New York Mortgage Trust(NYMT)2025-02-21 21:57Investment Strategy - The company has reduced exposure in its multi-family investments to 16.0 million[43]. - The company anticipates allocating less capital to multi-family investments going forward, focusing on preferred equity and mezzanine loans[34]. - The company’s Agency RMBS portfolio is primarily comprised of fixed-rate RMBS and ARMs, with leverage expected to be employed through repurchase agreements[30]. - The company has made strategic repositioning decisions, including the opportunistic disposition of joint venture equity investments in multi-family properties[43]. - The company may change its investment and financing strategies without stockholder consent, which could affect its operational stability[90]. - The company’s investment strategy may be adversely affected by interest rate mismatches between interest-earning assets and borrowings, potentially reducing net income[101]. - The company’s portfolio may be concentrated in certain asset types or geographic areas, increasing exposure to economic downturns and risks associated with real estate[103]. - The competitive market for investment opportunities may hinder the company's ability to acquire targeted assets at favorable terms, impacting net income[156]. Financial Leverage and Risk - The company’s maximum leverage ratios are set at 15:1 for liquid Agency securities, between 4:1 and 6:1 for illiquid assets, and 8:1 for residential loans, with a target total debt leverage ratio not exceeding 4:1[48]. - As of December 31, 2024, the company’s recourse leverage ratio was approximately 3.0 to 1, and the portfolio recourse leverage ratio was approximately 2.9 to 1[50]. - The company employs leverage as part of its financing strategy, relying on a mix of short-term and long-term repurchase agreements and structured financings[48]. - Increased leverage may exacerbate losses and reduce cash available for distribution to stockholders[172]. - The company may face challenges in meeting debt service obligations, risking asset sales to satisfy debts[173]. - The company may have limited or no ability to sell or transfer assets transferred to the SPE, which could adversely affect liquidity and cash available for distribution to stockholders[177]. Regulatory Compliance - The company is subject to various regulatory requirements, including those under the Dodd-Frank Act and the Gramm-Leach-Bliley Act, which impact its operations[68]. - The company must distribute at least 90% of its ordinary taxable income each year to qualify as a REIT, which is crucial for its financial strategy[71]. - The company’s ability to maintain its qualification as a REIT for federal tax purposes is critical for its operations and distributions[90]. - Changes in laws and regulations affecting the relationship with government-sponsored entities may materially impact the company's financial condition and operations[90]. - The company must maintain its exemption from regulation as an investment company under the Investment Company Act, which imposes limits on its operations and asset acquisitions[203]. - Failure to qualify as a REIT could result in significant tax liabilities, adversely affecting the company's operations and distributions[214][216]. Employee and Workplace Policies - As of December 31, 2024, the company had 70 full-time employees across its offices in New York, Charlotte, and Woodland Hills[64]. - The company believes that its employees are its greatest asset and focuses on recruitment, training, and retention to enhance business growth[64]. - The company has a hybrid workplace policy allowing employees to work partly from the office and partly remotely, promoting flexibility[67]. - The company is committed to maintaining a diverse workforce, with women comprising 29% and 33% of employees self-identifying as ethnically diverse as of December 31, 2024[66]. Market and Economic Risks - The company anticipates that increases in interest rates will generally decrease net income and the market value of the investment portfolio[91]. - A decline in the market value of interest-bearing assets may require the company to post additional collateral, reducing liquidity and potentially leading to asset liquidation at unfavorable prices[92]. - The company faces risks related to increased defaults and prepayment rates, which could adversely affect the performance of its assets[93]. - The market value of the investment portfolio may decline due to various factors, including adverse economic conditions and changes in credit spreads[93]. - Economic downturns and disruptions in the mortgage markets could lead to increased delinquencies and defaults, adversely affecting net interest income and earnings[191]. - The U.S. Government's credit rating downgrade in August 2023 could negatively impact financial markets and the credit risk associated with the company's targeted assets[194]. Asset Management and Valuation - As of December 31, 2024, 49% of the total investment portfolio was comprised of "credit assets" which exposes the company to significant credit risk[94]. - The company holds a 50% equity interest in a loan originator, which exposes it to additional risks due to the unsecured nature of these investments[110]. - Business purpose loans constitute approximately 25.9% of the asset value of the total investment portfolio as of December 31, 2024, and are directly exposed to losses from default and foreclosure[111]. - The company’s investments in residential loans are subject to increased risks of loss, as these loans are generally not guaranteed by the federal government or any GSE[106]. - The evaluation of anticipated cash flows for real estate assets is highly subjective and may differ materially from actual results in future periods[135]. - Valuations of assets may fluctuate and are subject to inherent uncertainty, which could materially affect the company's financial condition[152]. Cybersecurity and Operational Risks - Cybersecurity and data security breaches could materially adversely impact the company's business and financial results[157]. - The company has enhanced its cybersecurity systems, but vulnerabilities remain due to evolving techniques used by cybercriminals[159]. - Operational disruptions due to system failures could adversely affect the company's financial condition and ability to distribute to stockholders[162]. - The company relies on adequate capital and financing sources, which may be limited due to market volatility, impacting operations and asset acquisitions[166]. Financial Performance and Impairment - The company recognized net impairment losses of approximately 89.5 million for the years ended December 31, 2024 and 2023, respectively[136]. - The company recorded losses on reclassification of disposal group of approximately 16.2 million for the years ended December 31, 2024 and 2023, respectively[136]. - Impairment charges have a direct adverse impact on the company's net income and financial condition, affecting cash available for distribution to stockholders[136]. - The performance of the company's assets is adversely affected by changes in prepayment rates, which are difficult to predict[118]. - The company may experience increased volatility in financial results due to reliance on third-party service providers for loan servicing and compliance[124].