Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2024 | Aug. 07, 2024 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Jun. 30, 2024 | |
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 | 168,214,839 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2024 | |
Document Fiscal Period Focus | Q2 | |
Entity Central Index Key | 0001527590 | |
Amendment Flag | false | |
Common Stock | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Common Stock, $0.0001 par value per share | |
Trading Symbol | RC | |
Security Exchange Name | NYSE | |
Preferred Stock, 6.25% Series C Cumulative Convertible, par value $0.0001 per share | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Preferred Stock, 6.25% Series C Cumulative Convertible, par value $0.0001 per share | |
Trading Symbol | RC PRC | |
Security Exchange Name | NYSE | |
Preferred Stock, 6.50% Series E Cumulative Redeemable, par value $0.0001 per share | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Preferred Stock, 6.50% Series E Cumulative Redeemable, par value $0.0001 per share | |
Trading Symbol | RC PRE | |
Security Exchange Name | NYSE | |
6.20% Senior Notes due 2026 | ||
Document Information [Line Items] | ||
Title of 12(b) Security | 6.20% Senior Notes due 2026 | |
Trading Symbol | RCB | |
Security Exchange Name | NYSE | |
5.75% Senior Notes Due 2026 | ||
Document Information [Line Items] | ||
Title of 12(b) Security | 5.75% Senior Notes due 2026 | |
Trading Symbol | RCC | |
Security Exchange Name | NYSE |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2024 | Dec. 31, 2023 |
Assets | ||
Cash and cash equivalents | $ 226,286 | |
Restricted cash | 29,971 | |
Loans, net (including $0 and $9,348 held at fair value) | 3,444,879 | $ 4,020,160 |
Loans, held for sale (including $89,380 and $81,599 held at fair value and net of valuation allowance of $217,719 and $0) | 532,511 | 81,599 |
Mortgage-backed securities | 30,174 | 27,436 |
Investment in unconsolidated joint ventures (including $6,974 and $7,360 held at fair value) | 134,602 | 133,321 |
Derivative instruments | 14,382 | 2,404 |
Servicing rights | 119,768 | 102,837 |
Real estate owned, held for sale | 187,883 | 252,949 |
Other assets | 379,413 | 300,175 |
Assets held for sale (refer to Note 9) | 423,894 | 454,596 |
Total Assets | 11,774,333 | 12,441,217 |
Liabilities | ||
Secured borrowings | 2,311,969 | 2,102,075 |
Senior secured notes, net | 417,040 | 345,127 |
Corporate debt, net | 767,271 | 764,908 |
Guaranteed loan financing | 782,345 | 844,540 |
Contingent consideration | 3,926 | 7,628 |
Derivative instruments | 2,638 | 212 |
Dividends payable | 53,119 | 54,289 |
Loan participations sold | 89,532 | 62,944 |
Accounts payable and other accrued liabilities | 204,766 | 207,481 |
Liabilities held for sale (refer to Note 9) | 332,265 | 333,157 |
Total Liabilities | 9,374,107 | 9,794,455 |
Preferred stock Series C liquidation preference, $25.00 per share (refer to Note 20) | 8,361 | 8,361 |
Commitments and contingencies (refer to Note 24) | ||
Stockholders' Equity | ||
Preferred stock Series E, liquidation preference $25.00 per share (refer to Note 20) | 111,378 | 111,378 |
Common stock, $0.0001 par value, 500,000,000 shares authorized, 168,167,272 and 172,276,105 shares issued and outstanding, respectively | 17 | 17 |
Additional paid-in capital | 2,287,684 | 2,321,989 |
Retained earnings (deficit) | (92,319) | 124,413 |
Accumulated other comprehensive loss | (13,880) | (17,860) |
Total Ready Capital Corporation equity | 2,292,880 | 2,539,937 |
Non-controlling interests | 98,985 | 98,464 |
Total Stockholders' Equity | 2,391,865 | 2,638,401 |
Total Liabilities, Redeemable Preferred Stock, and Stockholders' Equity | 11,774,333 | 12,441,217 |
Consolidated Excluding VIEs | ||
Assets | ||
Cash and cash equivalents | 226,286 | 138,532 |
Restricted cash | 29,971 | 30,063 |
Loans, net (including $0 and $9,348 held at fair value) | 3,444,879 | 4,020,160 |
Loans, held for sale (including $89,380 and $81,599 held at fair value and net of valuation allowance of $217,719 and $0) | 532,511 | 81,599 |
Other assets | 379,413 | 300,175 |
Liabilities | ||
Secured borrowings | 2,311,969 | 2,102,075 |
Due to third parties | 1,995 | 3,641 |
Accounts payable and other accrued liabilities | 204,766 | 207,481 |
Consolidated VIEs | ||
Assets | ||
Assets of consolidated VIEs (net of valuation allowance of $9,448 and $0) | 6,250,570 | 6,897,145 |
Liabilities | ||
Secured borrowings | $ 4,407,241 | $ 5,068,453 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2024 | Dec. 31, 2023 |
Parenthetical information | ||
Loans, net, fair value | $ 0 | $ 9,348 |
Loans, held for sale | 89,380 | 81,599 |
Loans, held for sale, valuation allowance | 217,719 | 0 |
Investment in unconsolidated joint ventures, held at fair value | 6,974 | 7,360 |
Assets of consolidated VIEs, valuation allowance | $ 9,448 | $ 0 |
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 | 168,167,272 | 172,276,105 |
Common stock, outstanding | 168,167,272 | 172,276,105 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Interest income | $ 234,119 | $ 231,004 | $ 466,473 | $ 446,972 |
Interest expense | (183,167) | (170,221) | (366,972) | (329,089) |
Net interest income before recovery of (provision for) loan losses | 50,952 | 60,783 | 99,501 | 117,883 |
Recovery of (provision for) loan losses | 18,871 | (19,427) | 45,415 | (12,693) |
Net interest income after recovery of (provision for) loan losses | 69,823 | 41,356 | 144,916 | 105,190 |
Non-interest income | ||||
Net realized gain (loss) on financial instruments and real estate owned | 7,250 | 23,878 | 26,118 | 35,453 |
Net unrealized gain (loss) on financial instruments | (1,357) | (1,411) | 3,275 | (7,046) |
Valuation allowance, loans held for sale | (80,987) | (227,167) | ||
Servicing income, net of amortization and impairment of $4,678 and $8,375 for the three and six months ended June 30, 2024, and $2,412 and $4,171 for the three and six months ended June 30, 2023, respectively | 3,271 | 5,039 | 7,029 | 9,681 |
Income on unconsolidated joint ventures | 1,139 | 33 | 1,607 | 689 |
Gain (loss) on bargain purchase | (18,306) | 229,894 | (18,306) | 229,894 |
Other income | 6,597 | 18,632 | 22,423 | 39,024 |
Total non-interest income (expense) | (82,393) | 276,065 | (185,021) | 307,695 |
Non-interest expense | ||||
Professional fees | (6,033) | (5,533) | (13,098) | (11,076) |
Loan servicing expense | (11,012) | (10,894) | (23,806) | (19,049) |
Transaction related expenses | (1,592) | (13,966) | (2,242) | (14,859) |
Other operating expenses | (21,802) | (9,557) | (51,989) | (22,166) |
Total non-interest expense | (67,436) | (70,695) | (145,694) | (126,749) |
Income (loss) from continuing operations before benefit (provision) for income taxes | (80,006) | 246,726 | (185,799) | 286,136 |
Income tax benefit (provision) | 48,579 | (2,194) | 78,790 | (3,095) |
Net income (loss) from continuing operations | (31,427) | 244,532 | (107,009) | 283,041 |
Discontinued operations (refer to Note 9) | ||||
Income (loss) from discontinued operations before benefit (provision) for income taxes | (3,699) | 11,788 | (1,812) | 9,747 |
Income tax benefit (provision) | 925 | (2,947) | 453 | (2,437) |
Net income (loss) from discontinued operations | (2,774) | 8,841 | (1,359) | 7,310 |
Net income (loss) | (34,201) | 253,373 | (108,368) | 290,351 |
Less: Dividends on preferred stock | 1,999 | 2,000 | 3,998 | 3,999 |
Less: Net income attributable to non-controlling interest | 1,820 | 4,490 | 1,937 | 6,325 |
Net income (loss) attributable to Ready Capital Corporation | $ (38,020) | $ 246,883 | $ (114,303) | $ 280,027 |
Earnings per basic common share | ||||
Earnings per common share from continuing operations - basic | $ (0.21) | $ 1.80 | $ (0.67) | $ 2.24 |
Earnings per common share from discontinued operations - basic | (0.02) | 0.07 | (0.01) | 0.06 |
Total earnings per common share - basic | (0.23) | 1.87 | (0.68) | 2.30 |
Earnings per diluted common share | ||||
Earnings per common share from continuing operations - diluted | (0.21) | 1.70 | (0.67) | 2.11 |
Earnings per common share from discontinued operations - diluted | (0.02) | 0.06 | (0.01) | 0.06 |
Total earnings per common share - diluted | $ (0.23) | $ 1.76 | $ (0.68) | $ 2.17 |
Weighted-average shares outstanding | ||||
Basic | 168,653,741 | 131,651,125 | 170,343,303 | 121,219,982 |
Diluted | 169,863,975 | 141,583,837 | 171,513,556 | 131,096,368 |
Dividends declared per share of common stock | $ 0.30 | $ 0.40 | $ 0.60 | $ 0.80 |
Nonrelated party | ||||
Non-interest expense | ||||
Employee compensation and benefits | $ (17,799) | $ (22,414) | $ (36,213) | $ (42,141) |
Related Party | ||||
Non-interest expense | ||||
Employee compensation and benefits | (3,000) | (2,500) | (5,500) | (4,826) |
Management fees - related party | $ (6,198) | (5,760) | $ (12,846) | (10,841) |
Incentive fees - related party | $ (71) | $ (1,791) |
CONSOLIDATED STATEMENTS OF OP_2
CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
Servicing income, amortization and impairment | $ 4,678 | $ 2,412 | $ 8,375 | $ 4,171 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | ||||
Net income (loss) | $ (34,201) | $ 253,373 | $ (108,368) | $ 290,351 |
Other comprehensive income (loss) - net change by component | ||||
Derivative financial instruments (cash flow hedges) | (1,440) | 2,493 | 4,805 | (1,312) |
Foreign currency translation | (116) | 674 | (723) | 1,452 |
Other comprehensive income (loss) | (1,556) | 3,167 | 4,082 | 140 |
Comprehensive income (loss) | (35,757) | 256,540 | (104,286) | 290,491 |
Less: Comprehensive income attributable to non-controlling interests | 1,806 | 4,528 | 1,964 | 6,322 |
Comprehensive income (loss) attributable to Ready Capital Corporation | $ (37,563) | $ 252,012 | $ (106,250) | $ 284,169 |
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, 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 | (97,882) | (97,882) | (97,882) | |||||
Dividend declared on OP units | (1,255) | (1,255) | ||||||
Dividend declared on Series C preferred shares | (262) | (262) | (262) | |||||
Dividend declared on Series D preferred shares | (3,737) | (3,737) | (3,737) | |||||
Shares issued pursuant to merger transactions | 637,229 | $ 6 | 637,223 | 637,229 | ||||
Shares issued pursuant merger to merger transactions (shares) | 62,229,429 | |||||||
Equity issuances | 125 | 125 | 125 | |||||
Offering costs | (127) | (127) | (2) | (129) | ||||
Contributions (distributions), net | (100) | (100) | ||||||
Equity component of 2017 convertible note issuance | (191) | (191) | (3) | (194) | ||||
Stock-based compensation | 8,636 | 8,636 | 8,636 | |||||
Stock-based compensation (shares) | 689,787 | |||||||
Conversion of OP units into common stock | 567 | 567 | (567) | |||||
Conversion of OP units into common stock (shares) | 52,742 | |||||||
Share repurchases | (20,094) | (20,094) | (20,094) | |||||
Share repurchases (shares) | (1,843,675) | |||||||
Reallocation of noncontrolling interest | 3,581 | 3,636 | (55) | (3,581) | ||||
Net income (loss) | 284,026 | 284,026 | 6,325 | 290,351 | ||||
Other comprehensive income | 143 | 143 | (3) | 140 | ||||
Balance at end of period at Jun. 30, 2023 | 2,603,102 | $ 111,378 | $ 17 | 2,313,849 | 187,139 | (9,281) | 99,960 | 2,703,062 |
Balance at end of period (in shares) at Jun. 30, 2023 | 4,600,000 | 171,651,924 | ||||||
Balance at beginning 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 beginning of period (in shares) at Mar. 31, 2023 | 4,600,000 | 110,745,658 | ||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Dividend declared on common stock | (53,212) | (53,212) | (53,212) | |||||
Dividend declared on OP units | (617) | (617) | ||||||
Dividend declared on Series C preferred shares | (131) | (131) | (131) | |||||
Dividend declared on Series E preferred shares | (1,869) | (1,869) | (1,869) | |||||
Shares issued pursuant to merger transactions | 637,229 | $ 6 | 637,223 | 637,229 | ||||
Shares issued pursuant merger to merger transactions (shares) | 62,229,429 | |||||||
Offering costs | (108) | (108) | (2) | (110) | ||||
Equity component of 2017 convertible note issuance | (76) | (76) | (1) | (77) | ||||
Stock-based compensation | 3,689 | 3,689 | 3,689 | |||||
Stock-based compensation (shares) | 356,317 | |||||||
Conversion of OP units into common stock | 567 | 567 | (567) | |||||
Conversion of OP units into common stock (shares) | 52,742 | |||||||
Share repurchases | (18,712) | (18,712) | (18,712) | |||||
Share repurchases (shares) | (1,732,222) | |||||||
Reallocation of noncontrolling interest | 3,578 | 3,635 | (57) | (3,578) | ||||
Net income (loss) | 248,883 | 248,883 | 4,490 | 253,373 | ||||
Other comprehensive income | 3,129 | 3,129 | 38 | 3,167 | ||||
Balance at end of period at Jun. 30, 2023 | 2,603,102 | $ 111,378 | $ 17 | 2,313,849 | 187,139 | (9,281) | 99,960 | 2,703,062 |
Balance at end of period (in shares) at Jun. 30, 2023 | 4,600,000 | 171,651,924 | ||||||
Balance at beginning of period at Dec. 31, 2023 | 2,539,937 | $ 111,378 | $ 17 | 2,321,989 | 124,413 | (17,860) | 98,464 | 2,638,401 |
Balance at beginning of period (in shares) at Dec. 31, 2023 | 4,600,000 | 172,276,105 | ||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Dividend declared on common stock | (102,429) | (102,429) | (102,429) | |||||
Dividend declared on OP units | (740) | (740) | ||||||
Dividend declared on Series C preferred shares | (262) | (262) | (262) | |||||
Dividend declared on Series E preferred shares | (3,736) | (3,736) | (3,736) | |||||
Contributions (distributions), net | (18) | (18) | 600 | 582 | ||||
Stockholders' Equity, Contributions (Distributions), Net, Shares | (1,981) | |||||||
Stock-based compensation | 4,606 | 4,606 | 4,606 | |||||
Stock-based compensation (shares) | 386,072 | |||||||
Conversion of OP units into common stock | 983 | 983 | (983) | |||||
Conversion of OP units into common stock (shares) | 105,000 | |||||||
Share repurchases | (40,271) | (40,271) | (40,271) | |||||
Share repurchases (shares) | (4,597,924) | |||||||
Reallocation of noncontrolling interest | 320 | 395 | (75) | (320) | ||||
Net income (loss) | (110,305) | (110,305) | 1,937 | (108,368) | ||||
Other comprehensive income | 4,055 | 4,055 | 27 | 4,082 | ||||
Balance at end of period at Jun. 30, 2024 | 2,292,880 | $ 111,378 | $ 17 | 2,287,684 | (92,319) | (13,880) | 98,985 | 2,391,865 |
Balance at end of period (in shares) at Jun. 30, 2024 | 4,600,000 | 168,167,272 | ||||||
Balance at beginning of period at Mar. 31, 2024 | 2,402,817 | $ 111,378 | $ 17 | 2,307,303 | (3,546) | (12,335) | 97,065 | 2,499,882 |
Balance at beginning of period (in shares) at Mar. 31, 2024 | 4,600,000 | 170,445,333 | ||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Dividend declared on common stock | (50,753) | (50,753) | (50,753) | |||||
Dividend declared on OP units | (368) | (368) | ||||||
Dividend declared on Series C preferred shares | (131) | (131) | (131) | |||||
Dividend declared on Series E preferred shares | (1,868) | (1,868) | (1,868) | |||||
Contributions (distributions), net | 600 | 600 | ||||||
Stock-based compensation | 496 | 496 | 496 | |||||
Stock-based compensation (shares) | 60,154 | |||||||
Conversion of OP units into common stock | 126 | 126 | (126) | |||||
Conversion of OP units into common stock (shares) | 15,000 | |||||||
Share repurchases | (20,236) | (20,236) | (20,236) | |||||
Share repurchases (shares) | (2,353,215) | |||||||
Reallocation of noncontrolling interest | (8) | (5) | (3) | 8 | ||||
Net income (loss) | (36,021) | (36,021) | 1,820 | (34,201) | ||||
Other comprehensive income | (1,542) | (1,542) | (14) | (1,556) | ||||
Balance at end of period at Jun. 30, 2024 | $ 2,292,880 | $ 111,378 | $ 17 | $ 2,287,684 | $ (92,319) | $ (13,880) | $ 98,985 | $ 2,391,865 |
Balance at end of period (in shares) at Jun. 30, 2024 | 4,600,000 | 168,167,272 |
CONSOLIDATED STATEMENTS OF CH_2
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Parenthetical) - $ / shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Dividends declared per share of common stock | $ 0.30 | $ 0.40 | $ 0.60 | $ 0.80 |
Series C Preferred Stock | ||||
Dividends declared per share of preferred stock | 0.390625 | 0.390625 | 0.78125 | 0.78125 |
Series E Preferred Stock | ||||
Dividends declared per share of preferred stock | $ 0.406250 | $ 0.406250 | $ 0.81250 | $ 0.81250 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS $ in Thousands | 6 Months Ended | |
Jun. 30, 2024 USD ($) | Jun. 30, 2023 USD ($) | |
Cash Flows From Operating Activities: | ||
Net income (loss) | $ (108,368) | $ 290,351 |
Net income (loss) from discontinued operations, net of tax | (1,359) | 7,310 |
Net income (loss) from continuing operations | (107,009) | 283,041 |
Adjustments to reconcile net income to net cash provided by (used for) operating activities: | ||
Amortization of premiums, discounts, and debt issuance costs, net | 23,548 | 17,982 |
Stock-based compensation | 3,768 | 3,915 |
Provision for (recovery of) loan losses | (45,415) | 12,693 |
Impairment loss on real estate owned, held for sale | 26,102 | 3,418 |
Repair and denial reserve (recovery) | 606 | (944) |
Paid-in-kind accrued interest | (28,547) | |
Provision for loan losses on purchased future receivables | 2,118 | 4,232 |
Loans, held for sale, net | 48,911 | 32,585 |
Valuation allowance, loans held for sale | 227,167 | |
Net income (loss) of unconsolidated joint ventures, net of distributions | (808) | 472 |
Realized (gains) losses, net | (25,491) | (35,928) |
Unrealized (gains) losses, net | (3,318) | 5,599 |
Bargain purchase gain (loss) | 18,306 | (229,894) |
Changes in operating assets and liabilities: | ||
Derivative instruments | 4,399 | 13,665 |
Assets of consolidated VIEs (excluding loans, net), accrued interest and due from servicers | (23,249) | (13,142) |
Receivable from third parties | 3,624 | (7,878) |
Other assets | (70,970) | (15,601) |
Accounts payable and other accrued liabilities | (3,681) | (25,339) |
Net cash provided by operating activities from continuing operations | 50,061 | 48,876 |
Net cash used for operating activities from discontinued operations | (25,554) | (11,637) |
Net cash provided by operating activities | 24,507 | 37,239 |
Cash Flows From Investing Activities: | ||
Origination of loans | (505,224) | (518,209) |
Proceeds from disposition and principal payment of loans | 1,044,121 | 793,937 |
Funding of real estate, held for sale | (981) | (3,968) |
Proceeds from sale of real estate, held for sale | 34,684 | 34,782 |
Investment in unconsolidated joint ventures | (2,245) | (9,387) |
Distributions in excess of cumulative earnings from unconsolidated joint ventures | 1,772 | 5,052 |
Proceeds from liabilities under participation agreements | 25,697 | |
Payment of liabilities under participation agreements | (1,474) | (6,242) |
Net cash provided by (used for) business acquisitions | (32,063) | 38,710 |
Net cash provided by investing activities from continuing operations | 564,287 | 334,675 |
Net cash provided by (used for) investing activities from discontinued operations | 60,709 | (1,056) |
Net cash provided by investing activities | 624,996 | 333,619 |
Cash Flows From Financing Activities: | ||
Proceeds from secured borrowings | 1,620,500 | 3,360,360 |
Repayment of secured borrowings | (1,409,193) | (3,860,660) |
Repayment of the Paycheck Protection Program Liquidity Facility borrowings | (11,206) | (90,173) |
Proceeds from issuance of securitized debt obligations of consolidated VIEs | 988,837 | |
Repayment of securitized debt obligations of consolidated VIEs | (681,336) | (500,261) |
Proceeds from senior secured note | 72,118 | |
Repayment of guaranteed loan financing | (62,195) | (49,120) |
Payment of deferred financing costs | (7,047) | (21,127) |
Payment of contingent consideration | (9,000) | |
Proceeds from issuance of equity, net of issuance costs | 108 | |
Common stock repurchased | (39,190) | (18,102) |
Settlement of share-based awards in satisfaction of withholding tax requirements | (1,081) | (2,104) |
Dividend payments | (107,167) | (123,932) |
Distributions, net | (18) | (100) |
Net cash used for financing activities from continuing operations | (625,815) | (325,274) |
Net cash provided by (used for) financing activities from discontinued operations | (1,059) | 46,338 |
Net cash used for financing activities | (626,874) | (278,936) |
Net increase in cash, cash equivalents, and restricted cash including cash classified within assets held for sale | 22,629 | 91,922 |
Less: Net increase in cash and cash equivalents within assets held for sale | 6,096 | 11,785 |
Net increase in cash, cash equivalents, and restricted cash | 16,533 | 80,137 |
Cash, cash equivalents, and restricted cash beginning balance | 262,506 | 273,604 |
Cash, cash equivalents, and restricted cash ending balance | 279,039 | 353,741 |
Supplemental disclosures: | ||
Cash paid for interest | 355,012 | 311,667 |
Cash paid (received) for income taxes | (11,940) | 648 |
Non-cash investing activities | ||
Loans transferred from loans, net to loans, held for sale | 719,623 | 1,635 |
Loans transferred to real estate owned, held for sale | 18,711 | 24,388 |
Contingent consideration in connection with acquisitions | 3,926 | |
Non-cash financing activities | ||
Shares and OP units issued in connection with merger transactions | 637,229 | |
Conversion of OP units to common stock | $ 983 | $ 567 |
CONSOLIDATED STATEMENTS OF CA_2
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2024 | Jun. 30, 2023 |
Cash, cash equivalents, and restricted cash reconciliation | ||
Cash and cash equivalents | $ 226,286 | $ 197,651 |
Restricted cash | 29,971 | 29,179 |
Cash, cash equivalents, and restricted cash in assets of consolidated VIEs | 22,782 | 126,911 |
Cash, cash equivalents, and restricted cash ending balance | $ 279,039 | $ 353,741 |
Organization
Organization | 6 Months Ended |
Jun. 30, 2024 | |
Organization | |
Organization | 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 lower-to-middle-market commercial real estate (“LMM”) loans, Small Business Administration (“SBA”) loans, construction loans, and to a lesser extent, mortgage-backed securities (“MBS”) collateralized primarily by LMM loans, or other real estate-related investments. LMM loans represent a special category of commercial loans, sharing both commercial and residential loan characteristics. LMM loans are generally secured by first mortgages on commercial properties, but because LMM 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 June 30, 2024 and December 31, 2023, the Company owned approximately 99.3% and 99.2% of the operating partnership, respectively. The Company, as sole general partner of the operating partnership, has responsibility and discretion in the management and control of the operating partnership, and the limited partners of the operating partnership, in such capacity, have no authority to transact business for, or participate in the management activities of the operating partnership. Therefore, the Company consolidates the operating partnership. Acquisitions Madison One. Broadmark. 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) was automatically cancelled and converted into the right to receive from the Company 0.47233 (the “Exchange Ratio”) shares of its common stock, par value $0.0001 (“common stock”). No fractional shares of common stock were issued in the Broadmark Merger, and the value of any fractional interests to which a former holder of Broadmark Common Stock was otherwise entitled was paid in cash. In addition, RCC Merger Sub assumed Broadmark’s outstanding senior unsecured notes. 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”), as of the Effective Time, was automatically 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 (rounded to the nearest whole share). Each award of restricted stock units that was not a Broadmark Performance RSU Award granted pursuant to the Broadmark Equity Plan (each a “Broadmark RSU Award”) was 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”) had the right to 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 was outstanding as of the Effective Time was assumed by the Company and entitles each holder thereof to receive, upon exercise of such assumed 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. The per share price under each Broadmark Warrant was adjusted by dividing the per share purchase price under such Broadmark Warrant as of immediately prior to the Effective Time by the Exchange Ratio and rounding down to the nearest cent. As a result of the Broadmark Merger, the number of directors on the Company’s board of directors (the “Board”) increased by three members, from nine to twelve, with the three additional directors each having served on the board of directors of Broadmark immediately prior to the Effective Time. The Broadmark Merger further diversified our business by expanding our residential and commercial construction lending platforms. Refer to Note 5 for assets acquired and liabilities assumed in the Broadmark Merger. REIT Status The Company qualifies as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), commencing with its first taxable year ended December 31, 2011. To maintain its tax status as a REIT, the Company distributes dividends equal to at least 90% of its taxable income in the form of distributions to shareholders. |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2024 | |
Basis of Presentation | |
Basis of Presentation | Note 2. Basis of Presentation The unaudited interim consolidated financial statements herein, referred to as the “consolidated financial statements”, as of June 30, 2024 and December 31, 2023 and for the three and six months ended June 30, 2024 and 2023, 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, 2023, as filed with the SEC. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2024 | |
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 Current Expected Credit Loss (“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 to be “collateral-dependent” loans if they 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. 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. Loan modifications made to borrowers experiencing financial difficulty. Loans, held for sale Loans are classified as held for sale if there is an intent to sell in the near-term. These loans are recorded at the lower of amortized cost or fair value, unless the fair value option has been elected at the time of origination or acquisition. If the loan’s fair value is determined to be less than its amortized cost, a non-recurring fair value adjustment may be recorded through a valuation allowance. For loans originated through the LMM Commercial Real Estate and Small Business Lending segments, for which the fair value option has been elected, changes in fair value are recurring and are reported as net unrealized gain (loss) on financial instruments in the consolidated statements of operations. Loans, held for sale for which the fair value option has been elected are predominantly classified as level 2 in the fair value hierarchy. For originated SBA loans, the guaranteed portion is held at fair value. Interest is recognized as interest income in the consolidated statements of operations when earned and deemed collectible. Paycheck Protection Program loans Paycheck Protection Program (“PPP”) loans were originated in response to the COVID-19 pandemic. 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 operations 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 operations. 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 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 operations. Mortgage-backed securities are classified as level 2 in the fair value hierarchy. Derivative instruments Subject to maintaining qualification as a REIT for U.S. federal income tax purposes, the Company utilizes derivative financial instruments, comprised of interest rate swaps and FX forwards as part of its risk management strategy. The Company accounts for derivative instruments under ASC 815, Derivatives and Hedging Interest rate swap agreements. FX forwards. 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 operations 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. 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 (losses) related to servicing rights retained is included in net realized gain (loss) in the consolidated statements of operations. Servicing rights are accounted for under ASC 860, Transfers and Servicing Servicing rights are initially recorded at fair value and subsequently carried at amortized cost. Servicing rights are amortized in proportion to and over the expected service period, or term of the loans, and are evaluated for potential impairment quarterly. 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 the consolidated statements of operations 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. 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 operations. 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 CECL method the Company utilizes is an aging schedule where estimating expected life-time credit losses is determined on the basis of how long a receivable has been outstanding. Where there is doubt regarding the ultimate collectability, the allowance for credit losses increases through provisions recorded in the consolidated statements of operations and reduced by charge-offs, net of recoveries. Purchased future receivables that have been delinquent for 90 days or more are considered uncollectible and subsequently charged off. While the Company has a formal methodology to determine the adequate and appropriate level of the allowance for credit losses, estimates involve judgment and assumptions as to various factors, including current economic conditions and inherent risk in the portfolio. 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. 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 second quarter of 2024, 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 LMM Commercial Real Estate segment are performed primarily by third-party servicers. SBA loans originated and held by the Company are 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 30 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 Liquidity Facility (“PPPLF”) is a government loan facility created to enable the distribution of funds for PPP whereby the Company received advances from the Federal Reserve through the PPPLF. The Company accounts for borrowings under the PPPLF under ASC 470. Interest accrued in connection with PPPLF is recorded as interest expense in the consolidated statements of operations. Securitized debt obligations of consolidated VIEs, net The Company has engaged in several securitization transactions accounted 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 operations. Senior secured notes, net The Company accounts for secured debt offerings, net of issuance costs, under ASC 470 . Corporate debt, net The Company accounts for corporate debt offerings, net of issuance costs, under ASC 470. Interest accrued in connection with corporate debt is recorded as interest expense in the consolidated statements of operations. Guaranteed loan financing Certain partial loan sales do not meet the definition of a “participating interest” under ASC 860 and therefore, do not qualify as a sale. 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 operations. 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 operations. 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 with which they are associated. 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 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 are presented on the consolidated balance sheets and the consolidated statements of operations and represent direct investment in the operating partnership by third parties, including operating partnership units issued to satisfy a portion of the purchase price in connection with a series of mergers (collectively, the “Mosaic Mergers”), pursuant to which the company acquired a group of privately held, real estate structured finance opportunities funds, with a focus on construction lending (collectively, the “Mosaic Funds”), managed by MREC Management, LLC. 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 ASC 825 , Financial Instruments 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 originated by the Company were made due to the short-term nature of these instruments. The Company additionally elected the fair value option for certain investments in unconsolidated joint ventures due to their short-term tenor. Earnings per share Basic EPS 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 preferred stock and contingent equity rights (“CERs”) under the if-converted method and warrants under the treasury stock 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 and preferred stock 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 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 expen |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 6 Months Ended |
Jun. 30, 2024 | |
Recent Accounting Pronouncements | |
Recent Accounting Pronouncements | Note 4. Recent Accounting Pronouncements ASU 2024-01, Compensation – Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards Issued March 2024 This ASU clarifies how to determine whether profits interest and similar awards should be accounted for as share-based payment arrangements. The ASU is effective in reporting periods beginning after December 15, 2024, including interim periods within the fiscal year, on a prospective or retrospective basis. Early adoption is permitted. The Company is currently assessing the impact upon adoption of this standard on the consolidated financial statements. ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures Issued December 2023 This ASU improves income tax disclosure requirements, primarily through standardization of rate reconciliation categories and disaggregation of income taxes paid by jurisdiction. The ASU is effective in reporting periods beginning after December 15, 2024 on a prospective or retrospective basis. Early adoption is permitted. The Company is currently assessing the impact upon adoption of this standard on the consolidated financial statements. ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures Issued November 2023 This ASU improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”). The ASU is effective in reporting periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, on a retrospective basis. Early adoption is permitted. The Company is currently assessing the impact upon adoption of this standard on the consolidated financial statements. ASU 2023-05, Business Combinations- Joint Venture Formations (Topic 805): Recognition and Initial Measurement Issued August 2023 This ASU applies to the formation of a “joint venture” or a “corporate joint venture” and requires a joint venture to initially measure all contributions received upon its formation at fair value and is applicable to joint venture entities with a formation date on or after January 1, 2025 on a prospective basis. The Company is currently assessing the impact of the adoption of this standard on the consolidated financial statements. |
Business Combinations
Business Combinations | 6 Months Ended |
Jun. 30, 2024 | |
Business Combinations | |
Business Combinations | Note 5. Business Combinations Madison One Acquisition On June 5, 2024 the Company acquired Madison One, a lending originator and servicer in the government guaranteed loan industry focusing on USDA and SBA guaranteed loan products. Refer to Note 1 for more information about the Madison One Acquisition. The purchase price 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 Madison One Acquisition. (in thousands) June 5, 2024 Assets Cash and cash equivalents $ 83 Restricted cash 721 Servicing rights 16,304 Other assets: Intangible assets 10,400 Other 303 Total assets acquired $ 27,811 Liabilities Accounts payable and other accrued liabilities 978 Total liabilities assumed $ 978 Net assets acquired $ 26,833 Non-controlling interests (600) Net assets acquired, net of non-controlling interests $ 26,233 The table below illustrates the aggregate consideration transferred, net assets acquired, and the related goodwill. (in thousands) June 5, 2024 Fair value of net assets acquired $ 26,233 Cash paid 32,868 Contingent consideration 3,926 Total consideration transferred $ 36,794 Goodwill $ 10,561 Broadmark Merger On May 31, 2023, the Company completed a merger with Broadmark, a specialty real estate finance company that specialized in originating and servicing residential and commercial construction loans. Refer to Note 1 for more information about the Broadmark Merger. The purchase price 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 Broadmark Merger. (in thousands) Preliminary Purchase Price Allocation Measurement Period Adjustments Updated Purchase Price Allocation Assets Cash and cash equivalents $ 38,710 $ — $ 38,710 Loans, net 772,954 (8,587) 764,367 Real estate owned, held for sale 158,911 (23,671) 135,240 Other assets 17,107 (7,151) 9,956 Total assets acquired $ 987,682 $ (39,409) $ 948,273 Liabilities Corporate debt, net 98,028 — 98,028 Accounts payable and other accrued liabilities 22,531 819 23,350 Total liabilities assumed $ 120,559 $ 819 $ 121,378 Net assets acquired $ 867,123 $ (40,228) $ 826,895 In a business combination, the initial allocation of the purchase price is considered preliminary and therefore, is subject to change until the end of the measurement period. The final determination occurred within one year of the merger date. Because the measurement period for the Broadmark Merger remained open until May 31, 2024, certain fair value estimates changed once all information necessary to make a final fair value assessment was received. The amounts presented in the table above pertained to the preliminary purchase price allocation reported at the time of the Broadmark Merger based on information that was available to management at the time the consolidated financial statements were prepared. The preliminary purchase price allocation changed as the Company completed its analysis of the fair value of the assets acquired and liabilities assumed, which impacts the consolidated financial statements. 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 and the total bargain purchase gain related to this transaction by $40.2 million. The table below illustrates the aggregate consideration transferred, net assets acquired, and the related bargain purchase gain. (in thousands) Preliminary Purchase Price Allocation Measurement Period Adjustments Updated Purchase Price Allocation Fair value of net assets acquired $ 867,123 $ (40,228) $ 826,895 Consideration transferred based on the value of common stock issued 637,229 — 637,229 Bargain purchase gain $ 229,894 $ (40,228) $ 189,666 In the table above, the bargain purchase gain represents the fair value of the assets acquired and liabilities assumed in the Broadmark Merger which exceeds the fair value of the 62.2 million shares of common stock issued at $10.24 per share at the Effective Time. Gain on bargain purchase is recognized in the consolidated statements of operations. The following pro-forma income and earnings (unaudited) of the combined company are presented as if the Broadmark Merger had occurred on January 1, 2024 and January 1, 2023. Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2024 2023 2024 2023 Selected Financial Data Interest income $ 234,119 $ 246,245 $ 466,473 $ 486,050 Interest expense (183,167) (172,876) (366,972) (333,860) Recovery of (provision for) loan losses 18,871 (22,360) 45,415 (17,327) Non-interest income (82,393) 276,813 (185,021) 309,307 Non-interest expense (66,239) (65,526) (144,101) (132,242) Income (loss) before provision for income taxes $ (78,809) $ 262,296 $ (184,206) $ 311,928 Income tax benefit (expense) 48,579 (5,141) 78,790 (5,532) Net income (loss) $ (30,230) $ 257,155 $ (105,416) $ 306,396 Non-recurring pro-forma transaction costs directly attributable to the Broadmark Merger were $1.2 million for both the three months ended June 30, 2024 and 2023 and $1.6 million for both the six months ended June 30, 2024 and 2023, 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 Broadmark Merger. |
