New York Mortgage Trust(NYMT) - 2023 Q4 - Annual Results

Financial Highlights The company reported a net income for Q4 2023 but a significant net loss for the full year, with book value at $11.31 per share Fourth Quarter and Full Year 2023 Performance Summary The company reported a net income of $31.5 million, or $0.35 per basic share, for the fourth quarter of 2023. However, for the full year 2023, it recorded a significant net loss of $90.0 million, or ($0.99) per basic share. Book value per common share stood at $11.31 at year-end, with an adjusted book value of $12.66 per share. The company declared a dividend of $0.20 per common share for the fourth quarter Q4 and Full Year 2023 Financial Summary (in thousands) | Metric | For the Three Months Ended Dec 31, 2023 | For the Twelve Months Ended Dec 31, 2023 | | :--- | :--- | :--- | | Net income (loss) attributable to common stockholders | $31,465 | $(90,035) | | Net income (loss) per common share (basic) | $0.35 | $(0.99) | | Undepreciated earnings (loss) per common share (Non-GAAP) | $0.37 | $(0.89) | | Net interest income | $16,800 | $66,526 | | Book value per common share (period end) | $11.31 | $11.31 | | Adjusted book value per common share (period end, Non-GAAP) | $12.66 | $12.66 | | Dividends per common share | $0.20 | $1.20 | Key Developments The company actively managed its portfolio, made significant investments, executed financing activities, and addressed multi-family property challenges throughout 2023 and into early 2024 Fourth Quarter 2023 During the fourth quarter of 2023, the company actively managed its portfolio by purchasing $416.4 million of Agency RMBS and $237.7 million in residential loans. It also renewed and amended key repurchase agreements, increasing capacity to $2.2 billion. A significant event was the suspension of marketing for nine multi-family properties, leading to a reclassification loss of approximately $16.2 million due to unfavorable market conditions - Purchased approximately $416.4 million of Agency RMBS and $237.7 million in residential loans[7] - Suspended the marketing of nine multi-family properties, resulting in a reclassification loss of approximately $16.2 million due to unfavorable market conditions[7] - Renewed and amended repurchase agreements for residential loans and single-family rental properties, increasing the maximum aggregate purchase price to $2.2 billion[7] Full Year 2023 Investing Activities For the full year 2023, the company's investment activities included purchasing $2.0 billion of Agency RMBS and $620.3 million in residential loans. The company also sold five multi-family properties and recognized significant impairment losses of $89.5 million on other multi-family properties due to wider cap rates and lower net operating income - Purchased approximately $2.0 billion of Agency RMBS and $620.3 million in residential loans[7] - Recognized $89.5 million of impairment losses on multi-family properties held for sale, driven by wider cap rates and lower net operating income[7] - Sold five multi-family properties held by joint venture equity investments, representing total net equity investments of $43.2 million[7] Full Year 2023 Financing Activities In 2023, the company focused on strengthening its financial position. Key financing activities included obtaining new financing for residential loans and single-family rentals, repurchasing $59.9 million of its residential loan securitization CDOs, and executing a one-for-four reverse stock split. The company also upsized its common stock repurchase program and initiated a preferred stock repurchase program, buying back shares under both - Obtained approximately $84.9 million of financing for residential loans with a new counterparty and $74.3 million for single-family rentals with an existing counterparty[7] - Effected a one-for-four reverse stock split of its common stock[7] - Repurchased 937,850 common shares for ~$8.6 million and 120,580 preferred shares for ~$2.4 million[7] Subsequent Developments After the year-end, the company completed a securitization of business purpose loans, generating approximately $223.2 million in net proceeds, which were used to pay down $136.6 million in repurchase agreements. Additionally, the Board of Directors extended both the common and preferred stock repurchase programs to March 31, 2025, with significant capacity remaining under both