Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2023 | May 08, 2023 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Mar. 31, 2023 | |
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 | 110,745,658 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q1 | |
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 | Mar. 31, 2023 | Dec. 31, 2022 |
Assets | ||
Cash and cash equivalents | $ 111,192 | |
Restricted cash | 49,632 | |
Loans, net (including $9,859 and $9,786 held at fair value) | 3,128,197 | $ 3,576,310 |
Loans, held-for-sale, at fair value | 236,578 | 258,377 |
Paycheck Protection Program loans (including $346 and $576 held at fair value) | 146,557 | 186,985 |
Mortgage backed securities, at fair value | 32,607 | 32,041 |
Loans eligible for repurchase from Ginnie Mae | 64,293 | 66,193 |
Investment in unconsolidated joint ventures (including $7,913 and $8,094 held at fair value) | 114,169 | 118,641 |
Investments held to maturity | 3,306 | 3,306 |
Purchased future receivables, net | 10,568 | 8,246 |
Derivative instruments | 13,773 | 12,963 |
Servicing rights (including $188,985 and $192,203 held at fair value) | 278,936 | 279,320 |
Real estate owned, held for sale | 90,104 | 117,098 |
Other assets | 202,690 | 189,769 |
Total Assets | 11,537,463 | 11,620,977 |
Liabilities | ||
Paycheck Protection Program Liquidity Facility (PPPLF) borrowings | 169,596 | 201,011 |
Convertible notes, net | 114,689 | 114,397 |
Senior secured notes, net | 343,798 | 343,355 |
Corporate debt, net | 663,623 | 662,665 |
Guaranteed loan financing | 238,948 | 264,889 |
Contingent consideration | 16,636 | 28,500 |
Liabilities for loans eligible for repurchase from Ginnie Mae | 64,293 | 66,193 |
Derivative instruments | 2,639 | 1,586 |
Dividends payable | 47,308 | 47,177 |
Loan participations sold | 55,967 | 54,641 |
Due to third parties | 12,881 | 11,805 |
Accounts payable and other accrued liabilities | 132,523 | 176,520 |
Total Liabilities | 9,648,770 | 9,722,382 |
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, 110,745,658 and 110,523,641 shares issued and outstanding, respectively | 11 | 11 |
Additional paid-in capital | 1,687,631 | 1,684,074 |
Retained earnings (deficit) | (6,532) | 4,994 |
Accumulated other comprehensive loss | (12,353) | (9,369) |
Total Ready Capital Corporation equity | 1,780,135 | 1,791,088 |
Non-controlling interests | 100,197 | 99,146 |
Total Stockholders' Equity | 1,880,332 | 1,890,234 |
Total Liabilities, Redeemable Preferred Stock, and Stockholders' Equity | 11,537,463 | 11,620,977 |
Consolidated Excluding VIEs | ||
Assets | ||
Cash and cash equivalents | 111,192 | 163,041 |
Restricted cash | 49,632 | 55,927 |
Loans, net (including $9,859 and $9,786 held at fair value) | 3,128,197 | 3,576,310 |
Other assets | 202,690 | 189,769 |
Liabilities | ||
Secured borrowings | 2,484,902 | 2,846,293 |
Consolidated VIEs | ||
Assets | ||
Assets of consolidated VIEs | 7,054,861 | 6,552,760 |
Liabilities | ||
Secured borrowings | $ 5,300,967 | $ 4,903,350 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Parenthetical information | ||
Loans, net, held at fair value | $ 9,859 | $ 9,786 |
Paycheck Protection Program loans, held at fair value | 346 | 576 |
Investment in unconsolidated joint ventures, held at fair value | 7,913 | 8,094 |
Servicing rights held at fair value | $ 188,985 | $ 192,203 |
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 | 110,745,658 | 110,523,641 |
Common stock, outstanding | 110,745,658 | 110,523,641 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
CONSOLIDATED STATEMENTS OF INCOME | ||
Interest income | $ 217,573 | $ 124,405 |
Interest expense | (160,394) | (61,017) |
Net interest income before provision for loan losses | 57,179 | 63,388 |
Recovery of (provision for) loan losses | 6,734 | (1,542) |
Net interest income after recovery of (provision for) loan losses | 63,913 | 61,846 |
Non-interest income | ||
Residential mortgage banking activities | 9,169 | 8,424 |
Net realized gain (loss) on financial instruments and real estate owned | 11,575 | 8,007 |
Net unrealized gain (loss) on financial instruments | (11,728) | 45,315 |
Servicing income, net of amortization and impairment of $1,759 and $3,345 | 14,003 | 10,528 |
Income on purchased future receivables, net of allowance for (recovery of) doubtful accounts of $1,594 and $(125) | 540 | 2,469 |
Income on unconsolidated joint ventures | 656 | 6,563 |
Other income | 19,883 | 6,501 |
Total non-interest income | 44,098 | 87,807 |
Non-interest expense | ||
Employee compensation and benefits | (25,139) | (27,968) |
Allocated employee compensation and benefits from related party | (2,326) | (3,000) |
Variable expenses on residential mortgage banking activities | (5,485) | (979) |
Professional fees | (5,717) | (5,126) |
Management fees - related party | (5,081) | (3,196) |
Incentive fees - related party | (1,720) | |
Loan servicing expense | (9,963) | (8,920) |
Transaction related expenses | (893) | (5,699) |
Other operating expenses | (14,318) | (12,653) |
Total non-interest expense | (70,642) | (67,541) |
Income before provision for income taxes | 37,369 | 82,112 |
Income tax provision | (391) | (17,849) |
Net income | 36,978 | 64,263 |
Less: Dividends on preferred stock | 1,999 | 1,999 |
Less: Net income attributable to non-controlling interest | 1,835 | 775 |
Net income attributable to Ready Capital Corporation | $ 33,144 | $ 61,489 |
Earnings per basic common share | ||
Earnings per common share - basic | $ 0.30 | $ 0.70 |
Earnings per diluted common share | ||
Earnings per common share - diluted | $ 0.29 | $ 0.66 |
Weighted-average shares outstanding | ||
Basic | 110,672,939 | 87,707,281 |
Diluted | 121,025,909 | 95,402,494 |
Dividends declared per share of common stock | $ 0.40 | $ 0.42 |
CONSOLIDATED STATEMENTS OF IN_2
CONSOLIDATED STATEMENTS OF INCOME (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
CONSOLIDATED STATEMENTS OF INCOME | ||
Servicing income, amortization and impairment | $ 1,759 | $ 3,345 |
Income on purchased future receivable, allowance for (recovery of) doubtful accounts | $ 1,594 | $ (125) |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||
Net income | $ 36,978 | $ 64,263 |
Other comprehensive income - net change by component | ||
Net change in hedging derivatives (cash flow hedges) | (3,805) | 213 |
Foreign currency translation adjustment | 778 | 766 |
Other comprehensive income (loss) | (3,027) | 979 |
Comprehensive income | 33,951 | 65,242 |
Comprehensive income attributable to non-controlling interests | 1,794 | 780 |
Comprehensive income attributable to Ready Capital Corporation | $ 32,157 | $ 64,462 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - USD ($) $ in Thousands | Total Ready Capital Corporation Equity | 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, 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 | (48,426) | (48,426) | (48,426) | |||||
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) | |||||
Shares issued pursuant to merger transactions | 437,311 | $ 3 | 437,308 | 437,311 | ||||
Shares issued pursuant merger to merger transactions (shares) | 30,252,764 | |||||||
OP units issued pursuant to merger transaction | 20,745 | 20,745 | ||||||
Non-controlling interest acquired in merger transaction | 82,257 | 82,257 | ||||||
Equity issuances | 124,149 | 124,149 | 124,149 | |||||
Shares issued | 8,077,101 | |||||||
Offering costs | (763) | (763) | (4) | (767) | ||||
Distributions, net | (1,916) | (1,916) | ||||||
Equity component of 2017 convertible note issuance | (108) | (108) | (1) | (109) | ||||
Stock-based compensation | 3,646 | 3,646 | 3,646 | |||||
Stock-based compensation (shares) | 252,260 | |||||||
Share repurchases | (1,261) | (1,261) | (1,261) | |||||
Share repurchases (shares) | (84,227) | |||||||
Reallocation of noncontrolling interest | (1,670) | (1,725) | 55 | 1,670 | ||||
Net income | 63,488 | 63,488 | 775 | 64,263 | ||||
Other comprehensive income (loss) | 974 | 974 | 5 | 979 | ||||
Balance at end 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 end of period (in shares) at Mar. 31, 2022 | 4,600,000 | 114,335,948 | ||||||
Balance at beginning of period at Dec. 31, 2022 | 1,791,088 | $ 111,378 | $ 11 | 1,684,074 | 4,994 | (9,369) | 99,146 | 1,890,234 |
Balance at beginning of period (in shares) at Dec. 31, 2022 | 4,600,000 | 110,523,641 | ||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Dividend declared on common stock | (44,670) | (44,670) | (44,670) | |||||
Dividend declared on OP units | (638) | (638) | ||||||
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 | 125 | 125 | 125 | |||||
Offering costs | (19) | (19) | (19) | |||||
Distributions, net | (100) | (100) | ||||||
Equity component of 2017 convertible note issuance | (115) | (115) | (2) | (117) | ||||
Stock-based compensation | 4,947 | 4,947 | 4,947 | |||||
Stock-based compensation (shares) | 333,470 | |||||||
Share repurchases | (1,382) | (1,382) | (1,382) | |||||
Share repurchases (shares) | (111,453) | |||||||
Reallocation of noncontrolling interest | 3 | 1 | 2 | (3) | ||||
Net income | 35,143 | 35,143 | 1,835 | 36,978 | ||||
Other comprehensive income (loss) | (2,986) | (2,986) | (41) | (3,027) | ||||
Balance at end of period at Mar. 31, 2023 | $ 1,780,135 | $ 111,378 | $ 11 | $ 1,687,631 | $ (6,532) | $ (12,353) | $ 100,197 | $ 1,880,332 |
Balance at end of period (in shares) at Mar. 31, 2023 | 4,600,000 | 110,745,658 |
CONSOLIDATED STATEMENTS OF CH_2
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Parenthetical) - $ / shares | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Dividends declared per share of common stock | $ 0.40 | $ 0.42 |
Series C Preferred Stock | ||
Dividends declared per share of preferred stock | 0.390625 | 0.390625 |
Series E Preferred Stock | ||
Dividends declared per share of preferred stock | $ 0.406250 | $ 0.406250 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Cash Flows From Operating Activities: | ||
Net income | $ 36,978 | $ 64,263 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Stock-based compensation | 1,853 | 1,963 |
Provision for (recovery of) loan losses | (6,734) | 1,542 |
Impairment loss on real estate, held for sale | 3,418 | 1,827 |
Repair and denial reserve | 199 | (2,193) |
Allowance for (recovery of) doubtful accounts on purchased future receivables | 1,594 | (125) |
Net income of unconsolidated joint ventures, net of distributions | (60) | (4,779) |
Realized (gains) losses, net | (19,700) | (11,689) |
Unrealized (gains) losses, net | 12,481 | (46,912) |
Loans, held for sale, at fair value | 30,223 | 23,503 |
Amortization of premiums, discounts, and debt issuance costs, net | 9,767 | (5,739) |
Net changes in operating assets and liabilities | ||
Purchased future receivables, net | (3,916) | (756) |
Derivative instruments | (4,115) | 495 |
Assets of consolidated VIEs (excluding loans, net), accrued interest and due from servicers | (9,918) | (115) |
Receivable from third parties | (5,899) | 21,979 |
Other assets | (10,067) | (9,329) |
Accounts payable and other accrued liabilities | (37,011) | (19,193) |
Net cash provided by (used for) operating activities | (907) | 14,742 |
Cash Flows From Investing Activities: | ||
Origination of loans | (283,368) | (1,289,329) |
Purchase of loans | (519) | (643,744) |
Proceeds from disposition and principal payment of loans | 252,609 | 371,142 |
Proceeds from disposition and principal payment of Paycheck Protection Program loans | 43,341 | 330,945 |
Funding of investments held to maturity | (406) | |
Proceeds from sale and principal payment of mortgage backed securities, at fair value | 5,168 | |
Funding of real estate, held for sale | (1,678) | (902) |
Proceeds from sale of real estate, held for sale | 33,761 | 1,416 |
Investment in unconsolidated joint ventures | (65) | (8,700) |
Distributions in excess of cumulative earnings from unconsolidated joint ventures | 4,597 | 5,152 |
Payment of liability under participation agreements, net of proceeds received | (782) | (17,270) |
Net cash provided by business acquisitions | 123,566 | |
Net cash provided by (used for) investing activities | 47,896 | (1,122,962) |
Cash Flows From Financing Activities: | ||
Proceeds from secured borrowings | 1,939,011 | 4,208,161 |
Repayment of secured borrowings | (2,302,394) | (3,516,612) |
Repayment of Paycheck Protection Program Liquidity Facility borrowings | (31,415) | (314,060) |
Proceeds from issuance of securitized debt obligations of consolidated VIEs | 482,267 | 928,257 |
Repayment of securitized debt obligations of consolidated VIEs | (86,345) | (259,705) |
Proceeds from corporate debt | 4,040 | |
Repayment of guaranteed loan financing | (31,563) | (30,486) |
Payment of deferred financing costs | (9,321) | (11,477) |
Payment of contingent consideration | (9,000) | (9,000) |
Proceeds from issuance of equity, net of issuance costs | 106 | 123,382 |
Settlement of share-based awards in satisfaction of withholding tax requirements | (1,382) | (1,261) |
Dividend payments | (47,176) | (34,347) |
Distributions to non-controlling interests, net | (100) | (1,916) |
Net cash provided by (used for) financing activities | (97,312) | 1,084,976 |
Net decrease in cash, cash equivalents, and restricted cash | (50,323) | (23,244) |
Cash, cash equivalents, and restricted cash beginning balance | 297,027 | 323,328 |
Cash, cash equivalents, and restricted cash ending balance | 246,704 | 300,084 |
Supplemental disclosures: | ||
Cash paid for interest | 144,970 | 49,854 |
Cash paid for income taxes | 134 | 102 |
Supplemental disclosure: Non-cash investing activities | ||
Loans transferred from loans, held for sale, at fair value to loans, net | 344 | |
Loans transferred from loans, net to loans, held for sale, at fair value | 1,507 | |
Loans transferred to real estate owned | $ 22,393 | 496 |
Contingent consideration in connection with acquisitions | 84,348 | |
Supplemental disclosure: Non-cash financing activities | ||
Shares and OP units issued in connection with merger transactions | $ 458,056 |
CONSOLIDATED STATEMENTS OF CA_2
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2023 | Mar. 31, 2022 |
Cash, cash equivalents, and restricted cash reconciliation | ||
Cash and cash equivalents | $ 111,192 | $ 211,369 |
Restricted cash | 49,632 | 56,963 |
Cash, cash equivalents, and restricted cash in assets of consolidated VIEs | 85,880 | 31,752 |
Cash, cash equivalents, and restricted cash ending balance | $ 246,704 | $ 300,084 |
Organization
Organization | 3 Months Ended |
Mar. 31, 2023 | |
Organization | |
Organization | 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 the Company’s assets and conducts substantially all of the Company’s business. As of both March 31, 2023 and December 31, 2022, the Company owned approximately 98.6% of the operating partnership. 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 Broadmark. Under the terms of the Broadmark Merger Agreement, at the effective time of the Broadmark Merger (the “Effective Time”), each share of common stock, par value $0.001 per share, of Broadmark (the “Broadmark Common Stock”) issued and outstanding immediately prior to the Effective Time (excluding any shares held by the Company, RCC Merger Sub or any of their respective subsidiaries) will automatically be converted into the right to receive from the Company 0.47233 shares of its common stock, par value $0.0001 (“Common Stock”), subject to adjustment as provided in the Broadmark Merger Agreement (the “Exchange Ratio”). Each award of performance restricted stock units (each a “Broadmark Performance RSU Award”) granted by Broadmark under its 2019 Stock Incentive Plan (the “Broadmark Equity Plan”) will, as of the Effective Time, automatically be cancelled in exchange for the right to receive a number of shares of Common Stock equal to the product of (i) the number of shares of Broadmark Common Stock subject to such Broadmark Performance RSU Award based on the achievement of the applicable performance metric measured as of immediately prior to the Effective Time and (ii) the Exchange Ratio. Each award of restricted stock units that is not a Broadmark Performance RSU Award granted pursuant to the Broadmark Equity Plan (each a “Broadmark RSU Award”) will be assumed by the Company and converted into an award of restricted stock units with respect to a number of shares of Common Stock, equal to the product of (i) the total number of shares of Broadmark Common Stock subject to such Broadmark RSU Award as of immediately prior to the Effective Time and (ii) the Exchange Ratio (rounded to the nearest whole share), on the same terms and conditions as were applicable to such Broadmark RSU Award as of immediately prior to the Effective Time. Each holder of a warrant (whether designated as public warrants, private warrants or otherwise) representing the right to purchase shares of Broadmark Common Stock (each a “Broadmark Warrant”) may exercise such Broadmark Warrant at any time prior to the Effective Time in exchange for Broadmark Common Stock, in accordance with, and subject to, the terms and conditions of the agreement governing such Broadmark Warrant. Following the Effective Time, each Broadmark Warrant that is outstanding as of the Effective Time shall remain outstanding and entitle each holder thereof to receive, upon exercise of such Broadmark Warrant, a number of shares of Common Stock equal to the product of (i) the total number of shares of Broadmark Common Stock that such holder would have been entitled to receive had such holder exercised such Broadmark Warrant immediately prior to the Effective Time and (ii) the Exchange Ratio. Following the consummation of the Broadmark Merger, the number of directors on the Company's Board will be increased by three members, from nine to twelve, and will include all of the current directors of the Company's Board and three additional directors, each of whom currently serves on the board of directors of Broadmark. The Company currently expects that the Broadmark Merger will close as soon as the second quarter of 2023, subject to the respective approvals of the Company’s stockholders and Broadmark’s stockholders and other customary closing conditions. 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, pursuant to a Board resolution, 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 Mosaic Mergers. 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 | 3 Months Ended |
Mar. 31, 2023 | |
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 March 31, 2023 and for the three months ended March 31, 2023 and 2022, 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 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 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, 2022, as filed with the SEC. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2023 | |
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 the Company is 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. 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. The Company utilizes 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 the Company has 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. The Company’s 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. of loans for which principal or interest has been delinquent for 90 days or more and for which specific reserves are recorded, including purchased credit-deteriorated (“PCD”) loans. Interest income accrued, but not collected, at the date loans are placed on non-accrual status is reversed, unless the loan is expected to be fully recoverable by the collateral or is in the process of being collected. Interest income is subsequently recognized only to the extent it is received in cash or until the loan qualifies for return to accrual status. However, where there is doubt regarding the ultimate collectability of loan principal, all cash received is applied to reduce the carrying value of such loans. Loans are restored to accrual status only when contractually current and the collection of future payments is reasonably assured. 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. 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 qualification as a REIT for U.S. federal income tax purposes, the Company utilizes 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 its risk management strategy. The Company accounts for derivative instruments under ASC 815, Derivatives and Hedging in earnings unless hedge accounting is elected. As of March 31, 2023 and December 31, 2022, the Company had offset $34.0 and $41.8 million of cash collateral payable against gross derivative asset positions, respectively. 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. Cash flow hedges are used to hedge the exposure to the 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 remained 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 Hedge accounting is generally terminated at the debt issuance date because the Company is 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 servicing rights for impairment, the Company first determines whether facts and circumstances exist that would suggest the carrying value of the servicing asset is not recoverable. If so, the Company then compares 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. The Company estimates 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 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. The Company also considers other factors that can impact the value of the servicing rights, such as surety provider termination clauses and servicer terminations that could result if the Company failed to materially comply with the covenants or conditions of its servicing agreements and did not remedy the failure. Since many factors can affect the estimate of the fair value of servicing rights, the Company regularly evaluates the major assumptions and modeling techniques used in its estimate and reviews these assumptions against market comparables, if available. The Company monitors the actual performance of its 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. Such securities are accounted for at amortized cost and reviewed on a quarterly basis to determine if an allowance for credit losses should be recorded in the consolidated statements of income. Purchased future receivables 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 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 Software- costs of software to be sold, leased, or marketed. 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, which permits a qualitative assessment of whether it is more likely than not that the fair value of the reporting unit is less than its carrying value including goodwill. If the qualitative assessment determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying value, including goodwill, then no impairment is determined to exist for the reporting unit. However, if the qualitative assessment determines that it is more likely than not that the fair value of the reporting unit is less than its carrying value, including goodwill, or the Company chooses not to perform the qualitative assessment, then the Company compares the fair value of that reporting unit with its carrying value, including goodwill, in a quantitative assessment. If the carrying value of a reporting unit exceeds its fair value, goodwill is considered impaired with the impairment loss measured as the excess of the reporting unit’s carrying value, including goodwill, over its fair value. The estimated fair value of the reporting unit is derived based on valuation techniques the Company believes market participants would use for each of the reporting units. 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 first quarter of 2023, 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. Deferred financing costs Costs incurred in connection with 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. 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. The Company accounts for borrowings under the PPPLF under ASC 470. Interest paid and accrued in connection with PPPLF is recorded as interest expense in the consolidated statements of income. Securitized debt obligations of consolidated VIEs, net Since 2011, the Company has 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. The Company measured the estimated fair value of the debt component of its convertible notes as of the issuance date based on its nonconvertible debt borrowing rate. The equity components of the convertible senior notes have been reflected within additional paid-in capital in the Company’s 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 the Company’s 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 the 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 the Company’s obligations under its existing indebtedness or to be released at the Company’s 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 the Company is required to make the SBA whole for reimbursement of the guaranteed portion of SBA loans. The Company 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 ha |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2023 | |
Recent Accounting Pronouncements | |
Recent Accounting Pronouncements | Note 4. Recent accounting pronouncements 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. In December 2022, the FASB issued ASU No. 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848. The amendments in this update defers the sunset date of Topic 848 from December 31, 2022 to December 31, 2024, after which relief will no longer be permitted. The Company has not adopted any of the optional expedients or exceptions through March 31, 2023, but will continue to evaluate the possible adoption of any such expedients or exceptions. 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 ASU became effective in January 2023. The Company adopted the ASU under a prospective approach. The adoption of this standard does not have a material impact on the Company's consolidated financial statements. |
Business Combinations
Business Combinations | 3 Months Ended |
Mar. 31, 2023 | |
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) Preliminary Purchase Price Allocation Measurement Period Adjustments Final Purchase Price Allocation Assets Cash and cash equivalents $ 100,236 $ — $ 100,236 Restricted cash 23,330 — 23,330 Loans, net 432,779 (20,034) 412,745 Investments held to maturity 165,302 (3,735) 161,567 Real estate owned, held for sale 78,693 (33,945) 44,748 Other assets 25,761 (5,097) 20,664 Total assets acquired $ 826,101 $ (62,811) $ 763,290 Liabilities Secured borrowings $ 66,202 $ — $ 66,202 Loan participations sold 73,656 — 73,656 Due to third parties 24,634 (333) 24,301 Accounts payable and other accrued liabilities 38,182 599 38,781 Total liabilities assumed $ 202,674 $ 266 $ 202,940 Net assets acquired $ 623,427 $ (63,077) $ 560,350 Non-controlling interests (82,257) (267) (82,524) Net assets acquired, net of non-controlling interests $ 541,170 $ (63,344) $ 477,826 In a business combination, the initial allocation of the purchase price is considered preliminary and therefore, was subject to change until the end of the measurement period. The final determination occurred within one year of the acquisition date. The provisional amounts presented in the table above pertained to the preliminary purchase price allocation reported at the time of the Mosaic Mergers based on information that was available to management. The preliminary purchase price allocation changed as the Company completed its analysis of the fair value of the assets acquired and liabilities assumed, with impacts on the consolidated financial statements recorded as such. Subsequent to the determination of the preliminary purchase price allocation, the Company recorded a measurement period adjustment based on the updated valuations obtained by decreasing net assets acquired by $63.3 million and decreasing the fair value of the CERs issued by $59.3 million, with the remainder of the offset recorded as a $4.0 million increase to goodwill as reflected in the table below. In addition, the Company recognized $2.8 million of interest from non-credit discounts on acquired assets which was reported as interest income in the consolidated statements of income. The table below illustrates the aggregate consideration transferred, net assets acquired, and the related goodwill. (in thousands) Preliminary Purchase Price Allocation Measurement Period Adjustments Final Purchase Price Allocation Fair value of net assets acquired $ 541,170 $ (63,344) $ 477,826 Consideration transferred based on the value of Class B shares issued 437,311 — 437,311 Consideration transferred based on the value of OP units issued 20,745 — 20,745 Fair value of CERs issued 84,348 (59,348) 25,000 Total consideration transferred $ 542,404 $ (59,348) $ 483,056 Goodwill $ (1,234) $ (3,996) $ (5,230) The table above includes contingent consideration in the form of CERs valued at approximately $25.0 million or $0.83 per CER. As of March 31, 2023, the CERs were valued at approximately $16.6 million or $0.55 per CER. See Note 7 for more information about the valuation of the CERs. As of March 31, 2023, the goodwill recorded in connection with the Mosaic Mergers has 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, 2023 and January 1, 2022. Three Months Ended March 31, (in thousands) 2023 2022 Selected Financial Data Interest income $ 217,573 $ 137,466 Interest expense (160,394) (63,942) Recovery of (provision for) loan losses 6,734 (1,542) Non-interest income 44,098 88,474 Non-interest expense (70,565) (75,927) Income before provision for income taxes $ 37,446 $ 84,529 Income tax expense (391) (17,849) Net income $ 37,055 $ 66,680 Non-recurring pro-forma transaction costs directly attributable to the Mosaic Mergers were $0.1 million and $5.7 million for the three months ended March 31, 2023 and March 31, 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. |
Loans and Allowance for Credit
Loans and Allowance for Credit Losses | 3 Months Ended |
Mar. 31, 2023 | |