Loans and Allowance for Credit
Loans and Allowance for Credit Losses | 6 Months Ended |
Jun. 30, 2024 | |
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, (ii) loans held at fair value under the fair value option, (iii) loans held for sale that are accounted for at the lower of cost or fair value net of valuation allowance and (iv) loans held for sale at fair value under the fair value option. The classification for a loan is based on product type and management’s strategy for the loan. Loan portfolio The table below summarizes the classification, unpaid principal balance (“UPB”), and carrying value of loans held by the Company including loans of consolidated VIEs. June 30, 2024 December 31, 2023 (in thousands) Carrying Value UPB Carrying Value UPB Loans Bridge $ 1,267,122 $ 1,270,125 $ 1,444,770 $ 1,448,281 Fixed rate 186,857 184,707 247,476 241,674 Construction 841,695 842,854 1,207,783 1,212,526 Freddie Mac — — 9,500 9,719 SBA - 7(a) 1,020,826 1,028,043 995,974 1,003,323 Other 162,155 164,043 196,087 198,499 Total Loans, before allowance for loan losses $ 3,478,655 $ 3,489,772 $ 4,101,590 $ 4,114,022 Allowance for loan losses $ (33,776) $ — $ (81,430) $ — Total Loans, net $ 3,444,879 $ 3,489,772 $ 4,020,160 $ 4,114,022 Loans in consolidated VIEs Bridge 4,804,452 4,816,128 5,370,251 5,389,535 Fixed rate 773,230 772,576 790,068 790,967 SBA - 7(a) 201,343 214,415 213,892 227,636 Other 233,440 234,224 257,289 258,029 Total Loans, in consolidated VIEs, before allowance for loan losses $ 6,012,465 $ 6,037,343 $ 6,631,500 $ 6,666,167 Allowance for loan losses on loans in consolidated VIEs $ (11,056) $ — $ (20,175) $ — Total Loans, net, in consolidated VIEs $ 6,001,409 $ 6,037,343 $ 6,611,325 $ 6,666,167 Loans, held for sale Bridge 251,836 251,375 — — Fixed rate 38,051 39,826 — — Construction 356,753 359,208 — — Freddie Mac 12,046 12,266 20,955 20,729 SBA - 7(a) 71,281 65,842 59,421 55,769 Other 20,263 20,021 1,223 1,297 Total Loans, held for sale, before valuation allowance $ 750,230 $ 748,538 $ 81,599 $ 77,795 Valuation allowance $ (217,719) $ — $ — $ — Total Loans, held for sale $ 532,511 $ 748,538 $ 81,599 $ 77,795 Loans, held for sale in consolidated VIEs Bridge $ 19,173 $ 19,173 $ — $ — Valuation allowance on loans, held for sale in consolidated VIEs $ (9,448) $ — $ — $ — Total Loans, held for sale in consolidated VIEs $ 9,725 $ 19,173 $ — $ — Total $ 9,988,524 $ 10,294,826 $ 10,713,084 $ 10,857,984 In the table above, loans with the “Other” classification are generally LMM acquired loans that have nonconforming characteristics for the Fixed rate, Bridge, Construction, or Freddie Mac classifications due to loan size, rate type, collateral, or borrower criteria. 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. Total Loans, net includes Loans, net in consolidated VIEs and a specific allowance for loan losses of $8.2 million, including $1.9 million of PCD loan reserves as of June 30, 2024, and a specific allowance for loan losses of $57.1 million, including $21.4 million of PCD loan reserves, as of December 31, 2023. The tables below summarize the classification, UPB, carrying value and gross write-offs of loans by year of origination. Carrying Value by Year of Origination (in thousands) UPB 2024 2023 2022 2021 2020 Pre 2020 Total June 30, 2024 Bridge $ 6,086,253 $ 231,149 $ 255,672 $ 2,669,676 $ 2,643,443 $ 176,563 $ 93,405 $ 6,069,908 Fixed rate 957,283 — — 110,625 181,427 90,094 576,876 959,022 Construction 842,854 — 107,206 156,856 103,290 12,866 459,407 839,625 SBA - 7(a) 1,242,458 94,112 148,941 344,158 283,853 109,300 238,443 1,218,807 Other 398,267 6,330 2,801 4,614 7,375 8,600 365,824 395,544 Total Loans, before general allowance for loan losses $ 9,527,115 $ 331,591 $ 514,620 $ 3,285,929 $ 3,219,388 $ 397,423 $ 1,733,955 $ 9,482,906 General allowance for loan losses $ (36,618) Total Loans, net $ 9,446,288 Gross write-offs $ — $ 1,273 $ 1,492 $ 2,890 $ 533 $ 5,511 $ 11,699 UPB 2023 2022 2021 2020 2019 Pre 2019 Total December 31, 2023 Bridge $ 6,837,816 $ 323,648 $ 2,956,697 $ 2,949,521 $ 288,647 $ 166,266 $ 111,303 $ 6,796,082 Fixed rate 1,032,641 4,007 110,800 207,510 90,794 318,077 300,642 1,031,830 Construction 1,212,526 108,218 253,100 182,920 73,370 434,151 128,876 1,180,635 Freddie Mac 9,719 — — 3,810 5,690 — — 9,500 SBA - 7(a) 1,230,959 151,878 353,871 318,208 115,019 76,080 189,622 1,204,678 Other 456,528 2,599 4,877 18,549 8,708 43,724 374,776 453,233 Total Loans, before general allowance for loan losses $ 10,780,189 $ 590,350 $ 3,679,345 $ 3,680,518 $ 582,228 $ 1,038,298 $ 1,105,219 $ 10,675,958 General allowance for loan losses $ (44,473) Total Loans, net $ 10,631,485 Gross write-offs $ 100 $ 950 $ 3,236 $ 258 $ 360 $ 25,731 $ 30,635 The tables below present delinquency information on loans, net by year of origination. Carrying Value by Year of Origination (in thousands) UPB 2024 2023 2022 2021 2020 Pre 2020 Total June 30, 2024 Current $ 9,103,724 $ 330,985 $ 497,155 $ 3,168,095 $ 3,029,683 $ 380,511 $ 1,664,385 $ 9,070,814 30 - 59 days past due 45,971 505 124 16,759 13,408 — 15,112 45,908 60+ days past due 377,420 101 17,341 101,075 176,297 16,912 54,458 366,184 Total Loans, before general allowance for loan losses $ 9,527,115 $ 331,591 $ 514,620 $ 3,285,929 $ 3,219,388 $ 397,423 $ 1,733,955 $ 9,482,906 General allowance for loan losses $ (36,618) Total Loans, net $ 9,446,288 UPB 2023 2022 2021 2020 2019 Pre 2019 Total December 31, 2023 Current $ 9,632,399 $ 574,507 $ 3,351,046 $ 3,409,643 $ 495,433 $ 881,868 $ 875,348 $ 9,587,845 30 - 59 days past due 172,355 582 59,988 80,684 510 22,586 7,148 171,498 60+ days past due 975,435 15,261 268,311 190,191 86,285 133,844 222,723 916,615 Total Loans, before general allowance for loan losses $ 10,780,189 $ 590,350 $ 3,679,345 $ 3,680,518 $ 582,228 $ 1,038,298 $ 1,105,219 $ 10,675,958 General allowance for loan losses $ (44,473) Total Loans, net $ 10,631,485 The table below presents delinquency information on loans, net by portfolio. (in thousands) Current 30-59 days past due 60+ days past due Total Non-Accrual Loans 90+ days past due and Accruing June 30, 2024 Bridge $ 5,752,441 $ 25,074 $ 292,393 $ 6,069,908 $ 103,996 $ 119,009 Fixed rate 933,012 3,500 22,510 959,022 22,511 — Construction 803,198 15,182 21,245 839,625 19,578 1,667 SBA - 7(a) 1,192,886 262 25,659 1,218,807 43,484 — Other 389,277 1,890 4,377 395,544 2,822 — Total Loans, before general allowance for loan losses $ 9,070,814 $ 45,908 $ 366,184 $ 9,482,906 $ 192,391 $ 120,676 General allowance for loan losses $ (36,618) Total Loans, net $ 9,446,288 Percentage of loans outstanding 95.6% 0.5% 3.9% 100% 2.0% 1.3% December 31, 2023 Bridge $ 6,186,367 $ 87,163 $ 522,552 $ 6,796,082 $ 339,073 $ — Fixed rate 986,755 21,798 23,277 1,031,830 13,928 — Construction 782,123 49,694 348,818 1,180,635 241,751 82,781 Freddie Mac 9,500 — — 9,500 2,695 — SBA - 7(a) 1,179,231 8,619 16,828 1,204,678 30,549 40 Other 443,869 4,224 5,140 453,233 6,005 — Total Loans, before general allowance for loan losses $ 9,587,845 $ 171,498 $ 916,615 $ 10,675,958 $ 634,001 $ 82,821 General allowance for loan losses $ (44,473) Total Loans, net $ 10,631,485 Percentage of loans outstanding 89.8% 1.6% 8.6% 100% 5.9% 0.8% 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 June 30, 2024 Bridge $ 2,243 $ 85,672 $ 721,964 $ 4,974,660 $ 179,286 $ 106,083 $ 6,069,908 Fixed rate 3,227 30,987 437,170 466,402 19,940 1,296 959,022 Construction 21,019 4,521 147,031 569,839 91,895 5,320 839,625 SBA - 7(a) 13,798 69,428 218,269 353,621 228,658 335,033 1,218,807 Other 108,028 135,847 67,757 67,845 14,729 1,338 395,544 Total Loans, before general allowance for loan losses $ 148,315 $ 326,455 $ 1,592,191 $ 6,432,367 $ 534,508 $ 449,070 $ 9,482,906 General allowance for loan losses $ (36,618) Total Loans, net $ 9,446,288 Percentage of loans outstanding 1.6% 3.4% 16.8% 67.8% 5.6% 4.8% December 31, 2023 Bridge $ 2,308 $ 97,309 $ 756,353 $ 5,781,651 $ 82,517 $ 75,944 $ 6,796,082 Fixed rate 5,222 36,021 449,804 517,628 19,965 3,190 1,031,830 Construction 25,173 94,856 532,730 355,631 119,191 53,054 1,180,635 Freddie Mac — — 2,995 6,505 — — 9,500 SBA - 7(a) 10,627 56,061 172,743 404,102 226,327 334,818 1,204,678 Other 127,310 159,386 81,291 68,451 14,124 2,671 453,233 Total Loans, before general allowance for loan losses $ 170,640 $ 443,633 $ 1,995,916 $ 7,133,968 $ 462,124 $ 469,677 $ 10,675,958 General allowance for loan losses $ (44,473) Total Loans, net $ 10,631,485 Percentage of loans outstanding 1.6% 4.2% 18.7% 66.8% 4.3% 4.4% (1) LTV is calculated by dividing the current carrying amount by the most recent collateral value received. The most recent value for performing loans is often the third-party as-is valuation utilized during the original underwriting process. The table below presents the geographic concentration of loans, net, secured by real estate. Geographic Concentration (% of UPB) June 30, 2024 December 31, 2023 Texas 18.8 % 18.6 % California 11.8 11.4 Arizona 7.5 6.1 Florida 7.3 6.4 Georgia 6.8 7.1 Oregon 6.7 5.9 New York 4.6 4.8 North Carolina 4.3 4.1 Ohio 3.4 3.2 Washington 2.8 3.4 Other 26.0 29.0 Total 100.0 % 100.0 % The table below presents the collateral type concentration of loans, net. Collateral Concentration (% of UPB) June 30, 2024 December 31, 2023 Multi-family 62.3 % 60.9 % SBA 13.0 11.4 Mixed Use 8.5 8.4 Industrial 5.3 4.3 Retail 4.1 4.3 Office 3.5 4.4 Lodging 1.6 1.6 Other 1.7 4.7 Total 100.0 % 100.0 % The table below presents the collateral type concentration of SBA loans within loans, net. Collateral Concentration (% of UPB) June 30, 2024 December 31, 2023 Lodging 22.0 % 23.4 % Gasoline Service Stations 12.7 12.8 Eating Places 6.6 6.2 Child Day Care Services 5.6 5.6 Offices of Physicians 3.7 4.1 General Freight Trucking, Local 3.2 3.5 Grocery Stores 2.3 2.3 Coin-Operated Laundries and Drycleaners 1.7 1.9 Beer, Wine, and Liquor Stores 1.3 1.3 Funeral Service & Crematories 1.1 1.4 Other 39.8 37.5 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) Other Total June 30, 2024 General $ 12,732 $ 5,415 $ 5,840 $ 10,204 $ 2,427 $ 36,618 Specific 1,666 1,065 181 3,362 51 6,325 PCD — — 1,889 — — 1,889 Ending balance $ 14,398 $ 6,480 $ 7,910 $ 13,566 $ 2,478 $ 44,832 December 31, 2023 General $ 17,302 $ 7,884 $ 3,722 $ 12,679 $ 2,886 $ 44,473 Specific 18,939 5,714 5,726 5,188 143 35,710 PCD — — 21,422 — — 21,422 Ending balance $ 36,241 $ 13,598 $ 30,870 $ 17,867 $ 3,029 $ 101,605 The table below presents a summary of the changes in the allowance for loan losses. (in thousands) Bridge Fixed Rate Construction SBA - 7(a) Other Total Three Months Ended June 30, 2024 Beginning balance $ 13,181 $ 7,264 $ 23,755 $ 20,579 $ 2,644 $ 67,423 Provision for (recoveries of) loan losses 1,217 (784) (12,579) (4,409) (166) (16,721) Charge-offs and sales — — (3,266) (2,680) — (5,946) Recoveries — — — 76 — 76 Ending balance $ 14,398 $ 6,480 $ 7,910 $ 13,566 $ 2,478 $ 44,832 Three Months Ended June 30, 2023 Beginning balance $ 40,319 $ 9,085 $ 373 $ 15,110 $ 2,893 $ 67,780 Provision for loan losses 3,538 4,523 7,935 2,012 466 18,474 PCD (1) — — 27,617 — — 27,617 Charge-offs and sales — (1,404) — (402) — (1,806) Recoveries — — — 89 — 89 Ending balance $ 43,857 $ 12,204 $ 35,925 $ 16,809 $ 3,359 $ 112,154 Six Months Ended June 30, 2024 Beginning balance $ 36,241 $ 13,598 $ 30,870 $ 17,867 $ 3,029 $ 101,605 Recoveries of loan losses (21,843) (4,489) (18,215) (246) (485) (45,278) Charge-offs and sales — (2,629) (4,745) (4,259) (66) (11,699) Recoveries — — — 204 — 204 Ending balance $ 14,398 $ 6,480 $ 7,910 $ 13,566 $ 2,478 $ 44,832 Six Months Ended June 30, 2023 Beginning balance $ 49,905 $ 6,531 $ 17,334 $ 14,299 $ 2,450 $ 90,519 Provision for (recoveries of) loan losses (5,437) 7,177 7,872 3,407 909 13,928 PCD (1) — — 27,617 — — 27,617 Charge-offs and sales (611) (1,504) (16,898) (1,015) — (20,028) Recoveries — — — 118 — 118 Ending balance $ 43,857 $ 12,204 $ 35,925 $ 16,809 $ 3,359 $ 112,154 (1) Refer to Note 5 for further details on assets acquired and liabilities assumed in connection with the Broadmark Merger. The table above excludes $0.6 million and $3.6 million of allowance for loan losses on unfunded lending commitments as of June 30, 2024 and June 30, 2023, 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) June 30, 2024 December 31, 2023 Non-accrual loans With an allowance $ 178,046 $ 607,292 Without an allowance 14,345 26,709 Total recorded carrying value of non-accrual loans $ 192,391 $ 634,001 Allowance for loan losses related to non-accrual loans $ (9,499) $ (50,796) UPB of non-accrual loans $ 203,666 $ 688,282 June 30, 2024 June 30, 2023 Interest income on non-accrual loans for the three months ended $ 52 $ 6,841 Interest income on non-accrual loans for the six months ended $ 1,338 $ 14,690 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 delays intended to minimize the Company’s economic loss and to avoid foreclosure or repossession of collateral. Three months ended June 30, 2024. There were 12 loans with an aggregate carrying value of $334.7 million, or 3.6% of loans, net, that were modified to include both term extensions and interest payment deferrals. The term extensions ranged between 3 and 27 months with a weighted average of 13 months added to the original loan term. Payment modifications include the reduction of interest payments to equal excess net operating income with the difference between the original rate and the interest collected due at maturity. In most cases, cash management accounts are set up for the loans and default interest is waived. There was 1 loan with a carrying value of $75.0 million, or 0.8% of loans, net that was modified to include both a term extension and interest rate reduction. The term extension was for 18 months added to the original loan term and the interest rate decreased from SOFR + 3.25% to a fixed rate of 6.0% from June 2024 to December 2024 and 6.5% from January 2025 to July 2025. There were 3 loans with an aggregate carrying value of $58.3 million, or 0.6% of loans, net that were modified by interest payment deferrals. The number of interest payments deferred ranged between 10 and 28 months with a weighted average of 17 months and include periods before the modification date. Payment modifications include the reduction of interest payments to equal excess net operating income with the difference between the original rate and the interest collected due at maturity. In most cases, cash management accounts are set up for the loans and default interest is waived. There were 4 loans with an aggregate carrying value of $51.0 million, or 0.5% of loans, net that were modified by a term extension. The term extensions ranged between 10 and 24 months with a weighted average of 18 months added to the original loan term. Of the loans that were modified during the three months ended June 30, 2024, substantially all were on accrual status. During the three months ended June 30, 2024, $7.2 million of total capital was invested by the borrowers, substantially all in the form of payment towards past due interest or contribution to various reserve accounts. Six months ended June 30, 2024. There were 13 loans with an aggregate carrying value of $360.0 million, or 3.8% of loans, net, that were modified to include both term extensions and interest payment deferrals. The term extensions ranged between 3 and 27 months with a weighted average of 12 months added to the original loan term. Payment modifications include the reduction of interest payments to equal excess net operating income with the difference between the original rate and the interest collected due at maturity. In most cases, cash management accounts are set up for the loans and default interest is waived. There was 1 loan with a carrying value of $75.0 million, or 0.8% of loans, net that was modified to include both a term extension and interest rate reduction. The term extension was for 18 months added to the original loan term and the interest rate decreased from SOFR + 3.25% to a fixed rate of 6.0% from June 2024 to December 2024 and 6.5% from January 2025 to July 2025. There were 7 loans with an aggregate carrying value of $62.3 million, or 0.7% of loans, net that were modified to include term extensions. The term extensions ranged between 6 and 24 months with a weighted average of 17 months added to the original loan term. There were 3 loans with an aggregate carrying value of $58.3 million, or 0.6% of loans, net that were modified by interest payment deferrals. The number of interest payments deferred ranged between 10 and 28 months with a weighted average of 17 months and include payments for periods before the modification date. Payment modifications include the reduction of interest payments to equal excess net operating income with the difference between the original rate and the interest collected due at maturity. In most cases, cash management accounts are set up for the loans and default interest is waived. Of the loans that were modified during the six months ended June 30, 2024, substantially all were on accrual status. During the six months ended June 30, 2024, $7.2 million of total capital was invested by the borrowers, substantially all in the form of payment towards past due interest or contribution to various reserve accounts. Three months ended June 30, 2023. There were 4 loans with an aggregate carrying value of $381.9 million, or 3.7% of loans, net that were modified by a term extension. The term extensions ranged between 12 and 36 months with a weighted average of 18 months added to the original loan term. The largest loan with a carrying value of $357.4 million was modified in May 2023 to extend the maturity date of the loan from June 2023 to December 2024, or 18 months. The borrower was required to contribute $17.0 million, or 3.9% of the total carrying value of the loan, towards various reserve accounts. There was 1 loan with a carrying value of $0.1 million, or less than 0.1% of loans, net that was modified by interest payment deferrals of 9 months. Of the loans that were modified during the three months ended June 30, 2023, substantially all were on accrual status as of June 30, 2024. Six months ended June 30, 2023. There were 9 loans with an aggregate carrying value of $405.2 million, or 3.9% of loans, net that were modified by term extensions. The term extensions ranged between 12 and 120 months with a weighted average of 18 months added to the original loan term. The largest loan with a carrying value of $357.4 million was modified in May 2023 to extend the maturity date of the loan from June 2023 to December 2024, or 18 months. The borrower was required to contribute $17.0 million, or 3.9% of the total carrying value of the loan, towards various reserve accounts. There was 1 SBA loan with a carrying value of less than $0.1 million with a 10 year term extension, which is included in the range. There was 1 loan with a carrying value of $28.4 million, or 0.3% of loans, net, that was modified to include both a term extension and an interest payment deferral. The loan was modified by a term extension for 18 months added to the original loan term and an interest payment deferral of 12 months. There were 2 loans with an aggregate carrying value of $0.8 million, or less than 0.1% of loans, net that were modified by interest payment deferrals. The payment deferrals ranged between 6 and 9 months with a weighted average of 6 months. Of the loans that were modified during the six months ended June 30, 2023, substantially all were on accrual status as of June 30, 2024. The remaining elements of the Company’s modification programs are generally considered insignificant and do not have a material impact on financial results. Allowance for loan losses. All loans with modifications disclosed in the previous twelve months are performing in accordance with their modified terms as of June 30, 2024. On loans for which the Company determines foreclosure of the collateral is probable, expected losses are measured based on the difference between the fair value of the collateral and the amortized cost basis of the loan as of the measurement date. As of June 30, 2024 and December 31, 2023, the Company’s total carrying amount of loans in the foreclosure process was $65.8 million and $95.0 million, respectively. Lending commitments. PCD loans During the three months ended June 30, 2023, the Company acquired PCD loans in connection with the Broadmark merger. Subsequent to the determination of the preliminary purchase price allocation, based on updated valuations obtained, the Company recorded a measurement period adjustment of $5.2 million to increase the PCD allowance. Refer to Note 5 for further details on assets acquired and liabilities assumed in connection with the Broadmark Merger. The table below presents a reconciliation of the Company’s purchase price with the par value of the purchased loans. (in thousands) Preliminary Purchase Price Allocation Measurement Period Adjustments Updated Purchase Price Allocation UPB $ 244,932 $ 38,750 $ 283,682 Allowance for credit losses (27,617) (5,245) (32,862) Non-credit discount (6,035) (3,342) (9,377) Purchase price of loans classified as PCD $ 211,280 $ 30,163 $ 241,443 The Company did not acquire any PCD loans during the three months ended June 30, 2024. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2024 | |
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 UPB. 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. The fair value of the contingent consideration in connection with mergers and acquisitions was determined using a Monte Carlo simulation model which considers various potential results based on Level 3 inputs, including management’s latest estimates of future operating results. Fair value measurements of the contingent consideration liability are sensitive to changes in assumptions related to earnings before tax, discount rate and risk-free rate of return. Contingent consideration also consists of CERs issued pursuant to the Mosaic Mergers. 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. The final purchase price allocation associated with the closing of the Mosaic Mergers valued the CERs at approximately $25.0 million or $0.83 per CER. As of June 30, 2024, the CERs were valued at zero. In certain cases, the inputs used to measure fair value may be categorized into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the investment. The table below presents financial instruments carried at fair value on a recurring basis. (in thousands) Level 1 Level 2 Level 3 Total June 30, 2024 Assets: Money market funds (a) $ 72,499 $ — $ — $ 72,499 Loans, held for sale — 80,235 9,145 89,380 PPP loans (b) — 230 — 230 MBS — 30,174 — 30,174 Derivative instruments — 14,382 — 14,382 Investment in unconsolidated joint ventures — — 6,974 6,974 Preferred equity investment (c) — — 108,423 108,423 Total assets $ 72,499 $ 125,021 $ 124,542 $ 322,062 Liabilities: Derivative instruments — 2,638 — 2,638 Contingent consideration — — 3,926 3,926 Total liabilities $ — $ 2,638 $ 3,926 $ 6,564 December 31, 2023 Assets: Money market funds (a) $ 100,238 $ — $ — $ 100,238 Loans, held for sale — 81,599 — 81,599 Loans, net — — 9,348 9,348 PPP loans (b) — 165 — 165 MBS — 27,436 — 27,436 Derivative instruments — 2,404 — 2,404 Investment in unconsolidated joint ventures — — 7,360 7,360 Preferred equity investment (c) — — 108,423 108,423 Total assets $ 100,238 $ 111,604 $ 125,131 $ 336,973 Liabilities: Derivative instruments — 212 — 212 Contingent consideration — — 7,628 7,628 Total liabilities $ — $ 212 $ 7,628 $ 7,840 (a) Money market funds are included in cash and cash equivalents on the consolidated balance sheets (b) PPP loans are included in other assets on the consolidated balance sheets (c) Preferred equity investment held through consolidated joint ventures are included in assets of consolidated VIEs on the consolidated balance sheets The table below presents the valuation techniques and significant unobservable inputs used to value Level 3 financial instruments, using third party information without adjustment. (in thousands) Fair Value Predominant Valuation Technique (a) Type Range Weighted Average June 30, 2024 Assets: Investment in unconsolidated joint ventures $ 6,974 Income Approach Discount rate 9.0% 9.0% Preferred equity investment 108,423 Income Approach Discount rate 11.0% 11.0% Total assets $ 115,397 Liabilities: Contingent consideration - Madison One 526 Monte Carlo Simulation Model Net income volatility | Risk-adjusted discount rate 66.0% | 47.5% 66.0% | 47.5% Total liabilities $ 526 December 31, 2023 Assets: Investment in unconsolidated joint ventures $ 7,360 Income Approach Discount rate 9.0% 9.0% Preferred equity investment 108,423 Income Approach Discount rate 10.0% 10.0% Total assets $ 115,783 Liabilities: Contingent consideration- Mosaic CER dividends 1,591 Monte Carlo Simulation Model Equity volatility | Risk-free rate of return | Discount rate 30.0% | 4.7% | 11.5% 30% | 4.7% | 11.5% Contingent consideration- Mosaic CER units 6,037 Income approach and PWERM Model Revaluation discount rate | Discount rate 12.0% | 11.5% 12.0% | 11.5% Total liabilities $ 7,628 (a) Prices are weighted based on the UPB of the loans and securities included in the range for each class. Included within Level 3 assets of $124.5 million as of June 30, 2024 and $125.1 million as of December 31, 2023, is $9.1 million and $9.3 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 $3.9 million as of June 30, 2024 is $3.4 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. Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2024 2023 2024 2023 Assets: Loans, net Beginning balance $ — $ 9,859 $ 9,348 $ 9,786 Unrealized gains (losses), net — (86) 680 (13) Transfer to (from) Level 3 — — (10,028) — Ending balance $ — $ 9,773 $ — $ 9,773 Loans, held for sale Beginning balance — 58,330 — 60,924 Sales / Principal payments — (11) — (22) Unrealized gains (losses), net — (1,287) — (3,870) Transfer to (from) Level 3 9,145 — 9,145 — Ending balance $ 9,145 $ 57,032 $ 9,145 $ 57,032 Investment in unconsolidated joint ventures Beginning balance 7,169 7,913 7,360 8,094 Unrealized gains (losses), net (195) (182) (386) (363) Ending balance $ 6,974 $ 7,731 $ 6,974 $ 7,731 Preferred equity investment (1) Beginning balance 106,548 108,423 108,423 108,423 Unrealized gains (losses), net 1,875 — — — Ending balance $ 108,423 $ 108,423 $ 108,423 $ 108,423 Total assets Beginning balance 113,717 184,525 125,131 187,227 Sales / Principal payments — (11) — (22) Unrealized gains (losses), net 1,680 (1,555) 294 (4,246) Transfer to (from) Level 3 9,145 — (883) — Ending balance $ 124,542 $ 182,959 $ 124,542 $ 182,959 Liabilities: Contingent consideration Beginning balance — 16,636 7,628 28,500 Sales / Principal payments — — — (9,000) Realized losses (gains), net — — (7,628) — Unrealized losses (gains), net — (1,070) — (3,934) Merger (2) 3,926 — 3,926 Ending balance $ 3,926 $ 15,566 $ 3,926 $ 15,566 (1) Preferred equity investment held through consolidated joint ventures are included in assets of consolidated VIEs on the consolidated balance sheets. (2) Includes assets acquired and liabilities assumed as a result of the Madison One Acquisition. Refer to Note 5 for further details on assets acquired and liabilities assumed in connection with the Madison One Acquisition. The Company’s policy is to recognize transfers in and transfers out as of the end of the period of the event or the date of the change in circumstances that caused the transfer. Transfers between Level 2 and Level 3 generally relate to whether there were changes in the significant relevant observable and unobservable inputs that are available for the fair value measurements of such financial instruments. Financial instruments not carried at fair value The table below presents the carrying value and estimated fair value of financial instruments that are not carried at fair value and are classified as Level 3. June 30, 2024 December 31, 2023 (in thousands) Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value Assets: Loans, net $ 9,446,288 $ 9,255,383 $ 10,622,137 $ 10,380,893 Loans, held for sale 452,856 452,856 — — Servicing rights 119,768 129,471 102,837 113,715 Total assets $ 10,018,912 $ 9,837,710 $ 10,724,974 $ 10,494,608 Liabilities: Secured borrowings 2,311,969 2,311,969 2,102,075 2,102,075 Securitized debt obligations of consolidated VIEs, net 4,407,241 4,361,392 5,068,453 5,022,057 Senior secured notes, net 417,040 395,879 345,127 317,239 Guaranteed loan financing 782,345 828,902 844,540 889,744 Corporate debt, net 767,271 717,056 764,908 731,104 Total liabilities $ 8,685,866 $ 8,615,198 $ 9,125,103 $ 9,062,219 As of both June 30, 2024 and December 31, 2023, other assets and accounts payable and accrued liabilities are not carried at fair value but generally approximate fair value. Further details are presented in Note 18 – Other Assets and Other Liabilities. |
Servicing Rights
Servicing Rights | 6 Months Ended |
Jun. 30, 2024 | |
Servicing Rights | |
Servicing Rights | Note 8. Servicing Rights The Company performs servicing activities for third parties, which primarily include collecting principal, interest and other payments from borrowers, remitting the corresponding payments to investors and monitoring delinquencies. The Company’s servicing fees are specified by pooling and servicing agreements. The table below presents information about servicing rights. Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2024 2023 2024 2023 SBA servicing rights, at amortized cost Beginning net carrying amount $ 31,343 $ 22,040 $ 29,536 $ 19,756 Additions 5,596 2,043 8,273 3,555 Amortization (1,105) (921) (1,960) (1,756) Recovery (impairment) (507) 1,166 (522) 2,773 Ending net carrying amount $ 35,327 $ 24,328 $ 35,327 $ 24,328 Multi-family servicing rights, at amortized cost Beginning net carrying amount 72,212 67,911 73,301 67,361 Additions 882 5,311 2,620 8,392 Amortization (2,872) (2,657) (5,699) (5,188) Ending net carrying amount $ 70,222 $ 70,565 $ 70,222 $ 70,565 USDA servicing rights, at amortized cost Beginning net carrying amount — — — — Additions 14,413 — 14,413 — Amortization (194) — (194) — Ending net carrying amount $ 14,219 $ — $ 14,219 $ — Total servicing rights $ 119,768 $ 94,893 $ 119,768 $ 94,893 The Company’s servicing rights are carried at amortized cost and evaluated quarterly for impairment. The Company estimates the fair value of these servicing rights by using a combination of internal models and data provided by third-party valuation experts. The assumptions used in the Company’s internal models include forward prepayment rates, forward default rates, discount rates, and servicing expenses. 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 servicing rights. As of June 30, 2024 As of December 31, 2023 (in thousands) UPB Carrying Value UPB Carrying Value SBA $ 1,534,092 $ 35,327 $ 1,208,201 $ 29,536 Multi-family 5,885,203 70,222 5,689,872 73,301 USDA 506,131 14,219 — — Total $ 7,925,426 $ 119,768 $ 6,898,073 $ 102,837 The table below presents significant assumptions used in the estimated valuation of servicing rights carried at amortized cost. June 30, 2024 December 31, 2023 Range of input values Weighted Average Range of input values Weighted Average SBA servicing rights Forward prepayment rate 1.5 - 21.6 % 9.1 % 0.0 - 4.5 % 4.4 % Forward default rate 0.0 - 6.6 % 6.3 % 0.0 - 7.3 % 7.0 % Discount rate 11.6 - 20.9 % 12.2 % 14.4 - 22.9 % 14.6 % Servicing expense 0.4 - 0.4 % 0.4 % 0.4 - 0.4 % 0.4 % Multi-family servicing rights Forward prepayment rate 0.0 - 6.5 % 5.6 % 0.0 - 6.5 % 5.4 % Forward default rate 0.0 - 0.9 % 0.6 % 0.0 - 0.9 % 0.6 % 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 % USDA servicing rights (1) Forward prepayment rate 2.1 - 6.5 % 5.6 % N/A N/A N/A Discount rate 6.9 - 6.9 % 6.9 % N/A N/A N/A Servicing expense 0.3 - 0.3 % 0.3 % N/A N/A N/A (1) Refer to Note 5 for further details on assets acquired and liabilities assumed in connection with the Madison One Acquisition 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 servicing rights. (in thousands) June 30, 2024 December 31, 2023 SBA servicing rights Forward prepayment rate Impact of 10% adverse change $ (1,164) $ (543) Impact of 20% adverse change $ (2,261) $ (1,069) Default rate Impact of 10% adverse change $ (162) $ (165) Impact of 20% adverse change $ (323) $ (328) Discount rate Impact of 10% adverse change $ (1,244) $ (1,530) Impact of 20% adverse change $ (2,401) $ (2,922) Servicing expense Impact of 10% adverse change $ (2,258) $ (2,047) Impact of 20% adverse change $ (4,515) $ (4,095) Multi-family servicing rights Forward prepayment rate Impact of 10% adverse change $ (466) $ (491) Impact of 20% adverse change $ (918) $ (965) Default rate Impact of 10% adverse change $ (14) $ (14) Impact of 20% adverse change $ (27) $ (29) Discount rate Impact of 10% adverse change $ (2,238) $ (2,320) Impact of 20% adverse change $ (4,365) $ (4,524) Servicing expense Impact of 10% adverse change $ (2,567) $ (2,587) Impact of 20% adverse change $ (5,135) $ (5,173) USDA servicing rights Forward prepayment rate Impact of 10% adverse change $ (804) $ — Impact of 20% adverse change $ (1,543) $ — Discount rate Impact of 10% adverse change $ (485) $ — Impact of 20% adverse change $ (942) $ — Servicing expense Impact of 10% adverse change $ (625) $ — Impact of 20% adverse change $ (1,250) $ — The table below presents estimated future amortization expense for servicing rights. (in thousands) June 30, 2024 2024 $ 10,183 2025 17,730 2026 15,673 2027 13,755 2028 12,074 Thereafter 50,353 Total $ 119,768 |
Discontinued Operations and Ass
Discontinued Operations and Assets and Liabilities For Sale | 6 Months Ended |
Jun. 30, 2024 | |
Discontinued operations and assets and liabilities held for sale | |
Discontinued operations and assets and liabilities held for sale | Note 9. Discontinued Operations and Assets and Liabilities Held for Sale In the fourth quarter of 2023, the Board approved a plan to strategically shift the Company’s core focus to LMM commercial real estate lending and government backed small business loans, which contemplates the disposition of assets and liabilities of the Company’s residential mortgage banking segment. Accordingly, the then Residential Mortgage Banking segment met the criteria to be classified as held for sale on the consolidated balance sheets, presented as discontinued operations on the consolidated statements of operations, and excluded from continuing operations for all periods presented. As of June 30, 2024, the Company sold $4.7 billion of residential mortgage servicing rights for net proceeds of $61.8 million as part of the Company’s disposition of its residential mortgage banking segment. The Company expects to complete the disposition of its residential mortgage banking segment in the current year. The table below presents the assets and liabilities of the Residential Mortgage Banking segment classified as held for sale. (in thousands) June 30, 2024 December 31, 2023 Assets Cash and cash equivalents $ 20,438 $ 13,694 Restricted cash 5,666 6,314 Loans, net 3,860 2,778 Loans, held for sale 156,264 133,204 Loans eligible for repurchase from Ginnie Mae 89,679 86,872 Derivative instruments — 847 Servicing rights (1) 125,795 188,855 Other assets 22,192 22,032 Total Assets $ 423,894 $ 454,596 Liabilities Secured borrowings 229,906 230,965 Liabilities for loans eligible for repurchase from Ginnie Mae 89,679 86,872 Derivative instruments 813 1,321 Accounts payable and other accrued liabilities 11,867 13,999 Total Liabilities $ 332,265 $ 333,157 (1) Servicing rights are Level 3 assets that had been measured at fair value using the income approach valuation technique. Refer to Note 7- Fair Value Measurements for further details. The table below presents the operating results of the Residential Mortgage Banking segment presented as discontinued operations. Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2024 2023 2024 2023 Interest income $ 2,121 $ 1,880 $ 3,962 $ 3,485 Interest expense (2,755) (2,313) (5,285) (3,839) Net interest expense $ (634) $ (433) $ (1,323) $ (354) Non-interest income Residential mortgage banking activities 11,353 9,884 20,595 19,053 Net realized gain (loss) on financial instruments 2,938 — 2,938 — Net unrealized gain (loss) on financial instruments (7,219) 8,818 (7,219) 2,725 Servicing income, net of amortization and impairment 8,472 9,393 17,888 18,754 Other income 4 23 8 54 Total non-interest income $ 15,548 $ 28,118 $ 34,210 $ 40,586 Non-interest expense Employee compensation and benefits (5,818) (5,295) (11,502) (10,707) Variable expenses on residential mortgage banking activities (8,122) (6,574) (14,208) (12,059) Professional fees (259) (123) (412) (297) Loan servicing expense (2,412) (2,221) (4,741) (4,029) Other operating expenses (2,002) (1,684) (3,836) (3,393) Total non-interest expense $ (18,613) $ (15,897) $ (34,699) $ (30,485) Income (loss) from discontinued operations before provision for income taxes (3,699) 11,788 (1,812) 9,747 Income tax (provision) benefit 925 (2,947) 453 (2,437) Net income (loss) from discontinued operations $ (2,774) $ 8,841 $ (1,359) $ 7,310 |
Secured borrowings
Secured borrowings | 6 Months Ended |
Jun. 30, 2024 | |
Secured borrowings | |
