Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2022 | Aug. 05, 2022 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Jun. 30, 2022 | |
Entity File Number | 001-35808 | |
Entity Registrant Name | READY CAPITAL CORPORATION | |
Entity Incorporation, State or Country Code | MD | |
Entity Tax Identification Number | 90-0729143 | |
Entity Address, Address Line One | 1251 Avenue of the Americas, 50th Floor | |
Entity Address, City or Town | New York | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 10020 | |
City Area Code | 212 | |
Local Phone Number | 257-4600 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 114,403,087 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q2 | |
Entity Central Index Key | 0001527590 | |
Amendment Flag | false | |
Common Stock | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Common Stock, $0.0001 par value per share | |
Trading Symbol | RC | |
Security Exchange Name | NYSE | |
Preferred Stock, 6.25% Series C Cumulative Convertible, par value $0.0001 per share | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Preferred Stock, 6.25% Series C Cumulative Convertible, par value $0.0001 per share | |
Trading Symbol | RC PRC | |
Security Exchange Name | NYSE | |
Preferred Stock, 6.50% Series E Cumulative Redeemable, par value $0.0001 per share | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Preferred Stock, 6.50% Series E Cumulative Redeemable, par value $0.0001 per share | |
Trading Symbol | RC PRE | |
Security Exchange Name | NYSE | |
7.00% Convertible Senior Notes due 2023 | ||
Document Information [Line Items] | ||
Title of 12(b) Security | 7.00% Convertible Senior Notes due 2023 | |
Trading Symbol | RCA | |
Security Exchange Name | NYSE | |
6.20% Senior Notes due 2026 | ||
Document Information [Line Items] | ||
Title of 12(b) Security | 6.20% Senior Notes due 2026 | |
Trading Symbol | RCB | |
Security Exchange Name | NYSE | |
5.75% Senior Notes Due 2026 | ||
Document Information [Line Items] | ||
Title of 12(b) Security | 5.75% Senior Notes due 2026 | |
Trading Symbol | RCC | |
Security Exchange Name | NYSE |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Assets | ||
Cash and cash equivalents | $ 127,939 | |
Restricted cash | 64,746 | |
Loans, net (including $9,956 and $10,766 held at fair value) | 3,907,321 | $ 2,915,446 |
Loans, held-for-sale, at fair value | 469,442 | 552,935 |
Paycheck Protection Program loans (including $763 and $3,243 held at fair value) | 389,189 | 870,352 |
Mortgage backed securities, at fair value | 40,648 | 99,496 |
Loans eligible for repurchase from Ginnie Mae | 54,784 | 94,111 |
Investment in unconsolidated joint ventures (including $8,430 and $8,894 held at fair value) | 224,220 | 141,148 |
Purchased future receivables, net | 8,704 | 7,872 |
Derivative instruments | 46,530 | 7,022 |
Servicing rights (including $168,653 and $120,142 held at fair value) | 253,511 | 204,599 |
Real estate owned, held for sale | 119,557 | 42,288 |
Other assets | 183,887 | 172,098 |
Total Assets | 11,937,315 | 9,534,031 |
Liabilities | ||
Paycheck Protection Program Liquidity Facility (PPPLF) borrowings | 427,759 | 941,505 |
Convertible notes, net | 113,818 | 113,247 |
Senior secured notes, net | 342,469 | 342,035 |
Corporate debt, net | 565,230 | 441,817 |
Guaranteed loan financing | 304,158 | 345,217 |
Contingent consideration | 92,548 | 16,400 |
Liabilities for loans eligible for repurchase from Ginnie Mae | 54,784 | 94,111 |
Derivative instruments | 1,303 | 410 |
Dividends payable | 51,185 | 34,348 |
Loan participations sold | 53,544 | |
Due to third parties | 24,737 | 668 |
Accounts payable and other accrued liabilities | 189,182 | 183,411 |
Total Liabilities | 9,966,889 | 8,245,072 |
Preferred stock Series C liquidation preference, $25.00 per share (refer to Note 21) | 8,361 | 8,361 |
Commitments and contingencies (refer to Note 25) | ||
Stockholders' Equity | ||
Preferred stock Series E, liquidation preference $25.00 per share (refer to Note 21) | 111,378 | 111,378 |
Common stock, $0.0001 par value, 500,000,000 shares authorized, 114,375,070 and 75,838,050 shares issued and outstanding, respectively | 11 | 8 |
Additional paid-in capital | 1,723,580 | 1,161,853 |
Retained earnings (deficit) | 27,298 | 8,598 |
Accumulated other comprehensive loss | (2,815) | (5,733) |
Total Ready Capital Corporation equity | 1,859,452 | 1,276,104 |
Non-controlling interests | 102,613 | 4,494 |
Total Stockholders' Equity | 1,962,065 | 1,280,598 |
Total Liabilities, Redeemable Preferred Stock, and Stockholders' Equity | 11,937,315 | 9,534,031 |
Consolidated Excluding VIEs | ||
Assets | ||
Cash and cash equivalents | 127,939 | 229,531 |
Restricted cash | 64,746 | 51,569 |
Loans, net (including $9,956 and $10,766 held at fair value) | 3,907,321 | 2,915,446 |
Investments held to maturity (including $9,601 held at fair value) | 50,618 | |
Other assets | 183,887 | 172,098 |
Liabilities | ||
Secured borrowings | 3,212,383 | 2,517,600 |
Consolidated VIEs | ||
Assets | ||
Assets of consolidated VIEs | 5,996,219 | 4,145,564 |
Liabilities | ||
Secured borrowings | $ 4,533,789 | $ 3,214,303 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Parenthetical information | ||
Loans, net, held at fair value | $ 9,956 | $ 10,766 |
Paycheck Protection Program loans, held at fair value | 763 | 3,243 |
Investment in unconsolidated joint ventures, held at fair value | 8,430 | 8,894 |
Investments held to maturity, held at fair value | 9,601 | |
Servicing rights held at fair value | $ 168,653 | $ 120,142 |
Preferred stock Series C, liquidation preference | $ 25 | $ 25 |
Preferred stock Series E liquidation preference | 25 | 25 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, authorized capital | 500,000,000 | 500,000,000 |
Common stock, issued | 114,375,070 | 75,838,050 |
Common stock, outstanding | 114,375,070 | 75,838,050 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
CONSOLIDATED STATEMENTS OF INCOME | ||||
Interest income | $ 153,671 | $ 103,047 | $ 278,076 | $ 176,418 |
Interest expense | (80,827) | (55,415) | (141,844) | (106,176) |
Net interest income before recovery of (provision for) loan losses | 72,844 | 47,632 | 136,232 | 70,242 |
Recovery of (provision for) loan losses | 4,390 | (5,517) | 2,848 | (5,509) |
Net interest income after recovery of (provision for) loan losses | 77,234 | 42,115 | 139,080 | 64,733 |
Non-interest income | ||||
Residential mortgage banking activities | 2,947 | 36,690 | 11,371 | 78,099 |
Net realized gains on financial instruments and real estate owned | 21,114 | 17,183 | 29,121 | 26,029 |
Net unrealized gain (loss) on financial instruments | (3,253) | 4,612 | 42,062 | 25,608 |
Servicing income, net of amortization and impairment of $5,660 and $9,005 for the three and six months ended June 30, 2022, and $2,604 and $4,546 for three and six months ended June 30, 2021, respectively | 14,565 | 11,928 | 25,093 | 27,563 |
Income on purchased future receivables, net of allowance for (recovery of) doubtful accounts of ($565) and ($440) for the three and six months ended June 30, 2022, and $587 and $1,540 for three and six months ended June 30, 2021, respectively | 1,859 | 2,779 | 4,328 | 5,096 |
Income (loss) on unconsolidated joint ventures | 5,200 | 3,361 | 11,763 | 2,552 |
Other income (loss) | 8,334 | (688) | 14,835 | (117) |
Total non-interest income | 50,766 | 75,865 | 138,573 | 164,830 |
Non-interest expense | ||||
Employee compensation and benefits | (26,089) | (24,270) | (54,057) | (47,047) |
Allocated employee compensation and benefits from related party | (1,804) | (3,299) | (4,804) | (5,422) |
Variable income (expenses) on residential mortgage banking activities | 4,532 | (21,421) | 3,553 | (36,906) |
Professional fees | (3,851) | (2,872) | (8,977) | (5,854) |
Management fees - related party | (5,465) | (2,626) | (8,661) | (5,319) |
Incentive fees - related party | (286) | (286) | ||
Loan servicing expense | (10,296) | (6,851) | (19,216) | (12,955) |
Transaction related expenses | (1,372) | (1,266) | (7,071) | (7,573) |
Other operating expenses | (14,372) | (17,190) | (27,025) | (32,674) |
Total non-interest expense | (58,717) | (80,081) | (126,258) | (154,036) |
Income before provision for income taxes | 69,283 | 37,899 | 151,395 | 75,527 |
Income tax provision | (10,318) | (6,995) | (28,167) | (15,676) |
Net income | 58,965 | 30,904 | 123,228 | 59,851 |
Less: Dividends on preferred stock | 1,999 | 3,224 | 3,998 | 3,505 |
Less: Net income attributable to non-controlling interest | 2,874 | 444 | 3,649 | 1,103 |
Net income attributable to Ready Capital Corporation | $ 54,092 | $ 27,236 | $ 115,581 | $ 55,243 |
Earnings (loss) per basic common share | ||||
Earnings per common share - basic | $ 0.47 | $ 0.38 | $ 1.13 | $ 0.85 |
Earnings (loss) per diluted common share | ||||
Earnings per common share - diluted | $ 0.45 | $ 0.38 | $ 1.07 | $ 0.85 |
Weighted-average shares outstanding | ||||
Basic | 114,359,026 | 71,221,806 | 101,106,777 | 64,059,509 |
Diluted | 125,065,492 | 71,385,603 | 111,803,431 | 64,209,934 |
Dividends declared per share of common stock | $ 0.42 | $ 0.42 | $ 0.84 | $ 0.82 |
CONSOLIDATED STATEMENTS OF IN_2
CONSOLIDATED STATEMENTS OF INCOME (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
CONSOLIDATED STATEMENTS OF INCOME | ||||
Servicing income, amortization and impairment | $ 5,660 | $ 2,604 | $ 9,005 | $ 4,546 |
Income on purchased future receivable, allowance for (recovery of) doubtful accounts | $ (565) | $ 587 | $ (440) | $ 1,540 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Net income | $ 58,965 | $ 30,904 | $ 123,228 | $ 59,851 |
Other comprehensive income (loss) - net change by component | ||||
Net change in hedging derivatives (cash flow hedges) | 351 | 124 | 564 | 2,102 |
Foreign currency translation adjustment | 1,567 | (240) | 2,333 | 751 |
Other comprehensive income (loss) | 1,918 | (116) | 2,897 | 2,853 |
Comprehensive income | 60,883 | 30,788 | 126,125 | 62,704 |
Comprehensive income attributable to non-controlling interests | 2,902 | 475 | 3,682 | 1,198 |
Comprehensive income attributable to Ready Capital Corporation | $ 57,981 | $ 30,313 | $ 122,443 | $ 61,506 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - USD ($) $ in Thousands | Total Ready Capital Corporation Equity | Preferred stock Series B Preferred Stock | Preferred stock Series D Preferred Stock | Preferred stock Series E Preferred Stock | Common Stock | Additional Paid-in-Capital | Retained Earnings (Deficit) | Accumulated Other Comprehensive Loss | Noncontrolling Interests | Total |
Balance at beginning of period at Dec. 31, 2020 | $ 815,396 | $ 5 | $ 849,541 | $ (24,203) | $ (9,947) | $ 18,812 | $ 834,208 | |||
Balance at beginning of period (in shares) at Dec. 31, 2020 | 54,368,999 | |||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||
Dividend declared on common stock | (54,145) | (54,145) | (54,145) | |||||||
Dividend declared on OP units | (964) | (964) | ||||||||
Dividend declared on Series B preferred shares | (1,162) | (1,162) | (1) | (1,163) | ||||||
Dividend declared on Series C preferred shares | (230) | (230) | (230) | |||||||
Dividend declared on Series D preferred shares | (1,074) | (1,074) | (1) | (1,075) | ||||||
Dividend declared on Series E preferred shares | (1,039) | (1,039) | (1,039) | |||||||
Shares issued pursuant to merger transactions | 337,778 | $ 47,984 | $ 50,257 | $ 2 | 239,535 | 337,778 | ||||
Shares issued pursuant merger to merger transactions (shares) | 1,919,378 | 2,010,278 | 16,774,337 | |||||||
Equity issuances | 111,378 | $ 111,378 | 111,378 | |||||||
Shares issued | 4,600,000 | |||||||||
Offering costs | (70) | (70) | (1) | (71) | ||||||
Distributions, net | (150) | (150) | ||||||||
Equity component of 2017 convertible note issuance | (202) | (202) | (4) | (206) | ||||||
Stock-based compensation | 2,345 | 2,345 | 2,345 | |||||||
Stock-based compensation (shares) | 125,327 | |||||||||
Share repurchases | (987) | (987) | (987) | |||||||
Share repurchases (shares) | (37,241) | |||||||||
Net income | 58,748 | 58,748 | 1,103 | 59,851 | ||||||
Other comprehensive income (loss) | 2,790 | 2,790 | 63 | 2,853 | ||||||
Balance at end of period at Jun. 30, 2021 | 1,269,526 | $ 47,984 | $ 50,257 | $ 111,378 | $ 7 | 1,090,162 | (23,105) | (7,157) | 18,857 | 1,288,383 |
Balance at end of period (in shares) at Jun. 30, 2021 | 1,919,378 | 2,010,278 | 4,600,000 | 71,231,422 | ||||||
Balance at beginning of period at Mar. 31, 2021 | 1,159,691 | $ 47,984 | $ 50,257 | $ 7 | 1,088,512 | (20,027) | (7,042) | 19,061 | 1,178,752 | |
Balance at beginning of period (in shares) at Mar. 31, 2021 | 1,919,378 | 2,010,278 | 71,221,699 | |||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||
Dividend declared on common stock | (30,312) | (30,312) | (30,312) | |||||||
Dividend declared on OP units | (494) | (494) | ||||||||
Dividend declared on Series B preferred shares | (1,036) | (1,036) | (1,036) | |||||||
Dividend declared on Series C preferred shares | (193) | (193) | (193) | |||||||
Dividend declared on Series D preferred shares | (958) | (958) | (958) | |||||||
Dividend declared on Series E preferred shares | (1,039) | (1,039) | (1,039) | |||||||
Equity issuances | 111,378 | $ 111,378 | 111,378 | |||||||
Shares issued | 4,600,000 | |||||||||
Offering costs | (70) | (70) | (1) | (71) | ||||||
Distributions, net | (150) | (150) | ||||||||
Equity component of 2017 convertible note issuance | (103) | (103) | (2) | (105) | ||||||
Stock-based compensation | 1,823 | 1,823 | 1,823 | |||||||
Stock-based compensation (shares) | 9,723 | |||||||||
Net income | 30,460 | 30,460 | 444 | 30,904 | ||||||
Other comprehensive income (loss) | (115) | (115) | (1) | (116) | ||||||
Balance at end of period at Jun. 30, 2021 | 1,269,526 | $ 47,984 | $ 50,257 | $ 111,378 | $ 7 | 1,090,162 | (23,105) | (7,157) | 18,857 | 1,288,383 |
Balance at end of period (in shares) at Jun. 30, 2021 | 1,919,378 | 2,010,278 | 4,600,000 | 71,231,422 | ||||||
Balance at beginning of period at Dec. 31, 2021 | 1,276,104 | $ 111,378 | $ 8 | 1,161,853 | 8,598 | (5,733) | 4,494 | 1,280,598 | ||
Balance at beginning of period (in shares) at Dec. 31, 2021 | 4,600,000 | 75,838,050 | ||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||
Dividend declared on common stock | (96,881) | (96,881) | (96,881) | |||||||
Dividend declared on OP units | (1,470) | (1,470) | ||||||||
Dividend declared on Series C preferred shares | (262) | (262) | (262) | |||||||
Dividend declared on Series E preferred shares | (3,736) | (3,736) | (3,736) | |||||||
Shares issued pursuant to merger transactions | 437,311 | $ 3 | 437,308 | 437,311 | ||||||
Shares issued pursuant merger to merger transactions (shares) | 30,252,764 | |||||||||
Non-controlling interest acquired in merger transaction | 82,257 | 82,257 | ||||||||
Equity issuances | 124,515 | 124,515 | 124,515 | |||||||
Shares issued | 8,100,926 | |||||||||
Offering costs | (903) | (903) | (6) | (909) | ||||||
Distributions, net | (8,753) | (8,753) | ||||||||
Equity component of 2017 convertible note issuance | (219) | (219) | (2) | (221) | ||||||
Stock-based compensation | 4,040 | 4,040 | 4,040 | |||||||
Stock-based compensation (shares) | 269,776 | |||||||||
Share repurchases | (1,294) | (1,294) | (1,294) | |||||||
Share repurchases (shares) | (86,446) | |||||||||
OP units issued pursuant to merger transaction | 20,745 | 20,745 | ||||||||
Reallocation of noncontrolling interest | (1,666) | (1,720) | 54 | 1,666 | ||||||
Net income | 119,579 | 119,579 | 3,649 | 123,228 | ||||||
Other comprehensive income (loss) | 2,864 | 2,864 | 33 | 2,897 | ||||||
Balance at end of period at Jun. 30, 2022 | 1,859,452 | $ 111,378 | $ 11 | 1,723,580 | 27,298 | (2,815) | 102,613 | 1,962,065 | ||
Balance at end of period (in shares) at Jun. 30, 2022 | 4,600,000 | 114,375,070 | ||||||||
Balance at beginning of period at Mar. 31, 2022 | 1,851,445 | $ 111,378 | $ 11 | 1,723,099 | 21,661 | (4,704) | 107,290 | 1,958,735 | ||
Balance at beginning of period (in shares) at Mar. 31, 2022 | 4,600,000 | 114,335,948 | ||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||
Dividend declared on common stock | (48,455) | (48,455) | (48,455) | |||||||
Dividend declared on OP units | (735) | (735) | ||||||||
Dividend declared on Series C preferred shares | (131) | (131) | (131) | |||||||
Dividend declared on Series E preferred shares | (1,868) | (1,868) | (1,868) | |||||||
Equity issuances | 366 | 366 | 366 | |||||||
Shares issued | 23,825 | |||||||||
Offering costs | (3) | (3) | (2) | (5) | ||||||
Distributions, net | (6,837) | (6,837) | ||||||||
Equity component of 2017 convertible note issuance | (111) | (111) | (1) | (112) | ||||||
Stock-based compensation | 257 | 257 | 257 | |||||||
Stock-based compensation (shares) | 17,516 | |||||||||
Share repurchases | (33) | (33) | (33) | |||||||
Share repurchases (shares) | (2,219) | |||||||||
Reallocation of noncontrolling interest | 4 | 5 | (1) | (4) | ||||||
Net income | 56,091 | 56,091 | 2,874 | 58,965 | ||||||
Other comprehensive income (loss) | 1,890 | 1,890 | 28 | 1,918 | ||||||
Balance at end of period at Jun. 30, 2022 | $ 1,859,452 | $ 111,378 | $ 11 | $ 1,723,580 | $ 27,298 | $ (2,815) | $ 102,613 | $ 1,962,065 | ||
Balance at end of period (in shares) at Jun. 30, 2022 | 4,600,000 | 114,375,070 |
CONSOLIDATED STATEMENTS OF CH_2
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Parenthetical) - $ / shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Dividends declared per share of common stock | $ 0.42 | $ 0.42 | $ 0.84 | $ 0.82 |
Series B Preferred Stock | ||||
Dividends declared per share of preferred stock | 0.5390625 | 1.078125 | ||
Series C Preferred Stock | ||||
Dividends declared per share of preferred stock | 0.390625 | 0.3906250 | 0.78125 | 0.781250 |
Series D Preferred Stock | ||||
Dividends declared per share of preferred stock | 0.4765625 | 0.953125 | ||
Series E Preferred Stock | ||||
Dividends declared per share of preferred stock | $ 0.406250 | $ 0.2256940 | $ 0.81250 | $ 0.225694 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS $ in Thousands | 6 Months Ended | |
Jun. 30, 2022 USD ($) | Jun. 30, 2021 USD ($) | |
Cash Flows From Operating Activities: | ||
Net income | $ 123,228 | $ 59,851 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Amortization of premiums, discounts, and debt issuance costs, net | (10,298) | (8,367) |
Stock-based compensation | 4,110 | 2,345 |
Provision for (recovery of) loan losses | (2,848) | 5,509 |
Impairment loss on real estate, held for sale | 2,667 | 1,278 |
Repair and denial reserve | (3,614) | 6,095 |
Allowance for doubtful accounts on purchased future receivables | 440 | 1,630 |
Origination of loans, held for sale, at fair value | (1,997,997) | (2,899,959) |
Proceeds from disposition and principal payments of loans, held for sale, at fair value | 2,070,326 | 2,961,060 |
Net income of unconsolidated joint ventures, net of distributions | (8,755) | (2,342) |
Realized (gains) losses, net | (28,956) | (92,704) |
Unrealized (gains) losses, net | (46,722) | (25,712) |
Net changes in operating assets and liabilities | ||
Purchased future receivables, net | (1,272) | 8,465 |
Derivative instruments | 1,562 | (62,474) |
Assets of consolidated VIEs (excluding loans, net), accrued interest and due from servicers | (9,648) | 8,624 |
Receivable from third parties | 21,801 | 34,487 |
Other assets | (6,211) | (10,871) |
Accounts payable and other accrued liabilities | (28,630) | 34,017 |
Net cash provided by (used for) operating activities | 79,183 | 20,932 |
Cash Flows From Investing Activities: | ||
Origination of loans | (2,302,054) | (1,497,521) |
Purchase of loans | (649,834) | (17,100) |
Proceeds from disposition and principal payment of loans | 672,327 | 367,055 |
Origination of Paycheck Protection Program loans | (2,134,612) | |
Purchase of Paycheck Protection Program loans | (3,866) | |
Proceeds from disposition and principal payment of Paycheck Protection Program loans | 514,607 | 62,366 |
Funding of investments held to maturity | (1,191) | |
Proceeds from principal payments of investments held to maturity | 7,295 | |
Proceeds from sale and principal payment of mortgage backed securities, at fair value | 56,167 | 1,846,109 |
Funding of real estate, held for sale | (2,160) | |
Proceeds from sale of real estate, held for sale | 1,518 | 2,094 |
Investment in unconsolidated joint ventures | (85,634) | (15,686) |
Distributions in excess of cumulative earnings from unconsolidated joint ventures | 11,317 | 10,543 |
Payment of liability under participation agreements, net of proceeds received | (20,112) | |
Net of cash provided by business acquisitions | 123,566 | 49,917 |
Net cash used for investing activities | (1,674,188) | (1,330,701) |
Cash Flows From Financing Activities: | ||
Proceeds from secured borrowings | 6,017,619 | 6,830,648 |
Repayment of secured borrowings | (5,386,027) | (8,204,704) |
Proceeds from the Paycheck Protection Program Liquidity Facility borrowings | 2,295,535 | |
Repayment of Paycheck Protection Program Liquidity Facility borrowings | (513,746) | (85,187) |
Proceeds from issuance of securitized debt obligations of consolidated VIEs | 1,735,344 | 696,840 |
Repayment of securitized debt obligations of consolidated VIEs | (390,575) | (290,645) |
Proceeds from corporate debt | 122,646 | 195,768 |
Repayment of corporate debt | (50,000) | |
Repayment of guaranteed loan financing | (61,912) | (44,873) |
Payment of deferred financing costs | (25,662) | (16,708) |
Proceeds from issuance of equity, net of issuance costs | 123,606 | 111,307 |
Payment of contingent consideration | (9,000) | |
Settlement of share-based awards in satisfaction of withholding tax requirements | (1,294) | (987) |
Dividend payments | (85,512) | (44,394) |
Tender offer of preferred shares | (11,133) | |
Distributions to non-controlling interests, net | (8,753) | (150) |
Net cash provided by financing activities | 1,516,734 | 1,381,317 |
Net increase (decrease) in cash, cash equivalents, and restricted cash | (78,271) | 71,548 |
Cash, cash equivalents, and restricted cash beginning balance | 323,328 | 200,482 |
Cash, cash equivalents, and restricted cash ending balance | 245,057 | 272,030 |
Supplemental disclosures: | ||
Cash paid for interest | 125,411 | 91,099 |
Cash paid for income taxes | 13,858 | 416 |
Supplemental disclosure: Non-cash investing activities | ||
Loans transferred from loans, held for sale, at fair value to loans, net | 3,862 | |
Loans transferred from loans, net to loans, held for sale, at fair value | 3,029 | 1,793 |
Loans transferred to real estate owned | 496 | 1,388 |
Contingent consideration in connection with acquisitions | 84,348 | |
Supplemental disclosure: Non-cash financing activities | ||
Shares issued in connection with merger transactions | $ 458,056 | $ 239,537 |
CONSOLIDATED STATEMENTS OF CA_2
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2022 | Jun. 30, 2021 |
Cash, cash equivalents, and restricted cash reconciliation | ||
Cash and cash equivalents | $ 127,939 | $ 200,723 |
Restricted cash | 64,746 | 57,118 |
Cash, cash equivalents, and restricted cash in Assets of consolidated VIEs | 52,372 | 14,189 |
Cash, cash equivalents, and restricted cash ending balance | $ 245,057 | $ 272,030 |
Organization
Organization | 6 Months Ended |
Jun. 30, 2022 | |
Organization | |
Organization | See Notes To Unaudited Consolidated Financial Statements READY CAPITAL CORPORATION NOTES TO the CONS OLIDATED FINANCIAL STATEMENTS (UNAUDITED) Note 1. Organization Ready Capital Corporation (the “Company” or “Ready Capital” and together with its subsidiaries “we,” “us” and “our”), is a Maryland corporation. The Company is a multi-strategy real estate finance company that originates, acquires, finances and services small to medium balance commercial (“SBC”) loans, Small Business Administration (“SBA”) loans, residential mortgage loans, construction loans, and to a lesser extent, mortgage-backed securities (“MBS”) collateralized primarily by SBC loans, or other real estate-related investments. SBC loans represent a special category of commercial loans, sharing both commercial and residential loan characteristics. SBC loans are generally secured by first mortgages on commercial properties, but because SBC loans are also often accompanied by collateralization of personal assets and subordinate lien positions, aspects of residential mortgage credit analysis are utilized in the underwriting process. The Company is externally managed and advised by Waterfall Asset Management, LLC (“Waterfall” or the “Manager”), an investment advisor registered with the United States Securities and Exchange Commission (“SEC”) under the Investment Advisors Act of 1940, as amended. Sutherland Partners, L.P. (the “operating partnership”) holds substantially all of our assets and conducts substantially all of our business. As of June 30, 2022 and December 31, 2021, the Company owned approximately 98.5% and 99.6% of the operating partnership, respectively. The Company, as sole general partner of the operating partnership, has responsibility and discretion in the management and control of the operating partnership, and the limited partners of the operating partnership, in such capacity, have no authority to transact business for, or participate in the management activities of the operating partnership. Therefore, the Company consolidates the operating partnership. Acquisitions Mosaic. As consideration for the Mosaic Mergers, each former investor was entitled to receive an equal number of shares of each of Class B-1 Common Stock, $0.0001 par value per share (the “Class B-1 Common Stock”), Class B-2 Common Stock, $0.0001 par value per share (the “Class B-2 Common Stock”) Class B-3 Common Stock, $0.0001 par value per share (the “Class B-3 Common Stock”), and Class B-4 Common Stock, $0.0001 par value per share (the “Class B-4 Common Stock” and, together with the Class B-1 Common Stock, the Class B-2 Common Stock and the Class B-3 Common Stock, the “Class B Common Stock”), of Ready Capital, contingent equity rights (“CERs”) representing the potential right to receive shares of Common Stock as of the end of the three-year period following the closing date of the Mosaic Mergers based upon the performance of the assets acquired by Ready Capital pursuant to the Mosaic Mergers, and cash consideration in lieu of any fractional shares of Class B Common Stock. The Class B Common Stock ranked equally with the common stock, except that the shares of Class B Common Stock were not listed on the New York Stock Exchange. On May 11, 2022, each issued and outstanding share of Class B Common Stock automatically converted, on a one-for-one basis, into an equal number of shares of Common Stock, and as such, no shares of Class B Common Stock remain outstanding. The CERs are contractual rights and do not represent any equity or ownership interest in Ready Capital or any of its affiliates. If any shares of common stock are issued in settlement of the CERs, each former investor will also be entitled to receive a number of additional shares of common stock equal to (i) the amount of any dividends or other distributions paid with respect to the number of whole shares of common stock received in respect of CERs and having a record date on or after the closing date of the Mergers and a payment date prior to the issuance date of such shares of common stock, divided by (ii) the greater of (a) the average of the volume weighted average prices of one share of common stock over the ten trading days preceding the determination date and (b) the most recently reported book value per share of common stock as of the determination date. The acquisition further expanded the Company’s investment portfolio and origination platform to include a diverse portfolio of construction assets with attractive portfolio yields. Refer to Note 5 for assets acquired and liabilities assumed in the merger. Red Stone. Anworth Mortgage Asset Corporation. In addition, in connection with the Anworth merger, the Company issued 1,919,378 shares of newly designated 8.625% Series B Cumulative Preferred Stock, par value $0.0001 per share (the “Series B Preferred Stock”), 779,743 shares of newly designated 6.25% Series C Cumulative Convertible Preferred Stock, par value $0.0001 per share (the “Series C Preferred Stock”), and 2,010,278 shares of newly designated 7.625% Series D Cumulative Redeemable Preferred Stock, par value $0.0001 per share (the “Series D Preferred Stock”), in exchange for all shares of Anworth’s 8.625% Series A Cumulative Preferred Stock, 6.25% Series B Cumulative Convertible Preferred Stock and 7.625% Series C Cumulative Redeemable preferred stock outstanding prior to the effective time of the Anworth Merger. On July 15, 2021, the Company redeemed all of the outstanding Series B Preferred Stock and Series D Preferred Stock, in each case at a redemption Upon the closing of the transaction and after giving effect to the issuance of shares of common stock as consideration in the merger, the Company’s historical stockholders owned approximately 77% of the combined Company’s outstanding common stock, while historical Anworth stockholders owned approximately 23% of the combined Company’s outstanding common stock. Refer to Note 5 for assets acquired and liabilities assumed in the merger. The acquisition of Anworth increased the Company’s equity capitalization, supported continued growth of the Company’s platform and execution of the Company’s strategy, and provided the Company with improved scale, liquidity and capital alternatives, including additional borrowing capacity. Also, the stockholder base resulting from the acquisition of Anworth enhanced the trading volume and liquidity for our stockholders. In addition, part of our strategy in acquiring Anworth was to manage the liquidation and runoff of certain assets within the Anworth portfolio and repay certain indebtedness on the Anworth portfolio following the completion of the Anworth Merger, and to redeploy the capital into opportunities in our core SBC strategies and other assets we expect will generate attractive risk-adjusted returns and long-term earnings accretion. Consistent with this strategy, as of June 30, 2022, the Company has liquidated approximately $2.1 billion of assets, primarily consisting of agency residential mortgage-backed securities, which are guaranteed by the U.S. government or by federally sponsored enterprises, and repaid approximately $1.8 billion of indebtedness on the Anworth portfolio. In addition, concurrently with entering into the Anworth Merger Agreement, we, the operating partnership and the Manager entered into the First Amendment to the Amended and Restated Management Agreement (the “Amendment”), pursuant to which, upon the closing of the Anworth Merger, the Manager’s base management fee will be reduced by $1,000,000 per quarter for each of the first full four quarters following the effective time of the Anworth Merger (the “Temporary Fee Reduction”). Other than the Temporary Fee Reduction set forth in the Amendment, the terms of the Management Agreement remain the same. REIT Status The Company qualifies as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), commencing with its first taxable year ended December 31, 2011. To maintain its tax status as a REIT, the Company distributes dividends equal to at least 90% of its taxable income in the form of distributions to shareholders. |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2022 | |
Basis of Presentation | |
Basis of Presentation | Note 2. Basis of Presentation The unaudited interim consolidated financial statements herein, referred to as the “consolidated financial statements”, as of June 30, 2022 and December 31, 2021 and for the three months ended June 30, 2022 and 2021, have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”)—as prescribed by the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) and the rules and regulations of the SEC. The accompanying interim consolidated financial statements, including the notes thereto, are unaudited and exclude some of the disclosures required in audited financial statements. Accordingly, certain information and footnote disclosures normally included in the consolidated financial statements have been condensed or omitted. In the opinion of management, the accompanying consolidated financial statements contain all normal recurring adjustments necessary for a fair statement of the results for the interim periods presented. Such operating results may not be indicative of the expected results for any other interim period or the entire year. The accompanying consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed with the SEC. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2022 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | Note 3. Summary of Significant Accounting Policies Use of estimates Preparation of the Company’s consolidated financial statements in conformity with U.S. GAAP requires certain estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of income and expenses during the reporting period. These estimates and assumptions are based on the best available information however, actual results could be materially different. Basis of consolidation The accompanying consolidated financial statements of the Company include the accounts and results of operations of the operating partnership and other consolidated subsidiaries and variable interest entities (“VIEs”) in which we are the primary beneficiary. The consolidated financial statements are prepared in accordance with ASC 810, Consolidation. Reclassifications Certain amounts reported for the prior periods in the accompanying consolidated financial statements have been reclassified in order to conform to the current period’s presentation. Cash and cash equivalents The Company accounts for cash and cash equivalents in accordance with ASC 305, Cash and Cash Equivalents. Restricted cash Restricted cash represents cash held by the Company as collateral against its derivatives, borrowings under repurchase agreements, borrowings under credit facilities and other financing agreements with counterparties, construction and mortgage escrows, as well as cash held for remittance on loans serviced for third parties. Restricted cash is not available for general corporate purposes but may be applied against amounts due to counterparties under existing swaps and repurchase agreement borrowings, returned to the Company when the restriction requirements no longer exist or at the maturity of the swap or repurchase agreement. Loans, net Loans, net consists of loans, held-for-investment, net of allowance for credit losses, and loans, held at fair value. Loans, held-for-investment. Consolidation Receivables. The Company uses the interest method to recognize, as a constant effective yield adjustment, the difference between the initial recorded investment in the loan and the principal amount of the loan. The calculation of the constant effective yield necessary to apply the interest method uses the payment terms required by the loan contract, and prepayments of principal are not anticipated to shorten the loan term. Loans, held at fair value. Allowance for credit losses. On January 1, 2020, the Company adopted ASU 2016-13, Financial Instruments-Credit Losses In connection with the Company’s adoption of ASU 2016-13 on January 1, 2020, the Company implemented new processes including the utilization of loan loss forecasting models, updates to the Company’s reserve policy documentation, changes to internal reporting processes and related internal controls. The Company has implemented loan loss forecasting models for estimating expected life-time credit losses, at the individual loan level, for its loan portfolio. The CECL forecasting methods used by the Company include (i) a probability of default and loss given default method using underlying third-party CMBS/CRE loan databases with historical loan losses and (ii) probability weighted expected cash flow method, depending on the type of loan and the availability of relevant historical market loan loss data. The Company might use other acceptable alternative approaches in the future depending on, among other factors, the type of loan, underlying collateral, and availability of relevant historical market loan loss data. Significant inputs to the Company’s forecasting methods include (i) key loan-specific inputs such as LTV, vintage year, loan-term, underlying property type, occupancy, geographic location, and others, and (ii) a macro-economic forecast, including unemployment rates, interest rates, commercial real estate prices, and others. These estimates may change in future periods based on available future macro-economic data and might result in a material change in the Company’s future estimates of expected credit losses for its loan portfolio. In certain instances, the Company considers relevant loan-specific qualitative factors to certain loans to estimate its CECL expected credit losses. The Company considers loan investments that are both (i) expected to be substantially repaid through the operation or sale of the underlying collateral, and (ii) for which the borrower is experiencing financial difficulty, to be “collateral-dependent” loans. For such loans that the Company determines that foreclosure of the collateral is probable, the Company measures the expected losses based on the difference between the fair value of the collateral (less costs to sell the asset if repayment is expected through the sale of the collateral) and the amortized cost basis of the loan as of the measurement date. For collateral-dependent loans that the Company determines foreclosure is not probable, the Company applies a practical expedient to estimate expected losses using the difference between the collateral’s fair value (less costs to sell the asset if repayment is expected through the sale of the collateral) and the amortized cost basis of the loan. While we have a formal methodology to determine the adequate and appropriate level of the allowance for credit losses, estimates of inherent loan losses involve judgment and assumptions as to various factors, including current economic conditions. Our determination of adequacy of the allowance for credit losses is based on quarterly evaluations of the above factors. Accordingly, the provision for credit losses will vary from period to period based on management's ongoing assessment of the adequacy of the allowance for credit losses. Non-accrual loans. Troubled debt restructurings. Generally, all loans modified in a TDR are placed or remain on non-accrual status at the time of the restructuring. However, certain accruing loans modified in a TDR that are current at the time of restructuring may remain on accrual status if payment in full under the restructured terms is expected. In addition, based on issued regulatory guidance provided by federal and state regulatory agencies, a loan modification is not considered a TDR if: (1) made in response to the COVID-19 pandemic; (2) the borrower was current on payments at the time the modification program was implemented; and (3) the modification was short-term (e.g., six months). Loans, held for sale, at fair value Loans, held for sale, at fair value are loans that are expected to be sold to third parties in the near term. Interest is recognized as interest income in the consolidated statements of income when earned and deemed collectible. For loans originated through the SBC Lending and Acquisitions and Small Business Lending segments, changes in fair value are recurring and are reported as net unrealized gain (loss) on financial instruments in the consolidated statements of income. For originated SBA loans, the guaranteed portion is held for sale, at fair value. For loans originated by GMFS, changes in fair value are reported as residential mortgage banking activities in the consolidated statements of income. Paycheck Protection Program loans Paycheck Protection Program (“PPP”) loans originated in response to the COVID-19 pandemic are further described in Note 20. The Company has elected the fair value option for the loans originated by the Company for the first round of the program. Interest is recognized in the consolidated statements of income as interest income when earned and deemed collectible. Although PPP includes a 100% guarantee from the federal government and principal forgiveness for borrowers if the funds were used for defined purposes, changes in fair value are recurring and are reported as net unrealized gains (losses) on financial instruments in the consolidated statements of income. The Company’s loan originations in the second round of the program are accounted for as loans, held-for-investment under ASC 310. Loan origination fees and related direct loan origination costs are capitalized into the initial recorded investment in the loan and are deferred over the loan term. The Company recognizes the difference between the initial recorded investment and the principal amount of the loan as interest income using the effective yield method. The effective yield is determined based on the payment terms required by the loan contract as well as with actual and expected prepayments from loan forgiveness by the federal government. Mortgage-backed securities, at fair value The Company accounts for MBS as trading securities and carries them at fair value under ASC 320, Investments-Debt and Equity Securities. MBS are recorded at fair value as determined by market prices provided by independent broker dealers or other independent valuation service providers. The fair values assigned to these investments are based upon available information and may not reflect amounts that may be realized. We generally intend to hold our investment in MBS to generate interest income; however, we have and may continue to sell certain of our investment securities as part of the overall management of our assets and liabilities and operating our business. The fair value adjustments on MBS are reported within net unrealized gain (loss) on financial instruments in the consolidated statements of income. Loans eligible for repurchase from Ginnie Mae When the Company has the unilateral right to repurchase Ginnie Mae pool loans it has previously sold (generally loans that are more than 90 days past due), the Company then records the right to repurchase the loan as an asset and liability in its consolidated balance sheets. Such amounts reflect the unpaid principal balance of the loans. Derivative instruments, at fair value Subject to maintaining our qualification as a REIT for U.S. federal income tax purposes, we utilize derivative financial instruments, comprised of credit default swaps (“CDSs”), interest rate swaps, TBA agency securities, FX forwards and interest rate lock commitments (“IRLCs”) as part of our risk management strategy. The Company accounts for derivative instruments under ASC 815, Derivatives and Hedging Interest rate swap agreements. TBA Agency Securities IRLC. FX forwards. CDS. Hedge accounting. To qualify as an accounting hedge under the hedge accounting rules (versus an economic hedge where hedge accounting is not applied), a hedging relationship must be highly effective in offsetting the risk designated as being hedged. We use cash flow hedges to hedge the exposure to variability in cash flows from forecasted transactions, including the anticipated issuance of securitized debt obligations. ASC 815 requires that a forecasted transaction be identified as either: 1) a single transaction, or 2) a group of individual transactions that share the same risk exposures for which they are designated as being hedged. Hedges of forecasted transactions are considered cash flow hedges since the price is not fixed, hence involve variability of cash flows. For qualifying cash flow hedges, the change in the fair value of the derivative (the hedging instrument) is recorded in other comprehensive income (loss) ("OCI") and is reclassified out of OCI and into the consolidated statements of income when the hedged cash flows affect earnings. These amounts are recognized consistent with the classification of the hedged item, primarily interest expense (for hedges of interest rate risk). If the hedge relationship is terminated, then the value of the derivative recorded in accumulated other comprehensive income (loss) ("AOCI") is recognized in earnings when the cash flows that were hedged affect earnings, so long as the forecasted transaction remains probable of occurring. During May 2021, the Company discontinued hedge accounting for the anticipated issuance of securitized debt obligations for certain hedges. As a general rule, derivative gains or losses reported in AOCI are required to be recorded in earnings when it becomes probable that the forecasted transaction will not occur by the end of the originally specified time period or within an additional two-month period thereafter. The guidance in ASC 815 includes an exception to the general rule when extenuating circumstances that are outside the control or influence of the reporting entity cause the forecasted transaction to be probable of occurring on a date that is beyond the additional two-month period. The issuance of the securitized debt obligations was delayed beyond the additional two-month period due to the uncertainty in the capital markets and lower origination volumes as a result of the COVID-19 pandemic. Since the delay was caused by extenuating circumstances related to the COVID-19 pandemic and the issuance of securitized debt obligations remains probable over a reasonable time period after the additional two-month period, the discontinued cash flow hedges qualify for the exception in accordance with FASB Staff Q&A Topic 815: Cashflow hedge accounting affected by the Covid-19 Pandemic will remain in AOCI. Gains and losses from the derivative instruments will be recorded in the earnings from the date of the discontinuation of cash flow hedges. Hedge accounting is generally terminated at the debt issuance date because we are no longer exposed to cash flow variability subsequent to issuance. Accumulated amounts recorded in AOCI at that date are then released to earnings in future periods to reflect the difference in 1) the fixed rates economically locked in at the inception of the hedge and 2) the actual fixed rates established in the debt instrument at issuance. Because of the effects of the time value of money, the actual interest expense reported in earnings will not equal the effective yield locked in at hedge inception multiplied by the par value. Similarly, this hedging strategy does not actually fix the interest payments associated with the forecasted debt issuance. Servicing rights Servicing rights initially represent the fair value of expected future cash flows for performing servicing activities for others. The fair value considers estimated future servicing fees and ancillary revenue, offset by estimated costs to service the loans, and generally declines over time as net servicing cash flows are received, effectively amortizing the servicing right asset against contractual servicing and ancillary fee income. Servicing rights are recognized upon sale of loans, including a securitization of loans accounted for as a sale in accordance with U.S. GAAP, if servicing is retained. For servicing rights, gains related to servicing rights retained is included in net realized gain (loss) in the consolidated statements of income. For residential MSRs, gains on servicing rights retained upon sale of a loan are included in residential mortgage banking activities in the consolidated statements of income. The Company treats its servicing rights and residential MSRs as two separate classes of servicing assets based on the class of the underlying mortgages and it treats these assets as two separate pools for risk management purposes. Servicing rights relating to the Company’s servicing of loans guaranteed by the SBA under its Section 7(a) loan program and multi-family servicing rights are accounted for under ASC 860, Transfers and Servicing, Financial Instruments. Servicing rights – SBA and multi-family portfolio. For purposes of testing our servicing rights for impairment, we first determine whether facts and circumstances exist that would suggest the carrying value of the servicing asset is not recoverable. If so, we then compare the net present value of servicing cash flow to its carrying value. The estimated net present value of servicing cash flows is determined using discounted cash flow modeling techniques, which require management to make estimates regarding future net servicing cash flows, taking into consideration historical and forecasted loan prepayment rates, delinquency rates and anticipated maturity defaults. If the carrying value of the servicing rights exceeds the net present value of servicing cash flows, the servicing rights are considered impaired, and an impairment loss is recognized in earnings for the amount by which carrying value exceeds the net present value of servicing cash flows. We estimate the fair value of servicing rights by determining the present value of future expected servicing cash flows using modeling techniques that incorporate management's best estimates of key variables including estimates regarding future net servicing cash flows, forecasted loan prepayment rates, delinquency rates, and return requirements commensurate with the risks involved. Cash flow assumptions are modeled using our internally forecasted revenue and expenses, and where possible, the reasonableness of assumptions is periodically validated through comparisons to market data. Prepayment speed estimates are determined from historical prepayment rates or obtained from third-party industry data. Return requirement assumptions are determined using data obtained from market participants, where available, or based on current relevant interest rates plus a risk-adjusted spread. We also consider other factors that can impact the value of the servicing rights, such as surety provider termination clauses and servicer terminations that could result if we failed to materially comply with the covenants or conditions of our servicing agreements and did not remedy the failure. Since many factors can affect the estimate of the fair value of servicing rights, we regularly evaluate the major assumptions and modeling techniques used in our estimate and review these assumptions against market comparables, if available. We monitor the actual performance of our servicing rights by regularly comparing actual cash flow, credit, and prepayment experience to modeled estimates. Servicing rights - Residential (carried at fair value). The Company has elected to account for its portfolio of residential MSRs at fair value. For these assets, the Company uses a third-party vendor to assist management in estimating the fair value. The third-party vendor uses a discounted cash flow approach which consists of projecting servicing cash flows discounted at a rate that management believes market participants would use in their determinations of fair value. The key assumptions used in the estimation of the fair value of MSRs include prepayment rates, discount rates, and cost of servicing. Residential MSRs are classified as Level 3 in the fair value hierarchy. Real estate owned, held for sale Real estate owned, held for sale includes purchased real estate and real estate acquired in full or partial settlement of loan obligations, generally through foreclosure, that is being marketed for sale. Real estate owned, held for sale is recorded at acquisition at the property’s estimated fair value less estimated costs to sell. After acquisition, costs incurred relating to the development and improvement of property are capitalized to the extent they do not cause the recorded value to exceed the net realizable value, whereas costs relating to holding and disposition of the property are expensed as incurred. After acquisition, real estate owned, held for sale is analyzed periodically for changes in fair values and any subsequent write down is charged through impairment. The Company records a gain or loss from the sale of real estate when control of the property transfers to the buyer, which generally occurs at the time of an executed deed. When the Company finances the sale of real estate to the buyer, the Company assesses whether the buyer is committed to perform their obligations under the contract and whether the collectability of the transaction price is probable. Once these criteria are met, the real estate is derecognized and the gain or loss on sale is recorded upon transfer of control of the property to the buyer. In determining the gain or loss on the sale, the Company adjusts the transaction price and related gain (loss) on sale if a significant financing component is present. This adjustment is based on management’s estimate of the fair value of the loan extended to the buyer to finance the sale. Investment in unconsolidated joint ventures According to ASC 323 , Equity Method and Joint Ventures Investments held to maturity The Company accounts for held to maturity investments under ASC 320, Investments- Debt Securities Purchased future receivables Through Knight Capital, the Company provides working capital advances to small businesses through the purchase of their future revenues. The Company enters into a contract with the business whereby the Company pays the business an upfront amount in return for a specific amount of the business’s future revenue receivables, known as payback amounts. The payback amounts are primarily received through daily payments initiated by automated clearing house (“ACH”) transactions. Revenues from purchased future receivables are realized when funds are received under each contract. The allocation of the amount received is determined by apportioning the amount received based upon the factor (discount) rate of the business's contract. Management believes that this methodology best reflects the effective interest method. The Company has established an allowance for doubtful purchased future receivables. An increase in the allowance for doubtful purchased future receivables results in a charge to income and is reduced when purchased future receivables are charged-off. Purchased future receivables are charged-off after 90 days past due. Management believes that the allowance reflects the risk elements and is adequate to absorb losses inherent in the portfolio. Although management has performed this evaluation, future adjustments may be necessary based on changes in economic conditions or other factors. Intangible assets The Company accounts for intangible assets under ASC 350, Intangibles- Goodwill and Other Goodwill Goodwill represents the excess of the consideration transferred over the fair value of net assets, including identifiable intangible assets, at the acquisition date. Goodwill is assessed for impairment annually in the fourth quarter or more frequently if events or changes in circumstances indicate a potential impairment exists. In assessing goodwill for impairment, the Company follows ASC 350, Intangibles- Goodwill and Other, The qualitative assessment requires judgment to be applied in evaluating the effects of multiple factors, including actual and projected financial performance of the reporting unit, macroeconomic conditions, industry and market conditions and relevant entity specific events in determining whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount, including goodwill. In the fourth quarter of 2021, as a result of the qualitative assessment, the Company determined that it was more likely than not that the estimated fair value of each of the reporting units exceeded its respective estimated carrying value. Therefore, goodwill for each reporting unit was not impaired and a quantitative test was not required. There were no events or changes in circumstances during the three months ended June 30, 2022 that would indicate that it was more likely than not that the fair value of each of the reporting units did not exceed its respective carrying value as of June 30, 2022. Deferred financing costs Costs incurred in connection with our secured borrowings are accounted for under ASC 340, Other Assets and Deferred Costs Due from servicers The loan-servicing activities of the Company’s SBC Lending and Acquisitions segment are performed primarily by third-party servicers. SBA loans originated by and held at RCL are internally serviced. Residential mortgage loans originated by and held at GMFS are both serviced by third-party servicers and internally serviced. The Company’s servicers hold substantially all of the cash owned by the Company related to loan servicing activities. These amounts include principal and interest payments made by borrowers, net of advances and servicing fees. Cash is generally received within thirty days of recording the receivable. The Company is subject to credit risk to the extent any servicer with whom the Company conducts business is unable to deliver cash balances or process loan-related transactions on the Company’s behalf. The Company monitors the financial condition of the servicers with whom the Company conducts business and believes the likelihood of loss under the aforementioned circumstances is remote. Secured borrowings Secured borrowings include borrowings under credit facilities and other financing agreements and repurchase agreements. Borrowings under credit facilities and other financing agreements. Debt. Borrowings under repurchase agreements. Transfers and Servicing Paycheck Protection Program Liquidity Facility borrowings The Paycheck Protection Program Facility (“PPPLF”) is a government loan facility created to enable the distribution of funds for PPP whereby the Company may receive advances from the Federal Reserve through the PPPLF. Loans are participated with a PPP participant bank in accordance with respective financing agreements, repurchased from such PPP participant bank, and then pledged using PPPLF. The Company accounts for borrowings under the PPPLF under ASC 470, Debt Securitized debt obligations of consolidated VIEs, net Since 2011, we have engaged in several securitization transactions, which the Company accounts for under ASC 810. Securitization involves transferring assets to a special purpose entity or securitization trust, which typically qualifies as a VIE. The entity that has a controlling financial interest in a VIE is referred to as the primary beneficiary and is required to consolidate the VIE. The consolidation of the VIE includes the VIE’s issuance of senior securities to third parties, which are shown as securitized debt obligations of consolidated VIEs in the consolidated balance sheets. Debt issuance costs related to securitizations are presented as a direct deduction from the carrying value of the related debt liability. Debt issuance costs are amortized using the effective interest method and are included in interest expense in the consolidated statements of income. Convertible note, net ASC 470 requires the liability and equity components of convertible debt instruments that may be settled in cash upon conversion to be separately accounted for in a manner that reflects the issuer’s nonconvertible debt borrowing rate. ASC 470-20 requires that the initial proceeds from the sale of these notes be allocated between a liability component and an equity component in a manner that reflects interest expense at the interest rate of similar nonconvertible debt that could have been issued by the Company at such time. We measured the estimated fair value of the debt component of our convertible notes as of the issuance date based on our nonconvertible debt borrowing rate. The equity components of the convertible senior notes have been reflected within additional paid-in capital in our consolidated balance sheet, and the resulting debt discount is amortized over the period during which the convertible notes are expected to be outstanding (through the maturity date) as additional non-cash interest expense. Upon repurchase of convertible debt instruments, ASC 470-20 requires the issuer to allocate total settlement consideration, inclusive of transaction costs, amongst the liability and equity components of the instrument based on the fair value of the liability component immediately prior to repurchase. The difference between the settlement consideration allocated to the liability component and the net carrying value of the liability component, including unamortized debt issuance costs, would be recognized as gain (loss) on extinguishment of debt in our consolidated statements of income. The remaining settlement consideration allocated to the equity component would be recognized as a reduction of additional paid-in capital in our consolidated balance sheets. Senior secured notes, net The Company accounts for secured debt offerings under ASC 470 . Corporate debt, net The Company accounts for corporate debt offerings under ASC 470. The Company’s corporate debt is presented net of debt issuance costs. Interest paid and accrued in connection with corporate debt is recorded as interest expense in the consolidated statements of income. Guaranteed loan financing Certain partial loan sales do not qualify for sale accounting under ASC 860 because these sales do not meet the definition of a “participating interest,” as defined in the guidance, in order for sale treatment to be allowed. Participations or other partial loan sales which do not meet the definition of a participating interest remain as an investment in the consolidated balance sheets and the proceeds from the portion sold is recorded as guaranteed loan financing in the liabilities section of the consolidated balance sheets. For these partial loan sales, the interest earned on the entire loan balance is recorded as interest income and the interest earned by the buyer in the partial loan sale is recorded within interest expense in the accompanying consolidated statements of income. Contingent consideration The Company accounts for certain liabilities recognized in relation to mergers and acquisitions as contingent consideration whereby the fair value of this liability is dependent on certain criteria. Contingent consideration is classified as level 3 in the fair value hierarchy with fair value adjustments reported within other income (loss) in the consolidated statements of income. Loan participations sold The Company accounts for loan participations sold, which represents an interest in a loan receivable sold, as a liability on the consolidated balance sheets as these arrangements do not qualify as a sale under U.S. GAAP. Such liabilities are non-recourse and remain on the consolidated balance sheets until the loan is repaid. Due to third parties Due to third parties primarily relates to funds held by the Company to advance certain expenditures necessary to fulfill our obligations under our existing indebtedness or to be released at our discretion upon the occurrence of certain pre-specified events, and to serve as additional collateral for borrowers’ loans. While retained, these balances earn interest in accordance with the specific loan terms they are associated with. Repair and denial reserve The repair and denial reserve represents the potential liability to the SBA in the event that we are required to make the SBA whole for reimbursement of the guaranteed portion of SBA loans. We may be responsible for the guaranteed portion of SBA loans if there are lien and collateral issues, unauthorized use of proceeds, liquidation deficiencies, undocumented servicing actions or denial of SBA eligibility. This reserve is calculated using an estimated frequency of a repair and denial event upon default, as well as an estimate of the severity of the repair and denial as a percentage of the guaranteed balance. Variable interest entities VIEs are entities that, by design, either (i) lack sufficient equity to permit the entity to finance its activities without additional subordinated financial support from other parties; or (ii) have equity investors that do not have the ability to make significant decisions relating to the entity’s operations through voting rights, or do not have the obligation to absorb the expected losses, or do not have the right to receive the residual returns of the entity. The entity that is the primary beneficiary is required to consolidate the VIE. An entity is deemed to be the primary beneficiary of a VIE if the entity has both (i) the power to direct the activities that most significantly impact the VIE’s economic performance and (ii) the right to receive benefits from the VIE or the obligation to absorb losses of the VIE that could be significant to the VIE. In determining whether we are the primary beneficiary of a VIE, we consider both qualitative and quantitative factors regarding the nature, size and form of our involvement with the VIE, such as our role establish |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 6 Months Ended |
