Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2021 | May 06, 2021 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Mar. 31, 2021 | |
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 | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 71,221,699 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q1 | |
Entity Central Index Key | 0001527590 | |
Amendment Flag | false | |
Common Stock | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Common Stock, $0.0001 par value per share | |
Trading Symbol | RC | |
Security Exchange Name | NYSE | |
Series B Preferred Stock | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Preferred Stock, 8.625% Series B Cumulative, par value $0.0001 per share | |
Trading Symbol | RC PRB | |
Security Exchange Name | NYSE | |
Series C Preferred Stock | ||
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 | |
Series D Preferred Stock | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Preferred Stock, 7.625% Series D Cumulative Redeemable, par value $0.0001 per share | |
Trading Symbol | RC PRD | |
Security Exchange Name | NYSE | |
7.00% Convertible Senior Notes due 2023 | ||
Document Information [Line Items] | ||
Title of 12(b) Security | 7.00% Convertible Senior Notes due 2023 | |
Trading Symbol | RCA | |
Security Exchange Name | NYSE | |
6.20% Senior Notes due 2026 | ||
Document Information [Line Items] | ||
Title of 12(b) Security | 6.20% Senior Notes due 2026 | |
Trading Symbol | RCB | |
Security Exchange Name | NYSE | |
5.75% Senior Notes due 2026 | ||
Document Information [Line Items] | ||
Title of 12(b) Security | 5.75% Senior Notes due 2026 | |
Trading Symbol | RCC | |
Security Exchange Name | NYSE |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Assets | ||
Cash and cash equivalents | $ 308,428 | |
Restricted cash | 62,961 | |
Loans, net (including $13,618 and $13,795 held at fair value) | 1,611,826 | $ 1,550,624 |
Paycheck Protection Program loans (including $38,388 and $74,931 held at fair value) | 1,292,808 | 74,931 |
Mortgage backed securities, at fair value | 682,948 | 88,011 |
Loans eligible for repurchase from Ginnie Mae | 221,464 | 250,132 |
Investment in unconsolidated joint ventures | 75,048 | 79,509 |
Purchased future receivables, net | 13,240 | 17,308 |
Derivative instruments | 12,529 | 16,363 |
Servicing rights (including $98,542 and $76,840 held at fair value) | 138,941 | 114,663 |
Other assets | 151,503 | 89,503 |
Total Assets | 8,016,955 | 5,372,095 |
Liabilities | ||
Secured borrowings | 2,064,785 | 1,294,243 |
Paycheck Protection Program Liquidity Facility (PPPLF) borrowings | 1,132,536 | 76,276 |
Convertible notes, net | 112,405 | 112,129 |
Senior secured notes, net | 179,744 | 179,659 |
Corporate debt, net | 333,317 | 150,989 |
Guaranteed loan financing | 386,036 | 401,705 |
Liabilities for loans eligible for repurchase from Ginnie Mae | 221,464 | 250,132 |
Derivative instruments | 4,403 | 11,604 |
Dividends payable | 9,631 | 19,746 |
Accounts payable and other accrued liabilities | 162,465 | 135,655 |
Total Liabilities | 6,818,709 | 4,537,887 |
Preferred stock Series C liquidation preference, $25.00 per share (refer to Note 21) | 19,494 | |
Stockholders' Equity | ||
Preferred stock Series B and D, liquidation preference $25.00 per share (refer to Note 21) | 98,241 | |
Common stock, $0.0001 par value, 500,000,000 shares authorized, 71,221,699 and 54,368,999 shares issued and outstanding, respectively | 7 | 5 |
Additional paid-in capital | 1,088,512 | 849,541 |
Retained earnings (deficit) | (20,027) | (24,203) |
Accumulated other comprehensive loss | (7,042) | (9,947) |
Total Ready Capital Corporation equity | 1,159,691 | 815,396 |
Non-controlling interests | 19,061 | 18,812 |
Total Stockholders' Equity | 1,178,752 | 834,208 |
Total Liabilities, Redeemable Preferred Stock, and Stockholders' Equity | 8,016,955 | 5,372,095 |
Consolidated Excluding VIEs | ||
Assets | ||
Cash and cash equivalents | 308,428 | 138,975 |
Restricted cash | 62,961 | 47,697 |
Loans, net (including $13,618 and $13,795 held at fair value) | 1,611,826 | 1,550,624 |
Loans, held-for-sale, at fair value | 473,078 | 340,288 |
Real estate, held for sale | 73,454 | 45,348 |
Other assets | 151,503 | 89,503 |
Consolidated VIEs | ||
Assets | ||
Total Assets | 2,898,727 | 2,518,743 |
Liabilities | ||
Secured borrowings | $ 2,211,923 | $ 1,905,749 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Parenthetical information | ||
Loans, net, held at fair value | $ 13,618 | $ 13,795 |
Paycheck Protection Program loans, held at fair value | 38,388 | 74,931 |
Servicing rights held at fair value | $ 98,542 | $ 76,840 |
Preferred stock Series C, liquidation preference | $ 25 | |
Preferred stock Series B and D, liquidation preference | 25 | |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, authorized capital | 500,000,000 | 500,000,000 |
Common stock, issued | 71,221,699 | 54,368,999 |
Common stock, outstanding | 71,221,699 | 54,368,999 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
CONSOLIDATED STATEMENTS OF INCOME | ||
Interest income | $ 73,371 | $ 69,551 |
Interest expense | (50,761) | (46,930) |
Net interest income before provision for loan losses | 22,610 | 22,621 |
Provision for (recovery of) loan losses | 8 | (39,804) |
Net interest income after provision for (recovery of) loan losses | 22,618 | (17,183) |
Non-interest income | ||
Residential mortgage banking activities | 41,409 | 36,669 |
Net realized gains on financial instruments and real estate owned | 8,846 | 7,172 |
Net unrealized gain (loss) on financial instruments | 20,996 | (33,434) |
Servicing income, net of amortization and impairment of $1,942 and $1,725 | 15,635 | 8,097 |
Income on purchased future receivables, net of allowance for doubtful accounts of $995 and $6,917 | 2,317 | 3,483 |
Income (loss) on unconsolidated joint ventures | (809) | (3,537) |
Other income | 571 | 4,073 |
Total non-interest income (loss) | 88,965 | 22,523 |
Non-interest expense | ||
Employee compensation and benefits | (22,777) | (18,936) |
Allocated employee compensation and benefits from related party | (2,123) | (1,250) |
Variable expenses on residential mortgage banking activities | (15,485) | (20,129) |
Professional fees | (2,982) | (2,556) |
Management fees - related party | (2,693) | (2,561) |
Loan servicing expense | (6,104) | (5,570) |
Merger related expenses | (6,307) | (47) |
Other operating expenses | (15,484) | (13,744) |
Total non-interest expense | (73,955) | (64,793) |
Income (loss) before provision for income taxes | 37,628 | (59,453) |
Income tax (provision) benefit | (8,681) | 7,937 |
Net income (loss) | 28,947 | (51,516) |
Less: Dividends on preferred stock | 281 | |
Less: Net income (loss) attributable to non-controlling interest | 659 | (1,064) |
Net income (loss) attributable to Ready Capital Corporation | $ 28,007 | $ (50,452) |
Earnings (loss) per basic common share | ||
Earnings (loss) per common share - basic | $ 0.49 | $ (0.98) |
Earnings (loss) per diluted common share | ||
Earnings (loss) per common share - basic | 0.49 | (0.98) |
Earnings (loss) per common share - diluted | $ 0.49 | $ (0.98) |
Weighted-average shares outstanding | ||
Basic | 56,817,632 | 51,984,040 |
Diluted | 56,843,448 | 51,990,013 |
Dividends declared per share of common stock | $ 0.40 | $ 0.40 |
CONSOLIDATED STATEMENTS OF IN_2
CONSOLIDATED STATEMENTS OF INCOME (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
CONSOLIDATED STATEMENTS OF INCOME | ||
Servicing income, amortization and impairment | $ 1,942 | $ 1,725 |
Income on purchased future receivable, allowance for doubtful accounts | $ 995 | $ 6,917 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||
Net income (loss) | $ 28,947 | $ (51,516) |
Other comprehensive income (loss) - net change by component | ||
Net change in hedging derivatives (cash flow hedges) | 1,978 | (3,128) |
Foreign currency translation adjustment | 991 | (304) |
Other comprehensive (loss) | 2,969 | (3,432) |
Comprehensive income (loss) | 31,916 | (54,948) |
Comprehensive income (loss) attributable to non-controlling interests | 723 | (1,136) |
Comprehensive income (loss) attributable to Ready Capital Corporation | $ 31,193 | $ (53,812) |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - USD ($) $ in Thousands | Total Ready Capital Corporation EquityCumulative Effect, Period of Adoption, Adjustment | Total Ready Capital Corporation Equity | Preferred stockSeries B Preferred Stock | Preferred stockSeries D Preferred Stock | Common Stock | Additional Paid-in-Capital | Retained Earnings (Deficit)Cumulative Effect, Period of Adoption, Adjustment | Retained Earnings (Deficit) | Accumulated Other Comprehensive Loss | Noncontrolling InterestsCumulative Effect, Period of Adoption, Adjustment | Noncontrolling Interests | Cumulative Effect, Period of Adoption, Adjustment | Total |
Balance at beginning of period at Dec. 31, 2019 | $ (6,599) | $ 825,412 | $ 5 | $ 822,837 | $ (6,599) | $ 8,746 | $ (6,176) | $ (155) | $ 19,372 | $ (6,754) | $ 844,784 | ||
Balance at beginning of period (in shares) at Dec. 31, 2019 | 51,127,326 | ||||||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||||
Dividend declared on common stock | (21,300) | (21,300) | (21,300) | ||||||||||
Dividend declared on OP units | (447) | (447) | |||||||||||
Equity issuances | 13,410 | 13,410 | 13,410 | ||||||||||
Equity issuances (shares) | 900,000 | ||||||||||||
Offering costs | (38) | (38) | (1) | (39) | |||||||||
Equity component of 2017 convertible note issuance | (92) | (92) | (2) | (94) | |||||||||
Stock-based compensation | 894 | 894 | 894 | ||||||||||
Stock-based compensation (shares) | 60,370 | ||||||||||||
Manager incentive fee paid in stock | 53 | 53 | 53 | ||||||||||
Manager incentive fee paid in stock (shares) | 4,154 | ||||||||||||
Net income (loss) | (50,452) | (50,452) | (1,064) | (51,516) | |||||||||
Other comprehensive income (loss) | (3,360) | (3,360) | (72) | (3,432) | |||||||||
Balance at end of period at Mar. 31, 2020 | 757,928 | $ 5 | 837,064 | (69,605) | (9,536) | 17,631 | 775,559 | ||||||
Balance at end of period (in shares) at Mar. 31, 2020 | 52,091,850 | ||||||||||||
Balance at beginning of period at Dec. 31, 2020 | 815,396 | $ 5 | 849,541 | (24,203) | (9,947) | 18,812 | 834,208 | ||||||
Balance at beginning of period (in shares) at Dec. 31, 2020 | 54,368,999 | ||||||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||||
Dividend declared on common stock | (23,833) | (23,833) | (23,833) | ||||||||||
Dividend declared on OP units | (470) | (470) | |||||||||||
Dividend declared - $0.5390625 per Series B preferred share | (126) | (126) | (1) | (127) | |||||||||
Dividend declared - $0.390625 per Series C preferred share | (37) | (37) | (37) | ||||||||||
Dividend declared - $0.4765625 per Series D preferred share | (116) | (116) | (1) | (117) | |||||||||
Shares issued pursuant to merger transactions | 337,778 | $ 47,984 | $ 50,257 | $ 2 | 239,535 | 337,778 | |||||||
Shares issued pursuant merger to merger transactions (shares) | 1,919,378 | 2,010,278 | 16,774,337 | ||||||||||
Equity component of 2017 convertible note issuance | (99) | (99) | (2) | (101) | |||||||||
Stock-based compensation | 522 | 522 | 522 | ||||||||||
Stock-based compensation (shares) | 115,604 | ||||||||||||
Share repurchases | (987) | (987) | (987) | ||||||||||
Share repurchases (shares) | (37,241) | ||||||||||||
Net income (loss) | 28,288 | 28,288 | 659 | 28,947 | |||||||||
Other comprehensive income (loss) | 2,905 | 2,905 | 64 | 2,969 | |||||||||
Balance at end of period at Mar. 31, 2021 | $ 1,159,691 | $ 47,984 | $ 50,257 | $ 7 | $ 1,088,512 | $ (20,027) | $ (7,042) | $ 19,061 | $ 1,178,752 | ||||
Balance at end of period (in shares) at Mar. 31, 2021 | 1,919,378 | 2,010,278 | 71,221,699 |
CONSOLIDATED STATEMENTS OF CH_2
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Parenthetical) | 3 Months Ended |
Mar. 31, 2021$ / shares | |
Dividends declared per share of common stock | $ 0.40 |
Series B Preferred Stock | |
Dividends declared per share of preferred stock | 0.5390625 |
Series C Preferred Stock | |
Dividends declared per share of preferred stock | 0.390625 |
Series D Preferred Stock | |
Dividends declared per share of preferred stock | $ 0.4765625 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Cash Flows From Operating Activities: | ||
Net income (loss) | $ 28,947 | $ (51,516) |
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: | ||
Amortization of premiums, discounts, and debt issuance costs, net | 5,053 | 9,366 |
Provision for (recovery of) loan losses | (8) | 39,804 |
Impairment loss on real estate, held for sale | 2,969 | |
Change in repair and denial reserve | 2,069 | (136) |
Net settlement of derivative instruments | (58,499) | (8,818) |
Origination of loans, held for sale, at fair value | (1,467,502) | (881,549) |
Proceeds from disposition and principal payments of loans, held for sale, at fair value | 1,475,565 | 793,428 |
Realized (gains) losses, net | (44,022) | (40,538) |
Unrealized (gains) losses, net | (23,006) | 33,488 |
Net loss (income) of unconsolidated joint ventures, net of distributions | 909 | 3,537 |
Foreign currency (gain) loss. net | 1,876 | (83) |
Payoff of purchased future receivables, net of originations | 3,073 | (12,802) |
Allowance for doubtful accounts on purchased future receivables | 995 | 6,917 |
Net changes in operating assets and liabilities | ||
Assets of consolidated VIEs (excluding loans, net), accrued interest and due from servicers | 10,203 | 17,764 |
Receivable from third parties | 27,249 | 674 |
Other assets | (33,801) | (8,563) |
Accounts payable and other accrued liabilities | 20,698 | (3,954) |
Net cash (used in) provided by operating activities | (50,201) | (100,012) |
Cash Flows From Investing Activities: | ||
Origination of loans | (661,053) | (328,509) |
Purchase of loans | (2,316) | (52,067) |
Origination of Paycheck Protection Program loans | (1,248,895) | |
Purchase of Paycheck Protection Program loans | (3,866) | |
Proceeds from disposition and principal payment of Paycheck Protection Program loans | 40,409 | |
Purchase of mortgage backed securities, at fair value | (1,576) | |
Funding of unconsolidated joint ventures | (4,669) | (1,644) |
Proceeds on unconsolidated joint venture in excess of earnings recognized | 8,221 | 3,578 |
Proceeds from disposition and principal payment of loans | 192,763 | 222,868 |
Proceeds from sale and principal payment of mortgage backed securities, at fair value | 1,417,871 | 5,031 |
Proceeds from sale of real estate | 1,077 | 7,851 |
Cash acquired in connection with the ORM Merger | 49,917 | |
Net cash (used in) provided by investing activities | (210,541) | (144,468) |
Cash Flows From Financing Activities: | ||
Proceeds from secured borrowings | 3,597,363 | 1,866,732 |
Payment of secured borrowings | (4,609,399) | (1,356,573) |
Proceeds from the Paycheck Protection Program Liquidity Facility borrowings | 1,095,900 | |
Payment of Paycheck Protection Program Liquidity Facility borrowings | (39,640) | |
Proceeds from issuance of securitized debt obligations of consolidated VIEs | 510,955 | |
Payment of securitized debt obligations of consolidated VIEs | (201,310) | (125,468) |
Payment of guaranteed loan financing | (19,320) | (34,672) |
Payment of deferred financing costs | (12,337) | (1,602) |
Equity issuance, net of offering costs | 13,372 | |
Dividend payments | (34,699) | (21,302) |
Proceeds from corporate debt | 195,768 | |
Payments of corporate debt | (50,000) | |
Shares repurchase program | (987) | |
Net cash provided by (used in) provided by financing activities | 432,294 | 340,487 |
Net increase (decrease) in cash, cash equivalents, and restricted cash | 171,552 | 96,007 |
Cash, cash equivalents, and restricted cash at beginning of period | 200,482 | 127,980 |
Cash, cash equivalents, and restricted cash at end of period | 372,034 | 223,987 |
Supplemental disclosure of operating cash flow | ||
Cash paid for interest | 47,536 | 44,576 |
Stock-based compensation | 522 | 894 |
Supplemental disclosure of non-cash investing activities | ||
Loans transferred from loans, held for sale, at fair value to loans, net | 509 | |
Loans transferred from loans, net to loans, held for sale, at fair value | 1,571 | |
Loans transferred to real estate owned | 1,276 | |
Supplemental disclosure of non-cash financing activities | ||
Common stock issued in connection with merger transactions | 239,537 | |
Share-based component of incentive fees | 53 | |
Cash and restricted cash reconciliation | ||
Cash and cash equivalents | 308,428 | 122,265 |
Restricted cash | 62,961 | 93,164 |
Cash, cash equivalents, and restricted cash in Assets of consolidated VIEs | 645 | 8,558 |
Cash, cash equivalents, and restricted cash at end of period | $ 372,034 | $ 223,987 |
Organization
Organization | 3 Months Ended |
Mar. 31, 2021 | |
Organization | |
Organization | READY CAPITAL CORPORATION NOTES TO the CONS OLIDATED FINANCIAL STATEMENTS (UNAUDITED) Note 1. Organization Ready Capital Corporation (the “Company” or “Ready Capital” and together with its subsidiaries “we”, “us” and “our”), is a Maryland corporation. The Company is a multi-strategy real estate finance company that originates, acquires, finances and services small to medium balance commercial (“SBC”) loans, Small Business Administration (“SBA”) loans, residential mortgage loans, and to a lesser extent, mortgage backed securities (“MBS”) collateralized primarily by SBC loans, or other real estate-related investments. SBC loans represent a special category of commercial loans, sharing both commercial and residential loan characteristics. SBC loans are generally secured by first mortgages on commercial properties, but because SBC loans are also often accompanied by collateralization of personal assets and subordinate lien positions, aspects of residential mortgage credit analysis are utilized in the underwriting process. The Company is externally managed and advised by Waterfall Asset Management, LLC (“Waterfall” or the “Manager”), an investment advisor registered with the United States Securities and Exchange Commission under the Investment Advisors Act of 1940, as amended. Sutherland Partners, LP (the “Operating Partnership”) holds substantially all of our assets and conducts substantially all of our business. As of March 31, 2021 and December 31, 2020, the Company owned approximately 98.4% and 97.9% 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. The Company reports its results of operations through the following four business segments: i) Acquisitions, ii) SBC Originations, iii) SBA Originations, Acquisitions and Servicing, and iv) Residential Mortgage Banking, with the remaining amounts recorded in Corporate- Other. The Company’s acquisition and origination platforms consist of the following four operating segments: ● Acquisitions . We acquire performing and non-performing SBC loans as part of our business strategy. We hold performing SBC loans to term, and we seek to maximize the value of the non-performing SBC loans acquired by us through borrower-based resolution strategies. We typically acquire non-performing loans at a discount to their unpaid principal balance (“UPB”) when we believe that resolution of the loans will provide attractive risk-adjusted returns. We also acquire purchased future receivables through our Knight Capital platform (“Knight Capital”). Knight Capital, which we acquired in 2019, is a technology-driven platform that provides working capital to small and medium sized businesses across the U.S. ● SBC Originations . We originate SBC loans secured by stabilized or transitional investor properties using multiple loan origination channels through our wholly-owned subsidiary, ReadyCap Commercial, LLC (“ReadyCap Commercial”). These originated loans are generally held-for-investment or placed into securitization structures. Additionally, as part of this segment, we originate and service multi-family loan products under the Federal Home Loan Mortgage Corporation’s Small Balance Loan Program (“Freddie Mac” and the “Freddie Mac program”). These originated loans are held for sale, then sold to Freddie Mac. ● SBA Originations, Acquisitions and Servicing . We acquire, originate and service owner-occupied loans guaranteed by the SBA under its Section 7(a) loan program (the “SBA Section 7(a) Program”) through our wholly-owned subsidiary, ReadyCap Lending, LLC (“ReadyCap Lending”). We hold an SBA license as one of only 14 non-bank Small Business Lending Companies (“SBLCs”) and have been granted preferred lender status by the SBA. These originated loans are either held-for-investment, placed into securitization structures, or sold. ● Residential Mortgage Banking . We operate our residential mortgage loan origination segment through our wholly-owned subsidiary, GMFS, LLC ("GMFS"). GMFS originates residential mortgage loans eligible to be purchased, guaranteed or insured by the Federal National Mortgage Association (“Fannie Mae”), Freddie Mac, Federal Housing Administration (“FHA”), U.S. Department of Agriculture (“USDA”) and U.S. Department of Veterans Affairs (“VA”) through retail, correspondent and broker channels. These originated loans are then sold to third parties, primarily agency lending programs. On March 19, 2021, the Company completed the acquisition of Anworth Mortgage Asset Corporation (“ANH”), through a merger of ANH with and into a wholly-owned subsidiary of the Company, in exchange for approximately 16.8 million shares of the Company’s common stock and approximately $60.6 million in cash (“ANH Merger”). In accordance with the Agreement and Plan of Merger, dated as of December 6, 2020 (the "Merger Agreement"), by and among the Company, RC Merger Subsidiary, LLC and ANH, the number of shares of the Company’s common stock issued was based on an exchange ratio of 0.1688 per share plus $0.61 in cash. The total purchase price for the merger of $417.9 million consists of the Company’s common stock issued in exchange for shares of ANH common stock and cash paid in lieu of fractional shares of the Company’s common stock, which was based on a price of $14.28 of the Company’s common stock on the acquisition date, and $0.61 in cash per share. In addition, the Company issued 1,919,378 shares of newly designated 8.625% Series B Cumulative Preferred Stock, par value $0.0001 per share (the “Series B Preferred Stock”), 779,743 shares of newly designated 6.25% Series C Cumulative Convertible Preferred Stock, par value $0.0001 per share (the “Series C Preferred Stock”), and 2,010,278 shares of newly designated 7.625% Series D Cumulative Redeemable Preferred Stock, par value $0.0001 per share (the “Series D Preferred Stock”), in exchange for all shares of ANH’s 8.625% Series A Cumulative Preferred Stock, 6.25% Series B Cumulative Convertible Preferred Stock and 7.625% Series C Cumulative Redeemable preferred stock outstanding prior to the effective time of the ANH Merger. Upon the closing of the transaction and after giving effect to the issuance of shares of common stock as consideration in the merger, the Company’s historical stockholders owned approximately 77% of the combined Company’s outstanding common stock, while historical ANH stockholders owned approximately 23% of the combined Company’s outstanding common stock. Refer to Note 5 for assets acquired and liabilities assumed in the merger. The acquisition of ANH increased the Company’s equity capitalization, supported continued growth of the Company’s platform and execution of the Company’s strategy, and provided the Company with improved scale, liquidity and capital alternatives, including additional borrowing capacity. Also, the stockholder base resulting from the acquisition of ANH enhanced the trading volume and liquidity for our stockholders. In addition, part of our strategy in acquiring ANH was to manage the liquidation and runoff of certain assets within the ANH portfolio and repay certain indebtedness on the ANH portfolio following the completion of the ANH Merger, and to redeploy the capital into opportunities in our core SBC strategies and other assets we expect will generate attractive risk-adjusted returns and long-term earnings accretion. Consistent with this strategy, at March 31, 2021, we have liquidated approximately $1.4 billion of assets within the ANH portfolio, primarily consisting of Agency RMBS, and repaid approximately $1.3 billion of indebtedness on the portfolio. In addition, concurrently with entering into the Merger Agreement, we, the Operating Partnership and the Manager entered into the First Amendment to the Amended and Restated Management Agreement (the “Amendment”), pursuant to which, upon the closing of the ANH Merger, the Manager’s base management fee will be reduced by $1,000,000 per quarter for each of the first full four quarters following the effective time of the ANH Merger (the “Temporary Fee Reduction”). Other than the Temporary Fee Reduction set forth in the Amendment, the terms of the Management Agreement remain the same. 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 at least 90% of its taxable income in the form of distributions to shareholders. |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2021 | |
Basis of Presentation | |
Basis of Presentation | Note 2. Basis of Presentation The unaudited interim consolidated financial statements herein referred to as the “consolidated financial statements” as of March 31, 2021 and December 31, 2020 and for the three months ended March 31, 2021 and 2020 and 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 U.S. Securities and Exchange Commission (“SEC”). The accompanying interim 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 the 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 our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 filed with the SEC. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2021 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | Note 3. Summary of Significant Accounting Policies Use of estimates The preparation of the Company’s consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of income and expenses during the reporting period. Actual results could materially differ from those estimates. 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 VIEs in which we are the primary beneficiary. The consolidated financial statements are prepared in accordance with ASC 810, Consolidations. 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, or 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. Recognition of interest income is suspended when any loans are placed on non-accrual status. Generally, all classes of loans are placed on non-accrual status when principal or interest has been delinquent for 90 days or when full collection is determined to be not probable. Interest income accrued, but not collected, at the date loans are placed on non-accrual status is reversed and subsequently recognized only to the extent it is received in cash or until the loan qualifies for return to accrual status. However, where there is doubt regarding the ultimate collectability of loan principal, all cash received is applied to reduce the carrying value of such loans. Loans are restored to accrual status only when contractually current and the collection of future payments is reasonably assured. Loans, held at fair value. Allowance for credit losses. On January 1, 2020, the Company adopted ASU 2016-13, Financial Instruments-Credit Losses In connection with the Company’s adoption of ASU 2016-13 on January 1, 2020, the Company implemented new processes including the utilization of loan loss forecasting models, updates to the Company’s reserve policy documentation, changes to internal reporting processes and related internal controls. The Company has implemented loan loss forecasting models for estimating expected life-time credit losses, at the individual loan level, for its loan portfolio. The CECL forecasting methods used by the Company include (i) a probability of default and loss given default method using underlying third-party CMBS/CRE loan database with historical loan losses from 1998 to 2020 and (ii) probability weighted expected cash flow method, depending on the type of loan and the availability of relevant historical market loan loss data. The Company might use other acceptable alternative approaches in the future depending on, among other factors, the type of loan, underlying collateral, and availability of relevant historical market loan loss data. Significant inputs to the Company’s forecasting methods include (i) key loan-specific inputs such as LTV, vintage year, loan-term, underlying property type, occupancy, geographic location, and others, and (ii) a macro-economic forecast, including unemployment rates, interest rates, commercial real estate prices, and others. These estimates may change in future periods based on available future macro-economic data and might result in a material change in the Company’s future estimates of expected credit losses for its loan portfolio. In certain instances, the Company considers relevant loan-specific qualitative factors to certain loans to estimate its CECL expected credit losses. The Company considers loan investments that are both (i) expected to be substantially repaid through the operation or sale of the underlying collateral, and (ii) for which the borrower is experiencing financial difficulty, to be “collateral-dependent” loans. For such loans that the Company determines that foreclosure of the collateral is probable, the Company measures the expected losses based on the difference between the fair value of the collateral 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 we have 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. Our 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. Troubled debt restructurings. Generally, all loans modified in a TDR are placed or remain on non-accrual status at the time of the restructuring. However, certain accruing loans modified in a TDR that are current at the time of restructuring may remain on accrual status if payment in full under the restructured terms is expected. Additionally, based on issued regulatory guidance provided by federal and state regulatory agencies, a loan modification is not considered TDR if: (1) made in response to the COVID-19 pandemic; (2) the borrower was current on payments at the time the modification program was implemented; (3) the modification was short-term (e.g., six months). Loans, held for sale, at fair value Loans, held for sale, at fair value are loans that are expected to be sold to third parties in the near term. Interest is recognized as interest income in the consolidated statements of income when earned and deemed collectible. For loans originated by our SBC originations and SBA originations segments, changes in fair value are recurring and are reported as net unrealized gain (loss) in the consolidated statements of income. For originated SBA loans, the guaranteed portion is held for sale, at fair value. For loans originated by GMFS, changes in fair value are reported as residential mortgage banking activities in the consolidated statements of income. Paycheck Protection Program loans Paycheck Protection Program (“PPP”) loans originated in response to the COVID-19 pandemic are described in Note 20. The Company has elected the fair value option for the loans originated by the Company for the first round of the program. Interest is recognized as interest income in the consolidated statements of income when earned and deemed collectible. Changes in fair value are recurring and are reported as net unrealized gain (loss) in the consolidated statements of income, although the PPP includes a 100% guarantee from the federal government and principal forgiveness for borrowers if the funds were used for defined purposes. 