Secured borrowings | Note 10. 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 June 30, 2024 December 31, 2023 3 SBA loans October 2024 - March 2025 SOFR + 2.83% $ 250,000 $ 238,184 $ 189,015 $ 117,115 1 LMM loans - USD February 2025 SOFR + 1.35% 80,000 2,652 2,645 20,729 1 LMM loans - Non-USD (4) January 2025 EURIBOR + 3.00% 214,264 45,127 32,648 12,079 Total borrowings under credit facilities and other financing agreements $ 544,264 $ 285,963 $ 224,308 $ 149,923 9 LMM loans November 2024 - November 2026 SOFR + 3.18% 4,306,000 2,828,152 1,758,071 1,677,885 1 LMM loans - Non-USD (4) Matured EURIBOR + 3.00% — — — 45,031 7 MBS July 2024 - June 2025 7.95% 329,590 596,798 329,590 229,236 Total borrowings under repurchase agreements $ 4,635,590 $ 3,424,950 $ 2,087,661 $ 1,952,152 Total secured borrowings $ 5,179,854 $ 3,710,913 $ 2,311,969 $ 2,102,075 (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 June 30, 2024 and December 31, 2023, certain financing counterparties covenants calculations were amended to exclude the PPPLF from certain covenant calculations. As of both June 30, 2024 and December 31, 2023 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) June 30, 2024 December 31, 2023 Collateral pledged - borrowings under credit facilities and other financing agreements Loans, held for sale $ 24,186 $ 43,365 Loans, net 261,777 169,147 Total $ 285,963 $ 212,512 Collateral pledged - borrowings under repurchase agreements Loans, net 2,117,106 2,560,725 MBS 80,093 20,770 Retained interest in assets of consolidated VIEs 516,705 356,772 Loans, held for sale 579,866 9,349 Real estate acquired in settlement of loans 131,180 160,455 Total $ 3,424,950 $ 3,108,071 Total collateral pledged on secured borrowings $ 3,710,913 $ 3,320,583 |
Senior secured notes and corpor
Senior secured notes and corporate debt, net | 6 Months Ended |
Jun. 30, 2024 | |
Senior secured notes and corporate debt, net | |
Senior secured notes and corporate debt, net | Note 11. Senior Secured 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 SSN 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, ReadyCap Holdings, and the SSN Guarantors, including maintenance of minimum liquidity, minimum tangible net worth, maximum debt to net worth ratio and limitations on transactions with affiliates. Ready Term Holdings, LLC (“Ready Term Holdings”) term loan due 2029. Ready Term Holdings’ and the Term Loan Guarantors’ respective obligations under the Term Loan are secured by a perfected first-priority lien on certain capital stock and assets (collectively, the “Term Loan Collateral”) owned by certain subsidiaries of the Company. The Term Loan matures on April 12, 2029, and may be drawn at any time on or prior to January 12, 2025, subject to the satisfaction of customary conditions. The Company borrowed $75.0 million in connection with the initial closing of the Term Loan. The Term Loan bears interest on the outstanding principal amount thereof at a rate equal to (a) SOFR plus 5.50% per annum or (b) base rate plus 4.50% per annum; provided that if at any time the Term Loan is rated below investment grade, the interest rate shall increase to (x) SOFR plus 6.50% per annum or (y) base rate plus 5.50% per annum until the rating is no longer below investment grade. In connection with the entry into the credit agreement, the Company also agreed to pay certain upfront fees on the initial borrowing date. The Company will also pay, with respect to any unused portion of the Term Loan, a commitment fee of 1.00% per annum. The Term Loan was issued pursuant to a credit agreement, which contains certain customary representations and warranties and affirmative and negative covenants and requirements relating to the collateral and our Company, Ready Term Holdings, and the Term Loan Guarantors, including maintenance of a minimum asset coverage ratio. As of June 30, 2024, the Company was in compliance with all covenants with respect to the Senior Secured Notes and the Term Loan. 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. In addition, in connection with the Broadmark Merger, RCC Merger Sub, a wholly owned subsidiary of the operating partnership, assumed Broadmark’s obligations on certain senior unsecured notes. The note purchase agreement governing these notes contain financial covenants that require compliance with leverage and coverage ratios and maintenance of minimum tangible net worth, as well as other customary affirmative and negative covenants. As of June 30, 2024, 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 or six months ended June 30, 2024 or June 30, 2023, respectively. The table below presents information about senior secured notes and corporate debt. (in thousands) Coupon Rate Maturity Date June 30, 2024 Senior secured notes principal amount (1) 4.50 % 10/20/2026 $ 350,000 Term loan principal amount (2) SOFR + 5.50 % 4/12/2029 75,000 Unamortized discount - Term loan (2,740) Unamortized deferred financing costs - Senior secured notes (5,220) Total senior secured notes, net $ 417,040 Corporate debt principal amount (3) 5.50 % 12/30/2028 110,000 Corporate debt principal amount (4) 6.20 % 7/30/2026 104,614 Corporate debt principal amount (4) 5.75 % 2/15/2026 206,270 Corporate debt principal amount (5) 6.125 % 4/30/2025 120,000 Corporate debt principal amount (6) 7.375 % 7/31/2027 100,000 Corporate debt principal amount (7) 5.00 % 11/15/2026 100,000 Unamortized discount - corporate debt (5,730) Unamortized deferred financing costs - corporate debt (4,133) Junior subordinated notes principal amount (8) SOFR + 3.10 % 3/30/2035 15,000 Junior subordinated notes principal amount (9) SOFR + 3.10 % 4/30/2035 21,250 Total corporate debt, net $ 767,271 Total carrying amount of debt $ 1,184,311 (1) Interest on the senior secured notes is payable semiannually on April 20 and October 20 of each year. (2) Interest on the term loan is payable quarterly on January 12, April 12, July 12, and October 12 of each year. (3) Interest on the corporate debt is payable semiannually on June 30 and December 30 of each year. (4) Interest on the corporate debt is payable quarterly on January 30, April 30, July 30, and October 30 of each year. (5) Interest on the corporate debt is payable semiannually on April 30 and October 30 of each year. (6) Interest on the corporate debt is payable semiannually on January 31 and July 31 of each year. (7) Interest on the corporate debt is payable semiannually on May 15 and November 15 of each year; assumed as part of the Broadmark Merger. (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 and corporate debt. (in thousands) June 30, 2024 2024 $ — 2025 120,000 2026 760,884 2027 100,000 2028 110,000 Thereafter 111,250 Total contractual amounts $ 1,202,134 Unamortized deferred financing costs, discounts, and premiums, net (17,823) Total carrying amount of debt $ 1,184,311 |
Guaranteed loan financing
Guaranteed loan financing | 6 Months Ended |
Jun. 30, 2024 | |
Guaranteed loan financing. | |
Guaranteed loan financing | Note 12. 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 operations. Guaranteed loan financings are secured by loans of $782.7 million and $845.0 million as of June 30, 2024 and December 31, 2023, respectively. The table below presents guaranteed loan financing and the related interest rates and maturity dates. Weighted Average Range of Range of (in thousands) Interest Rate Interest Rates Maturities (Years) Ending Balance June 30, 2024 9.17 % 1.45-10.50 % 2024-2048 $ 782,345 December 31, 2023 9.17 % 1.45-10.50 % 2023-2048 $ 844,540 The table below presents the contractual maturities of guaranteed loan financing. (in thousands) June 30, 2024 2024 $ 182 2025 414 2026 1,914 2027 7,778 2028 8,614 Thereafter 763,443 Total $ 782,345 |
Variable interest entities and
Variable interest entities and securitization activities | 6 Months Ended |
Jun. 30, 2024 | |
Variable interest entities and securitization activities | |
Variable interest entities and securitization activities | Note 13. 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. Consolidated VIEs The Company consolidates variable interests held in an acquired joint venture investment for which it is the primary beneficiary. The equity held by the remaining owners and their portions of net income (loss) are reflected in stockholders’ equity on the consolidated balance sheets as Non-controlling interests and in the consolidated statements of operations as Net income attributable to noncontrolling interests, respectively. As of June 30, 2024 and December 31, 2023, income and expenses on joint venture investments identified as consolidated VIEs were not material. The table below presents assets and liabilities of consolidated VIEs. (in thousands) June 30, 2024 December 31, 2023 Assets: Cash and cash equivalents $ 4 $ 671 Restricted cash 22,778 93,240 Loans, net 6,001,409 6,611,325 Loans, held for sale 9,725 — Preferred equity investment (1) 108,423 108,423 Other assets 108,231 83,486 Total assets $ 6,250,570 $ 6,897,145 Liabilities: Securitized debt obligations of consolidated VIEs, net 4,407,241 5,068,453 Due to third parties 2,773 2,944 Accounts payable and other accrued liabilities 1 34 Total liabilities $ 4,410,015 $ 5,071,431 (1) Preferred equity investment held through consolidated VIEs are included in Assets of consolidated VIEs on the consolidated balance sheets. Securitization-related VIEs Company sponsored securitizations. As a result of the consolidation, the securitization is viewed as a loan financing to enable the creation of the senior security and ultimately, sale to a third-party investor. As such, the senior security is presented in the consolidated balance sheets as securitized debt obligations of consolidated VIEs. The third-party beneficial interest holders in the VIE have no recourse against the Company, with the exception of an obligation to repurchase assets from the VIE in the event that certain representations and warranties in relation to the loans sold to the VIE are breached. In the absence of such a breach, the Company has no obligation to provide any other explicit or implicit support to any VIE. The securitization trust receives principal and interest on the underlying loans and distributes those payments to the certificate holders. The assets and other instruments held by the securitization trust are restricted in that they can only be used to fulfill the obligations of the securitization trust. The risks associated with the Company’s involvement with the VIE is limited to the risks and rights as a certificate holder of the securities retained by the Company. The consolidation of securitization transactions includes the senior securities issued to third parties which are shown as securitized debt obligations of consolidated VIEs in the consolidated balance sheets. The table below presents additional information on the Company’s securitized debt obligations. June 30, 2024 December 31, 2023 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 $ 25,512 $ 25,512 8.0 % $ 32,175 $ 32,175 7.6 % ReadyCap Lending Small Business Trust 2023-3 114,485 112,549 8.6 121,527 119,308 8.5 Sutherland Commercial Mortgage Trust 2017-SBC6 277 277 5.0 1,550 1,532 5.0 Sutherland Commercial Mortgage Trust 2019-SBC8 97,659 96,256 2.9 105,281 103,733 2.9 Sutherland Commercial Mortgage Trust 2021-SBC10 69,979 68,902 1.6 81,214 79,952 1.6 ReadyCap Commercial Mortgage Trust 2015-2 1,758 1,688 5.1 1,902 1,753 5.1 ReadyCap Commercial Mortgage Trust 2016-3 8,901 8,670 5.3 9,038 8,723 5.2 ReadyCap Commercial Mortgage Trust 2018-4 52,078 50,569 4.6 53,052 51,309 4.5 ReadyCap Commercial Mortgage Trust 2019-5 84,579 80,128 4.9 88,520 83,529 4.7 ReadyCap Commercial Mortgage Trust 2019-6 192,110 188,680 3.4 199,379 195,496 3.4 ReadyCap Commercial Mortgage Trust 2022-7 194,429 188,188 4.2 195,866 188,995 4.2 Ready Capital Mortgage Financing 2021-FL5 113,339 113,339 7.4 273,681 273,623 6.6 Ready Capital Mortgage Financing 2021-FL6 242,920 242,920 6.9 417,782 416,467 6.4 Ready Capital Mortgage Financing 2021-FL7 552,629 552,131 7.1 586,117 583,771 6.7 Ready Capital Mortgage Financing 2022-FL8 789,968 788,547 7.5 808,671 805,220 7.0 Ready Capital Mortgage Financing 2022-FL9 453,978 451,260 8.5 511,622 505,917 8.1 Ready Capital Mortgage Financing 2022-FL10 577,204 572,469 8.2 654,116 646,141 7.8 Ready Capital Mortgage Financing 2023-FL11 429,849 427,051 8.2 473,481 468,307 8.2 Ready Capital Mortgage Financing 2023-FL12 440,609 437,381 8.1 507,646 500,882 8.0 Total $ 4,442,263 $ 4,406,517 7.2 % $ 5,122,620 $ 5,066,833 6.9 % The table above excludes non-company sponsored securitized debt obligations of $0.7 million and $1.6 million that are included in the consolidated balance sheets as of June 30, 2024 and December 31, 2023, 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. Unconsolidated VIEs The Company does not consolidate variable interests held in an acquired joint venture investment accounted for as an equity method investment as it does not have the power to direct the activities that most significantly impact their economic performance and therefore, the Company only accounts for its specific interest in them. 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) June 30, 2024 December 31, 2023 June 30, 2024 December 31, 2023 MBS (2) $ 27,364 $ 26,301 $ 27,364 $ 26,301 Investment in unconsolidated joint ventures 134,602 133,321 134,602 133,321 Total assets in unconsolidated VIEs $ 161,966 $ 159,622 $ 161,966 $ 159,622 (1) Maximum exposure to loss is limited to the greater of the fair value or carrying value of the assets as of the consolidated balance sheet date. (2) Retained interest in other third party sponsored securitizations. |
Interest income and interest ex
Interest income and interest expense | 6 Months Ended |
Jun. 30, 2024 | |
Interest income and interest expense | |
Interest income and interest expense | Note 14. Interest Income and Interest Expense Interest income and expense are recorded in the consolidated statements of operations and classified based on the nature of the underlying asset or liability. The table below presents the components of interest income and expense. Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2024 2023 2024 2023 Interest income Loans, net Bridge $ 146,418 $ 165,788 $ 294,691 $ 326,219 Fixed rate 11,693 12,164 23,959 25,192 Construction 25,963 22,337 56,131 34,503 SBA - 7(a) 31,945 15,335 63,235 30,256 PPP (1) 127 3,435 428 6,442 Other 8,218 7,857 16,003 16,232 Total loans, net (2) $ 224,364 $ 226,916 $ 454,447 $ 438,844 Loans, held for sale Bridge 124 — 124 — Fixed rate 264 701 264 1,436 Construction 4,400 — 4,400 — Other 538 24 756 31 Total loans, held for sale (2) $ 5,326 $ 725 $ 5,544 $ 1,467 Investments held to maturity (1) 14 12 27 20 Preferred equity investment (2) 3,439 2,193 4,523 4,361 MBS 976 1,158 1,932 2,280 Total interest income $ 234,119 $ 231,004 $ 466,473 $ 446,972 Interest expense Secured borrowings (51,500) (47,282) (99,138) (92,502) PPPLF borrowings (3) (24) (124) (52) (288) Securitized debt obligations of consolidated VIEs (94,476) (99,558) (194,728) (190,159) Guaranteed loan financing (17,782) (4,693) (36,290) (9,565) Senior secured notes (6,368) (4,397) (10,749) (8,778) Convertible note — (2,188) — (4,376) Corporate debt (13,017) (11,979) (26,015) (23,421) Total interest expense $ (183,167) $ (170,221) $ (366,972) $ (329,089) Net interest income before provision for loan losses $ 50,952 $ 60,783 $ 99,501 $ 117,883 (1) Included in other assets on the consolidated balance sheets. (2) Includes interest income on assets in consolidated VIEs. (3) Included in other liabilities on the consolidated balance sheets. |
Derivative instruments
Derivative instruments | 6 Months Ended |
Jun. 30, 2024 | |
Derivative instruments | |
Derivative instruments | Note 15. 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. 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 operations. 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 operations. 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. Refer to Note 22 for further details on derivative assets and liabilities by product type. June 30, 2024 December 31, 2023 Notional Derivative Derivative Notional Derivative Derivative (in thousands) Primary Underlying Risk Amount Asset Liability Amount Asset Liability Interest Rate Swaps - not designated as hedges Interest rate risk $ 26,300 $ 4,380 $ — $ 183,081 $ 12,349 $ — Interest Rate Swaps - designated as hedges Interest rate risk 546,620 51,390 (2,038) 416,139 24,463 — FX forwards Foreign exchange rate risk 62,166 343 (600) 39,447 — (212) Total $ 635,086 $ 56,113 $ (2,638) $ 638,667 $ 36,812 $ (212) The table below presents gains and losses on derivatives. Net Realized Net Unrealized (in thousands) Gain (Loss) Gain (Loss) Three Months Ended June 30, 2024 Interest rate swaps $ 3,566 $ (1,803) FX forwards 912 — Total $ 4,478 $ (1,803) Three Months Ended June 30, 2023 Interest rate swaps $ 9,682 $ 3,853 FX forwards 745 (1,364) Total $ 10,427 $ 2,489 Six Months Ended June 30, 2024 Interest rate swaps $ 7,958 $ 5,083 FX forwards 912 — Total $ 8,870 $ 5,083 Six Months Ended June 30, 2023 Interest rate swaps $ 13,368 $ (4,606) FX forwards 745 (1,826) Total $ 14,113 $ (6,432) 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 operations. ● 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. 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 Derivatives - effective portion recorded in OCI Total change in OCI for period Interest rate swaps Three Months Ended June 30, 2024 $ (278) $ (1,718) $ (1,440) Three Months Ended June 30, 2023 $ (294) $ 2,199 $ 2,493 Six Months Ended June 30, 2024 $ (561) $ 4,244 $ 4,805 Six Months Ended June 30, 2023 $ (592) $ (1,904) $ (1,312) 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 | 6 Months Ended |
Jun. 30, 2024 | |
Real estate owned, held for sale | |
Real estate owned, held for sale | Note 16. Real Estate Owned, Held for Sale The table below presents details on the real estate owned, held for sale portfolio. (in thousands) June 30, 2024 December 31, 2023 Acquired Portfolio: Mixed use $ 9,658 $ 8,535 Multi-family 35,589 73,745 Lodging 5,035 14,010 Residential 11,977 23,064 Office 6,630 6,901 Land 74,478 86,375 Total Acquired REO (1) $ 143,367 $ 212,630 Other REO Held for Sale: Office 10,683 5,983 Mixed use 4,247 4,247 Multi-family 27,892 28,139 Other 1,694 1,950 Total Other REO $ 44,516 $ 40,319 Total real estate owned, held for sale $ 187,883 $ 252,949 (1) Refer to Note 5 for further details on assets acquired and liabilities assumed in connection with the Broadmark Merger. In the table above, Other REO excludes $3.4 million and $1.9 million as of June 30, 2024 and December 31, 2023, 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 $23.7 million to decrease the value of real estate owned, held for sale in connection with the Broadmark Merger. Refer to Note 5 for further details on assets acquired and liabilities assumed in connection with the Broadmark Merger. |
Agreements and transactions wit
Agreements and transactions with related parties | 6 Months Ended |
Jun. 30, 2024 | |
Agreements and transactions with related parties | |
Agreements and transactions with related parties | Note 17. 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 Board. Management fee. The table below presents the management fee payable to the Manager. Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Management fee - total $ 6.2 million $ 5.8 million $ 12.8 million $ 10.9 million Management fee - amount unpaid $ 12.8 million $ 10.9 million $ 12.8 million $ 10.9 million Incentive distribution. four twelve The table below presents the Incentive fee payable to the Manager. Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Incentive fee distribution - total $ — $ 0.1 million $ — $ 1.8 million Incentive fee distribution - amount unpaid $ — $ 1.8 million $ — $ 1.8 million The Management Agreement may be terminated upon the affirmative vote of at least two-thirds two-thirds concurrently with such termination, the Class A special unit for an amount equal to three times the average annual amount of the incentive distribution paid or payable in respect of the Class A special unit during the 24 month period immediately preceding such termination, calculated as of the end of the most recently completed fiscal quarter before the date of termination. The current term of the Management Agreement will expire on October 31, 2024 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 June 30, Six Months Ended June 30, 2024 2023 2024 2023 Reimbursable expenses payable to Manager - total $ 3.3 million $ 2.8 million $ 6.1 million $ 5.7 million Reimbursable expenses payable to Manager - amount unpaid $ 3.0 million $ 2.8 million $ 3.0 million $ 2.8 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 | 6 Months Ended |
Jun. 30, 2024 | |
Other assets and other liabilities | |
Other assets and other liabilities | Note 18. Other Assets and Other Liabilities The table below presents the composition of other assets and other liabilities. (in thousands) June 30, 2024 December 31, 2023 Other assets: Goodwill $ 49,091 $ 38,530 Deferred loan exit fees 30,175 32,271 Accrued interest 65,498 64,504 Due from servicers 35,759 20,780 Intangible assets 28,704 17,749 Receivable from third party 32,895 36,519 Deferred financing costs 9,994 9,544 Deferred tax asset 21,085 — Tax receivable 61,526 3,069 Right-of-use lease asset 3,957 2,539 PPP receivables 23,735 34,597 Investments held to maturity 3,446 3,446 Purchased future receivables, net 2,093 9,483 Other 11,455 27,144 Other assets $ 379,413 $ 300,175 Accounts payable and other accrued liabilities: Accrued salaries, wages and commissions 20,028 33,961 Accrued interest payable 38,545 35,373 Servicing principal and interest payable 10,360 6,249 Deferred tax liability 32,977 32,977 Repair and denial reserve 7,580 6,974 Payable to related parties 12,854 7,038 PPP liabilities 24,830 36,182 Accrued professional fees 3,235 5,354 Lease payable 9,384 8,205 Other 44,973 35,168 Total accounts payable and other accrued liabilities $ 204,766 $ 207,481 In the table above, investments held to maturity was $3.4 million as of both June 30, 2024 and December 31, 2023. As of both June 30, 2024 and December 31, 2023 substantially all of the investments held to maturity consisted of multi-family preferred equities with maturities of one through five years and a weighted average interest rate of 10.0%. The provision for credit losses on held to maturity securities was not material for the three and six months ended June 30, 2024 or June 30, 2023. Goodwill The table below presents the carrying value of goodwill by reportable segment. (in thousands) June 30, 2024 December 31, 2023 LMM Commercial Real Estate $ 27,324 $ 27,324 Small Business Lending 21,767 11,206 Total $ 49,091 $ 38,530 Intangible assets The table below presents information on intangible assets. (in thousands) Gross Carrying Amount Accumulated Amortization Net Carrying Value June 30, 2024 Amortized intangible assets: Internally developed software $ 14,107 $ 5,161 $ 8,946 Customer relationships 6,799 1,043 5,756 Broker network 9,300 1,284 8,016 Other 3,182 696 2,486 Unamortized intangible assets: Trade name 2,500 — 2,500 SBA license 1,000 — 1,000 Total intangible assets $ 36,888 $ 8,184 $ 28,704 December 31, 2023 Amortized intangible assets: Internally developed software $ 11,840 $ 3,884 $ 7,956 Customer relationships 6,800 865 5,935 Other 2,080 1,722 358 Unamortized intangible assets: Trade name 2,500 — 2,500 SBA license 1,000 — 1,000 Total intangible assets $ 24,220 $ 6,471 $ 17,749 The amortization expense related to intangible assets was $0.9 million and $1.7 million for the three and six months ended June 30, 2024 and $0.4 million and $0.8 million for the three and six months ended June 30, 2023, respectively. Such amounts are recorded as other operating expenses in the consolidated statements of operations. The table below presents amortization expense related to finite-lived intangible assets for the subsequent five years. (in thousands) June 30, 2024 2024 $ 2,168 2025 4,204 2026 3,554 2027 3,434 2028 2,407 Thereafter 9,437 Total $ 25,204 |
Other income and operating expe
Other income and operating expenses | 6 Months Ended |
Jun. 30, 2024 | |
Other income and operating expenses | |
Other income and operating expenses | Note 19. Other Income and Operating Expenses The table below presents the composition of other income and operating expenses. Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2024 2023 2024 2023 Other income: Origination income $ 2,473 $ 6,316 $ 5,130 $ 10,928 Change in repair and denial reserve (959) 527 (2,166) 328 ERC consulting income 95 8,481 2,586 18,156 Other 4,988 3,308 16,873 9,612 Total other income $ 6,597 $ 18,632 $ 22,423 $ 39,024 Other operating expenses: Origination costs 1,415 1,744 3,229 3,399 Technology expense 2,232 1,578 4,825 3,090 Impairment on real estate 9,130 — 26,102 3,418 Rent and property tax expense 1,372 1,043 3,690 2,111 Recruiting, training and travel expense 525 722 1,232 1,353 Marketing expense 350 220 749 532 Bad debt expense - ERC 1,808 — 3,621 — Other 4,970 4,250 8,541 8,263 Total other operating expenses $ 21,802 $ 9,557 $ 51,989 $ 22,166 |
Redeemable Preferred Stock and
Redeemable Preferred Stock and Stockholders Equity | 6 Months Ended |
Jun. 30, 2024 | |
Redeemable Preferred Stock and Stockholders' Equity | |
Redeemable Preferred Stock and Stockholders' Equity | Note 20. Redeemable Preferred Stock and Stockholders’ Equity Common stock dividends The table below presents dividends declared by the Board on common stock during the last twelve months. Declaration Date Record Date Payment Date Dividend per Share May 15, 2023 May 30, 2023 June 15, 2023 $ 0.26 May 15, 2023 June 30, 2023 July 31, 2023 $ 0.14 September 15, 2023 September 29, 2023 October 31, 2023 $ 0.36 December 14, 2023 December 29, 2023 January 31, 2024 $ 0.30 March 15, 2024 March 28, 2024 April 30, 2024 $ 0.30 June 14, 2024 June 28, 2024 July 31, 2024 $ 0.30 Stock incentive plans The Company currently maintains the 2013 Equity Incentive Plan and the 2023 Equity Incentive Plan which authorize the Compensation Committee of the Board to approve grants of equity-based awards to the Company’s officers and directors, and employees of the Manager and its affiliates. The 2013 Equity Incentive Plan provided 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. On August 22, 2023, the Company’s stockholders approved the 2023 Equity Incentive Plan which replaces the 2013 Equity Incentive Plan and provides for grants of equity-based awards up to 5.5 million shares of the Company’s common stock. As of August 22, 2023, no further awards will be granted under the 2013 Equity Incentive Plan, and the 2013 Equity Incentive Plan remains in effect only for so long as awards granted thereunder remain outstanding. 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 - In 2024, 2023, and 2022, the Company granted 615,022, 413,852, and 327,692, respectively, of time-based RSAs under the 2013 Equity Incentive Plan and the 2023 Equity Incentive Plan 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. The Company further granted in these years 126,930, 75,639, and 45,162, 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 may elect to receive RSAs or RSUs that have a deferred settlement date of their choosing. Dividends are paid on all above-mentioned time-based awards, vested and non-vested. Additionally, as part of the Broadmark Merger, the Company assumed the Broadmark RSU Awards outstanding immediately prior to the Effective Time and converted them into 736,666 Company RSUs after applying the Exchange Ratio, of which 1,230 Company RSUs remain outstanding. The Broadmark RSU Awards have the same terms and conditions as were applicable to them immediately prior to the Effective Time and, accordingly, are not dividend eligible. The table below summarizes RSU and RSA activity, excluding performance-based equity awards. See below for further details on performance-based equity awards. 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, 2023 747,808 $ 9,888 $ 13.22 Granted 768,407 6,993 9.10 Vested (325,918) (4,110) 12.61 Forfeited (58,937) (609) 10.33 Outstanding, March 31, 2024 1,131,360 $ 12,162 $ 10.75 Granted 2,760 25 9.06 Vested (60,154) (592) 9.84 Forfeited (65,872) (699) 10.61 Outstanding, June 30, 2024 1,008,094 $ 10,896 $ 10.81 The Company recognized $1.9 million and $3.8 million for the three and six months ended June 30, 2024, respectively, and $2.0 million and $3.9 million for the three and six months ended June 30, 2023, respectively, of non-cash compensation expense related to its stock-based incentive plan in the consolidated statements of operations. As of June 30, 2024 and December 31, 2023, approximately $10.9 million and $9.9 million, respectively, of non-cash compensation expense related to unvested awards had not yet been charged to net income. These costs are expected to be amortized into compensation expense ratably over the course of the remaining vesting periods. Performance-based equity awards under the 2023 Equity Incentive Plan 2024 performance-based RSUs. Performance-based equity awards under the 2013 Equity Incentive Plan 2023 performance-based RSUs. 2/3 1/3 In February 2023, the Company granted, to certain key employees, 92,451 performance-based RSUs at a grant date fair value of $12.98 per performance-based RSU. The performance-based RSUs are allocated 50% to awards that may be earned based on achievement of performance goals related to distributable ROE for the three-year forward-looking period ending December 31, 2025 and 50% to awards that may be earned based on achievement of performance goals related to relative TSR for such three-year forward-looking performance period relative to the performance of a designated peer group. Subject to the distributable ROE metric and relative TSR achieved during the performance period, the actual number of shares that the key employees receive at the end of the performance period may range from 0% to 200% of the target award. The fair value of the performance-based RSUs is recorded as compensation expense over the performance period and will cliff vest at the end of the three-year performance period, with an offsetting increase in stockholders’ equity. 2022 performance-based RSUs. and 50% to awards that may be earned based on achievement of performance goals related to relative TSR for such three-year forward-looking performance period relative to the performance of a designated peer group. Subject to the distributable ROE metric and relative TSR achieved during the vesting period, the actual number of shares that the key employees receive at the end of the performance period may range from 0% to 200% of the target award. The fair value of the performance-based RSUs is recorded as compensation expense over the performance period and will cliff vest at the end of a three-year performance period, with an offsetting increase in stockholders’ equity. 2021 performance-based RSUs 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 June 30, 2024, the conversion rate was 1.5285 shares of common stock per $25 principal amount of the Series C Preferred Stock, which is equivalent to a conversion price of approximately $16.36 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 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) June 30, 2024 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 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 on its Series C Preferred Stock and Series E Preferred Stock, respectively, during the three months ended June 30, 2024. The dividends were paid on July 15, 2024 for Series C Preferred Stock and on July 31, 2024 for Series E Preferred Stock to the holders of record as of the close of business on June 28, 2024. ● 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. Public and Private Warrants As part of the Broadmark Merger, the Company assumed public and private placement warrants that represented the right to purchase shares of Broadmark Common Stock. As of June 30, 2024, there were 41.7 million public warrants outstanding, each representing the right to purchase 0.1180825 shares of our common stock, and 5.2 million private placement warrants outstanding, each representing the right to purchase 0.47233 shares of common stock. In the aggregate, the Company has outstanding warrants to purchase approximately 7.4 million shares of common stock at a price of $24.34 per whole share. Settlement of outstanding warrants will be in shares of common stock, unless the Company elects (solely in the Company’s discretion) to settle warrants the Company has called for redemption in cash, and subject to customary adjustment in the event of business combinations and certain tender offers. Unless earlier redeemed, the public warrants will expire on November 19, 2024. The liability for the private placement warrants was less than $0.1 million as of June 30, 2024 and is included in accounts payable and other accrued liabilities in the consolidated balance sheets. 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”). The Company made no such sales through the Equity ATM Program during the three or six months ended June 30, 2024 or June 30, 2023. As of June 30, 2024, shares representing approximately $78.4 million remain available for sale under the Equity ATM Program. |
Earnings per Share of Common St
Earnings per Share of Common Stock | 6 Months Ended |
Jun. 30, 2024 | |
Earnings per Share of Common Stock | |
Earnings per Share of Common Stock | Note 21. 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 June 30, Six Months Ended June 30, (in thousands, except for share and per share amounts) 2024 2023 2024 2023 Basic Earnings Net income (loss) from continuing operations $ (31,427) $ 244,532 $ (107,009) $ 283,041 Less: Income attributable to non-controlling interest 1,820 4,490 1,937 6,325 Less: Income attributable to participating shares 2,301 2,373 4,636 4,744 Basic earnings - continuing operations $ (35,548) $ 237,669 $ (113,582) $ 271,972 Basic earnings - discontinued operations $ (2,774) $ 8,841 $ (1,359) $ 7,310 Diluted Earnings Net income (loss) from continuing operations (31,427) 244,532 (107,009) 283,041 Less: Income attributable to non-controlling interest 1,820 4,490 1,937 6,325 Less: Income attributable to participating shares 2,301 2,373 4,636 4,744 Add: Expenses attributable to dilutive instruments 131 2,319 262 4,638 Diluted earnings - continuing operations $ (35,417) $ 239,988 $ (113,320) $ 276,610 Diluted earnings - discontinued operations $ (2,774) $ 8,841 $ (1,359) $ 7,310 Number of Shares Basic — Average shares outstanding 168,653,741 131,651,125 170,343,303 121,219,982 Effect of dilutive securities — Unvested participating shares 1,210,234 9,932,712 1,170,253 9,876,386 Diluted — Average shares outstanding 169,863,975 141,583,837 171,513,556 131,096,368 EPS Attributable to RC Common Stockholders: Basic - continuing operations $ (0.21) $ 1.80 $ (0.67) $ 2.24 Basic - discontinued operations $ (0.02) $ 0.07 $ (0.01) $ 0.06 Basic - total $ (0.23) $ 1.87 $ (0.68) $ 2.30 Diluted - continuing operations $ (0.21) $ 1.70 $ (0.67) $ 2.11 Diluted - discontinued operations $ (0.02) $ 0.06 $ (0.01) $ 0.06 Diluted - total $ (0.23) $ 1.76 $ (0.68) $ 2.17 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. 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 June 30, 2024 and December 31, 2023, the non-controlling interest OP unit holders owned 1,225,582 and 1,330,582 OP units, respectively. |
Offsetting assets and liabiliti
Offsetting assets and liabilities | 6 Months Ended |
Jun. 30, 2024 | |
Offsetting assets and liabilities | |
Offsetting assets and liabilities | Note 22. Offsetting Assets and Liabilities In order to better define its contractual rights and to secure rights that will help the Company mitigate its counterparty risk, the Company may enter into an International Swaps and Derivatives Association (“ISDA”) Master Agreement with multiple derivative counterparties. An ISDA Master Agreement, published by ISDA, is a bilateral trading agreement between two parties that allow both parties to enter into over-the-counter (“OTC”), derivative contracts. The ISDA Master Agreement contains a Schedule to the Master Agreement and a Credit Support Annex, which governs the maintenance, reporting, collateral management and default process (netting provisions in the event of a default and/or a termination event). Under an ISDA Master Agreement, the Company may, under certain circumstances, offset with the counterparty certain derivative financial instruments’ payables and/or receivables with collateral held and/or posted and create one single net payment. The provisions of the ISDA Master Agreement typically permit a single net payment in the event of default, including the bankruptcy or insolvency of the counterparty. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against the right of offset in bankruptcy, insolvency or other events. In addition, certain ISDA Master Agreements allow counterparties to terminate derivative contracts prior to maturity in the event the Company’s stockholders’ equity declines by a stated percentage or the Company fails to meet the terms of its ISDA Master Agreements, which would cause the Company to accelerate payment of any net liability owed to the counterparty. As of June 30, 2024 and December 31, 2023, 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. The Company discloses the impact of offsetting of assets and liabilities represented in the consolidated balance sheets to enable users of the consolidated financial statements to evaluate the effect or potential effect of netting arrangements on its financial position for recognized assets and liabilities. These recognized assets and liabilities are financial instruments and derivative instruments that are either subject to enforceable master netting arrangements or ISDA Master Agreements or meet the following right of setoff criteria: (a) the amounts owed by the Company to another party are determinable, (b) the Company has the right to set off the amounts owed with the amounts owed by the counterparty, (c) the Company intends to offset, and (d) the Company’s right of offset is enforceable at law. As of June 30, 2024 and December 31, 2023, the Company has elected to offset assets and liabilities associated with its OTC derivative contracts in the consolidated balances sheets. 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 June 30, 2024 Assets FX forwards $ 343 $ — $ 343 $ — $ — $ 343 Interest rate swaps 55,770 41,731 14,039 — — 14,039 Total $ 56,113 $ 41,731 $ 14,382 $ — $ — $ 14,382 Liabilities Interest rate swaps 2,038 — 2,038 — — 2,038 FX forwards 600 — 600 — — 600 Secured borrowings 2,311,969 — 2,311,969 2,311,969 — — PPPLF 24,830 — 24,830 23,735 — 1,095 Total $ 2,339,437 $ — $ 2,339,437 $ 2,335,704 $ — $ 3,733 December 31, 2023 Assets Interest rate swaps 36,812 34,408 2,404 — — 2,404 Total $ 36,812 $ 34,408 $ 2,404 $ — $ — $ 2,404 Liabilities FX forwards 212 — 212 — — 212 Secured borrowings 2,102,075 — 2,102,075 2,102,075 — — PPPLF 36,036 — 36,036 34,596 — 1,440 Total $ 2,138,323 $ — $ 2,138,323 $ 2,136,671 $ — $ 1,652 (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 | 6 Months Ended |
Jun. 30, 2024 | |
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 23. Financial Instruments with Off-Balance Sheet Risk, Credit Risk, and Certain Other Risks In the normal course of business, the Company enters into transactions 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 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. 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 Risk 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 LMM 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 LMM loans are short-term assets, the discount rates used for valuation are based on short-term market interest rates, which may not move in tandem with long-term market interest rates. Prepayment Risk — |
