NEW YORK, Aug. 7 /PRNewswire-FirstCall/ -- New York Mortgage Trust, Inc. , 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 June 30, 2006.
Comparison of the Quarters Ended June 30, 2006 and 2005
* Quarterly loan origination volume of $741.3 million for the quarter
ended June 30, 2006 as compared to $613.8 for the immediate preceding
quarter ended March 31, 2006 and $939.7 million for the quarter ended
June 30, 2005.
* Consolidated net income of $178,000 for the quarter ended June 30, 2006
as compared to a net loss of $1.8 million for the immediate preceding
quarter ended March 31, 2006 and net income of $546,000 for the quarter
ended June 30, 2005.
* REIT (Mortgage Portfolio Management segment) earnings of $2.4 million
for the quarter ended June 30, 2006 as compared to net income of $2.0
million for the immediately preceding quarter ended March 31, 2006 and
net income of $3.5 million for the quarter ended June 30, 2005.
Second Quarter Results
For the quarter ended June 30, 2006, the Company's Mortgage Portfolio Management segment (REIT operations exclusive of its taxable REIT subsidiaries) reported net revenues of $3.1 million and net income of $2.4 million, or $0.13 per share.
The Company's Mortgage Lending segment (the Company's wholly owned taxable REIT subsidiaries or "TRS") reported net revenues of $9.4 million and a net loss of $2.2 million for the quarter ended June 30, 2006. On a consolidated basis, the Company reported net income of $0.2 million for the quarter ended June 30, 2006.
Comments from Management
Steven B. Schnall, Chairman, President and Co-Chief Executive Officer, commented, "Our second quarter operating results represent an improvement over the previous quarter in both our Mortgage Portfolio Management and our Mortgage Lending segments. The improvement in our Mortgage Portfolio Management segment was largely the result of an asset repositioning initiative which occurred in the first quarter of 2006. Despite this progress, our second quarter results in both our Mortgage Portfolio and Mortgage Lending segments reflect continued pressure from the impact of compressed net interest margins resulting from the flat yield curve -- this is particularly true for our Mortgage Portfolio Management segment which has over $1.3 billion invested in mortgage securities and loans held in securitization trusts. During the quarter, though, we did see a slight improvement in net interest margins to 78 basis points as compared to 71 basis points from the immediately preceding first quarter of 2006. Additionally, our net duration gap between the average lives of our assets and our liabilities declined slightly to approximately nine months which is an improvement from the first quarter of 2006. Also, indicative of the credit strength of our portfolio is the fact that loan delinquencies greater than 90 days represent only 0.43% of portfolio value -- with no losses projected."
Mr. Schnall added, "The improvement in our Mortgage Lending segment's earnings was primarily attributable to a 21% increase in our mortgage origination volume from the first quarter of 2006. Notwithstanding this improvement, our second quarter results in our Mortgage Lending segment reflect weaker than anticipated origination volumes and continued pricing pressure on premiums earned on loans sold to third parties. Specifically, we experienced a 73 basis point reduction in gain on sale premiums for the second quarter of 2006 relative to the second quarter of 2005. Fortunately, we are currently seeing signs of some market stabilization -- gain on sale premiums earned on loans originated by our TRS and sold to third parties declined by only approximately 11 basis points for the second quarter of 2006 relative to the first quarter of 2006. Despite these negative market factors, the Mortgage Lending segment showed second quarter 2006 net earnings improvement of approximately $700,000 as compared to the second quarter of 2005. It should also be noted that various cost cutting initiatives undertaken at the end of the first quarter of 2006 were fully implemented in the second quarter. These initiatives include expense reductions to general and administrative expense, including non-commission and non-sales payroll, with savings up to approximately $900,000. Lastly, we are very excited to have announced last week the launch of a new, innovative and unique mortgage loan product -- the "Homeowner Protection Loan," a monthly Adjustable Rate Mortgage ("ARM") with a 10-year interest rate cap at 6.99% and no negative amortization. We believe that this new product will be compelling for consumers in that it's maximum rate for the first 10-years, which is capped of 6.99%, is approximately the same as a fixed rate or comparably termed hybrid ARM loan, but can decrease in a declining rate environment, thus largely eliminating the need for a borrower to refinance. While it is too early to report actual results, we are confident that this new product will gain meaningful traction, thereby increasing our origination volumes and our operating results in future quarters."
