Ready Capital Corporation Announces Second Quarter 2019 Results – Wire Real Estate

Ready Capital Corporation Announces Second Quarter 2019 Results




Aug 8, 2019

Wire.RealEstate powered by Google



NEW YORK,- Ready Capital Corporation (“Ready Capital” or the “Company”) (NYSE: RC), a multi-strategy real estate finance company that originates, acquires, finances, and services small- to medium-sized balance commercial loans, today reported financial results for the quarter ended June 30, 2019. A summary of Ready Capital’s operating results for the quarter ended June 30, 2019 is presented below. Ready Capital reported U.S. GAAP Net Income for the three months ended June 30, 2019 of $11.2 million, or $0.25 per share of common stock, and Core Earnings (a non-GAAP financial measure) of $16.8 million, or $0.37 per share of common stock.

  Second Quarter Highlights:

  • U.S. GAAP Net Income of $11.2 million, or $0.25 per diluted share of common stock
  • Core Earnings of $16.8 million, or $0.37 per diluted share of common stock
  • Adjusted net book value of $16.35 per share of common stock as of June 30, 2019
  • Originated $419.6 million and acquired $362.2 million of small balance commercial (“SBC”) loans
  • Originated $53.7 million of loans guaranteed by the U.S. Small Business Administration (the “SBA”) under its Section 7(a) loan program
  • Originated $518.2 million of residential mortgage loans
  • Declared and paid dividend of $0.40 per share
  • Subsequent to quarter end, completed the issuance of $57.5 million in aggregate principal of 6.20% Senior Notes due 2026

Use of Non-GAAP Financial Information

In addition to the results presented in accordance with U.S. GAAP, this press release includes Core Earnings which is a non-U.S. GAAP financial measure. The Company defines Core Earnings as net income adjusted for unrealized gains and losses related to certain mortgage backed securities, realized gains and losses on sales of certain MBS, unrealized gains and losses related to residential mortgage servicing rights, and one-time non-recurring gains or losses, such as gains or losses on discontinued operations, bargain purchase gains or merger related expenses.

The Company believes that providing investors with this non-U.S. GAAP financial information, in addition to the related U.S. GAAP measures, gives investors greater transparency into the information used by management in its financial and operational decision-making. However, because Core Earnings is an incomplete measure of the Company’s financial performance and involves differences from net income computed in accordance with U.S. GAAP, it should be considered along with, but not as an alternative to, the Company’s net income computed in accordance with U.S. GAAP as a measure of the Company’s financial performance. In addition, because not all companies use identical calculations, the Company’s presentation of Core Earnings may not be comparable to other similarly-titled measures of other companies.

In calculating Core Earnings, Net Income (in accordance with GAAP) is adjusted to exclude unrealized gains and losses on MBS acquired by the Company in the secondary market, but is not adjusted to exclude unrealized gains and losses on MBS retained by Ready Capital as part of its loan origination businesses, where the Company transfers originated loans into an MBS securitization and the Company retains an interest in the securitization. In calculating Core Earnings, the Company does not adjust Net Income (in accordance with GAAP) to take into account unrealized gains and losses on MBS retained by us as part of the loan origination businesses because the unrealized gains and losses that are generated in the loan origination and securitization process are considered to be a fundamental part of this business and an indicator of the ongoing performance and credit quality of the Company’s historical loan originations. In calculating Core Earnings, Net Income (in accordance with GAAP) is adjusted to exclude realized gains and losses on certain MBS securities considered to be non-core.  Certain MBS positions are considered to be non-core due to a variety of reasons which may include collateral type, duration, and size.

In addition, in calculating Core Earnings, Net Income (in accordance with GAAP) is adjusted to exclude unrealized gains or losses on residential MSRs, held at fair value.  The Company treats its commercial MSRs and residential MSRs as two separate classes based on the nature of the underlying mortgages and the treatment of these assets as two separate pools for risk management purposes.  Servicing rights relating to the Company’s small business commercial business are accounted for under ASC 860, Transfer and Servicing, while the Company’s residential MSRs are accounted for under the fair value option under ASC 825, Financial Instruments.  In calculating Core Earnings, the Company does not exclude realized gains or losses on either commercial MSRs or Residential MSRs, held at fair value, as servicing income is a fundamental part of Ready Capital’s business and as an indicator of the ongoing performance.

