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New York Mortgage Trust Reports Third Quarter 2018 Results

NEW YORK, Nov. 05, 2018 (GLOBE NEWSWIRE) -- New York Mortgage Trust, Inc. (Nasdaq: NYMT) (“NYMT,” the “Company,” “we,” “our” or “us”) today reported results for the three and nine months ended September 30, 2018.

/EIN News/ -- Summary of Third Quarter 2018:

  • Earned net income attributable to common stockholders of $28.0 million, or $0.21 per share (basic), and comprehensive income to common stockholders of $18.2 million, or $0.14 per share.
  • Earned net interest income of $19.6 million and portfolio net interest margin of 255 basis points.
  • Recognized book value per common share of $5.72 at September 30, 2018, a decrease of less than 1% from June 30, 2018, resulting in an economic return of 2.8% for the quarter and an annualized economic return of 7.1% for the nine months ended September 30, 2018.
  • Declared third quarter dividend of $0.20 per common share that was paid on October 26, 2018.
  • Issued 14,375,000 shares of common stock through an underwritten public offering and 2,443,487 shares of common stock under our at-the-market equity offering program, resulting in total net proceeds to the Company of $101.2 million.
  • Acquired residential and multi-family credit assets totaling $161.5 million.
  • Sold residential mortgage loans, including distressed residential mortgage loans, for aggregate proceeds of approximately $30.1 million.

Management Overview

Steven Mumma, NYMT’s Chairman and Chief Executive Officer, commented:  "The Company had a solid quarter of earnings and book value, with GAAP earnings of $0.21 per common share and book value at $5.72, down $0.04 from the previous quarter.  The Company delivered a 2.8% economic return for the quarter and a 7.1% annualized economic return for the nine months ended September 30, 2018. The Company raised a total of $101.2 million in common equity during the quarter at an average net price of $6.02, or approximately 4% accretive to our June 30, 2018 book value.

The Company’s net interest margin improved 16 basis points to 255 basis points from the previous quarter.  The improvement is largely attributable to our continued focus on credit sensitive assets in both residential and multi-family, adding $161.5 million during the quarter.   The Company continues to see improved valuations for multi-family assets, with our multi-family CMBS contributing $12.3 million in unrealized gains during the quarter.  The Company also benefited from a $3.6 million recovery in one of our multi-family joint venture equity investments which had been previously written down.

The Company sold distressed loans for total proceeds of $30.1 million in the quarter and anticipates more sales in the fourth quarter.  The previously announced internalization of the single family residential credit strategy progressed nicely during the quarter with the addition of 11 employees, bringing the total number of new hires year-to-date to 12 employees. We continue to work towards a mutual early termination of our external management agreement and anticipate a final transition strategy for those services by the end of the year.

As we look at the fourth quarter of 2018, our pipeline for new investments is strong, with over $390 million in purchases or commitments to purchase credit assets, including securities and loans.  We believe the addition of our new team of residential credit professionals, together with our existing team, has us well positioned for 2019.   Consistent with our approach in recent years, we will continue to focus on credit assets as we believe these assets give us the best balance of risk and return."

Capital Allocation

The following tables set forth our allocated capital by investment type at September 30, 2018, our interest income and interest expense by investment type, and the weighted average yield, average cost of funds, and portfolio net interest margin for our average interest earning assets (by investment type) for the three months ended September 30, 2018 (dollar amounts in thousands):

Capital Allocation at September 30, 2018:
   Agency
RMBS(1)
   Multi-
Family (2)
   Distressed
Residential (3)
   Other (4)    Total
Carrying Value $ 1,055,433     $ 947,851     $ 474,717     $ 145,228     $ 2,623,229  
Liabilities                  
Callable(5) (852,325 )   (278,334 )   (141,396 )   (35,830 )   (1,307,885 )
Non-Callable     (29,870 )   (23,727 )   (101,504 )   (155,101 )
Convertible             (130,251 )   (130,251 )
Hedges (Net) (6) 8,760                 8,760  
Cash (7) 10,554     1,992     7,478     45,744     65,768  
Goodwill             25,222     25,222  
Other 2,123     (8,816 )   18,783     (33,143 )   (21,053 )
Net Capital Allocated $ 224,545     $ 632,823     $ 335,855     $ (84,534 )   $ 1,108,689  
% of Capital Allocated 20.2 %   57.1 %   30.3 %   (7.6 )%   100.0 %
                   
