Jason and around conditions to Jason? some our

Jason Serrano

Steve. Thanks,

particularly we also strong with general spread We while tightening, liquid performance strategies within credit quarter-over-quarter. our witnessed are book in pleased second value the maintaining more quarter the In portfolio.

Our investment single exposure credit. between in busy were multifamily, of approximately family the with million added teams quarter $XXX

On lower the agency business the of environment. in MBS to a of portfolio rate out continue the to optimize slower exposure we growth, side rotate

increased MBS with speeds agency value of prepayment bonds, Performance causing rates lower of due speeds. was mortgage the decreased With MBS investment prepayment At hedging portfolio the XX%. shortening premium agency challenged proved premium beginning total agency our was value XX% higher the the year, us difficult generally exposure our the today the market. duration broader the to of of and for generally represents

agency Looking the quarter agency of of not MBS our at we do allocations pipeline accelerate to our in the expect planned indefinite. rotation away MBS active opportunities out third from is

shareholders. the to continue over difficult mid-term. the returns In pursue near multifamily do we space, allocation for capital focus to for and However, attractive is likely without excessive we to the generate two strategies on incurring MBS thesis agency feel risk

direct mezzanine that First, is sponsor. focus medium a as generally on to type the property origination structured term loan we bridge

had fit adjusted of this network of we management experienced offer we excellent out markets the our transactions management proprietary from away structures developers. to of With broader risk through to unique team, investment direct private Our with deliver our team continues to program property can needs with effort our activity our multifamily record to build-off amount to source loan returns. borrowers'. opportunity look glad point a and I'm the

in portion is securitizations. equity of investments focus Mac, the multifamily loan credit Freddie multifamily area secured in Another

the As a background, structured typically term deals. multifamily vehicles year loans securitized and ten

property, Our management portfolio. of asset analysis determine of each team a detailed multifamily conducts high to overall site value risk visits to ongoing the including properties

long. to that Our on strength and hands better diligence role losses of comes from an of a are have we the able take our investments. few active instances to been protect that process in minimize these the problem the portfolios and Historically, workouts we in the fact occurred

are space our satisfactory our to participate capability results. from Freddie expected deal strong continue strategy K-series is remain volume $XX strong and and active Mac capital We record. issuance to routinely anticipated year. in do Mac outcome of diligence to transactions of given with per in We billion to allocate expect very this subject track Freddie

second from largest people of million face particularly value United units downward States with rates boomers -- National a XX pressure demand the next two in generation, millennials who people. in low with XX trends downsize baby fund is for But vacancy million approximately over homes. now multifamily keep Solid a continue And elevated at capacity where hover shift their our to the or are lacking. X%. largest, credit With the homeownership who decade, the solid rental now for demographic underpin decade to to exposure. financial fundamental poised in now

rate compression We expect persist. cap to of trend the

disproportionately obtain supply to in. projects are with in the where primary construction higher markets markets, developers avoid of completions with brought is brought market annually times or low Despite space seek primary the through higher units In supply of in vacancy was market two the than or could significant supply is years rents. sustained on ago. exposure part the of new in rent built tracking key where large risk Apartment we with the growth expansion coupled growth, units seen [Phonetic] U.S., currently rise XXX,XXX rates a market five One side, construction. to around the multifamily development a completion

the single over class which shilling the is the income asset mortgage in single-family of switching world fixed market, eleven with largest Now, assets.

the on is mortgage mortgage equation. the on of side the credit -- focus credit Our