The following table reconciles net income computed in accordance with U.S. GAAP to Core Earnings for the three months ended June 30, 2019:

     
   

Three Months Ended

(In Thousands)

 

June 30, 2019

Net Income

$

11,245

Reconciling items:

   

Unrealized loss on mortgage-backed securities

 

106

Unrealized loss on mortgage servicing rights

 

6,339

Merger transaction costs

 

603

Non-recurring expenses

 

67

Total reconciling items

$

7,115

Core earnings before income taxes

$

18,360

      Income tax adjustments

 

(1,585)

Core earnings

$

16,775

U.S. GAAP Return on Equity is based on U.S. GAAP Net Income, while Core Return on Equity is based on Core Earnings, which adjusts GAAP Net Income for the items in the Core reconciliation above.

Webcast and Earnings Conference Call

Management will host a webcast and conference call on Thursday, August 8, 2019 at 8:30 am ET to provide a general business update and discuss the financial results for the quarter ended June 30, 2019. A webcast will be available on the Company’s website at www.readycapital.com. To listen to a live broadcast, access the site at least 15 minutes prior to the scheduled start time in order to register and download and install any necessary audio software.

To Participate in the Telephone Conference Call:

Dial in at least five minutes prior to start time.

Domestic: 1-855-327-6838
International: 1-604-638-5340 
Conference ID #: 13689763

Conference Call Playback:

Domestic: 1-844-512-2921
International: 1-412-317-6671 
Replay Pin #: 10007329

The playback can be accessed through August 22, 2019.

Safe Harbor Statement

This press release contains statements that constitute forward-looking statements,” as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and such statements are intended to be covered by the safe harbor provided by the same. These statements are based on management’s current expectations and beliefs and are subject to a number of trends and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements; the Company can give no assurance that its expectations will be attained. Factors that could cause actual results to differ materially from the Company’s expectations include, but are not limited to, applicable regulatory changes; general volatility of the capital markets; changes in the Company’s investment objectives and business strategy; the availability of financing on acceptable terms or at all; the availability, terms and deployment of capital; the availability of suitable investment opportunities; changes in the interest rates or the general economy; increased rates of default and/or decreased recovery rates on investments; changes in interest rates, interest rate spreads, the yield curve or prepayment rates; changes in prepayments of Company’s assets; the degree and nature of competition, including competition for the Company’s target assets; and other factors, including those set forth in the Risk Factors section of the Company’s most recent Annual Report on Form 10-K filed with the SEC, and other reports filed by the Company with the SEC, copies of which are available on the SEC’s website, www.sec.gov. The Company undertakes no obligation to update these statements for revisions or changes after the date of this release, except as required by law.

About Ready Capital Corporation

Ready Capital Corporation (NYSE: RC) is a multi-strategy real estate finance company that originates, acquires, finances and services small- to medium-sized balance commercial loans. Ready Capital specializes in loans backed by commercial real estate, including agency multifamily, investor and bridge as well as SBA 7(a) business loans. Headquartered in New York, New York, Ready Capital employs over 400 lending professionals nationwide. The company is externally managed and advised by Waterfall Asset Management, LLC.

Contact 
Investor Relations 
Ready Capital Corporation
212-257-4666 
InvestorRelations@readycapital.com 

Additional information can be found on the Company’s website at www.readycapital.com


 

READY CAPITAL CORPORATION

UNAUDITED CONSOLIDATED BALANCE SHEETS

 
             

(In Thousands)

 

June 30, 2019

 

December 31, 2018

Assets

           

Cash and cash equivalents

 

$

41,925

 

$

54,406

Restricted cash

   

38,019

   

28,921

Loans, net (including $20,409 and $22,664 held at fair value)

   

1,002,676

   

1,193,392

Loans, held for sale, at fair value

   

177,507

   

115,258

Mortgage backed securities, at fair value

   

99,407

   

91,937

Loans eligible for repurchase from Ginnie Mae

   

69,101

   

74,180

Investment in unconsolidated joint ventures

   

47,551

   

33,438

Derivative instruments

   

3,670

   