Jun. 30, 2022 | |
Recent Accounting Pronouncements | |
Recent Accounting Pronouncements | Note 4. Recent accounting pronouncements Financial Accounting Standards Board (“FASB”) Standards Standard Summary of guidance Effects on financial statements ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting Issued March 2020 Provides optional expedients and exceptions to GAAP requirements for modifications on debt instruments, leases, derivatives, and other contracts, related to the expected market transition from LIBOR, and certain other floating rate benchmark indices, or collectively, IBORs, to alternative reference rates. The guidance generally considers contract modifications related to reference rate reform to be an event that does not require contract remeasurement at the modification date nor a reassessment of a previous accounting determination. The Company has loan, security, and debt agreements that incorporate LIBOR as a reference interest rate. It is difficult to predict what effect, if any, the phase-out of LIBOR and the use of alternative benchmarks may have on our business or on the overall financial markets. In January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848): Scope. The amendments in this update refine the scope for certain optional expedients and exceptions for contract modifications and hedge accounting to apply to derivative contracts and certain hedging relationships affected by the discounting transition. Guidance is optional and may be elected over time, through December 31, 2022 using a prospective application on all eligible contract modifications. The Company has not adopted any of the optional expedients or exceptions through June 30, 2022, but will continue to evaluate the possible adoption of any such expedients or exceptions. ASU 2020-06, Debt – Debt with Conversion and other Options and Derivatives and Hedging-Contracts in Entity’s Own Equity (Topic 470-20) Issued August 2020 Addresses the complexities in accounting for certain financial instruments with a debt and equity component. The number of accounting models for convertible notes will be reduced and entities that issue convertible debt will be required to use the if-converted method for the computation of diluted “Earnings per share” under ASC 260. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements. Effective for fiscal years beginning after December 15, 2021 and may be adopted through either a modified retrospective method of transition or a fully retrospective method of transition. ASU 2022-02, Financial Instruments- Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures Issued March 2022 Eliminates the recognition and measurement guidance for TDRs and requires assessment on whether the modification represents a new loan or a continuation of an existing loan. This ASU requires enhanced disclosures about loan modifications for borrowers experiencing financial difficulty and vintage disclosures which show the gross write-offs recorded in the current period by origination year. The ASU is effective in reporting periods beginning after December 15, 2022, under a prospective approach. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements. |
Business Combinations
Business Combinations | 6 Months Ended |
Jun. 30, 2022 | |
Business Combinations | |
Business Combinations | Note 5. Business Combinations On March 16, 2022, the Company acquired the Mosaic Funds, a group of privately held, real estate structured finance opportunities funds, with a focus on construction lending. See Note 1 for more information about the Mosaic Mergers. The consideration transferred was allocated to the assets acquired and liabilities assumed based on their respective fair values. The methodologies used, and key assumptions made, to estimate the fair value of the assets acquired and liabilities assumed are primarily based on future cash flows and discount rates. The table below summarizes the fair value of assets acquired and liabilities assumed from the acquisition. (in thousands) March 16, 2022 Assets Cash and cash equivalents $ 100,236 Restricted cash 23,330 Loans, net 432,779 Investments held to maturity (including $17,053 held at fair value) 165,302 Real estate owned, held for sale 78,693 Other assets 25,761 Total assets acquired $ 826,101 Liabilities Secured borrowings 66,202 Loan participations sold 73,656 Due to third parties 24,634 Accounts payable and other accrued liabilities 38,182 Total liabilities assumed $ 202,674 Net assets acquired $ 623,427 Non-controlling interests (82,257) Net assets acquired, net of non-controlling interests $ 541,170 The table below illustrates the aggregate consideration transferred, net assets acquired, and the related goodwill. (in thousands) Fair value of net assets acquired $ 541,170 Consideration transferred based on the value of Class B shares issued 437,311 Consideration transferred based on the value of OP units issued 20,745 Fair value of CERs issued 84,348 Total consideration transferred $ 542,404 Goodwill $ 1,234 The table above includes contingent consideration in the form of CERs valued at approximately $84.3 million or $2.79 per CER. See Note 7 for more information about the valuation of the CER. On July 31, 2021, the Company acquired Red Stone, a privately owned real estate finance and investment company that provides innovative financial products and services to multifamily affordable housing. See Note 1 for more information about the Red Stone acquisition. The consideration transferred was allocated to the assets acquired and liabilities assumed based on their respective fair values. The methodologies used, and key assumptions made, to estimate the fair value of the assets acquired and liabilities assumed are primarily based on future cash flows and discount rates. The table below summarizes the fair value of assets acquired and liabilities assumed from the acquisition. (in thousands) July 31, 2021 Assets Cash and cash equivalents $ 1,553 Restricted cash 6,994 Investment in unconsolidated joint ventures 20,793 Servicing rights 30,503 Other assets: Intangible Assets 9,300 Other 1,330 Total assets acquired $ 70,473 Liabilities Accounts payable and other accrued liabilities 9,082 Total liabilities assumed $ 9,082 Net assets acquired $ 61,391 The table below illustrates the aggregate consideration transferred, net assets acquired, and the related goodwill. (in thousands) Fair value of net assets acquired $ 61,391 Cash paid 63,000 Contingent consideration 12,400 Total consideration transferred $ 75,400 Goodwill $ 14,009 In the table above, the future value of the contingent consideration is dependent on the probability of the acquiree achieving certain financial performance targets using earnings before interest, taxes, depreciation and amortization (“EBITDA”) as a metric. The increase in value during the three months ended June 30, 2022 was due to a higher probability of achieving projected EBITDA at the measurement date. On March 19, 2021, the Company completed a merger with Anworth, a specialty finance company that focused primarily on residential mortgage-backed securities and loans that are either rated “investment grade” or are guaranteed by federally sponsored enterprises. See Note 1 for more information about the Anworth Merger. The consideration transferred was allocated to the assets acquired and liabilities assumed based on their respective fair values. The methodologies used and key assumptions made to estimate the fair value of the assets acquired and liabilities assumed are primarily based on future cash flows and discount rates. The table below summarizes the fair value of assets acquired and liabilities assumed from the merger. (in thousands) March 19, 2021 Assets Cash and cash equivalents $ 110,545 Mortgage-backed securities, at fair value 2,010,504 Loans, held for sale, at fair value 102,798 Real estate owned, held for sale 26,107 Accrued interest 8,183 Other assets 38,216 Total assets acquired $ 2,296,353 Liabilities Secured borrowings 1,784,047 Corporate debt, net 36,250 Derivative instruments, at fair value 60,719 Accounts payable and other accrued liabilities 4,811 Total liabilities assumed $ 1,885,827 Net assets acquired $ 410,526 In the table above, the gross contractual unpaid principal amount for acquired loans held for sale, at fair value was $98.3 million, all of which is expected to be collected. The table below illustrates the aggregate consideration transferred, net assets acquired, and the related goodwill. (in thousands, except per share data) Fair value of net assets acquired $ 410,526 Anworth shares outstanding at March 19, 2021 99,374 Exchange ratio x 0.1688 Shares issued 16,774 Market price as of March 19, 2021 $ 14.28 Consideration transferred based on value of common shares issued $ 239,537 Cash paid per share $ 0.61 Cash paid based on outstanding Anworth shares $ 60,626 Preferred Stock, Series B Issued 1,919,378 Market price as of March 19, 2021 $ 25.00 Consideration transferred based on value of Preferred Stock, Series B issued $ 47,984 Preferred Stock, Series C Issued 779,743 Market price as of March 19, 2021 $ 25.00 Consideration transferred based on value of Preferred Stock, Series C issued $ 19,494 Preferred Stock, Series D Issued 2,010,278 Market price as of March 19, 2021 $ 25.00 Consideration transferred based on value of Preferred Stock, Series D issued $ 50,257 Total consideration transferred $ 417,898 Goodwill $ 7,372 In a business combination, the initial allocation of the purchase price is considered preliminary and therefore, is subject to change until the end of the measurement period. The final determination must occur within one year of the acquisition date. Because the measurement period is still open for the Mosaic Mergers and the Red Stone acquisition, certain fair value estimates may change once all information necessary to make a final fair value assessment has been received. As of June 30, 2022, the goodwill recorded in connection with the Mosaic Mergers, Anworth Merger and Red Stone acquisition have been allocated to the SBC Lending and Acquisitions segment. The following pro-forma income and earnings (unaudited) of the combined company are presented as if the Mosaic Mergers had occurred on January 1, 2022 and January 1, 2021. Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2022 2021 2022 2021 Selected Financial Data Interest income $ 153,671 $ 121,420 $ 291,137 $ 212,238 Interest expense (80,827) (60,702) (144,769) (116,322) Recovery of (provision for) loan losses 4,390 (5,517) 2,848 (5,509) Non-interest income 50,766 75,855 139,240 164,853 Non-interest expense (57,345) (79,133) (133,272) (156,890) Income before provision for income taxes $ 70,655 $ 51,923 $ 155,184 $ 98,370 Income tax expense (10,318) (6,995) (28,167) (15,676) Net income $ 60,337 $ 44,928 $ 127,017 $ 82,694 Non-recurring pro-forma transaction costs directly attributable to the Mosaic Mergers were $1.4 million and $7.1 million for the three and six months ended June 30, 2022, respectively and have been deducted from the non-interest expense amount above. These costs included legal, accounting, valuation, and other professional or consulting fees directly attributable to the Mosaic Mergers. Due to the relative size of the Red Stone business acquisition, pro forma financial information is considered not material. |
Loans and Allowance for Credit
Loans and Allowance for Credit Losses | 6 Months Ended |
Jun. 30, 2022 | |
Loans and Allowance for Credit Losses | |
Loans and Allowance for Credit Losses | Note 6. Loans and allowance for credit losses Loans includes (i) loans held for investment that are accounted for at amortized cost net of allowance for credit losses or (ii) loans held at fair value under the fair value option and (iii) loans held for sale at fair value that are accounted for at the lower of cost or fair value. The classification for a loan is based on product type and management’s strategy for the loan. Loans with the “Other” classification are generally SBC acquired loans that have nonconforming characteristics for the Fixed rate, Bridge, or Freddie Mac securitizations due to loan size, rate type, collateral, or borrower criteria. Loan portfolio The table below summarizes the classification, UPB, and carrying value of loans held by the Company including loans of consolidated VIEs. June 30, 2022 December 31, 2021 (in thousands) Carrying Value UPB Carrying Value UPB Loans Residential $ 2,689 $ 2,873 $ 3,641 $ 3,914 SBA - 7(a) 490,564 508,251 503,991 519,408 Fixed rate 116,512 113,060 344,673 341,356 Freddie Mac 6,179 6,070 3,087 2,985 Bridge 2,563,807 2,586,024 1,849,524 1,861,932 Construction 439,519 434,520 — — Other 324,183 328,504 243,746 248,246 Total Loans, before allowance for loan losses $ 3,943,453 $ 3,979,302 $ 2,948,662 $ 2,977,841 Allowance for loan losses $ (36,132) $ — $ (33,216) $ — Total Loans, net $ 3,907,321 $ 3,979,302 $ 2,915,446 $ 2,977,841 Loans in consolidated VIEs Fixed rate $ 903,579 $ 903,097 $ 749,364 $ 746,720 Bridge 4,469,478 4,502,893 2,693,186 2,717,487 SBA - 7(a) 73,798 82,085 88,348 98,604 Other 367,426 368,078 563,111 562,771 Total Loans, in consolidated VIEs, before allowance for loan losses $ 5,814,281 $ 5,856,153 $ 4,094,009 $ 4,125,582 Allowance for loan losses on loans in consolidated VIEs $ (9,993) $ — $ (12,161) $ — Total Loans, net, in consolidated VIEs $ 5,804,288 $ 5,856,153 $ 4,081,848 $ 4,125,582 Loans, held for sale, at fair value Residential $ 199,378 $ 197,531 $ 269,164 $ 263,479 SBA - 7(a) 51,239 47,878 42,760 38,966 Fixed rate 200,459 214,380 197,290 195,114 Freddie Mac 17,859 17,648 42,384 41,864 Other 507 554 1,337 1,337 Total Loans, held for sale, at fair value $ 469,442 $ 477,991 $ 552,935 $ 540,760 Total Loans, net and Loans, held for sale, at fair value $ 10,181,051 $ 10,313,446 $ 7,550,229 $ 7,644,183 Paycheck Protection Program loans Paycheck Protection Program loans, held-for-investment $ 388,426 $ 415,640 $ 867,109 $ 927,766 Paycheck Protection Program loans, held at fair value 763 763 3,243 3,243 Total Paycheck Protection Program loans $ 389,189 $ 416,403 $ 870,352 $ 931,009 Total Loan portfolio $ 10,570,240 $ 10,729,849 $ 8,420,581 $ 8,575,192 Loan vintage and credit quality indicators The Company monitors the credit quality of its loan portfolio based on primary credit quality indicators, such as delinquency rates. Loans that are 30 days or more past due, provide an indication of the borrower’s capacity and willingness to meet its financial obligations. In the tables below, Total Loans, net includes Loans, net in consolidated VIEs and a specific allowance for loan losses of $18.7 million, including $5.0 million of reserves of PCD loans as of June 30, 2022 and $17.3 million of specific allowance for loan losses as of December 31, 2021. The tables below summarize the classification, UPB and carrying value of loans by year of origination. Carrying Value by Year of Origination (in thousands) UPB 2022 2021 2020 2019 2018 Pre 2018 Total June 30, 2022 Bridge $ 7,088,917 $ 2,273,190 $ 3,839,216 $ 384,815 $ 331,772 $ 166,603 $ 32,763 $ 7,028,359 Construction 434,520 — — 10,000 364,124 60,395 — 434,519 Fixed rate 1,016,157 38,292 143,770 95,074 346,706 143,314 248,954 1,016,110 Freddie Mac 6,070 — — 6,179 — — — 6,179 Residential 2,873 1,141 156 — — 183 1,157 2,637 SBA - 7(a) 590,336 54,407 85,108 42,224 91,154 102,958 184,659 560,510 Other 696,582 2,323 27,420 12,517 72,354 16,959 559,131 690,704 Total Loans, before general allowance for loan losses $ 9,835,455 $ 2,369,353 $ 4,095,670 $ 550,809 $ 1,206,110 $ 490,412 $ 1,026,664 $ 9,739,018 General allowance for loan losses $ (27,409) Total Loans, net $ 9,711,609 UPB 2021 2020 2019 2018 2017 Pre 2017 Total December 31, 2021 Bridge $ 4,579,419 $ 3,461,864 $ 430,248 $ 399,603 $ 205,855 $ 11,327 $ 29,490 $ 4,538,387 Fixed rate 1,088,076 142,801 103,528 393,563 163,912 98,123 187,918 1,089,845 Freddie Mac 2,985 — 3,093 — — — — 3,093 Residential 3,914 1,413 492 468 — — 1,215 3,588 SBA - 7(a) 618,012 92,030 44,955 104,938 122,242 49,031 173,616 586,812 Other 811,017 4,523 22,973 76,320 31,570 14,868 653,428 803,682 Total Loans, before general allowance for loan losses $ 7,103,423 $ 3,702,631 $ 605,289 $ 974,892 $ 523,579 $ 173,349 $ 1,045,667 $ 7,025,407 General allowance for loan losses $ (28,113) Total Loans, net $ 6,997,294 The tables below present delinquency information on loans, net by year of origination. Carrying Value by Year of Origination (in thousands) UPB 2022 2021 2020 2019 2018 Pre 2018 Total June 30, 2022 Current and less than 30 days past due $ 9,577,193 $ 2,369,245 $ 4,095,520 $ 546,341 $ 1,161,571 $ 353,190 $ 971,228 $ 9,497,095 30 - 59 days past due 16,211 — — — 14,675 — 1,462 16,137 60+ days past due 242,051 108 150 4,468 29,864 137,222 53,974 225,786 Total Loans, before general allowance for loan losses $ 9,835,455 $ 2,369,353 $ 4,095,670 $ 550,809 $ 1,206,110 $ 490,412 $ 1,026,664 $ 9,739,018 General allowance for loan losses $ (27,409) Total Loans, net $ 9,711,609 Carrying Value by Year of Origination UPB 2021 2020 2019 2018 2017 Pre 2017 Total December 31, 2021 Current and less than 30 days past due $ 6,901,474 $ 3,666,020 $ 596,289 $ 953,269 $ 473,798 $ 167,629 $ 984,680 $ 6,841,685 30 - 59 days past due 73,836 35,549 352 18,393 3,714 228 14,601 72,837 60+ days past due 128,113 1,062 8,648 3,230 46,067 5,492 46,386 110,885 Total Loans, before general allowance for loan losses $ 7,103,423 $ 3,702,631 $ 605,289 $ 974,892 $ 523,579 $ 173,349 $ 1,045,667 $ 7,025,407 General allowance for loan losses $ (28,113) Total Loans, net $ 6,997,294 The table below presents delinquency information on loans, net by portfolio. (in thousands) Current 30-59 days past due 60+ days past due Total Non-Accrual Loans 90+ days past due and Accruing June 30, 2022 Bridge $ 6,927,794 $ 14,675 $ 85,890 $ 7,028,359 $ 96,137 $ — Construction 360,124 — 74,395 434,519 74,395 — Fixed rate 988,947 — 27,163 1,016,110 21,923 — Freddie Mac 3,086 — 3,093 6,179 3,093 — Residential 1,537 — 1,100 2,637 1,102 — SBA - 7(a) 557,134 730 2,646 560,510 11,034 — Other 658,473 732 31,499 690,704 36,040 — Total Loans, before general allowance for loan losses $ 9,497,095 $ 16,137 $ 225,786 $ 9,739,018 $ 243,724 $ — General allowance for loan losses $ (27,409) Total Loans, net $ 9,711,609 Percentage of loans outstanding 97.5% 0.2% 2.3% 100% 2.5% 0.0% December 31, 2021 Bridge $ 4,451,230 $ 52,997 $ 34,160 $ 4,538,387 $ 28,820 $ — Fixed rate 1,057,708 — 32,137 1,089,845 24,031 — Freddie Mac — — 3,093 3,093 3,093 - Residential 1,674 — 1,914 3,588 1,914 — SBA - 7(a) 576,593 6,741 3,478 586,812 15,119 — Other 754,480 13,099 36,103 803,682 26,525 — Total Loans, before general allowance for loan losses $ 6,841,685 $ 72,837 $ 110,885 $ 7,025,407 $ 99,502 $ — General allowance for loan losses $ (28,113) Total Loans, net $ 6,997,294 Percentage of loans outstanding 97.4% 1.0% 1.6% 100% 1.4% 0.0% In addition to delinquency rates, the current estimated LTV ratio, geographic distribution of the loan collateral and collateral concentration are primary credit quality indicators that provide insight into a borrower’s capacity and willingness to meet its financial obligation. High LTV loans tend to have higher delinquency rates than loans where the borrower has equity in the collateral. The geographic distribution of the loan collateral considers factors such as the regional economy, property price changes and specific events such as natural disasters, which will affect credit quality. The collateral concentration of the loan portfolio considers economic factors or events may have a more pronounced impact on certain sectors or property types. The table below presents quantitative information on the credit quality of loans, net. Loan-to-Value (1) (in thousands) 0.0 – 20.0% 20.1 – 40.0% 40.1 – 60.0% 60.1 – 80.0% 80.1 – 100.0% Greater than 100.0% Total June 30, 2022 Bridge $ — $ 240,207 $ 859,550 $ 5,609,293 $ 290,016 $ 29,293 $ 7,028,359 Construction 10,800 10,000 49,595 364,124 — — 434,519 Fixed rate 11,625 59,157 361,397 560,290 16,844 6,797 1,016,110 Freddie Mac — — 3,086 3,093 — — 6,179 Residential 62 549 942 1,084 — — 2,637 SBA - 7(a) 8,459 44,630 99,499 186,780 90,845 130,297 560,510 Other 183,161 278,346 166,127 47,285 9,842 5,943 690,704 Total Loans, before general allowance for loan losses $ 214,107 $ 632,889 $ 1,540,196 $ 6,771,949 $ 407,547 $ 172,330 $ 9,739,018 General allowance for loan losses $ (27,409) Total Loans, net $ 9,711,609 Percentage of loans outstanding 2.2% 6.5% 15.8% 69.5% 4.2% 1.8% December 31, 2021 Bridge $ — $ 107,606 $ 338,355 $ 3,432,820 $ 640,215 $ 19,391 $ 4,538,387 Fixed rate 13,983 40,570 390,213 624,462 9,972 10,645 1,089,845 Freddie Mac — — — 3,093 — — 3,093 Residential 69 262 835 1,050 1,219 153 3,588 SBA - 7(a) 7,219 41,943 119,114 197,950 81,388 139,198 586,812 Other 221,823 300,723 185,538 76,590 8,701 10,307 803,682 Total Loans, before general allowance for loan losses $ 243,094 $ 491,104 $ 1,034,055 $ 4,335,965 $ 741,495 $ 179,694 $ 7,025,407 General allowance for loan losses $ (28,113) Total Loans, net $ 6,997,294 Percentage of loans outstanding 3.5% 7.0% 14.7% 61.7% 10.5% 2.6% (1) Loan-to-value is calculated using carrying amount as a percentage of current collateral value The table below presents the geographic concentration of loans, net, secured by real estate. Geographic Concentration (% of Unpaid Principal Balance) June 30, 2022 December 31, 2021 Texas 19.8 % 19.2 % California 11.4 14.3 Georgia 7.4 7.0 Arizona 6.9 7.4 Florida 6.8 6.7 New York 5.7 7.3 Illinois 4.7 4.3 North Carolina 3.2 2.6 Washington 1.6 2.1 Colorado 1.3 1.9 Other 31.2 27.2 Total 100.0 % 100.0 % The table below presents the collateral type concentration of loans, net. Collateral Concentration (% of Unpaid Principal Balance) June 30, 2022 December 31, 2021 Multi-family 64.4 % 54.4 % Mixed Use 8.5 7.1 Retail 6.5 10.2 SBA 6.0 8.7 Office 5.6 8.2 Industrial 4.9 6.4 Lodging/Residential 1.8 1.8 Other 2.3 3.2 Total 100.0 % 100.0 % The table below presents the collateral type concentration of SBA loans within loans, net. Collateral Concentration (% of Unpaid Principal Balance) June 30, 2022 December 31, 2021 Lodging 14.9 % 17.0 % Offices of Physicians 9.1 10.9 Child Day Care Services 6.5 7.4 Eating Places 4.0 5.0 Gasoline Service Stations 3.7 3.7 Grocery Stores 2.0 1.8 Veterinarians 1.9 2.4 Funeral Service & Crematories 1.8 1.9 Couriers 1.2 1.3 Car washes 0.8 1.4 Other 54.1 47.2 Total 100.0 % 100.0 % Allowance for credit losses The allowance for credit losses consists of the allowance for losses on loans and lending commitments accounted for at amortized cost. Such loans and lending commitments are reviewed quarterly considering credit quality indicators, including probable and historical losses, collateral values, LTV ratios, and economic conditions. The table below presents the allowance for loan losses by loan product and impairment methodology. (in thousands) Bridge Construction Fixed Rate Residential SBA - 7(a) Other Total Allowance for loan losses June 30, 2022 General $ 13,466 $ 122 $ 2,241 $ 5 $ 9,275 $ 2,300 $ 27,409 Specific 4,927 — 3,981 52 3,851 905 13,716 PCD — 5,000 — — — — 5,000 Ending balance $ 18,393 $ 5,122 $ 6,222 $ 57 $ 13,126 $ 3,205 $ 46,125 December 31, 2021 General $ 15,204 $ — $ 2,667 $ 8 $ 6,653 $ 3,581 $ 28,113 Specific 4,315 — 4,194 52 5,527 3,176 17,264 Ending balance $ 19,519 $ — $ 6,861 $ 60 $ 12,180 $ 6,757 $ 45,377 The table below presents a summary of the changes in the allowance for loan losses. (in thousands) Bridge Construction Fixed Rate Residential SBA - 7(a) Other Total Allowance for loan losses Three Months Ended June 30, 2022 Beginning balance $ 19,878 $ 5,323 $ 6,524 $ 60 $ 13,233 $ 6,226 $ 51,244 Provision for (recoveries of) loan losses (1,485) (201) (302) (3) 219 (2,956) (4,728) Charge-offs and sales — — — — (326) (7) (333) Recoveries — — — — — (58) (58) Ending balance $ 18,393 $ 5,122 $ 6,222 $ 57 $ 13,126 $ 3,205 $ 46,125 Three Months Ended June 30, 2021 Beginning balance $ 17,057 $ — $ 6,753 $ 60 13,599 $ 8,180 $ 45,649 Provision for loan losses 4,121 — 612 1 794 6 5,534 Charge-offs and sales — — (311) — (1,045) — (1,356) Recoveries — — (189) — 2 (11) (198) Ending balance $ 21,178 $ — $ 6,865 $ 61 $ 13,350 $ 8,175 $ 49,629 Six Months Ended June 30, 2022 Beginning balance $ 19,519 $ — $ 6,861 $ 60 $ 12,180 $ 6,757 $ 45,377 Provision for (recoveries of) loan losses (1,126) 122 (639) (3) 1,491 (3,332) (3,487) Purchased financial assets with credit deterioration — 5,000 — — — — 5,000 Charge-offs and sales — — — — (499) (7) (506) Recoveries — — — — (46) (213) (259) Ending balance $ 18,393 $ 5,122 $ 6,222 $ 57 $ 13,126 $ 3,205 $ 46,125 Six Months Ended June 30, 2021 Beginning balance $ 14,588 $ — $ 7,629 $ 52 $ 14,600 $ 9,863 $ 46,732 Provision for (recoveries of) loan losses 6,590 — 736 9 439 (1,677) 6,097 Charge-offs and sales — — (1,311) — (1,703) — (3,014) Recoveries — — (189) — 14 (11) (186) Ending balance $ 21,178 $ — $ 6,865 $ 61 $ 13,350 $ 8,175 $ 49,629 The table above excludes $0.9 million and $0.4 million of allowance for loan losses on unfunded lending commitments as of June 30, 2022 and June 30, 2021, respectively. Refer to Note 3 – Summary of Significant Accounting Policies for more information on our accounting policies, methodologies and judgment applied to determine the allowance for loan losses and lending commitments. Non-accrual loans A loan is placed on nonaccrual status when it is probable that principal and interest will not be collected under the original contractual terms. At that time, interest income is no longer accrued. The table below presents information on non-accrual loans. (in thousands) June 30, 2022 December 31, 2021 Non-accrual loans With an allowance $ 159,014 $ 71,644 Without an allowance 84,710 27,858 Total recorded carrying value of non-accrual loans $ 243,724 $ 99,502 Allowance for loan losses related to non-accrual loans $ (18,797) $ (17,264) Unpaid principal balance of non-accrual loans $ 261,272 $ 119,554 June 30, 2022 June 30, 2021 Interest income on non-accrual loans for the three months ended $ 365 $ 611 Interest income on non-accrual loans for the six months ended $ 1,773 $ 1,727 Troubled debt restructurings A loan is classified as a TDR when there is a reasonable expectation that the original terms of the loan agreement will be modified by granting concessions to a borrower who is experiencing financial difficulty. Concessions typically include modifications to the interest rate, maturity date, timing of principal and interest payments and principal forgiveness. Modified loans that are classified as TDRs are individually evaluated and measured for impairment. The table below presents details on TDR loans by type. June 30, 2022 December 31, 2021 (in thousands) SBC SBA Total SBC SBA Total Carrying value of modified loans classified as TDRs: On accrual status $ 837 $ 11,837 $ 12,674 $ 284 $ 8,242 $ 8,526 On non-accrual status 9,441 9,012 18,453 11,220 11,409 22,629 Total carrying value of modified loans classified as TDRs $ 10,278 $ 20,849 $ 31,127 $ 11,504 $ 19,651 $ 31,155 Allowance for loan losses on loans classified as TDRs $ 38 $ 1,093 $ 1,131 $ 46 $ 2,626 $ 2,672 The table below presents TDR loan activity and the financial effects of these modifications by type. Three Months Ended June 30, 2022 Three Months Ended June 30, 2021 (in thousands, except number of loans) SBC SBA Total SBC SBA Total Number of loans permanently modified — 3 3 — 10 10 Pre-modification recorded balance (a) $ — $ 1,087 $ 1,087 $ — $ 6,867 $ 6,867 Post-modification recorded balance (a) $ — $ 906 $ 906 $ — $ 6,867 $ 6,867 Number of loans that remain in default (b) — — — — — — Balance of loans that remain in default (b) $ — $ — $ — $ — $ — $ — Concession granted (a) : Term extension $ — $ 811 $ 811 $ — $ 6,345 $ 6,345 Interest rate reduction — — — — — — Principal reduction — — — — — — Foreclosure — — — — 93 93 Total $ — $ 811 $ 811 $ — $ 6,438 $ 6,438 Six Months Ended June 30, 2022 Six Months Ended June 30, 2021 (in thousands, except number of loans) SBC SBA Total SBC SBA Total Number of loans permanently modified 1 6 7 1 17 18 Pre-modification recorded balance (a) $ 496 $ 1,554 $ 2,050 $ 1,276 $ 8,309 $ 9,585 Post-modification recorded balance (a) $ 496 $ 1,060 $ 1,556 $ 1,276 $ 7,842 $ 9,118 Number of loans that remain in default (b) 1 1 2 — 1 1 Balance of loans that remain in default (b) $ 356 $ 1 $ 357 $ — $ 58 $ 58 Concession granted (a) Term extension $ — $ 978 $ 978 $ — $ 7,319 $ 7,319 Interest rate reduction — — — — — — Principal reduction — — — — — — Foreclosure 356 — 356 1,276 93 1,369 Total $ 356 $ 978 $ 1,334 $ 1,276 $ 7,412 $ 8,688 (a) Represents carrying value. (b) Represents carrying values of the TDRs that occurred during the respective periods ended and remained in default as of the current period ended. Generally, all loans modified in a TDR are placed or remain on non-accrual status at the time of the restructuring. However, certain accruing loans modified in a TDR that are current at the time of restructuring may remain on accrual status if payment in full under the restructured terms is expected. For purposes of this schedule, a loan is considered in default if it is 30 or more days past due. The remaining elements of the Company’s modification programs are generally considered insignificant and do not have a material impact on financial results. For loans that the Company determines foreclosure of the collateral is probable, expected losses are measured based on the difference between the fair value of the collateral and the amortized cost basis of the loan as of the measurement date. As of June 30, 2022 and December 31, 2021, the Company’s total carrying amount of loans in the foreclosure process was $1.2 million and $2.3 million, respectively. PCD loans The Company did not acquire any PCD loans during the three months ended June 30, 2022 and June 30, 2021. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2022 | |
Fair Value Measurements | |
Fair Value Measurements | Note 7. Fair value measurements Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. U.S. GAAP has a three-level hierarchy that prioritizes and ranks the level of market price observability used in measuring financial instruments at fair value. Market price observability is impacted by a number of factors, including the type of investment, the characteristics specific to the investment, and the state of the marketplace (including the existence and transparency of transactions between market participants). The Company’s valuation techniques for financial instruments use observable and unobservable inputs. Investments with readily available, actively quoted prices or for which fair value can be measured from actively quoted prices in an orderly market will generally have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Investments measured and reported at fair value are classified and disclosed into one of the following categories: Level 1 Level 2 Level 3 Valuation techniques of Level 3 investments vary by instrument type, but are generally based on an income, market or cost-based approach. The income approach predominantly considers discounted cash flows which is the measure of expected future cash flows in a default scenario, implied by the value of the underlying collateral, where applicable, and current performance whereas the market-based approach predominantly considers pull-through rates, industry multiples and the unpaid principal balance. Fair value measurements of loans are sensitive to changes in assumptions regarding prepayments, probability of default, loss severity in the event of default, forecasts of home prices, and significant activity or developments in the real estate market. Fair value measurements of residential MSRs are sensitive to changes in assumptions regarding prepayments, discount rates, and cost of servicing. Fair value measurements of derivative instruments, specifically IRLC’s, are sensitive to changes in assumptions related to origination pull-through rates, servicing fee multiples, and percentages of unpaid principal balances. Origination pull-through rates are also dependent on factors such as market interest rates, type of origination, length of lock, purpose of the loan (purchase or refinance), type of loan (fixed or variable), and the processing status of the loan. The fair value of the acquired contingent consideration was determined using a Monte Carlo simulation model which considers various potential results based on Level 3 inputs, including management’s latest estimates of future operating results. Fair value measurements of the contingent consideration liability are sensitive to changes in assumptions related to earnings before tax (“EBT”), discount rate and risk-free rate of return. Contingent consideration also consists of CERs. Pursuant to the CER agreement, if, as of the revaluation date, the sum of the updated fair value of the acquired portfolio less all advances made on such assets, plus all principal payments, return of capital and liquidation proceeds received on such assets exceeds the initial discounted fair value of the acquired portfolio, then the Company will issue to the CER holders, with respect to each CER, a number of shares of common stock equal to 90% of the lesser of the valuation excess and the discount amount, divided by the number of initially issued CERs divided by the Company share value, with cash being paid in lieu of any fractional shares of common stock otherwise due to such holder. In addition, each CER holder will be entitled to receive a number of additional shares of common stock equal to (i) the amount of any dividends or other distributions paid with respect to the number of whole shares of common stock received by such CER holder in respect of such holder’s CERs and having a record date on or after the closing of the Mosaic Mergers and a payment date prior to the issuance date of such shares of common stock, divided by (ii) the Company share value. The probability-weighted expected return method (“PWERM”) was utilized to estimate the return of capital and liquidation proceeds of the acquired asset portfolio, considering each possible outcome, including the economic and projected performance of each acquired asset, using a probability of 65%-100% return of capital. The discounted cashflow technique was utilized by the Company to assess the updated value of the acquired portfolio as of the revaluation date. The fair value of dividend distributions to the CER holders was determined using a Monte Carlo simulation model which considers various potential results based on the CER payments, volatility of the Company’s share value and projected dividend distributions. In certain cases, the inputs used to measure fair value may be categorized into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the investment. The table below presents financial instruments carried at fair value on a recurring basis. (in thousands) Level 1 Level 2 Level 3 Total June 30, 2022 Assets: Loans, held for sale, at fair value $ — $ 268,579 $ 200,863 $ 469,442 Loans, net, at fair value — — 9,956 9,956 Investments held to maturity — — 9,601 9,601 Paycheck Protection Program loans — 763 — 763 MBS, at fair value — 38,982 1,666 40,648 Derivative instruments, at fair value — 44,131 2,399 46,530 Residential MSRs, at fair value — — 168,653 168,653 Investment in unconsolidated joint ventures — — 8,439 8,439 Total assets $ — $ 352,455 $ 401,577 $ 754,032 Liabilities: Derivative instruments, at fair value $ — $ 1,303 $ — $ 1,303 Contingent consideration — — 92,548 92,548 Total liabilities $ — $ 1,303 $ 92,548 $ 93,851 December 31, 2021 Assets: Loans, held for sale, at fair value $ — $ 321,070 $ 231,865 $ 552,935 Loans, net, at fair value — — 10,766 10,766 Paycheck Protection Program loans — — 3,243 3,243 MBS, at fair value — 97,915 1,581 99,496 Derivative instruments, at fair value — 4,683 2,339 7,022 Residential MSRs, at fair value — — 120,142 120,142 Investment in unconsolidated joint ventures — — 8,894 8,894 Total assets $ — $ 423,668 $ 378,830 $ 802,498 Liabilities: Derivative instruments, at fair value $ — $ 410 $ — $ 410 Contingent consideration — — 16,400 16,400 Total liabilities $ — $ 410 $ 16,400 $ 16,810 The table below presents the valuation techniques and significant unobservable inputs used to value Level 3 financial instruments, using third party information without adjustment. (in thousands) Fair Value Predominant Valuation Technique (a) Type Range Weighted Average June 30, 2022 Investments held to maturity $ 9,601 Income Approach Discount rate 12.0% 12.0% Residential MSRs, at fair value $ 168,653 Income Approach Forward prepayment rate | Forward Default Rate | Discount rate | Servicing expense (b) (b) Investment in unconsolidated joint ventures $ 8,439 Income Approach Discount rate 9.0% 9.0% Derivative instruments, at fair value $ 2,399 Market Approach Origination pull-through rate | Servicing Fee Multiple | Percentage of unpaid principal balance 48.3 - 100% | 1.1 - 6.5% | 0.3 to 3.2% 85.1% | 4.7% | 1.6% Contingent consideration- Red Stone $ (8,200) Monte Carlo Simulation Model EBT volatility | EBT discount rate | Liability discount rate 25.0% | 4.0% | 6.5% 25.0% | 4.0% | 6.5% Contingent consideration- Mosaic CER dividends $ (18,475) Monte Carlo Simulation Model Equity volatility | Risk-free rate of return | Discount Rate 45.0% | 2.14% | 9.98% 45.0% | 2.14% | 9.98% Contingent consideration- Mosaic CER units $ (65,873) Income Approach and PWERM Model Revaluation discount rate | Discount rate 8.50 - 12.00% | 9.98% 9.6% | 9.98% December 31, 2021 Derivative instruments, at fair value $ 2,339 Market Approach Origination pull-through rate | Servicing Fee Multiple | Percentage of unpaid principal balance 63.0 - 100% | 0.4 - 5.2% | 0.1 to 3.1% 86.7% | 4.1% | 1.3% Residential MSRs, at fair value $ 120,142 Income Approach Forward prepayment rate | Forward Default Rate | Discount rate | Servicing expense (b) (b) Investment in unconsolidated joint ventures $ 8,894 Income Approach Discount rate 9.0% 9.0% Contingent consideration $ (16,400) Monte Carlo Simulation Model EBT volatility | Risk-free rate of return | EBT discount rate | Liability discount rate 25.0% | 0.4% | 17.6% | 3.8% 25.0% | 0.4% | 17.6% | 3.8% (a) Prices are weighted based on the unpaid principal balance of the loans and securities included in the range for each class. (b) Refer to Note 9 - Servicing Rights for more information on residential MSRs unobservable inputs. Included within Level 3 assets of $401.6 million as of June 30, 2022 and $378.8 million as of December 31, 2021, is $212.5 million and $247.5 million of quoted or transaction prices in which quantitative unobservable inputs are not developed by the Company when measuring fair value, respectively. The table below presents a summary of changes in fair value for Level 3 assets and liabilities. (in thousands) MBS Derivatives Loans, net Loans, held for sale, at fair value Investments held to maturity PPP loans Residential MSRs Investment in unconsolidated joint ventures Contingent Consideration Total Three Months Ended June 30, 2022 Beginning Balance $ 7,014 $ (2,616) $ 10,722 $ 203,958 $ 17,053 $ — $ 159,834 $ 8,610 $ (92,148) $ 312,427 Purchases or Originations — — — 5,900 — — — — — 5,900 Additions due to loans sold, servicing retained — — — — — — 12,448 — — 12,448 Sales / Principal payments (1,352) — — (115) (7,296) — (3,614) — — (12,377) Realized gains (losses), net (1,449) — — (1) (156) — — — — (1,606) Unrealized gains (losses), net 2,661 5,015 (766) (5,014) — — (15) (171) (400) 1,310 Accreted discount, net 1 — — — — — — — — 1 Transfer to loans, held for investment — — — (3,862) — — — — — (3,862) Transfer to (from) Level 3 (5,209) — — (3) — — — — — (5,212) Ending Balance $ 1,666 $ 2,399 $ 9,956 $ 200,863 $ 9,601 $ — $ 168,653 $ 8,439 $ (92,548) $ 309,029 Unrealized gains (losses), net on assets/liabilities $ 239 $ 2,399 $ (1,000) $ (13,953) $ — $ — $ 2,293 $ (757) $ (800) $ (11,579) Six Months Ended June 30, 2022 Beginning Balance $ 1,581 $ 2,339 $ 10,766 $ 231,865 $ — $ 3,243 $ 120,142 $ 8,894 $ (16,400) $ 362,430 Purchases or Originations — — — 23,470 — — — — — 23,470 Additions due to loans sold, servicing retained — — — — — — 22,954 — — 22,954 Sales / Principal payments (1,352) — — (32,709) (7,296) (1,400) (7,026) — 9,000 (40,783) Realized gains (losses), net (1,449) — — (787) (156) — — — — (2,392) Unrealized gains (losses), net 2,705 60 (810) (15,774) — — 32,583 (455) (800) 17,509 Accreted discount, net 1 — — — — — — — — 1 Merger — — — — 17,053 — — — (84,348) (67,295) Transfer to loans, held for investment — — — (3,862) — — — — — (3,862) Transfer to (from) Level 3 180 — — (1,340) — (1,843) — — — (3,003) Ending Balance $ 1,666 $ 2,399 $ 9,956 $ 200,863 $ 9,601 $ — $ 168,653 $ 8,439 $ (92,548) $ 309,029 Unrealized gains (losses), net on assets/liabilities $ 239 $ 2,399 $ (1,000) $ (13,953) $ — $ — $ 2,293 $ (757) $ (800) $ (11,579) Three Months Ended June 30, 2021 Beginning Balance $ 5,633 $ 11,724 $ 13,618 $ — $ — $ 38,388 $ 98,542 $ — $ — $ 167,905 Accreted discount, net 2 — — — — — — — — 2 Additions due to loans sold, servicing retained — — — — — — 11,925 — — 11,925 Sales / Principal payments — — (11) — — (21,957) (4,948) — — (26,916) Unrealized gains (losses), net 125 (5,594) 74 — — — (4,699) — — (10,094) Transfer to (from) Level 3 (4,046) — — — — — — — — (4,046) Ending Balance $ 1,714 $ 6,130 $ 13,681 $ — $ — $ 16,431 $ 100,820 $ — $ — $ 138,776 Unrealized gains (losses), net on assets/liabilities $ 286 $ 6,130 $ (189) $ — $ — $ — $ (36,553) $ — $ — $ (30,326) Six Months Ended June 30, 2021 Beginning Balance $ 25,131 $ 16,363 $ 13,795 $ — $ — $ 74,931 $ 76,840 $ — $ — $ 207,060 Purchases or Originations — — — — — 3,866 — — — 3,866 Additions due to loans sold, servicing retained — — — — — — 23,973 — — 23,973 Sales / Principal payments (92) — (212) — — (62,366) (10,650) — — (73,320) Realized gains (losses), net — — (5) — — — — — — (5) Unrealized gains (losses), net 1,194 (10,233) 103 — — — 10,657 — — 1,721 Accreted discount, net 60 — — — — — — — — 60 Transfer to (from) Level 3 (24,579) — — — — — — — — (24,579) Ending Balance $ 1,714 $ 6,130 $ 13,681 $ — $ — $ 16,431 $ 100,820 $ — $ — $ 138,776 Unrealized gains (losses), net on assets/liabilities $ 286 $ 6,130 $ (189) $ — $ — $ — $ (36,553) $ — $ — $ (30,326) The Company’s policy is to recognize transfers in and transfers out as of the end of the period of the event or the date of the change in circumstances that caused the transfer. Transfers between Level 2 and Level 3 generally relate to whether there were changes in the significant relevant observable and unobservable inputs that are available for the fair value measurements of such financial instruments. Financial instruments not carried at fair value The table below presents the carrying value and estimated fair value of financial instruments that are not carried at fair value and are classified as Level 3. June 30, 2022 December 31, 2021 (in thousands) Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value Assets: Loans, net $ 9,701,653 $ 9,795,382 $ 6,986,528 $ 7,112,282 Paycheck Protection Program loans 388,426 388,427 867,109 927,766 Investments held to maturity 149,440 149,440 — — Purchased future receivables, net 8,704 8,704 7,872 7,872 Servicing rights 84,858 88,455 84,457 89,470 Total assets $ 10,333,081 $ 10,430,408 $ 7,945,966 $ 8,137,390 Liabilities: Secured borrowings $ 3,212,383 $ 3,212,383 $ 2,517,600 $ 2,517,600 Paycheck Protection Program Liquidity Facility borrowings 427,759 427,759 941,505 941,505 Securitized debt obligations of consolidated VIEs, net 4,533,789 4,499,632 3,214,303 3,238,155 Senior secured note, net 342,469 318,459 342,035 338,990 Guaranteed loan financing 304,158 318,209 345,217 366,887 Convertible notes, net 113,818 116,733 113,247 118,922 Corporate debt, net 565,230 550,057 441,817 457,741 Total liabilities $ 9,499,606 $ 9,443,232 $ 7,915,724 $ 7,979,800 Other assets of $67.2 million as of June 30, 2022, and $45.6 million as of December 31, 2021, are not carried at fair value and include due from servicers and accrued interest, which are presented in Note 19 – Other Assets and Other Liabilities. Receivables from third parties of $7.5 million as of June 30, 2022, and $29.3 million as of December 31, 2021, are not carried at fair value but generally approximate fair value and are classified as Level 3. Accounts payable and other accrued liabilities of $30.3 million as of June 30, 2022, and $27.5 million as of December 31, 2021 are not carried at fair value and include payables to related parties and accrued interest payable which are included in Note 19. For these instruments, carrying value generally approximates fair value and are classified as Level 3. |
Investments Held to Maturity
Investments Held to Maturity | 6 Months Ended |
Jun. 30, 2022 | |
Investments Held to Maturity | |
Investments Held to Maturity | Note 8. Investments held to maturity The table below presents information about held to maturity investments. Gross Gross Amortized Unrealized Unrealized (in thousands) Weighted Average Interest Rate (a) Cost Fair Value Gains Losses June 30, 2022 Less than one year 12.0 % $ 446 $ 446 $ — $ — One to five years 14.6 % 50,172 50,172 — — Construction preferred equities 14.6 % $ 50,618 $ 50,618 $ — $ — One to five years 12.0 % $ 108,423 $ 108,423 — — Construction preferred equities in consolidated VIEs 12.0 % $ 108,423 $ 108,423 $ — $ — Total held to maturity investments 12.8 % $ 159,049 $ 159,049 $ — $ — (a) Weighted based on current principal balance Provision for credit losses on held to maturity securities was not material for the three and six months ended June 30, 2022. The Company had no such held to maturity investments as of December 31, 2021. |
Servicing Rights
Servicing Rights | 6 Months Ended |
Jun. 30, 2022 | |
Servicing Rights | |
Servicing Rights | Note 9. Servicing rights The Company performs servicing activities for third parties, which primarily include collecting principal, interest and other payments from borrowers, remitting the corresponding payments to investors and monitoring delinquencies. The Company’s servicing fees are specified by pooling and servicing agreements. The table below presents information about servicing rights. Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2022 2021 2022 2021 SBA servicing rights, at amortized cost Beginning net carrying amount $ 22,891 $ 18,642 $ 22,157 $ 18,764 Additions due to loans sold, servicing retained 2,045 2,741 3,779 3,700 Amortization (1,000) (1,042) (1,949) (2,089) Impairment (2,266) (620) (2,317) (654) Ending net carrying amount $ 21,670 $ 19,721 $ 21,670 $ 19,721 Multi-family servicing rights, at amortized cost Beginning net carrying amount $ 61,418 $ 21,757 $ 62,300 $ 19,059 Additions due to loans sold, servicing retained 4,164 3,909 5,627 7,468 Amortization (2,394) (942) (4,739) (1,803) Ending net carrying amount $ 63,188 $ 24,724 $ 63,188 $ 24,724 Total servicing rights, at amortized cost $ 84,858 $ 44,445 $ 84,858 $ 44,445 Residential MSRs, at fair value Beginning net carrying amount $ 159,834 $ 98,542 $ 120,142 $ 76,840 Additions due to loans sold, servicing retained 12,448 11,925 22,954 23,973 Loan pay-offs (3,614) (4,948) (7,026) (10,650) Unrealized gains (losses) (15) (4,699) 32,583 10,657 Ending fair value amount $ 168,653 $ 100,820 $ 168,653 $ 100,820 Total servicing rights $ 253,511 $ 145,265 $ 253,511 $ 145,265 Servicing rights – SBA and multi-family portfolio. The Company’s models calculate the present value of expected future cash flows utilizing assumptions that we believe are used by market participants. We derive forward prepayment rates, forward default rates and discount rates from historical experience adjusted for prevailing market conditions. Components of the estimated future cash flows include servicing fees, late fees, other ancillary fees and cost of servicing. The table below presents additional information about SBA and multi-family servicing rights. As of June 30, 2022 As of December 31, 2021 (in thousands) UPB Carrying Value UPB Carrying Value SBA $ 926,364 $ 21,670 $ 856,188 $ 22,157 Multi-family 4,624,421 63,188 4,232,969 62,300 Total $ 5,550,785 $ 84,858 $ 5,089,157 $ 84,457 The table below presents significant assumptions used in the estimated valuation of SBA and multi-family servicing rights carried at amortized cost. June 30, 2022 December 31, 2021 Range of input values Weighted Average Range of input values Weighted Average SBA servicing rights Forward prepayment rate 9.0 - 21.7 % 9.6 % 7.9 - 21.0 % 8.9 % Forward default rate 0.0 - 10.1 % 9.1 % 0.0 - 10.4 % 9.1 % Discount rate 12.3 - 19.7 % 12.9 % 10.0 - 21.3 % 10.7 % Servicing expense 0.4 - 0.4 % 0.4 % 0.4 - 0.4 % 0.4 % Multi-family servicing rights Forward prepayment rate 0.0 - 7.3 % 3.5 % 0.0 - 7.3 % 3.5 % Forward default rate 0.0 - 1.3 % 0.9 % 0.0 - 1.3 % 1.0 % Discount rate 6.0 - 6.0 % 6.0 % 6.0 - 6.0 % 6.0 % Servicing expense 0.0 - 0.8 % 0.1 % 0.0 - 0.8 % 0.1 % Assumptions can change between and at each reporting period as market conditions and projected interest rates change. The table below presents the possible impact of 10% and 20% adverse changes to key assumptions on SBA and multi-family servicing rights. (in thousands) June 30, 2022 December 31, 2021 SBA servicing rights Forward prepayment rate Impact of 10% adverse change $ (656) $ (670) Impact of 20% adverse change $ (1,277) $ (1,305) Default rate Impact of 10% adverse change $ (145) $ (155) Impact of 20% adverse change $ (289) $ (309) Discount rate Impact of 10% adverse change $ (791) $ (746) Impact of 20% adverse change $ (1,522) $ (1,443) Servicing expense Impact of 10% adverse change $ (1,315) $ (1,344) Impact of 20% adverse change $ (2,630) $ (2,687) Multi-family servicing rights Forward prepayment rate Impact of 10% adverse change $ (283) $ (291) Impact of 20% adverse change $ (560) $ (575) Default rate Impact of 10% adverse change $ (25) $ (25) Impact of 20% adverse change $ (50) $ (50) Discount rate Impact of 10% adverse change $ (1,892) $ (1,910) Impact of 20% adverse change $ (3,693) $ (3,726) Servicing expense Impact of 10% adverse change $ (2,685) $ (2,659) Impact of 20% adverse change $ (5,369) $ (5,318) The table below presents estimated future amortization expense for SBA and multi-family servicing rights. (in thousands) June 30, 2022 2022 $ 8,659 2023 11,753 2024 10,348 2025 9,135 2026 8,190 Thereafter 36,773 Total $ 84,858 Residential MSRs. The table below presents additional information about residential MSRs carried at fair value. June 30, 2022 December 31, 2021 (in thousands) UPB Fair Value UPB Fair Value Fannie Mae $ 4,352,916 $ 58,659 $ 4,056,595 $ 41,698 Freddie Mac 4,429,902 61,789 4,131,904 45,017 Ginnie Mae 2,940,107 48,205 2,807,186 33,427 Total $ 11,722,925 $ 168,653 $ 10,995,685 $ 120,142 The table below presents significant assumptions used in the valuation of residential MSRs carried at fair value. June 30, 2022 December 31, 2021 Range of input values Weighted Average Range of input values Weighted Average Residential MSRs Forward prepayment rate 6.2 - 15.8 % 6.7 % 8.4 - 20.9 % 9.5 % Discount rate 9.5 - 12.5 % 10.2 % 9.0 - 11.0 % 9.4 % Servicing expense $80 - $95 $93 $70 - $85 $74 Assumptions can change between and at each reporting period as market conditions and projected interest rates change. The table below presents the possible impact of 10% and 20% adverse changes to key assumptions on the fair value of residential MSRs. (in thousands) June 30, 2022 December 31, 2021 Residential MSRs Prepayment rate Impact of 10% adverse change $ (5,133) $ (5,262) Impact of 20% adverse change $ (9,995) $ (9,262) Discount rate Impact of 10% adverse change $ (7,541) $ (4,533) Impact of 20% adverse change $ (14,469) $ (8,745) Servicing expense Impact of 10% adverse change $ (2,563) $ (2,125) Impact of 20% adverse change $ (5,127) $ (4,251) |
Residential mortgage banking ac
Residential mortgage banking activities and variable expenses on residential mortgage banking activities | 6 Months Ended |
Jun. 30, 2022 | |
Residential mortgage banking activities and variable expenses on residential mortgage banking activities | |
