RC - Earnings call transcript Q4 2024 | Ready Capital Corporation

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Operator

Greetings and welcome to Ready Capital Fourth Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Andrew Ahlborn, Chief Financial Officer. Thank you, sir.

You may begin.

Andrew Ahlborn

Thank you, operator, and good morning to those of you on the call.

today federal forward-looking securities comments meaning within our the of laws. of will statements be the Some Such statements from are that could subject to numerous actual to risks results differ materially what expect. cause we and uncertainties should future you our discussion operating financial refer of results you on more that risks for to exercise and and SEC interpreting Therefore, relying in could them. We the a filings detailed caution impact condition. our

the with is a our discuss will be found be the the non-GAAP operating which information, we measures we to can not measures prepared available isolation evaluating which Investors our supplemental GAAP During in believe considered the Ready section in useful in GAAP. A results our XXXX of measure should and measures, our company's Capital accordance These comparable fourth substitute these release website. performance. in call, financial in be the or for can most reconciliation of quarter directly earnings as

Tom Chief today's Chief Credit myself to Capital's now it turn In on will Officer, Ready are to Tom over call, also by Capasse. Zausmer, Officer. I addition and Executive joined Adam we

Thomas Capasse

in Good a transitional our Andrew. continue of quarter call fourth today. results morning, our business. concludes impacted by broader be joining to of thank we everyone, cycle The CRE for innings Thanks, you in and XXXX, this business. the sector In mixed the year and CREIT later the lending

the aggressive to and over a our improving the of of contrast, X.Xx, path loans, have reset growth the profile. However, capital recovery. multifamily preceding the problem accelerate undertaken dividend go-forward current experienced business earnings entering made will to we sheet cash small significant XXXX, investments reserving operations aggressive origination lending and balance years. To begin, actions X harvesting market rightsizing to earnings an on In

nonperforming $XX.XX, share $XXX in to a nonperforming value loans combined per problem reserve in bottom. resolutions, asset NIM. marks REO first, higher-yield the managers of XXX% with of interest sets values. allowances, in This or generating in The by a which options new current book reinvestment in originations accelerated turn, ring-fencing XX% but lowers more liquidity net for valuation margin the our CECL loans in reduction to our loans, providing XXX% basis and million This in a our and recovery resulted action for

of level quarter to The be the and to first to dividend periods. a our with in second, projected earnings from share grow the reduction dividend It value. earnings cash the for book better improved in will new the per align expectation this dividend short with future the $X.XXX term preserve to

We also dividend. and buckets. asset book X CRE book both and and context, this earnings portfolio the set In strategy future the the aggressive it believe late-cycle to further per share value to actions portfolio share at share and repurchase to announced allow more $XXX of preserve bottom establish the in will capital clear, for reinvestment transparency, portfolio core recently value our better of these million enhance for splitting this program. To into be frame the involves level for we our utilization management evaluation per

of yield First, in provides bifurcation strong management liquidity and originated our aggressive primary additional a both plus core transparency cash to generate providing track core and XX% book designated ROE asset credit of recovery non-core non-core assets, and returns; hold into with liquidation path that as to loans, competitive M&A. This X.X% NIM. maturity the assets to second, metrics strategy, reinvestment

split totaled prior CRE XX% M&A portfolio, core of the the originated CRE the total XX% is reduced relevant. longer under and year-end, year-end $X.X successfully portfolio to the no non-core. and portfolio of classification M&A XX% At billion, With loan

a industrial. net interest contractual CRE across metric and initiatives, yield yield ROE solid in XXXX, and in credit pace X,XXX as year. metrics, to with are our delinquencies mixed-use pay liquidation to is market billion foundation strong with XXX collapse our to and losses portfolio XX $X expect providing core only XXXX, LTV originate a rating limited the X% is of loans move approximately rate. XX-day core months. in of contracted Average billion of XX% In evidences XX% points billion term various average matured resulting with are to basis reinvestment with maturity average versus lower an XX%. In new a portfolio for XX% X.X. multifamily of and $X to risk X% recover Our and through plus loans is production new mark-to-market $X.X and $XXX margin average yields reissuance XX%, X.X% our contribution or portfolio long the million, CRE we between increased as CLO, production of in of the target an billion notably the realized loans liquidity non-core distributable middle XXXX, before we $X.X through debt