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. March 31, 2023 December 31, 2022 (in thousands) Carrying Value UPB Carrying Value UPB Loans Bridge $ 1,769,498 $ 1,774,827 $ 2,236,333 $ 2,247,173 Fixed rate 186,158 179,041 182,415 175,285 Construction 479,305 481,558 445,814 448,923 Freddie Mac 10,004 9,896 10,040 9,932 SBA - 7(a) 481,319 499,804 491,532 509,672 Residential 5,146 5,146 4,511 4,511 Other 229,775 233,715 266,702 270,748 Total Loans, before allowance for loan losses $ 3,161,205 $ 3,183,987 $ 3,637,347 $ 3,666,244 Allowance for loan losses $ (33,008) $ — $ (61,037) $ — Total Loans, net $ 3,128,197 $ 3,183,987 $ 3,576,310 $ 3,666,244 Loans in consolidated VIEs Bridge $ 5,622,134 $ 5,656,827 $ 5,098,539 $ 5,134,790 Fixed rate 830,071 831,050 856,345 856,914 SBA - 7(a) 58,723 64,567 64,226 70,904 Other 306,015 306,857 322,070 322,975 Total Loans, in consolidated VIEs, before allowance for loan losses $ 6,816,943 $ 6,859,301 $ 6,341,180 $ 6,385,583 Allowance for loan losses on loans in consolidated VIEs $ (34,772) $ — $ (29,482) $ — Total Loans, net, in consolidated VIEs $ 6,782,171 $ 6,859,301 $ 6,311,698 $ 6,385,583 Loans, held for sale, at fair value Fixed rate $ 57,962 $ 68,280 $ 60,551 $ 68,280 Freddie Mac 10,146 10,048 13,791 13,611 SBA - 7(a) 43,427 40,589 44,037 41,674 Residential 119,699 118,179 134,642 133,635 Other 5,344 5,206 5,356 4,414 Total Loans, held for sale, at fair value $ 236,578 $ 242,302 $ 258,377 $ 261,614 Total Loans, net and Loans, held for sale, at fair value $ 10,146,946 $ 10,285,590 $ 10,146,385 $ 10,313,441 Paycheck Protection Program loans Paycheck Protection Program loans, held-for-investment $ 146,211 $ 153,111 $ 186,409 $ 196,222 Paycheck Protection Program loans, held at fair value 346 346 576 576 Total Paycheck Protection Program loans $ 146,557 $ 153,457 $ 186,985 $ 196,798 Total Loan portfolio $ 10,293,503 $ 10,439,047 $ 10,333,370 $ 10,510,239 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 $15.1 million as of March 31, 2023 and $32.8 million, including $16.0 million of reserves of PCD loans, as of December 31, 2022. 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 2023 2022 2021 2020 2019 Pre 2019 Total March 31, 2023 Bridge $ 7,431,654 $ 112,489 $ 2,978,036 $ 3,535,656 $ 332,726 $ 279,749 $ 146,648 $ 7,385,304 Fixed rate 1,010,091 4,013 96,823 153,927 91,774 333,390 332,712 1,012,639 Construction 481,558 27,000 30,372 — 10,000 374,280 37,542 479,194 Freddie Mac 9,896 — — 3,870 6,134 — — 10,004 SBA - 7(a) 564,371 19,942 109,391 74,331 36,091 72,863 223,551 536,169 Residential 5,146 519 4,105 156 — — 366 5,146 Other 540,572 218 5,810 18,647 8,866 45,514 455,498 534,553 Total Loans, before general allowance for loan losses $ 10,043,288 $ 164,181 $ 3,224,537 $ 3,786,587 $ 485,591 $ 1,105,796 $ 1,196,317 $ 9,963,009 General allowance for loan losses $ (52,641) Total Loans, net $ 9,910,368 UPB 2022 2021 2020 2019 2018 Pre 2018 Total December 31, 2022 Bridge $ 7,381,963 $ 2,942,695 $ 3,575,213 $ 355,647 $ 288,957 $ 137,463 $ 27,971 $ 7,327,946 Fixed rate 1,032,199 96,897 154,077 92,080 343,500 134,666 213,406 1,034,626 Construction 448,923 27,532 — 10,000 348,622 42,651 — 428,805 Freddie Mac 9,932 — 3,891 6,149 — — — 10,040 SBA - 7(a) 580,576 110,549 79,946 36,853 77,449 89,085 158,378 552,260 Residential 4,511 1,719 725 361 422 678 606 4,511 Other 593,723 5,893 17,015 10,393 74,762 13,832 465,635 587,530 Total Loans, before general allowance for loan losses $ 10,051,827 $ 3,185,285 $ 3,830,867 $ 511,483 $ 1,133,712 $ 418,375 $ 865,996 $ 9,945,718 General allowance for loan losses $ (57,710) Total Loans, net $ 9,888,008 The tables below present delinquency information on loans, net by year of origination. Carrying Value by Year of Origination (in thousands) UPB 2023 2022 2021 2020 2019 Pre 2019 Total March 31, 2023 Current and less than 30 days past due $ 9,608,149 $ 164,181 $ 3,139,050 $ 3,752,081 $ 476,044 $ 979,327 $ 1,034,485 $ 9,545,168 30 - 59 days past due 146,182 — 84,525 972 2,285 50,866 6,065 144,713 60+ days past due 288,957 — 962 33,534 7,262 75,603 155,767 273,128 Total Loans, before general allowance for loan losses $ 10,043,288 $ 164,181 $ 3,224,537 $ 3,786,587 $ 485,591 $ 1,105,796 $ 1,196,317 $ 9,963,009 General allowance for loan losses $ (52,641) Total Loans, net $ 9,910,368 UPB 2022 2021 2020 2019 2018 Pre 2018 Total December 31, 2022 Current and less than 30 days past due $ 9,666,328 $ 3,099,822 $ 3,826,140 $ 501,168 $ 1,061,145 $ 298,208 $ 810,322 $ 9,596,805 30 - 59 days past due 111,992 85,403 3,483 1,634 6,654 11,190 1,948 110,312 60+ days past due 273,507 60 1,244 8,681 65,913 108,977 53,726 238,601 Total Loans, before general allowance for loan losses $ 10,051,827 $ 3,185,285 $ 3,830,867 $ 511,483 $ 1,133,712 $ 418,375 $ 865,996 $ 9,945,718 General allowance for loan losses $ (57,710) Total Loans, net $ 9,888,008 The table below presents the gross write-offs recorded in the current period for loans by year of origination. (in thousands) Three Months Ended March 31, 2023 2023 $ — 2022 123 2021 140 2020 176 2019 — Pre-2019 17,783 Total $ 18,222 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 March 31, 2023 Bridge $ 7,088,912 $ 127,728 $ 168,664 $ 7,385,304 $ 136,485 $ — Fixed rate 984,724 5,294 22,621 1,012,639 18,614 — Construction 428,035 — 51,159 479,194 51,160 — Freddie Mac 6,911 — 3,093 10,004 3,093 — SBA - 7(a) 524,987 8,621 2,561 536,169 15,277 — Residential 3,896 — 1,250 5,146 1,250 — Other 507,703 3,070 23,780 534,553 25,803 — Total Loans, before general allowance for loan losses $ 9,545,168 $ 144,713 $ 273,128 $ 9,963,009 $ 251,682 $ — General allowance for loan losses $ (52,641) Total Loans, net $ 9,910,368 Percentage of loans outstanding 95.8% 1.5% 2.7% 100% 2.5% 0.0% December 31, 2022 Bridge $ 7,120,162 $ 94,823 $ 112,961 $ 7,327,946 $ 113,360 $ — Fixed rate 993,832 8,101 32,693 1,034,626 28,719 — Construction 372,812 — 55,993 428,805 55,993 — Freddie Mac 6,947 — 3,093 10,040 3,093 — SBA - 7(a) 541,378 6,690 4,192 552,260 12,790 — Residential 2,871 — 1,640 4,511 1,306 — Other 558,803 698 28,029 587,530 27,544 — Total Loans, before general allowance for loan losses $ 9,596,805 $ 110,312 $ 238,601 $ 9,945,718 $ 242,805 $ — General allowance for loan losses $ (57,710) Total Loans, net $ 9,888,008 Percentage of loans outstanding 96.5% 1.1% 2.4% 100% 2.4% 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. LTV (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 March 31, 2023 Bridge $ 736 $ 99,589 $ 694,857 $ 6,423,805 $ 143,403 $ 22,914 $ 7,385,304 Fixed rate 8,499 30,350 431,044 526,064 11,180 5,502 1,012,639 Construction 10,946 14,262 53,742 375,827 24,417 — 479,194 Freddie Mac — — 3,041 6,963 — — 10,004 SBA - 7(a) 7,057 45,868 90,306 178,384 82,289 132,265 536,169 Residential — 921 630 973 1,816 806 5,146 Other 142,134 183,413 117,651 68,513 17,810 5,032 534,553 Total Loans, before general allowance for loan losses $ 169,372 $ 374,403 $ 1,391,271 $ 7,580,529 $ 280,915 $ 166,519 $ 9,963,009 General allowance for loan losses $ (52,641) Total Loans, net $ 9,910,368 Percentage of loans outstanding 1.7% 3.7% 14.0% 76.1% 2.8% 1.7% December 31, 2022 Bridge $ 717 $ 104,606 $ 700,835 $ 6,331,353 $ 167,521 $ 22,914 $ 7,327,946 Fixed rate 9,102 35,459 386,040 578,456 17,056 8,513 1,034,626 Construction 10,817 12,910 26,387 349,085 24,142 5,464 428,805 Freddie Mac — — 3,056 6,984 — — 10,040 SBA - 7(a) 7,275 45,366 92,592 189,733 78,577 138,717 552,260 Residential — 934 300 901 1,716 660 4,511 Other 173,720 214,370 115,934 70,124 8,153 5,229 587,530 Total Loans, before general allowance for loan losses $ 201,631 $ 413,645 $ 1,325,144 $ 7,526,636 $ 297,165 $ 181,497 $ 9,945,718 General allowance for loan losses $ (57,710) Total Loans, net $ 9,888,008 Percentage of loans outstanding 2.0% 4.2% 13.3% 75.7% 3.0% 1.8% (1) LTV 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 UPB) March 31, 2023 December 31, 2022 Texas 20.0 % 20.1 % California 11.3 11.1 Georgia 7.5 7.6 Arizona 6.4 6.8 Florida 6.4 6.3 New York 5.1 5.5 Oregon 4.6 4.4 North Carolina 4.3 4.2 Illinois 4.0 3.9 Ohio 3.2 3.2 Other 27.2 26.9 Total 100.0 % 100.0 % The table below presents the collateral type concentration of loans, net. Collateral Concentration (% of UPB) March 31, 2023 December 31, 2022 Multi-family 67.6 % 67.0 % Mixed Use 8.2 8.1 SBA 5.6 5.8 Retail 5.1 5.5 Industrial 5.1 5.0 Office 4.9 4.9 Lodging/Residential 1.6 1.6 Other 1.9 2.1 Total 100.0 % 100.0 % The table below presents the collateral type concentration of SBA loans within loans, net. Collateral Concentration (% of UPB) March 31, 2023 December 31, 2022 Lodging 22.8 % 14.6 % Offices of Physicians 8.0 7.5 Gasoline Service Stations 7.8 2.5 Eating Places 6.9 3.7 Child Day Care Services 6.6 5.7 General Freight Trucking, Local 2.5 2.5 Veterinarians 1.7 1.6 Grocery Stores 1.7 1.6 Funeral Service & Crematories 1.3 1.2 Coin-Operated Laundries and Drycleaners 1.0 0.8 Other 39.7 58.3 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 Fixed Rate Construction SBA - 7(a) Residential Other Total Allowance for loan losses March 31, 2023 General $ 33,991 $ 5,495 $ 262 $ 11,237 $ — $ 1,656 $ 52,641 Specific 6,328 3,590 111 3,873 — 1,237 15,139 Ending balance $ 40,319 $ 9,085 $ 373 $ 15,110 $ — $ 2,893 $ 67,780 December 31, 2022 General $ 42,979 $ 2,397 $ 325 $ 10,801 $ — $ 1,208 $ 57,710 Specific 6,926 4,134 1,037 3,498 — 1,242 16,837 PCD — — 15,972 — — — 15,972 Ending balance $ 49,905 $ 6,531 $ 17,334 $ 14,299 $ — $ 2,450 $ 90,519 The table below presents a summary of the changes in the allowance for loan losses. (in thousands) Bridge Fixed Rate Construction SBA - 7(a) Residential Other Total Allowance for loan losses Three Months Ended March 31, 2023 Beginning balance $ 49,905 $ 6,531 $ 17,334 $ 14,299 $ — $ 2,450 $ 90,519 Provision for (recoveries of) loan losses (8,975) 2,654 (63) 1,395 — 443 (4,546) Charge-offs and sales (611) (100) (16,898) (613) — — (18,222) Recoveries — — — 29 — — 29 Ending balance $ 40,319 $ 9,085 $ 373 $ 15,110 $ — $ 2,893 $ 67,780 Three Months Ended March 31, 2022 Beginning balance $ 19,519 $ 6,861 $ — $ 12,180 $ 60 $ 6,757 $ 45,377 Provision for (recoveries of) loan losses 359 (337) 323 1,272 — (376) 1,241 PCD — — 5,000 — — — 5,000 Charge-offs and sales — — — (173) — — (173) Recoveries — — — (46) — (155) (201) Ending balance $ 19,878 $ 6,524 $ 5,323 $ 13,233 $ 60 $ 6,226 $ 51,244 The table above excludes $1.6 million and $0.6 million of allowance for loan losses on unfunded lending commitments as of March 31, 2023 and March 31, 2022, respectively. Refer to Note 3 – Summary of Significant Accounting Policies for more information on 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) March 31, 2023 December 31, 2022 Non-accrual loans With an allowance $ 180,986 $ 197,101 Without an allowance 70,696 45,704 Total recorded carrying value of non-accrual loans $ 251,682 $ 242,805 Allowance for loan losses related to non-accrual loans $ (15,027) $ (32,809) UPB of non-accrual loans $ 269,346 $ 278,401 March 31, 2023 March 31, 2022 Interest income on non-accrual loans for the three months ended $ 818 $ 46 PCD loans The Company did not acquire any PCD loans during the three months ended March 31, 2023. During the three months ended March 31, 2022, the Company acquired $22.0 million of credit deteriorated loans in connection with the Mosaic Mergers. Loan modifications made to borrowers experiencing financial difficulty In certain situations, the Company may provide loan modifications to borrowers experiencing financial difficulty. These modifications may include interest rate reductions, principal forgiveness, term extensions, and other-than-insignificant payment delay intended to minimize the Company's economic loss and to avoid foreclosure or repossession of collateral. The table below presents loan modifications made to borrowers experiencing financial difficulty. Three Months Ended March 31, 2023 (in thousands) Carrying Value % of Total Carrying Value of Loans, net Financial Effect SBC loans modified during the period ended Term extension $ 23,356 0.24 % 1 year added to the weighted average life of the loans Other-than-insignificant payment delay 117 0.00 31 months of payment deferral Combination - Term extension and other-than-insignificant payment delay 26,742 0.27 12 months of payment deferral and 1.5 years added to the weighted average life of the loan SBA loans modified during the period ended Term extension $ 10 0.00 % 8.7 years added to the weighted average life of the loans Other-than-insignificant payment delay 659 0.01 6 months of payment deferral The Company monitors the performance of loans modified to borrowers experiencing financial difficulty. The table below presents the performance of loans that have been modified in the last 12 months to borrowers experiencing financial difficulty. The Company considers loans that are 30 days past due to be in payment default. Three Months Ended March 31, 2023 (in thousands) Current 30-59 days past due 60+ days past due Total SBC Term extension $ 23,356 $ — $ — $ 23,356 Other-than-insignificant payment delay 117 — — 117 Combination - Term extension and other-than-insignificant payment delay — — 26,742 26,742 SBA Term extension $ 10 $ — $ — $ 10 Other-than-insignificant payment delay 659 — — 659 As of March 31, 2023, the Company did not have any lending commitments to borrowers experiencing financial difficulty for which the Company has modified the loan terms. The Company's allowance for loan losses reflects our estimate of expected life-time loan losses, which considers historical loan losses including losses from modified loans to borrowers experiencing financial difficulty. The Company continues to estimate the allowance for loan losses after modification using loan-specific inputs. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2023 | |
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. Liabilities recognized in relation to mergers and acquisitions that are accounted for as contingent consideration are classified as Level 3 in the fair value hierarchy with fair value adjustments reported within other income (loss) in the consolidated statements of income. 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. Subsequent to the determination of the preliminary purchase price allocation, based on updated valuations obtained, the Company recorded a measurement period adjustment of $59.3 million to decrease the fair value of the CERs in connection with the Mosaic Mergers. Refer to Note 5 for further details on assets acquired and liabilities assumed in connection with the Mosaic Mergers. 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 March 31, 2023 Assets: Money market funds (a) $ 18,917 $ — $ — $ 18,917 Loans, held for sale, at fair value — 178,248 58,330 236,578 Loans, net, at fair value — — 9,859 9,859 Paycheck Protection Program loans — 346 — 346 MBS, at fair value — 32,607 — 32,607 Derivative instruments, at fair value — 11,794 1,979 13,773 Residential MSRs, at fair value — — 188,985 188,985 Investment in unconsolidated joint ventures — — 7,913 7,913 Preferred equity investment (b) — — 108,423 108,423 Total assets $ 18,917 $ 222,995 $ 375,489 $ 617,401 Liabilities: Derivative instruments, at fair value $ — $ 2,639 $ — $ 2,639 Contingent consideration — — 16,636 16,636 Total liabilities $ — $ 2,639 $ 16,636 $ 19,275 December 31, 2022 Assets: Money market funds (a) $ 44,611 $ — $ — $ 44,611 Loans, held for sale, at fair value — 197,453 60,924 258,377 Loans, net, at fair value — — 9,786 9,786 Paycheck Protection Program loans — 576 — 576 MBS, at fair value — 32,041 — 32,041 Derivative instruments, at fair value — 12,846 117 12,963 Residential MSRs, at fair value — — 192,203 192,203 Investment in unconsolidated joint ventures — — 8,094 8,094 Preferred equity investment (b) — — 108,423 108,423 Total assets $ 44,611 $ 242,916 $ 379,547 $ 667,074 Liabilities: Derivative instruments, at fair value $ — $ 1,586 $ — $ 1,586 Contingent consideration — — 28,500 28,500 Total liabilities $ — $ 1,586 $ 28,500 $ 30,086 (a) Money market funds are included in cash and cash equivalents on the consolidated balance sheet (b) Preferred equity investments held through consolidated joint ventures are included in assets of consolidated VIEs on the consolidated balance sheet 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 March 31, 2023 Residential MSRs, at fair value $ 188,985 Income Approach Forward prepayment rate | Discount rate | Servicing expense (b) (b) Investment in unconsolidated joint ventures $ 7,913 Income Approach Discount rate 9.0% 9.0% Derivative instruments, at fair value 1,979 Market Approach Origination pull-through rate | Servicing Fee Multiple | Percentage of unpaid principal balance 53.88% - 100% | 0.07 - 6.7% | 0.02 - 2.9% 80% | 4.3% | 1.5% Preferred equity investment 108,423 Income Approach Discount rate 10.5% 10.5% Contingent consideration- Mosaic CER dividends (4,003) Monte Carlo Simulation Model Equity volatility | Discount rate 1.89% | 11.54% 1.89% | 11.54% Contingent consideration- Mosaic CER units (12,633) Income approach and PWERM Model Revaluation discount rate | Discount rate 12% | 11.54% 12% | 11.54% December 31, 2022 Residential MSRs, at fair value 192,203 Income Approach Forward prepayment rate | Discount rate | Servicing expense (b) (b) Investment in unconsolidated joint ventures $ 8,094 Income Approach Discount rate 9.0% 9.0% Derivative instruments, at fair value $ 117 Market Approach Origination pull-through rate | Servicing Fee Multiple | Percentage of unpaid principal balance 53.9% - 100% | 2.0 - 7.2% | 0.5 - 3.2% 83% | 4.7% | 1.6% Preferred equity investment 108,423 Income Approach Discount rate 10.5% 10.5% Contingent consideration- Mosaic CER dividends (4,587) Monte Carlo Simulation Model Equity volatility | Discount rate 35.0% | 11.9% 35.0% | 11.9% Contingent consideration- Mosaic CER units (14,913) Income approach and PWERM Model Revaluation discount rate | Discount rate 12.0% | 11.9% 12.0% | 11.9% (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 $375.5 million as of March 31, 2023 and $379.5 million as of December 31, 2022, is $68.2 million and $70.7 million, respectively, of quoted or transaction prices in which quantitative unobservable inputs are not developed by the Company when measuring fair value. Included within Level 3 liabilities of $28.5 million as of December 31, 2022, is $9.0 million of quoted or transaction prices in which quantitative unobservable inputs are not developed by the Company when measuring fair value. 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 Preferred Equity investments Total Three Months Ended March 31, 2023 Beginning Balance $ — $ 117 $ 9,786 $ 60,924 $ — $ — $ 192,203 $ 8,094 $ (28,500) $ 108,423 $ 351,047 Additions due to loans sold, servicing retained — — — — — — 4,593 — — — 4,593 Sales / Principal payments — — — (11) — — (1,718) — 9,000 — 7,271 Unrealized gains (losses), net — 1,862 73 (2,583) — — (6,093) (181) 2,864 — (4,058) Ending Balance $ — $ 1,979 $ 9,859 $ 58,330 $ — $ — $ 188,985 $ 7,913 $ (16,636) $ 108,423 $ 358,853 Three Months Ended March 31, 2022 Beginning Balance $ 1,581 $ 2,339 $ 10,766 $ 231,865 $ — $ 3,243 $ 120,142 $ 8,894 $ (16,400) $ — $ 362,430 Purchases or Originations — — — 17,570 — — — — — — 17,570 Additions due to loans sold, servicing retained — — — — — — 10,506 — — — 10,506 Sales / Principal payments — — — (32,594) — (1,400) (3,412) — 9,000 — (28,406) Realized gains (losses), net — — — (786) — — — — — — (786) Unrealized gains (losses), net 44 (4,955) (44) (10,760) — — 32,598 (284) (400) — 16,199 Merger — — — — 17,053 — — — (84,348) — (67,295) Transfer to (from) Level 3 5,389 — — (1,337) — (1,843) — — — — 2,209 Ending Balance $ 7,014 $ (2,616) $ 10,722 $ 203,958 $ 17,053 $ — $ 159,834 $ 8,610 $ (92,148) $ — $ 312,427 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. March 31, 2023 December 31, 2022 (in thousands) Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value Assets: Loans, net $ 9,900,509 $ 9,680,701 $ 9,878,222 $ 9,610,412 Paycheck Protection Program loans 146,211 146,211 186,409 196,222 Investments held to maturity 3,306 3,320 3,306 3,306 Purchased future receivables, net 10,568 10,568 8,246 8,246 Servicing rights 89,951 95,620 87,117 91,698 Total assets $ 10,150,545 $ 9,936,420 $ 10,163,300 $ 9,909,884 Liabilities: Secured borrowings $ 2,484,902 $ 2,484,902 $ 2,846,293 $ 2,846,293 Paycheck Protection Program Liquidity Facility borrowings 169,596 169,596 201,011 201,011 Securitized debt obligations of consolidated VIEs, net 5,300,967 5,105,516 4,903,350 4,748,291 Senior secured note, net 343,798 309,043 343,355 312,975 Guaranteed loan financing 238,948 248,635 264,889 275,316 Convertible notes, net 114,689 114,104 114,397 113,823 Corporate debt, net 663,623 612,396 662,665 614,744 Total liabilities $ 9,316,523 $ 9,044,192 $ 9,335,960 $ 9,112,453 Other assets of $63.9 million as of March 31, 2023 and $59.0 million as of December 31, 2022, 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 $21.0 million as of March 31, 2023 and $15.1 million as of December 31, 2022, are not carried at fair value but generally approximates fair value and are classified as Level 3. Accounts payable and other accrued liabilities of $47.1 million as of March 31, 2023 and $42.6 million as of December 31, 2022 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 | 3 Months Ended |
Mar. 31, 2023 | |
Investments Held to Maturity | |
Investments Held to Maturity | Note 8. Investments held to maturity The table below presents information about investments held to maturity as of March 31, 2023 and December 31, 2022. Weighted Average Gross Gross Interest Amortized Unrealized Unrealized (in thousands) Rate (a) Cost Fair Value Gains Losses March 31, 2023 Less than one year 12.0 % $ 306 $ 306 $ — $ — Construction preferred equities 12.0 % $ 306 $ 306 $ — $ — One to five years 10.0 % $ 3,000 $ 3,000 $ — $ — Multi-family preferred equities 10.0 % $ 3,000 $ 3,000 $ — $ — Total investments held to maturity 10.3 % $ 3,306 $ 3,306 $ — $ — December 31, 2022 Less than one year 12.0 % $ 306 $ 306 $ — $ — Construction preferred equities 12.0 % $ 306 $ 306 $ — $ — One to five years 10.0 % $ 3,000 $ 3,000 $ — $ — Multi-family preferred equities 10.0 % $ 3,000 $ 3,000 $ — $ — Total investments held to maturity 10.3 % $ 3,306 $ 3,306 $ — $ — (a) Weighted based on current principal balance Provision for credit losses on held to maturity securities was not material for the three months ended March 31, 2023 or March 31, 2022. Subsequent to the determination of the preliminary purchase price allocation, based on updated valuations obtained, the Company recorded a measurement period adjustment of $3.7 million to decrease the value of investments held to maturity in connection with the Mosaic Mergers. Refer to Note 5 for further details on assets acquired and liabilities assumed in connection with the Mosaic Mergers. |
Servicing Rights
Servicing Rights | 3 Months Ended |
Mar. 31, 2023 | |
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 March 31, (in thousands) 2023 2022 SBA servicing rights, at amortized cost Beginning net carrying amount $ 19,756 $ 22,157 Additions due to loans sold, servicing retained 1,512 1,734 Amortization (835) (949) Recovery (impairment) 1,607 (51) Ending net carrying amount $ 22,040 $ 22,891 Multi-family servicing rights, at amortized cost Beginning net carrying amount $ 67,361 $ 62,300 Additions due to loans sold, servicing retained 3,081 1,463 Amortization (2,531) (2,345) Ending net carrying amount $ 67,911 $ 61,418 Total servicing rights, at amortized cost $ 89,951 $ 84,309 Residential MSRs, at fair value Beginning net carrying amount $ 192,203 $ 120,142 Additions due to loans sold, servicing retained 4,593 10,506 Loan pay-offs (1,718) (3,412) Unrealized gains (losses) (6,093) 32,598 Ending fair value amount $ 188,985 $ 159,834 Total servicing rights $ 278,936 $ 244,143 Servicing rights – SBA and multi-family portfolio. The Company’s models calculate the present value of expected future cash flows utilizing assumptions that it believes are used by market participants. Forward prepayment rates, forward default rates and discount rates are derived from historical experiences 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 March 31, 2023 As of December 31, 2022 (in thousands) UPB Carrying Value UPB Carrying Value SBA $ 1,051,612 $ 22,040 $ 1,019,770 $ 19,756 Multi-family 4,999,057 67,911 4,839,028 67,361 Total $ 6,050,669 $ 89,951 $ 5,858,798 $ 87,117 The table below presents significant assumptions used in the estimated valuation of SBA and multi-family servicing rights carried at amortized cost. March 31, 2023 December 31, 2022 Range of input values Weighted Average Range of input values Weighted Average SBA servicing rights Forward prepayment rate 10.1 - 21.9 % 10.5 % 10.2 - 21.6 % 10.6 % Forward default rate 0.0 - 9.9 % 9.2 % 0.0 - 10.0 % 9.2 % Discount rate 15.4 - 23.5 % 15.8 % 18.0 - 31.4 % 18.7 % Servicing expense 0.4 - 0.4 % 0.4 % 0.4 - 0.4 % 0.4 % Multi-family servicing rights Forward prepayment rate 0.0 - 7.5 % 3.5 % 0.0 - 7.2 % 3.5 % Forward default rate 0.0 - 1.1 % 0.8 % 0.0 - 1.1 % 0.8 % 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) March 31, 2023 December 31, 2022 SBA servicing rights Forward prepayment rate Impact of 10% adverse change $ (689) $ (578) Impact of 20% adverse change $ (1,339) $ (1,125) Default rate Impact of 10% adverse change $ (145) $ (125) Impact of 20% adverse change $ (289) $ (249) Discount rate Impact of 10% adverse change $ (897) $ (861) Impact of 20% adverse change $ (1,717) $ (1,642) Servicing expense Impact of 10% adverse change $ (1,373) $ (1,228) Impact of 20% adverse change $ (2,746) $ (2,455) Multi-family servicing rights Forward prepayment rate Impact of 10% adverse change $ (265) $ (271) Impact of 20% adverse change $ (525) $ (537) Default rate Impact of 10% adverse change $ (21) $ (22) Impact of 20% adverse change $ (42) $ (44) Discount rate Impact of 10% adverse change $ (2,104) $ (2,057) Impact of 20% adverse change $ (4,102) $ (4,012) Servicing expense Impact of 10% adverse change $ (2,632) $ (2,685) Impact of 20% adverse change $ (5,264) $ (5,370) The table below presents estimated future amortization expense for SBA and multi-family servicing rights. (in thousands) March 31, 2023 2023 $ 10,538 2024 12,231 2025 10,913 2026 9,672 2027 8,618 Thereafter 37,979 Total $ 89,951 Residential MSRs. The table below presents additional information about residential MSRs carried at fair value. March 31, 2023 December 31, 2022 (in thousands) UPB Fair Value UPB Fair Value Fannie Mae $ 4,539,967 $ 64,188 $ 4,492,990 $ 64,914 Freddie Mac 4,508,391 66,998 4,499,992 68,208 Ginnie Mae 3,108,122 57,799 3,085,038 59,081 Total $ 12,156,480 $ 188,985 $ 12,078,020 $ 192,203 The table below presents significant assumptions used in the valuation of residential MSRs carried at fair value. March 31, 2023 December 31, 2022 Range of input values Weighted Average Range of input values Weighted Average Residential MSRs Forward prepayment rate 5.8 - 17.9 % 7.0 % 6.0 - 21.5 % 6.3 % Discount rate 9.5 - 13.8 % 10.1 % 9.5 - 12.0 % 10.1 % Servicing expense $70 - $95 $74 $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) March 31, 2023 December 31, 2022 Residential MSRs Prepayment rate Impact of 10% adverse change $ (5,556) $ (5,620) Impact of 20% adverse change $ (10,817) $ (10,948) Discount rate Impact of 10% adverse change $ (8,620) $ (8,906) Impact of 20% adverse change $ (16,527) $ (17,066) Servicing expense Impact of 10% adverse change $ (2,692) $ (2,689) Impact of 20% adverse change $ (5,385) $ (5,378) |
Residential mortgage banking ac
Residential mortgage banking activities and variable expenses on residential mortgage banking activities | 3 Months Ended |
Mar. 31, 2023 | |
Residential mortgage banking activities and variable expenses on residential mortgage banking activities | |
Residential mortgage banking activities and variable expenses on residential mortgage banking activities | Note 10. Residential mortgage banking activities and variable expenses on residential mortgage banking activities Residential mortgage banking activities reflects revenue within the Company’s 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 March 31, (in thousands) 2023 2022 Realized and unrealized gain (loss) of residential mortgage loans held for sale, at fair value $ 2,891 $ (5,087) Creation of new MSRs, net of payoffs 2,875 7,094 Loan origination fee income on residential mortgage loans 2,526 4,110 Unrealized gain on IRLCs and other derivatives 877 2,307 Residential mortgage banking activities $ 9,169 $ 8,424 Variable expenses on residential mortgage banking activities $ (5,485) $ (979) |
Secured Borrowings
Secured Borrowings | 3 Months Ended |
Mar. 31, 2023 | |
Secured Borrowings | |
Secured borrowings | Note 11. Secured borrowings The table below presents certain characteristics of secured borrowings. Pledged Assets Carrying Value at Lenders (1) Asset Class Current Maturity (2) Pricing (3) Facility Size Carrying Value March 31, 2023 December 31, 2022 3 SBA loans October 2023 – March 2025 SOFR + 2.875% $ 250,000 $ 235,036 $ 162,839 $ 160,903 2 SBC loans - USD June 2023 – February 2024 1 ML + 7.00% 360,000 360,009 109,336 111,966 1 SBC loans - Non-USD (4) June 2026 SONIA + 3.25% 123,370 50,716 36,317 61,596 5 Residential loans May 2023 – November 2023 Variable Pricing 440,000 122,850 118,641 132,658 1 Residential MSRs February 2026 SOFR + 3.00% 120,000 131,185 97,881 49,900 1 Purchased future receivables October 2023 1 ML + 4.50% 50,000 — — — Total borrowings under credit facilities and other financing agreements $ 1,343,370 $ 899,796 $ 525,014 $ 517,023 7 SBC loans November 2023 – March 2026 1 MT + 2.00% $ 3,870,500 $ 1,920,195 $ 1,527,847 $ 1,905,358 1 SBC loans - Non-USD (4) January 2024 EURIBOR + 3.00% 216,780 46,724 39,174 — 6 MBS April 2023 – August 2023 6.93% 392,867 773,823 392,867 423,912 Total borrowings under repurchase agreements $ 4,480,147 $ 2,740,742 $ 1,959,888 $ 2,329,270 Total secured borrowings $ 5,823,517 $ 3,640,538 $ 2,484,902 $ 2,846,293 (1) Represents the total number of facility lenders. (2) Current maturity does not reflect extension options available beyond original commitment terms. (3) Asset class pricing is determined using an index rate plus a weighted average spread. (4) Non-USD denominated credit facilities and repurchase agreements have been converted into USD for purposes of this disclosure. In the table above, the agreements governing secured borrowings require maintenance of certain financial and debt covenants. As of both March 31, 2023 and December 31, 2022, certain financing counterparties covenants calculations were amended to exclude the PPPLF from certain covenant calculations. As of both March 31, 2023 and December 31, 2022 the Company was in compliance with all debt and financial covenants. The table below presents the carrying value of collateral pledged with respect to secured borrowings outstanding. Pledged Assets Carrying Value (in thousands) March 31, 2023 December 31, 2022 Collateral pledged - borrowings under credit facilities and other financing agreements Loans, held for sale, at fair value $ 136,181 $ 146,721 Loans, net 632,430 630,910 MSRs 131,185 133,122 Total $ 899,796 $ 910,753 Collateral pledged - borrowings under repurchase agreements Loans, net $ 1,940,993 $ 2,496,880 MBS 26,219 27,015 Retained interest in assets of consolidated VIEs 747,604 753,099 Loans, held for sale, at fair value 20,428 60,551 Loans, held at fair value 4,007 3,974 Real estate acquired in settlement of loans 1,491 1,491 Total $ 2,740,742 $ 3,343,010 Total collateral pledged on secured borrowings $ 3,640,538 $ 4,253,763 |
Senior secured notes, convertib
Senior secured notes, convertible notes, and corporate debt, net | 3 Months Ended |
Mar. 31, 2023 | |
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, LLC (“ReadyCap Holdings”) 4.50% senior secured notes due 2026. 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 (collectively, the “SSN Collateral”) owned by certain subsidiaries of the Company. The Senior Secured Notes are redeemable by ReadyCap Holdings’ following a non-call period, through the payment of the outstanding principal balance of the Senior Secured Notes plus a “make-whole” or other premium that decreases the closer the Senior Secured Notes are to maturity. ReadyCap Holdings is required to offer to repurchase the Senior Secured Notes at 101% of the principal balance of the Senior Secured Notes in the event of a change in control and a downgrade of the rating on the Senior Secured Notes in connection therewith, as set forth more fully in the note purchase agreement. The Senior Secured Notes were issued pursuant to a note purchase agreement, which contains certain customary negative covenants and requirements relating to the collateral and our company, including maintenance of minimum liquidity, minimum tangible net worth, maximum debt to net worth ratio and limitations on transactions with affiliates. 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”). As of March 31, 2023, the conversion rate was 1.6548 shares of common stock per $25 principal amount of the Convertible Notes, which is equivalent to a conversion price of approximately $15.11 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 the Company provides 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 March 31, 2023, the Company was in compliance with all covenants with respect to the Convertible Notes. Corporate debt, net The Company issues senior unsecured notes in public and private transactions. The notes are governed by a base indenture and supplemental indentures. Often, the notes are redeemable by us following a non-call period, through the payment of the outstanding principal balance plus a “make-whole” or other premium that typically decreases the closer the notes are to maturity. The Company often is required to offer to repurchase the notes in some cases at 101% of the principal balance of the notes in the event of a change in control or fundamental change pertaining to our company, as defined in the applicable supplemental indentures. The notes rank equal in right of payment to any of its 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 us) preferred stock, if any, of our subsidiaries. The supplemental indentures governing the notes often contain customary negative covenants and financial covenants relating to maintenance of minimum liquidity, minimum tangible net worth, maximum debt to net worth ratio and limitations on transactions with affiliates. As of March 31, 2023, the Company was in compliance with all covenants with respect to Corporate debt. 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 it 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 (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. such sales through the Debt ATM Program were made during the three months ended March 31, 2023. The table below presents information about senior secured notes, convertible notes and corporate debt. (in thousands) Coupon Rate Maturity Date March 31, 2023 Senior secured notes principal amount (1) 4.50 % 10/20/2026 $ 350,000 Unamortized deferred financing costs - Senior secured notes (6,202) Total Senior secured notes, net $ 343,798 Convertible notes principal amount (2) 7.00 % 8/15/2023 115,000 Unamortized discount - Convertible notes (3) (77) Unamortized deferred financing costs - Convertible notes (234) Total Convertible notes, net $ 114,689 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 Corporate debt principal amount (7) 7.375 % 7/31/2027 100,000 Unamortized discount - corporate debt (9,141) Unamortized deferred financing costs - corporate debt (4,369) Junior subordinated notes principal amount (8) 3ML + 3.10 % 3/30/2035 15,000 Junior subordinated notes principal amount (9) 3ML + 3.10 % 4/30/2035 21,250 Total corporate debt, net $ 663,623 Total carrying amount of debt $ 1,122,110 Total carrying amount of conversion option of equity components recorded in equity $ 77 (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 corporate debt is payable semiannually on January 31 and July 31 of each year. (8) Interest on the Junior subordinated notes I-A is payable quarterly on March 30, June 30, September 30, and December 30 of each year. (9) 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 senior secured notes, convertible notes, and corporate debt. (in thousands) March 31, 2023 2023 $ 115,000 2024 — 2025 120,000 2026 660,883 2027 100,000 Thereafter 146,250 Total contractual amounts $ 1,142,133 Unamortized deferred financing costs, discounts, and premiums, net (20,023) Total carrying amount of debt $ 1,122,110 |
Guaranteed loan financing
Guaranteed loan financing | 3 Months Ended |
Mar. 31, 2023 | |
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 $239.6 million and $265.6 million as of March 31, 2023 and December 31, 2022, 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 March 31, 2023 7.87 % 1.45-9.25 % 2023-2046 $ 238,948 December 31, 2022 6.68 % 1.45-8.50 % 2023-2046 $ 264,889 The table below presents the contractual maturities of guaranteed loan financing. g (in thousands) March 31, 2023 2023 $ 149 2024 859 2025 1,136 2026 3,881 2027 11,475 Thereafter 221,448 Total $ 238,948 |
Variable interest entities and
Variable interest entities and securitization activities | 3 Months Ended |
Mar. 31, 2023 | |
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, the Company enters into certain types of transactions with entities that are considered to be VIEs. The Company’s primary involvement with VIEs has been related to its securitization transactions in which it transfers assets to securitization vehicles, most notably trusts. The Company primarily securitizes its acquired and originated loans, which provides a source of funding and has enabled it to transfer a certain portion of economic risk on loans or related debt securities to third parties. The Company also transfers originated loans to securitization trusts sponsored by third parties, most notably Freddie Mac. Third-party securitizations are securitization entities in which it maintains an economic interest but does 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 the Company is involved in are consolidated within its financial statements. Refer to Note 3 – Summary of Significant Accounting Policies for a discussion of 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. March 31, 2023 December 31, 2022 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 $ 43,189 $ 42,804 7.0 % $ 49,031 $ 48,518 4.0 % Sutherland Commercial Mortgage Trust 2017-SBC6 5,386 5,296 5.0 7,386 7,273 4.3 Sutherland Commercial Mortgage Trust 2019-SBC8 116,818 115,053 2.9 120,916 119,072 2.9 Sutherland Commercial Mortgage Trust 2021-SBC10 102,608 101,062 1.6 109,622 107,969 1.6 ReadyCap Commercial Mortgage Trust 2015-2 2,167 1,926 5.2 2,726 2,442 5.1 ReadyCap Commercial Mortgage Trust 2016-3 11,732 11,603 5.1 11,950 11,787 5.1 ReadyCap Commercial Mortgage Trust 2018-4 53,380 52,432 4.7 58,838 57,857 4.3 ReadyCap Commercial Mortgage Trust 2019-5 105,388 103,220 4.6 111,184 108,859 4.5 ReadyCap Commercial Mortgage Trust 2019-6 204,357 202,040 3.4 209,930 207,464 3.3 ReadyCap Commercial Mortgage Trust 2022-7 193,041 190,145 4.1 197,498 194,456 4.2 Ready Capital Mortgage Financing 2019-FL3 59,508 59,508 6.8 59,508 59,508 3.5 Ready Capital Mortgage Financing 2020-FL4 188,928 188,881 8.0 192,419 192,213 4.8 Ready Capital Mortgage Financing 2021-FL5 377,996 376,512 6.0 415,166 413,101 3.1 Ready Capital Mortgage Financing 2021-FL6 498,855 495,345 5.8 502,220 497,891 2.9 Ready Capital Mortgage Financing 2021-FL7 743,848 739,197 6.1 743,848 738,246 3.2 Ready Capital Mortgage Financing 2022-FL8 913,675 907,341 6.3 913,675 906,307 3.7 Ready Capital Mortgage Financing 2022-FL9 588,202 581,453 7.6 587,722 579,823 5.9 Ready Capital Mortgage Financing 2022-FL10 651,910 644,030 7.3 651,460 642,578 7.9 Ready Capital Mortgage Financing 2023-FL11 482,312 475,467 7.7 — — — Total $ 5,343,300 $ 5,293,315 6.3 % $ 4,945,099 $ 4,895,364 4.3 % The table above excludes non-company sponsored securitized debt obligations of $7.7 million and $8.0 million that are consolidated in the consolidated balance sheets as of March 31, 2023 and December 31, 2022, respectively. Repayment of 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 the Company’s 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) March 31, 2023 December 31, 2022 Assets: Cash and cash equivalents $ 10,401 $ 997 Restricted cash 75,479 77,062 Loans, net 6,782,171 6,311,698 Preferred equity investment 108,423 108,423 Other assets 78,387 54,580 Total assets $ 7,054,861 $ 6,552,760 Liabilities: Securitized debt obligations of consolidated VIEs, net 5,300,967 4,903,350 Due to third parties 3,441 3,727 Total liabilities $ 5,304,408 $ 4,907,077 Assets of unconsolidated VIEs The table below reflects variable interests in identified VIEs for which the Company is not the primary beneficiary. Carrying Amount Maximum Exposure to Loss (1) (in thousands) March 31, 2023 December 31, 2022 March 31, 2023 December 31, 2022 MBS, at fair value (2) $ 23,201 $ 24,408 $ 23,201 $ 24,408 Investment in unconsolidated joint ventures 114,169 118,641 114,169 118,641 Total assets in unconsolidated VIEs $ 137,370 $ 143,049 $ 137,370 $ 143,049 (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 | 3 Months Ended |