Commitments, Contingencies and
Commitments, Contingencies and Indemnifications | 6 Months Ended |
Jun. 30, 2024 | |
Commitments, Contingencies and Indemnifications | |
Commitments, Contingencies and Indemnifications | Note 24. Commitments, Contingencies and Indemnifications Litigation The Company may be subject to litigation and administrative proceedings arising in the ordinary course of 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. Such indemnification obligations may not be subject to maximum loss clauses. Historically, payments related to these indemnification obligations have not been material to the Company. 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) June 30, 2024 December 31, 2023 Loans, net $ 520,855 $ 745,782 Loans, held for sale $ 116,544 $ 19,327 Preferred equity investment $ 279 $ 436 |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2024 | |
Income Taxes | |
Income Taxes | Note 25. 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 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. The Company recognizes deferred tax assets and liabilities for the future tax consequences arising from differences between the carrying amounts of existing assets and liabilities under GAAP and their respective tax bases. The Company evaluates its deferred tax assets for recoverability using a consistent approach which considers the relative impact of negative and positive evidence, including historical profitability and projections of future taxable income. The provisions of ASC 740 require that carrying amounts of deferred tax assets be reduced by a valuation allowance if, based on the available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. As of December 31, 2023, the Company recorded net deferred tax assets of $21.1 million as a result of the acquisition of Broadmark taxable REIT subsidiary. A full valuation allowance was recorded against these deferred tax assets at year-end as it was more likely than not that these assets would not be realized. In the first quarter of 2024, the Company completed a reorganization which will allow the Company to recover the deferred tax assets recorded, and as such, the valuation allowance was released in the first quarter. There was no such valuation allowance activity during the three months ended June 30, 2024. The Company’s framework for assessing the recoverability of deferred tax assets requires it to weigh all available evidence, including the sustainability of recent profitability required to realize the deferred tax assets, the cumulative net income in its consolidated statements of operations in recent years, the future reversals of existing taxable temporary differences, and the carryforward periods for any carryforwards of net operating losses. |
Segment reporting
Segment reporting | 6 Months Ended |
Jun. 30, 2024 | |
Segment reporting | |
Segment reporting | Note 26. Segment Reporting The Company reports its results of operations through the following two business segments: i) LMM Commercial Real Estate (formerly our SBC Lending and Acquisitions segment) and ii) Small Business Lending. The Company’s organizational structure is based on a number of factors that the Chief Operating Decision Maker (“CODM”), the Chief Executive Officer, uses to evaluate, view, and run its business operations, which includes customer base and nature of loan program types. The segments are based on this organizational structure and the information reviewed by the CODM and management to evaluate segment results. LMM Commercial Real Estate The Company originates LMM loans across the full life-cycle of an LMM 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. LMM originations include construction and permanent financing activities for the preservation and construction of affordable housing, primarily utilizing tax-exempt bonds. This segment also reflects the impact of LMM securitization activities. The Company acquires performing and non-performing LMM 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 and government guaranteed loans focused on the USDA. This segment also reflects the impact of SBA securitization activities. Corporate- Other Corporate - Other consists primarily of unallocated activities including interest expense relating to senior secured 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 June 30, 2024 Small LMM Commercial Business Corporate- (in thousands) Real Estate Lending Other Consolidated Interest income $ 202,047 $ 32,072 $ — $ 234,119 Interest expense (158,344) (24,823) — (183,167) Net interest income before recovery of loan losses $ 43,703 $ 7,249 $ — $ 50,952 Recovery of loan losses 14,414 4,457 — 18,871 Net interest income after recovery of loan losses $ 58,117 $ 11,706 $ — $ 69,823 Non-interest income Net realized gain (loss) on financial instruments and real estate owned (10,089) 17,339 — 7,250 Net unrealized gain (loss) on financial instruments (1,497) 140 — (1,357) Valuation allowance, loans held for sale (80,987) — — (80,987) Servicing income, net 1,255 2,016 — 3,271 Loss on bargain purchase — — (18,306) (18,306) Income on unconsolidated joint ventures 1,139 — — 1,139 Other income 4,796 376 1,425 6,597 Total non-interest income (loss) $ (85,383) $ 19,871 $ (16,881) $ (82,393) Non-interest expense Employee compensation and benefits (7,142) (8,328) (2,329) (17,799) Allocated employee compensation and benefits from related party (300) — (2,700) (3,000) Professional fees (874) (2,930) (2,229) (6,033) Management fees – related party — — (6,198) (6,198) Loan servicing expense (10,896) (116) — (11,012) Transaction related expenses — — (1,592) (1,592) Other operating expenses (12,054) (5,918) (3,830) (21,802) Total non-interest expense $ (31,266) $ (17,292) $ (18,878) $ (67,436) Income (loss) before provision for income taxes $ (58,532) $ 14,285 $ (35,759) $ (80,006) Total assets $ 9,527,088 $ 1,367,463 $ 455,888 $ 11,350,439 Six Months Ended June 30, 2024 Small LMM Commercial Business Corporate- (in thousands) Real Estate Lending Other Consolidated Interest income $ 402,810 $ 63,663 $ — $ 466,473 Interest expense (317,229) (49,743) — (366,972) Net interest income before recovery of loan losses $ 85,581 $ 13,920 $ — $ 99,501 Recovery of loan losses 45,169 246 45,415 Net interest income after recovery of loan losses $ 130,750 $ 14,166 $ — $ 144,916 Non-interest income Net realized gain (loss) on financial instruments and real estate owned (4,334) 30,452 — 26,118 Net unrealized gain (loss) on financial instruments 1,489 1,786 — 3,275 Valuation allowance, loans held for sale (227,167) — — (227,167) Servicing income, net 2,553 4,476 — 7,029 Loss on bargain purchase — — (18,306) (18,306) Income on unconsolidated joint ventures 1,607 — — 1,607 Other income 17,523 3,475 1,425 22,423 Total non-interest income (loss) $ (208,329) $ 40,189 $ (16,881) $ (185,021) Non-interest expense Employee compensation and benefits (14,618) (17,620) (3,975) (36,213) Allocated employee compensation and benefits from related party (550) — (4,950) (5,500) Professional fees (2,515) (6,145) (4,438) (13,098) Management fees – related party — — (12,846) (12,846) Loan servicing expense (23,443) (363) — (23,806) Transaction related expenses — — (2,242) (2,242) Other operating expenses (33,588) (11,271) (7,130) (51,989) Total non-interest expense $ (74,714) $ (35,399) $ (35,581) $ (145,694) Income (loss) before provision for income taxes $ (152,293) $ 18,956 $ (52,462) $ (185,799) Total assets $ 9,527,088 $ 1,367,463 $ 455,888 $ 11,350,439 Three Months Ended June 30, 2023 Small LMM Commercial Business Corporate- (in thousands) Real Estate Lending Other Consolidated Interest income $ 212,233 $ 18,771 $ — $ 231,004 Interest expense (160,503) (9,718) — (170,221) Net interest income before provision for loan losses $ 51,730 $ 9,053 $ — $ 60,783 Provision for loan losses (17,415) (2,012) — (19,427) Net interest income after provision for loan losses $ 34,315 $ 7,041 $ — $ 41,356 Non-interest income Net realized gain (loss) on financial instruments and real estate owned 15,356 8,522 — 23,878 Net unrealized gain (loss) on financial instruments (677) (734) — (1,411) Servicing income, net 1,890 3,149 — 5,039 Gain on bargain purchase — — 229,894 229,894 Income on unconsolidated joint ventures 33 — — 33 Other income 8,167 10,185 280 18,632 Total non-interest income $ 24,769 $ 21,122 $ 230,174 $ 276,065 Non-interest expense Employee compensation and benefits (8,724) (11,614) (2,076) (22,414) Allocated employee compensation and benefits from related party (250) — (2,250) (2,500) Professional fees (1,135) (2,782) (1,616) (5,533) Management fees – related party — — (5,760) (5,760) Incentive fees – related party — — (71) (71) Loan servicing expense (10,746) (148) — (10,894) Transaction related expenses — — (13,966) (13,966) Other operating expenses (3,598) (4,687) (1,272) (9,557) Total non-interest expense $ (24,453) $ (19,231) $ (27,011) $ (70,695) Income before provision for income taxes $ 34,631 $ 8,932 $ 203,163 $ 246,726 Total assets $ 10,969,193 $ 739,391 $ 220,484 $ 11,929,068 Six Months Ended June 30, 2023 Small LMM Commercial Business Corporate- (in thousands) Real Estate Lending Other Consolidated Interest income $ 410,272 $ 36,700 $ — $ 446,972 Interest expense (309,997) (19,092) — (329,089) Net interest income before provision for loan losses $ 100,275 $ 17,608 $ — $ 117,883 Provision for loan losses (9,286) (3,407) — (12,693) Net interest income after provision for loan losses $ 90,989 $ 14,201 $ — $ 105,190 Non-interest income Net realized gain (loss) on financial instruments and real estate owned 20,181 15,272 — 35,453 Net unrealized gain (loss) on financial instruments (6,788) (258) — (7,046) Servicing income, net 2,983 6,698 — 9,681 Gain on bargain purchase — — 229,894 229,894 Income on unconsolidated joint ventures 689 — — 689 Other income 17,260 21,153 611 39,024 Total non-interest income $ 34,325 $ 42,865 $ 230,505 $ 307,695 Non-interest expense Employee compensation and benefits (14,930) (22,889) (4,322) (42,141) Allocated employee compensation and benefits from related party (482) — (4,344) (4,826) Professional fees (2,116) (4,407) (4,553) (11,076) Management fees – related party — — (10,841) (10,841) Incentive fees – related party — — (1,791) (1,791) Loan servicing expense (18,804) (245) — (19,049) Transaction related expenses — — (14,859) (14,859) Other operating expenses (10,331) (8,781) (3,054) (22,166) Total non-interest expense $ (46,663) $ (36,322) $ (43,764) $ (126,749) Income before provision for income taxes $ 78,651 $ 20,744 $ 186,741 $ 286,136 Total assets $ 10,969,193 $ 739,391 $ 220,484 $ 11,929,068 |
Subsequent events
Subsequent events | 6 Months Ended |
Jun. 30, 2024 | |
Subsequent events | |
Subsequent events | Note 27. Subsequent Events On July 1, 2024, the Company acquired Funding Circle USA, Inc., which operates an online lending platform to originate and service small business loans, for approximately $41.2 million in cash. |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Jun. 30, 2024 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2024 | |
Summary of Significant Accounting Policies | |
Use of estimates | Use of estimates |
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, net | 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 | 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 credit 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 Current Expected Credit Loss (“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 to be “collateral-dependent” loans if they 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. 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. |
Loan modifications made to borrowers experiencing financial difficulty | Loan modifications made to borrowers experiencing financial difficulty. |
Loans, held for sale | Loans, held for sale Loans are classified as held for sale if there is an intent to sell in the near-term. These loans are recorded at the lower of amortized cost or fair value, unless the fair value option has been elected at the time of origination or acquisition. If the loan’s fair value is determined to be less than its amortized cost, a non-recurring fair value adjustment may be recorded through a valuation allowance. For loans originated through the LMM Commercial Real Estate and Small Business Lending segments, for which the fair value option has been elected, changes in fair value are recurring and are reported as net unrealized gain (loss) on financial instruments in the consolidated statements of operations. Loans, held for sale for which the fair value option has been elected are predominantly classified as level 2 in the fair value hierarchy. For originated SBA loans, the guaranteed portion is held at fair value. Interest is recognized as interest income in the consolidated statements of operations when earned and deemed collectible. |
Paycheck Protection Program loans | Paycheck Protection Program loans Paycheck Protection Program (“PPP”) loans were originated in response to the COVID-19 pandemic. 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 operations 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 operations. 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 | Mortgage-backed securities 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 operations. Mortgage-backed securities are classified as level 2 in the fair value hierarchy. |
Derivative instruments | Derivative instruments Subject to maintaining qualification as a REIT for U.S. federal income tax purposes, the Company utilizes derivative financial instruments, comprised of interest rate swaps and FX forwards as part of its risk management strategy. The Company accounts for derivative instruments under ASC 815, Derivatives and Hedging Interest rate swap agreements. FX forwards. 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 operations 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. 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 (losses) related to servicing rights retained is included in net realized gain (loss) in the consolidated statements of operations. Servicing rights are accounted for under ASC 860, Transfers and Servicing Servicing rights are initially recorded at fair value and subsequently carried at amortized cost. Servicing rights are amortized in proportion to and over the expected service period, or term of the loans, and are evaluated for potential impairment quarterly. 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 the consolidated statements of operations 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. |
Real estate owned, 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 operations. |
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 CECL method the Company utilizes is an aging schedule where estimating expected life-time credit losses is determined on the basis of how long a receivable has been outstanding. Where there is doubt regarding the ultimate collectability, the allowance for credit losses increases through provisions recorded in the consolidated statements of operations and reduced by charge-offs, net of recoveries. Purchased future receivables that have been delinquent for 90 days or more are considered uncollectible and subsequently charged off. While the Company has a formal methodology to determine the adequate and appropriate level of the allowance for credit losses, estimates involve judgment and assumptions as to various factors, including current economic conditions and inherent risk in the portfolio. 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. |
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 second quarter of 2024, 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 LMM Commercial Real Estate segment are performed primarily by third-party servicers. SBA loans originated and held by the Company are 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 30 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 Liquidity Facility (“PPPLF”) is a government loan facility created to enable the distribution of funds for PPP whereby the Company received advances from the Federal Reserve through the PPPLF. The Company accounts for borrowings under the PPPLF under ASC 470. Interest accrued in connection with PPPLF is recorded as interest expense in the consolidated statements of operations. |
Securitized debt obligations of consolidated VIEs, net | Securitized debt obligations of consolidated VIEs, net The Company has engaged in several securitization transactions accounted 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 operations. |
Senior secured notes, net | Senior secured notes, net The Company accounts for secured debt offerings, net of issuance costs, under ASC 470 . |
Corporate debt, net | Corporate debt, net The Company accounts for corporate debt offerings, net of issuance costs, under ASC 470. Interest accrued in connection with corporate debt is recorded as interest expense in the consolidated statements of operations. |
Guaranteed loan financing | Guaranteed loan financing Certain partial loan sales do not meet the definition of a “participating interest” under ASC 860 and therefore, do not qualify as a sale. 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 operations. |
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 operations. |
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 with which they are associated. |
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 operations and represent direct investment in the operating partnership by third parties, including operating partnership units issued to satisfy a portion of the purchase price in connection with a series of mergers (collectively, the “Mosaic Mergers”), pursuant to which the company acquired a group of privately held, real estate structured finance opportunities funds, with a focus on construction lending (collectively, the “Mosaic Funds”), managed by MREC Management, LLC. In addition, the Company has non-controlling interests from investments in consolidated joint ventures whereby, net income or loss is generally based upon relative ownership interests or contractual arrangements. |
Fair value option | Fair value option ASC 825 , Financial Instruments 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 originated by the Company were made due to the short-term nature of these instruments. The Company additionally elected the fair value option for certain investments in unconsolidated joint ventures due to their short-term tenor. |
Earnings per share | Earnings per share Basic EPS 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 preferred stock and contingent equity rights (“CERs”) under the if-converted method and warrants under the treasury stock 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 and preferred stock 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 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 operations. 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 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. Employee retention credit consulting income. Realized gains (losses). Origination income and expense. |
Assets and Liabilities Held for Sale | Assets and liabilities held for sale The Company classifies long-lived assets or a disposal group to be sold as held for sale in the period when all the necessary criteria are met. The criteria includes (i) management, having the authority to approve the action, commits to a plan to sell the asset or the disposal group (ii) the asset or disposal group is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets (iii) an active program to locate a buyer and other actions required to complete the plan to sell the asset or disposal group have been initiated (iv) the sale of the asset or disposal group is probable, and transfer of the asset or disposal group is expected to qualify for recognition as a completed sale within one year (v) the asset or disposal group is being actively marketed for sale at a price that is reasonable in relation to its current fair value and (vi) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. Upon determining that a long-lived asset or disposal group meets the criteria to be classified as held for sale, the Company reports the assets and liabilities of the disposal group, if material, in the line items assets or liabilities held for sale, respectively, on the consolidated balance sheets. A long-lived asset or disposal group that is classified as held for sale is measured at the lower of its cost or estimated fair value less any costs to sell. The fair values of assets held for sale are assessed each reporting period and changes in such fair values are reported as an adjustment to the carrying value of the asset or disposal group with an offset on the consolidated statements of operations, to the extent that any subsequent changes in fair value do not exceed the cost basis of the asset or disposal group. Any loss resulting from the transfer of long-lived assets or disposal groups to assets held for sale is recognized in the period in which the held for sale criteria are met. |
Discontinued Operations | Discontinued operations The results of operations of long-lived assets or a disposal group that the Company has either disposed of or has classified as held for sale is reported as discontinued operations on the consolidated statements of operations if the disposal represents a strategic shift that has or will have a major effect on the Company’s operations and financial results. |
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 (loss). |
Business Combinations (Tables)
Business Combinations (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Madison One | |
Acquisitions | |
Schedule of fair value of assets acquired and liabilities acquired | (in thousands) June 5, 2024 Assets Cash and cash equivalents $ 83 Restricted cash 721 Servicing rights 16,304 Other assets: Intangible assets 10,400 Other 303 Total assets acquired $ 27,811 Liabilities Accounts payable and other accrued liabilities 978 Total liabilities assumed $ 978 Net assets acquired $ 26,833 Non-controlling interests (600) Net assets acquired, net of non-controlling interests $ 26,233 |
Schedule of aggregate amount of consideration transferred, net assets acquired, and related goodwill | (in thousands) June 5, 2024 Fair value of net assets acquired $ 26,233 Cash paid 32,868 Contingent consideration 3,926 Total consideration transferred $ 36,794 Goodwill $ 10,561 |
Broadmark | |
Acquisitions | |
Schedule of fair value of assets acquired and liabilities acquired | (in thousands) Preliminary Purchase Price Allocation Measurement Period Adjustments Updated Purchase Price Allocation Assets Cash and cash equivalents $ 38,710 $ — $ 38,710 Loans, net 772,954 (8,587) 764,367 Real estate owned, held for sale 158,911 (23,671) 135,240 Other assets 17,107 (7,151) 9,956 Total assets acquired $ 987,682 $ (39,409) $ 948,273 Liabilities Corporate debt, net 98,028 — 98,028 Accounts payable and other accrued liabilities 22,531 819 23,350 Total liabilities assumed $ 120,559 $ 819 $ 121,378 Net assets acquired $ 867,123 $ (40,228) $ 826,895 |
Schedule of aggregate amount of consideration transferred, net assets acquired, and related goodwill | (in thousands) Preliminary Purchase Price Allocation Measurement Period Adjustments Updated Purchase Price Allocation Fair value of net assets acquired $ 867,123 $ (40,228) $ 826,895 Consideration transferred based on the value of common stock issued 637,229 — 637,229 Bargain purchase gain $ 229,894 $ (40,228) $ 189,666 |
Schedule of pro-forma revenue and earnings | Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2024 2023 2024 2023 Selected Financial Data Interest income $ 234,119 $ 246,245 $ 466,473 $ 486,050 Interest expense (183,167) (172,876) (366,972) (333,860) Recovery of (provision for) loan losses 18,871 (22,360) 45,415 (17,327) Non-interest income (82,393) 276,813 (185,021) 309,307 Non-interest expense (66,239) (65,526) (144,101) (132,242) Income (loss) before provision for income taxes $ (78,809) $ 262,296 $ (184,206) $ 311,928 Income tax benefit (expense) 48,579 (5,141) 78,790 (5,532) Net income (loss) $ (30,230) $ 257,155 $ (105,416) $ 306,396 |
Loans and Allowance for Credi_2
Loans and Allowance for Credit Losses (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
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 | June 30, 2024 December 31, 2023 (in thousands) Carrying Value UPB Carrying Value UPB Loans Bridge $ 1,267,122 $ 1,270,125 $ 1,444,770 $ 1,448,281 Fixed rate 186,857 184,707 247,476 241,674 Construction 841,695 842,854 1,207,783 1,212,526 Freddie Mac — — 9,500 9,719 SBA - 7(a) 1,020,826 1,028,043 995,974 1,003,323 Other 162,155 164,043 196,087 198,499 Total Loans, before allowance for loan losses $ 3,478,655 $ 3,489,772 $ 4,101,590 $ 4,114,022 Allowance for loan losses $ (33,776) $ — $ (81,430) $ — Total Loans, net $ 3,444,879 $ 3,489,772 $ 4,020,160 $ 4,114,022 Loans in consolidated VIEs Bridge 4,804,452 4,816,128 5,370,251 5,389,535 Fixed rate 773,230 772,576 790,068 790,967 SBA - 7(a) 201,343 214,415 213,892 227,636 Other 233,440 234,224 257,289 258,029 Total Loans, in consolidated VIEs, before allowance for loan losses $ 6,012,465 $ 6,037,343 $ 6,631,500 $ 6,666,167 Allowance for loan losses on loans in consolidated VIEs $ (11,056) $ — $ (20,175) $ — Total Loans, net, in consolidated VIEs $ 6,001,409 $ 6,037,343 $ 6,611,325 $ 6,666,167 Loans, held for sale Bridge 251,836 251,375 — — Fixed rate 38,051 39,826 — — Construction 356,753 359,208 — — Freddie Mac 12,046 12,266 20,955 20,729 SBA - 7(a) 71,281 65,842 59,421 55,769 Other 20,263 20,021 1,223 1,297 Total Loans, held for sale, before valuation allowance $ 750,230 $ 748,538 $ 81,599 $ 77,795 Valuation allowance $ (217,719) $ — $ — $ — Total Loans, held for sale $ 532,511 $ 748,538 $ 81,599 $ 77,795 Loans, held for sale in consolidated VIEs Bridge $ 19,173 $ 19,173 $ — $ — Valuation allowance on loans, held for sale in consolidated VIEs $ (9,448) $ — $ — $ — Total Loans, held for sale in consolidated VIEs $ 9,725 $ 19,173 $ — $ — Total $ 9,988,524 $ 10,294,826 $ 10,713,084 $ 10,857,984 |
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 2024 2023 2022 2021 2020 Pre 2020 Total June 30, 2024 Bridge $ 6,086,253 $ 231,149 $ 255,672 $ 2,669,676 $ 2,643,443 $ 176,563 $ 93,405 $ 6,069,908 Fixed rate 957,283 — — 110,625 181,427 90,094 576,876 959,022 Construction 842,854 — 107,206 156,856 103,290 12,866 459,407 839,625 SBA - 7(a) 1,242,458 94,112 148,941 344,158 283,853 109,300 238,443 1,218,807 Other 398,267 6,330 2,801 4,614 7,375 8,600 365,824 395,544 Total Loans, before general allowance for loan losses $ 9,527,115 $ 331,591 $ 514,620 $ 3,285,929 $ 3,219,388 $ 397,423 $ 1,733,955 $ 9,482,906 General allowance for loan losses $ (36,618) Total Loans, net $ 9,446,288 Gross write-offs $ — $ 1,273 $ 1,492 $ 2,890 $ 533 $ 5,511 $ 11,699 UPB 2023 2022 2021 2020 2019 Pre 2019 Total December 31, 2023 Bridge $ 6,837,816 $ 323,648 $ 2,956,697 $ 2,949,521 $ 288,647 $ 166,266 $ 111,303 $ 6,796,082 Fixed rate 1,032,641 4,007 110,800 207,510 90,794 318,077 300,642 1,031,830 Construction 1,212,526 108,218 253,100 182,920 73,370 434,151 128,876 1,180,635 Freddie Mac 9,719 — — 3,810 5,690 — — 9,500 SBA - 7(a) 1,230,959 151,878 353,871 318,208 115,019 76,080 189,622 1,204,678 Other 456,528 2,599 4,877 18,549 8,708 43,724 374,776 453,233 Total Loans, before general allowance for loan losses $ 10,780,189 $ 590,350 $ 3,679,345 $ 3,680,518 $ 582,228 $ 1,038,298 $ 1,105,219 $ 10,675,958 General allowance for loan losses $ (44,473) Total Loans, net $ 10,631,485 Gross write-offs $ 100 $ 950 $ 3,236 $ 258 $ 360 $ 25,731 $ 30,635 |
Schedule of delinquency information on loans by year of origination | Carrying Value by Year of Origination (in thousands) UPB 2024 2023 2022 2021 2020 Pre 2020 Total June 30, 2024 Current $ 9,103,724 $ 330,985 $ 497,155 $ 3,168,095 $ 3,029,683 $ 380,511 $ 1,664,385 $ 9,070,814 30 - 59 days past due 45,971 505 124 16,759 13,408 — 15,112 45,908 60+ days past due 377,420 101 17,341 101,075 176,297 16,912 54,458 366,184 Total Loans, before general allowance for loan losses $ 9,527,115 $ 331,591 $ 514,620 $ 3,285,929 $ 3,219,388 $ 397,423 $ 1,733,955 $ 9,482,906 General allowance for loan losses $ (36,618) Total Loans, net $ 9,446,288 UPB 2023 2022 2021 2020 2019 Pre 2019 Total December 31, 2023 Current $ 9,632,399 $ 574,507 $ 3,351,046 $ 3,409,643 $ 495,433 $ 881,868 $ 875,348 $ 9,587,845 30 - 59 days past due 172,355 582 59,988 80,684 510 22,586 7,148 171,498 60+ days past due 975,435 15,261 268,311 190,191 86,285 133,844 222,723 916,615 Total Loans, before general allowance for loan losses $ 10,780,189 $ 590,350 $ 3,679,345 $ 3,680,518 $ 582,228 $ 1,038,298 $ 1,105,219 $ 10,675,958 General allowance for loan losses $ (44,473) Total Loans, net $ 10,631,485 |
Schedule of delinquency information on loans, net | (in thousands) Current 30-59 days past due 60+ days past due Total Non-Accrual Loans 90+ days past due and Accruing June 30, 2024 Bridge $ 5,752,441 $ 25,074 $ 292,393 $ 6,069,908 $ 103,996 $ 119,009 Fixed rate 933,012 3,500 22,510 959,022 22,511 — Construction 803,198 15,182 21,245 839,625 19,578 1,667 SBA - 7(a) 1,192,886 262 25,659 1,218,807 43,484 — Other 389,277 1,890 4,377 395,544 2,822 — Total Loans, before general allowance for loan losses $ 9,070,814 $ 45,908 $ 366,184 $ 9,482,906 $ 192,391 $ 120,676 General allowance for loan losses $ (36,618) Total Loans, net $ 9,446,288 Percentage of loans outstanding 95.6% 0.5% 3.9% 100% 2.0% 1.3% December 31, 2023 Bridge $ 6,186,367 $ 87,163 $ 522,552 $ 6,796,082 $ 339,073 $ — Fixed rate 986,755 21,798 23,277 1,031,830 13,928 — Construction 782,123 49,694 348,818 1,180,635 241,751 82,781 Freddie Mac 9,500 — — 9,500 2,695 — SBA - 7(a) 1,179,231 8,619 16,828 1,204,678 30,549 40 Other 443,869 4,224 5,140 453,233 6,005 — Total Loans, before general allowance for loan losses $ 9,587,845 $ 171,498 $ 916,615 $ 10,675,958 $ 634,001 $ 82,821 General allowance for loan losses $ (44,473) Total Loans, net $ 10,631,485 Percentage of loans outstanding 89.8% 1.6% 8.6% 100% 5.9% 0.8% |
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 June 30, 2024 Bridge $ 2,243 $ 85,672 $ 721,964 $ 4,974,660 $ 179,286 $ 106,083 $ 6,069,908 Fixed rate 3,227 30,987 437,170 466,402 19,940 1,296 959,022 Construction 21,019 4,521 147,031 569,839 91,895 5,320 839,625 SBA - 7(a) 13,798 69,428 218,269 353,621 228,658 335,033 1,218,807 Other 108,028 135,847 67,757 67,845 14,729 1,338 395,544 Total Loans, before general allowance for loan losses $ 148,315 $ 326,455 $ 1,592,191 $ 6,432,367 $ 534,508 $ 449,070 $ 9,482,906 General allowance for loan losses $ (36,618) Total Loans, net $ 9,446,288 Percentage of loans outstanding 1.6% 3.4% 16.8% 67.8% 5.6% 4.8% December 31, 2023 Bridge $ 2,308 $ 97,309 $ 756,353 $ 5,781,651 $ 82,517 $ 75,944 $ 6,796,082 Fixed rate 5,222 36,021 449,804 517,628 19,965 3,190 1,031,830 Construction 25,173 94,856 532,730 355,631 119,191 53,054 1,180,635 Freddie Mac — — 2,995 6,505 — — 9,500 SBA - 7(a) 10,627 56,061 172,743 404,102 226,327 334,818 1,204,678 Other 127,310 159,386 81,291 68,451 14,124 2,671 453,233 Total Loans, before general allowance for loan losses $ 170,640 $ 443,633 $ 1,995,916 $ 7,133,968 $ 462,124 $ 469,677 $ 10,675,958 General allowance for loan losses $ (44,473) Total Loans, net $ 10,631,485 Percentage of loans outstanding 1.6% 4.2% 18.7% 66.8% 4.3% 4.4% (1) LTV is calculated by dividing the current carrying amount by the most recent collateral value received. The most recent value for performing loans is often the third-party as-is valuation utilized during the original underwriting process. |
Schedule of activity of the allowance for loan losses for loans | (in thousands) Bridge Fixed Rate Construction SBA - 7(a) Other Total June 30, 2024 General $ 12,732 $ 5,415 $ 5,840 $ 10,204 $ 2,427 $ 36,618 Specific 1,666 1,065 181 3,362 51 6,325 PCD — — 1,889 — — 1,889 Ending balance $ 14,398 $ 6,480 $ 7,910 $ 13,566 $ 2,478 $ 44,832 December 31, 2023 General $ 17,302 $ 7,884 $ 3,722 $ 12,679 $ 2,886 $ 44,473 Specific 18,939 5,714 5,726 5,188 143 35,710 PCD — — 21,422 — — 21,422 Ending balance $ 36,241 $ 13,598 $ 30,870 $ 17,867 $ 3,029 $ 101,605 (in thousands) Bridge Fixed Rate Construction SBA - 7(a) Other Total Three Months Ended June 30, 2024 Beginning balance $ 13,181 $ 7,264 $ 23,755 $ 20,579 $ 2,644 $ 67,423 Provision for (recoveries of) loan losses 1,217 (784) (12,579) (4,409) (166) (16,721) Charge-offs and sales — — (3,266) (2,680) — (5,946) Recoveries — — — 76 — 76 Ending balance $ 14,398 $ 6,480 $ 7,910 $ 13,566 $ 2,478 $ 44,832 Three Months Ended June 30, 2023 Beginning balance $ 40,319 $ 9,085 $ 373 $ 15,110 $ 2,893 $ 67,780 Provision for loan losses 3,538 4,523 7,935 2,012 466 18,474 PCD (1) — — 27,617 — — 27,617 Charge-offs and sales — (1,404) — (402) — (1,806) Recoveries — — — 89 — 89 Ending balance $ 43,857 $ 12,204 $ 35,925 $ 16,809 $ 3,359 $ 112,154 Six Months Ended June 30, 2024 Beginning balance $ 36,241 $ 13,598 $ 30,870 $ 17,867 $ 3,029 $ 101,605 Recoveries of loan losses (21,843) (4,489) (18,215) (246) (485) (45,278) Charge-offs and sales — (2,629) (4,745) (4,259) (66) (11,699) Recoveries — — — 204 — 204 Ending balance $ 14,398 $ 6,480 $ 7,910 $ 13,566 $ 2,478 $ 44,832 Six Months Ended June 30, 2023 Beginning balance $ 49,905 $ 6,531 $ 17,334 $ 14,299 $ 2,450 $ 90,519 Provision for (recoveries of) loan losses (5,437) 7,177 7,872 3,407 909 13,928 PCD (1) — — 27,617 — — 27,617 Charge-offs and sales (611) (1,504) (16,898) (1,015) — (20,028) Recoveries — — — 118 — 118 Ending balance $ 43,857 $ 12,204 $ 35,925 $ 16,809 $ 3,359 $ 112,154 (1) Refer to Note 5 for further details on assets acquired and liabilities assumed in connection with the Broadmark Merger. |
Schedule of reconciliation between purchase price with par value of purchased loans | (in thousands) Preliminary Purchase Price Allocation Measurement Period Adjustments Updated Purchase Price Allocation UPB $ 244,932 $ 38,750 $ 283,682 Allowance for credit losses (27,617) (5,245) (32,862) Non-credit discount (6,035) (3,342) (9,377) Purchase price of loans classified as PCD $ 211,280 $ 30,163 $ 241,443 |
Non-accrual loans | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Schedule of non-accrual loans | (in thousands) June 30, 2024 December 31, 2023 Non-accrual loans With an allowance $ 178,046 $ 607,292 Without an allowance 14,345 26,709 Total recorded carrying value of non-accrual loans $ 192,391 $ 634,001 Allowance for loan losses related to non-accrual loans $ (9,499) $ (50,796) UPB of non-accrual loans $ 203,666 $ 688,282 June 30, 2024 June 30, 2023 Interest income on non-accrual loans for the three months ended $ 52 $ 6,841 Interest income on non-accrual loans for the six months ended $ 1,338 $ 14,690 |
Geographical concentration | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |
Schedule of concentration risk of loans secured by real estate | Geographic Concentration (% of UPB) June 30, 2024 December 31, 2023 Texas 18.8 % 18.6 % California 11.8 11.4 Arizona 7.5 6.1 Florida 7.3 6.4 Georgia 6.8 7.1 Oregon 6.7 5.9 New York 4.6 4.8 North Carolina 4.3 4.1 Ohio 3.4 3.2 Washington 2.8 3.4 Other 26.0 29.0 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) June 30, 2024 December 31, 2023 Multi-family 62.3 % 60.9 % SBA 13.0 11.4 Mixed Use 8.5 8.4 Industrial 5.3 4.3 Retail 4.1 4.3 Office 3.5 4.4 Lodging 1.6 1.6 Other 1.7 4.7 Total 100.0 % 100.0 % The table below presents the collateral type concentration of SBA loans within loans, net. Collateral Concentration (% of UPB) June 30, 2024 December 31, 2023 Lodging 22.0 % 23.4 % Gasoline Service Stations 12.7 12.8 Eating Places 6.6 6.2 Child Day Care Services 5.6 5.6 Offices of Physicians 3.7 4.1 General Freight Trucking, Local 3.2 3.5 Grocery Stores 2.3 2.3 Coin-Operated Laundries and Drycleaners 1.7 1.9 Beer, Wine, and Liquor Stores 1.3 1.3 Funeral Service & Crematories 1.1 1.4 Other 39.8 37.5 Total 100.0 % 100.0 % |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Fair Value Measurements | |
Schedule of financial instruments carried at fair value on a recurring basis | (in thousands) Level 1 Level 2 Level 3 Total June 30, 2024 Assets: Money market funds (a) $ 72,499 $ — $ — $ 72,499 Loans, held for sale — 80,235 9,145 89,380 PPP loans (b) — 230 — 230 MBS — 30,174 — 30,174 Derivative instruments — 14,382 — 14,382 Investment in unconsolidated joint ventures — — 6,974 6,974 Preferred equity investment (c) — — 108,423 108,423 Total assets $ 72,499 $ 125,021 $ 124,542 $ 322,062 Liabilities: Derivative instruments — 2,638 — 2,638 Contingent consideration — — 3,926 3,926 Total liabilities $ — $ 2,638 $ 3,926 $ 6,564 December 31, 2023 Assets: Money market funds (a) $ 100,238 $ — $ — $ 100,238 Loans, held for sale — 81,599 — 81,599 Loans, net — — 9,348 9,348 PPP loans (b) — 165 — 165 MBS — 27,436 — 27,436 Derivative instruments — 2,404 — 2,404 Investment in unconsolidated joint ventures — — 7,360 7,360 Preferred equity investment (c) — — 108,423 108,423 Total assets $ 100,238 $ 111,604 $ 125,131 $ 336,973 Liabilities: Derivative instruments — 212 — 212 Contingent consideration — — 7,628 7,628 Total liabilities $ — $ 212 $ 7,628 $ 7,840 (a) Money market funds are included in cash and cash equivalents on the consolidated balance sheets (b) PPP loans are included in other assets on the consolidated balance sheets (c) Preferred equity investment held through consolidated joint ventures are included in assets of consolidated VIEs on the consolidated balance sheets |
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 | (in thousands) Fair Value Predominant Valuation Technique (a) Type Range Weighted Average June 30, 2024 Assets: Investment in unconsolidated joint ventures $ 6,974 Income Approach Discount rate 9.0% 9.0% Preferred equity investment 108,423 Income Approach Discount rate 11.0% 11.0% Total assets $ 115,397 Liabilities: Contingent consideration - Madison One 526 Monte Carlo Simulation Model Net income volatility | Risk-adjusted discount rate 66.0% | 47.5% 66.0% | 47.5% Total liabilities $ 526 December 31, 2023 Assets: Investment in unconsolidated joint ventures $ 7,360 Income Approach Discount rate 9.0% 9.0% Preferred equity investment 108,423 Income Approach Discount rate 10.0% 10.0% Total assets $ 115,783 Liabilities: Contingent consideration- Mosaic CER dividends 1,591 Monte Carlo Simulation Model Equity volatility | Risk-free rate of return | Discount rate 30.0% | 4.7% | 11.5% 30% | 4.7% | 11.5% Contingent consideration- Mosaic CER units 6,037 Income approach and PWERM Model Revaluation discount rate | Discount rate 12.0% | 11.5% 12.0% | 11.5% Total liabilities $ 7,628 (a) Prices are weighted based on the UPB of the loans and securities included in the range for each class. |
