New York Mortgage Trust Reports Third Quarter 2006 Results
- Consolidated net loss of $0.21 per share for the quarter ended September 30, 2006 as compared to a net income of $0.01 per share for the immediate preceding quarter ended June 30, 2006 and net income of $0.16 per share for the quarter ended September 30, 2005.
- REIT (Mortgage Portfolio Management segment) earnings of $0.07 per share for the quarter ended September 30, 2006 as compared to net income of $0.13 per share for the immediate preceding quarter ended June 30, 2006 and net income of $0.21 per share for the quarter ended September 30, 2005.
- Mortgage Lending segment net loss of $0.28 per share for the quarter ended September 30, 2006 as compared to a net loss of $0.12 per share for the immediate preceding quarter ended June 30, 2006 and a net loss of $0.05 per share for the quarter ended September 30, 2005.
- Mortgage Lending segment net loss includes a $0.13 per share loan loss associated primarily with early payment defaults incurred in the Company's sub-prime lending business which has been substantially discontinued.
- Board of Directors declared a third quarter 2006 cash dividend of $0.14 per share.
- The Company announced on October 31st that it has engaged Milestone Advisors, LLC as its financial advisor to assist it in the review and exploration of its strategic alternatives. As a part of that process the Company is currently engaged in discussions regarding a possible sale or merger of the Company.
NEW YORK, Nov. 7 /PRNewswire-FirstCall/ -- New York Mortgage Trust, Inc. (NYSE: NTR), a self-advised residential mortgage finance company organized as a real estate investment trust ("REIT") for federal income tax purposes, today reported results for the quarter ended September 30, 2006.
Comparison of the Quarters Ended September 30, 2006 and 2005
- Quarterly loan origination volume of $602.8 million for the quarter ended September 30, 2006 as compared to $741.8 million for the immediate preceding quarter ended June 30, 2006 and $1.0 billion for the quarter ended September 30, 2005.
- Consolidated net loss of $3.9 million for the quarter ended September 30, 2006 as compared to a net income of $178,000 for the immediate preceding quarter ended June 30, 2006 and net income of $2.9 million for the quarter ended September 30, 2005.
- REIT (Mortgage Portfolio Management segment) earnings of $1.2 million for the quarter ended September 30, 2006 as compared to net income of $2.4 million for the immediately preceding quarter ended June 30, 2006 and net income of $3.8 million for the quarter ended September 30, 2005.
Third Quarter Results
For the quarter ended September 30, 2006, the Company's Mortgage Portfolio Management segment (REIT operations exclusive of its taxable REIT subsidiaries) reported net revenues of $1.5 million and a net income of $1.2 million, or $0.07 per share.
The Company's Mortgage Lending segment (the Company's wholly owned taxable REIT subsidiaries or "TRS") reported net revenues of $2.4 million (including $4.0 million in loan losses) and a net loss of $5.1 million for the quarter ended September 30, 2006. On a consolidated basis, the Company reported net loss of $3.9 million for the quarter ended September 30, 2006.
Comments from Management
Steven B. Schnall, Chairman, President and Co-Chief Executive Officer, commented, "The deterioration in third quarter operating results is attributable to continued pressure in both our Mortgage Portfolio Management and our Mortgage Lending segments. The decline in earnings in our Mortgage Portfolio Management segment was largely the result of the persistence of a flat to inverted yield curve and decreasing net interest spreads due to hedge maturities and, to a lesser extent, high prepayment rates associated with the re-pricing of adjustable rate mortgage loans held in our $1.2 billion loan portfolio. Specifically, our net interest margin declined to 16 basis points, as compared to 78 basis points from the immediately preceding second quarter of 2006. Additionally, on a positive note, the net duration gap between the average lives of our assets and our liabilities declined slightly to approximately six months and the credit characteristics of our portfolio remains very strong, with total loan delinquencies of 1.03% of portfolio, loan delinquencies greater than 90 days representing only 0.41% of portfolio value and credit losses since inception of only $52,000."
Mr. Schnall added, "Our Mortgage Lending segment also experienced significant earnings pressure primarily as the result of a 19% decrease in our mortgage origination volume from the second quarter of 2006 (as compared to a 14% nationwide decline in mortgage originations for the same period -- as reported by the Mortgage Bankers Association) as well as continued pricing pressure on premiums earned on loans sold to third parties. Our third quarter earnings were further affected by atypical, and largely non-recurring, loan losses due primarily to early payment defaults incurred on sub-prime loans made during the early part of 2006. Of note, though, is that we have largely discontinued making sub-prime loans other than in cases where the loans are either prior-approved by loan purchasers or simply brokered to third parties -- both of which serve to dramatically reduce our risk going forward. Additionally, on a positive note, both our loan application and funding volumes for October 2006 have taken a slight positive turn as compared to September 2006 results."