Gains on residential mortgage banking activities, net of variable loan expenses | Note 10. Residential mortgage banking activities and variable expenses on residential mortgage banking activities Residential mortgage banking activities reflects revenue within our residential mortgage banking business directly related to loan origination and sale activity. This primarily consists of the realized gains on sales of residential loans held for sale and loan origination fee income. Residential mortgage banking activities also consists of unrealized gains and losses associated with the changes in fair value of the loans held for sale, the fair value of retained MSR additions, and the realized and unrealized gains and losses from derivative instruments. Variable expenses include correspondent fee expenses and other direct expenses relating to these loans, which vary based on loan origination volumes. The table below presents the components of residential mortgage banking activities and associated variable expenses. Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2022 2021 2022 2021 Realized and unrealized gain (loss) of residential mortgage loans held for sale, at fair value $ (7,886) $ 31,020 $ (12,973) $ 60,580 Creation of new MSRs, net of payoffs 8,834 6,976 15,928 13,324 Loan origination fee income on residential mortgage loans 4,749 5,192 8,859 11,424 Unrealized gain (loss) on IRLCs and other derivatives (2,750) (6,498) (443) (7,229) Residential mortgage banking activities $ 2,947 $ 36,690 $ 11,371 $ 78,099 Variable income (expenses) on residential mortgage banking activities $ 4,532 $ (21,421) $ 3,553 $ (36,906) |
Secured Borrowings
Secured Borrowings | 6 Months Ended |
Jun. 30, 2022 | |
Secured Borrowings | |
Secured borrowings | Note 11. Secured borrowings The table below presents certain characteristics of secured borrowings. Pledged Assets Carrying Value Lender Asset Class Current Maturity Pricing Facility Size Carrying Value June 30, 2022 December 31, 2021 JPMorgan Acquired loans, SBA loans August 2022 1M L + 2.50% SOFR + 2.875% $ 250,000 $ 101,855 $ 71,414 $ 54,164 KeyBank Freddie Mac loans February 2023 SOFR + 1.35% 100,000 17,859 17,648 41,864 East West Bank SBA loans October 2023 Prime - 0.821% to + 0.00% 75,000 93,908 68,502 58,622 Credit Suisse Acquired loans (non USD) August 2022 Euribor + 2.50% to 3.00% 209,680 41,208 35,670 40,373 Comerica Bank Residential loans June 2023 1M L + 1.75% 100,000 61,096 58,703 63,991 TBK Bank Residential loans February 2023 Variable Pricing 150,000 72,435 71,931 125,145 Origin Bank Residential loans September 2022 Variable Pricing 60,000 22,919 22,211 16,052 Associated Bank Residential loans November 2022 1M L + 1.50% 60,000 27,044 26,048 14,449 East West Bank Residential MSRs September 2023 1M L + 2.50% 50,000 120,448 49,900 49,400 Credit Suisse Purchased future receivables October 2023 1M L + 4.50% 50,000 8,704 1,000 1,000 Western Alliance Residential loans July 2022 Variable Pricing 50,000 14,204 12,080 6,823 Madison Construction loans June 2023 1 ML +7.00% 360,000 339,324 76,096 — Total borrowings under credit facilities and other financing agreements $ 1,514,680 $ 921,004 $ 511,203 $ 471,883 Citibank Fixed rate, Transitional, Acquired loans October 2022 SOFR + 2.10% to 3.10% $ 500,000 $ 169,967 $ 136,881 $ 128,851 Deutsche Bank Fixed rate, Transitional loans November 2023 SOFR + 1.90% to 2.75% 350,000 318,800 231,278 236,073 JPMorgan Transitional loans November 2022 SOFR + 2.10% to 2.85% 1,250,000 1,061,198 849,492 825,265 Performance Trust Fixed rate, Transitional, Acquired loans March 2024 1M T + 2.00% 263,000 235,502 206,245 124,057 Credit Suisse Fixed rate, Transitional, Acquired loans February 2023 SOFR + 2.00% to 2.35% 750,000 584,888 430,509 403,644 Credit Suisse Residential loans Matured L + 3.00% — — — 27,058 Goldman Sachs Fixed rate, Transitional, Acquired loans February 2025 SOFR + 1.50%-2.25% 350,000 227,806 181,713 — Churchill Transitional, Acquired loans March 2026 SOFR + 2.50% 500,000 326,385 258,551 — Various MBS July 2022 – November 2022 1.36% to 4.28% 406,511 744,901 406,511 300,769 Total borrowings under repurchase agreements $ 4,369,511 $ 3,669,447 $ 2,701,180 $ 2,045,717 Total secured borrowings $ 5,884,191 $ 4,590,451 $ 3,212,383 $ 2,517,600 In the table above: ● The current facility size for borrowings under credit facilities due to Credit Suisse is approximately €200.0 million, but has been converted into USD for purposes of this disclosure. ● Borrowings for certain assets under JPMorgan repurchase agreements are subject to an over-advance rate, by which incremental borrowings are at an interest rate of SOFR plus 6.25%. ● The weighted average interest rate of borrowings under credit facilities was 3.7% and 2.8% as of June 30, 2022 and December 31, 2021, respectively. ● The weighted average interest rate of borrowings under repurchase agreements was 2.7% and 2.1% as of June 30, 2022 and December 31, 2021, respectively. ● The agreements governing secured borrowings require maintenance of certain financial and debt covenants. The Company received a waiver from certain financing counterparties to exclude the Paycheck Protection Program Liquidity Fund from certain covenant calculations as of both June 30, 2022 and December 31, 2021 and therefore was in compliance with all debt and financial covenants as of the current period ended. The table below presents the carrying value of collateral pledged with respect to secured borrowings outstanding. Pledged Assets Carrying Value (in thousands) June 30, 2022 December 31, 2021 Collateral pledged - borrowings under credit facilities and other financing agreements Loans, held for sale, at fair value $ 214,602 $ 276,022 Loans, net 577,250 206,169 MSRs 120,448 86,714 Purchased future receivables 8,704 7,872 Total $ 921,004 $ 576,777 Collateral pledged - borrowings under repurchase agreements Loans, net $ 2,722,663 $ 2,062,867 Mortgage-backed securities 34,992 53,194 Retained interest in assets of consolidated VIEs 709,909 379,349 Loans, held for sale, at fair value 200,458 208,558 Real estate acquired in settlement of loans 1,425 1,425 Total $ 3,669,447 $ 2,705,393 Total collateral pledged on secured borrowings $ 4,590,451 $ 3,282,170 |
Senior secured notes, convertib
Senior secured notes, convertible notes, and corporate debt, net | 6 Months Ended |
Jun. 30, 2022 | |
Senior secured notes, convertible notes, and corporate debt, net | |
Senior secured notes, convertible notes, and corporate debt, net | Note 12. Senior secured notes, convertible notes, and corporate debt, net Senior secured notes, net ReadyCap Holdings 4.50% senior secured notes due 2026. The Senior Secured Notes bear interest at 4.50% per annum, payable semiannually on each April 20 and October 20, beginning on April 20, 2022. The Senior Secured Notes will mature on October 15, 2026, unless redeemed or repurchased prior to such date. ReadyCap Holdings may redeem the Senior Secured Notes on or after October 15, 2021, at its option, in whole or in part at any time and from time to time, at a price equal to 100% of the outstanding principal amount thereof, plus the applicable “make-whole” premium as of, and unpaid interest, if any, accrued to, the redemption date. ReadyCap Holdings’ and the Guarantors’ respective obligations under the Senior Secured Notes are secured by a perfected first-priority lien on certain capital stock and assets owned by certain subsidiaries of the Company. ReadyCap Holdings, LLC (“ReadyCap Holdings”) 7.50% senior secured notes due 2022. Convertible notes, net On August 9, 2017, the Company closed an underwritten public sale of $115.0 million aggregate principal amount of its 7.00% convertible senior notes due 2023 ( “Convertible Notes”). The Convertible Notes will mature on August 15, 2023, unless earlier repurchased, redeemed or converted. During certain periods and subject to certain conditions, the Convertible Notes will be convertible by holders into shares of the Company's common stock. As of June 30, 2022, the conversion rate was 1.6374 shares of common stock per $25 principal amount of the Convertible Notes, which is equivalent to an initial conversion price of approximately $15.27 per share of common stock. Upon conversion, holders will receive, at the Company's discretion, cash, shares of the Company's common stock or a combination thereof. The Company may redeem all or any portion of the Convertible Notes on or after August 15, 2021, if the last reported sale price of the Company’s common stock has been at least 120% of the conversion price in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption, at a redemption price payable in cash equal to 100% of the principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid interest. Additionally, upon the occurrence of certain corporate transactions, holders may require the Company to purchase the Convertible Notes for cash at a purchase price equal to 100% of the principal amount of the Convertible Notes to be purchased, plus accrued and unpaid interest. The Convertible Notes will be convertible only upon satisfaction of one or more of the following conditions: (1) the closing market price of the Company’s common stock is greater than or equal to 120% of the conversion price of the respective Convertible Notes for at least 20 out of 30 days prior to the end of the preceding fiscal quarter, (2) the trading price of the Convertible Notes is less than 98% of the product of (i) the conversion rate and (ii) the closing price of the Company’s common stock during any five At issuance, the Company allocated $112.7 million and $2.3 million of the carrying value of the Convertible Notes to its debt and equity components, respectively, before the allocation of deferred financing costs. As of June 30, 2022, the Company was in compliance with all covenants with respect to the Convertible Notes. Corporate debt, net The 6.125% 2025 Notes. The 6.125% 2025 Notes bear interest at a rate of 6.125% per annum, payable semi-annually in arrears on April 30 and October 30 of each year, beginning on October 30, 2022. The 6.125% 2025 Notes will mature on April 30, 2025, unless earlier repurchased or redeemed. On or after January 30, 2025, the Company may redeem for cash all or any portion of the 6.125% 2025 Notes, at its option, at a redemption price equal to 100% of the principal amount of the 6.125% 2025 Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. If the Company undergoes a change of control repurchase event, holders may require it to purchase the 6.125% 2025 Notes, in whole or in part, for cash at a repurchase price equal to 101% of the aggregate principal amount of the 6.125% 2025 Notes to be purchased, plus accrued and unpaid interest, if any, to, but excluding, the date of repurchase, as described in greater detail in the base indenture. The 5.50% 2028 Notes. On or after December 30, 2024, the Company may redeem for cash all or any portion of the 5.50% 2028 Notes, at its option, at the redemption prices (expressed as percentages of principal amount) plus accrued and unpaid interest thereon, if any, to, but excluding, the redemption date, if redeemed during the twelve-month period beginning on December 30 of the years indicated: 2024 equal to 102.75%; 2025 equal to 101.375%; 2026 equal to 100.6875%; 2027 and thereafter equal to 100.00%. If the Company undergoes a change of control repurchase event, holders may require it to purchase the 5.50% 2028 Notes for cash at a repurchase price equal to 101% of the aggregate principal amount of the 5.50% 2028 Notes to be purchased, plus accrued and unpaid interest, if any, to, but excluding, the date of repurchase. The 5.75% 2026 Notes. The 5.75% 2026 Notes bear interest at a rate of 5.75% per annum, payable quarterly in arrears on January 30, April 30, July 30, and October 30 of each year, beginning on April 30, 2021. The 5.75% 2026 Notes will mature on February 15, 2026, unless earlier repurchased or redeemed. Prior to February 15, 2023, the 5.75% 2026 Notes will not be redeemable by the Company. On or after February 15, 2023, the Company may redeem for cash all or any portion of the 5.75% 2026 Notes, at its option, at a redemption price equal to 100% of the principal amount of the 5.75% 2026 Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. If the Company undergoes a change of control repurchase event, holders may require it to purchase the 5.75% 2026 Notes, in whole or in part, for cash at a repurchase price equal to 101% of the aggregate principal amount of the 5.75% 2026 Notes to be purchased, plus accrued and unpaid interest, if any, to, but excluding, the date of repurchase, as described in greater detail in the base indenture, as supplemented by the fifth supplemental indenture dated as of February 10, 2021. The 5.75% 2026 Notes are the Company’s senior unsecured obligations and will not be guaranteed by any of its subsidiaries, except to the extent described in the Indenture upon the occurrence of certain events. The 5.75% 2026 Notes rank equal in right of payment to any of the Company’s existing and future unsecured and unsubordinated indebtedness; effectively junior in right of payment to any of its existing and future secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all existing and future indebtedness, other liabilities (including trade payables) and (to the extent not held by the Company) preferred stock, if any, of its subsidiaries. The 6.20% 2026 Notes. The 6.20% 2026 Notes bear interest at a rate of 6.20% per annum, payable quarterly in arrears on January 30, April 30, July 30, and October 30 of each year. The 6.20% 2026 Notes will mature on July 30, 2026, unless earlier repurchased or redeemed. The Company may redeem for cash all or any portion of the 6.20% 2026 Notes, at its option, on or after July 30, 2022 and before July 30, 2025 at a redemption price equal to 101% of the principal amount of the 6.20% 2026 Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. On or after July 30, 2025, the Company may redeem for cash all or any portion of the 6.20% 2026 Notes, at its option, at a redemption price equal to 100% of the principal amount of the 6.20% 2026 Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. If the Company undergoes a change of control repurchase event, holders may require it to purchase the 6.20% 2026 Notes, in whole or in part, for cash at a repurchase price equal to 101% of the aggregate principal amount of the 6.20% 2026 Notes to be purchased, plus accrued and unpaid interest. The 6.20% 2026 Notes are the Company’s senior unsecured obligations and will not be guaranteed by any of its subsidiaries, except to the extent described in the Indenture upon the occurrence of certain events. The 6.20% 2026 Notes rank equal in right of payment to any of the Company’s existing and future unsecured and unsubordinated indebtedness; effectively junior in right of payment to any of its existing and future secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all existing and future indebtedness, other liabilities (including trade payables) and (to the extent not held by the Company) preferred stock, if any, of its subsidiaries. On December 2, 2019, the Company completed the public offer and sale of an additional $45.0 million aggregate principal amount of the 6.20% 2026 Notes. The new notes have the same terms (except with respect to issue date, issue price and the date from which interest will accrue), are fully fungible with, and are treated as a single series of debt securities as, the 6.20% Senior Notes due 2026 the Company issued on July 22, 2019. The 2021 Notes. On March 25, 2021, the Company redeemed all of the outstanding 2021 Notes, at a redemption price equal to 100% of the principal amount of the 2021 Notes plus accrued and unpaid interest, for cash. The Debt ATM Agreement On May 20, 2021, the Company entered into an At Market Issuance Sales Agreement (the “Sales Agreement”) with B. Riley Securities, Inc. (the “Agent”), pursuant to which the Company may offer and sell, from time to time, up to $100.0 million of the 6.20% 2026 Notes and the 5.75% 2026 Notes. Sales of the 6.20% 2026 Notes and the 5.75% 2026 Notes pursuant to the Sales Agreement, if any, may be made in transactions that are deemed to be “at the market offerings” as defined in Rule 415 under the Securities Act of 1933, as amended (the “Debt ATM Program”). The Agent is not required to sell any specific number of the notes, but the Agent will make all sales using commercially reasonable efforts consistent with its normal trading and sales practices on mutually agreed terms between the Agent and the Company. During the three months ended June 30, 2022, the Company sold an aggregate of thousand of the 6.20% 2026 Notes and 5.75% 2026 Notes through the Debt ATM Program As of June 30, 2022, the Company was in compliance with all covenants with respect to Corporate debt. The table below presents information about senior secured notes, convertible notes and corporate debt. (in thousands) Coupon Rate Maturity Date June 30, 2022 Senior secured notes principal amount (1) 4.50 % 10/20/2026 $ 350,000 Unamortized deferred financing costs - Senior secured notes (7,531) Total Senior secured notes, net $ 342,469 Convertible notes principal amount (2) 7.00 % 8/15/2023 115,000 Unamortized discount - Convertible notes (3) (422) Unamortized deferred financing costs - Convertible notes (760) Total Convertible notes, net $ 113,818 Corporate debt principal amount (4) 5.50 % 12/30/2028 110,000 Corporate debt principal amount (5) 6.20 % 7/30/2026 104,613 Corporate debt principal amount (5) 5.75 % 2/15/2026 206,270 Corporate debt principal amount (6) 6.125 % 4/30/2025 120,000 Unamortized discount - corporate debt (8,485) Unamortized deferred financing costs - corporate debt (3,418) Junior subordinated notes principal amount (7) 3M + 3.10 % 3/30/2035 15,000 Junior subordinated notes principal amount (8) 3M + 3.10 % 4/30/2035 21,250 Total corporate debt, net $ 565,230 Total carrying amount of debt $ 1,021,517 Total carrying amount of conversion option of equity components recorded in equity $ 422 (1) Interest on the senior secured notes is payable semiannually on April 20 and October 20 of each year. (2) Interest on the convertible notes is payable quarterly on February 15, May 15, August 15, and November 15 of each year. (3) Represents the discount created by separating the conversion option from the debt host instrument. (4) Interest on the corporate debt is payable semiannually on June 30 and December 30 of each year. (5) Interest on the corporate debt is payable quarterly on January 30, April 30, July 30, and October 30 of each year. (6) Interest on the corporate debt is payable semiannually on April 30, and October 30 of each year. (7) Interest on the Junior subordinated notes I-A is payable quarterly on March 30, June 30, September 30, and December 30 of each year. (8) Interest on the Junior subordinated notes I-B is payable quarterly on January 30, April 30, July 30, and October 30 of each year. The table below presents the contractual maturities for our senior secured notes, convertible notes, and corporate debt. (in thousands) June 30, 2022 2022 $ — 2023 115,000 2024 — 2025 120,000 2026 660,883 Thereafter 146,250 Total contractual amounts $ 1,042,133 Unamortized deferred financing costs, discounts, and premiums, net (20,616) Total carrying amount of debt $ 1,021,517 |
Guaranteed loan financing
Guaranteed loan financing | 6 Months Ended |
Jun. 30, 2022 | |
Guaranteed loan financing. | |
Guaranteed loan financing | Note 13. Guaranteed loan financing Participations or other partial loan sales which do not meet the definition of a participating interest remain as an investment in the consolidated balance sheets and the portion sold is recorded as guaranteed loan financing in the liabilities section of the consolidated balance sheets. For these partial loan sales, the interest earned on the entire loan balance is recorded as interest income and the interest earned by the buyer in the partial loan sale is recorded within interest expense in the accompanying consolidated statements of income. Guaranteed loan financings are secured by loans of $305.0 million and $346.1 million as of June 30, 2022 and December 31, 2021, respectively. The table below presents guaranteed loan financing and the related interest rates and maturity dates. Weighted Average Range of Range of (in thousands) Interest Rate Interest Rates Maturities (Years) Ending Balance June 30, 2022 4.00 % 1.24-6.50 % 2022-2046 $ 304,158 December 31, 2021 3.78 % 0.99-6.50 % 2022-2046 $ 345,217 The table below presents the contractual maturities of guaranteed loan financing. (in thousands) June 30, 2022 2022 $ 607 2023 411 2024 1,512 2025 1,934 2026 5,321 Thereafter 294,373 Total $ 304,158 |
Variable interest entities and
Variable interest entities and securitization activities | 6 Months Ended |
Jun. 30, 2022 | |
Variable interest entities and securitization activities | |
Variable interest entities and securitization activities | Note 14. Variable interest entities and securitization activities In the normal course of business, we enter into certain types of transactions with entities that are considered to be VIEs. Our primary involvement with VIEs has been related to our securitization transactions in which we transfer assets to securitization vehicles, most notably trusts. We primarily securitize our acquired and originated loans, which provides a source of funding and has enabled us to transfer a certain portion of economic risk on loans or related debt securities to third parties. We also transfer originated loans to securitization trusts sponsored by third parties, most notably Freddie Mac. Third-party securitizations are securitization entities in which we maintain an economic interest but do not sponsor. The entity that has a controlling financial interest in a VIE is referred to as the primary beneficiary and is required to consolidate the VIE. The majority of the VIE activity in which we are involved in are consolidated within our financial statements. Refer to Note 3 – Summary of Significant Accounting Policies for a discussion of our accounting policies applied to the consolidation of the VIE and transfer of the loans in connection with the securitization. Securitization-related VIEs Company sponsored securitizations. As a result of the consolidation, the securitization is viewed as a loan financing to enable the creation of the senior security and ultimately, sale to a third-party investor. As such, the senior security is presented in the consolidated balance sheets as securitized debt obligations of consolidated VIEs. The third-party beneficial interest holders in the VIE have no recourse against the Company, with the exception of an obligation to repurchase assets from the VIE in the event that certain representations and warranties in relation to the loans sold to the VIE are breached. In the absence of such a breach, the Company has no obligation to provide any other explicit or implicit support to any VIE. The securitization trust receives principal and interest on the underlying loans and distributes those payments to the certificate holders. The assets and other instruments held by the securitization trust are restricted in that they can only be used to fulfill the obligations of the securitization trust. The risks associated with the Company’s involvement with the VIE is limited to the risks and rights as a certificate holder of the securities retained by the Company. The consolidation of securitization transactions includes the senior securities issued to third parties which are shown as securitized debt obligations of consolidated VIEs in the consolidated balance sheets. The table below presents additional information on the Company’s securitized debt obligations. June 30, 2022 December 31, 2021 Current Weighted Current Weighted Principal Carrying Average Principal Carrying Average (in thousands) Balance value Interest Rate Balance value Interest Rate ReadyCap Lending Small Business Trust 2019-2 $ 61,955 $ 61,186 2.9 % $ 79,294 $ 78,268 2.6 % Sutherland Commercial Mortgage Trust 2017-SBC6 12,118 11,942 4.2 16,729 16,471 3.8 Sutherland Commercial Mortgage Trust 2019-SBC8 132,514 130,490 2.9 145,351 143,153 2.9 Sutherland Commercial Mortgage Trust 2020-SBC9 — — 4.2 86,680 85,459 4.1 Sutherland Commercial Mortgage Trust 2021-SBC10 126,622 124,681 1.6 159,745 157,483 1.6 ReadyCap Commercial Mortgage Trust 2014-1 4,490 4,481 5.7 6,770 6,756 5.7 ReadyCap Commercial Mortgage Trust 2015-2 8,219 7,353 5.1 17,598 15,960 5.1 ReadyCap Commercial Mortgage Trust 2016-3 14,639 13,940 5.1 19,106 18,285 4.9 ReadyCap Commercial Mortgage Trust 2018-4 66,422 64,057 4.3 81,379 78,751 4.1 ReadyCap Commercial Mortgage Trust 2019-5 131,205 124,521 4.5 150,547 143,204 4.3 ReadyCap Commercial Mortgage Trust 2019-6 226,638 221,514 3.3 269,315 263,752 3.2 ReadyCap Commercial Mortgage Trust 2022-7 203,848 195,354 4.2 — — — Ready Capital Mortgage Financing 2019-FL3 67,982 67,982 2.4 92,930 92,921 1.6 Ready Capital Mortgage Financing 2020-FL4 242,860 240,679 3.5 304,157 300,832 3.1 Ready Capital Mortgage Financing 2021-FL5 468,871 465,426 1.8 506,721 501,697 1.5 Ready Capital Mortgage Financing 2021-FL6 543,133 537,542 1.7 543,223 536,270 1.3 Ready Capital Mortgage Financing 2021-FL7 752,598 745,361 2.0 753,314 744,449 1.6 Ready Capital Mortgage Financing 2022-FL8 913,675 905,124 2.4 — — — Ready Capital Mortgage Financing 2022-FL9 612,809 598,908 4.7 — — — Total $ 4,590,598 $ 4,520,541 2.8 % $ 3,232,859 $ 3,183,711 2.2 % The table above excludes non-company sponsored securitized debt obligations of $13.2 million and $30.6 million that are consolidated in the consolidated balance sheets as of June 30, 2022 and December 31, 2021, respectively. Repayment of our securitized debt will be dependent upon the cash flows generated by the loans in the securitization trust that collateralize such debt. The actual cash flows from the securitized loans are comprised of coupon interest, scheduled principal payments, prepayments and liquidations of the underlying loans. The actual term of the securitized debt may differ significantly from our estimate given that actual interest collections, mortgage prepayments and/or losses on liquidation of mortgages may differ significantly from those expected. Third-party sponsored securitizations. Joint Venture Investments- VIEs Unconsolidated VIEs. Consolidated VIEs. Assets and liabilities of consolidated VIEs The table below presents assets and liabilities of consolidated VIEs. (in thousands) June 30, 2022 December 31, 2021 Assets: Cash and cash equivalents $ 4,195 $ 9,041 Restricted cash 48,177 33,187 Loans, net 5,804,288 4,081,848 Investments held to maturity 108,423 — Other assets 31,136 21,488 Total assets $ 5,996,219 $ 4,145,564 Liabilities: Securitized debt obligations of consolidated VIEs, net 4,533,789 3,214,303 Due to third parties 4,963 — Accounts payable and other accrued liabilities 9 — Total liabilities $ 4,538,761 $ 3,214,303 Assets of unconsolidated VIEs The table below reflects our variable interests in identified VIEs for which we are not the primary beneficiary. Carrying Amount Maximum Exposure to Loss (1) (in thousands) June 30, 2022 December 31, 2021 June 30, 2022 December 31, 2021 MBS, at fair value (2) $ 25,632 $ 80,756 $ 25,632 $ 80,756 Investment in unconsolidated joint ventures 223,316 74,334 223,316 74,334 Total assets in unconsolidated VIEs $ 248,948 $ 155,090 $ 248,948 $ 155,090 (1) Maximum exposure to loss is limited to the greater of the fair value or carrying value of the assets as of the consolidated balance sheet date. (2) Retained interest in other third party sponsored securitizations. |
Interest income and interest ex
Interest income and interest expense | 6 Months Ended |
Jun. 30, 2022 | |
Interest income and interest expense | |
Interest income and interest expense | Note 15. Interest income and interest expense Interest income and expense are recorded in the consolidated statements of income and classified based on the nature of the underlying asset or liability. The table below presents the components of interest income and expense. Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2022 2021 2022 2021 Interest income Loans Bridge $ 82,499 $ 32,221 $ 147,479 $ 57,289 Fixed rate 14,468 14,258 28,939 28,688 Construction 7,243 — 9,000 — SBA - 7(a) 9,742 9,777 19,121 18,318 PPP 19,282 26,355 36,140 33,247 Residential 31 62 50 122 Other 10,055 11,462 20,291 23,980 Total loans (1) $ 143,320 $ 94,135 $ 261,020 $ 161,644 Held for sale, at fair value, loans Fixed rate $ 2,236 $ — $ 4,293 $ — Freddie Mac 307 728 499 1,332 Residential 2,198 3,160 4,298 5,286 Other 24 — 46 — Total loans, held for sale, at fair value (1) $ 4,765 $ 3,888 $ 9,136 $ 6,618 Investments held to maturity $ 3,612 $ — $ 4,219 $ — MBS, at fair value $ 1,974 $ 5,024 $ 3,701 $ 8,156 Total interest income $ 153,671 $ 103,047 $ 278,076 $ 176,418 Interest expense Secured borrowings $ (28,147) $ (18,065) $ (47,770) $ (35,639) Paycheck Protection Program Liquidity Facility borrowings (459) (1,545) (1,147) (1,879) Securitized debt obligations of consolidated VIEs (33,804) (21,421) (58,055) (40,514) Guaranteed loan financing (3,186) (3,472) (6,271) (7,123) Senior secured note (4,380) (3,456) (8,737) (6,915) Convertible note (2,188) (2,188) (4,376) (4,376) Corporate debt (8,663) (5,268) (15,488) (9,730) Total interest expense $ (80,827) $ (55,415) $ (141,844) $ (106,176) Net interest income before provision for loan losses $ 72,844 $ 47,632 $ 136,232 $ 70,242 (1) Includes interest income on loans in consolidated VIEs. |
Derivative instruments
Derivative instruments | 6 Months Ended |
Jun. 30, 2022 | |
Derivative instruments | |
Derivative instruments | Note 16. Derivative instruments The Company is exposed to changing interest rates and market conditions, which affect cash flows associated with borrowings. The Company uses derivative instruments to manage interest rate risk and conditions in the commercial mortgage market and, as such, views them as economic hedges. Interest rate swaps are used to mitigate the exposure to changes in interest rates and involve the receipt of variable-rate interest amounts from a counterparty in exchange for making payments based on a fixed interest rate over the life of the swap contract. CDS are executed in order to mitigate the risk of deterioration in the current credit health of the commercial mortgage market. IRLCs are entered into with customers who have applied for residential mortgage loans and meet certain underwriting criteria. These commitments expose GMFS to market risk if interest rates change and if the loan is not economically hedged or committed to an investor. For derivative instruments where the Company has not elected hedge accounting, fair value adjustments are recorded in earnings. The fair value adjustments for interest rate swaps and CDS, along with the related interest income, interest expense and gains (losses) on termination of such instruments, are reported as a net realized gain on financial instruments in the consolidated statements of income. The fair value adjustments for IRLCs and TBAs, along with the related interest income, interest expense and gains (losses) on termination of such instruments, are reported in residential mortgage banking activities in the consolidated statements of income. As described in Note 3, for qualifying cash flow hedges, the change in the fair value of derivatives is recorded in OCI and recognized in the consolidated statements of income. Derivative movements impacting earnings are recognized on a consistent basis with the classification of the hedged item, primarily interest expense. The ineffective portions of the cash flow hedges are immediately recognized in earnings. The table below presents average notional derivative amounts, as this is the most relevant measure of volume, and derivative assets and liabilities by type. June 30, 2022 December 31, 2021 Notional Derivative Derivative Notional Derivative Derivative (in thousands) Primary Underlying Risk Amount Asset Liability Amount Asset Liability Interest rate lock commitments Interest rate risk $ 446,663 $ 2,399 $ — $ 348,348 $ 2,340 $ — Interest Rate Swaps - not designated as hedges Interest rate risk 579,098 42,822 — 536,548 4,076 — TBA Agency Securities Interest rate risk 388,500 391 (1,303) 346,000 — (410) FX forwards Foreign exchange rate risk 28,248 918 — 27,484 606 — Total $ 1,442,509 $ 46,530 $ (1,303) $ 1,258,380 $ 7,022 $ (410) The table below presents gains and losses on derivatives. Three Months Ended June 30, 2022 Six Months Ended June 30, 2022 Net Realized Net Unrealized Net Realized Net Unrealized (in thousands) Gain (Loss) Gain (Loss) Gain (Loss) Gain (Loss) Interest rate swaps $ (688) $ 13,873 $ (2,493) $ 40,575 TBA Agency Securities — (7,765) — (501) Interest rate lock commitments — 5,016 — 59 FX forwards 1,546 81 2,226 312 Total $ 858 $ 11,205 $ (267) $ 40,445 Three Months Ended June 30, 2021 Six Months Ended June 30, 2021 Net Realized Net Unrealized Net Realized Net Unrealized Gain (Loss) Gain (Loss) Gain (Loss) Gain (Loss) Credit default swaps $ — $ (21) $ — $ 21 Interest rate swaps (4,482) 1,947 (5,779) 8,470 TBA Agency Securities — (903) — 3,005 Interest rate lock commitments — (5,595) — (10,234) FX forwards 170 (334) (358) 1,243 Total $ (4,312) $ (4,906) $ (6,137) $ 2,505 In the table above: ● Gains (losses) on credit default swaps, interest rate swaps and FX forwards are recorded in net unrealized gain (loss) on financial instruments or net realized gain (loss) on financial instruments in the consolidated statements of income. ● For qualifying hedges of interest rate risk on interest rate swaps, the effective portion relating to the unrealized gain (loss) on derivatives are recorded in accumulated other comprehensive income (loss). ● Gains (losses) on residential mortgage banking activity TBAs are recorded in residential mortgage banking activities in the consolidated statements of income. The table below summarizes the gains and losses on derivatives which have qualified for hedge accounting. (in thousands) Derivatives - effective portion reclassified from AOCI to income Hedge ineffectiveness recorded directly in income Total income statement impact Derivatives- effective portion recorded in OCI Total change in OCI for period Interest rate hedges- forecasted transactions: Three Months Ended June 30, 2022 $ (438) $ — $ (438) $ (87) $ 351 Three Months Ended June 30, 2021 $ (312) $ — $ (312) $ (188) $ 124 Six Months Ended June 30, 2022 $ (692) $ — $ (692) $ (128) $ 564 Six Months Ended June 30, 2021 $ (610) $ — $ (610) $ 1,492 $ 2,102 In the table above: ● Forecasted transactions on interest rates consists of benchmark interest rate hedges of LIBOR-indexed floating-rate liabilities. ● Hedge ineffectiveness is the amount by which the cumulative gain or loss on the designated derivative instrument exceeds the present value of the cumulative expected change in cash flows on the hedged item attributable to the hedged risk. ● Amounts recorded in OCI for the period represents after tax amounts. |
Real estate owned, held for sal
Real estate owned, held for sale | 6 Months Ended |
Jun. 30, 2022 | |
Real estate owned, held for sale | |
Real estate owned, held for sale | Note 17. Real estate owned, held for sale The table below presents details on our real estate owned, held for sale portfolio. (in thousands) June 30, 2022 December 31, 2021 Acquired Portfolio: Mixed Use $ 35,779 $ 1,020 Land 4,174 6,318 Multi-family 31,837 — Office 14,133 — Total Acquired REO $ 85,923 $ 7,338 Other REO held for sale: Single Family $ 24,300 $ 24,300 Retail 1,853 3,129 Office 7,125 7,384 SBA — 137 Health Care 356 — Total Other REO $ 33,634 $ 34,950 Total real estate owned, held for sale $ 119,557 $ 42,288 |
Agreements and transactions wit
Agreements and transactions with related parties | 6 Months Ended |
Jun. 30, 2022 | |
Agreements and transactions with related parties | |
Agreements and transactions with related parties | Note 18. Agreements and transactions with related parties Management Agreement The Company has entered into a management agreement with our Manager (the “Management Agreement”), which describes the services to be provided to us by our Manager and compensation for such services. Our Manager is responsible for managing the Company’s day-to-day operations, subject to the direction and oversight of the Company’s board of directors. Management fee. The table below presents the management fee payable to our Manager. Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Management fee - total $ 5.5 million $ 2.6 million $ 8.7 million $ 5.3 million Management fee - amount unpaid $ 5.3 million $ 2.6 million $ 5.3 million $ 2.6 million Incentive distribution. four twelve The table below presents the incentive fee payable to our Manager. Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Incentive fee distribution - total $ — $ 0.3 million $ — $ 0.3 million Incentive fee distribution - amount unpaid $ — $ 0.3 million $ — $ 0.3 million The Management Agreement may be terminated upon the affirmative vote of at least two-thirds two-thirds The current term of the Management Agreement will expire on October 31, 2022, and is automatically renewed for successive one-year terms on each anniversary thereafter; provided, however, that either the Company, under the certain limited circumstances described above that would require the Company and the operating partnership to make the payments described above, or the Manager may terminate the Management Agreement annually upon 180 days prior notice. Expense reimbursement. The table below presents reimbursable expenses payable to our Manager. Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Reimbursable expenses payable to our Manager - total $ 2.3 million $ 3.5 million $ 5.8 million $ 5.5 million Reimbursable expenses payable to our Manager - amount unpaid $ 4.9 million $ 4.6 million $ 4.9 million $ 4.6 million Co-Investment with Manager On January 14, 2022, the Company committed to invest, in the form of an asset contribution of existing commercial real estate equity positions and additional capital, an aggregate amount equal to at least $50 million, into a parallel vehicle, Waterfall Atlas Fund, LP (the “Fund”), a fund managed by our Manager, in exchange for interests in the Fund. The Company committed to invest up to an additional $50 million as of the final closing date of the Fund, subject to available capacity in the Fund. In exchange for the Company’s commitment, the Company is entitled to 15% of any carried interest distributions received by the general partner of the Fund such that over the life of the Fund, the Company receives an internal rate of return of 1.5% over the internal rate of return of the Fund. The Fund will focus on commercial real estate equity through the acquisition of distressed and value-add real estate across property types with local operating partners. Other During 2021, the Company acquired $6.3 million of interests in unconsolidated joint ventures from a fund which is managed by an affiliate of its Manager. |
Other assets and other liabilit
Other assets and other liabilities | 6 Months Ended |
Jun. 30, 2022 | |
Other assets and other liabilities | |
Other assets and other liabilities | Note 19. Other assets and other liabilities The table below presents the composition of other assets and other liabilities. (in thousands) June 30, 2022 December 31, 2021 Other assets: Deferred tax asset $ 3,601 $ 3,601 Deferred loan exit fees 32,943 25,923 Accrued interest 37,316 21,873 Goodwill 34,172 31,470 Due from servicers 29,861 23,729 Right-of-use lease asset 1,828 2,402 Intangible assets 14,058 14,842 Deferred financing costs 3,540 3,840 PPP fee receivable 346 407 Receivable from third party 7,497 29,298 Other assets 18,725 14,713 Other assets $ 183,887 $ 172,098 Accounts payable and other accrued liabilities: Deferred tax liability $ 11,986 $ 11,986 Accrued salaries, wages and commissions 28,605 42,715 Accrued interest payable 24,791 22,278 Servicing principal and interest payable 12,993 19,100 Repair and denial reserve 16,111 19,725 Payable to related parties 5,539 5,232 Accrued professional fees 3,025 4,324 Lease payable 2,053 3,002 Deferred LSP revenue 178 286 Accrued PPP related costs 4,296 12,460 Other liabilities 79,605 42,303 Total accounts payable and other accrued liabilities $ 189,182 $ 183,411 Goodwill The table below presents the carrying value of goodwill by reportable segment. (in thousands) June 30, 2022 December 31, 2021 SBC Lending and Acquisitions $ 22,966 $ 20,264 Small Business Lending 11,206 11,206 Total $ 34,172 $ 31,470 Intangible assets The table below presents information on intangible assets. (in thousands) June 30, 2022 December 31, 2021 Estimated Useful Life Customer Relationships - Red Stone $ 6,501 $ 6,651 19 years Internally developed software - Knight Capital 2,111 2,428 6 years Trade name - Red Stone 2,500 2,500 Indefinite life SBA license 1,000 1,000 Indefinite life Broker network - Knight Capital 489 622 4.5 years Favorable lease 580 640 12 years Trade name - Knight Capital 489 562 6 years Trade name - GMFS 388 439 15 years Total intangible assets $ 14,058 $ 14,842 The amortization expense related to intangible assets was $0.4 million and $0.8 million for the three and six months ended June 30, 2022 and $0.3 million and $0.6 million for the three and six months ended June 30, 2021. Such amounts are recorded as other operating expenses in the consolidated statements of income. The table below presents accumulated amortization for finite-lived intangible assets. (in thousands) June 30, 2022 Internally developed software - Knight Capital $ 1,689 Favorable lease 900 Trade name - GMFS 835 Broker network - Knight Capital 711 Trade name - Knight Capital 391 Customer Relationship - Red Stone 328 Total accumulated amortization $ 4,854 The table below presents amortization expense related to finite-lived intangible assets for the subsequent five years. (in thousands) June 30, 2022 2022 $ 842 2023 1,599 2024 1,390 2025 1,144 2026 477 Thereafter 5,106 Total $ 10,558 Loan indemnification reserve A liability has been established for potential losses related to representations and warranties made by GMFS for loans sold with a corresponding provision recorded for loan indemnification losses. The liability is included in accounts payable and other accrued liabilities in the Company's consolidated balance sheets and the provision for loan indemnification losses is included in variable expenses on residential mortgage banking activities, in the Company's consolidated statements of income. In assessing the adequacy of the liability, management evaluates various factors including historical repurchases and indemnifications, historical loss experience, known delinquent and other problem loans, outstanding repurchase demand, historical rescission rates and economic trends and conditions in the industry. Actual losses incurred are reflected as a reduction of the reserve liability. As of June 30, 2022 and December 31, 2021, the loan indemnification reserve was $3.6 million and $4.0 million, respectively. Due to the uncertainty in the various estimates underlying the loan indemnification reserve, there is a range of losses in excess of the recorded loan indemnification reserve that is reasonably possible. The estimate of the range of possible losses for representations and warranties does not represent a probable loss, and is based on current available information, significant judgment, and a number of assumptions that are subject to change. As of June 30, 2022 and December 31, 2021, the reasonably possible loss above the recorded loan indemnification reserve was not material. |
Other income and operating expe
Other income and operating expenses | 6 Months Ended |
Jun. 30, 2022 | |
Other income and operating expenses | |
Other income and operating expenses | Note 20. Other income and operating expenses Paycheck Protection Program In response to the COVID-19 pandemic, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act” or “Round 1”), signed into law on March 27, 2020, and the Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act (the “Economic Aid Act” or “Round 2”), signed into law on December 27, 2020, established and extended the PPP, respectively. Both the CARES Act and the Economic Aid Act, among other things, provide certain measures to support individuals and businesses in maintaining solvency through monetary relief in the form of financing and loan forgiveness and/or forbearance. The primary catalyst of small business stimulus is the PPP, an SBA loan that temporarily supports businesses to retain their workforce and cover certain operating expenses during the COVID-19 pandemic. Furthermore, the PPP includes a 100% guarantee from the federal government and principal forgiveness for borrowers if the funds are used for defined purposes. The Company has participated in the PPP as both direct lender and service provider. Under the CARES Act, we originated $109.5 million of PPP loans and were a Lender Service Provider (“LSP”) for $2.5 billion of PPP loans. For our originations as direct lender, we elected the fair value option and thus, classified the loans as held at fair value on our consolidated balance sheets. Fees totaling $5.2 million were recognized in the period of origination. For loans processed under the LSP, we were obligated to perform certain services including: 1) assistance and services to the third-party in the underwriting, marketing, processing and funding of loans, 2) processing forgiveness of the loans with the SBA and 3) servicing and management of subsequently resulting PPP loan portfolios. Such loans are not carried on our consolidated balance sheet and fees totaling $43.3 million were recognized as services were performed. Unrecognized fees as of June 30, 2022 were $0.2 million. Expenses related to PPP loans under the CARES Act are recognized in the period in which they are incurred. The table below presents details about the Company’s assets and liabilities related to its PPP activities. (in thousands) June 30, 2022 December 31, 2021 Assets Paycheck Protection Program loans $ 388,426 $ 867,109 Paycheck Protection Program loans, at fair value 763 3,243 PPP fee receivable 346 407 Accrued interest receivable 4,923 7,025 Total PPP related assets $ 394,458 $ 877,784 Liabilities Paycheck Protection Program Liquidity Facility borrowings $ 427,759 $ 941,505 Interest payable 1,769 2,358 Deferred LSP revenue 178 286 Accrued PPP related costs 4,296 12,460 Payable to third parties 1,101 2,091 Repair and denial reserve 8,007 12,844 Total PPP related liabilities $ 443,110 $ 971,544 In the table above, ● Originations of PPP loans under the Economic Aid Act were $2.2 billion. These loans are classified as held-for-investment and are accounted for under ASC 310-10, Receivables . ● Total net fees of $123.7 million are deferred over the expected life of the loans and will be recognized as interest income. ● As of June 30, 2022, PPPLF borrowings exceed PPP loans on the balance sheet due to net fees of $27.2 million. In addition, PPP loans are forgiven before the related PPPLF borrowings are repaid. These proceeds are unrestricted and held in cash and cash equivalents on the consolidated balance sheet. The table below presents details about the Company’s income and expenses related to its pre-tax PPP activities. Three Months Ended June 30, Six Months Ended June 30, Financial statement account (in thousands) 2022 2021 2022 2021 Income LSP fee income $ 5,273 $ 3,117 $ 5,310 $ 9,858 Servicing income Interest income 19,282 26,355 36,140 33,247 Interest income Repair and denial reserve 2,156 — 4,400 — Other income - change in repair and denial reserve Total PPP related income $ 26,711 $ 29,472 $ 45,850 $ 43,105 Expense Direct operating expenses $ 191 $ 3,673 $ 341 $ 8,218 Other operating expenses - origination costs Repair and denial reserve — 3,733 — 5,389 Other income - change in repair and denial reserve Interest expense 459 8,761 1,147 12,622 Interest expense Total PPP related expenses (direct) $ 650 $ 16,167 $ 1,488 $ 26,229 Net PPP related income $ 26,061 $ 13,305 $ 44,362 $ 16,876 Other income and expenses The table below presents the composition of other income and operating expenses. Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2022 2021 2022 2021 Other income: Origination income $ 2,725 $ 1,890 $ 4,379 $ 3,503 Change in repair and denial reserve 1,305 (4,084) 3,498 (6,153) Other 4,304 1,506 6,958 2,533 Total other income $ 8,334 $ (688) $ 14,835 $ (117) Other operating expenses: Origination costs $ 2,168 $ 7,883 $ 7,102 $ 16,028 Technology expense 2,376 2,038 4,416 3,910 Impairment on real estate 840 1,278 2,667 1,278 Rent and property tax expense 1,564 1,743 2,659 3,429 Recruiting, training and travel expense 524 333 826 829 Marketing expense 596 609 924 1,185 Loan acquisition costs 113 300 218 334 Financing costs on purchased future receivables 32 32 62 56 Other 6,159 2,974 8,151 5,625 Total other operating expenses $ 14,372 $ 17,190 $ 27,025 $ 32,674 |
Redeemable Preferred Stock and
Redeemable Preferred Stock and Stockholders Equity | 6 Months Ended |
Jun. 30, 2022 | |
Redeemable Preferred Stock and Stockholders' Equity | |
Redeemable Preferred Stock and Stockholders' Equity | Note 21. Redeemable Preferred Stock and Stockholders’ Equity Common stock dividends The table below presents dividends declared by the board of directors on common stock during the last twelve months. Declaration Date Record Date Payment Date Dividend per Share June 14, 2021 June 30, 2021 July 30, 2021 $ 0.42 September 15, 2021 September 30, 2021 October 29, 2021 $ 0.42 December 14, 2021 December 31, 2021 January 31, 2022 $ 0.42 March 15, 2022 March 31, 2022 April 29, 2022 $ 0.42 June 15, 2022 June 30, 2022 July 29, 2022 $ 0.42 Stock incentive plan The Company currently maintains the 2012 equity incentive plan (the “2012 Plan”). The 2012 Plan authorizes the Compensation Committee to approve grants of equity-based awards to our officers, directors, and employees of our Manager and its affiliates. The equity incentive plan provides for grants of equity-based awards up to an aggregate of 5% of the shares of the Company’s common stock issued and outstanding from time to time on a fully diluted basis. The Company’s current policy for issuing shares upon settlement of stock-based incentive awards is to issue new shares. The fair value of the RSUs and RSAs granted, which is determined based upon the stock price on the grant date, is recorded as compensation expense on a straight - The table below summarizes RSU and RSA activity. Restricted Stock Awards (in thousands, except share data) Number of Shares Grant date fair value Weighted-average grant date fair value (per share) Outstanding, December 31, 2021 888,777 $ 13,517 $ 15.21 Granted 349,824 4,964 14.19 Vested (252,259) (3,791) 15.03 Forfeited (2,064) (26) 12.82 Outstanding, March 31, 2022 984,278 $ 14,664 $ 14.90 Granted 18,192 264 14.52 Vested (17,516) (257) 14.66 Forfeited (2,326) (33) 14.19 Outstanding, June 30, 2022 982,628 $ 14,638 $ 14.90 The Company recognized $2.1 million and $4.1 million for the three and six months ended June 30, 2022, respectively and $1.7 million and $3.3 million for the three and six months ended June 30, 2021, respectively, of non-cash compensation expense related to its stock-based incentive plan in our consolidated statements of income. As of June 30, 2022 and December 31, 2021, approximately $14.6 million and $13.5 million, respectively, of non-cash compensation expense related to unvested awards had not yet been charged to net income. These costs are expected to be amortized into compensation expense ratably over the course of the remaining vesting periods. Performance-based equity awards In February 2021, the Company granted, to certain key employees, 43,327 shares of performance-based equity awards which are allocated 50% to awards that vest based on absolute total shareholder return (“TSR”) for the three-year forward-looking period ending December 31, 2023 and 50% to awards that vest based on TSR for such three-year forward-looking performance period relative to the performance of a designated peer group. Subject to the absolute and relative TSR achieved during the vesting period, the actual number of shares that the key employees receive at the end of the period may range from 0% to 300% of the target shares granted. The fair value of the performance-based equity awards granted is recorded as compensation expense and will cliff vest at the end of a three year vesting period, with an offsetting increase in stockholders’ equity. In February 2022, the Company granted, to certain key employees 84,566 shares of performance-based equity awards which are allocated 50% to awards that vest based on return metrics and relative total shareholder return (“TSR”) for the three-year forward-looking period ending December 31, 2024 and 50% to awards that vest based on TSR for such three-year forward-looking performance period relative to the performance of a designated peer group. Subject to the return metrics and relative TSR achieved during the vesting period, the actual number of shares that the key employees receive at the end of the period may range from 0% to 300% of the target shares granted. The fair value of the performance-based equity awards granted is recorded as compensation expense and will cliff vest at the end of a three year vesting period, with an offsetting increase in stockholders’ equity. Preferred Stock In the event of a liquidation or dissolution of the Company, any outstanding preferred stock ranks senior to the outstanding common stock with respect to payment of dividends and the distribution of assets. We classify Series C Cumulative Convertible Preferred Stock, or Series C Preferred Stock, on our balance sheets using the guidance in ASC 480‑10‑S99. Our Series C Preferred Stock contains certain fundamental change provisions that allow the holder to redeem the preferred stock for cash only if certain events occur, such as a change in control. As of June 30, 2022, the conversion rate was 1.1626 shares of common stock per $25 principal amount of the Series C Preferred Stock, which is equivalent to an initial conversion price of approximately $21.50 per share of common stock. As redemption under these circumstances is not solely within our control, we have classified our Series C Preferred Stock as temporary equity. We have analyzed whether the conversion features should be bifurcated under the guidance in ASC 815‑10 and have determined that bifurcation is not necessary. The table below presents details on preferred equity by series. Preferential Cash Dividends Carrying Value (in thousands) Series Shares Issued and Outstanding (in thousands) Par Value Liquidation Preference Rate per Annum Annual Dividend (per share) June 30, 2022 C 335 0.0001 $ 25.00 6.25% $ 1.56 $ 8,361 E 4,600 0.0001 $ 25.00 6.50% $ 1.63 $ 111,378 In the table above, ● Shareholders are entitled to receive dividends, when and as authorized by the Company's Board, out of funds legally available for the payment of dividends. Dividends for Series C Preferred Stock are payable quarterly on the 15th day of January, April, July and October of each year or if not a business day, the next succeeding business day. Dividends for Series E preferred stock are payable quarterly on or about the last day of each January, April, July and October of each year. Any dividend payable on the preferred stock for any partial dividend period will be computed on the basis of a 360- day year consisting of twelve 30-day months. Dividends will be payable in arrears to holders of record as they appear on the Company’s records at the close of business on the last day of each of March, June, September and December, as the case may be, immediately preceding the applicable dividend payment date. ● The Company declared dividends of $0.1 million and $1.9 million of its Series C Preferred Stock and Series E Preferred Stock during the three months ended June 30, 2022. The dividends are payable on July 15, 2022 for Series C Preferred Stock and on July 29, 2022 for Series E Preferred Stock to the holders of record as of the close of business on June 30, 2022. ● The Company may, at its option, redeem the Series E Preferred Stock, in whole or in part, at any time and from time to time, for cash at a redemption price equal to 100% of the liquidation preference of $25.00 per share, plus accrued and unpaid dividends, if any, to the redemption date. Series E Preferred Stock is not redeemable prior to June 10, 2026, except under certain conditions. Equity ATM Program On July 9, 2021, the Company entered into an Equity Distribution Agreement, as amended on March 8, 2022, (the “Equity Distribution Agreement”) with JMP Securities LLC, (the “Sales Agent”), pursuant to which the Company may sell, from time to time, shares of the Company’s common stock, par value $0.0001 per share, having an aggregate offering price of up to $150 million, through the Sales Agent either as agent or principal (the “Equity ATM Program”). During the three months ended June 30, 2022, the Company sold 23,825 shares of common stock at an average price of $15.35 per share through the Equity ATM Program, for net proceeds of $0.4 million, after deducting offering related expenses. As of June 30, 2022, shares representing approximately $78.4 million remain available for sale under the Equity ATM Program. Other On January 14, 2022, the Company completed a public offering of 7 million shares of common stock, par value $0.0001 per share, at a price of $15.30 per share. The Company received aggregate net proceeds of approximately $106.6 million, after deducting offering expenses . |
Earnings per Share of Common St
Earnings per Share of Common Stock | 6 Months Ended |
Jun. 30, 2022 | |
Earnings per Share of Common Stock | |
