Timothy D'Agostino

Timothy D'Agostino asked about the quarter-over-quarter decline in net interest income, specifically a $3.5 million lower top-line interest income, and if it was attributable to loans funded in Q4 being recognized in Q1.

Answer

Brian Harris (CEO, Ladder Capital Corp) explained that net interest income can be lumpy, confirming that many Q4 loans were funded late in December, delaying NII recognition to Q1 2026. He also noted that payoffs, though modest in Q4, tend to be higher-rate loans, contributing to a slight dip in spread. Harris highlighted strong Q1 2026 originations and anticipated continued growth as cash from unsecured lines and securities sales funds new, higher-yielding loans, with securities payoffs accelerating as expected.

Timothy D'Agostino asked about the quarter-over-quarter decrease in net interest income, specifically a $3.5 million lower top-line interest income, and whether this was attributable to SOFR fluctuations or loans written in Q4 being funded in Q1.

Answer

Brian Harris, CEO of Ladder Capital Corp, explained that loan originations can be lumpy, with many Q4 loans funded late in December, which impacted Q4 net interest income but would benefit Q1. He also noted that while loan payoffs were slowing, they tended to be higher-rate loans, and securities book payoffs were picking up, providing liquidity for new, higher-yielding loan originations.

Timothy D'Agostino inquired about Sunrise Realty Trust's expanding presence across the southern United States, specifically asking about new geographies within the region that are appearing in the investment pipeline and which of these geographies are most attractive for investment.

Answer

Brian Sedrish, CEO of Sunrise Realty Trust, confirmed that the company remains focused on the southern U.S., with primary markets including Florida, Texas, North Carolina, Georgia, and Tennessee. He noted that Texas and Florida continue to offer interesting pockets, while the Carolinas and Tennessee also remain attractive, with deal flow allowing continued focus on these areas.

Timothy D'Agostino inquired about new geographic markets within the southern U.S. that Sunrise Realty Trust is targeting for pipeline assets and which of these regions offer the most attractive investment opportunities.

Answer

Brian Sedrish, CEO, confirmed the continued focus on the southern U.S., specifically mentioning Florida, Texas, the Carolinas (North Carolina), Georgia, and Tennessee as primary markets. He noted that Texas, Florida, the Carolinas, and Tennessee continue to present interesting pockets for investment, with no significant shift from historical attractiveness.

Timothy D'Agostino asked about the factors needed for the economic net interest margin to continue widening or pick up pace through year-end and into 2026.

Answer

CFO Gordon Harper stated that the trend depends on the portfolio's construction and the pace of Fed rate cuts impacting financing costs. Co-Chief Investment Officer Desmond Macauley added that forward ROEs of 16%-18% on production coupons are considered, with the 18% dividend yield serving as a hurdle rate, indicating a constructive medium-term outlook for assets to exceed this rate with further tightening.

Timothy D'Agostino from B. Riley Securities asked about the factors needed for the economic net interest margin, which widened by one basis point quarter-over-quarter, to continue or accelerate its trend through year-end and mid-2026.

Answer

CFO Gordon Harper stated that the trend depends on the portfolio and the pace of Fed rate cuts, which impact financing costs, emphasizing that the company does not typically provide forward-looking earnings statements. Co-Chief Investment Officer Desmond Macauley added that they focus on forward ROEs, with production coupons yielding 16% to 18%, aligning with their 18% hurdle rate (dividend yield plus operational expenses).

Timothy D'Agostino, on behalf of Randy Binner, inquired about the drivers behind lower-than-expected servicing costs and the company's outlook on financial leverage for the remainder of 2025.

Answer

An executive attributed lower servicing costs to the resolution of deboarding fees related to the Mr. Cooper acquisition and a declining loan count. Chief Investment Officer Julian Evans added that leverage is expected to 'creep up' through the end of the year, as a potentially more accommodative Fed policy would make spread assets more attractive.

Timothy D'Agostino, on behalf of Randy Binner from B. Riley Securities, inquired about the company's perspective on M&A activity within the mortgage servicing sector, especially in contrast to recent origination-focused transactions in the industry.

Answer

CEO, President & Chair Glen Messina responded that M&A in the servicing sector is a trade-off against acquiring assets in the bulk market. He suggested that as long as the bulk MSR market remains robust, it will be the preferred channel for growth. However, if that supply diminishes while demand for servicing assets remains high, M&A activity on the servicing side could increase.

Tim D'Agostino, on behalf of Randy Binner, asked about the anticipated quarterly pace of capital deployment and the specific asset classes being targeted for investment.

Answer

Michael Nierenberg, Chairman, President & CEO, stated that the target assets remain retail, multifamily, office, and industrial properties, along with SRT deals. He noted the company has approximately $100 million in liquidity and projects deploying about $50 million in the third quarter. For future capital needs, he indicated a preference for tapping the preferred stock market to avoid diluting common shareholders.

Timothy D'Agostino of B. Riley Securities, on behalf of Randy Binner, asked for management's perspective on the potential impact of Government-Sponsored Enterprise (GSE) reform on NYMT's business and the broader mortgage market.

Answer

CEO Jason Serrano explained that NYMT's credit investments are primarily outside the GSE landscape. He stated that while significant GSE reform could increase mortgage rates, he does not see it as a near- or medium-term risk, noting the transition would likely take years and is not expected under the current or a potential new administration.