New York Mortgage Trust ((ADAM)) has held its Q4 earnings call. Read on for the main highlights of the call.
Claim 55% Off TipRanks
- Unlock hedge fund-level data and powerful investing tools for smarter, sharper decisions
- Discover top-performing stock ideas and upgrade to a portfolio of market leaders with Smart Investor Picks
New York Mortgage Trust’s latest earnings call painted a picture of a company in the middle of a major pivot, but one that is already paying off in earnings, book value and total return. Management acknowledged some near-term growing pains from integration costs and spread compression, yet stressed that 2025’s expansion has set the stage for stronger, more durable earnings in 2026 and beyond.
Portfolio Expansion Anchored in Agency RMBS
New York Mortgage Trust dramatically reshaped its balance sheet in 2025, expanding the investment portfolio by $3.1 billion and leaning heavily into Agency RMBS. The Agency book roughly doubled to $6.6 billion, now 63% of the portfolio and 56% of equity, underscoring a strategic shift toward more liquid, lower‑credit‑risk assets.
Robust Earnings Growth and Higher Dividend
Earnings available for distribution jumped 44% year over year, reflecting a sharp step‑up in profitability as the new strategy took hold. GAAP net income reached $41.6 million, or $0.46 per share, in Q4, helping push full‑year net income above $100 million and allowing the company to raise its common dividend by 15%.
Book Value Gains and Full Dividend Coverage
Book value trends underscored capital strength, with GAAP book value up 4.3% and adjusted book value up 2.4% in Q4. Quarterly EAD of $0.23 per share fully covered the dividend, and management noted adjusted book value is already up roughly 3%–4% entering 2026, suggesting continued momentum.
Improved Returns and Stable Net Interest Spread
For 2025, the company generated a 12.72% economic return on GAAP book value and 11.01% on adjusted book, solid figures in a volatile rate backdrop. Adjusted net interest income climbed to $46.3 million in Q4 from $42.8 million in Q3, while the net interest spread held steady at 152 basis points, showing resilience in core earnings power.
Constructive Acquisition Scaling Origination Platform
The acquisition of Constructive is rapidly turning New York Mortgage Trust into a scaled originator of business‑purpose rental loans. Constructive originated $1.8 billion of loans in 2025, including a record $474 million in Q4, with 93% of volume in BPL‑Rental products that match NYMT’s credit criteria.
Growing BPL-Rental Book with Strong Credit Metrics
The BPL‑Rental portfolio nearly doubled over the year, rising from $770 million to $1.4 billion as the company leaned into this higher‑yielding strategy. Borrower quality remains solid, with an average FICO score around 748, loan‑to‑value near 71%, a 1.36x DSCR and delinquencies at just 1.4%, supporting the risk‑reward profile.
Enhanced Liquidity and Balance-Sheet Flexibility
Liquidity remains a key pillar, with year‑end cash of $206 million and total liquidity capacity of about $420 million. By issuing longer‑dated unsecured notes and redeeming near‑term obligations, New York Mortgage Trust now faces no corporate debt maturities for three years, improving its funding runway and strategic flexibility.
Shareholder Returns and Perceived Market Mispricing
Investors who stayed the course were rewarded with a 36% cumulative total stockholder return in 2025 alongside book value growth. Even so, shares still traded at roughly a 31% discount to book value at year‑end, which management views as a mispricing and upside opportunity if execution continues.
Modest Sequential EAD Dip and J-Curve Effect
Quarterly EAD ticked down by $0.01 to $0.23 per share, a small pullback that management attributed to a J‑curve effect from scaling Constructive. The company framed this as a temporary drag driven by integration and upfront costs, rather than a sign of structural pressure on long‑term earnings capacity.
Constructive Losses Reflect Integration and Setup Costs
Constructive posted $12.5 million of mortgage banking income in Q4 but still showed a $2 million stand‑alone loss as integration expenses weighed. Direct origination costs of $4.3 million, $10.2 million in direct G&A and higher repurchase reserves hit results, and some of these integration‑related costs are expected to linger into early 2026.
Credit Losses and Legacy Asset Cleanup
The company recorded $14.9 million of realized losses in Q4, largely tied to discounted payoffs and resolutions of nonperforming residential loans. Valuation write‑downs on foreclosed properties, particularly in the BPL‑Bridge book, also contributed, signaling ongoing cleanup of legacy or lower‑return positions.
Spread Compression Slows Non-Agency Deployment
Non‑Agency and non‑QM AAA spreads tightened over the quarter, making new acquisitions less attractive and causing the firm to slow its deployment pace. Agency current‑coupon spreads also narrowed by about 16 basis points, from 126 to 110, leading management to moderate purchases and stay disciplined on pricing.
Contracting BPL-Bridge Book Amid Tough Competition
The BPL‑Bridge portfolio shrank from $1.2 billion to $820 million over 2025, as competitive pressure and lower available yields eroded risk‑adjusted returns. Management expects this book to keep contracting in 2026, reflecting a deliberate shift away from segments where the company cannot earn adequate spreads.
Persistent Market Valuation Disconnect
Despite portfolio growth and stronger earnings, the market continues to value New York Mortgage Trust at a steep discount to underlying assets. At year‑end, the share price implied a roughly 31% discount to book and about a 14% discount to Agency capital alone, effectively assigning minimal value to the non‑Agency and multifamily assets and the origination franchise.
Higher-Cost Long-Term Funding Trade-Off
To extend its maturity profile, the company recently issued $90 million of 9.25% senior unsecured notes due 2031, replacing $100 million of 5.75% notes. While this move removes near‑term refinancing risk, it comes at the cost of higher interest expense on that tranche, reflecting the balance between safety and funding cost.
Forward Guidance Points to Constructive-Led Growth
Looking ahead, management expects Constructive to shift from integration to full production and become a positive contributor to EAD as early as Q1 2026. They aim to keep expanding Agency RMBS to 60%–70% of equity, maintain strong liquidity and leverage metrics, and target mid‑ to high‑teens returns in core strategies while supporting a sustainable dividend.
New York Mortgage Trust’s call underscored a company leaning into scale, credit discipline and balance‑sheet strength, even as it absorbs integration and funding costs. For investors, the story is one of rising earnings power, better asset quality and a sizeable discount to book that could narrow if management delivers on its 2026 outlook.