programs - Completed a securitization of business purpose loans, resulting in approximately $223.2 million in net proceeds, used to repay $136.6 million on outstanding repurchase agreements[8] - The Board of Directors extended the common and preferred stock repurchase programs to March 31, 2025. Available repurchase capacity is $193.2 million for common stock and $97.6 million for preferred stock[8] Management Overview Management discussed macroeconomic volatility, challenges in commercial real estate, and the strategic decision to reduce portfolio risk for future opportunities CEO Commentary CEO Jason Serrano highlighted the macroeconomic volatility typical of the end of an economic cycle, noting renewed inflation concerns in early 2024. He pointed to challenges from U.S. government deficit spending and a dislocated commercial real estate market with $2.8 trillion in loans maturing. While acknowledging that the company's 2023 decision to reduce risk was premature and lowered earnings, he believes this defensive posture will yield improved results as attractive entry points emerge from market strain - Management noted heightened macroeconomic volatility, with a Fed pivot at the end of 2023 followed by renewed inflation concerns in early 2024[9] - Significant challenges are anticipated from the commercial real estate market, with approximately $2.8 trillion of loans maturing over the next four years, which could strain credit market liquidity[10] - The company's past decision to reduce portfolio risk and increase liquidity was deemed premature, lowering 2023 earnings, but is expected to enhance future results as market dislocations provide better investment opportunities[11] Portfolio and Capital Structure The company's investment portfolio totaled $5.15 billion, primarily in single-family assets, with a net interest spread of 1.02% for Q4 2023 Capital Allocation as of December 31, 2023 As of December 31, 2023, the company's total investment portfolio had a carrying value of approximately $5.15 billion, with the majority allocated to the Single-Family segment ($4.66 billion). Net company capital allocated totaled approximately $1.58 billion. The Company Recourse Leverage Ratio was 1.6x, and the Portfolio Recourse Leverage Ratio was 1.5x Capital Allocation by Investment Category (December 31, 2023, in thousands) | Category | Single-Family | Multi-Family | Corporate/Other | Total | | :--- | :--- | :--- | :--- | :--- | | Total investment portfolio carrying value | $4,656,268 | $453,783 | $37,154 | $5,147,205 | | Net Company capital allocated | $1,122,653 | $422,369 | $34,590 | $1,579,612 | - The Company Recourse Leverage Ratio was 1.6x, and the Portfolio Recourse Leverage Ratio was 1.5x as of year-end[12] Interest Earning Assets Analysis (Q4 2023) For the fourth quarter of 2023, the company's total average interest-earning assets were approximately $4.67 billion, generating a yield of 6.21%. The average financing cost was 5.19%, resulting in a net interest spread of 1.02%. The Single-Family segment was the primary driver of both interest income and expense Q4 2023 Interest Earning Assets Performance (Non-GAAP, in thousands) | Metric | Single-Family | Multi-Family | Corporate/Other | Total | | :--- | :--- | :--- | :--- | :--- | | Adjusted Net Interest Income | $24,333 | $2,670 | $(3,512) | $23,491 | | Average Interest Earning Assets | $4,569,863 | $99,509 | $1,000 | $4,670,372 | | Yield on Average Interest Earning Assets | 6.11% | 10.65% | — | 6.21% | | Average Financing Cost | (5.12)% | — | (6.34)% | (5.19)% | | Net Interest Spread | 0.99% | 10.65% | (6.34)% | 1.02% | Financial Statements The company's total assets increased to $7.40 billion, while stockholders' equity decreased, resulting in a full-year net loss despite a profitable Q4 Consolidated Balance Sheets As of December 31, 2023, the company's total assets increased to $7.40 billion from $6.24 billion at the end of 2022. This was primarily driven by a significant increase in investment securities available for sale. Total liabilities also grew to $5.77 billion from $4.38 billion, largely due to a substantial rise in repurchase agreements. Consequently, total stockholders' equity decreased from $1.77 billion to $1.58 billion over the year Consolidated Balance Sheet Summary (in thousands) | Account | December 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Total Assets | $7,401,328 | $6,240,745 | | Total Liabilities | $5,773,202 | $4,376,634 | | Company's stockholders' equity | $1,579,612 | $1,767,216 | - Assets of consolidated variable interest entities (VIEs) totaled $3.82 billion as of December 31, 2023, with corresponding liabilities of $3.08 billion[26] Consolidated Statements of Operations For the full year 2023, the company reported a net loss attributable to common stockholders of $90.0 million, a significant shift from the $340.6 million loss in 2022. The result was heavily influenced by a $39.4 million total other loss, which included impairment of real estate and losses on reclassification, compared to a $262.2 million other loss in the prior year. Net interest income decreased to $66.5 million in 2023 from $129.0 million in 2022 Full Year Statement of Operations Summary (in thousands) | Account | Twelve Months Ended Dec 31, 2023 | Twelve Months Ended Dec 31, 2022 | | :--- | :--- | :--- | | Total net interest income | $66,526 | $128,969 | | Total net loss from real estate | $(31,302) | $(113,579) | | Total other income (loss) | $(39,431) | $(262,169) | | Net income (loss) attributable to Company | $(48,665) | $(298,605) | | Net income (loss) attributable to common stockholders | $(90,035) | $(340,577) | | Basic earnings (loss) per common share | $(0.99) | $(3.61) | Summary of Quarterly Earnings (Loss) The company's performance fluctuated significantly throughout 2023, culminating in a profitable fourth quarter with a basic EPS of $0.35. This followed two consecutive quarters of losses, with Q3 experiencing a substantial loss of ($1.04) per share. Book value per common share declined steadily from $13.27 at the end of 2022 to $11.31 at the end of 2023. Dividends per common share were also reduced during the year, from $0.40 in Q1 to $0.20 in Q4 Quarterly Performance Trend 2023 | Metric | Q4 2023 | Q3 2023 | Q2 2023 | Q1 2023 | | :--- | :--- | :--- | :--- | :--- | | Basic earnings (loss) per common share | $0.35 | $(1.04) | $(0.41) | $0.12 | | Book value per common share | $11.31 | $11.26 | $12.44 | $12.95 | | Adjusted book value per common share | $12.66 | $12.93 | $14.32 | $15.41 | | Dividends declared per common share | $0.20 | $0.30 | $0.30 | $0.40 | Reconciliation of Non-GAAP Financial Measures The company uses non-GAAP measures like adjusted net interest income, undepreciated earnings, and adjusted book value to provide supplemental performance insights Overview of Non-GAAP Measures The company utilizes several non-GAAP financial measures to provide supplemental information for investors to evaluate performance and trends. These measures include adjusted interest income/expense, adjusted net interest income, net interest spread, undepreciated earnings, and adjusted book value per common share. Management believes these metrics align with how they operate the business and are not a substitute for GAAP measures - The company uses non-GAAP measures such as adjusted net interest income, net interest spread, undepreciated earnings, and adjusted book value per common share[31] - Management believes these non-GAAP measures provide useful supplemental information for investors to evaluate current performance and trends[31] Adjusted Net Interest Income and Net Interest Spread The company adjusts GAAP net interest income to remove the impact of its consolidated SLST securitization and to include the net interest component of its interest rate swaps. This provides a clearer view of the performance of assets the company directly owns and the true cost of its financing strategy. For Q4 2023, GAAP net interest income was $16.8 million, while adjusted net interest income was $23.5 million Reconciliation of GAAP Net Interest Income to Adjusted (Q4 2023, in thousands) | Description | Amount | | :--- | :--- | | GAAP total net interest income | $16,800 | | Adjustments to Income: | | | Consolidated SLST CDO interest expense | $(6,268) | | Adjusted interest income | $72,521 | | Adjustments to Expense: | | | Consolidated SLST CDO interest expense | $6,268 | | Net interest benefit of interest rate swaps | $6,691 | | Adjusted interest expense | $(49,030) | | Adjusted net interest income | $23,491 | Undepreciated Earnings (Loss) Undepreciated earnings is a non-GAAP measure calculated by excluding the company's share of non-cash depreciation and lease amortization expenses from GAAP net income. This metric is