Granite Point Mortgage Trust(US:GPMT)2023-03-02 21:30Financial Performance - For the year ended December 31, 2022, Granite Point Mortgage Trust Inc. reported a GAAP net loss attributable to common stockholders of $(55.3) million, or $(1.04) per basic share, primarily due to an increase in CECL reserves of $(69.3) million and an $(18.8) million loss on early extinguishment of debt [256]. - Distributable Earnings for the same period were $14.7 million, or $0.28 per basic share, excluding the $(69.3) million increase in CECL reserve and other non-recurring expenses [256]. - GAAP net loss attributable to common stockholders for 2022 was $(55,327) thousand, compared to a profit of $67,560 thousand in 2021 [266]. - Distributable Earnings for 2022 were $14,692 thousand, down from $54,303 thousand in 2021, with Distributable Earnings per basic and diluted share at $0.28, compared to $0.99 in 2021 [266]. - The company reported a net loss attributable to common stockholders of $55,327,000 for 2022, compared to a net income of $67,560,000 in 2021 [419]. - Basic loss per share for 2022 was $1.04, down from earnings of $1.24 per share in 2021 [419]. - The company reported a provision for credit losses of $69.265 million, a significant increase from a benefit of $20.027 million in the previous year [424]. Dividends and Stockholder Returns - The company declared aggregate common stock dividends of $51.3 million, or $0.95 per share, and preferred dividends of $14.5 million, or $1.75 per share of Series A Preferred Stock [256]. - For the year ended December 31, 2022, the company declared total dividends of $0.95 per share, with a requirement to distribute at least 90% of taxable income to stockholders [346]. - The company declared dividends on preferred stock amounting to $14,502,000 in 2022, compared to $793,000 in 2021 [419]. - The company's cumulative distributions to stockholders increased from $284.3 million in 2021 to $350.1 million in 2022, an increase of about 23.1% [417]. Loan Portfolio and Investments - As of December 31, 2022, the company maintained a portfolio of 90 loan investments with an aggregate unpaid principal balance of $3.4 billion and total commitments of $3.6 billion, with a weighted average stabilized LTV at origination of 62.9% [256]. - The company originated 11 loans with total commitments of $466.8 million and a total principal balance of $421.0 million during the year [256]. - The investment portfolio consisted of 90 loans with total loan commitments of $3,591,613 thousand and an unpaid principal balance of $3,362,006 thousand [272]. - The company has a diversified portfolio with loans in multiple states, including Illinois, New York, and California, with varying property types such as office, retail, and industrial [274]. - The company has a total of 43 loans listed, with varying LTV ratios, indicating a balanced risk profile [274]. - The company has maintained a consistent origination strategy with loans primarily focused on senior debt [274]. - The company originated and acquired loans held-for-investment totaling $557.468 million, a decrease from $814.515 million in 2021 [424]. Financial Position and Liquidity - The company had unrestricted cash of $133.1 million and $5.7 million of restricted cash related to balances in CRE CLOs as of December 31, 2022 [257]. - The company maintained unrestricted cash liquidity of $133.1 million, exceeding the required minimum [306]. - The tangible net worth was reported at $1.1 billion, surpassing the calculated requirement of $931.7 million [306]. - The company had outstanding borrowings of $1.0 billion under repurchase facilities with a weighted average borrowing rate of 6.8% as of December 31, 2022 [291]. - The company had $2.4 billion of outstanding borrowings under various financing arrangements, including repurchase facilities and convertible senior notes [357]. - The company reported a decrease in cash and cash equivalents by approximately $64.1 million, ending with a balance of $140.2 million as of December 31, 2022 [360]. Credit Losses and Risk Management - The provision for credit losses increased to $(69.3) million in 2022, compared to a decrease of $20.0 million in 2021, significantly impacting the company's financial results [329]. - The allowance for credit losses increased significantly, driven by a general reserve increase of $24.3 million and a provision for collateral-dependent loans of $42.7 million [336]. - The company aims to manage credit risk through deep fundamental credit analysis and ongoing monitoring of its investment portfolio [376]. - The company implemented loan loss forecasting models to estimate expected lifetime credit losses at the individual loan level for its commercial mortgage loan portfolio [364]. - The company estimates its CECL allowance for its loan portfolio based on key loan-specific inputs, macroeconomic forecasts, and qualitative factors [365]. Interest Income and Expense - The company reported interest income of $210.9 million and interest expense of $126.1 million for 2022, resulting in net interest income of $84.7 million [270]. - The total interest income for the year ended December 31, 2022, was $210,854,000, an increase of 6.4% from $198,288,000 in 2021 [419]. - Total interest expense increased to $126,129,000 in 2022, up from $105,580,000 in 2021, marking a rise of 19.4% [419]. - The company reported a net interest income of $84.725 million for the year ended December 31, 2022, with a net interest rate spread of 1.2%, down from $92.708 million and 1.8% in 2021 [312]. Market Conditions and Economic Factors - The company is actively exploring additional funding facilities to diversify its financing sources amid disruptions in financial markets due to inflation and rising interest rates [317]. - Rising interest rates may increase interest expense and slow loan repayments, impacting the overall business performance [380]. - The company is exposed to risks related to capital markets, which may affect its ability to raise capital and finance its business [389]. - Macroeconomic factors such as unemployment rates and interest rates are considered in estimating the allowance for credit losses, with significant judgment required in selecting forecasts [443].