Here we also investment strategies. two have primary

performing second, in effort mortgage is strategy not mortgage impaired this of note popular vertical there shortage important is into and a aside, we First, followed loans. to an a integration esoteric credit origination has which of have bonds. In that And willing sellers. no credit been platform mortgage residential

can cycles. of to from where maintain may period where we the loan in environments opportunities. buyers can to it production offer believe mortgage originator, selection attractive locate of is out sourced be at face in We flexibility imperative prefer indefinite be compelling risk. move flexibility Simply, We various markets, With can believe consistent the a large to we in of capital an to and we pressure -- maintain investing investment sector risk sellers. a no attractive the

offer As packages with niche unique performing year. an as far and We sub with as -- move subsector each characteristics a scratch XX understanding repair flip mortgage certain purchase credit at thus and deep dent, over are known from sellers, where loans market example, that this we quickly credit such loans. the liquidity loan or can we fix

average, were the of [indiscernible] investing opposite is we activity paid to In where that Much securitization allocate we a loan our investment multifamily or securitization higher providing of prepayments. company's offer certain like exposure created or On the the esoteric prepayments, lower of the crisis. quarter. continue to par discount investment second in our rates markets, the this attractive assets case, on single classes quite discount XX% with may to value, which asset monetize at financial mortgage believe loan these we purchase increase agency effort, for MBS family types strategies return. various at In

of and large credit declined managers increased. tighter companies asset aggregate U.S. of supply for from investments product As years several continue demand credit Spreads the in grow the a stable outstanding mortgage fundamentals. quarter has second housing to insurance and securitized alongside for

we flow market. on trades, risk the be we to of enhanced time securitization. of of the horizon. securitization assets more of we underlying active value Given price sector this to in liquidity tend We one each the year typically them priced seek With the underlying over traders in two are loan

been A significantly securitized bonds products, opportunity. inflation loans, risk of tightened between factor imply the to the that fatigue by harder countries, find inverted take much similar has in between loans this that developed trade efficiently us for falling globe. especially over credit in keeps uniquely have is platform our A advantage core and curve below the XXXX secured spreads, differences various this year. We is course home of believe two to very as creates busy -- are in in opportunities very it across Admittedly, the growth highs looks much value market us that situated markets fundamental dislocation. rarely price is

are the we in are to capital However, the putting market work which large each in quarter. very to traffic relative we

incremental here the As point more the would to free objectives. today. we Unfortunately, There out work managers adds like is are to quarter no this each are meet same lunches where out, there. return passing

proprietary our the multifamily, vigor canvassing to across chasing with and down investment are leads market We healthy the pipelines credit. with increased create network single-family

us each This has a afforded effort to in of raise the quarters. capital creative

advantage under financial only coming is preserve enable borrowings strategy to course of the value better a of X.X locations. leverage, this believe billion risk will over formed $X.X Our at to and which as markets X/XX. three take to by is We level limiting portfolio times ask quarters conservative us of book

As platform, -- generated providing a flexibility corporate fundamental mentioned and Under of attractive earlier, are our by approach, from lack credit focused our operational stronger. diverse we liquidity, which our by deep balance entanglements on been and never comes strength offered strong has sheet. verification experience, dividends

provide of quarters formula expect our credit expect look earnings we our to of of forward performance to We the seasoning our financial portfolio. how our in strength discussing to of improve to is reallocation with subsequent the offer exposure we and This NBS the shareholders. as real

I'll to Steve. With it that, pass back

Steven Mumma

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

for Generating basis debt of in in Now for the the net interest in go XXX performance GAAP the $XX.X comprehensive million million income. income second $XX.X net and let's million income points quarter. of earnings quarter. We net through had portfolio margin $XX.X

Our margin of loan by basis related points, decreased to XX the received timing primarily was net portfolio. flows the in which distressed cash

our for basis of purpose. on for are a accounted cash loans many GAAP As

quarter. year Bringing Our $X.X for beginning average total of for million earnings of $XXX the the increase the increase increase XX% the from from previous the million the to $XXX assets or an million quarter, year. totaled

our assets average as our earning build. in the to to continue to quarter expect third grow investment pipeline continues We

capital. Our investment a of portfolio with the strategy X.X% X/XX/XXXX $X million in totaled or $X.X billion securities, total billion RMBS $XXX including in agency as equity of allocated

investment smaller not to continue our As we'll is and strategy Jason a investment for portfolio. a represent our of mentioned this earlier, core focus percentage

subperforming including types opportunities, billion $X.X well credit reperforming continue backed and credit have We in see loans. by as residential of securities varying non-agency loans we residential as to as