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 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 along with expected prepayments from loan forgiveness by the federal government. Mortgage backed securities, at fair value The Company accounts for MBS as trading securities and carries them at fair value under ASC 320, Investments-Debt and Equity Securities. MBS are recorded at fair value as determined by market prices provided by independent broker dealers or other independent valuation service providers. The fair values assigned to these investments are based upon available information and may not reflect amounts that may be realized. We generally intend to hold our investment in MBS to generate interest income; however, we have and may continue to sell certain of our investment securities as part of the overall management of our assets and liabilities and operating our business. Loans eligible for repurchase from Ginnie Mae When the Company has the unilateral right to repurchase Ginnie Mae pool loans it has previously sold (generally loans that are more than 90 days past due), the Company then records the right to repurchase the loan as an asset and liability in its consolidated balance sheets. Such amounts reflect the unpaid principal balance of the loans. Derivative instruments, at fair value Subject to maintaining our qualification as a REIT for U.S. federal income tax purposes, we utilize derivative financial instruments, currently comprised of credit default swaps (“CDSs”), interest rate swaps, TBA agency securities and interest rate lock commitments (“IRLCs”) as part of our risk management. The Company accounts for derivative instruments under ASC 815, Derivatives and Hedges Interest rate swap agreements. TBA Agency Securities IRLC. FX forwards. CDS. Hedge accounting. To qualify as an accounting hedge under the hedge accounting rules (versus an economic hedge where hedge accounting is not applied), a hedging relationship must be highly effective in offsetting the risk designated as being hedged. We use cash flow hedges to hedge the exposure to variability in cash flows from forecasted transactions, including the anticipated issuance of securitized debt obligations. ASC 815 requires that a forecasted transaction be identified as either: 1) a single transaction, or 2) a group of individual transactions that share the same risk exposures for which they are designated as being hedged. Hedges of forecasted transactions are considered cash flow hedges since the price is not fixed, hence involve variability of cash flows. For qualifying cash flow hedges, the change in the fair value of the derivative (the hedging instrument) is recorded in other comprehensive income (loss) ("OCI"), and is reclassified out of OCI and into the consolidated statements of income when the hedged cash flows affect earnings. These amounts are recognized consistent with the classification of the hedged item, primarily interest expense (for hedges of interest rate risk). If the hedge relationship is terminated, then the value of the derivative recorded in accumulated other comprehensive income (loss) ("AOCI") is recognized in earnings when the cash flows that were hedged affect earnings, so long as the forecasted transaction remains probable of occurring. For hedge relationships that are discontinued because a forecasted transaction is probable of not occurring according to the original hedge forecast (including an additional two-month window), any related derivative values recorded in AOCI are immediately recognized in earnings. Hedge accounting is generally terminated at the debt issuance date because we are no longer exposed to cash flow variability subsequent to issuance. Accumulated amounts recorded in AOCI at that date are then released to earnings in future periods to reflect the difference in 1) the fixed rates economically locked in at the inception of the hedge and 2) the actual fixed rates established in the debt instrument at issuance. Because of the effects of the time value of money, the actual interest expense reported in earnings will not equal the effective yield locked in at hedge inception multiplied by the par value. Similarly, this hedging strategy does not actually fix the interest payments associated with the forecasted debt issuance. Servicing rights Servicing rights initially represent the fair value of expected future cash flows for performing servicing activities for others. The fair value considers estimated future servicing fees and ancillary revenue, offset by estimated costs to service the loans, and generally declines over time as net servicing cash flows are received, effectively amortizing the servicing right asset against contractual servicing and ancillary fee income. Servicing rights are recognized upon sale of loans, including a securitization of loans accounted for as a sale in accordance with U.S. GAAP, if servicing is retained. For servicing rights, gains related to servicing rights retained is included in net realized gain (loss) in the consolidated statements of income. For residential mortgage servicing rights, gains on servicing rights retained upon sale of a loan are included in residential mortgage banking activities in the consolidated statements of income. The Company treats its servicing rights and residential mortgage servicing rights as two separate classes of servicing assets based on the class of the underlying mortgages and it treats these assets as two separate pools for risk management purposes. Servicing rights relating to the Company’s servicing of loans guaranteed by the SBA under its Section 7(a) loan program and servicing rights related to the Freddie Mac program are accounted for under ASC 860, Transfers and Servicing, Financial Instruments. Servicing rights – SBA and Freddie Mac. For purposes of testing our servicing rights for impairment, we first determine whether facts and circumstances exist that would suggest the carrying value of the servicing asset is not recoverable. If so, we then compare the net present value of servicing cash flow with its carrying value. The estimated net present value of servicing cash flows is determined using discounted cash flow modeling techniques, which require management to make estimates regarding future net servicing cash flows, taking into consideration historical and forecasted loan prepayment rates, delinquency rates and anticipated maturity defaults. If the carrying value of the servicing rights exceeds the net present value of servicing cash flows, the servicing rights are considered impaired and an impairment loss is recognized in earnings for the amount by which carrying value exceeds the net present value of servicing cash flows. We estimate 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 our 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. We also consider other factors that can impact the value of the servicing rights, such as surety provider termination clauses and servicer terminations that could result if we failed to materially comply with the covenants or conditions of our servicing agreements and did not remedy the failure. Since many factors can affect the estimate of the fair value of servicing rights, we regularly evaluate the major assumptions and modeling techniques used in our estimate and review these assumptions against market comparables, if available. We monitor the actual performance of our servicing rights by regularly comparing actual cash flow, credit, and prepayment experience to modeled estimates. Servicing rights - Residential (carried at fair value). The Company has elected to account for its portfolio of residential mortgage servicing rights (“MSRs”) at fair value. For these assets, the Company uses a third-party vendor to assist management in estimating the fair value. The third-party vendor uses a discounted cash flow approach which consists of projecting servicing cash flows discounted at a rate that management believes market participants would use in their determinations of fair value. The key assumptions used in the estimation of the fair value of MSRs include prepayment rates, discount rates, default rates, and cost of servicing rates. Residential MSRs are classified as Level 3 in the fair value hierarchy. Real estate, held for sale Real estate, 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, 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, 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 Purchased future receivables Through Knight Capital, 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 (“ACH”) transactions. Revenues from purchased future receivables are realized when funds are received under each contract. The allocation of the amount received is determined by apportioning the amount received based upon the factor (discount) rate of the business's contract. Management believes that this methodology best reflects the effective interest method. The Company has established an allowance for doubtful purchased future receivables. An increase in the allowance for doubtful purchased future receivables results in a charge to income and is reduced when purchased future receivables are charged-off. Purchased future receivables are charged-off after 90 days past due. Management believes that the allowance reflects the risk elements and is adequate to absorb losses inherent in the portfolio. Although management has performed this evaluation, future adjustments may be necessary based on changes in economic conditions or other factors. Intangible assets The Company accounts for intangible assets under ASC 350, Intangibles- Goodwill and Other Goodwill The Company recorded goodwill in connection with the Company’s acquisition of Knight Capital and the ANH Merger. Goodwill is not amortized, but rather, is tested for impairment annually or more frequently if events or changes in circumstances indicate potential impairment. Goodwill as of March 31, 2021, represents the excess of the consideration transferred over the fair value of net assets acquired in connection with the acquisition of Knight Capital and the ANH Merger. In testing goodwill for impairment, the Company follows ASC 350, Intangibles- Goodwill and Other, 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. Deferred financing costs Costs incurred in connection with our secured borrowings are accounted for under ASC 340, Other Assets and Deferred Costs Due from servicers The loan-servicing activities of the Company’s acquisitions and SBC originations reportable segments are performed primarily by third-party servicers. SBA loans originated by and held at RCL are internally serviced. Residential mortgage loans originated by and held at GMFS are both serviced by third-party servicers and internally serviced. The Company’s servicers hold substantially all of the cash owned by the Company related to loan servicing activities. These amounts include principal and interest payments made by borrowers, net of advances and servicing fees. Cash is generally received within thirty days of recording the receivable. The Company is subject to credit risk to the extent any servicer with whom the Company conducts business is unable to deliver cash balances or process loan-related transactions on the Company’s behalf. The Company monitors the financial condition of the servicers with whom the Company conducts business and believes the likelihood of loss under the aforementioned circumstances is remote. Secured borrowings Secured borrowings include borrowings under credit facilities and other financing agreements and repurchase agreements. Borrowings under credit facilities and other financing agreements. Debt. Borrowings under repurchase agreements. Transfers and Servicing Paycheck Protection Program Liquidity Facility borrowings The Company accounts for borrowings under the Paycheck Protection Program Liquidity Facility (“PPPLF”) borrowings under ASC 470, Debt Securitized debt obligations of consolidated VIEs, net Since 2011, we have engaged in several securitization transactions, which the Company accounts for under ASC 810. Securitization involves transferring assets to an SPE, 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 SPE includes the issuance of senior securities to third parties, which are shown as securitized debt obligations of consolidated VIEs in the consolidated balance sheets. Debt issuance costs related to securitizations are presented as a direct deduction from the carrying value of the related debt liability. Debt issuance costs are amortized using the effective interest method and are included in interest expense in the consolidated statements of income. Convertible note, net ASC 470 requires the liability and equity components of convertible debt instruments that may be settled in cash upon conversion to be separately accounted for in a manner that reflects the issuer’s nonconvertible debt borrowing rate. ASC 470-20 requires that the initial proceeds from the sale of these notes be allocated between a liability component and an equity component in a manner that reflects interest expense at the interest rate of similar nonconvertible debt that could have been issued by the Company at such time. We measured the estimated fair value of the debt component of our convertible notes as of the issuance date based on our nonconvertible debt borrowing rate. The equity components of the convertible senior notes have been reflected within additional paid-in capital in our consolidated balance sheet, and the resulting debt discount is amortized over the period during which the convertible notes are expected to be outstanding (through the maturity date) as additional non-cash interest expense. Upon repurchase of convertible debt instruments, ASC 470-20 requires the issuer to allocate total settlement consideration, inclusive of transaction costs, amongst the liability and equity components of the instrument based on the fair value of the liability component immediately prior to repurchase. The difference between the settlement consideration allocated to the liability component and the net carrying value of the liability component, including unamortized debt issuance costs, would be recognized as gain (loss) on extinguishment of debt in our consolidated statements of operations. The remaining settlement consideration allocated to the equity component would be recognized as a reduction of additional paid-in capital in our consolidated balance sheets. Senior secured notes, net The Company accounts for secured debt offerings under ASC 470 . Corporate debt, net The Company accounts for corporate debt offerings under ASC 470. The Company’s corporate debt is presented net of debt issuance costs. Interest paid and accrued in connection with corporate debt is recorded as interest expense in the consolidated statements of income. Guaranteed loan financing Certain partial loan sales do not qualify for sale accounting under ASC 860 because these sales do not meet the definition of a “participating interest,” as defined in the guidance, in order for sale treatment to be allowed. Participations or other partial loan sales which do not meet the definition of a participating interest remain as an investment in the consolidated balance sheets and the proceeds from the portion sold is recorded as guaranteed loan financing in the liabilities section of the consolidated balance sheets. For these partial loan sales, the interest earned on the entire loan balance is recorded as interest income and the interest earned by the buyer in the partial loan sale is recorded within interest expense in the accompanying consolidated statements of income. Repair and denial reserve The repair and denial reserve represents the potential liability to the SBA in the event that we are required to make the SBA whole for reimbursement of the guaranteed portion of SBA loans. We 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 we are the primary beneficiary of a VIE, we consider both qualitative and quantitative factors regarding the nature, size and form of our involvement with the VIE, such as our role establishing the VIE and our ongoing rights and responsibilities, the design of the VIE, our economic interests, servicing fees and servicing responsibilities, and other factors. We perform ongoing reassessments to evaluate whether changes in the entity’s capital structure or changes in the nature of our involvement with the entity result in a change to the VIE designation or a change to our consolidation conclusion. Non-controlling interests Non-controlling interests are presented on the consolidated balance sheets and the consolidated statements of income and represent direct investment in the Operating Partnership by Sutherland OP Holdings II, Ltd., which is managed by our Manager, and third parties. Fair value option ASC 825, Financial Instruments We have elected the fair value option for certain loans held-for-sale originated by the Company that we intend to sell in the near term. The fair value elections for loans, held for sale, at fair value originated by the Company were made due to the short-term nature of these instruments. We have also elected the fair value option for loans originated in round 1 of the Paycheck Protection Program. We have elected the fair value option for loans held-for-sale originated by GMFS that the Company intends to sell in the near term. We have elected the fair value option for certain residential mortgage servicing rights acquired as part of the merger transaction. Share repurchase program The Company accounts for repurchases of its common stock as a reduction in additional paid in capital. The amounts recognized represent the amount paid to repurchase these shares and are categorized on the balance sheet and changes in equity as a reduction in additional paid in capital. Earnings per share We present both basic and diluted earnings per share (“EPS”) amounts in our consolidated financial statements. Basic EPS excludes dilution and is computed by dividing income available to common stockholders by the weighted-average number of shares of common stock outstanding for the period. Diluted EPS reflects the maximum potential dilution that could occur from our share-based compensation, consisting of unvested restricted stock units (“RSUs”), unvested restricted stock awards (“RSAs”), performance-based equity awards, as well as “in-the-money” conversion options associated with our outstanding convertible senior notes and convertible preferred stock. 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 and unvested RSAs 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 met |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2021 | |
Recent Accounting Pronouncements | |
Recent Accounting Pronouncements | Note 4. Recent accounting pronouncements Financial Accounting Standards Board (“FASB”) Standards Standard Summary of guidance Effects on financial statements ASU 2020-4, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting Provides optional expedients and exceptions to GAAP requirements for modifications on debt instruments, leases, derivatives, and other contracts, related to the expected market transition from LIBOR, and certain other floating rate benchmark indices, or collectively, IBORs, to alternative reference rates. The Company has loan, security, and debt agreements that incorporate LIBOR as a reference interest rate. It is difficult to predict what effect, if any, the phase-out of LIBOR and the use of alternative benchmarks may have on our business or on the overall financial markets. Issued March 2020 Generally considers contract modifications related to reference rate reform to be an event that does not require contract remeasurement at the modification date nor a reassessment of a previous accounting determination. The Company has not adopted any of the optional expedients or exceptions through March 31, 2021, but will continue to evaluate the possible adoption of any such expedients or exceptions. Guidance is optional and may be elected over time, through December 31, 2022 using a prospective application on all eligible contract modifications. ASU 2020-6, Debt – Debt with Conversion and other Options and Derivatives and Hedging-Contracts in Entity’s Own Equity (Topic 470-20) Addresses the complexities in accounting for certain financial instruments with a debt and equity component. The number of accounting models for convertible notes will be reduced and entities that issue convertible debt will be required to use the if-converted method for the computation of diluted “Earnings per share” under ASC 260. The Company is currently assessing the impact this guidance will have on our consolidated financial statements. Issued August 2020 Effective for fiscal years beginning after December 15, 2021 and may be adopted through either a modified retrospective method of transition or a fully retrospective method of transition. |
Business Combinations
Business Combinations | 3 Months Ended |
Mar. 31, 2021 | |
Business Combinations | |
Business Combinations | Note 5. Business Combinations ANH Merger On March 19, 2021, the Company completed the ANH Merger. See Note 1 for more information about the ANH Merger. The consideration transferred was allocated to the assets acquired and liabilities assumed based on their respective fair values. The methodologies used and key assumptions made to estimate the fair value of the assets acquired and liabilities assumed are primarily based on future cash flows and discount rates. The following table summarizes the fair value of assets acquired and liabilities assumed from the merger: (In Thousands) March 19, 2021 Assets Cash and cash equivalents $ 110,545 Mortgage backed, securities, at fair value 2,010,504 Loans, held for sale, at fair value 102,798 Real estate, held for sale 26,107 Accrued interest 8,453 Other assets 38,707 Total assets acquired $ 2,297,114 Liabilities Secured borrowings 1,784,047 Corporate debt, net 36,250 Derivative instruments, at fair value 60,719 Accounts payable and other accrued liabilities 4,811 Total liabilities assumed $ 1,885,827 Net assets acquired $ 411,287 For acquired loan receivables, the gross contractual unpaid principal acquired is $98.3 million and we expect to collect all contractual amounts. The aggregate consideration transferred, net assets acquired, and the related goodwill was as follows: Total consideration transferred (in thousands, except per share data) Fair value of net assets acquired $ 411,287 ANH shares outstanding at March 19, 2021 99,374 Exchange ratio x 0.1688 Shares issued 16,774 Market price as of March 19, 2021 $ 14.28 Consideration transferred based on value of common shares issued $ 239,537 Cash paid per share $ 0.61 Cash paid based on outstanding ANH shares $ 60,626 Preferred Stock, Series B Issued 1,919,378 Market price as of March 19, 2021 $ 25.00 Consideration transferred based on value of Preferred Stock, Series B issued $ 47,984 Preferred Stock, Series C Issued 779,743 Market price as of March 19, 2021 $ 25.00 Consideration transferred based on value of Preferred Stock, Series C issued $ 19,494 Preferred Stock, Series D Issued 2,010,278 Market price as of March 19, 2021 $ 25.00 Consideration transferred based on value of Preferred Stock, Series D shares issued $ 50,257 Total consideration transferred $ 417,898 Goodwill $ 6,611 Acquisition-related costs directly attributable to the ANH Merger, including legal, accounting, valuation, and other professional or consulting fees, totaling $6.3 million for the three months ended March 31, 2021, were expensed as incurred and are reflected separately within the consolidated statements of income. 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 must occur within one year of the acquisition date. Because the measurement period is still open, certain fair value estimates may change once all information necessary to make a final fair value assessment has been received. As of March 31, 2021, the goodwill recorded in the ANH Merger has not been allocated to any reporting unit because the benefitting reportable segment has yet to be determined. The following pro-forma income and earnings (unaudited) of the combined company are presented as if the merger had occurred on January 1, 2021 and January 1, 2020: For the three months ended For the three months ended (In Thousands) March 31, 2021 March 31, 2020 Selected Financial Data Interest income $ 85,120 $ 105,314 Interest expense (54,289) (70,317) Recovery of (provision for) loan losses 8 (39,860) Non-interest income 91,690 19,463 Non-interest expense (79,584) (296,474) Income (loss) before provision for income taxes 42,945 (281,874) Income tax benefit (expense) (8,681) 7,937 Net income (loss) $ 34,264 $ (273,937) Non-recurring pro-forma transaction costs directly attributable to the merger were $6.3 million for the three months ended March 31, 2021, 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 merger. |
Loans and Allowance for Credit
Loans and Allowance for Credit Losses | 3 Months Ended |
Mar. 31, 2021 | |
Loans and Allowance for Credit Losses | |
Loans and Allowance for Credit Losses | Note 6. Loans and allowance for credit losses The accounting for a loan depends on management’s strategy for the loan, and on whether the loan was credit-deteriorated at the date of acquisition. The Company accounts for loans based on the following loan program categories: ● Originated or purchased loans held-for-investment – originated transitional loans, originated conventional SBC and SBA loans, or acquired loans with no signs of credit deterioration at time of purchase ● Loans at fair value – certain originated conventional SBC loans for which the Company has elected the fair value option ● Loans, held-for-sale, at fair value – originated or acquired that we intend to sell in the near term ● Paycheck Protection Program loans, held at fair value – SBA loans originated in round 1 of the PPP program for which the Company has elected the fair value option ● Paycheck Protection Program loans, held-for-investment - SBA loans originated in round 2 of the PPP program Loan portfolio The following table summarizes the classification, UPB, and carrying value of loans held by the Company including loans of consolidated VIEs: March 31, 2021 December 31, 2020 (In Thousands) Carrying Value UPB Carrying Value UPB Loans Originated Transitional loans $ 522,747 $ 525,615 $ 530,671 $ 535,963 Originated SBA 7(a) loans 309,487 314,182 310,537 314,938 Acquired SBA 7(a) loans 188,462 196,983 201,066 210,115 Originated SBC loans 167,772 161,763 173,190 167,470 Acquired loans 439,936 444,742 351,381 352,546 Originated SBC loans, at fair value 13,618 13,881 13,795 14,088 Originated Residential Agency loans 3,138 3,083 3,208 3,208 Total Loans, before allowance for loan losses $ 1,645,160 $ 1,660,249 $ 1,583,848 $ 1,598,328 Allowance for loan losses $ (33,334) $ — $ (33,224) $ — Total Loans, net $ 1,611,826 $ 1,660,249 $ 1,550,624 $ 1,598,328 Loans in consolidated VIEs Originated SBC loans $ 877,461 $ 873,517 $ 889,566 $ 885,235 Originated Transitional loans 1,352,642 1,363,543 788,403 792,432 Acquired loans 552,582 553,122 697,567 701,133 Originated SBA 7(a) loans 67,214 70,902 68,625 72,451 Acquired SBA 7(a) loans 40,253 49,795 42,154 52,456 Total Loans, in consolidated VIEs, before allowance for loan losses $ 2,890,152 $ 2,910,879 $ 2,486,315 $ 2,503,707 Allowance for loan losses on loans in consolidated VIEs $ (12,315) $ — $ (13,508) $ — Total Loans, net, in consolidated VIEs $ 2,877,837 $ 2,910,879 $ 2,472,807 $ 2,503,707 Loans, held for sale, at fair value Originated Residential Agency loans $ 310,892 $ 305,487 $ 260,447 $ 249,852 Originated Freddie Mac loans 24,707 24,260 51,248 50,408 Originated SBC loans 23,661 23,822 17,850 17,850 Originated SBA 7(a) loans 14,571 13,261 10,232 9,436 Acquired loans 99,247 94,898 511 499 Total Loans, held for sale, at fair value $ 473,078 $ 461,728 $ 340,288 $ 328,045 Total Loans, net and Loans, held for sale, at fair value $ 4,962,741 $ 5,032,856 $ 4,363,719 $ 4,430,080 Paycheck Protection Program loans Paycheck Protection Program loans, held-for-investment $ 1,254,420 $ 1,322,188 $ — $ — Paycheck Protection Program loans, held at fair value 38,388 38,388 74,931 74,931 Total Paycheck Protection Program loans $ 1,292,808 $ 1,360,576 $ 74,931 $ 74,931 Total Loan portfolio $ 6,255,549 $ 6,393,432 $ 4,438,650 $ 4,505,011 Loan vintage and credit quality indicators The Company monitors credit quality of our loan portfolio based on primary credit quality indicators. Delinquency rates are a primary credit quality indicator for our types of loans. Loans that are more than 30 days past due provide an early warning of borrowers who may be experiencing financial difficulties and/or who may be unable or unwilling to repay the loan. As the loan continues to age, it becomes clearer that the borrower is likely either unable or unwilling to pay. The following tables summarize the classification, UPB and carrying value of loans by year of origination: Carrying Value by Year of Origination (In Thousands) UPB 2021 2020 2019 2018 2017 Pre 2017 Total As of March 31, 2021 Loans (1) (2) Originated Transitional loans $ 1,889,158 $ 599,301 $ 397,349 $ 570,278 $ 277,650 $ 13,292 $ 15,294 $ 1,873,164 Originated SBC loans 1,035,280 — 62,606 479,979 235,716 105,628 155,608 1,039,537 Acquired loans 997,864 — 21,042 40,618 41,301 37,507 849,833 990,301 Originated SBA 7(a) loans 385,084 6,599 47,218 97,040 129,904 66,195 25,332 372,288 Acquired SBA 7(a) loans 246,778 — 129 19,485 14,315 279 190,812 225,020 Originated SBC loans, at fair value 13,881 — — — — 1,597 12,021 13,618 Originated Residential Agency loans 3,083 935 659 644 702 — 198 3,138 Total Loans, before general allowance for loan losses $ 4,571,128 $ 606,835 $ 529,003 $ 1,208,044 $ 699,588 $ 224,498 $ 1,249,098 $ 4,517,066 General allowance for loan losses $ (27,403) Total Loans, net $ 4,489,663 (1) Loan balances include specific allowance for loan losses of $18.2 million (2) Includes Loans, net in consolidated VIEs Carrying Value by Year of Origination (In Thousands) UPB 2020 2019 2018 2017 2016 Pre 2016 Total As of December 31, 2020 Loans (1) (2) Originated Transitional loans $ 1,328,395 $ 385,183 $ 583,593 $ 306,971 $ 23,783 $ 18,480 $ 1,064 $ 1,319,074 Originated SBC loans 