Earnings per Share of Common Stock | Note 22. Earnings per Share of Common Stock The table below provides information on the basic and diluted earnings per share computations, including the number of shares of common stock used for purposes of these computations. Three Months Ended June 30, Six Months Ended June 30, (in thousands, except for share and per share amounts) 2022 2021 2022 2021 Basic Earnings Net income $ 58,965 $ 30,904 $ 123,228 $ 59,851 Less: Income attributable to non-controlling interest 2,874 444 3,649 1,103 Less: Income attributable to participating shares 2,412 3,616 4,824 4,273 Basic earnings $ 53,679 $ 26,844 $ 114,755 $ 54,475 Diluted Earnings Net income $ 58,965 $ 30,904 $ 123,228 $ 59,851 Less: Income attributable to non-controlling interest 2,874 444 3,649 1,103 Less: Income attributable to participating shares 2,412 3,616 4,824 4,273 Add: Expenses attributable to dilutive instruments 2,319 — 4,638 — Diluted earnings $ 55,998 $ 26,844 $ 119,393 $ 54,475 Number of Shares Basic — Average shares outstanding 114,359,026 71,221,806 101,106,777 64,059,509 Effect of dilutive securities — Unvested participating shares 10,706,466 163,797 10,696,654 150,425 Diluted — Average shares outstanding 125,065,492 71,385,603 111,803,431 64,209,934 Earnings Per Share Attributable to RC Common Stockholders: Basic $ 0.47 $ 0.38 $ 1.13 $ 0.85 Diluted $ 0.45 $ 0.38 $ 1.07 $ 0.85 In the table above, participating unvested RSUs were excluded from the computation of diluted shares as their effect was already considered under the more dilutive two-class method used above. The Company adopted ASU 2020-06 , Debt – Debt with Conversion and other Options and Derivatives and Hedging-Contracts in Entity’s Own Equity , which simplifies the accounting for convertible instruments by reducing the number of accounting models available for convertible debt instruments. This guidance eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments and requires the use of the if-converted method. Certain investors own OP units in our operating partnership. An OP unit and a share of common stock of the Company have substantially the same economic characteristics in as much as they effectively share equally in the net income or loss of the operating partnership. OP unit holders have the right to redeem their OP units, subject to certain restrictions. The redemption is required to be satisfied in shares of common stock or cash at the Company's option, calculated as follows: one share of the Company's common stock, or cash equal to the fair value of a share of the Company's common stock at the time of redemption, for each OP unit. When an OP unit holder redeems an OP unit, non-controlling interests in the operating partnership is reduced and the Company's equity is increased. As of June 30, 2022 and December 31, 2021, the non-controlling interest OP unit holders owned 1,749,746 and 293,003 OP units, respectively. |
Offsetting assets and liabiliti
Offsetting assets and liabilities | 6 Months Ended |
Jun. 30, 2022 | |
Offsetting assets and liabilities | |
Offsetting assets and liabilities | Note 23. Offsetting assets and liabilities In order to better define its contractual rights and to secure rights that will help the Company mitigate its counterparty risk, the Company may enter into an International Swaps and Derivatives Association (“ISDA”) Master Agreement with multiple derivative counterparties. An ISDA Master Agreement, published by ISDA, is a bilateral trading agreement between two parties that allow both parties to enter into over-the-counter (“OTC”), derivative contracts. The ISDA Master Agreement contains a Schedule to the Master Agreement and a Credit Support Annex, which governs the maintenance, reporting, collateral management and default process (netting provisions in the event of a default and/or a termination event). Under an ISDA Master Agreement, the Company may, under certain circumstances, offset with the counterparty certain derivative financial instruments’ payables and/or receivables with collateral held and/or posted and create one single net payment. The provisions of the ISDA Master Agreement typically permit a single net payment in the event of default, including the bankruptcy or insolvency of the counterparty. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against the right of offset in bankruptcy, insolvency or other events. In addition, certain ISDA Master Agreements allow counterparties to terminate derivative contracts prior to maturity in the event the Company’s stockholders’ equity declines by a stated percentage or the Company fails to meet the terms of its ISDA Master Agreements, which would cause the Company to accelerate payment of any net liability owed to the counterparty. As of June 30, 2022 and December 31, 2021, the Company was in good standing on all of its ISDA Master Agreements or similar arrangements with its counterparties. For derivatives traded under an ISDA Master Agreement, the collateral requirements are listed under the Credit Support Annex, which is the sum of the mark to market for each derivative contract, the independent amount due to the derivative counterparty and any thresholds, if any. Collateral may be in the form of cash or any eligible securities, as defined in the respective ISDA agreements. Cash collateral pledged to and by the Company with the counterparty, if any, is reported separately in the consolidated balance sheets as restricted cash. All margin call amounts must be made before the notification time and must exceed a minimum transfer amount threshold before a transfer is required. All margin calls must be responded to and completed by the close of business on the same day of the margin call, unless otherwise specified. Any margin calls after the notification time must be completed by the next business day. Typically, the Company and its counterparties are not permitted to sell, rehypothecate or use the collateral posted. To the extent amounts due to the Company from its counterparties are not fully collateralized, the Company bears exposure and the risk of loss from a defaulting counterparty. The Company attempts to mitigate counterparty risk by establishing ISDA agreements with only high grade counterparties that have the financial health to honor their obligations and diversification by entering into agreements with multiple counterparties. In accordance with ASU 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities The table below presents the gross fair value of derivative contracts by product type and secured borrowings, the amount of netting reflected in the consolidated balance sheets, as well as the amount not offset in the consolidated balance sheets as they do not meet the enforceable credit support criteria for netting under U.S. GAAP. Gross amounts not offset in the Consolidated Balance Sheets (1) (in thousands) Gross amounts of Assets / Liabilities Gross amounts offset Balance in Consolidated Balance Sheets Financial Instruments Cash Collateral Received / Paid Net Amount June 30, 2022 Assets Interest rate lock commitments $ 2,399 $ — $ 2,399 $ — $ — $ 2,399 FX forwards 918 — 918 — — 918 TBA Agency Securities 1,001 610 391 — — 391 Interest rate swaps 42,887 65 42,822 — 31,929 10,893 Total $ 47,205 $ 675 $ 46,530 $ — $ 31,929 $ 14,601 Liabilities Interest rate swaps $ 65 $ 65 $ — $ — $ — $ — TBA Agency Securities 1,913 610 1,303 — — 1,303 Secured borrowings 3,212,383 — 3,212,383 3,212,383 — — Paycheck Protection Program Liquidity Facility 427,759 — 427,759 388,065 — 39,694 Total $ 3,642,120 $ 675 $ 3,641,445 $ 3,600,448 $ — $ 40,997 December 31, 2021 Assets Interest rate lock commitments $ 2,340 $ — $ 2,340 $ — $ — $ 2,340 FX forwards 606 — 606 — — 606 TBA Agency Securities 128 128 — — — — Interest rate swaps 6,076 2,000 4,076 — — 4,076 Total $ 9,150 $ 2,128 $ 7,022 $ — $ — $ 7,022 Liabilities Interest rate swaps $ 3,830 $ 3,830 $ — $ — $ — $ — TBA Agency Securities 538 128 410 — — 410 Secured borrowings 2,517,600 — 2,517,600 2,517,600 — — Paycheck Protection Program Liquidity Facility 941,505 — 941,505 870,349 — 71,156 Total $ 3,463,473 $ 3,958 $ 3,459,515 $ 3,387,949 $ — $ 71,566 (1) Amounts presented in these columns are limited in total to the net amount of assets or liabilities presented in the prior column by instrument. In certain cases, there is excess cash collateral or financial assets we have pledged to a counterparty that exceed the financial liabilities subject to a master netting repurchase arrangement or similar agreement. Additionally, in certain cases, counterparties may have pledged excess cash collateral to us that exceeds our corresponding financial assets. In each case, any of these excess amounts are excluded from the table although they are separately reported in our consolidated balance sheets as assets or liabilities, respectively. |
Financial Instruments with off-
Financial Instruments with off-balance sheet risk, credit risk, and certain other risks | 6 Months Ended |
Jun. 30, 2022 | |
Financial Instruments off-balance sheet risk, credit risk, and certain other risks | |
Financial Instruments with off-balance sheet risk, credit risk, and certain other risks | Note 24. Financial instruments with off-balance sheet risk, credit risk, and certain other risks In the normal course of business, the Company enters into transactions in various financial instruments that expose us to various types of risk, both on and off balance sheet. Such risks are associated with financial instruments and markets in which the Company invests. These financial instruments expose us to varying degrees of market risk, credit risk, interest rate risk, liquidity risk, off balance sheet risk and prepayment risk. Market Risk Credit Risk The Company is also subject to credit risk with respect to the counterparties to derivative contracts. If a counterparty becomes bankrupt or otherwise fails to perform its obligation under a derivative contract due to financial difficulties, we may experience significant delays in obtaining any recovery under the derivative contract in a dissolution, assignment for the benefit of creditors, liquidation, winding-up, bankruptcy, or other analogous proceeding. In the event of the insolvency of a counterparty to a derivative transaction, the derivative transaction would typically be terminated at its fair market value. If we are owed this fair market value in the termination of the derivative transaction and its claim is unsecured, we will be treated as a general creditor of such counterparty and will not have any claim with respect to the underlying security. We may obtain only a limited recovery or may obtain no recovery in such circumstances. In addition, the business failure of a counterparty with whom we enter a hedging transaction will most likely result in its default, which may result in the loss of potential future value and the loss of our hedge and force us to cover our commitments, if any, at the then current market price. Counterparty credit risk is the risk that counterparties may fail to fulfill their obligations, including their inability to post additional collateral in circumstances where their pledged collateral value becomes inadequate. The Company attempts to manage its exposure to counterparty risk through diversification, use of financial instruments and monitoring the creditworthiness of counterparties. The Company finances the acquisition of a significant portion of its loans and investments with repurchase agreements and borrowings under credit facilities and other financing agreements. In connection with these financing arrangements, the Company pledges its loans, securities and cash as collateral to secure the borrowings. The amount of collateral pledged will typically exceed the amount of the borrowings (i.e., the haircut) such that the borrowings will be over-collateralized. As a result, the Company is exposed to the counterparty if, during the term of the repurchase agreement financing, a lender should default on its obligation and the Company is not able to recover its pledged assets. The amount of this exposure is the difference between the amount loaned to the Company plus interest due to the counterparty and the fair value of the collateral pledged by the Company to the lender including accrued interest receivable on such collateral. GMFS sells loans to investors without recourse. As such, the investors have assumed the risk of loss or default by the borrower. However, GMFS is usually required by these investors to make certain standard representations and warranties relating to credit information, loan documentation and collateral. To the extent that GMFS does not comply with such representations, or there are early payment defaults, GMFS may be required to repurchase the loans or indemnify these investors for any losses from borrower defaults. In addition, if loans pay-off within a specified time frame, GMFS may be required to refund a portion of the sales proceeds to the investors. Liquidity Risk Off-Balance Sheet Risk Interest Rate Our operating results will depend, in part, on differences between the income from our investments and our financing costs. Generally, our debt financing is based on a floating rate of interest calculated on a fixed spread over the relevant index, subject to a floor, as determined by the particular financing arrangement. In the event of a significant rising interest rate environment and/or economic downturn, defaults could increase and result in credit losses to us, which could materially and adversely affect our business, financial condition, liquidity, results of operations and prospects. Furthermore, such defaults could have an adverse effect on the spread between our interest-earning assets and interest-bearing liabilities. Additionally, non-performing SBC loans are not as interest rate sensitive as performing loans, as earnings on non-performing loans are often generated from restructuring the assets through loss mitigation strategies and opportunistically disposing of them. Because non-performing SBC loans are short-term assets, the discount rates used for valuation are based on short-term market interest rates, which may not move in tandem with long-term market interest rates. Prepayment Risk — |
Commitments, Contingencies and
Commitments, Contingencies and Indemnifications | 6 Months Ended |
Jun. 30, 2022 | |
Commitments, Contingencies and Indemnifications | |
Commitments, Contingencies and Indemnifications | Note 25. Commitments, contingencies and indemnifications Litigation The Company may be subject to litigation and administrative proceedings arising in the ordinary course of its business and as such, has entered into agreements which provide for indemnifications against losses, costs, claims, and liabilities arising from the performance of individual obligations under such agreements. The Company has had no prior claims or payments pursuant to these agreements and the individual maximum exposure is unknown as this would involve future claims that may be made against the Company that have not yet occurred. However, based on history and experience, the risk of loss is expected to be remote. Management is not aware of any other contingencies that would require accrual or disclosure in the consolidated financial statements. Unfunded Loan Commitments The table below presents unfunded loan commitments for SBC loans. (in thousands) June 30, 2022 December 31, 2021 Loans, net $ 762,637 $ 455,119 Loans, held for sale at fair value $ 22,818 $ 24,150 Investments held to maturity $ 2,318 $ — Commitments to Originate Loans GMFS enters into IRLCs with customers who have applied for residential mortgage loans and meet certain credit and underwriting criteria. These commitments expose GMFS to market risk if interest rates change, and the loan is not economically hedged or committed to an investor. GMFS is also exposed to credit loss if the loan is originated and not sold to an investor and the borrower does not perform. Commitments to originate loans do not necessarily reflect future cash requirements as some commitments are expected to expire without being drawn upon. The table below presents commitments to originate residential agency loans. (in thousands) June 30, 2022 December 31, 2021 Commitments to originate residential agency loans $ 338,320 $ 346,660 |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2022 | |
Income Taxes | |
Income Taxes | Note 26. Income Taxes The Company is a REIT pursuant to Internal Revenue Code Section 856. Our qualification as a REIT depends on our ability to meet various requirements imposed by the Internal Revenue Code, which relate to our organizational structure, diversity of stock ownership and certain requirements with regard to the nature of our assets and the sources of our income. As a REIT, we generally must distribute annually dividends equal to at least 90% of our net taxable income, subject to certain adjustments and excluding any net capital gain, in order for U.S. federal income tax not to apply to our earnings that we distribute. To the extent that we satisfy this distribution requirement, but distribute less than 100% of our net taxable income, we will be subject to U.S. federal income tax on our undistributed taxable income. In addition, we will be subject to a 4% nondeductible excise tax if the actual amount that we pay out to our stockholders in a calendar year is less than a minimum amount specified under U.S. federal tax laws. Even if we qualify as a REIT, we may be subject to certain U.S. federal income and excise taxes and state and local taxes on our income and assets. If we fail to maintain our qualification as a REIT for any taxable year, we may be subject to material penalties as well as federal, state and local income tax on our taxable income at regular corporate rates and we would not be able to qualify as a REIT for the subsequent four Certain of our subsidiaries have elected to be treated as taxable REIT subsidiaries (“TRSs”). TRSs permit us to participate in certain activities that would not be qualifying income if earned directly by the parent REIT, as long as these activities meet specific criteria, are conducted within the parameters of certain limitations established by the Internal Revenue Code, and are conducted in entities which elect to be treated as taxable subsidiaries under the Internal Revenue Code. To the extent these criteria are met, we will continue to maintain our qualification as a REIT. Our TRSs engage in various real estate - related operations, including originating and securitizing commercial and residential mortgage loans, and investments in real property. Our TRSs are not consolidated for federal income tax purposes, but are instead taxed as corporations. For financial reporting purposes, a provision for current and deferred income taxes is established for the portion of earnings recognized by us with respect to our interest in TRSs. The income tax provision was $10.3 million and $28.2 million for the three and six months ended June 30, 2022 and $7.0 million and $15.7 million for the three and six months ended June 30, 2021. The income tax provision primarily relates to activities of the Company’s TRSs. |
Segment Reporting
Segment Reporting | 6 Months Ended |
Jun. 30, 2022 | |
Segment Reporting | |
Segment Reporting | Note 27. Segment reporting The Company reports its results of operations through the following three business segments: i) SBC Lending and Acquisitions Small Business Lending Residential Mortgage Banking SBC Lending and Acquisitions The Company originates SBC loans across the full life-cycle of an SBC property including construction, transitional, stabilized and agency channels. As part of this segment, we originate and service multi-family loan products under the Freddie Mac SBL program. SBC originations include construction and permanent financing activities for the preservation and construction of affordable housing, primarily utilizing tax-exempt bonds, through Red Stone. This segment also reflects the impact of SBC securitization activities. The Company acquires performing and non-performing SBC loans and intends to continue to acquire these loans as part of the Company’s business strategy. Small Business Lending The Company acquires, originates and services loans guaranteed by the SBA under the SBA Section 7(a) Program. This segment also reflects the impact of our SBA securitization activities. The Company also acquires purchased future receivables through our Knight Capital platform. Residential mortgage banking The Company originates residential mortgage loans eligible to be purchased, guaranteed or insured by Fannie Mae, Freddie Mac, FHA, USDA and VA through retail, correspondent and broker channels. Corporate- Other Corporate - Other consists primarily of unallocated activities including interest expense relating to our senior secured and convertible notes, allocated employee compensation from our Manager, management and incentive fees paid to our Manager and other general corporate overhead expenses. Prior to the fourth quarter of 2021, we reported our activities in the following four business segments: Acquisitions, SBC Originations, Small Business Lending and Residential Mortgage Banking. Our Chief Executive Officer, as our CODM, realigned our business segments to incorporate results from our Acquisitions segment in our SBC Lending and Acquisitions segment. We believe this to be more closely aligned with the activities for and projections of our business models. We have recast prior period amounts and segment information to conform to this presentation. Results of business segments and all other. Three Months Ended June 30, 2022 Small Residential SBC Lending Business Mortgage Corporate- (in thousands) and Acquisitions Lending Banking Other Consolidated Interest income $ 122,427 $ 29,024 $ 2,220 $ — $ 153,671 Interest expense (72,685) (5,916) (2,226) — (80,827) Net interest income before recovery of (provision for) loan losses $ 49,742 $ 23,108 $ (6) $ — $ 72,844 Recovery of (provision for) loan losses 4,609 (219) — — 4,390 Net interest income after recovery of (provision for) loan losses $ 54,351 $ 22,889 $ (6) $ — $ 77,234 Non-interest income Residential mortgage banking activities $ — $ — $ 2,947 $ — $ 2,947 Net realized gain on financial instruments and real estate owned 12,034 9,080 — — 21,114 Net unrealized gain (loss) on financial instruments (2,517) (721) (15) — (3,253) Servicing income, net 1,431 4,558 8,576 — 14,565 Income on purchased future receivables, net — 1,859 — — 1,859 Income on unconsolidated joint ventures 5,200 — — — 5,200 Other income 6,338 1,950 21 25 8,334 Total non-interest income $ 22,486 $ 16,726 $ 11,529 $ 25 $ 50,766 Non-interest expense Employee compensation and benefits $ (7,903) $ (10,217) $ (6,906) $ (1,063) $ (26,089) Allocated employee compensation and benefits from related party (180) — — (1,624) (1,804) Variable income (expenses) on residential mortgage banking activities — — 4,532 — 4,532 Professional fees (1,097) (1,619) (217) (918) (3,851) Management fees – related party — — — (5,465) (5,465) Loan servicing expense (7,912) 74 (2,458) — (10,296) Transaction related expenses — — — (1,372) (1,372) Other operating expenses (6,457) (4,314) (2,175) (1,426) (14,372) Total non-interest expense $ (23,549) $ (16,076) $ (7,224) $ (11,868) $ (58,717) Income (loss) before provision for income taxes $ 53,288 $ 23,539 $ 4,299 $ (11,843) $ 69,283 Total assets $ 10,296,900 $ 1,049,763 $ 454,556 $ 136,096 $ 11,937,315 Six Months Ended June 30, 2022 Small Residential SBC Lending Business Mortgage Corporate- (in thousands) and Acquisitions Lending Banking Other Consolidated Interest income $ 218,770 $ 55,261 $ 4,045 $ — $ 278,076 Interest expense (125,778) (11,606) (4,184) (276) (141,844) Net interest income before recovery of (provision for) loan losses $ 92,992 $ 43,655 $ (139) $ (276) $ 136,232 Recovery of (provision for) loan losses 4,339 (1,491) — — 2,848 Net interest income after recovery of (provision for) loan losses $ 97,331 $ 42,164 $ (139) $ (276) $ 139,080 Non-interest income Residential mortgage banking activities $ — $ — $ 11,371 $ — $ 11,371 Net realized gain on financial instruments and real estate owned 12,916 16,205 — — 29,121 Net unrealized gain (loss) on financial instruments 9,912 (433) 32,583 — 42,062 Servicing income, net 2,351 6,051 16,691 — 25,093 Income on purchased future receivables, net — 4,328 — — 4,328 Income on unconsolidated joint ventures 11,763 — — — 11,763 Other income 9,352 4,821 45 617 14,835 Total non-interest income $ 46,294 $ 30,972 $ 60,690 $ 617 $ 138,573 Non-interest expense Employee compensation and benefits $ (18,063) $ (19,735) $ (14,440) $ (1,819) $ (54,057) Allocated employee compensation and benefits from related party (480) — — (4,324) (4,804) Variable income (expenses) on residential mortgage banking activities — — 3,553 — 3,553 Professional fees (3,498) (3,087) (481) (1,911) (8,977) Management fees – related party — — — (8,661) (8,661) Loan servicing expense (13,787) (428) (5,001) — (19,216) Transaction related expenses — — — (7,071) (7,071) Other operating expenses (11,833) (8,101) (4,199) (2,892) (27,025) Total non-interest expense $ (47,661) $ (31,351) $ (20,568) $ (26,678) $ (126,258) Income (loss) before provision for income taxes $ 95,964 $ 41,785 $ 39,983 $ (26,337) $ 151,395 Total assets $ 10,296,900 $ 1,049,763 $ 454,556 $ 136,096 $ 11,937,315 Three Months Ended June 30, 2021 Small Residential SBC Lending Business Mortgage Corporate- (in thousands) and Acquisitions Lending Banking Other Consolidated Interest income $ 64,880 $ 36,133 $ 2,034 $ — $ 103,047 Interest expense (39,140) (13,980) (2,295) — (55,415) Net interest income before provision for loan losses $ 25,740 $ 22,153 $ (261) $ — $ 47,632 Provision for loan losses (4,723) (794) — — (5,517) Net interest income after provision for loan losses $ 21,017 $ 21,359 $ (261) $ — $ 42,115 Non-interest income Residential mortgage banking activities $ — $ — $ 36,690 $ — $ 36,690 Net realized gain on financial instruments and real estate owned 2,620 14,563 — — 17,183 Net unrealized gain (loss) on financial instruments 6,843 2,467 (4,698) — 4,612 Servicing income, net 796 3,666 7,466 — 11,928 Income on purchased future receivables, net — 2,779 — — 2,779 Income on unconsolidated joint ventures 3,361 — — — 3,361 Other income (loss) 2,753 (3,550) 38 71 (688) Total non-interest income $ 16,373 $ 19,925 $ 39,496 $ 71 $ 75,865 Non-interest expense Employee compensation and benefits $ (4,294) $ (9,335) $ (10,127) $ (514) $ (24,270) Allocated employee compensation and benefits from related party (331) — — (2,968) (3,299) Variable expenses on residential mortgage banking activities — — (21,421) — (21,421) Professional fees (993) (704) (144) (1,031) (2,872) Management fees – related party — — — (2,626) (2,626) Incentive fees – related party — — — (286) (286) Loan servicing expense (4,621) (144) (2,086) — (6,851) Transaction related expenses — — — (1,266) (1,266) Other operating expenses (6,642) (7,405) (2,213) (930) (17,190) Total non-interest expense $ (16,881) $ (17,588) $ (35,991) $ (9,621) $ (80,081) Income (loss) before provision for income taxes $ 20,509 $ 23,696 $ 3,244 $ (9,550) $ 37,899 Total assets $ 5,275,662 $ 2,860,365 $ 588,435 $ 252,430 $ 8,976,892 Six Months Ended June 30, 2021 Small Residential SBC Lending Business Mortgage Corporate- (in thousands) and Acquisitions Lending Banking Other Consolidated Interest income $ 120,775 $ 51,565 $ 4,078 $ — $ 176,418 Interest expense (76,357) (23,187) (4,623) (2,009) (106,176) Net interest income before provision for loan losses $ 44,418 $ 28,378 $ (545) $ (2,009) $ 70,242 Provision for loan losses (5,070) (439) — — (5,509) Net interest income after provision for loan losses $ 39,348 $ 27,939 $ (545) $ (2,009) $ 64,733 Non-interest income Residential mortgage banking activities $ — $ — $ 78,099 $ — $ 78,099 Net realized gain on financial instruments and real estate owned 6,566 19,463 — — 26,029 Net unrealized gain (loss) on financial instruments 11,970 2,981 10,657 — 25,608 Servicing income, net 1,522 11,469 14,572 — 27,563 Income on purchased future receivables, net — 5,096 — — 5,096 Income on unconsolidated joint ventures 2,552 — — — 2,552 Other income (loss) 4,897 (5,150) 53 83 (117) Total non-interest income $ 27,507 $ 33,859 $ 103,381 $ 83 $ 164,830 Non-interest expense Employee compensation and benefits $ (6,546) $ (15,381) $ (23,715) $ (1,405) $ (47,047) Allocated employee compensation and benefits from related party (543) — — (4,879) (5,422) Variable expenses on residential mortgage banking activities — — (36,906) — (36,906) Professional fees (1,838) (1,348) (395) (2,273) (5,854) Management fees – related party — — — (5,319) (5,319) Incentive fees – related party — — — (286) (286) Loan servicing expense (8,463) (42) (4,450) — (12,955) Transaction related expenses — — — (7,573) (7,573) Other operating expenses (11,599) (15,070) (4,417) (1,588) (32,674) Total non-interest expense $ (28,989) $ (31,841) $ (69,883) $ (23,323) $ (154,036) Income (loss) before provision for income taxes $ 37,866 $ 29,957 $ 32,953 $ (25,249) $ 75,527 Total assets $ 5,275,662 $ 2,860,365 $ 588,435 $ 252,430 $ 8,976,892 |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2022 | |
Subsequent Events | |
Subsequent Events | Note 28. Subsequent events On July 13, 2022, the Company entered into a joint venture with Starz Real Estate, a pan-European commercial real estate lending platform to originate approximately €300 million of new senior commercial real estate loans over the next two years. This joint venture will focus on deploying commercial real estate bridge and term loans between €10 million and €40 million in size across the United Kingdom, Benelux, Dach Region, Italy and Portugal with up to 75% LTV across sectors including office, residential, mixed use, student housing, logistics, self-storage, and selective retail and hotel opportunities. The joint venture will also offer construction lending in the above mentioned continental European locations. On July 15, 2022, the Company closed on a commitment to invest into a parallel vehicle of the Fund, a fund managed by our Manager, in exchange for interests in the Fund. Refer to Note 18 – Agreements and transactions with related parties for a more detailed description of the co-investment terms. On July 25, 2022, the Company issued $80 million in aggregate principal amount of 7.375% Senior Unsecured Notes due 2027 by means of a direct public offering to a certain purchaser in a privately negotiated transaction. The net proceeds from the sale of the Notes were approximately $77.5 million, after deducting estimated transaction expenses payable by the Company. The Company intends to use the net proceeds to originate or acquire target assets consistent with its investment strategy and for general business purposes. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2022 | |
Summary of Significant Accounting Policies | |
Use of estimates | Use of estimates Preparation of the Company’s consolidated financial statements in conformity with U.S. GAAP requires certain estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of income and expenses during the reporting period. These estimates and assumptions are based on the best available information however, actual results could be materially different. |
Basis of consolidation | Basis of consolidation The accompanying consolidated financial statements of the Company include the accounts and results of operations of the operating partnership and other consolidated subsidiaries and variable interest entities (“VIEs”) in which we are the primary beneficiary. The consolidated financial statements are prepared in accordance with ASC 810, Consolidation. |
Reclassifications | Reclassifications Certain amounts reported for the prior periods in the accompanying consolidated financial statements have been reclassified in order to conform to the current period’s presentation. |
Cash and cash equivalents | Cash and cash equivalents The Company accounts for cash and cash equivalents in accordance with ASC 305, Cash and Cash Equivalents. |
Restricted cash | Restricted cash Restricted cash represents cash held by the Company as collateral against its derivatives, borrowings under repurchase agreements, borrowings under credit facilities and other financing agreements with counterparties, construction and mortgage escrows, as well as cash held for remittance on loans serviced for third parties. Restricted cash is not available for general corporate purposes but may be applied against amounts due to counterparties under existing swaps and repurchase agreement borrowings, returned to the Company when the restriction requirements no longer exist or at the maturity of the swap or repurchase agreement. |
Loans, held-for-investment | Loans, held-for-investment. Consolidation Receivables. The Company uses the interest method to recognize, as a constant effective yield adjustment, the difference between the initial recorded investment in the loan and the principal amount of the loan. The calculation of the constant effective yield necessary to apply the interest method uses the payment terms required by the loan contract, and prepayments of principal are not anticipated to shorten the loan term. |
Loans, held at fair value | Loans, held at fair value. |
Allowance for loan losses | Allowance for credit losses. On January 1, 2020, the Company adopted ASU 2016-13, Financial Instruments-Credit Losses In connection with the Company’s adoption of ASU 2016-13 on January 1, 2020, the Company implemented new processes including the utilization of loan loss forecasting models, updates to the Company’s reserve policy documentation, changes to internal reporting processes and related internal controls. The Company has implemented loan loss forecasting models for estimating expected life-time credit losses, at the individual loan level, for its loan portfolio. The CECL forecasting methods used by the Company include (i) a probability of default and loss given default method using underlying third-party CMBS/CRE loan databases with historical loan losses and (ii) probability weighted expected cash flow method, depending on the type of loan and the availability of relevant historical market loan loss data. The Company might use other acceptable alternative approaches in the future depending on, among other factors, the type of loan, underlying collateral, and availability of relevant historical market loan loss data. Significant inputs to the Company’s forecasting methods include (i) key loan-specific inputs such as LTV, vintage year, loan-term, underlying property type, occupancy, geographic location, and others, and (ii) a macro-economic forecast, including unemployment rates, interest rates, commercial real estate prices, and others. These estimates may change in future periods based on available future macro-economic data and might result in a material change in the Company’s future estimates of expected credit losses for its loan portfolio. In certain instances, the Company considers relevant loan-specific qualitative factors to certain loans to estimate its CECL expected credit losses. The Company considers loan investments that are both (i) expected to be substantially repaid through the operation or sale of the underlying collateral, and (ii) for which the borrower is experiencing financial difficulty, to be “collateral-dependent” loans. For such loans that the Company determines that foreclosure of the collateral is probable, the Company measures the expected losses based on the difference between the fair value of the collateral (less costs to sell the asset if repayment is expected through the sale of the collateral) and the amortized cost basis of the loan as of the measurement date. For collateral-dependent loans that the Company determines foreclosure is not probable, the Company applies a practical expedient to estimate expected losses using the difference between the collateral’s fair value (less costs to sell the asset if repayment is expected through the sale of the collateral) and the amortized cost basis of the loan. While we have a formal methodology to determine the adequate and appropriate level of the allowance for credit losses, estimates of inherent loan losses involve judgment and assumptions as to various factors, including current economic conditions. Our determination of adequacy of the allowance for credit losses is based on quarterly evaluations of the above factors. Accordingly, the provision for credit losses will vary from period to period based on management's ongoing assessment of the adequacy of the allowance for credit losses. |
Troubled debt restructurings | Troubled debt restructurings. Generally, all loans modified in a TDR are placed or remain on non-accrual status at the time of the restructuring. However, certain accruing loans modified in a TDR that are current at the time of restructuring may remain on accrual status if payment in full under the restructured terms is expected. In addition, based on issued regulatory guidance provided by federal and state regulatory agencies, a loan modification is not considered a TDR if: (1) made in response to the COVID-19 pandemic; (2) the borrower was current on payments at the time the modification program was implemented; and (3) the modification was short-term (e.g., six months). |
Loans, held for sale, at fair value | Loans, held for sale, at fair value Loans, held for sale, at fair value are loans that are expected to be sold to third parties in the near term. Interest is recognized as interest income in the consolidated statements of income when earned and deemed collectible. For loans originated through the SBC Lending and Acquisitions and Small Business Lending segments, changes in fair value are recurring and are reported as net unrealized gain (loss) on financial instruments in the consolidated statements of income. For originated SBA loans, the guaranteed portion is held for sale, at fair value. For loans originated by GMFS, changes in fair value are reported as residential mortgage banking activities in the consolidated statements of income. |
Paycheck Protection Program loans | Paycheck Protection Program loans Paycheck Protection Program (“PPP”) loans originated in response to the COVID-19 pandemic are further described in Note 20. The Company has elected the fair value option for the loans originated by the Company for the first round of the program. Interest is recognized in the consolidated statements of income as interest income when earned and deemed collectible. Although PPP includes a 100% guarantee from the federal government and principal forgiveness for borrowers if the funds were used for defined purposes, changes in fair value are recurring and are reported as net unrealized gains (losses) on financial instruments in the consolidated statements of income. The Company’s loan originations in the second round of the program are accounted for as loans, held-for-investment under ASC 310. Loan origination fees and related direct loan origination costs are capitalized into the initial recorded investment in the loan and are deferred over the loan term. The Company recognizes the difference between the initial recorded investment and the principal amount of the loan as interest income using the effective yield method. The effective yield is determined based on the payment terms required by the loan contract as well as with actual and expected prepayments from loan forgiveness by the federal government. |
Mortgage backed securities, at fair value | Mortgage-backed securities, at fair value The Company accounts for MBS as trading securities and carries them at fair value under ASC 320, Investments-Debt and Equity Securities. MBS are recorded at fair value as determined by market prices provided by independent broker dealers or other independent valuation service providers. The fair values assigned to these investments are based upon available information and may not reflect amounts that may be realized. We generally intend to hold our investment in MBS to generate interest income; however, we have and may continue to sell certain of our investment securities as part of the overall management of our assets and liabilities and operating our business. The fair value adjustments on MBS are reported within net unrealized gain (loss) on financial instruments in the consolidated statements of income. |
Loans eligible for repurchase from Ginnie Mae | Loans eligible for repurchase from Ginnie Mae When the Company has the unilateral right to repurchase Ginnie Mae pool loans it has previously sold (generally loans that are more than 90 days past due), the Company then records the right to repurchase the loan as an asset and liability in its consolidated balance sheets. Such amounts reflect the unpaid principal balance of the loans. |
Derivative instruments, at fair value | Derivative instruments, at fair value Subject to maintaining our qualification as a REIT for U.S. federal income tax purposes, we utilize derivative financial instruments, comprised of credit default swaps (“CDSs”), interest rate swaps, TBA agency securities, FX forwards and interest rate lock commitments (“IRLCs”) as part of our risk management strategy. The Company accounts for derivative instruments under ASC 815, Derivatives and Hedging Interest rate swap agreements. TBA Agency Securities IRLC. FX forwards. CDS. Hedge accounting. To qualify as an accounting hedge under the hedge accounting rules (versus an economic hedge where hedge accounting is not applied), a hedging relationship must be highly effective in offsetting the risk designated as being hedged. We use cash flow hedges to hedge the exposure to variability in cash flows from forecasted transactions, including the anticipated issuance of securitized debt obligations. ASC 815 requires that a forecasted transaction be identified as either: 1) a single transaction, or 2) a group of individual transactions that share the same risk exposures for which they are designated as being hedged. Hedges of forecasted transactions are considered cash flow hedges since the price is not fixed, hence involve variability of cash flows. For qualifying cash flow hedges, the change in the fair value of the derivative (the hedging instrument) is recorded in other comprehensive income (loss) ("OCI") and is reclassified out of OCI and into the consolidated statements of income when the hedged cash flows affect earnings. These amounts are recognized consistent with the classification of the hedged item, primarily interest expense (for hedges of interest rate risk). If the hedge relationship is terminated, then the value of the derivative recorded in accumulated other comprehensive income (loss) ("AOCI") is recognized in earnings when the cash flows that were hedged affect earnings, so long as the forecasted transaction remains probable of occurring. During May 2021, the Company discontinued hedge accounting for the anticipated issuance of securitized debt obligations for certain hedges. As a general rule, derivative gains or losses reported in AOCI are required to be recorded in earnings when it becomes probable that the forecasted transaction will not occur by the end of the originally specified time period or within an additional two-month period thereafter. The guidance in ASC 815 includes an exception to the general rule when extenuating circumstances that are outside the control or influence of the reporting entity cause the forecasted transaction to be probable of occurring on a date that is beyond the additional two-month period. The issuance of the securitized debt obligations was delayed beyond the additional two-month period due to the uncertainty in the capital markets and lower origination volumes as a result of the COVID-19 pandemic. Since the delay was caused by extenuating circumstances related to the COVID-19 pandemic and the issuance of securitized debt obligations remains probable over a reasonable time period after the additional two-month period, the discontinued cash flow hedges qualify for the exception in accordance with FASB Staff Q&A Topic 815: Cashflow hedge accounting affected by the Covid-19 Pandemic will remain in AOCI. Gains and losses from the derivative instruments will be recorded in the earnings from the date of the discontinuation of cash flow hedges. Hedge accounting is generally terminated at the debt issuance date because we are no longer exposed to cash flow variability subsequent to issuance. Accumulated amounts recorded in AOCI at that date are then released to earnings in future periods to reflect the difference in 1) the fixed rates economically locked in at the inception of the hedge and 2) the actual fixed rates established in the debt instrument at issuance. Because of the effects of the time value of money, the actual interest expense reported in earnings will not equal the effective yield locked in at hedge inception multiplied by the par value. Similarly, this hedging strategy does not actually fix the interest payments associated with the forecasted debt issuance. |
Servicing rights | Servicing rights Servicing rights initially represent the fair value of expected future cash flows for performing servicing activities for others. The fair value considers estimated future servicing fees and ancillary revenue, offset by estimated costs to service the loans, and generally declines over time as net servicing cash flows are received, effectively amortizing the servicing right asset against contractual servicing and ancillary fee income. Servicing rights are recognized upon sale of loans, including a securitization of loans accounted for as a sale in accordance with U.S. GAAP, if servicing is retained. For servicing rights, gains related to servicing rights retained is included in net realized gain (loss) in the consolidated statements of income. For residential MSRs, gains on servicing rights retained upon sale of a loan are included in residential mortgage banking activities in the consolidated statements of income. The Company treats its servicing rights and residential MSRs as two separate classes of servicing assets based on the class of the underlying mortgages and it treats these assets as two separate pools for risk management purposes. Servicing rights relating to the Company’s servicing of loans guaranteed by the SBA under its Section 7(a) loan program and multi-family servicing rights are accounted for under ASC 860, Transfers and Servicing, Financial Instruments. Servicing rights – SBA and multi-family portfolio. For purposes of testing our servicing rights for impairment, we first determine whether facts and circumstances exist that would suggest the carrying value of the servicing asset is not recoverable. If so, we then compare the net present value of servicing cash flow to its carrying value. The estimated net present value of servicing cash flows is determined using discounted cash flow modeling techniques, which require management to make estimates regarding future net servicing cash flows, taking into consideration historical and forecasted loan prepayment rates, delinquency rates and anticipated maturity defaults. If the carrying value of the servicing rights exceeds the net present value of servicing cash flows, the servicing rights are considered impaired, and an impairment loss is recognized in earnings for the amount by which carrying value exceeds the net present value of servicing cash flows. We estimate the fair value of servicing rights by determining the present value of future expected servicing cash flows using modeling techniques that incorporate management's best estimates of key variables including estimates regarding future net servicing cash flows, forecasted loan prepayment rates, delinquency rates, and return requirements commensurate with the risks involved. Cash flow assumptions are modeled using our internally forecasted revenue and expenses, and where possible, the reasonableness of assumptions is periodically validated through comparisons to market data. Prepayment speed estimates are determined from historical prepayment rates or obtained from third-party industry data. Return requirement assumptions are determined using data obtained from market participants, where available, or based on current relevant interest rates plus a risk-adjusted spread. We also consider other factors that can impact the value of the servicing rights, such as surety provider termination clauses and servicer terminations that could result if we failed to materially comply with the covenants or conditions of our servicing agreements and did not remedy the failure. Since many factors can affect the estimate of the fair value of servicing rights, we regularly evaluate the major assumptions and modeling techniques used in our estimate and review these assumptions against market comparables, if available. We monitor the actual performance of our servicing rights by regularly comparing actual cash flow, credit, and prepayment experience to modeled estimates. Servicing rights - Residential (carried at fair value). The Company has elected to account for its portfolio of residential MSRs at fair value. For these assets, the Company uses a third-party vendor to assist management in estimating the fair value. The third-party vendor uses a discounted cash flow approach which consists of projecting servicing cash flows discounted at a rate that management believes market participants would use in their determinations of fair value. The key assumptions used in the estimation of the fair value of MSRs include prepayment rates, discount rates, and cost of servicing. Residential MSRs are classified as Level 3 in the fair value hierarchy. |
Real estate, held for sale | Real estate owned, held for sale Real estate owned, held for sale includes purchased real estate and real estate acquired in full or partial settlement of loan obligations, generally through foreclosure, that is being marketed for sale. Real estate owned, held for sale is recorded at acquisition at the property’s estimated fair value less estimated costs to sell. After acquisition, costs incurred relating to the development and improvement of property are capitalized to the extent they do not cause the recorded value to exceed the net realizable value, whereas costs relating to holding and disposition of the property are expensed as incurred. After acquisition, real estate owned, held for sale is analyzed periodically for changes in fair values and any subsequent write down is charged through impairment. The Company records a gain or loss from the sale of real estate when control of the property transfers to the buyer, which generally occurs at the time of an executed deed. When the Company finances the sale of real estate to the buyer, the Company assesses whether the buyer is committed to perform their obligations under the contract and whether the collectability of the transaction price is probable. Once these criteria are met, the real estate is derecognized and the gain or loss on sale is recorded upon transfer of control of the property to the buyer. In determining the gain or loss on the sale, the Company adjusts the transaction price and related gain (loss) on sale if a significant financing component is present. This adjustment is based on management’s estimate of the fair value of the loan extended to the buyer to finance the sale. |
Investment in unconsolidated joint venture | Investment in unconsolidated joint ventures According to ASC 323 , Equity Method and Joint Ventures |
Investments held to maturity | Investments held to maturity The Company accounts for held to maturity investments under ASC 320, Investments- Debt Securities |
Purchased future receivables | Purchased future receivables Through Knight Capital, the Company provides working capital advances to small businesses through the purchase of their future revenues. The Company enters into a contract with the business whereby the Company pays the business an upfront amount in return for a specific amount of the business’s future revenue receivables, known as payback amounts. The payback amounts are primarily received through daily payments initiated by automated clearing house (“ACH”) transactions. Revenues from purchased future receivables are realized when funds are received under each contract. The allocation of the amount received is determined by apportioning the amount received based upon the factor (discount) rate of the business's contract. Management believes that this methodology best reflects the effective interest method. The Company has established an allowance for doubtful purchased future receivables. An increase in the allowance for doubtful purchased future receivables results in a charge to income and is reduced when purchased future receivables are charged-off. Purchased future receivables are charged-off after 90 days past due. Management believes that the allowance reflects the risk elements and is adequate to absorb losses inherent in the portfolio. Although management has performed this evaluation, future adjustments may be necessary based on changes in economic conditions or other factors. |
Intangible assets | Intangible assets The Company accounts for intangible assets under ASC 350, Intangibles- Goodwill and Other |
Goodwill | Goodwill Goodwill represents the excess of the consideration transferred over the fair value of net assets, including identifiable intangible assets, at the acquisition date. Goodwill is assessed for impairment annually in the fourth quarter or more frequently if events or changes in circumstances indicate a potential impairment exists. In assessing goodwill for impairment, the Company follows ASC 350, Intangibles- Goodwill and Other, The qualitative assessment requires judgment to be applied in evaluating the effects of multiple factors, including actual and projected financial performance of the reporting unit, macroeconomic conditions, industry and market conditions and relevant entity specific events in determining whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount, including goodwill. In the fourth quarter of 2021, as a result of the qualitative assessment, the Company determined that it was more likely than not that the estimated fair value of each of the reporting units exceeded its respective estimated carrying value. Therefore, goodwill for each reporting unit was not impaired and a quantitative test was not required. There were no events or changes in circumstances during the three months ended June 30, 2022 that would indicate that it was more likely than not that the fair value of each of the reporting units did not exceed its respective carrying value as of June 30, 2022. |
Deferred financing costs | Deferred financing costs Costs incurred in connection with our secured borrowings are accounted for under ASC 340, Other Assets and Deferred Costs |
Due from servicers | Due from servicers The loan-servicing activities of the Company’s SBC Lending and Acquisitions segment are performed primarily by third-party servicers. SBA loans originated by and held at RCL are internally serviced. Residential mortgage loans originated by and held at GMFS are both serviced by third-party servicers and internally serviced. The Company’s servicers hold substantially all of the cash owned by the Company related to loan servicing activities. These amounts include principal and interest payments made by borrowers, net of advances and servicing fees. Cash is generally received within thirty days of recording the receivable. The Company is subject to credit risk to the extent any servicer with whom the Company conducts business is unable to deliver cash balances or process loan-related transactions on the Company’s behalf. The Company monitors the financial condition of the servicers with whom the Company conducts business and believes the likelihood of loss under the aforementioned circumstances is remote. |
Secured borrowings | Secured borrowings Secured borrowings include borrowings under credit facilities and other financing agreements and repurchase agreements. Borrowings under credit facilities and other financing agreements. Debt. Borrowings under repurchase agreements. Transfers and Servicing |
Paycheck Protection Program Liquidity Facility borrowings | Paycheck Protection Program Liquidity Facility borrowings The Paycheck Protection Program Facility (“PPPLF”) is a government loan facility created to enable the distribution of funds for PPP whereby the Company may receive advances from the Federal Reserve through the PPPLF. Loans are participated with a PPP participant bank in accordance with respective financing agreements, repurchased from such PPP participant bank, and then pledged using PPPLF. The Company accounts for borrowings under the PPPLF under ASC 470, Debt |
Securitized debt obligations of consolidated VIEs, net | Securitized debt obligations of consolidated VIEs, net Since 2011, we have engaged in several securitization transactions, which the Company accounts for under ASC 810. Securitization involves transferring assets to a special purpose entity or securitization trust, which typically qualifies as a VIE. The entity that has a controlling financial interest in a VIE is referred to as the primary beneficiary and is required to consolidate the VIE. The consolidation of the VIE includes the VIE’s issuance of senior securities to third parties, which are shown as securitized debt obligations of consolidated VIEs in the consolidated balance sheets. Debt issuance costs related to securitizations are presented as a direct deduction from the carrying value of the related debt liability. Debt issuance costs are amortized using the effective interest method and are included in interest expense in the consolidated statements of income. |
Convertible note, net | Convertible note, net ASC 470 requires the liability and equity components of convertible debt instruments that may be settled in cash upon conversion to be separately accounted for in a manner that reflects the issuer’s nonconvertible debt borrowing rate. ASC 470-20 requires that the initial proceeds from the sale of these notes be allocated between a liability component and an equity component in a manner that reflects interest expense at the interest rate of similar nonconvertible debt that could have been issued by the Company at such time. We measured the estimated fair value of the debt component of our convertible notes as of the issuance date based on our nonconvertible debt borrowing rate. The equity components of the convertible senior notes have been reflected within additional paid-in capital in our consolidated balance sheet, and the resulting debt discount is amortized over the period during which the convertible notes are expected to be outstanding (through the maturity date) as additional non-cash interest expense. Upon repurchase of convertible debt instruments, ASC 470-20 requires the issuer to allocate total settlement consideration, inclusive of transaction costs, amongst the liability and equity components of the instrument based on the fair value of the liability component immediately prior to repurchase. The difference between the settlement consideration allocated to the liability component and the net carrying value of the liability component, including unamortized debt issuance costs, would be recognized as gain (loss) on extinguishment of debt in our consolidated statements of income. The remaining settlement consideration allocated to the equity component would be recognized as a reduction of additional paid-in capital in our consolidated balance sheets. |