profile, credit the debt XXs tightened X% have with XX-month forward debt X% yield low note, an and vintage on LTVs debt current over return the in In mid-XXs yields XXXX versus current support required agency forward refinancing with into debt with and addition loans attractive Of yield. curve. fundamentals yield, to yield LTV based the the mid-X% permanent

M&A split in is asset. mixed-use RC Our XX% high-quality XX% into $X.X Oregon and originated a X% non-core loans billion Portland, portfolio loans,

assets portfolio RC construction tagged senior Portland under $XXX generate our $XX million X X of to a approximately equity Based with $XX XX% approximately will full X.X%; Mosaic and portfolio Excluding mixed of the XX% credit this better the million $XXX X X contract take XXXX currently transaction, with following rated, is X and loan is with or the quarters and asset in and management X% preferred liquidity. The to project where a expected of assets holds a comprised XX acquired million XX% plans, use a are liquidation million position. delinquencies the ratings Portland XX-day in risk strategies liquidation and on asset XX%; have yield aggressive rating; land. non-core rated office cash profile: asset, of concentrated

offerings in in property The completed our construction call, was features quarter hospitality, Ritz-Carlton property the mixed-use last premier and with in to XXXX. discussed retail fourth the earnings the respectively, and hospitality October Portland leased on the retail, of are office hotel stabilization. Currently, is office and the and moving are The with X% the sold. $XXX. in condos XXX% each now XX% As opening component residential RevPAR

basis While the reduction a ownership of best as the to immediate construction the a The on net loan, $X.XX into favored other the original XXX present on disposition ROE. share per factors current value appraisal strategy components earnings quarterly serial was and asset refinance is the and outcome. to impact points bridge or

by asset expect changes of proceeds reinvestment However, received to coincident offset stabilization. more of immediate rates proceeds these from property financing advance reinvestment bringing upon of with sales for to market and the we the

have current original our reserved million mark appraisal. $XXX value, exposure the to on the We its asset of to based as-is

recover otherwise only We as loan position remaining the market an Of senior of basis X% loan lower granular Mosaic CRE XX also portfolio. the over loan stabilize our to loan we in represents property. the expect XX positions next gross representing top current portfolio the idiosyncratic middle our quarters note, the with

providing business a a leading $XX,XXX loans. capital Turning lending backed USDA become loans operations. businesses, lender has $XX Capital small unsecured a to non-bank plus to from loan Ready real to working options, million full small suite of estate our

only overall originations Ready As production. was the lender of The and the of X% of but USDA of business quarter in [ of capital contributing and billion small lender ROE. a loans or country. Fourth million earnings SBA basis across segment a unsecured working our million $XXX from $X #X $XX $X.XX loans, SBA outsized, lending #X non-bank share of small XXX billion, representing including per million lending record X(a) Capital business is $X.X contribution points capital, of capped year year-end, ] $X.X of

another As recovers with attractive CRE business contribution the the the lending our the in the company activities liquidation CREIT of differentiator sector. non-core for from small NIM portfolio, stable is

Now turning outlook XXXX. our back to for

the expect will to the through take X with to key stabilized items goal. We return XXXX a the that us providing that following bridge recovery XX% core

our non-core portfolio. of the First, summarized our deck, supplemental on Page liquidation as X of

non-core ROE. liquidation will in or and previously, share of M&A originated discussed the annual an RC $X.XX As per XXX on the points benefit of result portfolio basis

earnings asset These stabilization. or over fully in in of occurring X Serial share liquidation accretive and highly is realized earlier retained Ritz with XXXX. will basis disposition XXX the by the upon an timeline, Given replacing result increased sales ROE XX $X.XX of components quarters be negative are plus yield office contribution project loans. components the of XX% with projected the expected of annual yield the per to to of the future hospitality the points sale bridge benefit