Mar. 31, 2023 | |
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 March 31, (in thousands) 2023 2022 Interest income Loans Bridge $ 160,431 $ 64,779 Fixed rate 13,028 14,662 Construction 12,166 1,757 SBA - 7(a) 14,921 9,379 PPP 3,007 16,858 Residential 40 19 Other 8,375 10,246 Total loans (1) $ 211,968 $ 117,700 Held for sale, at fair value, loans Fixed rate $ 735 $ 2,066 Freddie Mac — 192 Residential 1,565 2,100 Other 7 13 Total loans, held for sale, at fair value (1) $ 2,307 $ 4,371 Investments held to maturity $ 8 $ 607 Preferred equity investment (1) $ 2,168 $ — MBS, at fair value $ 1,122 $ 1,727 Total interest income $ 217,573 $ 124,405 Interest expense Secured borrowings $ (46,746) $ (19,623) Paycheck Protection Program Liquidity Facility borrowings (164) (688) Securitized debt obligations of consolidated VIEs (90,601) (24,251) Guaranteed loan financing (4,872) (3,085) Senior secured note (4,381) (4,357) Convertible note (2,188) (2,188) Corporate debt (11,442) (6,825) Total interest expense $ (160,394) $ (61,017) Net interest income before provision for loan losses $ 57,179 $ 63,388 (1) Includes interest income on assets in consolidated VIEs. |
Derivative instruments
Derivative instruments | 3 Months Ended |
Mar. 31, 2023 | |
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. 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, 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 not 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. March 31, 2023 December 31, 2022 Notional Derivative Derivative Notional Derivative Derivative (in thousands) Primary Underlying Risk Amount Asset Liability Amount Asset Liability IRLCs Interest rate risk $ 205,204 $ 1,979 $ — $ 205,204 $ 117 $ — Interest Rate Swaps - not designated as hedges (1) Interest rate risk 216,731 16,299 (7) 216,381 19,366 — Interest Rate Swaps - designated as hedges (1) Interest rate risk 266,139 28,478 — 266,139 33,863 — TBA Agency Securities (1) Market risk 163,500 81 (1,019) 134,150 796 (749) FX forwards Foreign exchange rate risk 47,834 1,040 (1,698) 47,834 1,123 (1,319) Total $ 899,408 $ 47,877 $ (2,724) $ 869,708 $ 55,265 $ (2,068) (1) Refer to Note 23 – Offsetting Assets and Liabilities for further details. The table below presents gains and losses on derivatives. Three Months Ended March 31, 2023 Three Months Ended March 31, 2022 Net Realized Net Unrealized Net Realized Net Unrealized (in thousands) Gain (Loss) Gain (Loss) Gain (Loss) Gain (Loss) Interest rate swaps $ 3,686 $ (8,459) $ (1,805) $ 26,702 TBA Agency Securities — (985) — 7,264 IRLCs — 1,862 — (4,957) FX forwards — (462) 680 231 Total $ 3,686 $ (8,044) $ (1,125) $ 29,240 In the table above: ● Gains (losses) on 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 AOCI. ● Gains (losses) on residential mortgage banking activity TBAs and IRLCs 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 March 31, 2023 $ (298) $ — $ (298) $ (4,103) $ (3,805) Three Months Ended March 31, 2022 $ (254) $ — $ (254) $ (41) $ 213 In the table above: ● Forecasted transactions on interest rates consists of benchmark interest rate hedges of SOFR and 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 | 3 Months Ended |
Mar. 31, 2023 | |
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 the real estate owned, held for sale portfolio. (in thousands) March 31, 2023 December 31, 2022 Acquired Portfolio: Mixed Use $ 35,367 $ 35,361 Multi-family 12,675 48,768 Lodging/Residential 9,088 — Total Acquired REO $ 57,130 $ 84,129 Other REO held for sale: Single Family $ 24,305 $ 24,300 Retail 1,853 1,853 Office 6,816 6,816 Total Other REO $ 32,974 $ 32,969 Total real estate owned, held for sale $ 90,104 $ 117,098 In the table above, Other REO excludes $14.9 million and $1.0 million as of March 31, 2023 and December 31, 2022, respectively, of real estate owned, held for sale within consolidated VIEs. Subsequent to the determination of the preliminary purchase price allocation, based on updated valuations obtained, the Company recorded a measurement period adjustment of $33.9 million to decrease the value of real estate owned, held for sale in connection with the Mosaic Mergers. Refer to Note 5 for further details on assets acquired and liabilities assumed in connection with the Mosaic Mergers. |
Agreements and transactions wit
Agreements and transactions with related parties | 3 Months Ended |
Mar. 31, 2023 | |
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 its Manager (the “Management Agreement”), which describes the services to be provided to the Company by its Manager and compensation for such services. The Company’s 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 the Manager. Three Months Ended March 31, 2023 2022 Management fee - total $ 5.1 million $ 3.2 million Management fee - amount unpaid $ 5.1 million $ 6.1 million Incentive distribution. four twelve The table below presents the incentive fee payable to the Manager. Three Months Ended March 31, 2023 2022 Incentive fee distribution - total $ 1.7 million $ — Incentive fee distribution - amount unpaid $ 1.7 million $ 2.4 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, 2023, 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 the Manager. Three Months Ended March 31, 2023 2022 Reimbursable expenses payable to Manager - total $ 2.9 million $ 3.5 million Reimbursable expenses payable to Manager - amount unpaid $ 1.8 million $ 9.5 million Co-Investment with Manager On July 15, 2022, the Company closed on a $125.0 million commitment to invest into a parallel vehicle, Waterfall Atlas Anchor Feeder, LLC (the “Fund”), a fund managed by the Manager, in exchange for interests 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 focuses on commercial real estate equity through the acquisition of distressed and value-add real estate across property types with local operating partners. |
Other assets and other liabilit
Other assets and other liabilities | 3 Months Ended |
Mar. 31, 2023 | |
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) March 31, 2023 December 31, 2022 Other assets: Goodwill $ 37,818 $ 37,818 Deferred loan exit fees 36,629 36,669 Accrued interest 37,436 34,951 Due from servicers 26,422 24,078 Intangible assets 16,868 16,308 Receivable from third party 21,013 15,114 Deferred financing costs 5,624 5,176 Deferred tax asset 977 977 Right-of-use lease asset 2,364 1,687 Other assets 17,539 16,991 Other assets $ 202,690 $ 189,769 Accounts payable and other accrued liabilities: Accrued salaries, wages and commissions $ 19,789 $ 38,245 Accrued interest payable 40,023 34,785 Servicing principal and interest payable 11,171 13,163 Deferred tax liability 30,885 30,885 Repair and denial reserve 11,045 10,846 Payable to related parties 7,080 7,815 Accrued PPP related costs 145 4,016 Accrued professional fees 2,431 2,804 Lease payable 2,514 1,778 Other liabilities 7,440 32,183 Total accounts payable and other accrued liabilities $ 132,523 $ 176,520 Goodwill The table below presents the carrying value of goodwill by reportable segment. (in thousands) March 31, 2023 December 31, 2022 SBC Lending and Acquisitions $ 26,612 $ 26,612 Small Business Lending 11,206 11,206 Total $ 37,818 $ 37,818 Subsequent to the determination of the preliminary purchase price allocation, the Company recorded a measurement period adjustment based on the updated valuations obtained by decreasing net assets acquired by $63.3 million and decreasing the fair value of the CERs issued by $59.3 million, with the remainder of the offset recorded as a $4.0 million increase to goodwill. Refer to Note 5 for further details on assets acquired and liabilities assumed in connection with the Mosaic Mergers. Intangible assets The table below presents information on intangible assets. (in thousands) March 31, 2023 December 31, 2022 Estimated Useful Life Customer Relationships - Red Stone $ 6,204 $ 6,293 19 years Internally developed software to be sold, leased, or marketed 4,052 3,092 5 years Trade name - Red Stone 2,500 2,500 Indefinite life Internally developed software - Knight Capital 1,636 1,794 6 years SBA license 1,000 1,000 Indefinite life Favorable lease 492 520 12 years Trade name - Knight Capital 379 416 6 years Trade name - GMFS 316 337 15 years Broker network - Knight Capital 289 356 4.5 years Total intangible assets $ 16,868 $ 16,308 The amortization expense related to intangible assets was $0.6 million for the three months ended March 31, 2023 and $0.4 million for the three months ended March 31, 2022. 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) March 31, 2023 Internally developed software - Knight Capital $ 2,163 Favorable lease 987 Trade name - GMFS 906 Broker network - Knight Capital 911 Trade name - Knight Capital 501 Internally developed software to be sold, leased, or marketed 317 Customer Relationship - Red Stone 596 Total accumulated amortization $ 6,381 The table below presents amortization expense related to finite-lived intangible assets for the subsequent five years. (in thousands) March 31, 2023 2023 $ 1,855 2024 2,264 2025 2,018 2026 1,351 2027 1,216 Thereafter 4,664 Total $ 13,368 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 March 31, 2023 and December 31, 2022, the loan indemnification reserve was $2.6 million and $2.9 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 March 31, 2023 and December 31, 2022, the reasonably possible loss above the recorded loan indemnification reserve was not material. |
Other income and operating expe
Other income and operating expenses | 3 Months Ended |
Mar. 31, 2023 | |
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 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, the Company originated $109.5 million of PPP loans and was a Lender Service Provider (“LSP”) for $2.5 billion of PPP loans. For the Company’s originations as direct lender, it elected the fair value option and thus, classified the loans as held at fair value on the consolidated balance sheets. Fees totaling $5.2 million were recognized in the period of origination. For loans processed under the LSP, the Company was 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 the consolidated balance sheet and fees totaling $43.3 million were recognized as services were performed. Unrecognized fees as of March 31, 2023 were $0.1 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) March 31, 2023 December 31, 2022 Assets Paycheck Protection Program loans $ 146,211 $ 186,409 Paycheck Protection Program loans, at fair value 346 576 PPP fee receivable 323 328 Accrued interest receivable 2,024 3,196 Total PPP related assets $ 148,904 $ 190,509 Liabilities Paycheck Protection Program Liquidity Facility borrowings $ 169,596 $ 201,011 Interest payable 1,134 1,176 Deferred LSP revenue 97 122 Accrued PPP related costs 145 4,016 Payable to third parties 368 277 Repair and denial reserve 5,159 4,878 Total PPP related liabilities $ 176,499 $ 211,480 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. ● 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 March 31, 2023, PPPLF borrowings exceed PPP loans on the balance sheet due to net fees of $6.9 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 March 31, Financial statement account (in thousands) 2023 2022 Income LSP fee income $ 25 $ 37 Servicing income Interest income 3,007 16,858 Interest income Repair and denial reserve (281) 2,244 Other income - change in repair and denial reserve Total PPP related income $ 2,751 $ 19,139 Expense Direct operating expenses $ 118 $ 150 Other operating expenses - origination costs Interest expense 164 688 Interest expense Total PPP related expenses $ 282 $ 838 Net PPP related income $ 2,469 $ 18,301 Other income and expenses The table below presents the composition of other income and operating expenses. Three Months Ended March 31, (in thousands) 2023 2022 Other income: Origination income $ 4,612 $ 1,654 Change in repair and denial reserve (199) 2,193 Employee retention credit consulting income 9,675 — Other 5,795 2,654 Total other income $ 19,883 $ 6,501 Other operating expenses: Origination costs $ 1,655 $ 4,934 Technology expense 2,114 2,040 Impairment on real estate 3,418 1,827 Rent and property tax expense 1,400 1,095 Recruiting, training and travel expense 748 302 Marketing expense 557 328 Other 4,426 2,127 Total other operating expenses $ 14,318 $ 12,653 |
Redeemable Preferred Stock and
Redeemable Preferred Stock and Stockholders Equity | 3 Months Ended |
Mar. 31, 2023 | |
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 March 15, 2022 March 31, 2022 April 29, 2022 $ 0.42 June 15, 2022 June 30, 2022 July 29, 2022 $ 0.42 September 15, 2022 September 30, 2022 October 31, 2022 $ 0.42 December 15, 2022 December 30, 2022 January 31, 2023 $ 0.40 March 15, 2023 March 31, 2023 April 28, 2023 $ 0.40 Stock incentive plan The Company currently maintains the Equity Incentive Plan which authorizes the Compensation Committee to approve grants of equity-based awards to its officers, directors, and employees of the 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 currently settles stock-based incentive awards with newly issued 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 Units/Awards (in thousands, except share data) Number of Shares Grant date fair value Weighted-average grant date fair value (per share) Outstanding, December 31, 2022 827,163 $ 12,258 $ 14.82 Granted 441,296 5,728 12.98 Vested (333,470) (4,946) 14.83 Forfeited (4,536) (61) 13.62 Outstanding, March 31, 2023 930,453 $ 12,979 $ 13.95 The Company recognized $1.9 million and $2.0 million for the three months ended March 31, 2023 and 2022, respectively, of non-cash compensation expense related to its stock-based incentive plan in the consolidated statements of income. As of March 31, 2023 and December 31, 2022, approximately $13.0 million and $12.3 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. During each of 2023, 2022 and 2021, the Company granted RSUs and RSAs under the Equity Plan to its officers, directors, and employees of the Manager and its affiliates, as described in greater detail below. Time-based equity awards In 2023, 2022, and 2021, the Company granted 388,136, 327,692, and 287,787, respectively, of time-based RSAs to certain key employees. These awards generally vest ratably in equal annual installments over a three-year period based solely on continued employment or service. Additionally, the 2021 shares as noted above include the 128,533 shares of common stock issued to Red Stone executives as part of the Red Stone acquisition. The Company further granted in these years 53,160, 45,162, and 36,968, respectively, of time-based RSAs and RSUs to directors of the Company, which vest ratably in equal installments quarterly over a one-year period. Directors have the option to defer receipt of shares and receive as RSUs at a later settlement date of their choosing. Dividends are paid on all time-based awards, vested and non-vested. Performance-based equity awards 2023 performance-based equity awards. 2022 performance-based equity awards. 2021 performance-based equity awards. 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. The Company classifies Series C Cumulative Convertible Preferred Stock, or Series C Preferred Stock, on the balance sheets using the guidance in ASC 480‑10‑S99. The 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 March 31, 2023, the conversion rate was 1.3013 shares of common stock per $25 principal amount of the Series C Preferred Stock, which is equivalent to a conversion price of approximately $19.21 per share of common stock. As redemption under these circumstances is not solely within the Company’s control, the Series C Preferred Stock has been classified as temporary equity. The Company has analyzed whether the conversion features should be bifurcated under the guidance in ASC 815‑10 and has 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) March 31, 2023 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 March 31, 2023. The dividends were paid on April 14, 2023 for Series C Preferred Stock and on April 28, 2023 for Series E Preferred Stock to the holders of record as of the close of business on March 31, 2023. ● 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”). As of March 31, 2023, the Company has sold 1.1 million shares of common stock at an average price of $15.82 per share through the Equity ATM Program, for net proceeds of $17.2 million, after deducting offering related expenses paid of $0.3 million. The Company made no such sales through the Equity ATM Program during the three months ended March 31, 2023. As of March 31, 2023, 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 | 3 Months Ended |
Mar. 31, 2023 | |
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 EPS computations, including the number of shares of common stock used for purposes of these computations. Three Months Ended March 31, (in thousands, except for share and per share amounts) 2023 2022 Basic Earnings Net income $ 36,978 $ 64,263 Less: Income attributable to non-controlling interest 1,835 775 Less: Income attributable to participating shares 2,371 2,412 Basic earnings $ 32,772 $ 61,076 Diluted Earnings Net income $ 36,978 $ 64,263 Less: Income attributable to non-controlling interest 1,835 775 Less: Income attributable to participating shares 2,371 2,412 Add: Expenses attributable to dilutive instruments 2,319 2,319 Diluted earnings $ 35,091 $ 63,395 Number of Shares Basic — Average shares outstanding 110,672,939 87,707,281 Effect of dilutive securities — Unvested participating shares 10,352,970 7,695,213 Diluted — Average shares outstanding 121,025,909 95,402,494 EPS Attributable to RC Common Stockholders: Basic $ 0.30 $ 0.70 Diluted $ 0.29 $ 0.66 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 EPS for convertible instruments and requires the use of the if-converted method. Certain investors own OP units in the 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 both March 31, 2023 and December 31, 2022, the non-controlling interest OP unit holders owned 1,593,983 OP units. |
Offsetting assets and liabiliti
Offsetting assets and liabilities | 3 Months Ended |
Mar. 31, 2023 | |
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 March 31, 2023 and December 31, 2022, 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, Paycheck Protection Program Liquidity Facility borrowings 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 March 31, 2023 Assets IRLCs $ 1,979 $ — $ 1,979 $ — $ — $ 1,979 FX forwards 1,040 — 1,040 — — 1,040 TBA Agency Securities 81 78 3 — — 3 Interest rate swaps 44,777 34,026 10,751 — — 10,751 Total $ 47,877 $ 34,104 $ 13,773 $ — $ — $ 13,773 Liabilities Interest rate swaps $ 7 $ 7 $ — $ — $ — $ — TBA Agency Securities 1,019 78 941 — — 941 FX forwards 1,698 — 1,698 — — 1,698 Secured borrowings 2,484,902 — 2,484,902 2,484,902 — — Paycheck Protection Program Liquidity Facility 169,596 — 169,596 146,556 — 23,040 Total $ 2,657,222 $ 85 $ 2,657,137 $ 2,631,458 $ — $ 25,679 December 31, 2022 Assets IRLCs $ 117 $ — $ 117 $ — $ — $ 117 FX forwards 1,123 — 1,123 — — 1,123 TBA Agency Securities 796 482 314 — — 314 Interest rate swaps 53,229 41,820 11,409 — — 11,409 Total $ 55,265 $ 42,302 $ 12,963 $ — $ — $ 12,963 Liabilities TBA Agency Securities $ 749 $ 482 $ 267 $ — $ — $ 267 FX forwards 1,319 — 1,319 — — 1,319 Secured borrowings 2,846,293 — 2,846,293 2,846,293 — — Paycheck Protection Program Liquidity Facility 201,011 — 201,011 186,985 — 14,026 Total $ 3,049,372 $ 482 $ 3,048,890 $ 3,033,278 $ — $ 15,612 (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 the Company has 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 the Company that exceeds the Company’s corresponding financial assets. In each case, any of these excess amounts are excluded from the table although they are separately reported in the Company’s 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 | 3 Months Ended |
Mar. 31, 2023 | |
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, the Company 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 the Company is owed this fair market value in the termination of the derivative transaction and its claim is unsecured, it will be treated as a general creditor of such counterparty and will not have any claim with respect to the underlying security. The Company may obtain only a limited recovery or may obtain no recovery in such circumstances. In addition, the business failure of a counterparty with whom it enters 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 the Company to cover its 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. The Company is exposed to changing interest rates and market conditions, which affects cash flows associated with borrowings. The Company enters into derivative instruments, such as interest rate swaps, to mitigate these risks. 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. Certain subsidiaries have entered into OTC interest rate swap agreements to hedge risks associated with movements in interest rates. Because certain interest rate swaps were not cleared through a central counterparty, the Company remains exposed to the counterparty's ability to perform its obligations under each such swap and cannot look to the creditworthiness of a central counterparty for performance. As a result, if an OTC swap counterparty cannot perform under the terms of an interest rate swap, the Company’s subsidiary would not receive payments due under that agreement, the Company may lose any unrealized gain associated with the interest rate swap and the hedged liability would cease to be hedged by the interest rate swap. While the Company would seek to terminate the relevant OTC swap transaction and may have a claim against the defaulting counterparty for any losses, including unrealized gains, there is no assurance that the Company would be able to recover such amounts or to replace the relevant swap on economically viable terms or at all. In such case, the Company could be forced to cover its unhedged liabilities at the then current market price. The Company may also be at risk for any pledged collateral to secure its obligations under the OTC interest rate swap if the counterparty becomes insolvent or files for bankruptcy. Therefore, upon a default by an interest rate swap agreement counterparty, the interest rate swap would no longer mitigate the impact of changes in interest rates as intended. Liquidity Risk Off-Balance Sheet Risk Interest Rate The Company’s operating results will depend, in part, on differences between the income from its investments and financing costs. Generally, 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 the Company’s business, financial condition, liquidity, results of operations and prospects. Furthermore, such defaults could have an adverse effect on the spread between the Company’s 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 | 3 Months Ended |
Mar. 31, 2023 | |
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. (in thousands) March 31, 2023 December 31, 2022 Loans, net $ 819,819 $ 881,519 Loans, held for sale at fair value $ 16,666 $ 20,546 Preferred equity investment $ 853 $ 1,147 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) March 31, 2023 December 31, 2022 Commitments to originate residential agency loans $ 185,165 $ 112,319 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2023 | |
Income Taxes | |
Income Taxes | Note 26. Income Taxes The Company is a REIT pursuant to Internal Revenue Code Section 856. Qualification as a REIT depends on the Company’s ability to meet various requirements imposed by the Internal Revenue Code, which relate to its organizational structure, diversity of stock ownership and certain requirements with regard to the nature of its assets and the sources of its income. As a REIT, the Company generally must distribute annually dividends equal to at least 90% of its 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 earnings that are distributed. To the extent the Company satisfies this distribution requirement but distributes less than 100% of its net taxable income, it will be subject to U.S. federal income tax on its undistributed taxable income. In addition, the Company will be subject to a 4% nondeductible excise tax if the actual amount paid to stockholders in a calendar year is less than a minimum amount specified under U.S. federal tax laws. Even if the Company qualifies as a REIT, it may be subject to certain U.S. federal income and excise taxes and state and local taxes on its income and assets. If the Company fails to maintain its qualification as a REIT for any taxable year, it may be subject to material penalties as well as federal, state and local income tax on its taxable income at regular corporate rates and it would not be able to qualify as a REIT for the subsequent four Certain subsidiaries have elected to be treated as taxable REIT subsidiaries (“TRSs”). TRSs permit the Company 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, the Company will continue to maintain our qualification as a REIT. The Company’s TRSs engage in various real estate - related operations, including originating and securitizing commercial and residential mortgage loans, and investments in real property. Such 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 the Company with respect to its interest in TRSs. |
Segment Reporting
Segment Reporting | 3 Months Ended |
Mar. 31, 2023 | |
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, bridge, stabilized and agency channels. As part of this segment, the Company originates and services 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 SBA securitization activities. The Company also acquires purchased future receivables through Knight Capital. 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 senior secured and convertible notes, allocated employee compensation from the Manager, management and incentive fees paid to the Manager and other general corporate overhead expenses. Results of business segments and all other. Three Months Ended March 31, 2023 Small Residential SBC Lending Business Mortgage Corporate- (in thousands) and Acquisitions Lending Banking Other Consolidated Interest income $ 198,039 $ 17,929 $ 1,605 $ — $ 217,573 Interest expense (149,494) (9,374) (1,526) — (160,394) Net interest income before recovery of (provision for) loan losses $ 48,545 $ 8,555 $ 79 $ — $ 57,179 Recovery of (provision for) loan losses 8,129 (1,395) — — 6,734 Net interest income after recovery of (provision for) loan losses $ 56,674 $ 7,160 $ 79 $ — $ 63,913 Non-interest income Residential mortgage banking activities $ — $ — $ 9,169 $ — $ 9,169 Net realized gain (loss) on financial instruments and real estate owned 4,825 6,750 — — 11,575 Net unrealized gain (loss) on financial instruments (6,111) 476 (6,093) — (11,728) Servicing income, net 1,093 3,549 9,361 — 14,003 Income on purchased future receivables, net — 540 — — 540 Income on unconsolidated joint ventures 656 — — — 656 Other income 9,093 10,428 31 331 19,883 Total non-interest income $ 9,556 $ 21,743 $ 12,468 $ 331 $ 44,098 Non-interest expense Employee compensation and benefits $ (6,206) $ (11,275) $ (5,412) $ (2,246) $ (25,139) Allocated employee compensation and benefits from related party (232) — — (2,094) (2,326) Variable expenses on residential mortgage banking activities — — (5,485) — (5,485) Professional fees (981) (1,625) (174) (2,937) (5,717) Management fees – related party — — — (5,081) (5,081) Incentive fees – related party — — — (1,720) (1,720) Loan servicing expense (8,058) (97) (1,808) — (9,963) Transaction related expenses — — — (893) (893) Other operating expenses (6,733) (4,094) (1,709) (1,782) (14,318) Total non-interest expense $ (22,210) $ (17,091) $ (14,588) $ (16,753) $ (70,642) Income (loss) before provision for income taxes $ 44,020 $ 11,812 $ (2,041) $ (16,422) $ 37,369 Total assets $ 10,184,788 $ 791,394 $ 402,562 $ 158,719 $ 11,537,463 Three Months Ended March 31, 2022 Small Residential SBC Lending Business Mortgage Corporate- (in thousands) and Acquisitions Lending Banking Other Consolidated Interest income $ 96,343 $ 26,237 $ 1,825 $ — $ 124,405 Interest expense (53,093) (5,690) (1,958) (276) (61,017) Net interest income before provision for loan losses $ 43,250 $ 20,547 $ (133) $ (276) $ 63,388 Provision for loan losses (270) (1,272) — — (1,542) Net interest income after provision for loan losses $ 42,980 $ 19,275 $ (133) $ (276) $ 61,846 Non-interest income Residential mortgage banking activities $ — $ — $ 8,424 $ — $ 8,424 Net realized gain (loss) on financial instruments and real estate owned 882 7,125 — — 8,007 Net unrealized gain (loss) on financial instruments 12,429 288 32,598 — 45,315 Servicing income, net 920 1,493 8,115 — 10,528 Income on purchased future receivables, net — 2,469 — — 2,469 Income on unconsolidated joint ventures 6,563 — — — 6,563 Other income 3,014 2,871 24 592 6,501 Total non-interest income $ 23,808 $ 14,246 $ 49,161 $ 592 $ 87,807 Non-interest expense Employee compensation and benefits $ (10,160) (9,518) (7,534) (756) (27,968) Allocated employee compensation and benefits from related party (300) — — (2,700) (3,000) Variable expenses on residential mortgage banking activities — — (979) — (979) Professional fees (2,401) (1,468) (264) (993) (5,126) Management fees – related party — — — (3,196) (3,196) Loan servicing expense (5,875) (502) (2,543) — (8,920) Transaction related expenses — — — (5,699) (5,699) Other operating expenses (5,376) (3,787) (2,024) (1,466) (12,653) Total non-interest expense $ (24,112) $ (15,275) $ (13,344) $ (14,810) $ (67,541) Income (loss) before provision for income taxes $ 42,676 $ 18,246 $ 35,684 $ (14,494) $ 82,112 Total assets $ 9,520,677 $ 1,217,726 $ 493,671 $ 244,170 $ 11,476,244 |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2023 | |
Subsequent Events | |
Subsequent Events | Note 28. Subsequent events The Company has evaluated subsequent events through the issuance date of the financial statements and determined that no additional disclosure is necessary. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2023 | |
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 the Company is 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. 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. The Company utilizes 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 the Company has 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. The Company’s 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 | Non-accrual loans. of loans for which principal or interest has been delinquent for 90 days or more and for which specific reserves are recorded, including purchased credit-deteriorated (“PCD”) loans. Interest income accrued, but not collected, at the date loans are placed on non-accrual status is reversed, unless the loan is expected to be fully recoverable by the collateral or is in the process of being collected. Interest income is subsequently recognized only to the extent it is received in cash or until the loan qualifies for return to accrual status. However, where there is doubt regarding the ultimate collectability of loan principal, all cash received is applied to reduce the carrying value of such loans. Loans are restored to accrual status only when contractually current and the collection of future payments is reasonably assured. |
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. 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 qualification as a REIT for U.S. federal income tax purposes, the Company utilizes 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 its risk management strategy. The Company accounts for derivative instruments under ASC 815, Derivatives and Hedging in earnings unless hedge accounting is elected. As of March 31, 2023 and December 31, 2022, the Company had offset $34.0 and $41.8 million of cash collateral payable against gross derivative asset positions, respectively. 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. Cash flow hedges are used to hedge the exposure to the 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 remained 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 Hedge accounting is generally terminated at the debt issuance date because the Company is 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 servicing rights for impairment, the Company first determines whether facts and circumstances exist that would suggest the carrying value of the servicing asset is not recoverable. If so, the Company then compares 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. The Company estimates 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 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. The Company also considers other factors that can impact the value of the servicing rights, such as surety provider termination clauses and servicer terminations that could result if the Company failed to materially comply with the covenants or conditions of its servicing agreements and did not remedy the failure. Since many factors can affect the estimate of the fair value of servicing rights, the Company regularly evaluates the major assumptions and modeling techniques used in its estimate and reviews these assumptions against market comparables, if available. The Company monitors the actual performance of its 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. Such securities are accounted for at amortized cost and reviewed on a quarterly basis to determine if an allowance for credit losses should be recorded in the consolidated statements of income. |
Purchased future receivables | Purchased future receivables 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 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 Software- costs of software to be sold, leased, or marketed. |
