New York Mortgage Trust, Inc. (NYMT) Q2 2024 Earnings Call Transcript

In New York Mortgage Trust's second quarter 2024 earnings call, the company provided insights into its financial performance and strategic direction. The call highlighted a number of key themes and trends, showcasing the company's focus on managing risk, transitioning to higher liquidity, and capitalizing on the current market environment.

Transitioning to Higher Liquidity and De-risking the Portfolio

The call revealed that New York Mortgage Trust has been implementing a large-scale portfolio rotation plan to de-risk the portfolio and transition to a higher level of liquidity. This strategy, which began after the first rate hike in March 2022, is aimed at reducing the balance sheet and company earnings in the short term, with the expectation of long-term benefits. The company has successfully achieved an elevated second quarter adjusted interest income of $84 million, a 63% increase from the same period last year, despite the reduction in balance sheet size.

Focus on Core Strategies and Selective Growth

New York Mortgage Trust has been focusing on its core strategies, including Agency RMBS and short duration business purpose loans. The company has also been exploring opportunities to raise capital through external funding sources, such as a joint venture for NYMT originated multifamily mezzanine loans. This strategic approach, coupled with a focus on liquidity and risk management, positions the company well for the current economic environment and potential future rate cuts.

Financial Performance and Outlook

The company's financial performance in the second quarter was marked by a solid portfolio acquisition momentum and increased net interest income contribution. The company's net interest income grew to $27.3 million, up from $26.2 million in the first quarter. The net interest spread has also steadily increased, reflecting the company's successful efforts to manage its balance sheet and capitalize on the current market conditions.

Managing Risks and Challenges

The call also touched on the challenges faced by the company, including the impact of inflation, consumer debt levels, and interest rate volatility on the portfolio. The company has been actively managing these risks, focusing on maintaining minimal levels of recourse mark-to-market leverage and exploring opportunities within its capital structure. The company's strong track record in mezzanine lending, particularly in managing delinquent loans, demonstrates its ability to navigate through challenging market conditions.

Looking Ahead

New York Mortgage Trust is well-positioned to capitalize on the current market environment, with a focus on core strategies, risk management, and capital raising opportunities. The company's strategic approach, coupled with its strong financial performance, positions it well for the future. As the company continues to navigate through the economic slowdown and the evolving market conditions, it remains committed to generating sustainable earnings and delivering value to its shareholders.