1,052,705 66,715 486,033 237,313 110,354 43,696 112,444 1,056,555 Acquired loans 1,053,679 21,414 40,572 42,167 38,649 19,533 883,774 1,046,109 Originated SBA 7(a) loans 387,389 47,939 98,568 133,812 68,375 22,056 4,041 374,791 Acquired SBA 7(a) loans 262,571 139 19,658 14,636 283 19 204,703 239,438 Originated SBC loans, at fair value 14,088 — — — 1,598 6,442 5,755 13,795 Originated Residential Agency loans 3,208 1,571 645 705 — 88 199 3,208 Total Loans, before general allowance for loan losses $ 4,102,035 $ 522,961 $ 1,229,069 $ 735,604 $ 243,042 $ 110,314 $ 1,211,980 $ 4,052,970 General allowance for loan losses $ (29,539) Total Loans, net $ 4,023,431 (1) Loan balances include specific allowance for loan losses of $17.2 million (2) Includes Loans, net in consolidated VIEs The following tables present delinquency information on loans, net by year of origination: Carrying Value by Year of Origination (In Thousands) UPB 2021 2020 2019 2018 2017 Pre 2017 Total As of March 31, 2021 Loans (1) (2) Current and less than 30 days past due $ 4,351,956 $ 606,638 $ 512,632 $ 1,178,806 $ 632,881 $ 205,280 $ 1,178,466 $ 4,314,703 30 - 59 days past due 79,654 — 15,711 24,790 21,139 4,841 12,081 78,562 60+ days past due 139,518 197 660 4,448 45,568 14,377 58,551 123,801 Total Loans, before general allowance for loan losses $ 4,571,128 $ 606,835 $ 529,003 $ 1,208,044 $ 699,588 $ 224,498 $ 1,249,098 $ 4,517,066 General allowance for loan losses $ (27,403) Total Loans, net $ 4,489,663 (1) Loan balances include specific allowance for loan losses of $18.2 million (2) Includes Loans, net in consolidated VIEs Carrying Value by Year of Origination (In Thousands) UPB 2020 2019 2018 2017 2016 Pre 2016 Total As of December 31, 2020 Loans (1) (2) Current and less than 30 days past due $ 3,904,294 $ 516,474 $ 1,221,227 $ 707,068 $ 203,331 $ 100,003 $ 1,125,100 $ 3,873,203 30 - 59 days past due 38,836 5,812 5,191 15,097 401 2 11,933 38,436 60+ days past due 158,905 675 2,651 13,439 39,310 10,309 74,947 141,331 Total Loans, before general allowance for loan losses $ 4,102,035 $ 522,961 $ 1,229,069 $ 735,604 $ 243,042 $ 110,314 $ 1,211,980 $ 4,052,970 General allowance for loan losses $ (29,539) Total Loans, net $ 4,023,431 (1) Loan balances include specific allowance for loan losses of $17.2 million (2) Includes Loans, net in consolidated VIEs The following tables present delinquency information on loans, net: March 31, 2021 (In Thousands) Current and less than 30 days past due 30-59 days 60+ days Total Loans Carrying Value Non-Accrual 90+ days past due and Accruing Loans (1)(2) Originated Transitional loans $ 1,794,270 $ 30,315 $ 48,579 $ 1,873,164 $ 39,574 $ — Originated SBC loans 993,570 16,953 29,014 1,039,537 38,599 — Acquired loans 934,265 14,485 41,551 990,301 54,750 — Originated SBA 7(a) loans 356,600 14,789 899 372,288 7,076 — Acquired SBA 7(a) loans 221,444 2,020 1,556 225,020 8,436 — Originated SBC loans, at fair value 13,618 — — 13,618 — — Originated Residential Agency loans 936 — 2,202 3,138 2,202 — Total Loans, before general allowance for loan losses $ 4,314,703 $ 78,562 $ 123,801 $ 4,517,066 $ 150,637 $ — General allowance for loan losses $ (27,403) Total Loans, net $ 4,489,663 Percentage of loans outstanding 95.6% 1.7% 2.7% 100% 3.3% 0.0% (1) Loan balances include specific allowance for loan losses of $18.2 million (2) Includes Loans, net in consolidated VIEs December 31, 2020 (In Thousands) Current and less than 30 days past due 30-59 days 60+ days Total Loans Carrying Value Non-Accrual 90+ days past due and Accruing Loans (1)(2) Originated Transitional loans $ 1,281,579 $ 17,713 $ 19,782 $ 1,319,074 $ 19,416 $ — Originated SBC loans 1,000,878 6,591 49,086 1,056,555 37,635 — Acquired loans 978,346 7,729 60,034 1,046,109 57,020 - Originated SBA 7(a) loans 369,416 1,741 3,634 374,791 8,668 — Acquired SBA 7(a) loans 228,651 4,008 6,779 239,438 9,001 — Originated SBC loans, at fair value 13,795 — — 13,795 — — Originated Residential Agency loans 538 654 2,016 3,208 2,418 — Total Loans, before general allowance for loan losses $ 3,873,203 $ 38,436 $ 141,331 $ 4,052,970 $ 134,158 $ — General allowance for loan losses $ (29,539) Total Loans, net $ 4,023,431 Percentage of loans outstanding 95.6% 0.9% 3.5% 100% 3.3% 0.0% (1) Loan balances include specific allowance for loan losses of $17.2 million (2) Includes Loans, net in consolidated VIEs In addition to delinquency rates, the current estimated LTV ratio is another indicator that can provide insight into a borrower’s continued willingness to pay, as the delinquency rate of high LTV loans tends to be greater than that for loans where the borrower has equity in the collateral. The geographic distribution of the loan collateral also provides insight as to the credit quality of the portfolio, as factors such as the regional economy, property price changes and specific events such as natural disasters, will affect credit quality. The collateral concentration of the loan portfolio also provides insight as to the credit quality of the portfolio, as certain economic factors or events may have a more pronounced impact on certain sectors or property types. The Company monitors the loan-to-value ratio and associated risks on a monthly basis. The following table presents quantitative information on the credit quality of loans, net: Loan-to-Value (1) (In Thousands) 0.0 – 20.0% 20.1 – 40.0% 40.1 – 60.0% 60.1 – 80.0% 80.1 – 100.0% Greater than 100.0% Total March 31, 2021 Loans (2) (3) Originated Transitional loans $ 11,669 $ 11,319 $ 237,489 $ 1,359,157 $ 236,062 $ 17,468 $ 1,873,164 Originated SBC loans 5,248 73,432 520,800 428,041 6,136 5,880 1,039,537 Acquired loans 261,037 373,055 224,470 94,011 25,307 12,421 990,301 Originated SBA 7(a) loans 1,138 15,519 46,789 138,676 66,520 103,646 372,288 Acquired SBA 7(a) loans 6,575 33,186 79,334 55,506 27,673 22,746 225,020 Originated SBC loans, at fair value — 8,643 — 4,975 — — 13,618 Originated Residential Agency loans — — 198 577 1,985 378 3,138 Total Loans, before general allowance for loan losses $ 285,667 $ 515,154 $ 1,109,080 $ 2,080,943 $ 363,683 $ 162,539 $ 4,517,066 General allowance for loan losses $ (27,403) Total Loans, net $ 4,489,663 Percentage of loans outstanding 6.3% 11.4% 24.6% 46.1% 8.1% 3.5% December 31, 2020 Loans (2) (3) Originated Transitional loans $ 5,485 $ 8,269 $ 252,798 $ 891,895 $ 157,900 $ 2,727 $ 1,319,074 Originated SBC loans 5,372 76,899 453,381 515,023 — 5,880 1,056,555 Acquired loans 266,345 385,579 228,262 113,023 40,838 12,062 1,046,109 Originated SBA 7(a) loans 1,203 15,013 51,133 147,020 61,297 99,125 374,791 Acquired SBA 7(a) loans 7,523 39,086 89,644 54,007 28,332 20,846 239,438 Originated SBC loans, at fair value — 7,354 — 6,441 — — 13,795 Originated Residential Agency loans — — 88 1,236 1,552 332 3,208 Total Loans, before general allowance for loan losses $ 285,928 $ 532,200 $ 1,075,306 $ 1,728,645 $ 289,919 $ 140,972 $ 4,052,970 General allowance for loan losses $ (29,539) Total Loans, net $ 4,023,431 Percentage of loans outstanding 7.1% 13.0% 26.5% 42.7% 7.2% 3.5% (1) Loan-to-value is calculated as carrying amount as a percentage of current collateral value (2) Loan balances include specific allowance for loan loss reserves (3) Includes Loans, net in consolidated VIEs As of March 31, 2021 and December 31, 2020, the Company’s total carrying amount of loans in the foreclosure process was $1.1 million and $2.2 million, respectively. The following table displays the geographic concentration of the Company’s loans, net, secured by real estate: Geographic Concentration (% of Unpaid Principal Balance) March 31, 2021 December 31, 2020 California 19.2 % 18.1 % Texas 14.3 14.2 New York 10.5 9.8 Florida 7.4 7.8 Georgia 6.3 4.9 Illinois 6.0 5.2 North Carolina 3.1 3.1 Arizona 3.1 2.8 Washington 2.7 3.1 Colorado 2.6 2.8 Other 24.8 28.2 Total 100.0 % 100.0 % The following table displays the collateral type concentration of the Company’s loans, net: Collateral Concentration (% of Unpaid Principal Balance) March 31, 2021 December 31, 2020 Multi-family 31.4 % 23.8 % Retail 15.7 17.3 SBA (1) 13.8 17.4 Office 12.8 13.1 Mixed Use 11.9 12.9 Industrial 6.7 7.1 Lodging/Residential 2.8 3.2 Other 4.9 5.2 Total 100.0 % 100.0 % (1) Further detail provided on SBA collateral concentration is included in table below. The following table displays the collateral type concentration of the Company’s SBA loans within loans, net: Collateral Concentration (% of Unpaid Principal Balance) March 31, 2021 December 31, 2020 Lodging 19.3 % 17.2 % Offices of Physicians 12.9 12.0 Child Day Care Services 8.0 7.2 Eating Places 5.6 5.3 Gasoline Service Stations 3.9 3.4 Veterinarians 3.4 3.3 Funeral Service & Crematories 2.0 1.8 Grocery Stores 2.0 1.7 Car washes 1.6 1.4 Couriers 1.1 1.0 Other 40.2 45.7 Total 100.0 % 100.0 % Allowance for credit losses The allowance for loan losses represents the Company’s estimate of expected credit losses inherent in the Company’s held-for-investment loan portfolio. This is assessed by considering credit quality indicators, including probable and historical losses, collateral values, loan-to-value (“LTV”) ratios, and economic conditions. The following tables present the allowance for loan losses by loan product and impairment methodology: March 31, 2021 (In Thousands) Originated Originated Transitional loans Acquired Acquired Originated Total Allowance for General $ 2,729 $ 14,848 $ 4,335 $ 627 $ 4,864 $ 27,403 Specific 5,243 2,195 2,700 3,695 4,413 18,246 Ending balance $ 7,972 $ 17,043 $ 7,035 $ 4,322 $ 9,277 $ 45,649 December 31, 2020 (In Thousands) Originated Originated Transitional loans Acquired Acquired Originated Total Allowance for General $ 2,640 $ 14,995 $ 5,457 $ 767 $ 5,680 $ 29,539 Specific 6,200 — 2,840 3,782 4,371 17,193 Ending balance $ 8,840 $ 14,995 $ 8,297 $ 4,549 $ 10,051 $ 46,732 The following tables detail the activity of the allowance for loan losses for loans: Three Months Ended March 31, 2021 (In Thousands) Originated Originated Transitional loans Acquired Acquired Originated Total Allowance for Beginning balance $ 8,840 $ 14,995 $ 8,297 $ 4,549 $ 10,051 $ 46,732 Provision for (recoveries of) loan losses 132 2,048 (1,262) 47 (402) 563 Charge-offs and sales (1,000) — — (283) (375) (1,658) Recoveries — — — 9 3 12 Ending balance $ 7,972 $ 17,043 $ 7,035 $ 4,322 $ 9,277 $ 45,649 Three Months Ended March 31, 2020 (In Thousands) Originated Originated Transitional loans Acquired Acquired Originated Total Allowance for Beginning balance $ 304 $ 188 $ 3,054 $ 2,114 $ 1,781 $ 7,441 Cumulative -effect adjustment upon adoption of ASU 2016-13 2,400 1,906 1,878 3,562 1,379 11,125 Provision for (recoveries of) loan losses 7,658 22,170 5,722 12 4,242 39,804 Charge-offs and sales — — (8) (131) (329) (468) Recoveries — — — 65 1 66 Ending balance $ 10,362 $ 24,264 $ 10,646 $ 5,622 $ 7,074 $ 57,968 The tables above exclude $0.4 million and $0.9 million of allowance for loan losses on unfunded lending commitments as of March 31, 2021 and December 31, 2020, respectively. Refer to Note 3 – Summary of Significant Accounting Policies for more information on our accounting policies, methodologies and judgment applied to determine the allowance for loan losses and lending commitments. Non-accrual loans The following table details information about the Company’s non-accrual loans: (In Thousands) March 31, 2021 December 31, 2020 Non-accrual loans With an allowance $ 105,141 $ 75,862 Without an allowance 45,496 58,296 Total recorded carrying value of non-accrual loans $ 150,637 $ 134,158 Allowance for loan losses related to non-accrual loans $ (18,433) $ (17,367) Unpaid principal balance of non-accrual loans $ 175,570 $ 158,471 March 31, 2021 March 31, 2020 Interest income on non-accrual loans for the three months ended $ 615 $ 157 Troubled debt restructurings If the borrower is determined to be in financial difficulty, then the Company will determine whether a financial concession has been granted to the borrower by analyzing the value of the loan as compared to the recorded investment, modifications of the interest rate as compared to market rates, modification of the stated maturity date, modification of the timing of principal and interest payments and the partial forgiveness of the loan. Modified loans that are classified as TDRs are individually evaluated and measured for impairment. The following table summarizes the recorded investment of TDRs in the consolidated balance sheet by loan type. March 31, 2021 December 31, 2020 (In Thousands) SBC SBA Total SBC SBA Total Carrying value of modified loans classified as TDRs: On accrual status $ 304 $ 6,661 $ 6,965 $ 307 $ 6,888 $ 7,195 On non-accrual status 8,291 9,108 17,399 7,020 11,044 18,064 Total carrying value of modified loans classified as TDRs $ 8,595 $ 15,769 $ 24,364 $ 7,327 $ 17,932 $ 25,259 Allowance for loan losses on loans classified as TDRs $ 16 $ 3,701 $ 3,717 $ 17 $ 3,323 $ 3,340 The following table summarizes the TDR activity and the financial effects of these modifications. Three Months Ended March 31, 2021 Three Months Ended March 31, 2020 (In Thousands, except number of loans) SBC SBA Total SBC SBA Total Number of loans permanently modified 1 7 8 1 7 8 Pre-modification recorded balance (a) $ 1,276 $ 1,442 $ 2,718 $ 151 $ 2,767 $ 2,918 Post-modification recorded balance (a) $ 1,276 975 $ 2,251 $ 151 $ 2,769 $ 2,920 Number of loans that remain in default as of March 31, 2021 (b) 1 — 1 1 3 4 Balance of loans that remain in default as of March 31, 2021 (b) $ 1,276 $ — $ 1,276 $ 151 $ 160 $ 311 Concession granted (a) : Term extension $ — $ 974 $ 974 $ — $ 1,564 $ 1,564 Interest rate reduction — — — — — — Principal reduction — — — — — — Foreclosure 1,276 — 1,276 151 152 303 Total $ 1,276 $ 974 $ 2,250 $ 151 $ 1,716 $ 1,867 (a) Represents carrying value. (b) Represents the March 31, 2021 carrying values of the TDRs that occurred during the three months ended March 31, 2021 and 2020 that remained in default as of March 31, 2021. Generally, all loans modified in a TDR are placed or remain on non-accrual status at the time of the restructuring. However, certain accruing loans modified in a TDR that are current at the time of restructuring may remain on accrual status if payment in full under the restructured terms is expected. For purposes of this schedule, a loan is considered in default if it is 30 or more days past due. The Company does not believe the financial impact of the presented TDRs to be material. The other elements of the Company’s modification programs do not have a significant impact on financial results given their relative size, or do not have a direct financial impact as in the case of covenant changes. PCD loans The Company did not acquire any PCD loans in the three months ended March 31, 2021 and 2020. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2021 | |
Fair Value Measurements | |
Fair Value Measurements | Note 7. Fair value measurements The Company adopted the provisions of ASC 820 Fair Value Measurement Level 1 Level 2 Level 3 In certain cases, the inputs used to measure fair value may fall 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 following table presents the Company’s financial instruments carried at fair value on a recurring basis as of March 31, 2021: (In Thousands) Level 1 Level 2 Level 3 Total Assets: Loans, held for sale, at fair value $ — $ 473,078 $ — $ 473,078 Loans, net, at fair value — — 13,618 13,618 Paycheck Protection Program loans — — 38,388 38,388 Mortgage backed securities, at fair value — 677,315 5,633 682,948 Derivative instruments, at fair value — 805 11,724 12,529 Residential mortgage servicing rights, at fair value — — 98,542 98,542 Total assets $ — $ 1,151,198 $ 167,905 $ 1,319,103 Liabilities: Derivative instruments, at fair value $ — $ 4,403 $ — $ 4,403 Total liabilities $ — $ 4,403 $ — $ 4,403 The following table presents the Company’s financial instruments carried at fair value on a recurring basis as of December 31, 2020: (In Thousands) Level 1 Level 2 Level 3 Total Assets: Loans, held for sale, at fair value $ — $ 340,288 $ — $ 340,288 Loans, net, at fair value — — 13,795 13,795 Paycheck Protection Program loans — — 74,931 74,931 Mortgage backed securities, at fair value — 62,880 25,131 88,011 Derivative instruments, at fair value — — 16,363 16,363 Residential mortgage servicing rights, at fair value — — 76,840 76,840 Total assets $ — $ 403,168 $ 207,060 $ 610,228 Liabilities: Derivative instruments, at fair value $ — $ 11,604 $ — $ 11,604 Total liabilities $ — $ 11,604 $ — $ 11,604 The following tables present a summary of changes in our Level 3 assets and liabilities: Three Months Ended March 31, 2021 (In Thousands) MBS Derivatives Loans, net, at fair value Paycheck Protection Program loans Residential MSRs, at fair value Total Beginning Balance $ 25,131 $ 16,363 $ 13,795 $ 74,931 $ 76,840 $ 207,060 Originations — — — 3,866 — 3,866 Accreted discount, net 58 — — — — 58 Additions due to loans sold, servicing retained — — — — 12,048 12,048 Sales / Principal payments (92) — (201) (40,409) (5,700) (46,402) Realized gains, net — — (5) — — (5) Unrealized gains (losses), net 1,069 (4,639) 29 — 15,354 11,813 Transfer to (from) Level 3 (20,533) — — — — (20,533) Ending Balance $ 5,633 $ 11,724 $ 13,618 $ 38,388 $ 98,542 $ 167,905 Unrealized gains (losses), net on assets/liabilities held at the end of the period $ (319) $ 11,724 $ (263) $ — $ (31,855) $ (20,713) Three Months Ended March 31, 2020 (In Thousands) MBS Derivatives Loans, net, at fair value Residential MSRs, at fair value Total Beginning Balance $ 460 $ 2,814 $ 20,212 $ 91,174 $ 114,660 Additions due to loans sold, servicing retained — — — 7,147 7,147 Sales / Principal payments (2) — (8) (3,253) (3,263) Unrealized gains (losses), net (40) 14,436 (391) (16,437) (2,432) Transfer to (from) Level 3 (315) — — — (315) Ending Balance $ 103 $ 17,250 $ 19,813 $ 78,631 $ 115,797 Unrealized gains (losses), net on assets or liabilities held at the end of the period $ (1) $ 17,250 $ 255 $ (26,392) $ (8,888) 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. Valuation process for fair value measurements The Company establishes valuation processes and procedures designed so that fair value measurements are appropriate and reliable, that they are based on observable inputs where possible, and that valuation approaches are consistently applied and the assumptions and inputs are reasonable. The Company has also established processes to provide that the valuation methodologies, techniques and approaches for financial instruments that are categorized within Level 3 of the fair value hierarchy are fair, consistent and verifiable. The Company’s processes provide a framework that ensures the oversight of the Company’s fair value methodologies, techniques, validation procedures, and results. The Company designates a valuation committee (the “Committee”) to oversee the entire valuation process of the Company’s Level 3 financial instruments. The Committee is comprised of various personnel who are responsible for developing the Company’s written valuation policies, processes and procedures, conducting periodic reviews of the valuation policies, and performing validation procedures on the overall fairness and consistent application of the valuation policies and processes and that the assumptions and inputs used in valuation are reasonable. The validation procedures overseen by the Committee are also intended to provide that the values received from external third-party pricing sources are consistent with the Company’s Valuation Policy and are carried at fair value. To the extent that there is no exchange pricing, vendor marks or broker quotes readily available, the Company may use an internal valuation model or other valuation methodology that may be based on unobservable market inputs to fair value the investment. The values provided by a third-party pricing service are calculated based on key inputs provided by the Company including collateral values, unpaid principal balances, cash flow velocity, contractual status and anticipated disposition timelines. In addition, the Company performs an internal valuation used to assess and review the reasonableness and validity of the fair values provided by a third party. The Company also performs analytical procedures, which include automated checks consisting of prior-period variance analysis, comparisons of actual prices to internally calculate expected prices based on observable market changes, analysis of changes in pricing ranges, and relative value and yield comparisons using the Company’s proprietary valuation models. Upon completion of the review process described above, the Company may provide additional quantitative and qualitative data to the third-party pricing service to consider in valuing certain financial assets and liabilities, as applicable. Such data may include deal specific information not included in the data tape provided to the third party, outliers when compared to the unpaid principal balance and collateral value and knowledge of any impending liquidation of an investment. If deemed necessary by the third party and management, the investments are re-valued by the third party to account for the updated information. The following table summarizes 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 as of March 31, 2021, using third party information without adjustment: (In Thousands, except price) Fair Value Predominant Valuation Technique (a) Type Range Weighted Average Residential mortgage servicing rights, at fair value $ 98,542 Income Approach Discounted cash flow N/A N/A Derivative instruments, at fair value $ 11,724 Market Approach Origination pull-through rate | Servicing Fee Multiple | Percentage of unpaid principal balance 65.0 - 100% | 0.5 - 5.0% | 0.1 to 2.9% 86.5% | 3.9% | 1.2% (a) Prices are weighted based on the unpaid principal balance of the loans and securities included in the range for each class. Included within Level 3 assets of $167.9 million is $57.7 million of quoted or transaction prices in which quantitative unobservable inputs are not developed by the Company when measuring fair value (for example, when we utilize prices from prior transactions or third-party pricing information without adjustments). Refer to Note 9 for more information on Residential mortgage servicing rights unobservable inputs. The following table summarizes 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 as of December 31, 2020 using third-party information without adjustment: (In Thousands, except price) Fair Value Predominant Valuation Technique (a) Type Range Weighted Average Residential mortgage servicing rights, at fair value $ 76,840 Income Approach Discounted cash flow N/A N/A Derivative instruments, at fair value $ 16,363 Market Approach Origination pull-through rate | Servicing Fee Multiple | Percentage of unpaid principal balance 47.6 - 100% | 0.5 - 12.8% | 0.1 to 2.9% 84.1% | 3.6% | 1.1% (a) Prices are weighted based on the unpaid principal balance of the loans and securities included in the range for each class. Included within Level 3 assets of $207.1 million is $113.9 million of quoted or transaction prices in which quantitative unobservable inputs are not developed by the Company when measuring fair value (for example, when we utilize prices from prior transactions or third-party pricing information without adjustments). Refer to Note 9 - Servicing Rights for more information on Residential mortgage servicing rights unobservable inputs. The fair value measurements of these assets are sensitive to changes in assumptions regarding prepayment, probability of default, loss severity in the event of default, forecasts of home prices, and significant activity or developments in the real estate market. Significant changes in any of those inputs in isolation may result in significantly higher or lower fair value measurements. Generally, an increase in the probability of default and loss severity in the event of default would result in a lower fair value measurement. A decrease in these assumptions would have the opposite effect. Conversely, an assumption that the home prices will increase would result in a higher fair value measurement. A decrease in the assumption for home prices would have the opposite effect. Financial instruments not carried at fair value The following table presents the carrying value and estimated fair value of our financial instruments that are not carried at fair value in the consolidated balance sheets and are classified as Level 3: March 31, 2021 December 31, 2020 (In Thousands) Carrying Value Estimated Carrying Value Estimated Assets: Loans, net $ 4,476,045 $ 4,581,610 $ 4,009,636 $ 4,103,200 Paycheck Protection Program loans 1,254,420 1,322,188 — — Purchased future receivables, net 13,240 13,240 17,308 17,308 Servicing rights 40,399 50,365 37,823 47,567 Total assets $ 5,784,104 $ 5,967,403 $ 4,064,767 $ 4,168,075 Liabilities: Secured borrowings $ 2,064,785 $ 2,064,785 $ 1,294,243 $ 1,294,243 Paycheck Protection Program Liquidity Facility borrowings 1,132,536 1,132,536 76,276 76,276 Securitized debt obligations of consolidated VIEs, net 2,211,923 2,145,650 1,905,749 1,907,541 Senior secured note, net 179,744 185,277 179,659 188,114 Guaranteed loan financing 386,036 412,644 401,705 426,348 Convertible notes, net 112,405 66,544 112,129 68,186 Corporate debt, net 333,317 351,865 150,989 151,209 Total liabilities $ 6,420,746 $ 6,359,301 $ 4,120,750 $ 4,111,917 Other assets of $32.6 million at March 31, 2021, and $23.8 million at December 31, 2020, are not carried at fair value and include due from servicers and accrued interest, which are reflected in Note 19. Receivable from third parties of $11.1 million at March 31, 2021, and $1.2 million at December 31, 2020, are not carried at fair value. For these instruments, carrying value approximates fair value and are classified as Level 3. Accounts payable and other accrued liabilities of $24.0 million at March 31, 2021, and $23.8 million at December 31, 2020, are not carried at fair value and include payable to related parties and accrued interest payable which are included in Note 19. For these instruments, carrying value approximates fair value and are classified as Level 3. |
Mortgage Backed Securities
Mortgage Backed Securities | 3 Months Ended |
Mar. 31, 2021 | |
Mortgage Backed Securities | |
Mortgage Backed Securities | Note 8. Mortgage backed securities The following table presents certain information about the Company’s MBS portfolio, which are classified as trading securities and carried at fair value. Weighted Weighted Average Gross Gross Average Interest Principal Amortized Unrealized Unrealized (In Thousands) Maturity (a) Rate (a) Balance Cost Fair Value Gains Losses March 31, 2021 Freddie Mac Loans 02/2037 3.8 % $ 131,326 $ 51,390 $ 54,693 $ 3,433 $ (130) Commercial Loans 11/2050 4.6 72,985 39,162 34,062 333 (5,433) Residential 10/2042 3.5 637,395 594,193 594,193 — — Total Mortgage backed securities, at fair value 08/2042 3.6 % $ 841,706 $ 684,745 $ 682,948 $ 3,766 $ (5,563) December 31, 2020 Freddie Mac Loans 01/2037 3.7 % $ 139,408 $ 52,320 $ 53,509 $ 1,880 $ (691) Commercial Loans 11/2050 4.5 73,074 39,224 34,411 226 (5,039) Tax Liens 09/2026 6.0 92 92 91 — (1) Total Mortgage backed securities, at fair value 10/2041 4.1 % $ 212,574 $ 91,636 $ 88,011 $ 2,106 $ (5,731) (a) Weighted based on current principal balance The following table presents certain information about the maturity of the Company’s MBS portfolio. Weighted Average Principal Amortized (In Thousands) Interest Rate (a) Balance Cost Fair Value March 31, 2021 After five years through ten years 2.9 % $ 8,500 $ 8,500 $ 8,500 After ten years 3.4 833,206 676,245 674,448 Total Mortgage backed securities, at fair value 3.6 % $ 841,706 $ 684,745 $ 682,948 December 31, 2020 After five years through ten years 6.0 % $ 92 $ 92 $ 91 After ten years 2.8 212,482 91,544 87,920 Total Mortgage backed securities, at fair value 4.1 % $ 212,574 $ 91,636 $ 88,011 (a) Weighted based on current principal balance |
Servicing Rights
Servicing Rights | 3 Months Ended |
Mar. 31, 2021 | |
Servicing Rights | |
Servicing Rights | Note 9. Servicing rights The Company performs servicing activities for third parties, which primarily include collecting principal, interest and other payments from borrowers, remitting the corresponding payments to investors and monitoring delinquencies. The Company’s servicing fees are specified by pooling and servicing agreements. The following table presents information about the Company’s portfolios of servicing rights: Three Months Ended March 31, (In Thousands) 2021 2020 SBA servicing rights, at amortized cost Beginning net carrying amount $ 18,764 $ 17,660 Additions due to loans sold, servicing retained 959 961 Acquisitions — Amortization (1,047) (873) Impairment (34) (212) Ending net carrying value of SBA servicing rights $ 18,642 $ 17,536 Freddie Mac multi-family servicing rights, at amortized cost Beginning net carrying amount $ 19,059 $ 13,135 Additions due to loans sold, servicing retained 3,559 1,449 Amortization (861) (640) Ending net carrying value of Freddie Mac multi-family servicing rights $ 21,757 $ 13,944 Total servicing rights, at amortized cost $ 40,399 $ 31,480 Residential mortgage servicing rights, at fair value Beginning net carrying amount $ 76,840 $ 91,174 Additions due to loans sold, servicing retained 12,048 7,147 Loan pay-offs (5,700) (3,253) Unrealized losses 15,354 (16,437) Ending fair value of Residential mortgage servicing rights $ 98,542 $ 78,631 Total servicing rights $ 138,941 $ 110,111 Servicing rights – SBA and Freddie Mac. The Company’s models calculate the present value of expected future cash flows utilizing assumptions that we believe are used by market participants. We derive forward prepayment rates, forward default rates and discount rates from historical experience 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 following table presents additional information about the Company’s SBA and Freddie Mac multi-family servicing rights: As of March 31, 2021 As of December 31, 2020 Unpaid Principal Unpaid Principal (In Thousands) Amount Carrying Value Amount Carrying Value SBA $ 656,216 $ 18,642 $ 643,135 $ 18,764 Freddie Mac multi-family 1,647,443 21,757 1,501,998 19,059 Total $ 2,303,659 $ 40,399 $ 2,145,133 $ 37,823 The significant assumptions used in the estimated valuation of the Company’s SBA and Freddie Mac multi-family servicing rights carried at amortized cost include: March 31, 2021 December 31, 2020 Range of input values Weighted Range of input values Weighted SBA servicing rights (at amortized cost) Forward prepayment rate 6.7 - 20.9 % 8.4 % 6.7 - 20.8 % 8.5 % Forward default rate 0.0 - 10.4 % 8.3 % 0.0 - 10.5 % 8.2 % Discount rate 4.5 - 4.5 % 4.5 % 4.5 - 4.5 % 4.5 % Servicing expense 0.4 - 0.4 % 0.4 % 0.4 - 0.4 % 0.4 % Freddie Mac multi-family servicing rights (at amortized cost) Forward prepayment rate 0.1 - 5.1 % 2.4 % 0.1 - 5.1 % 2.4 % Forward default rate 0.0 - 0.4 % 0.3 % 0.0 - 0.4 % 0.3 % Discount rate 6.0 - 6.0 % 6.0 % 6.0 - 6.0 % 6.0 % Servicing expense 0.2 - 0.3 % 0.2 % 0.2 - 0.3 % 0.2 % Assumptions can change between and at each reporting period as market conditions and projected interest rates change. The following table reflects the possible impact of 10% and 20% adverse changes to key assumptions on the carrying amount of the Company’s SBA and Freddie Mac multi-family servicing rights. (In Thousands) March 31, 2021 December 31, 2020 SBA servicing rights (at amortized cost) Forward prepayment rate Impact of 10% adverse change $ (730) $ (729) Impact of 20% adverse change $ (1,421) $ (1,420) Default rate Impact of 10% adverse change $ (154) $ (150) Impact of 20% adverse change $ (305) $ (298) Discount rate Impact of 10% adverse change $ (401) $ (395) Impact of 20% adverse change $ (789) $ (777) Freddie Mac multi-family servicing rights (at amortized cost) Forward prepayment rate Impact of 10% adverse change $ (188) $ (163) Impact of 20% adverse change $ (373) $ (324) Default rate Impact of 10% adverse change $ (7) $ (6) Impact of 20% adverse change $ (14) $ (13) Discount rate Impact of 10% adverse change $ (761) $ (678) Impact of 20% adverse change $ (1,487) $ (1,324) The estimated future amortization expense for the servicing rights is expected to be as follows: (In Thousands) March 31, 2021 2021 $ 5,672 2022 6,760 2023 5,944 2024 5,228 2025 4,596 Thereafter 12,199 Total $ 40,399 Residential mortgage servicing rights. The following table presents additional information about the Company’s residential mortgage servicing rights carried at fair value: As of March 31, 2021 As of December 31, 2020 (In Thousands) Unpaid Principal Amount Fair Value Unpaid Principal Amount Fair Value Fannie Mae $ 3,787,761 $ 35,390 $ 3,700,450 $ 27,632 Ginnie Mae 2,802,997 30,340 2,757,124 25,899 Freddie Mac 3,357,437 32,812 3,071,312 23,309 Total $ 9,948,195 $ 98,542 $ 9,528,886 $ 76,840 The significant assumptions used in the valuation of the Company’s residential mortgage servicing rights carried at fair value include: March 31, 2021 December 31, 2020 Range of input Weighted Range of input Weighted Residential mortgage servicing rights (at fair value) Forward prepayment rate 10.5 - 28.8 % 11.2 % 12.6 - 31.4 % 14.3 % Discount rate 9.0 - 11.6 % 9.8 % 9.1 - 11.7 % 9.8 % Servicing expense $70 - $85 $74 $70 - $85 $74 The following table reflects the possible impact of 10% and 20% adverse changes to key assumptions on the fair value of the Company’s residential mortgage servicing rights. (In Thousands) March 31, 2021 December 31, 2020 Residential mortgage servicing rights (at fair value) Prepayment rate Impact of 10% adverse change $ (4,958) $ (5,049) Impact of 20% adverse change $ (9,568) $ (9,701) Discount rate Impact of 10% adverse change $ (3,623) $ (2,601) Impact of 20% adverse change $ (6,992) $ (5,028) Cost of servicing Impact of 10% adverse change $ (1,785) $ (1,469) Impact of 20% adverse change $ (3,571) $ (2,938) |