Senior secured notes, net | Senior secured notes, net The Company accounts for secured debt offerings under ASC 470 . |
Corporate debt, net | Corporate debt, net The Company accounts for corporate debt offerings under ASC 470. The Company’s corporate debt is presented net of debt issuance costs. Interest paid and accrued in connection with corporate debt is recorded as interest expense in the consolidated statements of income. |
Guaranteed loan financing | Guaranteed loan financing Certain partial loan sales do not qualify for sale accounting under ASC 860 because these sales do not meet the definition of a “participating interest,” as defined in the guidance, in order for sale treatment to be allowed. Participations or other partial loan sales which do not meet the definition of a participating interest remain as an investment in the consolidated balance sheets and the proceeds from the portion sold is recorded as guaranteed loan financing in the liabilities section of the consolidated balance sheets. For these partial loan sales, the interest earned on the entire loan balance is recorded as interest income and the interest earned by the buyer in the partial loan sale is recorded within interest expense in the accompanying consolidated statements of income. |
Contingent consideration | Contingent consideration The Company accounts for certain liabilities recognized in relation to mergers and acquisitions as contingent consideration whereby the fair value of this liability is dependent on certain criteria. Contingent consideration is classified as level 3 in the fair value hierarchy with fair value adjustments reported within other income (loss) in the consolidated statements of income. |
Loan participations sold | Loan participations sold The Company accounts for loan participations sold, which represents an interest in a loan receivable sold, as a liability on the consolidated balance sheets as these arrangements do not qualify as a sale under U.S. GAAP. Such liabilities are non-recourse and remain on the consolidated balance sheets until the loan is repaid. |
Due to third parties | Due to third parties Due to third parties primarily relates to funds held by the Company to advance certain expenditures necessary to fulfill our obligations under our existing indebtedness or to be released at our discretion upon the occurrence of certain pre-specified events, and to serve as additional collateral for borrowers’ loans. While retained, these balances earn interest in accordance with the specific loan terms they are associated with. |
Repair and denial reserve | Repair and denial reserve The repair and denial reserve represents the potential liability to the SBA in the event that we are required to make the SBA whole for reimbursement of the guaranteed portion of SBA loans. We may be responsible for the guaranteed portion of SBA loans if there are lien and collateral issues, unauthorized use of proceeds, liquidation deficiencies, undocumented servicing actions or denial of SBA eligibility. This reserve is calculated using an estimated frequency of a repair and denial event upon default, as well as an estimate of the severity of the repair and denial as a percentage of the guaranteed balance. |
Variable interest entities | Variable interest entities VIEs are entities that, by design, either (i) lack sufficient equity to permit the entity to finance its activities without additional subordinated financial support from other parties; or (ii) have equity investors that do not have the ability to make significant decisions relating to the entity’s operations through voting rights, or do not have the obligation to absorb the expected losses, or do not have the right to receive the residual returns of the entity. The entity that is the primary beneficiary is required to consolidate the VIE. An entity is deemed to be the primary beneficiary of a VIE if the entity has both (i) the power to direct the activities that most significantly impact the VIE’s economic performance and (ii) the right to receive benefits from the VIE or the obligation to absorb losses of the VIE that could be significant to the VIE. In determining whether we are the primary beneficiary of a VIE, we consider both qualitative and quantitative factors regarding the nature, size and form of our involvement with the VIE, such as our role establishing the VIE and our ongoing rights and responsibilities, the design of the VIE, our economic interests, servicing fees and servicing responsibilities, and other factors. We perform ongoing reassessments to evaluate whether changes in the entity’s capital structure or changes in the nature of our involvement with the entity result in a change to the VIE designation or a change to our consolidation conclusion. |
Non-controlling interests | Non-controlling interests Non-controlling interests are presented on the consolidated balance sheets and the consolidated statements of income and represent direct investment in the operating partnership by Sutherland OP Holdings II, Ltd., which is managed by our Manager, and third parties. The Company also has non-controlling interest related to the operating partnership units issued to satisfy a portion of the purchase price in connection with the Mosaic Merger. In addition, the Company has non-controlling interests from investments in consolidated joint ventures whereby, net income or loss is generally based upon relative ownership interests or contractual arrangements. |
Fair value option | Fair value option ASC 825, Financial Instruments We have elected the fair value option for certain loans held-for-sale originated by the Company that we intend to sell in the near term. The fair value elections for loans, held for sale, at fair value originated by the Company were made due to the short-term nature of these instruments. This includes loans originated in round one of the PPP, loans held-for-sale originated by GMFS that the Company intends to sell in the near term and residential MSRs. We additionally elected the fair value option for certain held to maturity investments and investments in unconsolidated joint ventures due to their short-term tenor. |
Share repurchase program | Share repurchase program The Company accounts for repurchases of its common stock as a reduction in additional paid in capital. The amounts recognized represent the amount paid to repurchase these shares and are categorized on the balance sheet and changes in equity as a reduction in additional paid in capital. |
Earnings per share | Earnings per share We present both basic and diluted earnings per share (“EPS”) amounts in our consolidated financial statements. Basic EPS excludes dilution and is computed by dividing income available to common stockholders by the weighted-average number of shares of common stock outstanding for the period. Diluted EPS reflects the maximum potential dilution that could occur from our share-based compensation, consisting of unvested restricted stock units (“RSUs”), unvested restricted stock awards (“RSAs”), performance-based equity awards, as well as the dilutive impact of convertible senior notes and convertible preferred stock under the if-converted method. Potential dilutive shares are excluded from the calculation if they have an anti-dilutive effect in the period. All of the Company’s unvested RSUs, unvested RSAs, preferred stock and CERs contain rights to receive non-forfeitable dividends and, thus, are participating securities. Due to the existence of these participating securities, the two-class method of computing EPS is required, unless another method is determined to be more dilutive. Under the two-class method, undistributed earnings are reallocated between shares of common stock and participating securities. |
Income taxes | Income taxes U.S. GAAP establishes financial accounting and reporting standards for the effect of income taxes. The objectives of accounting for income taxes are to recognize the amount of taxes payable or refundable for the current period and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in an entity’s consolidated financial statements or tax returns. We assess the recoverability of deferred tax assets through evaluation of carryback availability, projected taxable income and other factors as applicable. Significant judgment is required in assessing the future tax consequences of events that have been recognized in our consolidated financial statements or tax returns as well as the recoverability of amounts we record, including deferred tax assets. We provide for exposure in connection with uncertain tax positions, which requires significant judgment by management including determination, based on the weight of the tax law and available evidence, that it is more-likely-than-not that a tax result will be realized. Our policy is to recognize interest and/or penalties related to income tax matters in income tax expense on our consolidated statements of income. As of the date of the consolidated balance sheets, we accrued no taxes, interest or penalties related to uncertain tax positions. In addition, we do not anticipate a change in this position in the next 12 months. |
Revenue recognition | Revenue recognition Under revenue recognition guidance, specifically ASC 606- Revenue Recognition Step 1: Identify the contract(s) with a customer. Step 2: Identify the performance obligations in the contract. Step 3: Determine the transaction price. Step 4: Allocate the transaction price to the performance obligations in the contract. Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation. Most of the Company’s revenue streams, such as revenue associated with financial instruments, including interest income, realized or unrealized gains on financial instruments, loan servicing fees, loan origination fees, among other revenue streams, follow specific revenue recognition criteria and therefore the guidance referenced above does not have a material impact on our consolidated financial statements. In addition, revisions to existing accounting rules regarding the determination of whether a company is acting as a principal or agent in an arrangement and accounting for sales of nonfinancial assets where the seller has continuing involvement, did not materially impact the Company. A further description of the revenue recognition criteria is outlined below. Interest income. Realized gains (losses). Origination income and expense. |
Residential Mortgage Banking Activities | Residential mortgage banking activities Residential mortgage banking activities reflects revenue within our residential mortgage banking business directly related to loan origination and sale activity. This primarily consists of the realized gains on sales of residential loans held for sale and loan origination fee income, Residential mortgage banking activities also consists of unrealized gains and losses associated with the changes in fair value of the loans held for sale, the fair value of retained MSR additions, and the realized and unrealized gains and losses from derivative instruments. Gains and losses from the sale of mortgage loans held for sale are recognized based upon the difference between the sales proceeds and carrying value of the related loans upon sale and is included in residential mortgage banking activities, in the consolidated statements of income. Sales proceeds reflect the cash received from investors from the sale of a loan plus the servicing release premium if the related MSR is sold. Gains and losses also include the unrealized gains and losses associated with the mortgage loans held for sale and the realized and unrealized gains and losses from derivative instruments. Loan origination fee income represents revenue earned from originating mortgage loans held for sale and are reflected in residential mortgage banking activities, when loans are sold. Variable expenses on residential mortgage banking activities. |
Foreign currency transactions | Foreign currency transactions Assets and liabilities denominated in non-U.S. currencies are translated into U.S. dollars using foreign currency exchange rates prevailing at the end of the reporting period. Revenue and expenses are translated at the average exchange rates for each reporting period. Foreign currency remeasurement gains or losses on transactions in nonfunctional currencies are recognized in earnings. Gains or losses on translation of the financial statements of a non-U.S. operation, when the functional currency is other than the U.S. dollar, are included, net of taxes, in the consolidated statements of comprehensive income. |
Business Combinations (Tables)
Business Combinations (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Mosaic | |
Acquisitions | |
Schedule of fair value of assets acquired and liabilities acquired | (in thousands) March 16, 2022 Assets Cash and cash equivalents $ 100,236 Restricted cash 23,330 Loans, net 432,779 Investments held to maturity (including $17,053 held at fair value) 165,302 Real estate owned, held for sale 78,693 Other assets 25,761 Total assets acquired $ 826,101 Liabilities Secured borrowings 66,202 Loan participations sold 73,656 Due to third parties 24,634 Accounts payable and other accrued liabilities 38,182 Total liabilities assumed $ 202,674 Net assets acquired $ 623,427 Non-controlling interests (82,257) Net assets acquired, net of non-controlling interests $ 541,170 |
Schedule of aggregate amount of consideration transferred, net assets acquired, and related goodwill | (in thousands) Fair value of net assets acquired $ 541,170 Consideration transferred based on the value of Class B shares issued 437,311 Consideration transferred based on the value of OP units issued 20,745 Fair value of CERs issued 84,348 Total consideration transferred $ 542,404 Goodwill $ 1,234 |
Schedule of pro-forma revenue and earnings | Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2022 2021 2022 2021 Selected Financial Data Interest income $ 153,671 $ 121,420 $ 291,137 $ 212,238 Interest expense (80,827) (60,702) (144,769) (116,322) Recovery of (provision for) loan losses 4,390 (5,517) 2,848 (5,509) Non-interest income 50,766 75,855 139,240 164,853 Non-interest expense (57,345) (79,133) (133,272) (156,890) Income before provision for income taxes $ 70,655 $ 51,923 $ 155,184 $ 98,370 Income tax expense (10,318) (6,995) (28,167) (15,676) Net income $ 60,337 $ 44,928 $ 127,017 $ 82,694 |
ANH | |
Acquisitions | |
Schedule of fair value of assets acquired and liabilities acquired | (in thousands) March 19, 2021 Assets Cash and cash equivalents $ 110,545 Mortgage-backed securities, at fair value 2,010,504 Loans, held for sale, at fair value 102,798 Real estate owned, held for sale 26,107 Accrued interest 8,183 Other assets 38,216 Total assets acquired $ 2,296,353 Liabilities Secured borrowings 1,784,047 Corporate debt, net 36,250 Derivative instruments, at fair value 60,719 Accounts payable and other accrued liabilities 4,811 Total liabilities assumed $ 1,885,827 Net assets acquired $ 410,526 |
Schedule of aggregate amount of consideration transferred, net assets acquired, and related goodwill | (in thousands, except per share data) Fair value of net assets acquired $ 410,526 Anworth shares outstanding at March 19, 2021 99,374 Exchange ratio x 0.1688 Shares issued 16,774 Market price as of March 19, 2021 $ 14.28 Consideration transferred based on value of common shares issued $ 239,537 Cash paid per share $ 0.61 Cash paid based on outstanding Anworth shares $ 60,626 Preferred Stock, Series B Issued 1,919,378 Market price as of March 19, 2021 $ 25.00 Consideration transferred based on value of Preferred Stock, Series B issued $ 47,984 Preferred Stock, Series C Issued 779,743 Market price as of March 19, 2021 $ 25.00 Consideration transferred based on value of Preferred Stock, Series C issued $ 19,494 Preferred Stock, Series D Issued 2,010,278 Market price as of March 19, 2021 $ 25.00 Consideration transferred based on value of Preferred Stock, Series D issued $ 50,257 Total consideration transferred $ 417,898 Goodwill $ 7,372 |
Red Stone | |
Acquisitions | |
Schedule of fair value of assets acquired and liabilities acquired | (in thousands) July 31, 2021 Assets Cash and cash equivalents $ 1,553 Restricted cash 6,994 Investment in unconsolidated joint ventures 20,793 Servicing rights 30,503 Other assets: Intangible Assets 9,300 Other 1,330 Total assets acquired $ 70,473 Liabilities Accounts payable and other accrued liabilities 9,082 Total liabilities assumed $ 9,082 Net assets acquired $ 61,391 |
Schedule of aggregate amount of consideration transferred, net assets acquired, and related goodwill | (in thousands) Fair value of net assets acquired $ 61,391 Cash paid 63,000 Contingent consideration 12,400 Total consideration transferred $ 75,400 Goodwill $ 14,009 |
Loans and Allowance for Credi_2
Loans and Allowance for Credit Losses (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Schedule of classification, unpaid principal balance, and carrying value of loans held including loans of consolidated VIEs | June 30, 2022 December 31, 2021 (in thousands) Carrying Value UPB Carrying Value UPB Loans Residential $ 2,689 $ 2,873 $ 3,641 $ 3,914 SBA - 7(a) 490,564 508,251 503,991 519,408 Fixed rate 116,512 113,060 344,673 341,356 Freddie Mac 6,179 6,070 3,087 2,985 Bridge 2,563,807 2,586,024 1,849,524 1,861,932 Construction 439,519 434,520 — — Other 324,183 328,504 243,746 248,246 Total Loans, before allowance for loan losses $ 3,943,453 $ 3,979,302 $ 2,948,662 $ 2,977,841 Allowance for loan losses $ (36,132) $ — $ (33,216) $ — Total Loans, net $ 3,907,321 $ 3,979,302 $ 2,915,446 $ 2,977,841 Loans in consolidated VIEs Fixed rate $ 903,579 $ 903,097 $ 749,364 $ 746,720 Bridge 4,469,478 4,502,893 2,693,186 2,717,487 SBA - 7(a) 73,798 82,085 88,348 98,604 Other 367,426 368,078 563,111 562,771 Total Loans, in consolidated VIEs, before allowance for loan losses $ 5,814,281 $ 5,856,153 $ 4,094,009 $ 4,125,582 Allowance for loan losses on loans in consolidated VIEs $ (9,993) $ — $ (12,161) $ — Total Loans, net, in consolidated VIEs $ 5,804,288 $ 5,856,153 $ 4,081,848 $ 4,125,582 Loans, held for sale, at fair value Residential $ 199,378 $ 197,531 $ 269,164 $ 263,479 SBA - 7(a) 51,239 47,878 42,760 38,966 Fixed rate 200,459 214,380 197,290 195,114 Freddie Mac 17,859 17,648 42,384 41,864 Other 507 554 1,337 1,337 Total Loans, held for sale, at fair value $ 469,442 $ 477,991 $ 552,935 $ 540,760 Total Loans, net and Loans, held for sale, at fair value $ 10,181,051 $ 10,313,446 $ 7,550,229 $ 7,644,183 Paycheck Protection Program loans Paycheck Protection Program loans, held-for-investment $ 388,426 $ 415,640 $ 867,109 $ 927,766 Paycheck Protection Program loans, held at fair value 763 763 3,243 3,243 Total Paycheck Protection Program loans $ 389,189 $ 416,403 $ 870,352 $ 931,009 Total Loan portfolio $ 10,570,240 $ 10,729,849 $ 8,420,581 $ 8,575,192 |
Schedule of summary of the classification, UPB, and carrying value of loans by year of origination | Carrying Value by Year of Origination (in thousands) UPB 2022 2021 2020 2019 2018 Pre 2018 Total June 30, 2022 Bridge $ 7,088,917 $ 2,273,190 $ 3,839,216 $ 384,815 $ 331,772 $ 166,603 $ 32,763 $ 7,028,359 Construction 434,520 — — 10,000 364,124 60,395 — 434,519 Fixed rate 1,016,157 38,292 143,770 95,074 346,706 143,314 248,954 1,016,110 Freddie Mac 6,070 — — 6,179 — — — 6,179 Residential 2,873 1,141 156 — — 183 1,157 2,637 SBA - 7(a) 590,336 54,407 85,108 42,224 91,154 102,958 184,659 560,510 Other 696,582 2,323 27,420 12,517 72,354 16,959 559,131 690,704 Total Loans, before general allowance for loan losses $ 9,835,455 $ 2,369,353 $ 4,095,670 $ 550,809 $ 1,206,110 $ 490,412 $ 1,026,664 $ 9,739,018 General allowance for loan losses $ (27,409) Total Loans, net $ 9,711,609 UPB 2021 2020 2019 2018 2017 Pre 2017 Total December 31, 2021 Bridge $ 4,579,419 $ 3,461,864 $ 430,248 $ 399,603 $ 205,855 $ 11,327 $ 29,490 $ 4,538,387 Fixed rate 1,088,076 142,801 103,528 393,563 163,912 98,123 187,918 1,089,845 Freddie Mac 2,985 — 3,093 — — — — 3,093 Residential 3,914 1,413 492 468 — — 1,215 3,588 SBA - 7(a) 618,012 92,030 44,955 104,938 122,242 49,031 173,616 586,812 Other 811,017 4,523 22,973 76,320 31,570 14,868 653,428 803,682 Total Loans, before general allowance for loan losses $ 7,103,423 $ 3,702,631 $ 605,289 $ 974,892 $ 523,579 $ 173,349 $ 1,045,667 $ 7,025,407 General allowance for loan losses $ (28,113) Total Loans, net $ 6,997,294 |
Schedule of delinquency information on loans by year of origination | Carrying Value by Year of Origination (in thousands) UPB 2022 2021 2020 2019 2018 Pre 2018 Total June 30, 2022 Current and less than 30 days past due $ 9,577,193 $ 2,369,245 $ 4,095,520 $ 546,341 $ 1,161,571 $ 353,190 $ 971,228 $ 9,497,095 30 - 59 days past due 16,211 — — — 14,675 — 1,462 16,137 60+ days past due 242,051 108 150 4,468 29,864 137,222 53,974 225,786 Total Loans, before general allowance for loan losses $ 9,835,455 $ 2,369,353 $ 4,095,670 $ 550,809 $ 1,206,110 $ 490,412 $ 1,026,664 $ 9,739,018 General allowance for loan losses $ (27,409) Total Loans, net $ 9,711,609 Carrying Value by Year of Origination UPB 2021 2020 2019 2018 2017 Pre 2017 Total December 31, 2021 Current and less than 30 days past due $ 6,901,474 $ 3,666,020 $ 596,289 $ 953,269 $ 473,798 $ 167,629 $ 984,680 $ 6,841,685 30 - 59 days past due 73,836 35,549 352 18,393 3,714 228 14,601 72,837 60+ days past due 128,113 1,062 8,648 3,230 46,067 5,492 46,386 110,885 Total Loans, before general allowance for loan losses $ 7,103,423 $ 3,702,631 $ 605,289 $ 974,892 $ 523,579 $ 173,349 $ 1,045,667 $ 7,025,407 General allowance for loan losses $ (28,113) Total Loans, net $ 6,997,294 |
Schedule of delinquency information on loans, net | (in thousands) Current 30-59 days past due 60+ days past due Total Non-Accrual Loans 90+ days past due and Accruing June 30, 2022 Bridge $ 6,927,794 $ 14,675 $ 85,890 $ 7,028,359 $ 96,137 $ — Construction 360,124 — 74,395 434,519 74,395 — Fixed rate 988,947 — 27,163 1,016,110 21,923 — Freddie Mac 3,086 — 3,093 6,179 3,093 — Residential 1,537 — 1,100 2,637 1,102 — SBA - 7(a) 557,134 730 2,646 560,510 11,034 — Other 658,473 732 31,499 690,704 36,040 — Total Loans, before general allowance for loan losses $ 9,497,095 $ 16,137 $ 225,786 $ 9,739,018 $ 243,724 $ — General allowance for loan losses $ (27,409) Total Loans, net $ 9,711,609 Percentage of loans outstanding 97.5% 0.2% 2.3% 100% 2.5% 0.0% December 31, 2021 Bridge $ 4,451,230 $ 52,997 $ 34,160 $ 4,538,387 $ 28,820 $ — Fixed rate 1,057,708 — 32,137 1,089,845 24,031 — Freddie Mac — — 3,093 3,093 3,093 - Residential 1,674 — 1,914 3,588 1,914 — SBA - 7(a) 576,593 6,741 3,478 586,812 15,119 — Other 754,480 13,099 36,103 803,682 26,525 — Total Loans, before general allowance for loan losses $ 6,841,685 $ 72,837 $ 110,885 $ 7,025,407 $ 99,502 $ — General allowance for loan losses $ (28,113) Total Loans, net $ 6,997,294 Percentage of loans outstanding 97.4% 1.0% 1.6% 100% 1.4% 0.0% |
Schedule of information on credit quality of loans | Loan-to-Value (1) (in thousands) 0.0 – 20.0% 20.1 – 40.0% 40.1 – 60.0% 60.1 – 80.0% 80.1 – 100.0% Greater than 100.0% Total June 30, 2022 Bridge $ — $ 240,207 $ 859,550 $ 5,609,293 $ 290,016 $ 29,293 $ 7,028,359 Construction 10,800 10,000 49,595 364,124 — — 434,519 Fixed rate 11,625 59,157 361,397 560,290 16,844 6,797 1,016,110 Freddie Mac — — 3,086 3,093 — — 6,179 Residential 62 549 942 1,084 — — 2,637 SBA - 7(a) 8,459 44,630 99,499 186,780 90,845 130,297 560,510 Other 183,161 278,346 166,127 47,285 9,842 5,943 690,704 Total Loans, before general allowance for loan losses $ 214,107 $ 632,889 $ 1,540,196 $ 6,771,949 $ 407,547 $ 172,330 $ 9,739,018 General allowance for loan losses $ (27,409) Total Loans, net $ 9,711,609 Percentage of loans outstanding 2.2% 6.5% 15.8% 69.5% 4.2% 1.8% December 31, 2021 Bridge $ — $ 107,606 $ 338,355 $ 3,432,820 $ 640,215 $ 19,391 $ 4,538,387 Fixed rate 13,983 40,570 390,213 624,462 9,972 10,645 1,089,845 Freddie Mac — — — 3,093 — — 3,093 Residential 69 262 835 1,050 1,219 153 3,588 SBA - 7(a) 7,219 41,943 119,114 197,950 81,388 139,198 586,812 Other 221,823 300,723 185,538 76,590 8,701 10,307 803,682 Total Loans, before general allowance for loan losses $ 243,094 $ 491,104 $ 1,034,055 $ 4,335,965 $ 741,495 $ 179,694 $ 7,025,407 General allowance for loan losses $ (28,113) Total Loans, net $ 6,997,294 Percentage of loans outstanding 3.5% 7.0% 14.7% 61.7% 10.5% 2.6% (1) Loan-to-value is calculated using carrying amount as a percentage of current collateral value |
Schedule of activity of the allowance for loan losses for loans | (in thousands) Bridge Construction Fixed Rate Residential SBA - 7(a) Other Total Allowance for loan losses June 30, 2022 General $ 13,466 $ 122 $ 2,241 $ 5 $ 9,275 $ 2,300 $ 27,409 Specific 4,927 — 3,981 52 3,851 905 13,716 PCD — 5,000 — — — — 5,000 Ending balance $ 18,393 $ 5,122 $ 6,222 $ 57 $ 13,126 $ 3,205 $ 46,125 December 31, 2021 General $ 15,204 $ — $ 2,667 $ 8 $ 6,653 $ 3,581 $ 28,113 Specific 4,315 — 4,194 52 5,527 3,176 17,264 Ending balance $ 19,519 $ — $ 6,861 $ 60 $ 12,180 $ 6,757 $ 45,377 (in thousands) Bridge Construction Fixed Rate Residential SBA - 7(a) Other Total Allowance for loan losses Three Months Ended June 30, 2022 Beginning balance $ 19,878 $ 5,323 $ 6,524 $ 60 $ 13,233 $ 6,226 $ 51,244 Provision for (recoveries of) loan losses (1,485) (201) (302) (3) 219 (2,956) (4,728) Charge-offs and sales — — — — (326) (7) (333) Recoveries — — — — — (58) (58) Ending balance $ 18,393 $ 5,122 $ 6,222 $ 57 $ 13,126 $ 3,205 $ 46,125 Three Months Ended June 30, 2021 Beginning balance $ 17,057 $ — $ 6,753 $ 60 13,599 $ 8,180 $ 45,649 Provision for loan losses 4,121 — 612 1 794 6 5,534 Charge-offs and sales — — (311) — (1,045) — (1,356) Recoveries — — (189) — 2 (11) (198) Ending balance $ 21,178 $ — $ 6,865 $ 61 $ 13,350 $ 8,175 $ 49,629 Six Months Ended June 30, 2022 Beginning balance $ 19,519 $ — $ 6,861 $ 60 $ 12,180 $ 6,757 $ 45,377 Provision for (recoveries of) loan losses (1,126) 122 (639) (3) 1,491 (3,332) (3,487) Purchased financial assets with credit deterioration — 5,000 — — — — 5,000 Charge-offs and sales — — — — (499) (7) (506) Recoveries — — — — (46) (213) (259) Ending balance $ 18,393 $ 5,122 $ 6,222 $ 57 $ 13,126 $ 3,205 $ 46,125 Six Months Ended June 30, 2021 Beginning balance $ 14,588 $ — $ 7,629 $ 52 $ 14,600 $ 9,863 $ 46,732 Provision for (recoveries of) loan losses 6,590 — 736 9 439 (1,677) 6,097 Charge-offs and sales — — (1,311) — (1,703) — (3,014) Recoveries — — (189) — 14 (11) (186) Ending balance $ 21,178 $ — $ 6,865 $ 61 $ 13,350 $ 8,175 $ 49,629 |
Schedule of recorded investment of TDRs | June 30, 2022 December 31, 2021 (in thousands) SBC SBA Total SBC SBA Total Carrying value of modified loans classified as TDRs: On accrual status $ 837 $ 11,837 $ 12,674 $ 284 $ 8,242 $ 8,526 On non-accrual status 9,441 9,012 18,453 11,220 11,409 22,629 Total carrying value of modified loans classified as TDRs $ 10,278 $ 20,849 $ 31,127 $ 11,504 $ 19,651 $ 31,155 Allowance for loan losses on loans classified as TDRs $ 38 $ 1,093 $ 1,131 $ 46 $ 2,626 $ 2,672 |
Schedule of TDR modifications by primary modification type and related financial effects | Three Months Ended June 30, 2022 Three Months Ended June 30, 2021 (in thousands, except number of loans) SBC SBA Total SBC SBA Total Number of loans permanently modified — 3 3 — 10 10 Pre-modification recorded balance (a) $ — $ 1,087 $ 1,087 $ — $ 6,867 $ 6,867 Post-modification recorded balance (a) $ — $ 906 $ 906 $ — $ 6,867 $ 6,867 Number of loans that remain in default (b) — — — — — — Balance of loans that remain in default (b) $ — $ — $ — $ — $ — $ — Concession granted (a) : Term extension $ — $ 811 $ 811 $ — $ 6,345 $ 6,345 Interest rate reduction — — — — — — Principal reduction — — — — — — Foreclosure — — — — 93 93 Total $ — $ 811 $ 811 $ — $ 6,438 $ 6,438 Six Months Ended June 30, 2022 Six Months Ended June 30, 2021 (in thousands, except number of loans) SBC SBA Total SBC SBA Total Number of loans permanently modified 1 6 7 1 17 18 Pre-modification recorded balance (a) $ 496 $ 1,554 $ 2,050 $ 1,276 $ 8,309 $ 9,585 Post-modification recorded balance (a) $ 496 $ 1,060 $ 1,556 $ 1,276 $ 7,842 $ 9,118 Number of loans that remain in default (b) 1 1 2 — 1 1 Balance of loans that remain in default (b) $ 356 $ 1 $ 357 $ — $ 58 $ 58 Concession granted (a) Term extension $ — $ 978 $ 978 $ — $ 7,319 $ 7,319 Interest rate reduction — — — — — — Principal reduction — — — — — — Foreclosure 356 — 356 1,276 93 1,369 Total $ 356 $ 978 $ 1,334 $ 1,276 $ 7,412 $ 8,688 (a) Represents carrying value. (b) Represents carrying values of the TDRs that occurred during the respective periods ended and remained in default as of the current period ended. Generally, all loans modified in a TDR are placed or remain on non-accrual status at the time of the restructuring. However, certain accruing loans modified in a TDR that are current at the time of restructuring may remain on accrual status if payment in full under the restructured terms is expected. For purposes of this schedule, a loan is considered in default if it is 30 or more days past due. |
Non-accrual loans | |
Schedule of non-accrual loans | (in thousands) June 30, 2022 December 31, 2021 Non-accrual loans With an allowance $ 159,014 $ 71,644 Without an allowance 84,710 27,858 Total recorded carrying value of non-accrual loans $ 243,724 $ 99,502 Allowance for loan losses related to non-accrual loans $ (18,797) $ (17,264) Unpaid principal balance of non-accrual loans $ 261,272 $ 119,554 June 30, 2022 June 30, 2021 Interest income on non-accrual loans for the three months ended $ 365 $ 611 Interest income on non-accrual loans for the six months ended $ 1,773 $ 1,727 |
Geographical concentration | |
Schedule of concentration risk of loans secured by real estate | Geographic Concentration (% of Unpaid Principal Balance) June 30, 2022 December 31, 2021 Texas 19.8 % 19.2 % California 11.4 14.3 Georgia 7.4 7.0 Arizona 6.9 7.4 Florida 6.8 6.7 New York 5.7 7.3 Illinois 4.7 4.3 North Carolina 3.2 2.6 Washington 1.6 2.1 Colorado 1.3 1.9 Other 31.2 27.2 Total 100.0 % 100.0 % |
Collateral concentration | |
Schedule of concentration risk of loans secured by real estate | The table below presents the collateral type concentration of loans, net. Collateral Concentration (% of Unpaid Principal Balance) June 30, 2022 December 31, 2021 Multi-family 64.4 % 54.4 % Mixed Use 8.5 7.1 Retail 6.5 10.2 SBA 6.0 8.7 Office 5.6 8.2 Industrial 4.9 6.4 Lodging/Residential 1.8 1.8 Other 2.3 3.2 Total 100.0 % 100.0 % The table below presents the collateral type concentration of SBA loans within loans, net. Collateral Concentration (% of Unpaid Principal Balance) June 30, 2022 December 31, 2021 Lodging 14.9 % 17.0 % Offices of Physicians 9.1 10.9 Child Day Care Services 6.5 7.4 Eating Places 4.0 5.0 Gasoline Service Stations 3.7 3.7 Grocery Stores 2.0 1.8 Veterinarians 1.9 2.4 Funeral Service & Crematories 1.8 1.9 Couriers 1.2 1.3 Car washes 0.8 1.4 Other 54.1 47.2 Total 100.0 % 100.0 % |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Fair Value Measurements | |
Schedule of financial instruments carried at fair value on a recurring basis | (in thousands) Level 1 Level 2 Level 3 Total June 30, 2022 Assets: Loans, held for sale, at fair value $ — $ 268,579 $ 200,863 $ 469,442 Loans, net, at fair value — — 9,956 9,956 Investments held to maturity — — 9,601 9,601 Paycheck Protection Program loans — 763 — 763 MBS, at fair value — 38,982 1,666 40,648 Derivative instruments, at fair value — 44,131 2,399 46,530 Residential MSRs, at fair value — — 168,653 168,653 Investment in unconsolidated joint ventures — — 8,439 8,439 Total assets $ — $ 352,455 $ 401,577 $ 754,032 Liabilities: Derivative instruments, at fair value $ — $ 1,303 $ — $ 1,303 Contingent consideration — — 92,548 92,548 Total liabilities $ — $ 1,303 $ 92,548 $ 93,851 December 31, 2021 Assets: Loans, held for sale, at fair value $ — $ 321,070 $ 231,865 $ 552,935 Loans, net, at fair value — — 10,766 10,766 Paycheck Protection Program loans — — 3,243 3,243 MBS, at fair value — 97,915 1,581 99,496 Derivative instruments, at fair value — 4,683 2,339 7,022 Residential MSRs, at fair value — — 120,142 120,142 Investment in unconsolidated joint ventures — — 8,894 8,894 Total assets $ — $ 423,668 $ 378,830 $ 802,498 Liabilities: Derivative instruments, at fair value $ — $ 410 $ — $ 410 Contingent consideration — — 16,400 16,400 Total liabilities $ — $ 410 $ 16,400 $ 16,810 |
Summary of the valuation techniques and significant unobservable inputs used for the Company's financial instruments that are categorized within Level 3 of the fair value hierarchy | The table below presents the valuation techniques and significant unobservable inputs used to value Level 3 financial instruments, using third party information without adjustment. (in thousands) Fair Value Predominant Valuation Technique (a) Type Range Weighted Average June 30, 2022 Investments held to maturity $ 9,601 Income Approach Discount rate 12.0% 12.0% Residential MSRs, at fair value $ 168,653 Income Approach Forward prepayment rate | Forward Default Rate | Discount rate | Servicing expense (b) (b) Investment in unconsolidated joint ventures $ 8,439 Income Approach Discount rate 9.0% 9.0% Derivative instruments, at fair value $ 2,399 Market Approach Origination pull-through rate | Servicing Fee Multiple | Percentage of unpaid principal balance 48.3 - 100% | 1.1 - 6.5% | 0.3 to 3.2% 85.1% | 4.7% | 1.6% Contingent consideration- Red Stone $ (8,200) Monte Carlo Simulation Model EBT volatility | EBT discount rate | Liability discount rate 25.0% | 4.0% | 6.5% 25.0% | 4.0% | 6.5% Contingent consideration- Mosaic CER dividends $ (18,475) Monte Carlo Simulation Model Equity volatility | Risk-free rate of return | Discount Rate 45.0% | 2.14% | 9.98% 45.0% | 2.14% | 9.98% Contingent consideration- Mosaic CER units $ (65,873) Income Approach and PWERM Model Revaluation discount rate | Discount rate 8.50 - 12.00% | 9.98% 9.6% | 9.98% December 31, 2021 Derivative instruments, at fair value $ 2,339 Market Approach Origination pull-through rate | Servicing Fee Multiple | Percentage of unpaid principal balance 63.0 - 100% | 0.4 - 5.2% | 0.1 to 3.1% 86.7% | 4.1% | 1.3% Residential MSRs, at fair value $ 120,142 Income Approach Forward prepayment rate | Forward Default Rate | Discount rate | Servicing expense (b) (b) Investment in unconsolidated joint ventures $ 8,894 Income Approach Discount rate 9.0% 9.0% Contingent consideration $ (16,400) Monte Carlo Simulation Model EBT volatility | Risk-free rate of return | EBT discount rate | Liability discount rate 25.0% | 0.4% | 17.6% | 3.8% 25.0% | 0.4% | 17.6% | 3.8% (a) Prices are weighted based on the unpaid principal balance of the loans and securities included in the range for each class. (b) Refer to Note 9 - Servicing Rights for more information on residential MSRs unobservable inputs. |
Summary of changes in the fair value of financial instruments held at fair value classified as Level 3 | (in thousands) MBS Derivatives Loans, net Loans, held for sale, at fair value Investments held to maturity PPP loans Residential MSRs Investment in unconsolidated joint ventures Contingent Consideration Total Three Months Ended June 30, 2022 Beginning Balance $ 7,014 $ (2,616) $ 10,722 $ 203,958 $ 17,053 $ — $ 159,834 $ 8,610 $ (92,148) $ 312,427 Purchases or Originations — — — 5,900 — — — — — 5,900 Additions due to loans sold, servicing retained — — — — — — 12,448 — — 12,448 Sales / Principal payments (1,352) — — (115) (7,296) — (3,614) — — (12,377) Realized gains (losses), net (1,449) — — (1) (156) — — — — (1,606) Unrealized gains (losses), net 2,661 5,015 (766) (5,014) — — (15) (171) (400) 1,310 Accreted discount, net 1 — — — — — — — — 1 Transfer to loans, held for investment — — — (3,862) — — — — — (3,862) Transfer to (from) Level 3 (5,209) — — (3) — — — — — (5,212) Ending Balance $ 1,666 $ 2,399 $ 9,956 $ 200,863 $ 9,601 $ — $ 168,653 $ 8,439 $ (92,548) $ 309,029 Unrealized gains (losses), net on assets/liabilities $ 239 $ 2,399 $ (1,000) $ (13,953) $ — $ — $ 2,293 $ (757) $ (800) $ (11,579) Six Months Ended June 30, 2022 Beginning Balance $ 1,581 $ 2,339 $ 10,766 $ 231,865 $ — $ 3,243 $ 120,142 $ 8,894 $ (16,400) $ 362,430 Purchases or Originations — — — 23,470 — — — — — 23,470 Additions due to loans sold, servicing retained — — — — — — 22,954 — — 22,954 Sales / Principal payments (1,352) — — (32,709) (7,296) (1,400) (7,026) — 9,000 (40,783) Realized gains (losses), net (1,449) — — (787) (156) — — — — (2,392) Unrealized gains (losses), net 2,705 60 (810) (15,774) — — 32,583 (455) (800) 17,509 Accreted discount, net 1 — — — — — — — — 1 Merger — — — — 17,053 — — — (84,348) (67,295) Transfer to loans, held for investment — — — (3,862) — — — — — (3,862) Transfer to (from) Level 3 180 — — (1,340) — (1,843) — — — (3,003) Ending Balance $ 1,666 $ 2,399 $ 9,956 $ 200,863 $ 9,601 $ — $ 168,653 $ 8,439 $ (92,548) $ 309,029 Unrealized gains (losses), net on assets/liabilities $ 239 $ 2,399 $ (1,000) $ (13,953) $ — $ — $ 2,293 $ (757) $ (800) $ (11,579) Three Months Ended June 30, 2021 Beginning Balance $ 5,633 $ 11,724 $ 13,618 $ — $ — $ 38,388 $ 98,542 $ — $ — $ 167,905 Accreted discount, net 2 — — — — — — — — 2 Additions due to loans sold, servicing retained — — — — — — 11,925 — — 11,925 Sales / Principal payments — — (11) — — (21,957) (4,948) — — (26,916) Unrealized gains (losses), net 125 (5,594) 74 — — — (4,699) — — (10,094) Transfer to (from) Level 3 (4,046) — — — — — — — — (4,046) Ending Balance $ 1,714 $ 6,130 $ 13,681 $ — $ — $ 16,431 $ 100,820 $ — $ — $ 138,776 Unrealized gains (losses), net on assets/liabilities $ 286 $ 6,130 $ (189) $ — $ — $ — $ (36,553) $ — $ — $ (30,326) Six Months Ended June 30, 2021 Beginning Balance $ 25,131 $ 16,363 $ 13,795 $ — $ — $ 74,931 $ 76,840 $ — $ — $ 207,060 Purchases or Originations — — — — — 3,866 — — — 3,866 Additions due to loans sold, servicing retained — — — — — — 23,973 — — 23,973 Sales / Principal payments (92) — (212) — — (62,366) (10,650) — — (73,320) Realized gains (losses), net — — (5) — — — — — — (5) Unrealized gains (losses), net 1,194 (10,233) 103 — — — 10,657 — — 1,721 Accreted discount, net 60 — — — — — — — — 60 Transfer to (from) Level 3 (24,579) — — — — — — — — (24,579) Ending Balance $ 1,714 $ 6,130 $ 13,681 $ — $ — $ 16,431 $ 100,820 $ — $ — $ 138,776 Unrealized gains (losses), net on assets/liabilities $ 286 $ 6,130 $ (189) $ — $ — $ — $ (36,553) $ — $ — $ (30,326) |
Summary of the carrying value and estimated fair value of financial instruments not carried at fair value on the consolidated balance sheets and are classified as Level 3 | June 30, 2022 December 31, 2021 (in thousands) Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value Assets: Loans, net $ 9,701,653 $ 9,795,382 $ 6,986,528 $ 7,112,282 Paycheck Protection Program loans 388,426 388,427 867,109 927,766 Investments held to maturity 149,440 149,440 — — Purchased future receivables, net 8,704 8,704 7,872 7,872 Servicing rights 84,858 88,455 84,457 89,470 Total assets $ 10,333,081 $ 10,430,408 $ 7,945,966 $ 8,137,390 Liabilities: Secured borrowings $ 3,212,383 $ 3,212,383 $ 2,517,600 $ 2,517,600 Paycheck Protection Program Liquidity Facility borrowings 427,759 427,759 941,505 941,505 Securitized debt obligations of consolidated VIEs, net 4,533,789 4,499,632 3,214,303 3,238,155 Senior secured note, net 342,469 318,459 342,035 338,990 Guaranteed loan financing 304,158 318,209 345,217 366,887 Convertible notes, net 113,818 116,733 113,247 118,922 Corporate debt, net 565,230 550,057 441,817 457,741 Total liabilities $ 9,499,606 $ 9,443,232 $ 7,915,724 $ 7,979,800 |
Investments Held to Maturity (T
Investments Held to Maturity (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Investments Held to Maturity | |
Schedule of information about held to maturity investments | Gross Gross Amortized Unrealized Unrealized (in thousands) Weighted Average Interest Rate (a) Cost Fair Value Gains Losses June 30, 2022 Less than one year 12.0 % $ 446 $ 446 $ — $ — One to five years 14.6 % 50,172 50,172 — — Construction preferred equities 14.6 % $ 50,618 $ 50,618 $ — $ — One to five years 12.0 % $ 108,423 $ 108,423 — — Construction preferred equities in consolidated VIEs 12.0 % $ 108,423 $ 108,423 $ — $ — Total held to maturity investments 12.8 % $ 159,049 $ 159,049 $ — $ — (a) Weighted based on current principal balance |
Servicing rights (Tables)
Servicing rights (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Schedule of information regarding portfolio of servicing rights | Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2022 2021 2022 2021 SBA servicing rights, at amortized cost Beginning net carrying amount $ 22,891 $ 18,642 $ 22,157 $ 18,764 Additions due to loans sold, servicing retained 2,045 2,741 3,779 3,700 Amortization (1,000) (1,042) (1,949) (2,089) Impairment (2,266) (620) (2,317) (654) Ending net carrying amount $ 21,670 $ 19,721 $ 21,670 $ 19,721 Multi-family servicing rights, at amortized cost Beginning net carrying amount $ 61,418 $ 21,757 $ 62,300 $ 19,059 Additions due to loans sold, servicing retained 4,164 3,909 5,627 7,468 Amortization (2,394) (942) (4,739) (1,803) Ending net carrying amount $ 63,188 $ 24,724 $ 63,188 $ 24,724 Total servicing rights, at amortized cost $ 84,858 $ 44,445 $ 84,858 $ 44,445 Residential MSRs, at fair value Beginning net carrying amount $ 159,834 $ 98,542 $ 120,142 $ 76,840 Additions due to loans sold, servicing retained 12,448 11,925 22,954 23,973 Loan pay-offs (3,614) (4,948) (7,026) (10,650) Unrealized gains (losses) (15) (4,699) 32,583 10,657 Ending fair value amount $ 168,653 $ 100,820 $ 168,653 $ 100,820 Total servicing rights $ 253,511 $ 145,265 $ 253,511 $ 145,265 |
Residential MSRs | |
Schedule of servicing rights | June 30, 2022 December 31, 2021 (in thousands) UPB Fair Value UPB Fair Value Fannie Mae $ 4,352,916 $ 58,659 $ 4,056,595 $ 41,698 Freddie Mac 4,429,902 61,789 4,131,904 45,017 Ginnie Mae 2,940,107 48,205 2,807,186 33,427 Total $ 11,722,925 $ 168,653 $ 10,995,685 $ 120,142 |
Schedule of mortgage servicing rights portfolio | June 30, 2022 December 31, 2021 Range of input values Weighted Average Range of input values Weighted Average Residential MSRs Forward prepayment rate 6.2 - 15.8 % 6.7 % 8.4 - 20.9 % 9.5 % Discount rate 9.5 - 12.5 % 10.2 % 9.0 - 11.0 % 9.4 % Servicing expense $80 - $95 $93 $70 - $85 $74 |
Schedule of adverse changes to key assumptions on the carrying amount of the servicing rights | (in thousands) June 30, 2022 December 31, 2021 Residential MSRs Prepayment rate Impact of 10% adverse change $ (5,133) $ (5,262) Impact of 20% adverse change $ (9,995) $ (9,262) Discount rate Impact of 10% adverse change $ (7,541) $ (4,533) Impact of 20% adverse change $ (14,469) $ (8,745) Servicing expense Impact of 10% adverse change $ (2,563) $ (2,125) Impact of 20% adverse change $ (5,127) $ (4,251) |
SBA | Multi-family | |
Schedule of servicing rights | As of June 30, 2022 As of December 31, 2021 (in thousands) UPB Carrying Value UPB Carrying Value SBA $ 926,364 $ 21,670 $ 856,188 $ 22,157 Multi-family 4,624,421 63,188 4,232,969 62,300 Total $ 5,550,785 $ 84,858 $ 5,089,157 $ 84,457 |
Schedule of assumptions used in the estimated valuation of servicing rights carried at amortized cost | June 30, 2022 December 31, 2021 Range of input values Weighted Average Range of input values Weighted Average SBA servicing rights Forward prepayment rate 9.0 - 21.7 % 9.6 % 7.9 - 21.0 % 8.9 % Forward default rate 0.0 - 10.1 % 9.1 % 0.0 - 10.4 % 9.1 % Discount rate 12.3 - 19.7 % 12.9 % 10.0 - 21.3 % 10.7 % Servicing expense 0.4 - 0.4 % 0.4 % 0.4 - 0.4 % 0.4 % Multi-family servicing rights Forward prepayment rate 0.0 - 7.3 % 3.5 % 0.0 - 7.3 % 3.5 % Forward default rate 0.0 - 1.3 % 0.9 % 0.0 - 1.3 % 1.0 % Discount rate 6.0 - 6.0 % 6.0 % 6.0 - 6.0 % 6.0 % Servicing expense 0.0 - 0.8 % 0.1 % 0.0 - 0.8 % 0.1 % |
Schedule of adverse changes to key assumptions on the carrying amount of the servicing rights | (in thousands) June 30, 2022 December 31, 2021 SBA servicing rights Forward prepayment rate Impact of 10% adverse change $ (656) $ (670) Impact of 20% adverse change $ (1,277) $ (1,305) Default rate Impact of 10% adverse change $ (145) $ (155) Impact of 20% adverse change $ (289) $ (309) Discount rate Impact of 10% adverse change $ (791) $ (746) Impact of 20% adverse change $ (1,522) $ (1,443) Servicing expense Impact of 10% adverse change $ (1,315) $ (1,344) Impact of 20% adverse change $ (2,630) $ (2,687) Multi-family servicing rights Forward prepayment rate Impact of 10% adverse change $ (283) $ (291) Impact of 20% adverse change $ (560) $ (575) Default rate Impact of 10% adverse change $ (25) $ (25) Impact of 20% adverse change $ (50) $ (50) Discount rate Impact of 10% adverse change $ (1,892) $ (1,910) Impact of 20% adverse change $ (3,693) $ (3,726) Servicing expense Impact of 10% adverse change $ (2,685) $ (2,659) Impact of 20% adverse change $ (5,369) $ (5,318) |
Schedule of future amortization expense for the servicing rights | (in thousands) June 30, 2022 2022 $ 8,659 2023 11,753 2024 10,348 2025 9,135 2026 8,190 Thereafter 36,773 Total $ 84,858 |
Residential mortgage banking _2
Residential mortgage banking activities and variable expenses on residential mortgage banking activities (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Residential mortgage banking activities and variable expenses on residential mortgage banking activities | |
Schedule of the components of gains on residential mortgage banking activities, net of variable loan expenses | Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2022 2021 2022 2021 Realized and unrealized gain (loss) of residential mortgage loans held for sale, at fair value $ (7,886) $ 31,020 $ (12,973) $ 60,580 Creation of new MSRs, net of payoffs 8,834 6,976 15,928 13,324 Loan origination fee income on residential mortgage loans 4,749 5,192 8,859 11,424 Unrealized gain (loss) on IRLCs and other derivatives (2,750) (6,498) (443) (7,229) Residential mortgage banking activities $ 2,947 $ 36,690 $ 11,371 $ 78,099 Variable income (expenses) on residential mortgage banking activities $ 4,532 $ (21,421) $ 3,553 $ (36,906) |
Secured Borrowings (Tables)
Secured Borrowings (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Secured Borrowings | |
Schedule of characteristics of secured borrowings | Pledged Assets Carrying Value Lender Asset Class Current Maturity Pricing Facility Size Carrying Value June 30, 2022 December 31, 2021 JPMorgan Acquired loans, SBA loans August 2022 1M L + 2.50% SOFR + 2.875% $ 250,000 $ 101,855 $ 71,414 $ 54,164 KeyBank Freddie Mac loans February 2023 SOFR + 1.35% 100,000 17,859 17,648 41,864 East West Bank SBA loans October 2023 Prime - 0.821% to + 0.00% 75,000 93,908 68,502 58,622 Credit Suisse Acquired loans (non USD) August 2022 Euribor + 2.50% to 3.00% 209,680 41,208 35,670 40,373 Comerica Bank Residential loans June 2023 1M L + 1.75% 100,000 61,096 58,703 63,991 TBK Bank Residential loans February 2023 Variable Pricing 150,000 72,435 71,931 125,145 Origin Bank Residential loans September 2022 Variable Pricing 60,000 22,919 22,211 16,052 Associated Bank Residential loans November 2022 1M L + 1.50% 60,000 27,044 26,048 14,449 East West Bank Residential MSRs September 2023 1M L + 2.50% 50,000 120,448 49,900 49,400 Credit Suisse Purchased future receivables October 2023 1M L + 4.50% 50,000 8,704 1,000 1,000 Western Alliance Residential loans July 2022 Variable Pricing 50,000 14,204 12,080 6,823 Madison Construction loans June 2023 1 ML +7.00% 360,000 339,324 76,096 — Total borrowings under credit facilities and other financing agreements $ 1,514,680 $ 921,004 $ 511,203 $ 471,883 Citibank Fixed rate, Transitional, Acquired loans October 2022 SOFR + 2.10% to 3.10% $ 500,000 $ 169,967 $ 136,881 $ 128,851 Deutsche Bank Fixed rate, Transitional loans November 2023 SOFR + 1.90% to 2.75% 350,000 318,800 231,278 236,073 JPMorgan Transitional loans November 2022 SOFR + 2.10% to 2.85% 1,250,000 1,061,198 849,492 825,265 Performance Trust Fixed rate, Transitional, Acquired loans March 2024 1M T + 2.00% 263,000 235,502 206,245 124,057 Credit Suisse Fixed rate, Transitional, Acquired loans February 2023 SOFR + 2.00% to 2.35% 750,000 584,888 430,509 403,644 Credit Suisse Residential loans Matured L + 3.00% — — — 27,058 Goldman Sachs Fixed rate, Transitional, Acquired loans February 2025 SOFR + 1.50%-2.25% 350,000 227,806 181,713 — Churchill Transitional, Acquired loans March 2026 SOFR + 2.50% 500,000 326,385 258,551 — Various MBS July 2022 – November 2022 1.36% to 4.28% 406,511 744,901 406,511 300,769 Total borrowings under repurchase agreements $ 4,369,511 $ 3,669,447 $ 2,701,180 $ 2,045,717 Total secured borrowings $ 5,884,191 $ 4,590,451 $ 3,212,383 $ 2,517,600 |
Schedule of carrying value of collateral pledged with respect to borrowings under credit facilities and promissory note payable outstanding | Pledged Assets Carrying Value (in thousands) June 30, 2022 December 31, 2021 Collateral pledged - borrowings under credit facilities and other financing agreements Loans, held for sale, at fair value $ 214,602 $ 276,022 Loans, net 577,250 206,169 MSRs 120,448 86,714 Purchased future receivables 8,704 7,872 Total $ 921,004 $ 576,777 Collateral pledged - borrowings under repurchase agreements Loans, net $ 2,722,663 $ 2,062,867 Mortgage-backed securities 34,992 53,194 Retained interest in assets of consolidated VIEs 709,909 379,349 Loans, held for sale, at fair value 200,458 208,558 Real estate acquired in settlement of loans 1,425 1,425 Total $ 3,669,447 $ 2,705,393 Total collateral pledged on secured borrowings $ 4,590,451 $ 3,282,170 |
Senior secured notes, convert_2
Senior secured notes, convertible notes, and corporate debt, net (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Senior secured notes, convertible notes, and corporate debt, net | |
Schedule of components of the Senior Secured Notes, Convertible Notes, and Corporate debt | (in thousands) Coupon Rate Maturity Date June 30, 2022 Senior secured notes principal amount (1) 4.50 % 10/20/2026 $ 350,000 Unamortized deferred financing costs - Senior secured notes (7,531) Total Senior secured notes, net $ 342,469 Convertible notes principal amount (2) 7.00 % 8/15/2023 115,000 Unamortized discount - Convertible notes (3) (422) Unamortized deferred financing costs - Convertible notes (760) Total Convertible notes, net $ 113,818 Corporate debt principal amount (4) 5.50 % 12/30/2028 110,000 Corporate debt principal amount (5) 6.20 % 7/30/2026 104,613 Corporate debt principal amount (5) 5.75 % 2/15/2026 206,270 Corporate debt principal amount (6) 6.125 % 4/30/2025 120,000 Unamortized discount - corporate debt (8,485) Unamortized deferred financing costs - corporate debt (3,418) Junior subordinated notes principal amount (7) 3M + 3.10 % 3/30/2035 15,000 Junior subordinated notes principal amount (8) 3M + 3.10 % 4/30/2035 21,250 Total corporate debt, net $ 565,230 Total carrying amount of debt $ 1,021,517 Total carrying amount of conversion option of equity components recorded in equity $ 422 (1) Interest on the senior secured notes is payable semiannually on April 20 and October 20 of each year. (2) Interest on the convertible notes is payable quarterly on February 15, May 15, August 15, and November 15 of each year. (3) Represents the discount created by separating the conversion option from the debt host instrument. (4) Interest on the corporate debt is payable semiannually on June 30 and December 30 of each year. (5) Interest on the corporate debt is payable quarterly on January 30, April 30, July 30, and October 30 of each year. (6) Interest on the corporate debt is payable semiannually on April 30, and October 30 of each year. (7) Interest on the Junior subordinated notes I-A is payable quarterly on March 30, June 30, September 30, and December 30 of each year. (8) Interest on the Junior subordinated notes I-B is payable quarterly on January 30, April 30, July 30, and October 30 of each year. |
Schedule of contractual maturities of the Senior Secured Notes, Convertible Notes, and Corporate debt | (in thousands) June 30, 2022 2022 $ — 2023 115,000 2024 — 2025 120,000 2026 660,883 Thereafter 146,250 Total contractual amounts $ 1,042,133 Unamortized deferred financing costs, discounts, and premiums, net (20,616) Total carrying amount of debt $ 1,021,517 |
Guaranteed loan financing (Tabl
Guaranteed loan financing (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Guaranteed loan financing. | |
Schedule of guaranteed loan financing and the related interest rates and maturity dates | Weighted Average Range of Range of (in thousands) Interest Rate Interest Rates Maturities (Years) Ending Balance June 30, 2022 4.00 % 1.24-6.50 % 2022-2046 $ 304,158 December 31, 2021 3.78 % 0.99-6.50 % 2022-2046 $ 345,217 |
Summary of contractual maturities of total guaranteed loan financing outstanding | (in thousands) June 30, 2022 2022 $ 607 2023 411 2024 1,512 2025 1,934 2026 5,321 Thereafter 294,373 Total $ 304,158 |
Variable interest entities an_2
Variable interest entities and securitization activities (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Consolidated VIEs | |
Variable interest entities | |
Summary of information on securitized debt obligations | June 30, 2022 December 31, 2021 Current Weighted Current Weighted Principal Carrying Average Principal Carrying Average (in thousands) Balance value Interest Rate Balance value Interest Rate ReadyCap Lending Small Business Trust 2019-2 $ 61,955 $ 61,186 2.9 % $ 79,294 $ 78,268 2.6 % Sutherland Commercial Mortgage Trust 2017-SBC6 12,118 11,942 4.2 16,729 16,471 3.8 Sutherland Commercial Mortgage Trust 2019-SBC8 132,514 130,490 2.9 145,351 143,153 2.9 Sutherland Commercial Mortgage Trust 2020-SBC9 — — 4.2 86,680 85,459 4.1 Sutherland Commercial Mortgage Trust 2021-SBC10 126,622 124,681 1.6 159,745 157,483 1.6 ReadyCap Commercial Mortgage Trust 2014-1 4,490 4,481 5.7 6,770 6,756 5.7 ReadyCap Commercial Mortgage Trust 2015-2 8,219 7,353 5.1 17,598 15,960 5.1 ReadyCap Commercial Mortgage Trust 2016-3 14,639 13,940 5.1 19,106 18,285 4.9 ReadyCap Commercial Mortgage Trust 2018-4 66,422 64,057 4.3 81,379 78,751 4.1 ReadyCap Commercial Mortgage Trust 2019-5 131,205 124,521 4.5 150,547 143,204 4.3 ReadyCap Commercial Mortgage Trust 2019-6 226,638 221,514 3.3 269,315 263,752 3.2 ReadyCap Commercial Mortgage Trust 2022-7 203,848 195,354 4.2 — — — Ready Capital Mortgage Financing 2019-FL3 67,982 67,982 2.4 92,930 92,921 1.6 Ready Capital Mortgage Financing 2020-FL4 242,860 240,679 3.5 304,157 300,832 3.1 Ready Capital Mortgage Financing 2021-FL5 468,871 465,426 1.8 506,721 501,697 1.5 Ready Capital Mortgage Financing 2021-FL6 543,133 537,542 1.7 543,223 536,270 1.3 Ready Capital Mortgage Financing 2021-FL7 752,598 745,361 2.0 753,314 744,449 1.6 Ready Capital Mortgage Financing 2022-FL8 913,675 905,124 2.4 — — — Ready Capital Mortgage Financing 2022-FL9 612,809 598,908 4.7 — — — Total $ 4,590,598 $ 4,520,541 2.8 % $ 3,232,859 $ 3,183,711 2.2 % |
Schedule of assets and liabilities for VIEs | (in thousands) June 30, 2022 December 31, 2021 Assets: Cash and cash equivalents $ 4,195 $ 9,041 Restricted cash 48,177 33,187 Loans, net 5,804,288 4,081,848 Investments held to maturity 108,423 — Other assets 31,136 21,488 Total assets $ 5,996,219 $ 4,145,564 Liabilities: Securitized debt obligations of consolidated VIEs, net 4,533,789 3,214,303 Due to third parties 4,963 — Accounts payable and other accrued liabilities 9 — Total liabilities $ 4,538,761 $ 3,214,303 |
Unconsolidated VIEs | |
Variable interest entities | |
Schedule of assets and liabilities for VIEs | Carrying Amount Maximum Exposure to Loss (1) (in thousands) June 30, 2022 December 31, 2021 June 30, 2022 December 31, 2021 MBS, at fair value (2) $ 25,632 $ 80,756 $ 25,632 $ 80,756 Investment in unconsolidated joint ventures 223,316 74,334 223,316 74,334 Total assets in unconsolidated VIEs $ 248,948 $ 155,090 $ 248,948 $ 155,090 (1) Maximum exposure to loss is limited to the greater of the fair value or carrying value of the assets as of the consolidated balance sheet date. (2) Retained interest in other third party sponsored securitizations. |
Interest income and interest _2
Interest income and interest expense (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Interest income and interest expense | |
Schedule of components of interest income and expense | Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2022 2021 2022 2021 Interest income Loans Bridge $ 82,499 $ 32,221 $ 147,479 $ 57,289 Fixed rate 14,468 14,258 28,939 28,688 Construction 7,243 — 9,000 — SBA - 7(a) 9,742 9,777 19,121 18,318 PPP 19,282 26,355 36,140 33,247 Residential 31 62 50 122 Other 10,055 11,462 20,291 23,980 Total loans (1) $ 143,320 $ 94,135 $ 261,020 $ 161,644 Held for sale, at fair value, loans Fixed rate $ 2,236 $ — $ 4,293 $ — Freddie Mac 307 728 499 1,332 Residential 2,198 3,160 4,298 5,286 Other 24 — 46 — Total loans, held for sale, at fair value (1) $ 4,765 $ 3,888 $ 9,136 $ 6,618 Investments held to maturity $ 3,612 $ — $ 4,219 $ — MBS, at fair value $ 1,974 $ 5,024 $ 3,701 $ 8,156 Total interest income $ 153,671 $ 103,047 $ 278,076 $ 176,418 Interest expense Secured borrowings $ (28,147) $ (18,065) $ (47,770) $ (35,639) Paycheck Protection Program Liquidity Facility borrowings (459) (1,545) (1,147) (1,879) Securitized debt obligations of consolidated VIEs (33,804) (21,421) (58,055) (40,514) Guaranteed loan financing (3,186) (3,472) (6,271) (7,123) Senior secured note (4,380) (3,456) (8,737) (6,915) Convertible note (2,188) (2,188) (4,376) (4,376) Corporate debt (8,663) (5,268) (15,488) (9,730) Total interest expense $ (80,827) $ (55,415) $ (141,844) $ (106,176) Net interest income before provision for loan losses $ 72,844 $ 47,632 $ 136,232 $ 70,242 (1) Includes interest income on loans in consolidated VIEs. |
Derivative instruments (Tables)
Derivative instruments (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Derivative instruments | |
