Q3 2018 Earnings Conference Call

November 08 2018 | 8:30 AM ET
 View details

Press Release

Ready Capital Corporation Announces Third Quarter 2018 Results

- Net Income of $0.53 per share of common stock in the third quarter -

- Third Quarter Core Earnings grew 26% to $0.48 per share of common stock -

- Added over $400 Million of SBC Loans During Third Quarter 2018 -

Company Release - 11/7/2018 4:15 PM ET

NEW YORK, Nov. 7, 2018 /PRNewswire/ -- Ready Capital Corporation ("Ready Capital" or the "Company") (NYSE: RC) today reported financial results for the quarter ended September 30, 2018.   

Third Quarter Highlights:

  • Net income of $17.6 million, or $0.53 per share of common stock
  • Core earnings of $16.1 million, or $0.48 per share of common stock, up 26% compared to the same quarter last year
  • Return on Equity of 12.4%
  • Adjusted net book value of $17.08 per share of common stock as of September 30, 2018
  • Originated $291.2 million of small balance commercial ("SBC") loans
  • Originated $51.1 million of loans guaranteed by the U.S. Small Business Administration (the "SBA") under its Section 7(a) loan program
  • Originated $472.1 million of residential mortgage loans
  • Acquired $86.4 million of SBC loans
  • Declared and paid dividend of $0.40 per share.

A summary of Ready Capital's operating results for the quarter ended September 30, 2018 is presented below. Ready Capital reported U.S. GAAP net income for the three months ended September 30, 2018 of $17.6 million, or $0.53 per share of common stock, and Core Earnings (a non-GAAP financial measure) of $16.1 million, or $0.48 per share of common stock.

"For the third consecutive quarter, our diversified multi-pronged platform enabled us to outperform our stated goal of a return on equity of at least 10%," commented Thomas Capasse, Chairman and Chief Executive Officer. "Our focus on growing our earnings from our stable small balance commercial origination franchise, along with our robust origination and acquisition platform, also continued to contribute to our strong results and our efforts to provide strong value for our shareholders."

The Company issued a supplemental presentation of its third quarter 2018 results, which can be viewed in the investor relations section at www.readycapital.com.

Use of Non-GAAP Financial Information

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

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

The following table reconciles net income computed in accordance with U.S. GAAP to Core Earnings for the three months ended September 30, 2018:





(In Thousands)



Three Months Ended
September 30, 2018

Net Income


$

17,569

Reconciling items:




Unrealized loss on mortgage-backed securities



(10)

Unrealized (gain) on mortgage servicing rights



(1,969)

Total reconciling items


$

(1,979)

Core earnings before income taxes


$

15,590

      Income tax adjustments



495

Core earnings


$

16,085

Webcast and Earnings Conference Call

Management will host a webcast and conference call on Thursday, November 8, 2018 at 8:30 am ET to provide a general business update and discuss the financial results for the quarter ended September 30, 2018.  The conference call can be accessed by dialing 877-407-0792 (domestic) or 201-689-8263 (international).

The conference call will also be available in the Investor Relations section of the Company's website at www.readycapital.com. To listen to a live broadcast, go to the site at least 15 minutes prior to the scheduled start time in order to register, download and install any necessary audio software.  A replay of the call will also be available on the Company's website approximately two hours after the live call through November 22, 2018.  To access the replay, dial 844-512-2921 (domestic) or 412-317-6671 (international). The replay pin number is 13683750.

Safe Harbor Statement

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

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

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

 

 

READY CAPITAL CORPORATION

UNAUDITED CONSOLIDATED BALANCE SHEETS









(In Thousands)


September 30, 2018


December 31, 2017

Assets







Cash and cash equivalents


$

47,845


$

63,425

Restricted cash



18,864



11,666

Loans, net (including $22,680 and $188,150 held at fair value)



1,256,177



1,017,920

Loans, held for sale, at fair value



124,988



216,022

Mortgage backed securities, at fair value



94,341



39,922

Loans eligible for repurchase from Ginnie Mae



79,600



95,158

Investment in unconsolidated joint venture



40,914



55,369

Derivative instruments



5,846



4,725

Servicing rights (including $91,708 and $72,295 held at fair value)



