Adamas Trust, Inc. · NASDAQ:ADAM
Adamas Trust — New York Mortgage Trust — Friedman Billings Ramsey 11th Annual Investor Conference 2004
26 slides from Adamas Trust's conference presentation, Nov 30, 2004
Slide 1: Investor Presentation
INVESTOR PRESENTATION Friedman Billings Ramsey 11th Annual Investor Conference November 30, 2004
Slide 2: Safe Harbor Statement
Safe Harbor Statement – Private Securities Litigation Reform Act of 1995 Forward Looking Information This presentation may include forward-looking statements. These forward-looking statements include comments with respect to our objectives and strategies, and the results of our operations and our bu
Slide 3: Why New York Mortgage Trust?
Why New York Mortgage Trust? Internally managed “active” residential mortgage REIT MBS Portfolio: Favorable returns using reasonable leverage and a disciplined, risk-adverse, interest rate hedging strategy The New York Mortgage Company (TRS): Rapidly growing, mortgage originator with 68 locati
Slide 4: Key Statistics
Key Statistics NYSE:NTR $135 million initial public offering June 24, 2004 $1.2 billion portfolio of mortgage backed securities & loans $6.79 book value attractive relative to peers 1.38 price to book ratio (based on Nov 26, 2004 closing price) Strong “out of the box” dividend yield • 7% (
Slide 5: Straightforward Corporate Structure
Straightforward Corporate Structure (Real Estate Investment Trust ) Mortgage Loans & Securitized Loan Portfolio Prime ARM Loans Held in Portfolio Prime ARM Loans Transferred from TRS to REIT at Cost THE NEW YORK MORTGAGE and Securitized COMPANY, LLC (Taxable REIT Subsidiary) Loans Sold Loan originat
Slide 6: Long-Term Asset Preservation & Stabilized Dividends
Long-Term Asset Preservation & Stabilized Dividends Self-origination & retention strategy • Prime retail mortgage originations through The New York Mortgage Company, a taxable REIT subsidiary (TRS) • High credit quality ARM’s will be retained; all others sold Portfolio strategy • Retained ARM’s
Slide 7: Origination Capabilities
Origination Capabilities 7
Slide 8: The New York Mortgage Company (NYMC)
The New York Mortgage Company (NYMC) NYMC is a prime retail, referral based residential lender • Consistent year-over-year originations growth, complemented by recent branch acquisitions • 68 physical locations in 14 states (at 11/26/04) • Approximately 800 employees (at 11/26/04) • Mortgage origi
Slide 9: Origination Growth Consistently Outpaces Market
Origination Growth Consistently Outpaces Market NYMC v. Industry* Origination Growth NYMC Purchase v. Refi Originations 300% 100% 250% 200% 80% 150% 60% 100% 50% 40% 0% 20% -50% 0% 2004 E 2003 2002 2001 2000 1999 02 02 03 03 03 03 04 04 04 20 E E 04 05 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q NYMC Industry Pur
Slide 10: Rapidly Growing Origination Franchise
Rapidly Growing Origination Franchise Growing Geographic Footprint States with Retail Branches 14 Strong continued 12 10 organic growth, and 8 6 4 Disciplined strategic 2 branch acquisitions 0 2002 2003 2004 Results in: States Licensed/Authorized 45 Acceleration of 40 35 self-originated portfo
Slide 11: Low Cost Branch Acquisitions - 2004
Low Cost Branch Acquisitions - 2004 Guaranty Residential Lending Branch Acquisition (Price $1.3M – asset purchase) • 15 retail branches & 25 satellite offices in Northeast and Mid-Atlantic states • 300 employees, 160 retail Loan Officers & $300M application pipeline (approx) • Current run-rate of
Slide 12: Mortgage-Backed Portfolio
Mortgage-Backed Portfolio 12
Slide 13: Portfolio Strategy
Portfolio Strategy Investment in Agency & AAA ARM loans and securities • Initial fixed periods of 5 years and shorter = manageable interest rate risk • Portfolio will be substantially comprised of self originated loans by 12/31/05 Conservative, effective hedging • Hedges, primarily swaps & caps,
