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New York Mortgage Trust(NYMT) - 2025 Q1 - Earnings Call Transcript
NYMTNew York Mortgage Trust(NYMT)2025-05-01 13:00
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Financial Data and Key Metrics Changes - The recurring earnings in Q1 2025 increased to a level consistent with the company's dividend of 0.20pershare,reflectingastrategicportfoliorestructuringinitiatedtwoyearsago[6][7]−EarningsAvailableforDistribution(EAD)pershareroseto0.20 per share, reflecting a strategic portfolio restructuring initiated two years ago [6][7] - Earnings Available for Distribution (EAD) per share rose to 0.20 in Q1 2025 from 0.16inQ42024,whilequarterlyEPScontributionfromadjustednetinterestincomeincreasedto0.16 in Q4 2024, while quarterly EPS contribution from adjusted net interest income increased to 0.40 per share, up from 0.36inthepriorquarter[12][13]−GAAPbookvalueandadjustedbookvaluepershareincreasedto0.36 in the prior quarter [12][13] - GAAP book value and adjusted book value per share increased to 9.37 and 10.43respectively,representinga110.43 respectively, representing a 1% increase compared to the end of 2024 [17] Business Line Data and Key Metrics Changes - Agency RMBS investments now account for over 50% of company assets, with approximately 1.5 billion of Agency RMBS purchased in Q1 2025, nearly four times more than the previous quarter [11][18] - In the residential credit sector, 397millionofwholeloanswerepurchased,withafocusonbridgeloansandrentalloans[19][20]−Theportfoliorecourseleverageratiodecreasedto0.5timesfrom1.1times,reflectingsuccessfulsecuritizationsintheresidentialloansector[10][17]MarketDataandKeyMetricsChanges−ThemarketexperiencedspreadwideninginAgencyRMBSandresidentialcredit,withcurrentcouponagencyspreadswideningfrom135basispointsto143basispoints[22]−AsofApril2025,adjustedbookvalueisestimatedtobedownapproximately1.5397 million of whole loans were purchased, with a focus on bridge loans and rental loans [19][20] - The portfolio recourse leverage ratio decreased to 0.5 times from 1.1 times, reflecting successful securitizations in the residential loan sector [10][17] Market Data and Key Metrics Changes - The market experienced spread widening in Agency RMBS and residential credit, with current coupon agency spreads widening from 135 basis points to 143 basis points [22] - As of April 2025, adjusted book value is estimated to be down approximately 1.5% [38] Company Strategy and Development Direction - The company aims to maintain a strong focus on Agency RMBS while also exploring opportunities in residential credit, particularly BPL rental loans [21][41] - The strategic shift towards more liquid agency RMBS is intended to enhance flexibility in capital allocation depending on market conditions [21][22] - The company has reduced its JV equity exposure to less than 1% of the overall portfolio, indicating a shift in investment strategy [28] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the potential for additional revenue generation through service fee income and highlighted the importance of operational efficiencies in supporting dividend coverage [8][12] - The company anticipates continued market volatility but is prepared to deploy liquidity into attractive investment opportunities as they arise [21][22] - Management does not foresee significant impacts from potential GSE reforms in the near to medium term [33][34] Other Important Information - The company recognized net unrealized gains of 118.2 million during the quarter, primarily from higher valuations in the agency RMBS portfolio [14] - General and administrative expenses increased slightly due to non-recurring employee severance costs related to restructuring initiatives [16] Q&A Session Summary Question: Impact of FHFA and GSEs changes on business - Management discussed potential GSE reforms, indicating that it could lead to higher mortgage rates and liquidity issues, but does not expect significant changes in the near term [33][34] Question: Update on book value performance in Q2 - As of April 2025, adjusted book value is estimated to be down approximately 1.5% [38] Question: Capital allocation strategy amidst market volatility - Management confirmed a continued focus on Agency RMBS and BPL, with a preference for BPL rental over BPL bridge loans [40][41] Question: Timing surrounding mezzanine and multifamily investments - The 10% payoff rate mentioned was year-to-date as of early April, with expectations for continued resolutions in the multifamily mezzanine portfolio [44] Question: Future capital allocation preferences - Management expressed a preference for Agency RMBS in the near term but acknowledged the potential for shifts depending on market conditions [46]