2,070

Servicing rights (including $85,658 and $93,065 held at fair value)

   

114,761

   

120,062

Receivable from third parties

   

2,763

   

8,888

Real estate acquired in settlement of loans, held for sale

   

65,834

   

7,787

Other assets

   

68,399

   

55,447

Assets of consolidated VIEs

   

2,108,710

   

1,251,057

Total Assets

 

$

3,840,323

 

$

3,036,843

Liabilities

           

Secured borrowings

   

988,868

   

834,547

Securitized debt obligations of consolidated VIEs, net

   

1,567,113

   

905,367

Convertible notes, net

   

110,506

   

109,979

Senior secured notes, net

   

179,086

   

178,870

Corporate debt, net

   

48,795

   

48,457

Guaranteed loan financing

   

28,445

   

229,678

Liabilities for loans eligible for repurchase from Ginnie Mae

   

69,101

   

74,180

Derivative instruments

   

9,032

   

3,625

Dividends payable

   

18,292

   

13,346

Accounts payable and other accrued liabilities

   

73,679

   

74,719

Total Liabilities

 

$

3,092,917

 

$

2,472,768

Stockholders’ Equity

           

Common stock, $0.0001 par value, 500,000,000 shares authorized, 44,415,479 and 32,105,112 
shares issued and outstanding, respectively

   

4

   

3

Additional paid-in capital

   

720,812

   

540,478

Retained earnings

   

14,914

   

5,272

Accumulated other comprehensive loss

   

(7,703)

   

(922)

Total Ready Capital Corporation equity

   

728,027

   

544,831

Non-controlling interests

   

19,379

   

19,244

Total Stockholders’ Equity

 

$

747,406

 

$

564,075

Total Liabilities and Stockholders’ Equity

 

$

3,840,323

 

$

3,036,843

READY CAPITAL CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

 
                           
   

Three Months Ended June 30, 

 

Six Months Ended June 30, 

 

(In Thousands, except share data)

 

2019

 

2018

 

2019

 

2018

 

Interest income

 

$

57,034

 

$

41,858

 

$

105,787

 

$

79,007

 

Interest expense

   

(35,753)

   

(26,407)

   

(71,529)

   

(49,071)

 

Net interest income before provision for loan losses

 

$

21,281

 

$

15,451

 

$

34,258

 

$

29,936

 

Provision for loan losses

   

(1,348)

   

397

   

(1,866)

   

229

 

Net interest income after provision for loan losses

 

$

19,933

 

$

15,848

 

$

32,392

 

$

30,165

 

Non-interest income

                         

Residential mortgage banking activities

   

21,021

   

17,255

   

35,608

   

31,279

 

Net realized gain on financial instruments and real estate owned

   

6,255

   

8,620

   

13,537

   

20,851

 

Net unrealized gain (loss) on financial instruments

   

(7,006)

   

4,457

   

(13,918)

   

7,464

 

Servicing income, net of amortization and impairment of $853 and $2,616 for 
the three and six months ended June 30, 2019, and $1,229 and $2,580 for the 
three and six months ended June 30, 2018, respectively

   

7,811

   

6,627

   

14,563

   

13,037

 

Other income

   

2,792

   

1,826

   

3,692

   

3,160

 

Income on unconsolidated joint ventures

   

2,083

   

1,503

   

5,012

   

7,243

 

Gain on bargain purchase

   

   

   

30,728

   

 

Total non-interest income

 

$

32,956

 

$

40,288

   

89,222

   

83,034

 

Non-interest expense

                         

Employee compensation and benefits

   

(12,509)

   

(14,272)

   

(23,957)

   

(29,592)

 

Allocated employee compensation and benefits from related party

   

(1,250)

   

(1,200)

   

(2,103)

   

(2,400)

 

Variable expenses on residential mortgage banking activities

   

(13,501)

   

(7,493)

   

(22,677)

   

(9,783)

 

Professional fees

   

(1,586)

   

(2,401)

   

(3,415)

   

(5,049)

 

Management fees – related party

   

(2,495)

   

(2,036)

   

(4,492)

   

(4,049)

 

Incentive fees – related party

   

   

(269)

   

   

(676)

 

Loan servicing expense

   

(4,571)

   

