NYMT - Earnings call transcript Q1 2024 | New York Mortgage Trust, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, ladies and gentlemen and thank you for standing by. Welcome to the New York Mortgage Trust First Quarter 2024 Results Conference Call. [Operator Instructions] This conference is being recorded on Thursday, May 2, 2024.I would now like to turn the call over to Kristi Mussallem, Investor Relations. Please go ahead.

Kristi Mussallem

Thank you, operator, and good morning, everyone. us our joining earnings quarter for call. you today first for XXXX Thank and with financial Trust's press supplemental A release presentation XXXX was first results New released yesterday. quarter Mortgage York are release and of supplemental at press Presentations we a which section today's hosting the webcast are the in you the Both can www.nymtrust.com.Additionally, financial presentation access company's available and website of call, website. live company's on the Events conference Reform will the statements forward-looking Mortgage call, Trust statements be like would attained. Litigation assurance me inform it made management believes any on New may based during no certain in deemed assumptions, reasonable the the are reflected time, statements this of Act are At be can which XXXX.Although you to expectations historical, Private the not its York within that forward-looking give expectations that meaning Securities of actual risks Securities Serrano, time, from are like press Jason Chief in that yesterday's could and to I company's Executive Factors with to the cause expectations from at introduce differ this detailed Exchange Commission.Now in filings and materially release would results Officer. time-to-time and the please go Jason, ahead.

Jason Serrano

you Thank earnings call. for first York joining Trust's Hi. Mortgage quarter New

an on is or quarter basis.GAAP our company X.XX% CFO. Kristine President; value. Mah, with the undepreciated book per share X declined Starting earnings incurred value book share X.XX% or first Joining and on QX $X.XX today activity me $X.XX Page Nick on the per noted Nario, of adjusted supplemental, negative of

quarter, underlying the equity alongside impairments a primary driver flows, of a valuations. market and rate As been the negatively earnings impacting value cash to challenge JV the divestments conditions JV unfavorable higher my are the mentioned our of in impacting both environment has in earlier property first equity portfolio statement, book positions decline.In

exposure of quarter.However, increases, assets the volatilities X% to our the we expect as joint or subside. JV end equity represent value than which less capital and on equity multifamily the allocation company's at than book of RMBS X% are focused portfolio Agency of approaches venture X investments, reducing allocation to We less to exposure to

from company's balance the which magnitude, the GDP the volatility measure coupled which resulted would on company's wanted growth. income continued With the JV economy BEA's caused prudently sheet growth the liquidity, BPL-Bridge PCE, slightly worse year-over-year preferred current are savings. on is residential from deeper the that the quarter the of equity to in moving to sustainable predominantly points for the book have adjusting first issue. proving signaling grow quarter, the credit of in print by potential the expenditure believe final Fed's quickly in the the expectations.In is focused $XXX future short-duration insight year.In to not favor late-stage in comments the we release form loans to within million our increase facing Observable if the returns the the continuing March, to given in quarter in later, that first potentially in ]. X.X% We not into X% is it's to the target now XXXX the the will The Agency looking wrong late has not of out Dilbert's more Nick economy economy service point.The repriced the is inflation be card in now with first these provide conditions. QX sector, the in touch rate credit I steady and X into from curve rate be RMBS U.S. surprise Also, PCE on story fact slowed debt, meet is of could we low surprisingly the is Core in GDP in GDP has price last distant durable XX record nearly dipping prices X-year X.X% some the March. up year Holding growth of X was late to with but U.S. than method Contending sticky a were direction.However, cuts quarter.The have expected result, jumped to The by way year. imputed less market treasury cuts for jumping with assumptions result the X.X% X% the has of first other The print the ago later Core market to of anticipated in steady that the first was over months [ starting acquisitions. which in to case, could drawing the of see chairs this excellent sectors which points.Consumer the from month, been these XX far goods yield witnessed today.The into in but certainly lower approximately an would this in declines inflation is Fed's prior number. personal point past. inflection savings an quarter. savings, related cut we risk-adjusted the utilization has only X Fed's rate retraced X.X% in and with going is better cycle basis market basis

the believe of or compelling take by ] XX% company. market [ risk RMBS income intentionally We opportunities through continue depress balanced the the year-over-year continue provide adjusted income at effects, to these on particularly moderate focused year risk. in economic credit rest short-duration avoiding interest this recession.In to increasing to growth a and the earnings. credit income to interest by seasonality we growth of which are to drive fixed to approach response, a QX, Agency in typically quarter investments, After backdrop.Focusing identifiable on activity we slow expect led mortgage increase increasing lowering We the for portfolio within returns assets first have exposure

our this and time, higher to then pass I'll call additional Kristine portfolio for Kristine? environment.At Nick company's deploy over to rate management comments $XXX the into of expect million to We excess liquidity the discussion. financials on this for