intended to provide a more consistent measure of operating performance. For Q4 2023, GAAP net income attributable to common stockholders was $31.5 million, while undepreciated earnings were $33.7 million, or $0.37 per share Reconciliation to Undepreciated Earnings (Q4 2023, in thousands) | Description | Amount | | :--- | :--- | | Net income attributable to Company's common stockholders | $31,465 | | Add: Depreciation expense on operating real estate | $2,232 | | Undepreciated earnings (loss) | $33,697 | | Undepreciated earnings (loss) per common share | $0.37 | Adjusted Book Value Per Common Share Adjusted book value is a non-GAAP measure that modifies GAAP book value by excluding cumulative depreciation on unimpaired real estate, excluding adjustments for redeemable non-controlling interests, and adjusting certain liabilities to fair value. This provides a measure that management believes better reflects the company's value. As of December 31, 2023, GAAP book value per share was $11.31, while adjusted book value per share was $12.66 Reconciliation to Adjusted Book Value (Dec 31, 2023, in thousands) | Description | Amount | | :--- | :--- | | GAAP book value | $1,025,502 | | Add: Cumulative depreciation expense on real estate | $21,801 | | Add: Cumulative amortization of lease intangibles | $14,897 | | Add: Cumulative adjustment of redeemable non-controlling interest | $30,062 | | Add: Adjustment of amortized cost liabilities to fair value | $55,271 | | Adjusted book value | $1,147,533 | | GAAP book value per common share | $11.31 | | Adjusted book value per common share | $12.66 | Equity Investments in Multi-Family Entities The company consolidates most of its joint venture equity investments in multi-family properties as it is deemed the primary beneficiary of these Variable Interest Entities (VIEs). As of December 31, 2023, the company's net equity investment in these consolidated entities totaled $248.0 million, split between $211.2 million in consolidated multi-family properties and $36.8 million in properties classified as held for sale - The company consolidates VIEs where it is the primary beneficiary, including their assets, liabilities, income, and expenses in its financial statements[49] Net Equity Investment in Consolidated Multi-Family Properties (Dec 31, 2023, in thousands) | Description | Amount (in thousands) | | :--- | :--- | | Total assets | $1,458,598 | | Total liabilities | $1,192,242 | | Redeemable & Non-controlling interests | $17,150 | | Net equity investment | $248,029 | Company Information and Disclosures New York Mortgage Trust operates as an internally-managed REIT, providing financial results via conference calls and issuing forward-looking statements with inherent risks About New York Mortgage Trust New York Mortgage Trust, Inc. is an internally-managed Maryland corporation that has elected to be taxed as a real estate investment trust (REIT). The company's business focuses on acquiring, investing in, financing, and managing primarily mortgage-related single-family and multi-family residential assets - NYMT is an internally-managed REIT focused on acquiring, investing in, financing, and managing mortgage-related single-family and multi-family residential assets[18] Conference Call Information The company scheduled a conference call and audio webcast for February 22, 2024, at 9:00 a.m. Eastern Time to discuss its fourth quarter and full-year 2023 financial results. A supplemental financial presentation and a replay of the webcast were made available on the company's website - A conference call to discuss financial results was scheduled for February 22, 2024[16] - Supplemental financial presentations and the full Annual Report on Form 10-K are available on the company's website[17] Forward-Looking Statements This press release contains forward-looking statements that involve known and unknown risks and uncertainties. These statements are not guarantees of future performance, and actual results could differ materially due to various factors, including changes in interest rates, credit spreads, market volatility, and other risks detailed in the company's SEC filings - The report includes forward-looking statements subject to risks and uncertainties[20] - Key risk factors include changes in interest rates, credit spreads, market volatility, prepayment rates, and the company's ability to finance its assets[21]