A breakdown of the Company's loan originations by payment stream for the quarter ended June 30, 2006 follows:
MORTGAGE LOAN ORIGINATION SUMMARY
For the Second Quarter Ended June 30, 2006
Number Par % of
(Dollar amounts in thousands) of Loans Amount Total
Payment Stream
Fixed Rate
FHA/VA 170 $28,891 3.9 %
Conventional Conforming 1,556 277,639 37.5 %
Conventional Jumbo 131 80,752 10.9 %
Total Fixed Rate 1,857 387,282 52.3 %
ARMs
FHA/VA 7 1,697 0.2 %
Conventional 1,021 352,363 47.5 %
Total ARMs 1,028 354,060 47.7 %
Total 2,885 $741,342 100.0 %
Loan Purpose
Conventional 2,708 $710,755 95.9 %
FHA/VA 177 30,587 4.1 %
Total 2,885 $741,342 100.0 %
Documentation Type
Full Documentation 1,508 $393,105 53.0 %
Stated Income 540 170,891 23.1 %
Stated Income/Stated Assets 285 74,130 10.0 %
No Documentation 394 70,556 9.5 %
No Ratio 102 22,934 3.1 %
Stated Asset 6 634 0.1 %
Other 50 9,092 1.2 %
Total 2,885 $741,342 100.0 %
A breakdown by credit quality of the Company's loan originations for second quarter 2006 follows:
Aggregate
Principal Weighted
Number Balance Percentage Average
of ($ in Of Total Interest
Loans millions) Principal Rate
ARM 1,021 $352.3 47.5 % 6.83 %
Fixed-rate 1,687 358.4 48.4 % 7.20 %
Subtotal-non-FHA 2,708 710.7 95.9 % 7.02 %
FHA - - ARM 7 1.7 0.2 % 5.60 %
FHA - fixed-rate 170 28.9 3.9 % 6.32 %
Subtotal - FHA 177 30.6 4.1 % 6.28 %
Total ARM 1,028 354.0 47.7 % 6.82 %
Total fixed-rate 1,857 387.3 52.3 % 7.13 %
Total Originations 2,885 $741.3 100.0 % 6.99 %
Purchase mortgages 1,792 $434.7 58.7 % 7.10 %
Refinancings 916 276.0 37.2 % 6.88 %
Subtotal-non-FHA 2,708 710.7 95.9 % 7.02 %
FHA - purchase 108 19.2 2.6 % 6.23 %
FHA - refinancings 69 11.4 1.5 % 6.38 %
Subtotal - FHA 177 30.6 4.1 % 6.28 %
Total purchase 1,900 453.9 61.3 % 7.07 %
Total refinancings 985 287.4 38.7 % 6.86 %
Total Originations 2,885 $741.3 100.0 % 6.99 %
Weighted Average
Average
Principal
Balance LTV FICO
ARM 345,116 72.2 711
Fixed-rate 212,443 75.2 713
Subtotal-non-FHA 262,465 73.7 712
FHA - - ARM 242,250 95.8 608
FHA - fixed-rate 169,950 93.3 662
Subtotal - FHA 172,809 93.4 659
Total ARM 344,416 72.3 711
Total fixed-rate 208,553 76.5 709
Total Originations $256,964 74.5 710
Purchase mortgages $242,591 78.7 720
Refinancings 301,345 65.8 698
Subtotal-non-FHA 262,465 73.7 712
FHA - purchase 178,163 96.6 669
FHA - refinancings 164,429 88.0 642
Subtotal - FHA 172,809 93.4 659
Total purchase 238,929 79.4 718
Total refinancings 291,754 66.7 696
Total Originations $256,964 74.5 710
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 June 30, 2006, the Company's portfolio of investment securities totaled $652.7 million and had a weighted average purchase price of 100.36. Approximately 34% of the securities purchased have rate resets in less than six months, 8% reset in six to 24 months and the remaining 58% reset in less than five years. In addition, loans held in securitization trusts totaled $690.5 million and had an average origination value/purchase price of 100.66. Approximately 37% of loans held in the portfolio have interest rate resets of less than 24 months, 2% have resets between 24 months and 36 months and the remaining 61% have resets greater than 36 months. The investment securities and the loans held in securitization trusts are financed in part with debt totaling $1.0 billion at June 30, 2006.
The net interest margin on the Company's mortgage portfolio investments for the three-month period ended June 30, 2006 averaged 78 basis points, up from 71 basis points in the first quarter of 2006. This increase in spreads is reflective of the redeployment of proceeds from the sale of certain of our investment securities during the first quarter 2006.