These continue investments are rated currently possible we both coming in securitizations funded unrated to with evaluate but the quarters. markets lines, repo for and the

billion multifamily to of XX% $XX another the find $X.X invested capital. investments, for of million. Freddie -- expense We continues strategy representing totaling company's first investment have quarter, in to and to total XX% the the Mac multifamily company loss be -- a our In contributor expects the third performance. A assets major

which a income loans annual of from this of business to held million of mortgage realized will $X.X other quarter gains $X.X our and quarter, given $XX.X our be of the in $X.X comprised of the at included other gain of earnings, current was million in nature significant accounting $X.X million net was million our and unrealized total requirements, million gains. our the in residential Recognize and Value, a Fair this of distress during continue part

to which gains interest other carrying from component related We in sales during gains were loans, the securities also income. million, were value. as unrealized the our quarter Yet losses had for other of of our for $X.X at sale on which reported swaps unrealized rate for residential from million, available accounted realized accounted $XX instruments, a comprehensive as trading of $XX.X distress by million offset

the $X.X tightening loss a preferred otherwise losses. securities in reflected We interest of in $X.X included income early also investments other million be would but Freddie income $X.X unconsolidated The primarily estate accounting primarily of of K-Series by preferred in Mac unrealized share company or $X.X investments, that credit of $X.XX $X.X income our other additional driven and net in gains accounted gains spreads. a from investments our first real in that development on which for recognized gain joint and to have million interest venture equity We million had on had must been in of margin, after million, on consolidated effect investments comprised a purposes non-controlling investment. property for loss redemption unrealized giving equity from equity also million

XX, June quarter, expenses June as non-employee increase had company ended $XXX,XXX quarter meeting, compensation, $X.X in G&A to invested which million in a previous related the in our compared For annual $X.X the following XXXX, million was which equity the board XXXX. to or majority, was held issuance

During we finalized our our the of third management. quarter, exit party

management third-party management quarters. or in any more and fees not final future expect Our agreement do incentive

months billion XX fulfilling Well, of deliver company new focused been its in of of economic to economic June the the To dividend The payment at per months credit XX this of over stockholders XXth have quarter level. new to stable with an the distributions XXXX, objective, over rate the in straight a trailing continues investments. XXth, more to filled of share, $X.X base term our maintaining while return increase and last conditions. total has capital end, on than that ended $X million hires, the changing company a delivered NYMT XX.X% long acquisition remain $X.XX to our

forward appreciate our We continued third look to support your about early quarter in speaking results November. and

on filed website our we'll August about the thereafter. available be Xth will SEC Friday, or on XX-Q and with be Our

myself. if for Thank could you questions and please Operator, open Jason for you.

Operator

Instructions] go Please Doug question is Suisse. ahead. with [Operator Harter Your first Credit from

Doug Harter

Thanks.

a know, about prepared you're portfolio, the seeing compares it's and hoping the your to capital you of talk bit you capital that on open know you how if could the deployed, in seeing challenging, little continue it incremental said I to kind capital, on Just kind incremental remarks your to more appetite existing you. of raise the therefore markets remain returns to you're returns that

Steven Mumma

raising feel raise we would Yeah, investment. is to could we capital investments into targeted our that look, think going didn't I about not reach are way we that think deploy the capital we capital

portfolio the that now, asset, to % that there's asset right no know, by Know, you of XX investment the difficult mean our You leverage in target, agency that financing is both extreme our of the that volatility is the XX% is with at to especially, and and we supported target strategy. -- going recently, an to investment ROE, ROE it's rates that look be one to question, given on things that amount reach difficult on investment of

the about leverage one that multifamily, one credit distressed So strategies, you that trades. if Jason those you sources can in of We some over residential of give know, put of that look to believe loans horizon two of our at about -- those to us three a year our talked we do on return. couple with four investments kind kind will will return