Net Interest Income- Three Months Ended September 30, 2018:
Interest Income $ 7,479     $ 19,668     $ 6,058     $ 1,899     $ 35,104  
Interest Expense (4,860 )   (4,047 )   (2,182 )   (4,412 )   (15,501 )
Net Interest Income (Expense) $ 2,619     $ 15,621     $ 3,876     $ (2,513 )   $ 19,603  
                   
Portfolio Net Interest Margin - Three Months Ended September 30, 2018
Average Interest Earning Assets (8) $ 1,121,180     $ 681,040     $ 456,240     $ 140,960     $ 2,399,420  
Weighted Average Yield on Interest Earning Assets (9) 2.67 %   11.55 %   5.31 %   5.39 %   5.85 %
Less: Average Cost of Funds (10) (2.22 )%   (5.04 )%   (4.96 )%   (4.19 )%   (3.30 )%
Portfolio Net Interest Margin (11) 0.45 %   6.51 %   0.35 %   1.20 %   2.55 %
                             

(1) Includes Agency fixed-rate RMBS and Agency ARMs.
(2) The Company, through its ownership of certain securities, has determined it is the primary beneficiary of the Consolidated K-Series and has consolidated the Consolidated K-Series into the Company’s condensed consolidated financial statements.  Carrying Value and Average Interest Earning Assets for the quarter exclude all Consolidated K-Series assets other than those securities actually owned by the Company. Interest income amounts represent interest income earned by securities that are actually owned by the Company. A reconciliation of net capital allocated to and net interest income from multi-family investments is included below in “Additional Information.”
(3) Includes $260.8 million of distressed residential mortgage loans, $112.5 million of distressed residential mortgage loans, at fair value, and $98.2 million of Non-Agency RMBS.
(4) Other includes residential mortgage loans held in securitization trusts amounting to $60.5 million, residential second mortgage loans, at fair value of $69.4 million, investments in unconsolidated entities amounting to $13.5 million and mortgage loans held for sale and mortgage loans held for investment totaling $2.0 million. Mortgage loans held for sale and mortgage loans held for investment are included in the Company’s accompanying condensed consolidated balance sheets in receivables and other assets. Other non-callable liabilities consist of $45.0 million in subordinated debentures and $56.5 million in residential collateralized debt obligations
(5) Includes repurchase agreements.
(6) Includes derivative assets and variation margin.
(7) Includes $7.5 million in deposits held in our distressed residential securitization trusts to be used to pay down outstanding debt. These deposits are included in the Company’s accompanying condensed consolidated balance sheets in receivables and other assets.
(8) Our Average Interest Earning Assets is calculated each quarter based on daily average amortized cost.
(9) Our Weighted Average Yield on Interest Earning Assets was calculated by dividing our annualized interest income for the quarter by our Average Interest Earning Assets for the quarter.
(10) Our Average Cost of Funds was calculated by dividing our annualized interest expense for the quarter by our average interest bearing liabilities, excluding our subordinated debentures and convertible notes, which generated interest expense of approximately $0.7 million and $2.7 million, respectively, for the quarter. Our Average Cost of Funds includes interest expense on our interest rate swaps.
(11) Portfolio Net Interest Margin is the difference between our Weighted Average Yield on Interest Earning Assets and our Average Cost of Funds, excluding the weighted average cost of subordinated debentures and convertible notes.

Prepayment History

The following table sets forth the constant prepayment rates (“CPR”) for selected asset classes, by quarter, for the quarterly periods indicated.

Quarter Ended   Agency
Fixed-Rate
RMBS
  Agency
ARMs
  Residential
Securitized
Loans
September 30, 2018   7.3 %   14.6 %   23.1 %
June 30, 2018   5.9 %   16.3 %   20.1 %
March 31, 2018   5.4 %   10.2 %   10.8 %
December 31, 2017   6.3 %   12.9 %   22.1 %
September 30, 2017   12.8 %   9.4 %   18.2 %
                   

Third Quarter Earnings Summary

For the quarter ended September 30, 2018, we reported net income attributable to common stockholders of $28.0 million as compared to $23.8 million in the quarter ended June 30, 2018.

We generated net interest income of $19.6 million and a portfolio net interest margin of 255 basis points for the quarter ended September 30, 2018 as compared to net interest income of $17.5 million and a portfolio net interest margin of 239 basis points for the quarter ended June 30, 2018.  The $2.1 million increase in net interest income in the third quarter was primarily due to a $1.2 million increase in net interest income generated by our distressed residential portfolio and a $1.4 million increase in net interest income generated by our multi-family portfolio.  Net interest income generated by our Agency RMBS portfolio decreased by $0.6 million primarily due to a decrease in average interest earning assets and an increase in funding costs for that portfolio during the quarter.