Second, both and liability management, securitized corporate.

non-core debt resulting collapse tranches, currently with our group. In and of rapid into peer throughout of deploy Of and X this cheap new the in relative outstanding XXXX, the deals, the discussed As reissue more are in CLOs X the year. deals. to AAA the structure prior quarters, sequentially collateral deal deleveraging efficient our to costs remaining our managed in XXXX, an loans in callable higher CLOs payoffs of resulted inability June once plan is collapsible to callable static

be $XX million the reissuance With $X.XX to of would in of accretion basis reinvestment XXX first share basis declining only collateral March not higher deals earnings called, margin. per generate reduce tranches of The grow providing first to CLO core liquidity from ] to points billion reissued of interest or projected X points rate totaling CRE with currently, will XX $X.X the advance AAA XX tranche net portfolio, 'XX serial costs, providing liability increase liquidity, basis but to [ points quarter ROE.

target. X.Xx market, issues below for corporate leverage, provides since million X XXXX debt we've Additionally, Xx our [ at receptive ] remains recourse to which X.Xx the December $XXX where completed additional totaling

segment, Third, in growth for in despite growth in growth 'XX. business our small is additional X.Xx lending XXXX positioned which

ROE. business, million, February, anticipate to basis our XX share $X.XX $X.X contribute which period we year. and in originated lending X(a) volume points up $XXX same should XX% was last in lending Specifically, billion X(a) Through SBA the per from be

XX% Andrew pressure we quarterly on followed annual acquired per to One, in earnings, in our closing USDA over in per provide close of basis cycle to the more variable basis by turn is in to or the The ROE originate volume or expect million UDF but earnings to merger, in Madison platform through deliver complexity, ROE. Fourth, the which of USDA earnings $XXX of larger of plan. With points as is I'll go to to ROE. subsequent sizes XX estimated share Due loan is CRE points the volume incremental lender on it the is incremental recovery share last quarterly, June, we current cumulative and expected results. execute XXX $X.XX expected on effect to Additionally, IV March, transitory the XXXX. that,

Andrew Ahlborn

showed earnings distributable quarter Fourth loss were a per Tom. Thanks, GAAP while common losses of share $X.XX. $X.XX

in fourth quarterly losses quarter. Four on of core million kind income; $XX.X from between recorded variable was costs; the previously our realized interest were operations, paid and return was our in recorded cash distributable first, Excluding earnings timing and realized interest allowances or share, to X%. primarily lower was million losses includes gain million million. equity. construction to gross key assets which modified decreased average decline was and loans, on due quarter-over-quarter earnings. Revenue yield per a representing settlements sale net and slight interest interest distributable quarter loss and of common income, X.X% The of XX% primarily $XX.X interest on income servicing $XX.X due quarter loans X.X% The in $XX.X a on net loans. non-accrual $X.XX increase a differences accrued asset income investment sales, in X.X% quarter. the change in stockholders' income factors the recorded averaged in in The reflects income net from income of other $XXX,XXX impacted the to: on which quarter-over-quarter interest the portfolio X% valuation yield was

of at servicing Second, income of million. was $X.X working net million X(a) MSRs investments due total Third, due and million of on income, in JV noncash quarter. And of averaged billion quarter activities, capital rates. in of collection revenue discount at of products balance Mac $XX.X million $XX.X income gain Freddie $X costs, from the which to all across guaranteed in sale the The last, from the These SBA and rent, X(a) loans premiums of change income other the average sale investment of X.X%.% was million sale to decreased $XXX impairment revenue premiums proceeds $X.X the loans SBA are $XXX $X.X XX.X% other a to million million. sources decreased of a driven This variable include the the loans service sale by up reoccurring. in on

