New York Mortgage Trust(US:NYMT)2024-02-22 16:52Financial Data and Key Metrics Changes - The company generated earnings per share of $0.35 or $0.37 on an undepreciated basis, with adjusted book value per share ending at $12.66, down 2.09% from the previous quarter [5][21] - Quarterly adjusted economic return was negative 54 basis points after a $0.20 dividend [5] - Adjusted interest income increased by 22% quarter-over-quarter to $72.5 million, driven by a net increase in the investment portfolio [38][42] Business Line Data and Key Metrics Changes - The company experienced solid momentum in portfolio acquisitions, increasing the investment portfolio by approximately $0.4 billion in Q4 and $1.3 billion for the year, ending at $5.1 billion [17] - The agency RMBS portfolio grew by approximately 30% on a market value basis, with the average coupon of specified pools rising from 5.73% to 5.85% [28] - The BPL bridge portfolio continued to grow, with a focus on higher coupon, higher return assets, while maintaining a low delinquency rate of 20% [55] Market Data and Key Metrics Changes - The U.S. budget deficit is expected to total $1.6 trillion in 2024, with interest expenses projected to exceed $1 trillion [11] - The Fed's restrictive policy has moderated inflation, leading to tightening spreads across asset classes [23] - The company noted a spillover effect constraining residential loan markets, with a need for fresh liquidity to recapitalize $2.8 trillion of debt maturing over the next four years [36] Company Strategy and Development Direction - The company aims to enhance liquidity and capitalize on opportunities in the multifamily bridge loan sector while navigating through commercial real estate dislocation [12][15] - A shift in strategy was noted, focusing on growing the balance sheet to achieve more consistent earnings while maintaining liquidity for future opportunities [24] - The company plans to continue investing in agency RMBS and BPL bridge loans, with a patient approach to portfolio growth [15][29] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about the potential for a slowing U.S. economy and increased market credit concerns, emphasizing a cautious approach to capital allocation [9][13] - The company believes that the current market environment presents significant opportunities for growth, particularly in the agency RMBS and BPL bridge sectors [34][64] - Management highlighted the importance of tactical asset management and prudent liability management in the current structural landscape change [64] Other Important Information - The company paid a $0.20 per common share dividend, down from $0.30 in the prior quarter, while evaluating its dividend policy based on projected net interest income and capital gains [47] - The recourse leverage ratio increased to 1.6 times, with expectations for higher leverage as the company expands its holdings of high liquid agency RMBS [46] Q&A Session Summary Question: How does the company view the trade-off in allocating new capital to agency versus BPL bridge? - Management indicated that while BPL bridge offers higher returns, agency investments are more liquid, allowing for quicker capital deployment [74][75] Question: What is the current return on equity for the multifamily JV equity? - Management stated that the remaining JV equity is not materially significant to earnings growth, with returns expected to come primarily from property valuation increases [79] Question: How does the company envision participating in the upcoming CRE debt maturities? - Management sees opportunities in preferred equity lending and mezzanine lending, particularly for dislocated assets from earlier vintages [99] Question: What is the expected economic return from the current portfolio going into 2024? - Management anticipates mid-teens returns from the portfolio, focusing on capital deployment and stabilization of interest earnings [86][97]