The main components of other income for the quarters ended September 30, 2018 and June 30, 2018, respectively, are detailed in the following table (dollar amounts in thousands):

    Three Months Ended
Other Income (Loss)   September 30,
2018
  June 30, 2018
Recovery of loan losses   $ 840     $ 437  
Realized gain (loss) on investment securities and related hedges, net   299     (8,654 )
Realized gain on distressed residential mortgage loans at carrying value, net   1,806     2,021  
Net gain on residential mortgage loans at fair value   643     97  
Unrealized gain on investment securities and related hedges, net   2,275     12,606  
Unrealized gain on multi-family loans and debt held in securitization trusts, net   12,303     12,019  
Income from operating real estate and real estate held for sale in consolidated variable interest entities   1,380     1,253  
Other income   4,757     228  
Total other income   $ 24,303     $ 20,007  
                 

For the quarter ended September 30, 2018, we recognized other income of $24.3 million primarily comprised of the following:

  • Unrealized gain of $12.3 million on our Consolidated K-Series investments due to continued tightening of credit spreads from the previous quarter.
  • Total net gain of $2.4 million from our residential mortgage loans, including distressed residential mortgage loans, primarily generated by sales during the period.
  • Other income of $4.8 million primarily related to a $3.6 million valuation recovery from a joint venture equity investment and $1.2 million in income from other equity investments.
  • Unrealized gain of $2.3 million from our interest rate swaps accounted for as trading instruments.

The change in net realized gain on investment securities and related hedges of $9.0 million and the decrease in net unrealized gain on investment securities and related hedges of $10.3 million from the previous quarter can be primarily attributed to the final liquidation of our Agency IO portfolio in the quarter ended June 30, 2018.

The following table details the general and administrative expenses for the quarters ended September 30, 2018 and June 30, 2018 respectively (dollar amounts in thousands):

    Three Months Ended
General and Administrative Expenses   September 30,
2018
  June 30, 2018
Salaries, benefits and directors’ compensation   $ 4,219     $ 3,173  
Base management and incentive fees   844     809  
Other general and administrative expenses   1,977     2,103  
Total general and administrative expenses   $ 7,040     $ 6,085  
                 

The change in general and administrative expenses is primarily related to the increase in salaries and benefits due to the increase in employee headcount as part of the internalization of our single family residential credit strategy.  We expect the increase to be offset by a decrease in base management and incentive fees upon expiration of our external management agreement.

The following table sets out the operating expenses related to our distressed residential mortgage loans and the operating real estate and real estate held for sale in consolidated variable interest entities for the quarters ended September 30, 2018 and June 30, 2018, respectively (dollar amounts in thousands):

    Three Months Ended
Operating Expenses   September 30,
2018
  June 30, 2018
Expenses related to distressed residential mortgage loans   $ 2,117     $ 1,811  
Expenses related to operating real estate and real estate held for sale in consolidated variable interest entities   755     873  
Total operating expenses   $ 2,872     $ 2,684  
                 

The increase in operating expenses in the third quarter can be primarily attributed to our distressed residential loan strategy, including due diligence expenses for loan purchases and appraisal costs related to loan sales.

The results of operations applicable to the operating real estate and real estate held for sale in consolidated variable interest entities included in the Company's condensed consolidated statements of operations for the three months ended September 30, 2018 are as follows (dollar amounts in thousands):

    Three Months Ended
September 30, 2018
Income from operating real estate and real estate held for sale in consolidated variable interest entities   $ 1,380  
Expenses related to operating real estate and real estate held for sale in consolidated variable interest entities   (755 )
Net income from operating real estate and real estate held for sale in consolidated variable interest entities   625  
Net income from operating real estate and real estate held for sale in consolidated variable interest entities attributable to non-controlling interest   (517 )
Net income from operating real estate and real estate held for sale in consolidated variable interest entities attributable to Company's common stockholders   $ 108  
         

Analysis of Changes in Book Value

The following table analyzes the changes in book value of our common stock for the quarter ended September 30, 2018 (amounts in thousands, except per share):

  Quarter Ended September 30, 2018
  Amount     Shares   Per Share(1)
                     
Beginning Balance $ 715,967     124,313     $ 5.76  
Common stock issuance, net(2) 101,795     16,902        
Balance after share issuance activity 817,762     141,215     5.79  
Dividends declared (28,243 )       (0.20 )
Net change in accumulated other comprehensive income:          
Investment securities (3) (9,874 )       (0.07 )
Net income attributable to Company's common stockholders 28,048         0.20  
Ending Balance $ 807,693     141,215     $ 5.72  

(1) Outstanding shares used to calculate book value per share for the ending balance is based on outstanding shares as of September 30, 2018 of 141,214,528.
(2) Includes amortization of stock based compensation.
(3) The $9.9 million decrease related to investment securities is primarily due to a decline in the value of the Agency RMBS portfolio for the three months ended September 30, 2018.