Kristine Nario

you, I results. will focus first Thank quarter morning. Good Jason. financial the commentary on main of Today, my drivers

metrics Slide for covers XX had of first for quarter quarter.As key summarizes per compared the the portfolio Slide XX on $X.XX snapshot of financial fourth per undepreciated $X.XX and company in the the financial as loss quarter Our covered, to in quarter. Jason share results share just the earnings the undepreciated

consolidation resulting estate rates recognized due related in per to one per equity compared with the Our of multifamily the interest carrying per GAAP. due decrease we $XX.X a operations multifamily net a received at to the to on recognition quarter by of and value for assets due a earnings in impacted in of loss expense in sale is due net during costs income of used portfolio, interest end increase $X.XX in reducing of loss one, multifamily quarter. JV quarter, an as interest assets our proceeds a from losses $X.XX $X.XX income to investments an a as in as second, longer real XX of during by during and primarily estate share our benefit reclassification of the net the properties lower JV related equity $XXX as the and impact equity certain rate criteria preferred or primarily investments held consolidated of: as of estimated $XX.X real $X.XX to result related share contributed loss a to fourth by expense to million quarter. $X.XX related due losses or were of million increase certain multifamily to sale.As swaps JV wider estate per per from depreciation fair estate increase and of held first have property $X.X net multifamily a of the estate reclassification for first, interest valuations per sale our Overall, used million of to real a operating as The $XX.X properties in end quarter.Our our quarter.Second, million We carrying the held sale the to share a for million, held decrease from of impairment quarter loss adjusted lower money in the continue used. contribution the we in X amortization per to share deconsolidation of our to charges $XX.X held the the equity earnest up interest interest the of quarter, expense by loss to Agency estimates sale to the in the from of was net costs.And made the share the a of fourth due intangible from real owned growth the our lease fourth no held on per and quarter. resulting increase adjusted financing multifamily an in quarterly the of had investments income, investment interest-earning million entities million mentioned by conformity the from $X.X fourth canceled adjusted by or to in in be held March non-GAAP the at $XX.X million offset $XX.X a cap our compared of following: million adjusted earlier, business $X.XX The in JV real income of share, estate nonrecurring in income investments a result quarter.Our $X.XX million a is to result $X.X held quarter financial assets increased which assets reclassification The increase for a met the share it increase to properties of from from and share and from of in measure, a real RMBS in our fourth purpose full during short-duration income estate in a the real fourth quarter recognized the increase the made investment to from loans. $X.XX in and operating

our we JV for sale provide timing portfolio on can our multifamily to or related in investments.The from these but assurance We fair continue exit value earnings. significant to a changes the of equity X of to impact no have properties, success investments our continued investment ultimate our market

portfolio portfolio recognized quarter, million the share recourse from our issuance primarily of to per result costs X% Agency $X.XX gains to recognized as share, our and amortized value leverage valuations increases as $XX.X operating million of of rate primarily primarily up the share our loss per million of fair due from portfolio or also we share expenses to $X.XX and unrealized had of cost option of There X.X the of issued, instruments, declared in CDOs consisting a per $XX.X $X.XX leverage related book respectively, liabilities.As and respectively, in increased main certain X.X $X.XX XX. BPL-Bridge to million, sale $XX.X losses to election a of $XX.X prices, lower change fair related per had quarter adjusted during performing or during to the estimated per value rates. of drivers related year-end. realized company's loans increase swaps due due which securitizations incurred to the share expenses our debt per the During residential basic million, X.X caps.We in losses share losses and incurred RMBS negative in on dividend to result per X.X $XX.X ratio fees foreclosed G&A during nonrecurring an first in of a a asset value of and These nonperforming quarter, and consulting asset as by book of ratio of of from interest expenses ended professional change total the management previous derivative at incurred for in to in were were value increased due offset down recognized end, and primarily properties and share issued $X.XX We quarter. our $X.XX the interest were recourse related The the quarter. reduction losses our fees lower portfolio.Adjusted quarter.We December in $XX.XX,

when our to common net continue per in Nick remain or rotate our projection below maintaining strategy expect at We yield from share continue of would which be market expect $X.XX completion of of we attractively -- portion only low highly generated for purchase higher financing to the each of income, RMBS.Our excess replace margin continue a our an on XX- committed to quarter.We the capital our but we X.Xx gains subject update. credit prior liquidity debt were a quarter. dividend the interest and holdings more portfolio mark-to-market the to leverage of current no reduced as the debt [indiscernible] liquid the is we for compared XX% down current earnings from from gains as remains recourse over market.I through now will by our shareholders.However, not XX% remaining realized move prior securitizations this also X.Xx per to to book calls our counterparties. quarter attractive quarter, our to remain can XX% XX-month it financing.Consequently, evaluate look policy due to the unchanged used our over and our dividend of exposure from expand the to to to historical leverage previous to reinvestment to Agency paid our While Nick? We recourse realized proceeds as March share undepreciated priced our leverage to quarter to turn to at relative of levels, repricing we X collateral a has portfolio. The go dividend that