(3,000)

   

(8,219)

   

(7,093)

 

Merger related expenses

   

(603)

   

   

(6,070)

   

 

Other operating expenses

   

(8,085)

   

(8,916)

   

(14,947)

   

(16,927)

 

Total non-interest expense

 

$

(44,600)

 

$

(39,587)

 

$

(85,880)

 

$

(75,569)

 

Income before provision for income taxes

 

$

8,289

 

$

16,549

 

$

35,734

 

$

37,630

 

Provision for income (taxes) benefit

   

2,956

   

(665)

   

5,959

   

(3,228)

 

Net income

 

$

11,245

 

$

15,884

 

$

41,693

 

$

34,402

 

Less: Net income attributable to non-controlling interest

   

276

   

588

   

1,257

   

1,252

 

Net income attributable to Ready Capital Corporation

 

$

10,969

 

$

15,296

 

$

40,436

 

$

33,150

 
                           

Earnings per common share – basic

 

$

0.25

 

$

0.48

 

$

1.05

 

$

1.03

 

Earnings per common share – diluted

 

$

0.25

 

$

0.48

 

$

1.05

 

$

1.03

 
                           

Weighted-average shares outstanding

                         

Basic

   

44,425,598

   

32,073,717

   

38,524,023

   

32,055,110

 

Diluted

   

44,431,263

   

32,092,750

   

38,527,317

   

32,069,499

 
                           

Dividends declared per share of common stock

 

$

0.40

 

$

0.40

 

$

0.80

 

$

0.77

 

READY CAPITAL CORPORATION

 UNAUDITED SEGMENT REPORTING

FOR THE THREE MONTHS ENDED JUNE 30, 2019

 
                                     
           

SBA Originations,

 

Residential

       
   

Loan

 

SBC

 

Acquisitions,

 

Mortgage

 

Corporate-

   

(In Thousands)

 

Acquisitions

 

Originations

 

and Servicing

 

Banking

 

Other

 

Consolidated

Interest income

 

$

18,208

 

$

30,639

 

$

7,124

 

$

1,063

 

$

 

$

57,034

Interest expense

   

(10,602)

   

(21,401)

   

(2,300)

   

(1,450)

   

   

(35,753)

Net interest income before provision for loan losses

 

$

7,606

 

$

9,238

 

$

4,824

 

$

(387)

 

$

 

$

21,281

Provision for loan losses

   

(544)

   

(350)

   

(454)

   

   

   

(1,348)

Net interest income after provision for loan losses

 

$

7,062

 

$

8,888

 

$

4,370

 

$

(387)

 

$

 

$

19,933

Non-interest income

                                   

Residential mortgage banking activities

 

$

 

$

 

$

 

$

21,021

 

$

 

$

21,021

Net realized gain on financial instruments

   

453

   

1,627

   

4,175

   

   

   

6,255

Net unrealized gain on financial instruments

   

(661)

   

(76)

   

71

   

(6,340)

   

   

(7,006)

Other income

   

957

   

1,661

   

39

   

85

   

50

   

2,792

Servicing income

   

   

461

   

1,818

   

5,532

   

   

7,811

Income from unconsolidated joint ventures

   

2,083

   

   

   

   

   

2,083

Gain on bargain purchase

   

   

   

   

   

   

Total non-interest income

 

$

2,832

 

$

3,673

 

$

6,103

 

$

20,298

 

$

50

 

$

32,956

Non-interest expense

                                   

Employee compensation and benefits

   

(26)

   

(1,774)

   

(4,424)

   

(5,445)

   

(840)

   

(12,509)

Allocated employee compensation and benefits from 
related party

   

(125)

   

   

   

   

(1,125)

   

(1,250)

Variable expenses on residential mortgage banking 
activities

   

   

   

   

(13,501)

   

   

(13,501)

Professional fees

   

(47)

   

(313)

   

(169)

   

(229)

   

(828)

   

(1,586)

Management fees – related party

   

   

   

   

   

(2,495)

   

(2,495)

Loan servicing expense

   

(1,117)

   

(1,475)

   

(260)

   

(1,677)

   

(42)

   

(4,571)

Merger related expenses

   

   

   

   

   

(603)

   

(603)