Slide 14: Portfolio Loan Characteristics
Portfolio Loan Characteristics Atypically strong portfolio loan credit characteristics Disciplined approach towards loan selection Experienced in-house underwriting & credit decisions Average Loan Balance: $450,000 Average Loan to Value: 67% Average FICO: 742 Full Doc Loans: 83% Purchase Origi
Slide 15: REIT Portfolio Economics
REIT Portfolio Economics Current Market Yields Short Hybrid ARMs < 3/1 3/1 5/1 Blended Approximate Asset Allocation 58% 28% 14% Asset Yield 3.92% Borrowing Cost (Including Hedging*) 2.65% Net Interest Spread 1.27% Leverage (Debt/Equity) 11x Levered Return 14.0% Equity Yield 3.9% Gross ROE - Initial
Slide 16: Financing, Liquidity & Leverage
Financing, Liquidity & Leverage Adequate financing capacity • Warehouse Î Aggregation line Î Securitization Î Repo • Multiple counterparties, available credit ($4.0 billion in repo capacity) Liquidity assured through high-quality assets • Securitize loans into AAA assets Reasonable leverage •
Slide 17: Financial Highlights
Financial Highlights 17
Slide 18: Third Quarter 2004 Financial Highlights
Third Quarter 2004 Financial Highlights Q3 2004 Dividend: 7% ($0.16) (1st quarter after IPO ramp-up) Q4 2004 Dividend: 10%–11% estimated (1st qtr fully invested) Growing dividend as self originations replace current portfolio Loan Originations: $415 million • current quarterly run-rate $830
Slide 19: Financial Viability of TRS is not Sacrificed
Financial Viability of TRS is not Sacrificed Replacement of portfolio with self-originated loans - does not sacrifice viability of TRS or diminish book value TRS not operating at substantial losses • Avoids “double-whammy” on cash flow ◦ REIT stands alone for dividend payment ◦ No need for REIT
Slide 20: Operational & Financial Transparency
Operational & Financial Transparency Retained loans transfer to REIT at GAAP cost basis • TRS operations stand-alone; no gain-on-sale is recognized on retained loans and thus no need for gain-on-sale eliminations • Segment reporting does not obfuscate losses between REIT and TRS performance via “e
Slide 21: Operational & Financial Transparency
Operational & Financial Transparency Balanced portfolio; short duration mismatch (3 months) • “Plain vanilla” hedging of interest rate risk using interest rate swaps and caps • No “save now, pay later” structured repos – we are not taking bets on interest rates or optionality • Honest CPRs – consi
Slide 22: Management and Board
Management and Board 22
Slide 23: Management Team
Management Team Steven Schnall Chairman & Co-CEO, Director • Co-founder, President and CEO of NYMC • 15 years experience in mortgage banking David Akre Co-CEO, Director • Former VP at Thornburg Mortgage – whole loan trading, capital markets, ALCO • GE Capital Mortgage – pipeline hedging, loan se
Slide 24: Board of Directors
Board of Directors Independent Board Member Major Affiliations & Previous Positions Thomas K. White SVP of Fannie Mae, Investment Banker at Bear Stearns, EVP of National Council of State Housing Agencies Mary Dwyre Pembroke Director, Government Relations for Freddie Mac, Counsel to Senate Banking Co
Slide 25: Attractive Relative Valuation
Attractive Relative Valuation Price to Tangible Book 3.0x 2.5x 2.0x 1.5x 1.0x 0.5x 0.0x NFI IMH AHM HMB MHL RWT TMA NTR 25 Source: 10-Q filings; stock prices as of November 26, 2004
Slide 26: Why New York Mortgage Trust?
Why New York Mortgage Trust? Internally managed “active” residential mortgage REIT MBS Portfolio: Favorable returns using reasonable leverage and a disciplined, risk-adverse, interest rate hedging strategy The New York Mortgage Company (TRS): Rapidly growing, mortgage originator with 68 locati
New York Mortgage Trust — Friedman Billings Ramsey 11th Annual Investor Conference 2004 on 6ix