New York Mortgage Trust(NYMT) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported an undepreciated loss per share of $0.44 in Q4, compared to an undepreciated earnings per share of $0.39 in Q3 [19] - Adjusted net interest income EPS contribution increased to $0.36 per share in Q4, up from $0.32 in Q3 and $0.26 a year ago, representing a 12.5% increase quarter-over-quarter and a 38% increase year-over-year [19] - GAAP book value decreased by 5.6% during the quarter, while adjusted book value per share ended at $10.35, down 4.8% from Q3 [24] Business Line Data and Key Metrics Changes - The portfolio grew by 44% year-over-year, driven by $4.1 billion in acquisitions, primarily in liquid agency bonds and higher spread bridge loans [10] - The company recognized net unrealized losses of $131.6 million due to lower asset prices, primarily in the agency RMBS portfolio and residential loan book [21] - The company disposed of five multifamily real estate assets, resulting in net gains of $4.9 million, which will reduce the negative earnings drag from these properties [22] Market Data and Key Metrics Changes - The agency RMBS portfolio is valued at $3.1 billion, representing 42% of the asset portfolio and 23% of net equity [31] - Current coupon mortgage spreads widened by six basis points to 135 basis points, with spreads peaking at 154 basis points before normalizing [32] - The bridge securitization market saw deal issuance grow from $3 billion in 2023 to $8 billion in 2024, indicating strong market momentum [35] Company Strategy and Development Direction - The company aims to focus on sustainable recurring income through strategic deployment of excess liquidity, with a goal to optimize returns in 2025 [10][14] - The strategy includes prioritizing positive carry profiles across low payout spec pools and expanding into BPO rental strategy [33][38] - The company plans to maintain a competitive current yield for shareholders with a consistent dividend of $0.20 per common share [26] Management's Comments on Operating Environment and Future Outlook - Management noted that the market shows signs of resiliency with strong fundamentals, despite elevated mortgage rates keeping housing demand in check [9] - The company expects to see significant value upside to current market capitalization levels, especially considering a 13% plus dividend yield [16] - Management expressed optimism about the potential for increased portfolio flexibility and recurring earnings improvement in 2025 [14] Other Important Information - The company issued six securitizations in 2024 and began 2025 with a detailed bridge securitization [12] - The company has excess liquidity totaling $343 million at the end of the year, which will be strategically deployed [13] Q&A Session Summary Question: Normalized earnings and ROE outlook - Management indicated that growth in earnings for 2024 supports alignment with the current dividend, with adjusted interest income increasing significantly [46] Question: Excess liquidity characterization - Management stated that excess liquidity will be rotated into both the agency market and residential credit, aligning with the outlook for the US housing market [48] Question: G&A and portfolio expense outlook - Management anticipates opportunities for G&A cost reduction as capital deployment continues, with a run rate of $11 to $11.5 million per quarter expected [55][56] Question: Update on book value performance - Management noted that adjusted book value is up between 1% to 2% as of the first quarter [59] Question: Update on remaining multifamily assets - Management provided details on the four remaining JV equity assets, with two in Florida for sale and two in Texas showing improved occupancy rates [64][66] Question: Prepayment speeds outlook - Management expects robust prepayment speeds in the RPL portfolio, regardless of rate outlook, due to the nature of the projects [75] Question: Opportunities to call and relever securitized debt - Management confirmed that several deals are callable and that this strategy will be employed on a deal-by-deal basis [78]