Conference Call

On Tuesday, November 6, 2018 at 9:00 a.m., Eastern Time, New York Mortgage Trust's executive management is scheduled to host a conference call and audio webcast to discuss the Company’s financial results for the three and nine months ended September 30, 2018. The conference call dial-in number is (877) 312-8806. The replay will be available until Tuesday, November 13, 2018 and can be accessed by dialing (855) 859-2056 and entering passcode 3993317.  A live audio webcast of the conference call can be accessed via the Internet, on a listen-only basis, at 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.

Third quarter 2018 financial and operating data can be viewed in the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2018, which is expected to be filed with the Securities and Exchange Commission on or about November 9, 2018. A copy of the Form 10-Q will be posted at the Company’s website as soon as reasonably practicable following its filing with the Securities and Exchange Commission.

About New York Mortgage Trust

New York Mortgage Trust, Inc. is a Maryland corporation that has elected to be taxed as a real estate investment trust for federal income tax purposes (“REIT”). NYMT is an internally managed REIT in the business of acquiring, investing in, financing and managing mortgage-related and residential housing-related assets and targets multi-family CMBS, direct financing to owners of multi-family properties through preferred equity and mezzanine loan investments, residential mortgage loans, including second mortgages and loans sourced from distressed markets, non-Agency RMBS, Agency RMBS and other mortgage-related and residential housing-related investments. Headlands Asset Management, LLC provides investment management services to the Company with respect to certain of its distressed residential loans. For a list of defined terms used from time to time in this press release, see “Defined Terms” below.

Defined Terms

The following defines certain of the commonly used terms in this press release: “RMBS” refers to residential mortgage-backed securities comprised of adjustable-rate, hybrid adjustable-rate, fixed-rate, interest only and inverse interest only, and principal only securities; “Agency RMBS” refers to RMBS representing interests in or obligations backed by pools of residential mortgage loans issued or guaranteed by a federally chartered corporation ("GSE"), such as the Federal National Mortgage Association (“Fannie Mae”) or the Federal Home Loan Mortgage Corporation (“Freddie Mac”), or an agency of the U.S. government, such as the Government National Mortgage Association (“Ginnie Mae”); "Non-Agency RMBS" refers to RMBS backed by performing, re-performing and non-performing mortgage loans; “Agency ARMs” refers to Agency RMBS comprised of adjustable-rate and hybrid adjustable-rate RMBS; "Agency fixed-rate RMBS" refers to Agency RMBS comprised of fixed-rate RMBS; “IOs” refers collectively to interest only and inverse interest only mortgage-backed securities that represent the right to the interest component of the cash flow from a pool of mortgage loans; “Agency IOs” refers to an IO that represents the right to the interest component of cash flow from a pool of residential mortgage loans issued or guaranteed by a GSE, or an agency of the U.S. government; “POs” refers to mortgage-backed securities that represent the right to the principal component of the cash flow from a pool of mortgage loans; “ARMs” refers to adjustable-rate residential mortgage loans; “residential securitized loans” refers to prime credit quality ARMs held in securitization trusts; “distressed residential mortgage loans” or "distressed residential loans" refers to pools of performing and re-performing fixed-rate and adjustable-rate, fully amortizing, interest-only and balloon, seasoned mortgage loans secured by first liens on one- to four-family properties; “CMBS” refers to commercial mortgage-backed securities comprised of commercial mortgage pass-through securities, as well as IO or PO securities that represent the right to a specific component of the cash flow from a pool of commercial mortgage loans; “multi-family CMBS” refers to CMBS backed by commercial mortgage loans on multi-family properties; “multi-family securitized loans” refers to the commercial mortgage loans included in the Consolidated K-Series; “CDO” refers to collateralized debt obligation; “CLO” refers to collateralized loan obligation; and "Consolidated K-Series” refers to Freddie Mac- sponsored multi-family loan K-Series securitizations, of which we, or one of our special purpose entities, own the first loss PO securities and certain IO and/or mezzanine securities issued by them.