Residential mortgage banking ac
Residential mortgage banking activities and variable expenses on residential mortgage banking activities | 3 Months Ended |
Mar. 31, 2021 | |
Residential mortgage banking activities and variable expenses on residential mortgage banking activities | |
Gains on residential mortgage banking activities, net of variable loan expenses | Note 10. Residential mortgage banking activities and variable expenses on residential mortgage banking activities Residential mortgage banking activities, reflects revenue within our residential mortgage banking business directly related to loan origination and sale activity. This primarily consists of the realized gains on sales of residential loans held for sale and loan origination fee income. Residential mortgage banking activities also consists of unrealized gains and losses associated with the changes in fair value of the loans held for sale, the fair value of retained MSR additions, and the realized and unrealized gains and losses from derivative instruments. Variable expenses include correspondent fee expenses and other direct expenses relating to these loans, which vary based on loan origination volumes. The following table presents the components of residential mortgage banking activities and variable expenses on residential mortgage banking activities recorded in the Company’s consolidated statements of operations. Three Months Ended March 31, (In Thousands) 2021 2020 Realized and unrealized gain (loss) of residential mortgage loans held for sale, at fair value $ 29,560 $ 25,166 Creation of new mortgage servicing rights, net of payoffs 6,348 3,894 Loan origination fee income on residential mortgage loans 6,232 3,303 Unrealized gain (loss) on IRLCs and other derivatives (731) 4,306 Residential mortgage banking activities $ 41,409 $ 36,669 Variable expenses on residential mortgage banking activities $ (15,485) $ (20,129) |
Secured Borrowings
Secured Borrowings | 3 Months Ended |
Mar. 31, 2021 | |
Secured Borrowings | |
Secured borrowings | Note 11. Secured borrowings The following tables present certain characteristics of our secured borrowings: Carrying Value at Lender Asset Class Current Maturity Pricing Facility Size Pledged Assets March 31, 2021 December 31, 2020 JPMorgan Acquired loans, SBA loans June 2021 1M L + 2.25% to 2.875% $ 200,000 $ 56,867 $ 41,822 $ 36,604 Keybank Freddie Mac loans February 2022 SOFR + 1.41% 100,000 24,707 24,260 50,408 East West Bank SBA loans October 2022 Prime - 0.821% to + 0.29% 50,000 45,717 39,623 40,542 Credit Suisse Acquired loans (non USD) December 2021 Euribor + 2.50% to 3.00% 234,470 (a) 56,895 35,372 36,840 Comerica Bank Residential loans June 2021 1M L + 1.75% 125,000 83,075 78,687 78,312 TBK Bank Residential loans October 2021 Variable Pricing 150,000 141,092 139,426 123,951 Origin Bank Residential loans June 2021 Variable Pricing 60,000 35,251 33,899 27,450 Associated Bank Residential loans November 2021 1M L + 1.50% 60,000 49,863 47,670 15,556 East West Bank Residential MSRs September 2023 1M L + 2.50% 50,000 68,202 49,400 34,400 Credit Suisse Purchased future receivables June 2021 1M L + 4.50% 150,000 13,240 1,000 — Bank of the Sierra Real estate August 2050 3.25% to 3.45% 22,750 32,948 22,499 22,611 PPP Participant PPP loans June 2021 Sold 99.61% / Buyback Par 600,000 221,940 230,483 — Total borrowings under credit facilities and other financing agreements (b) $ 1,802,220 $ 829,797 $ 744,141 $ 466,674 Citibank Fixed rate, Transitional, Acquired loans October 2021 1M L + 2.50% to 3.25% $ 500,000 $ 247,895 $ 152,097 $ 210,735 Deutsche Bank Fixed rate, Transitional loans November 2021 3M L + 2.00% to 2.40% 350,000 96,830 88,831 190,567 JPMorgan Transitional loans November 2022 1M L + 2.25% to 4.00% 650,000 414,099 282,974 247,616 Performance Trust Acquired loans March 2024 1M T + 2.00% 113,000 105,627 93,532 — Credit Suisse Acquired loans July 2021 L + 2.25% 100,000 98,751 81,485 — JPMorgan MBS June 2021 1.39% to 2.33% 62,300 99,088 62,300 65,407 Deutsche Bank MBS April 2021 2.47% 13,227 20,083 13,227 16,354 Citibank MBS April 2021 2.72% 46,847 85,593 46,847 58,076 RBC MBS April 2021 2.39% to 2.59% 39,053 60,495 39,053 38,814 CSFB MBS April 2021 2.45% 4,078 6,549 4,078 — Various MBS April 2021 Variable Pricing 106,737 183,588 106,737 — Various Agency MBS May 2021 Variable Pricing 349,483 387,388 349,483 — Total borrowings under repurchase agreements (c) $ 2,334,725 $ 1,805,986 $ 1,320,644 $ 827,569 Total secured borrowings $ 4,136,945 $ 2,635,783 $ 2,064,785 $ 1,294,243 (a) The current facility size is €200.0 million, but has been converted into USD for purposes of this disclosure. (b) The weighted average interest rate of borrowings under credit facilities was 2.0% and 2.8% as of March 31, 2021 and December 31, 2020, respectively. (c) The weighted average interest rate of borrowings under repurchase agreements was 2.1% and 3.3% as of March 31, 2021 and December 31, 2020, respectively The following table presents the carrying value of the Company’s collateral pledged with respect to secured borrowings outstanding with our lenders: Pledged Assets (In Thousands) March 31, 2021 December 31, 2020 Collateral pledged - borrowings under credit facilities and other financing agreements Loans, held for sale, at fair value $ 192,492 $ 313,844 Loans, net 159,883 159,482 Loans, held at fair value 141,092 73,799 Mortgage servicing rights 68,202 50,941 Paycheck Protection Program loans 221,940 — Purchased future receivables 13,240 — Real estate, held for sale 32,948 32,948 Total $ 829,797 $ 631,014 Collateral pledged - borrowings under repurchase agreements Loans, net $ 835,211 $ 815,603 Mortgage backed securities 742,299 72,179 Retained interest in assets of consolidated VIEs 100,485 226,773 Loans, held for sale, at fair value 122,413 17,850 Loans, held at fair value 3,071 3,071 Real estate acquired in settlement of loans 2,507 829 Total $ 1,805,986 $ 1,136,305 Total collateral pledged on secured borrowings $ 2,635,783 $ 1,767,319 The agreements governing the Company’s secured borrowings require the Company to maintain certain financial and debt covenants. The Company was in compliance with all debt and financial covenants as of March 31, 2021 and December 31, 2020. |
Senior secured notes, convertib
Senior secured notes, convertible notes, and corporate debt, net | 3 Months Ended |
Mar. 31, 2021 | |
Senior secured notes, convertible notes, and corporate debt, net | |
Senior secured notes, convertible notes, and corporate debt, net | Note 12. Senior secured notes, convertible notes, and corporate debt, net Senior secured notes, net During 2017, ReadyCap Holdings LLC, a subsidiary of the Company, issued $140.0 million in 7.50% Senior Secured Notes due 2022. On January 30, 2018 ReadyCap Holdings LLC, issued an additional $40.0 million in aggregate principal amount of 7.50% Senior Secured Notes due 2022, which have identical terms (other than issue date and issue price) to the notes issued during 2017 (collectively “the Senior Secured Notes”). The additional $40.0 million in Senior Secured Notes were priced with a yield to par call date of 6.5%. Payments of the amounts due on the Senior Secured Notes are fully and unconditionally guaranteed by the Company and its subsidiaries: Sutherland Partners LP, Sutherland Asset I, LLC, and ReadyCap Commercial, LLC. The funds were used to fund new SBC and SBA loan originations and new SBC loan acquisitions. As of March 31, 2021, we were in compliance with all covenants with respect to the Senior Secured Notes. Convertible notes, net On August 9, 2017, the Company closed an underwritten public sale of $115.0 million aggregate principal amount of its 7.00% convertible senior notes due 2023 (the “Convertible Notes”). The Convertible Notes will mature on August 15, 2023, unless earlier repurchased, redeemed or converted. During certain periods and subject to certain conditions, the Convertible Notes will be convertible by holders into shares of the Company's common stock. As of March 31, 2021, the conversion rate was 1.5994 shares of common stock per $25 principal amount of the Convertible Notes, which is equals a conversion price of approximately $15.63 per share of the Company’s common stock. Upon conversion, holders will receive, at the Company's discretion, cash, shares of the Company's common stock or a combination thereof. The Company may redeem all or any portion of the Convertible Notes on or after August 15, 2021, if the last reported sale price of the Company’s common stock has been at least 120% of the conversion price in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption, at a redemption price payable in cash equal to 100% of the principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid interest. Additionally, upon the occurrence of certain corporate transactions, holders may require the Company to purchase the Convertible Notes for cash at a purchase price equal to 100% of the principal amount of the Convertible Notes to be purchased, plus accrued and unpaid interest. The Convertible Notes will be convertible only upon satisfaction of one or more of the following conditions: (1) the closing market price of the Company’s common stock is greater than or equal to 120% of the conversion price of the respective Convertible Notes for at least 20 out of 30 days prior to the end of the preceding fiscal quarter, (2) the trading price of the Convertible Notes is less than 98% of the product of (i) the conversion rate and (ii) the closing price of the Company’s common stock during any five At issuance, we allocated $112.7 million and $2.3 million of the carrying value of the Convertible Notes to its debt and equity components, respectively, before the allocation of deferred financing costs. As of March 31, 2021, we were in compliance with all covenants with respect to the Convertible Notes. Corporate debt, net On April 27, 2018, the Company completed the public offer and sale of $50,000,000 aggregate principal amount of its 6.50% Senior Notes due 2021 (the “2021 Notes”). The Company issued the 2021 Notes under a base indenture, dated August 9, 2017, (the “base indenture”) as supplemented by the second supplemental indenture, dated as of April 27, 2018, between the Company and U.S. Bank National Association, as trustee. The 2021 Notes bear interest at a rate of 6.50% per annum, payable quarterly in arrears on January 30, April 30, July 30, and October 30 of each year, beginning on July 30, 2018. The 2021 Notes will mature on April 30, 2021, unless earlier redeemed or repurchased. On March 26, 2021, the Company redeemed all of the outstanding 2021 Notes, at a redemption price equal to 100% of the principal amount of the 2021 Notes plus accrued and unpaid interest, for cash. On July 22, 2019, the Company completed the public offer and sale of $57.5 million aggregate principal amount of its 6.20% Senior Notes due 2026 (the “6.20% 2026 Notes”), which includes $7.5 million aggregate principal amount of the 6.20% 2026 Notes relating to the full exercise of the underwriters’ over-allotment option. The net proceeds from the sale of the 6.20% 2026 Notes were approximately $55.3 million, after deducting underwriters’ discount and estimated offering expenses. The Company contributed the net proceeds to Sutherland Partners, L.P. (the “Operating Partnership”), the operating partnership subsidiary, in exchange for the issuance by the Operating Partnership of a senior note with terms that are substantially equivalent to the terms of the 6.20% 2026 Notes. The 6.20% 2026 Notes bear interest at a rate of 6.20% per annum, payable quarterly in arrears on January 30, April 30, July 30, and October 30 of each year, beginning on October 30, 2019. The 6.20% 2026 Notes will mature on July 30, 2026, unless earlier repurchased or redeemed. The Company may redeem for cash all or any portion of the 6.20% 2026 Notes, at its option, on or after July 30, 2022 and before July 30, 2025 at a redemption price equal to 101% of the principal amount of the 6.20% 2026 Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. On or after July 30, 2025, the Company may redeem for cash all or any portion of the 6.20% 2026 Notes, at its option, at a redemption price equal to 100% of the principal amount of the 6.20% 2026 Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. If the Company undergoes a change of control repurchase event, holders may require it to purchase the 6.20% 2026 Notes, in whole or in part, for cash at a repurchase price equal to 101% of the aggregate principal amount of the 6.20% 2026 Notes to be purchased, plus accrued and unpaid interest. The 6.20% 2026 Notes are the Company’s senior obligations and will not be guaranteed by any of its subsidiaries, except to the extent described in the Indenture upon the occurrence of certain events. The 6.20% 2026 Notes rank equal in right of payment to any of the Company’s 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 the Company) preferred stock, if any, of its subsidiaries. On December 2, 2019, the Company completed an additional public offering and sale of $45.0 million aggregate principal amount of the 6.20% 2026 Notes. The new notes have the same terms (expect with respect to issue date, issue price and the date from which interest will accrue), and are fully fungible with and are treated as a single series of debt securities as the 6.20% 2026 notes the Company issued on July 22, 2019. On February 10, 2021, the Company completed the public offer and sale of $201.3 million aggregate principal amount of its 5.75% Senior Notes due 2026 (the “5.75% 2026 Notes”), which includes $26.3 million aggregate principal amount of 5.75% 2026 Notes relating to the full exercise of the underwriters’ over-allotment option. The net proceeds from the sale of 5.75% Senior Notes were approximately $195.2 million, after deducting underwriters’ discount and estimated offering expenses. The Company contributed the net proceeds to the Operating Partnership in exchange for the issuance by the Operating Partnership of a senior note with terms that are substantially equivalent to the terms of the 5.75% 2026 Notes. The 5.75% 2026 Notes bear interest at a rate of 5.75% per annum, payable quarterly in arrears on January 30, April 30, July 30, and October 30 of each year, beginning on April 30, 2021. The 5.75% 2026 Notes will mature on February 15, 2026, unless earlier repurchased or redeemed. The 5.75% 2026 Notes are the Company’s senior unsecured obligations and will not be guaranteed by any of its subsidiaries, except to the extent described in the Indenture upon the occurrence of certain events. The 5.75% 2026 Notes rank equal in right of payment to any of the Company’s 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 the Company) preferred stock, if any, of its subsidiaries. As of March 31, 2021, we were in compliance with all covenants with respect to the corporate debt. Junior subordinated notes A notes and $21,250,000 for I-B notes, to unrelated third party investors. Both the junior subordinated notes and the trust preferred securities require quarterly payments and bear interest at the prevailing three-month LIBOR rate plus 3.10%, reset quarterly. Both the junior subordinated notes and the trust preferred securities will mature in 2035 and are currently redeemable, at our option, in whole or in part, without penalty. ANH used the net proceeds of this issuance to invest in Agency MBS. In accordance with ASC 810-10, Anworth Capital Trust I does not meet the requirements for consolidation. The following table presents the components of the Senior Secured Notes, Convertible Notes, and corporate debt including the carrying value for the aggregate contractual maturities: (in thousands, except rates) Coupon Rate Maturity Date March 31, 2021 Senior secured notes principal amount (1) 7.50 % 2/15/2022 $ 180,000 Unamortized premium - Senior secured notes 695 Unamortized deferred financing costs - Senior secured notes (951) Total Senior secured notes, net $ 179,744 Convertible notes principal amount (2) 7.00 % 8/15/2023 115,000 Unamortized discount - Convertible notes (3) (958) Unamortized deferred financing costs - Convertible notes (1,637) Total Convertible notes, net $ 112,405 Corporate debt principal amount (4) 6.20 % 7/30/2026 104,250 Corporate debt principal amount (5) 5.75 % 2/15/2026 201,250 Unamortized discount - corporate debt (4,966) Unamortized deferred financing costs - corporate debt (3,467) Junior subordinated notes principal amount (6) 3M + 3.10 % 3/30/2035 15,000 Junior subordinated notes principal amount (7) 3M + 3.10 % 4/30/2035 21,250 Total corporate debt, net $ 333,317 Total carrying amount of debt components $ 625,466 Total carrying amount of conversion option of equity components recorded in equity $ 958 (1) Interest on the senior secured notes is payable semiannually on each February 15 and August 15, beginning on August 15, 2017. (2) Interest on the convertible notes is payable quarterly on February 15, May 15, August 15, and November 15 of each year, beginning on November 15, 2017. (3) Represents the discount created by separating the conversion option from the debt host instrument. (4) Interest on the corporate debt is payable January 30, April 30, July 30, and October 30 of each year, beginning on October 30, 2019. (5) Interest on the corporate debt is payable January 30, April 30, July 30, and October 30 of each year, beginning on April 30, 2021. (6) Interest on the Junior subordinated notes I-A payable March 30, June 30, September 30, and December 30 of each year. (7) Interest on the Junior subordinated notes I-B payable January 30, April 30, July 30, and October 30 of each year. The following table presents the contractual maturities of Senior Secured Notes, Convertible Notes, and corporate debt: (In Thousands) March 31, 2021 2021 $ — 2022 180,000 2023 115,000 2024 — 2025 — Thereafter 341,750 Total contractual amounts $ 636,750 Unamortized deferred financing costs, discounts, and premiums, net (11,284) Total carrying amount of debt components $ 625,466 |
Guaranteed loan financing
Guaranteed loan financing | 3 Months Ended |
Mar. 31, 2021 | |
Guaranteed loan financing. | |
Guaranteed loan financing | Note 13. Guaranteed loan financing Participations or other partial loan sales which do not meet the definition of a participating interest remain as an investment in the consolidated balance sheets and the portion sold is recorded as guaranteed loan financing in the liabilities section of the consolidated balance sheets. For these partial loan sales, the interest earned on the entire loan balance is recorded as interest income and the interest earned by the buyer in the partial loan sale is recorded within interest expense in the accompanying consolidated statements of income. The following table presents guaranteed loan financing and the related interest rates and maturity dates: Weighted Average Range of Range of (In Thousands) Interest Rate Interest Rates Maturities (Years) Ending Balance March 31, 2021 3.78 % 0.99 - 6.50 % 2021 - 2044 $ 386,036 December 31, 2020 3.76 % 0.99 - 6.50 % 2021 - 2044 $ 401,705 The following table summarizes contractual maturities of total guaranteed loan financing outstanding: (In Thousands) March 31, 2021 2021 212 2022 1,257 2023 1,998 2024 3,242 2025 3,410 Thereafter 375,917 Total $ 386,036 Our guaranteed loan financings are secured by loans of $387.2 million and $403.0 million as of March 31, 2021 and December 31, 2020, respectively. |
Variable interest entities and
Variable interest entities and securitization activities | 3 Months Ended |
Mar. 31, 2021 | |
Variable interest entities and securitization activities | |
Variable interest entities and securitization activities | Note 14. Variable interest entities and securitization activities In the normal course of business, we enter into certain types of transactions with entities that are considered to be VIEs. Our primary involvement with VIEs has been related to our securitization transactions in which we transfer assets to securitization trusts. We primarily securitize our acquired and originated loans, which provides a source of funding for us and has enabled us to transfer a certain portion of the economic risk of the loans or related debt securities to third parties. We also transfer originated loans to securitization trusts sponsored by third parties, most notably Freddie Mac. Third-party securitizations are securitization entities in which we maintain an economic interest but do 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 VIEs in which we have been involved in are consolidated within our financial statements. See Note 3 for a discussion of our accounting policies applied to the consolidation of the VIE and transfer of the loans in connection with the securitization. Securitization-related VIEs Company sponsored securitizations. For financial statement reporting purposes, since the underlying trust is consolidated, the securitization is effectively viewed as a financing of the loans that were securitized to enable the senior security to be created and sold 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, except that the Company has 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 the 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 following table presents additional information on the Company’s securitized debt obligations: March 31, 2021 December 31, 2020 Current Weighted Current Weighted Principal Carrying Average Principal Carrying Average (In Thousands) Balance value Interest Rate Balance value Interest Rate Waterfall Victoria Mortgage Trust 2011-SBC2 $ 2,869 $ 2,869 5.5 % $ 4,055 $ 4,055 5.5 % ReadyCap Lending Small Business Trust 2019-2 103,030 97,078 2.6 103,030 101,468 3.1 Sutherland Commercial Mortgage Trust 2017-SBC6 24,747 24,334 3.7 27,035 26,555 3.6 Sutherland Commercial Mortgage Trust 2018-SBC7 — — — 79,302 78,168 4.7 Sutherland Commercial Mortgage Trust 2019-SBC8 170,678 168,180 2.9 178,911 176,307 2.9 Sutherland Commercial Mortgage Trust 2020-SBC9 124,621 122,129 3.9 131,729 129,014 3.8 ReadyCap Commercial Mortgage Trust 2014-1 10,703 10,681 5.7 10,880 10,858 5.8 ReadyCap Commercial Mortgage Trust 2015-2 35,894 33,864 5.1 45,075 35,183 4.8 ReadyCap Commercial Mortgage Trust 2016-3 26,083 25,068 4.8 26,371 25,286 4.7 ReadyCap Commercial Mortgage Trust 2018-4 89,739 86,702 4.1 94,273 91,098 4.0 ReadyCap Commercial Mortgage Trust 2019-5 225,934 217,636 4.2 229,232 220,605 4.2 ReadyCap Commercial Mortgage Trust 2019-6 348,901 342,606 3.2 359,266 348,773 3.2 Ready Capital Mortgage Financing 2018-FL2 — — — 48,979 48,975 2.4 Ready Capital Mortgage Financing 2019-FL3 202,993 202,043 1.5 229,440 227,950 2.0 Ready Capital Mortgage Financing 2020-FL4 324,215 319,075 3.0 324,219 318,385 3.1 Ready Capital Mortgage Financing 2021-FL5 461,432 503,583 1.5 — — — Total (1) $ 2,151,839 $ 2,155,848 2.9 % $ 1,891,797 $ 1,842,680 3.3 % (1) Excludes non-company sponsored securitized debt obligations of $56.1 million and $63.1 million that are consolidated in the consolidated balance sheets as of March 31, 2021 and December 31, 2020, respectively. Repayment of our 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 our 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. Other VIEs Other VIEs include a variable interest that we hold in an acquired joint venture investment that we account for as an equity method investment. We do not consolidate these entities because we do not have the power to direct the activities that most significantly impact their economic performance, we only account for our specific interest in them. Assets and liabilities of consolidated VIEs The following table presents securitized assets and liabilities of VIEs consolidated on our consolidated balance sheets: (In Thousands) March 31, 2021 December 31, 2020 Assets: Cash and cash equivalents $ 14 $ 20 Restricted cash 631 13,790 Loans, net 2,877,837 2,472,807 Real estate, held for sale 2,778 4,456 Other assets 17,467 27,670 Total assets $ 2,898,727 $ 2,518,743 Liabilities: Securitized debt obligations of consolidated VIEs, net 2,211,923 1,905,749 Total liabilities $ 2,211,923 $ 1,905,749 Assets of unconsolidated VIEs The following table reflects our variable interests in identified VIEs, of which we are not the primary beneficiary: Carrying Amount Maximum Exposure to Loss (1) (In Thousands) March 31, 2021 December 31, 2020 March 31, 2021 December 31, 2020 Mortgage backed securities, at fair value (2) $ 82,158 $ 80,690 $ 82,158 $ 80,690 Investment in unconsolidated joint ventures 26,298 28,290 26,298 28,290 Total assets in unconsolidated VIEs $ 108,456 $ 108,980 $ 108,456 $ 108,980 (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 Freddie Mac and other third party sponsored securitizations. |
Interest income and interest ex
Interest income and interest expense | 3 Months Ended |
Mar. 31, 2021 | |
Interest income and interest expense | |
Interest income and interest expense | Note 15. Interest income and interest expense Interest income expense are recorded in the consolidated statements of income and classified based on the nature of the underlying asset or liability. The following table presents the components of interest income and expense: Three Months Ended March 31, (In Thousands) 2021 2020 Interest income Loans Originated transitional loans $ 25,560 $ 22,219 Originated SBC loans 12,441 15,998 Acquired loans 13,810 15,411 Acquired SBA 7(a) loans 4,926 6,202 Originated SBA 7(a) loans 3,614 6,269 Originated SBC loans, at fair value 229 317 Originated residential agency loans 37 20 Total loans (1) $ 60,617 $ 66,436 Held for sale, at fair value, loans Originated residential agency loans $ 2,121 $ 1,297 Originated Freddie loans 607 271 Acquired loans 2 68 Total loans, held for sale, at fair value (1) $ 2,730 $ 1,636 Paycheck Protection Program loans Paycheck Protection Program loans $ 6,721 $ — Paycheck Protection Program loans, at fair value 171 — Total Paycheck Protection Program loans $ 6,892 $ — Mortgage backed securities, at fair value $ 3,132 $ 1,479 Total interest income $ 73,371 $ 69,551 Interest expense Secured borrowings $ (17,574) $ (12,758) Paycheck Protection Program Liquidity Facility borrowings (334) — Securitized debt obligations of consolidated VIEs (19,093) (19,529) Guaranteed loan financing (3,651) (6,243) Senior secured note (3,459) (3,472) Convertible note (2,188) (2,188) Corporate debt (4,462) (2,740) Total interest expense $ (50,761) $ (46,930) Net interest income before provision for loan losses $ 22,610 $ 22,621 (1) Includes interest income on loans in consolidated VIEs. |
Derivative instruments
Derivative instruments | 3 Months Ended |
Mar. 31, 2021 | |
Derivative instruments | |