$XX.X quarter. corporate Turning and which million The to compared advances. in in $XX.X costs servicing higher prior due operating fees legal in million to increase primarily operating increase development and to normal was the expenses activities to were operations, costs related from an

expenses to move decline to out the UDF ratio operating OpEx expect of decline We we the our of merger. non-core as upon and portfolio closing

sale, Moving settlement items piece others, a the loan allowances to end. loan release million a upon last million The balance remaining million. generated to value operations, $XX.X sales. And in non-core an million $XX.X loss the mark-to-market incurred million on, for These due $X.X normal allowance charge-offs other discontinued primarily mark reduction loan of $XXX were from the not increase positions sales by the several include, included expenses a the of million and in final to assets. The activity. Non-cash provision increase loans million million value of was amongst the in valuation loss $XX.X realizable or reserves CECL losses quarter. which quarter $XXX.X the reflects allowance valuation transaction $X.X related and M&A in to combined were settlement expenses of $XXX.X due a additional on on of The our and foreclosures, REO on increased to operations. recovery the on debt of earnings in fair impacted million is on reserves of sheet operating and offset relates that at $XX.X valuation

of the the We items supplement to an XX earnings Slide profitability. of presentation included and between updated other distinguish financial on operations normalized affecting have

book in $X.XX to the increase per allowance. average price share last to due an valuation a dividend sheet, These share now repurchases, by CECL per earnings, of balance share $X.XX $XX.XX versus allowance The an absent shortfall book combined $X.XX the due share On totaled share. value an change per shares were is $XX.XX and per and quarter. offset was in increase coverage share X.X increase million combined which from on the changes per at value

the expect Liquidity unrestricted announced we to financing of of return across XXXX of XXXX with secured our to million line a the cash begin last The we will will be subsidiary. $XXX million of that, senior on mentioned, have to which for $XXX we this execute from go week share towards The the raised Tom $XXX transactions. enhancing most was remains will a $XXX million proceeds note taxable contribute expected offering earnings this and senior REIT recent issued and business. With into of Since questions. million program, improve. $XX As strong call, X remaining corporate shareholder to our the the out open $XXX maturities. million retiring notes April repurchase will the invested new due portion last year. million is

Operator

question first Crispin Piper [Operator Sandler. Instructions] The is coming of Love from

Crispin Love

earnings core and dividend the on first power. So,

that power how a basis. level? do several you next cut to cover about expect You've earnings you earnings quarter, over then to $X.XXX. on quarters And the the non-cash would the think in cash and dividend first the cash Starting just

Andrew Ahlborn

definitely primarily So, non-core strategy. fact lowest by the the go bucket and given on a first basis going quarter majority to quarter of impacted year, non-accrual is the liquidation the the be of that cash on booked the be the will

where from 'XX. rest $X.XX cumulative effect So -- the of that, roughly those drawdown the a is in were the including effect assets

year. And couple the dividend in So, approximately But the year items. up along coverage the that earnings course profile will we the move to that over is the X.Xx. as of further expectation to of the is we bridge a ramp the cover

be Madison mainly as from and be second further into drawdown from Funding well our back level. in non-core the -- as impact. the come quarter towards overhead which is USDA just That and a other $X.XX the this portfolio. I will first first, Circle expected to have of immediate savings, annual is of explained half is to based the more some quarter. generate cuts OpEx on One, lender should The staffing online the going what an benefit

business, then an to as that in The $XXX incremental per volume UDF, March, add million of his expect share. million in to we $XXX exponential We think in continues that an growth expect mentioned Tom mentioned, to earnings of add We incremental close experience year. comments, SBA growth. generate the And to will as $X.XX to which Tom incremental $X.XX should $X.XX. $X.XX

coverage So forma that the liquidation we basis, reinvestment get into pro the X.Xx loans non-core to of a think, dividend not that taking core, level. upon on even current consideration the on we