Summary of changes in fair value for Level 3 assets and liabilities | Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2024 2023 2024 2023 Assets: Loans, net Beginning balance $ — $ 9,859 $ 9,348 $ 9,786 Unrealized gains (losses), net — (86) 680 (13) Transfer to (from) Level 3 — — (10,028) — Ending balance $ — $ 9,773 $ — $ 9,773 Loans, held for sale Beginning balance — 58,330 — 60,924 Sales / Principal payments — (11) — (22) Unrealized gains (losses), net — (1,287) — (3,870) Transfer to (from) Level 3 9,145 — 9,145 — Ending balance $ 9,145 $ 57,032 $ 9,145 $ 57,032 Investment in unconsolidated joint ventures Beginning balance 7,169 7,913 7,360 8,094 Unrealized gains (losses), net (195) (182) (386) (363) Ending balance $ 6,974 $ 7,731 $ 6,974 $ 7,731 Preferred equity investment (1) Beginning balance 106,548 108,423 108,423 108,423 Unrealized gains (losses), net 1,875 — — — Ending balance $ 108,423 $ 108,423 $ 108,423 $ 108,423 Total assets Beginning balance 113,717 184,525 125,131 187,227 Sales / Principal payments — (11) — (22) Unrealized gains (losses), net 1,680 (1,555) 294 (4,246) Transfer to (from) Level 3 9,145 — (883) — Ending balance $ 124,542 $ 182,959 $ 124,542 $ 182,959 Liabilities: Contingent consideration Beginning balance — 16,636 7,628 28,500 Sales / Principal payments — — — (9,000) Realized losses (gains), net — — (7,628) — Unrealized losses (gains), net — (1,070) — (3,934) Merger (2) 3,926 — 3,926 Ending balance $ 3,926 $ 15,566 $ 3,926 $ 15,566 (1) Preferred equity investment held through consolidated joint ventures are included in assets of consolidated VIEs on the consolidated balance sheets. (2) Includes assets acquired and liabilities assumed as a result of the Madison One Acquisition. Refer to Note 5 for further details on assets acquired and liabilities assumed in connection with the Madison One Acquisition. |
Summary of the carrying value and estimated fair value of financial instruments not carried at fair value on the consolidated balance sheets and are classified as Level 3 | June 30, 2024 December 31, 2023 (in thousands) Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value Assets: Loans, net $ 9,446,288 $ 9,255,383 $ 10,622,137 $ 10,380,893 Loans, held for sale 452,856 452,856 — — Servicing rights 119,768 129,471 102,837 113,715 Total assets $ 10,018,912 $ 9,837,710 $ 10,724,974 $ 10,494,608 Liabilities: Secured borrowings 2,311,969 2,311,969 2,102,075 2,102,075 Securitized debt obligations of consolidated VIEs, net 4,407,241 4,361,392 5,068,453 5,022,057 Senior secured notes, net 417,040 395,879 345,127 317,239 Guaranteed loan financing 782,345 828,902 844,540 889,744 Corporate debt, net 767,271 717,056 764,908 731,104 Total liabilities $ 8,685,866 $ 8,615,198 $ 9,125,103 $ 9,062,219 |
Servicing rights (Tables)
Servicing rights (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Servicing Rights | |
Schedule of information regarding portfolio of servicing rights | Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2024 2023 2024 2023 SBA servicing rights, at amortized cost Beginning net carrying amount $ 31,343 $ 22,040 $ 29,536 $ 19,756 Additions 5,596 2,043 8,273 3,555 Amortization (1,105) (921) (1,960) (1,756) Recovery (impairment) (507) 1,166 (522) 2,773 Ending net carrying amount $ 35,327 $ 24,328 $ 35,327 $ 24,328 Multi-family servicing rights, at amortized cost Beginning net carrying amount 72,212 67,911 73,301 67,361 Additions 882 5,311 2,620 8,392 Amortization (2,872) (2,657) (5,699) (5,188) Ending net carrying amount $ 70,222 $ 70,565 $ 70,222 $ 70,565 USDA servicing rights, at amortized cost Beginning net carrying amount — — — — Additions 14,413 — 14,413 — Amortization (194) — (194) — Ending net carrying amount $ 14,219 $ — $ 14,219 $ — Total servicing rights $ 119,768 $ 94,893 $ 119,768 $ 94,893 |
Schedule of servicing rights | As of June 30, 2024 As of December 31, 2023 (in thousands) UPB Carrying Value UPB Carrying Value SBA $ 1,534,092 $ 35,327 $ 1,208,201 $ 29,536 Multi-family 5,885,203 70,222 5,689,872 73,301 USDA 506,131 14,219 — — Total $ 7,925,426 $ 119,768 $ 6,898,073 $ 102,837 |
Schedule of assumptions used in the estimated valuation of servicing rights carried at amortized cost | June 30, 2024 December 31, 2023 Range of input values Weighted Average Range of input values Weighted Average SBA servicing rights Forward prepayment rate 1.5 - 21.6 % 9.1 % 0.0 - 4.5 % 4.4 % Forward default rate 0.0 - 6.6 % 6.3 % 0.0 - 7.3 % 7.0 % Discount rate 11.6 - 20.9 % 12.2 % 14.4 - 22.9 % 14.6 % Servicing expense 0.4 - 0.4 % 0.4 % 0.4 - 0.4 % 0.4 % Multi-family servicing rights Forward prepayment rate 0.0 - 6.5 % 5.6 % 0.0 - 6.5 % 5.4 % Forward default rate 0.0 - 0.9 % 0.6 % 0.0 - 0.9 % 0.6 % 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 % USDA servicing rights (1) Forward prepayment rate 2.1 - 6.5 % 5.6 % N/A N/A N/A Discount rate 6.9 - 6.9 % 6.9 % N/A N/A N/A Servicing expense 0.3 - 0.3 % 0.3 % N/A N/A N/A (1) Refer to Note 5 for further details on assets acquired and liabilities assumed in connection with the Madison One Acquisition |
Schedule of adverse changes to key assumptions on the carrying amount of the servicing rights | (in thousands) June 30, 2024 December 31, 2023 SBA servicing rights Forward prepayment rate Impact of 10% adverse change $ (1,164) $ (543) Impact of 20% adverse change $ (2,261) $ (1,069) Default rate Impact of 10% adverse change $ (162) $ (165) Impact of 20% adverse change $ (323) $ (328) Discount rate Impact of 10% adverse change $ (1,244) $ (1,530) Impact of 20% adverse change $ (2,401) $ (2,922) Servicing expense Impact of 10% adverse change $ (2,258) $ (2,047) Impact of 20% adverse change $ (4,515) $ (4,095) Multi-family servicing rights Forward prepayment rate Impact of 10% adverse change $ (466) $ (491) Impact of 20% adverse change $ (918) $ (965) Default rate Impact of 10% adverse change $ (14) $ (14) Impact of 20% adverse change $ (27) $ (29) Discount rate Impact of 10% adverse change $ (2,238) $ (2,320) Impact of 20% adverse change $ (4,365) $ (4,524) Servicing expense Impact of 10% adverse change $ (2,567) $ (2,587) Impact of 20% adverse change $ (5,135) $ (5,173) USDA servicing rights Forward prepayment rate Impact of 10% adverse change $ (804) $ — Impact of 20% adverse change $ (1,543) $ — Discount rate Impact of 10% adverse change $ (485) $ — Impact of 20% adverse change $ (942) $ — Servicing expense Impact of 10% adverse change $ (625) $ — Impact of 20% adverse change $ (1,250) $ — |
Schedule of future amortization expense for the servicing rights | (in thousands) June 30, 2024 2024 $ 10,183 2025 17,730 2026 15,673 2027 13,755 2028 12,074 Thereafter 50,353 Total $ 119,768 |
Discontinued Operations and A_2
Discontinued Operations and Assets and Liabilities Held For Sale (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Discontinued operations and assets and liabilities held for sale | |
Schedule of reconciliation of the carrying amounts of major classes of assets and liabilities of the discontinued segment | The table below presents the assets and liabilities of the Residential Mortgage Banking segment classified as held for sale. (in thousands) June 30, 2024 December 31, 2023 Assets Cash and cash equivalents $ 20,438 $ 13,694 Restricted cash 5,666 6,314 Loans, net 3,860 2,778 Loans, held for sale 156,264 133,204 Loans eligible for repurchase from Ginnie Mae 89,679 86,872 Derivative instruments — 847 Servicing rights (1) 125,795 188,855 Other assets 22,192 22,032 Total Assets $ 423,894 $ 454,596 Liabilities Secured borrowings 229,906 230,965 Liabilities for loans eligible for repurchase from Ginnie Mae 89,679 86,872 Derivative instruments 813 1,321 Accounts payable and other accrued liabilities 11,867 13,999 Total Liabilities $ 332,265 $ 333,157 (1) Servicing rights are Level 3 assets that had been measured at fair value using the income approach valuation technique. Refer to Note 7- Fair Value Measurements for further details. The table below presents the operating results of the Residential Mortgage Banking segment presented as discontinued operations. Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2024 2023 2024 2023 Interest income $ 2,121 $ 1,880 $ 3,962 $ 3,485 Interest expense (2,755) (2,313) (5,285) (3,839) Net interest expense $ (634) $ (433) $ (1,323) $ (354) Non-interest income Residential mortgage banking activities 11,353 9,884 20,595 19,053 Net realized gain (loss) on financial instruments 2,938 — 2,938 — Net unrealized gain (loss) on financial instruments (7,219) 8,818 (7,219) 2,725 Servicing income, net of amortization and impairment 8,472 9,393 17,888 18,754 Other income 4 23 8 54 Total non-interest income $ 15,548 $ 28,118 $ 34,210 $ 40,586 Non-interest expense Employee compensation and benefits (5,818) (5,295) (11,502) (10,707) Variable expenses on residential mortgage banking activities (8,122) (6,574) (14,208) (12,059) Professional fees (259) (123) (412) (297) Loan servicing expense (2,412) (2,221) (4,741) (4,029) Other operating expenses (2,002) (1,684) (3,836) (3,393) Total non-interest expense $ (18,613) $ (15,897) $ (34,699) $ (30,485) Income (loss) from discontinued operations before provision for income taxes (3,699) 11,788 (1,812) 9,747 Income tax (provision) benefit 925 (2,947) 453 (2,437) Net income (loss) from discontinued operations $ (2,774) $ 8,841 $ (1,359) $ 7,310 |
Secured borrowings (Tables)
Secured borrowings (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
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 June 30, 2024 December 31, 2023 3 SBA loans October 2024 - March 2025 SOFR + 2.83% $ 250,000 $ 238,184 $ 189,015 $ 117,115 1 LMM loans - USD February 2025 SOFR + 1.35% 80,000 2,652 2,645 20,729 1 LMM loans - Non-USD (4) January 2025 EURIBOR + 3.00% 214,264 45,127 32,648 12,079 Total borrowings under credit facilities and other financing agreements $ 544,264 $ 285,963 $ 224,308 $ 149,923 9 LMM loans November 2024 - November 2026 SOFR + 3.18% 4,306,000 2,828,152 1,758,071 1,677,885 1 LMM loans - Non-USD (4) Matured EURIBOR + 3.00% — — — 45,031 7 MBS July 2024 - June 2025 7.95% 329,590 596,798 329,590 229,236 Total borrowings under repurchase agreements $ 4,635,590 $ 3,424,950 $ 2,087,661 $ 1,952,152 Total secured borrowings $ 5,179,854 $ 3,710,913 $ 2,311,969 $ 2,102,075 (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. |
Schedule of carrying value of collateral pledged with respect to borrowings under credit facilities and promissory note payable outstanding | Pledged Assets Carrying Value (in thousands) June 30, 2024 December 31, 2023 Collateral pledged - borrowings under credit facilities and other financing agreements Loans, held for sale $ 24,186 $ 43,365 Loans, net 261,777 169,147 Total $ 285,963 $ 212,512 Collateral pledged - borrowings under repurchase agreements Loans, net 2,117,106 2,560,725 MBS 80,093 20,770 Retained interest in assets of consolidated VIEs 516,705 356,772 Loans, held for sale 579,866 9,349 Real estate acquired in settlement of loans 131,180 160,455 Total $ 3,424,950 $ 3,108,071 Total collateral pledged on secured borrowings $ 3,710,913 $ 3,320,583 |
Senior secured notes and corp_2
Senior secured notes and corporate debt, net (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Senior secured notes and corporate debt, net | |
Schedule of components of the Senior Secured Notes, Convertible Notes, and Corporate debt | (in thousands) Coupon Rate Maturity Date June 30, 2024 Senior secured notes principal amount (1) 4.50 % 10/20/2026 $ 350,000 Term loan principal amount (2) SOFR + 5.50 % 4/12/2029 75,000 Unamortized discount - Term loan (2,740) Unamortized deferred financing costs - Senior secured notes (5,220) Total senior secured notes, net $ 417,040 Corporate debt principal amount (3) 5.50 % 12/30/2028 110,000 Corporate debt principal amount (4) 6.20 % 7/30/2026 104,614 Corporate debt principal amount (4) 5.75 % 2/15/2026 206,270 Corporate debt principal amount (5) 6.125 % 4/30/2025 120,000 Corporate debt principal amount (6) 7.375 % 7/31/2027 100,000 Corporate debt principal amount (7) 5.00 % 11/15/2026 100,000 Unamortized discount - corporate debt (5,730) Unamortized deferred financing costs - corporate debt (4,133) Junior subordinated notes principal amount (8) SOFR + 3.10 % 3/30/2035 15,000 Junior subordinated notes principal amount (9) SOFR + 3.10 % 4/30/2035 21,250 Total corporate debt, net $ 767,271 Total carrying amount of debt $ 1,184,311 (1) Interest on the senior secured notes is payable semiannually on April 20 and October 20 of each year. (2) Interest on the term loan is payable quarterly on January 12, April 12, July 12, and October 12 of each year. (3) Interest on the corporate debt is payable semiannually on June 30 and December 30 of each year. (4) Interest on the corporate debt is payable quarterly on January 30, April 30, July 30, and October 30 of each year. (5) Interest on the corporate debt is payable semiannually on April 30 and October 30 of each year. (6) Interest on the corporate debt is payable semiannually on January 31 and July 31 of each year. (7) Interest on the corporate debt is payable semiannually on May 15 and November 15 of each year; assumed as part of the Broadmark Merger. (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) June 30, 2024 2024 $ — 2025 120,000 2026 760,884 2027 100,000 2028 110,000 Thereafter 111,250 Total contractual amounts $ 1,202,134 Unamortized deferred financing costs, discounts, and premiums, net (17,823) Total carrying amount of debt $ 1,184,311 |
Guaranteed loan financing (Tabl
Guaranteed loan financing (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Guaranteed loan financing. | |
Schedule of guaranteed loan financing and the related interest rates and maturity dates | Weighted Average Range of Range of (in thousands) Interest Rate Interest Rates Maturities (Years) Ending Balance June 30, 2024 9.17 % 1.45-10.50 % 2024-2048 $ 782,345 December 31, 2023 9.17 % 1.45-10.50 % 2023-2048 $ 844,540 |
Summary of contractual maturities of total guaranteed loan financing outstanding | (in thousands) June 30, 2024 2024 $ 182 2025 414 2026 1,914 2027 7,778 2028 8,614 Thereafter 763,443 Total $ 782,345 |
Variable interest entities an_2
Variable interest entities and securitization activities (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Consolidated VIEs | |
Variable interest entities | |
Schedule of assets and liabilities for VIEs | (in thousands) June 30, 2024 December 31, 2023 Assets: Cash and cash equivalents $ 4 $ 671 Restricted cash 22,778 93,240 Loans, net 6,001,409 6,611,325 Loans, held for sale 9,725 — Preferred equity investment (1) 108,423 108,423 Other assets 108,231 83,486 Total assets $ 6,250,570 $ 6,897,145 Liabilities: Securitized debt obligations of consolidated VIEs, net 4,407,241 5,068,453 Due to third parties 2,773 2,944 Accounts payable and other accrued liabilities 1 34 Total liabilities $ 4,410,015 $ 5,071,431 (1) Preferred equity investment held through consolidated VIEs are included in Assets of consolidated VIEs on the consolidated balance sheets. |
Summary of information on securitized debt obligations | June 30, 2024 December 31, 2023 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 $ 25,512 $ 25,512 8.0 % $ 32,175 $ 32,175 7.6 % ReadyCap Lending Small Business Trust 2023-3 114,485 112,549 8.6 121,527 119,308 8.5 Sutherland Commercial Mortgage Trust 2017-SBC6 277 277 5.0 1,550 1,532 5.0 Sutherland Commercial Mortgage Trust 2019-SBC8 97,659 96,256 2.9 105,281 103,733 2.9 Sutherland Commercial Mortgage Trust 2021-SBC10 69,979 68,902 1.6 81,214 79,952 1.6 ReadyCap Commercial Mortgage Trust 2015-2 1,758 1,688 5.1 1,902 1,753 5.1 ReadyCap Commercial Mortgage Trust 2016-3 8,901 8,670 5.3 9,038 8,723 5.2 ReadyCap Commercial Mortgage Trust 2018-4 52,078 50,569 4.6 53,052 51,309 4.5 ReadyCap Commercial Mortgage Trust 2019-5 84,579 80,128 4.9 88,520 83,529 4.7 ReadyCap Commercial Mortgage Trust 2019-6 192,110 188,680 3.4 199,379 195,496 3.4 ReadyCap Commercial Mortgage Trust 2022-7 194,429 188,188 4.2 195,866 188,995 4.2 Ready Capital Mortgage Financing 2021-FL5 113,339 113,339 7.4 273,681 273,623 6.6 Ready Capital Mortgage Financing 2021-FL6 242,920 242,920 6.9 417,782 416,467 6.4 Ready Capital Mortgage Financing 2021-FL7 552,629 552,131 7.1 586,117 583,771 6.7 Ready Capital Mortgage Financing 2022-FL8 789,968 788,547 7.5 808,671 805,220 7.0 Ready Capital Mortgage Financing 2022-FL9 453,978 451,260 8.5 511,622 505,917 8.1 Ready Capital Mortgage Financing 2022-FL10 577,204 572,469 8.2 654,116 646,141 7.8 Ready Capital Mortgage Financing 2023-FL11 429,849 427,051 8.2 473,481 468,307 8.2 Ready Capital Mortgage Financing 2023-FL12 440,609 437,381 8.1 507,646 500,882 8.0 Total $ 4,442,263 $ 4,406,517 7.2 % $ 5,122,620 $ 5,066,833 6.9 % |
Unconsolidated VIEs | |
Variable interest entities | |
Schedule of assets and liabilities for VIEs | Carrying Amount Maximum Exposure to Loss (1) (in thousands) June 30, 2024 December 31, 2023 June 30, 2024 December 31, 2023 MBS (2) $ 27,364 $ 26,301 $ 27,364 $ 26,301 Investment in unconsolidated joint ventures 134,602 133,321 134,602 133,321 Total assets in unconsolidated VIEs $ 161,966 $ 159,622 $ 161,966 $ 159,622 (1) Maximum exposure to loss is limited to the greater of the fair value or carrying value of the assets as of the consolidated balance sheet date. (2) Retained interest in other third party sponsored securitizations. |
Interest income and interest _2
Interest income and interest expense (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Interest income and interest expense | |
Schedule of components of interest income and expense | Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2024 2023 2024 2023 Interest income Loans, net Bridge $ 146,418 $ 165,788 $ 294,691 $ 326,219 Fixed rate 11,693 12,164 23,959 25,192 Construction 25,963 22,337 56,131 34,503 SBA - 7(a) 31,945 15,335 63,235 30,256 PPP (1) 127 3,435 428 6,442 Other 8,218 7,857 16,003 16,232 Total loans, net (2) $ 224,364 $ 226,916 $ 454,447 $ 438,844 Loans, held for sale Bridge 124 — 124 — Fixed rate 264 701 264 1,436 Construction 4,400 — 4,400 — Other 538 24 756 31 Total loans, held for sale (2) $ 5,326 $ 725 $ 5,544 $ 1,467 Investments held to maturity (1) 14 12 27 20 Preferred equity investment (2) 3,439 2,193 4,523 4,361 MBS 976 1,158 1,932 2,280 Total interest income $ 234,119 $ 231,004 $ 466,473 $ 446,972 Interest expense Secured borrowings (51,500) (47,282) (99,138) (92,502) PPPLF borrowings (3) (24) (124) (52) (288) Securitized debt obligations of consolidated VIEs (94,476) (99,558) (194,728) (190,159) Guaranteed loan financing (17,782) (4,693) (36,290) (9,565) Senior secured notes (6,368) (4,397) (10,749) (8,778) Convertible note — (2,188) — (4,376) Corporate debt (13,017) (11,979) (26,015) (23,421) Total interest expense $ (183,167) $ (170,221) $ (366,972) $ (329,089) Net interest income before provision for loan losses $ 50,952 $ 60,783 $ 99,501 $ 117,883 (1) Included in other assets on the consolidated balance sheets. (2) Includes interest income on assets in consolidated VIEs. (3) Included in other liabilities on the consolidated balance sheets. |
Derivative instruments (Tables)
Derivative instruments (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Derivative instruments | |
Schedule of the Company's derivatives | June 30, 2024 December 31, 2023 Notional Derivative Derivative Notional Derivative Derivative (in thousands) Primary Underlying Risk Amount Asset Liability Amount Asset Liability Interest Rate Swaps - not designated as hedges Interest rate risk $ 26,300 $ 4,380 $ — $ 183,081 $ 12,349 $ — Interest Rate Swaps - designated as hedges Interest rate risk 546,620 51,390 (2,038) 416,139 24,463 — FX forwards Foreign exchange rate risk 62,166 343 (600) 39,447 — (212) Total $ 635,086 $ 56,113 $ (2,638) $ 638,667 $ 36,812 $ (212) |
Schedule of gains and losses on derivatives | Net Realized Net Unrealized (in thousands) Gain (Loss) Gain (Loss) Three Months Ended June 30, 2024 Interest rate swaps $ 3,566 $ (1,803) FX forwards 912 — Total $ 4,478 $ (1,803) Three Months Ended June 30, 2023 Interest rate swaps $ 9,682 $ 3,853 FX forwards 745 (1,364) Total $ 10,427 $ 2,489 Six Months Ended June 30, 2024 Interest rate swaps $ 7,958 $ 5,083 FX forwards 912 — Total $ 8,870 $ 5,083 Six Months Ended June 30, 2023 Interest rate swaps $ 13,368 $ (4,606) FX forwards 745 (1,826) Total $ 14,113 $ (6,432) |
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 Derivatives - effective portion recorded in OCI Total change in OCI for period Interest rate swaps Three Months Ended June 30, 2024 $ (278) $ (1,718) $ (1,440) Three Months Ended June 30, 2023 $ (294) $ 2,199 $ 2,493 Six Months Ended June 30, 2024 $ (561) $ 4,244 $ 4,805 Six Months Ended June 30, 2023 $ (592) $ (1,904) $ (1,312) |
Real estate owned, held for s_2
Real estate owned, held for sale (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Real estate owned, held for sale | |
Summary of the carrying amount of the Company's real estate holdings | (in thousands) June 30, 2024 December 31, 2023 Acquired Portfolio: Mixed use $ 9,658 $ 8,535 Multi-family 35,589 73,745 Lodging 5,035 14,010 Residential 11,977 23,064 Office 6,630 6,901 Land 74,478 86,375 Total Acquired REO (1) $ 143,367 $ 212,630 Other REO Held for Sale: Office 10,683 5,983 Mixed use 4,247 4,247 Multi-family 27,892 28,139 Other 1,694 1,950 Total Other REO $ 44,516 $ 40,319 Total real estate owned, held for sale $ 187,883 $ 252,949 (1) Refer to Note 5 for further details on assets acquired and liabilities assumed in connection with the Broadmark Merger. |
Agreements and transactions w_2
Agreements and transactions with related parties (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Management fee | |
Related-party transactions | |
Schedule of related party transactions | Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Management fee - total $ 6.2 million $ 5.8 million $ 12.8 million $ 10.9 million Management fee - amount unpaid $ 12.8 million $ 10.9 million $ 12.8 million $ 10.9 million |
Management fee | |
Related-party transactions | |
Schedule of related party transactions | Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Incentive fee distribution - total $ — $ 0.1 million $ — $ 1.8 million Incentive fee distribution - amount unpaid $ — $ 1.8 million $ — $ 1.8 million |
Expense reimbursement | |
Related-party transactions | |
Schedule of related party transactions | Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Reimbursable expenses payable to Manager - total $ 3.3 million $ 2.8 million $ 6.1 million $ 5.7 million Reimbursable expenses payable to Manager - amount unpaid $ 3.0 million $ 2.8 million $ 3.0 million $ 2.8 million |
Other assets and other liabil_2
Other assets and other liabilities (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Other assets and other liabilities | |
Schedule of other assets and other liabilities | (in thousands) June 30, 2024 December 31, 2023 Other assets: Goodwill $ 49,091 $ 38,530 Deferred loan exit fees 30,175 32,271 Accrued interest 65,498 64,504 Due from servicers 35,759 20,780 Intangible assets 28,704 17,749 Receivable from third party 32,895 36,519 Deferred financing costs 9,994 9,544 Deferred tax asset 21,085 — Tax receivable 61,526 3,069 Right-of-use lease asset 3,957 2,539 PPP receivables 23,735 34,597 Investments held to maturity 3,446 3,446 Purchased future receivables, net 2,093 9,483 Other 11,455 27,144 Other assets $ 379,413 $ 300,175 Accounts payable and other accrued liabilities: Accrued salaries, wages and commissions 20,028 33,961 Accrued interest payable 38,545 35,373 Servicing principal and interest payable 10,360 6,249 Deferred tax liability 32,977 32,977 Repair and denial reserve 7,580 6,974 Payable to related parties 12,854 7,038 PPP liabilities 24,830 36,182 Accrued professional fees 3,235 5,354 Lease payable 9,384 8,205 Other 44,973 35,168 Total accounts payable and other accrued liabilities $ 204,766 $ 207,481 |
Schedule of Goodwill | (in thousands) June 30, 2024 December 31, 2023 LMM Commercial Real Estate $ 27,324 $ 27,324 Small Business Lending 21,767 11,206 Total $ 49,091 $ 38,530 |
Schedule of Intangible assets | (in thousands) Gross Carrying Amount Accumulated Amortization Net Carrying Value June 30, 2024 Amortized intangible assets: Internally developed software $ 14,107 $ 5,161 $ 8,946 Customer relationships 6,799 1,043 5,756 Broker network 9,300 1,284 8,016 Other 3,182 696 2,486 Unamortized intangible assets: Trade name 2,500 — 2,500 SBA license 1,000 — 1,000 Total intangible assets $ 36,888 $ 8,184 $ 28,704 December 31, 2023 Amortized intangible assets: Internally developed software $ 11,840 $ 3,884 $ 7,956 Customer relationships 6,800 865 5,935 Other 2,080 1,722 358 Unamortized intangible assets: Trade name 2,500 — 2,500 SBA license 1,000 — 1,000 Total intangible assets $ 24,220 $ 6,471 $ 17,749 |
Amortization expense related to the intangible assets | (in thousands) June 30, 2024 2024 $ 2,168 2025 4,204 2026 3,554 2027 3,434 2028 2,407 Thereafter 9,437 Total $ 25,204 |
Other income and operating ex_2
Other income and operating expenses (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Other income and operating expenses | |
Schedule of other income and operating expenses | Three Months Ended June 30, Six Months Ended June 30, (in thousands) 2024 2023 2024 2023 Other income: Origination income $ 2,473 $ 6,316 $ 5,130 $ 10,928 Change in repair and denial reserve (959) 527 (2,166) 328 ERC consulting income 95 8,481 2,586 18,156 Other 4,988 3,308 16,873 9,612 Total other income $ 6,597 $ 18,632 $ 22,423 $ 39,024 Other operating expenses: Origination costs 1,415 1,744 3,229 3,399 Technology expense 2,232 1,578 4,825 3,090 Impairment on real estate 9,130 — 26,102 3,418 Rent and property tax expense 1,372 1,043 3,690 2,111 Recruiting, training and travel expense 525 722 1,232 1,353 Marketing expense 350 220 749 532 Bad debt expense - ERC 1,808 — 3,621 — Other 4,970 4,250 8,541 8,263 Total other operating expenses $ 21,802 $ 9,557 $ 51,989 $ 22,166 |
Redeemable Preferred Stock an_2
Redeemable Preferred Stock and Stockholders Equity (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
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 on common stock during the last twelve months. Declaration Date Record Date Payment Date Dividend per Share May 15, 2023 May 30, 2023 June 15, 2023 $ 0.26 May 15, 2023 June 30, 2023 July 31, 2023 $ 0.14 September 15, 2023 September 29, 2023 October 31, 2023 $ 0.36 December 14, 2023 December 29, 2023 January 31, 2024 $ 0.30 March 15, 2024 March 28, 2024 April 30, 2024 $ 0.30 June 14, 2024 June 28, 2024 July 31, 2024 $ 0.30 |
Schedule of RSU and RSA activity, excluding performance-based equity awards | 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, 2023 747,808 $ 9,888 $ 13.22 Granted 768,407 6,993 9.10 Vested (325,918) (4,110) 12.61 Forfeited (58,937) (609) 10.33 Outstanding, March 31, 2024 1,131,360 $ 12,162 $ 10.75 Granted 2,760 25 9.06 Vested (60,154) (592) 9.84 Forfeited (65,872) (699) 10.61 Outstanding, June 30, 2024 1,008,094 $ 10,896 $ 10.81 |
Schedule of preferred stock outstanding | Preferential Cash Dividends Carrying Value (in thousands) Series Shares Issued and Outstanding (in thousands) Par Value Liquidation Preference Rate per Annum Annual Dividend (per share) June 30, 2024 C 335 0.0001 $ 25.00 6.25% $ 1.56 $ 8,361 E 4,600 0.0001 $ 25.00 6.50% $ 1.63 $ 111,378 |
Earnings per Share of Common _2
Earnings per Share of Common Stock (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Earnings per Share of Common Stock | |
Schedule of computation of basic and diluted earnings per share | Three Months Ended June 30, Six Months Ended June 30, (in thousands, except for share and per share amounts) 2024 2023 2024 2023 Basic Earnings Net income (loss) from continuing operations $ (31,427) $ 244,532 $ (107,009) $ 283,041 Less: Income attributable to non-controlling interest 1,820 4,490 1,937 6,325 Less: Income attributable to participating shares 2,301 2,373 4,636 4,744 Basic earnings - continuing operations $ (35,548) $ 237,669 $ (113,582) $ 271,972 Basic earnings - discontinued operations $ (2,774) $ 8,841 $ (1,359) $ 7,310 Diluted Earnings Net income (loss) from continuing operations (31,427) 244,532 (107,009) 283,041 Less: Income attributable to non-controlling interest 1,820 4,490 1,937 6,325 Less: Income attributable to participating shares 2,301 2,373 4,636 4,744 Add: Expenses attributable to dilutive instruments 131 2,319 262 4,638 Diluted earnings - continuing operations $ (35,417) $ 239,988 $ (113,320) $ 276,610 Diluted earnings - discontinued operations $ (2,774) $ 8,841 $ (1,359) $ 7,310 Number of Shares Basic — Average shares outstanding 168,653,741 131,651,125 170,343,303 121,219,982 Effect of dilutive securities — Unvested participating shares 1,210,234 9,932,712 1,170,253 9,876,386 Diluted — Average shares outstanding 169,863,975 141,583,837 171,513,556 131,096,368 EPS Attributable to RC Common Stockholders: Basic - continuing operations $ (0.21) $ 1.80 $ (0.67) $ 2.24 Basic - discontinued operations $ (0.02) $ 0.07 $ (0.01) $ 0.06 Basic - total $ (0.23) $ 1.87 $ (0.68) $ 2.30 Diluted - continuing operations $ (0.21) $ 1.70 $ (0.67) $ 2.11 Diluted - discontinued operations $ (0.02) $ 0.06 $ (0.01) $ 0.06 Diluted - total $ (0.23) $ 1.76 $ (0.68) $ 2.17 |
Offsetting assets and liabili_2
Offsetting assets and liabilities (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Offsetting assets and liabilities | |
Schedule of effect of offsetting recognized assets and liabilities | Gross amounts not offset in the Consolidated Balance Sheets (1) (in thousands) Gross amounts of Assets / Liabilities Gross amounts offset Balance in Consolidated Balance Sheets Financial Instruments Cash Collateral Received / Paid Net Amount June 30, 2024 Assets FX forwards $ 343 $ — $ 343 $ — $ — $ 343 Interest rate swaps 55,770 41,731 14,039 — — 14,039 Total $ 56,113 $ 41,731 $ 14,382 $ — $ — $ 14,382 Liabilities Interest rate swaps 2,038 — 2,038 — — 2,038 FX forwards 600 — 600 — — 600 Secured borrowings 2,311,969 — 2,311,969 2,311,969 — — PPPLF 24,830 — 24,830 23,735 — 1,095 Total $ 2,339,437 $ — $ 2,339,437 $ 2,335,704 $ — $ 3,733 December 31, 2023 Assets Interest rate swaps 36,812 34,408 2,404 — — 2,404 Total $ 36,812 $ 34,408 $ 2,404 $ — $ — $ 2,404 Liabilities FX forwards 212 — 212 — — 212 Secured borrowings 2,102,075 — 2,102,075 2,102,075 — — PPPLF 36,036 — 36,036 34,596 — 1,440 Total $ 2,138,323 $ — $ 2,138,323 $ 2,136,671 $ — $ 1,652 (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) | 6 Months Ended |
Jun. 30, 2024 | |
Commitments, Contingencies and Indemnifications | |
Schedule of unfunded loan commitments | (in thousands) June 30, 2024 December 31, 2023 Loans, net $ 520,855 $ 745,782 Loans, held for sale $ 116,544 $ 19,327 Preferred equity investment $ 279 $ 436 |
Segment reporting (Tables)
Segment reporting (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Segment reporting | |
Schedule of segment reporting information | Three Months Ended June 30, 2024 Small LMM Commercial Business Corporate- (in thousands) Real Estate Lending Other Consolidated Interest income $ 202,047 $ 32,072 $ — $ 234,119 Interest expense (158,344) (24,823) — (183,167) Net interest income before recovery of loan losses $ 43,703 $ 7,249 $ — $ 50,952 Recovery of loan losses 14,414 4,457 — 18,871 Net interest income after recovery of loan losses $ 58,117 $ 11,706 $ — $ 69,823 Non-interest income Net realized gain (loss) on financial instruments and real estate owned (10,089) 17,339 — 7,250 Net unrealized gain (loss) on financial instruments (1,497) 140 — (1,357) Valuation allowance, loans held for sale (80,987) — — (80,987) Servicing income, net 1,255 2,016 — 3,271 Loss on bargain purchase — — (18,306) (18,306) Income on unconsolidated joint ventures 1,139 — — 1,139 Other income 4,796 376 1,425 6,597 Total non-interest income (loss) $ (85,383) $ 19,871 $ (16,881) $ (82,393) Non-interest expense Employee compensation and benefits (7,142) (8,328) (2,329) (17,799) Allocated employee compensation and benefits from related party (300) — (2,700) (3,000) Professional fees (874) (2,930) (2,229) (6,033) Management fees – related party — — (6,198) (6,198) Loan servicing expense (10,896) (116) — (11,012) Transaction related expenses — — (1,592) (1,592) Other operating expenses (12,054) (5,918) (3,830) (21,802) Total non-interest expense $ (31,266) $ (17,292) $ (18,878) $ (67,436) Income (loss) before provision for income taxes $ (58,532) $ 14,285 $ (35,759) $ (80,006) Total assets $ 9,527,088 $ 1,367,463 $ 455,888 $ 11,350,439 Six Months Ended June 30, 2024 Small LMM Commercial Business Corporate- (in thousands) Real Estate Lending Other Consolidated Interest income $ 402,810 $ 63,663 $ — $ 466,473 Interest expense (317,229) (49,743) — (366,972) Net interest income before recovery of loan losses $ 85,581 $ 13,920 $ — $ 99,501 Recovery of loan losses 45,169 246 45,415 Net interest income after recovery of loan losses $ 130,750 $ 14,166 $ — $ 144,916 Non-interest income Net realized gain (loss) on financial instruments and real estate owned (4,334) 30,452 — 26,118 Net unrealized gain (loss) on financial instruments 1,489 1,786 — 3,275 Valuation allowance, loans held for sale (227,167) — — (227,167) Servicing income, net 2,553 4,476 — 7,029 Loss on bargain purchase — — (18,306) (18,306) Income on unconsolidated joint ventures 1,607 — — 1,607 Other income 17,523 3,475 1,425 22,423 Total non-interest income (loss) $ (208,329) $ 40,189 $ (16,881) $ (185,021) Non-interest expense Employee compensation and benefits (14,618) (17,620) (3,975) (36,213) Allocated employee compensation and benefits from related party (550) — (4,950) (5,500) Professional fees (2,515) (6,145) (4,438) (13,098) Management fees – related party — — (12,846) (12,846) Loan servicing expense (23,443) (363) — (23,806) Transaction related expenses — — (2,242) (2,242) Other operating expenses (33,588) (11,271) (7,130) (51,989) Total non-interest expense $ (74,714) $ (35,399) $ (35,581) $ (145,694) Income (loss) before provision for income taxes $ (152,293) $ 18,956 $ (52,462) $ (185,799) Total assets $ 9,527,088 $ 1,367,463 $ 455,888 $ 11,350,439 Three Months Ended June 30, 2023 Small LMM Commercial Business Corporate- (in thousands) Real Estate Lending Other Consolidated Interest income $ 212,233 $ 18,771 $ — $ 231,004 Interest expense (160,503) (9,718) — (170,221) Net interest income before provision for loan losses $ 51,730 $ 9,053 $ — $ 60,783 Provision for loan losses (17,415) (2,012) — (19,427) Net interest income after provision for loan losses $ 34,315 $ 7,041 $ — $ 41,356 Non-interest income Net realized gain (loss) on financial instruments and real estate owned 15,356 8,522 — 23,878 Net unrealized gain (loss) on financial instruments (677) (734) — (1,411) Servicing income, net 1,890 3,149 — 5,039 Gain on bargain purchase — — 229,894 229,894 Income on unconsolidated joint ventures 33 — — 33 Other income 8,167 10,185 280 18,632 Total non-interest income $ 24,769 $ 21,122 $ 230,174 $ 276,065 Non-interest expense Employee compensation and benefits (8,724) (11,614) (2,076) (22,414) Allocated employee compensation and benefits from related party (250) — (2,250) (2,500) Professional fees (1,135) (2,782) (1,616) (5,533) Management fees – related party — — (5,760) (5,760) Incentive fees – related party — — (71) (71) Loan servicing expense (10,746) (148) — (10,894) Transaction related expenses — — (13,966) (13,966) Other operating expenses (3,598) (4,687) (1,272) (9,557) Total non-interest expense $ (24,453) $ (19,231) $ (27,011) $ (70,695) Income before provision for income taxes $ 34,631 $ 8,932 $ 203,163 $ 246,726 Total assets $ 10,969,193 $ 739,391 $ 220,484 $ 11,929,068 Six Months Ended June 30, 2023 Small LMM Commercial Business Corporate- (in thousands) Real Estate Lending Other Consolidated Interest income $ 410,272 $ 36,700 $ — $ 446,972 Interest expense (309,997) (19,092) — (329,089) Net interest income before provision for loan losses $ 100,275 $ 17,608 $ — $ 117,883 Provision for loan losses (9,286) (3,407) — (12,693) Net interest income after provision for loan losses $ 90,989 $ 14,201 $ — $ 105,190 Non-interest income Net realized gain (loss) on financial instruments and real estate owned 20,181 15,272 — 35,453 Net unrealized gain (loss) on financial instruments (6,788) (258) — (7,046) Servicing income, net 2,983 6,698 — 9,681 Gain on bargain purchase — — 229,894 229,894 Income on unconsolidated joint ventures 689 — — 689 Other income 17,260 21,153 611 39,024 Total non-interest income $ 34,325 $ 42,865 $ 230,505 $ 307,695 Non-interest expense Employee compensation and benefits (14,930) (22,889) (4,322) (42,141) Allocated employee compensation and benefits from related party (482) — (4,344) (4,826) Professional fees (2,116) (4,407) (4,553) (11,076) Management fees – related party — — (10,841) (10,841) Incentive fees – related party — — (1,791) (1,791) Loan servicing expense (18,804) (245) — (19,049) Transaction related expenses — — (14,859) (14,859) Other operating expenses (10,331) (8,781) (3,054) (22,166) Total non-interest expense $ (46,663) $ (36,322) $ (43,764) $ (126,749) Income before provision for income taxes $ 78,651 $ 20,744 $ 186,741 $ 286,136 Total assets $ 10,969,193 $ 739,391 $ 220,484 $ 11,929,068 |
Organization (Details)
Organization (Details) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2024 | Dec. 31, 2023 | |
Operating Partnership | ||
Ownership percentage in operating partnership | 99.30% | 99.20% |
Organization - Acquisitions (De
Organization - Acquisitions (Details) $ / shares in Units, $ in Thousands | 6 Months Ended | ||||
Jun. 05, 2024 USD ($) | May 31, 2023 director $ / shares | May 30, 2023 director | Jun. 30, 2024 $ / shares shares | Dec. 31, 2023 $ / shares 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 | |||
Number of common shares outstanding | shares | 168,167,272 | 172,276,105 | |||
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 | ||||
Madison One | |||||
Acquisitions | |||||
Cash paid - Acquisition price | $ | $ 32,868 | ||||
Cash payments for bonuses for certain key personnel | $ | $ 3,600 | ||||
Period over which additional purchase price payments may be made if certain performance metrics are achieved | 4 years | ||||
Broadmark | |||||
Acquisitions | |||||
Stock conversion rate | 0.47233 | ||||
Common stock, par value | $ 0.0001 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2024 | Dec. 31, 2023 | |
Cash collateral receivable offset against gross derivative asset positions | $ 41.7 | $ 34.4 |
Unrecognized accrued taxes, interest and penalties | $ 0 | $ 0 |
Borrowings under credit facilities and other financing arrangements | Maximum | ||
Maturity period | 2 years |
Business Combinations - Acquisi
Business Combinations - Acquisitions (Details) - USD ($) $ / shares in Units, $ in Thousands, shares in Millions | 3 Months Ended | 6 Months Ended | |||||
Jun. 05, 2024 | May 31, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | Dec. 31, 2023 | |
Business Combination, Consideration Transferred [Abstract] | |||||||
Contingent consideration | $ 3,926 | $ 3,926 | $ 7,628 | ||||
Goodwill | 49,091 | 49,091 | $ 38,530 | ||||
Bargain purchase gain | $ (18,306) | $ 229,894 | (18,306) | $ 229,894 | |||
Madison One | |||||||
Assets: | |||||||
Cash and cash equivalents | $ 83 | ||||||
Restricted cash | 721 | ||||||
Servicing rights | 16,304 | ||||||
Intangible assets | 10,400 | ||||||
Other assets | 303 | ||||||
Total assets acquired | 27,811 | ||||||