Derivative instruments | Note 16. Derivative instruments The Company is exposed to changing interest rates and market conditions, which affect cash flows associated with borrowings. The Company uses derivative instruments to manage interest rate risk and conditions in the commercial mortgage market and, as such, views them as economic hedges. Interest rate swaps are used to mitigate the exposure to changes in interest rates and involve the receipt of variable-rate interest amounts from a counterparty in exchange for making payments based on a fixed interest rate over the life of the swap contract. CDS are executed in order to mitigate the risk of deterioration in the current credit health of the commercial mortgage market. IRLCs are entered into with customers who have applied for residential mortgage loans and meet certain underwriting criteria. These commitments expose GMFS to market risk if interest rates change and if the loan is not economically hedged or committed to an investor. For derivative instruments that the Company has not elected hedge accounting, the fair value adjustments on such instruments are recorded in earnings. The fair value adjustments for interest rate swaps and CDS, along with the related interest income, interest expense and gains (losses) on termination of such instruments, are reported as a net realized gain on financial instruments in the consolidated statements of income. The fair value adjustments for IRLCs, along with the related interest income, interest expense and gains (losses) on termination of such instruments, are reported in residential mortgage banking activities in the consolidated statements of income. As described in Note 3, for qualifying cash flow hedges, the entire change in the fair value of the derivative is recorded in OCI and recognized in the consolidated statements of income when the hedged cash flows affect earnings. Derivative amounts affecting earnings are recognized consistent with the classification of the hedged item, primarily interest expense. The ineffective portions of the cash flow hedges are immediately recognized in earnings. The following tables summarize the Company’s use of derivatives and their effect in the consolidated financial statements. Notional amounts included in the table are the average notional amounts on the consolidated balance sheet dates. We believe these are the most relevant measure of volume or derivative activity as they best represent the Company’s exposure to underlying instruments. The following table summarizes our derivatives, by type: As of March 31, 2021 As of December 31, 2020 Asset Liability Asset Liability Notional Derivatives Derivatives Notional Derivatives Derivatives (In Thousands) Primary Underlying Risk Amount Fair Value Fair Value Amount Fair Value Fair Value Interest rate lock commitments Interest rate risk $ 581,383 $ 11,724 $ — $ 614,358 $ 16,363 $ — Interest Rate Swaps - not designated as hedges Interest rate risk 429,181 — (784) 160,801 — (952) Interest Rate Swaps - designated as hedges Interest rate risk 132,325 — (3,391) 132,325 — (5,701) TBA Agency Securities Interest rate risk 592,000 — (97) 565,000 — (4,004) Credit Default Swaps Credit risk 189,525 (131) 15,000 — (174) FX forwards Foreign exchange rate risk 25,554 805 — 3,866 — (773) Total $ 1,949,968 $ 12,529 $ (4,403) $ 1,491,350 $ 16,363 $ (11,604) The following tables summarize the gains and losses on the Company’s derivatives: Three Months Ended March 31, 2021 Three Months Ended March 31, 2020 Net Change in Net Change in Net Realized Unrealized Net Realized Unrealized (In Thousands) Gain (Loss) Gain (Loss) Gain (Loss) Gain (Loss) Credit default swaps (1) $ — $ 42 $ — $ 370 Interest rate swaps (1)(2) (1,297) 6,523 (247) (20,168) TBA Agency Securities (3) — 3,908 — — Interest rate lock commitments (3) — (4,639) — 14,487 FX forwards (1) (528) 1,577 (137) 485 Total $ (1,825) $ 7,411 $ (384) $ (4,826) (1) Gains (losses) are recorded in net unrealized gain (loss) on financial instruments or net realized gain (loss) on financial instruments in the consolidated statements of income. The following table summarizes the gains and losses on the Company’s derivatives which have qualified for hedge accounting: (In Thousands) Derivatives - effective portion reclassified from AOCI to income Hedge ineffectiveness recorded directly in income (2) Total income statement impact Derivatives- effective portion recorded in OCI (3) Total change in OCI for period (3) Hedge type: Interest rate - forecasted transactions (1) $ (298) — (298) 1,680 1,978 Three Months Ended March 31, 2021 $ (298) $ — $ (298) $ 1,680 $ 1,978 Interest rate - forecasted transactions (1) $ (367) $ (1,694) $ (2,061) $ (83) $ 1,978 Three Months Ended March 31, 2020 $ (367) $ (1,694) $ (2,061) $ (5,189) $ (3,128) (1) Consists of benchmark interest rate hedges of LIBOR-indexed floating-rate liabilities. (2) 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. (3) Represents after tax amounts recorded in OCI. |
Real estate, held for sale
Real estate, held for sale | 3 Months Ended |
Mar. 31, 2021 | |
Real estate, held for sale | |
Real estate, held for sale | Note 17. Real estate, held for sale The following table summarizes the carrying amount of the Company’s real estate holdings. The Company completed the acquisition of Owens Realty Mortgage, Inc. (“ORM”), through a merger in March of 2019. Real estate, held for sale acquired in the merger with ORM is separately disclosed below. (In Thousands) March 31, 2021 December 31, 2020 Acquired ORM Portfolio: Retail $ 18,700 $ 18,700 Mixed Use 14,248 14,248 Land 6,317 7,256 Lodging/Residential 3,230 3,230 Total Acquired ORM REO $ 42,495 $ 43,434 Other REO held for sale: Single Family $ 26,107 $ — Retail 3,614 660 Office 829 829 SBA 409 425 Total Other REO (1) $ 30,959 $ 1,914 Total Real Estate, held for sale $ 73,454 $ 45,348 (1) Excludes $2.8 million and $4.5 million of real estate, held for sale within consolidated VIEs. |
Agreements and transactions wit
Agreements and transactions with related parties | 3 Months Ended |
Mar. 31, 2021 | |
Agreements and transactions with related parties | |
Agreements and transactions with related parties | Note 18. Agreements and transactions with related parties Management Agreement The Company has entered into a management agreement with our Manager (the “Management Agreement”), which describes the services to be provided to us by our Manager and compensation for such services. Our Manager is responsible for managing the Company’s day-to-day operations, subject to the direction and oversight of the Company’s board of directors. Management fee. The following table presents certain information on the management fee payable to our Manager: For the Three Months Ended March 31, 2021 2020 Management fee - total $ 2.7 million $ 2.6 million Management fee - amount unpaid $ 5.4 million $ 2.6 million Incentive distribution. four twelve realized gains or losses on the sales of MBS and on discontinued operations which were excluded from the definition of distributable earnings described under "Non-GAAP Financial Measures". The following table presents certain information on the incentive fee payable to our Manager: For the Three Months Ended March 31, 2021 2020 Incentive fee distribution - total $ — $ — Incentive fee distribution - amount unpaid $ 1.3 million $ — The Management Agreement may be terminated upon the affirmative vote of at least two The current term of the Management Agreement will expire on October 31, 2021, 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 following table presents certain information on reimbursable expenses payable to our Manager: For the Three Months Ended March 31, 2021 2020 Reimbursable expenses payable to our Manager - total $ 2.0 million $ 1.3 million Reimbursable expenses payable to our Manager - amount unpaid $ 2.3 million $ 0.2 million |
Other assets and other liabilit
Other assets and other liabilities | 3 Months Ended |
Mar. 31, 2021 | |
Other assets and other liabilities | |
Other assets and other liabilities | Note 19. Other assets and other liabilities The following table details the Company’s other assets and other liabilities. (In Thousands) March 31, 2021 December 31, 2020 Other assets: Deferred tax asset $ 18,396 $ 18,396 Deferred loan exit fees 16,725 13,940 Accrued interest 16,120 12,656 Goodwill 17,817 11,206 Due from servicers 16,487 11,171 Right-of-use lease asset 3,138 3,172 Intangible assets 6,662 6,986 Deferred financing costs 4,611 2,612 PPP fee receivable 31,413 18 Other assets 20,134 9,346 Other assets $ 151,503 $ 89,503 Accounts payable and other accrued liabilities: Deferred tax liability $ 16,839 $ 16,839 Accrued salaries, wages and commissions 24,442 35,724 Accrued interest payable 17,250 19,695 Servicing principal and interest payable 10,028 7,318 Repair and denial reserve 11,626 9,557 Payable to related parties 6,769 4,088 Accrued professional fees 5,014 1,365 Lease payable 4,349 3,670 Deferred LSP revenue 3,959 10,700 Accrued PPP related costs 30,620 498 Other liabilities 31,569 26,201 Total accounts payable and other accrued liabilities $ 162,465 $ 135,655 Intangible assets The following table presents information about the intangible assets held by the Company: (In Thousands) March 31, 2021 December 31, 2020 Estimated Useful Life Internally developed software - Knight Capital $ 2,903 $ 3,061 6 years Broker network - Knight Capital 822 889 4.5 years Trade name - Knight Capital 672 709 6 years Favorable lease 736 768 12 years Trade name - GMFS 529 559 15 years SBA license 1,000 1,000 Indefinite life Total Intangible Assets $ 6,662 $ 6,986 Amortization expense related to the intangible assets previously acquired for both the three months ended March 31, 2021 and 2020, was $0.3 million. Such amounts are recorded as other operating expenses in the consolidated statements of income. Accumulated amortization for finite-lived intangible assets is as follows: (In Thousands) March 31, 2021 Favorable lease $ 744 Trade name - GMFS 694 Internally developed software - Knight Capital 897 Broker network - Knight Capital 378 Trade name - Knight Capital 208 Total Accumulated Amortization $ 2,921 Amortization expense related to the finite-lived intangible assets for the subsequent five years is as follows: (In Thousands) March 31, 2021 2021 $ 971 2022 1,268 2023 1,242 2024 1,032 2025 786 2026 119 Thereafter 244 Total $ 5,662 Loan indemnification reserve A liability has been established for potential losses related to representations and warranties made by GMFS for loans sold with a corresponding provision recorded for loan indemnification losses. The liability is included in accounts payable and other accrued liabilities in the Company's consolidated balance sheets and the provision for loan indemnification losses is included in variable expenses on residential mortgage banking activities, in the Company's consolidated statements of income. In assessing the adequacy of the liability, management evaluates various factors including historical repurchases and indemnifications, historical loss experience, known delinquent and other problem loans, outstanding repurchase demand, historical rescission rates and economic trends and conditions in the industry. Actual losses incurred are reflected as a reduction of the reserve liability. At March 31, 2021 and December 31, 2020, the loan indemnification reserve was $4.5 million and $4.1 million, respectively. Because of the uncertainty in the various estimates underlying the loan indemnification reserve, there is a range of losses in excess of the recorded loan indemnification reserve that is reasonably possible. The estimate of the range of possible losses for representations and warranties does not represent a probable loss, and is based on current available information, significant judgment, and a number of assumptions that are subject to change. At March 31, 2021 and December 31, 2020, the reasonably possible loss above the recorded loan indemnification reserve was not considered material. |
Other income and operating expe
Other income and operating expenses | 3 Months Ended |
Mar. 31, 2021 | |
Other income and operating expenses | |
Other income and operating expenses | Note 20. Other income and operating expenses Paycheck Protection Program In response to the COVID-19 pandemic, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act” or “Round 1”), signed into law on March 27, 2020, and the Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act (the “Economic Aid Act” or “Round 2”), signed into law on December 27, 2020, established and extended the PPP. Both the CARES Act and the Economic Aid Act, among other things, provide certain measures to support individuals and businesses in maintaining solvency through monetary relief in the form of financing and loan forgiveness and/or forbearance. The primary catalyst of small business stimulus is the PPP, an SBA loan that temporarily supports businesses to retain their workforce and cover certain operating expenses during the COVID-19 pandemic. Furthermore, the PPP includes a 100% guarantee from the federal government and principal forgiveness for borrowers if the funds are used for defined purposes. The Company has participated in the PPP as both a direct lender and as service provider. Under the CARES Act, we originated $109.5 million of PPP loans and were a Lender Service Provider (“LSP”) for $2.5 billion of PPP loans. For our originations as direct lender, we classified the loans as held at fair value and elected the fair value option. Fees totaling $5.2 million, were recognized in the period of origination. For loans processed under the LSP, we were obligated to perform certain services including: 1) assistance and services to the third-party in the underwriting, marketing, processing and funding of loans, 2) processing forgiveness of the loans with the SBA and 3) servicing and management of subsequently resulting PPP loan portfolios. We do not hold these loans on balance sheet and fees totaling $43.3 million were recognized as services are performed. As of March 31, 2021, we have $4.0 million in unrecognized fees. Expenses related to PPP loans under the CARES Act were recognized in the period in which they were incurred. Under the Economic Aid Act, we have originated $1.3 billion of PPP loans. These loans are classified loans as held-for-investment and are accounted for the loans under ASC 310-10, Receivables . Net fees totaling The following tables present details about the Company’s financial position related to its PPP activities: (In Thousands) March 31, 2021 Assets Restricted cash $ 10,000 Paycheck Protection Program loans 1,254,420 Paycheck Protection Program loans, at fair value 38,388 Prepaid expenses 13 PPP fee receivable 31,413 Deferred financing costs 1,065 Accrued interest receivable 1,554 Total PPP related assets $ 1,336,853 Liabilities Secured borrowings $ 230,483 Paycheck Protection Program Liquidity Facility borrowings 1,132,536 Interest payable 364 Deferred LSP revenue 3,959 Accrued PPP related costs 30,620 Payable to third parties 365 Repair and denial reserve 4,961 Total PPP related liabilities $ 1,403,288 (In Thousands) Three Months Ended March 31, 2021 Financial statement account Income LSP fee income $ 6,741 Servicing income Interest income 6,892 Interest income Total PPP related income $ 13,633 Expense Direct operating expenses $ 4,545 Other operating expenses - origination costs Repair and denial reserve 1,656 Other income - change in repair and denial reserve Interest expense 3,861 Interest expense Total PPP related expenses (direct) $ 10,062 Net PPP related income $ 3,571 Other income and expenses The following table details the Company’s other income and operating expenses. Three Months Ended March 31, (In Thousands) 2021 2020 Other income Origination income $ 1,613 $ 2,495 Change in repair and denial reserve (2,069) 136 Other 1,027 1,442 Total other income $ 571 $ 4,073 Other operating expenses Origination costs $ 8,145 $ 3,025 Technology expense 1,872 1,580 Impairment on real estate — 2,969 Rent and property tax expense 1,686 1,184 Recruiting, training and travel expense 496 624 Marketing expense 576 546 Loan acquisition costs 34 98 Financing costs on purchased future receivables 24 624 Other 2,651 3,094 Total other operating expenses $ 15,484 $ 13,744 |
Stockholders Equity
Stockholders Equity | 3 Months Ended |
Mar. 31, 2021 | |
Stockholders' Equity | |
Stockholders' Equity | Note 21. Stockholders’ Equity Common stock dividends The following table presents cash dividends declared by our board of directors on our common stock from March 31, 2020 through March 31, 2021: Declaration Date Record Date Payment Date Dividend per Share June 15, 2020 June 30, 2020 July 31, 2020 $ 0.25 September 16, 2020 September 30, 2020 October 30, 2020 $ 0.30 December 14, 2020 December 31, 2020 January 29, 2021 $ 0.35 March 1, 2021 March 15, 2021 March 18, 2021 $ 0.30 March 24, 2021 April 5, 2021 April 30, 2021 $ 0.10 Stock incentive plan The Company currently maintains the 2012 equity incentive plan (the “2012 Plan”). The 2012 Plan authorizes the Compensation Committee to approve grants of equity-based awards to our officers, directors, and employees of our Manager and its affiliates. The equity incentive plan provides for grants of equity-based awards up to an aggregate of 5% of the shares of the Company’s common stock issued and outstanding from time to time on a fully diluted basis. The Company’s current policy for issuing shares upon settlement of stock-based incentive awards is to issue new shares. The fair value of the RSUs and RSAs granted, which is determined based upon the stock price on the grant date, is recorded as compensation expense on a straight - The following table summarizes the Company’s RSU and RSA activity: Restricted Stock Awards (In Thousands, except share data) Number of Grant date fair value Weighted-average grant date fair value (per share) Outstanding, December 31, 2020 872,079 $ 13,737 $ 15.75 Granted 185,586 2,379 12.82 Vested (115,604) (1,801) 15.58 Canceled (1,547) (21) 13.50 Outstanding, March 31, 2021 940,514 $ 14,294 $ 15.20 For the three months ended March 31, 2021 and 2020, the Company recognized $1.6 million and $1.4 million, respectively of noncash compensation expense related to its stock-based incentive plan in our consolidated statements of income, respectively. At March 31, 2021 and December 31, 2020, approximately $14.3 million and $13.7 million, respectively of noncash 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 remainder of the respective vesting periods. Performance-based equity awards In February 2021, the Company granted to certain key employees 61,895 shares of performance-based equity awards, which are allocated 50% to awards that vest based on absolute total shareholder return (“TSR”) for the three-year forward-looking period ended December 31, 2023 and 50% to awards that vest based on TSR for such three-year forward-looking performance period relative to the performance of a designated peer group. Subject to the absolute and relative TSR achieved during the vesting period, the actual number of shares that the key employees receive at the end of the period may range from 0% to 300% of the target shares granted. The fair value of the performance-based equity awards granted is recorded as compensation expense and will cliff vest at the end of the vesting period on December 31, 2023, with an offsetting increase in stockholders’ equity. Preferred stock The following is a summary of the Company’s preferred stock outstanding at March 31, 2021. In the event of a liquidation or dissolution of the Company, the Company’s then outstanding preferred stock ranks senior to the Company’s common stock with respect to payment of dividends and the distribution of assets. We classify our Series C Cumulative Convertible Preferred Stock, or Series C Preferred Stock, on our balance sheets using the guidance in ASC 480‑10‑S99. Our 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 redemption under these circumstances is not solely within our control, we have classified our Series C Preferred Stock as temporary equity. We have analyzed whether the conversion features in our Series C Preferred Stock should be bifurcated under the guidance in ASC 815‑10 and have determined that bifurcation is not necessary. Preferential Cash Dividends (1)(2) Carrying Value (in thousands) Series Shares Issued and Outstanding (in thousands) Par Value Liquidation Preference (3) Rate per Annum Annual Dividend (per share) March 31, 2021 B 1,919 $ 0.0001 $ 25.00 8.63% $ 2.16 $ 47,984 C 780 0.0001 25.00 6.25% 1.56 $ 19,494 D 2,010 0.0001 25.00 7.63% 1.91 $ 50,257 (1) (2) (3) |
Earnings per Share of Common St
Earnings per Share of Common Stock | 3 Months Ended |
Mar. 31, 2021 | |
Earnings per Share of Common Stock | |
Earnings per Share of Common Stock | Note 22. Earnings per Share of Common Stock The following table provides information on the basic and diluted earnings per share computations, including the number of shares of common stock used for purposes of these computations. Three Months Ended March 31, (In Thousands, except for share and per share amounts) 2021 2020 Basic Earnings Net income (loss) $ 28,947 $ (51,516) Less: Income (loss) attributable to non-controlling interest 659 (1,064) Less: Income attributable to participating shares 657 463 Basic earnings $ 27,631 $ (50,915) Diluted Earnings Net income (loss) $ 28,947 $ (51,516) Less: Income (loss) attributable to non-controlling interest 659 (1,064) Less: Income attributable to participating shares 657 463 Diluted earnings $ 27,631 $ (50,915) Number of Shares Basic — Average shares outstanding 56,817,632 51,984,040 Effect of dilutive securities — Unvested participating shares 25,816 5,973 Diluted — Average shares outstanding 56,843,448 51,990,013 Earnings Per Share Attributable to RC Common Stockholders: Basic $ 0.49 $ (0.98) Diluted $ 0.49 $ (0.98) 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. Additionally, as of March 31, 2021, there are potential shares of common stock contingently issuable upon the conversion of the Convertible Notes in the future. The Company has asserted its intent and ability to settle the principal amount of the Convertible Notes in cash. Based on this assessment, the Company determined that it would be appropriate to apply a method similar to the treasury stock method, such that contingently issuable common stock is assessed quarterly along with our other potentially dilutive instruments. In order to compute the dilutive effect, the number of shares included in the denominator of diluted EPS is determined by dividing the “conversion spread value” of the share-settled portion (value above accreted value of face value and interest component) of the instrument by the share price. The “conversion spread value” is the value that would be delivered to investors in shares based on the terms of the bond upon an assumed conversion. As of March 31, 2021, the conversion spread value is currently zero, since the closing price of our common stock does not exceed the conversion rate (strike price) and is “out-of-the-money”, resulting in no impact on diluted EPS. Certain investors own OP units in our 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 March 31, 2021 and December 31, 2020, the non-controlling interest OP unit holders owned 1,175,205 OP units. |
Offsetting assets and liabiliti
Offsetting assets and liabilities | 3 Months Ended |
Mar. 31, 2021 | |
Offsetting assets and liabilities | |
Offsetting assets and liabilities | Note 23. Offsetting assets and liabilities In order to better define its contractual rights and to secure rights that will help the Company mitigate its counterparty risk, the Company may enter into an International Swaps and Derivatives Association (“ISDA”) Master Agreement with multiple derivative counterparties. An ISDA Master Agreement, published by ISDA, is a bilateral trading agreement between two parties that allow both parties to enter into over-the-counter (“OTC”), derivative contracts. The ISDA Master Agreement contains a Schedule to the Master Agreement and a Credit Support Annex, which governs the maintenance, reporting, collateral management and default process (netting provisions in the event of a default and/or a termination event). Under an ISDA Master Agreement, the Company may, under certain circumstances, offset with the counterparty certain derivative financial instruments’ payables and/or receivables with collateral held and/or posted and create one single net payment. The provisions of the ISDA Master Agreement typically permit a single net payment in the event of default, including the bankruptcy or insolvency of the counterparty. However, bankruptcy or insolvency laws of a particular jurisdiction may impose restrictions on or prohibitions against the right of offset in bankruptcy, insolvency or other events. In addition, certain ISDA Master Agreements allow counterparties to terminate derivative contracts prior to maturity in the event the Company’s stockholders’ equity declines by a stated percentage or the Company fails to meet the terms of its ISDA Master Agreements, which would cause the Company to accelerate payment of any net liability owed to the counterparty. As of March 31, 2021 and December 31, 2020, 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, entering into agreements with multiple counterparties. In accordance with ASU 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities The following tables provide details regarding the effect of offsetting the Company’s recognized assets and liabilities presented in the consolidated balance sheets: Gross amounts not offset in the Consolidated Balance Sheets (1) (in thousands) Gross amounts of recognized Assets / Liabilities Gross amounts offset in the Consolidated Balance Sheets Amounts presented in the Consolidated Balance Sheets Financial Instruments Cash Collateral Received / Paid Net Amount March 31, 2021 Assets Derivative instruments - Interest rate lock commitments 11,724 — 11,724 — $ — $ 11,724 Derivative instruments - FX forwards 805 — 805 — $ — $ 805 Total $ 12,529 $ — $ 12,529 $ — $ — $ 12,529 Liabilities Derivative instruments - Interest rate swaps $ 7,651 $ 3,476 $ 4,175 $ — $ 4,175 $ — Derivative instruments - Credit default swaps 131 — 131 — 131 — Derivative instruments - TBA Agency Securities 97 — 97 — — 97 Derivative instruments - FX forwards — — — — — — Secured borrowings 2,064,785 — 2,064,785 2,064,785 — — Total $ 2,072,664 $ 3,476 $ 2,069,188 $ 2,064,785 $ 4,306 $ 97 December 31, 2020 Assets Derivative instruments - Interest rate lock commitments $ 16,363 — 16,363 — $ — $ 16,363 Total $ 16,363 $ — $ 16,363 $ — $ — $ 16,363 Liabilities Derivative instruments - Interest rate swaps $ 11,670 $ 5,017 $ 6,653 $ — $ 6,653 $ — Derivative instruments - TBA Agency Securities 174 — 174 — 174 — Derivative instruments - Credit default swaps 4,004 — 4,004 — — 4,004 Derivative instruments - FX forwards 773 773 — — 773 Secured borrowings 1,294,243 — 1,294,243 1,294,243 — — Total $ 1,310,864 $ 5,017 $ 1,305,847 $ 1,294,243 $ 6,827 $ 4,777 (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 we have 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 us that exceeds our corresponding financial assets. In each case, any of these excess amounts are excluded from the table although they are separately reported in our consolidated balance sheets as assets or liabilities, respectively. |
Financial Instruments with off-
Financial Instruments with off-balance sheet risk, credit risk, and certain other risks | 3 Months Ended |
Mar. 31, 2021 | |
Financial Instruments off-balance sheet risk, credit risk, and certain other risks | |
Financial Instruments with off-balance sheet risk, credit risk, and certain other risks | Note 24. Financial instruments with off-balance sheet risk, credit risk, and certain other risks In the normal course of business, the Company enters into transactions in various financial instruments that expose us to various types of risk, both on and off balance sheet. Such risks are associated with financial instruments and markets in which the Company invests. These financial instruments expose us to varying degrees of market risk, credit risk, interest rate risk, liquidity risk, off balance sheet risk and prepayment risk. Market Risk Credit Risk The Company is also subject to credit risk with respect to the counterparties to derivative contracts. If a counterparty becomes bankrupt or otherwise fails to perform its obligation under a derivative contract due to financial difficulties, we 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 we are owed this fair market value in the termination of the derivative transaction and its claim is unsecured, we will be treated as a general creditor of such counterparty, and will not have any claim with respect to the underlying security. We may obtain only a limited recovery or may obtain no recovery in such circumstances. In addition, the business failure of a counterparty with whom we enter 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 us to cover our commitments, if any, at the then current market price. Counterparty credit risk is the risk that counterparties may fail to fulfill their obligations, including their inability to post additional collateral in circumstances where their pledged collateral value becomes inadequate. The Company attempts to manage its exposure to counterparty risk through diversification, use of financial instruments and monitoring the creditworthiness of counterparties. The Company finances the acquisition of a significant portion of its loans and investments with repurchase agreements and borrowings under credit facilities and other financing agreements. In connection with these financing arrangements, the Company pledges its loans, securities and cash as collateral to secure the borrowings. The amount of collateral pledged will typically exceed the amount of the borrowings (i.e., the haircut) such that the borrowings will be over-collateralized. As a result, the Company is exposed to the counterparty if, during the term of the repurchase agreement financing, a lender should default on its obligation and the Company is not able to recover its pledged assets. The amount of this exposure is the difference between the amount loaned to the Company plus interest due to the counterparty and the fair value of the collateral pledged by the Company to the lender including accrued interest receivable on such collateral. GMFS sells loans to investors without recourse. As such, the investors have assumed the risk of loss or default by the borrower. However, GMFS is usually required by these investors to make certain standard representations and warranties relating to credit information, loan documentation and collateral. To the extent that GMFS does not comply with such representations, or there are early payment defaults, GMFS may be required to repurchase the loans or indemnify these investors for any losses from borrower defaults. In addition, if loans pay-off within a specified time frame, GMFS may be required to refund a portion of the sales proceeds to the investors. Liquidity Risk Off-Balance Sheet Risk Interest Rate Our operating results will depend, in part, on differences between the income from our investments and our financing costs. Generally, our 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 our business, financial condition, liquidity, results of operations and prospects. Furthermore, such defaults could have an adverse effect on the spread between our interest-earning assets and interest-bearing liabilities. Additionally, non-performing SBC loans are not as interest rate sensitive as performing loans, as earnings on non-performing loans are often generated from restructuring the assets through loss mitigation strategies and opportunistically disposing of them. Because non-performing SBC loans are short-term assets, the discount rates used for valuation are based on short-term market interest rates, which may not move in tandem with long-term market interest rates. A rising rate environment often means an improving economy, which might have a positive impact on commercial property values, resulting in increased gains on the disposition of these assets. While rising rates could make it more costly to refinance these assets, we expect that the impact of this would be mitigated by higher property values. Moreover, small business owners are generally less interest rate sensitive than large commercial property owners, and interest cost is a relatively small component of their operating expenses. An improving economy will likely spur increased property values and sales, thereby increasing the need for SBC financing. Prepayment Risk — |