Operator

Our next of is question Doug Harter coming UBS. from

Douglas Harter

more challenges back makes done acquiring you guess, acquired bit could context, little the I that those distressed and you've another look if I putting on a in the have sense? deals credit kind And this out highly was why the you that hoping UDF. think around prior decision the from talk of to at and returns point given portfolios, penciled how you portfolio

Thomas Capasse

to on a were portfolio, the $XXX and history Andrew, do loans GFC's particular, around you that, around stress stress home over basis which under test of the tests buying the XX-year little want acquiring in the the -- the million of touch prices. we

Andrew Ahlborn

Yes.

the on in So for merger discounts fairly the mechanics basis the aggressive of those some projects. called current

is trade the on the in given a basis think, principal even loans downturn, booking pretty we is aggressive the Ready covered. that in those So Capital actual

of $XXX projects and the loans are the the the Tom acquiring we as million Many of as happens. other over Now done is confident it are mentioned, thing credit the in highly part there projects M&A. be us But at that years, that a of the gives where we've comfort some is, of may those some that loans. basis I'd perspective, a that pressure from yield secure. if level we're is say

has historical knowledge projects. on these have base been loans of The those we pristine. so And performance very good a

underwriting the basis the actual experience combination of our and think projects and that the we comfort. gives us in these So,

Douglas Harter

Okay. do the problem comfort there for take think kind quarter that assets And How actions additional about reserving the to mentioned and of known you then needs you how reserve risk we looking remaining be the should the kind this of actions? of won't assets. additional ring-fence problems, and significant

Thomas Capasse

Yes. Adam, only the I potential core the is rating under migration portfolio, bifurcated portfolio specific the the where from Doug, do is reference methodology with which think you negative want to risk to on touch the X? -- we

Douglas Harter

Correct.

Thomas Capasse

and -- of So, elements that otherwise risk Adam, the you then under credit existing portfolio there, higher call core modified. the we the to discuss will, which the maybe loans it, from potential portfolio, the the if methodology strong modified bifurcated particularly were we'll previously

Adam Zausmer

Doug, long-term sure. core XX% portfolio, the yes, that are to these is good of returns. be that holds have assets healthy we which Yes, really where you overall generate metrics the credit portfolio, deem

within losses We the where minimal flowing to call the with that and collateral new bifurcated those is expected majority The executing XX of is really We core are, plan. sponsors mods. these mods closer future business core put XX% are average it, portfolio multifamily industrial. portfolio, months. majority -- The of have debt the the on cash that the maturity is And equity on into healthier have into yields. they those

we higher the non-core. versus feel is that maturity So significantly at takeout of probability the

on takeout, be multifamily the where ultimately, probability an deemed, yields, this we less going assets inside little mentioned, or liquidate XX% holdings, non-core, as foreclosure. expeditious modifications. fresh equity those the there short-term if liquidation. Tom loan of we really really agency the have no this And the specifically, and more and don't we're the borrowers challenging stabilization will are that on a from the lower side, bucket viable feel specifically is loans of of takeout, management that of strategy, have higher path to the asset primary These On we've to is portfolio. These represents

laser the we So, where beam the that focused the X are the bifurcated XX to on on noncore, quarters. really execute expeditious next expect over liquidations we X we to

Thomas Capasse

add just to Doug. want I And Yes. that, to

to old bridge side, go made it XXXX, especially where was a saying, the -- 'XX, the been rate is an think hike systemic you alive stay this that I'm have look there I while ago, period. rates year through to down. didn't to to industry, sorry, loans multifamily to the on And

So, or Adam, required of XXs, is bridge what yield is we with a that qualify split Freddie, is to you're I'd on previously mark-to-market are the kind the refi there Fannie X portfolio And core point debt qualify what's loan. And upper the strong that that out were now to in sponsors, buckets. One -- liquidity, current the for those market? stabilized takeout and LTVs current where loans either in the and this highly is modified projects, will seeing portfolio the here bridge for in into likely the debt metric yield X.X%. good