Additional Information

We determined that the Consolidated K-Series were variable interest entities and that we are the primary beneficiary of the Consolidated K-Series. As a result, we are required to consolidate the Consolidated K-Series’ underlying multi-family loans including their liabilities, income and expenses in our condensed consolidated financial statements. We have elected the fair value option on the assets and liabilities held within the Consolidated K-Series, which requires that changes in valuations in the assets and liabilities of the Consolidated K-Series be reflected in our condensed consolidated statements of operations.

A reconciliation of our net capital allocated to multi-family investments to our condensed consolidated financial statements as of September 30, 2018 is set forth below (dollar amounts in thousands):

Multi-family loans held in securitization trusts, at fair value $ 10,070,834  
Multi-family CDOs, at fair value (9,504,313 )
Net carrying value 566,521  
Investment securities available for sale, at fair value 133,511  
Total CMBS, at fair value 700,032  
Preferred equity investments, mezzanine loans and investments in unconsolidated entities 228,562  
Real estate under development (1) 22,185  
Real estate held for sale in consolidated variable interest entities 29,558  
Mortgages and notes payable in consolidated variable interest entities (32,486 )
Financing arrangements, portfolio investments (278,334 )
Securitized debt (29,870 )
Cash and other (6,824 )
Net Capital in Multi-Family $ 632,823  

(1) Included in the Company’s accompanying condensed consolidated balance sheets in receivables and other assets.

A reconciliation of our net interest income in multi-family investments to our condensed consolidated financial statements for the three months ended September 30, 2018 is set forth below (dollar amounts in thousands):

  Three Months Ended
September 30, 2018
Interest income, multi-family loans held in securitization trusts $ 86,458  
Interest income, investment securities, available for sale (1) 2,481  
Interest income, preferred equity investments and mezzanine loans (1) 5,874  
Interest expense, multi-family collateralized debt obligation (75,145 )
Interest income, Multi-Family, net 19,668  
Interest expense, investment securities, available for sale (3,317 )
Interest expense, securitized debt (730 )
Net interest income, Multi-Family $ 15,621  

(1) Included in the Company’s accompanying condensed consolidated statements of operations in interest income, investment securities and other.

Cautionary Statement Regarding Forward-Looking Statements

When used in this press release, in future filings with the Securities and Exchange Commission (“SEC”) or in other written or oral communications, statements which are not historical in nature, including those containing words such as “believe,” “expect,” “anticipate,” “estimate,” “plan,” “continue,” “intend,” “should,” “would,” “could,” “goal,” “objective,” “will,” “may” or similar expressions, are intended to identify “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended ("Exchange Act"), and, as such, may involve known and unknown risks, uncertainties and assumptions.

Forward-looking statements are based on the Company’s beliefs, assumptions and expectations of its future performance, taking into account all information currently available to it. These beliefs, assumptions and expectations are subject to risks and uncertainties and can change as a result of many possible events or factors, not all of which are known to the Company. If a change occurs, the Company’s business, financial condition, liquidity and results of operations may vary materially from those expressed in its forward-looking statements. The following factors are examples of those that could cause actual results to vary from the Company’s forward-looking statements: changes in interest rates and the market value of the Company’s investments; changes in credit spreads; changes in the long-term credit ratings of the U.S., Fannie Mae, Freddie Mac, and Ginnie Mae; market volatility; changes in the prepayment rates on the mortgage loans underlying the Company’s investment securities; increased rates of default and/or decreased recovery rates on the Company's assets; the Company's ability to identify and acquire its targeted assets, including assets in its investment pipeline; the Company’s ability to borrow to finance its assets and the terms thereof; changes in governmental laws, regulations or policies affecting the Company’s business; the Company’s ability to maintain its qualification as a REIT for federal tax purposes; the Company’s ability to maintain its exemption from registration under the Investment Company Act of 1940, as amended; and risks associated with investing in real estate assets, including changes in business conditions and the general economy. These and other risks, uncertainties and factors, including the risk factors described in the Company’s reports filed with the SEC pursuant to the Exchange Act, could cause the Company’s actual results to differ materially from those projected in any forward-looking statements it makes. All forward-looking statements speak only as of the date on which they are made. New risks and uncertainties arise over time and it is not possible to predict those events or how they may affect the Company. Except as required by law, the Company is not obligated to, and does not intend to, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

For Further Information

CONTACT:   AT THE COMPANY
    Kristine R. Nario-Eng
    Chief Financial Officer
    Phone:  (646) 216-2363
    Email: KNario@nymtrust.com


FINANCIAL TABLES FOLLOW

NEW YORK MORTGAGE TRUST, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands, except share data)