Commitments, Contingencies and
Commitments, Contingencies and Indemnifications | 3 Months Ended |
Mar. 31, 2021 | |
Commitments, Contingencies and Indemnifications | |
Commitments, Contingencies and Indemnifications | Note 25. Commitments, contingencies and indemnifications Litigation The Company may be subject to litigation and administrative proceedings arising in the ordinary course of its business. The Company has entered into agreements, which provide for indemnifications against losses, costs, claims, and liabilities arising from the performance of individual obligations under such agreements. The Company has had no prior claims or payments pursuant to these agreements. The Company’s individual maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Company that have not yet occurred. However, based on history and experience, the Company expects the risk of loss to be remote. Management is not aware of any other contingencies that would require accrual or disclosure in the consolidated financial statements. Unfunded Loan Commitments Unfunded loan commitments for SBC loans were as follows: (In Thousands) March 31, 2021 December 31, 2020 Loans, net $ 293,919 $ 285,389 Loans, held for sale at fair value $ 11,123 $ 7,809 Commitments to Originate Loans GMFS enters into IRLCs with customers who have applied for residential mortgage loans and meet certain credit and underwriting criteria. These commitments expose GMFS to market risk if interest rates change, and the loan is not economically hedged or committed to an investor. GMFS is also exposed to credit loss if the loan is originated and not sold to an investor and the borrower does not perform. Commitments to originate loans do not necessarily reflect future cash requirements as some commitments are expected to expire without being drawn upon. Total commitments to originate loans were as follows: (In Thousands) March 31, 2021 December 31, 2020 Commitments to originate residential agency loans $ 590,612 $ 575,600 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2021 | |
Income Taxes | |
Income Taxes | Note 26. Income Taxes The Company is a REIT pursuant to Internal Revenue Code Section 856. Our qualification as a REIT depends on our ability to meet various requirements imposed by the Internal Revenue Code, which relate to our organizational structure, diversity of stock ownership and certain requirements with regard to the nature of our assets and the sources of our income. As a REIT, we generally must distribute annually at least 90% of our 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 our earnings that we distribute. To the extent that we satisfy this distribution requirement, but distribute less than 100% of our net taxable income, we will be subject to U.S. federal income tax on our undistributed taxable income. In addition, we will be subject to a 4% nondeductible excise tax if the actual amount that we pay out to our stockholders in a calendar year is less than a minimum amount specified under U.S. federal tax laws. Even if we qualify as a REIT, we may be subject to certain U.S. federal income and excise taxes and state and local taxes on our income and assets. If we fail to maintain our qualification as a REIT for any taxable year, we may be subject to material penalties as well as federal, state and local income tax on our taxable income at regular corporate rates and we would not be able to qualify as a REIT for the subsequent four Certain of our subsidiaries have elected to be treated as taxable REIT subsidiaries (“TRSs”). TRSs permit us 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, we will continue to maintain our qualification as a REIT. Our TRSs engage in various real estate - related operations, including originating and securitizing commercial and residential mortgage loans, and investments in real property. The majority of our TRSs are held within the SBC originations, SBA originations, acquisitions and servicing, and residential mortgage banking segments. Our 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 us with respect to our interest in TRSs. During 2020, the CARES Act and the Consolidated Appropriations Act of 2021 (the “CAA”) were signed into law. Among other things, the provisions of these laws relate to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, and technical corrections to tax depreciation methods for qualified improvement property. As of March 31, 2021 and December 31, 2020, we have recognized a benefit of $2.7 million due to changes in net operating loss carryback provisions which allow net operating losses from tax years beginning in 2018, 2019, or 2020 to be carried back for five years. We will continue to monitor the impacts on our business due to legislative developments related to the COVID-19 pandemic. |
Segment Reporting
Segment Reporting | 3 Months Ended |
Mar. 31, 2021 | |
Segment Reporting | |
Segment Reporting | Note 27. Segment reporting The Company reports its results of operations through the following four business segments: i) Acquisitions SBC Originations SBA Originations, Acquisitions and Servicing Residential Mortgage Banking Acquisitions Through the acquisitions segment, the Company acquires performing and non-performing SBC loans and intends to continue to acquire these loans as part of the Company’s business strategy. The Company also acquires purchased future receivables through Knight Capital within this segment. SBC originations Through the SBC originations segment, the Company originates SBC loans secured by stabilized or transitional investor properties using multiple loan origination channels. Additionally, as part of this segment, we originate and service multi-family loan products under the Freddie Mac program. This segment also reflects the impact of our SBC securitization activities. SBA originations, acquisitions, and servicing Through the SBA originations, acquisitions, and servicing segment, the Company acquires, originates and services loans guaranteed by the SBA under the SBA Section 7(a) Program. This segment also reflects the impact of our SBA securitization activities. Residential mortgage banking Through the residential mortgage banking segment, the Company originates residential mortgage loans eligible to be purchased, guaranteed or insured by Fannie Mae, Freddie Mac, FHA, USDA and VA through retail, correspondent and broker channels. Corporate- Other Corporate - Other consists primarily of unallocated activities including interest expense relating to our senior secured and convertible notes on funds yet to be deployed, allocated employee compensation from our Manager, management and incentive fees paid to our Manager and other general corporate overhead expenses. Results of business segments and all other. SBA Originations, Residential Loan SBC Acquisitions, Mortgage Corporate- (In Thousands) Acquisitions Originations and Servicing Banking Other Consolidated Interest income $ 14,534 $ 39,693 $ 15,432 $ 2,044 $ 1,668 $ 73,371 Interest expense (11,971) (24,998) (9,207) (2,328) (2,257) (50,761) Net interest income before provision for loan losses $ 2,563 $ 14,695 $ 6,225 $ (284) $ (589) $ 22,610 Recovery of (provision for) loan losses 1,262 (1,609) 355 — — 8 Net interest income after (provision for) recovery of loan losses $ 3,825 $ 13,086 $ 6,580 $ (284) $ (589) $ 22,618 Non-interest income Residential mortgage banking activities $ — $ — $ — $ 41,409 $ — $ 41,409 Net realized gain on financial instruments and real estate owned (1,493) 5,565 4,900 — (126) 8,846 Net unrealized gain (loss) on financial instruments 897 3,033 514 15,355 1,197 20,996 Other income 1,183 1,288 (1,960) 15 45 571 Servicing income 21 726 7,782 7,106 — 15,635 Income on purchased future receivables, net of allowance for doubtful accounts 2,317 — — — — 2,317 Income (loss) on unconsolidated joint ventures (809) — — — — (809) Total non-interest income $ 2,116 $ 10,612 $ 11,236 $ 63,885 $ 1,116 $ 88,965 Non-interest expense Employee compensation and benefits (1,485) (2,252) (4,561) (13,588) (891) (22,777) Allocated employee compensation and benefits from related party (212) — — — (1,911) (2,123) Variable expenses on residential mortgage banking activities — — — (15,485) — (15,485) Professional fees (786) (323) (380) (251) (1,242) (2,982) Management fees – related party — — — — (2,693) (2,693) Loan servicing expense (1,751) (2,052) 102 (2,364) (39) (6,104) Merger related expenses — — — — (6,307) (6,307) Other operating expenses (2,364) (3,916) (6,285) (2,204) (715) (15,484) Total non-interest expense $ (6,598) $ (8,543) $ (11,124) $ (33,892) $ (13,798) $ (73,955) Income (loss) before provision for income taxes $ (657) $ 15,155 $ 6,692 $ 29,709 $ (13,271) $ 37,628 Total assets $ 1,121,590 $ 3,128,924 $ 1,983,098 $ 672,255 $ 1,111,088 $ 8,016,955 Reportable business segments, along with remaining unallocated amounts recorded within Corporate- Other, for the three months ended March 31, 2020 are summarized in the below table. SBA Originations, Residential Loan SBC Acquisitions, Mortgage Corporate- (In Thousands) Acquisitions Originations and Servicing Banking Other Consolidated Interest income $ 16,494 $ 39,269 $ 12,471 $ 1,317 $ — $ 69,551 Interest expense (11,205) (25,627) (8,513) (1,585) — (46,930) Net interest income before provision for loan losses $ 5,289 $ 13,642 $ 3,958 $ (268) $ — $ 22,621 Recovery of (provision for) loan losses (5,722) (29,828) (4,254) — — (39,804) Net interest income after provision for loan losses $ (433) $ (16,186) $ (296) $ (268) $ — $ (17,183) Non-interest income Residential mortgage banking activities $ — $ — $ — $ 36,669 $ $ 36,669 Net realized gain on financial instruments (739) 3,649 4,262 — — 7,172 Net unrealized gain (loss) on financial instruments (9,423) (6,491) (1,082) (16,438) — (33,434) Other income 2,336 1,283 295 60 99 4,073 Income on purchased future receivables, net 3,483 — — — — 3,483 Servicing income 355 532 1,074 6,136 — 8,097 Income from unconsolidated joint ventures (3,537) — — — — (3,537) Total non-interest income $ (7,525) $ (1,027) $ 4,549 $ 26,427 $ 99 $ 22,523 Non-interest expense Employee compensation and benefits $ (2,833) $ (2,710) $ (3,910) $ (8,741) $ (742) (18,936) Allocated employee compensation and benefits from related party (125) — — — (1,125) (1,250) Variable expenses on residential mortgage banking activities — — — (20,129) — (20,129) Professional fees (235) (338) (289) (287) (1,407) (2,556) Management fees – related party — — — — (2,561) (2,561) Loan servicing (expense) income (1,365) (1,580) (335) (2,258) (32) (5,570) Merger related expenses — — — — (47) (47) Other operating expenses (6,245) (3,457) (1,559) (1,785) (698) (13,744) Total non-interest expense $ (10,803) $ (8,085) $ (6,093) $ (33,200) $ (6,612) $ (64,793) Net income (loss) before provision for income taxes $ (18,761) $ (25,298) $ (1,840) $ (7,041) $ (6,513) $ (59,453) Total assets $ 1,209,617 $ 2,704,301 $ 703,331 $ 418,421 $ 234,380 $ 5,270,050 |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2021 | |
Subsequent Events | |
Subsequent Events | Note 28. Subsequent events As of April 15, 2021, the Company has fully liquidated the remaining Agency RMBS portfolio of $387.4 million acquired in the ANH Merger and repaid $349.5 million of indebtedness on the related assets. The Company has evaluated subsequent events through the issuance date of the financial statements and determined that no additional disclosure is necessary. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2021 | |
Summary of Significant Accounting Policies | |
Use of estimates | Use of estimates The preparation of the Company’s consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of income and expenses during the reporting period. Actual results could materially differ from those 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 VIEs in which we are the primary beneficiary. The consolidated financial statements are prepared in accordance with ASC 810, Consolidations. |
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, or returned to the Company when the restriction requirements no longer exist or at the maturity of the swap or repurchase agreement. |
Loans, held-for-investment | Loans, held-for-investment. Receivables. The Company uses the interest method to recognize, as a constant effective yield adjustment, the difference between the initial recorded investment in the loan and the principal amount of the loan. The calculation of the constant effective yield necessary to apply the interest method uses the payment terms required by the loan contract, and prepayments of principal are not anticipated to shorten the loan term. Recognition of interest income is suspended when any loans are placed on non-accrual status. Generally, all classes of loans are placed on non-accrual status when principal or interest has been delinquent for 90 days or when full collection is determined to be not probable. Interest income accrued, but not collected, at the date loans are placed on non-accrual status is reversed and subsequently recognized only to the extent it is received in cash or until the loan qualifies for return to accrual status. However, where there is doubt regarding the ultimate collectability of loan principal, all cash received is applied to reduce the carrying value of such loans. Loans are restored to accrual status only when contractually current and the collection of future payments is reasonably assured. |
Loans, held at fair value | Loans, held at fair value. |
Allowance for loan losses | Allowance for credit losses. On January 1, 2020, the Company adopted ASU 2016-13, Financial Instruments-Credit Losses In connection with the Company’s adoption of ASU 2016-13 on January 1, 2020, the Company implemented new processes including the utilization of loan loss forecasting models, updates to the Company’s reserve policy documentation, changes to internal reporting processes and related internal controls. The Company has implemented loan loss forecasting models for estimating expected life-time credit losses, at the individual loan level, for its loan portfolio. The CECL forecasting methods used by the Company include (i) a probability of default and loss given default method using underlying third-party CMBS/CRE loan database with historical loan losses from 1998 to 2020 and (ii) probability weighted expected cash flow method, depending on the type of loan and the availability of relevant historical market loan loss data. The Company might use other acceptable alternative approaches in the future depending on, among other factors, the type of loan, underlying collateral, and availability of relevant historical market loan loss data. Significant inputs to the Company’s forecasting methods include (i) key loan-specific inputs such as LTV, vintage year, loan-term, underlying property type, occupancy, geographic location, and others, and (ii) a macro-economic forecast, including unemployment rates, interest rates, commercial real estate prices, and others. These estimates may change in future periods based on available future macro-economic data and might result in a material change in the Company’s future estimates of expected credit losses for its loan portfolio. In certain instances, the Company considers relevant loan-specific qualitative factors to certain loans to estimate its CECL expected credit losses. The Company considers loan investments that are both (i) expected to be substantially repaid through the operation or sale of the underlying collateral, and (ii) for which the borrower is experiencing financial difficulty, to be “collateral-dependent” loans. For such loans that the Company determines that foreclosure of the collateral is probable, the Company measures the expected losses based on the difference between the fair value of the collateral 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 we have 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. Our 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. |
Troubled debt restructurings | Troubled debt restructurings. Generally, all loans modified in a TDR are placed or remain on non-accrual status at the time of the restructuring. However, certain accruing loans modified in a TDR that are current at the time of restructuring may remain on accrual status if payment in full under the restructured terms is expected. Additionally, based on issued regulatory guidance provided by federal and state regulatory agencies, a loan modification is not considered TDR if: (1) made in response to the COVID-19 pandemic; (2) the borrower was current on payments at the time the modification program was implemented; (3) the modification was short-term (e.g., six months). |
Loans, held for sale, at fair value | Loans, held for sale, at fair value Loans, held for sale, at fair value are loans that are expected to be sold to third parties in the near term. Interest is recognized as interest income in the consolidated statements of income when earned and deemed collectible. For loans originated by our SBC originations and SBA originations segments, changes in fair value are recurring and are reported as net unrealized gain (loss) in the consolidated statements of income. For originated SBA loans, the guaranteed portion is held for sale, at fair value. For loans originated by GMFS, changes in fair value are reported as residential mortgage banking activities in the consolidated statements of income. |
Paycheck Protection Program loans | Paycheck Protection Program loans Paycheck Protection Program (“PPP”) loans originated in response to the COVID-19 pandemic are described in Note 20. The Company has elected the fair value option for the loans originated by the Company for the first round of the program. Interest is recognized as interest income in the consolidated statements of income when earned and deemed collectible. Changes in fair value are recurring and are reported as net unrealized gain (loss) in the consolidated statements of income, although the PPP includes a 100% guarantee from the federal government and principal forgiveness for borrowers if the funds were used for defined purposes. 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 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 along with expected prepayments from loan forgiveness by the federal government. |
Mortgage backed securities, at fair value | Mortgage backed securities, at fair value The Company accounts for MBS as trading securities and carries them at fair value under ASC 320, Investments-Debt and Equity Securities. MBS are recorded at fair value as determined by market prices provided by independent broker dealers or other independent valuation service providers. The fair values assigned to these investments are based upon available information and may not reflect amounts that may be realized. We generally intend to hold our investment in MBS to generate interest income; however, we have and may continue to sell certain of our investment securities as part of the overall management of our assets and liabilities and operating our business. |
Loans eligible for repurchase from Ginnie Mae | Loans eligible for repurchase from Ginnie Mae When the Company has the unilateral right to repurchase Ginnie Mae pool loans it has previously sold (generally loans that are more than 90 days past due), the Company then records the right to repurchase the loan as an asset and liability in its consolidated balance sheets. Such amounts reflect the unpaid principal balance of the loans. |
Derivative instruments, at fair value | Derivative instruments, at fair value Subject to maintaining our qualification as a REIT for U.S. federal income tax purposes, we utilize derivative financial instruments, currently comprised of credit default swaps (“CDSs”), interest rate swaps, TBA agency securities and interest rate lock commitments (“IRLCs”) as part of our risk management. The Company accounts for derivative instruments under ASC 815, Derivatives and Hedges Interest rate swap agreements. TBA Agency Securities IRLC. FX forwards. CDS. Hedge accounting. To qualify as an accounting hedge under the hedge accounting rules (versus an economic hedge where hedge accounting is not applied), a hedging relationship must be highly effective in offsetting the risk designated as being hedged. We use cash flow hedges to hedge the exposure to variability in cash flows from forecasted transactions, including the anticipated issuance of securitized debt obligations. ASC 815 requires that a forecasted transaction be identified as either: 1) a single transaction, or 2) a group of individual transactions that share the same risk exposures for which they are designated as being hedged. Hedges of forecasted transactions are considered cash flow hedges since the price is not fixed, hence involve variability of cash flows. For qualifying cash flow hedges, the change in the fair value of the derivative (the hedging instrument) is recorded in other comprehensive income (loss) ("OCI"), and is reclassified out of OCI and into the consolidated statements of income when the hedged cash flows affect earnings. These amounts are recognized consistent with the classification of the hedged item, primarily interest expense (for hedges of interest rate risk). If the hedge relationship is terminated, then the value of the derivative recorded in accumulated other comprehensive income (loss) ("AOCI") is recognized in earnings when the cash flows that were hedged affect earnings, so long as the forecasted transaction remains probable of occurring. For hedge relationships that are discontinued because a forecasted transaction is probable of not occurring according to the original hedge forecast (including an additional two-month window), any related derivative values recorded in AOCI are immediately recognized in earnings. Hedge accounting is generally terminated at the debt issuance date because we are no longer exposed to cash flow variability subsequent to issuance. Accumulated amounts recorded in AOCI at that date are then released to earnings in future periods to reflect the difference in 1) the fixed rates economically locked in at the inception of the hedge and 2) the actual fixed rates established in the debt instrument at issuance. Because of the effects of the time value of money, the actual interest expense reported in earnings will not equal the effective yield locked in at hedge inception multiplied by the par value. Similarly, this hedging strategy does not actually fix the interest payments associated with the forecasted debt issuance. |
Servicing rights | Servicing rights Servicing rights initially represent the fair value of expected future cash flows for performing servicing activities for others. The fair value considers estimated future servicing fees and ancillary revenue, offset by estimated costs to service the loans, and generally declines over time as net servicing cash flows are received, effectively amortizing the servicing right asset against contractual servicing and ancillary fee income. Servicing rights are recognized upon sale of loans, including a securitization of loans accounted for as a sale in accordance with U.S. GAAP, if servicing is retained. For servicing rights, gains related to servicing rights retained is included in net realized gain (loss) in the consolidated statements of income. For residential mortgage servicing rights, gains on servicing rights retained upon sale of a loan are included in residential mortgage banking activities in the consolidated statements of income. The Company treats its servicing rights and residential mortgage servicing rights as two separate classes of servicing assets based on the class of the underlying mortgages and it treats these assets as two separate pools for risk management purposes. Servicing rights relating to the Company’s servicing of loans guaranteed by the SBA under its Section 7(a) loan program and servicing rights related to the Freddie Mac program are accounted for under ASC 860, Transfers and Servicing, Financial Instruments. Servicing rights – SBA and Freddie Mac. For purposes of testing our servicing rights for impairment, we first determine whether facts and circumstances exist that would suggest the carrying value of the servicing asset is not recoverable. If so, we then compare the net present value of servicing cash flow with its carrying value. The estimated net present value of servicing cash flows is determined using discounted cash flow modeling techniques, which require management to make estimates regarding future net servicing cash flows, taking into consideration historical and forecasted loan prepayment rates, delinquency rates and anticipated maturity defaults. If the carrying value of the servicing rights exceeds the net present value of servicing cash flows, the servicing rights are considered impaired and an impairment loss is recognized in earnings for the amount by which carrying value exceeds the net present value of servicing cash flows. We estimate 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 our 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. We also consider other factors that can impact the value of the servicing rights, such as surety provider termination clauses and servicer terminations that could result if we failed to materially comply with the covenants or conditions of our servicing agreements and did not remedy the failure. Since many factors can affect the estimate of the fair value of servicing rights, we regularly evaluate the major assumptions and modeling techniques used in our estimate and review these assumptions against market comparables, if available. We monitor the actual performance of our servicing rights by regularly comparing actual cash flow, credit, and prepayment experience to modeled estimates. Servicing rights - Residential (carried at fair value). The Company has elected to account for its portfolio of residential mortgage servicing rights (“MSRs”) at fair value. For these assets, the Company uses a third-party vendor to assist management in estimating the fair value. The third-party vendor uses a discounted cash flow approach which consists of projecting servicing cash flows discounted at a rate that management believes market participants would use in their determinations of fair value. The key assumptions used in the estimation of the fair value of MSRs include prepayment rates, discount rates, default rates, and cost of servicing rates. Residential MSRs are classified as Level 3 in the fair value hierarchy. |
Real estate, held for sale | Real estate, held for sale Real estate, 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, 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, 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 |
Purchased future receivables | Purchased future receivables Through Knight Capital, 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 (“ACH”) transactions. Revenues from purchased future receivables are realized when funds are received under each contract. The allocation of the amount received is determined by apportioning the amount received based upon the factor (discount) rate of the business's contract. Management believes that this methodology best reflects the effective interest method. The Company has established an allowance for doubtful purchased future receivables. An increase in the allowance for doubtful purchased future receivables results in a charge to income and is reduced when purchased future receivables are charged-off. Purchased future receivables are charged-off after 90 days past due. Management believes that the allowance reflects the risk elements and is adequate to absorb losses inherent in the portfolio. Although management has performed this evaluation, future adjustments may be necessary based on changes in economic conditions or other factors. |
Intangible assets | Intangible assets The Company accounts for intangible assets under ASC 350, Intangibles- Goodwill and Other |
Goodwill | Goodwill The Company recorded goodwill in connection with the Company’s acquisition of Knight Capital and the ANH Merger. Goodwill is not amortized, but rather, is tested for impairment annually or more frequently if events or changes in circumstances indicate potential impairment. Goodwill as of March 31, 2021, represents the excess of the consideration transferred over the fair value of net assets acquired in connection with the acquisition of Knight Capital and the ANH Merger. In testing goodwill for impairment, the Company follows ASC 350, Intangibles- Goodwill and Other, 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. |
Deferred financing costs | Deferred financing costs Costs incurred in connection with our 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 acquisitions and SBC originations reportable segments are performed primarily by third-party servicers. SBA loans originated by and held at RCL are internally serviced. Residential mortgage loans originated by and held at GMFS are both serviced by third-party servicers and internally serviced. The Company’s servicers hold substantially all of the cash owned by the Company related to loan servicing activities. These amounts include principal and interest payments made by borrowers, net of advances and servicing fees. Cash is generally received within thirty days of recording the receivable. The Company is subject to credit risk to the extent any servicer with whom the Company conducts business is unable to deliver cash balances or process loan-related transactions on the Company’s behalf. The Company monitors the financial condition of the servicers with whom the Company conducts business and believes the likelihood of loss under the aforementioned circumstances is remote. |
Secured borrowings | Secured borrowings Secured borrowings include borrowings under credit facilities and other financing agreements and repurchase agreements. Borrowings under credit facilities and other financing agreements. Debt. Borrowings under repurchase agreements. Transfers and Servicing |
Paycheck Protection Program Liquidity Facility borrowings | Paycheck Protection Program Liquidity Facility borrowings The Company accounts for borrowings under the Paycheck Protection Program Liquidity Facility (“PPPLF”) borrowings under ASC 470, Debt |