A breakdown of the Company's loan originations by payment stream for the quarter ended September 30, 2006 follows:
MORTGAGE LOAN ORIGINATION SUMMARY
For the Third Quarter Ended September 30, 2006
(Dollar amounts in thousands)
Number
of Loans Par Amount % of Total
Payment Stream
Fixed Rate
FHA/VA 82 $12,882 2.1%
Conventional Conforming 1,577 270,379 44.9%
Conventional Jumbo 132 80,705 13.4%
Total Fixed Rate 1,791 363,966 60.4%
ARMs
FHA/VA 3 1,271 0.2%
Conventional 794 237,572 39.4%
Total ARMs 797 238,843 39.6%
Total 2,588 $602,809 100.0%
Loan Purpose
Conventional 2,503 $588,656 97.7%
FHA/VA 85 14,153 2.3%
Total 2,588 $602,809 100.0%
Documentation Type
Full Documentation 1,285 $288,726 47.9%
Stated Income 545 141,503 23.5%
Stated Income/Stated Assets 323 73,166 12.1%
No Documentation 266 63,481 10.5%
No Ratio 116 27,091 4.5%
Stated Asset 4 578 0.1%
Other 49 8,264 1.4%
Total 2,588 $602,809 100.0%
A breakdown by credit quality of the Company's loan originations for third quarter 2006 follows:
Aggregate Weighted
Principal Weighted Average
Balance Percentage Average Average
Number of ($ in Of Total Interest Principal
Loans millions) Principal Rate Balance LTV FICO
ARM 794 $237.6 39.4% 7.27% $299,209 72.8 704
Fixed-
rate 1,709 351.1 58.2% 7.48% 205,433 75.6 711
Subtotal
-non-FHA 2,503 588.7 97.6% 7.39% 235,180 74.5 708
FHA -
ARM 3 1.2 0.2% 6.06% 423,701 96.1 681
FHA -
fixed-rate 82 12.9 2.2% 6.61% 157,096 95.7 652
Subtotal
- FHA 85 14.1 2.4% 6.56% 166,506 95.7 654
Total ARM 797 238.8 39.6% 7.27% 299,678 72.9 704
Total fixed
-rate 1,791 364.0 60.4% 7.45% 203,220 76.4 709
Total
Origi-
nations 2,588 $602.8 100.0% 7.38% $232,925 75.0 707
Purchase
mortgages 1,594 $352.6 58.5% 7.47% $221,215 79.0 718
Refinancings 909 236.1 39.1% 7.28% 259,670 67.8 693
Subtotal-
non-FHA 2,503 588.7 97.6% 7.39% 235,180 74.5 708
FHA -
purchase 70 11.9 2.0% 6.50% 170,453 96.5 664
FHA -
refinancings 15 2.2 0.4% 6.84% 148,087 91.4 604
Subtotal
- FHA 85 14.1 2.4% 6.56% 166,506 95.7 654
Total
purchase 1,664 364.5 60.5% 7.44% 219,079 79.5 716
Total
refinancings 924 238.3 39.5% 7.27% 257,858 68.0 692
Total
Origi-
nations 2,588 $602.8 100.0% 7.38% $232,925 75.0 707
Note: FHA originations are Streamlined Refinance mortgages with low average balances. All FHA loans are and will continue to be sold or brokered to third party investors.
Investment Activity
As of September 30, 2006, the Company's portfolio of investment securities totaled $524.0 million and had a weighted average purchase price of 100.31. Approximately 41% of the securities purchased have rate resets in less than six months, 8% reset in six to 24 months and the remaining 51% reset in less than five years. In addition, loans held in securitization trusts totaled $628.6 million and had an average origination value (purchase price) of 100.66. Approximately 26% of loans held in the portfolio have interest rate resets of less than 6 months, 9% have resets between 6 months and 24 months and the remaining 65% have resets less than 48 months. The investment securities and the loans held in securitization trusts are financed in part with debt totaling $1.1 billion at September 30, 2006.
The net interest margin on the Company's mortgage portfolio investments for the quarter ended September 30, 2006 averaged 16 basis points, down from 78 basis points in the quarter ended June 30, 2006. This decrease in spreads is primarily due to hedge maturities and, to a lesser extent, to the re- pricing of adjustable rate mortgage loans held in our portfolio.
