Ready Capital (US:RC)2022-11-08 22:02Financial Performance - Total management fees for the three months ended September 30, 2022, were $5.4 million, compared to $2.7 million in the same period of 2021, representing a 100% increase [332]. - Total incentive fee distribution for the three months ended September 30, 2022, was $0.9 million, down from $2.8 million in the same period of 2021, a decrease of 67.9% [336]. - The Company reported a net income of $66.253 million for the three months ended September 30, 2022, an increase of 42.4% from $46.535 million in the same period in 2021 [379]. - Basic earnings per share (EPS) for the three months ended September 30, 2022, was $0.53, compared to $0.61 for the same period in 2021, representing a decrease of 13.1% [379]. - Diluted EPS for the nine months ended September 30, 2022, was $1.56, an increase of 6.8% from $1.46 in the same period in 2021 [379]. - The company reported distributable earnings of $58.186 million for the three months ended September 30, 2022, compared to $49.365 million in the same period of 2021, reflecting a 17.5% increase [467]. - Consolidated net income for the nine months ended September 30, 2022, was $189.5 million, an increase of $83.1 million from the same period in 2021, driven by higher loan volumes and interest income from PPP loans [499]. Assets and Liabilities - The total other assets as of September 30, 2022, amounted to $213.0 million, an increase from $172.1 million as of December 31, 2021 [344]. - As of September 30, 2022, total PPP related assets amounted to $278.4 million, a decrease of 68.3% from $877.8 million as of December 31, 2021 [359]. - Total assets as of September 30, 2022, reached $11,858,211,000, indicating a stable asset base [423]. - Total liabilities increased to $9.881 billion as of September 30, 2022, up $1.636 billion or 19.8% from $8.245 billion at the end of 2021 [474]. - Stockholders' equity rose by $688 million to $1.969 billion as of September 30, 2022, primarily due to equity raised from the Mosaic Mergers and public offerings [476]. Income and Expenses - Total interest income for the three months ended September 30, 2022, was $186,026,000, with a net interest income after provision for loan losses of $67,100,000 [423]. - Non-interest income totaled $78,528,000 for the same period, driven by residential mortgage banking activities and net realized gains on financial instruments [423]. - The company reported a total non-interest expense of $200,857,000 for the nine months ended September 30, 2022, reflecting operational costs [425]. - The provision for loan losses for Q3 2022 was $3.2 million, an increase of $1.7 million due to higher loan balances and changes in macroeconomic forecasts [485]. - Non-interest expense for the nine months ended September 30, 2022, was $200.9 million, a decrease of $42.0 million compared to the same period in 2021 [481]. Loan Activity - The Company originated $109.5 million in PPP loans and recognized fees totaling $5.2 million during the period of origination [356]. - Total loan originations for the three months ended September 30, 2022, were $1.499 billion, a decrease of 34% from $2.272 billion in the same period of 2021 [471]. - The Company originated $2.2 billion in PPP loans under the Economic Aid Act, classified as held-for-investment [363]. - Total loan investment activity for the nine months ended September 30, 2022, was $6.703 billion, a slight decrease from $6.877 billion in the same period of 2021 [471]. Financing and Commitments - The Company has committed $125.0 million to invest in the Waterfall Atlas Fund, with $36.6 million already contributed as of September 30, 2022, leaving a remaining commitment of $88.4 million [341]. - The Company has undrawn commitments on outstanding loans, which are disclosed in Note 25, indicating potential future funding requirements [401]. - The company maintains various short-term and long-term financing arrangements secured by loans and investments [512]. Market Conditions and Risks - Current market conditions are characterized by inflationary pressures and macroeconomic concerns, with the U.S. Federal Reserve likely to continue raising interest rates into 2023 [463]. - The company anticipates that increases in interest rates may lead to higher interest expenses and a decline in the value of fixed-rate loans and securities [454]. - The company reported that credit risk is a significant concern, with default rates influenced by various factors including property performance and regional economics [462]. Shareholder Information - The Company declared dividends of $0.1 million for Series C Preferred Stock and $1.9 million for Series E Preferred Stock during the three months ended September 30, 2022 [376]. - The dividend yield for the three months ended September 30, 2022, was 16.6%, compared to 11.6% in the same period of 2021 [467]. - The conversion rate for Series C Preferred Stock was 1.2018 shares of common stock per $25 principal amount, equivalent to a conversion price of approximately $20.80 per share [374]. Strategic Initiatives - The company aims to provide attractive risk-adjusted returns primarily through dividends and capital appreciation by growing its investment portfolio [434]. - The company has a large and active pipeline of potential acquisition and origination opportunities, although competition may limit the ability to acquire or originate these investments [468]. - The acquisition of Red Stone was completed for an initial purchase price of approximately $63 million in cash, plus $7 million in retention payments and 128,533 shares of common stock [445].