Filing identity and reporting period
Important source mismatch: The supplied filing is New York Mortgage Trust, Inc. (NYSE/NASDAQ ticker NYMT), not Adamas Trust, Inc. This summary describes the filing text provided. It is the unaudited Form 10-Q for the quarter and six months ended June 30, 2021.
NYMT is a mortgage-focused REIT investing in single-family and multifamily residential loans, mortgage-backed securities, and related equity investments.
Financial results and position
Amounts below are in millions of dollars except per-share data. Comparisons are with the corresponding 2020 periods.
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Net interest income | $31.5 | $28.5 | $61.8 | $75.6 |
| Non-interest income (loss) | $43.3 | $104.4 | $83.0 | $(517.6) |
| Net income (loss) attributable to common stockholders | $42.9 | $107.5 | $84.9 | $(491.2) |
| Basic EPS | $0.11 | $0.28 | $0.22 | $(1.35) |
| Portfolio net interest margin | 2.97% | 2.43% | 2.70% | 2.64% |
Q2 comprehensive income attributable to common stockholders was $46.5 million; first-half comprehensive income was $91.3 million. Book value per common share was $4.74 at June 30, versus $4.71 at both March 31 and December 31, 2020. Common dividends declared were $0.10 per share for Q2 and $0.20 for the first half.
At June 30, total assets were $4.78 billion, total liabilities $2.45 billion, and total equity $2.33 billion. Cash and cash equivalents were $324.9 million; cash, cash equivalents, and restricted cash totaled $400.5 million. Residential loans were $3.20 billion, investment securities $607.4 million, and equity investments $204.7 million.
Debt included $340.5 million of repurchase agreements, $1.63 billion of CDOs, $136.6 million carrying value of convertible notes, $96.4 million carrying value of senior unsecured notes, and $45.0 million of subordinated debentures. Management-reported total leverage was 0.3x equity and portfolio leverage (repurchase agreements only) was 0.1x; these measures exclude non-recourse CDO and certain VIE debt.
For the first half, operating cash flow was $73.8 million, investing cash flow $42.9 million, and financing cash flow $(20.7) million. Cash, cash equivalents, and restricted cash increased by $96.0 million.
Material changes versus prior period
- Q2 net interest income rose $2.9 million year over year, and portfolio net interest margin improved to 2.97% from 2.43%, with management citing growth in higher-yielding business-purpose loans.
- Q2 common-stockholder income declined to $42.9 million from $107.5 million, primarily reflecting lower unrealized gains ($23.9 million versus $102.9 million); operating expenses also increased.
- First-half net interest income fell $13.8 million year over year, largely reflecting a smaller average earning-asset base after the 2020 asset sales. The much larger year-over-year earnings improvement chiefly reflects the prior-year pandemic-related losses, K-Series deconsolidation loss, and goodwill impairment—not simply a change in recurring operating performance.
- Residential loans increased from $3.05 billion at year-end to $3.20 billion; available-for-sale investment securities declined from $724.7 million to $607.4 million; equity investments declined from $259.1 million to $204.7 million.
- The company issued $100 million of 5.75% senior unsecured notes in April. In May, a business-purpose-loan securitization generated approximately $178.4 million net proceeds, of which $117.1 million repaid repurchase financing.
Outlook, commentary, and risks
Management described improving asset prices, tighter credit spreads, and stable mortgage-financing liquidity in Q2, but said it expected to maintain a defensive posture on new investments and selectively realize gains in non-Agency RMBS and CMBS. It aims to increase longer-term or more committed funding. Management believed available cash, financing, and operating cash flows would meet liquidity needs for at least 12 months, while cautioning that future financing access is not assured.
After quarter-end, NYMT issued Series F preferred stock for approximately $138.6 million net proceeds and used approximately $104.9 million to redeem all Series C preferred shares, lowering the coupon on the redeemed capital by 100 basis points. It also directed redemption of a residential securitization with a June 30 balance of $208.6 million, scheduled for August 12, and sold CMBS for approximately $89.5 million in July.
Key risks include interest-rate and spread movements, loan delinquencies and defaults, prepayments, fair-value uncertainty, financing availability and margin calls, and COVID-19-related economic effects. Approximately 1.2% of the residential loan portfolio had an active COVID-19 relief plan; one multifamily loan was delinquent and another was in forbearance, together representing 4.7% of preferred-equity and mezzanine-loan investments. The company had no interest-rate hedges outstanding. Its modeled 12-month net interest income sensitivity was $(13.7) million for a 200-basis-point rate increase and $(5.3) million for a 100-basis-point increase. Management reported compliance with applicable repurchase and unsecured-note covenants; it did not believe current litigation would have a material adverse effect.
Investor verification checklist
- Confirm the issuer: the supplied text identifies New York Mortgage Trust, Inc., not Adamas Trust, Inc.
- Assess how much reported earnings depend on fair-value changes and realized gains versus recurring net interest income.
- Review the composition, delinquency status, and valuation assumptions for residential loans and multifamily investments, including Level 3 estimates.
- Check refinancing and liquidity needs, especially the $138 million convertible notes due January 2022, repurchase-agreement margin exposure, and the post-quarter securitization redemption.
- Verify the effects of the Series F issuance and Series C redemption, and whether dividends remain supported by earnings, liquidity, and REIT distribution requirements.