Other operating expenses

   

(882)

   

(2,712)

   

(2,076)

   

(2,054)

   

(361)

   

(8,085)

Total non-interest expense

 

$

(2,197)

 

$

(6,274)

 

$

(6,929)

 

$

(22,906)

 

$

(6,294)

 

$

(44,600)

Net income (loss) before provision for income taxes

 

$

7,697

 

$

6,287

 

$

3,544

 

$

(2,995)

 

$

(6,244)

 

$

8,289

Total assets

 

$

1,158,351

 

$

2,055,751

 

$

261,326

 

$

303,465

 

$

61,430

 

$

3,840,323

READY CAPITAL CORPORATION

 UNAUDITED SEGMENT REPORTING

FOR THE SIX MONTHS ENDED JUNE 30, 2019

 
                                     
           

SBA Originations,

 

Residential

       
   

Loan

 

SBC

 

Acquisitions,

 

Mortgage

 

Corporate-

   

(In Thousands)

 

Acquisitions

 

Originations

 

and Servicing

 

Banking

 

Other

 

Consolidated

Interest income

 

$

28,881

 

$

58,828

 

$

16,233

 

$

1,845

 

$

 

$

105,787

Interest expense

   

(18,307)

   

(42,068)

   

(8,790)

   

(2,364)

   

   

(71,529)

Net interest income before provision for loan losses

 

$

10,574

 

$

16,760

 

$

7,443

 

$

(519)

 

$

 

$

34,258

Provision for loan losses

   

(677)

   

(309)

   

(880)

   

   

   

(1,866)

Net interest income after provision for loan losses

 

$

9,897

 

$

16,451

 

$

6,563

 

$

(519)

 

$

 

$

32,392

Non-interest income

                                   

Residential mortgage banking activities

 

$

 

$

 

$

 

$

35,608

 

$

 

$

35,608

Net realized gain on financial instruments

   

404

   

5,167

   

7,966

   

   

   

13,537

Net unrealized gain on financial instruments

   

(680)

   

734

   

(504)

   

(13,468)

   

   

(13,918)

Other income

   

1,025

   

2,447

   

53

   

102

   

65

   

3,692

Servicing income

   

1

   

897

   

2,833

   

10,832

   

   

14,563

Income from unconsolidated joint ventures

   

5,012

   

   

   

   

   

5,012

Gain on bargain purchase

   

   

   

   

   

30,728

   

30,728

Total non-interest income

 

$

5,762

 

$

9,245

 

$

10,348

 

$

33,074

 

$

30,793

 

$

89,222

Non-interest expense

                                   

Employee compensation and benefits

   

(27)

   

(4,034)

   

(8,192)

   

(10,040)

   

(1,664)

   

(23,957)

Allocated employee compensation and benefits from 
related party

   

(210)

   

   

   

   

(1,893)

   

(2,103)

Variable expenses on residential mortgage banking 
activities

   

   

   

   

(22,677)

   

   

(22,677)

Professional fees

   

(217)

   

(614)

   

(356)

   

(465)

   

(1,763)

   

(3,415)

Management fees – related party

   

   

   

   

   

(4,492)

   

(4,492)

Incentive fees – related party

   

   

   

   

   

   

Loan servicing expense

   

(1,918)

   

(2,690)

   

(117)

   

(3,417)

   

(77)

   

(8,219)

Merger related expenses

   

   

   

   

   

(6,070)

   

(6,070)

Other operating expenses

   

(1,304)

   

(4,829)

   

(3,126)

   

(4,127)

   

(1,561)

   

(14,947)

Total non-interest expense

 

$

(3,676)

 

$

(12,167)

 

$

(11,791)

 

$

(40,726)

 

$

(17,520)

 

$

(85,880)

Net income (loss) before provision for income taxes

 

$

11,983

 

$

13,529

 

$

5,120

 

$

(8,171)

 

$

13,273

 

$

35,734

Total assets

 

$

1,158,351

 

$

2,055,751

 

$

261,326

 

$

303,465

 

$

61,430

 

$

3,840,323

Tags:

See Campaign: https://readycapital.com
Contact Information:
Ready Capital Corporation

Tags:
, Wire, Wire Real Estate, South America, United States, English