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, which permits a qualitative assessment of whether it is more likely than not that the fair value of the reporting unit is less than its carrying value including goodwill. If the qualitative assessment determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying value, including goodwill, then no impairment is determined to exist for the reporting unit. However, if the qualitative assessment determines that it is more likely than not that the fair value of the reporting unit is less than its carrying value, including goodwill, or the Company chooses not to perform the qualitative assessment, then the Company compares the fair value of that reporting unit with its carrying value, including goodwill, in a quantitative assessment. If the carrying value of a reporting unit exceeds its fair value, goodwill is considered impaired with the impairment loss measured as the excess of the reporting unit’s carrying value, including goodwill, over its fair value. The estimated fair value of the reporting unit is derived based on valuation techniques the Company believes market participants would use for each of the reporting units. 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 first quarter of 2023, 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. |
Deferred financing costs | Deferred financing costs Costs incurred in connection with 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. |
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. The Company accounts for borrowings under the PPPLF under ASC 470. Interest paid and accrued in connection with PPPLF is recorded as interest expense in the consolidated statements of income. |
Securitized debt obligations of consolidated VIEs, net | Securitized debt obligations of consolidated VIEs, net Since 2011, the Company has 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. The Company measured the estimated fair value of the debt component of its convertible notes as of the issuance date based on its nonconvertible debt borrowing rate. The equity components of the convertible senior notes have been reflected within additional paid-in capital in the Company’s 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 the Company’s 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 the 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 the Company’s obligations under its existing indebtedness or to be released at the Company’s 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 the Company is required to make the SBA whole for reimbursement of the guaranteed portion of SBA loans. The Company 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 the Company is the primary beneficiary of a VIE, both qualitative and quantitative factors are considered regarding the nature, size and form of its involvement with the VIE, such as its role establishing the VIE and ongoing rights and responsibilities, the design of the VIE, its economic interests, servicing fees and servicing responsibilities, and other factors. The Company performs ongoing reassessments to evaluate whether changes in the entity’s capital structure or changes in the nature of its involvement with the entity result in a change to the VIE designation or a change to its 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 the 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 provides a fair value option election that allows entities to make an election of fair value as the initial and subsequent measurement attribute for certain eligible financial assets and liabilities. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. The decision to elect the fair value option is determined on an instrument-by-instrument basis and must be applied to an entire instrument and is irrevocable once elected. Assets and liabilities measured at fair value pursuant to this guidance are required to be reported separately in the consolidated balance sheets from those instruments using another accounting method. The Company has elected the fair value option for certain loans held-for-sale originated by the Company that it intends 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. |
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 The Company presents both basic and diluted earnings per share (“EPS”) amounts in its 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 the Company’s 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. The Company assesses 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 the consolidated financial statements or tax returns as well as the recoverability of amounts recorded, including deferred tax assets. The Company provides 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. The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense on the consolidated statements of income. As of the date of the consolidated balance sheets, the Company has accrued no taxes, interest or penalties related to uncertain tax positions. In addition, changes in this position in the next 12 months are not anticipated. |
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 the 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 the Company’s 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. |
Recent Accounting Pronounceme_2
Recent Accounting Pronouncements (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Recent Accounting Pronouncements | |
Schedule of 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. In December 2022, the FASB issued ASU No. 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848. The amendments in this update defers the sunset date of Topic 848 from December 31, 2022 to December 31, 2024, after which relief will no longer be permitted. The Company has not adopted any of the optional expedients or exceptions through March 31, 2023, but will continue to evaluate the possible adoption of any such expedients or exceptions. 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 ASU became effective in January 2023. The Company adopted the ASU under a prospective approach. The adoption of this standard does not have a material impact on the Company's consolidated financial statements. |
Business Combinations (Tables)
Business Combinations (Tables) - Mosaic | 3 Months Ended |
Mar. 31, 2023 | |
Acquisitions | |
Schedule of fair value of assets acquired and liabilities acquired | (in thousands) Preliminary Purchase Price Allocation Measurement Period Adjustments Final Purchase Price Allocation Assets Cash and cash equivalents $ 100,236 $ — $ 100,236 Restricted cash 23,330 — 23,330 Loans, net 432,779 (20,034) 412,745 Investments held to maturity 165,302 (3,735) 161,567 Real estate owned, held for sale 78,693 (33,945) 44,748 Other assets 25,761 (5,097) 20,664 Total assets acquired $ 826,101 $ (62,811) $ 763,290 Liabilities Secured borrowings $ 66,202 $ — $ 66,202 Loan participations sold 73,656 — 73,656 Due to third parties 24,634 (333) 24,301 Accounts payable and other accrued liabilities 38,182 599 38,781 Total liabilities assumed $ 202,674 $ 266 $ 202,940 Net assets acquired $ 623,427 $ (63,077) $ 560,350 Non-controlling interests (82,257) (267) (82,524) Net assets acquired, net of non-controlling interests $ 541,170 $ (63,344) $ 477,826 |
Schedule of aggregate amount of consideration transferred, net assets acquired, and related goodwill | (in thousands) Preliminary Purchase Price Allocation Measurement Period Adjustments Final Purchase Price Allocation Fair value of net assets acquired $ 541,170 $ (63,344) $ 477,826 Consideration transferred based on the value of Class B shares issued 437,311 — 437,311 Consideration transferred based on the value of OP units issued 20,745 — 20,745 Fair value of CERs issued 84,348 (59,348) 25,000 Total consideration transferred $ 542,404 $ (59,348) $ 483,056 Goodwill $ (1,234) $ (3,996) $ (5,230) |
Schedule of pro-forma revenue and earnings | Three Months Ended March 31, (in thousands) 2023 2022 Selected Financial Data Interest income $ 217,573 $ 137,466 Interest expense (160,394) (63,942) Recovery of (provision for) loan losses 6,734 (1,542) Non-interest income 44,098 88,474 Non-interest expense (70,565) (75,927) Income before provision for income taxes $ 37,446 $ 84,529 Income tax expense (391) (17,849) Net income $ 37,055 $ 66,680 |
Loans and Allowance for Credi_2
Loans and Allowance for Credit Losses (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Schedule of classification, unpaid principal balance, and carrying value of loans held including loans of consolidated VIEs | March 31, 2023 December 31, 2022 (in thousands) Carrying Value UPB Carrying Value UPB Loans Bridge $ 1,769,498 $ 1,774,827 $ 2,236,333 $ 2,247,173 Fixed rate 186,158 179,041 182,415 175,285 Construction 479,305 481,558 445,814 448,923 Freddie Mac 10,004 9,896 10,040 9,932 SBA - 7(a) 481,319 499,804 491,532 509,672 Residential 5,146 5,146 4,511 4,511 Other 229,775 233,715 266,702 270,748 Total Loans, before allowance for loan losses $ 3,161,205 $ 3,183,987 $ 3,637,347 $ 3,666,244 Allowance for loan losses $ (33,008) $ — $ (61,037) $ — Total Loans, net $ 3,128,197 $ 3,183,987 $ 3,576,310 $ 3,666,244 Loans in consolidated VIEs Bridge $ 5,622,134 $ 5,656,827 $ 5,098,539 $ 5,134,790 Fixed rate 830,071 831,050 856,345 856,914 SBA - 7(a) 58,723 64,567 64,226 70,904 Other 306,015 306,857 322,070 322,975 Total Loans, in consolidated VIEs, before allowance for loan losses $ 6,816,943 $ 6,859,301 $ 6,341,180 $ 6,385,583 Allowance for loan losses on loans in consolidated VIEs $ (34,772) $ — $ (29,482) $ — Total Loans, net, in consolidated VIEs $ 6,782,171 $ 6,859,301 $ 6,311,698 $ 6,385,583 Loans, held for sale, at fair value Fixed rate $ 57,962 $ 68,280 $ 60,551 $ 68,280 Freddie Mac 10,146 10,048 13,791 13,611 SBA - 7(a) 43,427 40,589 44,037 41,674 Residential 119,699 118,179 134,642 133,635 Other 5,344 5,206 5,356 4,414 Total Loans, held for sale, at fair value $ 236,578 $ 242,302 $ 258,377 $ 261,614 Total Loans, net and Loans, held for sale, at fair value $ 10,146,946 $ 10,285,590 $ 10,146,385 $ 10,313,441 Paycheck Protection Program loans Paycheck Protection Program loans, held-for-investment $ 146,211 $ 153,111 $ 186,409 $ 196,222 Paycheck Protection Program loans, held at fair value 346 346 576 576 Total Paycheck Protection Program loans $ 146,557 $ 153,457 $ 186,985 $ 196,798 Total Loan portfolio $ 10,293,503 $ 10,439,047 $ 10,333,370 $ 10,510,239 |
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 2023 2022 2021 2020 2019 Pre 2019 Total March 31, 2023 Bridge $ 7,431,654 $ 112,489 $ 2,978,036 $ 3,535,656 $ 332,726 $ 279,749 $ 146,648 $ 7,385,304 Fixed rate 1,010,091 4,013 96,823 153,927 91,774 333,390 332,712 1,012,639 Construction 481,558 27,000 30,372 — 10,000 374,280 37,542 479,194 Freddie Mac 9,896 — — 3,870 6,134 — — 10,004 SBA - 7(a) 564,371 19,942 109,391 74,331 36,091 72,863 223,551 536,169 Residential 5,146 519 4,105 156 — — 366 5,146 Other 540,572 218 5,810 18,647 8,866 45,514 455,498 534,553 Total Loans, before general allowance for loan losses $ 10,043,288 $ 164,181 $ 3,224,537 $ 3,786,587 $ 485,591 $ 1,105,796 $ 1,196,317 $ 9,963,009 General allowance for loan losses $ (52,641) Total Loans, net $ 9,910,368 UPB 2022 2021 2020 2019 2018 Pre 2018 Total December 31, 2022 Bridge $ 7,381,963 $ 2,942,695 $ 3,575,213 $ 355,647 $ 288,957 $ 137,463 $ 27,971 $ 7,327,946 Fixed rate 1,032,199 96,897 154,077 92,080 343,500 134,666 213,406 1,034,626 Construction 448,923 27,532 — 10,000 348,622 42,651 — 428,805 Freddie Mac 9,932 — 3,891 6,149 — — — 10,040 SBA - 7(a) 580,576 110,549 79,946 36,853 77,449 89,085 158,378 552,260 Residential 4,511 1,719 725 361 422 678 606 4,511 Other 593,723 5,893 17,015 10,393 74,762 13,832 465,635 587,530 Total Loans, before general allowance for loan losses $ 10,051,827 $ 3,185,285 $ 3,830,867 $ 511,483 $ 1,133,712 $ 418,375 $ 865,996 $ 9,945,718 General allowance for loan losses $ (57,710) Total Loans, net $ 9,888,008 |
Schedule of delinquency information on loans by year of origination | Carrying Value by Year of Origination (in thousands) UPB 2023 2022 2021 2020 2019 Pre 2019 Total March 31, 2023 Current and less than 30 days past due $ 9,608,149 $ 164,181 $ 3,139,050 $ 3,752,081 $ 476,044 $ 979,327 $ 1,034,485 $ 9,545,168 30 - 59 days past due 146,182 — 84,525 972 2,285 50,866 6,065 144,713 60+ days past due 288,957 — 962 33,534 7,262 75,603 155,767 273,128 Total Loans, before general allowance for loan losses $ 10,043,288 $ 164,181 $ 3,224,537 $ 3,786,587 $ 485,591 $ 1,105,796 $ 1,196,317 $ 9,963,009 General allowance for loan losses $ (52,641) Total Loans, net $ 9,910,368 UPB 2022 2021 2020 2019 2018 Pre 2018 Total December 31, 2022 Current and less than 30 days past due $ 9,666,328 $ 3,099,822 $ 3,826,140 $ 501,168 $ 1,061,145 $ 298,208 $ 810,322 $ 9,596,805 30 - 59 days past due 111,992 85,403 3,483 1,634 6,654 11,190 1,948 110,312 60+ days past due 273,507 60 1,244 8,681 65,913 108,977 53,726 238,601 Total Loans, before general allowance for loan losses $ 10,051,827 $ 3,185,285 $ 3,830,867 $ 511,483 $ 1,133,712 $ 418,375 $ 865,996 $ 9,945,718 General allowance for loan losses $ (57,710) Total Loans, net $ 9,888,008 |
Schedule of gross write-offs of loans by year of origination | (in thousands) Three Months Ended March 31, 2023 2023 $ — 2022 123 2021 140 2020 176 2019 — Pre-2019 17,783 Total $ 18,222 |
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 March 31, 2023 Bridge $ 7,088,912 $ 127,728 $ 168,664 $ 7,385,304 $ 136,485 $ — Fixed rate 984,724 5,294 22,621 1,012,639 18,614 — Construction 428,035 — 51,159 479,194 51,160 — Freddie Mac 6,911 — 3,093 10,004 3,093 — SBA - 7(a) 524,987 8,621 2,561 536,169 15,277 — Residential 3,896 — 1,250 5,146 1,250 — Other 507,703 3,070 23,780 534,553 25,803 — Total Loans, before general allowance for loan losses $ 9,545,168 $ 144,713 $ 273,128 $ 9,963,009 $ 251,682 $ — General allowance for loan losses $ (52,641) Total Loans, net $ 9,910,368 Percentage of loans outstanding 95.8% 1.5% 2.7% 100% 2.5% 0.0% December 31, 2022 Bridge $ 7,120,162 $ 94,823 $ 112,961 $ 7,327,946 $ 113,360 $ — Fixed rate 993,832 8,101 32,693 1,034,626 28,719 — Construction 372,812 — 55,993 428,805 55,993 — Freddie Mac 6,947 — 3,093 10,040 3,093 — SBA - 7(a) 541,378 6,690 4,192 552,260 12,790 — Residential 2,871 — 1,640 4,511 1,306 — Other 558,803 698 28,029 587,530 27,544 — Total Loans, before general allowance for loan losses $ 9,596,805 $ 110,312 $ 238,601 $ 9,945,718 $ 242,805 $ — General allowance for loan losses $ (57,710) Total Loans, net $ 9,888,008 Percentage of loans outstanding 96.5% 1.1% 2.4% 100% 2.4% 0.0% |
Schedule of information on credit quality of loans | LTV (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 March 31, 2023 Bridge $ 736 $ 99,589 $ 694,857 $ 6,423,805 $ 143,403 $ 22,914 $ 7,385,304 Fixed rate 8,499 30,350 431,044 526,064 11,180 5,502 1,012,639 Construction 10,946 14,262 53,742 375,827 24,417 — 479,194 Freddie Mac — — 3,041 6,963 — — 10,004 SBA - 7(a) 7,057 45,868 90,306 178,384 82,289 132,265 536,169 Residential — 921 630 973 1,816 806 5,146 Other 142,134 183,413 117,651 68,513 17,810 5,032 534,553 Total Loans, before general allowance for loan losses $ 169,372 $ 374,403 $ 1,391,271 $ 7,580,529 $ 280,915 $ 166,519 $ 9,963,009 General allowance for loan losses $ (52,641) Total Loans, net $ 9,910,368 Percentage of loans outstanding 1.7% 3.7% 14.0% 76.1% 2.8% 1.7% December 31, 2022 Bridge $ 717 $ 104,606 $ 700,835 $ 6,331,353 $ 167,521 $ 22,914 $ 7,327,946 Fixed rate 9,102 35,459 386,040 578,456 17,056 8,513 1,034,626 Construction 10,817 12,910 26,387 349,085 24,142 5,464 428,805 Freddie Mac — — 3,056 6,984 — — 10,040 SBA - 7(a) 7,275 45,366 92,592 189,733 78,577 138,717 552,260 Residential — 934 300 901 1,716 660 4,511 Other 173,720 214,370 115,934 70,124 8,153 5,229 587,530 Total Loans, before general allowance for loan losses $ 201,631 $ 413,645 $ 1,325,144 $ 7,526,636 $ 297,165 $ 181,497 $ 9,945,718 General allowance for loan losses $ (57,710) Total Loans, net $ 9,888,008 Percentage of loans outstanding 2.0% 4.2% 13.3% 75.7% 3.0% 1.8% (1) LTV 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 Fixed Rate Construction SBA - 7(a) Residential Other Total Allowance for loan losses March 31, 2023 General $ 33,991 $ 5,495 $ 262 $ 11,237 $ — $ 1,656 $ 52,641 Specific 6,328 3,590 111 3,873 — 1,237 15,139 Ending balance $ 40,319 $ 9,085 $ 373 $ 15,110 $ — $ 2,893 $ 67,780 December 31, 2022 General $ 42,979 $ 2,397 $ 325 $ 10,801 $ — $ 1,208 $ 57,710 Specific 6,926 4,134 1,037 3,498 — 1,242 16,837 PCD — — 15,972 — — — 15,972 Ending balance $ 49,905 $ 6,531 $ 17,334 $ 14,299 $ — $ 2,450 $ 90,519 (in thousands) Bridge Fixed Rate Construction SBA - 7(a) Residential Other Total Allowance for loan losses Three Months Ended March 31, 2023 Beginning balance $ 49,905 $ 6,531 $ 17,334 $ 14,299 $ — $ 2,450 $ 90,519 Provision for (recoveries of) loan losses (8,975) 2,654 (63) 1,395 — 443 (4,546) Charge-offs and sales (611) (100) (16,898) (613) — — (18,222) Recoveries — — — 29 — — 29 Ending balance $ 40,319 $ 9,085 $ 373 $ 15,110 $ — $ 2,893 $ 67,780 Three Months Ended March 31, 2022 Beginning balance $ 19,519 $ 6,861 $ — $ 12,180 $ 60 $ 6,757 $ 45,377 Provision for (recoveries of) loan losses 359 (337) 323 1,272 — (376) 1,241 PCD — — 5,000 — — — 5,000 Charge-offs and sales — — — (173) — — (173) Recoveries — — — (46) — (155) (201) Ending balance $ 19,878 $ 6,524 $ 5,323 $ 13,233 $ 60 $ 6,226 $ 51,244 |
Schedule of loan modifications by primary modification type and related financial effects | Three Months Ended March 31, 2023 (in thousands) Carrying Value % of Total Carrying Value of Loans, net Financial Effect SBC loans modified during the period ended Term extension $ 23,356 0.24 % 1 year added to the weighted average life of the loans Other-than-insignificant payment delay 117 0.00 31 months of payment deferral Combination - Term extension and other-than-insignificant payment delay 26,742 0.27 12 months of payment deferral and 1.5 years added to the weighted average life of the loan SBA loans modified during the period ended Term extension $ 10 0.00 % 8.7 years added to the weighted average life of the loans Other-than-insignificant payment delay 659 0.01 6 months of payment deferral |
Schedule of performance of modified loans | Three Months Ended March 31, 2023 (in thousands) Current 30-59 days past due 60+ days past due Total SBC Term extension $ 23,356 $ — $ — $ 23,356 Other-than-insignificant payment delay 117 — — 117 Combination - Term extension and other-than-insignificant payment delay — — 26,742 26,742 SBA Term extension $ 10 $ — $ — $ 10 Other-than-insignificant payment delay 659 — — 659 |
Non-accrual loans | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Schedule of non-accrual loans | (in thousands) March 31, 2023 December 31, 2022 Non-accrual loans With an allowance $ 180,986 $ 197,101 Without an allowance 70,696 45,704 Total recorded carrying value of non-accrual loans $ 251,682 $ 242,805 Allowance for loan losses related to non-accrual loans $ (15,027) $ (32,809) UPB of non-accrual loans $ 269,346 $ 278,401 March 31, 2023 March 31, 2022 Interest income on non-accrual loans for the three months ended $ 818 $ 46 |
Geographical concentration | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Schedule of concentration risk of loans secured by real estate | Geographic Concentration (% of UPB) March 31, 2023 December 31, 2022 Texas 20.0 % 20.1 % California 11.3 11.1 Georgia 7.5 7.6 Arizona 6.4 6.8 Florida 6.4 6.3 New York 5.1 5.5 Oregon 4.6 4.4 North Carolina 4.3 4.2 Illinois 4.0 3.9 Ohio 3.2 3.2 Other 27.2 26.9 Total 100.0 % 100.0 % |
Collateral concentration | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Schedule of concentration risk of loans secured by real estate | The table below presents the collateral type concentration of loans, net. Collateral Concentration (% of UPB) March 31, 2023 December 31, 2022 Multi-family 67.6 % 67.0 % Mixed Use 8.2 8.1 SBA 5.6 5.8 Retail 5.1 5.5 Industrial 5.1 5.0 Office 4.9 4.9 Lodging/Residential 1.6 1.6 Other 1.9 2.1 Total 100.0 % 100.0 % The table below presents the collateral type concentration of SBA loans within loans, net. Collateral Concentration (% of UPB) March 31, 2023 December 31, 2022 Lodging 22.8 % 14.6 % Offices of Physicians 8.0 7.5 Gasoline Service Stations 7.8 2.5 Eating Places 6.9 3.7 Child Day Care Services 6.6 5.7 General Freight Trucking, Local 2.5 2.5 Veterinarians 1.7 1.6 Grocery Stores 1.7 1.6 Funeral Service & Crematories 1.3 1.2 Coin-Operated Laundries and Drycleaners 1.0 0.8 Other 39.7 58.3 Total 100.0 % 100.0 % |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Fair Value Measurements | |
Schedule of financial instruments carried at fair value on a recurring basis | (in thousands) Level 1 Level 2 Level 3 Total March 31, 2023 Assets: Money market funds (a) $ 18,917 $ — $ — $ 18,917 Loans, held for sale, at fair value — 178,248 58,330 236,578 Loans, net, at fair value — — 9,859 9,859 Paycheck Protection Program loans — 346 — 346 MBS, at fair value — 32,607 — 32,607 Derivative instruments, at fair value — 11,794 1,979 13,773 Residential MSRs, at fair value — — 188,985 188,985 Investment in unconsolidated joint ventures — — 7,913 7,913 Preferred equity investment (b) — — 108,423 108,423 Total assets $ 18,917 $ 222,995 $ 375,489 $ 617,401 Liabilities: Derivative instruments, at fair value $ — $ 2,639 $ — $ 2,639 Contingent consideration — — 16,636 16,636 Total liabilities $ — $ 2,639 $ 16,636 $ 19,275 December 31, 2022 Assets: Money market funds (a) $ 44,611 $ — $ — $ 44,611 Loans, held for sale, at fair value — 197,453 60,924 258,377 Loans, net, at fair value — — 9,786 9,786 Paycheck Protection Program loans — 576 — 576 MBS, at fair value — 32,041 — 32,041 Derivative instruments, at fair value — 12,846 117 12,963 Residential MSRs, at fair value — — 192,203 192,203 Investment in unconsolidated joint ventures — — 8,094 8,094 Preferred equity investment (b) — — 108,423 108,423 Total assets $ 44,611 $ 242,916 $ 379,547 $ 667,074 Liabilities: Derivative instruments, at fair value $ — $ 1,586 $ — $ 1,586 Contingent consideration — — 28,500 28,500 Total liabilities $ — $ 1,586 $ 28,500 $ 30,086 (a) Money market funds are included in cash and cash equivalents on the consolidated balance sheet (b) Preferred equity investments held through consolidated joint ventures are included in assets of consolidated VIEs on the consolidated balance sheet |
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 March 31, 2023 Residential MSRs, at fair value $ 188,985 Income Approach Forward prepayment rate | Discount rate | Servicing expense (b) (b) Investment in unconsolidated joint ventures $ 7,913 Income Approach Discount rate 9.0% 9.0% Derivative instruments, at fair value 1,979 Market Approach Origination pull-through rate | Servicing Fee Multiple | Percentage of unpaid principal balance 53.88% - 100% | 0.07 - 6.7% | 0.02 - 2.9% 80% | 4.3% | 1.5% Preferred equity investment 108,423 Income Approach Discount rate 10.5% 10.5% Contingent consideration- Mosaic CER dividends (4,003) Monte Carlo Simulation Model Equity volatility | Discount rate 1.89% | 11.54% 1.89% | 11.54% Contingent consideration- Mosaic CER units (12,633) Income approach and PWERM Model Revaluation discount rate | Discount rate 12% | 11.54% 12% | 11.54% December 31, 2022 Residential MSRs, at fair value 192,203 Income Approach Forward prepayment rate | Discount rate | Servicing expense (b) (b) Investment in unconsolidated joint ventures $ 8,094 Income Approach Discount rate 9.0% 9.0% Derivative instruments, at fair value $ 117 Market Approach Origination pull-through rate | Servicing Fee Multiple | Percentage of unpaid principal balance 53.9% - 100% | 2.0 - 7.2% | 0.5 - 3.2% 83% | 4.7% | 1.6% Preferred equity investment 108,423 Income Approach Discount rate 10.5% 10.5% Contingent consideration- Mosaic CER dividends (4,587) Monte Carlo Simulation Model Equity volatility | Discount rate 35.0% | 11.9% 35.0% | 11.9% Contingent consideration- Mosaic CER units (14,913) Income approach and PWERM Model Revaluation discount rate | Discount rate 12.0% | 11.9% 12.0% | 11.9% (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 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 Preferred Equity investments Total Three Months Ended March 31, 2023 Beginning Balance $ — $ 117 $ 9,786 $ 60,924 $ — $ — $ 192,203 $ 8,094 $ (28,500) $ 108,423 $ 351,047 Additions due to loans sold, servicing retained — — — — — — 4,593 — — — 4,593 Sales / Principal payments — — — (11) — — (1,718) — 9,000 — 7,271 Unrealized gains (losses), net — 1,862 73 (2,583) — — (6,093) (181) 2,864 — (4,058) Ending Balance $ — $ 1,979 $ 9,859 $ 58,330 $ — $ — $ 188,985 $ 7,913 $ (16,636) $ 108,423 $ 358,853 Three Months Ended March 31, 2022 Beginning Balance $ 1,581 $ 2,339 $ 10,766 $ 231,865 $ — $ 3,243 $ 120,142 $ 8,894 $ (16,400) $ — $ 362,430 Purchases or Originations — — — 17,570 — — — — — — 17,570 Additions due to loans sold, servicing retained — — — — — — 10,506 — — — 10,506 Sales / Principal payments — — — (32,594) — (1,400) (3,412) — 9,000 — (28,406) Realized gains (losses), net — — — (786) — — — — — — (786) Unrealized gains (losses), net 44 (4,955) (44) (10,760) — — 32,598 (284) (400) — 16,199 Merger — — — — 17,053 — — — (84,348) — (67,295) Transfer to (from) Level 3 5,389 — — (1,337) — (1,843) — — — — 2,209 Ending Balance $ 7,014 $ (2,616) $ 10,722 $ 203,958 $ 17,053 $ — $ 159,834 $ 8,610 $ (92,148) $ — $ 312,427 |
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 | March 31, 2023 December 31, 2022 (in thousands) Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value Assets: Loans, net $ 9,900,509 $ 9,680,701 $ 9,878,222 $ 9,610,412 Paycheck Protection Program loans 146,211 146,211 186,409 196,222 Investments held to maturity 3,306 3,320 3,306 3,306 Purchased future receivables, net 10,568 10,568 8,246 8,246 Servicing rights 89,951 95,620 87,117 91,698 Total assets $ 10,150,545 $ 9,936,420 $ 10,163,300 $ 9,909,884 Liabilities: Secured borrowings $ 2,484,902 $ 2,484,902 $ 2,846,293 $ 2,846,293 Paycheck Protection Program Liquidity Facility borrowings 169,596 169,596 201,011 201,011 Securitized debt obligations of consolidated VIEs, net 5,300,967 5,105,516 4,903,350 4,748,291 Senior secured note, net 343,798 309,043 343,355 312,975 Guaranteed loan financing 238,948 248,635 264,889 275,316 Convertible notes, net 114,689 114,104 114,397 113,823 Corporate debt, net 663,623 612,396 662,665 614,744 Total liabilities $ 9,316,523 $ 9,044,192 $ 9,335,960 $ 9,112,453 |
Investments Held to Maturity (T
Investments Held to Maturity (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Investments Held to Maturity | |
Schedule of information about held to maturity investments | Weighted Average Gross Gross Interest Amortized Unrealized Unrealized (in thousands) Rate (a) Cost Fair Value Gains Losses March 31, 2023 Less than one year 12.0 % $ 306 $ 306 $ — $ — Construction preferred equities 12.0 % $ 306 $ 306 $ — $ — One to five years 10.0 % $ 3,000 $ 3,000 $ — $ — Multi-family preferred equities 10.0 % $ 3,000 $ 3,000 $ — $ — Total investments held to maturity 10.3 % $ 3,306 $ 3,306 $ — $ — December 31, 2022 Less than one year 12.0 % $ 306 $ 306 $ — $ — Construction preferred equities 12.0 % $ 306 $ 306 $ — $ — One to five years 10.0 % $ 3,000 $ 3,000 $ — $ — Multi-family preferred equities 10.0 % $ 3,000 $ 3,000 $ — $ — Total investments held to maturity 10.3 % $ 3,306 $ 3,306 $ — $ — (a) Weighted based on current principal balance |
Servicing rights (Tables)
Servicing rights (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Schedule of information regarding portfolio of servicing rights | Three Months Ended March 31, (in thousands) 2023 2022 SBA servicing rights, at amortized cost Beginning net carrying amount $ 19,756 $ 22,157 Additions due to loans sold, servicing retained 1,512 1,734 Amortization (835) (949) Recovery (impairment) 1,607 (51) Ending net carrying amount $ 22,040 $ 22,891 Multi-family servicing rights, at amortized cost Beginning net carrying amount $ 67,361 $ 62,300 Additions due to loans sold, servicing retained 3,081 1,463 Amortization (2,531) (2,345) Ending net carrying amount $ 67,911 $ 61,418 Total servicing rights, at amortized cost $ 89,951 $ 84,309 Residential MSRs, at fair value Beginning net carrying amount $ 192,203 $ 120,142 Additions due to loans sold, servicing retained 4,593 10,506 Loan pay-offs (1,718) (3,412) Unrealized gains (losses) (6,093) 32,598 Ending fair value amount $ 188,985 $ 159,834 Total servicing rights $ 278,936 $ 244,143 |
Residential MSRs | |
Schedule of servicing rights | March 31, 2023 December 31, 2022 (in thousands) UPB Fair Value UPB Fair Value Fannie Mae $ 4,539,967 $ 64,188 $ 4,492,990 $ 64,914 Freddie Mac 4,508,391 66,998 4,499,992 68,208 Ginnie Mae 3,108,122 57,799 3,085,038 59,081 Total $ 12,156,480 $ 188,985 $ 12,078,020 $ 192,203 |
Schedule of mortgage servicing rights portfolio | March 31, 2023 December 31, 2022 Range of input values Weighted Average Range of input values Weighted Average Residential MSRs Forward prepayment rate 5.8 - 17.9 % 7.0 % 6.0 - 21.5 % 6.3 % Discount rate 9.5 - 13.8 % 10.1 % 9.5 - 12.0 % 10.1 % Servicing expense $70 - $95 $74 $70 - $85 $74 |
Schedule of adverse changes to key assumptions on the carrying amount of the servicing rights | (in thousands) March 31, 2023 December 31, 2022 Residential MSRs Prepayment rate Impact of 10% adverse change $ (5,556) $ (5,620) Impact of 20% adverse change $ (10,817) $ (10,948) Discount rate Impact of 10% adverse change $ (8,620) $ (8,906) Impact of 20% adverse change $ (16,527) $ (17,066) Servicing expense Impact of 10% adverse change $ (2,692) $ (2,689) Impact of 20% adverse change $ (5,385) $ (5,378) |
SBA | Multi-family | |
Schedule of servicing rights | As of March 31, 2023 As of December 31, 2022 (in thousands) UPB Carrying Value UPB Carrying Value SBA $ 1,051,612 $ 22,040 $ 1,019,770 $ 19,756 Multi-family 4,999,057 67,911 4,839,028 67,361 Total $ 6,050,669 $ 89,951 $ 5,858,798 $ 87,117 |
Schedule of assumptions used in the estimated valuation of servicing rights carried at amortized cost | March 31, 2023 December 31, 2022 Range of input values Weighted Average Range of input values Weighted Average SBA servicing rights Forward prepayment rate 10.1 - 21.9 % 10.5 % 10.2 - 21.6 % 10.6 % Forward default rate 0.0 - 9.9 % 9.2 % 0.0 - 10.0 % 9.2 % Discount rate 15.4 - 23.5 % 15.8 % 18.0 - 31.4 % 18.7 % Servicing expense 0.4 - 0.4 % 0.4 % 0.4 - 0.4 % 0.4 % Multi-family servicing rights Forward prepayment rate 0.0 - 7.5 % 3.5 % 0.0 - 7.2 % 3.5 % Forward default rate 0.0 - 1.1 % 0.8 % 0.0 - 1.1 % 0.8 % 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) March 31, 2023 December 31, 2022 SBA servicing rights Forward prepayment rate Impact of 10% adverse change $ (689) $ (578) Impact of 20% adverse change $ (1,339) $ (1,125) Default rate Impact of 10% adverse change $ (145) $ (125) Impact of 20% adverse change $ (289) $ (249) Discount rate Impact of 10% adverse change $ (897) $ (861) Impact of 20% adverse change $ (1,717) $ (1,642) Servicing expense Impact of 10% adverse change $ (1,373) $ (1,228) Impact of 20% adverse change $ (2,746) $ (2,455) Multi-family servicing rights Forward prepayment rate Impact of 10% adverse change $ (265) $ (271) Impact of 20% adverse change $ (525) $ (537) Default rate Impact of 10% adverse change $ (21) $ (22) Impact of 20% adverse change $ (42) $ (44) Discount rate Impact of 10% adverse change $ (2,104) $ (2,057) Impact of 20% adverse change $ (4,102) $ (4,012) Servicing expense Impact of 10% adverse change $ (2,632) $ (2,685) Impact of 20% adverse change $ (5,264) $ (5,370) |
Schedule of future amortization expense for the servicing rights | (in thousands) March 31, 2023 2023 $ 10,538 2024 12,231 2025 10,913 2026 9,672 2027 8,618 Thereafter 37,979 Total $ 89,951 |
Residential mortgage banking _2
Residential mortgage banking activities and variable expenses on residential mortgage banking activities (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
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 March 31, (in thousands) 2023 2022 Realized and unrealized gain (loss) of residential mortgage loans held for sale, at fair value $ 2,891 $ (5,087) Creation of new MSRs, net of payoffs 2,875 7,094 Loan origination fee income on residential mortgage loans 2,526 4,110 Unrealized gain on IRLCs and other derivatives 877 2,307 Residential mortgage banking activities $ 9,169 $ 8,424 Variable expenses on residential mortgage banking activities $ (5,485) $ (979) |
Secured Borrowings (Tables)
Secured Borrowings (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Secured Borrowings | |
Schedule of characteristics of secured borrowings | Pledged Assets Carrying Value at Lenders (1) Asset Class Current Maturity (2) Pricing (3) Facility Size Carrying Value March 31, 2023 December 31, 2022 3 SBA loans October 2023 – March 2025 SOFR + 2.875% $ 250,000 $ 235,036 $ 162,839 $ 160,903 2 SBC loans - USD June 2023 – February 2024 1 ML + 7.00% 360,000 360,009 109,336 111,966 1 SBC loans - Non-USD (4) June 2026 SONIA + 3.25% 123,370 50,716 36,317 61,596 5 Residential loans May 2023 – November 2023 Variable Pricing 440,000 122,850 118,641 132,658 1 Residential MSRs February 2026 SOFR + 3.00% 120,000 131,185 97,881 49,900 1 Purchased future receivables October 2023 1 ML + 4.50% 50,000 — — — Total borrowings under credit facilities and other financing agreements $ 1,343,370 $ 899,796 $ 525,014 $ 517,023 7 SBC loans November 2023 – March 2026 1 MT + 2.00% $ 3,870,500 $ 1,920,195 $ 1,527,847 $ 1,905,358 1 SBC loans - Non-USD (4) January 2024 EURIBOR + 3.00% 216,780 46,724 39,174 — 6 MBS April 2023 – August 2023 6.93% 392,867 773,823 392,867 423,912 Total borrowings under repurchase agreements $ 4,480,147 $ 2,740,742 $ 1,959,888 $ 2,329,270 Total secured borrowings $ 5,823,517 $ 3,640,538 $ 2,484,902 $ 2,846,293 |
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) March 31, 2023 December 31, 2022 Collateral pledged - borrowings under credit facilities and other financing agreements Loans, held for sale, at fair value $ 136,181 $ 146,721 Loans, net 632,430 630,910 MSRs 131,185 133,122 Total $ 899,796 $ 910,753 Collateral pledged - borrowings under repurchase agreements Loans, net $ 1,940,993 $ 2,496,880 MBS 26,219 27,015 Retained interest in assets of consolidated VIEs 747,604 753,099 Loans, held for sale, at fair value 20,428 60,551 Loans, held at fair value 4,007 3,974 Real estate acquired in settlement of loans 1,491 1,491 Total $ 2,740,742 $ 3,343,010 Total collateral pledged on secured borrowings $ 3,640,538 $ 4,253,763 |
Senior secured notes, convert_2
Senior secured notes, convertible notes, and corporate debt, net (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
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 March 31, 2023 Senior secured notes principal amount (1) 4.50 % 10/20/2026 $ 350,000 Unamortized deferred financing costs - Senior secured notes (6,202) Total Senior secured notes, net $ 343,798 Convertible notes principal amount (2) 7.00 % 8/15/2023 115,000 Unamortized discount - Convertible notes (3) (77) Unamortized deferred financing costs - Convertible notes (234) Total Convertible notes, net $ 114,689 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 Corporate debt principal amount (7) 7.375 % 7/31/2027 100,000 Unamortized discount - corporate debt (9,141) Unamortized deferred financing costs - corporate debt (4,369) Junior subordinated notes principal amount (8) 3ML + 3.10 % 3/30/2035 15,000 Junior subordinated notes principal amount (9) 3ML + 3.10 % 4/30/2035 21,250 Total corporate debt, net $ 663,623 Total carrying amount of debt $ 1,122,110 Total carrying amount of conversion option of equity components recorded in equity $ 77 (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 corporate debt is payable semiannually on January 31 and July 31 of each year. (8) Interest on the Junior subordinated notes I-A is payable quarterly on March 30, June 30, September 30, and December 30 of each year. (9) 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) March 31, 2023 2023 $ 115,000 2024 — 2025 120,000 2026 660,883 2027 100,000 Thereafter 146,250 Total contractual amounts $ 1,142,133 Unamortized deferred financing costs, discounts, and premiums, net (20,023) Total carrying amount of debt $ 1,122,110 |