Adam Zausmer

X% X% Yes. debt yield. Call to Yes. it average

Thomas Capasse

point basis XXX which book yield. the on significantly premium non-core, almost that versus lower a have You debt is

other So static. our our thing about that I again, think -- Ready CRE are is -- and that CLOs the

the So no there's bridge will, strong hiding, to word, a if maybe the ability -- the no but of nature disclose loans. you not status of

and portfolio. resolution and to So, the a what bifurcating accelerated non-core perspective, forward, the of strategies. That's then book. suited of approach very conservative going at the of are is -- track that performance are we're about then able credit from from a the we're core we the And billion it's for think we're taking about liquidation the to $X marked migration $X.XX -- non-core, core able here transparency the loans investors highlight best doing

Operator

coming Rahmani of is question next KBW. Jade The from

Jade Rahmani

Regarding the million. I maturities, address those? to -- think I plan XXXX the $XXX around it's what's it estimate

Thomas Capasse

with So, to last the -- retire our we portion remarks, senior those. notes proceeds, address we prepared started A in it the going the of said secured to of issued some are as we week.

beginning out, look are the when handful of maturities So in we year. of there a the part

those there's million will $XX supports a business projected roughly in of to smaller in X which the due taking and profile preference $XXX due out and certainly, into move we our liquidity July. million. senior is issuance due months. And further million the that in flow that as but a comes comes there's access due into secured November, We -- cash million those maturities, $XXX in for markets then, cash, the So February, October be summer $XXX in looking 'XX, note, the out

this is we've debt business the plan continue markets believe to those of some year access to to continue of profile start thinking to over those markets. But that proven securities, financial of a handle such the to Our the course allows larger to us variety we debt position corporate issuances. the about

We ladder. continue maturity other point into the lean closely thing will to I'd Jade, liability out, then that aligns asset those markets. And with is the the ladder only very

those the to So, take undertake various we'll are paths care of those.

Jade Rahmani

On really the UDF asset assets? explain has that maintain that I in see unencumbered and basis order IV replenish value you access? alternatively, the an Broadmark to unsecured pool which rationale to acquiring to debt. to assets are merger, is compelling upside looking at the you're Mosaic unencumbered assets Or issue you the the in the logic behind allow mergers mean the those company that the because the would you

of And this that replenish pool order unencumbered a in kind is deal assets. of to necessary somewhat so,

Thomas Capasse

Jade. the whole residential the unlevered. XX-year market. again, and is as view But is could this at it management number The that lot a on, create it, terms loan of one EPS view on strategies comment you unlevered, But it's forward to for on that's basis highly in say transaction cake, leverage fact with the we an one, relationship you the icing how non-bridge is will, the our we ability on d'etre the the the I'd the it transaction. if XX% the Andrew, team of it raison evaluated and accretive given evaluated Board company. We'll going based

just yield considered. know to the from question, the answer anything don't -- think Adam that add really the Andrew, transaction. -- you'd viewed -- how was more that's to accretion So It I was your the I leverage EPS again, to not asset Less if actual the itself. really we that.

Andrew Ahlborn

think I that's right. No,

unencumbered pull equity choose earnings incremental the us, I the improves the alluded think, time. main bringing a to, profile. which was profile leverage It allow of Jade, improves to over will we you balance unlevered this as sheet that asset pool standpoint metric from debt post-merger, on ratios. financial and that will driver the debt it there's transaction of of out so benefit, the of But should an equity improve the