Liabilities: | |||||||
Accounts payable and other accrued liabilities | 978 | ||||||
Total liabilities assumed | 978 | ||||||
Net assets acquired | 26,833 | ||||||
Non-controlling interests | (600) | ||||||
Net assets acquired, net of non-controlling interests | 26,233 | ||||||
Business Combination, Consideration Transferred [Abstract] | |||||||
Cash paid | 32,868 | ||||||
Contingent consideration | 3,926 | ||||||
Total consideration transferred | 36,794 | ||||||
Goodwill | $ 10,561 | ||||||
Broadmark | |||||||
Assets: | |||||||
Cash and cash equivalents | $ 38,710 | ||||||
Loans, net | 764,367 | ||||||
Real estate owned, held for sale | 135,240 | ||||||
Other assets | 9,956 | ||||||
Total assets acquired | 948,273 | ||||||
Liabilities: | |||||||
Corporate debt | 98,028 | ||||||
Accounts payable and other accrued liabilities | 23,350 | ||||||
Total liabilities assumed | 121,378 | ||||||
Net assets acquired | 826,895 | ||||||
Business Combination, Consideration Transferred [Abstract] | |||||||
Consideration transferred based on value of stock issued | 637,229 | ||||||
Bargain purchase gain | $ 189,666 | ||||||
Number of common shares issued in acquisition | 62.2 | ||||||
Price per share of stock issued | $ 10.24 | ||||||
Measurement Period Adjustments | |||||||
Bargain purchase gain | $ (40,200) | ||||||
Broadmark | Previously Reported | |||||||
Assets: | |||||||
Cash and cash equivalents | 38,710 | ||||||
Loans, net | 772,954 | ||||||
Real estate owned, held for sale | 158,911 | ||||||
Other assets | 17,107 | ||||||
Total assets acquired | 987,682 | ||||||
Liabilities: | |||||||
Corporate debt | 98,028 | ||||||
Accounts payable and other accrued liabilities | 22,531 | ||||||
Total liabilities assumed | 120,559 | ||||||
Net assets acquired | 867,123 | ||||||
Business Combination, Consideration Transferred [Abstract] | |||||||
Consideration transferred based on value of stock issued | 637,229 | ||||||
Bargain purchase gain | 229,894 | ||||||
Broadmark | Adjustments | |||||||
Measurement Period Adjustments | |||||||
Loans, net | (8,587) | ||||||
Real estate owned, held for sale | (23,671) | $ (23,700) | |||||
Other assets | (7,151) | ||||||
Total assets acquired | (39,409) | ||||||
Accounts payable and other accrued liabilities | 819 | ||||||
Total liabilities assumed | 819 | ||||||
Net assets acquired | (40,228) | ||||||
Bargain purchase gain | $ (40,228) |
Business Combinations - Pro-for
Business Combinations - Pro-forma Information (Details) - Broadmark - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Pro-forma information | ||||
Interest income | $ 234,119 | $ 246,245 | $ 466,473 | $ 486,050 |
Interest expense | (183,167) | (172,876) | (366,972) | (333,860) |
Recovery of (provision for) loan losses | 18,871 | (22,360) | 45,415 | (17,327) |
Non-interest income | (82,393) | 276,813 | (185,021) | 309,307 |
Non-interest expense | (66,239) | (65,526) | (144,101) | (132,242) |
Income (loss) before provision for income taxes | (78,809) | 262,296 | (184,206) | 311,928 |
Income tax benefit (expense) | 48,579 | (5,141) | 78,790 | (5,532) |
Net income (loss) | (30,230) | 257,155 | (105,416) | 306,396 |
Nonrecurring transaction costs excluded from pro forma non-interest expense | $ 1,200 | $ 1,200 | $ 1,600 | $ 1,600 |
Loans and Allowance for Credi_3
Loans and Allowance for Credit Losses - Classification, unpaid principal balance, and carrying value (Details) - USD ($) $ in Thousands | Jun. 30, 2024 | Mar. 31, 2024 | Dec. 31, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Dec. 31, 2022 |
Carrying Value | ||||||
Total Loans, before allowance for loan losses | $ 3,478,655 | $ 4,101,590 | ||||
Allowance for loan losses | (33,776) | (81,430) | ||||
Total Loans, net | 3,444,879 | 4,020,160 | ||||
Allowance for loan losses on loans in consolidated VIEs | (44,832) | $ (67,423) | (101,605) | $ (112,154) | $ (67,780) | $ (90,519) |
Total Loans, held for sale, before valuation allowance | 750,230 | 81,599 | ||||
Valuation allowance | (217,719) | |||||
Total Loans, held for sale | 532,511 | 81,599 | ||||
Valuation allowance on loans, held for sale in consolidated VIEs | (9,448) | 0 | ||||
Total Loans, net and Loans held for sale, at fair value | 9,988,524 | 10,713,084 | ||||
UPB | ||||||
Total Loans, before allowance for loan losses | 3,489,772 | 4,114,022 | ||||
Total Loans, net | 3,489,772 | 4,114,022 | ||||
Total Loans, held for sale, before valuation allowance | 748,538 | 77,795 | ||||
Total Loans, held for sale | 748,538 | 77,795 | ||||
Total Loans, net and Loans held for sale, at fair value | 10,294,826 | 10,857,984 | ||||
Consolidated VIEs | ||||||
Carrying Value | ||||||
Total Loans, in consolidated VIEs, before allowance for loan losses | 6,012,465 | 6,631,500 | ||||
Allowance for loan losses on loans in consolidated VIEs | (11,056) | (20,175) | ||||
Total Loans, net, in consolidated VIEs | 6,001,409 | 6,611,325 | ||||
Valuation allowance on loans, held for sale in consolidated VIEs | (9,448) | |||||
Total Loans, held for sale in consolidated VIEs | 9,725 | |||||
UPB | ||||||
Total Loans, in consolidated VIEs, before allowance for loan losses | 6,037,343 | 6,666,167 | ||||
Total Loans, net, in consolidated VIEs | 6,037,343 | 6,666,167 | ||||
Total Loans, held for sale in consolidated VIEs | 19,173 | |||||
Bridge | ||||||
Carrying Value | ||||||
Total Loans, before allowance for loan losses | 1,267,122 | 1,444,770 | ||||
Allowance for loan losses on loans in consolidated VIEs | (14,398) | (13,181) | (36,241) | (43,857) | (40,319) | (49,905) |
Total Loans, held for sale, before valuation allowance | 251,836 | |||||
UPB | ||||||
Total Loans, before allowance for loan losses | 1,270,125 | 1,448,281 | ||||
Total Loans, held for sale, before valuation allowance | 251,375 | |||||
Bridge | Consolidated VIEs | ||||||
Carrying Value | ||||||
Total Loans, in consolidated VIEs, before allowance for loan losses | 4,804,452 | 5,370,251 | ||||
Loans, held for sale in consolidated VIEs | 19,173 | |||||
UPB | ||||||
Total Loans, in consolidated VIEs, before allowance for loan losses | 4,816,128 | 5,389,535 | ||||
Loans, held for sale in consolidated VIEs | 19,173 | |||||
Fixed rate | ||||||
Carrying Value | ||||||
Total Loans, before allowance for loan losses | 186,857 | 247,476 | ||||
Allowance for loan losses on loans in consolidated VIEs | (6,480) | (7,264) | (13,598) | (12,204) | (9,085) | (6,531) |
Total Loans, held for sale, before valuation allowance | 38,051 | |||||
UPB | ||||||
Total Loans, before allowance for loan losses | 184,707 | 241,674 | ||||
Total Loans, held for sale, before valuation allowance | 39,826 | |||||
Fixed rate | Consolidated VIEs | ||||||
Carrying Value | ||||||
Total Loans, in consolidated VIEs, before allowance for loan losses | 773,230 | 790,068 | ||||
UPB | ||||||
Total Loans, in consolidated VIEs, before allowance for loan losses | 772,576 | 790,967 | ||||
Construction | ||||||
Carrying Value | ||||||
Total Loans, before allowance for loan losses | 841,695 | 1,207,783 | ||||
Allowance for loan losses on loans in consolidated VIEs | (7,910) | (23,755) | (30,870) | (35,925) | (373) | (17,334) |
Total Loans, held for sale, before valuation allowance | 356,753 | |||||
UPB | ||||||
Total Loans, before allowance for loan losses | 842,854 | 1,212,526 | ||||
Total Loans, held for sale, before valuation allowance | 359,208 | |||||
Freddie Mac | ||||||
Carrying Value | ||||||
Total Loans, before allowance for loan losses | 9,500 | |||||
Total Loans, held for sale, before valuation allowance | 12,046 | 20,955 | ||||
UPB | ||||||
Total Loans, before allowance for loan losses | 9,719 | |||||
Total Loans, held for sale, before valuation allowance | 12,266 | 20,729 | ||||
SBA 7(a) | ||||||
Carrying Value | ||||||
Total Loans, before allowance for loan losses | 1,020,826 | 995,974 | ||||
Allowance for loan losses on loans in consolidated VIEs | (13,566) | (20,579) | (17,867) | (16,809) | (15,110) | (14,299) |
Total Loans, held for sale, before valuation allowance | 71,281 | 59,421 | ||||
UPB | ||||||
Total Loans, before allowance for loan losses | 1,028,043 | 1,003,323 | ||||
Total Loans, held for sale, before valuation allowance | 65,842 | 55,769 | ||||
SBA 7(a) | Consolidated VIEs | ||||||
Carrying Value | ||||||
Total Loans, in consolidated VIEs, before allowance for loan losses | 201,343 | 213,892 | ||||
UPB | ||||||
Total Loans, in consolidated VIEs, before allowance for loan losses | 214,415 | 227,636 | ||||
Other | ||||||
Carrying Value | ||||||
Total Loans, before allowance for loan losses | 162,155 | 196,087 | ||||
Allowance for loan losses on loans in consolidated VIEs | (2,478) | $ (2,644) | (3,029) | $ (3,359) | $ (2,893) | $ (2,450) |
Total Loans, held for sale, before valuation allowance | 20,263 | 1,223 | ||||
UPB | ||||||
Total Loans, before allowance for loan losses | 164,043 | 198,499 | ||||
Total Loans, held for sale, before valuation allowance | 20,021 | 1,297 | ||||
Other | Consolidated VIEs | ||||||
Carrying Value | ||||||
Total Loans, in consolidated VIEs, before allowance for loan losses | 233,440 | 257,289 | ||||
UPB | ||||||
Total Loans, in consolidated VIEs, before allowance for loan losses | $ 234,224 | $ 258,029 |
Loans and Allowance for Credi_4
Loans and Allowance for Credit Losses - Loan Vintage (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2024 | Dec. 31, 2023 | |
Loan classification and delinquency by year of origination | ||
UPB | $ 9,527,115 | $ 10,780,189 |
Current fiscal year | 331,591 | 590,350 |
Year before current fiscal year | 514,620 | 3,679,345 |
Two years before current fiscal year | 3,285,929 | 3,680,518 |
Three years before current fiscal year | 3,219,388 | 582,228 |
Four years before current fiscal year | 397,423 | 1,038,298 |
Five or more years before current fiscal year | 1,733,955 | 1,105,219 |
Total | 9,482,906 | 10,675,958 |
General allowance for loan losses | (36,618) | (44,473) |
Total Loans, net of allowance for loan losses, including loans in consolidated VIEs | 9,446,288 | 10,631,485 |
Specific allowance for loan losses including PCD allowance | 8,200 | 57,100 |
Specific allowance for purchased financial assets with credit deterioration | 1,889 | 21,422 |
Specific allowance for loan losses | 6,325 | 35,710 |
Gross write-offs by year of origination | ||
Current fiscal year write-offs | 100 | |
Year before current fiscal year write-offs | 1,273 | 950 |
Two years before current fiscal year write-offs | 1,492 | 3,236 |
Three years before current fiscal year write-offs | 2,890 | 258 |
Four years before current fiscal year write-offs | 533 | 360 |
Five or more years before current fiscal year write-offs | 5,511 | 25,731 |
Total write-offs | 11,699 | 30,635 |
Current and less than 30 days past due | ||
Loan classification and delinquency by year of origination | ||
UPB | 9,103,724 | 9,632,399 |
Current fiscal year | 330,985 | 574,507 |
Year before current fiscal year | 497,155 | 3,351,046 |
Two years before current fiscal year | 3,168,095 | 3,409,643 |
Three years before current fiscal year | 3,029,683 | 495,433 |
Four years before current fiscal year | 380,511 | 881,868 |
Five or more years before current fiscal year | 1,664,385 | 875,348 |
Total | 9,070,814 | 9,587,845 |
30-59 Days Past Due | ||
Loan classification and delinquency by year of origination | ||
UPB | 45,971 | 172,355 |
Current fiscal year | 505 | 582 |
Year before current fiscal year | 124 | 59,988 |
Two years before current fiscal year | 16,759 | 80,684 |
Three years before current fiscal year | 13,408 | 510 |
Four years before current fiscal year | 22,586 | |
Five or more years before current fiscal year | 15,112 | 7,148 |
Total | 45,908 | 171,498 |
60+ Days Past Due | ||
Loan classification and delinquency by year of origination | ||
UPB | 377,420 | 975,435 |
Current fiscal year | 101 | 15,261 |
Year before current fiscal year | 17,341 | 268,311 |
Two years before current fiscal year | 101,075 | 190,191 |
Three years before current fiscal year | 176,297 | 86,285 |
Four years before current fiscal year | 16,912 | 133,844 |
Five or more years before current fiscal year | 54,458 | 222,723 |
Total | 366,184 | 916,615 |
Bridge | ||
Loan classification and delinquency by year of origination | ||
UPB | 6,086,253 | 6,837,816 |
Current fiscal year | 231,149 | 323,648 |
Year before current fiscal year | 255,672 | 2,956,697 |
Two years before current fiscal year | 2,669,676 | 2,949,521 |
Three years before current fiscal year | 2,643,443 | 288,647 |
Four years before current fiscal year | 176,563 | 166,266 |
Five or more years before current fiscal year | 93,405 | 111,303 |
Total | 6,069,908 | 6,796,082 |
General allowance for loan losses | (12,732) | (17,302) |
Specific allowance for loan losses | 1,666 | 18,939 |
Bridge | Current and less than 30 days past due | ||
Loan classification and delinquency by year of origination | ||
Total | 5,752,441 | 6,186,367 |
Bridge | 30-59 Days Past Due | ||
Loan classification and delinquency by year of origination | ||
Total | 25,074 | 87,163 |
Bridge | 60+ Days Past Due | ||
Loan classification and delinquency by year of origination | ||
Total | 292,393 | 522,552 |
Fixed rate | ||
Loan classification and delinquency by year of origination | ||
UPB | 957,283 | 1,032,641 |
Current fiscal year | 4,007 | |
Year before current fiscal year | 110,800 | |
Two years before current fiscal year | 110,625 | 207,510 |
Three years before current fiscal year | 181,427 | 90,794 |
Four years before current fiscal year | 90,094 | 318,077 |
Five or more years before current fiscal year | 576,876 | 300,642 |
Total | 959,022 | 1,031,830 |
General allowance for loan losses | (5,415) | (7,884) |
Specific allowance for loan losses | 1,065 | 5,714 |
Fixed rate | Current and less than 30 days past due | ||
Loan classification and delinquency by year of origination | ||
Total | 933,012 | 986,755 |
Fixed rate | 30-59 Days Past Due | ||
Loan classification and delinquency by year of origination | ||
Total | 3,500 | 21,798 |
Fixed rate | 60+ Days Past Due | ||
Loan classification and delinquency by year of origination | ||
Total | 22,510 | 23,277 |
Construction | ||
Loan classification and delinquency by year of origination | ||
UPB | 842,854 | 1,212,526 |
Current fiscal year | 108,218 | |
Year before current fiscal year | 107,206 | 253,100 |
Two years before current fiscal year | 156,856 | 182,920 |
Three years before current fiscal year | 103,290 | 73,370 |
Four years before current fiscal year | 12,866 | 434,151 |
Five or more years before current fiscal year | 459,407 | 128,876 |
Total | 839,625 | 1,180,635 |
General allowance for loan losses | (5,840) | (3,722) |
Specific allowance for purchased financial assets with credit deterioration | 1,889 | 21,422 |
Specific allowance for loan losses | 181 | 5,726 |
Construction | Current and less than 30 days past due | ||
Loan classification and delinquency by year of origination | ||
Total | 803,198 | 782,123 |
Construction | 30-59 Days Past Due | ||
Loan classification and delinquency by year of origination | ||
Total | 15,182 | 49,694 |
Construction | 60+ Days Past Due | ||
Loan classification and delinquency by year of origination | ||
Total | 21,245 | 348,818 |
Freddie Mac | ||
Loan classification and delinquency by year of origination | ||
UPB | 9,719 | |
Two years before current fiscal year | 3,810 | |
Three years before current fiscal year | 5,690 | |
Total | 9,500 | |
Freddie Mac | Current and less than 30 days past due | ||
Loan classification and delinquency by year of origination | ||
Total | 9,500 | |
SBA 7(a) | ||
Loan classification and delinquency by year of origination | ||
UPB | 1,242,458 | 1,230,959 |
Current fiscal year | 94,112 | 151,878 |
Year before current fiscal year | 148,941 | 353,871 |
Two years before current fiscal year | 344,158 | 318,208 |
Three years before current fiscal year | 283,853 | 115,019 |
Four years before current fiscal year | 109,300 | 76,080 |
Five or more years before current fiscal year | 238,443 | 189,622 |
Total | 1,218,807 | 1,204,678 |
General allowance for loan losses | (10,204) | (12,679) |
Specific allowance for loan losses | 3,362 | 5,188 |
SBA 7(a) | Current and less than 30 days past due | ||
Loan classification and delinquency by year of origination | ||
Total | 1,192,886 | 1,179,231 |
SBA 7(a) | 30-59 Days Past Due | ||
Loan classification and delinquency by year of origination | ||
Total | 262 | 8,619 |
SBA 7(a) | 60+ Days Past Due | ||
Loan classification and delinquency by year of origination | ||
Total | 25,659 | 16,828 |
Other | ||
Loan classification and delinquency by year of origination | ||
UPB | 398,267 | 456,528 |
Current fiscal year | 6,330 | 2,599 |
Year before current fiscal year | 2,801 | 4,877 |
Two years before current fiscal year | 4,614 | 18,549 |
Three years before current fiscal year | 7,375 | 8,708 |
Four years before current fiscal year | 8,600 | 43,724 |
Five or more years before current fiscal year | 365,824 | 374,776 |
Total | 395,544 | 453,233 |
General allowance for loan losses | (2,427) | (2,886) |
Specific allowance for loan losses | 51 | 143 |
Other | Current and less than 30 days past due | ||
Loan classification and delinquency by year of origination | ||
Total | 389,277 | 443,869 |
Other | 30-59 Days Past Due | ||
Loan classification and delinquency by year of origination | ||
Total | 1,890 | 4,224 |
Other | 60+ Days Past Due | ||
Loan classification and delinquency by year of origination | ||
Total | $ 4,377 | $ 5,140 |
Loans and Allowance for Credi_5
Loans and Allowance for Credit Losses - Delinquency (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2024 | Dec. 31, 2023 | Mar. 31, 2024 | Jun. 30, 2023 | Mar. 31, 2023 | Dec. 31, 2022 | |
Loan delinquency information | ||||||
Total Loans Carrying Value | $ 9,482,906 | $ 10,675,958 | ||||
Non-Accrual Loans | 192,391 | 634,001 | ||||
90+ Days Past Due but Accruing | 120,676 | 82,821 | ||||
General allowance for loan losses | (36,618) | (44,473) | ||||
Total Loans, net of allowance for loan losses, including loans in consolidated VIEs | $ 9,446,288 | $ 10,631,485 | ||||
Percentage of loans outstanding | 100% | 100% | ||||
Percentage of outstanding, Non-Accrual Loans | 2% | 5.90% | ||||
Percentage of outstanding, 90+Days Past Due Accruing | 1.30% | 0.80% | ||||
Specific allowance for loan losses | $ 44,832 | $ 101,605 | $ 67,423 | $ 112,154 | $ 67,780 | $ 90,519 |
Current and less than 30 days past due | ||||||
Loan delinquency information | ||||||
Total Loans Carrying Value | $ 9,070,814 | $ 9,587,845 | ||||
Percentage of loans outstanding | 95.60% | 89.80% | ||||
30-59 Days Past Due | ||||||
Loan delinquency information | ||||||
Total Loans Carrying Value | $ 45,908 | $ 171,498 | ||||
Percentage of loans outstanding | 0.50% | 1.60% | ||||
60+ Days Past Due | ||||||
Loan delinquency information | ||||||
Total Loans Carrying Value | $ 366,184 | $ 916,615 | ||||
Percentage of loans outstanding | 3.90% | 8.60% | ||||
Bridge | ||||||
Loan delinquency information | ||||||
Total Loans Carrying Value | $ 6,069,908 | $ 6,796,082 | ||||
Non-Accrual Loans | 103,996 | 339,073 | ||||
90+ Days Past Due but Accruing | 119,009 | |||||
General allowance for loan losses | (12,732) | (17,302) | ||||
Specific allowance for loan losses | 14,398 | 36,241 | 13,181 | 43,857 | 40,319 | 49,905 |
Bridge | Current and less than 30 days past due | ||||||
Loan delinquency information | ||||||
Total Loans Carrying Value | 5,752,441 | 6,186,367 | ||||
Bridge | 30-59 Days Past Due | ||||||
Loan delinquency information | ||||||
Total Loans Carrying Value | 25,074 | 87,163 | ||||
Bridge | 60+ Days Past Due | ||||||
Loan delinquency information | ||||||
Total Loans Carrying Value | 292,393 | 522,552 | ||||
Fixed rate | ||||||
Loan delinquency information | ||||||
Total Loans Carrying Value | 959,022 | 1,031,830 | ||||
Non-Accrual Loans | 22,511 | 13,928 | ||||
General allowance for loan losses | (5,415) | (7,884) | ||||
Specific allowance for loan losses | 6,480 | 13,598 | 7,264 | 12,204 | 9,085 | 6,531 |
Fixed rate | Current and less than 30 days past due | ||||||
Loan delinquency information | ||||||
Total Loans Carrying Value | 933,012 | 986,755 | ||||
Fixed rate | 30-59 Days Past Due | ||||||
Loan delinquency information | ||||||
Total Loans Carrying Value | 3,500 | 21,798 | ||||
Fixed rate | 60+ Days Past Due | ||||||
Loan delinquency information | ||||||
Total Loans Carrying Value | 22,510 | 23,277 | ||||
Construction | ||||||
Loan delinquency information | ||||||
Total Loans Carrying Value | 839,625 | 1,180,635 | ||||
Non-Accrual Loans | 19,578 | 241,751 | ||||
90+ Days Past Due but Accruing | 1,667 | 82,781 | ||||
General allowance for loan losses | (5,840) | (3,722) | ||||
Specific allowance for loan losses | 7,910 | 30,870 | 23,755 | 35,925 | 373 | 17,334 |
Construction | Current and less than 30 days past due | ||||||
Loan delinquency information | ||||||
Total Loans Carrying Value | 803,198 | 782,123 | ||||
Construction | 30-59 Days Past Due | ||||||
Loan delinquency information | ||||||
Total Loans Carrying Value | 15,182 | 49,694 | ||||
Construction | 60+ Days Past Due | ||||||
Loan delinquency information | ||||||
Total Loans Carrying Value | 21,245 | 348,818 | ||||
Freddie Mac | ||||||
Loan delinquency information | ||||||
Total Loans Carrying Value | 9,500 | |||||
Non-Accrual Loans | 2,695 | |||||
Freddie Mac | Current and less than 30 days past due | ||||||
Loan delinquency information | ||||||
Total Loans Carrying Value | 9,500 | |||||
SBA 7(a) | ||||||
Loan delinquency information | ||||||
Total Loans Carrying Value | 1,218,807 | 1,204,678 | ||||
Non-Accrual Loans | 43,484 | 30,549 | ||||
90+ Days Past Due but Accruing | 40 | |||||
General allowance for loan losses | (10,204) | (12,679) | ||||
Specific allowance for loan losses | 13,566 | 17,867 | 20,579 | 16,809 | 15,110 | 14,299 |
SBA 7(a) | Current and less than 30 days past due | ||||||
Loan delinquency information | ||||||
Total Loans Carrying Value | 1,192,886 | 1,179,231 | ||||
SBA 7(a) | 30-59 Days Past Due | ||||||
Loan delinquency information | ||||||
Total Loans Carrying Value | 262 | 8,619 | ||||
SBA 7(a) | 60+ Days Past Due | ||||||
Loan delinquency information | ||||||
Total Loans Carrying Value | 25,659 | 16,828 | ||||
Other | ||||||
Loan delinquency information | ||||||
Total Loans Carrying Value | 395,544 | 453,233 | ||||
Non-Accrual Loans | 2,822 | 6,005 | ||||
General allowance for loan losses | (2,427) | (2,886) | ||||
Specific allowance for loan losses | 2,478 | 3,029 | $ 2,644 | $ 3,359 | $ 2,893 | $ 2,450 |
Other | Current and less than 30 days past due | ||||||
Loan delinquency information | ||||||
Total Loans Carrying Value | 389,277 | 443,869 | ||||
Other | 30-59 Days Past Due | ||||||
Loan delinquency information | ||||||
Total Loans Carrying Value | 1,890 | 4,224 | ||||
Other | 60+ Days Past Due | ||||||
Loan delinquency information | ||||||
Total Loans Carrying Value | $ 4,377 | $ 5,140 |
Loans and Allowance for Credi_6
Loans and Allowance for Credit Losses - Credit Quality (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2024 | Dec. 31, 2023 | |
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | $ 9,482,906 | $ 10,675,958 |
General allowance for loan losses | (36,618) | (44,473) |
Total Loans, net of allowance for loan losses, including loans in consolidated VIEs | $ 9,446,288 | $ 10,631,485 |
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 | $ 148,315 | $ 170,640 |
Percentage of loans outstanding | 1.60% | 1.60% |
20.1 - 40.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | $ 326,455 | $ 443,633 |
Percentage of loans outstanding | 3.40% | 4.20% |
40.1 - 60.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | $ 1,592,191 | $ 1,995,916 |
Percentage of loans outstanding | 16.80% | 18.70% |
60.1 - 80.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | $ 6,432,367 | $ 7,133,968 |
Percentage of loans outstanding | 67.80% | 66.80% |
80.1 - 100.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | $ 534,508 | $ 462,124 |
Percentage of loans outstanding | 5.60% | 4.30% |
Greater than 100.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | $ 449,070 | $ 469,677 |
Percentage of loans outstanding | 4.80% | 4.40% |
Bridge | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | $ 6,069,908 | $ 6,796,082 |
General allowance for loan losses | (12,732) | (17,302) |
Bridge | 0.0 - 20.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 2,243 | 2,308 |
Bridge | 20.1 - 40.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 85,672 | 97,309 |
Bridge | 40.1 - 60.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 721,964 | 756,353 |
Bridge | 60.1 - 80.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 4,974,660 | 5,781,651 |
Bridge | 80.1 - 100.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 179,286 | 82,517 |
Bridge | Greater than 100.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 106,083 | 75,944 |
Fixed rate | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 959,022 | 1,031,830 |
General allowance for loan losses | (5,415) | (7,884) |
Fixed rate | 0.0 - 20.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 3,227 | 5,222 |
Fixed rate | 20.1 - 40.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 30,987 | 36,021 |
Fixed rate | 40.1 - 60.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 437,170 | 449,804 |
Fixed rate | 60.1 - 80.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 466,402 | 517,628 |
Fixed rate | 80.1 - 100.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 19,940 | 19,965 |
Fixed rate | Greater than 100.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 1,296 | 3,190 |
Construction | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 839,625 | 1,180,635 |
General allowance for loan losses | (5,840) | (3,722) |
Construction | 0.0 - 20.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 21,019 | 25,173 |
Construction | 20.1 - 40.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 4,521 | 94,856 |
Construction | 40.1 - 60.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 147,031 | 532,730 |
Construction | 60.1 - 80.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 569,839 | 355,631 |
Construction | 80.1 - 100.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 91,895 | 119,191 |
Construction | Greater than 100.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 5,320 | 53,054 |
Freddie Mac | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 9,500 | |
Freddie Mac | 40.1 - 60.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 2,995 | |
Freddie Mac | 60.1 - 80.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 6,505 | |
SBA 7(a) | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 1,218,807 | 1,204,678 |
General allowance for loan losses | (10,204) | (12,679) |
SBA 7(a) | 0.0 - 20.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 13,798 | 10,627 |
SBA 7(a) | 20.1 - 40.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 69,428 | 56,061 |
SBA 7(a) | 40.1 - 60.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 218,269 | 172,743 |
SBA 7(a) | 60.1 - 80.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 353,621 | 404,102 |
SBA 7(a) | 80.1 - 100.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 228,658 | 226,327 |
SBA 7(a) | Greater than 100.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 335,033 | 334,818 |
Other | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 395,544 | 453,233 |
General allowance for loan losses | (2,427) | (2,886) |
Other | 0.0 - 20.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 108,028 | 127,310 |
Other | 20.1 - 40.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 135,847 | 159,386 |
Other | 40.1 - 60.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 67,757 | 81,291 |
Other | 60.1 - 80.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 67,845 | 68,451 |
Other | 80.1 - 100.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 14,729 | 14,124 |
Other | Greater than 100.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | $ 1,338 | $ 2,671 |
Loans and Allowance for Credi_7
Loans and Allowance for Credit Losses - Geographic and Collateral Concentration (Details) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2024 | Dec. 31, 2023 | |
Geographical concentration | Loans, net | ||
Concentration risk | ||
Percentage of loan | 100% | 100% |
Geographical concentration | Loans, net | Texas | ||
Concentration risk | ||
Percentage of loan | 18.80% | 18.60% |
Geographical concentration | Loans, net | California | ||
Concentration risk | ||
Percentage of loan | 11.80% | 11.40% |
Geographical concentration | Loans, net | Arizona | ||
Concentration risk | ||
Percentage of loan | 7.50% | 6.10% |
Geographical concentration | Loans, net | Florida | ||
Concentration risk | ||
Percentage of loan | 7.30% | 6.40% |
Geographical concentration | Loans, net | Georgia | ||
Concentration risk | ||
Percentage of loan | 6.80% | 7.10% |
Geographical concentration | Loans, net | Oregon | ||
Concentration risk | ||
Percentage of loan | 6.70% | 5.90% |
Geographical concentration | Loans, net | New York | ||
Concentration risk | ||
Percentage of loan | 4.60% | 4.80% |
Geographical concentration | Loans, net | North Carolina | ||
Concentration risk | ||
Percentage of loan | 4.30% | 4.10% |
Geographical concentration | Loans, net | Ohio | ||
Concentration risk | ||
Percentage of loan | 3.40% | 3.20% |
Geographical concentration | Loans, net | Washington | ||
Concentration risk | ||
Percentage of loan | 2.80% | 3.40% |
Geographical concentration | Loans, net | Other | ||
Concentration risk | ||
Percentage of loan | 26% | 29% |
Collateral concentration | ||
Concentration risk | ||
Percentage of SBA loan | 100% | 100% |
Collateral concentration | Lodging | ||
Concentration risk | ||
Percentage of SBA loan | 22% | 23.40% |
Collateral concentration | Gasoline Service Stations | ||
Concentration risk | ||
Percentage of SBA loan | 12.70% | 12.80% |
Collateral concentration | Eating Places | ||
Concentration risk | ||
Percentage of SBA loan | 6.60% | 6.20% |
Collateral concentration | Child Day Care Services | ||
Concentration risk | ||
Percentage of SBA loan | 5.60% | 5.60% |
Collateral concentration | Offices of Physicians | ||
Concentration risk | ||
Percentage of SBA loan | 3.70% | 4.10% |
Collateral concentration | General Freight Trucking, Local | ||
Concentration risk | ||
Percentage of SBA loan | 3.20% | 3.50% |
Collateral concentration | Grocery Stores | ||
Concentration risk | ||
Percentage of SBA loan | 2.30% | 2.30% |
Collateral concentration | Coin-Operated Laundries and Drycleaners | ||
Concentration risk | ||
Percentage of SBA loan | 1.70% | 1.90% |
Collateral concentration | Beer, Wine, and Liquor Stores | ||
Concentration risk | ||
Percentage of SBA loan | 1.30% | 1.30% |
Collateral concentration | Funeral Service and Crematories | ||
Concentration risk | ||
Percentage of SBA loan | 1.10% | 1.40% |
Collateral concentration | Other | ||
Concentration risk | ||
Percentage of SBA loan | 39.80% | 37.50% |
Collateral concentration | Loans, net | ||
Concentration risk | ||
Percentage of loan | 100% | 100% |
Collateral concentration | Loans, net | Multi-family | ||
Concentration risk | ||
Percentage of loan | 62.30% | 60.90% |
Collateral concentration | Loans, net | SBA | ||
Concentration risk | ||
Percentage of loan | 13% | 11.40% |
Collateral concentration | Loans, net | Mixed Use | ||
Concentration risk | ||
Percentage of loan | 8.50% | 8.40% |
Collateral concentration | Loans, net | Industrial | ||
Concentration risk | ||
Percentage of loan | 5.30% | 4.30% |
Collateral concentration | Loans, net | Office | ||
Concentration risk | ||
Percentage of loan | 3.50% | 4.40% |
Collateral concentration | Loans, net | Retail | ||
Concentration risk | ||
Percentage of loan | 4.10% | 4.30% |
Collateral concentration | Loans, net | Lodging | ||
Concentration risk | ||
Percentage of loan | 1.60% | 1.60% |
Collateral concentration | Loans, net | Other | ||
Concentration risk | ||
Percentage of loan | 1.70% | 4.70% |
Loans and Allowance for Credi_8
Loans and Allowance for Credit Losses - Allowance for loan losses by loan product and impairment methodology (Details) - USD ($) $ in Thousands | Jun. 30, 2024 | Mar. 31, 2024 | Dec. 31, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Dec. 31, 2022 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
General | $ 36,618 | $ 44,473 | ||||
Specific | 6,325 | 35,710 | ||||
PCD | 1,889 | 21,422 | ||||
Ending Balance | 44,832 | $ 67,423 | 101,605 | $ 112,154 | $ 67,780 | $ 90,519 |
Bridge | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
General | 12,732 | 17,302 | ||||
Specific | 1,666 | 18,939 | ||||
Ending Balance | 14,398 | 13,181 | 36,241 | 43,857 | 40,319 | 49,905 |
Fixed rate | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
General | 5,415 | 7,884 | ||||
Specific | 1,065 | 5,714 | ||||
Ending Balance | 6,480 | 7,264 | 13,598 | 12,204 | 9,085 | 6,531 |
Construction | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
General | 5,840 | 3,722 | ||||
Specific | 181 | 5,726 | ||||
PCD | 1,889 | 21,422 | ||||
Ending Balance | 7,910 | 23,755 | 30,870 | 35,925 | 373 | 17,334 |
SBA 7(a) | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
General | 10,204 | 12,679 | ||||
Specific | 3,362 | 5,188 | ||||
Ending Balance | 13,566 | 20,579 | 17,867 | 16,809 | 15,110 | 14,299 |
Other | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
General | 2,427 | 2,886 | ||||
Specific | 51 | 143 | ||||
Ending Balance | $ 2,478 | $ 2,644 | $ 3,029 | $ 3,359 | $ 2,893 | $ 2,450 |
Loans and Allowance for Credi_9
Loans and Allowance for Credit Losses - Investment Loans Allowance Activity (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Allowance for loan losses | ||||
Beginning Balance | $ 67,423 | $ 67,780 | $ 101,605 | $ 90,519 |
Provision for (recovery of) loan losses | (16,721) | 18,474 | (45,278) | 13,928 |
PCD | 27,617 | 27,617 | ||
Charge-offs and sales | (5,946) | (1,806) | (11,699) | (20,028) |
Recoveries | 76 | 89 | 204 | 118 |
Ending Balance | 44,832 | 112,154 | 44,832 | 112,154 |
Bridge | ||||
Allowance for loan losses | ||||
Beginning Balance | 13,181 | 40,319 | 36,241 | 49,905 |
Provision for (recovery of) loan losses | 1,217 | 3,538 | (21,843) | (5,437) |
Charge-offs and sales | (611) | |||
Ending Balance | 14,398 | 43,857 | 14,398 | 43,857 |
Fixed rate | ||||
Allowance for loan losses | ||||
Beginning Balance | 7,264 | 9,085 | 13,598 | 6,531 |
Provision for (recovery of) loan losses | (784) | 4,523 | (4,489) | 7,177 |
Charge-offs and sales | (1,404) | (2,629) | (1,504) | |
Ending Balance | 6,480 | 12,204 | 6,480 | 12,204 |
Construction | ||||
Allowance for loan losses | ||||
Beginning Balance | 23,755 | 373 | 30,870 | 17,334 |
Provision for (recovery of) loan losses | (12,579) | 7,935 | (18,215) | 7,872 |
PCD | 27,617 | 27,617 | ||
Charge-offs and sales | (3,266) | (4,745) | (16,898) | |
Ending Balance | 7,910 | 35,925 | 7,910 | 35,925 |
SBA 7(a) | ||||
Allowance for loan losses | ||||
Beginning Balance | 20,579 | 15,110 | 17,867 | 14,299 |
Provision for (recovery of) loan losses | (4,409) | 2,012 | (246) | 3,407 |
Charge-offs and sales | (2,680) | (402) | (4,259) | (1,015) |
Recoveries | 76 | 89 | 204 | 118 |
Ending Balance | 13,566 | 16,809 | 13,566 | 16,809 |
Other | ||||
Allowance for loan losses | ||||
Beginning Balance | 2,644 | 2,893 | 3,029 | 2,450 |
Provision for (recovery of) loan losses | (166) | 466 | (485) | 909 |
Charge-offs and sales | (66) | |||
Ending Balance | 2,478 | 3,359 | 2,478 | 3,359 |
Unfunded Loan Commitment | ||||
Allowance for loan losses | ||||
Ending Balance | $ 600 | $ 3,600 | $ 600 | $ 3,600 |
Loans and Allowance for Cred_10
Loans and Allowance for Credit Losses - Non-accrual Loans (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | Dec. 31, 2023 | |
Non-accrual loans | |||||
Total recorded carrying value of non-accrual loans | $ 192,391 | $ 192,391 | $ 634,001 | ||
Non-accrual loans | |||||
Non-accrual loans | |||||
Non-accrual loans with an allowance | 178,046 | 178,046 | 607,292 | ||
Non-accrual loans without an allowance | 14,345 | 14,345 | 26,709 | ||
Total recorded carrying value of non-accrual loans | 192,391 | 192,391 | 634,001 | ||
Allowance for loan losses related to non-accrual loans | (9,499) | (9,499) | (50,796) | ||
Unpaid principal balance of non-accrual loans | 203,666 | 203,666 | $ 688,282 | ||
Interest income on non-accrual loans | $ 52 | $ 6,841 | $ 1,338 | $ 14,690 |
Loans and Allowance for Cred_11
Loans and Allowance for Credit Losses - Loan Modifications (Details) $ in Millions | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||
May 31, 2023 USD ($) | Jun. 30, 2024 USD ($) loan | Jun. 30, 2023 USD ($) loan | Jun. 30, 2024 USD ($) loan | Jun. 30, 2023 USD ($) loan | Dec. 31, 2023 USD ($) | |
Loan modifications | ||||||
Number of financing receivable modified | loan | 20 | 5 | 24 | 12 | ||
Carrying value of modified loans | $ 519 | $ 382 | $ 555.6 | $ 434.4 | ||
Percentage of modified loans | 5.50% | 3.70% | 5.90% | 4.20% | ||
Amount of cash inflow from capital investment | $ 7.2 | $ 7.2 | ||||
Carrying amount of loan foreclosure in process | $ 65.8 | $ 65.8 | $ 95 | |||
Term extension and interest payment deferral | ||||||
Loan modifications | ||||||
Number of financing receivable modified | loan | 12 | 13 | 1 | |||
Carrying value of modified loans | $ 334.7 | $ 360 | $ 28.4 | |||
Percentage of modified loans | 3.60% | 3.80% | 0.30% | |||
Term extension period | 18 months | |||||
Interest payment deferral period | 12 months | 12 months | ||||
Term extension and interest payment deferral | Minimum | ||||||
Loan modifications | ||||||
Term extension period | 3 months | 3 months | ||||
Term extension and interest payment deferral | Maximum | ||||||
Loan modifications | ||||||
Term extension period | 27 months | 27 months | ||||
Term extension and interest payment deferral | Weighted Average | ||||||
Loan modifications | ||||||
Term extension period | 13 months | 12 months | ||||
Term Extension | ||||||
Loan modifications | ||||||
Number of financing receivable modified | loan | 4 | 4 | 7 | 9 | ||
Carrying value of modified loans | $ 357.4 | $ 51 | $ 381.9 | $ 62.3 | $ 405.2 | |
Percentage of modified loans | 0.50% | 3.70% | 0.70% | 3.90% | ||
Term extension period | 18 months | |||||
Amount of contribution receivable from borrower | $ 17 | |||||
Percentage of contribution receivable | 3.90% | |||||
Term Extension | Minimum | ||||||
Loan modifications | ||||||
Term extension period | 10 months | 12 months | 6 months | 12 months | ||
Term Extension | Maximum | ||||||
Loan modifications | ||||||
Term extension period | 24 months | 36 months | 24 months | 120 months | ||
Term Extension | Weighted Average | ||||||
Loan modifications | ||||||
Term extension period | 18 months | 18 months | 17 months | 18 months | ||
Term Extension | SBA | ||||||
Loan modifications | ||||||
Number of financing receivable modified | loan | 1 | |||||
Term extension period | 10 years | |||||
Term Extension | SBA | Maximum | ||||||
Loan modifications | ||||||
Carrying value of modified loans | $ 0.1 | |||||
Interest payment deferral | ||||||
Loan modifications | ||||||
Number of financing receivable modified | loan | 3 | 1 | 3 | 2 | ||
Carrying value of modified loans | $ 58.3 | $ 0.1 | $ 58.3 | $ 0.8 | ||