118,221



94,038

Receivable from third parties



1,529



6,756

Other assets



59,160



56,840

Assets of consolidated VIEs



1,053,274



861,662

Total Assets


$

2,900,759


$

2,523,503

Liabilities







Secured borrowings



817,051



631,286

Promissory note



5,363



6,107

Securitized debt obligations of consolidated VIEs, net



752,432



598,148

Convertible notes, net



109,743



108,991

Senior secured notes, net



178,757



138,078

Corporate debt, net



48,301



Guaranteed loan financing



246,229



293,045

Contingent consideration



1,773



10,016

Liabilities for loans eligible for repurchase from Ginnie Mae



79,600



95,158

Derivative instruments



39



282

Dividends payable



13,346



12,289

Accounts payable and other accrued liabilities



79,089



74,636

Total Liabilities


$

2,331,723


$

1,968,036

Stockholders' Equity







Common stock, $0.0001 par value, 500,000,000 shares authorized, 32,065,112 and 31,996,440
shares issued and outstanding, respectively



3



3

Additional paid-in capital



539,869



539,455

Retained earnings (deficit)



9,698



(3,385)

Total Ready Capital Corporation equity



549,570



536,073

Non-controlling interests



19,466



19,394

Total Stockholders' Equity


$

569,036


$

555,467

Total Liabilities and Stockholders' Equity


$

2,900,759


$

2,523,503

 

 

READY CAPITAL CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME


















Three Months Ended September 30, 


Nine Months Ended September 30, 


(In Thousands, except share data)


2018


2017


2018


2017


Interest income


$

44,287


$

35,038


$

123,295


$

102,169


Interest expense



(28,925)



(19,908)



(77,996)



(53,579)


Net interest income before provision for loan losses


$

15,362


$

15,130


$

45,299


$

48,590


Provision for loan losses



(800)



(466)



(571)



(1,857)


Net interest income after provision for loan losses


$

14,562


$

14,664


$

44,728


$

46,733


Non-interest income














Gains on residential mortgage banking activities, net of variable loan expenses



8,674



10,735



30,170



32,229


Other income



1,204



1,853



4,364



4,281


Income on unconsolidated joint venture



2,178





9,420




Servicing income, net of amortization and impairment of $1,425 and
$4,005  for the three and nine months ended September 30, 2018, and
$976 and $5,252 for the three and nine months ended September 30, 2017,
respectively



6,922



6,134



19,959



16,208


Total non-interest income


$

18,978


$

18,722



63,913



52,718


Non-interest expense














Employee compensation and benefits



(14,163)



(13,715)



(43,755)



(40,630)


Allocated employee compensation and benefits from related party



(1,200)



(990)



(3,600)



(3,010)


Professional fees



(2,294)



(2,151)



(7,343)



(6,334)


Management fees – related party



(2,070)



(2,034)



(6,118)



(6,018)


Incentive fees – related party







(676)




Loan servicing expense



(4,247)



(3,388)



(11,340)



(7,513)


Other operating expenses



(6,548)



(7,447)



(23,475)



(19,183)


Total non-interest expense


$

(30,522)


$

(29,725)


$

(96,307)


$

(82,688)


Net realized gain on financial instruments



6,946



5,695



27,796



13,151


Net unrealized gain on financial instruments



8,500



2,678



15,964



4,933


Income before provision for income taxes


$

18,464


$

12,034


$

56,094


$

34,847


Provision for income (taxes) benefit



(895)



340



(4,123)



(1,763)


Net income


$

17,569


$

12,374


$

51,971


$

33,084


Less: Net income attributable to non-controlling interest



638



533



1,890



1,891


Net income attributable to Ready Capital Corporation


$

16,931


$

11,841


$

50,081


$

31,193
















Earnings per common share - basic


$

0.53


$

0.37


$

1.57


$

1.00


Earnings per common share - diluted


$

0.53


$

0.37


$

1.57


$

1.00
















Weighted-average shares outstanding














Basic



32,109,642



32,026,494



32,073,665



31,120,476


Diluted



32,130,262



32,028,980



32,090,126



31,121,449
















Dividends declared per share of common stock


$

0.40


$

0.37


$

1.17


$

1.11


 

 

READY CAPITAL CORPORATION

UNAUDITED SEGMENT REPORTING

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2018








SBA Originations,


Residential







Loan


SBC


Acquisitions,


Mortgage


Corporate-



(In Thousands)


Acquisitions


Originations


and Servicing


Banking


Other


Consolidated

Interest income


$

11,946


$

21,671


$

9,699


$

971


$


$

44,287

Interest expense



(7,755)



