Filing identity and reporting period
Important identity discrepancy: The request metadata names ADAMAS TRUST, INC., but the supplied Form 10-Q is for New York Mortgage Trust, Inc. (NYSE/ Nasdaq ticker NYMT). This summary reflects the filing text, which covers the quarter ended March 31, 2023. The financial statements are unaudited; dollar amounts below are in millions unless otherwise noted.
NYMT is a REIT that invests in mortgage-related single-family and multi-family residential assets. It aims to generate distributions through net interest spread and capital gains.
Financial results and position
| Metric | Q1 2023 | Q1 2022 or prior date |
|---|---|---|
| Interest income | $57.1 | $58.5 |
| Interest expense | $39.3 | $21.5 |
| Net interest income | $17.8 | $37.0 |
| Net non-interest income (loss) | $66.8 | $(46.8) |
| Net income (loss) attributable to company common stockholders | $10.5; $0.12 basic EPS, $0.11 diluted | $(84.3); $(0.89) EPS |
| Cash and cash equivalents at period end | $227.8 | $244.7 at Dec. 31, 2022 |
| Total assets | $6,170.2 | $6,240.7 at Dec. 31, 2022 |
| Total liabilities | $4,347.0 | $4,376.6 at Dec. 31, 2022 |
| Company stockholders’ equity | $1,737.5 | $1,767.2 at Dec. 31, 2022 |
| GAAP book value per common share | $12.95 | $13.27 at Dec. 31, 2022 |
| Adjusted book value per common share (non-GAAP) | $15.41 | $15.89 at Dec. 31, 2022 |
Cash flow from operations was negative $11.4; investing activities provided $57.1; financing activities used $83.6. Cash, cash equivalents and restricted cash decreased $37.9 to $343.0, including $115.2 of restricted cash.
Management reported a 6.24% yield on average interest-earning assets, a 0.41% net interest spread (both non-GAAP measures), and $0.40 in common dividends per share for the quarter. The company declared a $0.40 common dividend for Q1, payable April 26, 2023. Preferred dividends were $10.5.
At March 31, debt included $787.9 of repurchase agreements, $2,029.5 of collateralized debt obligations (CDOs), $97.6 of senior unsecured notes, $45.0 of subordinated debentures and $397.3 of mortgages payable on real estate. The balance sheet separately reported $897.0 of liabilities in the disposal group held for sale, including $878.1 of mortgages. Company recourse leverage was 0.4x and portfolio recourse leverage was 0.3x, as defined by management.
Material changes versus the prior comparable period
- Common-stockholder income improved by $94.9, from an $84.3 loss to $10.5 income. Results included $28.5 of net unrealized gains, versus $83.7 of net unrealized losses in Q1 2022; management attributed the reversal mainly to tighter yields on credit assets.
- Net interest income fell $19.2, despite interest income declining only $1.4. Higher borrowing balances and financing costs drove interest expense up $17.9. Management cited runoff of higher-yielding business-purpose loans and higher non-accrual loans as pressures on asset yield.
- Net interest spread contracted to 0.41% from 3.60%. Management’s non-GAAP yield on average interest-earning assets decreased to 6.24% from 6.80%, while average financing cost rose to 5.83% from 3.20%.
- Net unrealized gains were partly offset by $10.3 of net impairment on multi-family properties classified as held for sale. The disposal group recorded a pretax loss of $16.4, compared with $16.6 in Q1 2022.
- Investment securities available for sale increased to $202.6 from $99.6 at year-end, principally reflecting $106.1 of Agency RMBS purchases. Residential loans at fair value declined to $3,374.9 from $3,525.1.
- Common and preferred stockholders’ equity declined from year-end. The company repurchased $3.6 of common stock and $0.3 of Series G preferred stock, and completed a one-for-four reverse stock split on March 9, 2023. Per-share amounts in the filing reflect the split retroactively.
Outlook, commentary, risks and unusual items
Management said it was limiting investment activity amid market volatility, recession concerns and uncertainty around rates, inflation and banking conditions. Its stated priorities were liquidity, balance-sheet strength, book-value protection and selective investment in residential credit assets. NYMT is repositioning away from multi-family joint-venture equity investments, with capital intended to be redeployed to targeted assets; it reported purchase and sale agreements for two properties and later letters of intent for four additional properties. These transactions remained subject to completion.
The company said existing cash, financing availability and operating cash flows should meet liquidity needs for at least the next 12 months. It reported $215.8 of cash and cash equivalents available for margin requirements, $127.5 of unencumbered investment securities and $225.3 of unencumbered residential loans. However, repurchase agreements may involve margin calls, non-renewal or accelerated repayment; the company reported $133.3 of amount at risk under residential-loan repurchase agreements. It expects to favor longer-term and non-mark-to-market financing, while retaining some repurchase financing.
Management’s market-risk sensitivity estimated that a parallel 100-basis-point increase in rates would reduce next-12-month adjusted net interest income by $7.9, while a 100-basis-point decrease would increase it by $7.9. Its fair-value model estimated a $86.2 decrease for a 100-basis-point increase and a $95.4 increase for a 100-basis-point decrease. These are model estimates, not forecasts, and are sensitive to assumptions and market conditions.
Key risks discussed include interest-rate and credit-spread volatility; borrower, tenant and operating-partner defaults; falling property values or rents; refinancing and counterparty risk; margin calls and liquidity needs; and possible difficulty accessing capital. The filing also discusses the transition away from LIBOR, which was expected to cease for remaining U.S. dollar tenors on June 30, 2023. Management reported compliance with applicable repurchase-agreement and senior-note covenants and said it did not expect current litigation to have a material adverse effect. No formal earnings or dividend guidance was provided; the board will reassess dividends quarterly.
Important facts for investors to verify
- Confirm the intended issuer: the supplied filing is for New York Mortgage Trust, Inc., not ADAMAS TRUST, INC.
- Assess the durability of earnings: Q1 common income included substantial fair-value gains, while net interest income and spread fell sharply year over year.
- Review loan credit quality and valuation assumptions, including rising 90-day delinquencies in acquired residential loans and Level 3 fair-value estimates.
- Track completion, proceeds and any additional impairments from the multi-family property disposition program.
- Evaluate liquidity and refinancing exposure, especially short-term securities financing, collateral haircuts, margin-call capacity and the planned transition from LIBOR.
- Monitor common and preferred dividends, repurchases and the difference between GAAP book value and management’s non-GAAP adjusted book value.