Jade Rahmani

I that uncertainties. cycle. we're of credit enough. find Fair many mean, so Okay. the There's in surprising a I somewhat middle because

business? seeing now. And work did right It fourth credit deterioration problem notable you within taking lenders, side, what to for the Ready So a on you're on impact it might the SBA? results SBA you're that XQ SBA showed notice see and seem portfolio. the time We I the see out potential But potentially saying additional business seeing is coming And right with quarter. in further not understand the I accretion. The the about in can SBA around model that we may look on administrative could doesn't for last the the you're Capital's to adds that, not like assets risks trends corners saw like and that stress dodge question the business. discuss any be changes but to we to

Thomas Capasse

$X.X could the traditional strategy, -- dual we've the portfolio. first. whereby lending Obviously, our a of in lender that's small and second is let's one overall. uses which balance $X we the use average And lender has Actually, you a ] have to for a, at second -- credit our goes the we we running And then, a SBA essentially we're program undertaken has fourth largest where and in of SBL, the company. differentiated been loan in which program, relatively comment loan tackle non-bank service and -- part largest Yes. large on million maybe the small strategy scorecard, the been the seeing -- FinTech, some loans business running a trends we're Andrew, officer the [ provider that our the to balance average million. And up to where more approach

and conversations side, we've both the and we of which, maybe bottom sort and very that a had and touch the we with -- dodge of thing. what what during a XX:XX of about just credit But impact that always billion of it's of anything with what fraud with with business, of significantly couple usually -- commitment strong can of year seeing Jade, a PPP billion and some some $XX I've with there there trends a in about the and conversations, it's have in occurred aisle, whole. But seeing the mix there of heard sides Taylor that our -- as on because the the of to is losses president from -- you're So on the -- apple healthy industry about Yes, those, Gary authorization line $XX Andrew, to head-to-head, is SBA been. you the terms the concerns we're number had haven't a pie has mom on and both of Congress. would --

be program the there haven't So, major about commitments, But may sort -- an overhaul congressional specific accelerated the few of authorization the on anything the any of of would program, heard we retirements. basis. a X(a) authorization of which impact ongoing

what in the our industry? seeing maybe the in maybe reviews, risk the trends terms of Andrew, So SBA been credit on -- -- with in management some we've of -- just touch that, of versus terms

Adam Zausmer

the a Yes, side delinquencies XX-plus Adam. the at remain on moderate it's business, small Jade, level. for credit

at micro expected those estate over doing about years, and micro higher Certainly today today. loans, X.X% certainly loans. non-real had for sits levels, XX-plus historically, and in small our small at to X.X That year delinquency more loans. the X.X%, given balance the which small seeing they're So balance growth have which on bucket the component is past

that historically well. But in are asset even micro. in given that perspective, mean still performed lodging asset management expectation could trends. mom-and-pop service, balance growth a markets, monitoring is concerning don't assets are class delinquencies we're still through the smaller really performed at from are -- that well operators we're yes, the point we limited see the I is shift and it's -- think any and business it's pandemic. largest our the small have These up -- But carefully, this teams in extremely historically portfolio the hospitality I

Operator

is next James. of coming Raymond The question Laws Stephen from

Stephen Laws

look flow the or the on does talk SBA done segment. there? kind most how versus topics, on cash the about And follow-up the think like one sale but of You've the do Can cash flow of loans? about we the of mix gain what you operating

Thomas Capasse

do want that? touch Andrew, to on you

Andrew Ahlborn

free that business recovering our think positive. process the is are piece. basis loan, through and unguaranteed sale financing just very of on origination the you SBA Yes. cash quickly very, a full we highly From flow both about in perspective, basically When the the

the So, key on as we sale improving a operations of in the flow business of be business company. growth part forward, the is gain of and move the that free comes from going incremental to cash overall that off that

I thing couple the bit capital will we a have several been over one lines SBA. business here, is, the Now contributing warehouse for months of last into await say approval of the as quite that down

have currently totaling are expect ] over approval X and warehouse process [ approval, that we we $XXX million. lines So, the in of

for growth business -- warehouse that so, over SBA as your in flows. the of that improving be to business And line move we financial run profile incremental answer it that slightly. has into last right free bottom the terms lines business, basically there's to of to those and cash second the the given in into invested we of question, couple do drops the direct rebound more that the expect to of But been majority equity But months, declined the quarter. through