The following table summarizes the Company's investment portfolio of residential mortgage-backed securities and loans owned at June 30, 2006, classified by relevant categories:
Carrying
Par Value Coupon Value Yield
Agency REMIC floaters $191,667,510 6.52 % $191,198,886 6.70 %
Private label floaters 29,310,487 6.06 % 29,222,341 6.21 %
Private label ARMs 312,618,258 4.82 % 306,714,267 5.55 %
Agency ARMs 100,235,042 6.09 % 100,649,393 6.16 %
NYMT retained securities 26,049,816 5.66 % 24,889,263 7.73 %
Loans held in
securitization trusts 685,955,839 5.19 % 690,501,530 6.15 %
Total/Weighted
Average $1,345,836,952 5.39 % $1,343,175,680 6.12 %
Conference Call
On Tuesday, August 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 second quarter financial results. The conference call dial-in number is 303-262-2140. 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 Six For the Three
Months Ended Months Ended
June 30, June 30,
2006 2005 2006 2005
REVENUE:
Interest income:
Investment securities and loans
held in securitization trusts $33,052 $27,081 $15,468 $14,218
Loans held for investment - 3,605 - 1,944
Loans held for sale 8,275 6,100 3,233 3,507
Total interest income 41,327 36,786 18,701 19,669
Interest expense:
Investment securities and loans
held in securitization trusts 26,438 19,339 12,359 10,719
Loans held for investment - 2,545 - 1,401
Loans held for sale 5,947 3,843 2,632 1,995
Subordinated debentures 1,779 494 894 416
Total interest expense 34,164 26,221 15,885 14,531
Net interest income 7,163 10,565 2,816 5,138
OTHER INCOME (EXPENSE):
Gain on sales of mortgage loans 10,051 12,649 5,981 8,328
Brokered loan fees 6,270 4,534 3,493 2,534
(Loss) gain on sale of current
period securitized loans (747) - 26 -
Gain on sale of securities and
related hedges - 921 - 544
Realized loss on investment
securities (969) - - -
Miscellaneous income (expense) 267 104 148 (10)
Total other income 14,872 18,208 9,648 11,396
EXPENSES:
Salaries and benefits 12,342 16,572 6,001 9,430
Brokered loan expenses 4,935 4,206 2,767 2,686
Occupancy and equipment 2,615 3,716 1,289 1,582
Marketing and promotion 1,216 2,590 429 1,190
Data processing and communications 1,414 1,190 753 672
Office supplies and expenses 1,038 1,258 433 685
Professional fees 2,531 1,846 1,250 1,102
Travel and entertainment 283 446 101 230
Depreciation and amortization 1,086 767 521 424
Other 772 553 405 177
Total expenses 28,232 33,144 13,949 18,178
LOSS BEFORE INCOME TAX BENEFIT (6,197) (4,371) (1,485) (1,644)
Income tax benefit 4,579 4,880 1,663 2,190
NET (LOSS) INCOME $(1,618) $509 $178 $546
Basic (loss) income per share $(0.09) $0.03 $0.01 $0.03
Diluted (loss) income per share $(0.09) $0.03 $0.01 $0.03
Weighted average shares
outstanding -- basic 17,950 17,802 17,933 17,807
Weighted average shares
outstanding -- diluted 17,950 18,123 18,296 18,121
NEW YORK MORTGAGE TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands)
June 30, December
2006 31,
(unaudited) 2005
ASSETS
Cash and cash equivalents $6,911 $9,056
Restricted cash 1,255 5,468
Investment securities -- available for sale 652,674 716,482
Due from loan purchasers 76,139 121,813
Escrow deposits -- pending loan closings 1,385 1,434
Accounts and accrued interest receivable 10,514 14,866
Mortgage loans held for sale 84,327 108,271
Mortgage loans held in securitization trusts 690,502 776,610
Mortgage loans held for investment - 4,060
Prepaid and other assets 24,636 16,505
Derivative assets 10,899 9,846
Property and equipment, net 6,985 6,882
TOTAL ASSETS $1,566,227 $1,791,293
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Financing arrangements, portfolio
investments $1,039,799 $1,166,499
Financing arrangements, loans held
for sale/for investment 157,006 225,186
Collateralized debt obligations 213,486 228,226
Due to loan purchasers 869 1,652
Accounts payable and accrued expenses 19,651 22,794
Subordinated debentures 45,000 45,000
Derivative liabilities 229 394
Other liabilities 383 584
Total liabilities 1,476,423 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
18,024,840 outstanding at
June 30, 2006 and 18,258,221 shares
issued and 17,984,843 outstanding at
December 31, 2005 183 183
Additional paid-in capital 102,590 107,573
Accumulated other comprehensive (loss)
income (2,643) 1,910
Accumulated deficit (10,326) (8,708)
Total stockholders' equity 89,804 100,958
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $1,566,227 $1,791,293
NEW YORK MORTGAGE TRUST, INC. AND SUBSIDIARIES
SELECTED SEGMENT REPORTING
(Dollar amounts in thousands)
For the Six Months Ended June 30, 2006
Mortgage Portfolio Mortgage Lending
Management Segment Segment Total
Total revenue $5,645 $16,390 $22,035
Total expense 1,194 22,459 23,653
Net income (loss) $4,451 $(6,069) $(1,618)
Total assets $1,366,551 $199,676 $1,566,227
For the Six Months Ended June 30, 2005
Mortgage Portfolio Mortgage Lending
Management Segment Segment Total
Total revenue $9,724 $19,049 $28,773
Total expense 1,928 26,336 28,264
Net income (loss) $7,796 $(7,287) $509
For the Three Months Ended June 30, 2006
Mortgage Portfolio Mortgage Lending
Management Segment Segment Total
Total revenue $3,109 $9,355 $12,464
Total expense 699 11,587 12,286
Net income (loss) $2,410 $(2,232) $178
For the Three Months Ended June 30, 2005
Mortgage Portfolio Mortgage Lending
Management Segment Segment Total
Total revenue $4,587 $11,947 $16,534
Total expense 1,094 14,894 15,988
Net income (loss) $3,493 $(2,947) $546