Guaranteed loan financing (Tabl
Guaranteed loan financing (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
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 March 31, 2023 7.87 % 1.45-9.25 % 2023-2046 $ 238,948 December 31, 2022 6.68 % 1.45-8.50 % 2023-2046 $ 264,889 |
Summary of contractual maturities of total guaranteed loan financing outstanding | g (in thousands) March 31, 2023 2023 $ 149 2024 859 2025 1,136 2026 3,881 2027 11,475 Thereafter 221,448 Total $ 238,948 |
Variable interest entities an_2
Variable interest entities and securitization activities (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Consolidated VIEs | |
Variable interest entities | |
Summary of information on securitized debt obligations | March 31, 2023 December 31, 2022 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 $ 43,189 $ 42,804 7.0 % $ 49,031 $ 48,518 4.0 % Sutherland Commercial Mortgage Trust 2017-SBC6 5,386 5,296 5.0 7,386 7,273 4.3 Sutherland Commercial Mortgage Trust 2019-SBC8 116,818 115,053 2.9 120,916 119,072 2.9 Sutherland Commercial Mortgage Trust 2021-SBC10 102,608 101,062 1.6 109,622 107,969 1.6 ReadyCap Commercial Mortgage Trust 2015-2 2,167 1,926 5.2 2,726 2,442 5.1 ReadyCap Commercial Mortgage Trust 2016-3 11,732 11,603 5.1 11,950 11,787 5.1 ReadyCap Commercial Mortgage Trust 2018-4 53,380 52,432 4.7 58,838 57,857 4.3 ReadyCap Commercial Mortgage Trust 2019-5 105,388 103,220 4.6 111,184 108,859 4.5 ReadyCap Commercial Mortgage Trust 2019-6 204,357 202,040 3.4 209,930 207,464 3.3 ReadyCap Commercial Mortgage Trust 2022-7 193,041 190,145 4.1 197,498 194,456 4.2 Ready Capital Mortgage Financing 2019-FL3 59,508 59,508 6.8 59,508 59,508 3.5 Ready Capital Mortgage Financing 2020-FL4 188,928 188,881 8.0 192,419 192,213 4.8 Ready Capital Mortgage Financing 2021-FL5 377,996 376,512 6.0 415,166 413,101 3.1 Ready Capital Mortgage Financing 2021-FL6 498,855 495,345 5.8 502,220 497,891 2.9 Ready Capital Mortgage Financing 2021-FL7 743,848 739,197 6.1 743,848 738,246 3.2 Ready Capital Mortgage Financing 2022-FL8 913,675 907,341 6.3 913,675 906,307 3.7 Ready Capital Mortgage Financing 2022-FL9 588,202 581,453 7.6 587,722 579,823 5.9 Ready Capital Mortgage Financing 2022-FL10 651,910 644,030 7.3 651,460 642,578 7.9 Ready Capital Mortgage Financing 2023-FL11 482,312 475,467 7.7 — — — Total $ 5,343,300 $ 5,293,315 6.3 % $ 4,945,099 $ 4,895,364 4.3 % |
Schedule of assets and liabilities for VIEs | (in thousands) March 31, 2023 December 31, 2022 Assets: Cash and cash equivalents $ 10,401 $ 997 Restricted cash 75,479 77,062 Loans, net 6,782,171 6,311,698 Preferred equity investment 108,423 108,423 Other assets 78,387 54,580 Total assets $ 7,054,861 $ 6,552,760 Liabilities: Securitized debt obligations of consolidated VIEs, net 5,300,967 4,903,350 Due to third parties 3,441 3,727 Total liabilities $ 5,304,408 $ 4,907,077 |
Unconsolidated VIEs | |
Variable interest entities | |
Schedule of assets and liabilities for VIEs | Carrying Amount Maximum Exposure to Loss (1) (in thousands) March 31, 2023 December 31, 2022 March 31, 2023 December 31, 2022 MBS, at fair value (2) $ 23,201 $ 24,408 $ 23,201 $ 24,408 Investment in unconsolidated joint ventures 114,169 118,641 114,169 118,641 Total assets in unconsolidated VIEs $ 137,370 $ 143,049 $ 137,370 $ 143,049 (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) | 3 Months Ended |
Mar. 31, 2023 | |
Interest income and interest expense | |
Schedule of components of interest income and expense | Three Months Ended March 31, (in thousands) 2023 2022 Interest income Loans Bridge $ 160,431 $ 64,779 Fixed rate 13,028 14,662 Construction 12,166 1,757 SBA - 7(a) 14,921 9,379 PPP 3,007 16,858 Residential 40 19 Other 8,375 10,246 Total loans (1) $ 211,968 $ 117,700 Held for sale, at fair value, loans Fixed rate $ 735 $ 2,066 Freddie Mac — 192 Residential 1,565 2,100 Other 7 13 Total loans, held for sale, at fair value (1) $ 2,307 $ 4,371 Investments held to maturity $ 8 $ 607 Preferred equity investment (1) $ 2,168 $ — MBS, at fair value $ 1,122 $ 1,727 Total interest income $ 217,573 $ 124,405 Interest expense Secured borrowings $ (46,746) $ (19,623) Paycheck Protection Program Liquidity Facility borrowings (164) (688) Securitized debt obligations of consolidated VIEs (90,601) (24,251) Guaranteed loan financing (4,872) (3,085) Senior secured note (4,381) (4,357) Convertible note (2,188) (2,188) Corporate debt (11,442) (6,825) Total interest expense $ (160,394) $ (61,017) Net interest income before provision for loan losses $ 57,179 $ 63,388 (1) Includes interest income on assets in consolidated VIEs. |
Derivative instruments (Tables)
Derivative instruments (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Derivative instruments | |
Schedule of the Company's derivatives | March 31, 2023 December 31, 2022 Notional Derivative Derivative Notional Derivative Derivative (in thousands) Primary Underlying Risk Amount Asset Liability Amount Asset Liability IRLCs Interest rate risk $ 205,204 $ 1,979 $ — $ 205,204 $ 117 $ — Interest Rate Swaps - not designated as hedges (1) Interest rate risk 216,731 16,299 (7) 216,381 19,366 — Interest Rate Swaps - designated as hedges (1) Interest rate risk 266,139 28,478 — 266,139 33,863 — TBA Agency Securities (1) Market risk 163,500 81 (1,019) 134,150 796 (749) FX forwards Foreign exchange rate risk 47,834 1,040 (1,698) 47,834 1,123 (1,319) Total $ 899,408 $ 47,877 $ (2,724) $ 869,708 $ 55,265 $ (2,068) |
Schedule of gains and losses on derivatives | Three Months Ended March 31, 2023 Three Months Ended March 31, 2022 Net Realized Net Unrealized Net Realized Net Unrealized (in thousands) Gain (Loss) Gain (Loss) Gain (Loss) Gain (Loss) Interest rate swaps $ 3,686 $ (8,459) $ (1,805) $ 26,702 TBA Agency Securities — (985) — 7,264 IRLCs — 1,862 — (4,957) FX forwards — (462) 680 231 Total $ 3,686 $ (8,044) $ (1,125) $ 29,240 |
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 March 31, 2023 $ (298) $ — $ (298) $ (4,103) $ (3,805) Three Months Ended March 31, 2022 $ (254) $ — $ (254) $ (41) $ 213 |
Real estate owned, held for s_2
Real estate owned, held for sale (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Real estate owned, held for sale | |
Summary of the carrying amount of the Company's real estate holdings | (in thousands) March 31, 2023 December 31, 2022 Acquired Portfolio: Mixed Use $ 35,367 $ 35,361 Multi-family 12,675 48,768 Lodging/Residential 9,088 — Total Acquired REO $ 57,130 $ 84,129 Other REO held for sale: Single Family $ 24,305 $ 24,300 Retail 1,853 1,853 Office 6,816 6,816 Total Other REO $ 32,974 $ 32,969 Total real estate owned, held for sale $ 90,104 $ 117,098 |
Agreements and transactions w_2
Agreements and transactions with related parties (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Management fee | |
Related-party transactions | |
Schedule of related party transactions | Three Months Ended March 31, 2023 2022 Management fee - total $ 5.1 million $ 3.2 million Management fee - amount unpaid $ 5.1 million $ 6.1 million |
Incentive distribution | |
Related-party transactions | |
Schedule of related party transactions | Three Months Ended March 31, 2023 2022 Incentive fee distribution - total $ 1.7 million $ — Incentive fee distribution - amount unpaid $ 1.7 million $ 2.4 million |
Expense reimbursement | |
Related-party transactions | |
Schedule of related party transactions | Three Months Ended March 31, 2023 2022 Reimbursable expenses payable to Manager - total $ 2.9 million $ 3.5 million Reimbursable expenses payable to Manager - amount unpaid $ 1.8 million $ 9.5 million |
Other assets and other liabil_2
Other assets and other liabilities (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Other assets and other liabilities | |
Schedule of other assets and other liabilities | (in thousands) March 31, 2023 December 31, 2022 Other assets: Goodwill $ 37,818 $ 37,818 Deferred loan exit fees 36,629 36,669 Accrued interest 37,436 34,951 Due from servicers 26,422 24,078 Intangible assets 16,868 16,308 Receivable from third party 21,013 15,114 Deferred financing costs 5,624 5,176 Deferred tax asset 977 977 Right-of-use lease asset 2,364 1,687 Other assets 17,539 16,991 Other assets $ 202,690 $ 189,769 Accounts payable and other accrued liabilities: Accrued salaries, wages and commissions $ 19,789 $ 38,245 Accrued interest payable 40,023 34,785 Servicing principal and interest payable 11,171 13,163 Deferred tax liability 30,885 30,885 Repair and denial reserve 11,045 10,846 Payable to related parties 7,080 7,815 Accrued PPP related costs 145 4,016 Accrued professional fees 2,431 2,804 Lease payable 2,514 1,778 Other liabilities 7,440 32,183 Total accounts payable and other accrued liabilities $ 132,523 $ 176,520 |
Schedule of Goodwill | (in thousands) March 31, 2023 December 31, 2022 SBC Lending and Acquisitions $ 26,612 $ 26,612 Small Business Lending 11,206 11,206 Total $ 37,818 $ 37,818 |
Schedule of Intangible assets | (in thousands) March 31, 2023 December 31, 2022 Estimated Useful Life Customer Relationships - Red Stone $ 6,204 $ 6,293 19 years Internally developed software to be sold, leased, or marketed 4,052 3,092 5 years Trade name - Red Stone 2,500 2,500 Indefinite life Internally developed software - Knight Capital 1,636 1,794 6 years SBA license 1,000 1,000 Indefinite life Favorable lease 492 520 12 years Trade name - Knight Capital 379 416 6 years Trade name - GMFS 316 337 15 years Broker network - Knight Capital 289 356 4.5 years Total intangible assets $ 16,868 $ 16,308 |
Schedule of accumulated amortization for finite-lived intangible assets | (in thousands) March 31, 2023 Internally developed software - Knight Capital $ 2,163 Favorable lease 987 Trade name - GMFS 906 Broker network - Knight Capital 911 Trade name - Knight Capital 501 Internally developed software to be sold, leased, or marketed 317 Customer Relationship - Red Stone 596 Total accumulated amortization $ 6,381 |
Amortization expense related to the intangible assets | (in thousands) March 31, 2023 2023 $ 1,855 2024 2,264 2025 2,018 2026 1,351 2027 1,216 Thereafter 4,664 Total $ 13,368 |
Other income and operating ex_2
Other income and operating expenses (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Other income and operating expenses | |
Schedule of the financial position related to the Paycheck Protection Program (PPP) activities | (in thousands) March 31, 2023 December 31, 2022 Assets Paycheck Protection Program loans $ 146,211 $ 186,409 Paycheck Protection Program loans, at fair value 346 576 PPP fee receivable 323 328 Accrued interest receivable 2,024 3,196 Total PPP related assets $ 148,904 $ 190,509 Liabilities Paycheck Protection Program Liquidity Facility borrowings $ 169,596 $ 201,011 Interest payable 1,134 1,176 Deferred LSP revenue 97 122 Accrued PPP related costs 145 4,016 Payable to third parties 368 277 Repair and denial reserve 5,159 4,878 Total PPP related liabilities $ 176,499 $ 211,480 |
Schedule of the income and expenses related to the Paycheck Protection Program (PPP) activities. | Three Months Ended March 31, Financial statement account (in thousands) 2023 2022 Income LSP fee income $ 25 $ 37 Servicing income Interest income 3,007 16,858 Interest income Repair and denial reserve (281) 2,244 Other income - change in repair and denial reserve Total PPP related income $ 2,751 $ 19,139 Expense Direct operating expenses $ 118 $ 150 Other operating expenses - origination costs Interest expense 164 688 Interest expense Total PPP related expenses $ 282 $ 838 Net PPP related income $ 2,469 $ 18,301 |
Schedule of other income and operating expenses | Three Months Ended March 31, (in thousands) 2023 2022 Other income: Origination income $ 4,612 $ 1,654 Change in repair and denial reserve (199) 2,193 Employee retention credit consulting income 9,675 — Other 5,795 2,654 Total other income $ 19,883 $ 6,501 Other operating expenses: Origination costs $ 1,655 $ 4,934 Technology expense 2,114 2,040 Impairment on real estate 3,418 1,827 Rent and property tax expense 1,400 1,095 Recruiting, training and travel expense 748 302 Marketing expense 557 328 Other 4,426 2,127 Total other operating expenses $ 14,318 $ 12,653 |
Redeemable Preferred Stock an_2
Redeemable Preferred Stock and Stockholders Equity (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
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 March 15, 2022 March 31, 2022 April 29, 2022 $ 0.42 June 15, 2022 June 30, 2022 July 29, 2022 $ 0.42 September 15, 2022 September 30, 2022 October 31, 2022 $ 0.42 December 15, 2022 December 30, 2022 January 31, 2023 $ 0.40 March 15, 2023 March 31, 2023 April 28, 2023 $ 0.40 |
Schedule of Restricted Stock Unit RSU and RSA activity | Restricted Stock Units/Awards (in thousands, except share data) Number of Shares Grant date fair value Weighted-average grant date fair value (per share) Outstanding, December 31, 2022 827,163 $ 12,258 $ 14.82 Granted 441,296 5,728 12.98 Vested (333,470) (4,946) 14.83 Forfeited (4,536) (61) 13.62 Outstanding, March 31, 2023 930,453 $ 12,979 $ 13.95 |
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) March 31, 2023 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) | 3 Months Ended |
Mar. 31, 2023 | |
Earnings per Share of Common Stock | |
Schedule of computation of basic and diluted earnings per share | Three Months Ended March 31, (in thousands, except for share and per share amounts) 2023 2022 Basic Earnings Net income $ 36,978 $ 64,263 Less: Income attributable to non-controlling interest 1,835 775 Less: Income attributable to participating shares 2,371 2,412 Basic earnings $ 32,772 $ 61,076 Diluted Earnings Net income $ 36,978 $ 64,263 Less: Income attributable to non-controlling interest 1,835 775 Less: Income attributable to participating shares 2,371 2,412 Add: Expenses attributable to dilutive instruments 2,319 2,319 Diluted earnings $ 35,091 $ 63,395 Number of Shares Basic — Average shares outstanding 110,672,939 87,707,281 Effect of dilutive securities — Unvested participating shares 10,352,970 7,695,213 Diluted — Average shares outstanding 121,025,909 95,402,494 EPS Attributable to RC Common Stockholders: Basic $ 0.30 $ 0.70 Diluted $ 0.29 $ 0.66 |
Offsetting assets and liabili_2
Offsetting assets and liabilities (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
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 March 31, 2023 Assets IRLCs $ 1,979 $ — $ 1,979 $ — $ — $ 1,979 FX forwards 1,040 — 1,040 — — 1,040 TBA Agency Securities 81 78 3 — — 3 Interest rate swaps 44,777 34,026 10,751 — — 10,751 Total $ 47,877 $ 34,104 $ 13,773 $ — $ — $ 13,773 Liabilities Interest rate swaps $ 7 $ 7 $ — $ — $ — $ — TBA Agency Securities 1,019 78 941 — — 941 FX forwards 1,698 — 1,698 — — 1,698 Secured borrowings 2,484,902 — 2,484,902 2,484,902 — — Paycheck Protection Program Liquidity Facility 169,596 — 169,596 146,556 — 23,040 Total $ 2,657,222 $ 85 $ 2,657,137 $ 2,631,458 $ — $ 25,679 December 31, 2022 Assets IRLCs $ 117 $ — $ 117 $ — $ — $ 117 FX forwards 1,123 — 1,123 — — 1,123 TBA Agency Securities 796 482 314 — — 314 Interest rate swaps 53,229 41,820 11,409 — — 11,409 Total $ 55,265 $ 42,302 $ 12,963 $ — $ — $ 12,963 Liabilities TBA Agency Securities $ 749 $ 482 $ 267 $ — $ — $ 267 FX forwards 1,319 — 1,319 — — 1,319 Secured borrowings 2,846,293 — 2,846,293 2,846,293 — — Paycheck Protection Program Liquidity Facility 201,011 — 201,011 186,985 — 14,026 Total $ 3,049,372 $ 482 $ 3,048,890 $ 3,033,278 $ — $ 15,612 (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 the Company has 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 the Company that exceeds the Company’s corresponding financial assets. In each case, any of these excess amounts are excluded from the table although they are separately reported in the Company’s consolidated balance sheets as assets or liabilities, respectively. |
Commitments, Contingencies an_2
Commitments, Contingencies and Indemnifications (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Commitments, Contingencies and Indemnifications | |
Schedule of unfunded loan commitments | (in thousands) March 31, 2023 December 31, 2022 Loans, net $ 819,819 $ 881,519 Loans, held for sale at fair value $ 16,666 $ 20,546 Preferred equity investment $ 853 $ 1,147 (in thousands) March 31, 2023 December 31, 2022 Commitments to originate residential agency loans $ 185,165 $ 112,319 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Segment Reporting | |
Schedule of segment reporting information | Three Months Ended March 31, 2023 Small Residential SBC Lending Business Mortgage Corporate- (in thousands) and Acquisitions Lending Banking Other Consolidated Interest income $ 198,039 $ 17,929 $ 1,605 $ — $ 217,573 Interest expense (149,494) (9,374) (1,526) — (160,394) Net interest income before recovery of (provision for) loan losses $ 48,545 $ 8,555 $ 79 $ — $ 57,179 Recovery of (provision for) loan losses 8,129 (1,395) — — 6,734 Net interest income after recovery of (provision for) loan losses $ 56,674 $ 7,160 $ 79 $ — $ 63,913 Non-interest income Residential mortgage banking activities $ — $ — $ 9,169 $ — $ 9,169 Net realized gain (loss) on financial instruments and real estate owned 4,825 6,750 — — 11,575 Net unrealized gain (loss) on financial instruments (6,111) 476 (6,093) — (11,728) Servicing income, net 1,093 3,549 9,361 — 14,003 Income on purchased future receivables, net — 540 — — 540 Income on unconsolidated joint ventures 656 — — — 656 Other income 9,093 10,428 31 331 19,883 Total non-interest income $ 9,556 $ 21,743 $ 12,468 $ 331 $ 44,098 Non-interest expense Employee compensation and benefits $ (6,206) $ (11,275) $ (5,412) $ (2,246) $ (25,139) Allocated employee compensation and benefits from related party (232) — — (2,094) (2,326) Variable expenses on residential mortgage banking activities — — (5,485) — (5,485) Professional fees (981) (1,625) (174) (2,937) (5,717) Management fees – related party — — — (5,081) (5,081) Incentive fees – related party — — — (1,720) (1,720) Loan servicing expense (8,058) (97) (1,808) — (9,963) Transaction related expenses — — — (893) (893) Other operating expenses (6,733) (4,094) (1,709) (1,782) (14,318) Total non-interest expense $ (22,210) $ (17,091) $ (14,588) $ (16,753) $ (70,642) Income (loss) before provision for income taxes $ 44,020 $ 11,812 $ (2,041) $ (16,422) $ 37,369 Total assets $ 10,184,788 $ 791,394 $ 402,562 $ 158,719 $ 11,537,463 Three Months Ended March 31, 2022 Small Residential SBC Lending Business Mortgage Corporate- (in thousands) and Acquisitions Lending Banking Other Consolidated Interest income $ 96,343 $ 26,237 $ 1,825 $ — $ 124,405 Interest expense (53,093) (5,690) (1,958) (276) (61,017) Net interest income before provision for loan losses $ 43,250 $ 20,547 $ (133) $ (276) $ 63,388 Provision for loan losses (270) (1,272) — — (1,542) Net interest income after provision for loan losses $ 42,980 $ 19,275 $ (133) $ (276) $ 61,846 Non-interest income Residential mortgage banking activities $ — $ — $ 8,424 $ — $ 8,424 Net realized gain (loss) on financial instruments and real estate owned 882 7,125 — — 8,007 Net unrealized gain (loss) on financial instruments 12,429 288 32,598 — 45,315 Servicing income, net 920 1,493 8,115 — 10,528 Income on purchased future receivables, net — 2,469 — — 2,469 Income on unconsolidated joint ventures 6,563 — — — 6,563 Other income 3,014 2,871 24 592 6,501 Total non-interest income $ 23,808 $ 14,246 $ 49,161 $ 592 $ 87,807 Non-interest expense Employee compensation and benefits $ (10,160) (9,518) (7,534) (756) (27,968) Allocated employee compensation and benefits from related party (300) — — (2,700) (3,000) Variable expenses on residential mortgage banking activities — — (979) — (979) Professional fees (2,401) (1,468) (264) (993) (5,126) Management fees – related party — — — (3,196) (3,196) Loan servicing expense (5,875) (502) (2,543) — (8,920) Transaction related expenses — — — (5,699) (5,699) Other operating expenses (5,376) (3,787) (2,024) (1,466) (12,653) Total non-interest expense $ (24,112) $ (15,275) $ (13,344) $ (14,810) $ (67,541) Income (loss) before provision for income taxes $ 42,676 $ 18,246 $ 35,684 $ (14,494) $ 82,112 Total assets $ 9,520,677 $ 1,217,726 $ 493,671 $ 244,170 $ 11,476,244 |
Organization (Details)
Organization (Details) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Operating Partnership | ||
Ownership percentage in operating partnership | 98.60% | 98.60% |
Organization - Acquisitions (De
Organization - Acquisitions (Details) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | |||||
Feb. 26, 2023 director $ / shares | Feb. 25, 2023 director | Mar. 16, 2022 $ / shares | Sep. 30, 2022 USD ($) | Mar. 31, 2023 $ / shares shares | Dec. 31, 2022 $ / shares shares | Jan. 14, 2022 $ / shares | |
Acquisitions | |||||||
Increase in the number of directors on the Board of Directors | director | 3 | ||||||
Number of directors on Board of Directors | director | 12 | 9 | |||||
Number of directors from Broadmark added to the Board of Directors | director | 3 | ||||||
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||
Number of common shares outstanding | shares | 110,745,658 | 110,523,641 | |||||
Broadmark | |||||||
Acquisitions | |||||||
Common stock, par value | $ 0.001 | ||||||
Minimum | |||||||
Acquisitions | |||||||
Percentage of taxable income distributed in the form of qualifying distributions | 90% | ||||||
Series C Preferred Stock | |||||||
Acquisitions | |||||||
Par Value per Share | $ 0.0001 | ||||||
Rate per Annum | 6.25% | ||||||
Class B Common Stock | |||||||
Acquisitions | |||||||
Number of common shares outstanding | shares | 0 | ||||||
Broadmark | |||||||
Acquisitions | |||||||
Stock conversion rate | 0.47233 | ||||||
Common stock, par value | $ 0.0001 | ||||||
Mosaic | |||||||
Acquisitions | |||||||
Total purchase price | $ | $ 483,056 | ||||||
Common stock consideration | $ | $ 437,311 | ||||||
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 | 3 Months Ended | |
Mar. 31, 2023 USD ($) segment item class | Dec. 31, 2022 USD ($) | |
Number of reportable segments | segment | 3 | |
Cash collateral receivable offset against gross derivative asset positions | $ 34 | $ 41.8 |
Number of separate classes of servicing rights used for risk management purposes | class | 2 | |
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 |
Business Combinations - Mosaic
Business Combinations - Mosaic Acquisition (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | ||
Mar. 31, 2023 | Sep. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2022 | |
Assets: | ||||
Real estate, held for sale | $ 57,130 | $ 84,129 | ||
Business Combination, Consideration Transferred [Abstract] | ||||
Consideration transferred based on the value of OP units issued | $ 20,745 | |||
Goodwill | (37,818) | $ (37,818) | ||
Mosaic | ||||
Assets: | ||||
Cash and cash equivalents | $ 100,236 | |||
Restricted cash | 23,330 | |||
Loans, net | 412,745 | |||
Investments held to maturity | 161,567 | |||
Real estate, held for sale | 44,748 | |||
Other Assets: | ||||
Other assets | 20,664 | |||
Total assets acquired | 763,290 | |||
Liabilities: | ||||
Secured borrowings | 66,202 | |||
Loan participations sold | 73,656 | |||
Due to third parties | 24,301 | |||
Accounts payable and other accrued liabilities | 38,781 | |||
Total liabilities assumed | 202,940 | |||
Net assets acquired | 560,350 | |||
Non-controlling interests | (82,524) | |||
Net assets acquired, net of non-controlling interests | 477,826 | |||
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 | $ 16,600 | 25,000 | ||
Total consideration transferred | $ 483,056 | |||
Value per CER unit | $ 0.55 | $ 0.83 | ||
Goodwill | $ (5,230) | |||
Mosaic | Interest income | ||||
Business Combination, Consideration Transferred [Abstract] | ||||
Interest recognized from non-credit discounts on acquired assets | 2,800 | |||
Mosaic | Previously Reported | ||||
Assets: | ||||
Cash and cash equivalents | 100,236 | |||
Restricted cash | 23,330 | |||
Loans, net | 432,779 | |||
Investments held to maturity | 165,302 | |||
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 | |||
Goodwill | (1,234) | |||
Mosaic | Adjustments | ||||
Assets: | ||||
Loans, net | (20,034) | |||
Investments held to maturity | (3,735) | |||
Real estate, held for sale | (33,945) | |||
Other Assets: | ||||
Other assets | (5,097) | |||
Total assets acquired | (62,811) | |||
Liabilities: | ||||
Due to third parties | (333) | |||
Accounts payable and other accrued liabilities | 599 | |||
Total liabilities assumed | 266 | |||
Net assets acquired | (63,077) | |||
Non-controlling interests | (267) | |||
Net assets acquired, net of non-controlling interests | (63,344) | |||
Business Combination, Consideration Transferred [Abstract] | ||||
Fair value of CERs issued | (59,348) | |||
Total consideration transferred | (59,348) | |||
Goodwill | $ (3,996) |
Business Combinations - Pro-for
Business Combinations - Pro-forma Information (Details) - Mosaic - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Pro-forma information | ||
Interest income | $ 217,573 | $ 137,466 |
Interest expense | (160,394) | (63,942) |
Provision for loan losses | 6,734 | (1,542) |
Non-interest income | 44,098 | 88,474 |
Non-interest expense | (70,565) | (75,927) |
Income before provision for income taxes | 37,446 | 84,529 |
Income tax expense | (391) | (17,849) |
Net income | 37,055 | 66,680 |
Nonrecurring transaction costs excluded from pro forma non-interest expense | $ 100 | $ 5,700 |
Loans and Allowance for Credi_3
Loans and Allowance for Credit Losses - Classification, unpaid principal balance, and carrying value (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 | Mar. 31, 2022 | Dec. 31, 2021 |
Carrying Value | ||||
Total Loans, before allowance for loan losses | $ 3,161,205 | $ 3,637,347 | ||
Allowance for loan losses | (33,008) | (61,037) | ||
Total Loans, net | 3,128,197 | 3,576,310 | ||
Allowance for loan losses on loans in consolidated VIEs | (67,780) | (90,519) | $ (51,244) | $ (45,377) |
Total Loans, net of allowance for loan losses, including loans in consolidated VIEs | 9,910,368 | 9,888,008 | ||
Loans, held for sale, at fair value | 236,578 | 258,377 | ||
Total Loans, net and Loans held for sale, at fair value | 10,146,946 | 10,146,385 | ||
Paycheck Protection Program Loans | 146,557 | 186,985 | ||
Total loan portfolio | 10,293,503 | 10,333,370 | ||
UPB | ||||
Total Loans, before allowance for loan losses | 3,183,987 | 3,666,244 | ||
Total Loans, net | 3,183,987 | 3,666,244 | ||
Total Loans, held for sale, at fair value | 242,302 | 261,614 | ||
Total Loans, net and Loans held for sale, at fair value | 10,285,590 | 10,313,441 | ||
Total Paycheck Protection Program loans | 153,457 | 196,798 | ||
Total Loan portfolio | 10,439,047 | 10,510,239 | ||
Consolidated VIEs | ||||
Carrying Value | ||||
Total Loans, in consolidated VIEs, before allowance for loan losses | 6,816,943 | 6,341,180 | ||
Allowance for loan losses on loans in consolidated VIEs | (34,772) | (29,482) | ||
Total Loans, net, in consolidated VIEs | 6,782,171 | 6,311,698 | ||
UPB | ||||
Total Loans, in consolidated VIEs, before allowance for loan losses | 6,859,301 | 6,385,583 | ||
Total Loans, net, in consolidated VIEs | 6,859,301 | 6,385,583 | ||
Bridge | ||||
Carrying Value | ||||
Total Loans, before allowance for loan losses | 1,769,498 | 2,236,333 | ||
Allowance for loan losses on loans in consolidated VIEs | (40,319) | (49,905) | (19,878) | (19,519) |
UPB | ||||
Total Loans, before allowance for loan losses | 1,774,827 | 2,247,173 | ||
Bridge | Consolidated VIEs | ||||
Carrying Value | ||||
Total Loans, in consolidated VIEs, before allowance for loan losses | 5,622,134 | 5,098,539 | ||
UPB | ||||
Total Loans, in consolidated VIEs, before allowance for loan losses | 5,656,827 | 5,134,790 | ||
Fixed rate | ||||
Carrying Value | ||||
Total Loans, before allowance for loan losses | 186,158 | 182,415 | ||
Allowance for loan losses on loans in consolidated VIEs | (9,085) | (6,531) | (6,524) | (6,861) |
Loans, held for sale, at fair value | 57,962 | 60,551 | ||
UPB | ||||
Total Loans, before allowance for loan losses | 179,041 | 175,285 | ||
Total Loans, held for sale, at fair value | 68,280 | 68,280 | ||
Fixed rate | Consolidated VIEs | ||||
Carrying Value | ||||
Total Loans, in consolidated VIEs, before allowance for loan losses | 830,071 | 856,345 | ||
UPB | ||||
Total Loans, in consolidated VIEs, before allowance for loan losses | 831,050 | 856,914 | ||
Construction | ||||
Carrying Value | ||||
Total Loans, before allowance for loan losses | 479,305 | 445,814 | ||
Allowance for loan losses on loans in consolidated VIEs | (373) | (17,334) | (5,323) | |
UPB | ||||
Total Loans, before allowance for loan losses | 481,558 | 448,923 | ||
Freddie Mac | ||||
Carrying Value | ||||
Total Loans, before allowance for loan losses | 10,004 | 10,040 | ||
Loans, held for sale, at fair value | 10,146 | 13,791 | ||
UPB | ||||
Total Loans, before allowance for loan losses | 9,896 | 9,932 | ||
Total Loans, held for sale, at fair value | 10,048 | 13,611 | ||
SBA 7(a) | ||||
Carrying Value | ||||
Total Loans, before allowance for loan losses | 481,319 | 491,532 | ||
Allowance for loan losses on loans in consolidated VIEs | (15,110) | (14,299) | (13,233) | (12,180) |
Loans, held for sale, at fair value | 43,427 | 44,037 | ||
UPB | ||||
Total Loans, before allowance for loan losses | 499,804 | 509,672 | ||
Total Loans, held for sale, at fair value | 40,589 | 41,674 | ||
SBA 7(a) | Consolidated VIEs | ||||
Carrying Value | ||||
Total Loans, in consolidated VIEs, before allowance for loan losses | 58,723 | 64,226 | ||
UPB | ||||
Total Loans, in consolidated VIEs, before allowance for loan losses | 64,567 | 70,904 | ||
Residential | ||||
Carrying Value | ||||
Total Loans, before allowance for loan losses | 5,146 | 4,511 | ||
Allowance for loan losses on loans in consolidated VIEs | (60) | (60) | ||
Total Loans, net and Loans held for sale, at fair value | 119,699 | 134,642 | ||
UPB | ||||
Total Loans, before allowance for loan losses | 5,146 | 4,511 | ||
Total Loans, net and Loans held for sale, at fair value | 118,179 | 133,635 | ||
Other | ||||
Carrying Value | ||||
Total Loans, before allowance for loan losses | 229,775 | 266,702 | ||
Allowance for loan losses on loans in consolidated VIEs | (2,893) | (2,450) | $ (6,226) | $ (6,757) |
Loans, held for sale, at fair value | 5,344 | 5,356 | ||
UPB | ||||
Total Loans, before allowance for loan losses | 233,715 | 270,748 | ||
Total Loans, held for sale, at fair value | 5,206 | 4,414 | ||
Other | Consolidated VIEs | ||||
Carrying Value | ||||
Total Loans, in consolidated VIEs, before allowance for loan losses | 306,015 | 322,070 | ||
UPB | ||||
Total Loans, in consolidated VIEs, before allowance for loan losses | 306,857 | 322,975 | ||
Paycheck Protection Program loans, held for investment | ||||
Carrying Value | ||||
Paycheck Protection Program Loans | 146,211 | 186,409 | ||
UPB | ||||
Total Paycheck Protection Program loans | 153,111 | 196,222 | ||
Paycheck Protection Program loans, at fair value | ||||
Carrying Value | ||||
Paycheck Protection Program Loans | 346 | 576 | ||
UPB | ||||
Total Paycheck Protection Program loans | $ 346 | $ 576 |
Loans and Allowance for Credi_4
Loans and Allowance for Credit Losses - Loan Vintage (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Loan classification and delinquency by year of origination | ||
UPB | $ 10,043,288 | $ 10,051,827 |
Current fiscal year | 164,181 | 3,185,285 |
Year before current fiscal year | 3,224,537 | 3,830,867 |
Two years before current fiscal year | 3,786,587 | 511,483 |
Three years before current fiscal year | 485,591 | 1,133,712 |
Four years before current fiscal year | 1,105,796 | 418,375 |
Five or more years before current fiscal year | 1,196,317 | 865,996 |
Total | 9,963,009 | 9,945,718 |
General allowance for loan losses | (52,641) | (57,710) |
Total Loans, net of allowance for loan losses, including loans in consolidated VIEs | 9,910,368 | 9,888,008 |
Specific allowance for loan losses including PCD allowance | 15,100 | 32,800 |
Specific allowance for purchased financial assets with credit deterioration | 15,972 | |
Specific allowance for loan losses | 15,139 | 16,837 |
Current and less than 30 days past due | ||
Loan classification and delinquency by year of origination | ||
UPB | 9,608,149 | 9,666,328 |
Current fiscal year | 164,181 | 3,099,822 |
Year before current fiscal year | 3,139,050 | 3,826,140 |
Two years before current fiscal year | 3,752,081 | 501,168 |
Three years before current fiscal year | 476,044 | 1,061,145 |
Four years before current fiscal year | 979,327 | 298,208 |
Five or more years before current fiscal year | 1,034,485 | 810,322 |
Total | 9,545,168 | 9,596,805 |
30-59 Days Past Due | ||
Loan classification and delinquency by year of origination | ||
UPB | 146,182 | 111,992 |
Current fiscal year | 85,403 | |
Year before current fiscal year | 84,525 | 3,483 |
Two years before current fiscal year | 972 | 1,634 |
Three years before current fiscal year | 2,285 | 6,654 |
Four years before current fiscal year | 50,866 | 11,190 |
Five or more years before current fiscal year | 6,065 | 1,948 |
Total | 144,713 | 110,312 |
60+ Days Past Due | ||
Loan classification and delinquency by year of origination | ||
UPB | 288,957 | 273,507 |
Current fiscal year | 60 | |
Year before current fiscal year | 962 | 1,244 |
Two years before current fiscal year | 33,534 | 8,681 |
Three years before current fiscal year | 7,262 | 65,913 |
Four years before current fiscal year | 75,603 | 108,977 |
Five or more years before current fiscal year | 155,767 | 53,726 |
Total | 273,128 | 238,601 |
Bridge | ||
Loan classification and delinquency by year of origination | ||
UPB | 7,431,654 | 7,381,963 |
Current fiscal year | 112,489 | 2,942,695 |
Year before current fiscal year | 2,978,036 | 3,575,213 |
Two years before current fiscal year | 3,535,656 | 355,647 |
Three years before current fiscal year | 332,726 | 288,957 |
Four years before current fiscal year | 279,749 | 137,463 |
Five or more years before current fiscal year | 146,648 | 27,971 |
Total | 7,385,304 | 7,327,946 |
General allowance for loan losses | (33,991) | (42,979) |
Specific allowance for loan losses | 6,328 | 6,926 |
Bridge | Current and less than 30 days past due | ||
Loan classification and delinquency by year of origination | ||
Total | 7,088,912 | 7,120,162 |
Bridge | 30-59 Days Past Due | ||
Loan classification and delinquency by year of origination | ||
Total | 127,728 | 94,823 |
Bridge | 60+ Days Past Due | ||
Loan classification and delinquency by year of origination | ||
Total | 168,664 | 112,961 |
Fixed rate | ||
Loan classification and delinquency by year of origination | ||
UPB | 1,010,091 | 1,032,199 |
Current fiscal year | 4,013 | 96,897 |
Year before current fiscal year | 96,823 | 154,077 |