Schedule of the Company's derivatives | June 30, 2022 December 31, 2021 Notional Derivative Derivative Notional Derivative Derivative (in thousands) Primary Underlying Risk Amount Asset Liability Amount Asset Liability Interest rate lock commitments Interest rate risk $ 446,663 $ 2,399 $ — $ 348,348 $ 2,340 $ — Interest Rate Swaps - not designated as hedges Interest rate risk 579,098 42,822 — 536,548 4,076 — TBA Agency Securities Interest rate risk 388,500 391 (1,303) 346,000 — (410) FX forwards Foreign exchange rate risk 28,248 918 — 27,484 606 — Total $ 1,442,509 $ 46,530 $ (1,303) $ 1,258,380 $ 7,022 $ (410) |
Schedule of gains and losses on derivatives | Three Months Ended June 30, 2022 Six Months Ended June 30, 2022 Net Realized Net Unrealized Net Realized Net Unrealized (in thousands) Gain (Loss) Gain (Loss) Gain (Loss) Gain (Loss) Interest rate swaps $ (688) $ 13,873 $ (2,493) $ 40,575 TBA Agency Securities — (7,765) — (501) Interest rate lock commitments — 5,016 — 59 FX forwards 1,546 81 2,226 312 Total $ 858 $ 11,205 $ (267) $ 40,445 Three Months Ended June 30, 2021 Six Months Ended June 30, 2021 Net Realized Net Unrealized Net Realized Net Unrealized Gain (Loss) Gain (Loss) Gain (Loss) Gain (Loss) Credit default swaps $ — $ (21) $ — $ 21 Interest rate swaps (4,482) 1,947 (5,779) 8,470 TBA Agency Securities — (903) — 3,005 Interest rate lock commitments — (5,595) — (10,234) FX forwards 170 (334) (358) 1,243 Total $ (4,312) $ (4,906) $ (6,137) $ 2,505 |
Schedule of gains and losses on the Company's derivatives which have qualified for hedge accounting | (in thousands) Derivatives - effective portion reclassified from AOCI to income Hedge ineffectiveness recorded directly in income Total income statement impact Derivatives- effective portion recorded in OCI Total change in OCI for period Interest rate hedges- forecasted transactions: Three Months Ended June 30, 2022 $ (438) $ — $ (438) $ (87) $ 351 Three Months Ended June 30, 2021 $ (312) $ — $ (312) $ (188) $ 124 Six Months Ended June 30, 2022 $ (692) $ — $ (692) $ (128) $ 564 Six Months Ended June 30, 2021 $ (610) $ — $ (610) $ 1,492 $ 2,102 |
Real estate owned, held for s_2
Real estate owned, held for sale (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Real estate owned, held for sale | |
Summary of the carrying amount of the Company's real estate holdings | (in thousands) June 30, 2022 December 31, 2021 Acquired Portfolio: Mixed Use $ 35,779 $ 1,020 Land 4,174 6,318 Multi-family 31,837 — Office 14,133 — Total Acquired REO $ 85,923 $ 7,338 Other REO held for sale: Single Family $ 24,300 $ 24,300 Retail 1,853 3,129 Office 7,125 7,384 SBA — 137 Health Care 356 — Total Other REO $ 33,634 $ 34,950 Total real estate owned, held for sale $ 119,557 $ 42,288 |
Agreements and transactions w_2
Agreements and transactions with related parties (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Management fee | |
Related-party transactions | |
Schedule of related party transactions | Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Management fee - total $ 5.5 million $ 2.6 million $ 8.7 million $ 5.3 million Management fee - amount unpaid $ 5.3 million $ 2.6 million $ 5.3 million $ 2.6 million |
Incentive distribution | |
Related-party transactions | |
Schedule of related party transactions | Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Incentive fee distribution - total $ — $ 0.3 million $ — $ 0.3 million Incentive fee distribution - amount unpaid $ — $ 0.3 million $ — $ 0.3 million |
Expense reimbursement | |
Related-party transactions | |
Schedule of related party transactions | Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Reimbursable expenses payable to our Manager - total $ 2.3 million $ 3.5 million $ 5.8 million $ 5.5 million Reimbursable expenses payable to our Manager - amount unpaid $ 4.9 million $ 4.6 million $ 4.9 million $ 4.6 million |
Other assets and other liabil_2
Other assets and other liabilities (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Other assets and other liabilities | |
Schedule of other assets and other liabilities | (in thousands) June 30, 2022 December 31, 2021 Other assets: Deferred tax asset $ 3,601 $ 3,601 Deferred loan exit fees 32,943 25,923 Accrued interest 37,316 21,873 Goodwill 34,172 31,470 Due from servicers 29,861 23,729 Right-of-use lease asset 1,828 2,402 Intangible assets 14,058 14,842 Deferred financing costs 3,540 3,840 PPP fee receivable 346 407 Receivable from third party 7,497 29,298 Other assets 18,725 14,713 Other assets $ 183,887 $ 172,098 Accounts payable and other accrued liabilities: Deferred tax liability $ 11,986 $ 11,986 Accrued salaries, wages and commissions 28,605 42,715 Accrued interest payable 24,791 22,278 Servicing principal and interest payable 12,993 19,100 Repair and denial reserve 16,111 19,725 Payable to related parties 5,539 5,232 Accrued professional fees 3,025 4,324 Lease payable 2,053 3,002 Deferred LSP revenue 178 286 Accrued PPP related costs 4,296 12,460 Other liabilities 79,605 42,303 Total accounts payable and other accrued liabilities $ 189,182 $ 183,411 |
Schedule of Goodwill | (in thousands) June 30, 2022 December 31, 2021 SBC Lending and Acquisitions $ 22,966 $ 20,264 Small Business Lending 11,206 11,206 Total $ 34,172 $ 31,470 |
Schedule of Intangible assets | (in thousands) June 30, 2022 December 31, 2021 Estimated Useful Life Customer Relationships - Red Stone $ 6,501 $ 6,651 19 years Internally developed software - Knight Capital 2,111 2,428 6 years Trade name - Red Stone 2,500 2,500 Indefinite life SBA license 1,000 1,000 Indefinite life Broker network - Knight Capital 489 622 4.5 years Favorable lease 580 640 12 years Trade name - Knight Capital 489 562 6 years Trade name - GMFS 388 439 15 years Total intangible assets $ 14,058 $ 14,842 |
Schedule of accumulated amortization for finite-lived intangible assets | (in thousands) June 30, 2022 Internally developed software - Knight Capital $ 1,689 Favorable lease 900 Trade name - GMFS 835 Broker network - Knight Capital 711 Trade name - Knight Capital 391 Customer Relationship - Red Stone 328 Total accumulated amortization $ 4,854 |
Amortization expense related to the intangible assets | (in thousands) June 30, 2022 2022 $ 842 2023 1,599 2024 1,390 2025 1,144 2026 477 Thereafter 5,106 Total $ 10,558 |
Other income and operating ex_2
Other income and operating expenses (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Other income and operating expenses | |
Schedule of the financial position related to the Paycheck Protection Program (PPP) activities | (in thousands) June 30, 2022 December 31, 2021 Assets Paycheck Protection Program loans $ 388,426 $ 867,109 Paycheck Protection Program loans, at fair value 763 3,243 PPP fee receivable 346 407 Accrued interest receivable 4,923 7,025 Total PPP related assets $ 394,458 $ 877,784 Liabilities Paycheck Protection Program Liquidity Facility borrowings $ 427,759 $ 941,505 Interest payable 1,769 2,358 Deferred LSP revenue 178 286 Accrued PPP related costs 4,296 12,460 Payable to third parties 1,101 2,091 Repair and denial reserve 8,007 12,844 Total PPP related liabilities $ 443,110 $ 971,544 |
Schedule of the income and expenses related to the Paycheck Protection Program (PPP) activities. | Three Months Ended June 30, Six Months Ended June 30, Financial statement account (in thousands) 2022 2021 2022 2021 Income LSP fee income $ 5,273 $ 3,117 $ 5,310 $ 9,858 Servicing income Interest income 19,282 26,355 36,140 33,247 Interest income Repair and denial reserve 2,156 — 4,400 — Other income - change in repair and denial reserve Total PPP related income $ 26,711 $ 29,472 $ 45,850 $ 43,105 Expense Direct operating expenses $ 191 $ 3,673 $ 341 $ 8,218 Other operating expenses - origination costs Repair and denial reserve — 3,733 — 5,389 Other income - change in repair and denial reserve Interest expense 459 8,761 1,147 12,622 Interest expense Total PPP related expenses (direct) $ 650 $ 16,167 $ 1,488 $ 26,229 Net PPP related income $ 26,061 $ 13,305 $ 44,362 $ 16,876 |
Schedule of other income and operating expenses | Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2022 2021 2022 2021 Other income: Origination income $ 2,725 $ 1,890 $ 4,379 $ 3,503 Change in repair and denial reserve 1,305 (4,084) 3,498 (6,153) Other 4,304 1,506 6,958 2,533 Total other income $ 8,334 $ (688) $ 14,835 $ (117) Other operating expenses: Origination costs $ 2,168 $ 7,883 $ 7,102 $ 16,028 Technology expense 2,376 2,038 4,416 3,910 Impairment on real estate 840 1,278 2,667 1,278 Rent and property tax expense 1,564 1,743 2,659 3,429 Recruiting, training and travel expense 524 333 826 829 Marketing expense 596 609 924 1,185 Loan acquisition costs 113 300 218 334 Financing costs on purchased future receivables 32 32 62 56 Other 6,159 2,974 8,151 5,625 Total other operating expenses $ 14,372 $ 17,190 $ 27,025 $ 32,674 |
Redeemable Preferred Stock an_2
Redeemable Preferred Stock and Stockholders Equity (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Redeemable Preferred Stock and Stockholders' Equity | |
Schedule of cash dividends declared by the Board of Directors | The table below presents dividends declared by the board of directors on common stock during the last twelve months. Declaration Date Record Date Payment Date Dividend per Share June 14, 2021 June 30, 2021 July 30, 2021 $ 0.42 September 15, 2021 September 30, 2021 October 29, 2021 $ 0.42 December 14, 2021 December 31, 2021 January 31, 2022 $ 0.42 March 15, 2022 March 31, 2022 April 29, 2022 $ 0.42 June 15, 2022 June 30, 2022 July 29, 2022 $ 0.42 |
Schedule of Restricted Stock Unit RSU and RSA activity | Restricted Stock Awards (in thousands, except share data) Number of Shares Grant date fair value Weighted-average grant date fair value (per share) Outstanding, December 31, 2021 888,777 $ 13,517 $ 15.21 Granted 349,824 4,964 14.19 Vested (252,259) (3,791) 15.03 Forfeited (2,064) (26) 12.82 Outstanding, March 31, 2022 984,278 $ 14,664 $ 14.90 Granted 18,192 264 14.52 Vested (17,516) (257) 14.66 Forfeited (2,326) (33) 14.19 Outstanding, June 30, 2022 982,628 $ 14,638 $ 14.90 |
Schedule of preferred stock outstanding | Preferential Cash Dividends Carrying Value (in thousands) Series Shares Issued and Outstanding (in thousands) Par Value Liquidation Preference Rate per Annum Annual Dividend (per share) June 30, 2022 C 335 0.0001 $ 25.00 6.25% $ 1.56 $ 8,361 E 4,600 0.0001 $ 25.00 6.50% $ 1.63 $ 111,378 |
Earnings per Share of Common _2
Earnings per Share of Common Stock (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Earnings per Share of Common Stock | |
Schedule of computation of basic and diluted earnings per share | Three Months Ended June 30, Six Months Ended June 30, (in thousands, except for share and per share amounts) 2022 2021 2022 2021 Basic Earnings Net income $ 58,965 $ 30,904 $ 123,228 $ 59,851 Less: Income attributable to non-controlling interest 2,874 444 3,649 1,103 Less: Income attributable to participating shares 2,412 3,616 4,824 4,273 Basic earnings $ 53,679 $ 26,844 $ 114,755 $ 54,475 Diluted Earnings Net income $ 58,965 $ 30,904 $ 123,228 $ 59,851 Less: Income attributable to non-controlling interest 2,874 444 3,649 1,103 Less: Income attributable to participating shares 2,412 3,616 4,824 4,273 Add: Expenses attributable to dilutive instruments 2,319 — 4,638 — Diluted earnings $ 55,998 $ 26,844 $ 119,393 $ 54,475 Number of Shares Basic — Average shares outstanding 114,359,026 71,221,806 101,106,777 64,059,509 Effect of dilutive securities — Unvested participating shares 10,706,466 163,797 10,696,654 150,425 Diluted — Average shares outstanding 125,065,492 71,385,603 111,803,431 64,209,934 Earnings Per Share Attributable to RC Common Stockholders: Basic $ 0.47 $ 0.38 $ 1.13 $ 0.85 Diluted $ 0.45 $ 0.38 $ 1.07 $ 0.85 |
Offsetting assets and liabili_2
Offsetting assets and liabilities (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Offsetting assets and liabilities | |
Schedule of effect of offsetting recognized assets and liabilities | Gross amounts not offset in the Consolidated Balance Sheets (1) (in thousands) Gross amounts of Assets / Liabilities Gross amounts offset Balance in Consolidated Balance Sheets Financial Instruments Cash Collateral Received / Paid Net Amount June 30, 2022 Assets Interest rate lock commitments $ 2,399 $ — $ 2,399 $ — $ — $ 2,399 FX forwards 918 — 918 — — 918 TBA Agency Securities 1,001 610 391 — — 391 Interest rate swaps 42,887 65 42,822 — 31,929 10,893 Total $ 47,205 $ 675 $ 46,530 $ — $ 31,929 $ 14,601 Liabilities Interest rate swaps $ 65 $ 65 $ — $ — $ — $ — TBA Agency Securities 1,913 610 1,303 — — 1,303 Secured borrowings 3,212,383 — 3,212,383 3,212,383 — — Paycheck Protection Program Liquidity Facility 427,759 — 427,759 388,065 — 39,694 Total $ 3,642,120 $ 675 $ 3,641,445 $ 3,600,448 $ — $ 40,997 December 31, 2021 Assets Interest rate lock commitments $ 2,340 $ — $ 2,340 $ — $ — $ 2,340 FX forwards 606 — 606 — — 606 TBA Agency Securities 128 128 — — — — Interest rate swaps 6,076 2,000 4,076 — — 4,076 Total $ 9,150 $ 2,128 $ 7,022 $ — $ — $ 7,022 Liabilities Interest rate swaps $ 3,830 $ 3,830 $ — $ — $ — $ — TBA Agency Securities 538 128 410 — — 410 Secured borrowings 2,517,600 — 2,517,600 2,517,600 — — Paycheck Protection Program Liquidity Facility 941,505 — 941,505 870,349 — 71,156 Total $ 3,463,473 $ 3,958 $ 3,459,515 $ 3,387,949 $ — $ 71,566 (1) Amounts presented in these columns are limited in total to the net amount of assets or liabilities presented in the prior column by instrument. In certain cases, there is excess cash collateral or financial assets we have pledged to a counterparty that exceed the financial liabilities subject to a master netting repurchase arrangement or similar agreement. Additionally, in certain cases, counterparties may have pledged excess cash collateral to us that exceeds our corresponding financial assets. In each case, any of these excess amounts are excluded from the table although they are separately reported in our consolidated balance sheets as assets or liabilities, respectively. |
Commitments, Contingencies an_2
Commitments, Contingencies and Indemnifications (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Commitments, Contingencies and Indemnifications | |
Schedule of unfunded loan commitments and commitments to originate loans | (in thousands) June 30, 2022 December 31, 2021 Loans, net $ 762,637 $ 455,119 Loans, held for sale at fair value $ 22,818 $ 24,150 Investments held to maturity $ 2,318 $ — (in thousands) June 30, 2022 December 31, 2021 Commitments to originate residential agency loans $ 338,320 $ 346,660 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Segment Reporting | |
Schedule of segment reporting information | Three Months Ended June 30, 2022 Small Residential SBC Lending Business Mortgage Corporate- (in thousands) and Acquisitions Lending Banking Other Consolidated Interest income $ 122,427 $ 29,024 $ 2,220 $ — $ 153,671 Interest expense (72,685) (5,916) (2,226) — (80,827) Net interest income before recovery of (provision for) loan losses $ 49,742 $ 23,108 $ (6) $ — $ 72,844 Recovery of (provision for) loan losses 4,609 (219) — — 4,390 Net interest income after recovery of (provision for) loan losses $ 54,351 $ 22,889 $ (6) $ — $ 77,234 Non-interest income Residential mortgage banking activities $ — $ — $ 2,947 $ — $ 2,947 Net realized gain on financial instruments and real estate owned 12,034 9,080 — — 21,114 Net unrealized gain (loss) on financial instruments (2,517) (721) (15) — (3,253) Servicing income, net 1,431 4,558 8,576 — 14,565 Income on purchased future receivables, net — 1,859 — — 1,859 Income on unconsolidated joint ventures 5,200 — — — 5,200 Other income 6,338 1,950 21 25 8,334 Total non-interest income $ 22,486 $ 16,726 $ 11,529 $ 25 $ 50,766 Non-interest expense Employee compensation and benefits $ (7,903) $ (10,217) $ (6,906) $ (1,063) $ (26,089) Allocated employee compensation and benefits from related party (180) — — (1,624) (1,804) Variable income (expenses) on residential mortgage banking activities — — 4,532 — 4,532 Professional fees (1,097) (1,619) (217) (918) (3,851) Management fees – related party — — — (5,465) (5,465) Loan servicing expense (7,912) 74 (2,458) — (10,296) Transaction related expenses — — — (1,372) (1,372) Other operating expenses (6,457) (4,314) (2,175) (1,426) (14,372) Total non-interest expense $ (23,549) $ (16,076) $ (7,224) $ (11,868) $ (58,717) Income (loss) before provision for income taxes $ 53,288 $ 23,539 $ 4,299 $ (11,843) $ 69,283 Total assets $ 10,296,900 $ 1,049,763 $ 454,556 $ 136,096 $ 11,937,315 Six Months Ended June 30, 2022 Small Residential SBC Lending Business Mortgage Corporate- (in thousands) and Acquisitions Lending Banking Other Consolidated Interest income $ 218,770 $ 55,261 $ 4,045 $ — $ 278,076 Interest expense (125,778) (11,606) (4,184) (276) (141,844) Net interest income before recovery of (provision for) loan losses $ 92,992 $ 43,655 $ (139) $ (276) $ 136,232 Recovery of (provision for) loan losses 4,339 (1,491) — — 2,848 Net interest income after recovery of (provision for) loan losses $ 97,331 $ 42,164 $ (139) $ (276) $ 139,080 Non-interest income Residential mortgage banking activities $ — $ — $ 11,371 $ — $ 11,371 Net realized gain on financial instruments and real estate owned 12,916 16,205 — — 29,121 Net unrealized gain (loss) on financial instruments 9,912 (433) 32,583 — 42,062 Servicing income, net 2,351 6,051 16,691 — 25,093 Income on purchased future receivables, net — 4,328 — — 4,328 Income on unconsolidated joint ventures 11,763 — — — 11,763 Other income 9,352 4,821 45 617 14,835 Total non-interest income $ 46,294 $ 30,972 $ 60,690 $ 617 $ 138,573 Non-interest expense Employee compensation and benefits $ (18,063) $ (19,735) $ (14,440) $ (1,819) $ (54,057) Allocated employee compensation and benefits from related party (480) — — (4,324) (4,804) Variable income (expenses) on residential mortgage banking activities — — 3,553 — 3,553 Professional fees (3,498) (3,087) (481) (1,911) (8,977) Management fees – related party — — — (8,661) (8,661) Loan servicing expense (13,787) (428) (5,001) — (19,216) Transaction related expenses — — — (7,071) (7,071) Other operating expenses (11,833) (8,101) (4,199) (2,892) (27,025) Total non-interest expense $ (47,661) $ (31,351) $ (20,568) $ (26,678) $ (126,258) Income (loss) before provision for income taxes $ 95,964 $ 41,785 $ 39,983 $ (26,337) $ 151,395 Total assets $ 10,296,900 $ 1,049,763 $ 454,556 $ 136,096 $ 11,937,315 Three Months Ended June 30, 2021 Small Residential SBC Lending Business Mortgage Corporate- (in thousands) and Acquisitions Lending Banking Other Consolidated Interest income $ 64,880 $ 36,133 $ 2,034 $ — $ 103,047 Interest expense (39,140) (13,980) (2,295) — (55,415) Net interest income before provision for loan losses $ 25,740 $ 22,153 $ (261) $ — $ 47,632 Provision for loan losses (4,723) (794) — — (5,517) Net interest income after provision for loan losses $ 21,017 $ 21,359 $ (261) $ — $ 42,115 Non-interest income Residential mortgage banking activities $ — $ — $ 36,690 $ — $ 36,690 Net realized gain on financial instruments and real estate owned 2,620 14,563 — — 17,183 Net unrealized gain (loss) on financial instruments 6,843 2,467 (4,698) — 4,612 Servicing income, net 796 3,666 7,466 — 11,928 Income on purchased future receivables, net — 2,779 — — 2,779 Income on unconsolidated joint ventures 3,361 — — — 3,361 Other income (loss) 2,753 (3,550) 38 71 (688) Total non-interest income $ 16,373 $ 19,925 $ 39,496 $ 71 $ 75,865 Non-interest expense Employee compensation and benefits $ (4,294) $ (9,335) $ (10,127) $ (514) $ (24,270) Allocated employee compensation and benefits from related party (331) — — (2,968) (3,299) Variable expenses on residential mortgage banking activities — — (21,421) — (21,421) Professional fees (993) (704) (144) (1,031) (2,872) Management fees – related party — — — (2,626) (2,626) Incentive fees – related party — — — (286) (286) Loan servicing expense (4,621) (144) (2,086) — (6,851) Transaction related expenses — — — (1,266) (1,266) Other operating expenses (6,642) (7,405) (2,213) (930) (17,190) Total non-interest expense $ (16,881) $ (17,588) $ (35,991) $ (9,621) $ (80,081) Income (loss) before provision for income taxes $ 20,509 $ 23,696 $ 3,244 $ (9,550) $ 37,899 Total assets $ 5,275,662 $ 2,860,365 $ 588,435 $ 252,430 $ 8,976,892 Six Months Ended June 30, 2021 Small Residential SBC Lending Business Mortgage Corporate- (in thousands) and Acquisitions Lending Banking Other Consolidated Interest income $ 120,775 $ 51,565 $ 4,078 $ — $ 176,418 Interest expense (76,357) (23,187) (4,623) (2,009) (106,176) Net interest income before provision for loan losses $ 44,418 $ 28,378 $ (545) $ (2,009) $ 70,242 Provision for loan losses (5,070) (439) — — (5,509) Net interest income after provision for loan losses $ 39,348 $ 27,939 $ (545) $ (2,009) $ 64,733 Non-interest income Residential mortgage banking activities $ — $ — $ 78,099 $ — $ 78,099 Net realized gain on financial instruments and real estate owned 6,566 19,463 — — 26,029 Net unrealized gain (loss) on financial instruments 11,970 2,981 10,657 — 25,608 Servicing income, net 1,522 11,469 14,572 — 27,563 Income on purchased future receivables, net — 5,096 — — 5,096 Income on unconsolidated joint ventures 2,552 — — — 2,552 Other income (loss) 4,897 (5,150) 53 83 (117) Total non-interest income $ 27,507 $ 33,859 $ 103,381 $ 83 $ 164,830 Non-interest expense Employee compensation and benefits $ (6,546) $ (15,381) $ (23,715) $ (1,405) $ (47,047) Allocated employee compensation and benefits from related party (543) — — (4,879) (5,422) Variable expenses on residential mortgage banking activities — — (36,906) — (36,906) Professional fees (1,838) (1,348) (395) (2,273) (5,854) Management fees – related party — — — (5,319) (5,319) Incentive fees – related party — — — (286) (286) Loan servicing expense (8,463) (42) (4,450) — (12,955) Transaction related expenses — — — (7,573) (7,573) Other operating expenses (11,599) (15,070) (4,417) (1,588) (32,674) Total non-interest expense $ (28,989) $ (31,841) $ (69,883) $ (23,323) $ (154,036) Income (loss) before provision for income taxes $ 37,866 $ 29,957 $ 32,953 $ (25,249) $ 75,527 Total assets $ 5,275,662 $ 2,860,365 $ 588,435 $ 252,430 $ 8,976,892 |
Organization (Details)
Organization (Details) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Operating Partnership | ||
Ownership percentage in operating partnership | 98.50% | 99.60% |
Organization - Acquisitions (De
Organization - Acquisitions (Details) | 6 Months Ended | ||||||
Mar. 16, 2022 USD ($) $ / shares | Jul. 31, 2021 USD ($) shares | Mar. 19, 2021 USD ($) item $ / shares shares | Jun. 30, 2022 USD ($) $ / shares | Jan. 14, 2022 $ / shares | Dec. 31, 2021 $ / shares | Jul. 15, 2021 $ / shares | |
Acquisitions | |||||||
Financial assets liquidated | $ | $ 2,100,000,000 | ||||||
Extinguishment of indebtedness on the RMDS portfolio | $ | $ 1,800,000,000 | ||||||
Temporary reduction in the quarterly base management fee following the effective date of the merger | $ | $ 1,000,000 | ||||||
Number of quarters the temporary reduction in quarterly base management fee is effective | item | 4 | ||||||
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||
Minimum | |||||||
Acquisitions | |||||||
Percentage of taxable income distributed in the form of qualifying distributions | 90% | ||||||
Series B Preferred Stock | |||||||
Acquisitions | |||||||
Preferred stock redemption price | $ 25 | ||||||
Series B Preferred Stock | ANH | |||||||
Acquisitions | |||||||
Rate per Annum | 6.25% | ||||||
Series C Preferred Stock | |||||||
Acquisitions | |||||||
Rate per Annum | 6.25% | ||||||
Par Value per Share | $ 0.0001 | ||||||
Series C Preferred Stock | ANH | |||||||
Acquisitions | |||||||
Rate per Annum | 7.625% | ||||||
Series D Preferred Stock | |||||||
Acquisitions | |||||||
Preferred stock redemption price | $ 25 | ||||||
Series A Preferred Stock | ANH | |||||||
Acquisitions | |||||||
Rate per Annum | 8.625% | ||||||
ANH | |||||||
Acquisitions | |||||||
Shares issued | shares | 16,774,000 | ||||||
Cash paid | $ | $ 60,626,000 | ||||||
Exchange ratio | 0.1688 | ||||||
Cash paid per share | $ 0.61 | ||||||
Total purchase price | $ | $ 417,898,000 | ||||||
Market price as of March 19, 2021 | $ 14.28 | ||||||
Common stock consideration | $ | $ 239,537,000 | ||||||
ANH | Ready Capital Shareholders | |||||||
Acquisitions | |||||||
Percentage of equity interests held after closing | 77% | ||||||
ANH | ANH Shareholders | |||||||
Acquisitions | |||||||
Percentage of equity interests held after closing | 23% | ||||||
ANH | Series B Preferred Stock | |||||||
Acquisitions | |||||||
Shares issued | shares | 1,919,378 | ||||||
Market price as of March 19, 2021 | $ 25 | ||||||
Rate per Annum | 8.625% | ||||||
Par Value per Share | $ 0.0001 | ||||||
Common stock consideration | $ | $ 47,984,000 | ||||||
ANH | Series C Preferred Stock | |||||||
Acquisitions | |||||||
Shares issued | shares | 779,743 | ||||||
Market price as of March 19, 2021 | $ 25 | ||||||
Rate per Annum | 6.25% | ||||||
Par Value per Share | $ 0.0001 | ||||||
Common stock consideration | $ | $ 19,494,000 | ||||||
ANH | Series D Preferred Stock | |||||||
Acquisitions | |||||||
Shares issued | shares | 2,010,278 | ||||||
Market price as of March 19, 2021 | $ 25 | ||||||
Rate per Annum | 7.625% | ||||||
Par Value per Share | $ 0.0001 | ||||||
Common stock consideration | $ | $ 50,257,000 | ||||||
Red Stone | |||||||
Acquisitions | |||||||
Cash paid | $ | $ 63,000,000 | ||||||
Total purchase price | $ | 75,400,000 | ||||||
Payments for retention of key executives | $ | $ 7,000,000 | ||||||
Shares granted | shares | 128,533 | ||||||
Period over which additional purchase price payments may be made if certain hurdles are achieved | 3 years | ||||||
Mosaic | |||||||
Acquisitions | |||||||
Total purchase price | $ | $ 542,404,000 | ||||||
Common stock consideration | $ | $ 437,311,000 | ||||||
Period over which the performance of assets acquired will be measured to determine whether additional shares under the contingent equity rights are to be issued | 3 years | ||||||
Mosaic | Class B-1 Common Stock | |||||||
Acquisitions | |||||||
Common stock, par value | $ 0.0001 | ||||||
Mosaic | Class B-2 Common Stock | |||||||
Acquisitions | |||||||
Common stock, par value | 0.0001 | ||||||
Mosaic | Class B-3 Common Stock | |||||||
Acquisitions | |||||||
Common stock, par value | 0.0001 | ||||||
Mosaic | Class B-4 Common Stock | |||||||
Acquisitions | |||||||
Common stock, par value | $ 0.0001 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) $ in Millions | 6 Months Ended | 9 Months Ended | |
Jun. 30, 2022 USD ($) item class segment | Sep. 30, 2021 segment | Dec. 31, 2021 USD ($) | |
Number of reportable segments | segment | 3 | 4 | |
Cash collateral offset against derivative liability positions | $ 1.8 | ||
Number of separate classes of servicing rights used for risk management purposes | class | 2 | ||
Number of repurchase agreements accounted for as components of linked transactions | item | 0 | ||
Unrecognized accrued taxes, interest and penalties | $ 0 | 0 | |
The number of consecutive months contractual payments that must be received on a loan in non-accrual status before resuming recognition of interest income | item | 3 | ||
Borrowings under credit facilities | Maximum | |||
Maturity period | 2 years | ||
Restricted cash | |||
Cash collateral not offset against derivative liability positions | $ 9 |
Business Combinations - Mosaic
Business Combinations - Mosaic Acquisition (Details) - USD ($) $ / shares in Units, $ in Thousands | 6 Months Ended | ||
Mar. 16, 2022 | Jun. 30, 2022 | Dec. 31, 2021 | |
Assets: | |||
Real estate, held for sale | $ 85,923 | $ 7,338 | |
Business Combination, Consideration Transferred [Abstract] | |||
Consideration transferred based on the value of OP units issued | 20,745 | ||
Goodwill | $ 34,172 | $ 31,470 | |
Mosaic | |||
Assets: | |||
Cash and cash equivalents | $ 100,236 | ||
Restricted cash | 23,330 | ||
Loans | 432,779 | ||
Investments held to maturity (including $17,053 held at fair value) | 165,302 | ||
Investments held to maturity, portion at at fair value | 17,053 | ||
Real estate, held for sale | 78,693 | ||
Other Assets: | |||
Other assets | 25,761 | ||
Total assets acquired | 826,101 | ||
Liabilities: | |||
Secured borrowings | 66,202 | ||
Loan participations sold | 73,656 | ||
Due to third parties | 24,634 | ||
Accounts payable and other accrued liabilities | 38,182 | ||
Total liabilities assumed | 202,674 | ||
Net assets acquired | 623,427 | ||
Non-controlling interests | (82,257) | ||
Net assets acquired, net of non-controlling interests | 541,170 | ||
Business Combination, Consideration Transferred [Abstract] | |||
Consideration transferred based on value of stock issued | 437,311 | ||
Consideration transferred based on the value of OP units issued | 20,745 | ||
Fair value of CERs issued | 84,348 | ||
Total consideration transferred | $ 542,404 | ||
Value per CER unit | $ 2.79 | ||
Goodwill | $ 1,234 |
Business Combinations - Red Sto
Business Combinations - Red Stone Acquisition (Details) - USD ($) $ in Thousands | Jul. 31, 2021 | Jun. 30, 2022 | Dec. 31, 2021 |
Liabilities: | |||
Contingent consideration | $ 92,548 | $ 16,400 | |
Goodwill | $ 34,172 | $ 31,470 | |
Red Stone | |||
Acquisitions | |||
Cash paid | $ 63,000 | ||
Payments for retention of key executives | $ 7,000 | ||
Shares granted | 128,533 | ||
Period over which additional purchase price payments may be made if certain hurdles are achieved | 3 years | ||
Assets: | |||
Cash and cash equivalents | $ 1,553 | ||
Restricted cash | 6,994 | ||
Investment in unconsolidated joint ventures | 20,793 | ||
Servicing rights | 30,503 | ||
Other Assets: | |||
Intangible assets | 9,300 | ||
Other assets | 1,330 | ||
Total assets acquired | 70,473 | ||
Liabilities: | |||
Accounts payable and other accrued liabilities | 9,082 | ||
Total liabilities assumed | 9,082 | ||
Net assets acquired | 61,391 | ||
Cash paid | 63,000 | ||
Contingent consideration | 12,400 | ||
Total consideration transferred | 75,400 | ||
Goodwill | $ 14,009 |
Business Combinations - ANH Mer
Business Combinations - ANH Merger (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 | Mar. 19, 2021 |
Assets: | |||
Real estate, held for sale | $ 85,923 | $ 7,338 | |
ANH | |||
Assets: | |||
Cash and cash equivalents | $ 110,545 | ||
Mortgage backed securities, at fair value | 2,010,504 | ||
Loans, held for sale, at fair value | 102,798 | ||
Real estate, held for sale | 26,107 | ||
Accrued interest | 8,183 | ||
Other assets | 38,216 | ||
Total assets acquired | 2,296,353 | ||
Liabilities: | |||
Secured borrowings | 1,784,047 | ||
Corporate debt | 36,250 | ||
Derivative instruments, at fair value | 60,719 | ||
Accounts payable and other accrued liabilities | 4,811 | ||
Total liabilities assumed | 1,885,827 | ||
Net assets acquired | 410,526 | ||
Gross contractual principal of acquired loan receivables. | $ 98,300 |
Business Combinations - ANH Agg
Business Combinations - ANH Aggregate Consideration Transferred (Details) $ / shares in Units, $ in Thousands | Mar. 19, 2021 USD ($) $ / shares shares | Jun. 30, 2022 USD ($) | Dec. 31, 2021 USD ($) |
Acquisitions | |||
Goodwill | $ 34,172 | $ 31,470 | |
ANH | |||
Acquisitions | |||
Common stock consideration | $ 239,537 | ||
Fair value of net assets acquired | $ 410,526 | ||
ANH shares outstanding at March 19, 2021 | shares | 99,374,000 | ||
Exchange ratio | 0.1688 | ||
Shares issued | shares | 16,774,000 | ||
Market price as of March 19, 2021 | $ / shares | $ 14.28 | ||
Cash paid per share | $ / shares | $ 0.61 | ||
Cash paid based on outstanding ANH shares | $ 60,626 | ||
Consideration transferred based on value of stock issued | 239,537 | ||
Total consideration transferred | 417,898 | ||
Goodwill | 7,372 | ||
ANH | Series B Preferred Stock | |||
Acquisitions | |||
Common stock consideration | $ 47,984 | ||
Shares issued | shares | 1,919,378 | ||
Market price as of March 19, 2021 | $ / shares | $ 25 | ||
Consideration transferred based on value of stock issued | $ 47,984 | ||
ANH | Series C Preferred Stock | |||
Acquisitions | |||
Common stock consideration | $ 19,494 | ||
Shares issued | shares | 779,743 | ||
Market price as of March 19, 2021 | $ / shares | $ 25 | ||
Consideration transferred based on value of stock issued | $ 19,494 | ||
ANH | Series D Preferred Stock | |||
Acquisitions | |||
Common stock consideration | $ 50,257 | ||
Shares issued | shares | 2,010,278 | ||
Market price as of March 19, 2021 | $ / shares | $ 25 | ||
Consideration transferred based on value of stock issued | $ 50,257 |
Business Combinations - Pro-for
Business Combinations - Pro-forma Information (Details) - Mosaic - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Pro-forma information | ||||
Interest income | $ 153,671 | $ 121,420 | $ 291,137 | $ 212,238 |
Interest expense | (80,827) | (60,702) | (144,769) | (116,322) |
Recovery of (provision for) loan losses | 4,390 | (5,517) | 2,848 | (5,509) |
Non-interest income | 50,766 | 75,855 | 139,240 | 164,853 |
Non-interest expense | (57,345) | (79,133) | (133,272) | (156,890) |
Income before provision for income taxes | 70,655 | 51,923 | 155,184 | 98,370 |
Income tax expense | (10,318) | (6,995) | (28,167) | (15,676) |
Net income | 60,337 | $ 44,928 | 127,017 | $ 82,694 |
Nonrecurring transaction costs excluded from pro forma non-interest expense | $ 1,400 | $ 7,100 |
Loans and Allowance for Credi_3
Loans and Allowance for Credit Losses - Classification, unpaid principal balance, and carrying value (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2020 |
Carrying Value | ||||||
Total Loans, before allowance for loan losses | $ 3,943,453 | $ 2,948,662 | ||||
Allowance for loan losses | (36,132) | (33,216) | ||||
Total Loans, net | 3,907,321 | 2,915,446 | ||||
Allowance for loan losses on loans in consolidated VIEs | (46,125) | $ (51,244) | (45,377) | $ (49,629) | $ (45,649) | $ (46,732) |
Total Loans, net of allowance for loan losses, including loans in consolidated VIEs | 9,711,609 | 6,997,294 | ||||
Loans, held for sale, at fair value | 469,442 | 552,935 | ||||
Total Loans, net and Loans held for sale, at fair value | 10,181,051 | 7,550,229 | ||||
Paycheck Protection Program loans | 389,189 | 870,352 | ||||
Total loan portfolio | 10,570,240 | 8,420,581 | ||||
UPB | ||||||
Total Loans, before allowance for loan losses | 3,979,302 | 2,977,841 | ||||
Total Loans, net | 3,979,302 | 2,977,841 | ||||
Total Loans, held for sale, at fair value | 477,991 | 540,760 | ||||
Total Loans, net and Loans held for sale, at fair value | 10,313,446 | 7,644,183 | ||||
Total Paycheck Protection Program loans | 416,403 | 931,009 | ||||
Total Loan portfolio | 10,729,849 | 8,575,192 | ||||
Consolidated VIEs | ||||||
Carrying Value | ||||||
Total Loans, in consolidated VIEs, before allowance for loan losses | 5,814,281 | 4,094,009 | ||||
Allowance for loan losses on loans in consolidated VIEs | (9,993) | (12,161) | ||||
Total Loans, net, in consolidated VIEs | 5,804,288 | 4,081,848 | ||||
UPB | ||||||
Total Loans, in consolidated VIEs, before allowance for loan losses | 5,856,153 | 4,125,582 | ||||
Total Loans, net, in consolidated VIEs | 5,856,153 | 4,125,582 | ||||
Residential | ||||||
Carrying Value | ||||||
Total Loans, before allowance for loan losses | 2,689 | 3,641 | ||||
Allowance for loan losses on loans in consolidated VIEs | (57) | (60) | (60) | (61) | (60) | (52) |
Loans, held for sale, at fair value | 199,378 | 269,164 | ||||
UPB | ||||||
Total Loans, before allowance for loan losses | 2,873 | 3,914 | ||||
Total Loans, held for sale, at fair value | 197,531 | 263,479 | ||||
SBA 7(a) | ||||||
Carrying Value | ||||||
Total Loans, before allowance for loan losses | 490,564 | 503,991 | ||||
Allowance for loan losses on loans in consolidated VIEs | (13,126) | (13,233) | (12,180) | (13,350) | (13,599) | (14,600) |
Loans, held for sale, at fair value | 51,239 | 42,760 | ||||
UPB | ||||||
Total Loans, before allowance for loan losses | 508,251 | 519,408 | ||||
Total Loans, held for sale, at fair value | 47,878 | 38,966 | ||||
SBA 7(a) | Consolidated VIEs | ||||||
Carrying Value | ||||||
Total Loans, in consolidated VIEs, before allowance for loan losses | 73,798 | 88,348 | ||||
UPB | ||||||
Total Loans, in consolidated VIEs, before allowance for loan losses | 82,085 | 98,604 | ||||
Fixed rate | ||||||
Carrying Value | ||||||
Total Loans, before allowance for loan losses | 116,512 | 344,673 | ||||
Allowance for loan losses on loans in consolidated VIEs | (6,222) | (6,524) | (6,861) | (6,865) | (6,753) | (7,629) |
Loans, held for sale, at fair value | 200,459 | 197,290 | ||||
UPB | ||||||
Total Loans, before allowance for loan losses | 113,060 | 341,356 | ||||
Total Loans, held for sale, at fair value | 214,380 | 195,114 | ||||
Fixed rate | Consolidated VIEs | ||||||
Carrying Value | ||||||
Total Loans, in consolidated VIEs, before allowance for loan losses | 903,579 | 749,364 | ||||
UPB | ||||||
Total Loans, in consolidated VIEs, before allowance for loan losses | 903,097 | 746,720 | ||||
Freddie Mac | ||||||
Carrying Value | ||||||
Total Loans, before allowance for loan losses | 6,179 | 3,087 | ||||
Loans, held for sale, at fair value | 17,859 | 42,384 | ||||
UPB | ||||||
Total Loans, before allowance for loan losses | 6,070 | 2,985 | ||||
Total Loans, held for sale, at fair value | 17,648 | 41,864 | ||||
Bridge | ||||||
Carrying Value | ||||||
Total Loans, before allowance for loan losses | 2,563,807 | 1,849,524 | ||||
Allowance for loan losses on loans in consolidated VIEs | (18,393) | (19,878) | (19,519) | (21,178) | (17,057) | (14,588) |
UPB | ||||||
Total Loans, before allowance for loan losses | 2,586,024 | 1,861,932 | ||||
Bridge | Consolidated VIEs | ||||||
Carrying Value | ||||||
Total Loans, in consolidated VIEs, before allowance for loan losses | 4,469,478 | 2,693,186 | ||||
UPB | ||||||
Total Loans, in consolidated VIEs, before allowance for loan losses | 4,502,893 | 2,717,487 | ||||
Construction | ||||||
Carrying Value | ||||||
Total Loans, before allowance for loan losses | 439,519 | |||||
Allowance for loan losses on loans in consolidated VIEs | (5,122) | (5,323) | ||||
UPB | ||||||
Total Loans, before allowance for loan losses | 434,520 | |||||
Other | ||||||
Carrying Value | ||||||
Total Loans, before allowance for loan losses | 324,183 | 243,746 | ||||
Allowance for loan losses on loans in consolidated VIEs | (3,205) | $ (6,226) | (6,757) | $ (8,175) | $ (8,180) | $ (9,863) |
Loans, held for sale, at fair value | 507 | 1,337 | ||||
UPB | ||||||
Total Loans, before allowance for loan losses | 328,504 | 248,246 | ||||
Total Loans, held for sale, at fair value | 554 | 1,337 | ||||
Other | Consolidated VIEs | ||||||
Carrying Value | ||||||
Total Loans, in consolidated VIEs, before allowance for loan losses | 367,426 | 563,111 | ||||
UPB | ||||||
Total Loans, in consolidated VIEs, before allowance for loan losses | 368,078 | 562,771 | ||||
Paycheck Protection Program loans, held for investment | ||||||
Carrying Value | ||||||
Paycheck Protection Program loans | 388,426 | 867,109 | ||||
UPB | ||||||
Total Paycheck Protection Program loans | 415,640 | 927,766 | ||||
Paycheck Protection Program loans, at fair value | ||||||
Carrying Value | ||||||
Paycheck Protection Program loans | 763 | 3,243 | ||||
UPB | ||||||
Total Paycheck Protection Program loans | $ 763 | $ 3,243 |
Loans and Allowance for Credi_4
Loans and Allowance for Credit Losses - Loan Vintage (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Loan classification and delinquency by year of origination | ||
UPB | $ 9,835,455 | $ 7,103,423 |
Current fiscal year | 2,369,353 | 3,702,631 |
Year before current fiscal year | 4,095,670 | 605,289 |
Two years before current fiscal year | 550,809 | 974,892 |
Three years before current fiscal year | 1,206,110 | 523,579 |
Four years before current fiscal year | 490,412 | 173,349 |
Five or more years before current fiscal year | 1,026,664 | 1,045,667 |
Total | 9,739,018 | 7,025,407 |
General allowance for loan losses | (27,409) | (28,113) |
Total Loans, net of allowance for loan losses, including loans in consolidated VIEs | 9,711,609 | 6,997,294 |
Special allowance for loan losses including PCD allowance | 18,700 | |
Purchased financial assets with credit deterioration | 5,000 | |
Specific allowance for loan losses | 13,716 | 17,264 |
Current and less than 30 days past due | ||
Loan classification and delinquency by year of origination | ||
UPB | 9,577,193 | 6,901,474 |
Current fiscal year | 2,369,245 | 3,666,020 |
Year before current fiscal year | 4,095,520 | 596,289 |
Two years before current fiscal year | 546,341 | 953,269 |
Three years before current fiscal year | 1,161,571 | 473,798 |
Four years before current fiscal year | 353,190 | 167,629 |
Five or more years before current fiscal year | 971,228 | 984,680 |
Total | 9,497,095 | 6,841,685 |
30-59 Days Past Due | ||
Loan classification and delinquency by year of origination | ||
UPB | 16,211 | 73,836 |
Current fiscal year | 35,549 | |
Year before current fiscal year | 352 | |
Two years before current fiscal year | 18,393 | |
Three years before current fiscal year | 14,675 | 3,714 |
Four years before current fiscal year | 228 | |
Five or more years before current fiscal year | 1,462 | 14,601 |
Total | 16,137 | 72,837 |
60+ Days Past Due | ||
Loan classification and delinquency by year of origination | ||
UPB | 242,051 | 128,113 |
Current fiscal year | 108 | 1,062 |
Year before current fiscal year | 150 | 8,648 |
Two years before current fiscal year | 4,468 | 3,230 |
Three years before current fiscal year | 29,864 | 46,067 |
Four years before current fiscal year | 137,222 | 5,492 |
Five or more years before current fiscal year | 53,974 | 46,386 |
Total | 225,786 | 110,885 |
Bridge | ||
Loan classification and delinquency by year of origination | ||
UPB | 7,088,917 | 4,579,419 |
Current fiscal year | 2,273,190 | 3,461,864 |
Year before current fiscal year | 3,839,216 | 430,248 |
Two years before current fiscal year | 384,815 | 399,603 |
Three years before current fiscal year | 331,772 | 205,855 |
Four years before current fiscal year | 166,603 | 11,327 |
Five or more years before current fiscal year | 32,763 | 29,490 |
Total | 7,028,359 | 4,538,387 |
General allowance for loan losses | (13,466) | (15,204) |
Specific allowance for loan losses | 4,927 | 4,315 |
Bridge | Current and less than 30 days past due | ||
Loan classification and delinquency by year of origination | ||
Total | 6,927,794 | 4,451,230 |
Bridge | 30-59 Days Past Due | ||
Loan classification and delinquency by year of origination | ||
Total | 14,675 | 52,997 |
Bridge | 60+ Days Past Due | ||
Loan classification and delinquency by year of origination | ||
Total | 85,890 | 34,160 |
Construction | ||
Loan classification and delinquency by year of origination | ||
UPB | 434,520 | |
Two years before current fiscal year | 10,000 | |
Three years before current fiscal year | 364,124 | |
Four years before current fiscal year | 60,395 | |
Total | 434,519 | |
General allowance for loan losses | (122) | |
Purchased financial assets with credit deterioration | 5,000 | |
Construction | Current and less than 30 days past due | ||
Loan classification and delinquency by year of origination | ||
Total | 360,124 | |
Construction | 60+ Days Past Due | ||
Loan classification and delinquency by year of origination | ||
Total | 74,395 | |
Fixed rate | ||
Loan classification and delinquency by year of origination | ||
UPB | 1,016,157 | 1,088,076 |
Current fiscal year | 38,292 | 142,801 |
Year before current fiscal year | 143,770 | 103,528 |
Two years before current fiscal year | 95,074 | 393,563 |
Three years before current fiscal year | 346,706 | 163,912 |
Four years before current fiscal year | 143,314 | 98,123 |
Five or more years before current fiscal year | 248,954 | 187,918 |
Total | 1,016,110 | 1,089,845 |
General allowance for loan losses | (2,241) | (2,667) |
Specific allowance for loan losses | 3,981 | 4,194 |
Fixed rate | Current and less than 30 days past due | ||
Loan classification and delinquency by year of origination | ||
Total | 988,947 | 1,057,708 |
Fixed rate | 60+ Days Past Due | ||
Loan classification and delinquency by year of origination | ||
Total | 27,163 | 32,137 |
Freddie Mac | ||
Loan classification and delinquency by year of origination | ||
UPB | 6,070 | 2,985 |
Year before current fiscal year | 3,093 | |
Two years before current fiscal year | 6,179 | |
Total | 6,179 | 3,093 |
Freddie Mac | Current and less than 30 days past due | ||
Loan classification and delinquency by year of origination | ||
Total | 3,086 | |
Freddie Mac | 60+ Days Past Due | ||
Loan classification and delinquency by year of origination | ||
Total | 3,093 | 3,093 |
Residential | ||
Loan classification and delinquency by year of origination | ||
UPB | 2,873 | 3,914 |
Current fiscal year | 1,141 | 1,413 |
Year before current fiscal year | 156 | 492 |
Two years before current fiscal year | 468 | |
Four years before current fiscal year | 183 | |
Five or more years before current fiscal year | 1,157 | 1,215 |
Total | 2,637 | 3,588 |
General allowance for loan losses | (5) | (8) |
Specific allowance for loan losses | 52 | 52 |
Residential | Current and less than 30 days past due | ||
Loan classification and delinquency by year of origination | ||
Total | 1,537 | 1,674 |
Residential | 60+ Days Past Due | ||
Loan classification and delinquency by year of origination | ||
Total | 1,100 | 1,914 |
SBA 7(a) | ||
Loan classification and delinquency by year of origination | ||
UPB | 590,336 | 618,012 |
Current fiscal year | 54,407 | 92,030 |
Year before current fiscal year | 85,108 | 44,955 |
Two years before current fiscal year | 42,224 | 104,938 |
Three years before current fiscal year | 91,154 | 122,242 |
Four years before current fiscal year | 102,958 | 49,031 |
Five or more years before current fiscal year | 184,659 | 173,616 |
Total | 560,510 | 586,812 |
General allowance for loan losses | (9,275) | (6,653) |
Specific allowance for loan losses | 3,851 | 5,527 |
SBA 7(a) | Current and less than 30 days past due | ||
Loan classification and delinquency by year of origination | ||
Total | 557,134 | 576,593 |
SBA 7(a) | 30-59 Days Past Due | ||
Loan classification and delinquency by year of origination | ||
Total | 730 | 6,741 |
SBA 7(a) | 60+ Days Past Due | ||
Loan classification and delinquency by year of origination | ||
Total | 2,646 | 3,478 |
Other | ||
Loan classification and delinquency by year of origination | ||
UPB | 696,582 | 811,017 |
Current fiscal year | 2,323 | 4,523 |
Year before current fiscal year | 27,420 | 22,973 |
Two years before current fiscal year | 12,517 | 76,320 |
Three years before current fiscal year | 72,354 | 31,570 |
Four years before current fiscal year | 16,959 | 14,868 |
Five or more years before current fiscal year | 559,131 | 653,428 |
Total | 690,704 | 803,682 |
General allowance for loan losses | (2,300) | (3,581) |
Specific allowance for loan losses | 905 | 3,176 |
Other | Current and less than 30 days past due | ||
Loan classification and delinquency by year of origination | ||
Total | 658,473 | 754,480 |
Other | 30-59 Days Past Due | ||
Loan classification and delinquency by year of origination | ||
Total | 732 | 13,099 |
Other | 60+ Days Past Due | ||
Loan classification and delinquency by year of origination | ||
Total | $ 31,499 | $ 36,103 |
Loans and Allowance for Credi_5
Loans and Allowance for Credit Losses - Delinquency (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Loan delinquency information | ||
Total Loans Carrying Value | $ 9,739,018 | $ 7,025,407 |
Non-Accrual Loans | 243,724 | 99,502 |
General allowance for loan losses | (27,409) | (28,113) |
Total Loans, net of allowance for loan losses, including loans in consolidated VIEs | $ 9,711,609 | $ 6,997,294 |
Percentage of loans outstanding | 100% | 100% |
Percentage of outstanding, Non-Accrual Loans | 2.50% | 1.40% |
Current and less than 30 days past due | ||
Loan delinquency information | ||
Total Loans Carrying Value | $ 9,497,095 | $ 6,841,685 |
Percentage of loans outstanding | 97.50% | 97.40% |
30-59 Days Past Due | ||
Loan delinquency information | ||
Total Loans Carrying Value | $ 16,137 | $ 72,837 |
Percentage of loans outstanding | 0.20% | 1% |
60+ Days Past Due | ||
Loan delinquency information | ||
Total Loans Carrying Value | $ 225,786 | $ 110,885 |
Percentage of loans outstanding | 2.30% | 1.60% |
90+ Days Past Due | ||
Loan delinquency information | ||
Percentage of outstanding, 90+Days Past Due Accruing | 0% | 0% |
Bridge | ||
Loan delinquency information | ||
Total Loans Carrying Value | $ 7,028,359 | $ 4,538,387 |
Non-Accrual Loans | 96,137 | 28,820 |
General allowance for loan losses | (13,466) | (15,204) |
Bridge | Current and less than 30 days past due | ||
Loan delinquency information | ||
Total Loans Carrying Value | 6,927,794 | 4,451,230 |
Bridge | 30-59 Days Past Due | ||
Loan delinquency information | ||
Total Loans Carrying Value | 14,675 | 52,997 |
Bridge | 60+ Days Past Due | ||
Loan delinquency information | ||
Total Loans Carrying Value | 85,890 | 34,160 |
Construction | ||
Loan delinquency information | ||
Total Loans Carrying Value | 434,519 | |
Non-Accrual Loans | 74,395 | |
General allowance for loan losses | (122) | |
Construction | Current and less than 30 days past due | ||
Loan delinquency information | ||
Total Loans Carrying Value | 360,124 | |
Construction | 60+ Days Past Due | ||
Loan delinquency information | ||
Total Loans Carrying Value | 74,395 | |
Fixed rate | ||
Loan delinquency information | ||
Total Loans Carrying Value | 1,016,110 | 1,089,845 |
Non-Accrual Loans | 21,923 | 24,031 |
General allowance for loan losses | (2,241) | (2,667) |
Fixed rate | Current and less than 30 days past due | ||
Loan delinquency information | ||
Total Loans Carrying Value | 988,947 | 1,057,708 |
Fixed rate | 60+ Days Past Due | ||
Loan delinquency information | ||
Total Loans Carrying Value | 27,163 | 32,137 |
Freddie Mac | ||
Loan delinquency information | ||
Total Loans Carrying Value | 6,179 | 3,093 |
Non-Accrual Loans | 3,093 | 3,093 |
Freddie Mac | Current and less than 30 days past due | ||
Loan delinquency information | ||
Total Loans Carrying Value | 3,086 | |
Freddie Mac | 60+ Days Past Due | ||
Loan delinquency information | ||
Total Loans Carrying Value | 3,093 | 3,093 |
Residential | ||
Loan delinquency information | ||
Total Loans Carrying Value | 2,637 | 3,588 |
Non-Accrual Loans | 1,102 | 1,914 |
General allowance for loan losses | (5) | (8) |
Residential | Current and less than 30 days past due | ||
Loan delinquency information | ||
Total Loans Carrying Value | 1,537 | 1,674 |
Residential | 60+ Days Past Due | ||
Loan delinquency information | ||
Total Loans Carrying Value | 1,100 | 1,914 |
SBA 7(a) | ||
Loan delinquency information | ||
Total Loans Carrying Value | 560,510 | 586,812 |
Non-Accrual Loans | 11,034 | 15,119 |
General allowance for loan losses | (9,275) | (6,653) |
SBA 7(a) | Current and less than 30 days past due | ||
Loan delinquency information | ||
Total Loans Carrying Value | 557,134 | 576,593 |
SBA 7(a) | 30-59 Days Past Due | ||
Loan delinquency information | ||
Total Loans Carrying Value | 730 | 6,741 |
SBA 7(a) | 60+ Days Past Due | ||
Loan delinquency information | ||
Total Loans Carrying Value | 2,646 | 3,478 |
Other | ||
Loan delinquency information | ||
Total Loans Carrying Value | 690,704 | 803,682 |
Non-Accrual Loans | 36,040 | 26,525 |
General allowance for loan losses | (2,300) | (3,581) |
Other | Current and less than 30 days past due | ||
Loan delinquency information | ||
Total Loans Carrying Value | 658,473 | 754,480 |
Other | 30-59 Days Past Due | ||
Loan delinquency information | ||
Total Loans Carrying Value | 732 | 13,099 |
Other | 60+ Days Past Due | ||
Loan delinquency information | ||
Total Loans Carrying Value | $ 31,499 | $ 36,103 |
Loans and Allowance for Credi_6
Loans and Allowance for Credit Losses - Credit Quality (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | $ 9,739,018 | $ 7,025,407 |
General allowance for loan losses | (27,409) | (28,113) |
Total Loans, net of allowance for loan losses, including loans in consolidated VIEs | $ 9,711,609 | $ 6,997,294 |
Percentage of loans outstanding | 100% | 100% |
0.0 - 20.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | $ 214,107 | $ 243,094 |
Percentage of loans outstanding | 2.20% | 3.50% |
20.1 - 40.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | $ 632,889 | $ 491,104 |
Percentage of loans outstanding | 6.50% | 7% |
40.1 - 60.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | $ 1,540,196 | $ 1,034,055 |
Percentage of loans outstanding | 15.80% | 14.70% |
60.1 - 80.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | $ 6,771,949 | $ 4,335,965 |
Percentage of loans outstanding | 69.50% | 61.70% |
80.1 - 100.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | $ 407,547 | $ 741,495 |
Percentage of loans outstanding | 4.20% | 10.50% |
Greater than 100.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | $ 172,330 | $ 179,694 |
Percentage of loans outstanding | 1.80% | 2.60% |
Bridge | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | $ 7,028,359 | $ 4,538,387 |
General allowance for loan losses | (13,466) | (15,204) |
Bridge | 20.1 - 40.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 240,207 | 107,606 |
Bridge | 40.1 - 60.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 859,550 | 338,355 |
Bridge | 60.1 - 80.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 5,609,293 | 3,432,820 |
Bridge | 80.1 - 100.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 290,016 | 640,215 |
Bridge | Greater than 100.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 29,293 | 19,391 |
Construction | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 434,519 | |
General allowance for loan losses | (122) | |
Construction | 0.0 - 20.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 10,800 | |
Construction | 20.1 - 40.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 10,000 | |
Construction | 40.1 - 60.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 49,595 | |
Construction | 60.1 - 80.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 364,124 | |
Fixed rate | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 1,016,110 | 1,089,845 |
General allowance for loan losses | (2,241) | (2,667) |
Fixed rate | 0.0 - 20.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 11,625 | 13,983 |
Fixed rate | 20.1 - 40.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 59,157 | 40,570 |
Fixed rate | 40.1 - 60.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 361,397 | 390,213 |
Fixed rate | 60.1 - 80.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 560,290 | 624,462 |
Fixed rate | 80.1 - 100.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 16,844 | 9,972 |
Fixed rate | Greater than 100.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 6,797 | 10,645 |
Freddie Mac | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 6,179 | 3,093 |
Freddie Mac | 40.1 - 60.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 3,086 | |
Freddie Mac | 60.1 - 80.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 3,093 | 3,093 |
Residential | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 2,637 | 3,588 |
General allowance for loan losses | (5) | (8) |
Residential | 0.0 - 20.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 62 | 69 |
Residential | 20.1 - 40.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 549 | 262 |
Residential | 40.1 - 60.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 942 | 835 |
Residential | 60.1 - 80.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 1,084 | 1,050 |
Residential | 80.1 - 100.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 1,219 | |
Residential | Greater than 100.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 153 | |
SBA 7(a) | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 560,510 | 586,812 |
General allowance for loan losses | (9,275) | (6,653) |
SBA 7(a) | 0.0 - 20.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 8,459 | 7,219 |
SBA 7(a) | 20.1 - 40.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 44,630 | 41,943 |
SBA 7(a) | 40.1 - 60.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 99,499 | 119,114 |
SBA 7(a) | 60.1 - 80.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 186,780 | 197,950 |
SBA 7(a) | 80.1 - 100.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 90,845 | 81,388 |
SBA 7(a) | Greater than 100.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 130,297 | 139,198 |
Other | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 690,704 | 803,682 |
General allowance for loan losses | (2,300) | (3,581) |
Other | 0.0 - 20.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 183,161 | 221,823 |
Other | 20.1 - 40.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 278,346 | 300,723 |
Other | 40.1 - 60.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 166,127 | 185,538 |
Other | 60.1 - 80.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 47,285 | 76,590 |
Other | 80.1 - 100.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 9,842 | 8,701 |
Other | Greater than 100.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | $ 5,943 | $ 10,307 |
Loans and Allowance for Credi_7
Loans and Allowance for Credit Losses - Geographic and Collateral Concentration (Details) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Geographical concentration | Loans, net | ||
Concentration risk | ||
Percentage of loan | 100% | 100% |
Geographical concentration | Loans, net | Texas | ||
Concentration risk | ||
Percentage of loan | 19.80% | 19.20% |
Geographical concentration | Loans, net | California | ||
Concentration risk | ||
Percentage of loan | 11.40% | 14.30% |
Geographical concentration | Loans, net | Georgia | ||
Concentration risk | ||
Percentage of loan | 7.40% | 7% |
Geographical concentration | Loans, net | Arizona | ||
Concentration risk | ||
Percentage of loan | 6.90% | 7.40% |
Geographical concentration | Loans, net | Florida | ||
Concentration risk | ||
Percentage of loan | 6.80% | 6.70% |
Geographical concentration | Loans, net | New York | ||
Concentration risk | ||
Percentage of loan | 5.70% | 7.30% |
Geographical concentration | Loans, net | Illinois | ||
Concentration risk | ||
Percentage of loan | 4.70% | 4.30% |
Geographical concentration | Loans, net | North Carolina | ||
Concentration risk | ||
Percentage of loan | 3.20% | 2.60% |
Geographical concentration | Loans, net | Washington | ||
Concentration risk | ||
Percentage of loan | 1.60% | 2.10% |
Geographical concentration | Loans, net | Colorado | ||
Concentration risk | ||