Securitized debt obligations of consolidated VIEs, net | Securitized debt obligations of consolidated VIEs, net Since 2011, we have engaged in several securitization transactions, which the Company accounts for under ASC 810. Securitization involves transferring assets to an SPE, 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 SPE includes the issuance of senior securities to third parties, which are shown as securitized debt obligations of consolidated VIEs in the consolidated balance sheets. Debt issuance costs related to securitizations are presented as a direct deduction from the carrying value of the related debt liability. Debt issuance costs are amortized using the effective interest method and are included in interest expense in the consolidated statements of income. |
Convertible note, net | Convertible note, net ASC 470 requires the liability and equity components of convertible debt instruments that may be settled in cash upon conversion to be separately accounted for in a manner that reflects the issuer’s nonconvertible debt borrowing rate. ASC 470-20 requires that the initial proceeds from the sale of these notes be allocated between a liability component and an equity component in a manner that reflects interest expense at the interest rate of similar nonconvertible debt that could have been issued by the Company at such time. We measured the estimated fair value of the debt component of our convertible notes as of the issuance date based on our nonconvertible debt borrowing rate. The equity components of the convertible senior notes have been reflected within additional paid-in capital in our consolidated balance sheet, and the resulting debt discount is amortized over the period during which the convertible notes are expected to be outstanding (through the maturity date) as additional non-cash interest expense. Upon repurchase of convertible debt instruments, ASC 470-20 requires the issuer to allocate total settlement consideration, inclusive of transaction costs, amongst the liability and equity components of the instrument based on the fair value of the liability component immediately prior to repurchase. The difference between the settlement consideration allocated to the liability component and the net carrying value of the liability component, including unamortized debt issuance costs, would be recognized as gain (loss) on extinguishment of debt in our consolidated statements of operations. The remaining settlement consideration allocated to the equity component would be recognized as a reduction of additional paid-in capital in our consolidated balance sheets. |
Senior secured notes, net | Senior secured notes, net The Company accounts for secured debt offerings under ASC 470 . |
Corporate debt, net | Corporate debt, net The Company accounts for corporate debt offerings under ASC 470. The Company’s corporate debt is presented net of debt issuance costs. Interest paid and accrued in connection with corporate debt is recorded as interest expense in the consolidated statements of income. |
Guaranteed loan financing | Guaranteed loan financing Certain partial loan sales do not qualify for sale accounting under ASC 860 because these sales do not meet the definition of a “participating interest,” as defined in the guidance, in order for sale treatment to be allowed. Participations or other partial loan sales which do not meet the definition of a participating interest remain as an investment in the consolidated balance sheets and the proceeds from the portion sold is recorded as guaranteed loan financing in the liabilities section of the consolidated balance sheets. For these partial loan sales, the interest earned on the entire loan balance is recorded as interest income and the interest earned by the buyer in the partial loan sale is recorded within interest expense in the accompanying consolidated statements of income. |
Repair and denial reserve | Repair and denial reserve The repair and denial reserve represents the potential liability to the SBA in the event that we are required to make the SBA whole for reimbursement of the guaranteed portion of SBA loans. We 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 we are the primary beneficiary of a VIE, we consider both qualitative and quantitative factors regarding the nature, size and form of our involvement with the VIE, such as our role establishing the VIE and our ongoing rights and responsibilities, the design of the VIE, our economic interests, servicing fees and servicing responsibilities, and other factors. We perform ongoing reassessments to evaluate whether changes in the entity’s capital structure or changes in the nature of our involvement with the entity result in a change to the VIE designation or a change to our consolidation conclusion. |
Non-controlling interests | Non-controlling interests Non-controlling interests are presented on the consolidated balance sheets and the consolidated statements of income and represent direct investment in the Operating Partnership by Sutherland OP Holdings II, Ltd., which is managed by our Manager, and third parties. |
Fair value option | Fair value option ASC 825, Financial Instruments We have elected the fair value option for certain loans held-for-sale originated by the Company that we intend to sell in the near term. The fair value elections for loans, held for sale, at fair value originated by the Company were made due to the short-term nature of these instruments. We have also elected the fair value option for loans originated in round 1 of the Paycheck Protection Program. We have elected the fair value option for loans held-for-sale originated by GMFS that the Company intends to sell in the near term. We have elected the fair value option for certain residential mortgage servicing rights acquired as part of the merger transaction. |
Share repurchase program | Share repurchase program The Company accounts for repurchases of its common stock as a reduction in additional paid in capital. The amounts recognized represent the amount paid to repurchase these shares and are categorized on the balance sheet and changes in equity as a reduction in additional paid in capital. |
Earnings per share | Earnings per share We present both basic and diluted earnings per share (“EPS”) amounts in our consolidated financial statements. Basic EPS excludes dilution and is computed by dividing income available to common stockholders by the weighted-average number of shares of common stock outstanding for the period. Diluted EPS reflects the maximum potential dilution that could occur from our share-based compensation, consisting of unvested restricted stock units (“RSUs”), unvested restricted stock awards (“RSAs”), performance-based equity awards, as well as “in-the-money” conversion options associated with our outstanding convertible senior notes and convertible preferred stock. 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 and unvested RSAs contain rights to receive non-forfeitable dividends and, thus, are participating securities. Due to the existence of these participating securities, the two-class method of computing EPS is required, unless another method is determined to be more dilutive. Under the two-class method, undistributed earnings are reallocated between shares of common stock and participating securities. |
Income taxes | Income taxes U.S. GAAP establishes financial accounting and reporting standards for the effect of income taxes. The objectives of accounting for income taxes are to recognize the amount of taxes payable or refundable for the current period and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in an entity’s consolidated financial statements or tax returns. We assess 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 our consolidated financial statements or tax returns as well as the recoverability of amounts we record, including deferred tax assets. We provide 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. Our policy is to recognize interest and/or penalties related to income tax matters in income tax expense on our consolidated statements of income. As of March 31, 2021 and December 31, 2020, we accrued no taxes, interest or penalties related to uncertain tax positions. In addition, we do not anticipate a change in this position in the next 12 months. |
Revenue recognition | Revenue recognition Revenue is recognized upon the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Revenue is recognized through the following five-step process: 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. Since the guidance does not apply to 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, the revenue recognition guidance does not have a material impact on our 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. Interest income. Realized gains (losses). Origination income and expense. |
Residential Mortgage Banking Activities | Residential mortgage banking activities Residential mortgage banking activities reflects revenue within our residential mortgage banking business directly related to loan origination and sale activity. This primarily consists of the realized gains on sales of residential loans held for sale and loan origination fee income, Residential mortgage banking activities also consists of unrealized gains and losses associated with the changes in fair value of the loans held for sale, the fair value of retained MSR additions, and the realized and unrealized gains and losses from derivative instruments. Gains and losses from the sale of mortgage loans held for sale are recognized based upon the difference between the sales proceeds and carrying value of the related loans upon sale and is included in residential mortgage banking activities, in the consolidated statements of income. Sales proceeds reflect the cash received from investors from the sale of a loan plus the servicing release premium if the related MSR is sold. Gains and losses also include the unrealized gains and losses associated with the mortgage loans held for sale and the realized and unrealized gains and losses from IRLCs. Loan origination fee income represents revenue earned from originating mortgage loans held for sale and are reflected in residential mortgage banking activities, when loans are sold. Variable expenses on residential mortgage banking activities. |
Foreign currency transactions | Foreign currency transactions Assets and liabilities denominated in non-U.S. currencies are translated into U.S. dollars using foreign currency exchange rates prevailing at the end of the reporting period. Revenue and expenses are translated at the average exchange rates for each reporting period. Foreign currency remeasurement gains or losses on transactions in nonfunctional currencies are recognized in earnings. Gains or losses on translation of the financial statements of a non-U.S. operation, when the functional currency is other than the U.S. dollar, are included, net of taxes, in the consolidated statements of comprehensive income. |
Business Combinations (Tables)
Business Combinations (Tables) - ANH | 3 Months Ended |
Mar. 31, 2021 | |
Acquisitions | |
Schedule of fair value of assets acquired and liabilities acquired | (In Thousands) March 19, 2021 Assets Cash and cash equivalents $ 110,545 Mortgage backed, securities, at fair value 2,010,504 Loans, held for sale, at fair value 102,798 Real estate, held for sale 26,107 Accrued interest 8,453 Other assets 38,707 Total assets acquired $ 2,297,114 Liabilities Secured borrowings 1,784,047 Corporate debt, net 36,250 Derivative instruments, at fair value 60,719 Accounts payable and other accrued liabilities 4,811 Total liabilities assumed $ 1,885,827 Net assets acquired $ 411,287 |
Schedule of aggregate consideration transferred, net assets acquired, and related bargain purchase gain | Total consideration transferred (in thousands, except per share data) Fair value of net assets acquired $ 411,287 ANH shares outstanding at March 19, 2021 99,374 Exchange ratio x 0.1688 Shares issued 16,774 Market price as of March 19, 2021 $ 14.28 Consideration transferred based on value of common shares issued $ 239,537 Cash paid per share $ 0.61 Cash paid based on outstanding ANH shares $ 60,626 Preferred Stock, Series B Issued 1,919,378 Market price as of March 19, 2021 $ 25.00 Consideration transferred based on value of Preferred Stock, Series B issued $ 47,984 Preferred Stock, Series C Issued 779,743 Market price as of March 19, 2021 $ 25.00 Consideration transferred based on value of Preferred Stock, Series C issued $ 19,494 Preferred Stock, Series D Issued 2,010,278 Market price as of March 19, 2021 $ 25.00 Consideration transferred based on value of Preferred Stock, Series D shares issued $ 50,257 Total consideration transferred $ 417,898 Goodwill $ 6,611 |
Schedule of pro-forma revenue and earnings | For the three months ended For the three months ended (In Thousands) March 31, 2021 March 31, 2020 Selected Financial Data Interest income $ 85,120 $ 105,314 Interest expense (54,289) (70,317) Recovery of (provision for) loan losses 8 (39,860) Non-interest income 91,690 19,463 Non-interest expense (79,584) (296,474) Income (loss) before provision for income taxes 42,945 (281,874) Income tax benefit (expense) (8,681) 7,937 Net income (loss) $ 34,264 $ (273,937) |
Loans and Allowance for Credi_2
Loans and Allowance for Credit Losses (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Schedule of classification, unpaid principal balance, and carrying value of loans held including loans of consolidated VIEs | March 31, 2021 December 31, 2020 (In Thousands) Carrying Value UPB Carrying Value UPB Loans Originated Transitional loans $ 522,747 $ 525,615 $ 530,671 $ 535,963 Originated SBA 7(a) loans 309,487 314,182 310,537 314,938 Acquired SBA 7(a) loans 188,462 196,983 201,066 210,115 Originated SBC loans 167,772 161,763 173,190 167,470 Acquired loans 439,936 444,742 351,381 352,546 Originated SBC loans, at fair value 13,618 13,881 13,795 14,088 Originated Residential Agency loans 3,138 3,083 3,208 3,208 Total Loans, before allowance for loan losses $ 1,645,160 $ 1,660,249 $ 1,583,848 $ 1,598,328 Allowance for loan losses $ (33,334) $ — $ (33,224) $ — Total Loans, net $ 1,611,826 $ 1,660,249 $ 1,550,624 $ 1,598,328 Loans in consolidated VIEs Originated SBC loans $ 877,461 $ 873,517 $ 889,566 $ 885,235 Originated Transitional loans 1,352,642 1,363,543 788,403 792,432 Acquired loans 552,582 553,122 697,567 701,133 Originated SBA 7(a) loans 67,214 70,902 68,625 72,451 Acquired SBA 7(a) loans 40,253 49,795 42,154 52,456 Total Loans, in consolidated VIEs, before allowance for loan losses $ 2,890,152 $ 2,910,879 $ 2,486,315 $ 2,503,707 Allowance for loan losses on loans in consolidated VIEs $ (12,315) $ — $ (13,508) $ — Total Loans, net, in consolidated VIEs $ 2,877,837 $ 2,910,879 $ 2,472,807 $ 2,503,707 Loans, held for sale, at fair value Originated Residential Agency loans $ 310,892 $ 305,487 $ 260,447 $ 249,852 Originated Freddie Mac loans 24,707 24,260 51,248 50,408 Originated SBC loans 23,661 23,822 17,850 17,850 Originated SBA 7(a) loans 14,571 13,261 10,232 9,436 Acquired loans 99,247 94,898 511 499 Total Loans, held for sale, at fair value $ 473,078 $ 461,728 $ 340,288 $ 328,045 Total Loans, net and Loans, held for sale, at fair value $ 4,962,741 $ 5,032,856 $ 4,363,719 $ 4,430,080 Paycheck Protection Program loans Paycheck Protection Program loans, held-for-investment $ 1,254,420 $ 1,322,188 $ — $ — Paycheck Protection Program loans, held at fair value 38,388 38,388 74,931 74,931 Total Paycheck Protection Program loans $ 1,292,808 $ 1,360,576 $ 74,931 $ 74,931 Total Loan portfolio $ 6,255,549 $ 6,393,432 $ 4,438,650 $ 4,505,011 |
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 2021 2020 2019 2018 2017 Pre 2017 Total As of March 31, 2021 Loans (1) (2) Originated Transitional loans $ 1,889,158 $ 599,301 $ 397,349 $ 570,278 $ 277,650 $ 13,292 $ 15,294 $ 1,873,164 Originated SBC loans 1,035,280 — 62,606 479,979 235,716 105,628 155,608 1,039,537 Acquired loans 997,864 — 21,042 40,618 41,301 37,507 849,833 990,301 Originated SBA 7(a) loans 385,084 6,599 47,218 97,040 129,904 66,195 25,332 372,288 Acquired SBA 7(a) loans 246,778 — 129 19,485 14,315 279 190,812 225,020 Originated SBC loans, at fair value 13,881 — — — — 1,597 12,021 13,618 Originated Residential Agency loans 3,083 935 659 644 702 — 198 3,138 Total Loans, before general allowance for loan losses $ 4,571,128 $ 606,835 $ 529,003 $ 1,208,044 $ 699,588 $ 224,498 $ 1,249,098 $ 4,517,066 General allowance for loan losses $ (27,403) Total Loans, net $ 4,489,663 (1) Loan balances include specific allowance for loan losses of $18.2 million (2) Includes Loans, net in consolidated VIEs Carrying Value by Year of Origination (In Thousands) UPB 2020 2019 2018 2017 2016 Pre 2016 Total As of December 31, 2020 Loans (1) (2) Originated Transitional loans $ 1,328,395 $ 385,183 $ 583,593 $ 306,971 $ 23,783 $ 18,480 $ 1,064 $ 1,319,074 Originated SBC loans 1,052,705 66,715 486,033 237,313 110,354 43,696 112,444 1,056,555 Acquired loans 1,053,679 21,414 40,572 42,167 38,649 19,533 883,774 1,046,109 Originated SBA 7(a) loans 387,389 47,939 98,568 133,812 68,375 22,056 4,041 374,791 Acquired SBA 7(a) loans 262,571 139 19,658 14,636 283 19 204,703 239,438 Originated SBC loans, at fair value 14,088 — — — 1,598 6,442 5,755 13,795 Originated Residential Agency loans 3,208 1,571 645 705 — 88 199 3,208 Total Loans, before general allowance for loan losses $ 4,102,035 $ 522,961 $ 1,229,069 $ 735,604 $ 243,042 $ 110,314 $ 1,211,980 $ 4,052,970 General allowance for loan losses $ (29,539) Total Loans, net $ 4,023,431 (1) Loan balances include specific allowance for loan losses of $17.2 million (2) Includes Loans, net in consolidated VIEs |
Schedule of delinquency information on loans by year of origination | Carrying Value by Year of Origination (In Thousands) UPB 2021 2020 2019 2018 2017 Pre 2017 Total As of March 31, 2021 Loans (1) (2) Current and less than 30 days past due $ 4,351,956 $ 606,638 $ 512,632 $ 1,178,806 $ 632,881 $ 205,280 $ 1,178,466 $ 4,314,703 30 - 59 days past due 79,654 — 15,711 24,790 21,139 4,841 12,081 78,562 60+ days past due 139,518 197 660 4,448 45,568 14,377 58,551 123,801 Total Loans, before general allowance for loan losses $ 4,571,128 $ 606,835 $ 529,003 $ 1,208,044 $ 699,588 $ 224,498 $ 1,249,098 $ 4,517,066 General allowance for loan losses $ (27,403) Total Loans, net $ 4,489,663 (1) Loan balances include specific allowance for loan losses of $18.2 million (2) Includes Loans, net in consolidated VIEs Carrying Value by Year of Origination (In Thousands) UPB 2020 2019 2018 2017 2016 Pre 2016 Total As of December 31, 2020 Loans (1) (2) Current and less than 30 days past due $ 3,904,294 $ 516,474 $ 1,221,227 $ 707,068 $ 203,331 $ 100,003 $ 1,125,100 $ 3,873,203 30 - 59 days past due 38,836 5,812 5,191 15,097 401 2 11,933 38,436 60+ days past due 158,905 675 2,651 13,439 39,310 10,309 74,947 141,331 Total Loans, before general allowance for loan losses $ 4,102,035 $ 522,961 $ 1,229,069 $ 735,604 $ 243,042 $ 110,314 $ 1,211,980 $ 4,052,970 General allowance for loan losses $ (29,539) Total Loans, net $ 4,023,431 (1) Loan balances include specific allowance for loan losses of $17.2 million (2) Includes Loans, net in consolidated VIEs |
Schedule of delinquency information on loans, net | March 31, 2021 (In Thousands) Current and less than 30 days past due 30-59 days 60+ days Total Loans Carrying Value Non-Accrual 90+ days past due and Accruing Loans (1)(2) Originated Transitional loans $ 1,794,270 $ 30,315 $ 48,579 $ 1,873,164 $ 39,574 $ — Originated SBC loans 993,570 16,953 29,014 1,039,537 38,599 — Acquired loans 934,265 14,485 41,551 990,301 54,750 — Originated SBA 7(a) loans 356,600 14,789 899 372,288 7,076 — Acquired SBA 7(a) loans 221,444 2,020 1,556 225,020 8,436 — Originated SBC loans, at fair value 13,618 — — 13,618 — — Originated Residential Agency loans 936 — 2,202 3,138 2,202 — Total Loans, before general allowance for loan losses $ 4,314,703 $ 78,562 $ 123,801 $ 4,517,066 $ 150,637 $ — General allowance for loan losses $ (27,403) Total Loans, net $ 4,489,663 Percentage of loans outstanding 95.6% 1.7% 2.7% 100% 3.3% 0.0% (1) Loan balances include specific allowance for loan losses of $18.2 million (2) Includes Loans, net in consolidated VIEs December 31, 2020 (In Thousands) Current and less than 30 days past due 30-59 days 60+ days Total Loans Carrying Value Non-Accrual 90+ days past due and Accruing Loans (1)(2) Originated Transitional loans $ 1,281,579 $ 17,713 $ 19,782 $ 1,319,074 $ 19,416 $ — Originated SBC loans 1,000,878 6,591 49,086 1,056,555 37,635 — Acquired loans 978,346 7,729 60,034 1,046,109 57,020 - Originated SBA 7(a) loans 369,416 1,741 3,634 374,791 8,668 — Acquired SBA 7(a) loans 228,651 4,008 6,779 239,438 9,001 — Originated SBC loans, at fair value 13,795 — — 13,795 — — Originated Residential Agency loans 538 654 2,016 3,208 2,418 — Total Loans, before general allowance for loan losses $ 3,873,203 $ 38,436 $ 141,331 $ 4,052,970 $ 134,158 $ — General allowance for loan losses $ (29,539) Total Loans, net $ 4,023,431 Percentage of loans outstanding 95.6% 0.9% 3.5% 100% 3.3% 0.0% (1) Loan balances include specific allowance for loan losses of $17.2 million (2) Includes Loans, net in consolidated VIEs |
Schedule of information on credit quality of loans | Loan-to-Value (1) (In Thousands) 0.0 – 20.0% 20.1 – 40.0% 40.1 – 60.0% 60.1 – 80.0% 80.1 – 100.0% Greater than 100.0% Total March 31, 2021 Loans (2) (3) Originated Transitional loans $ 11,669 $ 11,319 $ 237,489 $ 1,359,157 $ 236,062 $ 17,468 $ 1,873,164 Originated SBC loans 5,248 73,432 520,800 428,041 6,136 5,880 1,039,537 Acquired loans 261,037 373,055 224,470 94,011 25,307 12,421 990,301 Originated SBA 7(a) loans 1,138 15,519 46,789 138,676 66,520 103,646 372,288 Acquired SBA 7(a) loans 6,575 33,186 79,334 55,506 27,673 22,746 225,020 Originated SBC loans, at fair value — 8,643 — 4,975 — — 13,618 Originated Residential Agency loans — — 198 577 1,985 378 3,138 Total Loans, before general allowance for loan losses $ 285,667 $ 515,154 $ 1,109,080 $ 2,080,943 $ 363,683 $ 162,539 $ 4,517,066 General allowance for loan losses $ (27,403) Total Loans, net $ 4,489,663 Percentage of loans outstanding 6.3% 11.4% 24.6% 46.1% 8.1% 3.5% December 31, 2020 Loans (2) (3) Originated Transitional loans $ 5,485 $ 8,269 $ 252,798 $ 891,895 $ 157,900 $ 2,727 $ 1,319,074 Originated SBC loans 5,372 76,899 453,381 515,023 — 5,880 1,056,555 Acquired loans 266,345 385,579 228,262 113,023 40,838 12,062 1,046,109 Originated SBA 7(a) loans 1,203 15,013 51,133 147,020 61,297 99,125 374,791 Acquired SBA 7(a) loans 7,523 39,086 89,644 54,007 28,332 20,846 239,438 Originated SBC loans, at fair value — 7,354 — 6,441 — — 13,795 Originated Residential Agency loans — — 88 1,236 1,552 332 3,208 Total Loans, before general allowance for loan losses $ 285,928 $ 532,200 $ 1,075,306 $ 1,728,645 $ 289,919 $ 140,972 $ 4,052,970 General allowance for loan losses $ (29,539) Total Loans, net $ 4,023,431 Percentage of loans outstanding 7.1% 13.0% 26.5% 42.7% 7.2% 3.5% (1) Loan-to-value is calculated as carrying amount as a percentage of current collateral value (2) Loan balances include specific allowance for loan loss reserves (3) Includes Loans, net in consolidated VIEs |
Schedule of activity of the allowance for loan losses for loans | March 31, 2021 (In Thousands) Originated Originated Transitional loans Acquired Acquired Originated Total Allowance for General $ 2,729 $ 14,848 $ 4,335 $ 627 $ 4,864 $ 27,403 Specific 5,243 2,195 2,700 3,695 4,413 18,246 Ending balance $ 7,972 $ 17,043 $ 7,035 $ 4,322 $ 9,277 $ 45,649 December 31, 2020 (In Thousands) Originated Originated Transitional loans Acquired Acquired Originated Total Allowance for General $ 2,640 $ 14,995 $ 5,457 $ 767 $ 5,680 $ 29,539 Specific 6,200 — 2,840 3,782 4,371 17,193 Ending balance $ 8,840 $ 14,995 $ 8,297 $ 4,549 $ 10,051 $ 46,732 Three Months Ended March 31, 2021 (In Thousands) Originated Originated Transitional loans Acquired Acquired Originated Total Allowance for Beginning balance $ 8,840 $ 14,995 $ 8,297 $ 4,549 $ 10,051 $ 46,732 Provision for (recoveries of) loan losses 132 2,048 (1,262) 47 (402) 563 Charge-offs and sales (1,000) — — (283) (375) (1,658) Recoveries — — — 9 3 12 Ending balance $ 7,972 $ 17,043 $ 7,035 $ 4,322 $ 9,277 $ 45,649 Three Months Ended March 31, 2020 (In Thousands) Originated Originated Transitional loans Acquired Acquired Originated Total Allowance for Beginning balance $ 304 $ 188 $ 3,054 $ 2,114 $ 1,781 $ 7,441 Cumulative -effect adjustment upon adoption of ASU 2016-13 2,400 1,906 1,878 3,562 1,379 11,125 Provision for (recoveries of) loan losses 7,658 22,170 5,722 12 4,242 39,804 Charge-offs and sales — — (8) (131) (329) (468) Recoveries — — — 65 1 66 Ending balance $ 10,362 $ 24,264 $ 10,646 $ 5,622 $ 7,074 $ 57,968 |
Schedule of recorded investment of TDRs | March 31, 2021 December 31, 2020 (In Thousands) SBC SBA Total SBC SBA Total Carrying value of modified loans classified as TDRs: On accrual status $ 304 $ 6,661 $ 6,965 $ 307 $ 6,888 $ 7,195 On non-accrual status 8,291 9,108 17,399 7,020 11,044 18,064 Total carrying value of modified loans classified as TDRs $ 8,595 $ 15,769 $ 24,364 $ 7,327 $ 17,932 $ 25,259 Allowance for loan losses on loans classified as TDRs $ 16 $ 3,701 $ 3,717 $ 17 $ 3,323 $ 3,340 |
Schedule of TDR modifications by primary modification type and related financial effects | Three Months Ended March 31, 2021 Three Months Ended March 31, 2020 (In Thousands, except number of loans) SBC SBA Total SBC SBA Total Number of loans permanently modified 1 7 8 1 7 8 Pre-modification recorded balance (a) $ 1,276 $ 1,442 $ 2,718 $ 151 $ 2,767 $ 2,918 Post-modification recorded balance (a) $ 1,276 975 $ 2,251 $ 151 $ 2,769 $ 2,920 Number of loans that remain in default as of March 31, 2021 (b) 1 — 1 1 3 4 Balance of loans that remain in default as of March 31, 2021 (b) $ 1,276 $ — $ 1,276 $ 151 $ 160 $ 311 Concession granted (a) : Term extension $ — $ 974 $ 974 $ — $ 1,564 $ 1,564 Interest rate reduction — — — — — — Principal reduction — — — — — — Foreclosure 1,276 — 1,276 151 152 303 Total $ 1,276 $ 974 $ 2,250 $ 151 $ 1,716 $ 1,867 (a) Represents carrying value. (b) Represents the March 31, 2021 carrying values of the TDRs that occurred during the three months ended March 31, 2021 and 2020 that remained in default as of March 31, 2021. Generally, all loans modified in a TDR are placed or remain on non-accrual status at the time of the restructuring. However, certain accruing loans modified in a TDR that are current at the time of restructuring may remain on accrual status if payment in full under the restructured terms is expected. For purposes of this schedule, a loan is considered in default if it is 30 or more days past due. |
Non-accrual loans | |
Schedule of non-accrual loans | (In Thousands) March 31, 2021 December 31, 2020 Non-accrual loans With an allowance $ 105,141 $ 75,862 Without an allowance 45,496 58,296 Total recorded carrying value of non-accrual loans $ 150,637 $ 134,158 Allowance for loan losses related to non-accrual loans $ (18,433) $ (17,367) Unpaid principal balance of non-accrual loans $ 175,570 $ 158,471 March 31, 2021 March 31, 2020 Interest income on non-accrual loans for the three months ended $ 615 $ 157 |
Geographical concentration | |
Schedule of concentration risk of loans secured by real estate | Geographic Concentration (% of Unpaid Principal Balance) March 31, 2021 December 31, 2020 California 19.2 % 18.1 % Texas 14.3 14.2 New York 10.5 9.8 Florida 7.4 7.8 Georgia 6.3 4.9 Illinois 6.0 5.2 North Carolina 3.1 3.1 Arizona 3.1 2.8 Washington 2.7 3.1 Colorado 2.6 2.8 Other 24.8 28.2 Total 100.0 % 100.0 % |
Collateral concentration | |
Schedule of concentration risk of loans secured by real estate | The following table displays the collateral type concentration of the Company’s loans, net: Collateral Concentration (% of Unpaid Principal Balance) March 31, 2021 December 31, 2020 Multi-family 31.4 % 23.8 % Retail 15.7 17.3 SBA (1) 13.8 17.4 Office 12.8 13.1 Mixed Use 11.9 12.9 Industrial 6.7 7.1 Lodging/Residential 2.8 3.2 Other 4.9 5.2 Total 100.0 % 100.0 % (1) Further detail provided on SBA collateral concentration is included in table below. The following table displays the collateral type concentration of the Company’s SBA loans within loans, net: Collateral Concentration (% of Unpaid Principal Balance) March 31, 2021 December 31, 2020 Lodging 19.3 % 17.2 % Offices of Physicians 12.9 12.0 Child Day Care Services 8.0 7.2 Eating Places 5.6 5.3 Gasoline Service Stations 3.9 3.4 Veterinarians 3.4 3.3 Funeral Service & Crematories 2.0 1.8 Grocery Stores 2.0 1.7 Car washes 1.6 1.4 Couriers 1.1 1.0 Other 40.2 45.7 Total 100.0 % 100.0 % |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Fair Value Measurements | |
Schedule of financial instruments carried at fair value on a recurring basis | The following table presents the Company’s financial instruments carried at fair value on a recurring basis as of March 31, 2021: (In Thousands) Level 1 Level 2 Level 3 Total Assets: Loans, held for sale, at fair value $ — $ 473,078 $ — $ 473,078 Loans, net, at fair value — — 13,618 13,618 Paycheck Protection Program loans — — 38,388 38,388 Mortgage backed securities, at fair value — 677,315 5,633 682,948 Derivative instruments, at fair value — 805 11,724 12,529 Residential mortgage servicing rights, at fair value — — 98,542 98,542 Total assets $ — $ 1,151,198 $ 167,905 $ 1,319,103 Liabilities: Derivative instruments, at fair value $ — $ 4,403 $ — $ 4,403 Total liabilities $ — $ 4,403 $ — $ 4,403 The following table presents the Company’s financial instruments carried at fair value on a recurring basis as of December 31, 2020: (In Thousands) Level 1 Level 2 Level 3 Total Assets: Loans, held for sale, at fair value $ — $ 340,288 $ — $ 340,288 Loans, net, at fair value — — 13,795 13,795 Paycheck Protection Program loans — — 74,931 74,931 Mortgage backed securities, at fair value — 62,880 25,131 88,011 Derivative instruments, at fair value — — 16,363 16,363 Residential mortgage servicing rights, at fair value — — 76,840 76,840 Total assets $ — $ 403,168 $ 207,060 $ 610,228 Liabilities: Derivative instruments, at fair value $ — $ 11,604 $ — $ 11,604 Total liabilities $ — $ 11,604 $ — $ 11,604 |
Summary of changes in the fair value of financial instruments held at fair value classified as Level 3 | Three Months Ended March 31, 2021 (In Thousands) MBS Derivatives Loans, net, at fair value Paycheck Protection Program loans Residential MSRs, at fair value Total Beginning Balance $ 25,131 $ 16,363 $ 13,795 $ 74,931 $ 76,840 $ 207,060 Originations — — — 3,866 — 3,866 Accreted discount, net 58 — — — — 58 Additions due to loans sold, servicing retained — — — — 12,048 12,048 Sales / Principal payments (92) — (201) (40,409) (5,700) (46,402) Realized gains, net — — (5) — — (5) Unrealized gains (losses), net 1,069 (4,639) 29 — 15,354 11,813 Transfer to (from) Level 3 (20,533) — — — — (20,533) Ending Balance $ 5,633 $ 11,724 $ 13,618 $ 38,388 $ 98,542 $ 167,905 Unrealized gains (losses), net on assets/liabilities held at the end of the period $ (319) $ 11,724 $ (263) $ — $ (31,855) $ (20,713) Three Months Ended March 31, 2020 (In Thousands) MBS Derivatives Loans, net, at fair value Residential MSRs, at fair value Total Beginning Balance $ 460 $ 2,814 $ 20,212 $ 91,174 $ 114,660 Additions due to loans sold, servicing retained — — — 7,147 7,147 Sales / Principal payments (2) — (8) (3,253) (3,263) Unrealized gains (losses), net (40) 14,436 (391) (16,437) (2,432) Transfer to (from) Level 3 (315) — — — (315) Ending Balance $ 103 $ 17,250 $ 19,813 $ 78,631 $ 115,797 Unrealized gains (losses), net on assets or liabilities held at the end of the period $ (1) $ 17,250 $ 255 $ (26,392) $ (8,888) |