Doug Harter

kind -- of to just of much is much down, roll curious current then And spread kind of you kind XX% XX%, that how know, those of how and season. of kind is expected credit that that the as of income as

Steven Mumma

has XX%, other gains that components generally will probably balances you income and multifamily. mean realized and which years, in to on three I and income last four both residential can over XX% margin think, other get been XX%, the I many of XX% look, sense and is the and Yeah, our to losses financials that a unrealized to

when You in, we're get driving business net a know, margin core only. not we

We of don't that leverage. rely generally return think lot which a has to on up

we can environments our think part -- our leverage don't leverage deliver on why of reasons generate -- return. stable across the book so look is at more we if at a substantial I we X.X these one And to don't value times, you of the depend have a that

that's which your what improved is get lower really some of have we're credit strategy, to return you're performance, have the from and So think asset targeting. leverage, I to you when going

Doug Harter

one book of a I moderate we been just recession that exceptional. volatility, you then again, to of of could improvement that. But, on I if credit of has kind performance or period mean, of more And spreads. kind just widening go period you know, value a think over, your we you it, know, credit, a through about piece know, -- how guess

Steven Mumma

shock, can gets from Yeah, fundamental do So, one, the we credit look, two creditworthiness widening, standpoint; little look there's at when I asset. the market a very especially we company's the spread right? the things market general of mean,

there's And technicals assets, we there's reaction then components, two to that assets. fundamentals two know, the the the will at and credit -- so, you events our and world look outside the when market us be technicals, fundamentals of of impact underlying

puts event, underwriting diligence if we the on a to So in credit in event. due we position get XXXX assets the us of XXXX think the and that better credit lower put the into withstand future, a leverage events combination come we

everyone, think We and portfolio of believe event. credit can for sit sustain well, our do we asset difficult we it the the But relative market manage will we future. classes. going see the we we think spreads reactions. becomes to standpoint in XXXX think to those very But could a but It is don't credit we that widen kind we're still assets of of other where where especially perform from exposure, reality a

Doug Harter

think. I Oh, Well, sorry…

Steven Mumma

Another to where credit in on seek assets have performance downside yourself protect the is way asset itself. to you protection

asset we're typically improved and the area looking XX% an are at assets market, for than that expecting at, LTV a XX% credit the we're performance basically an where below at borrowers, we're buying discount. when a we're example, SPL buying from more that So

short on term. refinance those better expect lower have loan opportunity prepare to their in basically So and cases, the when a the you borrowers is improves at credit the you will rates, discount. on the -- asset Initially, and extra underlying have with credit away built protection, in protection these the that

have forward ability with We're actually everything about that LTVs downside XX% rates So than faster to a a we just north the do. areas, underlying monetize borrower looking for asset we those and better credit par in across protection, lower value. lower of the to with we look

part reason keep been that's pricing. able stability to of So been we've on why And huge a help. asset portfolio the our

Doug Harter

the insights guys. you. there, appreciate I Thank

Steven Mumma

Thank you.

Operator

next Your Eric go question Please KBW. from with ahead. Hagen is

Eric Hagen

both remarks good hearing say John, I'm from opening credit both you that multifamily morning. are the Thanks, and resi just attractive. and

I'm two, the we've environment? of you this in even say the last in week. that I So of over favorably this more biased kind when environment, zeroing seen on to volatility which Thanks. And the are last just really

Steven Mumma

get and something that digest basis Fed a Eric. something possible I talk that's volatility None You have by markets really we -- the mean, the currency are I you know, of have that, see that been empirically to is eases rally have or about technically know, a credit rates week's mean, we markets is out. fundamentally, plays the increased how immediately last it almost points tariffs has we and reflected in the now either or massively. yet, down. board, Rates XX

have to terms In really, fortunate I mean, the capital been the between of enough to to as markets access trade book above allocation we we've continue value. two,

been so now. in growing restrict And we've asset other. investment really thesis right able mode We're versus one to not the