  September 30, 2018   December 31, 2017
  (unaudited)    
ASSETS      
Investment securities, available for sale, at fair value (including pledged securities of $899,065 and $1,076,187, as of September 30, 2018 and December 31, 2017, respectively, and $51,751 and $47,922 held in securitization trusts as of September 30, 2018 and December 31, 2017, respectively) $ 1,287,188     $ 1,413,081  
Residential mortgage loans held in securitization trusts, net 60,459     73,820  
Residential mortgage loans, at fair value 181,910     87,153  
Distressed residential mortgage loans, net (including $96,493 and $121,791 held in securitization trusts as of September 30, 2018 and December 31, 2017, respectively) 260,837     331,464  
Multi-family loans held in securitization trusts, at fair value 10,070,834     9,657,421  
Derivative assets 8,760     10,101  
Cash and cash equivalents 57,471     95,191  
Investment in unconsolidated entities 43,736     51,143  
Preferred equity and mezzanine loan investments 198,277     138,920  
Real estate held for sale in consolidated variable interest entities 29,558     64,202  
Goodwill 25,222     25,222  
Receivables and other assets 102,659     108,567  
Total Assets (1) $ 12,326,911     $ 12,056,285  
LIABILITIES AND STOCKHOLDERS' EQUITY      
Liabilities:      
Financing arrangements, portfolio investments $ 1,130,659     $ 1,276,918  
Financing arrangements, residential mortgage loans 177,226     149,063  
Residential collateralized debt obligations 56,504     70,308  
Multi-family collateralized debt obligations, at fair value 9,504,313     9,189,459  
Securitized debt 53,597     81,537  
Mortgages and notes payable in consolidated variable interest entities 32,486     57,124  
Accrued expenses and other liabilities 88,186     82,126  
Subordinated debentures 45,000     45,000  
Convertible notes 130,251     128,749  
Total liabilities (1) 11,218,222     11,080,284  
Commitments and Contingencies      
Stockholders' Equity:      
Preferred stock, $0.01 par value, 7.75% Series B cumulative redeemable, $25 liquidation preference per share, 6,000,000 shares authorized, 3,000,000 shares issued and outstanding 72,397     72,397  
Preferred stock, $0.01 par value, 7.875% Series C cumulative redeemable, $25 liquidation preference per share, 4,140,000 shares authorized, 3,600,000 shares issued and outstanding 86,862     86,862  
Preferred stock, $0.01 par value, 8.00% Series D Fixed-to-Floating Rate cumulative redeemable, $25 liquidation preference per share, 5,750,000 shares authorized and 5,400,000 shares issued and outstanding 130,496     130,496  
Common stock, $0.01 par value, 400,000,000 shares authorized, 141,214,528 and 111,909,909 shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively 1,412     1,119  
Additional paid-in capital 927,585     751,155  
Accumulated other comprehensive (loss) income (35,323 )   5,553  
Accumulated deficit (75,736 )   (75,717 )
Company's stockholders' equity 1,107,693     971,865  
Non-controlling interest in consolidated variable interest entities 996     4,136  
Total equity 1,108,689     976,001  
Total Liabilities and Stockholders' Equity $ 12,326,911     $ 12,056,285  

(1) Our condensed consolidated balance sheets include assets and liabilities of consolidated variable interest entities ("VIEs") as the Company is the primary beneficiary of these VIEs. As of September 30, 2018 and December 31, 2017, assets of consolidated VIEs totaled $10,381,126 and $10,041,468, respectively, and the liabilities of consolidated VIEs totaled $9,680,332 and $9,436,421, respectively.


NEW YORK MORTGAGE TRUST, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollar amounts in thousands, except per share data)
(unaudited)

  For the Three
Months Ended
September 30,
  For the Nine
Months Ended
September 30,
  2018   2017   2018   2017
INTEREST INCOME:                              
Investment securities and other $ 17,021     $ 9,716     $ 50,269     $ 29,716  
Multi-family loans held in securitization trusts 86,458     76,186     257,179     213,242  
Residential mortgage loans 2,844     1,556     7,415     4,163  
Distressed residential mortgage loans 3,926     3,924     12,000     16,627  
Total interest income 110,249     91,382     326,863     263,748  
               
INTEREST EXPENSE:              
Investment securities and other 10,548     5,759     30,673     17,132  
Convertible notes 2,669     2,630     7,971     7,220  
Multi-family collateralized debt obligations 75,145     67,030     224,310     187,835  
Residential collateralized debt obligations 462     403     1,348     978  
Securitized debt 1,110     1,651     3,684     5,937  
Subordinated debentures 712     589     2,023     1,699  
Total interest expense 90,646     78,062     270,009     220,801  
               