The following table summarizes the Company's investment portfolio of residential mortgage-backed securities and loans owned at September 30, 2006, classified by relevant categories:
Par Value Coupon Carrying Value Yield
Agency REMIC
floaters $178,388,984 6.68% $178,990,895 6.56%
Private label
floaters 27,573,587 6.11% 27,499,840 6.28%
Private label
ARMs 296,201,236 4.81% 293,237,365 6.03%
NYMT retained
securities 25,111,629 5.65% 24,240,627 7.91%
Loans held
in securitization
trusts 624,525,836 5.31% 628,624,669 6.00%
Total/Weighted
Average $1,151,801,272 5.42% $1,152,593,396 6.14%
Conference Call
On Wednesday, November 8, 2006 at 10:00 a.m. Eastern time, New York Mortgage Trust's executive management will host a conference call and audio webcast highlighting the Company's third quarter financial results. The conference call dial-in number is 303-262-2138. A live audio webcast of the conference call can be accessed via the Internet, on a listen-only basis, at http://www.earnings.com or at the Investor Relations section of the Company's website at http://www.nymtrust.com. Please allow extra time, prior to the call, to visit the site and download the necessary software to listen to the Internet broadcast. The online archive of the webcast will be available for approximately 90 days.
About New York Mortgage Trust
New York Mortgage Trust, Inc., a real estate investment trust (REIT), is engaged in the origination of and investment in residential mortgage loans throughout the United States. The Company, through its wholly owned taxable REIT subsidiary, The New York Mortgage Company, LLC ("NYMC"), originates a broad spectrum of residential loan products with a focus on high credit quality, or prime, loans. In addition to prime loans, NYMC also originates jumbo loans, alternative-A loans, sub-prime loans and home equity or second mortgage loans through its retail and wholesale origination branch network. The Company's REIT portfolio is comprised of securitized, high credit quality, adjustable and hybrid ARM loans, the majority of which, over time, will be originated by NYMC. As a REIT, the company is not subject to federal income tax provided that it distributes at least 90% of its REIT taxable income to its stockholders.
This news release contains forward-looking statements that predict or describe future events or trends. The matters described in these forward- looking statements are subject to known and unknown risks, uncertainties and other unpredictable factors, many of which are beyond the Company's control. The Company faces many risks that could cause its actual performance to differ materially from the results predicted by its forward- looking statements, including, without limitation, the possibilities that a rise in interest rates may cause a decline in the market value of the Company's assets, a decrease in the demand for mortgage loans may have a negative effect on the Company's volume of closed loan originations, prepayment rates may change, borrowings to finance the purchase of assets may not be available on favorable terms, the Company may not be able to maintain its qualification as a REIT for federal tax purposes, the Company may experience the risks associated with investing in real estate, including changes in business conditions and the general economy, and the Company's hedging strategies may not be effective. The reports that the Company files with the Securities and Exchange Commission contain a fuller description of these and many other risks to which the Company is subject. Because of those risks, the Company's actual results, performance or achievements may differ materially from the results, performance or achievements contemplated by its forward-looking statements. The information set forth in this news release represents management's current expectations and intentions. The Company assumes no responsibility to issue updates to the forward-looking matters discussed in this news release.
NEW YORK MORTGAGE TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollar amounts in thousands, except per share data)
(unaudited)
For the Nine Months Ended For the Three Months Ended
September 30, September 30,
2006 2005 2006 2005
REVENUE:
Interest income:
Investment
securities
and loans held
in securitization
trusts $50,050 $40,523 $16,998 $13,442
Loans held for
investment - 5,388 - 1,783
Loans held for sale 12,155 10,573 3,880 4,473
Total interest income 62,205 56,484 20,878 19,698
Interest expense:
Investment securities
and loans held in
securitization trusts 42,320 30,090 15,882 10,751