Nicholas Mah

pace you, our in we saw a mortgage was market. residential amidst allowed first Thank a assets, increasing paper million between were The the interpolated we high acquisitions our Fed's Investment growth and portfolio.In to loans. spreads of of was balanced acquisitions the value Agency months.The this generating $XXX this journey This XX-year note, over coupon BPL, quarter. relative of tightening labor credit X stable agencies quarter-over-quarter. deployment of continue Even acquired at average last data XXX QX concentrated million and goal the In inflation there consistent primarily upside to RMBS mortgage was has in purchases the in prior the mile more and spread environment of spec the be.On make showed tame unchanged quarter, points XXX $XXX this for money QX strong year. to quarter-over-quarter, relatively level healthy the Kristine. more basis just the in positive have inroads XXX the basis decreasing of evenly for pool spreads our capital of in the BPL to remain Agency market million Agency in RMBS, challenging last opportunities we the our to quarter ZV points demand backdrop, end more real year.For BPL resilient RMBS was compared RMBS basis though and to has $XXX assessment in attractive of been of how of Agency with of quarter, going QX. in in economic surprises earnings example, RMBS in for treasuries and of spread tempered and past the due through still the Agency Amidst current investment activity to X- points inflation

RMBS residential the our Agency as Our as remains see overall strategy complementary to we credit unchanged asset class portfolio.

range.Over average coupon to the X.XX%. the in X.X% coupon portfolio current remained at are with We our X.X% quarter, on targeting current spec currently unchanged coupons relatively coupon pools the overall

prioritize spec credit class is these prepayment like pools, some asset in historical agency this in manage spreads at is quarter. of pay-up anchored X.Xx, stories ratio X.Xx, range levels, returns. we to environment. that to last than within acceptable prices the which strategy.Overall, market due believe This that an strategy the additional Agency and RMBS lower our RMBS for LTV lower higher high in the low higher outperform this is are continue is still also leverage at range At FICO quarter's in will protection.Leverage Agency particularly of We bond primarily to this

purchases during pace throughout that of adjust in pipeline our be opportunistic to quarter prior success million have pace positions economic BPL-Bridge of acquisition spreads and ramp spread purchases partners. the we Agency represents of increase sector.Relating $XXX market where quarter.However, BPLs, and the BPL on aim may $XX wider RMBS from the every believe we of will based our purchases fluctuations These XX-year We The add rental million loans. $XXX we as this of the periods market had we loans moves year to BPL to XXXX. continually up commitment and did XX% a of consist we So capital data move can uneven into and the quarter. origination million from recent this create growing

our BPL for acquisitions some have longer-term term securitization of supported BPL is restarted We a now prudently loans rental healthy portfolio.The add to to market the funding. rental duration program also by

BPL to loans long-standing an advantageous market position in position. our are source given We

for We expect and origination BPL-Bridge, core profile billion we end the below and this new as existing XX for environment.Furthermore, basis with us high of and a guidelines partners. date the first duration as the purchases quarters this future short in at pricing level, strategy continued total the growth as both acquisitions uncertain carry points remains low and principal are BPL-Bridge on losses refine total market coming in a currently credit BPL-Rentals suitable to quarter. On $X.X remain in of of

have where credit profile the pursue and liquidity of to underlying We sound. chosen are assets BPL-Bridge the loans the

mentioned more sectors confers limit the securitizations comprise to and market BPL-Bridge lending introduction BPL-Bridge ground-up loans, continue to mainstream in last execution BPL exposure bridge We weighted I only of of better and both fringe quarter's now purchases.As of in financing construction combining quarter, bridge this credit-secure to X% the multifamily the product. to loans

means of weighted of far. issuance exploring increasing an conducive vehicles demand another program.The from investor more was a a of issued broader revolver as executed BPL-Bridge our supply met bonds frequent hope of for in year.Our limited an funding and a the X cost effective million more assets in for The securitizations X.XX%. be market by backed securitization XXXX $XXX issuer been securitization We with to thus quarter securitization year has future rest securitization the residential BPL-Bridge are first base. we the We to this has investable first

revolver finance BPL-Bridge future and structure We are purchases. existing our the utilizing X-year to

focus The purchasing and we any used the meaningful this X.XX% on lending, us mezzanine we increase securitization assets. for of allow with second years, in reperforming March.Although year, did activity $XXX effective been consistently existing investments. purchasing a in in amount million deal our to securitization markets.Shifting This not we a the the will some whole loans the in to couple our or have issued financing our access cost million multifamily performing year more of $XXX of optimize loans allocated last rated loan to we was securitization performing currently of reperforming have

