Steven Mumma – Chairman and Chief Executive Officer Kevin Donlon – President and Director.

Jessica Levi-Ribner – FBR Mickey Schleien – Ladenburg David Walrod – JonesTrading.

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the New York Mortgage Trust First Quarter 2017 Results Conference Call. [Operator Instructions] This conference is being recorded on Thursday, May 4, 2017. A press release with New York Mortgage Trust First Quarter 2017 Results was released yesterday.

The press release is available on the company's website at www.nymtrust.com. Additionally, we are hosting a live webcast of today's call, which you can access in the Events & Presentations section of the company's website.

At this time, management would like to -- would like me to inform you that certain statements made during the conference call, which are not historical, may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Although New York Mortgage Trust believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained.

Factors and risks that could cause actual results to differ materially from expectations are detailed in yesterday's press release and from time to time in the company's filings with the Securities and Exchange Commission. Now at this time, I would like to introduce Steve Mumma, Chairman and CEO. Steve, please go ahead..

a net realized and unrealized gain of approximately $2.6 million from our multifamily CMBS investment, a net realized loss of $900,000 from our Agency IO portfolio.

We also had net realized gains of $12 million from the sale of pool of our distressed residential loans, and we had $2.8 million of other income delivered from our multifamily investments, primarily from the unconsolidated entities or joint venture investments.

Our total general and administrative expenses for the quarter were approximately $10.2 million, up from $7.2 million for the fourth quarter of 2016. This increase was due to the increase of $1.8 million in incentive fees, which was related to the gain on sale from our distressed residential loans of $12.7 million -- of $12 million.

We also had an increase in employee compensation of approximately $800,000, which was related to the estimated increase in bonus and stock compensation from the increase in employees from the internalization of the RiverBanc employees that occurred in May of 2016, which was not included in the first quarter of 2016.

The company will continue to focus -- as we look forward, the company will continue to focus on residential and multifamily credit assets, which we will -- believe will allow us to deliver sustainable, positive economic returns over the long term, and we look forward to your continued support and speaking to you in our second quarter earnings call.

Our 10-Q will be filed on or about Wednesday, May 10th with the SEC and will be available on our website thereafter. Operator, if you can please open up for questions for Kevin and I. Thank you..

[Operator Instructions] Our first question or comment comes from the line of Jessica Levi-Ribner from FBR. Your line is open..

Good morning, thanks for taking my question..

Good morning, Jessica..

You alluded to seeing some of the demand for the assets that you're looking for kind of outstrip supply, but you did buy the first loss piece in a K-Series.

What's, kind of, the dynamics there, and what changed where you felt like you could go back into the market for that? And do you think that, that could persist in the next couple of quarters?.

Yes, so we were very active in '12 -- 2012 and 2013 in that first loss piece. We've continued to monitor the market. We felt in 2013, 2014 and 2015 that the spreads -- the yields on those assets came to levels that we thought we had better opportunities elsewhere.

As we got towards the end of 2016, we started to get -- enter the market and tried to become active again in that first loss piece. We were very close to winning an investment in the latter part of 2016, and because of that, we were awarded the opportunity to invest in a first loss piece in the first quarter of 2017.

And -- primarily because the spreads that we think -- the spreads have widened out to the point where we think it makes sense for us to get involved in that process again. We've also, in 2016, started buying other bonds and those structures, the C bond primarily, which is the bond that sits right above the first loss piece.

And so we've tried to be as active as possible in that particular instrument, which represents the balance of those investments that we made in the first quarter, would've been in that type of security. There's a very long lead time in investing in those securities, Jessica.

We committed a tremendous amount of time in review of the collateral, and so you're committing probably 90 days of work to get into a single investment. So it's a tremendous amount of work in getting those investments..

Okay, thanks for that.

And then just one on the multifamily side, if you could talk a little bit about what you're seeing in terms of loan pricing dynamics and the demand? And maybe even competition in the space that you're in?.

Sure. I'll let Kevin answer that, if that's okay..

When you say loan pricing demand, we don't do any senior loans, so everything we're doing is on the mezzanine and preferred equity. And it's competitive. I mean, you see everything from 9% to 12%.

I think we look for and we always have looked for slightly smaller deals, slightly more off-market deals to try to get the yields that we've been collecting, which right now are averaging around 12%, but it's as aggressive as ever.

I say this almost on every call, when we lose deals, we are typically losing it to common equity rather than to other mezzanine or preferred equity lenders..

A lot of cash is in the market, so a lot of people with this excess cash are just using it as equity and just putting a greater equity into deal as opposed to carving out a piece of that equity into the mezzanine level, which is where we try to participate..

Great. Okay thank you so much..

Thank you. Our next question or comment comes from the line of Mickey Schleien from Ladenburg. Your line is open..

Good morning. Just curious whether you'd be interested in investing in the Agency RMBS market should spreads widen sufficiently down the road.

And if you could give us a sense of how much those spreads would have to widen for you to get excited about that opportunity?.

I mean, we look at that market and -- 2 things at that market for us today. One, we have a Fed that's indicated they're on the move. So we have a rate environment that is, in our opinion, hard to predict.

And so while you can step in and put these investments on your book and hedge them, we just feel like the delta hedging that you're going to have to do over the life cycle of these loans as we're in a Fed environment would be difficult, and we think that we have better opportunities today in credit.

Now, that's not to say -- and in the future, if we think we can generate what we believe are predictable returns in an agency strategy, we absolutely would get back in that strategy. But today, we just don't think -- for us we think we have better opportunities in credit-related assets..

Our next question or comment comes from the line of David Walrod from JonesTrading..

A couple of questions.

First, can you give us an update on your second lien program?.

Sure. Yes, look, we continue to try to be active in that second lien program. We are about $25 million in invested assets at the end of the second -- at the end of the first quarter. It continues to roll out very slowly. We've brought on some additional originators.

We hope that, that -- we brought in a very large one that's going to start up very shortly, so we hope that's going to increase the volume. We're still dealing with the interest rate environment that has access to low first-rate funds.

We think -- again, what we've said for the last 18 months, we think that this program will be more beneficial if you got long-term rates up another -- if you got 30-year mortgage rates in the mid-to-high 4s is where we think that program will start to be significant. We have it in place. We have a process in place. We spent the money for it.

We continue to monitor it. We like the assets that we've accumulated. They're higher-yielding, lower-dollar priced assets, which we think have good credit criteria related to it. It's just a matter of getting critical mass, which we haven't done yet. So we continue to look at that model and hopeful that it will work.

But we will make an assessment at some point in '17 whether it makes sense to continue to pursue it..

You mentioned that you had about $100 million settled at the end of the quarter.

Would you say, as of the end of the quarter, that you could -- you're fully deployed? Or do you still have more dry powder?.

Yes. No, I mean, look, if we -- in a fully levered, balance sheet, I mean, if you look at our capital allocation tables, we have just slightly below $2 billion in assets. And depending on the make of those assets, we could go up to $2.3 billion to $2.4 billion in credit-like assets.

And if it was first loss pieces, it would probably be less than -- it would probably be closer to $2.3 billion, and if it's not first loss but other assets, closer to $2.4 billion. But yes, I think we can add between $250 million and $400 million more in assets without increasing equity and having sufficient liquidity in the balance sheet to do so..

Great.

And then my last question is just on your -- the pipeline for asset sales, how should we think about that for the next couple of quarters?.

We've spent a lot of time in 2016 discussing with our manager on how important it is to have routine sales, and we feel pretty comfortable that we have a good pipeline of sales in place today that we'd like to see sales. We're expecting to see sales every quarter this year..

[Operator Instructions] Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone have a wonderful day..