Operator

next Ladenburg Christopher Nolan at Thalmann. [Operator Instructions] question Our is from coming

Christopher Nolan

of because -- of quarters? over developing expected deal was acquisition, be comments For the the portfolio earnings. next couple and is in the what to delinquencies accretive What's your immediately that to the assumption

Thomas Capasse

Yes.

understand been projects business helpful Adam, where if seasoned the portfolio but these serial basis approved are UDF banking just is portfolio years. a essentially it business be land very many, important I you the credit asset many frame markets. would private very the well-understood the We've lot a are over decade to residential of that, business answer -- the to loans on represents private a company. lot class loan in doing And the residential that loans it's think, for a with that it, could

I are was is not -- offtake Dallas and a projects really think "the are there in -- the with comment So homebuilders. that problem from Metroplex these very loans." These prior strong loans strong portfolio

cash the transaction looked the itself for in of at terms just -- versus did when and profile So, we've and the liquidity in Adam, in amount the in seen broadly example, portfolio question, the the transaction and flow the comment yield maybe the September. -- on today of portfolio we

Adam Zausmer

Yes.

performing a end loans first through accrued regarding lot are fully is your loans have has loan they answer to this Just the maturity interest portfolio -- structured, And these question these delinquencies, today. component. Every of XXXX. land the way

is growth, XXXX, in you think, comprised, regards sites. Texas phases land national to to multiple to regional state we are any build expect continues And extremely cetera. out this know, the in job portfolio. The population metrics portfolio So growth, projects through continuing show lot build projects, delinquency these of the of at -- don't continuing as I to these loans et entirely the in that of strong end homebuilders and

given in the these acquiring feel basis here acquired basis. I maturity profile the at, we'll the and very credit be sorry, assets we think, at we that that and recoveries the comfortable our basis these -- the very,

Christopher Nolan

repurchases topic, what of going repurchases? and stock. forth pace just of up. sector going is quite But be lot be to to the headwinds Because seems And guys really and separate on the the attractive back you're a expecting? scarce, for capital time a maturities coming have with so like might buy though line what's And is it share it the even you

Andrew Ahlborn

Yes.

generate generate expected are of the of to the portfolio are CLOs the March million. $XX we're I the liquidity at in couple from sales to happening where generate of $XXX here noncore today over So, that amount a a million. there's collapse think of variety expected significant The months Certainly, expected of events is liquidity. at to next growth

is the timing the deliver to going going environment those being dependent And certainly the level given With it so the return. profile, given that to business our upon is we're year to to shareholder of a certainly, the of cash be plan said, a items. But somewhat carry return the higher position part continue we throughout of pace to key be operating in.

limitation we the throughout but So there, there year. is repurchase active be expect program to in some the

Christopher Nolan

earnings as more hour the and less for a then release company provide an quite moving before it could a And to us parts. call, than it's because going the Great. comment, if review guys forward, was you time just complex

that'd So, appreciated. be if you can keep in consideration, that

Andrew Ahlborn

Yes. address to that we that. and appreciate we'll undertake

Operator

over time, would I the this Capasse back like turn Mr. to At to floor for closing comments.

Thomas Capasse

CECL over expect So, we fully succeeding actions to terms year, fully of those are Thank accelerate net and ROE call. to dividend ability we look and have day. everybody, margin we the cut interest look confident with highly the that next the forward and in reserves, develop and critical the Thanks, were recovery -- these a in our the goals -- quarter's earnings to you. and good

Operator

concludes Ladies event. today's this and gentlemen,

off time, You day. the at the your may rest disconnect your lines log enjoy of this webcast or and

Ready Capital (RC) 3 Mar 252024 Q4 Earnings call transcript