Two years before current fiscal year | 153,927 | 92,080 |
Three years before current fiscal year | 91,774 | 343,500 |
Four years before current fiscal year | 333,390 | 134,666 |
Five or more years before current fiscal year | 332,712 | 213,406 |
Total | 1,012,639 | 1,034,626 |
General allowance for loan losses | (5,495) | (2,397) |
Specific allowance for loan losses | 3,590 | 4,134 |
Fixed rate | Current and less than 30 days past due | ||
Loan classification and delinquency by year of origination | ||
Total | 984,724 | 993,832 |
Fixed rate | 30-59 Days Past Due | ||
Loan classification and delinquency by year of origination | ||
Total | 5,294 | 8,101 |
Fixed rate | 60+ Days Past Due | ||
Loan classification and delinquency by year of origination | ||
Total | 22,621 | 32,693 |
Construction | ||
Loan classification and delinquency by year of origination | ||
UPB | 481,558 | 448,923 |
Current fiscal year | 27,000 | 27,532 |
Year before current fiscal year | 30,372 | |
Two years before current fiscal year | 10,000 | |
Three years before current fiscal year | 10,000 | 348,622 |
Four years before current fiscal year | 374,280 | 42,651 |
Five or more years before current fiscal year | 37,542 | |
Total | 479,194 | 428,805 |
General allowance for loan losses | (262) | (325) |
Specific allowance for purchased financial assets with credit deterioration | 15,972 | |
Specific allowance for loan losses | 111 | 1,037 |
Construction | Current and less than 30 days past due | ||
Loan classification and delinquency by year of origination | ||
Total | 428,035 | 372,812 |
Construction | 60+ Days Past Due | ||
Loan classification and delinquency by year of origination | ||
Total | 51,159 | 55,993 |
Freddie Mac | ||
Loan classification and delinquency by year of origination | ||
UPB | 9,896 | 9,932 |
Year before current fiscal year | 3,891 | |
Two years before current fiscal year | 3,870 | 6,149 |
Three years before current fiscal year | 6,134 | |
Total | 10,004 | 10,040 |
Freddie Mac | Current and less than 30 days past due | ||
Loan classification and delinquency by year of origination | ||
Total | 6,911 | 6,947 |
Freddie Mac | 60+ Days Past Due | ||
Loan classification and delinquency by year of origination | ||
Total | 3,093 | 3,093 |
SBA 7(a) | ||
Loan classification and delinquency by year of origination | ||
UPB | 564,371 | 580,576 |
Current fiscal year | 19,942 | 110,549 |
Year before current fiscal year | 109,391 | 79,946 |
Two years before current fiscal year | 74,331 | 36,853 |
Three years before current fiscal year | 36,091 | 77,449 |
Four years before current fiscal year | 72,863 | 89,085 |
Five or more years before current fiscal year | 223,551 | 158,378 |
Total | 536,169 | 552,260 |
General allowance for loan losses | (11,237) | (10,801) |
Specific allowance for loan losses | 3,873 | 3,498 |
SBA 7(a) | Current and less than 30 days past due | ||
Loan classification and delinquency by year of origination | ||
Total | 524,987 | 541,378 |
SBA 7(a) | 30-59 Days Past Due | ||
Loan classification and delinquency by year of origination | ||
Total | 8,621 | 6,690 |
SBA 7(a) | 60+ Days Past Due | ||
Loan classification and delinquency by year of origination | ||
Total | 2,561 | 4,192 |
Residential | ||
Loan classification and delinquency by year of origination | ||
UPB | 5,146 | 4,511 |
Current fiscal year | 519 | 1,719 |
Year before current fiscal year | 4,105 | 725 |
Two years before current fiscal year | 156 | 361 |
Three years before current fiscal year | 422 | |
Four years before current fiscal year | 678 | |
Five or more years before current fiscal year | 366 | 606 |
Total | 5,146 | 4,511 |
Residential | Current and less than 30 days past due | ||
Loan classification and delinquency by year of origination | ||
Total | 3,896 | 2,871 |
Residential | 60+ Days Past Due | ||
Loan classification and delinquency by year of origination | ||
Total | 1,250 | 1,640 |
Other | ||
Loan classification and delinquency by year of origination | ||
UPB | 540,572 | 593,723 |
Current fiscal year | 218 | 5,893 |
Year before current fiscal year | 5,810 | 17,015 |
Two years before current fiscal year | 18,647 | 10,393 |
Three years before current fiscal year | 8,866 | 74,762 |
Four years before current fiscal year | 45,514 | 13,832 |
Five or more years before current fiscal year | 455,498 | 465,635 |
Total | 534,553 | 587,530 |
General allowance for loan losses | (1,656) | (1,208) |
Specific allowance for loan losses | 1,237 | 1,242 |
Other | Current and less than 30 days past due | ||
Loan classification and delinquency by year of origination | ||
Total | 507,703 | 558,803 |
Other | 30-59 Days Past Due | ||
Loan classification and delinquency by year of origination | ||
Total | 3,070 | 698 |
Other | 60+ Days Past Due | ||
Loan classification and delinquency by year of origination | ||
Total | $ 23,780 | $ 28,029 |
Loans and Allowance for Credi_5
Loans and Allowance for Credit Losses - Delinquency (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Loan delinquency information | ||||
Total Loans Carrying Value | $ 9,963,009 | $ 9,945,718 | ||
Non-Accrual Loans | 251,682 | 242,805 | ||
General allowance for loan losses | (52,641) | (57,710) | ||
Total Loans, net of allowance for loan losses, including loans in consolidated VIEs | $ 9,910,368 | $ 9,888,008 | ||
Percentage of loans outstanding | 100% | 100% | ||
Percentage of outstanding, Non-Accrual Loans | 2.50% | 2.40% | ||
Specific allowance for loan losses | $ 67,780 | $ 51,244 | $ 90,519 | $ 45,377 |
Gross Loan Write-offs | ||||
Gross write-off of loans originated in year before current fiscal year | 123 | |||
Gross write-off of loans originated two years before current fiscal year | 140 | |||
Gross write-off of loans originated three years before current fiscal year | 176 | |||
Gross write-off of loans originated five or more years before current fiscal year | 17,783 | |||
Gross write-offs of loans | 18,222 | 173 | ||
Current and less than 30 days past due | ||||
Loan delinquency information | ||||
Total Loans Carrying Value | $ 9,545,168 | $ 9,596,805 | ||
Percentage of loans outstanding | 95.80% | 96.50% | ||
30-59 Days Past Due | ||||
Loan delinquency information | ||||
Total Loans Carrying Value | $ 144,713 | $ 110,312 | ||
Percentage of loans outstanding | 1.50% | 1.10% | ||
60+ Days Past Due | ||||
Loan delinquency information | ||||
Total Loans Carrying Value | $ 273,128 | $ 238,601 | ||
Percentage of loans outstanding | 2.70% | 2.40% | ||
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 | $ 7,385,304 | $ 7,327,946 | ||
Non-Accrual Loans | 136,485 | 113,360 | ||
General allowance for loan losses | (33,991) | (42,979) | ||
Specific allowance for loan losses | 40,319 | 19,878 | 49,905 | 19,519 |
Gross Loan Write-offs | ||||
Gross write-offs of loans | 611 | |||
Bridge | Current and less than 30 days past due | ||||
Loan delinquency information | ||||
Total Loans Carrying Value | 7,088,912 | 7,120,162 | ||
Bridge | 30-59 Days Past Due | ||||
Loan delinquency information | ||||
Total Loans Carrying Value | 127,728 | 94,823 | ||
Bridge | 60+ Days Past Due | ||||
Loan delinquency information | ||||
Total Loans Carrying Value | 168,664 | 112,961 | ||
Fixed rate | ||||
Loan delinquency information | ||||
Total Loans Carrying Value | 1,012,639 | 1,034,626 | ||
Non-Accrual Loans | 18,614 | 28,719 | ||
General allowance for loan losses | (5,495) | (2,397) | ||
Specific allowance for loan losses | 9,085 | 6,524 | 6,531 | 6,861 |
Gross Loan Write-offs | ||||
Gross write-offs of loans | 100 | |||
Fixed rate | Current and less than 30 days past due | ||||
Loan delinquency information | ||||
Total Loans Carrying Value | 984,724 | 993,832 | ||
Fixed rate | 30-59 Days Past Due | ||||
Loan delinquency information | ||||
Total Loans Carrying Value | 5,294 | 8,101 | ||
Fixed rate | 60+ Days Past Due | ||||
Loan delinquency information | ||||
Total Loans Carrying Value | 22,621 | 32,693 | ||
Construction | ||||
Loan delinquency information | ||||
Total Loans Carrying Value | 479,194 | 428,805 | ||
Non-Accrual Loans | 51,160 | 55,993 | ||
General allowance for loan losses | (262) | (325) | ||
Specific allowance for loan losses | 373 | 5,323 | 17,334 | |
Gross Loan Write-offs | ||||
Gross write-offs of loans | 16,898 | |||
Construction | Current and less than 30 days past due | ||||
Loan delinquency information | ||||
Total Loans Carrying Value | 428,035 | 372,812 | ||
Construction | 60+ Days Past Due | ||||
Loan delinquency information | ||||
Total Loans Carrying Value | 51,159 | 55,993 | ||
Freddie Mac | ||||
Loan delinquency information | ||||
Total Loans Carrying Value | 10,004 | 10,040 | ||
Non-Accrual Loans | 3,093 | 3,093 | ||
Freddie Mac | Current and less than 30 days past due | ||||
Loan delinquency information | ||||
Total Loans Carrying Value | 6,911 | 6,947 | ||
Freddie Mac | 60+ Days Past Due | ||||
Loan delinquency information | ||||
Total Loans Carrying Value | 3,093 | 3,093 | ||
SBA 7(a) | ||||
Loan delinquency information | ||||
Total Loans Carrying Value | 536,169 | 552,260 | ||
Non-Accrual Loans | 15,277 | 12,790 | ||
General allowance for loan losses | (11,237) | (10,801) | ||
Specific allowance for loan losses | 15,110 | 13,233 | 14,299 | 12,180 |
Gross Loan Write-offs | ||||
Gross write-offs of loans | 613 | 173 | ||
SBA 7(a) | Current and less than 30 days past due | ||||
Loan delinquency information | ||||
Total Loans Carrying Value | 524,987 | 541,378 | ||
SBA 7(a) | 30-59 Days Past Due | ||||
Loan delinquency information | ||||
Total Loans Carrying Value | 8,621 | 6,690 | ||
SBA 7(a) | 60+ Days Past Due | ||||
Loan delinquency information | ||||
Total Loans Carrying Value | 2,561 | 4,192 | ||
Residential | ||||
Loan delinquency information | ||||
Total Loans Carrying Value | 5,146 | 4,511 | ||
Non-Accrual Loans | 1,250 | 1,306 | ||
Specific allowance for loan losses | 60 | 60 | ||
Residential | Current and less than 30 days past due | ||||
Loan delinquency information | ||||
Total Loans Carrying Value | 3,896 | 2,871 | ||
Residential | 60+ Days Past Due | ||||
Loan delinquency information | ||||
Total Loans Carrying Value | 1,250 | 1,640 | ||
Other | ||||
Loan delinquency information | ||||
Total Loans Carrying Value | 534,553 | 587,530 | ||
Non-Accrual Loans | 25,803 | 27,544 | ||
General allowance for loan losses | (1,656) | (1,208) | ||
Specific allowance for loan losses | 2,893 | $ 6,226 | 2,450 | $ 6,757 |
Other | Current and less than 30 days past due | ||||
Loan delinquency information | ||||
Total Loans Carrying Value | 507,703 | 558,803 | ||
Other | 30-59 Days Past Due | ||||
Loan delinquency information | ||||
Total Loans Carrying Value | 3,070 | 698 | ||
Other | 60+ Days Past Due | ||||
Loan delinquency information | ||||
Total Loans Carrying Value | $ 23,780 | $ 28,029 |
Loans and Allowance for Credi_6
Loans and Allowance for Credit Losses - Credit Quality (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | $ 9,963,009 | $ 9,945,718 |
General allowance for loan losses | (52,641) | (57,710) |
Total Loans, net of allowance for loan losses, including loans in consolidated VIEs | $ 9,910,368 | $ 9,888,008 |
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 | $ 169,372 | $ 201,631 |
Percentage of loans outstanding | 1.70% | 2% |
20.1 - 40.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | $ 374,403 | $ 413,645 |
Percentage of loans outstanding | 3.70% | 4.20% |
40.1 - 60.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | $ 1,391,271 | $ 1,325,144 |
Percentage of loans outstanding | 14% | 13.30% |
60.1 - 80.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | $ 7,580,529 | $ 7,526,636 |
Percentage of loans outstanding | 76.10% | 75.70% |
80.1 - 100.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | $ 280,915 | $ 297,165 |
Percentage of loans outstanding | 2.80% | 3% |
Greater than 100.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | $ 166,519 | $ 181,497 |
Percentage of loans outstanding | 1.70% | 1.80% |
Bridge | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | $ 7,385,304 | $ 7,327,946 |
General allowance for loan losses | (33,991) | (42,979) |
Bridge | 0.0 - 20.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 736 | 717 |
Bridge | 20.1 - 40.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 99,589 | 104,606 |
Bridge | 40.1 - 60.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 694,857 | 700,835 |
Bridge | 60.1 - 80.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 6,423,805 | 6,331,353 |
Bridge | 80.1 - 100.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 143,403 | 167,521 |
Bridge | Greater than 100.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 22,914 | 22,914 |
Fixed rate | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 1,012,639 | 1,034,626 |
General allowance for loan losses | (5,495) | (2,397) |
Fixed rate | 0.0 - 20.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 8,499 | 9,102 |
Fixed rate | 20.1 - 40.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 30,350 | 35,459 |
Fixed rate | 40.1 - 60.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 431,044 | 386,040 |
Fixed rate | 60.1 - 80.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 526,064 | 578,456 |
Fixed rate | 80.1 - 100.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 11,180 | 17,056 |
Fixed rate | Greater than 100.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 5,502 | 8,513 |
Construction | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 479,194 | 428,805 |
General allowance for loan losses | (262) | (325) |
Construction | 0.0 - 20.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 10,946 | 10,817 |
Construction | 20.1 - 40.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 14,262 | 12,910 |
Construction | 40.1 - 60.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 53,742 | 26,387 |
Construction | 60.1 - 80.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 375,827 | 349,085 |
Construction | 80.1 - 100.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 24,417 | 24,142 |
Construction | Greater than 100.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 5,464 | |
Freddie Mac | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 10,004 | 10,040 |
Freddie Mac | 40.1 - 60.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 3,041 | 3,056 |
Freddie Mac | 60.1 - 80.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 6,963 | 6,984 |
SBA 7(a) | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 536,169 | 552,260 |
General allowance for loan losses | (11,237) | (10,801) |
SBA 7(a) | 0.0 - 20.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 7,057 | 7,275 |
SBA 7(a) | 20.1 - 40.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 45,868 | 45,366 |
SBA 7(a) | 40.1 - 60.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 90,306 | 92,592 |
SBA 7(a) | 60.1 - 80.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 178,384 | 189,733 |
SBA 7(a) | 80.1 - 100.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 82,289 | 78,577 |
SBA 7(a) | Greater than 100.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 132,265 | 138,717 |
Residential | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 5,146 | 4,511 |
Residential | 20.1 - 40.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 921 | 934 |
Residential | 40.1 - 60.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 630 | 300 |
Residential | 60.1 - 80.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 973 | 901 |
Residential | 80.1 - 100.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 1,816 | 1,716 |
Residential | Greater than 100.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 806 | 660 |
Other | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 534,553 | 587,530 |
General allowance for loan losses | (1,656) | (1,208) |
Other | 0.0 - 20.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 142,134 | 173,720 |
Other | 20.1 - 40.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 183,413 | 214,370 |
Other | 40.1 - 60.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 117,651 | 115,934 |
Other | 60.1 - 80.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 68,513 | 70,124 |
Other | 80.1 - 100.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 17,810 | 8,153 |
Other | Greater than 100.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | $ 5,032 | $ 5,229 |
Loans and Allowance for Credi_7
Loans and Allowance for Credit Losses - Geographic and Collateral Concentration (Details) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Geographical concentration | Loans, net | ||
Concentration risk | ||
Percentage of loan | 100% | 100% |
Geographical concentration | Loans, net | Texas | ||
Concentration risk | ||
Percentage of loan | 20% | 20.10% |
Geographical concentration | Loans, net | California | ||
Concentration risk | ||
Percentage of loan | 11.30% | 11.10% |
Geographical concentration | Loans, net | Georgia | ||
Concentration risk | ||
Percentage of loan | 7.50% | 7.60% |
Geographical concentration | Loans, net | Arizona | ||
Concentration risk | ||
Percentage of loan | 6.40% | 6.80% |
Geographical concentration | Loans, net | Florida | ||
Concentration risk | ||
Percentage of loan | 6.40% | 6.30% |
Geographical concentration | Loans, net | New York | ||
Concentration risk | ||
Percentage of loan | 5.10% | 5.50% |
Geographical concentration | Loans, net | Oregon | ||
Concentration risk | ||
Percentage of loan | 4.60% | 4.40% |
Geographical concentration | Loans, net | North Carolina | ||
Concentration risk | ||
Percentage of loan | 4.30% | 4.20% |
Geographical concentration | Loans, net | Illinois | ||
Concentration risk | ||
Percentage of loan | 4% | 3.90% |
Geographical concentration | Loans, net | Ohio | ||
Concentration risk | ||
Percentage of loan | 3.20% | 3.20% |
Geographical concentration | Loans, net | Other | ||
Concentration risk | ||
Percentage of loan | 27.20% | 26.90% |
Collateral concentration | ||
Concentration risk | ||
Percentage of SBA loan | 100% | 100% |
Collateral concentration | Lodging | ||
Concentration risk | ||
Percentage of SBA loan | 22.80% | 14.60% |
Collateral concentration | Offices of Physicians | ||
Concentration risk | ||
Percentage of SBA loan | 8% | 7.50% |
Collateral concentration | Gasoline Service Stations | ||
Concentration risk | ||
Percentage of SBA loan | 7.80% | 2.50% |
Collateral concentration | Eating Places | ||
Concentration risk | ||
Percentage of SBA loan | 6.90% | 3.70% |
Collateral concentration | Child Day Care Services | ||
Concentration risk | ||
Percentage of SBA loan | 6.60% | 5.70% |
Collateral concentration | General Freight Trucking, Local | ||
Concentration risk | ||
Percentage of SBA loan | 2.50% | 2.50% |
Collateral concentration | Veterinarians | ||
Concentration risk | ||
Percentage of SBA loan | 1.70% | 1.60% |
Collateral concentration | Grocery Stores | ||
Concentration risk | ||
Percentage of SBA loan | 1.70% | 1.60% |
Collateral concentration | Funeral Service and Crematories | ||
Concentration risk | ||
Percentage of SBA loan | 1.30% | 1.20% |
Collateral concentration | Coin-Operated Laundries and Drycleaners | ||
Concentration risk | ||
Percentage of SBA loan | 1% | 0.80% |
Collateral concentration | Other | ||
Concentration risk | ||
Percentage of SBA loan | 39.70% | 58.30% |
Collateral concentration | Loans, net | ||
Concentration risk | ||
Percentage of loan | 100% | 100% |
Collateral concentration | Loans, net | Multi-family | ||
Concentration risk | ||
Percentage of loan | 67.60% | 67% |
Collateral concentration | Loans, net | Mixed Use | ||
Concentration risk | ||
Percentage of loan | 8.20% | 8.10% |
Collateral concentration | Loans, net | SBA | ||
Concentration risk | ||
Percentage of loan | 5.60% | 5.80% |
Collateral concentration | Loans, net | Retail | ||
Concentration risk | ||
Percentage of loan | 5.10% | 5.50% |
Collateral concentration | Loans, net | Industrial | ||
Concentration risk | ||
Percentage of loan | 5.10% | 5% |
Collateral concentration | Loans, net | Office | ||
Concentration risk | ||
Percentage of loan | 4.90% | 4.90% |
Collateral concentration | Loans, net | Lodging/Residential | ||
Concentration risk | ||
Percentage of loan | 1.60% | 1.60% |
Collateral concentration | Loans, net | Other | ||
Concentration risk | ||
Percentage of loan | 1.90% | 2.10% |
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 | Mar. 31, 2023 | Dec. 31, 2022 | Mar. 31, 2022 | Dec. 31, 2021 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
General | $ 52,641 | $ 57,710 | ||
Specific | 15,139 | 16,837 | ||
PCD | 15,972 | |||
Ending Balance | 67,780 | 90,519 | $ 51,244 | $ 45,377 |
Bridge | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
General | 33,991 | 42,979 | ||
Specific | 6,328 | 6,926 | ||
Ending Balance | 40,319 | 49,905 | 19,878 | 19,519 |
Fixed rate | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
General | 5,495 | 2,397 | ||
Specific | 3,590 | 4,134 | ||
Ending Balance | 9,085 | 6,531 | 6,524 | 6,861 |
Construction | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
General | 262 | 325 | ||
Specific | 111 | 1,037 | ||
PCD | 15,972 | |||
Ending Balance | 373 | 17,334 | 5,323 | |
SBA 7(a) | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
General | 11,237 | 10,801 | ||
Specific | 3,873 | 3,498 | ||
Ending Balance | 15,110 | 14,299 | 13,233 | 12,180 |
Residential | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Ending Balance | 60 | 60 | ||
Other | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
General | 1,656 | 1,208 | ||
Specific | 1,237 | 1,242 | ||
Ending Balance | $ 2,893 | $ 2,450 | $ 6,226 | $ 6,757 |
Loans and Allowance for Credi_9
Loans and Allowance for Credit Losses - Investment Loans Allowance Activity (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Allowance for loan losses | ||
Beginning Balance | $ 90,519 | $ 45,377 |
Provision for (recovery of) loan losses | (4,546) | 1,241 |
PCD | 5,000 | |
Charge-offs and sales | (18,222) | (173) |
Recoveries | (29) | (201) |
Ending Balance | 67,780 | 51,244 |
Bridge | ||
Allowance for loan losses | ||
Beginning Balance | 49,905 | 19,519 |
Provision for (recovery of) loan losses | (8,975) | 359 |
Charge-offs and sales | (611) | |
Ending Balance | 40,319 | 19,878 |
Fixed rate | ||
Allowance for loan losses | ||
Beginning Balance | 6,531 | 6,861 |
Provision for (recovery of) loan losses | 2,654 | (337) |
Charge-offs and sales | (100) | |
Ending Balance | 9,085 | 6,524 |
Construction | ||
Allowance for loan losses | ||
Beginning Balance | 17,334 | |
Provision for (recovery of) loan losses | (63) | 323 |
PCD | 5,000 | |
Charge-offs and sales | (16,898) | |
Ending Balance | 373 | 5,323 |
SBA 7(a) | ||
Allowance for loan losses | ||
Beginning Balance | 14,299 | 12,180 |
Provision for (recovery of) loan losses | 1,395 | 1,272 |
Charge-offs and sales | (613) | (173) |
Recoveries | 29 | |
Recoveries | (46) | |
Ending Balance | 15,110 | 13,233 |
Residential | ||
Allowance for loan losses | ||
Beginning Balance | 60 | |
Ending Balance | 60 | |
Other | ||
Allowance for loan losses | ||
Beginning Balance | 2,450 | 6,757 |
Provision for (recovery of) loan losses | 443 | (376) |
Recoveries | (155) | |
Ending Balance | 2,893 | 6,226 |
Unfunded Loan Commitment | ||
Allowance for loan losses | ||
Ending Balance | $ 1,600 | $ 600 |
Loans and Allowance for Cred_10
Loans and Allowance for Credit Losses - Non-accrual Loans (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Non-accrual loans | |||
Total recorded carrying value of non-accrual loans | $ 251,682 | $ 242,805 | |
Non-accrual loans | |||
Non-accrual loans | |||
Non-accrual loans with an allowance | 180,986 | 197,101 | |
Non-accrual loans without an allowance | 70,696 | 45,704 | |
Total recorded carrying value of non-accrual loans | 251,682 | 242,805 | |
Allowance for loan losses related to non-accrual loans | (15,027) | (32,809) | |
Unpaid principal balance of non-accrual loans | 269,346 | $ 278,401 | |
Interest income on non-accrual loans | $ 818 | $ 46 |
Loans and Allowance for Cred_11
Loans and Allowance for Credit Losses - PCD Activity (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Loans and Allowance for Credit Losses | ||
PCD loans acquired during the period | $ 0 | $ 22 |
Loans and Allowance for Cred_12
Loans and Allowance for Credit Losses - Loan Modifications (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Combination - Term extension and other-than-insignificant payment delay | SBC | |
Loan modifications | |
Carrying Value | $ 26,742 |
Percent of Total Carrying Value of Loans, net | 0.27% |
Period added to the weighted average life of the loan | 12 months |
Period of payment deferral | 1 year 6 months |
Combination - Term extension and other-than-insignificant payment delay | SBC | 60+ Days Past Due | |
Loan modifications | |
Carrying Value | $ 26,742 |
Term Extension | SBC | |
Loan modifications | |
Carrying Value | $ 23,356 |
Percent of Total Carrying Value of Loans, net | 0.24% |
Period added to the weighted average life of the loan | 1 year |
Term Extension | SBC | Current and less than 30 days past due | |
Loan modifications | |
Carrying Value | $ 23,356 |
Term Extension | SBA | |
Loan modifications | |
Carrying Value | $ 10 |
Percent of Total Carrying Value of Loans, net | 0% |
Period added to the weighted average life of the loan | 8 years 8 months 12 days |
Term Extension | SBA | Current and less than 30 days past due | |
Loan modifications | |
Carrying Value | $ 10 |
Other-than-insignificant payment delay | SBC | |
Loan modifications | |
Carrying Value | $ 117 |
Percent of Total Carrying Value of Loans, net | 0% |
Period of payment deferral | 31 months |
Other-than-insignificant payment delay | SBC | Current and less than 30 days past due | |
Loan modifications | |
Carrying Value | $ 117 |
Other-than-insignificant payment delay | SBA | |
Loan modifications | |
Carrying Value | $ 659 |
Percent of Total Carrying Value of Loans, net | 0.01% |
Period of payment deferral | 6 months |
Other-than-insignificant payment delay | SBA | Current and less than 30 days past due | |
Loan modifications | |
Carrying Value | $ 659 |
Fair Value Measurements - Finan
Fair Value Measurements - Financial Instruments Carried at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | ||
Mar. 31, 2023 | Sep. 30, 2022 | Mar. 31, 2023 | Dec. 31, 2022 | |
Assets: | ||||
Loans, held for sale, at fair value | $ 236,578 | $ 236,578 | $ 258,377 | |
Loans, net, held at fair value | 9,859 | 9,859 | 9,786 | |
Investments held to maturity | 3,306 | 3,306 | 3,306 | |
Paycheck Protection Program loans | 346 | 346 | 576 | |
Derivative instruments, at fair value | 13,773 | 13,773 | 12,963 | |
Residential mortgage servicing rights, at fair value | 188,985 | 188,985 | 192,203 | |
Investment in unconsolidated joint venture | 7,913 | 7,913 | 8,094 | |
Liabilities: | ||||
Derivative instruments, at fair value | 2,639 | 2,639 | 1,586 | |
Contingent consideration | 16,636 | $ 16,636 | 28,500 | |
Mosaic | ||||
Fair value | ||||
Fair value of CERs issued | 16,600 | $ 25,000 | ||
Mosaic | Adjustments | ||||
Fair value | ||||
Fair value of CERs issued | $ (59,348) | |||
Minimum | ||||
Fair value | ||||
Return of capital assumption used in PWERM | 65% | |||
Maximum | ||||
Fair value | ||||
Return of capital assumption used in PWERM | 100% | |||
Recurring | ||||
Assets: | ||||
Cash held in money market funds | 18,917 | $ 18,917 | 44,611 | |
Loans, held for sale, at fair value | 236,578 | 236,578 | 258,377 | |
Loans, net, held at fair value | 9,859 | 9,859 | 9,786 | |
Paycheck Protection Program loans | 346 | 346 | 576 | |
Mortgage backed securities, at fair value | 32,607 | 32,607 | 32,041 | |
Derivative instruments, at fair value | 13,773 | 13,773 | 12,963 | |
Residential mortgage servicing rights, at fair value | 188,985 | 188,985 | 192,203 | |
Investment in unconsolidated joint venture | 7,913 | 7,913 | 8,094 | |
Preferred equity investments | 108,423 | 108,423 | 108,423 | |
Total assets | 617,401 | 617,401 | 667,074 | |
Liabilities: | ||||
Derivative instruments, at fair value | 2,639 | 2,639 | 1,586 | |
Contingent consideration | 16,636 | 16,636 | 28,500 | |
Total liabilities | 19,275 | 19,275 | 30,086 | |
Recurring | Level 1 | ||||
Assets: | ||||
Cash held in money market funds | 18,917 | 18,917 | 44,611 | |
Total assets | 18,917 | 18,917 | 44,611 | |
Recurring | Level 2 inputs | ||||
Assets: | ||||
Loans, held for sale, at fair value | 178,248 | 178,248 | 197,453 | |
Paycheck Protection Program loans | 346 | 346 | 576 | |
Mortgage backed securities, at fair value | 32,607 | 32,607 | 32,041 | |
Derivative instruments, at fair value | 11,794 | 11,794 | 12,846 | |
Total assets | 222,995 | 222,995 | 242,916 | |
Liabilities: | ||||
Derivative instruments, at fair value | 2,639 | 2,639 | 1,586 | |
Total liabilities | 2,639 | 2,639 | 1,586 | |
Recurring | Level 3 inputs | ||||
Assets: | ||||
Loans, held for sale, at fair value | 58,330 | 58,330 | 60,924 | |
Loans, net, held at fair value | 9,859 | 9,859 | 9,786 | |
Derivative instruments, at fair value | 1,979 | 1,979 | 117 | |
Residential mortgage servicing rights, at fair value | 188,985 | 188,985 | 192,203 | |
Investment in unconsolidated joint venture | 7,913 | 7,913 | 8,094 | |
Preferred equity investments | 108,423 | 108,423 | 108,423 | |
Total assets | 375,489 | 375,489 | 379,547 | |
Liabilities: | ||||
Contingent consideration | 16,636 | 16,636 | 28,500 | |
Total liabilities | $ 16,636 | $ 16,636 | $ 28,500 |
Fair Value Measurements - Valua
Fair Value Measurements - Valuation and Inputs, at FV (Details) $ in Thousands | Mar. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) | Mar. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) |
Level 3 inputs | ||||
Fair value inputs, quantitative information | ||||
Assets valued using quoted or transaction prices in which quantitative unobservable inputs are not developed | $ 358,853 | $ 351,047 | $ 312,427 | $ 362,430 |
Recurring | ||||
Fair value inputs, quantitative information | ||||
Asset, fair value | 617,401 | 667,074 | ||
Liabilities, fair value | (19,275) | (30,086) | ||
Recurring | Level 3 inputs | ||||
Fair value inputs, quantitative information | ||||
Asset, fair value | 375,489 | 379,547 | ||
Assets valued using quoted or transaction prices in which quantitative unobservable inputs are not developed | 68,200 | 70,700 | ||
Liabilities, fair value | (16,636) | (28,500) | ||
Liabilities valued using quoted or transaction prices in which quantitative unobservable inputs are not developed | 9,000 | |||
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 | 9,859 | 9,786 | 10,722 | 10,766 |
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 | 58,330 | 60,924 | 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 | 7,014 | 1,581 | ||
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 | 188,985 | 192,203 | 159,834 | 120,142 |
Mortgage servicing rights | Recurring | Level 3 inputs | ||||
Fair value inputs, quantitative information | ||||
Asset, fair value | $ 188,985 | $ 192,203 | ||
Mortgage servicing rights | Recurring | Level 3 inputs | Measurement Input, Servicing Fee Multiple | ||||
Fair value inputs, quantitative information | ||||
Servicing Asset, Valuation Technique [Extensible List] | Income Approach | Income Approach | ||
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 | $ 7,913 | $ 8,094 | 8,610 | 8,894 |
Investment in unconsolidated joint ventures | Recurring | Level 3 inputs | ||||
Fair value inputs, quantitative information | ||||
Asset, fair value | $ 7,913 | $ 8,094 | ||
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 | 17,053 | |||
Derivative instruments | Recurring | Level 3 inputs | ||||
Fair value inputs, quantitative information | ||||
Asset, fair value | $ 1,979 | $ 117 | ||
Derivative instruments | Recurring | Level 3 inputs | Market Approach | Measurement Input, Origination Pull-through Rate | Minimum | ||||
Fair value inputs, quantitative information | ||||
Derivative Asset, Measurement Input | 0.5388 | 0.539 | ||
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 | 0.80 | 0.83 | ||
Derivative instruments | Recurring | Level 3 inputs | Market Approach | Measurement Input, Servicing Fee Multiple | Minimum | ||||
Fair value inputs, quantitative information | ||||
Derivative Asset, Measurement Input | 0.0007 | 0.020 | ||
Derivative instruments | Recurring | Level 3 inputs | Market Approach | Measurement Input, Servicing Fee Multiple | Maximum | ||||
Fair value inputs, quantitative information | ||||
Derivative Asset, Measurement Input | 0.067 | 0.072 | ||
Derivative instruments | Recurring | Level 3 inputs | Market Approach | Measurement Input, Servicing Fee Multiple | Weighted Average | ||||
Fair value inputs, quantitative information | ||||
Derivative Asset, Measurement Input | 0.043 | 0.047 | ||
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 | 0.0002 | 0.005 | ||
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 | 0.029 | 0.032 | ||
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 | 0.015 | 0.016 | ||
Preferred Equity investments | Level 3 inputs | ||||
Fair value inputs, quantitative information | ||||
Assets valued using quoted or transaction prices in which quantitative unobservable inputs are not developed | $ 108,423 | $ 108,423 | ||
Preferred Equity investments | Recurring | Level 3 inputs | ||||
Fair value inputs, quantitative information | ||||
Asset, fair value | $ 108,423 | $ 108,423 | ||
Preferred Equity investments | Recurring | Level 3 inputs | Income Approach | Measurement Input, Discount Rate | ||||
Fair value inputs, quantitative information | ||||
Equity Securities, FV-NI, Measurement Input | 0.105 | 0.105 | ||
Preferred Equity investments | Recurring | Level 3 inputs | Income Approach | Measurement Input, Discount Rate | Weighted Average | ||||
Fair value inputs, quantitative information | ||||
Equity Securities, FV-NI, Measurement Input | 0.105 | 0.105 | ||
Contingent Consideration | Level 3 inputs | ||||
Fair value inputs, quantitative information | ||||
Liabilities valued using quoted or transaction prices in which quantitative unobservable inputs are not developed | $ 16,636 | $ 28,500 | $ 92,148 | $ 16,400 |
CER dividends | Mosaic | Recurring | Level 3 inputs | ||||
Fair value inputs, quantitative information | ||||
Liabilities, fair value | $ (4,003) | $ (4,587) | ||
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 | 0.0189 | 0.350 | ||
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 | 0.0189 | 0.350 | ||
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 | 0.1154 | 0.119 | ||
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 | 0.1154 | 0.119 | ||
CER units | Mosaic | Recurring | Level 3 inputs | ||||
Fair value inputs, quantitative information | ||||
Liabilities, fair value | $ (12,633) | $ (14,913) | ||
CER units | Mosaic | Recurring | Level 3 inputs | Income Approach and PWERM | Measurement Input, Revaluation Discount Rate | ||||
Fair value inputs, quantitative information | ||||
Contingent Consideration Liability, Measurement Input | 0.12 | 0.120 | ||
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 | 0.12 | 0.120 | ||
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 | 0.1154 | 0.119 | ||
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 | 0.1154 | 0.119 |
Fair Value Measurements - Chang
Fair Value Measurements - Changes in Fair Value (Details) - Level 3 inputs - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Changes in fair value of assets | ||