And to know, earlier them reach XX%. seek what have add long we making. you so attractive, a make to until now continue right drive we said of investments we XX% are will I that decision the will to those to the continue And, that's both of yields goal to as try as we choice. think But

Eric Hagen

underlevered two segments the can but leverage, see where agency that generally, are portfolio? the And clearly kind of then other the -- of you're segment, in In you Okay. I the just underlevered? on on

Steven Mumma

financed. of that I think have I funding some on loans, available we loans, you have mean, if Look, at capacity aren't look we loans the Yeah. our

securities are have that own We finance.

additional could asset add leverage, various have we classes. We

not certain just to the have may against up we level. So classes maximum to borrowed asset

the company So opinion. X.X in at we leverage our times X could run times to safely

gives So if flexibility that leverage some of needed. us

Eric Hagen

that today? credit -- looking can times recourse you the is running resi at maybe be of portfolio the segment, there you the Max makeup In get specifically, little leverage I'm What you would based guys think a like, leverage. on one over the

Steven Mumma

market the those at classes kind we know, leverage from itself. anywhere performing ratios. prepayments different rates we where a qualities obviously, to asset XX% that on levered, of and can loans performing XX% where based ratios. seeing we in on the on the mean, both versus digit leverage of not below or market we subperforming different asset were loans different offered think we're know, you XX% as asset you double I basically on such the to, performing and But, sub have standard have assets return monetization And also generate advance of

of not know, On securitizations to and trading not have because do of an we And our that's trade. you advantage of this we at XX% area of again, have and can leverage kind full levered roughly dislocations the some go to location taken looking assets we leverage. methodology and taking

return asset credit a thesis on of reason. spread know, with to class double that's of on net from -- tightening And basically lot the So provides digit leverage asset generated comes maturity return return. income, the for versus equal asset a you that the where to double various holding -- a is the particular that

is basically So the the we're our leverage, why we it I maturity a the versus bought leverage. reason being to discount able the monetize high holding with thesis and think that in to because asset on

Eric Hagen

I And just the it, mean, And just come residential months? then Thanks. call it. the look specifically, who's picture XX call does how like what the paper? will to you next, think next, much over again, year? selling market, side, the distressed it, just Got over supply on -- do

Steven Mumma

Right.

non-performing only end month fortune billion side dramatically one type $X of Issues] the the that loans of there. about -- that's delinquent that us, different shrink there So isn't there's not been market loans focused supply where quite in on XX supply of for we're [Technical has seen

thus supply and expect be this the On at billion that we RPL the year grow. continued we're to of know, you $XX looking far of side equation

available a the of banks continue from a of to seen is that loans pay their all delinquent performance them were time. have a those lot of ratio And then a of still large basically portion full made and portfolio we've billions loans that is after there to have to out This default portfolio Typically XXXX modified to those period in XXXX not of today. it dollars.

are doing portfolios So the basis. really billions on clean sell up banks the that a Fannie, loans to This needs is market sales, or through also basically what are consequence trying of didn't quarter-over-quarter they're in either bad reduction. these in get a which seeing the is Freddie be reduction as get that loans billions. those to borrower's payment in meet or relates modifications purchased. it to didn't completed didn't And -- we're the those the LTE

at directed -- is that's we're need for case with our modification And and bar doing. why looking more efforts we've programs basis goal that are the higher case been fitting servicing a what -- by touch the on what is

where but So month big couple is and the out of we we that current period have recently focused are a incremental of borrowers delinquent borrower only that defaulted it -- of when you either a XX the you the a intense about keeps spectrum know supply keep months. busy, RPLs paid paying some And there's in think borrowers more recently -- efforts. there time generally can borrowers case market we're talk or is through over there servicing where are still the

Eric Hagen

Interesting. Thank comments. for very much you the

Steven Mumma

Eric. Thanks,

Operator

Your Nomura. ahead. go Please next from with Howlett is Matthew question

line Your is open.