Percentage of loan | 1.30% | 1.90% |
Geographical concentration | Loans, net | Other | ||
Concentration risk | ||
Percentage of loan | 31.20% | 27.20% |
Collateral concentration | ||
Concentration risk | ||
Percentage of SBA loan | 100% | 100% |
Collateral concentration | Lodging | ||
Concentration risk | ||
Percentage of SBA loan | 14.90% | 17% |
Collateral concentration | Offices of Physicians | ||
Concentration risk | ||
Percentage of SBA loan | 9.10% | 10.90% |
Collateral concentration | Child Day Care Services | ||
Concentration risk | ||
Percentage of SBA loan | 6.50% | 7.40% |
Collateral concentration | Eating Places | ||
Concentration risk | ||
Percentage of SBA loan | 4% | 5% |
Collateral concentration | Gasoline Service Stations | ||
Concentration risk | ||
Percentage of SBA loan | 3.70% | 3.70% |
Collateral concentration | Grocery Stores | ||
Concentration risk | ||
Percentage of SBA loan | 2% | 1.80% |
Collateral concentration | Veterinarians | ||
Concentration risk | ||
Percentage of SBA loan | 1.90% | 2.40% |
Collateral concentration | Couriers | ||
Concentration risk | ||
Percentage of SBA loan | 1.20% | 1.30% |
Collateral concentration | Funeral Service and Crematories | ||
Concentration risk | ||
Percentage of SBA loan | 1.80% | 1.90% |
Collateral concentration | Car Washes | ||
Concentration risk | ||
Percentage of SBA loan | 0.80% | 1.40% |
Collateral concentration | Other | ||
Concentration risk | ||
Percentage of SBA loan | 54.10% | 47.20% |
Collateral concentration | Loans, net | ||
Concentration risk | ||
Percentage of loan | 100% | 100% |
Collateral concentration | Loans, net | Multi-family | ||
Concentration risk | ||
Percentage of loan | 64.40% | 54.40% |
Collateral concentration | Loans, net | Mixed Use | ||
Concentration risk | ||
Percentage of loan | 8.50% | 7.10% |
Collateral concentration | Loans, net | Retail | ||
Concentration risk | ||
Percentage of loan | 6.50% | 10.20% |
Collateral concentration | Loans, net | SBA | ||
Concentration risk | ||
Percentage of loan | 6% | 8.70% |
Collateral concentration | Loans, net | Office | ||
Concentration risk | ||
Percentage of loan | 5.60% | 8.20% |
Collateral concentration | Loans, net | Industrial | ||
Concentration risk | ||
Percentage of loan | 4.90% | 6.40% |
Collateral concentration | Loans, net | Lodging/Residential | ||
Concentration risk | ||
Percentage of loan | 1.80% | 1.80% |
Collateral concentration | Loans, net | Other | ||
Concentration risk | ||
Percentage of loan | 2.30% | 3.20% |
Loans and Allowance for Credi_8
Loans and Allowance for Credit Losses - Allowance for loan losses by loan product and impairment methodology (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2020 |
Allowance for loan losses | ||||||
General | $ 27,409 | $ 28,113 | ||||
Specific | 13,716 | 17,264 | ||||
PCD | 5,000 | |||||
Ending Balance | 46,125 | $ 51,244 | 45,377 | $ 49,629 | $ 45,649 | $ 46,732 |
Bridge | ||||||
Allowance for loan losses | ||||||
General | 13,466 | 15,204 | ||||
Specific | 4,927 | 4,315 | ||||
Ending Balance | 18,393 | 19,878 | 19,519 | 21,178 | 17,057 | 14,588 |
Construction | ||||||
Allowance for loan losses | ||||||
General | 122 | |||||
PCD | 5,000 | |||||
Ending Balance | 5,122 | 5,323 | ||||
Fixed rate | ||||||
Allowance for loan losses | ||||||
General | 2,241 | 2,667 | ||||
Specific | 3,981 | 4,194 | ||||
Ending Balance | 6,222 | 6,524 | 6,861 | 6,865 | 6,753 | 7,629 |
Residential | ||||||
Allowance for loan losses | ||||||
General | 5 | 8 | ||||
Specific | 52 | 52 | ||||
Ending Balance | 57 | 60 | 60 | 61 | 60 | 52 |
SBA 7(a) | ||||||
Allowance for loan losses | ||||||
General | 9,275 | 6,653 | ||||
Specific | 3,851 | 5,527 | ||||
Ending Balance | 13,126 | 13,233 | 12,180 | 13,350 | 13,599 | 14,600 |
Other | ||||||
Allowance for loan losses | ||||||
General | 2,300 | 3,581 | ||||
Specific | 905 | 3,176 | ||||
Ending Balance | $ 3,205 | $ 6,226 | $ 6,757 | $ 8,175 | $ 8,180 | $ 9,863 |
Loans and Allowance for Credi_9
Loans and Allowance for Credit Losses - Investment Loans Allowance Activity (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Allowance for loan losses | ||||
Beginning Balance | $ 51,244 | $ 45,649 | $ 45,377 | $ 46,732 |
Provision for (recoveries of) loan losses | (4,728) | 5,534 | (3,487) | 6,097 |
Purchased financial assets with credit deterioration | 5,000 | 5,000 | ||
Charge-offs and sales | (333) | (1,356) | (506) | (3,014) |
Recoveries | (58) | (198) | (259) | (186) |
Ending Balance | 46,125 | 49,629 | 46,125 | 49,629 |
Bridge | ||||
Allowance for loan losses | ||||
Beginning Balance | 19,878 | 17,057 | 19,519 | 14,588 |
Provision for (recoveries of) loan losses | (1,485) | 4,121 | (1,126) | 6,590 |
Ending Balance | 18,393 | 21,178 | 18,393 | 21,178 |
Construction | ||||
Allowance for loan losses | ||||
Beginning Balance | 5,323 | |||
Provision for (recoveries of) loan losses | (201) | 122 | ||
Purchased financial assets with credit deterioration | 5,000 | 5,000 | ||
Ending Balance | 5,122 | 5,122 | ||
Fixed rate | ||||
Allowance for loan losses | ||||
Beginning Balance | 6,524 | 6,753 | 6,861 | 7,629 |
Provision for (recoveries of) loan losses | (302) | 612 | (639) | 736 |
Charge-offs and sales | (311) | (1,311) | ||
Recoveries | (189) | (189) | ||
Ending Balance | 6,222 | 6,865 | 6,222 | 6,865 |
Residential | ||||
Allowance for loan losses | ||||
Beginning Balance | 60 | 60 | 60 | 52 |
Provision for (recoveries of) loan losses | (3) | 1 | (3) | 9 |
Ending Balance | 57 | 61 | 57 | 61 |
SBA 7(a) | ||||
Allowance for loan losses | ||||
Beginning Balance | 13,233 | 13,599 | 12,180 | 14,600 |
Provision for (recoveries of) loan losses | 219 | 794 | 1,491 | 439 |
Charge-offs and sales | (326) | (1,045) | (499) | (1,703) |
Recoveries | 2 | (46) | 14 | |
Ending Balance | 13,126 | 13,350 | 13,126 | 13,350 |
Other | ||||
Allowance for loan losses | ||||
Beginning Balance | 6,226 | 8,180 | 6,757 | 9,863 |
Provision for (recoveries of) loan losses | (2,956) | 6 | (3,332) | (1,677) |
Charge-offs and sales | (7) | (7) | ||
Recoveries | (58) | (11) | (213) | (11) |
Ending Balance | 3,205 | 8,175 | 3,205 | 8,175 |
Unfunded Loan Commitment | ||||
Allowance for loan losses | ||||
Ending Balance | $ 900 | $ 400 | $ 900 | $ 400 |
Loans and Allowance for Cred_10
Loans and Allowance for Credit Losses - Non-accrual Loans (Details) - Non-accrual loans - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Non-accrual loans | |||||
Non-accrual loans with an allowance | $ 159,014 | $ 159,014 | $ 71,644 | ||
Non-accrual loans without an allowance | 84,710 | 84,710 | 27,858 | ||
Total recorded carrying value of non-accrual loans | 243,724 | 243,724 | 99,502 | ||
Allowance for loan losses related to non-accrual loans | (18,797) | (18,797) | (17,264) | ||
Unpaid principal balance of non-accrual loans | 261,272 | 261,272 | $ 119,554 | ||
Interest income on non-accrual loans | $ 365 | $ 611 | $ 1,773 | $ 1,727 |
Loans and Allowance for Cred_11
Loans and Allowance for Credit Losses - TDR Accrual Status (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Troubled debt restructurings (TDRs) | ||
Recorded carrying value modified loans classified as TDR | $ 31,127 | $ 31,155 |
Allowance for loan losses on loans classified as TDRs | 1,131 | 2,672 |
Carrying value of modified loans classified as TDRs | ||
Carrying value of modified loans classified as TDRs on accrual status | 12,674 | 8,526 |
Carrying value of modified loans classified as TDRs on non-accrual status | 18,453 | 22,629 |
Total carrying value of modified loans classified as TDRs | 31,127 | 31,155 |
SBC | ||
Troubled debt restructurings (TDRs) | ||
Recorded carrying value modified loans classified as TDR | 10,278 | 11,504 |
Allowance for loan losses on loans classified as TDRs | 38 | 46 |
Carrying value of modified loans classified as TDRs | ||
Carrying value of modified loans classified as TDRs on accrual status | 837 | 284 |
Carrying value of modified loans classified as TDRs on non-accrual status | 9,441 | 11,220 |
Total carrying value of modified loans classified as TDRs | 10,278 | 11,504 |
SBA | ||
Troubled debt restructurings (TDRs) | ||
Recorded carrying value modified loans classified as TDR | 20,849 | 19,651 |
Allowance for loan losses on loans classified as TDRs | 1,093 | 2,626 |
Carrying value of modified loans classified as TDRs | ||
Carrying value of modified loans classified as TDRs on accrual status | 11,837 | 8,242 |
Carrying value of modified loans classified as TDRs on non-accrual status | 9,012 | 11,409 |
Total carrying value of modified loans classified as TDRs | $ 20,849 | $ 19,651 |
Loans and Allowance for Cred_12
Loans and Allowance for Credit Losses - TDR Activity (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2022 USD ($) loan | Jun. 30, 2021 USD ($) loan | Jun. 30, 2022 USD ($) loan | Jun. 30, 2021 USD ($) loan | Dec. 31, 2021 USD ($) | |
Troubled debt restructurings (TDRs) | |||||
Number of loans permanently modified | loan | 3 | 10 | 7 | 18 | |
Pre-modification recorded balance | $ 1,087 | $ 6,867 | $ 2,050 | $ 9,585 | |
Post-modification recorded balance | 906 | 6,867 | $ 1,556 | $ 9,118 | |
Number of loans that remain in default | loan | 2 | 1 | |||
Balance of loans that remain in default | $ 357 | $ 58 | |||
TDR Modifications including financial effects | 811 | 6,438 | 1,334 | 8,688 | |
Carrying amount of loan foreclosure in process | 1,200 | 1,200 | $ 2,300 | ||
Allowance for credit losses at the acquisition date | (5,000) | (5,000) | |||
Loans acquired with credit deterioration | |||||
Troubled debt restructurings (TDRs) | |||||
PCD loans acquired | $ 0 | $ 0 | $ 0 | $ 0 | |
SBC | |||||
Troubled debt restructurings (TDRs) | |||||
Number of loans permanently modified | loan | 1 | 1 | |||
Pre-modification recorded balance | $ 496 | $ 1,276 | |||
Post-modification recorded balance | $ 496 | 1,276 | |||
Number of loans that remain in default | loan | 1 | ||||
Balance of loans that remain in default | $ 356 | ||||
TDR Modifications including financial effects | $ 356 | $ 1,276 | |||
SBA | |||||
Troubled debt restructurings (TDRs) | |||||
Number of loans permanently modified | loan | 3 | 10 | 6 | 17 | |
Pre-modification recorded balance | $ 1,087 | $ 6,867 | $ 1,554 | $ 8,309 | |
Post-modification recorded balance | 906 | 6,867 | $ 1,060 | $ 7,842 | |
Number of loans that remain in default | loan | 1 | 1 | |||
Balance of loans that remain in default | $ 1 | $ 58 | |||
TDR Modifications including financial effects | 811 | 6,438 | 978 | 7,412 | |
Term Extension | |||||
Troubled debt restructurings (TDRs) | |||||
TDR Modifications including financial effects | 811 | 6,345 | 978 | 7,319 | |
Term Extension | SBA | |||||
Troubled debt restructurings (TDRs) | |||||
TDR Modifications including financial effects | $ 811 | 6,345 | 978 | 7,319 | |
Foreclosure | |||||
Troubled debt restructurings (TDRs) | |||||
TDR Modifications including financial effects | 93 | 356 | 1,369 | ||
Foreclosure | SBC | |||||
Troubled debt restructurings (TDRs) | |||||
TDR Modifications including financial effects | $ 356 | 1,276 | |||
Foreclosure | SBA | |||||
Troubled debt restructurings (TDRs) | |||||
TDR Modifications including financial effects | $ 93 | $ 93 |
Fair Value Measurements - Finan
Fair Value Measurements - Financial Instruments Carried at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2022 | Dec. 31, 2021 | |
Assets: | ||
Loans, held for sale, at fair value | $ 469,442 | $ 552,935 |
Loans, net, held at fair value | 9,956 | 10,766 |
Investments held to maturity | 9,601 | |
Paycheck Protection Program loans | 763 | 3,243 |
Derivative instruments, at fair value | 46,530 | 7,022 |
Residential mortgage servicing rights, at fair value | 168,653 | 120,142 |
Investment in unconsolidated joint venture | 8,430 | 8,894 |
Liabilities: | ||
Derivative instruments, at fair value | 1,303 | 410 |
Contingent consideration | $ 92,548 | 16,400 |
Minimum | ||
Fair value | ||
Return of capital assumption used in PWERM | 65% | |
Maximum | ||
Fair value | ||
Return of capital assumption used in PWERM | 100% | |
Recurring | ||
Assets: | ||
Loans, held for sale, at fair value | $ 469,442 | 552,935 |
Loans, net, held at fair value | 9,956 | 10,766 |
Investments held to maturity | 9,601 | |
Paycheck Protection Program loans | 763 | 3,243 |
Mortgage backed securities, at fair value | 40,648 | 99,496 |
Derivative instruments, at fair value | 46,530 | 7,022 |
Residential mortgage servicing rights, at fair value | 168,653 | 120,142 |
Investment in unconsolidated joint venture | 8,439 | 8,894 |
Total assets | 754,032 | 802,498 |
Liabilities: | ||
Derivative instruments, at fair value | 1,303 | 410 |
Contingent consideration | 92,548 | 16,400 |
Total liabilities | 93,851 | 16,810 |
Recurring | Level 2 inputs | ||
Assets: | ||
Loans, held for sale, at fair value | 268,579 | 321,070 |
Paycheck Protection Program loans | 763 | |
Mortgage backed securities, at fair value | 38,982 | 97,915 |
Derivative instruments, at fair value | 44,131 | 4,683 |
Total assets | 352,455 | 423,668 |
Liabilities: | ||
Derivative instruments, at fair value | 1,303 | 410 |
Total liabilities | 1,303 | 410 |
Recurring | Level 3 inputs | ||
Assets: | ||
Loans, held for sale, at fair value | 200,863 | 231,865 |
Loans, net, held at fair value | 9,956 | 10,766 |
Investments held to maturity | 9,601 | |
Paycheck Protection Program loans | 3,243 | |
Mortgage backed securities, at fair value | 1,666 | 1,581 |
Derivative instruments, at fair value | 2,399 | 2,339 |
Residential mortgage servicing rights, at fair value | 168,653 | 120,142 |
Investment in unconsolidated joint venture | 8,439 | 8,894 |
Total assets | 401,577 | 378,830 |
Liabilities: | ||
Contingent consideration | 92,548 | 16,400 |
Total liabilities | $ 92,548 | $ 16,400 |
Fair Value Measurements - Valua
Fair Value Measurements - Valuation and Inputs, at FV (Details) $ in Thousands | Jun. 30, 2022 USD ($) | Mar. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Jun. 30, 2021 USD ($) | Mar. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) |
Level 3 inputs | ||||||
Fair value inputs, quantitative information | ||||||
Assets valued using quoted or transaction prices in which quantitative unobservable inputs are not developed | $ 309,029 | $ 312,427 | $ 362,430 | $ 138,776 | $ 167,905 | $ 207,060 |
Recurring | ||||||
Fair value inputs, quantitative information | ||||||
Asset, fair value | 754,032 | 802,498 | ||||
Liabilities, fair value | (93,851) | (16,810) | ||||
Recurring | Level 3 inputs | ||||||
Fair value inputs, quantitative information | ||||||
Asset, fair value | 401,577 | 378,830 | ||||
Assets valued using quoted or transaction prices in which quantitative unobservable inputs are not developed | 212,500 | 247,500 | ||||
Liabilities, fair value | (92,548) | (16,400) | ||||
Loans Receivable | Level 3 inputs | ||||||
Fair value inputs, quantitative information | ||||||
Assets valued using quoted or transaction prices in which quantitative unobservable inputs are not developed | 9,956 | 10,722 | 10,766 | 13,681 | 13,618 | 13,795 |
Loans, held for sale, at fair value | Level 3 inputs | ||||||
Fair value inputs, quantitative information | ||||||
Assets valued using quoted or transaction prices in which quantitative unobservable inputs are not developed | 200,863 | 203,958 | 231,865 | |||
Mortgage backed securities | Level 3 inputs | ||||||
Fair value inputs, quantitative information | ||||||
Assets valued using quoted or transaction prices in which quantitative unobservable inputs are not developed | $ 1,666 | 7,014 | $ 1,581 | 1,714 | 5,633 | 25,131 |
Mortgage backed securities | Recurring | Level 3 inputs | Measurement Input, Servicing Fee Multiple | ||||||
Fair value inputs, quantitative information | ||||||
Servicing Asset, Valuation Technique [Extensible List] | Income Approach | Income Approach | ||||
Mortgage servicing rights | Level 3 inputs | ||||||
Fair value inputs, quantitative information | ||||||
Assets valued using quoted or transaction prices in which quantitative unobservable inputs are not developed | $ 168,653 | 159,834 | $ 120,142 | $ 100,820 | $ 98,542 | $ 76,840 |
Mortgage servicing rights | Recurring | Level 3 inputs | ||||||
Fair value inputs, quantitative information | ||||||
Asset, fair value | 168,653 | 120,142 | ||||
Investment in unconsolidated joint ventures | Level 3 inputs | ||||||
Fair value inputs, quantitative information | ||||||
Assets valued using quoted or transaction prices in which quantitative unobservable inputs are not developed | 8,439 | 8,610 | 8,894 | |||
Investment in unconsolidated joint ventures | Recurring | Level 3 inputs | ||||||
Fair value inputs, quantitative information | ||||||
Asset, fair value | $ 8,439 | $ 8,894 | ||||
Investment in unconsolidated joint ventures | Recurring | Level 3 inputs | Income Approach | Measurement Input, Discount Rate | ||||||
Fair value inputs, quantitative information | ||||||
Equity Securities, FV-NI, Measurement Input | 0.090 | 0.090 | ||||
Investment in unconsolidated joint ventures | Recurring | Level 3 inputs | Income Approach | Measurement Input, Discount Rate | Weighted Average | ||||||
Fair value inputs, quantitative information | ||||||
Equity Securities, FV-NI, Measurement Input | 0.090 | 0.090 | ||||
Investments held to maturity | Level 3 inputs | ||||||
Fair value inputs, quantitative information | ||||||
Assets valued using quoted or transaction prices in which quantitative unobservable inputs are not developed | $ 9,601 | $ 17,053 | ||||
Investments held to maturity | Recurring | Level 3 inputs | ||||||
Fair value inputs, quantitative information | ||||||
Asset, fair value | $ 9,601 | |||||
Investments held to maturity | Recurring | Level 3 inputs | Income Approach | Measurement Input, Discount Rate | ||||||
Fair value inputs, quantitative information | ||||||
Investments, Held To Maturity, Measurement Input | 0.120 | |||||
Investments held to maturity | Recurring | Level 3 inputs | Income Approach | Measurement Input, Discount Rate | Weighted Average | ||||||
Fair value inputs, quantitative information | ||||||
Investments, Held To Maturity, Measurement Input | 0.120 | |||||
Derivative instruments | Recurring | Level 3 inputs | ||||||
Fair value inputs, quantitative information | ||||||
Asset, fair value | $ 2,399 | $ 2,339 | ||||
Derivative instruments | Recurring | Level 3 inputs | Market Approach | Measurement Input, Origination Pull-through Rate | Minimum | ||||||
Fair value inputs, quantitative information | ||||||
Derivative Asset, Measurement Input | 0.483 | 0.630 | ||||
Derivative instruments | Recurring | Level 3 inputs | Market Approach | Measurement Input, Origination Pull-through Rate | Maximum | ||||||
Fair value inputs, quantitative information | ||||||
Derivative Asset, Measurement Input | 1 | 1 | ||||
Derivative instruments | Recurring | Level 3 inputs | Market Approach | Measurement Input, Origination Pull-through Rate | Weighted Average | ||||||
Fair value inputs, quantitative information | ||||||
Derivative Asset, Measurement Input | 0.851 | 0.867 | ||||
Derivative instruments | Recurring | Level 3 inputs | Market Approach | Measurement Input, Servicing Fee Multiple | Minimum | ||||||
Fair value inputs, quantitative information | ||||||
Derivative Asset, Measurement Input | 0.011 | 0.004 | ||||
Derivative instruments | Recurring | Level 3 inputs | Market Approach | Measurement Input, Servicing Fee Multiple | Maximum | ||||||
Fair value inputs, quantitative information | ||||||
Derivative Asset, Measurement Input | 0.065 | 0.052 | ||||
Derivative instruments | Recurring | Level 3 inputs | Market Approach | Measurement Input, Servicing Fee Multiple | Weighted Average | ||||||
Fair value inputs, quantitative information | ||||||
Derivative Asset, Measurement Input | 0.047 | 0.041 | ||||
Derivative instruments | Recurring | Level 3 inputs | Market Approach | Measurement Input, Percentage of Unpaid Principal Balance | Minimum | ||||||
Fair value inputs, quantitative information | ||||||
Derivative Asset, Measurement Input | 0.003 | 0.001 | ||||
Derivative instruments | Recurring | Level 3 inputs | Market Approach | Measurement Input, Percentage of Unpaid Principal Balance | Maximum | ||||||
Fair value inputs, quantitative information | ||||||
Derivative Asset, Measurement Input | 0.032 | 0.031 | ||||
Derivative instruments | Recurring | Level 3 inputs | Market Approach | Measurement Input, Percentage of Unpaid Principal Balance | Weighted Average | ||||||
Fair value inputs, quantitative information | ||||||
Derivative Asset, Measurement Input | 0.016 | 0.013 | ||||
Contingent Consideration | Recurring | Level 3 inputs | ||||||
Fair value inputs, quantitative information | ||||||
Liabilities, fair value | $ (16,400) | |||||
Contingent Consideration | Recurring | Level 3 inputs | Monte Carlo Simulation Model | Measurement Input, EBT Volatility | ||||||
Fair value inputs, quantitative information | ||||||
Contingent Consideration Liability, Measurement Input | 0.250 | |||||
Contingent Consideration | Recurring | Level 3 inputs | Monte Carlo Simulation Model | Measurement Input, EBT Volatility | Weighted Average | ||||||
Fair value inputs, quantitative information | ||||||
Contingent Consideration Liability, Measurement Input | 0.250 | |||||
Contingent Consideration | Recurring | Level 3 inputs | Monte Carlo Simulation Model | Measurement Input, Risk Free Interest Rate | ||||||
Fair value inputs, quantitative information | ||||||
Contingent Consideration Liability, Measurement Input | 0.004 | |||||
Contingent Consideration | Recurring | Level 3 inputs | Monte Carlo Simulation Model | Measurement Input, Risk Free Interest Rate | Weighted Average | ||||||
Fair value inputs, quantitative information | ||||||
Contingent Consideration Liability, Measurement Input | 0.004 | |||||
Contingent Consideration | Recurring | Level 3 inputs | Monte Carlo Simulation Model | Measurement Input, Discount Rate | ||||||
Fair value inputs, quantitative information | ||||||
Contingent Consideration Liability, Measurement Input | 0.176 | |||||
Contingent Consideration | Recurring | Level 3 inputs | Monte Carlo Simulation Model | Measurement Input, Discount Rate | Weighted Average | ||||||
Fair value inputs, quantitative information | ||||||
Contingent Consideration Liability, Measurement Input | 0.176 | |||||
Contingent Consideration | Recurring | Level 3 inputs | Monte Carlo Simulation Model | Measurement Input, Liability Discount Rate | ||||||
Fair value inputs, quantitative information | ||||||
Contingent Consideration Liability, Measurement Input | 0.038 | |||||
Contingent Consideration | Recurring | Level 3 inputs | Monte Carlo Simulation Model | Measurement Input, Liability Discount Rate | Weighted Average | ||||||
Fair value inputs, quantitative information | ||||||
Contingent Consideration Liability, Measurement Input | 0.038 | |||||
Contingent Consideration | Red Stone | Recurring | Level 3 inputs | ||||||
Fair value inputs, quantitative information | ||||||
Liabilities, fair value | $ (8,200) | |||||
Contingent Consideration | Red Stone | Recurring | Level 3 inputs | Monte Carlo Simulation Model | Measurement Input, EBT Volatility | ||||||
Fair value inputs, quantitative information | ||||||
Contingent Consideration Liability, Measurement Input | 0.250 | |||||
Contingent Consideration | Red Stone | Recurring | Level 3 inputs | Monte Carlo Simulation Model | Measurement Input, EBT Volatility | Weighted Average | ||||||
Fair value inputs, quantitative information | ||||||
Contingent Consideration Liability, Measurement Input | 0.250 | |||||
Contingent Consideration | Red Stone | Recurring | Level 3 inputs | Monte Carlo Simulation Model | Measurement Input, Discount Rate | ||||||
Fair value inputs, quantitative information | ||||||
Contingent Consideration Liability, Measurement Input | 0.040 | |||||
Contingent Consideration | Red Stone | Recurring | Level 3 inputs | Monte Carlo Simulation Model | Measurement Input, Discount Rate | Weighted Average | ||||||
Fair value inputs, quantitative information | ||||||
Contingent Consideration Liability, Measurement Input | 0.040 | |||||
Contingent Consideration | Red Stone | Recurring | Level 3 inputs | Monte Carlo Simulation Model | Measurement Input, Liability Discount Rate | ||||||
Fair value inputs, quantitative information | ||||||
Contingent Consideration Liability, Measurement Input | 0.065 | |||||
Contingent Consideration | Red Stone | Recurring | Level 3 inputs | Monte Carlo Simulation Model | Measurement Input, Liability Discount Rate | Weighted Average | ||||||
Fair value inputs, quantitative information | ||||||
Contingent Consideration Liability, Measurement Input | 0.065 | |||||
CER dividends | Mosaic | Recurring | Level 3 inputs | ||||||
Fair value inputs, quantitative information | ||||||
Liabilities, fair value | $ (18,475) | |||||
CER dividends | Mosaic | Recurring | Level 3 inputs | Monte Carlo Simulation Model | Measurement Input, Equity Volatility | ||||||
Fair value inputs, quantitative information | ||||||
Contingent Consideration Liability, Measurement Input | 0.450 | |||||
CER dividends | Mosaic | Recurring | Level 3 inputs | Monte Carlo Simulation Model | Measurement Input, Equity Volatility | Weighted Average | ||||||
Fair value inputs, quantitative information | ||||||
Contingent Consideration Liability, Measurement Input | 0.450 | |||||
CER dividends | Mosaic | Recurring | Level 3 inputs | Monte Carlo Simulation Model | Measurement Input, Risk Free Interest Rate | ||||||
Fair value inputs, quantitative information | ||||||
Contingent Consideration Liability, Measurement Input | 0.0214 | |||||
CER dividends | Mosaic | Recurring | Level 3 inputs | Monte Carlo Simulation Model | Measurement Input, Risk Free Interest Rate | Weighted Average | ||||||
Fair value inputs, quantitative information | ||||||
Contingent Consideration Liability, Measurement Input | 0.0214 | |||||
CER dividends | Mosaic | Recurring | Level 3 inputs | Monte Carlo Simulation Model | Measurement Input, Discount Rate | ||||||
Fair value inputs, quantitative information | ||||||
Contingent Consideration Liability, Measurement Input | 0.0998 | |||||
CER dividends | Mosaic | Recurring | Level 3 inputs | Monte Carlo Simulation Model | Measurement Input, Discount Rate | Weighted Average | ||||||
Fair value inputs, quantitative information | ||||||
Contingent Consideration Liability, Measurement Input | 0.0998 | |||||
CER units | Mosaic | Recurring | Level 3 inputs | ||||||
Fair value inputs, quantitative information | ||||||
Liabilities, fair value | $ (65,873) | |||||
CER units | Mosaic | Recurring | Level 3 inputs | Income Approach and PWERM | Measurement Input, Revaluation Discount Rate | Minimum | ||||||
Fair value inputs, quantitative information | ||||||
Contingent Consideration Liability, Measurement Input | 0.0850 | |||||
CER units | Mosaic | Recurring | Level 3 inputs | Income Approach and PWERM | Measurement Input, Revaluation Discount Rate | Maximum | ||||||
Fair value inputs, quantitative information | ||||||
Contingent Consideration Liability, Measurement Input | 0.1200 | |||||
CER units | Mosaic | Recurring | Level 3 inputs | Income Approach and PWERM | Measurement Input, Revaluation Discount Rate | Weighted Average | ||||||
Fair value inputs, quantitative information | ||||||
Contingent Consideration Liability, Measurement Input | 0.096 | |||||
CER units | Mosaic | Recurring | Level 3 inputs | Income Approach and PWERM | Measurement Input, Discount Rate | ||||||
Fair value inputs, quantitative information | ||||||
Contingent Consideration Liability, Measurement Input | 0.0998 | |||||
CER units | Mosaic | Recurring | Level 3 inputs | Income Approach and PWERM | Measurement Input, Discount Rate | Weighted Average | ||||||
Fair value inputs, quantitative information | ||||||
Contingent Consideration Liability, Measurement Input | 0.0998 |
Fair Value Measurements - Chang
Fair Value Measurements - Changes in Fair Value (Details) - Level 3 inputs - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Changes in fair value of assets | ||||
Beginning Balance | $ 312,427 | $ 167,905 | $ 362,430 | $ 207,060 |
Purchases or Originations | 5,900 | 23,470 | 3,866 | |
Accreted discount, net | 1 | 2 | 1 | 60 |
Additions due to loans sold, servicing retained | 12,448 | 11,925 | 22,954 | 23,973 |
Sales / Principal payments | (12,377) | (26,916) | (40,783) | (73,320) |
Realized gains (losses), net | (1,606) | (2,392) | (5) | |
Merger | (67,295) | |||
Unrealized gains (losses), net | 1,310 | (10,094) | 17,509 | 1,721 |
Transfer to (from) Level 3 | (5,212) | 4,046 | (3,003) | (24,579) |
Transfer from loans, held-for-investment, net | (3,862) | (3,862) | ||
Ending Balance | 309,029 | 138,776 | 309,029 | 138,776 |
Total unrealized gain (loss) | (11,579) | (30,326) | (11,579) | (30,326) |
Contingent Consideration | ||||
Changes in fair value of liabilities | ||||
Beginning Balance | (92,148) | (16,400) | ||
Unrealized gain (loss) | (400) | (800) | ||
Sales / Principal payments | 9,000 | |||
Merger | (84,348) | |||
Ending Balance | (92,548) | (92,548) | ||
Total unrealized gain (loss) | (800) | (800) | ||
Mortgage backed securities | ||||
Changes in fair value of assets | ||||
Beginning Balance | 7,014 | 5,633 | 1,581 | 25,131 |
Accreted discount, net | 1 | 2 | 1 | 60 |
Sales / Principal payments | (1,352) | (1,352) | (92) | |
Realized gains (losses), net | (1,449) | (1,449) | ||
Unrealized gains (losses), net | 2,661 | 125 | 2,705 | 1,194 |
Transfer to (from) Level 3 | (5,209) | 4,046 | 180 | (24,579) |
Ending Balance | 1,666 | 1,714 | 1,666 | 1,714 |
Total unrealized gain (loss) | 239 | 286 | 239 | 286 |
Derivatives | ||||
Changes in fair value of assets | ||||
Beginning Balance | (2,616) | 11,724 | 2,339 | 16,363 |
Unrealized gains (losses), net | 5,015 | (5,594) | 60 | (10,233) |
Ending Balance | 2,399 | 6,130 | 2,399 | 6,130 |
Total unrealized gain (loss) | 2,399 | 6,130 | 2,399 | 6,130 |
Loans, net | ||||
Changes in fair value of assets | ||||
Beginning Balance | 10,722 | 13,618 | 10,766 | 13,795 |
Sales / Principal payments | (11) | (212) | ||
Realized gains (losses), net | (5) | |||
Unrealized gains (losses), net | (766) | 74 | (810) | 103 |
Ending Balance | 9,956 | 13,681 | 9,956 | 13,681 |
Total unrealized gain (loss) | (1,000) | (189) | (1,000) | (189) |
Loans, held for sale, at fair value | ||||
Changes in fair value of assets | ||||
Beginning Balance | 203,958 | 231,865 | ||
Purchases or Originations | 5,900 | 23,470 | ||
Sales / Principal payments | (115) | (32,709) | ||
Realized gains (losses), net | (1) | (787) | ||
Unrealized gains (losses), net | (5,014) | (15,774) | ||
Transfer to (from) Level 3 | (3) | (1,340) | ||
Transfer from loans, held-for-investment, net | (3,862) | (3,862) | ||
Ending Balance | 200,863 | 200,863 | ||
Total unrealized gain (loss) | (13,953) | (13,953) | ||
Investments held to maturity | ||||
Changes in fair value of assets | ||||
Beginning Balance | 17,053 | |||
Sales / Principal payments | (7,296) | (7,296) | ||
Realized gains (losses), net | (156) | (156) | ||
Merger | 17,053 | |||
Ending Balance | 9,601 | 9,601 | ||
Paycheck Protection Program loans, at fair value | ||||
Changes in fair value of assets | ||||
Beginning Balance | 38,388 | 3,243 | 74,931 | |
Purchases or Originations | 3,866 | |||
Sales / Principal payments | (21,957) | (1,400) | (62,366) | |
Transfer to (from) Level 3 | (1,843) | |||
Ending Balance | 16,431 | 16,431 | ||
Mortgage servicing rights | ||||
Changes in fair value of assets | ||||
Beginning Balance | 159,834 | 98,542 | 120,142 | 76,840 |
Additions due to loans sold, servicing retained | 12,448 | 11,925 | 22,954 | 23,973 |
Sales / Principal payments | (3,614) | (4,948) | (7,026) | (10,650) |
Unrealized gains (losses), net | (15) | (4,699) | 32,583 | 10,657 |
Ending Balance | 168,653 | 100,820 | 168,653 | 100,820 |
Total unrealized gain (loss) | 2,293 | $ (36,553) | 2,293 | $ (36,553) |
Investment in unconsolidated joint ventures | ||||
Changes in fair value of assets | ||||
Beginning Balance | 8,610 | 8,894 | ||
Unrealized gains (losses), net | (171) | (455) | ||
Ending Balance | 8,439 | 8,439 | ||
Total unrealized gain (loss) | $ (757) | $ (757) |
Fair Value Measurements - Asset
Fair Value Measurements - Assets and Liabilities, Not at FV (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Assets: | ||
Paycheck Protection Program loans | $ 763 | $ 3,243 |
Investments held to maturity | 9,601 | |
Purchased future receivables, net | 8,704 | 7,872 |
Investment in unconsolidated joint venture | 8,430 | 8,894 |
Liabilities: | ||
Paycheck Protection Program Liquidity Facility (PPPLF) borrowings | 427,759 | 941,505 |
Senior secured notes, net | 342,469 | 342,035 |
Carrying Amount | ||
Assets: | ||
Loans, held-for-investment | 9,701,653 | 6,986,528 |
Paycheck Protection Program loans | 388,426 | 867,109 |
Investments held to maturity | 149,440 | |
Purchased future receivables, net | 8,704 | 7,872 |
Servicing rights | 84,858 | 84,457 |
Total assets | 10,333,081 | 7,945,966 |
Liabilities: | ||
Secured borrowings | 3,212,383 | 2,517,600 |
Paycheck Protection Program Liquidity Facility (PPPLF) borrowings | 427,759 | 941,505 |
Securitized debt obligations of consolidated VIEs | 4,533,789 | 3,214,303 |
Senior secured notes, net | 342,469 | 342,035 |
Guaranteed loan financing | 304,158 | 345,217 |
Convertible note, net | 113,818 | 113,247 |
Corporate debt, net | 565,230 | 441,817 |
Total liabilities | 9,499,606 | 7,915,724 |
Carrying Amount | Level 3 inputs | ||
Assets: | ||
Due from servicers and accrued interest | 67,200 | 45,600 |
Receivable from third parties | 7,500 | 29,300 |
Liabilities: | ||
Payable to related parties and accrued interest payable | 30,300 | 27,500 |
Fair Value | ||
Assets: | ||
Loans, held-for-investment | 9,795,382 | 7,112,282 |
Paycheck Protection Program loans | 388,427 | 927,766 |
Investments held to maturity | 149,440 | |
Purchased future receivables, net | 8,704 | 7,872 |
Servicing rights | 88,455 | 89,470 |
Total assets | 10,430,408 | 8,137,390 |
Liabilities: | ||
Secured borrowings | 3,212,383 | 2,517,600 |
Paycheck Protection Program Liquidity Facility (PPPLF) borrowings | 427,759 | 941,505 |
Securitized debt obligations of consolidated VIEs | 4,499,632 | 3,238,155 |
Senior secured notes, net | 318,459 | 338,990 |
Guaranteed loan financing | 318,209 | 366,887 |
Convertible note, net | 116,733 | 118,922 |
Corporate debt, net | 550,057 | 457,741 |
Total liabilities | $ 9,443,232 | $ 7,979,800 |
Investments Held to Maturity (D
Investments Held to Maturity (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2022 | Dec. 31, 2021 | |
Investments held to maturity | ||
Fair Value | $ 9,601 | |
Investments held to maturity | ||
Investments held to maturity | ||
Weighted Average Interest Rate | 12.80% | |
Amortized Cost | $ 159,049 | $ 0 |
Fair Value | $ 159,049 | |
Construction preferred equities | ||
Investments held to maturity | ||
Weighted Average Interest Rate | 14.60% | |
Amortized Cost | $ 50,618 | |
Fair Value | $ 50,618 | |
Weighted Average Interest Rate | ||
Within one year | 12% | |
After one year through five years | 14.60% | |
Amortized Cost | ||
Within one year | $ 446 | |
After one year through five years | 50,172 | |
Fair Value | ||
Within one year | 446 | |
After one year through five years | $ 50,172 | |
Construction preferred equities | Consolidated VIEs | ||
Investments held to maturity | ||
Weighted Average Interest Rate | 12% | |
Amortized Cost | $ 108,423 | |
Fair Value | $ 108,423 | |
Weighted Average Interest Rate | ||
After one year through five years | 12% | |
Amortized Cost | ||
After one year through five years | $ 108,423 | |
Fair Value | ||
After one year through five years | $ 108,423 |
Servicing rights (Details)
Servicing rights (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Servicing rights | |||||
Unpaid Principal Amount | $ 5,550,785 | $ 5,550,785 | $ 5,089,157 | ||
Carrying Value | 84,858 | 84,858 | 84,457 | ||
Total servicing rights | 253,511 | $ 145,265 | 253,511 | $ 145,265 | 204,599 |
Servicing rights activity at amortized cost | |||||
Beginning net carrying value at amortized cost | 84,457 | ||||
Ending net carrying value at amortized cost | 84,858 | 84,858 | |||
Residential MSRs | |||||
Servicing rights | |||||
Unpaid Principal Amount | 11,722,925 | 11,722,925 | 10,995,685 | ||
Servicing rights activity at fair value | |||||
Beginning net carrying value at fair value | 159,834 | 98,542 | 120,142 | 76,840 | |
Additions due to loans sold, servicing retained | 12,448 | 11,925 | 22,954 | 23,973 | |
Loan pay-offs | (3,614) | (4,948) | (7,026) | (10,650) | |
Unrealized gains (losses) | (15) | (4,699) | 32,583 | 10,657 | |
Ending net carrying value at fair value | 168,653 | 100,820 | 168,653 | 100,820 | |
Multi-family | |||||
Servicing rights | |||||
Unpaid Principal Amount | 4,624,421 | 4,624,421 | 4,232,969 | ||
Carrying Value | 63,188 | 24,724 | 63,188 | 24,724 | 62,300 |
Servicing rights activity at amortized cost | |||||
Beginning net carrying value at amortized cost | 61,418 | 21,757 | 62,300 | 19,059 | |
Additions due to loans sold, servicing retained | 4,164 | 3,909 | 5,627 | 7,468 | |
Amortization | (2,394) | (942) | (4,739) | (1,803) | |
Ending net carrying value at amortized cost | 63,188 | 24,724 | 63,188 | 24,724 | |
SBA | |||||
Servicing rights | |||||
Unpaid Principal Amount | 926,364 | 926,364 | 856,188 | ||
Carrying Value | 21,670 | 19,721 | 21,670 | 19,721 | $ 22,157 |
Servicing rights activity at amortized cost | |||||
Beginning net carrying value at amortized cost | 22,891 | 18,642 | 22,157 | 18,764 | |
Additions due to loans sold, servicing retained | 2,045 | 2,741 | 3,779 | 3,700 | |
Amortization | (1,000) | (1,042) | (1,949) | (2,089) | |
Impairment (recovery) | (2,266) | (620) | (2,317) | (654) | |
Ending net carrying value at amortized cost | 21,670 | 19,721 | 21,670 | 19,721 | |
SBA | Multi-family | |||||
Servicing rights | |||||
Carrying Value | 84,858 | 44,445 | 84,858 | 44,445 | |
Servicing rights activity at amortized cost | |||||
Ending net carrying value at amortized cost | $ 84,858 | $ 44,445 | $ 84,858 | $ 44,445 |
Servicing rights - Estimated va
Servicing rights - Estimated valuation (Details) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Multi-family | Minimum | ||
Servicing rights, valuation assumptions | ||
Forward prepayment assumptions | 0% | 0% |
Forward default rate | 0% | 0% |
Discount rate | 6% | 6% |
Servicing expense (as a percent) | 0% | 0% |
Multi-family | Maximum | ||
Servicing rights, valuation assumptions | ||
Forward prepayment assumptions | 7.30% | 7.30% |
Forward default rate | 1.30% | 1.30% |
Discount rate | 6% | 6% |
Servicing expense (as a percent) | 0.80% | 0.80% |
Multi-family | Weighted Average | ||
Servicing rights, valuation assumptions | ||
Forward prepayment assumptions | 3.50% | 3.50% |
Forward default rate | 0.90% | 1% |
Discount rate | 6% | 6% |
Servicing expense (as a percent) | 0.10% | 0.10% |
SBA | Minimum | ||
Servicing rights, valuation assumptions | ||
Forward prepayment assumptions | 9% | 7.90% |
Forward default rate | 0% | 0% |
Discount rate | 12.30% | 10% |
Servicing expense (as a percent) | 0.40% | 0.40% |
SBA | Maximum | ||
Servicing rights, valuation assumptions | ||
Forward prepayment assumptions | 21.70% | 21% |
Forward default rate | 10.10% | 10.40% |
Discount rate | 19.70% | 21.30% |
Servicing expense (as a percent) | 0.40% | 0.40% |
SBA | Weighted Average | ||
Servicing rights, valuation assumptions | ||
Forward prepayment assumptions | 9.60% | 8.90% |
Forward default rate | 9.10% | 9.10% |
Discount rate | 12.90% | 10.70% |
Servicing expense (as a percent) | 0.40% | 0.40% |
Servicing rights - Assumptions
Servicing rights - Assumptions (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Multi-family | ||
Adverse changes to key assumptions on the carrying amount of the servicing rights | ||
Prepayment rate (10% adverse change) | $ (283) | $ (291) |
Prepayment rate (20% adverse change) | (560) | (575) |
Default rate (10% adverse change) | (25) | (25) |
Default rate (20% adverse change) | (50) | (50) |
Discount rate (10% adverse change) | (1,892) | (1,910) |
Discount rate (20% adverse change) | (3,693) | (3,726) |
Cost of servicing (10% adverse change) | (2,685) | (2,659) |
Cost of servicing (20% adverse change) | (5,369) | (5,318) |
SBA | ||
Adverse changes to key assumptions on the carrying amount of the servicing rights | ||
Prepayment rate (10% adverse change) | (656) | (670) |
Prepayment rate (20% adverse change) | (1,277) | (1,305) |
Default rate (10% adverse change) | (145) | (155) |
Default rate (20% adverse change) | (289) | (309) |
Discount rate (10% adverse change) | (791) | (746) |
Discount rate (20% adverse change) | (1,522) | (1,443) |
Cost of servicing (10% adverse change) | (1,315) | (1,344) |
Cost of servicing (20% adverse change) | $ (2,630) | $ (2,687) |
Servicing rights - Amortization
Servicing rights - Amortization (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Future amortization expense for the servicing rights | ||
2022 | $ 8,659 | |
2023 | 11,753 | |
2024 | 10,348 | |
2025 | 9,135 | |
2026 | 8,190 | |
Thereafter | 36,773 | |
Total | $ 84,858 | $ 84,457 |
Servicing rights - Residential
Servicing rights - Residential mortgage servicing rights (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2022 | Dec. 31, 2021 | Mar. 31, 2022 | Jun. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2020 | |
Servicing rights | ||||||
Unpaid Principal Amount | $ 5,550,785 | $ 5,089,157 | ||||
Residential MSRs | ||||||
Servicing rights | ||||||
Unpaid Principal Amount | 11,722,925 | 10,995,685 | ||||
Fair Value | 168,653 | 120,142 | $ 159,834 | $ 100,820 | $ 98,542 | $ 76,840 |
Possible impact of adverse changes to key assumptions | ||||||
Prepayment rate (10% adverse change) | (5,133) | (5,262) | ||||
Prepayment rate (20% adverse change) | (9,995) | (9,262) | ||||
Discount rate (10% adverse change) | (7,541) | (4,533) | ||||
Discount rate (20% adverse change) | (14,469) | (8,745) | ||||
Cost of servicing (10% adverse change) | (2,563) | (2,125) | ||||
Cost of servicing (20% adverse change) | (5,127) | (4,251) | ||||
Fannie Mae | Residential MSRs | ||||||
Servicing rights | ||||||
Unpaid Principal Amount | 4,352,916 | 4,056,595 | ||||
Fair Value | 58,659 | 41,698 | ||||
Freddie Mac | Residential MSRs | ||||||
Servicing rights | ||||||
Unpaid Principal Amount | 4,429,902 | 4,131,904 | ||||
Fair Value | 61,789 | 45,017 | ||||
Ginnie Mae | Residential MSRs | ||||||
Servicing rights | ||||||
Unpaid Principal Amount | 2,940,107 | 2,807,186 | ||||
Fair Value | $ 48,205 | $ 33,427 | ||||
Minimum | Residential MSRs | ||||||
Servicing rights, valuation assumptions | ||||||
Forward prepayment assumptions | 6.20% | 8.40% | ||||
Discount rate | 9.50% | 9% | ||||
Cost of servicing | $ 80 | $ 70 | ||||
Maximum | Residential MSRs | ||||||
Servicing rights, valuation assumptions | ||||||
Forward prepayment assumptions | 15.80% | 20.90% | ||||
Discount rate | 12.50% | 11% | ||||
Cost of servicing | $ 95 | $ 85 | ||||
Weighted Average | Residential MSRs | ||||||
Servicing rights, valuation assumptions | ||||||
Forward prepayment assumptions | 6.70% | 9.50% | ||||
Discount rate | 10.20% | 9.40% | ||||
Cost of servicing | $ 93 | $ 74 |
Residential mortgage banking _3
Residential mortgage banking activities and variable expenses on residential mortgage banking activities (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Residential mortgage banking activities | ||||
Realized and unrealized gain (loss) of residential mortgage loans held for sale, at fair value | $ (7,886) | $ 31,020 | $ (12,973) | $ 60,580 |
Creation of new mortgage servicing rights, net of payoffs | 8,834 | 6,976 | 15,928 | 13,324 |
Loan origination fee income on residential mortgage loans | 4,749 | 5,192 | 8,859 | 11,424 |
Unrealized gains (loss) on IRLCs and other derivatives | (2,750) | (6,498) | (443) | (7,229) |
Residential mortgage banking activities | 2,947 | 36,690 | 11,371 | 78,099 |
Variable income (expenses) on residential mortgage banking activities | $ 4,532 | $ (21,421) | $ 3,553 | $ (36,906) |
Secured Borrowings (Details)
Secured Borrowings (Details) $ in Thousands, € in Millions | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2022 USD ($) | Dec. 31, 2021 USD ($) | Jun. 30, 2022 EUR (€) | |
Secured borrowings | |||
Secured borrowings and promissory note | |||
Current facility size | $ 5,884,191 | ||
Pledged Assets Carrying Value | 4,590,451 | $ 3,282,170 | |
Carrying Value, Secured borrowings | 3,212,383 | 2,517,600 | |
Borrowings under credit facilities | |||
Secured borrowings and promissory note | |||
Current facility size | 1,514,680 | ||
Pledged Assets Carrying Value | 921,004 | 576,777 | |
Carrying Value, Secured borrowings | $ 511,203 | $ 471,883 | |
Weighted average interest rate of borrowings (as a percent) | 3.70% | 2.80% | 3.70% |
Borrowings under repurchase agreements | |||
Secured borrowings and promissory note | |||
Current facility size | $ 4,369,511 | ||
Pledged Assets Carrying Value | 3,669,447 | $ 2,705,393 | |
Carrying Value, Secured borrowings | $ 2,701,180 | $ 2,045,717 | |
Weighted average interest rate of borrowings (as a percent) | 2.70% | 2.10% | 2.70% |
Purchased future receivables | Borrowings under credit facilities | |||
Secured borrowings and promissory note | |||
Pledged Assets Carrying Value | $ 8,704 | $ 7,872 | |
Mortgage backed securities | Borrowings under repurchase agreements | |||
Secured borrowings and promissory note | |||
Pledged Assets Carrying Value | 34,992 | 53,194 | |
JPMorgan | Acquired SBA Loans | Borrowings under credit facilities | |||
Secured borrowings and promissory note | |||
Current facility size | 250,000 | ||
Pledged Assets Carrying Value | 101,855 | ||
Carrying Value, Secured borrowings | $ 71,414 | 54,164 | |
JPMorgan | Acquired SBA Loans | Borrowings under credit facilities | One Month LIBOR | |||
Secured borrowings and promissory note | |||
Pricing, spread on variable (as a percent) | 2.50% | ||
JPMorgan | Acquired SBA Loans | Borrowings under credit facilities | Secured Overnight Financing Rate | |||
Secured borrowings and promissory note | |||
Pricing, spread on variable (as a percent) | 2.875% | ||
JPMorgan | Transitional loans | Borrowings under repurchase agreements | |||
Secured borrowings and promissory note | |||
Current facility size | $ 1,250,000 | ||
Pledged Assets Carrying Value | 1,061,198 | ||
Carrying Value, Secured borrowings | $ 849,492 | 825,265 | |
JPMorgan | Transitional loans | Borrowings under repurchase agreements | One Month LIBOR | Minimum | |||
Secured borrowings and promissory note | |||
Pricing, spread on variable (as a percent) | 2.10% | ||
JPMorgan | Transitional loans | Borrowings under repurchase agreements | One Month LIBOR | Maximum | |||
Secured borrowings and promissory note | |||
Pricing, spread on variable (as a percent) | 2.85% | ||
Performance Trust | Fixed rate, Transitional, Acquired loans | Borrowings under repurchase agreements | |||
Secured borrowings and promissory note | |||
Current facility size | $ 263,000 | ||
Pledged Assets Carrying Value | 235,502 | ||
Carrying Value, Secured borrowings | $ 206,245 | 124,057 | |
Performance Trust | Fixed rate, Transitional, Acquired loans | Borrowings under repurchase agreements | One Month Treasury Rate | |||
Secured borrowings and promissory note | |||
Pricing, spread on variable (as a percent) | 2% | ||
KeyBank | Freddie Mac Loans | Borrowings under credit facilities | |||
Secured borrowings and promissory note | |||
Current facility size | $ 100,000 | ||
Pledged Assets Carrying Value | 17,859 | ||
Carrying Value, Secured borrowings | $ 17,648 | 41,864 | |
KeyBank | Freddie Mac Loans | Borrowings under credit facilities | Secured Overnight Financing Rate | |||
Secured borrowings and promissory note | |||
Pricing, spread on variable (as a percent) | 1.35% | ||
East West Bank | SBA loans | Borrowings under credit facilities | |||
Secured borrowings and promissory note | |||
Current facility size | $ 75,000 | ||
Pledged Assets Carrying Value | 93,908 | ||
Carrying Value, Secured borrowings | $ 68,502 | 58,622 | |
East West Bank | SBA loans | Borrowings under credit facilities | Administrative agent's prime rate | Minimum | |||
Secured borrowings and promissory note | |||
Pricing, spread on variable (as a percent) | (0.821%) | ||
East West Bank | SBA loans | Borrowings under credit facilities | Administrative agent's prime rate | Maximum | |||
Secured borrowings and promissory note | |||
Pricing, spread on variable (as a percent) | 0% | ||
East West Bank | Residential MSRs | Borrowings under credit facilities | |||
Secured borrowings and promissory note | |||
Current facility size | $ 50,000 | ||
Pledged Assets Carrying Value | 120,448 | ||
Carrying Value, Secured borrowings | $ 49,900 | 49,400 | |
East West Bank | Residential MSRs | Borrowings under credit facilities | One Month LIBOR | |||
Secured borrowings and promissory note | |||
Pricing, spread on variable (as a percent) | 2.50% | ||
Credit Suisse | Acquired loans (non USD) | Borrowings under credit facilities | |||
Secured borrowings and promissory note | |||
Current facility size | $ 209,680 | € 200 | |
Pledged Assets Carrying Value | 41,208 | ||
Carrying Value, Secured borrowings | $ 35,670 | 40,373 | |
Credit Suisse | Acquired loans (non USD) | Borrowings under credit facilities | Euribor Rate | Minimum | |||
Secured borrowings and promissory note | |||
Pricing, spread on variable (as a percent) | 2.50% | ||
Credit Suisse | Acquired loans (non USD) | Borrowings under credit facilities | Euribor Rate | Maximum | |||
Secured borrowings and promissory note | |||
Pricing, spread on variable (as a percent) | 3% | ||
Credit Suisse | Residential loans | Borrowings under repurchase agreements | |||
Secured borrowings and promissory note | |||
Carrying Value, Secured borrowings | $ 27,058 | ||
Credit Suisse | Residential loans | Borrowings under repurchase agreements | LIBOR | |||
Secured borrowings and promissory note | |||
Pricing, spread on variable (as a percent) | 3% | ||
Credit Suisse | Purchased future receivables | Borrowings under credit facilities | |||
Secured borrowings and promissory note | |||
Current facility size | $ 50,000 | ||
Pledged Assets Carrying Value | 8,704 | ||
Carrying Value, Secured borrowings | $ 1,000 | $ 1,000 | |
Credit Suisse | Purchased future receivables | Borrowings under credit facilities | One Month LIBOR | |||
Secured borrowings and promissory note | |||
Pricing, spread on variable (as a percent) | 4.50% | ||
Credit Suisse | Fixed rate, Transitional, Acquired loans | Borrowings under repurchase agreements | |||
Secured borrowings and promissory note | |||
Current facility size | $ 750,000 | ||
Pledged Assets Carrying Value | 584,888 | ||
Carrying Value, Secured borrowings | $ 430,509 | 403,644 | |
Credit Suisse | Fixed rate, Transitional, Acquired loans | Borrowings under repurchase agreements | Secured Overnight Financing Rate | Minimum | |||
Secured borrowings and promissory note | |||
Pricing, spread on variable (as a percent) | 2% | ||
Credit Suisse | Fixed rate, Transitional, Acquired loans | Borrowings under repurchase agreements | Secured Overnight Financing Rate | Maximum | |||
Secured borrowings and promissory note | |||
Pricing, spread on variable (as a percent) | 2.35% | ||
Goldman Sachs | Fixed rate, Transitional, Acquired loans | Borrowings under repurchase agreements | |||
Secured borrowings and promissory note | |||
Current facility size | $ 350,000 | ||
Pledged Assets Carrying Value | 227,806 | ||
Carrying Value, Secured borrowings | $ 181,713 | ||
Goldman Sachs | Fixed rate, Transitional, Acquired loans | Borrowings under repurchase agreements | Secured Overnight Financing Rate | Minimum | |||
Secured borrowings and promissory note | |||
Pricing, spread on variable (as a percent) | 1.50% | ||
Goldman Sachs | Fixed rate, Transitional, Acquired loans | Borrowings under repurchase agreements | Secured Overnight Financing Rate | Maximum | |||
Secured borrowings and promissory note | |||
Pricing, spread on variable (as a percent) | 2.25% | ||
Churchill | Transitional, Acquired loans | Borrowings under repurchase agreements | |||
Secured borrowings and promissory note | |||
Current facility size | $ 500,000 | ||
Pledged Assets Carrying Value | 326,385 | ||
Carrying Value, Secured borrowings | $ 258,551 | ||
Churchill | Transitional, Acquired loans | Borrowings under repurchase agreements | Secured Overnight Financing Rate | |||
Secured borrowings and promissory note | |||
Pricing, spread on variable (as a percent) | 2.50% | ||
Comerica Bank | Residential loans | Borrowings under credit facilities | |||
Secured borrowings and promissory note | |||
Current facility size | $ 100,000 | ||
Pledged Assets Carrying Value | 61,096 | ||
Carrying Value, Secured borrowings | $ 58,703 | 63,991 | |
Comerica Bank | Residential loans | Borrowings under credit facilities | One Month LIBOR | |||
Secured borrowings and promissory note | |||
Pricing, spread on variable (as a percent) | 1.75% | ||
TBK Bank | Residential loans | Borrowings under credit facilities | |||
Secured borrowings and promissory note | |||
Current facility size | $ 150,000 | ||
Pledged Assets Carrying Value | 72,435 | ||
Carrying Value, Secured borrowings | 71,931 | 125,145 | |
Origin Bank | Residential loans | Borrowings under credit facilities | |||
Secured borrowings and promissory note | |||
Current facility size | 60,000 | ||
Pledged Assets Carrying Value | 22,919 | ||
Carrying Value, Secured borrowings | 22,211 | 16,052 | |
Associated Bank | Residential loans | Borrowings under credit facilities | |||
Secured borrowings and promissory note | |||
Current facility size | 60,000 | ||
Pledged Assets Carrying Value | 27,044 | ||
Carrying Value, Secured borrowings | $ 26,048 | 14,449 | |
Associated Bank | Residential loans | Borrowings under credit facilities | One Month LIBOR | |||
Secured borrowings and promissory note | |||
Pricing, spread on variable (as a percent) | 1.50% | ||
Western Alliance | Residential loans | Borrowings under credit facilities | |||
Secured borrowings and promissory note | |||
Current facility size | $ 50,000 | ||
Pledged Assets Carrying Value | 14,204 | ||
Carrying Value, Secured borrowings | 12,080 | 6,823 | |
Madison | Construction loans | Borrowings under credit facilities | |||
Secured borrowings and promissory note | |||
Current facility size | 360,000 | ||
Pledged Assets Carrying Value | 339,324 | ||
Carrying Value, Secured borrowings | $ 76,096 | ||
Madison | Construction loans | Borrowings under credit facilities | One Month LIBOR | |||
Secured borrowings and promissory note | |||
Pricing, spread on variable (as a percent) | 7% | ||
Citibank | Fixed rate, Transitional, Acquired loans | Borrowings under repurchase agreements | |||
Secured borrowings and promissory note | |||
Current facility size | $ 500,000 | ||
Pledged Assets Carrying Value | 169,967 | ||
Carrying Value, Secured borrowings | $ 136,881 | 128,851 | |
Citibank | Fixed rate, Transitional, Acquired loans | Borrowings under repurchase agreements | Secured Overnight Financing Rate | Minimum | |||
Secured borrowings and promissory note | |||
Pricing, spread on variable (as a percent) | 2.10% | ||
Citibank | Fixed rate, Transitional, Acquired loans | Borrowings under repurchase agreements | Secured Overnight Financing Rate | Maximum | |||
Secured borrowings and promissory note | |||
Pricing, spread on variable (as a percent) | 3.10% | ||
Deutsche Bank | Fixed rate, Transitional loans | Borrowings under repurchase agreements | |||
Secured borrowings and promissory note | |||
Current facility size | $ 350,000 | ||
Pledged Assets Carrying Value | 318,800 | ||
Carrying Value, Secured borrowings | $ 231,278 | 236,073 | |
Deutsche Bank | Fixed rate, Transitional loans | Borrowings under repurchase agreements | Secured Overnight Financing Rate | Minimum | |||
Secured borrowings and promissory note | |||
Pricing, spread on variable (as a percent) | 1.90% | ||
Deutsche Bank | Fixed rate, Transitional loans | Borrowings under repurchase agreements | Secured Overnight Financing Rate | Maximum | |||
Secured borrowings and promissory note | |||
Pricing, spread on variable (as a percent) | 2.75% | ||
Various | Mortgage backed securities | Borrowings under repurchase agreements | |||
Secured borrowings and promissory note | |||
Current facility size | $ 406,511 | ||
Pledged Assets Carrying Value | 744,901 | ||
Carrying Value, Secured borrowings | $ 406,511 | $ 300,769 | |
Various | Mortgage backed securities | Borrowings under repurchase agreements | Minimum | |||
Secured borrowings and promissory note | |||
Pricing, stated rate (as a percent) | 1.36% | 1.36% | |
Various | Mortgage backed securities | Borrowings under repurchase agreements | Maximum | |||
Secured borrowings and promissory note | |||
Pricing, stated rate (as a percent) | 4.28% | 4.28% |
Secured Borrowings - Collateral
Secured Borrowings - Collateral Pledged (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Secured borrowings | ||
Collateral pledged | ||
Pledged Assets Carrying Value | $ 4,590,451 | $ 3,282,170 |
Borrowings under credit facilities | ||
Collateral pledged | ||
Pledged Assets Carrying Value | 921,004 | 576,777 |
Borrowings under repurchase agreements | ||
Collateral pledged | ||
Pledged Assets Carrying Value | 3,669,447 | 2,705,393 |
Real estate acquired in settlement of loans | Borrowings under repurchase agreements | ||
Collateral pledged | ||
Pledged Assets Carrying Value | 1,425 | 1,425 |
Loans, held for sale, at fair value | Borrowings under credit facilities | ||
Collateral pledged | ||
Pledged Assets Carrying Value | 214,602 | 276,022 |
Loans, held for sale, at fair value | Borrowings under repurchase agreements | ||
Collateral pledged | ||
Pledged Assets Carrying Value | 200,458 | 208,558 |
Loans, net | Borrowings under credit facilities | ||
Collateral pledged | ||
Pledged Assets Carrying Value | 577,250 | 206,169 |
Loans, net | Borrowings under repurchase agreements | ||
Collateral pledged | ||
Pledged Assets Carrying Value | 2,722,663 | 2,062,867 |
Mortgage servicing rights | Borrowings under credit facilities | ||
Collateral pledged | ||
Pledged Assets Carrying Value | 120,448 | 86,714 |
Purchased future receivables | Borrowings under credit facilities | ||
Collateral pledged | ||
Pledged Assets Carrying Value | 8,704 | 7,872 |
Mortgage backed securities | Borrowings under repurchase agreements | ||
Collateral pledged | ||
Pledged Assets Carrying Value | 34,992 | 53,194 |
Retained interest in assets of consolidated VIEs | Borrowings under repurchase agreements | ||
Collateral pledged | ||