Beginning Balance | $ 351,047 | $ 362,430 |
Purchases or Originations | 17,570 | |
Additions due to loans sold, servicing retained | 4,593 | 10,506 |
Merger | (67,295) | |
Sales / Principal payments | 7,271 | (28,406) |
Realized gains (losses), net | (786) | |
Unrealized gains (losses), net | (4,058) | 16,199 |
Transfer to (from) Level 3 | 2,209 | |
Ending Balance | 358,853 | 312,427 |
Contingent Consideration | ||
Changes in fair value of liabilities | ||
Beginning Balance | (28,500) | (16,400) |
Sales / Principal payments | 9,000 | 9,000 |
Unrealized gain (loss) | 2,864 | (400) |
Merger | (84,348) | |
Ending Balance | (16,636) | (92,148) |
Mortgage backed securities | ||
Changes in fair value of assets | ||
Beginning Balance | 1,581 | |
Unrealized gains (losses), net | 44 | |
Transfer to (from) Level 3 | 5,389 | |
Ending Balance | 7,014 | |
Derivatives | ||
Changes in fair value of assets | ||
Beginning Balance | 117 | 2,339 |
Unrealized gains (losses), net | 1,862 | (4,955) |
Ending Balance | 1,979 | (2,616) |
Loans, net | ||
Changes in fair value of assets | ||
Beginning Balance | 9,786 | 10,766 |
Unrealized gains (losses), net | 73 | (44) |
Ending Balance | 9,859 | 10,722 |
Loans, held for sale, at fair value | ||
Changes in fair value of assets | ||
Beginning Balance | 60,924 | 231,865 |
Purchases or Originations | 17,570 | |
Sales / Principal payments | (11) | (32,594) |
Realized gains (losses), net | (786) | |
Unrealized gains (losses), net | (2,583) | (10,760) |
Transfer to (from) Level 3 | (1,337) | |
Ending Balance | 58,330 | 203,958 |
Investments held to maturity | ||
Changes in fair value of assets | ||
Merger | 17,053 | |
Ending Balance | 17,053 | |
Paycheck Protection Program loans, at fair value | ||
Changes in fair value of assets | ||
Beginning Balance | 3,243 | |
Sales / Principal payments | (1,400) | |
Transfer to (from) Level 3 | (1,843) | |
Mortgage servicing rights | ||
Changes in fair value of assets | ||
Beginning Balance | 192,203 | 120,142 |
Additions due to loans sold, servicing retained | 4,593 | 10,506 |
Sales / Principal payments | (1,718) | (3,412) |
Unrealized gains (losses), net | (6,093) | 32,598 |
Ending Balance | 188,985 | 159,834 |
Investment in unconsolidated joint ventures | ||
Changes in fair value of assets | ||
Beginning Balance | 8,094 | 8,894 |
Unrealized gains (losses), net | (181) | (284) |
Ending Balance | 7,913 | $ 8,610 |
Preferred Equity investments | ||
Changes in fair value of assets | ||
Beginning Balance | 108,423 | |
Ending Balance | $ 108,423 |
Fair Value Measurements - Asset
Fair Value Measurements - Assets and Liabilities, Not at FV (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Assets: | ||
Paycheck Protection Program loans | $ 346 | $ 576 |
Investments held to maturity | 3,306 | 3,306 |
Purchased future receivables, net | 10,568 | 8,246 |
Investment in unconsolidated joint venture | 7,913 | 8,094 |
Liabilities: | ||
Paycheck Protection Program Liquidity Facility (PPPLF) borrowings | 169,596 | 201,011 |
Senior secured notes, net | 343,798 | 343,355 |
Carrying Amount | ||
Assets: | ||
Loans, held-for-investment | 9,900,509 | 9,878,222 |
Paycheck Protection Program loans | 146,211 | 186,409 |
Investments held to maturity | 3,306 | 3,306 |
Purchased future receivables, net | 10,568 | 8,246 |
Servicing rights | 89,951 | 87,117 |
Total assets | 10,150,545 | 10,163,300 |
Liabilities: | ||
Secured borrowings | 2,484,902 | 2,846,293 |
Paycheck Protection Program Liquidity Facility (PPPLF) borrowings | 169,596 | 201,011 |
Securitized debt obligations of consolidated VIEs | 5,300,967 | 4,903,350 |
Senior secured notes, net | 343,798 | 343,355 |
Guaranteed loan financing | 238,948 | 264,889 |
Convertible note, net | 114,689 | 114,397 |
Corporate debt, net | 663,623 | 662,665 |
Total liabilities | 9,316,523 | 9,335,960 |
Carrying Amount | Level 3 inputs | ||
Assets: | ||
Due from servicers and accrued interest | 63,900 | 59,000 |
Receivable from third parties | 21,000 | 15,100 |
Liabilities: | ||
Payable to related parties and accrued interest payable | 47,100 | 42,600 |
Fair Value | ||
Assets: | ||
Loans, held-for-investment | 9,680,701 | 9,610,412 |
Paycheck Protection Program loans | 146,211 | 196,222 |
Investments held to maturity | 3,320 | 3,306 |
Purchased future receivables, net | 10,568 | 8,246 |
Servicing rights | 95,620 | 91,698 |
Total assets | 9,936,420 | 9,909,884 |
Liabilities: | ||
Secured borrowings | 2,484,902 | 2,846,293 |
Paycheck Protection Program Liquidity Facility (PPPLF) borrowings | 169,596 | 201,011 |
Securitized debt obligations of consolidated VIEs | 5,105,516 | 4,748,291 |
Senior secured notes, net | 309,043 | 312,975 |
Guaranteed loan financing | 248,635 | 275,316 |
Convertible note, net | 114,104 | 113,823 |
Corporate debt, net | 612,396 | 614,744 |
Total liabilities | $ 9,044,192 | $ 9,112,453 |
Investments Held to Maturity (D
Investments Held to Maturity (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | |
Investments held to maturity | |||
Weighted Average Interest Rate | 10.30% | 10.30% | |
Amortized Cost | $ 3,306 | $ 3,306 | |
Fair Value | $ 3,306 | $ 3,306 | |
Mosaic | |||
Investments held to maturity | |||
Investments held to maturity | $ 161,567 | ||
Mosaic | Adjustments | |||
Investments held to maturity | |||
Investments held to maturity | $ (3,735) | ||
Construction preferred equities | |||
Investments held to maturity | |||
Weighted Average Interest Rate | 12% | 12% | |
Amortized Cost | $ 306 | $ 306 | |
Fair Value | $ 306 | $ 306 | |
Weighted Average Interest Rate | |||
Within one year | 12% | 12% | |
Amortized Cost | |||
Within one year | $ 306 | $ 306 | |
Fair Value | |||
Within one year | $ 306 | $ 306 | |
Multi-family preferred equities | |||
Investments held to maturity | |||
Weighted Average Interest Rate | 10% | 10% | |
Amortized Cost | $ 3,000 | $ 3,000 | |
Fair Value | $ 3,000 | $ 3,000 | |
Weighted Average Interest Rate | |||
After one year through five years | 10% | 10% | |
Amortized Cost | |||
After one year through five years | $ 3,000 | $ 3,000 | |
Fair Value | |||
After one year through five years | $ 3,000 | $ 3,000 |
Servicing rights (Details)
Servicing rights (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Servicing rights | |||
Unpaid Principal Amount | $ 6,050,669 | $ 5,858,798 | |
Carrying Value | 89,951 | 87,117 | |
Total servicing rights | 278,936 | $ 244,143 | 279,320 |
Servicing rights activity at amortized cost | |||
Beginning net carrying value at amortized cost | 87,117 | ||
Ending net carrying value at amortized cost | 89,951 | ||
Residential MSRs | |||
Servicing rights | |||
Unpaid Principal Amount | 12,156,480 | 12,078,020 | |
Servicing rights activity at fair value | |||
Beginning net carrying value at fair value | 192,203 | 120,142 | |
Additions due to loans sold, servicing retained | 4,593 | 10,506 | |
Loan pay-offs | (1,718) | (3,412) | |
Unrealized gains (losses) | (6,093) | 32,598 | |
Ending net carrying value at fair value | 188,985 | 159,834 | |
Multi-family | |||
Servicing rights | |||
Unpaid Principal Amount | 4,999,057 | 4,839,028 | |
Carrying Value | 67,911 | 61,418 | 67,361 |
Servicing rights activity at amortized cost | |||
Beginning net carrying value at amortized cost | 67,361 | 62,300 | |
Additions due to loans sold, servicing retained | 3,081 | 1,463 | |
Amortization | (2,531) | (2,345) | |
Ending net carrying value at amortized cost | 67,911 | 61,418 | |
SBA | |||
Servicing rights | |||
Unpaid Principal Amount | 1,051,612 | 1,019,770 | |
Carrying Value | 22,040 | 22,891 | $ 19,756 |
Servicing rights activity at amortized cost | |||
Beginning net carrying value at amortized cost | 19,756 | 22,157 | |
Additions due to loans sold, servicing retained | 1,512 | 1,734 | |
Amortization | (835) | (949) | |
Impairment (recovery) | 1,607 | (51) | |
Ending net carrying value at amortized cost | 22,040 | 22,891 | |
SBA | Multi-family | |||
Servicing rights | |||
Carrying Value | 89,951 | 84,309 | |
Servicing rights activity at amortized cost | |||
Ending net carrying value at amortized cost | $ 89,951 | $ 84,309 |
Servicing rights - Estimated va
Servicing rights - Estimated valuation (Details) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
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 | 7.50% | 7.20% |
Forward default rate | 1.10% | 1.10% |
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 | 0.80% | 0.80% |
Discount rate | 6% | 6% |
Servicing expense (as a percent) | 0.10% | 0.10% |
SBA | Minimum | ||
Servicing rights, valuation assumptions | ||
Forward prepayment assumptions | 10.10% | 10.20% |
Forward default rate | 0% | 0% |
Discount rate | 15.40% | 18% |
Servicing expense (as a percent) | 0.40% | 0.40% |
SBA | Maximum | ||
Servicing rights, valuation assumptions | ||
Forward prepayment assumptions | 21.90% | 21.60% |
Forward default rate | 9.90% | 10% |
Discount rate | 23.50% | 31.40% |
Servicing expense (as a percent) | 0.40% | 0.40% |
SBA | Weighted Average | ||
Servicing rights, valuation assumptions | ||
Forward prepayment assumptions | 10.50% | 10.60% |
Forward default rate | 9.20% | 9.20% |
Discount rate | 15.80% | 18.70% |
Servicing expense (as a percent) | 0.40% | 0.40% |
Servicing rights - Assumptions
Servicing rights - Assumptions (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Multi-family | ||
Adverse changes to key assumptions on the carrying amount of the servicing rights | ||
Prepayment rate (10% adverse change) | $ (265) | $ (271) |
Prepayment rate (20% adverse change) | (525) | (537) |
Default rate (10% adverse change) | (21) | (22) |
Default rate (20% adverse change) | (42) | (44) |
Discount rate (10% adverse change) | (2,104) | (2,057) |
Discount rate (20% adverse change) | (4,102) | (4,012) |
Cost of servicing (10% adverse change) | (2,632) | (2,685) |
Cost of servicing (20% adverse change) | (5,264) | (5,370) |
SBA | ||
Adverse changes to key assumptions on the carrying amount of the servicing rights | ||
Prepayment rate (10% adverse change) | (689) | (578) |
Prepayment rate (20% adverse change) | (1,339) | (1,125) |
Default rate (10% adverse change) | (145) | (125) |
Default rate (20% adverse change) | (289) | (249) |
Discount rate (10% adverse change) | (897) | (861) |
Discount rate (20% adverse change) | (1,717) | (1,642) |
Cost of servicing (10% adverse change) | (1,373) | (1,228) |
Cost of servicing (20% adverse change) | $ (2,746) | $ (2,455) |
Servicing rights - Amortization
Servicing rights - Amortization (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Future amortization expense for the servicing rights | ||
2023 | $ 10,538 | |
2024 | 12,231 | |
2025 | 10,913 | |
2026 | 9,672 | |
2027 | 8,618 | |
Thereafter | 37,979 | |
Total | $ 89,951 | $ 87,117 |
Servicing rights - Residential
Servicing rights - Residential mortgage servicing rights (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2023 | Dec. 31, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | |
Servicing rights | ||||
Unpaid Principal Amount | $ 6,050,669 | $ 5,858,798 | ||
Residential MSRs | ||||
Servicing rights | ||||
Unpaid Principal Amount | 12,156,480 | 12,078,020 | ||
Fair Value | 188,985 | 192,203 | $ 159,834 | $ 120,142 |
Possible impact of adverse changes to key assumptions | ||||
Prepayment rate (10% adverse change) | (5,556) | (5,620) | ||
Prepayment rate (20% adverse change) | (10,817) | (10,948) | ||
Discount rate (10% adverse change) | (8,620) | (8,906) | ||
Discount rate (20% adverse change) | (16,527) | (17,066) | ||
Cost of servicing (10% adverse change) | (2,692) | (2,689) | ||
Cost of servicing (20% adverse change) | (5,385) | (5,378) | ||
Fannie Mae | Residential MSRs | ||||
Servicing rights | ||||
Unpaid Principal Amount | 4,539,967 | 4,492,990 | ||
Fair Value | 64,188 | 64,914 | ||
Ginnie Mae | Residential MSRs | ||||
Servicing rights | ||||
Unpaid Principal Amount | 3,108,122 | 3,085,038 | ||
Fair Value | 57,799 | 59,081 | ||
Freddie Mac | Residential MSRs | ||||
Servicing rights | ||||
Unpaid Principal Amount | 4,508,391 | 4,499,992 | ||
Fair Value | $ 66,998 | $ 68,208 | ||
Minimum | Residential MSRs | ||||
Servicing rights, valuation assumptions | ||||
Forward prepayment assumptions | 5.80% | 6% | ||
Discount rate | 9.50% | 9.50% | ||
Cost of servicing | $ 70 | $ 70 | ||
Maximum | Residential MSRs | ||||
Servicing rights, valuation assumptions | ||||
Forward prepayment assumptions | 17.90% | 21.50% | ||
Discount rate | 13.80% | 12% | ||
Cost of servicing | $ 95 | $ 85 | ||
Weighted Average | Residential MSRs | ||||
Servicing rights, valuation assumptions | ||||
Forward prepayment assumptions | 7% | 6.30% | ||
Discount rate | 10.10% | 10.10% | ||
Cost of servicing | $ 74 | $ 74 |
Residential mortgage banking _3
Residential mortgage banking activities and variable expenses on residential mortgage banking activities (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Residential mortgage banking activities | ||
Realized and unrealized gain (loss) of residential mortgage loans held for sale, at fair value | $ 2,891 | $ (5,087) |
Creation of new mortgage servicing rights, net of payoffs | 2,875 | 7,094 |
Loan origination fee income on residential mortgage loans | 2,526 | 4,110 |
Unrealized gains (loss) on IRLCs and other derivatives | 877 | 2,307 |
Residential mortgage banking activities | 9,169 | 8,424 |
Variable expenses on residential mortgage banking activities | $ (5,485) | $ (979) |
Secured Borrowings (Details)
Secured Borrowings (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 USD ($) Lender | Dec. 31, 2022 USD ($) | |
Secured borrowings | ||
Secured borrowings and promissory note | ||
Facility size | $ 5,823,517 | |
Pledged Assets Carrying Value | 3,640,538 | $ 4,253,763 |
Carrying Value, Secured borrowings | 2,484,902 | 2,846,293 |
Secured borrowings | Asset pledged as collateral without right | ||
Secured borrowings and promissory note | ||
Pledged Assets Carrying Value | 3,640,538 | |
Borrowings under credit facilities | ||
Secured borrowings and promissory note | ||
Facility size | 1,343,370 | |
Carrying Value, Secured borrowings | 525,014 | 517,023 |
Borrowings under credit facilities | Loans and finance receivables | ||
Secured borrowings and promissory note | ||
Pledged Assets Carrying Value | 899,796 | 910,753 |
Borrowings under credit facilities | Asset pledged as collateral without right | Loans and finance receivables | ||
Secured borrowings and promissory note | ||
Pledged Assets Carrying Value | 899,796 | |
Borrowings under repurchase agreements | ||
Secured borrowings and promissory note | ||
Facility size | 4,480,147 | |
Carrying Value, Secured borrowings | 1,959,888 | 2,329,270 |
Borrowings under repurchase agreements | Securities sold under agreements to repurchase | ||
Secured borrowings and promissory note | ||
Pledged Assets Carrying Value | 2,740,742 | 3,343,010 |
Borrowings under repurchase agreements | Asset pledged as collateral without right | ||
Secured borrowings and promissory note | ||
Pledged Assets Carrying Value | $ 2,740,742 | |
SBA | Borrowings under credit facilities | ||
Secured borrowings and promissory note | ||
Number of lenders per asset class | 3 | |
Facility size | $ 250,000 | |
Carrying Value, Secured borrowings | $ 162,839 | 160,903 |
SBA | Borrowings under credit facilities | Secured Overnight Financing Rate | ||
Secured borrowings and promissory note | ||
Pricing, spread on variable (as a percent) | 2.875% | |
SBA | Borrowings under credit facilities | Prime rate | ||
Secured borrowings and promissory note | ||
Pricing, spread on variable (as a percent) | (0.55%) | |
SBA | Borrowings under credit facilities | Prime rate | Minimum | ||
Secured borrowings and promissory note | ||
Pricing, spread on variable (as a percent) | (0.55%) | |
SBA | Borrowings under credit facilities | Asset pledged as collateral without right | Loans and finance receivables | ||
Secured borrowings and promissory note | ||
Pledged Assets Carrying Value | $ 235,036 | |
SBC loans - USD | Borrowings under credit facilities | ||
Secured borrowings and promissory note | ||
Number of lenders per asset class | 2 | |
Facility size | $ 360,000 | |
Carrying Value, Secured borrowings | $ 109,336 | 111,966 |
SBC loans - USD | Borrowings under credit facilities | One Month LIBOR | ||
Secured borrowings and promissory note | ||
Pricing, spread on variable (as a percent) | 7% | |
SBC loans - USD | Borrowings under credit facilities | Secured Overnight Financing Rate | ||
Secured borrowings and promissory note | ||
Pricing, spread on variable (as a percent) | 1.35% | |
SBC loans - USD | Borrowings under credit facilities | Asset pledged as collateral without right | Loans and finance receivables | ||
Secured borrowings and promissory note | ||
Pledged Assets Carrying Value | $ 360,009 | |
SBC loans - USD | Borrowings under repurchase agreements | ||
Secured borrowings and promissory note | ||
Number of lenders per asset class | Lender | 7 | |
Facility size | $ 3,870,500 | |
Carrying Value, Secured borrowings | $ 1,527,847 | 1,905,358 |
SBC loans - USD | Borrowings under repurchase agreements | One Month LIBOR | ||
Secured borrowings and promissory note | ||
Pricing, spread on variable (as a percent) | 2% | |
SBC loans - USD | Borrowings under repurchase agreements | Secured Overnight Financing Rate | ||
Secured borrowings and promissory note | ||
Pricing, spread on variable (as a percent) | 2.46% | |
SBC loans - USD | Borrowings under repurchase agreements | Asset pledged as collateral without right | Securities sold under agreements to repurchase | ||
Secured borrowings and promissory note | ||
Pledged Assets Carrying Value | $ 1,920,195 | |
SBC loans - Non-USD | Borrowings under credit facilities | ||
Secured borrowings and promissory note | ||
Number of lenders per asset class | Lender | 1 | |
Facility size | $ 123,370 | |
Carrying Value, Secured borrowings | $ 36,317 | 61,596 |
SBC loans - Non-USD | Borrowings under credit facilities | SONIA | Minimum | ||
Secured borrowings and promissory note | ||
Pricing, spread on variable (as a percent) | 3.25% | |
SBC loans - Non-USD | Borrowings under credit facilities | Asset pledged as collateral without right | ||
Secured borrowings and promissory note | ||
Pledged Assets Carrying Value | $ 50,716 | |
SBC loans - Non-USD | Borrowings under repurchase agreements | ||
Secured borrowings and promissory note | ||
Number of lenders per asset class | Lender | 1 | |
Facility size | $ 216,780 | |
Carrying Value, Secured borrowings | $ 39,174 | |
SBC loans - Non-USD | Borrowings under repurchase agreements | Euribor Rate | ||
Secured borrowings and promissory note | ||
Pricing, spread on variable (as a percent) | 3% | |
SBC loans - Non-USD | Borrowings under repurchase agreements | Asset pledged as collateral without right | Securities sold under agreements to repurchase | ||
Secured borrowings and promissory note | ||
Pledged Assets Carrying Value | $ 46,724 | |
Residential loans | Borrowings under credit facilities | ||
Secured borrowings and promissory note | ||
Number of lenders per asset class | 5 | |
Facility size | $ 440,000 | |
Carrying Value, Secured borrowings | 118,641 | 132,658 |
Residential loans | Borrowings under credit facilities | Asset pledged as collateral without right | Loans and finance receivables | ||
Secured borrowings and promissory note | ||
Pledged Assets Carrying Value | $ 122,850 | |
Residential MSRs | Borrowings under credit facilities | ||
Secured borrowings and promissory note | ||
Number of lenders per asset class | 1 | |
Facility size | $ 120,000 | |
Carrying Value, Secured borrowings | $ 97,881 | 49,900 |
Residential MSRs | Borrowings under credit facilities | Secured Overnight Financing Rate | ||
Secured borrowings and promissory note | ||
Pricing, spread on variable (as a percent) | 3% | |
Residential MSRs | Borrowings under credit facilities | Asset pledged as collateral without right | Loans and finance receivables | ||
Secured borrowings and promissory note | ||
Pledged Assets Carrying Value | $ 131,185 | |
Purchased future receivables | Borrowings under credit facilities | ||
Secured borrowings and promissory note | ||
Number of lenders per asset class | 1 | |
Facility size | $ 50,000 | |
Purchased future receivables | Borrowings under credit facilities | One Month LIBOR | ||
Secured borrowings and promissory note | ||
Pricing, spread on variable (as a percent) | 4.50% | |
Mortgage backed securities | Borrowings under repurchase agreements | ||
Secured borrowings and promissory note | ||
Number of lenders per asset class | Lender | 6 | |
Pricing, stated rate (as a percent) | 6.93% | |
Facility size | $ 392,867 | |
Carrying Value, Secured borrowings | 392,867 | 423,912 |
Mortgage backed securities | Borrowings under repurchase agreements | Securities sold under agreements to repurchase | ||
Secured borrowings and promissory note | ||
Pledged Assets Carrying Value | 26,219 | $ 27,015 |
Mortgage backed securities | Borrowings under repurchase agreements | Asset pledged as collateral without right | Securities sold under agreements to repurchase | ||
Secured borrowings and promissory note | ||
Pledged Assets Carrying Value | $ 773,823 |
Secured Borrowings - Collateral
Secured Borrowings - Collateral Pledged (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Secured borrowings | ||
Collateral pledged | ||
Total Loans, in consolidated VIEs, before allowance for loan losses | $ 3,640,538 | $ 4,253,763 |
Secured borrowings | Asset pledged as collateral without right | ||
Collateral pledged | ||
Total Loans, in consolidated VIEs, before allowance for loan losses | 3,640,538 | |
Borrowings under credit facilities | Loans and finance receivables | ||
Collateral pledged | ||
Total Loans, in consolidated VIEs, before allowance for loan losses | 899,796 | 910,753 |
Borrowings under credit facilities | Asset pledged as collateral without right | Loans and finance receivables | ||
Collateral pledged | ||
Total Loans, in consolidated VIEs, before allowance for loan losses | 899,796 | |
Borrowings under repurchase agreements | Securities sold under agreements to repurchase | ||
Collateral pledged | ||
Total Loans, in consolidated VIEs, before allowance for loan losses | 2,740,742 | 3,343,010 |
Borrowings under repurchase agreements | Asset pledged as collateral without right | ||
Collateral pledged | ||
Total Loans, in consolidated VIEs, before allowance for loan losses | 2,740,742 | |
Real estate acquired in settlement of loans | Borrowings under repurchase agreements | Securities sold under agreements to repurchase | ||
Collateral pledged | ||
Total Loans, in consolidated VIEs, before allowance for loan losses | 1,491 | 1,491 |
Loans, held for sale, at fair value | Borrowings under credit facilities | Loans and finance receivables | ||
Collateral pledged | ||
Total Loans, in consolidated VIEs, before allowance for loan losses | 136,181 | 146,721 |
Loans, held for sale, at fair value | Borrowings under repurchase agreements | Securities sold under agreements to repurchase | ||
Collateral pledged | ||
Total Loans, in consolidated VIEs, before allowance for loan losses | 20,428 | 60,551 |
Loans, net | Borrowings under credit facilities | Loans and finance receivables | ||
Collateral pledged | ||
Total Loans, in consolidated VIEs, before allowance for loan losses | 632,430 | 630,910 |
Loans, net | Borrowings under repurchase agreements | Securities sold under agreements to repurchase | ||
Collateral pledged | ||
Total Loans, in consolidated VIEs, before allowance for loan losses | 1,940,993 | 2,496,880 |
Loans, held at fair value | Borrowings under repurchase agreements | Securities sold under agreements to repurchase | ||
Collateral pledged | ||
Total Loans, in consolidated VIEs, before allowance for loan losses | 4,007 | 3,974 |
Mortgage servicing rights | Borrowings under credit facilities | Loans and finance receivables | ||
Collateral pledged | ||
Total Loans, in consolidated VIEs, before allowance for loan losses | 131,185 | 133,122 |
Mortgage backed securities | Borrowings under repurchase agreements | Securities sold under agreements to repurchase | ||
Collateral pledged | ||
Total Loans, in consolidated VIEs, before allowance for loan losses | 26,219 | 27,015 |
Mortgage backed securities | Borrowings under repurchase agreements | Asset pledged as collateral without right | Securities sold under agreements to repurchase | ||
Collateral pledged | ||
Total Loans, in consolidated VIEs, before allowance for loan losses | 773,823 | |
Retained interest in assets of consolidated VIEs | Borrowings under repurchase agreements | Securities sold under agreements to repurchase | ||
Collateral pledged | ||
Total Loans, in consolidated VIEs, before allowance for loan losses | $ 747,604 | $ 753,099 |
Senior secured notes, convert_3
Senior secured notes, convertible notes, and corporate debt, net (Details) | 3 Months Ended | ||||||||
Oct. 20, 2021 USD ($) | Mar. 31, 2023 USD ($) $ / shares | Mar. 31, 2023 USD ($) $ / shares | Mar. 31, 2023 USD ($) $ / shares | Mar. 31, 2023 USD ($) item $ / shares | Mar. 31, 2023 USD ($) $ / shares shares | Dec. 31, 2022 USD ($) | May 20, 2021 USD ($) | Aug. 09, 2017 USD ($) | |
Senior secured notes, Convertible notes, and Corporate debt | |||||||||
Total Senior secured notes, net | $ 343,798,000 | $ 343,798,000 | $ 343,798,000 | $ 343,798,000 | $ 343,798,000 | $ 343,355,000 | |||
Total Corporate debt, net | 663,623,000 | 663,623,000 | 663,623,000 | 663,623,000 | 663,623,000 | 662,665,000 | |||
Total Convertible notes, net | 114,689,000 | 114,689,000 | 114,689,000 | 114,689,000 | 114,689,000 | $ 114,397,000 | |||
Total carrying amount of debt components | 1,122,110,000 | 1,122,110,000 | 1,122,110,000 | 1,122,110,000 | 1,122,110,000 | ||||
Total carrying amount of conversion option of equity components recorded in equity | 77,000 | 77,000 | 77,000 | 77,000 | 77,000 | ||||
Contractual maturities of the Senior Secured Notes, Convertible Notes, and Corporate debt | |||||||||
2023 | 115,000,000 | 115,000,000 | 115,000,000 | 115,000,000 | 115,000,000 | ||||
2024 | 0 | 0 | 0 | 0 | 0 | ||||
2025 | 120,000,000 | 120,000,000 | 120,000,000 | 120,000,000 | 120,000,000 | ||||
2026 | 660,883,000 | 660,883,000 | 660,883,000 | 660,883,000 | 660,883,000 | ||||
2027 | 100,000,000 | 100,000,000 | 100,000,000 | 100,000,000 | 100,000,000 | ||||
Thereafter | 146,250,000 | 146,250,000 | 146,250,000 | 146,250,000 | 146,250,000 | ||||
Total contractual amounts | 1,142,133,000 | 1,142,133,000 | 1,142,133,000 | 1,142,133,000 | 1,142,133,000 | ||||
Unamortized deferred financing costs, discounts, and premiums, net | (20,023,000) | (20,023,000) | (20,023,000) | (20,023,000) | (20,023,000) | ||||
Total carrying amount of debt components | 1,122,110,000 | 1,122,110,000 | 1,122,110,000 | 1,122,110,000 | 1,122,110,000 | ||||
7.50% Senior Secured Notes Due 2022 | |||||||||
Senior secured notes, Convertible notes, and Corporate debt | |||||||||
Debt instrument, face value | $ 100,000,000 | $ 100,000,000 | $ 100,000,000 | $ 100,000,000 | $ 100,000,000 | ||||
Interest rate (as a percent) | 7.375% | 7.375% | 7.375% | 7.375% | 7.375% | ||||
Convertible Notes | |||||||||
Senior secured notes, Convertible notes, and Corporate debt | |||||||||
Debt instrument, face value | $ 115,000,000 | $ 115,000,000 | $ 115,000,000 | $ 115,000,000 | $ 115,000,000 | $ 115,000,000 | |||
Interest rate (as a percent) | 7% | 7% | 7% | 7% | 7% | 7% | |||
Conversion ratio | 1.6548 | ||||||||
Principal amount of notes for conversion | $ 25 | $ 25 | $ 25 | $ 25 | $ 25 | ||||
Conversion price | $ / shares | $ 15.11 | $ 15.11 | $ 15.11 | $ 15.11 | $ 15.11 | ||||
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 | $ (77,000) | $ (77,000) | $ (77,000) | $ (77,000) | $ (77,000) | ||||
Unamortized deferred financing costs | (234,000) | (234,000) | (234,000) | (234,000) | (234,000) | ||||
Total Convertible notes, net | 114,689,000 | $ 114,689,000 | $ 114,689,000 | $ 114,689,000 | 114,689,000 | ||||
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 | 20 | 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 | |||||||||
Repurchase price percentage in the event of change of control | 101% | ||||||||
Unamortized discount | (9,141,000) | $ (9,141,000) | $ (9,141,000) | $ (9,141,000) | (9,141,000) | ||||
Unamortized deferred financing costs | (4,369,000) | (4,369,000) | (4,369,000) | (4,369,000) | (4,369,000) | ||||
Total Corporate debt, net | 663,623,000 | 663,623,000 | 663,623,000 | 663,623,000 | $ 663,623,000 | ||||
6.20% and 5.75% Senior Notes due 2026 | |||||||||
Senior secured notes, Convertible notes, and Corporate debt | |||||||||
Number of shares sold in At The Market debt offering | shares | 0 | ||||||||
6.20% and 5.75% Senior Notes due 2026 | Maximum | |||||||||
Senior secured notes, Convertible notes, and Corporate debt | |||||||||
Debt notes available for sale under At Market Issuance Sales Agreement | $ 100,000,000 | ||||||||
6.20% Senior Notes due 2026 | |||||||||
Senior secured notes, Convertible notes, and Corporate debt | |||||||||
Debt instrument, face value | $ 104,613,000 | $ 104,613,000 | $ 104,613,000 | $ 104,613,000 | $ 104,613,000 | ||||
Interest rate (as a percent) | 6.20% | 6.20% | 6.20% | 6.20% | 6.20% | 6.20% | |||
5.75% Senior Notes Due 2026 | |||||||||
Senior secured notes, Convertible notes, and Corporate debt | |||||||||
Debt instrument, face value | $ 206,270,000 | $ 206,270,000 | $ 206,270,000 | $ 206,270,000 | $ 206,270,000 | ||||
Interest rate (as a percent) | 5.75% | 5.75% | 5.75% | 5.75% | 5.75% | 5.75% | |||
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 | $ 120,000,000 | $ 120,000,000 | ||||
Interest rate (as a percent) | 6.125% | 6.125% | 6.125% | 6.125% | 6.125% | ||||
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 | $ 350,000,000 | $ 350,000,000 | ||||
Interest rate (as a percent) | 4.50% | 4.50% | 4.50% | 4.50% | 4.50% | ||||
Unamortized deferred financing costs | $ (6,202,000) | $ (6,202,000) | $ (6,202,000) | $ (6,202,000) | $ (6,202,000) | ||||
Total Senior secured notes, net | 343,798,000 | 343,798,000 | $ 343,798,000 | 343,798,000 | 343,798,000 | ||||
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 | $ 15,000,000 | 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 | 21,250,000 | 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 | $ 110,000,000 | $ 110,000,000 | ||||
Interest rate (as a percent) | 5.50% | 5.50% | 5.50% | 5.50% | 5.50% | ||||
ReadyCap Holdings LLC | 4.50% Senior Secured Notes Due 2026 | |||||||||
Senior secured notes, Convertible notes, and Corporate debt | |||||||||
Debt instrument, face value | $ 350,000,000 | ||||||||
Interest rate (as a percent) | 4.50% | ||||||||
Repurchase price percentage in the event of change of control | 101% |
Guaranteed Loan Financing (Deta
Guaranteed Loan Financing (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Ending balance | $ 238,948 | $ 264,889 |
Guaranteed loan financing | ||
Ending balance | $ 238,948 | $ 264,889 |
Guaranteed loan financing | Weighted Average | ||
Interest Rates | 7.87% | 6.68% |
Guaranteed loan financing | Minimum | ||
Interest Rates | 1.45% | 1.45% |
Guaranteed loan financing | Maximum | ||
Interest Rates | 9.25% | 8.50% |
Guaranteed Loan Financing - Mat
Guaranteed Loan Financing - Maturities (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Contractual maturities of total guaranteed loan financing outstanding | ||
2023 | $ 149 | |
2024 | 859 | |
2025 | 1,136 | |
2026 | 3,881 | |
2027 | 11,475 | |
Thereafter | 221,448 | |
Total | 238,948 | |
Guaranteed loan financing | ||
Contractual maturities of total guaranteed loan financing outstanding | ||
Loans held-for-investment pledged as security against guaranteed loan financing | $ 239,600 | $ 265,600 |
Variable interest entities an_3
Variable interest entities and securitization activities - Securitized Debt Obligations (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Variable interest entities | ||
Current Principal Balance | $ 6,050,669 | $ 5,858,798 |
Current principal balance of non-company sponsored securitized loans | 7,700 | 8,000 |
Consolidated VIEs | ||
Variable interest entities | ||
Current Principal Balance | 5,343,300 | 4,945,099 |
Carrying value | $ 5,293,315 | $ 4,895,364 |
Weighted Average Rate | 6.30% | 4.30% |
ReadyCap Lending Small Business Trust 2019-2 | ||
Variable interest entities | ||
Current Principal Balance | $ 43,189 | $ 49,031 |
Carrying value | $ 42,804 | $ 48,518 |
Weighted Average Rate | 7% | 4% |
Sutherland Commercial Mortgage Trust 2017-SBC6 | ||
Variable interest entities | ||
Current Principal Balance | $ 5,386 | $ 7,386 |
Carrying value | $ 5,296 | $ 7,273 |
Weighted Average Rate | 5% | 4.30% |
Sutherland Commercial Mortgage Trust 2019-SBC8 | ||
Variable interest entities | ||
Current Principal Balance | $ 116,818 | $ 120,916 |
Carrying value | $ 115,053 | $ 119,072 |
Weighted Average Rate | 2.90% | 2.90% |
Sutherland Commercial Mortgage Trust 2021-SBC10 | ||
Variable interest entities | ||
Current Principal Balance | $ 102,608 | $ 109,622 |
Carrying value | $ 101,062 | $ 107,969 |
Weighted Average Rate | 1.60% | 1.60% |
ReadyCap Commercial Mortgage Trust 2015-2 | ||
Variable interest entities | ||
Current Principal Balance | $ 2,167 | $ 2,726 |
Carrying value | $ 1,926 | $ 2,442 |
Weighted Average Rate | 5.20% | 5.10% |
ReadyCap Commercial Mortgage Trust 2016-3 | ||
Variable interest entities | ||
Current Principal Balance | $ 11,732 | $ 11,950 |
Carrying value | $ 11,603 | $ 11,787 |
Weighted Average Rate | 5.10% | 5.10% |
ReadyCap Commercial Mortgage Trust 2018-4 | ||
Variable interest entities | ||
Current Principal Balance | $ 53,380 | $ 58,838 |
Carrying value | $ 52,432 | $ 57,857 |
Weighted Average Rate | 4.70% | 4.30% |
ReadyCap Commercial Mortgage Trust 2019-5 | ||
Variable interest entities | ||
Current Principal Balance | $ 105,388 | $ 111,184 |
Carrying value | $ 103,220 | $ 108,859 |
Weighted Average Rate | 4.60% | 4.50% |
ReadyCap Commercial Mortgage Trust 2019-6 | ||
Variable interest entities | ||
Current Principal Balance | $ 204,357 | $ 209,930 |
Carrying value | $ 202,040 | $ 207,464 |
Weighted Average Rate | 3.40% | 3.30% |
ReadyCap Commercial Mortgage Trust 2022-7 | ||
Variable interest entities | ||
Current Principal Balance | $ 193,041 | $ 197,498 |
Carrying value | $ 190,145 | $ 194,456 |
Weighted Average Rate | 4.10% | 4.20% |
Ready Capital Mortgage Financing 2019-FL3 | ||
Variable interest entities | ||
Current Principal Balance | $ 59,508 | $ 59,508 |
Carrying value | $ 59,508 | $ 59,508 |
Weighted Average Rate | 6.80% | 3.50% |
Ready Capital Mortgage Financing 2020-FL4 | ||
Variable interest entities | ||
Current Principal Balance | $ 188,928 | $ 192,419 |
Carrying value | $ 188,881 | $ 192,213 |
Weighted Average Rate | 8% | 4.80% |
Ready Capital Mortgage Financing 2021-FL5 | ||
Variable interest entities | ||
Current Principal Balance | $ 377,996 | $ 415,166 |
Carrying value | $ 376,512 | $ 413,101 |
Weighted Average Rate | 6% | 3.10% |
Ready Capital Mortgage Financing 2021-FL6 | ||
Variable interest entities | ||
Current Principal Balance | $ 498,855 | $ 502,220 |
Carrying value | $ 495,345 | $ 497,891 |
Weighted Average Rate | 5.80% | 2.90% |
Ready Capital Mortgage Financing 2021-FL7 | ||
Variable interest entities | ||
Current Principal Balance | $ 743,848 | $ 743,848 |