Percentage of modified loans | 0.60% | 0.60% | ||||
Interest payment deferral period | 9 months | 9 months | ||||
Interest payment deferral | Minimum | ||||||
Loan modifications | ||||||
Interest payment deferral period | 10 months | 6 months | 10 months | 6 months | ||
Interest payment deferral | Maximum | ||||||
Loan modifications | ||||||
Percentage of modified loans | 0.10% | 0.10% | ||||
Interest payment deferral period | 28 months | 9 months | 28 months | 9 months | ||
Interest payment deferral | Weighted Average | ||||||
Loan modifications | ||||||
Interest payment deferral period | 17 months | 6 months | 17 months | 6 months | ||
Term Extension and Interest Rate Reduction | ||||||
Loan modifications | ||||||
Number of financing receivable modified | loan | 1 | 1 | ||||
Carrying value of modified loans | $ 75 | $ 75 | ||||
Percentage of modified loans | 0.80% | 0.80% | ||||
Term extension period | 18 months | 18 months | ||||
Basis spread on variable rate before modification | 3.25% | 3.25% | ||||
Term Extension and Interest Rate Reduction | Period from June 2024 to December 2024 | ||||||
Loan modifications | ||||||
Fixed interest rate after modification | 6% | 6% | ||||
Term Extension and Interest Rate Reduction | Period from January 2025 to July 2025 | ||||||
Loan modifications | ||||||
Fixed interest rate after modification | 6.50% | 6.50% | ||||
Principal Reduction | Entity Loan Modification Program | ||||||
Loan modifications | ||||||
Post-modification recorded balance | $ 22.8 | $ 23.3 |
Loans and Allowance for Cred_12
Loans and Allowance for Credit Losses - PCD Activity (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2024 | Jun. 30, 2023 | |
Acquisitions | ||
PCD loans acquired during the period | $ 0 | |
Broadmark | ||
Acquisitions | ||
Unpaid principal balance | $ 283,682 | |
Allowance for credit losses | (32,862) | |
Non-credit discount | (9,377) | |
Purchase price of loans classified as PCD | 241,443 | |
Broadmark | Previously Reported | ||
Acquisitions | ||
Unpaid principal balance | 244,932 | |
Allowance for credit losses | (27,617) | |
Non-credit discount | (6,035) | |
Purchase price of loans classified as PCD | 211,280 | |
Broadmark | Adjustments | ||
Acquisitions | ||
Unpaid principal balance | 38,750 | |
Allowance for credit losses | (5,245) | |
Non-credit discount | (3,342) | |
Purchase price of loans classified as PCD | $ 30,163 |
Fair Value Measurements - Finan
Fair Value Measurements - Financial Instruments Carried at Fair Value on Recurring Basis (Details) - USD ($) | 6 Months Ended | ||
Mar. 16, 2022 | Jun. 30, 2024 | Dec. 31, 2023 | |
Assets: | |||
Loans, held for sale | $ 89,380,000 | $ 81,599,000 | |
Loans, net, fair value | 0 | 9,348,000 | |
Investments held to maturity | 3,446,000 | 3,446,000 | |
Derivative instruments | 14,382,000 | 2,404,000 | |
Investment in unconsolidated joint venture | 6,974,000 | 7,360,000 | |
Liabilities: | |||
Derivative instruments, at fair value | 2,638,000 | 212,000 | |
Contingent consideration | 3,926,000 | 7,628,000 | |
Mosaic | |||
Fair value | |||
Fair value of CERs issued | $ 25,000,000 | $ 0 | |
Value per CER unit | $ 0.83 | ||
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 | $ 72,499,000 | 100,238,000 | |
Loans, held for sale | 89,380,000 | 81,599,000 | |
Loans, net, fair value | 9,348,000 | ||
Paycheck Protection Program loans | 230,000 | 165,000 | |
Mortgage backed securities, at fair value | 30,174,000 | 27,436,000 | |
Derivative instruments | 14,382,000 | 2,404,000 | |
Investment in unconsolidated joint venture | 6,974,000 | 7,360,000 | |
Preferred equity investments | 108,423,000 | 108,423,000 | |
Total assets | 322,062,000 | 336,973,000 | |
Liabilities: | |||
Derivative instruments, at fair value | 2,638,000 | 212,000 | |
Contingent consideration | 3,926,000 | 7,628,000 | |
Total liabilities | 6,564,000 | 7,840,000 | |
Recurring | Level 1 | |||
Assets: | |||
Cash held in money market funds | 72,499,000 | 100,238,000 | |
Total assets | 72,499,000 | 100,238,000 | |
Recurring | Level 2 inputs | |||
Assets: | |||
Loans, held for sale | 80,235,000 | 81,599,000 | |
Paycheck Protection Program loans | 230,000 | 165,000 | |
Mortgage backed securities, at fair value | 30,174,000 | 27,436,000 | |
Derivative instruments | 14,382,000 | 2,404,000 | |
Total assets | 125,021,000 | 111,604,000 | |
Liabilities: | |||
Derivative instruments, at fair value | 2,638,000 | 212,000 | |
Total liabilities | 2,638,000 | 212,000 | |
Recurring | Level 3 inputs | |||
Assets: | |||
Loans, held for sale | 9,145,000 | ||
Loans, net, fair value | 9,348,000 | ||
Investment in unconsolidated joint venture | 6,974,000 | 7,360,000 | |
Preferred equity investments | 108,423,000 | 108,423,000 | |
Total assets | 124,542,000 | 125,131,000 | |
Liabilities: | |||
Contingent consideration | 3,926,000 | 7,628,000 | |
Total liabilities | $ 3,926,000 | $ 7,628,000 |
Fair Value Measurements - Valua
Fair Value Measurements - Valuation and Inputs, at FV (Details) $ in Thousands | Jun. 30, 2024 USD ($) | Mar. 31, 2024 USD ($) | Dec. 31, 2023 USD ($) | Jun. 30, 2023 USD ($) | Mar. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) |
Fair value inputs, quantitative information | ||||||
Assets valued using quoted or transaction prices in which quantitative unobservable inputs are not developed | $ 124,542 | $ 113,717 | $ 125,131 | $ 182,959 | $ 184,525 | $ 187,227 |
Recurring | ||||||
Fair value inputs, quantitative information | ||||||
Asset, fair value | 322,062 | 336,973 | ||||
Liabilities, fair value | 6,564 | 7,840 | ||||
Recurring | Level 3 inputs | ||||||
Fair value inputs, quantitative information | ||||||
Assets, fair value | 115,397 | 115,783 | ||||
Assets valued using quoted or transaction prices in which quantitative unobservable inputs are not developed | 9,100 | 9,300 | ||||
Asset, fair value | 124,542 | 125,131 | ||||
Liabilities, fair value | 526 | 7,628 | ||||
Liabilities valued using quoted or transaction prices in which quantitative unobservable inputs are not developed | 3,400 | |||||
Liabilities, fair value | 3,926 | 7,628 | ||||
Loans Receivable | ||||||
Fair value inputs, quantitative information | ||||||
Assets valued using quoted or transaction prices in which quantitative unobservable inputs are not developed | 9,348 | 9,773 | 9,859 | 9,786 | ||
Loans, held for sale | ||||||
Fair value inputs, quantitative information | ||||||
Assets valued using quoted or transaction prices in which quantitative unobservable inputs are not developed | 9,145 | 57,032 | 58,330 | 60,924 | ||
Investment in unconsolidated joint ventures | ||||||
Fair value inputs, quantitative information | ||||||
Assets valued using quoted or transaction prices in which quantitative unobservable inputs are not developed | 6,974 | 7,169 | 7,360 | 7,731 | 7,913 | 8,094 |
Investment in unconsolidated joint ventures | Recurring | Level 3 inputs | ||||||
Fair value inputs, quantitative information | ||||||
Assets, fair value | $ 6,974 | $ 7,360 | ||||
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 | ||||
Preferred Equity investments | ||||||
Fair value inputs, quantitative information | ||||||
Assets valued using quoted or transaction prices in which quantitative unobservable inputs are not developed | $ 108,423 | $ 106,548 | $ 108,423 | 108,423 | 108,423 | 108,423 |
Preferred Equity investments | Recurring | Level 3 inputs | ||||||
Fair value inputs, quantitative information | ||||||
Assets, 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 | 0.110 | 0.100 | ||||
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 | 0.110 | 0.100 | ||||
Contingent Consideration | ||||||
Fair value inputs, quantitative information | ||||||
Liabilities valued using quoted or transaction prices in which quantitative unobservable inputs are not developed | $ (3,926) | $ (7,628) | $ (15,566) | $ (16,636) | $ (28,500) | |
Contingent Consideration | Madison One | Recurring | Level 3 inputs | ||||||
Fair value inputs, quantitative information | ||||||
Liabilities, fair value | $ 526 | |||||
Contingent Consideration | Madison One | Recurring | Level 3 inputs | Monte Carlo Simulation Model | Measurement Input, Net Income Volatility | ||||||
Fair value inputs, quantitative information | ||||||
Contingent Consideration Liability, Measurement Input | 0.660 | |||||
Contingent Consideration | Madison One | Recurring | Level 3 inputs | Monte Carlo Simulation Model | Measurement Input, Net Income Volatility | Weighted Average | ||||||
Fair value inputs, quantitative information | ||||||
Contingent Consideration Liability, Measurement Input | 0.660 | |||||
Contingent Consideration | Madison One | Recurring | Level 3 inputs | Monte Carlo Simulation Model | Risk-adjusted Discount Rate | ||||||
Fair value inputs, quantitative information | ||||||
Contingent Consideration Liability, Measurement Input | 0.475 | |||||
Contingent Consideration | Madison One | Recurring | Level 3 inputs | Monte Carlo Simulation Model | Risk-adjusted Discount Rate | Weighted Average | ||||||
Fair value inputs, quantitative information | ||||||
Contingent Consideration Liability, Measurement Input | 0.475 | |||||
CER dividends | Mosaic | Recurring | Level 3 inputs | ||||||
Fair value inputs, quantitative information | ||||||
Liabilities, fair value | $ 1,591 | |||||
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 | 0.300 | |||||
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 | 0.30 | |||||
CER dividends | Mosaic | Recurring | Level 3 inputs | Monte Carlo Simulation Model | Measurement Input, Risk Free Interest Rate | ||||||
Fair value inputs, quantitative information | ||||||
Contingent Consideration Liability, Measurement Input | 0.047 | |||||
CER dividends | Mosaic | Recurring | Level 3 inputs | Monte Carlo Simulation Model | Measurement Input, Risk Free Interest Rate | Weighted Average | ||||||
Fair value inputs, quantitative information | ||||||
Contingent Consideration Liability, Measurement Input | 0.047 | |||||
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 | 0.115 | |||||
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 | 0.115 | |||||
CER units | Mosaic | Recurring | Level 3 inputs | ||||||
Fair value inputs, quantitative information | ||||||
Liabilities, fair value | $ 6,037 | |||||
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 | 0.120 | |||||
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 | 0.120 | |||||
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 | 0.115 | |||||
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 | 0.115 |
Fair Value Measurements - Chang
Fair Value Measurements - Changes in Fair Value (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Changes in fair value of assets | ||||
Beginning Balance | $ 113,717 | $ 184,525 | $ 125,131 | $ 187,227 |
Sales / Principal payments | (11) | (22) | ||
Unrealized gains (losses), net | 1,680 | (1,555) | 294 | (4,246) |
Transfer to (from) Level 3 | 9,145 | (883) | ||
Ending Balance | 124,542 | 182,959 | 124,542 | 182,959 |
Contingent Consideration | ||||
Changes in fair value of liabilities | ||||
Beginning Balance | 16,636 | 7,628 | 28,500 | |
Sales / Principal payments | (9,000) | |||
Unrealized gain (loss) | (1,070) | (3,934) | ||
Realized gains, net | (7,628) | |||
Merger | 3,926 | 3,926 | ||
Ending Balance | 3,926 | 15,566 | 3,926 | 15,566 |
Loans, net | ||||
Changes in fair value of assets | ||||
Beginning Balance | 9,859 | 9,348 | 9,786 | |
Unrealized gains (losses), net | (86) | 680 | (13) | |
Transfer to (from) Level 3 | (10,028) | |||
Ending Balance | 9,773 | 9,773 | ||
Loans, held for sale | ||||
Changes in fair value of assets | ||||
Beginning Balance | 58,330 | 60,924 | ||
Sales / Principal payments | (11) | (22) | ||
Unrealized gains (losses), net | (1,287) | (3,870) | ||
Transfer to (from) Level 3 | 9,145 | 9,145 | ||
Ending Balance | 9,145 | 57,032 | 9,145 | 57,032 |
Investment in unconsolidated joint ventures | ||||
Changes in fair value of assets | ||||
Beginning Balance | 7,169 | 7,913 | 7,360 | 8,094 |
Unrealized gains (losses), net | (195) | (182) | (386) | (363) |
Ending Balance | 6,974 | 7,731 | 6,974 | 7,731 |
Preferred Equity investments | ||||
Changes in fair value of assets | ||||
Beginning Balance | 106,548 | 108,423 | 108,423 | 108,423 |
Unrealized gains (losses), net | 1,875 | |||
Ending Balance | $ 108,423 | $ 108,423 | $ 108,423 | $ 108,423 |
Fair Value Measurements - Asset
Fair Value Measurements - Assets and Liabilities, Not at FV (Details) - USD ($) $ in Thousands | Jun. 30, 2024 | Dec. 31, 2023 |
Assets: | ||
Investments held to maturity | $ 3,446 | $ 3,446 |
Purchased future receivables, net | 2,093 | 9,483 |
Investment in unconsolidated joint venture | 6,974 | 7,360 |
Liabilities: | ||
Senior secured notes, net | 417,040 | 345,127 |
Carrying Amount | ||
Assets: | ||
Loans, held-for-investment | 9,446,288 | 10,622,137 |
Loans, held for sale | 452,856 | |
Servicing rights | 119,768 | 102,837 |
Total assets | 10,018,912 | 10,724,974 |
Liabilities: | ||
Secured borrowings | 2,311,969 | 2,102,075 |
Securitized debt obligations of consolidated VIEs | 4,407,241 | 5,068,453 |
Senior secured notes, net | 417,040 | 345,127 |
Guaranteed loan financing | 782,345 | 844,540 |
Corporate debt, net | 767,271 | 764,908 |
Total liabilities | 8,685,866 | 9,125,103 |
Fair Value | ||
Assets: | ||
Loans, held-for-investment | 9,255,383 | 10,380,893 |
Loans, held for sale | 452,856 | |
Servicing rights | 129,471 | 113,715 |
Total assets | 9,837,710 | 10,494,608 |
Liabilities: | ||
Secured borrowings | 2,311,969 | 2,102,075 |
Securitized debt obligations of consolidated VIEs | 4,361,392 | 5,022,057 |
Senior secured notes, net | 395,879 | 317,239 |
Guaranteed loan financing | 828,902 | 889,744 |
Corporate debt, net | 717,056 | 731,104 |
Total liabilities | $ 8,615,198 | $ 9,062,219 |
Servicing rights (Details)
Servicing rights (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | Dec. 31, 2023 | |
Servicing rights | |||||
Unpaid Principal Amount | $ 7,925,426 | $ 7,925,426 | $ 6,898,073 | ||
Carrying Value | 119,768 | 119,768 | 102,837 | ||
Total servicing rights | 119,768 | $ 94,893 | 119,768 | $ 94,893 | 102,837 |
Servicing rights activity at amortized cost | |||||
Beginning net carrying value at amortized cost | 102,837 | ||||
Ending net carrying value at amortized cost | 119,768 | 119,768 | |||
SBA servicing rights | |||||
Servicing rights | |||||
Unpaid Principal Amount | 1,534,092 | 1,534,092 | 1,208,201 | ||
Carrying Value | 35,327 | 24,328 | 35,327 | 24,328 | 29,536 |
Servicing rights activity at amortized cost | |||||
Beginning net carrying value at amortized cost | 31,343 | 22,040 | 29,536 | 19,756 | |
Additions | 5,596 | 2,043 | 8,273 | 3,555 | |
Amortization | (1,105) | (921) | (1,960) | (1,756) | |
Recovery (impairment) | (507) | 1,166 | (522) | 2,773 | |
Ending net carrying value at amortized cost | 35,327 | 24,328 | 35,327 | 24,328 | |
Multi-family servicing rights | |||||
Servicing rights | |||||
Unpaid Principal Amount | 5,885,203 | 5,885,203 | 5,689,872 | ||
Carrying Value | 70,222 | 70,565 | 70,222 | 70,565 | $ 73,301 |
Servicing rights activity at amortized cost | |||||
Beginning net carrying value at amortized cost | 72,212 | 67,911 | 73,301 | 67,361 | |
Additions | 882 | 5,311 | 2,620 | 8,392 | |
Amortization | (2,872) | (2,657) | (5,699) | (5,188) | |
Ending net carrying value at amortized cost | 70,222 | $ 70,565 | 70,222 | $ 70,565 | |
USDA | |||||
Servicing rights | |||||
Unpaid Principal Amount | 506,131 | 506,131 | |||
Carrying Value | 14,219 | 14,219 | |||
Servicing rights activity at amortized cost | |||||
Additions | 14,413 | 14,413 | |||
Amortization | (194) | (194) | |||
Ending net carrying value at amortized cost | $ 14,219 | $ 14,219 |
Servicing rights - Estimated va
Servicing rights - Estimated valuation (Details) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2024 | Dec. 31, 2023 | |
SBA servicing rights | Minimum | ||
Servicing rights, valuation assumptions | ||
Forward prepayment assumptions | 1.50% | 0% |
Forward default rate | 0% | 0% |
Discount rate | 11.60% | 14.40% |
Servicing expense (as a percent) | 0.40% | 0.40% |
SBA servicing rights | Maximum | ||
Servicing rights, valuation assumptions | ||
Forward prepayment assumptions | 21.60% | 4.50% |
Forward default rate | 6.60% | 7.30% |
Discount rate | 20.90% | 22.90% |
Servicing expense (as a percent) | 0.40% | 0.40% |
SBA servicing rights | Weighted Average | ||
Servicing rights, valuation assumptions | ||
Forward prepayment assumptions | 9.10% | 4.40% |
Forward default rate | 6.30% | 7% |
Discount rate | 12.20% | 14.60% |
Servicing expense (as a percent) | 0.40% | 0.40% |
Multi-family servicing rights | 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 servicing rights | Maximum | ||
Servicing rights, valuation assumptions | ||
Forward prepayment assumptions | 6.50% | 6.50% |
Forward default rate | 0.90% | 0.90% |
Discount rate | 6% | 6% |
Servicing expense (as a percent) | 0.80% | 0.80% |
Multi-family servicing rights | Weighted Average | ||
Servicing rights, valuation assumptions | ||
Forward prepayment assumptions | 5.60% | 5.40% |
Forward default rate | 0.60% | 0.60% |
Discount rate | 6% | 6% |
Servicing expense (as a percent) | 0.10% | 0.10% |
USDA | Minimum | ||
Servicing rights, valuation assumptions | ||
Forward prepayment assumptions | 2.10% | |
Discount rate | 6.90% | |
Servicing expense (as a percent) | 0.30% | |
USDA | Maximum | ||
Servicing rights, valuation assumptions | ||
Forward prepayment assumptions | 6.50% | |
Discount rate | 6.90% | |
Servicing expense (as a percent) | 0.30% | |
USDA | Weighted Average | ||
Servicing rights, valuation assumptions | ||
Forward prepayment assumptions | 5.60% | |
Discount rate | 6.90% | |
Servicing expense (as a percent) | 0.30% |
Servicing rights - Assumptions
Servicing rights - Assumptions (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2024 | Dec. 31, 2023 | |
SBA servicing rights | ||
Adverse changes to key assumptions on the carrying amount of the servicing rights | ||
Prepayment rate (10% adverse change) | $ (1,164) | $ (543) |
Prepayment rate (20% adverse change) | (2,261) | (1,069) |
Default rate (10% adverse change) | (162) | (165) |
Default rate (20% adverse change) | (323) | (328) |
Discount rate (10% adverse change) | (1,244) | (1,530) |
Discount rate (20% adverse change) | (2,401) | (2,922) |
Cost of servicing (10% adverse change) | (2,258) | (2,047) |
Cost of servicing (20% adverse change) | (4,515) | (4,095) |
Multi-family servicing rights | ||
Adverse changes to key assumptions on the carrying amount of the servicing rights | ||
Prepayment rate (10% adverse change) | (466) | (491) |
Prepayment rate (20% adverse change) | (918) | (965) |
Default rate (10% adverse change) | (14) | (14) |
Default rate (20% adverse change) | (27) | (29) |
Discount rate (10% adverse change) | (2,238) | (2,320) |
Discount rate (20% adverse change) | (4,365) | (4,524) |
Cost of servicing (10% adverse change) | (2,567) | (2,587) |
Cost of servicing (20% adverse change) | (5,135) | $ (5,173) |
USDA | ||
Adverse changes to key assumptions on the carrying amount of the servicing rights | ||
Prepayment rate (10% adverse change) | (804) | |
Prepayment rate (20% adverse change) | (1,543) | |
Discount rate (10% adverse change) | (485) | |
Discount rate (20% adverse change) | (942) | |
Cost of servicing (10% adverse change) | (625) | |
Cost of servicing (20% adverse change) | $ (1,250) |
Servicing rights - Amortization
Servicing rights - Amortization (Details) - USD ($) $ in Thousands | Jun. 30, 2024 | Dec. 31, 2023 |
Future amortization expense for the servicing rights | ||
2024 | $ 10,183 | |
2025 | 17,730 | |
2026 | 15,673 | |
2027 | 13,755 | |
2028 | 12,074 | |
Thereafter | 50,353 | |
Total | $ 119,768 | $ 102,837 |
Discontinued Operations and A_3
Discontinued Operations and Assets and Liabilities Held For Sale (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | Dec. 31, 2023 | |
Assets: | |||||
Total Assets | $ 423,894 | $ 423,894 | $ 454,596 | ||
Liabilities: | |||||
Total Liabilities | 332,265 | 332,265 | 333,157 | ||
Non-interest expense | |||||
Income (loss) from discontinued operations before provision for income taxes | (3,699) | $ 11,788 | (1,812) | $ 9,747 | |
Income tax benefit (provision) | 925 | (2,947) | 453 | (2,437) | |
Residential Mortgage Banking | |||||
Assets: | |||||
Cash and cash equivalents | 20,438 | 20,438 | 13,694 | ||
Restricted cash | 5,666 | 5,666 | 6,314 | ||
Loans, net | 3,860 | 3,860 | 2,778 | ||
Loans, held for sale | 156,264 | 156,264 | 133,204 | ||
Loans eligible for repurchase from Ginnie Mae | 89,679 | 89,679 | 86,872 | ||
Derivative instruments | 847 | ||||
Servicing rights | 125,795 | 125,795 | 188,855 | ||
Other assets | 22,192 | 22,192 | 22,032 | ||
Total Assets | 423,894 | 423,894 | 454,596 | ||
Liabilities: | |||||
Secured borrowings | 229,906 | 229,906 | 230,965 | ||
Liabilities for loans eligible for repurchase from Ginnie Mae | 89,679 | 89,679 | 86,872 | ||
Derivative instruments | 813 | 813 | 1,321 | ||
Accounts payable and other accrued liabilities | 11,867 | 11,867 | 13,999 | ||
Total Liabilities | 332,265 | 332,265 | $ 333,157 | ||
Interest income | 2,121 | 1,880 | 3,962 | 3,485 | |
Interest expense | (2,755) | (2,313) | (5,285) | (3,839) | |
Net interest expense | (634) | (433) | (1,323) | (354) | |
Non-interest income | |||||
Residential mortgage banking activities | 11,353 | 9,884 | 20,595 | 19,053 | |
Net realized gain (loss) on financial instruments | 2,938 | 2,938 | |||
Net unrealized gain (loss) on financial instruments | (7,219) | 8,818 | (7,219) | 2,725 | |
Servicing income, net of amortization and impairment | 8,472 | 9,393 | 17,888 | 18,754 | |
Other income | 4 | 23 | 8 | 54 | |
Total non-interest income | 15,548 | 28,118 | 34,210 | 40,586 | |
Non-interest expense | |||||
Employee compensation and benefits | (5,818) | (5,295) | (11,502) | (10,707) | |
Variable expenses on residential mortgage banking activities | (8,122) | (6,574) | (14,208) | (12,059) | |
Professional fees | (259) | (123) | (412) | (297) | |
Loan servicing expense | (2,412) | (2,221) | (4,741) | (4,029) | |
Other operating expenses | (2,002) | (1,684) | (3,836) | (3,393) | |
Total non-interest expense | (18,613) | (15,897) | (34,699) | (30,485) | |
Income (loss) from discontinued operations before provision for income taxes | (3,699) | 11,788 | (1,812) | 9,747 | |
Income tax benefit (provision) | 925 | (2,947) | 453 | (2,437) | |
Net income (loss) from discontinued operations | (2,774) | $ 8,841 | (1,359) | $ 7,310 | |
Residential Mortgage Banking | Sale | |||||
Discontinued operations | |||||
Consideration from sale of discontinued operations | 61,800 | 61,800 | |||
Mortgage servicing rights sold | $ 4,700,000 | $ 4,700,000 |
Secured borrowings (Details)
Secured borrowings (Details) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2024 USD ($) Lender | Dec. 31, 2023 USD ($) Lender | |
Secured borrowings and promissory note | ||
Facility size | $ 5,179,854 | |
Carrying Value, Secured borrowings | 2,311,969 | $ 2,102,075 |
Asset pledged as collateral without right | ||
Secured borrowings and promissory note | ||
Pledged Assets Carrying Value | 3,710,913 | |
Secured borrowings | ||
Secured borrowings and promissory note | ||
Pledged Assets Carrying Value | 3,710,913 | 3,320,583 |
Borrowings under credit facilities and other financing arrangements | ||
Secured borrowings and promissory note | ||
Facility size | 544,264 | |
Carrying Value, Secured borrowings | 224,308 | 149,923 |
Borrowings under credit facilities and other financing arrangements | Loans and finance receivables | ||
Secured borrowings and promissory note | ||
Pledged Assets Carrying Value | 285,963 | 212,512 |
Borrowings under credit facilities and other financing arrangements | Asset pledged as collateral without right | Loans and finance receivables | ||
Secured borrowings and promissory note | ||
Pledged Assets Carrying Value | 285,963 | |
Borrowings under repurchase agreements | ||
Secured borrowings and promissory note | ||
Facility size | 4,635,590 | |
Carrying Value, Secured borrowings | 2,087,661 | 1,952,152 |
Borrowings under repurchase agreements | Securities sold under agreements to repurchase | ||
Secured borrowings and promissory note | ||
Pledged Assets Carrying Value | 3,424,950 | 3,108,071 |
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 | $ 3,424,950 | |
SBA | Borrowings under credit facilities and other financing arrangements | ||
Secured borrowings and promissory note | ||
Number of lenders per asset class | Lender | 3 | |
Facility size | $ 250,000 | |
Carrying Value, Secured borrowings | $ 189,015 | 117,115 |
SBA | Borrowings under credit facilities and other financing arrangements | Secured Overnight Financing Rate | ||
Secured borrowings and promissory note | ||
Pricing, spread on variable (as a percent) | 2.83% | |
SBA | Borrowings under credit facilities and other financing arrangements | Prime rate | ||
Secured borrowings and promissory note | ||
Pricing, spread on variable (as a percent) | (0.82%) | |
SBA | Borrowings under credit facilities and other financing arrangements | Asset pledged as collateral without right | Loans and finance receivables | ||
Secured borrowings and promissory note | ||
Pledged Assets Carrying Value | $ 238,184 | |
LMM Loans | Borrowings under repurchase agreements | ||
Secured borrowings and promissory note | ||
Number of lenders per asset class | Lender | 9 | |
Facility size | $ 4,306,000 | |
Carrying Value, Secured borrowings | $ 1,758,071 | 1,677,885 |
LMM Loans | Borrowings under repurchase agreements | Secured Overnight Financing Rate | ||
Secured borrowings and promissory note | ||
Pricing, spread on variable (as a percent) | 3.18% | |
LMM Loans | 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 | $ 2,828,152 | |
LMM loans - USD | Borrowings under credit facilities and other financing arrangements | ||
Secured borrowings and promissory note | ||
Number of lenders per asset class | Lender | 1 | |
Facility size | $ 80,000 | |
Carrying Value, Secured borrowings | $ 2,645 | 20,729 |
LMM loans - USD | Borrowings under credit facilities and other financing arrangements | Secured Overnight Financing Rate | ||
Secured borrowings and promissory note | ||
Pricing, spread on variable (as a percent) | 1.35% | |
LMM loans - USD | Borrowings under credit facilities and other financing arrangements | Asset pledged as collateral without right | Loans and finance receivables | ||
Secured borrowings and promissory note | ||
Pledged Assets Carrying Value | $ 2,652 | |
LMM loans - Non-USD | Borrowings under credit facilities and other financing arrangements | ||
Secured borrowings and promissory note | ||
Number of lenders per asset class | Lender | 1 | |
Facility size | $ 214,264 | |
Carrying Value, Secured borrowings | $ 32,648 | $ 12,079 |
LMM loans - Non-USD | Borrowings under credit facilities and other financing arrangements | Euribor Rate | ||
Secured borrowings and promissory note | ||
Pricing, spread on variable (as a percent) | 3% | |
LMM loans - Non-USD | Borrowings under credit facilities and other financing arrangements | Asset pledged as collateral without right | ||
Secured borrowings and promissory note | ||
Pledged Assets Carrying Value | $ 45,127 | |
LMM loans - Non-USD | Borrowings under repurchase agreements | ||
Secured borrowings and promissory note | ||
Number of lenders per asset class | Lender | 1 | |
Carrying Value, Secured borrowings | $ 45,031 | |
LMM loans - Non-USD | Borrowings under repurchase agreements | Euribor Rate | ||
Secured borrowings and promissory note | ||
Pricing, spread on variable (as a percent) | 3% | |
Mortgage backed securities | Borrowings under repurchase agreements | ||
Secured borrowings and promissory note | ||
Number of lenders per asset class | Lender | 7 | |
Pricing, stated rate (as a percent) | 7.95% | |
Facility size | $ 329,590 | |
Carrying Value, Secured borrowings | 329,590 | $ 229,236 |
Mortgage backed securities | Borrowings under repurchase agreements | Securities sold under agreements to repurchase | ||
Secured borrowings and promissory note | ||
Pledged Assets Carrying Value | 80,093 | $ 20,770 |
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 | $ 596,798 |
Secured borrowings - Collateral
Secured borrowings - Collateral Pledged (Details) - USD ($) $ in Thousands | Jun. 30, 2024 | Dec. 31, 2023 |
Asset pledged as collateral without right | ||
Collateral pledged | ||
Total Loans, in consolidated VIEs, before allowance for loan losses | $ 3,710,913 | |
Secured borrowings | ||
Collateral pledged | ||
Total Loans, in consolidated VIEs, before allowance for loan losses | 3,710,913 | $ 3,320,583 |
Borrowings under credit facilities and other financing arrangements | Loans and finance receivables | ||
Collateral pledged | ||
Total Loans, in consolidated VIEs, before allowance for loan losses | 285,963 | 212,512 |
Borrowings under credit facilities and other financing arrangements | Asset pledged as collateral without right | Loans and finance receivables | ||
Collateral pledged | ||
Total Loans, in consolidated VIEs, before allowance for loan losses | 285,963 | |
Borrowings under repurchase agreements | Securities sold under agreements to repurchase | ||
Collateral pledged | ||
Total Loans, in consolidated VIEs, before allowance for loan losses | 3,424,950 | 3,108,071 |
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 | 3,424,950 | |
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 | 131,180 | 160,455 |
Loans, held for sale | Borrowings under credit facilities and other financing arrangements | Loans and finance receivables | ||
Collateral pledged | ||
Total Loans, in consolidated VIEs, before allowance for loan losses | 24,186 | 43,365 |
Loans, held for sale | Borrowings under repurchase agreements | Securities sold under agreements to repurchase | ||
Collateral pledged | ||
Total Loans, in consolidated VIEs, before allowance for loan losses | 579,866 | 9,349 |
Loans, net | Borrowings under credit facilities and other financing arrangements | Loans and finance receivables | ||
Collateral pledged | ||
Total Loans, in consolidated VIEs, before allowance for loan losses | 261,777 | 169,147 |
Loans, net | Borrowings under repurchase agreements | Securities sold under agreements to repurchase | ||
Collateral pledged | ||
Total Loans, in consolidated VIEs, before allowance for loan losses | 2,117,106 | 2,560,725 |
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 | 80,093 | 20,770 |
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 | 596,798 | |
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 | $ 516,705 | $ 356,772 |
Senior secured notes and corp_3
Senior secured notes and corporate debt, net (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||||
Apr. 12, 2024 | Oct. 20, 2021 | Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | Dec. 31, 2023 | May 20, 2021 | |
Senior secured notes, Convertible notes, and Corporate debt | ||||||||
Total Senior secured notes, net | $ 417,040 | $ 417,040 | $ 345,127 | |||||
Total Corporate debt, net | 767,271 | 767,271 | $ 764,908 | |||||
Total carrying amount of debt components | 1,184,311 | 1,184,311 | ||||||
Maximum borrowing capacity | 5,179,854 | 5,179,854 | ||||||
Amount drawn | 1,620,500 | $ 3,360,360 | ||||||
Contractual maturities of the Senior Secured Notes, Convertible Notes, and Corporate debt | ||||||||
2025 | 120,000 | 120,000 | ||||||
2026 | 760,884 | 760,884 | ||||||
2027 | 100,000 | 100,000 | ||||||
2028 | 110,000 | 110,000 | ||||||
Thereafter | 111,250 | 111,250 | ||||||
Total contractual amounts | 1,202,134 | 1,202,134 | ||||||
Unamortized deferred financing costs, discounts, and premiums, net | (17,823) | (17,823) | ||||||
Total carrying amount of debt components | 1,184,311 | 1,184,311 | ||||||
Senior Secured Notes | ||||||||
Senior secured notes, Convertible notes, and Corporate debt | ||||||||
Total Senior secured notes, net | 417,040 | 417,040 | ||||||
4.50% Senior Secured Notes Due 2026 | ||||||||
Senior secured notes, Convertible notes, and Corporate debt | ||||||||
Debt instrument, face value | $ 350,000 | $ 350,000 | ||||||
Interest rate (as a percent) | 4.50% | 4.50% | ||||||
Unamortized deferred financing costs | $ (5,220) | $ (5,220) | ||||||
Corporate Debt | ||||||||
Senior secured notes, Convertible notes, and Corporate debt | ||||||||
Repurchase price percentage in the event of change of control | 101% | |||||||
Unamortized discount | (5,730) | $ (5,730) | ||||||
Unamortized deferred financing costs | (4,133) | (4,133) | ||||||
Total Corporate debt, net | 767,271 | 767,271 | ||||||
5.50% Senior Notes due 2028 | ||||||||
Senior secured notes, Convertible notes, and Corporate debt | ||||||||
Debt instrument, face value | $ 110,000 | $ 110,000 | ||||||
Interest rate (as a percent) | 5.50% | 5.50% | ||||||
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 | 0 | 0 | 0 | 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 | |||||||
6.20% Senior Notes due 2026 | ||||||||
Senior secured notes, Convertible notes, and Corporate debt | ||||||||
Debt instrument, face value | $ 104,614 | $ 104,614 | ||||||
Interest rate (as a percent) | 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 | $ 206,270 | ||||||
Interest rate (as a percent) | 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 | $ 120,000 | ||||||
Interest rate (as a percent) | 6.125% | 6.125% | ||||||
7.375% Senior Notes due in 2027 | ||||||||
Senior secured notes, Convertible notes, and Corporate debt | ||||||||
Debt instrument, face value | $ 100,000 | $ 100,000 | ||||||
Interest rate (as a percent) | 7.375% | 7.375% | ||||||
5.00% Senior Notes due in 2026 | ||||||||
Senior secured notes, Convertible notes, and Corporate debt | ||||||||
Debt instrument, face value | $ 100,000 | $ 100,000 | ||||||
Interest rate (as a percent) | 5% | 5% | ||||||
Junior Subordinated I-A Notes | ||||||||
Senior secured notes, Convertible notes, and Corporate debt | ||||||||
Debt instrument, face value | $ 15,000 | $ 15,000 | ||||||
Junior Subordinated I-A Notes | SOFR | ||||||||
Senior secured notes, Convertible notes, and Corporate debt | ||||||||
Pricing, spread on variable (as a percent) | 3.10% | |||||||
Junior Subordinated I-B Notes | ||||||||
Senior secured notes, Convertible notes, and Corporate debt | ||||||||
Debt instrument, face value | 21,250 | $ 21,250 | ||||||
Junior Subordinated I-B Notes | SOFR | ||||||||
Senior secured notes, Convertible notes, and Corporate debt | ||||||||
Pricing, spread on variable (as a percent) | 3.10% | |||||||
Credit Agreement | Term loan due 2029 | ||||||||
Senior secured notes, Convertible notes, and Corporate debt | ||||||||
Debt instrument, face value | 75,000 | $ 75,000 | ||||||
Unamortized discount | $ (2,740) | $ (2,740) | ||||||
Maximum borrowing capacity | $ 115,250 | |||||||
Amount drawn | $ 75,000 | |||||||
Commitment fee percentage | 1% | |||||||
Credit Agreement | Term loan due 2029 | SOFR | ||||||||
Senior secured notes, Convertible notes, and Corporate debt | ||||||||
Pricing, spread on variable (as a percent) | 5.50% | 5.50% | ||||||
Pricing, spread on variable when loan is rated below investment grade (as a percent) | 6.50% | |||||||
Credit Agreement | Term loan due 2029 | Base rate | ||||||||
Senior secured notes, Convertible notes, and Corporate debt | ||||||||
Pricing, spread on variable (as a percent) | 4.50% | |||||||
Pricing, spread on variable when loan is rated below investment grade (as a percent) | 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 | |||||||
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 | 6 Months Ended | 12 Months Ended |
Jun. 30, 2024 | Dec. 31, 2023 | |
Ending balance | $ 782,345 | $ 844,540 |
Guaranteed loan financing | ||
Ending balance | $ 782,345 | $ 844,540 |
Guaranteed loan financing | Weighted Average | ||
Interest Rates | 9.17% | 9.17% |
Guaranteed loan financing | Minimum | ||
Interest Rates | 1.45% | 1.45% |
Guaranteed loan financing | Maximum | ||
Interest Rates | 10.50% | 10.50% |
Guaranteed loan financing - Mat
Guaranteed loan financing - Maturities (Details) - USD ($) $ in Thousands | Jun. 30, 2024 | Dec. 31, 2023 |
Contractual maturities of total guaranteed loan financing outstanding | ||
2024 | $ 182 | |
2025 | 414 | |
2026 | 1,914 | |
2027 | 7,778 | |
2028 | 8,614 | |
Thereafter | 763,443 | |
Total | 782,345 | |
Guaranteed loan financing | ||
Contractual maturities of total guaranteed loan financing outstanding | ||
Loans held-for-investment pledged as security against guaranteed loan financing | $ 782,700 | $ 845,000 |
Variable interest entities an_3
Variable interest entities and securitization activities - Consolidated VIE Assets and Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2024 | Dec. 31, 2023 | Jun. 30, 2023 |
Assets | |||
Cash and cash equivalents | $ 226,286 | $ 197,651 | |
Restricted cash | 29,971 | $ 29,179 | |
Other assets | 379,413 | $ 300,175 | |
Total Assets | 11,774,333 | 12,441,217 | |
Liabilities | |||
Secured borrowings | 2,311,969 | 2,102,075 | |
Accounts payable and other accrued liabilities | 204,766 | 207,481 | |
Total Liabilities | 9,374,107 | 9,794,455 | |
Consolidated VIEs | |||
Assets | |||
Loans, net | 6,001,409 | 6,611,325 | |
Loans, held for sale | 9,725 | ||
Liabilities | |||
Secured borrowings | 4,407,241 | 5,068,453 | |
Reportable Legal Entities | Consolidated VIEs | |||
Assets | |||
Cash and cash equivalents | 4 | 671 | |
Restricted cash | 22,778 | 93,240 | |
Loans, net | 6,001,409 | 6,611,325 | |
Loans, held for sale | 9,725 | ||
Preferred equity investments | 108,423 | 108,423 | |
Other assets | 108,231 | 83,486 | |
Total Assets | 6,250,570 | 6,897,145 | |
Liabilities | |||
Secured borrowings | 4,407,241 | 5,068,453 | |
Due to third parties | 2,773 | 2,944 | |
Accounts payable and other accrued liabilities | 1 | 34 | |
Total Liabilities | $ 4,410,015 | $ 5,071,431 |
Variable interest entities an_4
Variable interest entities and securitization activities - Securitized Debt Obligations (Details) - USD ($) $ in Thousands | Jun. 30, 2024 | Dec. 31, 2023 |
Variable interest entities | ||
Current Principal Balance | $ 7,925,426 | $ 6,898,073 |
Current principal balance of non-company sponsored securitized loans | 700 | 1,600 |
Consolidated VIEs | ||
Variable interest entities | ||
Current Principal Balance | 4,442,263 | 5,122,620 |
Carrying value | $ 4,406,517 | $ 5,066,833 |
Weighted Average Rate | 7.20% | 6.90% |
ReadyCap Lending Small Business Trust 2019-2 | ||
Variable interest entities | ||
Current Principal Balance | $ 25,512 | $ 32,175 |
Carrying value | $ 25,512 | $ 32,175 |
Weighted Average Rate | 8% | 7.60% |
ReadyCap Lending Small Business Trust 2023-3 | ||
Variable interest entities | ||
Current Principal Balance | $ 114,485 | $ 121,527 |
Carrying value | $ 112,549 | $ 119,308 |
Weighted Average Rate | 8.60% | 8.50% |
Sutherland Commercial Mortgage Trust 2017-SBC6 | ||
Variable interest entities | ||
Current Principal Balance | $ 277 | $ 1,550 |
Carrying value | $ 277 | $ 1,532 |
Weighted Average Rate | 5% | 5% |
Sutherland Commercial Mortgage Trust 2019-SBC8 | ||
Variable interest entities | ||
Current Principal Balance | $ 97,659 | $ 105,281 |