Matthew Howlett

question. my taking for Thanks guys. Hi,

that last sort residentially And that to we the margin, the spread. the can the give point Just to margin look interest interest -- and has continue you to kind XXX, of cash yield you complexities see net compression. and focusing can that's the been progress to consistently they quarter, mean of that at few good the the ended could myself appreciate -- the and I quarters? XXX Anything recognize as the spread, performing -- I normalized I top with we you margin, Anything back have net analysts last line was hear on you that up was to with GAAP you XXX reported getting not of to? with the some on us going the margin financials, will the at which accrual

Steven Mumma

would definitely net you you at the when company, the think to in to decrease I look margin Look, correlation one that is, the the could right. you leverage Yes. overall extent increases -- expect

Matthew Howlett

Right.

Steven Mumma

securities securities multifamily on tend multifamily we assets yield. times have to in than yield a are those going that add assets as four So of our some to five have put financing times, and -- a to much of higher lower

relative leverage you multifamily look barbell is XXX, four assets the yielding to resi times higher ratio a yielding five XXX that at multifamily, when So to relative but and of versus or really strategy lower residential it's difference.

know, exactly hard that last probably to versus between in high you tended is where we've it's periods X.XX%. those to So, added you assets, quarters, it's probably going and of of X% where higher low periods I margin if pinpoint think a six of look a to the over generate I we've much go, X.XX%, And yielding the think more multifamily residential.

drop of to increase the was so with say and going while drop margin that the to would in in really some part yielding be residential X% I assets. I think But XX% it's lower related the this Matt, quarter know, general, of residential net added between X.X%. we you leverage

Jason Serrano

delinquent they're consistent do in not provide borrowers come more have mortgage billion payment to which J Another time with that as generally buying over to just play, $X distressed for interest margin. higher do we some delinquent we to meaning that payments that drives the and extent loans, the curve attached fact it, -- net we're that had comes loans, of then work the bar,

with borrower. and Just were service working transfer to after purchase give at loans of and the we sense, delinquent purchase thirds you that two

actually a two-thirds those the Today, paying borrowers inverse consistent we on have basis. of are

effect, spectrum, because margin know think of are performance. J the most where I we borrower's that, the you you the delayed So be where know, those curve as would in we --that loans are assets have the net board interest payment SPL

Matthew Howlett

-- go you. you gross the to just though, continue as to capital and overall at Do the spread and increasing up been grow the deploy to continue Got it's the that's that Directionally, expectations -- very a going net you increase portfolio? to for as expect net saturable. income you

Steven Mumma

No, absolutely. Absolutely. you dollar right, dollar mean Yes. net margin. That's margin, net

Matthew Howlett

not that also then, And know, to spread program. And to you multifamily a that then direct, mover you're for we're the target known in can't real in And each in go lending K-series, of profile know, just market XQ. that Great. fresh K-series mentioned one to we've want you you're and in us, you games sort deal mezzanine moving, going sort -- I these your environment? return pick up you're the preferred today's the up characteristic What's consistent even subs the just of business. had always credit going in -- you've continue right and over. is It -- this of

Steven Mumma

you -- and market the K-series know, we bond. in value Look, increase the

If into XXXX got in high in high entered yield when we single investment. we digit yield about Today think into we investments were to -- earning a were XX%. digit those trades, XX% that those on you investment that's we double

curve a capabilities. so no prepayment amount has you a And think class. that, that in asset about the roll that There's tremendous of if year down duration on XX asset

portfolio. as generate, you it's in dollar million yield you $XXX price points, across a million So $XXX to know, improvements huge pickup XX incremental of basis

in So what's demand. spread supply the driving is credit

credit. which supply loans. multifamily, technical In our as probably in of assets and but are of outstanding -- $XX all and year my I factors opinion opposed and exposure, fundamentals terms last much of over performing on is to demand fundamental our as the across a billion mean, is half

servicer. we've I the work with think loans we've which of that minimal losses on those to bad, loans able we've had special had been out go three

the classes, a those to So liquidity knowledge they've but able the great detriment, standpoint of think tightening. market had availability mean, performance. the performing standpoint, outstanding class our increase I I agencies, which assets a been asset it's asset of credit to spread it's and is improved, these from and