We are the portfolio increase at on or annualized resolution into QX, continues period, a into a loan to payoff the XX%, return IRR.This and rate capital recycling the driven expect assets core annual to of Through payoff similar the is is pay strategies of rate as focused payout off. seasonally slow our do than historical year. payoff by the rate the average but XX% over $X a we XX%, lower the million

primarily equity experienced totaling portfolio.The additional portfolio quarter losses the JV equity factors. reclassification driven $XX stabilized continue are the due recapitalization.Additionally, or incentives in the equity We and quarter, built-up our losses of through to We unlock position see which occupancy on sale million the of mezzanine creates at in seasoning JV overall impairments equity a impairment several by sponsors to mature million for to XX% point our portfolio, in to a portfolio. and below numbers our $XX

pressure exposure. on insurance which to growth. means properties, million average First should also higher, higher remaining have that and and drifted future, given have range-bound supply any the losses same been also of expect from competing rent portfolio builds This by to left normalized the being expectation We due driven after slightly on being costs, debt taxes.Finally, rates properties new with rates. expect cap in expenses supply property resolve size reflecting we more future the the do has future potential portfolio the of at senior of the that can within the delivered is the Operating rents this be the markets. in lower glut current $XX

assets.At sale Q&A. as and our improve continuing same are improving management held continue the to and resolutions are higher drivers rent or will We held also the improve asset to rehab.At invest of open NOI that time, the pursue resources and growth value-add maintain for for maintain underlying valuation call this to and we used we time, to for for such assets

Operator

with first George the Instructions] comes question Bose [Operator from of line Our KBW.

Bose George

big Actually, your capital, as of Agency total become RMBS could remain assuming part attractive? how reasonably spreads a

Nicholas Mah

Yes.

to I portfolio, continue where we will come this pace have of is the So that the to to somewhat, spreads expect given of grow. -- in, to pace -- decline think the Nick. that how do expect grow do much just investments although We continue

would end in to we surprised year, $X the really billion to of right to but market we type exposure. that not have the I for $X low to approximately continued if believe So meaningfully billion billion, now have be us conditions $X widen something the under this out number. grow that hit

Bose George

the Okay. you the then of pull disposition levers -- require do can side is of will remain anything there? control? you side the have of curious harder the cost properties? if Just kind ROEs? that JV more Or Great. until to to on Is -- expense to what the the And help that there's

Jason Serrano

Yes.

see and on of to of expense relief the the side going equation. we're some we is opportunities. something expense that implementing year. be to course through that on those the -- That's on now do expect implementing Jason this be So the see some We're side Serrano, the side to

one you'll up course today. a any current But of in in, game see over plan quarter show come the particular our So expenses is won't I way. the in meaningful year, think which it the

Operator

UBS. Instructions] Our Harter from question [Operator next comes Doug with

Douglas Harter

hoping to of expenses, get your a you're just income how kind interest bit a outlook, level. to like is preferred the there dividend clarity looking to at kind it the dividend, I seems the remarks, operating the less back know get you less when portfolio and of long way net go we're touched to about thinking more in prepared of the on on dividend little but kind

about as how to thinking kind that level kind of right construct? in the you're of curious Just

Kristine Nario

Kristine. is This

were of to underwrite did peak to adding in little our our quarter in compare investments conscious and Fed's believe or comments, And is our a and risk income prepared And our to our XX% by And if transition earnings, curtail preserve activity our to about liquidity limit after teens XXXX function it material dispose a portfolio we turnover undepreciated return. us the holdings, in essentially valuations below portfolio rate opportunistically first dividend. goal XX% expect allowed to to of So if hike. we in we our significantly investments stabilized the our assets high increasing this in you interest XXXX. last really we is XXXX.But will to say generate bit portfolio continue we be decision into we our these to mid-type it investment this

