Q2 2024 Earnings Summary
Reported on Feb 18, 2025 (After Market Close)
Pre-Earnings Price$6.35Last close (Aug 1, 2024)
Post-Earnings Price$6.18Open (Aug 2, 2024)
Price Change
$-0.17(-2.68%)
- NYMT is positioning its portfolio to benefit from potential Fed rate cuts, which management believes will positively impact fixed income assets. The company is growing its portfolio and selecting assets to capitalize on the expected repricing of the rate curve.
- Management is maintaining high levels of liquidity to capitalize on selective opportunities, demonstrating prudent capital allocation that may enhance future returns. They are being patient and selective, looking for better opportunities to invest excess capital.
- The company is committed to maintaining an attractive dividend yield and is taking steps to optimize earnings and expenses to support it. This includes rotating into higher-yielding assets that generate recurring income and eliminating higher operating cost strategies.
- Limited Investment Opportunities and High Liquidity Holding: The company acknowledges a lack of production and transaction activity in the market, leading to limited investment opportunities. They are holding a high level of liquidity, which may reduce current income and affect earnings until capital is deployed. This is due to being selective in their growth and waiting for better opportunities in a volatile market.
- Risks from Increased Insurance Costs and Housing Market Pressures: Higher insurance costs and taxes are posing a headwind to further home price appreciation, particularly in markets like Austin, which are experiencing an increase in housing supply due to declining NOI in short-term rental investments. The company expresses concerns about these markets and is looking to minimize exposure, indicating potential risks to their real estate and loan portfolios.
- Potential Prepayment Risk in Agency MBS Portfolio: With expectations of interest rate declines, there is a potential for increased prepayment risk in the company's 6% coupon Agency RMBS holdings. If prepayments rise, this could negatively impact future yields and earnings from the MBS portfolio. The company plans to diversify towards other coupons but currently holds a significant position in higher coupon MBS.