Pledged Assets Carrying Value | $ 709,909 | $ 379,349 |
Senior secured notes, convert_3
Senior secured notes, convertible notes, and corporate debt, net (Details) | 3 Months Ended | 6 Months Ended | |||||||||||
Oct. 20, 2021 USD ($) | Feb. 10, 2021 USD ($) | Jul. 22, 2019 USD ($) | Apr. 27, 2018 USD ($) | Aug. 09, 2017 USD ($) $ / shares | Apr. 18, 2017 USD ($) | Jun. 30, 2022 USD ($) $ / shares shares | Jun. 30, 2022 USD ($) item | Dec. 31, 2021 USD ($) | May 20, 2021 USD ($) | Dec. 02, 2019 USD ($) | Jan. 30, 2018 USD ($) | Dec. 31, 2017 USD ($) | |
Senior secured notes, Convertible notes, and Corporate debt | |||||||||||||
Total Senior secured notes, net | $ 342,469,000 | $ 342,469,000 | $ 342,035,000 | ||||||||||
Total Corporate debt, net | 565,230,000 | 565,230,000 | 441,817,000 | ||||||||||
Total Convertible notes, net | 113,818,000 | 113,818,000 | $ 113,247,000 | ||||||||||
Total carrying amount of debt components | 1,021,517,000 | 1,021,517,000 | |||||||||||
Total carrying amount of conversion option of equity components recorded in equity | 422,000 | 422,000 | |||||||||||
Debt notes available for sale under At Market Issuance Sales Agreement | $ 100,000,000 | ||||||||||||
Contractual maturities of the Senior Secured Notes, Convertible Notes, and Corporate debt | |||||||||||||
2023 | 115,000,000 | 115,000,000 | |||||||||||
2025 | 120,000,000 | 120,000,000 | |||||||||||
2026 | 660,883,000 | 660,883,000 | |||||||||||
Thereafter | 146,250,000 | 146,250,000 | |||||||||||
Total contractual amounts | 1,042,133,000 | 1,042,133,000 | |||||||||||
Unamortized deferred financing costs, discounts, and premiums, net | (20,616,000) | (20,616,000) | |||||||||||
Total carrying amount of debt components | 1,021,517,000 | 1,021,517,000 | |||||||||||
7.50% Senior Secured Notes Due 2022 | |||||||||||||
Senior secured notes, Convertible notes, and Corporate debt | |||||||||||||
Interest rate (as a percent) | 7.50% | 7.50% | |||||||||||
Convertible Notes | |||||||||||||
Senior secured notes, Convertible notes, and Corporate debt | |||||||||||||
Debt instrument, face value | $ 115,000,000 | $ 115,000,000 | $ 115,000,000 | ||||||||||
Interest rate (as a percent) | 7% | 7% | 7% | ||||||||||
Conversion ratio | 1.6374 | ||||||||||||
Principal amount of notes for conversion | $ 25 | ||||||||||||
Initial conversion price | $ / shares | $ 15.27 | ||||||||||||
Principal amount of the notes to be redeemed (as a percent) | 100% | ||||||||||||
Threshold period of specified consecutive trading days within which common stock price to conversion price of convertible debt instruments must exceed threshold percentage for a specified number of trading days to trigger conversion feature | item | 30 | ||||||||||||
Threshold period of specified consecutive trading days within which the common stock price, used in a calculation with with the conversion rate, the result of which must exceed the threshold percentage | 5 days | ||||||||||||
Specified period of time used to calculate average closing market price of common stock to be used as a factor in determining potential trigger of conversion feature | 10 days | ||||||||||||
Gross carrying value of convertible notes | $ 112,700,000 | ||||||||||||
Gross carrying value of the equity component | $ 2,300,000 | ||||||||||||
Unamortized discount | $ (422,000) | $ (422,000) | |||||||||||
Unamortized deferred financing costs | (760,000) | (760,000) | |||||||||||
Total Convertible notes, net | 113,818,000 | $ 113,818,000 | |||||||||||
Convertible Notes | Minimum | |||||||||||||
Senior secured notes, Convertible notes, and Corporate debt | |||||||||||||
Percentage of common stock price to conversion price of convertible debt instruments to determine eligibility of conversion | 120% | ||||||||||||
Threshold number of specified trading days that common stock price to conversion price of convertible debt instruments must exceed threshold percentage within a specified consecutive trading period to trigger conversion feature | item | 20 | ||||||||||||
The threshold percentage that per share value of distributions exceeds the average market price which may trigger the conversion feature | 10% | ||||||||||||
Convertible Notes | Maximum | |||||||||||||
Senior secured notes, Convertible notes, and Corporate debt | |||||||||||||
Threshold percentage of the trading price of the convertible debt instrument to the product of the conversion rate and the closing stock price during any five consecutive trading day period | 98% | ||||||||||||
Corporate Debt | |||||||||||||
Senior secured notes, Convertible notes, and Corporate debt | |||||||||||||
Unamortized discount | (8,485,000) | $ (8,485,000) | |||||||||||
Unamortized deferred financing costs | (3,418,000) | (3,418,000) | |||||||||||
Total Corporate debt, net | 565,230,000 | 565,230,000 | |||||||||||
6.20% and 5.75% Senior Notes due 2026 | |||||||||||||
Senior secured notes, Convertible notes, and Corporate debt | |||||||||||||
Proceeds from secured debt | 1,300,000 | ||||||||||||
Proceeds from note offerings | 1,300,000 | ||||||||||||
Debt issuance related expenses | $ 20,400,000 | ||||||||||||
Number of shares sold in At The Market debt offering | shares | 54,300 | ||||||||||||
6.20% Senior Notes due 2026 | |||||||||||||
Senior secured notes, Convertible notes, and Corporate debt | |||||||||||||
Debt instrument, face value | $ 57,500,000 | $ 104,613,000 | $ 104,613,000 | $ 45,000,000 | |||||||||
Interest rate (as a percent) | 6.20% | 6.20% | 6.20% | 6.20% | 6.20% | ||||||||
Proceeds from secured debt | $ 55,300,000 | ||||||||||||
Proceeds from note offerings | $ 55,300,000 | ||||||||||||
Debt notes price per share | $ / shares | $ 25.40 | ||||||||||||
6.20% Senior Notes due 2026 | 2025 | |||||||||||||
Senior secured notes, Convertible notes, and Corporate debt | |||||||||||||
Principal amount of the notes to be redeemed (as a percent) | 101% | ||||||||||||
6.20% Senior Notes due 2026 | 2026 | |||||||||||||
Senior secured notes, Convertible notes, and Corporate debt | |||||||||||||
Principal amount of the notes to be redeemed (as a percent) | 100% | ||||||||||||
Repurchase price percentage in the event of change of control | 101% | ||||||||||||
6.20% Senior Notes due 2026 | Over-allotment option | |||||||||||||
Senior secured notes, Convertible notes, and Corporate debt | |||||||||||||
Debt instrument, face value | $ 7,500,000 | ||||||||||||
5.75% Senior Notes Due 2026 | |||||||||||||
Senior secured notes, Convertible notes, and Corporate debt | |||||||||||||
Debt instrument, face value | $ 201,300,000 | $ 206,270,000 | $ 206,270,000 | ||||||||||
Interest rate (as a percent) | 5.75% | 5.75% | 5.75% | 5.75% | |||||||||
Proceeds from secured debt | $ 195,200,000 | ||||||||||||
Debt redemption price percentage | 100% | ||||||||||||
Repurchase price percentage in the event of change of control | 101% | ||||||||||||
Proceeds from note offerings | $ 195,200,000 | ||||||||||||
Debt notes price per share | $ / shares | $ 25.01 | ||||||||||||
5.75% Senior Notes Due 2026 | Over-allotment option | |||||||||||||
Senior secured notes, Convertible notes, and Corporate debt | |||||||||||||
Debt instrument, face value | 26,300,000 | ||||||||||||
6.50% Senior Notes due 2021 | |||||||||||||
Senior secured notes, Convertible notes, and Corporate debt | |||||||||||||
Debt instrument, face value | $ 50,000,000 | ||||||||||||
Interest rate (as a percent) | 6.50% | ||||||||||||
6.50% Senior Notes due 2021 | 2024 | |||||||||||||
Senior secured notes, Convertible notes, and Corporate debt | |||||||||||||
Principal amount of the notes to be redeemed (as a percent) | 100% | ||||||||||||
6.125% Senior Notes due 2025 | |||||||||||||
Senior secured notes, Convertible notes, and Corporate debt | |||||||||||||
Debt instrument, face value | $ 120,000,000 | $ 120,000,000 | $ 120,000,000 | ||||||||||
Interest rate (as a percent) | 6.125% | 6.125% | 6.125% | ||||||||||
Proceeds from secured debt | $ 116,800,000 | ||||||||||||
Debt redemption price percentage | 100% | ||||||||||||
Repurchase price percentage in the event of change of control | 101% | ||||||||||||
Proceeds from note offerings | $ 116,800,000 | ||||||||||||
4.50% Senior Secured Notes Due 2026 | |||||||||||||
Senior secured notes, Convertible notes, and Corporate debt | |||||||||||||
Debt instrument, face value | $ 350,000,000 | $ 350,000,000 | $ 350,000,000 | ||||||||||
Interest rate (as a percent) | 4.50% | 4.50% | 4.50% | ||||||||||
Proceeds from secured debt | $ 341,800,000 | ||||||||||||
Debt redemption price percentage | 100% | ||||||||||||
Unamortized deferred financing costs | $ (7,531,000) | $ (7,531,000) | |||||||||||
Total Senior secured notes, net | 342,469,000 | $ 342,469,000 | |||||||||||
Proceeds from note offerings | $ 341,800,000 | ||||||||||||
Junior Subordinated Notes | Three Month LIBOR | |||||||||||||
Senior secured notes, Convertible notes, and Corporate debt | |||||||||||||
Pricing, spread on variable (as a percent) | 3.10% | ||||||||||||
Junior Subordinated I-A Notes | |||||||||||||
Senior secured notes, Convertible notes, and Corporate debt | |||||||||||||
Debt instrument, face value | 15,000,000 | $ 15,000,000 | |||||||||||
Junior Subordinated I-B Notes | |||||||||||||
Senior secured notes, Convertible notes, and Corporate debt | |||||||||||||
Debt instrument, face value | 21,250,000 | 21,250,000 | |||||||||||
5.50% Senior Notes due 2028 | |||||||||||||
Senior secured notes, Convertible notes, and Corporate debt | |||||||||||||
Debt instrument, face value | $ 110,000,000 | $ 110,000,000 | $ 110,000,000 | ||||||||||
Interest rate (as a percent) | 5.50% | 5.50% | 5.50% | ||||||||||
Proceeds from secured debt | $ 107,400,000 | ||||||||||||
Repurchase price percentage in the event of change of control | 101% | ||||||||||||
Proceeds from note offerings | $ 107,400,000 | ||||||||||||
5.50% Senior Notes due 2028 | 2024 | |||||||||||||
Senior secured notes, Convertible notes, and Corporate debt | |||||||||||||
Debt redemption price percentage | 102.75% | ||||||||||||
5.50% Senior Notes due 2028 | 2025 | |||||||||||||
Senior secured notes, Convertible notes, and Corporate debt | |||||||||||||
Debt redemption price percentage | 101.375% | ||||||||||||
5.50% Senior Notes due 2028 | 2026 | |||||||||||||
Senior secured notes, Convertible notes, and Corporate debt | |||||||||||||
Debt redemption price percentage | 100.6875% | ||||||||||||
5.50% Senior Notes due 2028 | 2027 and thereafter | |||||||||||||
Senior secured notes, Convertible notes, and Corporate debt | |||||||||||||
Debt redemption price percentage | 100% | ||||||||||||
ReadyCap Holdings LLC | 7.50% Senior Secured Notes Due 2022 | |||||||||||||
Senior secured notes, Convertible notes, and Corporate debt | |||||||||||||
Debt instrument, face value | $ 40,000,000 | $ 140,000,000 | |||||||||||
Interest rate (as a percent) | 7.50% | 7.50% | |||||||||||
Yield-to-maturity (as a percent) | 6.50% |
Guaranteed Loan Financing (Deta
Guaranteed Loan Financing (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Ending balance | $ 304,158 | $ 345,217 |
Guaranteed loan financing | ||
Ending balance | $ 304,158 | $ 345,217 |
Guaranteed loan financing | Weighted Average | ||
Interest Rates | 4% | 3.78% |
Guaranteed loan financing | Minimum | ||
Interest Rates | 1.24% | 0.99% |
Guaranteed loan financing | Maximum | ||
Interest Rates | 6.50% | 6.50% |
Guaranteed Loan Financing - Mat
Guaranteed Loan Financing - Maturities (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Contractual maturities of total guaranteed loan financing outstanding | ||
2022 | $ 607 | |
2023 | 411 | |
2024 | 1,512 | |
2025 | 1,934 | |
2026 | 5,321 | |
Thereafter | 294,373 | |
Total | 304,158 | |
Guaranteed loan financing | ||
Contractual maturities of total guaranteed loan financing outstanding | ||
Loans held-for-investment pledged as security against guaranteed loan financing | $ 305,000 | $ 346,100 |
Variable interest entities an_3
Variable interest entities and securitization activities - Securitized Debt Obligations (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Variable interest entities | ||
Current Principal Balance | $ 5,550,785 | $ 5,089,157 |
Current principal balance of non-company sponsored securitized loans | 13,200 | 30,600 |
Consolidated VIEs | ||
Variable interest entities | ||
Current Principal Balance | 4,590,598 | 3,232,859 |
Carrying value | $ 4,520,541 | $ 3,183,711 |
Weighted Average Rate | 2.80% | 2.20% |
ReadyCap Lending Small Business Trust 2019-2 | ||
Variable interest entities | ||
Current Principal Balance | $ 61,955 | $ 79,294 |
Carrying value | $ 61,186 | $ 78,268 |
Weighted Average Rate | 2.90% | 2.60% |
Sutherland Commercial Mortgage Trust 2017-SBC6 | ||
Variable interest entities | ||
Current Principal Balance | $ 12,118 | $ 16,729 |
Carrying value | $ 11,942 | $ 16,471 |
Weighted Average Rate | 4.20% | 3.80% |
Sutherland Commercial Mortgage Trust 2019-SBC8 | ||
Variable interest entities | ||
Current Principal Balance | $ 132,514 | $ 145,351 |
Carrying value | $ 130,490 | $ 143,153 |
Weighted Average Rate | 2.90% | 2.90% |
Sutherland Commercial Mortgage Trust 2020-SBC9 | ||
Variable interest entities | ||
Current Principal Balance | $ 86,680 | |
Carrying value | $ 85,459 | |
Weighted Average Rate | 4.20% | 4.10% |
Sutherland Commercial Mortgage Trust 2021-SBC10 | ||
Variable interest entities | ||
Current Principal Balance | $ 126,622 | $ 159,745 |
Carrying value | $ 124,681 | $ 157,483 |
Weighted Average Rate | 1.60% | 1.60% |
ReadyCap Commercial Mortgage Trust 2014-1 | ||
Variable interest entities | ||
Current Principal Balance | $ 4,490 | $ 6,770 |
Carrying value | $ 4,481 | $ 6,756 |
Weighted Average Rate | 5.70% | 5.70% |
ReadyCap Commercial Mortgage Trust 2015-2 | ||
Variable interest entities | ||
Current Principal Balance | $ 8,219 | $ 17,598 |
Carrying value | $ 7,353 | $ 15,960 |
Weighted Average Rate | 5.10% | 5.10% |
ReadyCap Commercial Mortgage Trust 2016-3 | ||
Variable interest entities | ||
Current Principal Balance | $ 14,639 | $ 19,106 |
Carrying value | $ 13,940 | $ 18,285 |
Weighted Average Rate | 5.10% | 4.90% |
ReadyCap Commercial Mortgage Trust 2018-4 | ||
Variable interest entities | ||
Current Principal Balance | $ 66,422 | $ 81,379 |
Carrying value | $ 64,057 | $ 78,751 |
Weighted Average Rate | 4.30% | 4.10% |
ReadyCap Commercial Mortgage Trust 2019-5 | ||
Variable interest entities | ||
Current Principal Balance | $ 131,205 | $ 150,547 |
Carrying value | $ 124,521 | $ 143,204 |
Weighted Average Rate | 4.50% | 4.30% |
ReadyCap Commercial Mortgage Trust 2019-6 | ||
Variable interest entities | ||
Current Principal Balance | $ 226,638 | $ 269,315 |
Carrying value | $ 221,514 | $ 263,752 |
Weighted Average Rate | 3.30% | 3.20% |
ReadyCap Commercial Mortgage Trust 2022-7 | ||
Variable interest entities | ||
Current Principal Balance | $ 203,848 | |
Carrying value | $ 195,354 | |
Weighted Average Rate | 4.20% | |
Ready Capital Mortgage Financing 2019-FL3 | ||
Variable interest entities | ||
Current Principal Balance | $ 67,982 | $ 92,930 |
Carrying value | $ 67,982 | $ 92,921 |
Weighted Average Rate | 2.40% | 1.60% |
Ready Capital Mortgage Financing 2020-FL4 | ||
Variable interest entities | ||
Current Principal Balance | $ 242,860 | $ 304,157 |
Carrying value | $ 240,679 | $ 300,832 |
Weighted Average Rate | 3.50% | 3.10% |
Ready Capital Mortgage Financing 2021-FL5 | ||
Variable interest entities | ||
Current Principal Balance | $ 468,871 | $ 506,721 |
Carrying value | $ 465,426 | $ 501,697 |
Weighted Average Rate | 1.80% | 1.50% |
Ready Capital Mortgage Financing 2021-FL6 | ||
Variable interest entities | ||
Current Principal Balance | $ 543,133 | $ 543,223 |
Carrying value | $ 537,542 | $ 536,270 |
Weighted Average Rate | 1.70% | 1.30% |
Ready Capital Mortgage Financing 2021-FL7 | ||
Variable interest entities | ||
Current Principal Balance | $ 752,598 | $ 753,314 |
Carrying value | $ 745,361 | $ 744,449 |
Weighted Average Rate | 2% | 1.60% |
Ready Capital Mortgage Financing 2022-FL8 | ||
Variable interest entities | ||
Current Principal Balance | $ 913,675 | |
Carrying value | $ 905,124 | |
Weighted Average Rate | 2.40% | |
Ready Capital Mortgage Financing 2022-FL9 | ||
Variable interest entities | ||
Current Principal Balance | $ 612,809 | |
Carrying value | $ 598,908 | |
Weighted Average Rate | 4.70% |
Variable interest entities an_4
Variable interest entities and securitization activities - Consolidated VIE Assets and Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 | Jun. 30, 2021 |
Assets | |||
Cash and cash equivalents | $ 127,939 | $ 200,723 | |
Restricted cash | 64,746 | $ 57,118 | |
Loans, held for sale, at fair value | 469,442 | $ 552,935 | |
Other assets | 183,887 | 172,098 | |
Total Assets | 11,937,315 | 9,534,031 | |
Liabilities | |||
Due to third parties | 24,737 | 668 | |
Accounts payable and other accrued liabilities | 189,182 | 183,411 | |
Total Liabilities | 9,966,889 | 8,245,072 | |
Consolidated VIEs | |||
Assets | |||
Loans, net | 5,804,288 | 4,081,848 | |
Liabilities | |||
Secured borrowings | 4,533,789 | 3,214,303 | |
Reportable Legal Entities | Consolidated VIEs | |||
Assets | |||
Cash and cash equivalents | 4,195 | 9,041 | |
Restricted cash | 48,177 | 33,187 | |
Loans, net | 5,804,288 | 4,081,848 | |
Investments held to maturity | 108,423 | ||
Other assets | 31,136 | 21,488 | |
Total Assets | 5,996,219 | 4,145,564 | |
Liabilities | |||
Secured borrowings | 4,533,789 | 3,214,303 | |
Due to third parties | 4,963 | ||
Accounts payable and other accrued liabilities | 9 | ||
Total Liabilities | $ 4,538,761 | $ 3,214,303 |
Variable interest entities an_5
Variable interest entities and securitization activities - Assets of Unconsolidated VIEs (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Carrying amount | ||
Mortgage backed securities, at fair value | $ 40,648 | $ 99,496 |
Investment in unconsolidated joint ventures (including $8,430 and $8,894 held at fair value) | 224,220 | 141,148 |
Total Assets | 11,937,315 | 9,534,031 |
Unconsolidated VIEs | ||
Carrying amount | ||
Mortgage backed securities, at fair value | 25,632 | 80,756 |
Investment in unconsolidated joint ventures (including $8,430 and $8,894 held at fair value) | 223,316 | 74,334 |
Total Assets | 248,948 | 155,090 |
Maximum Exposure to Loss | ||
Mortgage backed securities, at fair value | 25,632 | 80,756 |
Investment in unconsolidated joint venture | 223,316 | 74,334 |
Total assets in unconsolidated VIEs maximum exposure to loss | $ 248,948 | $ 155,090 |
Interest income and interest _3
Interest income and interest expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Interest income | ||||
Total loans | $ 143,320 | $ 94,135 | $ 261,020 | $ 161,644 |
Total loans, held for sale, at fair value | 4,765 | 3,888 | 9,136 | 6,618 |
Total Paycheck Protection Program loans | 3,612 | 4,219 | ||
Mortgage backed securities, at fair value | 1,974 | 5,024 | 3,701 | 8,156 |
Total interest income | 153,671 | 103,047 | 278,076 | 176,418 |
Interest expense | ||||
Secured borrowings | (28,147) | (18,065) | (47,770) | (35,639) |
Paycheck Protection Program Liquidity Facility borrowings | (459) | (1,545) | (1,147) | (1,879) |
Securitized debt obligations of consolidated VIEs | (33,804) | (21,421) | (58,055) | (40,514) |
Guaranteed loan financing | (3,186) | (3,472) | (6,271) | (7,123) |
Senior secured note | (4,380) | (3,456) | (8,737) | (6,915) |
Convertible note | (2,188) | (2,188) | (4,376) | (4,376) |
Corporate debt | (8,663) | (5,268) | (15,488) | (9,730) |
Total interest expense | (80,827) | (55,415) | (141,844) | (106,176) |
Net interest income before provision for loan losses | 72,844 | 47,632 | 136,232 | 70,242 |
Bridge | ||||
Interest income | ||||
Total loans | 82,499 | 32,221 | 147,479 | 57,289 |
Fixed rate | ||||
Interest income | ||||
Total loans | 14,468 | 14,258 | 28,939 | 28,688 |
Total loans, held for sale, at fair value | 2,236 | 4,293 | ||
Freddie Mac | ||||
Interest income | ||||
Total loans, held for sale, at fair value | 307 | 728 | 499 | 1,332 |
Construction | ||||
Interest income | ||||
Total loans | 7,243 | 9,000 | ||
SBA 7(a) | ||||
Interest income | ||||
Total loans | 9,742 | 9,777 | 19,121 | 18,318 |
Paycheck Protection Program loans, held for investment | ||||
Interest income | ||||
Total loans | 19,282 | 26,355 | 36,140 | 33,247 |
Residential | ||||
Interest income | ||||
Total loans | 31 | 62 | 50 | 122 |
Total loans, held for sale, at fair value | 2,198 | 3,160 | 4,298 | 5,286 |
Other | ||||
Interest income | ||||
Total loans | 10,055 | $ 11,462 | 20,291 | $ 23,980 |
Total loans, held for sale, at fair value | $ 24 | $ 46 |
Derivative instruments (Details
Derivative instruments (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Notional Amount | $ 1,442,509 | $ 1,442,509 | $ 1,258,380 | ||
Asset Derivatives Fair Value | 46,530 | 46,530 | 7,022 | ||
Liabilities Derivatives Fair Value | (1,303) | (1,303) | (410) | ||
Derivative gain (loss) | |||||
Net Realized Gain (Loss) | 858 | $ (4,312) | (267) | $ (6,137) | |
Unrealized Gain (Loss) | 11,205 | (4,906) | 40,445 | 2,505 | |
Total change in OCI for period | 351 | 124 | 564 | 2,102 | |
Designated as Hedging | |||||
Derivative gain (loss) | |||||
Derivatives - effective portion reclassified from AOCI to income | (438) | (312) | (692) | (610) | |
Total income statement impact | (438) | (312) | (692) | (610) | |
Derivatives- effective portion recorded in OCI | (87) | (188) | (128) | 1,492 | |
Total change in OCI for period | 351 | 124 | 564 | 2,102 | |
Interest rate lock commitments (IRLCs) | |||||
Derivative gain (loss) | |||||
Unrealized Gain (Loss) | 5,016 | (5,595) | 59 | (10,234) | |
Interest rate lock commitments (IRLCs) | Interest Rate Risk | |||||
Notional Amount | 446,663 | 446,663 | 348,348 | ||
Asset Derivatives Fair Value | 2,399 | 2,399 | 2,340 | ||
Interest Rate Swap Agreement | |||||
Liabilities Derivatives Fair Value | (65) | (65) | (3,830) | ||
Derivative gain (loss) | |||||
Net Realized Gain (Loss) | (688) | (4,482) | (2,493) | (5,779) | |
Unrealized Gain (Loss) | 13,873 | 1,947 | 40,575 | 8,470 | |
Interest Rate Swap Agreement | Not Designated as Hedging | Interest Rate Risk | |||||
Notional Amount | 579,098 | 579,098 | 536,548 | ||
Asset Derivatives Fair Value | 42,822 | 42,822 | 4,076 | ||
TBA agency securities | |||||
Liabilities Derivatives Fair Value | (1,913) | (1,913) | (538) | ||
Derivative gain (loss) | |||||
Unrealized Gain (Loss) | (7,765) | (903) | (501) | 3,005 | |
TBA agency securities | Interest Rate Risk | |||||
Notional Amount | 388,500 | 388,500 | 346,000 | ||
Asset Derivatives Fair Value | 391 | 391 | |||
Liabilities Derivatives Fair Value | (1,303) | (1,303) | (410) | ||
Credit default swaps | |||||
Derivative gain (loss) | |||||
Unrealized Gain (Loss) | (21) | 21 | |||
FX forwards | |||||
Derivative gain (loss) | |||||
Net Realized Gain (Loss) | 1,546 | 170 | 2,226 | (358) | |
Unrealized Gain (Loss) | 81 | $ (334) | 312 | $ 1,243 | |
FX forwards | Foreign Exchange Rate Risk | |||||
Notional Amount | 28,248 | 28,248 | 27,484 | ||
Asset Derivatives Fair Value | $ 918 | $ 918 | $ 606 |
Real estate owned, held for s_3
Real estate owned, held for sale (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Real estate acquired | ||
Acquired portfolio | $ 85,923 | $ 7,338 |
Other REO held for sale | 33,634 | 34,950 |
Total Real estate, held for sale | 119,557 | 42,288 |
Retail | ||
Real estate acquired | ||
Other REO held for sale | 1,853 | 3,129 |
Mixed Use | ||
Real estate acquired | ||
Acquired portfolio | 35,779 | 1,020 |
Land | ||
Real estate acquired | ||
Acquired portfolio | 4,174 | 6,318 |
Office | ||
Real estate acquired | ||
Acquired portfolio | 14,133 | |
Other REO held for sale | 7,125 | 7,384 |
SBA | ||
Real estate acquired | ||
Other REO held for sale | 137 | |
Single family | ||
Real estate acquired | ||
Other REO held for sale | 24,300 | $ 24,300 |
Multi-family | ||
Real estate acquired | ||
Acquired portfolio | 31,837 | |
Health Care | ||
Real estate acquired | ||
Other REO held for sale | $ 356 |
Agreements and transactions w_3
Agreements and transactions with related parties (Details) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jan. 14, 2022 USD ($) | Mar. 19, 2021 USD ($) item | Jun. 30, 2022 USD ($) | Jun. 30, 2021 USD ($) | Jun. 30, 2022 USD ($) | Jun. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) | |
Related-party transactions | |||||||
Temporary reduction in the quarterly base management fee following the effective date of the merger | $ 1,000,000 | ||||||
Number of quarters the temporary reduction in quarterly base management fee is effective | item | 4 | ||||||
Amount unpaid | $ 5,539,000 | $ 5,539,000 | $ 5,232,000 | ||||
Purchase of loans, held-for-investment | 649,834,000 | $ 17,100,000 | |||||
Investment in unconsolidated joint ventures (including $8,430 and $8,894 held at fair value) | 224,220,000 | $ 224,220,000 | 141,148,000 | ||||
Management agreement | |||||||
Related-party transactions | |||||||
Automatically renewal period | 1 year | ||||||
Minimum notice period for termination | 180 days | ||||||
Termination fee multiplier | 3 | ||||||
Period immediately preceding the termination used as basis for determination of the termination fee due | 24 months | ||||||
Management fee | |||||||
Related-party transactions | |||||||
Fee percentage for results up to threshold | 1.50% | ||||||
Fee threshold | $ 500,000,000 | ||||||
Fee percentage for results in excess of threshold | 1% | ||||||
Incentive distribution | |||||||
Related-party transactions | |||||||
Incentive multiplier | 15% | ||||||
Core earnings period | 12 months | ||||||
Percentage of Incentive fee multiplied by the weighted average of issue price | 8% | ||||||
The period over which core earnings must exceed the minimum threshold per the terms of the agreement | 48 months | ||||||
Minimum core earnings threshold | $ 0 | ||||||
Minimum | Management agreement | |||||||
Related-party transactions | |||||||
Independent director votes required for approval | 66.70% | ||||||
Manager | Management fee | |||||||
Related-party transactions | |||||||
Fees | 5,500,000 | $ 2,600,000 | $ 8,700,000 | 5,300,000 | |||
Amount unpaid | 5,300,000 | 2,600,000 | 5,300,000 | 2,600,000 | |||
Manager | Incentive distribution | |||||||
Related-party transactions | |||||||
Incentive distribution paid | 300,000 | 300,000 | |||||
Amount unpaid | 300,000 | 300,000 | |||||
Manager | Expense reimbursement | |||||||
Related-party transactions | |||||||
Reimbursable expenses | 2,300,000 | 3,500,000 | 5,800,000 | 5,500,000 | |||
Amount unpaid | $ 4,900,000 | $ 4,600,000 | $ 4,900,000 | $ 4,600,000 | |||
Manager | Waterfall Atlas Fund, LP | |||||||
Related-party transactions | |||||||
Distributions due as a percentage of carried interest distributions received by the General Partner | 15% | ||||||
Incremental percentage by which the entity's internal rate of return is to exceed the investment internal rate of return | 1.50% | ||||||
Manager | Minimum | Waterfall Atlas Fund, LP | |||||||
Related-party transactions | |||||||
Value of investment made in the form of asset contribution of commercial real estate equity positions and additional capital | $ 50,000,000 | ||||||
Manager | Maximum | Waterfall Atlas Fund, LP | |||||||
Related-party transactions | |||||||
Commitment to additional future investment contributions | $ 50,000,000 | ||||||
Affiliate of Manager | Investment in unconsolidated joint ventures | |||||||
Related-party transactions | |||||||
Purchase of investment | $ 6,300,000 |
Other assets and other liabil_3
Other assets and other liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Other assets: | ||
Deferred tax asset | $ 3,601 | $ 3,601 |
Deferred loan exit fees | 32,943 | 25,923 |
Accrued interest | 37,316 | 21,873 |
Due from servicers | 29,861 | 23,729 |
Right-of-use assets | $ 1,828 | $ 2,402 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Total other assets | Total other assets |
Goodwill | $ 34,172 | $ 31,470 |
Intangible assets | 14,058 | 14,842 |
Deferred financing costs | 3,540 | 3,840 |
PPP fee receivable | 346 | 407 |
Receivable from third parties | 7,497 | 29,298 |
Other assets | 18,725 | 14,713 |
Total other assets | 183,887 | 172,098 |
Accounts payable and other accrued liabilities: | ||
Deferred tax liability | 11,986 | 11,986 |
Accrued salaries, wages and commissions | 28,605 | 42,715 |
Accrued interest payable | 24,791 | 22,278 |
Servicing principal and interest payable | 12,993 | 19,100 |
Repair and denial reserve | 16,111 | 19,725 |
Payable to related parties | 5,539 | 5,232 |
Accrued professional fees | 3,025 | 4,324 |
Lease payable | 2,053 | 3,002 |
Deferred LSP revenue | 178 | 286 |
Accrued PPP related costs | 4,296 | 12,460 |
Other liabilities | 79,605 | 42,303 |
Total accounts payable and other accrued liabilities | 189,182 | 183,411 |
Loan indemnification reserve | ||
Loan indemnification reserve | $ 3,600 | $ 4,000 |
Other Asset and Other Liabiliti
Other Asset and Other Liabilities - Intangible assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Jul. 31, 2021 | |
Goodwill | $ 34,172 | $ 34,172 | $ 31,470 | |||
Finite-lived intangible assets | 10,558 | 10,558 | ||||
Total Intangible Assets | 14,058 | 14,058 | 14,842 | |||
Amortization expense | 400 | $ 300 | 800 | $ 600 | ||
Total Accumulated Amortization | 4,854 | 4,854 | ||||
Future amortization of lease intangibles | ||||||
2022 | 842 | 842 | ||||
2023 | 1,599 | 1,599 | ||||
2024 | 1,390 | 1,390 | ||||
2025 | 1,144 | 1,144 | ||||
2026 | 477 | 477 | ||||
Thereafter | 5,106 | 5,106 | ||||
Net amount | 10,558 | 10,558 | ||||
Red Stone | ||||||
Goodwill | $ 14,009 | |||||
Trade name | Red Stone | ||||||
Indefinite-lived intangible assets | 2,500 | 2,500 | 2,500 | |||
SBA license | ||||||
Indefinite-lived intangible assets | 1,000 | 1,000 | 1,000 | |||
SBC Lending and Acquisitions | ||||||
Goodwill | 22,966 | 22,966 | 20,264 | |||
Small Business Lending | ||||||
Goodwill | 11,206 | 11,206 | 11,206 | |||
Customer relationships | Red Stone | ||||||
Finite-lived intangible assets | 6,501 | $ 6,501 | 6,651 | |||
Estimated Useful Life | 19 years | |||||
Total Accumulated Amortization | 328 | $ 328 | ||||
Future amortization of lease intangibles | ||||||
Net amount | 6,501 | 6,501 | 6,651 | |||
Internally developed software | Knight Capital | ||||||
Finite-lived intangible assets | 2,111 | $ 2,111 | 2,428 | |||
Estimated Useful Life | 6 years | |||||
Total Accumulated Amortization | 1,689 | $ 1,689 | ||||
Future amortization of lease intangibles | ||||||
Net amount | 2,111 | 2,111 | 2,428 | |||
Broker network | Knight Capital | ||||||
Finite-lived intangible assets | 489 | $ 489 | 622 | |||
Estimated Useful Life | 4 years 6 months | |||||
Total Accumulated Amortization | 711 | $ 711 | ||||
Future amortization of lease intangibles | ||||||
Net amount | 489 | 489 | 622 | |||
Trade name | Knight Capital | ||||||
Finite-lived intangible assets | 489 | $ 489 | 562 | |||
Estimated Useful Life | 6 years | |||||
Total Accumulated Amortization | 391 | $ 391 | ||||
Future amortization of lease intangibles | ||||||
Net amount | 489 | 489 | 562 | |||
Trade name | GMFS | ||||||
Finite-lived intangible assets | 388 | $ 388 | 439 | |||
Estimated Useful Life | 15 years | |||||
Total Accumulated Amortization | 835 | $ 835 | ||||
Future amortization of lease intangibles | ||||||
Net amount | 388 | 388 | 439 | |||
Favorable lease | ||||||
Finite-lived intangible assets | 580 | $ 580 | 640 | |||
Estimated Useful Life | 12 years | |||||
Total Accumulated Amortization | 900 | $ 900 | ||||
Future amortization of lease intangibles | ||||||
Net amount | $ 580 | $ 580 | $ 640 |
Other income and operating ex_3
Other income and operating expenses - Paycheck Protection Program (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||||
Apr. 30, 2020 | Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Paycheck Protection Program (PPP) | |||||||
Unrecognized net service fees | $ 178 | $ 178 | $ 286 | ||||
Origination costs | 2,168 | $ 7,883 | 7,102 | $ 16,028 | |||
Paycheck Protection Program loans | |||||||
Paycheck Protection Program (PPP) | |||||||
Unrecognized net service fees | 178 | 178 | $ 286 | ||||
PPP Loans - CARES Act | |||||||
Paycheck Protection Program (PPP) | |||||||
PPP loans originated | $ 109,500 | ||||||
PPP processing fees | $ 5,200 | ||||||
Unrecognized net service fees | 200 | 200 | |||||
PPP Loans - Economic Aid Act | |||||||
Paycheck Protection Program (PPP) | |||||||
PPP loans originated | 2,200,000 | 2,200,000 | |||||
Total fees deferred and expected to be recognized over the life of the loans | $ 123,700 | 123,700 | |||||
Net fees creating an excess of PPLF borrowings in excess of PPP loans | $ 27,200 | ||||||
Lender Service Provider Agreement | PPP Loans - CARES Act | |||||||
Paycheck Protection Program (PPP) | |||||||
Amount of PPP loans underwritten and sold to third party | $ 2,500,000 | ||||||
Origination fee and fee income | $ 43,300 |
Other income and operating ex_4
Other income and operating expenses - Balance Sheet Impact of PPP Activities (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 | Jun. 30, 2021 |
Assets | |||
Restricted cash | $ 64,746 | $ 57,118 | |
Paycheck Protection Program loans | 389,189 | $ 870,352 | |
PPP fee receivable | 346 | 407 | |
Accrued interest | 37,316 | 21,873 | |
Total Assets | 11,937,315 | 9,534,031 | |
Liabilities | |||
Paycheck Protection Program Liquidity Facility (PPPLF) borrowings | 427,759 | 941,505 | |
Interest payable | 24,791 | 22,278 | |
Deferred LSP revenue | 178 | 286 | |
Accrued PPP Related Costs | 4,296 | 12,460 | |
Repair and denial reserve | 16,111 | 19,725 | |
Total Liabilities | 9,966,889 | 8,245,072 | |
Paycheck Protection Program loans | |||
Assets | |||
PPP fee receivable | 346 | 407 | |
Accrued interest | 4,923 | 7,025 | |
Total Assets | 394,458 | 877,784 | |
Liabilities | |||
Paycheck Protection Program Liquidity Facility (PPPLF) borrowings | 427,759 | 941,505 | |
Interest payable | 1,769 | 2,358 | |
Deferred LSP revenue | 178 | 286 | |
Accrued PPP Related Costs | 4,296 | 12,460 | |
Payable to third parties | 1,101 | 2,091 | |
Repair and denial reserve | 8,007 | 12,844 | |
Total Liabilities | 443,110 | 971,544 | |
Paycheck Protection Program loans, held for investment | |||
Assets | |||
Paycheck Protection Program loans | 388,426 | 867,109 | |
Paycheck Protection Program loans, held for investment | Paycheck Protection Program loans | |||
Assets | |||
Paycheck Protection Program loans | 388,426 | 867,109 | |
Paycheck Protection Program loans, at fair value | |||
Assets | |||
Paycheck Protection Program loans | 763 | 3,243 | |
Paycheck Protection Program loans, at fair value | Paycheck Protection Program loans | |||
Assets | |||
Paycheck Protection Program loans | $ 763 | $ 3,243 |
Other income and operating ex_5
Other income and operating expenses - Income and Expenses Related to Activities (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Other income | ||||
LSP origination fees | $ 2,725 | $ 1,890 | $ 4,379 | $ 3,503 |
Interest income | 153,671 | 103,047 | 278,076 | 176,418 |
Interest and Fee Income | 143,320 | 94,135 | 261,020 | 161,644 |
Other operating expenses | ||||
Direct operating expenses | 2,168 | 7,883 | 7,102 | 16,028 |
R&D reserve | 1,305 | (4,084) | 3,498 | (6,153) |
Interest expense | 80,827 | 55,415 | 141,844 | 106,176 |
Total other operating expenses | 14,372 | 17,190 | 27,025 | 32,674 |
Net income | 58,965 | 30,904 | 123,228 | 59,851 |
Paycheck Protection Program loans | ||||
Other income | ||||
Interest and Fee Income | 26,711 | 29,472 | 45,850 | 43,105 |
Other operating expenses | ||||
Repair and denial expense | 3,733 | 5,389 | ||
Total other operating expenses | 650 | 16,167 | 1,488 | 26,229 |
Net income | 26,061 | 13,305 | 44,362 | 16,876 |
Paycheck Protection Program loans | Other Income | ||||
Other income | ||||
Repair and denial reserve | 2,156 | 4,400 | ||
Paycheck Protection Program loans | Servicing income | ||||
Other income | ||||
LSP fee income | 5,273 | 3,117 | 5,310 | 9,858 |
Paycheck Protection Program loans | Interest income | ||||
Other income | ||||
Interest income | 19,282 | 26,355 | 36,140 | 33,247 |
Paycheck Protection Program loans | Other operating expenses | ||||
Other operating expenses | ||||
Direct operating expenses | 191 | 3,673 | 341 | 8,218 |
Paycheck Protection Program loans | Interest expense | ||||
Other operating expenses | ||||
Interest expense | $ 459 | $ 8,761 | $ 1,147 | $ 12,622 |
Other income and operating ex_6
Other income and operating expenses - Components of Other Income and Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Other income | ||||
Origination income | $ 2,725 | $ 1,890 | $ 4,379 | $ 3,503 |
Change in repair and denial reserve | 1,305 | (4,084) | 3,498 | (6,153) |
Other | 4,304 | 1,506 | 6,958 | 2,533 |
Total other income | 8,334 | (688) | 14,835 | (117) |
Other operating expenses | ||||
Origination costs | 2,168 | 7,883 | 7,102 | 16,028 |
Technology expense | 2,376 | 2,038 | 4,416 | 3,910 |
Impairment on real estate | 840 | 1,278 | 2,667 | 1,278 |
Rent and property tax expense | 1,564 | 1,743 | 2,659 | 3,429 |
Recruiting, training and travel expenses | 524 | 333 | 826 | 829 |
Marketing expense | 596 | 609 | 924 | 1,185 |
Loan acquisition costs | 113 | 300 | 218 | 334 |
Financing costs on purchased future receivables | 32 | 32 | 62 | 56 |
Other | 6,159 | 2,974 | 8,151 | 5,625 |
Total other operating expenses | $ 14,372 | $ 17,190 | $ 27,025 | $ 32,674 |
Redeemable Preferred Stock an_3
Redeemable Preferred Stock and Stockholders Equity - Common Stock Dividends (Details) - $ / shares | 3 Months Ended | 6 Months Ended | ||||||||||||
Jul. 29, 2022 | Jun. 15, 2022 | Apr. 29, 2022 | Mar. 15, 2022 | Jan. 31, 2022 | Dec. 14, 2021 | Oct. 29, 2021 | Sep. 15, 2021 | Jul. 30, 2021 | Jun. 14, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Dividends | ||||||||||||||
Dividend per Share, declared | $ 0.42 | $ 0.42 | $ 0.42 | $ 0.42 | $ 0.42 | $ 0.42 | $ 0.42 | $ 0.84 | $ 0.82 | |||||
Dividend per Share, paid | $ 0.42 | $ 0.42 | $ 0.42 | $ 0.42 | $ 0.42 |
Redeemable Preferred Stock an_4
Redeemable Preferred Stock and Stockholders Equity - RSU and RSA activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Weighted-average grant date fair value (per share) | ||||||
Percentage of shares of common stock issued and outstanding on a fully diluted basis | 5% | |||||
RSUs and RSAs | ||||||
Weighted-average grant date fair value (per share) | ||||||
Stock-based compensation | $ 2,100 | $ 1,700 | $ 4,100 | $ 3,300 | ||
Non-cash compensation expense not yet charged to net income | $ 14,600 | $ 13,500 | ||||
RSUs and RSAs | Certain employees | ||||||
Number of shares | ||||||
Outstanding, Beginning balance | 984,278 | 888,777 | 888,777 | |||
Granted (in shares) | 18,192 | 349,824 | ||||
Vested (in shares) | (17,516) | (252,259) | ||||
Forfeited (in shares) | (2,326) | (2,064) | ||||
Outstanding, Ending balance | 982,628 | 984,278 | 982,628 | 888,777 | ||
Grant date fair value | ||||||
Beginning balance | $ 14,664 | $ 13,517 | $ 13,517 | |||
Granted | 264 | 4,964 | ||||
Vested | (257) | (3,791) | ||||
Forfeited | (33) | (26) | ||||
Ending balance | $ 14,638 | $ 14,664 | $ 14,638 | $ 13,517 | ||
Weighted-average grant date fair value (per share) | ||||||
Beginning balance | $ 14.90 | $ 15.21 | $ 15.21 | |||
Granted (in per share) | 14.52 | 14.19 | ||||
Vested (in per share) | 14.66 | 15.03 | ||||
Forfeited (in per share) | 14.19 | 12.82 | ||||
Ending balance | $ 14.90 | $ 14.90 | $ 14.90 | $ 15.21 |
Redeemable Preferred Stock an_5
Redeemable Preferred Stock and Stockholders Equity - Performance-based Equity Awards (Details) - Performance Shares - shares | 1 Months Ended | |
Feb. 28, 2022 | Feb. 28, 2021 | |
Performance-based equity awards | ||
Granted (in shares) | 84,566 | 43,327 |
Vesting period | 3 years | 3 years |
Minimum | ||
Performance-based equity awards | ||
Percentage of target awards that may be achieved. | 0% | 0% |
Maximum | ||
Performance-based equity awards | ||
Percentage of target awards that may be achieved. | 300% | 300% |
Based on absolute TSR | ||
Performance-based equity awards | ||
Vesting percentage allocation | 50% | 50% |
Vesting period | 3 years | 3 years |
Based on TSR relative to performance of designated peer group | ||
Performance-based equity awards | ||
Vesting percentage allocation | 50% | 50% |
Vesting period | 3 years | 3 years |
Redeemable Preferred Stock an_6
Redeemable Preferred Stock and Stockholders Equity - Preferred Stock (Details) $ / shares in Units, shares in Thousands | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2022 USD ($) $ / shares shares | Jun. 30, 2022 USD ($) $ / shares shares | Dec. 31, 2021 USD ($) $ / shares | |
Preferred stock | |||
Liquidation Preference | $ 25 | $ 25 | $ 25 |
Carrying Value | $ | $ 111,378,000 | $ 111,378,000 | $ 111,378,000 |
Series C Preferred Stock | |||
Preferred stock | |||
Shares Issued | shares | 335 | 335 | |
Shares outstanding | shares | 335 | 335 | |
Par Value per Share | $ 0.0001 | $ 0.0001 | |
Liquidation Preference | $ 25 | $ 25 | |
Rate per Annum | 6.25% | ||
Annual Dividend (per share) | $ 1.56 | ||
Carrying Value | $ | $ 8,361,000 | $ 8,361,000 | |
Preferred stock conversion ratio | 1.1626 | 1.1626 | |
Conversion price | $ 21.50 | $ 21.50 | |
Preferred stock principal amount used as basis for application of conversion ratio | $ | $ 25 | $ 25 | |
Dividends declared | $ | $ 100,000 | ||
Series E Preferred Stock | |||
Preferred stock | |||
Shares Issued | shares | 4,600 | 4,600 | |
Shares outstanding | shares | 4,600 | 4,600 | |
Par Value per Share | $ 0.0001 | $ 0.0001 | |
Liquidation Preference | $ 25 | $ 25 | |
Rate per Annum | 6.50% | ||
Annual Dividend (per share) | $ 1.63 | ||
Carrying Value | $ | $ 111,378,000 | $ 111,378,000 | |
Dividends declared | $ | $ 1,900,000 | ||
Percentage of the liquidation preference at which the Company can choose to redeem | 100% |
Redeemable Preferred Stock an_7
Redeemable Preferred Stock and Stockholders Equity - Equity ATM Program (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | |||||
Jan. 14, 2022 | Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Jul. 09, 2021 | |
Equity | |||||||
Common stock par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||
Common stock, issued | 114,375,070 | 114,375,070 | 75,838,050 | ||||
Share price | $ 15.30 | ||||||
Equity issuances | $ 366 | $ 111,378 | $ 124,515 | $ 111,378 | |||
Stock offering costs | $ 5 | $ 71 | $ 909 | 71 | |||
Shares issued | 7,000,000 | ||||||
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||
Proceeds from issuance of equity, net of issuance costs | $ 106,600 | $ 123,606 | $ 111,307 | ||||
Equity ATM Program | |||||||
Equity | |||||||
Common stock par value | $ 0.0001 | ||||||
Value of remaining shares available for sale under the Equity ATM Program | $ 78,400 | $ 78,400 | |||||
Common stock, issued | 23,825 | 23,825 | |||||
Common stock, par value | $ 0.0001 | ||||||
Proceeds from issuance of equity, net of issuance costs | $ 400 | ||||||
Equity ATM Program | Maximum | |||||||
Equity | |||||||
Common stock authorized to be sold under an Equity ATM Program | $ 150,000 | ||||||
Equity ATM Program | Weighted Average | |||||||
Equity | |||||||
Share price | $ 15.35 | $ 15.35 |
Earnings per Share of Common _3
Earnings per Share of Common Stock (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Continuing Operations | ||||
Net income (loss) | $ 58,965 | $ 30,904 | $ 123,228 | $ 59,851 |
Less: Income (loss) attributable to non-controlling interest | 2,874 | 444 | 3,649 | 1,103 |
Less: Income attributable to participating shares | 2,412 | 3,616 | 4,824 | 4,273 |
Basic earnings | 53,679 | 26,844 | 114,755 | 54,475 |
Discontinued Operations | ||||
Net income attributable to Ready Capital Corporation | 54,092 | 27,236 | 115,581 | 55,243 |
Diluted Earnings | ||||
Net income (loss) | 58,965 | 30,904 | 123,228 | 59,851 |
Less: Income (loss) attributable to non-controlling interest | 2,874 | 444 | 3,649 | 1,103 |
Less: Income attributable to participating shares | 2,412 | 3,616 | 4,824 | 4,273 |
Add: Expenses attributable to dilutive instruments | 2,319 | 4,638 | ||
Diluted earnings | $ 55,998 | $ 26,844 | $ 119,393 | $ 54,475 |
Basic - Average shares outstanding | 114,359,026 | 71,221,806 | 101,106,777 | 64,059,509 |
Effect of dilutive securities - Unvested participating shares | 10,706,466 | 163,797 | 10,696,654 | 150,425 |
Diluted - Average shares outstanding | 125,065,492 | 71,385,603 | 111,803,431 | 64,209,934 |
Earnings Per Share Attributable to RC Common Stockholders: | ||||
Basic | $ 0.47 | $ 0.38 | $ 1.13 | $ 0.85 |
Diluted | $ 0.45 | $ 0.38 | $ 1.07 | $ 0.85 |
Earnings per Common Share - Ope
Earnings per Common Share - Operating Partnership Units (Details) - Operating Partnership - Noncontrolling Interests - shares | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Noncontrolling interest | ||
Number of common shares issued for OP unit redeemed by a noncontrolling interest unit holder | 1 | |
Units held by noncontrolling interest unit holders | 1,749,746 | 293,003 |
Offsetting assets and liabili_3
Offsetting assets and liabilities - Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Effect of offsetting of the Company's recognized assets | ||
Gross Amounts of Recognized Assets | $ 47,205 | $ 9,150 |
Gross amounts offset in the Consolidated Balance Sheets | 675 | 2,128 |
Amounts presented in the Consolidated Balance Sheets | 46,530 | 7,022 |
Cash Collateral Received | 31,929 | |
Net Amount | 14,601 | 7,022 |
Interest rate lock commitments (IRLCs) | ||
Effect of offsetting of the Company's recognized assets | ||
Gross Amounts of Recognized Assets | 2,399 | 2,340 |
Amounts presented in the Consolidated Balance Sheets | 2,399 | 2,340 |
Net Amount | 2,399 | 2,340 |
FX forwards | ||
Effect of offsetting of the Company's recognized assets | ||
Gross Amounts of Recognized Assets | 918 | 606 |
Amounts presented in the Consolidated Balance Sheets | 918 | 606 |
Net Amount | 918 | 606 |
TBA agency securities | ||
Effect of offsetting of the Company's recognized assets | ||
Gross Amounts of Recognized Assets | 1,001 | 128 |
Gross amounts offset in the Consolidated Balance Sheets | 610 | 128 |
Amounts presented in the Consolidated Balance Sheets | 391 | |
Net Amount | 391 | |
Interest Rate Swap Agreement | ||
Effect of offsetting of the Company's recognized assets | ||
Gross Amounts of Recognized Assets | 42,887 | 6,076 |
Gross amounts offset in the Consolidated Balance Sheets | 65 | 2,000 |
Amounts presented in the Consolidated Balance Sheets | 42,822 | 4,076 |
Cash Collateral Received | 31,929 | |
Net Amount | $ 10,893 | $ 4,076 |
Offsetting assets and liabili_4
Offsetting assets and liabilities - Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Effect of offsetting recognized liabilities, Derivative | ||
Gross Amounts of Recognized Liabilities | $ 1,303 | $ 410 |
Effect of offsetting recognized liabilities, Total | ||
Gross Amounts of Recognized Liabilities, Total | 3,642,120 | 3,463,473 |
Gross Amounts Offset in the Consolidated Balance Sheets, Total | 675 | 3,958 |
Liabilities Presented in the Consolidated Balance Sheets, Total | 3,641,445 | 3,459,515 |
Financial Instruments, Total | 3,600,448 | 3,387,949 |
Net Amount, Total | 40,997 | 71,566 |
Interest Rate Swap Agreement | ||
Effect of offsetting recognized liabilities, Derivative | ||
Gross Amounts of Recognized Liabilities | 65 | 3,830 |
Gross Amounts Offset in the Consolidated Balance Sheets, Derivative | 65 | 3,830 |
TBA agency securities | ||
Effect of offsetting recognized liabilities, Derivative | ||
Gross Amounts of Recognized Liabilities | 1,913 | 538 |
Gross Amounts Offset in the Consolidated Balance Sheets, Derivative | 610 | 128 |
Liabilities Presented in the Consolidated Balance Sheets, Derivative | 1,303 | 410 |
Cash Collateral Paid, Derivative | 410 | |
Net Amount, Derivative | 1,303 | |
Secured borrowings | ||
Effect of offsetting recognized liabilities, Borrowings | ||
Gross Amounts of Recognized Liabilities, Borrowings | 3,212,383 | 2,517,600 |
Liabilities Presented in the Consolidated Balance Sheets, Borrowings | 3,212,383 | 2,517,600 |
Financial Instruments, Borrowings | 3,212,383 | 2,517,600 |
Paycheck Protection Program Liquidity Facility | ||
Effect of offsetting recognized liabilities, Borrowings | ||
Gross Amounts of Recognized Liabilities, Borrowings | 427,759 | 941,505 |
Liabilities Presented in the Consolidated Balance Sheets, Borrowings | 427,759 | 941,505 |
Financial Instruments, Borrowings | 388,065 | 870,349 |
Net Amount, Borrowings | $ 39,694 | $ 71,156 |
Commitments, Contingencies an_3
Commitments, Contingencies and Indemnifications (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Originated Residential Agency loans | ||
Commitments, contingencies and indemnifications | ||
Commitments to originate residential agency loans | $ 338,320 | $ 346,660 |
Unfunded loan commitments | ||
Commitments, contingencies and indemnifications | ||
Loans, net | 762,637 | 455,119 |
Loans, held for sale at fair value | 22,818 | $ 24,150 |
Investments held to maturity | $ 2,318 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
REIT requirements and income tax information | ||||
Percentage of nondeductible excise tax the entity would be subject to if they fail to meet the minimum distributions requirement | 4% | |||
Number of taxable years an entity would not be able to qualify as a REIT if qualification lapses | 4 years | |||
Provision for income taxes | $ 10,318 | $ 6,995 | $ 28,167 | $ 15,676 |
Minimum | ||||
REIT requirements and income tax information | ||||
Percentage of taxable income distributed in the form of qualifying distributions | 90% | |||
Maximum | ||||
REIT requirements and income tax information | ||||
Percentage of taxable income distributed in the form of qualifying distributions | 100% |
Segment Reporting (Details)
Segment Reporting (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | 9 Months Ended | ||
Jun. 30, 2022 USD ($) | Jun. 30, 2021 USD ($) | Jun. 30, 2022 USD ($) segment | Jun. 30, 2021 USD ($) | Sep. 30, 2021 segment | |
Segment reporting | |||||
Number of reportable segments | segment | 3 | 4 | |||
Interest income | $ 153,671 | $ 103,047 | $ 278,076 | $ 176,418 | |
Interest expense | (80,827) | (55,415) | (141,844) | (106,176) | |
Net interest income before recovery of (provision for) loan losses | 72,844 | 47,632 | 136,232 | 70,242 | |
Recovery of (provision for) loan losses | 4,390 | (5,517) | 2,848 | (5,509) | |
Net interest income after recovery of (provision for) loan losses | 77,234 | 42,115 | 139,080 | 64,733 | |
Non-interest income | |||||
Residential mortgage banking activities | 2,947 | 36,690 | 11,371 | 78,099 | |
Net realized gains on financial instruments and real estate owned | 21,114 | 17,183 | 29,121 | 26,029 | |
Net unrealized gain (loss) on financial instruments | (3,253) | 4,612 | 42,062 | 25,608 | |
Servicing income, net | 14,565 | 11,928 | 25,093 | 27,563 | |
Income on purchased future receivables, net | 1,859 | 2,779 | 4,328 | 5,096 | |
Income (loss) from unconsolidated joint ventures | 5,200 | 3,361 | 11,763 | 2,552 | |
Other income (loss) | 8,334 | (688) | 14,835 | (117) | |
Total non-interest income | 50,766 | 75,865 | 138,573 | 164,830 | |
Non-interest expense | |||||
Employee compensation and benefits | (26,089) | (24,270) | (54,057) | (47,047) | |
Allocated employee compensation and benefits from related party | (1,804) | (3,299) | (4,804) | (5,422) | |
Variable income (expenses) on residential mortgage banking activities | 4,532 | (21,421) | 3,553 | (36,906) | |
Professional fees | (3,851) | (2,872) | (8,977) | (5,854) | |
Management fees - related party | (5,465) | (2,626) | (8,661) | (5,319) | |
Incentive fees - related party | (286) | (286) | |||
Loan servicing expense | (10,296) | (6,851) | (19,216) | (12,955) | |
Transaction related expenses | (1,372) | (1,266) | (7,071) | (7,573) | |
Other operating expenses | (14,372) | (17,190) | (27,025) | (32,674) | |
Total non-interest expense | (58,717) | (80,081) | (126,258) | (154,036) | |
Income (loss) before provision for income taxes | 69,283 | 37,899 | 151,395 | 75,527 | |
Total assets | 11,937,315 | 8,976,892 | 11,937,315 | 8,976,892 | |
Operating Segments | SBC Lending and Acquisitions | |||||
Segment reporting | |||||
Interest income | 122,427 | 64,880 | 218,770 | 120,775 | |
Interest expense | (72,685) | (39,140) | (125,778) | (76,357) | |
Net interest income before recovery of (provision for) loan losses | 49,742 | 25,740 | 92,992 | 44,418 | |
Recovery of (provision for) loan losses | 4,609 | (4,723) | 4,339 | (5,070) | |
Net interest income after recovery of (provision for) loan losses | 54,351 | 21,017 | 97,331 | 39,348 | |
Non-interest income | |||||
Net realized gains on financial instruments and real estate owned | 12,034 | 2,620 | 12,916 | 6,566 | |
Net unrealized gain (loss) on financial instruments | (2,517) | 6,843 | 9,912 | 11,970 | |
Servicing income, net | 1,431 | 796 | 2,351 | 1,522 | |
Income (loss) from unconsolidated joint ventures | 5,200 | 3,361 | 11,763 | 2,552 | |
Other income (loss) | 6,338 | 2,753 | 9,352 | 4,897 | |
Total non-interest income | 22,486 | 16,373 | 46,294 | 27,507 | |
Non-interest expense | |||||
Employee compensation and benefits | (7,903) | (4,294) | (18,063) | (6,546) | |
Allocated employee compensation and benefits from related party | (180) | (331) | (480) | (543) | |
Professional fees | (1,097) | (993) | (3,498) | (1,838) | |
Loan servicing expense | (7,912) | (4,621) | (13,787) | (8,463) | |
Other operating expenses | (6,457) | (6,642) | (11,833) | (11,599) | |
Total non-interest expense | (23,549) | (16,881) | (47,661) | (28,989) | |
Income (loss) before provision for income taxes | 53,288 | 20,509 | 95,964 | 37,866 | |
Total assets | 10,296,900 | 5,275,662 | 10,296,900 | 5,275,662 | |
Operating Segments | Small Business Lending | |||||
Segment reporting | |||||
Interest income | 29,024 | 36,133 | 55,261 | 51,565 | |
Interest expense | (5,916) | (13,980) | (11,606) | (23,187) | |
Net interest income before recovery of (provision for) loan losses | 23,108 | 22,153 | 43,655 | 28,378 | |
Recovery of (provision for) loan losses | (219) | (794) | (1,491) | (439) | |
Net interest income after recovery of (provision for) loan losses | 22,889 | 21,359 | 42,164 | 27,939 | |
Non-interest income | |||||
Net realized gains on financial instruments and real estate owned | 9,080 | 14,563 | 16,205 | 19,463 | |
Net unrealized gain (loss) on financial instruments | (721) | 2,467 | (433) | 2,981 | |
Servicing income, net | 4,558 | 3,666 | 6,051 | 11,469 | |
Income on purchased future receivables, net | 1,859 | 2,779 | 4,328 | 5,096 | |
Other income (loss) | 1,950 | (3,550) | 4,821 | (5,150) | |
Total non-interest income | 16,726 | 19,925 | 30,972 | 33,859 | |
Non-interest expense | |||||
Employee compensation and benefits | (10,217) | (9,335) | (19,735) | (15,381) | |
Professional fees | (1,619) | (704) | (3,087) | (1,348) | |
Loan servicing expense | 74 | (144) | (428) | ||
Loan servicing expense | (42) | ||||
Other operating expenses | (4,314) | (7,405) | (8,101) | (15,070) | |
Total non-interest expense | (16,076) | (17,588) | (31,351) | (31,841) | |
Income (loss) before provision for income taxes | 23,539 | 23,696 | 41,785 | 29,957 | |
Total assets | 1,049,763 | 2,860,365 | 1,049,763 | 2,860,365 | |
Operating Segments | Residential Mortgage Banking | |||||
Segment reporting | |||||
Interest income | 2,220 | 2,034 | 4,045 | 4,078 | |
Interest expense | (2,226) | (2,295) | (4,184) | (4,623) | |
Net interest income before recovery of (provision for) loan losses | (6) | (261) | (139) | (545) | |
Net interest income after recovery of (provision for) loan losses | (6) | (261) | (139) | (545) | |
Non-interest income | |||||
Residential mortgage banking activities | 2,947 | 36,690 | 11,371 | 78,099 | |
Net unrealized gain (loss) on financial instruments | (15) | (4,698) | 32,583 | 10,657 | |
Servicing income, net | 8,576 | 7,466 | 16,691 | 14,572 | |
Other income (loss) | 21 | 38 | 45 | 53 | |
Total non-interest income | 11,529 | 39,496 | 60,690 | 103,381 | |
Non-interest expense | |||||
Employee compensation and benefits | (6,906) | (10,127) | (14,440) | (23,715) | |
Variable income (expenses) on residential mortgage banking activities | 4,532 | (21,421) | 3,553 | (36,906) | |
Professional fees | (217) | (144) | (481) | (395) | |
Loan servicing expense | (2,458) | (2,086) | (5,001) | (4,450) | |
Other operating expenses | (2,175) | (2,213) | (4,199) | (4,417) | |
Total non-interest expense | (7,224) | (35,991) | (20,568) | (69,883) | |
Income (loss) before provision for income taxes | 4,299 | 3,244 | 39,983 | 32,953 | |
Total assets | 454,556 | 588,435 | 454,556 | 588,435 | |
Corporate | |||||
Segment reporting | |||||
Interest expense | (276) | (2,009) | |||
Net interest income before recovery of (provision for) loan losses | (276) | (2,009) | |||
Net interest income after recovery of (provision for) loan losses | (276) | (2,009) | |||
Non-interest income | |||||
Other income (loss) | 25 | 71 | 617 | 83 | |
Total non-interest income | 25 | 71 | 617 | 83 | |
Non-interest expense | |||||
Employee compensation and benefits | (1,063) | (514) | (1,819) | (1,405) | |
Allocated employee compensation and benefits from related party | (1,624) | (2,968) | (4,324) | (4,879) | |
Professional fees | (918) | (1,031) | (1,911) | (2,273) | |
Management fees - related party | (5,465) | (2,626) | (8,661) | (5,319) | |
Incentive fees - related party | (286) | (286) | |||
Transaction related expenses | (1,372) | (1,266) | (7,071) | (7,573) | |
Other operating expenses | (1,426) | (930) | (2,892) | (1,588) | |
Total non-interest expense | (11,868) | (9,621) | (26,678) | (23,323) | |
Income (loss) before provision for income taxes | (11,843) | (9,550) | (26,337) | (25,249) | |
Total assets | $ 136,096 | $ 252,430 | $ 136,096 | $ 252,430 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent event € in Millions, $ in Millions | Jul. 25, 2022 USD ($) | Jul. 13, 2022 EUR (€) |
Starz Real Estate | Commercial | Real Estate Loans | ||
Subsequent Event | ||
Total loans expected to be originated | € 300 | |
Period during which loans are expected to be originated | 2 years | |
Starz Real Estate | Commercial | Real Estate Loans | Minimum | ||
Subsequent Event | ||
Targeted loan values | € 10 | |
Starz Real Estate | Commercial | Real Estate Loans | Maximum | ||
Subsequent Event | ||
Targeted loan values | € 40 | |
Targeted LTV ratio | 75% | |
7.375% Senior Notes due in 2027 | ||
Subsequent Event | ||
Debt instrument, face value | $ | $ 80 | |
Interest rate (as a percent) | 7.375% | |
Proceeds from secured debt | $ | $ 77.5 |