Operator

of next Our Eric with Hagen the question from BTIG. line comes

Eric Hagen

mark-to-market cost Just cost of for on for to debt? what's securitized financing the of modeling, the How on the mean, that the credit I does financing the billion of compare portfolio? now repo $X.X

Nicholas Mah

Yes.

reasons is securitization to a a for into the of perspective, repo to we securitization space. one lower of So cost are time being, from the our is of it more the trying debt move why assets which relative

being to that is and depending perspective speaking, let's class securitizations on XX it's So whether a with SOFR asset points.And a implied could repo than struck what basis of that securitizations depending is you XXX call executed on doing, is points generally usually it, by SOFR. at from XXX rated it, to longer is -- call anywhere also there at where But or of benefit unrated, XX on depending a are. just the you're probably, tenure cost savings achieve basis let's you just between,

yield So getting the you're of inverted also the benefit curve.

Eric Hagen

that on trends in market? rates? much interest struggling portfolio seeing might And how where of Okay. loans from BPL-Bridge of seen sponsor in the your kind even is cases some to higher space the have we're the That's perspectives extend how appetite in Any helpful. that we've and elsewhere you delinquencies to compares the

Nicholas Mah

Yes.

BPL-Bridge on disclose do we mean, portfolio. I rates delinquency our So our

see can few has the stable You relatively last been quarters. that over

purchases If have approaches the you our given portfolio have portfolio, numbers remember, delinquencies years fact now the the up maturity.So pick a the different. our of we that -- those we ago, clearly couple seen are dynamics as slowed

buy remained stable. We this goes just continue case to we delinquencies be dollar that And the even of the continue relatively on. to value but to then, assets, have expect as

And on is we gone into buy the those of types in that changed need do pursue or that terms portfolio given of more the our both haven't extent is we to market will and are to refinanced we terms a we time do either that I time, of true get and something we something is future, originators we at there say So The hear extensions. that a frequency already is thing in clearly, to really public which in to information.Relating by borrowers with to we refinance, just we them viability that explore That note have that extensions. of or in near hope. one that have happen we BPL-Bridge talk extensions, another BPL-Bridge would approve that just is to we've effectively very displayed more is a loan.And is that that of the who loan or a continue we into them -- cycle sense the not longer-term that all is likely believe to assets whether something grant for extent we viable this investor path good that. -- full that propensity believe that terms do to part to that the it's common portfolio. is already those a we through do there of the to look one in the very the do a the

Eric Hagen

any a one relative mentioned X for now? that it actively cost portfolio, multifamily and that's where out I Yes, on and right taking idea me. disposition where helpful. you're properties shake you carrying mean, for that the your you're Last could marketing the to basis

Nicholas Mah

the on just be mean, it mentioned overall, think the I little think backdrop X. so a I XX. helpful Yes. I would provide of know you to I bit

the We mentioned of time years time And phenomenon portfolio portfolio which looking of X over putting at earlier rental be to on the about the versus to this a units portfolio the different monetize we we there's added entire All these activity bought getting X is a a value, lease-up up, is released to J-curve that just timing I've ago.And we fixing you're higher market, are that like where rates back that this related -- the near weakness markets. think where year. these the is quarter, is programs add-value lines the see unfortunately, in of the units mostly absorption.And those remainder. were that of pressure have term. markets, The losses you going through that's on alleviate took impairment rate the to the the the that the rents supply a unrealized in in also in to impairment reflecting basically we as absorption goal. losses where market faced and market was part expected unrealized the new depressed held rents is a rental part of We faced which the course be in also in we expect we the we the over the

of rate was the which then timing, we'd that of in obviously the market. respect our hopefully X gains see been really this be timing is at demand with rates.But difficult. market here level facing expect challenging related this years of a environment in very ago rental step-back the the the we overall, higher It's to it experience unknown type to multifamily So and and cap back to that

less X% we to So more marked X% of assets it And are we've we're stable -- analysis.And using portfolio. time than going through be had. our is our value think we're book appropriately less of expecting fair our on capital, than stable over that. We our

to impact earnings just will less be it than is -- quarters the was So ago. X our meaningful

So some our for is that. light hard asset of these looking these there's disposed, we have to relief take and fact valuations that that short-term to working but in the pressures management have impacted we're team get kind assets to related

Operator

session. the This to closing it like back now Serrano for remarks. concludes to question-and-answer I Jason turn would

Jason Serrano

quarter you Thank call. our Yes. joining for first earnings

forward look in -- conducted you. done will talking Our August second Thank to to we call you. quarter will be and be

Operator

conference. for you conclude program. Thank the participation your This in does today's

now disconnect. may You

New York Mortgage Trust (NYMT) 2 May 242024 Q1 Earnings call transcript