Matthew Howlett

on just me for on. one last a Just

You going forward some like the you said line, expense issues had paid management there's great, you adding you've parts on moving your to external fee. onetime it operating know, some last comp sounds I you're of people that sort think

the lot. you Just to what's expense the let overall? grow? should a sort operating in know overall, year? that And you that decline I as outlook to Thanks provided some mean continue earlier be of ratio guidance I

Steven Mumma

if want, our support significant you from -- Okay. mean, increase. senior to expense will, in Yeah, Matt, majority expense but continue if company, will asset managers, the not an staff, look I we hired you add the standpoint, of we've the

-- it's approximately runway time where would So, quarter, to if shot, it. to are that you going take the near where I that future. out would say one in we're every we be, year, annualize you happens if $XXX,XXX is XXX I The these want

Matthew Howlett

Great. Appreciate it. Thanks, guys.

Steven Mumma

Thanks. Thank you.

Operator

[Operator is next question with Your Please Instruction] Christopher go from Ladenburg ahead. Solman. Nolan

Christopher Nolan

effect of cost funds your this recent rate cut? most fed on is What's the for -- the

Steven Mumma

drop basis XX implicit are an point to implicit the of -- LIBOR of our well bank points immediate the basis would trade-off going securities, be, base, its kind and going indication funding either explicit, forward of of of easing. all on that to an drop, repos some with repos so as or be are majority that's loans, immediate XX the then as also it's kind our LIBOR borrowings on are of any Look

obviously to So lock look it's that's funding sure company term that but at the as securitization longer the impact. also, in would at for trend we'll to regard, to beneficial rates lower, in possibly -- continue immediate some we execution look definitely why

Christopher Nolan

take is these economic which X.X just leverage mentioned ratio for leverage of times, with ROE -- of X a tending towards lower you consistent or target? ratio a Also, Would earlier past in you given that the achieve changing environment, a to lower targeting your your calls. can comments -- you

Steven Mumma

Yeah, last you're the be the more us books. I digest days look, more to on hesitant would events, I to asking obviously, put we leverage two mean, if mean,

companies at always look always out we in I leverage and we as fundamental manage think a day to day on we to issue that business. and key run company, risk have the the the

assets, our historically, that that's the under distress, assets, mantra. you sort and been how companies not come it's know, the of have really finance financial it's You

thinking spend lot be but clearly, assets, so mean, about we of hesitant And time we how we increase events, would a leverage. given finance the the last to of days two I

also at However, actual fundamentally, the we're on would putting we that assets that will look dictate leverage decisioning.

Christopher Nolan

Final question.

utilize can is equity the X% continue to only the intent NAV, mean, ATM, about capital your Given stock trading the is above markets open. while raise to you I

Steven Mumma

capital, we enough have can strong want creatively base -- our raise we have it's support think when our current to the we sure investments pipeline believe I to twofold in yields. and that dividend two to Look, make add we one, we capital we it

you is capital we're would ATM we things trying don't, we that add to so the look it. the are use to two And and marketplace. And the to if one those know, program do optimistically source always to

long that's generate continue a capital, yes, see overnight we able to the it. horizon we is in The an way evaluate program as a generally to period of in to we But size. investment time that's to are as more capital larger a accretive raise shorter in coming as related that will it

Christopher Nolan

question. for Great. taking Thanks my

Steven Mumma

Thanks.

Operator

at Steve no turn the now are to Mr. this questions time. over call further I back There Mumma.

Steven Mumma

results. I operator, and forward you. look speaking for next Jason, November have good you, our everyone, you, quarter to about Thank a Thank the day. Everyone call. being third thank on

Operator

call. This concludes today's

disconnect. You may now

New York Mortgage Trust (NYMT) 6 Aug 192019 Q2 Earnings call transcript