NET INTEREST INCOME 19,603     13,320     56,854     42,947  
               
OTHER INCOME (LOSS):              
Recovery of loan losses 840     563     1,235     452  
Realized gain (loss) on investment securities and related hedges, net 299     4,059     (11,778 )   3,951  
Realized gain on distressed residential mortgage loans at carrying value, net 1,806     6,689     3,054     21,024  
Net gain on residential mortgage loans at fair value 643     717     573     717  
Unrealized gain on investment securities and related hedges, net 2,275     1,192     26,574     1,687  
Unrealized gain on multi-family loans and debt held in securitization trusts, net 12,303     2,353     31,867     5,184  
Income from operating real estate and real estate held for sale in consolidated variable interest entities 1,380     2,429     4,759     4,746  
Other income 4,757     6,916     8,981     12,037  
Total other income 24,303     24,918     65,265     49,798  
               
GENERAL, ADMINISTRATIVE AND OPERATING EXPENSES:              
General and administrative expenses 6,196     4,242     16,129     14,196  
Base management and incentive fees 844     1,386     2,486     4,355  
Expenses related to distressed residential mortgage loans 2,117     2,225     5,531     6,682  
Expenses related to operating real estate and real estate held for sale in consolidated variable interest entities 755     3,143     3,234     7,558  
Total general, administrative and operating expenses 9,912     10,996     27,380     32,791  
               
INCOME FROM OPERATIONS BEFORE INCOME TAXES 33,994     27,242     94,739     59,954  
Income tax (benefit) expense (454 )   507     (547 )   2,187  
NET INCOME 34,448     26,735     95,286     57,767  
Net (income) loss attributable to non-controlling interest in consolidated variable interest entities (475 )   1,110     (2,001 )   3,597  
NET INCOME ATTRIBUTABLE TO COMPANY 33,973     27,845     93,285     61,364  
Preferred stock dividends (5,925 )   (3,225 )   (17,775 )   (9,675 )
NET INCOME ATTRIBUTABLE TO COMPANY'S COMMON STOCKHOLDERS $ 28,048     $ 24,620     $ 75,510     $ 51,689  
               
Basic earnings per common share $ 0.21     $ 0.22     $ 0.63     $ 0.46  
Diluted earnings per common share $ 0.20     $ 0.21     $ 0.60     $ 0.45  
Weighted average shares outstanding-basic 132,413     111,886     119,955     111,824  
Weighted average shares outstanding-diluted 152,727     131,580     140,044     129,931  
                       


NEW YORK MORTGAGE TRUST, INC. AND SUBSIDIARIES
SUMMARY OF QUARTERLY EARNINGS
(Dollar amounts in thousands, except per share data)
(unaudited)

  For the Three Months Ended
  September 30, 2018   June 30,
2018
  March 31,
2018
  December 31,
2017
  September 30,
2017
Net interest income $ 19,603     $ 17,500     $ 19,752     $ 15,040     $ 13,320  
Total other income 24,303     20,007     20,953     25,218     24,918  
Total general, administrative and operating expenses 9,912     8,769     8,698     8,288     10,996  
Income from operations before income taxes 33,994     28,738     32,007     31,970     27,242  
Income tax (benefit) expense (454 )   (13 )   (79 )   1,169     507  
Net income 34,448     28,751     32,086     30,801     26,735  
Net (income) loss attributable to non-controlling interest in consolidated variable interest entities (475 )   943     (2,468 )   (184 )   1,110  
Net income attributable to Company 33,973     29,694     29,618     30,617     27,845  
Preferred stock dividends (5,925 )   (5,925 )   (5,925 )   (5,985 )   (3,225 )
Net income attributable to Company's common stockholders 28,048     23,769     23,693     24,632     24,620  
Basic earnings per common share $ 0.21     $ 0.21     $ 0.21     $ 0.22     $ 0.22  
Diluted earnings per common share $ 0.20     $ 0.20     $ 0.20     $ 0.21     $ 0.21  
Weighted average shares outstanding - basic 132,413     115,211     112,018     111,871     111,886  
Weighted average shares outstanding - diluted 152,727     135,164     131,761     131,565     131,580  
                   