Loans held for
investment - 3,911 - 1,366
Loans held for sale 9,284 7,284 3,337 3,441
Subordinated debentures 2,656 1,095 877 601
Total interest expense 54,260 42,380 20,096 16,159
Net interest income 7,945 14,104 782 3,539
OTHER INCOME (EXPENSE):
Gain on sales of
mortgage loans 14,362 21,634 4,311 8,985
Brokered loan fees 8,672 7,181 2,402 2,647
(Loss) gain on sale
of current period
securitized loans (747) - - -
(Loss) gain on sale
of securities and
related hedges (529) 2,207 440 1,286
Loan losses (4,077) - (4,077) -
Miscellaneous income
(expense) 310 195 43 91
Total other income 17,991 31,217 3,119 13,009
EXPENSES:
Salaries and benefits 17,720 23,875 5,378 7,302
Brokered loan expenses 6,609 5,689 1,674 1,483
Occupancy and equipment 3,871 4,981 1,256 1,265
Marketing and promotion 1,643 3,900 427 1,310
Data processing and
communications 1,938 1,807 524 618
Office supplies
and expenses 1,464 1,909 426 651
Professional fees 3,329 2,812 798 966
Travel and entertainment 409 707 126 261
Depreciation and
amortization 1,625 1,069 539 302
Other 1,308 1,084 536 531
Total expenses 39,916 47,833 11,684 14,689
(LOSS) INCOME BEFORE
INCOME TAX BENEFIT (13,980) (2,512) (7,783) 1,859
Income tax benefit 8,494 5,880 3,915 1,000
NET (LOSS) INCOME $(5,486) $3,368 $(3,868) $2,859
Basic (loss) income
per share $(0.31) $0.19 $(0.21) $0.16
Diluted (loss)
income per share $(0.31) $0.19 $(0.21) $0.16
Weighted average
shares outstanding
-basic 17,975 17,855 18,025 17,958
Weighted average
shares outstanding
-diluted 17,975 18,121 18,025 18,242
NEW YORK MORTGAGE TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands)
September 30, December 31,
2006 2005
(unaudited)
ASSETS
Cash and cash equivalents $6,879 $9,056
Restricted cash 1,979 5,468
Investment securities - available
for sale 523,969 716,482
Due from loan purchasers 132,950 121,813
Escrow deposits - pending loan closings 1,622 1,434
Accounts and accrued interest receivable 9,256 14,866
Mortgage loans held for sale 109,197 108,271
Mortgage loans held in securitization
trusts 628,625 776,610
Mortgage loans held for investment - 4,060
Prepaid and other assets 27,118 16,505
Derivative assets 3,402 9,846
Property and equipment, net 6,838 6,882
TOTAL ASSETS $1,451,835 $1,791,293
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Financing arrangements, portfolio
investments $886,956 $1,166,499
Financing arrangements, loans held
for sale/for investment 208,285 225,186
Collateralized debt obligations 203,550 228,226
Due to loan purchasers 11,677 1,652
Accounts payable and accrued expenses 14,736 22,794
Subordinated debentures 45,000 45,000
Derivative liabilities 686 394
Other liabilities 202 584
Total liabilities 1,371,092 1,690,335
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $0.01 par value,
400,000,000 shares authorized,
18,327,371 shares issued and
18,077,160 outstanding at September
30, 2006 and 18,258,221 shares issued
and 17,984,843 outstanding at December
31, 2005 183 183
Additional paid-in capital 100,324 107,573
Accumulated other comprehensive
(loss) income (5,570) 1,910
Accumulated deficit (14,194) (8,708)
Total stockholders' equity 80,743 100,958
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $1,451,835 $1,791,293
NEW YORK MORTGAGE TRUST, INC. AND SUBSIDIARIES
SELECTED SEGMENT REPORTING
(Dollar amounts in thousands)
For the Nine Months Ended September 30, 2006
Mortgage
Portfolio Mortgage
Management Lending
Segment Segment Total
Total revenue $7,149 $18,787 $25,936
Total expense 1,473 29,949 31,422
Net income (loss) $5,676 $(11,162) $(5,486)
Total assets $1,163,802 $288,033 $1,451,835
For the Nine Months Ended September 30, 2005
Mortgage
Portfolio Mortgage
Management Lending
Segment Segment Total
Total revenue $14,118 $31,203 $45,321
Total expense 2,527 39,426 41,953
Net income (loss) $11,591 $(8,223) $3,368
For the Three Months Ended September 30, 2006
Mortgage
Portfolio Mortgage
Management Lending
Segment Segment Total
Total revenue $1,504 $2,397 $3,901
Total expense 279 7,490 7,769
Net income (loss) $1,225 $(5,093) $(3,868)
For the Three Months Ended September 30, 2005
Mortgage
Portfolio Mortgage
Management Lending
Segment Segment Total
Total revenue $4,394 $12,154 $16,548
Total expense 599 13,090 13,689
Net income (loss) $3,795 $(936) $2,859
SOURCE New York Mortgage Trust, Inc.
CONTACT: Steven R. Mumma, Chief Financial Officer, +1-212-634-2411,
[email protected]; or Joe Calabrese, General, +1-212-827-3772, or
Julie Tu, Analysts, +1-212-827-3776, both of Financial Relations Board/
Web site: http://www.nymtrust.com /
(NTR)