(16,045)



(4,301)



(824)





(28,925)

Net interest income before provision for loan losses


$

4,191


$

5,626


$

5,398


$

147


$


$

15,362

Provision for loan losses



(796)



(101)



97








(800)

Net interest income after provision for loan losses


$

3,395


$

5,525


$

5,495


$

147


$


$

14,562

Non-interest income (expense)



















Gains on residential mortgage banking activities, net of
variable loan expenses


$


$


$


$

8,674


$


$

8,674

Other income (loss)



75



794



279



56





1,204

Income from unconsolidated joint venture



2,178











2,178

Servicing income



5



389



1,352



5,176





6,922

Total non-interest income


$

2,258


$

1,183


$

1,631


$

13,906


$


$

18,978

Employee compensation and benefits



(98)



(2,417)



(3,116)



(8,375)



(157)



(14,163)

Allocated employee compensation and benefits from
related party



(120)









(1,080)



(1,200)

Professional fees



(467)



(291)



(412)



(123)



(1,001)



(2,294)

Management fees – related party











(2,070)



(2,070)

Incentive fees – related party













Loan servicing expense



(1,183)



(1,294)



(198)



(1,572)





(4,247)

Other operating expenses



(450)



(2,545)



(929)



(2,080)



(544)



(6,548)

Total non-interest income (expense)


$

(2,318)


$

(6,547)


$

(4,655)


$

(12,150)


$

(4,852)


$

(30,522)

Net realized (loss) gain on financial instruments



774



3,253



2,919







6,946

Net unrealized gain (loss) on financial instruments



2,893



2,679



611



2,317





8,500

Net income (loss) before provision for income taxes


$

7,002


$

6,093


$

6,001


$

4,220


$

(4,852)


$

18,464

Total assets


$

672,569


$

1,442,601


$

484,387


$

276,284


$

24,918


$

2,900,759

 

 

READY CAPITAL CORPORATION

UNAUDITED SEGMENT REPORTING

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018


























SBA Originations,


Residential







Loan


SBC


Acquisitions,


Mortgage


Corporate-



(In Thousands)


Acquisitions


Originations


and Servicing


Banking


Other


Consolidated

Interest income


$

34,602


$

58,423


$

27,411


$

2,859


$


$

123,295

Interest expense



(19,779)



(43,912)



(11,892)



(2,413)





(77,996)

Net interest income before provision for loan losses


$

14,823


$

14,511


$

15,519


$

446


$


$

45,299

Provision for loan losses



(989)



8



410







(571)

Net interest income after provision for loan losses


$

13,834


$

14,519


$

15,929


$

446


$


$

44,728

Non-interest income



















Gains on residential mortgage banking activities, net of
variable loan expenses


$


$


$


$

30,170


$


$

30,170

Other income



342



3,409



447



166





4,364

Income from unconsolidated joint venture



9,420











9,420

Servicing income



15



972



4,067



14,905





19,959

Total non-interest income


$

9,777


$

4,381


$

4,514


$

45,241


$


$

63,913

Non-interest expense



















Employee compensation and benefits



(410)



(7,339)



(9,510)



(26,025)



(471)



(43,755)

Allocated employee compensation and benefits from
related party



(360)









(3,240)



(3,600)

Professional fees



(928)



(1,012)



(1,414)



(347)



(3,642)



(7,343)

Management fees – related party











(6,118)



(6,118)

Incentive fees – related party











(676)



(676)

Loan servicing expense



(2,748)



(2,819)



89



(5,862)





(11,340)

Other operating expenses



(3,267)



(8,512)



(3,009)



(6,760)



(1,927)



(23,475)

Total non-interest expense


$

(7,713)


$

(19,682)


$

(13,844)


$

(38,994)


$

(16,074)


$

(96,307)

Net realized gain on financial instruments



867



15,484



11,445







27,796

Net unrealized gain (loss) on financial instruments



3,695



4,441



325



7,503





15,964

Net income (loss) before provision for income taxes


$

20,460


$

19,143


$

18,369


$

14,196


$

(16,074)


$

56,094

Total assets


$

672,569


$

1,442,601


$

484,387


$

276,284


$

24,918


$

2,900,759

 

Cision View original content:http://www.prnewswire.com/news-releases/ready-capital-corporation-announces-third-quarter-2018-results-300746012.html

SOURCE Ready Capital Corporation