Book value per common share $ 5.72     $ 5.76     $ 5.79     $ 6.00     $ 6.05  
Dividends declared per common share $ 0.20     $ 0.20     $ 0.20     $ 0.20     $ 0.20  
Dividends declared per preferred share on Series B Preferred Stock $ 0.48     $ 0.48     $ 0.48     $ 0.48     $ 0.48  
Dividends declared per preferred share on Series C Preferred Stock $ 0.49     $ 0.49     $ 0.49     $ 0.49     $ 0.49  
Dividends declared per preferred share on Series D Preferred Stock $ 0.50     $ 0.50     $ 0.50     $ 0.51      
                                     

Capital Allocation Summary

The following tables set forth our allocated capital by investment type as well as the weighted average yield on interest earning assets, average cost of funds and portfolio net interest margin for our interest earning assets for the periods indicated (dollar amounts in thousands):

  Agency
RMBS
  Multi-
Family
   Distressed
Residential
  Other   Total
At September 30, 2018                                      
Carrying value $ 1,055,433     $ 947,851     $ 474,717     $ 145,228     $ 2,623,229  
Net capital allocated $ 224,545     $ 632,823     $ 335,855     $ (84,534 )   $ 1,108,689  
Three Months Ended September 30, 2018                  
Average interest earning assets $ 1,121,180     $ 681,040     $ 456,240     $ 140,960     $ 2,399,420  
Weighted average yield on interest earning assets 2.67 %   11.55 %   5.31 %   5.39 %   5.85 %
Less: Average cost of funds (2.22 )%   (5.04 )%   (4.96 )%   (4.19 )%   (3.30 )%
Portfolio net interest margin 0.45 %   6.51 %   0.35 %   1.20 %   2.55 %
                   
At June 30, 2018                  
Carrying value $ 1,101,344     $ 875,563     $ 445,353     $ 154,405     $ 2,576,665  
Net capital allocated $ 250,497     $ 557,422     $ 272,534     $ (64,252 )   $ 1,016,201  
Three Months Ended June 30, 2018                  
Average interest earning assets $ 1,167,278     $ 639,637     $ 453,407     $ 142,975     $ 2,403,297  
Weighted average yield on interest earning assets 2.69 %   11.43 %   4.51 %   5.02 %   5.50 %
Less: Average cost of funds (2.02 )%   (4.69 )%   (4.87 )%   (3.99 )%   (3.11 )%
Portfolio net interest margin 0.67 %   6.74 %   (0.36 )%   1.03 %   2.39 %
                   
At March 31, 2018                  
Carrying value $ 1,161,445     $ 836,353     $ 461,305     $ 150,461     $ 2,609,564  
Net capital allocated $ 251,405     $ 500,813     $ 282,561     $ (83,992 )   $ 950,787  
Three Months Ended March 31, 2018                  
Average interest earning assets $ 1,208,900     $ 612,357     $ 467,898     $ 136,135     $ 2,425,290  
Weighted average yield on interest earning assets 2.64 %   11.43 %   6.25 %   4.81 %   5.68 %
Less: Average cost of funds (1.82 )%   (4.51 )%   (4.45 )%   (3.25 )%   (2.82 )%
Portfolio net interest margin 0.82 %   6.92 %   1.80 %   1.56 %   2.86 %
                   
At December 31, 2017                  
Carrying value $ 1,169,535     $ 816,805     $ 474,128     $ 140,325     $ 2,600,793  
Net capital allocated $ 264,801     $ 475,200     $ 285,766     $ (49,766 )   $ 976,001  
Three Months Ended December 31, 2017                  
Average interest earning assets $ 971,707     $ 596,701     $ 480,711     $ 126,447     $ 2,175,566  
Weighted average yield on interest earning assets 2.50 %   11.11 %   3.68 %   4.53 %   5.24 %
Less: Average cost of funds (1.68 )%   (4.49 )%   (4.56 )%   (3.22 )%   (2.85 )%
Portfolio net interest margin 0.82 %   6.62 %   (0.88 )%   1.31 %   2.39 %
                   
At September 30, 2017                  
Carrying value $ 417,957     $ 723,170     $ 535,520     $ 136,304     $ 1,812,951  
Net capital allocated $ 90,526     $ 495,882     $ 305,668     $ (46,071 )   $ 846,005  
Three Months Ended September 30, 2017                  
Average interest earning assets $ 453,323     $ 536,537     $ 531,050     $ 126,848     $ 1,647,758  
Weighted average yield on interest earning assets 1.70 %   11.39 %   4.37 %   4.21 %   5.91 %
Less: Average cost of funds (1.44 )%   (4.46 )%   (4.28 )%   (2.57 )%   (3.10 )%
Portfolio net interest margin 0.26 %   6.93 %   0.09 %   1.64 %   2.81 %
                   

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