Carrying value | $ 96,256 | $ 103,733 |
Weighted Average Rate | 2.90% | 2.90% |
Sutherland Commercial Mortgage Trust 2021-SBC10 | ||
Variable interest entities | ||
Current Principal Balance | $ 69,979 | $ 81,214 |
Carrying value | $ 68,902 | $ 79,952 |
Weighted Average Rate | 1.60% | 1.60% |
ReadyCap Commercial Mortgage Trust 2015-2 | ||
Variable interest entities | ||
Current Principal Balance | $ 1,758 | $ 1,902 |
Carrying value | $ 1,688 | $ 1,753 |
Weighted Average Rate | 5.10% | 5.10% |
ReadyCap Commercial Mortgage Trust 2016-3 | ||
Variable interest entities | ||
Current Principal Balance | $ 8,901 | $ 9,038 |
Carrying value | $ 8,670 | $ 8,723 |
Weighted Average Rate | 5.30% | 5.20% |
ReadyCap Commercial Mortgage Trust 2018-4 | ||
Variable interest entities | ||
Current Principal Balance | $ 52,078 | $ 53,052 |
Carrying value | $ 50,569 | $ 51,309 |
Weighted Average Rate | 4.60% | 4.50% |
ReadyCap Commercial Mortgage Trust 2019-5 | ||
Variable interest entities | ||
Current Principal Balance | $ 84,579 | $ 88,520 |
Carrying value | $ 80,128 | $ 83,529 |
Weighted Average Rate | 4.90% | 4.70% |
ReadyCap Commercial Mortgage Trust 2019-6 | ||
Variable interest entities | ||
Current Principal Balance | $ 192,110 | $ 199,379 |
Carrying value | $ 188,680 | $ 195,496 |
Weighted Average Rate | 3.40% | 3.40% |
ReadyCap Commercial Mortgage Trust 2022-7 | ||
Variable interest entities | ||
Current Principal Balance | $ 194,429 | $ 195,866 |
Carrying value | $ 188,188 | $ 188,995 |
Weighted Average Rate | 4.20% | 4.20% |
Ready Capital Mortgage Financing 2021-FL5 | ||
Variable interest entities | ||
Current Principal Balance | $ 113,339 | $ 273,681 |
Carrying value | $ 113,339 | $ 273,623 |
Weighted Average Rate | 7.40% | 6.60% |
Ready Capital Mortgage Financing 2021-FL6 | ||
Variable interest entities | ||
Current Principal Balance | $ 242,920 | $ 417,782 |
Carrying value | $ 242,920 | $ 416,467 |
Weighted Average Rate | 6.90% | 6.40% |
Ready Capital Mortgage Financing 2021-FL7 | ||
Variable interest entities | ||
Current Principal Balance | $ 552,629 | $ 586,117 |
Carrying value | $ 552,131 | $ 583,771 |
Weighted Average Rate | 7.10% | 6.70% |
Ready Capital Mortgage Financing 2022-FL8 | ||
Variable interest entities | ||
Current Principal Balance | $ 789,968 | $ 808,671 |
Carrying value | $ 788,547 | $ 805,220 |
Weighted Average Rate | 7.50% | 7% |
Ready Capital Mortgage Financing 2022-FL9 | ||
Variable interest entities | ||
Current Principal Balance | $ 453,978 | $ 511,622 |
Carrying value | $ 451,260 | $ 505,917 |
Weighted Average Rate | 8.50% | 8.10% |
Ready Capital Mortgage Financing 2022-FL10 | ||
Variable interest entities | ||
Current Principal Balance | $ 577,204 | $ 654,116 |
Carrying value | $ 572,469 | $ 646,141 |
Weighted Average Rate | 8.20% | 7.80% |
Ready Capital Mortgage Financing 2023-FL11 | ||
Variable interest entities | ||
Current Principal Balance | $ 429,849 | $ 473,481 |
Carrying value | $ 427,051 | $ 468,307 |
Weighted Average Rate | 8.20% | 8.20% |
Ready Capital Mortgage Financing 2023-FL12 | ||
Variable interest entities | ||
Current Principal Balance | $ 440,609 | $ 507,646 |
Carrying value | $ 437,381 | $ 500,882 |
Weighted Average Rate | 8.10% | 8% |
Variable interest entities an_5
Variable interest entities and securitization activities - Assets of Unconsolidated VIEs (Details) - USD ($) $ in Thousands | Jun. 30, 2024 | Dec. 31, 2023 |
Carrying amount | ||
Mortgage-backed securities | $ 30,174 | $ 27,436 |
Investment in unconsolidated joint ventures | 134,602 | 133,321 |
Total Assets | 11,774,333 | 12,441,217 |
Unconsolidated VIEs | ||
Carrying amount | ||
Mortgage-backed securities | 27,364 | 26,301 |
Investment in unconsolidated joint ventures | 134,602 | 133,321 |
Total Assets | 161,966 | 159,622 |
Maximum Exposure to Loss | ||
Mortgage backed securities, at fair value | 27,364 | 26,301 |
Investment in unconsolidated joint venture | 134,602 | 133,321 |
Total assets in unconsolidated VIEs maximum exposure to loss | $ 161,966 | $ 159,622 |
Interest income and interest _3
Interest income and interest expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Interest income | ||||
Total loans, net | $ 224,364 | $ 226,916 | $ 454,447 | $ 438,844 |
Total loans, held for sale | 5,326 | 725 | 5,544 | 1,467 |
Investments held to maturity | 14 | 12 | 27 | 20 |
Preferred equity investments | 3,439 | 2,193 | 4,523 | 4,361 |
Mortgage backed securities, at fair value | 976 | 1,158 | 1,932 | 2,280 |
Total interest income | 234,119 | 231,004 | 466,473 | 446,972 |
Interest expense | ||||
Secured borrowings | (51,500) | (47,282) | (99,138) | (92,502) |
Paycheck Protection Program Liquidity Facility borrowings | (24) | (124) | (52) | (288) |
Securitized debt obligations of consolidated VIEs | (94,476) | (99,558) | (194,728) | (190,159) |
Guaranteed loan financing | (17,782) | (4,693) | (36,290) | (9,565) |
Senior secured note | (6,368) | (4,397) | (10,749) | (8,778) |
Convertible note | (2,188) | (4,376) | ||
Corporate debt | (13,017) | (11,979) | (26,015) | (23,421) |
Total interest expense | (183,167) | (170,221) | (366,972) | (329,089) |
Net interest income before provision for loan losses | 50,952 | 60,783 | 99,501 | 117,883 |
Bridge | ||||
Interest income | ||||
Total loans, net | 146,418 | 165,788 | 294,691 | 326,219 |
Total loans, held for sale | 124 | 124 | ||
Fixed rate | ||||
Interest income | ||||
Total loans, net | 11,693 | 12,164 | 23,959 | 25,192 |
Total loans, held for sale | 264 | 701 | 264 | 1,436 |
Construction | ||||
Interest income | ||||
Total loans, net | 25,963 | 22,337 | 56,131 | 34,503 |
Total loans, held for sale | 4,400 | 4,400 | ||
SBA 7(a) | ||||
Interest income | ||||
Total loans, net | 31,945 | 15,335 | 63,235 | 30,256 |
Paycheck Protection Program loans, held for investment | ||||
Interest income | ||||
Total loans, net | 127 | 3,435 | 428 | 6,442 |
Other | ||||
Interest income | ||||
Total loans, net | 8,218 | 7,857 | 16,003 | 16,232 |
Total loans, held for sale | $ 538 | $ 24 | $ 756 | $ 31 |
Derivative instruments (Details
Derivative instruments (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | Dec. 31, 2023 | |
Notional Amount | $ 635,086 | $ 635,086 | $ 638,667 | ||
Asset Derivatives Fair Value | 56,113 | 56,113 | 36,812 | ||
Liabilities Derivatives Fair Value | (2,638) | (2,638) | (212) | ||
Derivative gain (loss) | |||||
Net Realized Gain (Loss) | $ 4,478 | $ 10,427 | $ 8,870 | $ 14,113 | |
Net Realized gain (loss) - Statement of Income | Realized Investment Gains (Losses) | Realized Investment Gains (Losses) | Realized Investment Gains (Losses) | Realized Investment Gains (Losses) | |
Unrealized Gain (Loss) | $ (1,803) | $ 2,489 | $ 5,083 | $ (6,432) | |
Unrealized gain (loss) - Statement of Income | Net unrealized gain (loss) on financial instruments | Net unrealized gain (loss) on financial instruments | Net unrealized gain (loss) on financial instruments | Net unrealized gain (loss) on financial instruments | |
Total change in OCI for period | $ (1,440) | $ 2,493 | $ 4,805 | $ (1,312) | |
Designated as Hedging | |||||
Derivative gain (loss) | |||||
Derivatives - effective portion reclassified from AOCI to income | (278) | (294) | (561) | (592) | |
Derivatives- effective portion recorded in OCI | (1,718) | 2,199 | 4,244 | (1,904) | |
Total change in OCI for period | (1,440) | 2,493 | 4,805 | (1,312) | |
Interest rate swaps | |||||
Asset Derivatives Fair Value | 55,770 | 55,770 | 36,812 | ||
Liabilities Derivatives Fair Value | (2,038) | (2,038) | |||
Derivative gain (loss) | |||||
Net Realized Gain (Loss) | 3,566 | 9,682 | 7,958 | 13,368 | |
Unrealized Gain (Loss) | (1,803) | 3,853 | 5,083 | (4,606) | |
Interest rate swaps | Not Designated as Hedging | Interest Rate Risk | |||||
Notional Amount | 26,300 | 26,300 | 183,081 | ||
Asset Derivatives Fair Value | 4,380 | 4,380 | 12,349 | ||
Interest rate swaps | Designated as Hedging | Interest Rate Risk | |||||
Notional Amount | 546,620 | 546,620 | 416,139 | ||
Asset Derivatives Fair Value | 51,390 | 51,390 | 24,463 | ||
Liabilities Derivatives Fair Value | (2,038) | (2,038) | |||
FX forwards | |||||
Asset Derivatives Fair Value | 343 | 343 | |||
Liabilities Derivatives Fair Value | (600) | (600) | (212) | ||
Derivative gain (loss) | |||||
Net Realized Gain (Loss) | 912 | 745 | 912 | 745 | |
Unrealized Gain (Loss) | $ (1,364) | $ (1,826) | |||
FX forwards | Foreign Exchange Rate Risk | |||||
Notional Amount | 62,166 | 62,166 | 39,447 | ||
Asset Derivatives Fair Value | 343 | 343 | |||
Liabilities Derivatives Fair Value | $ (600) | $ (600) | $ (212) |
Real estate owned, held for s_3
Real estate owned, held for sale (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
May 31, 2023 | Jun. 30, 2024 | Dec. 31, 2023 | |
Real estate acquired | |||
Acquired portfolio | $ 143,367 | $ 212,630 | |
Other REO held for sale | 44,516 | 40,319 | |
Total Real estate, held for sale | 187,883 | 252,949 | |
Consolidated VIEs | |||
Real estate acquired | |||
Other REO held for sale | 3,400 | 1,900 | |
Mixed Use | |||
Real estate acquired | |||
Acquired portfolio | 9,658 | 8,535 | |
Other REO held for sale | 4,247 | 4,247 | |
Multi-family | |||
Real estate acquired | |||
Acquired portfolio | 35,589 | 73,745 | |
Other REO held for sale | 27,892 | 28,139 | |
Lodging | |||
Real estate acquired | |||
Acquired portfolio | 5,035 | 14,010 | |
Residential | |||
Real estate acquired | |||
Acquired portfolio | 11,977 | 23,064 | |
Office | |||
Real estate acquired | |||
Acquired portfolio | 6,630 | 6,901 | |
Other REO held for sale | 10,683 | 5,983 | |
Land | |||
Real estate acquired | |||
Acquired portfolio | 74,478 | 86,375 | |
Other | |||
Real estate acquired | |||
Other REO held for sale | 1,694 | $ 1,950 | |
Broadmark | Adjustments | |||
Real estate acquired | |||
Real estate owned, held for sale - measurement period decrease | $ 23,671 | $ 23,700 |
Agreements and transactions w_3
Agreements and transactions with related parties (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jul. 15, 2022 | Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | Dec. 31, 2023 | |
Related-party transactions | ||||||
Amount unpaid | $ 12,854 | $ 12,854 | $ 7,038 | |||
Investment in unconsolidated joint ventures (including $6,974 and $7,360 held at fair value) | 134,602 | $ 134,602 | $ 133,321 | |||
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 agreement | Minimum | ||||||
Related-party transactions | ||||||
Independent director votes required for approval | 66.70% | |||||
Related Party | Manager | 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% | |||||
Fees | 6,200 | $ 5,800 | $ 12,800 | $ 10,900 | ||
Amount unpaid | 12,800 | 10,900 | $ 12,800 | 10,900 | ||
Related Party | Manager | Incentive distribution | ||||||
Related-party transactions | ||||||
Incentive distribution paid | 100 | 1,800 | ||||
Amount unpaid | 1,800 | 1,800 | ||||
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 | |||||
Related Party | Manager | Expense reimbursement | ||||||
Related-party transactions | ||||||
Reimbursable expenses | 3,300 | 2,800 | 6,100 | 5,700 | ||
Amount unpaid | $ 3,000 | $ 2,800 | 3,000 | $ 2,800 | ||
Related Party | 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 | 61,200 | |||||
Amount of investment contributions committed but not yet funded | $ 63,800 |
Other assets and other liabil_3
Other assets and other liabilities (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2024 | Dec. 31, 2023 | |
Other assets: | ||
Goodwill | $ 49,091 | $ 38,530 |
Deferred loan exit fees | 30,175 | 32,271 |
Accrued interest | 65,498 | 64,504 |
Due from servicers | 35,759 | 20,780 |
Intangible assets | 28,704 | 17,749 |
PPP receivables | 23,735 | 34,597 |
Receivable from third parties | 32,895 | 36,519 |
Deferred financing costs | 9,994 | 9,544 |
Deferred tax asset | 21,085 | |
Tax receivable | 61,526 | 3,069 |
Right-of-use assets | $ 3,957 | $ 2,539 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Total other assets | Total other assets |
Investments held to maturity | $ 3,446 | $ 3,446 |
Purchased future receivables, net | 2,093 | 9,483 |
Other assets | 11,455 | 27,144 |
Total other assets | $ 379,413 | $ 300,175 |
Weighted average interest rate of held to maturity investments | 10% | 10% |
Accounts payable and other accrued liabilities: | ||
Accrued salaries, wages and commissions | $ 20,028 | $ 33,961 |
Accrued interest payable | 38,545 | 35,373 |
Servicing principal and interest payable | 10,360 | 6,249 |
Deferred tax liability | 32,977 | 32,977 |
Repair and denial reserve | 7,580 | 6,974 |
Payable to related parties | 12,854 | 7,038 |
PPP liabilities | 24,830 | 36,182 |
Accrued professional fees | 3,235 | 5,354 |
Lease payable | 9,384 | 8,205 |
Other liabilities | 44,973 | 35,168 |
Total accounts payable and other accrued liabilities | $ 204,766 | $ 207,481 |
Minimum | ||
Other assets: | ||
Maturity term of held to maturity investments | 1 year | 1 year |
Maximum | ||
Other assets: | ||
Maturity term of held to maturity investments | 5 years | 5 years |
Other asset and other liabiliti
Other asset and other liabilities - Intangible assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | Dec. 31, 2023 | |
Goodwill | $ 49,091 | $ 49,091 | $ 38,530 | ||
Amortized intangible assets | |||||
Accumulated Amortization | 8,184 | 8,184 | 6,471 | ||
Net Carrying Value | 25,204 | 25,204 | |||
Total intangible assets | |||||
Gross Carrying Amount | 36,888 | 36,888 | 24,220 | ||
Total Intangible Assets | 28,704 | 28,704 | 17,749 | ||
Amortization expense | 900 | $ 400 | 1,700 | $ 800 | |
Trade name | |||||
Unamortized intangible assets | |||||
Indefinite-lived intangible assets | 2,500 | 2,500 | 2,500 | ||
SBA license | |||||
Unamortized intangible assets | |||||
Indefinite-lived intangible assets | 1,000 | 1,000 | 1,000 | ||
LMM Commercial Real Estate | |||||
Goodwill | 27,324 | 27,324 | 27,324 | ||
Small Business Lending | |||||
Goodwill | 21,767 | 21,767 | 11,206 | ||
Customer relationships | |||||
Amortized intangible assets | |||||
Gross Carrying Amount | 6,799 | 6,799 | 6,800 | ||
Accumulated Amortization | 1,043 | 1,043 | 865 | ||
Net Carrying Value | 5,756 | 5,756 | 5,935 | ||
Internally developed software | |||||
Amortized intangible assets | |||||
Gross Carrying Amount | 14,107 | 14,107 | 11,840 | ||
Accumulated Amortization | 5,161 | 5,161 | 3,884 | ||
Net Carrying Value | 8,946 | 8,946 | 7,956 | ||
Broker network | |||||
Amortized intangible assets | |||||
Gross Carrying Amount | 9,300 | 9,300 | |||
Accumulated Amortization | 1,284 | 1,284 | |||
Net Carrying Value | 8,016 | 8,016 | |||
Other | |||||
Amortized intangible assets | |||||
Gross Carrying Amount | 3,182 | 3,182 | 2,080 | ||
Accumulated Amortization | 696 | 696 | 1,722 | ||
Net Carrying Value | $ 2,486 | $ 2,486 | $ 358 |
Other asset and other liabili_2
Other asset and other liabilities - Future amortization expense (Details) $ in Thousands | Jun. 30, 2024 USD ($) |
Future amortization of lease intangibles | |
2024 | $ 2,168 |
2025 | 4,204 |
2026 | 3,554 |
2027 | 3,434 |
2028 | 2,407 |
Thereafter | 9,437 |
Net Carrying Value | $ 25,204 |
Other income and operating ex_3
Other income and operating expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Other income | ||||
Origination income | $ 2,473 | $ 6,316 | $ 5,130 | $ 10,928 |
Change in repair and denial reserve | (959) | 527 | (2,166) | 328 |
Employee retention credit consulting income | 95 | 8,481 | 2,586 | 18,156 |
Other | 4,988 | 3,308 | 16,873 | 9,612 |
Total other income | 6,597 | 18,632 | 22,423 | 39,024 |
Other operating expenses | ||||
Origination costs | 1,415 | 1,744 | 3,229 | 3,399 |
Technology expense | 2,232 | 1,578 | 4,825 | 3,090 |
Impairment on real estate | 9,130 | 26,102 | 3,418 | |
Rent and property tax expense | 1,372 | 1,043 | 3,690 | 2,111 |
Recruiting, training and travel expenses | 525 | 722 | 1,232 | 1,353 |
Marketing expense | 350 | 220 | 749 | 532 |
Bad debt expense - ERC | 1,808 | 3,621 | ||
Other | 4,970 | 4,250 | 8,541 | 8,263 |
Total other operating expenses | $ 21,802 | $ 9,557 | $ 51,989 | $ 22,166 |
Redeemable Preferred Stock an_3
Redeemable Preferred Stock and Stockholders Equity - Common Stock Dividends (Details) - $ / shares | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2024 | Mar. 31, 2024 | Dec. 31, 2023 | Sep. 30, 2023 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Dividends | |||||||
Dividend per Share | $ 0.30 | $ 0.40 | $ 0.60 | $ 0.80 | |||
Q2 2023 Dividends, Dividend 1 | |||||||
Dividends | |||||||
Declaration Date | May 15, 2023 | ||||||
Record Date | May 30, 2023 | ||||||
Payment Date | Jun. 15, 2023 | ||||||
Dividend per Share | $ 0.26 | ||||||
Q2 2023 Dividends, Dividend 2 | |||||||
Dividends | |||||||
Declaration Date | May 15, 2023 | ||||||
Record Date | Jun. 30, 2023 | ||||||
Payment Date | Jul. 31, 2023 | ||||||
Dividend per Share | $ 0.14 | ||||||
Q3 2023 Dividends | |||||||
Dividends | |||||||
Declaration Date | Sep. 15, 2023 | ||||||
Record Date | Sep. 29, 2023 | ||||||
Payment Date | Oct. 31, 2023 | ||||||
Dividend per Share | $ 0.36 | ||||||
Q4 2023 Dividends | |||||||
Dividends | |||||||
Declaration Date | Dec. 14, 2023 | ||||||
Record Date | Dec. 29, 2023 | ||||||
Payment Date | Jan. 31, 2024 | ||||||
Dividend per Share | $ 0.30 | ||||||
Q1 2024 Dividends | |||||||
Dividends | |||||||
Declaration Date | Mar. 15, 2024 | ||||||
Record Date | Mar. 28, 2024 | ||||||
Payment Date | Apr. 30, 2024 | ||||||
Dividend per Share | $ 0.30 | ||||||
Q2 2024 Dividends | |||||||
Dividends | |||||||
Declaration Date | Jun. 14, 2024 | ||||||
Record Date | Jun. 28, 2024 | ||||||
Payment Date | Jul. 31, 2024 | ||||||
Dividend per Share | $ 0.30 |
Redeemable Preferred Stock an_4
Redeemable Preferred Stock and Stockholders Equity - RSU and RSA activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2024 | Mar. 31, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | Dec. 31, 2023 | Aug. 22, 2023 | |
Weighted-average grant date fair value (per share) | |||||||
Non-cash stock-based compensation expense | $ 1,900 | $ 2,000 | $ 3,768 | $ 3,915 | |||
RSUs and RSAs | |||||||
Number of shares | |||||||
Outstanding, Beginning balance | 1,131,360 | 747,808 | 747,808 | ||||
Granted (in shares) | 2,760 | 768,407 | |||||
Vested (in shares) | (60,154) | (325,918) | |||||
Forfeited (in shares) | (65,872) | (58,937) | |||||
Outstanding, Ending balance | 1,008,094 | 1,131,360 | 1,008,094 | 747,808 | |||
Grant date fair value | |||||||
Beginning balance | $ 12,162 | $ 9,888 | $ 9,888 | ||||
Granted | 25 | 6,993 | |||||
Vested | (592) | (4,110) | |||||
Forfeited | (699) | (609) | |||||
Ending balance | $ 10,896 | $ 12,162 | $ 10,896 | $ 9,888 | |||
Weighted-average grant date fair value (per share) | |||||||
Beginning balance | $ 10.75 | $ 13.22 | $ 13.22 | ||||
Granted (in per share) | 9.06 | 9.10 | |||||
Vested (in per share) | 9.84 | 12.61 | |||||
Forfeited (in per share) | 10.61 | 10.33 | |||||
Ending balance | $ 10.81 | $ 10.75 | $ 10.81 | $ 13.22 | |||
Non-cash compensation expense not yet charged to net income | $ 10,900 | $ 9,900 | |||||
2013 Equity Incentive Plan | |||||||
Weighted-average grant date fair value (per share) | |||||||
Number of remaining shares available for grant | 0 | ||||||
2013 Equity Incentive Plan | Maximum | |||||||
Weighted-average grant date fair value (per share) | |||||||
Percentage of shares of common stock issued and outstanding on a fully diluted basis | 5% | ||||||
2023 Equity Incentive Plan | Maximum | |||||||
Weighted-average grant date fair value (per share) | |||||||
Number of shares authorized | 5,500,000 |
Redeemable Preferred Stock an_5
Redeemable Preferred Stock and Stockholders Equity - Time-based Equity Awards (Details) - Time-based RSA - shares | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2024 | Dec. 31, 2023 | Dec. 31, 2022 | |
Broadmark | |||
Share-Based Compensation | |||
Granted (in shares) | 736,666 | ||
Outstanding (in shares) | 1,230 | ||
Employees | |||
Share-Based Compensation | |||
Granted (in shares) | 615,022 | 413,852 | 327,692 |
Vesting period | 3 years | 3 years | 3 years |
Directors | |||
Share-Based Compensation | |||
Granted (in shares) | 126,930 | 75,639 | 45,162 |
Vesting period | 1 year | 1 year | 1 year |
Redeemable Preferred Stock an_6
Redeemable Preferred Stock and Stockholders Equity - Performance-based Equity Awards (Details) - $ / shares | 1 Months Ended | |||||||||
Dec. 31, 2025 | Dec. 31, 2024 | Jan. 09, 2024 | Apr. 30, 2024 | Feb. 29, 2024 | Jun. 30, 2023 | Feb. 28, 2023 | Feb. 28, 2022 | Oct. 31, 2021 | Feb. 28, 2021 | |
2013 Equity Incentive Plan | Performance Shares | ||||||||||
Performance-based equity awards | ||||||||||
Granted (in shares) | 92,451 | 84,566 | 61,895 | |||||||
Grant date fair value (per share) | $ 12.98 | $ 14.19 | $ 12.82 | |||||||
Forfeited (in shares) | 8,809 | 18,568 | ||||||||
Vesting period | 3 years | 3 years | ||||||||
Vested (in shares) | 29,215 | |||||||||
2013 Equity Incentive Plan | Performance Shares | Minimum | ||||||||||
Performance-based equity awards | ||||||||||
Percentage of target awards that may be achieved. | 0% | 0% | 0% | |||||||
2013 Equity Incentive Plan | Performance Shares | Maximum | ||||||||||
Performance-based equity awards | ||||||||||
Percentage of target awards that may be achieved. | 200% | 200% | 300% | |||||||
2013 Equity Incentive Plan | Performance Shares | Based on absolute TSR | ||||||||||
Performance-based equity awards | ||||||||||
Vesting percentage allocation | 50% | 50% | 50% | |||||||
Vesting period | 3 years | 3 years | 3 years | |||||||
2013 Equity Incentive Plan | Performance Shares | 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 | |||||||
2013 Equity Incentive Plan | Performance Shares - Broadmark Merger | ||||||||||
Performance-based equity awards | ||||||||||
Granted (in shares) | 222,552 | |||||||||
Grant date fair value (per share) | $ 10.11 | |||||||||
Aggregate vesting percentage inclusive of all performance metrics | 33.30% | 66.70% | ||||||||
2013 Equity Incentive Plan | Performance Shares - Broadmark Merger | Minimum | ||||||||||
Performance-based equity awards | ||||||||||
Percentage of target awards that may be achieved. | 0% | |||||||||
2013 Equity Incentive Plan | Performance Shares - Broadmark Merger | Maximum | ||||||||||
Performance-based equity awards | ||||||||||
Percentage of target awards that may be achieved. | 200% | |||||||||
2013 Equity Incentive Plan | Performance Shares - Broadmark Merger | Based on cost savings as a percentage of pre-merger Broadmark expense run rate | ||||||||||
Performance-based equity awards | ||||||||||
Vesting percentage allocation | 30% | |||||||||
2013 Equity Incentive Plan | Performance Shares - Broadmark Merger | Based on volume of Broadmark product originated | ||||||||||
Performance-based equity awards | ||||||||||
Vesting percentage allocation | 15% | |||||||||
2013 Equity Incentive Plan | Performance Shares - Broadmark Merger | Based on generation of incremental liquidity from asset level financing, portfolio run-off , sales or corporate releveling | ||||||||||
Performance-based equity awards | ||||||||||
Vesting percentage allocation | 30% | |||||||||
2013 Equity Incentive Plan | Performance Shares - Broadmark Merger | Based on distributable return on equity | ||||||||||
Performance-based equity awards | ||||||||||
Vesting percentage allocation | 25% | |||||||||
2023 Equity Incentive Plan | Performance Shares | ||||||||||
Performance-based equity awards | ||||||||||
Granted (in shares) | 132,450 | |||||||||
Grant date fair value (per share) | $ 9.06 |
Redeemable Preferred Stock an_7
Redeemable Preferred Stock and Stockholders Equity - Preferred Stock (Details) $ / shares in Units, shares in Thousands | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2024 USD ($) $ / shares shares | Jun. 30, 2024 USD ($) $ / shares shares | Dec. 31, 2023 USD ($) $ / shares | |
Preferred stock | |||
Liquidation Preference | $ 25 | $ 25 | $ 25 |
Carrying Value | $ | $ 111,378,000 | $ 111,378,000 | $ 111,378,000 |
Q2 2024 Dividends | |||
Preferred stock | |||
Payment Date | Jul. 31, 2024 | ||
Series C Preferred Stock | |||
Preferred stock | |||
Shares Issued | shares | 335 | 335 | |
Shares outstanding | shares | 335 | 335 | |
Par Value per Share | $ 0.0001 | $ 0.0001 | |
Liquidation Preference | $ 25 | $ 25 | |
Rate per Annum | 6.25% | ||
Annual Dividend (per share) | $ 1.56 | ||
Carrying Value | $ | $ 8,361,000 | $ 8,361,000 | |
Preferred stock conversion ratio | 1.5285 | 1.5285 | |
Conversion price | $ 16.36 | $ 16.36 | |
Preferred stock principal amount used as basis for application of conversion ratio | $ | $ 25 | $ 25 | |
Series C Preferred Stock | Q2 2024 Dividends | |||
Preferred stock | |||
Preferred stock dividends | $ | $ 100,000 | ||
Payment Date | Jul. 15, 2024 | ||
Series E Preferred Stock | |||
Preferred stock | |||
Shares Issued | shares | 4,600 | 4,600 | |
Shares outstanding | shares | 4,600 | 4,600 | |
Par Value per Share | $ 0.0001 | $ 0.0001 | |
Liquidation Preference | $ 25 | $ 25 | |
Rate per Annum | 6.50% | ||
Annual Dividend (per share) | $ 1.63 | ||
Carrying Value | $ | $ 111,378,000 | $ 111,378,000 | |
Percentage of the liquidation preference at which the Company can choose to redeem | 100% | ||
Series E Preferred Stock | Q2 2024 Dividends | |||
Preferred stock | |||
Preferred stock dividends | $ | $ 1,900,000 | ||
Payment Date | Jul. 31, 2024 |
Redeemable Preferred Stock an_8
Redeemable Preferred Stock and Stockholders Equity - Public and Private Warrants (Details) $ / shares in Units, $ in Millions | Jun. 30, 2024 USD ($) $ / shares shares |
Warrants | |
Warrants | |
Shares that can be purchased with outstanding warrants | 7,400,000 |
Price per whole share if all warrants redeemed | $ / shares | $ 24.34 |
Public Warrants | |
Warrants | |
Warrants outstanding | 41,700,000 |
Shares that can be purchased per warrant. | 0.1180825 |
Private Placement Warrants | |
Warrants | |
Warrants outstanding | 5,200,000 |
Shares that can be purchased per warrant. | 0.47233 |
Private Placement Warrants | Maximum | |
Warrants | |
Liability for warrants | $ | $ 0.1 |
Redeemable Preferred Stock an_9
Redeemable Preferred Stock and Stockholders Equity - Equity ATM Program (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | Dec. 31, 2023 | Jul. 09, 2021 | |
Equity | ||||||
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||
Equity ATM Program | ||||||
Equity | ||||||
Value of remaining shares available for sale under the Equity ATM Program | $ 78.4 | $ 78.4 | ||||
Common stock, issued | 0 | 0 | 0 | 0 | ||
Common stock, par value | $ 0.0001 | |||||
Equity ATM Program | Maximum | ||||||
Equity | ||||||
Common stock authorized to be sold under an Equity ATM Program | $ 150 |
Earnings per Share of Common _3
Earnings per Share of Common Stock (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Continuing Operations | ||||
Net income (loss) from continuing operations | $ (31,427) | $ 244,532 | $ (107,009) | $ 283,041 |
Less: Income attributable to non-controlling interest | 1,820 | 4,490 | 1,937 | 6,325 |
Less: Income attributable to participating shares | 2,301 | 2,373 | 4,636 | 4,744 |
Basic earnings | (35,548) | 237,669 | (113,582) | 271,972 |
Discontinued Operations | ||||
Basic earnings | (2,774) | 8,841 | (1,359) | 7,310 |
Diluted Earnings | ||||
Net income (loss) from continuing operations | (31,427) | 244,532 | (107,009) | 283,041 |
Less: Income attributable to non-controlling interest | 1,820 | 4,490 | 1,937 | 6,325 |
Less: Income attributable to participating shares | 2,301 | 2,373 | 4,636 | 4,744 |
Add: Expenses attributable to dilutive instruments | 131 | 2,319 | 262 | 4,638 |
Diluted earnings, continuing operations | (35,417) | 239,988 | (113,320) | 276,610 |
Diluted earnings, discontinuing operations | $ (2,774) | $ 8,841 | $ (1,359) | $ 7,310 |
Basic - Average shares outstanding | 168,653,741 | 131,651,125 | 170,343,303 | 121,219,982 |
Effect of dilutive securities - Unvested participating shares | 1,210,234 | 9,932,712 | 1,170,253 | 9,876,386 |
Diluted - Average shares outstanding | 169,863,975 | 141,583,837 | 171,513,556 | 131,096,368 |
Earnings Per Share Attributable to RC Common Stockholders: | ||||
Basic - Continuing operations | $ (0.21) | $ 1.80 | $ (0.67) | $ 2.24 |
Basic - Discontinued operations | (0.02) | 0.07 | (0.01) | 0.06 |
Basic | (0.23) | 1.87 | (0.68) | 2.30 |
Diluted - Continuing operations | (0.21) | 1.70 | (0.67) | 2.11 |
Diluted - Discontinued operations | (0.02) | 0.06 | (0.01) | 0.06 |
Diluted | $ (0.23) | $ 1.76 | $ (0.68) | $ 2.17 |
Earnings per Common Stock - Ope
Earnings per Common Stock - Operating Partnership Units (Details) - Operating Partnership - Noncontrolling Interests - shares | 6 Months Ended | 12 Months Ended |
Jun. 30, 2024 | Dec. 31, 2023 | |
Noncontrolling interest | ||
Number of common shares issued for OP unit redeemed by a noncontrolling interest unit holder | 1 | 1 |
Units held by noncontrolling interest unit holders | 1,225,582 | 1,330,582 |
Offsetting assets and liabili_3
Offsetting assets and liabilities - Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2024 | Dec. 31, 2023 |
Effect of offsetting of the Company's recognized assets | ||
Gross Amounts of Recognized Assets | $ 56,113 | $ 36,812 |
Gross amounts offset in the Consolidated Balance Sheets | 41,731 | 34,408 |
Amounts presented in the Consolidated Balance Sheets | 14,382 | 2,404 |
Net Amount | 14,382 | 2,404 |
FX forwards | ||
Effect of offsetting of the Company's recognized assets | ||
Gross Amounts of Recognized Assets | 343 | |
Amounts presented in the Consolidated Balance Sheets | 343 | |
Net Amount | 343 | |
Interest rate swaps | ||
Effect of offsetting of the Company's recognized assets | ||
Gross Amounts of Recognized Assets | 55,770 | 36,812 |
Gross amounts offset in the Consolidated Balance Sheets | 41,731 | 34,408 |
Amounts presented in the Consolidated Balance Sheets | 14,039 | 2,404 |
Net Amount | $ 14,039 | $ 2,404 |
Offsetting assets and liabili_4
Offsetting assets and liabilities - Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2024 | Dec. 31, 2023 |
Effect of offsetting recognized liabilities, Derivative | ||
Gross Amounts of Recognized Liabilities | $ 2,638 | $ 212 |
Effect of offsetting recognized liabilities, Total | ||
Gross Amounts of Recognized Liabilities, Total | 2,339,437 | 2,138,323 |
Liabilities Presented in the Consolidated Balance Sheets, Total | 2,339,437 | 2,138,323 |
Financial Instruments, Total | 2,335,704 | 2,136,671 |
Net Amount, Total | 3,733 | 1,652 |
Interest rate swaps | ||
Effect of offsetting recognized liabilities, Derivative | ||
Gross Amounts of Recognized Liabilities | 2,038 | |
Liabilities Presented in the Consolidated Balance Sheets, Derivative | 2,038 | |
Net Amount, Derivative | 2,038 | |
FX forwards | ||
Effect of offsetting recognized liabilities, Derivative | ||
Gross Amounts of Recognized Liabilities | 600 | 212 |
Liabilities Presented in the Consolidated Balance Sheets, Derivative | 600 | 212 |
Net Amount, Derivative | 600 | 212 |
Secured borrowings | ||
Effect of offsetting recognized liabilities, Borrowings | ||
Gross Amounts of Recognized Liabilities, Borrowings | 2,311,969 | 2,102,075 |
Liabilities Presented in the Consolidated Balance Sheets, Borrowings | 2,311,969 | 2,102,075 |
Financial Instruments, Borrowings | 2,311,969 | 2,102,075 |
Paycheck Protection Program Liquidity Facility | ||
Effect of offsetting recognized liabilities, Borrowings | ||
Gross Amounts of Recognized Liabilities, Borrowings | 24,830 | 36,036 |
Liabilities Presented in the Consolidated Balance Sheets, Borrowings | 24,830 | 36,036 |
Financial Instruments, Borrowings | 23,735 | 34,596 |
Net Amount, Borrowings | $ 1,095 | $ 1,440 |
Commitments, contingencies an_3
Commitments, contingencies and indemnifications (Details) - Unfunded loan commitments - USD ($) $ in Thousands | Jun. 30, 2024 | Dec. 31, 2023 |
Commitments, contingencies and indemnifications | ||
Loans, net | $ 520,855 | $ 745,782 |
Loans, held for sale | 116,544 | 19,327 |
Preferred equity investments | $ 279 | $ 436 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) $ in Millions | 6 Months Ended | 12 Months Ended |
Jun. 30, 2024 | Dec. 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% | |
Broadmark | ||
REIT requirements and income tax information | ||
Increase in deferred tax assets | $ 21.1 |
Segment reporting (Details)
Segment reporting (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 USD ($) segment | Jun. 30, 2023 USD ($) segment | Jun. 30, 2024 USD ($) segment | Jun. 30, 2023 USD ($) segment | |
Segment reporting | ||||
Number of reportable segments | segment | 2 | 2 | 2 | 2 |
Interest income | $ 234,119 | $ 231,004 | $ 466,473 | $ 446,972 |
Interest expense | (183,167) | (170,221) | (366,972) | (329,089) |
Net interest income before recovery of (provision for) loan losses | 50,952 | 60,783 | 99,501 | 117,883 |
Recovery of (provision for) loan losses | 18,871 | (19,427) | 45,415 | (12,693) |
Net interest income after recovery of (provision for) loan losses | 69,823 | 41,356 | 144,916 | 105,190 |
Non-interest income | ||||
Net realized gain (loss) on financial instruments and real estate owned | 7,250 | 23,878 | 26,118 | 35,453 |
Net unrealized gain (loss) on financial instruments | (1,357) | (1,411) | 3,275 | (7,046) |
Valuation allowance, loans held for sale | (80,987) | (227,167) | ||
Servicing income, net | 3,271 | 5,039 | 7,029 | 9,681 |
Income (loss) from unconsolidated joint ventures | 1,139 | 33 | 1,607 | 689 |
Other income | 6,597 | 18,632 | 22,423 | 39,024 |
Gain (loss) on bargain purchase | (18,306) | 229,894 | (18,306) | 229,894 |
Total non-interest income (expense) | (82,393) | 276,065 | (185,021) | 307,695 |
Non-interest expense | ||||
Professional fees | (6,033) | (5,533) | (13,098) | (11,076) |
Loan servicing expense | (11,012) | (10,894) | (23,806) | (19,049) |
Transaction related expenses | (1,592) | (13,966) | (2,242) | (14,859) |
Other operating expenses | (21,802) | (9,557) | (51,989) | (22,166) |
Total non-interest expense | (67,436) | (70,695) | (145,694) | (126,749) |
Income (loss) before provision for income taxes | (80,006) | 246,726 | (185,799) | 286,136 |
Total assets | 11,350,439 | 11,929,068 | 11,350,439 | 11,929,068 |
Nonrelated party | ||||
Non-interest expense | ||||
Employee compensation and benefits | (17,799) | (22,414) | (36,213) | (42,141) |
Related Party | ||||
Non-interest expense | ||||
Employee compensation and benefits | (3,000) | (2,500) | (5,500) | (4,826) |
Management fees - related party | (6,198) | (5,760) | (12,846) | (10,841) |
Incentive fees - related party | (71) | (1,791) | ||
Operating Segments | LMM Commercial Real Estate | ||||
Segment reporting | ||||
Interest income | 202,047 | 212,233 | 402,810 | 410,272 |
Interest expense | (158,344) | (160,503) | (317,229) | (309,997) |
Net interest income before recovery of (provision for) loan losses | 43,703 | 51,730 | 85,581 | 100,275 |
Recovery of (provision for) loan losses | 14,414 | (17,415) | 45,169 | (9,286) |
Net interest income after recovery of (provision for) loan losses | 58,117 | 34,315 | 130,750 | 90,989 |
Non-interest income | ||||
Net realized gain (loss) on financial instruments and real estate owned | (10,089) | 15,356 | (4,334) | 20,181 |
Net unrealized gain (loss) on financial instruments | (1,497) | (677) | 1,489 | (6,788) |
Valuation allowance, loans held for sale | (80,987) | (227,167) | ||
Servicing income, net | 1,255 | 1,890 | 2,553 | 2,983 |
Income (loss) from unconsolidated joint ventures | 1,139 | 33 | 1,607 | 689 |
Other income | 4,796 | 8,167 | 17,523 | 17,260 |
Total non-interest income (expense) | (85,383) | 24,769 | (208,329) | 34,325 |
Non-interest expense | ||||
Professional fees | (874) | (1,135) | (2,515) | (2,116) |
Loan servicing expense | (10,896) | (10,746) | (23,443) | (18,804) |
Other operating expenses | (12,054) | (3,598) | (33,588) | (10,331) |
Total non-interest expense | (31,266) | (24,453) | (74,714) | (46,663) |
Income (loss) before provision for income taxes | (58,532) | 34,631 | (152,293) | 78,651 |
Total assets | 9,527,088 | 10,969,193 | 9,527,088 | 10,969,193 |
Operating Segments | LMM Commercial Real Estate | Nonrelated party | ||||
Non-interest expense | ||||
Employee compensation and benefits | (7,142) | (8,724) | (14,618) | (14,930) |
Operating Segments | LMM Commercial Real Estate | Related Party | ||||
Non-interest expense | ||||
Employee compensation and benefits | (300) | (250) | (550) | (482) |
Operating Segments | Small Business Lending | ||||
Segment reporting | ||||
Interest income | 32,072 | 18,771 | 63,663 | 36,700 |
Interest expense | (24,823) | (9,718) | (49,743) | (19,092) |
Net interest income before recovery of (provision for) loan losses | 7,249 | 9,053 | 13,920 | 17,608 |
Recovery of (provision for) loan losses | 4,457 | (2,012) | 246 | (3,407) |
Net interest income after recovery of (provision for) loan losses | 11,706 | 7,041 | 14,166 | 14,201 |
Non-interest income | ||||
Net realized gain (loss) on financial instruments and real estate owned | 17,339 | 8,522 | 30,452 | 15,272 |
Net unrealized gain (loss) on financial instruments | 140 | (734) | 1,786 | (258) |
Servicing income, net | 2,016 | 3,149 | 4,476 | 6,698 |
Other income | 376 | 10,185 | 3,475 | 21,153 |
Total non-interest income (expense) | 19,871 | 21,122 | 40,189 | 42,865 |
Non-interest expense | ||||
Professional fees | (2,930) | (2,782) | (6,145) | (4,407) |
Loan servicing expense | (116) | (148) | (363) | (245) |
Other operating expenses | (5,918) | (4,687) | (11,271) | (8,781) |
Total non-interest expense | (17,292) | (19,231) | (35,399) | (36,322) |
Income (loss) before provision for income taxes | 14,285 | 8,932 | 18,956 | 20,744 |
Total assets | 1,367,463 | 739,391 | 1,367,463 | 739,391 |
Operating Segments | Small Business Lending | Nonrelated party | ||||
Non-interest expense | ||||
Employee compensation and benefits | (8,328) | (11,614) | (17,620) | (22,889) |
Corporate | ||||
Non-interest income | ||||
Other income | 1,425 | 280 | 1,425 | 611 |
Gain (loss) on bargain purchase | (18,306) | 229,894 | (18,306) | 229,894 |
Total non-interest income (expense) | (16,881) | 230,174 | (16,881) | 230,505 |
Non-interest expense | ||||
Professional fees | (2,229) | (1,616) | (4,438) | (4,553) |
Transaction related expenses | (1,592) | (13,966) | (2,242) | (14,859) |
Other operating expenses | (3,830) | (1,272) | (7,130) | (3,054) |
Total non-interest expense | (18,878) | (27,011) | (35,581) | (43,764) |
Income (loss) before provision for income taxes | (35,759) | 203,163 | (52,462) | 186,741 |
Total assets | 455,888 | 220,484 | 455,888 | 220,484 |
Corporate | Nonrelated party | ||||
Non-interest expense | ||||
Employee compensation and benefits | (2,329) | (2,076) | (3,975) | (4,322) |
Corporate | Related Party | ||||
Non-interest expense | ||||
Employee compensation and benefits | (2,700) | (2,250) | (4,950) | (4,344) |
Management fees - related party | $ (6,198) | (5,760) | $ (12,846) | (10,841) |
Incentive fees - related party | $ (71) | $ (1,791) |
Subsequent events (Details)
Subsequent events (Details) $ in Millions | Jul. 01, 2024 USD ($) |
Subsequent event | Funding Circle USA, Inc. | |
Subsequent event | |
Cash paid - Acquisition price | $ 41.2 |