Carrying value | $ 739,197 | $ 738,246 |
Weighted Average Rate | 6.10% | 3.20% |
Ready Capital Mortgage Financing 2022-FL8 | ||
Variable interest entities | ||
Current Principal Balance | $ 913,675 | $ 913,675 |
Carrying value | $ 907,341 | $ 906,307 |
Weighted Average Rate | 6.30% | 3.70% |
Ready Capital Mortgage Financing 2022-FL9 | ||
Variable interest entities | ||
Current Principal Balance | $ 588,202 | $ 587,722 |
Carrying value | $ 581,453 | $ 579,823 |
Weighted Average Rate | 7.60% | 5.90% |
Ready Capital Mortgage Financing 2022-FL10 | ||
Variable interest entities | ||
Current Principal Balance | $ 651,910 | $ 651,460 |
Carrying value | $ 644,030 | $ 642,578 |
Weighted Average Rate | 7.30% | 7.90% |
Ready Capital Mortgage Financing 2023-FL11 | ||
Variable interest entities | ||
Current Principal Balance | $ 482,312 | |
Carrying value | $ 475,467 | |
Weighted Average Rate | 7.70% |
Variable interest entities an_4
Variable interest entities and securitization activities - Consolidated VIE Assets and Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 | Mar. 31, 2022 |
Assets | |||
Cash and cash equivalents | $ 111,192 | $ 211,369 | |
Restricted cash | 49,632 | $ 56,963 | |
Loans, held for sale, at fair value | 236,578 | $ 258,377 | |
Other assets | 202,690 | 189,769 | |
Total Assets | 11,537,463 | 11,620,977 | |
Liabilities | |||
Due to third parties | 12,881 | 11,805 | |
Accounts payable and other accrued liabilities | 132,523 | 176,520 | |
Total Liabilities | 9,648,770 | 9,722,382 | |
Consolidated VIEs | |||
Assets | |||
Loans, net | 6,782,171 | 6,311,698 | |
Liabilities | |||
Secured borrowings | 5,300,967 | 4,903,350 | |
Reportable Legal Entities | Consolidated VIEs | |||
Assets | |||
Cash and cash equivalents | 10,401 | 997 | |
Restricted cash | 75,479 | 77,062 | |
Loans, net | 6,782,171 | 6,311,698 | |
Preferred equity investments | 108,423 | 108,423 | |
Other assets | 78,387 | 54,580 | |
Total Assets | 7,054,861 | 6,552,760 | |
Liabilities | |||
Secured borrowings | 5,300,967 | 4,903,350 | |
Due to third parties | 3,441 | 3,727 | |
Total Liabilities | $ 5,304,408 | $ 4,907,077 |
Variable interest entities an_5
Variable interest entities and securitization activities - Assets of Unconsolidated VIEs (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Carrying amount | ||
Mortgage backed securities, at fair value | $ 32,607 | $ 32,041 |
Investment in unconsolidated joint ventures | 114,169 | 118,641 |
Total Assets | 11,537,463 | 11,620,977 |
Unconsolidated VIEs | ||
Carrying amount | ||
Mortgage backed securities, at fair value | 23,201 | 24,408 |
Investment in unconsolidated joint ventures | 114,169 | 118,641 |
Total Assets | 137,370 | 143,049 |
Maximum Exposure to Loss | ||
Mortgage backed securities, at fair value | 23,201 | 24,408 |
Investment in unconsolidated joint venture | 114,169 | 118,641 |
Total assets in unconsolidated VIEs maximum exposure to loss | $ 137,370 | $ 143,049 |
Interest income and interest _3
Interest income and interest expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Interest income | ||
Total loans | $ 211,968 | $ 117,700 |
Total loans, held for sale, at fair value | 2,307 | 4,371 |
Preferred equity investments | 2,168 | |
Total Paycheck Protection Program loans | 8 | 607 |
Mortgage backed securities, at fair value | 1,122 | 1,727 |
Total interest income | 217,573 | 124,405 |
Interest expense | ||
Secured borrowings | (46,746) | (19,623) |
Paycheck Protection Program Liquidity Facility borrowings | (164) | (688) |
Securitized debt obligations of consolidated VIEs | (90,601) | (24,251) |
Guaranteed loan financing | (4,872) | (3,085) |
Senior secured note | (4,381) | (4,357) |
Convertible note | (2,188) | (2,188) |
Corporate debt | (11,442) | (6,825) |
Total interest expense | (160,394) | (61,017) |
Net interest income before provision for loan losses | 57,179 | 63,388 |
Bridge | ||
Interest income | ||
Total loans | 160,431 | 64,779 |
Fixed rate | ||
Interest income | ||
Total loans | 13,028 | 14,662 |
Total loans, held for sale, at fair value | 735 | 2,066 |
Freddie Mac | ||
Interest income | ||
Total loans, held for sale, at fair value | 192 | |
Construction | ||
Interest income | ||
Total loans | 12,166 | 1,757 |
SBA 7(a) | ||
Interest income | ||
Total loans | 14,921 | 9,379 |
Paycheck Protection Program loans, held for investment | ||
Interest income | ||
Total loans | 3,007 | 16,858 |
Residential | ||
Interest income | ||
Total loans | 40 | 19 |
Total loans, held for sale, at fair value | 1,565 | 2,100 |
Other | ||
Interest income | ||
Total loans | 8,375 | 10,246 |
Total loans, held for sale, at fair value | $ 7 | $ 13 |
Derivative instruments (Details
Derivative instruments (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Notional Amount | $ 899,408 | $ 869,708 | |
Asset Derivatives Fair Value | 47,877 | 55,265 | |
Liabilities Derivatives Fair Value | (2,724) | (2,068) | |
Derivative gain (loss) | |||
Net Realized Gain (Loss) | 3,686 | $ (1,125) | |
Unrealized Gain (Loss) | (8,044) | 29,240 | |
Total change in OCI for period | (3,805) | 213 | |
Designated as Hedging | |||
Derivative gain (loss) | |||
Derivatives - effective portion reclassified from AOCI to income | (298) | (254) | |
Total income statement impact | (298) | (254) | |
Derivatives- effective portion recorded in OCI | (4,103) | (41) | |
Total change in OCI for period | (3,805) | 213 | |
Interest rate lock commitments (IRLCs) | |||
Derivative gain (loss) | |||
Unrealized Gain (Loss) | 1,862 | (4,957) | |
Interest rate lock commitments (IRLCs) | Interest Rate Risk | |||
Notional Amount | 205,204 | 205,204 | |
Asset Derivatives Fair Value | 1,979 | 117 | |
Interest Rate Swap Agreement | |||
Liabilities Derivatives Fair Value | (7) | ||
Derivative gain (loss) | |||
Net Realized Gain (Loss) | 3,686 | (1,805) | |
Unrealized Gain (Loss) | (8,459) | 26,702 | |
Interest Rate Swap Agreement | Not Designated as Hedging | Interest Rate Risk | |||
Notional Amount | 216,731 | 216,381 | |
Asset Derivatives Fair Value | 16,299 | 19,366 | |
Liabilities Derivatives Fair Value | (7) | ||
Interest Rate Swap Agreement | Designated as Hedging | Interest Rate Risk | |||
Notional Amount | 266,139 | 266,139 | |
Asset Derivatives Fair Value | 28,478 | 33,863 | |
TBA agency securities | |||
Liabilities Derivatives Fair Value | (1,019) | (749) | |
Derivative gain (loss) | |||
Unrealized Gain (Loss) | (985) | 7,264 | |
TBA agency securities | Interest Rate Risk | |||
Notional Amount | 163,500 | 134,150 | |
Asset Derivatives Fair Value | 81 | 796 | |
Liabilities Derivatives Fair Value | (1,019) | (749) | |
FX forwards | |||
Liabilities Derivatives Fair Value | (1,698) | (1,319) | |
Derivative gain (loss) | |||
Net Realized Gain (Loss) | 680 | ||
Unrealized Gain (Loss) | (462) | $ 231 | |
FX forwards | Foreign Exchange Rate Risk | |||
Notional Amount | 47,834 | 47,834 | |
Asset Derivatives Fair Value | 1,040 | 1,123 | |
Liabilities Derivatives Fair Value | $ (1,698) | $ (1,319) |
Real estate owned, held for s_3
Real estate owned, held for sale (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 | Sep. 30, 2022 |
Real estate acquired | |||
Acquired portfolio | $ 57,130 | $ 84,129 | |
Other REO held for sale | 32,974 | 32,969 | |
Total Real estate, held for sale | 90,104 | 117,098 | |
Consolidated VIEs | |||
Real estate acquired | |||
Other REO held for sale | 14,900 | 1,000 | |
Retail | |||
Real estate acquired | |||
Other REO held for sale | 1,853 | 1,853 | |
Mixed Use | |||
Real estate acquired | |||
Acquired portfolio | 35,367 | 35,361 | |
Lodging/Residential | |||
Real estate acquired | |||
Acquired portfolio | 9,088 | ||
Office | |||
Real estate acquired | |||
Other REO held for sale | 6,816 | 6,816 | |
Single family | |||
Real estate acquired | |||
Other REO held for sale | 24,305 | 24,300 | |
Multi-family | |||
Real estate acquired | |||
Acquired portfolio | $ 12,675 | $ 48,768 | |
Mosaic | |||
Real estate acquired | |||
Acquired portfolio | $ 44,748 | ||
Mosaic | Adjustments | |||
Real estate acquired | |||
Acquired portfolio | $ (33,945) |
Agreements and transactions w_3
Agreements and transactions with related parties (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Jul. 15, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Related-party transactions | ||||
Amount unpaid | $ 7,080 | $ 7,815 | ||
Purchase of loans, held-for-investment | 519 | $ 643,744 | ||
Investment in unconsolidated joint ventures (including $7,913 and $8,094 held at fair value) | $ 114,169 | $ 118,641 | ||
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 | |||
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 | $ 5,100 | 3,200 | ||
Amount unpaid | 5,100 | 6,100 | ||
Manager | Incentive distribution | ||||
Related-party transactions | ||||
Incentive distribution paid | 1,700 | |||
Amount unpaid | 1,700 | 2,400 | ||
Manager | Expense reimbursement | ||||
Related-party transactions | ||||
Reimbursable expenses | 2,900 | 3,500 | ||
Amount unpaid | 1,800 | $ 9,500 | ||
Manager | Waterfall Atlas Fund, LP | ||||
Related-party transactions | ||||
Commitment to invest into a parallel vehicle | $ 125,000 | |||
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% | |||
Cash contributions | 36,600 | |||
Amount of investment contributions committed but not yet funded | $ 88,400 |
Other assets and other liabil_3
Other assets and other liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Other assets: | ||
Goodwill | $ 37,818 | $ 37,818 |
Deferred loan exit fees | 36,629 | 36,669 |
Accrued interest | 37,436 | 34,951 |
Due from servicers | 26,422 | 24,078 |
Intangible assets | 16,868 | 16,308 |
Receivable from third parties | 21,013 | 15,114 |
Deferred financing costs | 5,624 | 5,176 |
Deferred tax asset | 977 | 977 |
Right-of-use assets | $ 2,364 | $ 1,687 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Total other assets | Total other assets |
Other assets | $ 17,539 | $ 16,991 |
Total other assets | 202,690 | 189,769 |
Accounts payable and other accrued liabilities: | ||
Accrued salaries, wages and commissions | 19,789 | 38,245 |
Accrued interest payable | 40,023 | 34,785 |
Servicing principal and interest payable | 11,171 | 13,163 |
Deferred tax liability | 30,885 | 30,885 |
Repair and denial reserve | 11,045 | 10,846 |
Payable to related parties | 7,080 | 7,815 |
Accrued PPP related costs | 145 | 4,016 |
Accrued professional fees | 2,431 | 2,804 |
Lease payable | 2,514 | 1,778 |
Other liabilities | 7,440 | 32,183 |
Total accounts payable and other accrued liabilities | 132,523 | 176,520 |
Loan indemnification reserve | ||
Loan indemnification reserve | $ 2,600 | $ 2,900 |
Other Asset and Other Liabiliti
Other Asset and Other Liabilities - Intangible assets (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | |||
Mar. 31, 2023 | Sep. 30, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Goodwill | $ 37,818 | $ 37,818 | $ 37,818 | ||
Finite-lived intangible assets | 13,368 | 13,368 | |||
Total Intangible Assets | 16,868 | 16,868 | 16,308 | ||
Amortization expense | 600 | $ 400 | |||
Total Accumulated Amortization | 6,381 | 6,381 | |||
Future amortization of lease intangibles | |||||
2023 | 1,855 | 1,855 | |||
2024 | 2,264 | 2,264 | |||
2025 | 2,018 | 2,018 | |||
2026 | 1,351 | 1,351 | |||
2027 | 1,216 | 1,216 | |||
Thereafter | 4,664 | 4,664 | |||
Net amount | 13,368 | 13,368 | |||
Mosaic | |||||
Goodwill | $ 5,230 | ||||
Net assets acquired, net of non-controlling interests | 477,826 | ||||
Fair value of CERs issued | 16,600 | 25,000 | |||
Mosaic | Adjustments | |||||
Goodwill | 3,996 | ||||
Net assets acquired, net of non-controlling interests | (63,344) | ||||
Fair value of CERs issued | $ (59,348) | ||||
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 | 26,612 | 26,612 | 26,612 | ||
Small Business Lending | |||||
Goodwill | 11,206 | 11,206 | 11,206 | ||
Customer relationships | Red Stone | |||||
Finite-lived intangible assets | 6,204 | $ 6,204 | 6,293 | ||
Estimated Useful Life | 19 years | ||||
Total Accumulated Amortization | 596 | $ 596 | |||
Future amortization of lease intangibles | |||||
Net amount | 6,204 | 6,204 | 6,293 | ||
Internally developed software | |||||
Finite-lived intangible assets | 4,052 | $ 4,052 | 3,092 | ||
Estimated Useful Life | 5 years | ||||
Total Accumulated Amortization | 317 | $ 317 | |||
Future amortization of lease intangibles | |||||
Net amount | 4,052 | 4,052 | 3,092 | ||
Internally developed software | Knight Capital | |||||
Finite-lived intangible assets | 1,636 | $ 1,636 | 1,794 | ||
Estimated Useful Life | 6 years | ||||
Total Accumulated Amortization | 2,163 | $ 2,163 | |||
Future amortization of lease intangibles | |||||
Net amount | 1,636 | 1,636 | 1,794 | ||
Broker network | Knight Capital | |||||
Finite-lived intangible assets | 289 | $ 289 | 356 | ||
Estimated Useful Life | 4 years 6 months | ||||
Total Accumulated Amortization | 911 | $ 911 | |||
Future amortization of lease intangibles | |||||
Net amount | 289 | 289 | 356 | ||
Trade name | Knight Capital | |||||
Finite-lived intangible assets | 379 | $ 379 | 416 | ||
Estimated Useful Life | 6 years | ||||
Total Accumulated Amortization | 501 | $ 501 | |||
Future amortization of lease intangibles | |||||
Net amount | 379 | 379 | 416 | ||
Trade name | GMFS | |||||
Finite-lived intangible assets | 316 | $ 316 | 337 | ||
Estimated Useful Life | 15 years | ||||
Total Accumulated Amortization | 906 | $ 906 | |||
Future amortization of lease intangibles | |||||
Net amount | 316 | 316 | 337 | ||
Favorable lease | |||||
Finite-lived intangible assets | 492 | $ 492 | 520 | ||
Estimated Useful Life | 12 years | ||||
Total Accumulated Amortization | 987 | $ 987 | |||
Future amortization of lease intangibles | |||||
Net amount | $ 492 | $ 492 | $ 520 |
Other income and operating ex_3
Other income and operating expenses - Paycheck Protection Program (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2020 | Dec. 31, 2022 | |
Paycheck Protection Program (PPP) | ||||
Origination costs | $ 1,655 | $ 4,934 | ||
Paycheck Protection Program loans | ||||
Paycheck Protection Program (PPP) | ||||
Unrecognized net service fees | 97 | $ 122 | ||
PPP Loans - CARES Act | ||||
Paycheck Protection Program (PPP) | ||||
PPP loans originated | $ 109,500 | |||
PPP processing fees | 5,200 | |||
Unrecognized net service fees | 100 | |||
PPP Loans - Economic Aid Act | ||||
Paycheck Protection Program (PPP) | ||||
PPP loans originated | 2,200,000 | |||
Total fees deferred and expected to be recognized over the life of the loans | 123,700 | |||
Net fees creating an excess of PPLF borrowings in excess of PPP loans | $ 6,900 | |||
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 | Mar. 31, 2023 | Dec. 31, 2022 | Mar. 31, 2022 |
Assets | |||
Restricted cash | $ 49,632 | $ 56,963 | |
Paycheck Protection Program loans | 146,557 | $ 186,985 | |
Paycheck Protection Program loans, held at fair value | 346 | 576 | |
Accrued interest | 37,436 | 34,951 | |
Total Assets | 11,537,463 | 11,620,977 | |
Liabilities | |||
Paycheck Protection Program Liquidity Facility (PPPLF) borrowings | 169,596 | 201,011 | |
Interest payable | 40,023 | 34,785 | |
Accrued PPP Related Costs | 145 | 4,016 | |
Repair and denial reserve | 11,045 | 10,846 | |
Total Liabilities | 9,648,770 | 9,722,382 | |
Paycheck Protection Program loans | |||
Assets | |||
PPP fee receivable | 323 | 328 | |
Accrued interest | 2,024 | 3,196 | |
Total Assets | 148,904 | 190,509 | |
Liabilities | |||
Paycheck Protection Program Liquidity Facility (PPPLF) borrowings | 169,596 | 201,011 | |
Interest payable | 1,134 | 1,176 | |
Deferred LSP revenue | 97 | 122 | |
Accrued PPP Related Costs | 145 | 4,016 | |
Payable to third parties | 368 | 277 | |
Repair and denial reserve | 5,159 | 4,878 | |
Total Liabilities | 176,499 | 211,480 | |
Paycheck Protection Program loans, held for investment | |||
Assets | |||
Paycheck Protection Program loans | 146,211 | 186,409 | |
Paycheck Protection Program loans, held for investment | Paycheck Protection Program loans | |||
Assets | |||
Paycheck Protection Program loans | 146,211 | 186,409 | |
Paycheck Protection Program loans, at fair value | |||
Assets | |||
Paycheck Protection Program loans | 346 | 576 | |
Paycheck Protection Program loans, at fair value | Paycheck Protection Program loans | |||
Assets | |||
Paycheck Protection Program loans | $ 346 | $ 576 |
Other income and operating ex_5
Other income and operating expenses - Income and Expenses Related to Activities (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Other income | ||
Interest income | $ 217,573 | $ 124,405 |
Interest and Fee Income | 211,968 | 117,700 |
Other operating expenses | ||
Direct operating expenses | 1,655 | 4,934 |
R&D reserve | (199) | 2,193 |
Interest expense | 160,394 | 61,017 |
Total other operating expenses | 14,318 | 12,653 |
Net income | 36,978 | 64,263 |
Paycheck Protection Program loans | ||
Other income | ||
Interest and Fee Income | 2,751 | 19,139 |
Other operating expenses | ||
Total other operating expenses | 282 | 838 |
Net income | 2,469 | 18,301 |
Paycheck Protection Program loans | Other Income | ||
Other income | ||
Repair and denial reserve | (281) | 2,244 |
Paycheck Protection Program loans | Servicing income | ||
Other income | ||
LSP fee income | 25 | 37 |
Paycheck Protection Program loans | Interest income | ||
Other income | ||
Interest income | 3,007 | 16,858 |
Paycheck Protection Program loans | Other operating expenses | ||
Other operating expenses | ||
Direct operating expenses | 118 | 150 |
Paycheck Protection Program loans | Interest expense | ||
Other operating expenses | ||
Interest expense | $ 164 | $ 688 |
Other income and operating ex_6
Other income and operating expenses - Components of Other Income and Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Other income | ||
Origination income | $ 4,612 | $ 1,654 |
Change in repair and denial reserve | (199) | 2,193 |
Employee retention credit consulting income | 9,675 | |
Other | 5,795 | 2,654 |
Total other income | 19,883 | 6,501 |
Other operating expenses | ||
Origination costs | 1,655 | 4,934 |
Technology expense | 2,114 | 2,040 |
Impairment on real estate | 3,418 | 1,827 |
Rent and property tax expense | 1,400 | 1,095 |
Recruiting, training and travel expenses | 748 | 302 |
Marketing expense | 557 | 328 |
Other | 4,426 | 2,127 |
Total other operating expenses | $ 14,318 | $ 12,653 |
Redeemable Preferred Stock an_3
Redeemable Preferred Stock and Stockholders Equity - Common Stock Dividends (Details) - $ / shares | 3 Months Ended | |||||||||||
Apr. 28, 2023 | Mar. 15, 2023 | Jan. 31, 2023 | Dec. 15, 2022 | Oct. 31, 2022 | Sep. 15, 2022 | Jul. 29, 2022 | Jun. 15, 2022 | Apr. 29, 2022 | Mar. 15, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | |
Dividends | ||||||||||||
Dividend per Share, declared | $ 0.40 | $ 0.40 | $ 0.42 | $ 0.42 | $ 0.42 | $ 0.40 | $ 0.42 | |||||
Dividend per Share, paid | $ 0.40 | $ 0.40 | $ 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 | 12 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Weighted-average grant date fair value (per share) | |||
Non-cash stock-based compensation expense | $ 1,853 | $ 1,963 | |
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) | |||
Non-cash compensation expense not yet charged to net income | $ 13,000 | $ 12,300 | |
RSUs and RSAs | Certain employees | |||
Number of shares | |||
Outstanding, Beginning balance | 827,163 | ||
Granted (in shares) | 441,296 | ||
Vested (in shares) | (333,470) | ||
Forfeited (in shares) | (4,536) | ||
Outstanding, Ending balance | 930,453 | 827,163 | |
Grant date fair value | |||
Beginning balance | $ 12,258 | ||
Granted | 5,728 | ||
Vested | (4,946) | ||
Forfeited | (61) | ||
Ending balance | $ 12,979 | $ 12,258 | |
Weighted-average grant date fair value (per share) | |||
Beginning balance | $ 14.82 | ||
Granted (in per share) | 12.98 | ||
Vested (in per share) | 14.83 | ||
Forfeited (in per share) | 13.62 | ||
Ending balance | $ 13.95 | $ 14.82 |
Redeemable Preferred Stock an_5
Redeemable Preferred Stock and Stockholders Equity - Time-based Equity Awards (Details) - Time-based RSA - shares | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Employees | |||
Share-Based Compensation | |||
Granted (in shares) | 388,136 | 327,692 | 287,787 |
Vesting period | 3 years | 3 years | 3 years |
Employees | Red Stone | |||
Share-Based Compensation | |||
Granted (in shares) | 128,533 | ||
Directors | |||
Share-Based Compensation | |||
Granted (in shares) | 53,160 | 45,162 | 36,968 |
Vesting period | 1 year | 1 year | 1 year |
Redeemable Preferred Stock an_6
Redeemable Preferred Stock and Stockholders Equity - Performance-based Equity Awards (Details) - Performance Shares - shares | 1 Months Ended | ||
Feb. 28, 2023 | Feb. 28, 2022 | Feb. 28, 2021 | |
Performance-based equity awards | |||
Granted (in shares) | 92,451 | 84,566 | 43,327 |
Vesting period | 3 years | 3 years | 3 years |
Minimum | |||
Performance-based equity awards | |||
Percentage of target awards that may be achieved. | 0% | 0% | 0% |
Maximum | |||
Performance-based equity awards | |||
Percentage of target awards that may be achieved. | 200% | 200% | 300% |
Based on absolute TSR | |||
Performance-based equity awards | |||
Vesting percentage allocation | 50% | 50% | 50% |
Vesting period | 3 years | 3 years | 3 years |
Based on TSR relative to performance of designated peer group | |||
Performance-based equity awards | |||
Vesting percentage allocation | 50% | 50% | 50% |
Vesting period | 3 years | 3 years | 3 years |
Redeemable Preferred Stock an_7
Redeemable Preferred Stock and Stockholders Equity - Preferred Stock (Details) $ / shares in Units, shares in Thousands | 3 Months Ended | |
Mar. 31, 2023 USD ($) $ / shares shares | Dec. 31, 2022 USD ($) $ / shares | |
Preferred stock | ||
Liquidation Preference | $ 25 | $ 25 |
Carrying Value | $ | $ 111,378,000 | $ 111,378,000 |
Series C Preferred Stock | ||
Preferred stock | ||
Shares Issued | shares | 335 | |
Shares outstanding | shares | 335 | |
Par Value per Share | $ 0.0001 | |
Liquidation Preference | $ 25 | |
Rate per Annum | 6.25% | |
Annual Dividend (per share) | $ 1.56 | |
Carrying Value | $ | $ 8,361,000 | |
Preferred stock conversion ratio | 1.3013 | |
Conversion price | $ 19.21 | |
Preferred stock principal amount used as basis for application of conversion ratio | $ | $ 25 | |
Dividends declared | $ | $ 100,000 | |
Series E Preferred Stock | ||
Preferred stock | ||
Shares Issued | shares | 4,600 | |
Shares outstanding | shares | 4,600 | |
Par Value per Share | $ 0.0001 | |
Liquidation Preference | $ 25 | |
Rate per Annum | 6.50% | |
Annual Dividend (per share) | $ 1.63 | |
Carrying Value | $ | $ 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_8
Redeemable Preferred Stock and Stockholders Equity - Equity ATM Program (Details) - USD ($) $ / shares in Units, $ in Thousands, shares in Millions | 3 Months Ended | 21 Months Ended | ||||
Jan. 14, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | Mar. 31, 2023 | Dec. 31, 2022 | Jul. 09, 2021 | |
Equity | ||||||
Share price | $ 15.30 | |||||
Equity issuances | $ 125 | $ 124,149 | ||||
Stock offering costs | $ 19 | 767 | ||||
Shares issued | 7 | |||||
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||
Proceeds from issuance of equity, net of issuance costs | $ 106,600 | $ 106 | $ 123,382 | |||
Equity ATM Program | ||||||
Equity | ||||||
Value of remaining shares available for sale under the Equity ATM Program | $ 78,400 | $ 78,400 | ||||
Common stock, issued | 0 | 1.1 | ||||
Stock offering costs | $ 300 | |||||
Common stock, par value | $ 0.0001 | |||||
Proceeds from issuance of equity, net of issuance costs | $ 17,200 | |||||
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 | $ 15.82 | $ 15.82 |
Earnings per Share of Common _3
Earnings per Share of Common Stock (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Continuing Operations | ||
Net income | $ 36,978 | $ 64,263 |
Less: Income (loss) attributable to non-controlling interest | 1,835 | 775 |
Less: Income attributable to participating shares | 2,371 | 2,412 |
Basic earnings | 32,772 | 61,076 |
Discontinued Operations | ||
Net income attributable to Ready Capital Corporation | 33,144 | 61,489 |
Diluted Earnings | ||
Net income | 36,978 | 64,263 |
Less: Income (loss) attributable to non-controlling interest | 1,835 | 775 |
Less: Income attributable to participating shares | 2,371 | 2,412 |
Add: Expenses attributable to dilutive instruments | 2,319 | 2,319 |
Diluted earnings | $ 35,091 | $ 63,395 |
Basic - Average shares outstanding | 110,672,939 | 87,707,281 |
Effect of dilutive securities - Unvested participating shares | 10,352,970 | 7,695,213 |
Diluted - Average shares outstanding | 121,025,909 | 95,402,494 |
Earnings Per Share Attributable to RC Common Stockholders: | ||
Basic | $ 0.30 | $ 0.70 |
Diluted | $ 0.29 | $ 0.66 |
Earnings per Common Share - Ope
Earnings per Common Share - Operating Partnership Units (Details) - Operating Partnership - Noncontrolling Interests - shares | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
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 | 1,593,983 | 1,593,983 |
Offsetting assets and liabili_3
Offsetting assets and liabilities - Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Effect of offsetting of the Company's recognized assets | ||
Gross Amounts of Recognized Assets | $ 47,877 | $ 55,265 |
Gross amounts offset in the Consolidated Balance Sheets | 34,104 | 42,302 |
Amounts presented in the Consolidated Balance Sheets | 13,773 | 12,963 |
Net Amount | 13,773 | 12,963 |
Interest rate lock commitments (IRLCs) | ||
Effect of offsetting of the Company's recognized assets | ||
Gross Amounts of Recognized Assets | 1,979 | 117 |
Amounts presented in the Consolidated Balance Sheets | 1,979 | 117 |
Net Amount | 1,979 | 117 |
FX forwards | ||
Effect of offsetting of the Company's recognized assets | ||
Gross Amounts of Recognized Assets | 1,040 | 1,123 |
Amounts presented in the Consolidated Balance Sheets | 1,040 | 1,123 |
Net Amount | 1,040 | 1,123 |
TBA agency securities | ||
Effect of offsetting of the Company's recognized assets | ||
Gross Amounts of Recognized Assets | 81 | 796 |
Gross amounts offset in the Consolidated Balance Sheets | 78 | 482 |
Amounts presented in the Consolidated Balance Sheets | 3 | 314 |
Net Amount | 3 | 314 |
Interest Rate Swap Agreement | ||
Effect of offsetting of the Company's recognized assets | ||
Gross Amounts of Recognized Assets | 44,777 | 53,229 |
Gross amounts offset in the Consolidated Balance Sheets | 34,026 | 41,820 |
Amounts presented in the Consolidated Balance Sheets | 10,751 | 11,409 |
Net Amount | $ 10,751 | $ 11,409 |
Offsetting assets and liabili_4
Offsetting assets and liabilities - Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Effect of offsetting recognized liabilities, Derivative | ||
Gross Amounts of Recognized Liabilities | $ 2,724 | $ 2,068 |
Effect of offsetting recognized liabilities, Total | ||
Gross Amounts of Recognized Liabilities, Total | 2,657,222 | 3,049,372 |
Gross Amounts Offset in the Consolidated Balance Sheets, Total | 85 | 482 |
Liabilities Presented in the Consolidated Balance Sheets, Total | 2,657,137 | 3,048,890 |
Financial Instruments, Total | 2,631,458 | 3,033,278 |
Net Amount, Total | 25,679 | 15,612 |
Interest Rate Swap Agreement | ||
Effect of offsetting recognized liabilities, Derivative | ||
Gross Amounts of Recognized Liabilities | 7 | |
Gross Amounts Offset in the Consolidated Balance Sheets, Derivative | 7 | |
TBA agency securities | ||
Effect of offsetting recognized liabilities, Derivative | ||
Gross Amounts of Recognized Liabilities | 1,019 | 749 |
Gross Amounts Offset in the Consolidated Balance Sheets, Derivative | 78 | 482 |
Liabilities Presented in the Consolidated Balance Sheets, Derivative | 941 | 267 |
Net Amount, Derivative | 941 | 267 |
FX forwards | ||
Effect of offsetting recognized liabilities, Derivative | ||
Gross Amounts of Recognized Liabilities | 1,698 | 1,319 |
Liabilities Presented in the Consolidated Balance Sheets, Derivative | 1,698 | 1,319 |
Cash Collateral Paid, Derivative | 1,319 | |
Net Amount, Derivative | 1,698 | |
Secured borrowings | ||
Effect of offsetting recognized liabilities, Borrowings | ||
Gross Amounts of Recognized Liabilities, Borrowings | 2,484,902 | 2,846,293 |
Liabilities Presented in the Consolidated Balance Sheets, Borrowings | 2,484,902 | 2,846,293 |
Financial Instruments, Borrowings | 2,484,902 | 2,846,293 |
Paycheck Protection Program Liquidity Facility | ||
Effect of offsetting recognized liabilities, Borrowings | ||
Gross Amounts of Recognized Liabilities, Borrowings | 169,596 | 201,011 |
Liabilities Presented in the Consolidated Balance Sheets, Borrowings | 169,596 | 201,011 |
Financial Instruments, Borrowings | 146,556 | 186,985 |
Net Amount, Borrowings | $ 23,040 | $ 14,026 |
Commitments, Contingencies an_3
Commitments, Contingencies and Indemnifications (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Originated Residential Agency loans | ||
Commitments, contingencies and indemnifications | ||
Commitments to originate residential agency loans | $ 185,165 | $ 112,319 |
Unfunded loan commitments | ||
Commitments, contingencies and indemnifications | ||
Loans, net | 819,819 | 881,519 |
Loans, held for sale at fair value | 16,666 | 20,546 |
Preferred equity investments | $ 853 | $ 1,147 |
Income Taxes (Details)
Income Taxes (Details) | 3 Months Ended |
Mar. 31, 2023 | |
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 |
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 | |
Mar. 31, 2023 USD ($) segment | Mar. 31, 2022 USD ($) | |
Segment reporting | ||
Number of reportable segments | segment | 3 | |
Interest income | $ 217,573 | $ 124,405 |
Interest expense | (160,394) | (61,017) |
Net interest income before provision for loan losses | 57,179 | 63,388 |
Recovery of (provision for) loan losses | 6,734 | (1,542) |
Net interest income after recovery of (provision for) loan losses | 63,913 | 61,846 |
Non-interest income | ||
Residential mortgage banking activities | 9,169 | 8,424 |
Net realized gain (loss) on financial instruments and real estate owned | 11,575 | 8,007 |
Net unrealized gain (loss) on financial instruments | (11,728) | 45,315 |
Servicing income, net | 14,003 | 10,528 |
Income on purchased future receivables, net | 540 | 2,469 |
Income (loss) from unconsolidated joint ventures | 656 | 6,563 |
Other income | 19,883 | 6,501 |
Total non-interest income | 44,098 | 87,807 |
Non-interest expense | ||
Employee compensation and benefits | (25,139) | (27,968) |
Allocated employee compensation and benefits from related party | (2,326) | (3,000) |
Variable expenses on residential mortgage banking activities | (5,485) | (979) |
Professional fees | (5,717) | (5,126) |
Management fees - related party | (5,081) | (3,196) |
Incentive fees - related party | (1,720) | |
Loan servicing expense | (9,963) | (8,920) |
Transaction related expenses | (893) | (5,699) |
Other operating expenses | (14,318) | (12,653) |
Total non-interest expense | (70,642) | (67,541) |
Income (loss) before provision for income taxes | 37,369 | 82,112 |
Total assets | 11,537,463 | 11,476,244 |
Operating Segments | SBC Lending and Acquisitions | ||
Segment reporting | ||
Interest income | 198,039 | 96,343 |
Interest expense | (149,494) | (53,093) |
Net interest income before provision for loan losses | 48,545 | 43,250 |
Recovery of (provision for) loan losses | 8,129 | (270) |
Net interest income after recovery of (provision for) loan losses | 56,674 | 42,980 |
Non-interest income | ||
Net realized gain (loss) on financial instruments and real estate owned | 4,825 | 882 |
Net unrealized gain (loss) on financial instruments | (6,111) | 12,429 |
Servicing income, net | 1,093 | 920 |
Income (loss) from unconsolidated joint ventures | 656 | 6,563 |
Other income | 9,093 | 3,014 |
Total non-interest income | 9,556 | 23,808 |
Non-interest expense | ||
Employee compensation and benefits | (6,206) | (10,160) |
Allocated employee compensation and benefits from related party | (232) | (300) |
Professional fees | (981) | (2,401) |
Loan servicing expense | (8,058) | (5,875) |
Other operating expenses | (6,733) | (5,376) |
Total non-interest expense | (22,210) | (24,112) |
Income (loss) before provision for income taxes | 44,020 | 42,676 |
Total assets | 10,184,788 | 9,520,677 |
Operating Segments | Small Business Lending | ||
Segment reporting | ||
Interest income | 17,929 | 26,237 |
Interest expense | (9,374) | (5,690) |
Net interest income before provision for loan losses | 8,555 | 20,547 |
Recovery of (provision for) loan losses | (1,395) | (1,272) |
Net interest income after recovery of (provision for) loan losses | 7,160 | 19,275 |
Non-interest income | ||
Net realized gain (loss) on financial instruments and real estate owned | 6,750 | 7,125 |
Net unrealized gain (loss) on financial instruments | 476 | 288 |
Servicing income, net | 3,549 | 1,493 |
Income on purchased future receivables, net | 540 | 2,469 |
Other income | 10,428 | 2,871 |
Total non-interest income | 21,743 | 14,246 |
Non-interest expense | ||
Employee compensation and benefits | (11,275) | (9,518) |
Professional fees | (1,625) | (1,468) |
Loan servicing expense | (97) | (502) |
Other operating expenses | (4,094) | (3,787) |
Total non-interest expense | (17,091) | (15,275) |
Income (loss) before provision for income taxes | 11,812 | 18,246 |
Total assets | 791,394 | 1,217,726 |
Operating Segments | Residential Mortgage Banking | ||
Segment reporting | ||
Interest income | 1,605 | 1,825 |
Interest expense | (1,526) | (1,958) |
Net interest income before provision for loan losses | 79 | (133) |
Net interest income after recovery of (provision for) loan losses | 79 | (133) |
Non-interest income | ||
Residential mortgage banking activities | 9,169 | 8,424 |
Net unrealized gain (loss) on financial instruments | (6,093) | 32,598 |
Servicing income, net | 9,361 | 8,115 |
Other income | 31 | 24 |
Total non-interest income | 12,468 | 49,161 |
Non-interest expense | ||
Employee compensation and benefits | (5,412) | (7,534) |
Variable expenses on residential mortgage banking activities | (5,485) | (979) |
Professional fees | (174) | (264) |
Loan servicing expense | (1,808) | (2,543) |
Other operating expenses | (1,709) | (2,024) |
Total non-interest expense | (14,588) | (13,344) |
Income (loss) before provision for income taxes | (2,041) | 35,684 |
Total assets | 402,562 | 493,671 |
Corporate | ||
Segment reporting | ||
Interest expense | (276) | |
Net interest income before provision for loan losses | (276) | |
Net interest income after recovery of (provision for) loan losses | (276) | |
Non-interest income | ||
Other income | 331 | 592 |
Total non-interest income | 331 | 592 |
Non-interest expense | ||
Employee compensation and benefits | (2,246) | (756) |
Allocated employee compensation and benefits from related party | (2,094) | (2,700) |
Professional fees | (2,937) | (993) |
Management fees - related party | (5,081) | (3,196) |
Incentive fees - related party | (1,720) | |
Transaction related expenses | (893) | (5,699) |
Other operating expenses | (1,782) | (1,466) |
Total non-interest expense | (16,753) | (14,810) |
Income (loss) before provision for income taxes | (16,422) | (14,494) |
Total assets | $ 158,719 | $ 244,170 |