8-K: New York Mortgage Trust Reports Net Loss for Fourth Quarter and Full Year 2024, Portfolio Grows by 44%

New York Mortgage Trust reported a net loss attributable to common stockholders of $41.8 million for the fourth quarter of 2024 and $103.8 million for the full year, while strategically expanding its investment portfolio.

Summary

• New York Mortgage Trust (NYMT) reported a net loss attributable to common stockholders of $41.8 million, or $0.46 per share, for the fourth quarter of 2024.
• The full-year 2024 net loss attributable to common stockholders was $103.8 million, or $1.14 per share.
• The company's portfolio grew by $2.2 billion, or 44%, driven by acquisitions in agency bond and bridge loan markets.
• Adjusted interest income rose 11% for the fourth quarter and 60% year-over-year.
• NYMT purchased approximately $362.8 million of Agency RMBS with an average coupon of 5.55% and $542.3 million of residential loans with an average gross coupon of 9.37% during the fourth quarter.
• The company completed a securitization of residential loans, resulting in approximately $292.9 million in net proceeds.
• For the full year, NYMT purchased approximately $2.2 billion of investment securities and $1.9 billion of residential loans.
• The company completed the issuance of $60.0 million of 9.125% Senior Notes due 2029 and repurchased 587,347 shares of common stock for approximately $3.5 million.
• Subsequent to the year-end, NYMT issued $82.5 million in aggregate principal amount of its 9.125% Senior Notes due 2030 and completed a new securitization of residential loans resulting in approximately $74.2 million of net proceeds.
• The Board of Directors approved extensions of the common stock and preferred stock repurchase programs, with $189.7 million and $97.6 million remaining available, respectively.

Sentiment

Score: 5

Explanation: The sentiment is neutral. While the company expanded its portfolio and increased adjusted interest income, it also reported a net loss and negative economic returns. The management's outlook is cautiously optimistic.

Positives

• The company's portfolio grew significantly by $2.2 billion, or 44%, indicating expansion and strategic deployment of capital.
• Adjusted interest income increased by 11% in Q4 and 60% year-over-year, suggesting improved earnings capacity.
• NYMT successfully completed several securitizations, generating $1.3 billion in net proceeds.
• The company repurchased shares of common stock, indicating management's belief in the company's value.
• The extension of the stock repurchase programs provides flexibility for future capital allocation.
• The company acquired $4.1 billion of assets, increasing the investment portfolio by 44% year over year.
• The company increased adjusted net interest income by $36 million or 46% year over year.
• The company divested lower income-producing multi-family JV equity holdings.
• The company maintained low levels of Portfolio Recourse Leverage at 2.9x.
• The company retained $163 million of available cash and $180 million of dry powder at year end to fuel earnings growth.
• The company maintained a low cost of operations at 3.3% despite significant portfolio growth.
• The company implemented an expense reduction plan, with anticipated annual savings of $2.8 million.

Negatives

• NYMT reported a net loss attributable to common stockholders of $41.8 million for Q4 2024 and $103.8 million for the full year.
• Economic return on book value was (3.56)% for Q4 and (10.88)% for the full year.
• Economic return on adjusted book value was (2.94)% for Q4 and (11.93)% for the full year.
• Book value per common share remained at $9.28 at the end of the period.
• The company recognized net realized losses of $9.9 million in Q4.
• The company recognized net unrealized losses of $131.6 million in Q4.
• The company recognized impairment of real estate of $0.7 million in Q4.
• The company recognized a loss on reclassification of disposal group of $16.163 million.

Risks

• Changes in interest rates and credit spreads could negatively impact the fair market value of the company's assets.
• Increased rates of default, delinquency, or vacancy could affect the company's assets.
• Changes in relationships with financing counterparties could impact the company's ability to borrow.
• The company's ability to maintain its REIT qualification is crucial for tax purposes.
• The company's exposure to liquidity risk, leverage, and market risks could affect its performance.
• The company's ability to manage or hedge credit risk, interest rate risk, and other financial and operational risks could affect its performance.
• The company's ability to predict and control costs could affect its performance.
• The company's ability to make distributions to its stockholders in the future could be affected by various factors.
• The company's ability to maintain its exemption from registration under the Investment Company Act of 1940, as amended, could affect its performance.
• Impairments in the value of the collateral underlying the company's investments could affect its performance.
• Risks associated with investing in real estate assets, including changes in business conditions and the general economy, the availability of investment opportunities and the conditions in markets for residential loans, mortgage-backed securities, structured multi-family investments and other assets in which the Company invests could affect its performance.

Future Outlook

Management anticipates optimizing returns and producing durable earnings in the years ahead, focusing on strategically deploying excess liquidity to expand the balance sheet and enhance recurring income.

Management Comments

• Jason Serrano, Chief Executive Officer, commented: 'During 2024, the Company's approach to earnings growth focused on strategically deploying excess liquidity to expand the balance sheet, with a goal of enhancing recurring income.'
• Jason Serrano, Chief Executive Officer, commented: 'The significant portfolio restructuring that began in 2022 and continued through this past year has provided us with an exciting opportunity to optimize returns and produce durable earnings in the years ahead.'

Industry Context

The company is operating in a market characterized by interest rate volatility and uncertainty, impacting the value of mortgage-related assets. The company's strategy of diversifying its portfolio into agency RMBS and business purpose loans reflects an attempt to navigate these conditions and generate stable returns.

Comparison to Industry Standards

• It's difficult to provide a direct comparison to industry standards without knowing the specific composition of NYMT's portfolio and the performance of its peers.
• However, other mortgage REITs such as Annaly Capital Management (NLY) and AGNC Investment Corp. (AGNC) also invest in agency RMBS and are sensitive to interest rate movements.
• NYMT's focus on business purpose loans differentiates it from some of its peers and exposes it to different risks and opportunities.
• A more detailed analysis would require comparing NYMT's financial metrics, such as net interest margin, leverage, and book value, to those of its peers.

Stakeholder Impact

• Shareholders are impacted by the net loss and negative economic returns, but may be encouraged by the portfolio growth and increased adjusted interest income.
• Employees may be affected by the expense reduction plan, but the company's overall growth could create new opportunities.
• Customers and suppliers are unlikely to be directly impacted by this announcement.
• Creditors are exposed to the company's leverage and market risks, but may be reassured by the company's strategic asset deployment and focus on recurring income.

Next Steps

• The company plans to continue increasing portfolio income through strategic asset deployment.
• NYMT intends to transition from lower-income strategies to those with higher recurring interest income profiles.
• The company will continue to focus on asset management to increase the pace of resolutions across the portfolio and mitigate future realized losses.

Key Dates