Summary of the valuation techniques and significant unobservable inputs used for the Company's financial instruments that are categorized within Level 3 of the fair value hierarchy | The following table summarizes 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 as of March 31, 2021, using third party information without adjustment: (In Thousands, except price) Fair Value Predominant Valuation Technique (a) Type Range Weighted Average Residential mortgage servicing rights, at fair value $ 98,542 Income Approach Discounted cash flow N/A N/A Derivative instruments, at fair value $ 11,724 Market Approach Origination pull-through rate | Servicing Fee Multiple | Percentage of unpaid principal balance 65.0 - 100% | 0.5 - 5.0% | 0.1 to 2.9% 86.5% | 3.9% | 1.2% (a) Prices are weighted based on the unpaid principal balance of the loans and securities included in the range for each class. The following table summarizes 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 as of December 31, 2020 using third-party information without adjustment: (In Thousands, except price) Fair Value Predominant Valuation Technique (a) Type Range Weighted Average Residential mortgage servicing rights, at fair value $ 76,840 Income Approach Discounted cash flow N/A N/A Derivative instruments, at fair value $ 16,363 Market Approach Origination pull-through rate | Servicing Fee Multiple | Percentage of unpaid principal balance 47.6 - 100% | 0.5 - 12.8% | 0.1 to 2.9% 84.1% | 3.6% | 1.1% (a) Prices are weighted based on the unpaid principal balance of the loans and securities included in the range for each class. |
Summary of the carrying value and estimated fair value of financial instruments not carried at fair value on the consolidated balance sheets and are classified as Level 3 | March 31, 2021 December 31, 2020 (In Thousands) Carrying Value Estimated Carrying Value Estimated Assets: Loans, net $ 4,476,045 $ 4,581,610 $ 4,009,636 $ 4,103,200 Paycheck Protection Program loans 1,254,420 1,322,188 — — Purchased future receivables, net 13,240 13,240 17,308 17,308 Servicing rights 40,399 50,365 37,823 47,567 Total assets $ 5,784,104 $ 5,967,403 $ 4,064,767 $ 4,168,075 Liabilities: Secured borrowings $ 2,064,785 $ 2,064,785 $ 1,294,243 $ 1,294,243 Paycheck Protection Program Liquidity Facility borrowings 1,132,536 1,132,536 76,276 76,276 Securitized debt obligations of consolidated VIEs, net 2,211,923 2,145,650 1,905,749 1,907,541 Senior secured note, net 179,744 185,277 179,659 188,114 Guaranteed loan financing 386,036 412,644 401,705 426,348 Convertible notes, net 112,405 66,544 112,129 68,186 Corporate debt, net 333,317 351,865 150,989 151,209 Total liabilities $ 6,420,746 $ 6,359,301 $ 4,120,750 $ 4,111,917 |
Mortgage Backed Securities (Tab
Mortgage Backed Securities (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Mortgage Backed Securities | |
Schedule of information about the Company's MBS portfolio | The following table presents certain information about the Company’s MBS portfolio, which are classified as trading securities and carried at fair value. Weighted Weighted Average Gross Gross Average Interest Principal Amortized Unrealized Unrealized (In Thousands) Maturity (a) Rate (a) Balance Cost Fair Value Gains Losses March 31, 2021 Freddie Mac Loans 02/2037 3.8 % $ 131,326 $ 51,390 $ 54,693 $ 3,433 $ (130) Commercial Loans 11/2050 4.6 72,985 39,162 34,062 333 (5,433) Residential 10/2042 3.5 637,395 594,193 594,193 — — Total Mortgage backed securities, at fair value 08/2042 3.6 % $ 841,706 $ 684,745 $ 682,948 $ 3,766 $ (5,563) December 31, 2020 Freddie Mac Loans 01/2037 3.7 % $ 139,408 $ 52,320 $ 53,509 $ 1,880 $ (691) Commercial Loans 11/2050 4.5 73,074 39,224 34,411 226 (5,039) Tax Liens 09/2026 6.0 92 92 91 — (1) Total Mortgage backed securities, at fair value 10/2041 4.1 % $ 212,574 $ 91,636 $ 88,011 $ 2,106 $ (5,731) (a) Weighted based on current principal balance |
Schedule of information about the maturity of the Company's MBS portfolio | The following table presents certain information about the maturity of the Company’s MBS portfolio. Weighted Average Principal Amortized (In Thousands) Interest Rate (a) Balance Cost Fair Value March 31, 2021 After five years through ten years 2.9 % $ 8,500 $ 8,500 $ 8,500 After ten years 3.4 833,206 676,245 674,448 Total Mortgage backed securities, at fair value 3.6 % $ 841,706 $ 684,745 $ 682,948 December 31, 2020 After five years through ten years 6.0 % $ 92 $ 92 $ 91 After ten years 2.8 212,482 91,544 87,920 Total Mortgage backed securities, at fair value 4.1 % $ 212,574 $ 91,636 $ 88,011 (a) Weighted based on current principal balance |
Servicing rights (Tables)
Servicing rights (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Schedule of information regarding portfolio of servicing rights | Three Months Ended March 31, (In Thousands) 2021 2020 SBA servicing rights, at amortized cost Beginning net carrying amount $ 18,764 $ 17,660 Additions due to loans sold, servicing retained 959 961 Acquisitions — Amortization (1,047) (873) Impairment (34) (212) Ending net carrying value of SBA servicing rights $ 18,642 $ 17,536 Freddie Mac multi-family servicing rights, at amortized cost Beginning net carrying amount $ 19,059 $ 13,135 Additions due to loans sold, servicing retained 3,559 1,449 Amortization (861) (640) Ending net carrying value of Freddie Mac multi-family servicing rights $ 21,757 $ 13,944 Total servicing rights, at amortized cost $ 40,399 $ 31,480 Residential mortgage servicing rights, at fair value Beginning net carrying amount $ 76,840 $ 91,174 Additions due to loans sold, servicing retained 12,048 7,147 Loan pay-offs (5,700) (3,253) Unrealized losses 15,354 (16,437) Ending fair value of Residential mortgage servicing rights $ 98,542 $ 78,631 Total servicing rights $ 138,941 $ 110,111 |
Schedule of future amortization expense for the servicing rights | (In Thousands) March 31, 2021 2021 $ 5,672 2022 6,760 2023 5,944 2024 5,228 2025 4,596 Thereafter 12,199 Total $ 40,399 |
Residential MSRs | |
Schedule of servicing rights | As of March 31, 2021 As of December 31, 2020 (In Thousands) Unpaid Principal Amount Fair Value Unpaid Principal Amount Fair Value Fannie Mae $ 3,787,761 $ 35,390 $ 3,700,450 $ 27,632 Ginnie Mae 2,802,997 30,340 2,757,124 25,899 Freddie Mac 3,357,437 32,812 3,071,312 23,309 Total $ 9,948,195 $ 98,542 $ 9,528,886 $ 76,840 |
Schedule of mortgage servicing rights portfolio | March 31, 2021 December 31, 2020 Range of input Weighted Range of input Weighted Residential mortgage servicing rights (at fair value) Forward prepayment rate 10.5 - 28.8 % 11.2 % 12.6 - 31.4 % 14.3 % Discount rate 9.0 - 11.6 % 9.8 % 9.1 - 11.7 % 9.8 % Servicing expense $70 - $85 $74 $70 - $85 $74 |
Schedule of adverse changes to key assumptions on the carrying amount of the servicing rights | (In Thousands) March 31, 2021 December 31, 2020 Residential mortgage servicing rights (at fair value) Prepayment rate Impact of 10% adverse change $ (4,958) $ (5,049) Impact of 20% adverse change $ (9,568) $ (9,701) Discount rate Impact of 10% adverse change $ (3,623) $ (2,601) Impact of 20% adverse change $ (6,992) $ (5,028) Cost of servicing Impact of 10% adverse change $ (1,785) $ (1,469) Impact of 20% adverse change $ (3,571) $ (2,938) |
SBA | Freddie Mac | |
Schedule of servicing rights | As of March 31, 2021 As of December 31, 2020 Unpaid Principal Unpaid Principal (In Thousands) Amount Carrying Value Amount Carrying Value SBA $ 656,216 $ 18,642 $ 643,135 $ 18,764 Freddie Mac multi-family 1,647,443 21,757 1,501,998 19,059 Total $ 2,303,659 $ 40,399 $ 2,145,133 $ 37,823 |
Schedule of adverse changes to key assumptions on the carrying amount of the servicing rights | (In Thousands) March 31, 2021 December 31, 2020 SBA servicing rights (at amortized cost) Forward prepayment rate Impact of 10% adverse change $ (730) $ (729) Impact of 20% adverse change $ (1,421) $ (1,420) Default rate Impact of 10% adverse change $ (154) $ (150) Impact of 20% adverse change $ (305) $ (298) Discount rate Impact of 10% adverse change $ (401) $ (395) Impact of 20% adverse change $ (789) $ (777) Freddie Mac multi-family servicing rights (at amortized cost) Forward prepayment rate Impact of 10% adverse change $ (188) $ (163) Impact of 20% adverse change $ (373) $ (324) Default rate Impact of 10% adverse change $ (7) $ (6) Impact of 20% adverse change $ (14) $ (13) Discount rate Impact of 10% adverse change $ (761) $ (678) Impact of 20% adverse change $ (1,487) $ (1,324) |
SBA | Freddie Mac | Commercial | |
Schedule of adverse changes to key assumptions on the carrying amount of the servicing rights | March 31, 2021 December 31, 2020 Range of input values Weighted Range of input values Weighted SBA servicing rights (at amortized cost) Forward prepayment rate 6.7 - 20.9 % 8.4 % 6.7 - 20.8 % 8.5 % Forward default rate 0.0 - 10.4 % 8.3 % 0.0 - 10.5 % 8.2 % Discount rate 4.5 - 4.5 % 4.5 % 4.5 - 4.5 % 4.5 % Servicing expense 0.4 - 0.4 % 0.4 % 0.4 - 0.4 % 0.4 % Freddie Mac multi-family servicing rights (at amortized cost) Forward prepayment rate 0.1 - 5.1 % 2.4 % 0.1 - 5.1 % 2.4 % Forward default rate 0.0 - 0.4 % 0.3 % 0.0 - 0.4 % 0.3 % Discount rate 6.0 - 6.0 % 6.0 % 6.0 - 6.0 % 6.0 % Servicing expense 0.2 - 0.3 % 0.2 % 0.2 - 0.3 % 0.2 % |
Residential mortgage banking _2
Residential mortgage banking activities and variable expenses on residential mortgage banking activities (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Residential mortgage banking activities and variable expenses on residential mortgage banking activities | |
Schedule of the components of gains on residential mortgage banking activities, net of variable loan expenses | Three Months Ended March 31, (In Thousands) 2021 2020 Realized and unrealized gain (loss) of residential mortgage loans held for sale, at fair value $ 29,560 $ 25,166 Creation of new mortgage servicing rights, net of payoffs 6,348 3,894 Loan origination fee income on residential mortgage loans 6,232 3,303 Unrealized gain (loss) on IRLCs and other derivatives (731) 4,306 Residential mortgage banking activities $ 41,409 $ 36,669 Variable expenses on residential mortgage banking activities $ (15,485) $ (20,129) |
Secured Borrowings (Tables)
Secured Borrowings (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Secured Borrowings | |
Schedule of characteristics of secured borrowings | Carrying Value at Lender Asset Class Current Maturity Pricing Facility Size Pledged Assets March 31, 2021 December 31, 2020 JPMorgan Acquired loans, SBA loans June 2021 1M L + 2.25% to 2.875% $ 200,000 $ 56,867 $ 41,822 $ 36,604 Keybank Freddie Mac loans February 2022 SOFR + 1.41% 100,000 24,707 24,260 50,408 East West Bank SBA loans October 2022 Prime - 0.821% to + 0.29% 50,000 45,717 39,623 40,542 Credit Suisse Acquired loans (non USD) December 2021 Euribor + 2.50% to 3.00% 234,470 (a) 56,895 35,372 36,840 Comerica Bank Residential loans June 2021 1M L + 1.75% 125,000 83,075 78,687 78,312 TBK Bank Residential loans October 2021 Variable Pricing 150,000 141,092 139,426 123,951 Origin Bank Residential loans June 2021 Variable Pricing 60,000 35,251 33,899 27,450 Associated Bank Residential loans November 2021 1M L + 1.50% 60,000 49,863 47,670 15,556 East West Bank Residential MSRs September 2023 1M L + 2.50% 50,000 68,202 49,400 34,400 Credit Suisse Purchased future receivables June 2021 1M L + 4.50% 150,000 13,240 1,000 — Bank of the Sierra Real estate August 2050 3.25% to 3.45% 22,750 32,948 22,499 22,611 PPP Participant PPP loans June 2021 Sold 99.61% / Buyback Par 600,000 221,940 230,483 — Total borrowings under credit facilities and other financing agreements (b) $ 1,802,220 $ 829,797 $ 744,141 $ 466,674 Citibank Fixed rate, Transitional, Acquired loans October 2021 1M L + 2.50% to 3.25% $ 500,000 $ 247,895 $ 152,097 $ 210,735 Deutsche Bank Fixed rate, Transitional loans November 2021 3M L + 2.00% to 2.40% 350,000 96,830 88,831 190,567 JPMorgan Transitional loans November 2022 1M L + 2.25% to 4.00% 650,000 414,099 282,974 247,616 Performance Trust Acquired loans March 2024 1M T + 2.00% 113,000 105,627 93,532 — Credit Suisse Acquired loans July 2021 L + 2.25% 100,000 98,751 81,485 — JPMorgan MBS June 2021 1.39% to 2.33% 62,300 99,088 62,300 65,407 Deutsche Bank MBS April 2021 2.47% 13,227 20,083 13,227 16,354 Citibank MBS April 2021 2.72% 46,847 85,593 46,847 58,076 RBC MBS April 2021 2.39% to 2.59% 39,053 60,495 39,053 38,814 CSFB MBS April 2021 2.45% 4,078 6,549 4,078 — Various MBS April 2021 Variable Pricing 106,737 183,588 106,737 — Various Agency MBS May 2021 Variable Pricing 349,483 387,388 349,483 — Total borrowings under repurchase agreements (c) $ 2,334,725 $ 1,805,986 $ 1,320,644 $ 827,569 Total secured borrowings $ 4,136,945 $ 2,635,783 $ 2,064,785 $ 1,294,243 (a) The current facility size is €200.0 million, but has been converted into USD for purposes of this disclosure. (b) The weighted average interest rate of borrowings under credit facilities was 2.0% and 2.8% as of March 31, 2021 and December 31, 2020, respectively. (c) The weighted average interest rate of borrowings under repurchase agreements was 2.1% and 3.3% as of March 31, 2021 and December 31, 2020, respectively |
Schedule of carrying value of collateral pledged with respect to borrowings under credit facilities and promissory note payable outstanding | Pledged Assets (In Thousands) March 31, 2021 December 31, 2020 Collateral pledged - borrowings under credit facilities and other financing agreements Loans, held for sale, at fair value $ 192,492 $ 313,844 Loans, net 159,883 159,482 Loans, held at fair value 141,092 73,799 Mortgage servicing rights 68,202 50,941 Paycheck Protection Program loans 221,940 — Purchased future receivables 13,240 — Real estate, held for sale 32,948 32,948 Total $ 829,797 $ 631,014 Collateral pledged - borrowings under repurchase agreements Loans, net $ 835,211 $ 815,603 Mortgage backed securities 742,299 72,179 Retained interest in assets of consolidated VIEs 100,485 226,773 Loans, held for sale, at fair value 122,413 17,850 Loans, held at fair value 3,071 3,071 Real estate acquired in settlement of loans 2,507 829 Total $ 1,805,986 $ 1,136,305 Total collateral pledged on secured borrowings $ 2,635,783 $ 1,767,319 |
Senior secured notes, convert_2
Senior secured notes, convertible notes, and corporate debt, net (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Senior secured notes, convertible notes, and corporate debt, net | |
Schedule of components of the Senior Secured Notes, Convertible Notes, and Corporate debt | (in thousands, except rates) Coupon Rate Maturity Date March 31, 2021 Senior secured notes principal amount (1) 7.50 % 2/15/2022 $ 180,000 Unamortized premium - Senior secured notes 695 Unamortized deferred financing costs - Senior secured notes (951) Total Senior secured notes, net $ 179,744 Convertible notes principal amount (2) 7.00 % 8/15/2023 115,000 Unamortized discount - Convertible notes (3) (958) Unamortized deferred financing costs - Convertible notes (1,637) Total Convertible notes, net $ 112,405 Corporate debt principal amount (4) 6.20 % 7/30/2026 104,250 Corporate debt principal amount (5) 5.75 % 2/15/2026 201,250 Unamortized discount - corporate debt (4,966) Unamortized deferred financing costs - corporate debt (3,467) Junior subordinated notes principal amount (6) 3M + 3.10 % 3/30/2035 15,000 Junior subordinated notes principal amount (7) 3M + 3.10 % 4/30/2035 21,250 Total corporate debt, net $ 333,317 Total carrying amount of debt components $ 625,466 Total carrying amount of conversion option of equity components recorded in equity $ 958 (1) Interest on the senior secured notes is payable semiannually on each February 15 and August 15, beginning on August 15, 2017. (2) Interest on the convertible notes is payable quarterly on February 15, May 15, August 15, and November 15 of each year, beginning on November 15, 2017. (3) Represents the discount created by separating the conversion option from the debt host instrument. (4) Interest on the corporate debt is payable January 30, April 30, July 30, and October 30 of each year, beginning on October 30, 2019. (5) Interest on the corporate debt is payable January 30, April 30, July 30, and October 30 of each year, beginning on April 30, 2021. (6) Interest on the Junior subordinated notes I-A payable March 30, June 30, September 30, and December 30 of each year. (7) Interest on the Junior subordinated notes I-B payable January 30, April 30, July 30, and October 30 of each year. |
Schedule of contractual maturities of the Senior Secured Notes, Convertible Notes, and Corporate debt | (In Thousands) March 31, 2021 2021 $ — 2022 180,000 2023 115,000 2024 — 2025 — Thereafter 341,750 Total contractual amounts $ 636,750 Unamortized deferred financing costs, discounts, and premiums, net (11,284) Total carrying amount of debt components $ 625,466 |
Guaranteed loan financing (Tabl
Guaranteed loan financing (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Guaranteed loan financing. | |
Schedule of guaranteed loan financing and the related interest rates and maturity dates | Weighted Average Range of Range of (In Thousands) Interest Rate Interest Rates Maturities (Years) Ending Balance March 31, 2021 3.78 % 0.99 - 6.50 % 2021 - 2044 $ 386,036 December 31, 2020 3.76 % 0.99 - 6.50 % 2021 - 2044 $ 401,705 |
Summary of contractual maturities of total guaranteed loan financing outstanding | (In Thousands) March 31, 2021 2021 212 2022 1,257 2023 1,998 2024 3,242 2025 3,410 Thereafter 375,917 Total $ 386,036 |
Variable interest entities an_2
Variable interest entities and securitization activities (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Consolidated VIEs | |
Variable interest entities | |
Summary of information on securitized debt obligations | March 31, 2021 December 31, 2020 Current Weighted Current Weighted Principal Carrying Average Principal Carrying Average (In Thousands) Balance value Interest Rate Balance value Interest Rate Waterfall Victoria Mortgage Trust 2011-SBC2 $ 2,869 $ 2,869 5.5 % $ 4,055 $ 4,055 5.5 % ReadyCap Lending Small Business Trust 2019-2 103,030 97,078 2.6 103,030 101,468 3.1 Sutherland Commercial Mortgage Trust 2017-SBC6 24,747 24,334 3.7 27,035 26,555 3.6 Sutherland Commercial Mortgage Trust 2018-SBC7 — — — 79,302 78,168 4.7 Sutherland Commercial Mortgage Trust 2019-SBC8 170,678 168,180 2.9 178,911 176,307 2.9 Sutherland Commercial Mortgage Trust 2020-SBC9 124,621 122,129 3.9 131,729 129,014 3.8 ReadyCap Commercial Mortgage Trust 2014-1 10,703 10,681 5.7 10,880 10,858 5.8 ReadyCap Commercial Mortgage Trust 2015-2 35,894 33,864 5.1 45,075 35,183 4.8 ReadyCap Commercial Mortgage Trust 2016-3 26,083 25,068 4.8 26,371 25,286 4.7 ReadyCap Commercial Mortgage Trust 2018-4 89,739 86,702 4.1 94,273 91,098 4.0 ReadyCap Commercial Mortgage Trust 2019-5 225,934 217,636 4.2 229,232 220,605 4.2 ReadyCap Commercial Mortgage Trust 2019-6 348,901 342,606 3.2 359,266 348,773 3.2 Ready Capital Mortgage Financing 2018-FL2 — — — 48,979 48,975 2.4 Ready Capital Mortgage Financing 2019-FL3 202,993 202,043 1.5 229,440 227,950 2.0 Ready Capital Mortgage Financing 2020-FL4 324,215 319,075 3.0 324,219 318,385 3.1 Ready Capital Mortgage Financing 2021-FL5 461,432 503,583 1.5 — — — Total (1) $ 2,151,839 $ 2,155,848 2.9 % $ 1,891,797 $ 1,842,680 3.3 % (1) Excludes non-company sponsored securitized debt obligations of $56.1 million and $63.1 million that are consolidated in the consolidated balance sheets as of March 31, 2021 and December 31, 2020, respectively. |
Schedule of assets and liabilities for VIEs | (In Thousands) March 31, 2021 December 31, 2020 Assets: Cash and cash equivalents $ 14 $ 20 Restricted cash 631 13,790 Loans, net 2,877,837 2,472,807 Real estate, held for sale 2,778 4,456 Other assets 17,467 27,670 Total assets $ 2,898,727 $ 2,518,743 Liabilities: Securitized debt obligations of consolidated VIEs, net 2,211,923 1,905,749 Total liabilities $ 2,211,923 $ 1,905,749 |
Unconsolidated VIEs | |
Variable interest entities | |
Schedule of assets and liabilities for VIEs | Carrying Amount Maximum Exposure to Loss (1) (In Thousands) March 31, 2021 December 31, 2020 March 31, 2021 December 31, 2020 Mortgage backed securities, at fair value (2) $ 82,158 $ 80,690 $ 82,158 $ 80,690 Investment in unconsolidated joint ventures 26,298 28,290 26,298 28,290 Total assets in unconsolidated VIEs $ 108,456 $ 108,980 $ 108,456 $ 108,980 (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 Freddie Mac and other third party sponsored securitizations. |
Interest income and interest _2
Interest income and interest expense (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Interest income and interest expense | |
Schedule of components of interest income and expense | Three Months Ended March 31, (In Thousands) 2021 2020 Interest income Loans Originated transitional loans $ 25,560 $ 22,219 Originated SBC loans 12,441 15,998 Acquired loans 13,810 15,411 Acquired SBA 7(a) loans 4,926 6,202 Originated SBA 7(a) loans 3,614 6,269 Originated SBC loans, at fair value 229 317 Originated residential agency loans 37 20 Total loans (1) $ 60,617 $ 66,436 Held for sale, at fair value, loans Originated residential agency loans $ 2,121 $ 1,297 Originated Freddie loans 607 271 Acquired loans 2 68 Total loans, held for sale, at fair value (1) $ 2,730 $ 1,636 Paycheck Protection Program loans Paycheck Protection Program loans $ 6,721 $ — Paycheck Protection Program loans, at fair value 171 — Total Paycheck Protection Program loans $ 6,892 $ — Mortgage backed securities, at fair value $ 3,132 $ 1,479 Total interest income $ 73,371 $ 69,551 Interest expense Secured borrowings $ (17,574) $ (12,758) Paycheck Protection Program Liquidity Facility borrowings (334) — Securitized debt obligations of consolidated VIEs (19,093) (19,529) Guaranteed loan financing (3,651) (6,243) Senior secured note (3,459) (3,472) Convertible note (2,188) (2,188) Corporate debt (4,462) (2,740) Total interest expense $ (50,761) $ (46,930) Net interest income before provision for loan losses $ 22,610 $ 22,621 (1) Includes interest income on loans in consolidated VIEs. |
Derivative instruments (Tables)
Derivative instruments (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Derivative instruments | |
Schedule of the Company's derivatives | As of March 31, 2021 As of December 31, 2020 Asset Liability Asset Liability Notional Derivatives Derivatives Notional Derivatives Derivatives (In Thousands) Primary Underlying Risk Amount Fair Value Fair Value Amount Fair Value Fair Value Interest rate lock commitments Interest rate risk $ 581,383 $ 11,724 $ — $ 614,358 $ 16,363 $ — Interest Rate Swaps - not designated as hedges Interest rate risk 429,181 — (784) 160,801 — (952) Interest Rate Swaps - designated as hedges Interest rate risk 132,325 — (3,391) 132,325 — (5,701) TBA Agency Securities Interest rate risk 592,000 — (97) 565,000 — (4,004) Credit Default Swaps Credit risk 189,525 (131) 15,000 — (174) FX forwards Foreign exchange rate risk 25,554 805 — 3,866 — (773) Total $ 1,949,968 $ 12,529 $ (4,403) $ 1,491,350 $ 16,363 $ (11,604) |
Schedule of gains and losses on derivatives | Three Months Ended March 31, 2021 Three Months Ended March 31, 2020 Net Change in Net Change in Net Realized Unrealized Net Realized Unrealized (In Thousands) Gain (Loss) Gain (Loss) Gain (Loss) Gain (Loss) Credit default swaps (1) $ — $ 42 $ — $ 370 Interest rate swaps (1)(2) (1,297) 6,523 (247) (20,168) TBA Agency Securities (3) — 3,908 — — Interest rate lock commitments (3) — (4,639) — 14,487 FX forwards (1) (528) 1,577 (137) 485 Total $ (1,825) $ 7,411 $ (384) $ (4,826) (1) Gains (losses) are recorded in net unrealized gain (loss) on financial instruments or net realized gain (loss) on financial instruments in the consolidated statements of income. |
Schedule of gains and losses on the Company's derivatives which have qualified for hedge accounting | (In Thousands) Derivatives - effective portion reclassified from AOCI to income Hedge ineffectiveness recorded directly in income (2) Total income statement impact Derivatives- effective portion recorded in OCI (3) Total change in OCI for period (3) Hedge type: Interest rate - forecasted transactions (1) $ (298) — (298) 1,680 1,978 Three Months Ended March 31, 2021 $ (298) $ — $ (298) $ 1,680 $ 1,978 Interest rate - forecasted transactions (1) $ (367) $ (1,694) $ (2,061) $ (83) $ 1,978 Three Months Ended March 31, 2020 $ (367) $ (1,694) $ (2,061) $ (5,189) $ (3,128) (1) Consists of benchmark interest rate hedges of LIBOR-indexed floating-rate liabilities. (2) 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. (3) Represents after tax amounts recorded in OCI. |
Real estate, held for sale (Tab
Real estate, held for sale (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Real estate, held for sale | |
Summary of the carrying amount of the Company's real estate holdings | (In Thousands) March 31, 2021 December 31, 2020 Acquired ORM Portfolio: Retail $ 18,700 $ 18,700 Mixed Use 14,248 14,248 Land 6,317 7,256 Lodging/Residential 3,230 3,230 Total Acquired ORM REO $ 42,495 $ 43,434 Other REO held for sale: Single Family $ 26,107 $ — Retail 3,614 660 Office 829 829 SBA 409 425 Total Other REO (1) $ 30,959 $ 1,914 Total Real Estate, held for sale $ 73,454 $ 45,348 (1) Excludes $2.8 million and $4.5 million of real estate, held for sale within consolidated VIEs. |
Agreements and transactions w_2
Agreements and transactions with related parties (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Management fee | |
Related-party transactions | |
Schedule of related party transactions | For the Three Months Ended March 31, 2021 2020 Management fee - total $ 2.7 million $ 2.6 million Management fee - amount unpaid $ 5.4 million $ 2.6 million |
Incentive distribution | |
Related-party transactions | |
Schedule of related party transactions | For the Three Months Ended March 31, 2021 2020 Incentive fee distribution - total $ — $ — Incentive fee distribution - amount unpaid $ 1.3 million $ — |
Expense reimbursement | |
Related-party transactions | |
Schedule of related party transactions | For the Three Months Ended March 31, 2021 2020 Reimbursable expenses payable to our Manager - total $ 2.0 million $ 1.3 million Reimbursable expenses payable to our Manager - amount unpaid $ 2.3 million $ 0.2 million |
Other assets and other liabil_2
Other assets and other liabilities (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Other assets and other liabilities | |
Schedule of other assets and other liabilities | (In Thousands) March 31, 2021 December 31, 2020 Other assets: Deferred tax asset $ 18,396 $ 18,396 Deferred loan exit fees 16,725 13,940 Accrued interest 16,120 12,656 Goodwill 17,817 11,206 Due from servicers 16,487 11,171 Right-of-use lease asset 3,138 3,172 Intangible assets 6,662 6,986 Deferred financing costs 4,611 2,612 PPP fee receivable 31,413 18 Other assets 20,134 9,346 Other assets $ 151,503 $ 89,503 Accounts payable and other accrued liabilities: Deferred tax liability $ 16,839 $ 16,839 Accrued salaries, wages and commissions 24,442 35,724 Accrued interest payable 17,250 19,695 Servicing principal and interest payable 10,028 7,318 Repair and denial reserve 11,626 9,557 Payable to related parties 6,769 4,088 Accrued professional fees 5,014 1,365 Lease payable 4,349 3,670 Deferred LSP revenue 3,959 10,700 Accrued PPP related costs 30,620 498 Other liabilities 31,569 26,201 Total accounts payable and other accrued liabilities $ 162,465 $ 135,655 |
Schedule of Intangible assets | (In Thousands) March 31, 2021 December 31, 2020 Estimated Useful Life Internally developed software - Knight Capital $ 2,903 $ 3,061 6 years Broker network - Knight Capital 822 889 4.5 years Trade name - Knight Capital 672 709 6 years Favorable lease 736 768 12 years Trade name - GMFS 529 559 15 years SBA license 1,000 1,000 Indefinite life Total Intangible Assets $ 6,662 $ 6,986 |
Schedule of accumulated amortization for finite-lived intangible assets | (In Thousands) March 31, 2021 Favorable lease $ 744 Trade name - GMFS 694 Internally developed software - Knight Capital 897 Broker network - Knight Capital 378 Trade name - Knight Capital 208 Total Accumulated Amortization $ 2,921 |
Amortization expense related to the intangible assets | (In Thousands) March 31, 2021 2021 $ 971 2022 1,268 2023 1,242 2024 1,032 2025 786 2026 119 Thereafter 244 Total $ 5,662 |
Other income and operating ex_2
Other income and operating expenses (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Other income and operating expenses | |
Schedule of the financial position related to the Paycheck Protection Program (PPP) activities | (In Thousands) March 31, 2021 Assets Restricted cash $ 10,000 Paycheck Protection Program loans 1,254,420 Paycheck Protection Program loans, at fair value 38,388 Prepaid expenses 13 PPP fee receivable 31,413 Deferred financing costs 1,065 Accrued interest receivable 1,554 Total PPP related assets $ 1,336,853 Liabilities Secured borrowings $ 230,483 Paycheck Protection Program Liquidity Facility borrowings 1,132,536 Interest payable 364 Deferred LSP revenue 3,959 Accrued PPP related costs 30,620 Payable to third parties 365 Repair and denial reserve 4,961 Total PPP related liabilities $ 1,403,288 |
Schedule of the income and expenses related to the Paycheck Protection Program (PPP) activities. | (In Thousands) Three Months Ended March 31, 2021 Financial statement account Income LSP fee income $ 6,741 Servicing income Interest income 6,892 Interest income Total PPP related income $ 13,633 Expense Direct operating expenses $ 4,545 Other operating expenses - origination costs Repair and denial reserve 1,656 Other income - change in repair and denial reserve Interest expense 3,861 Interest expense Total PPP related expenses (direct) $ 10,062 Net PPP related income $ 3,571 |
Schedule of other income and operating expenses | Three Months Ended March 31, (In Thousands) 2021 2020 Other income Origination income $ 1,613 $ 2,495 Change in repair and denial reserve (2,069) 136 Other 1,027 1,442 Total other income $ 571 $ 4,073 Other operating expenses Origination costs $ 8,145 $ 3,025 Technology expense 1,872 1,580 Impairment on real estate — 2,969 Rent and property tax expense 1,686 1,184 Recruiting, training and travel expense 496 624 Marketing expense 576 546 Loan acquisition costs 34 98 Financing costs on purchased future receivables 24 624 Other 2,651 3,094 Total other operating expenses $ 15,484 $ 13,744 |
Stockholders Equity (Tables)
Stockholders Equity (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Stockholders' Equity | |
Schedule of cash dividends declared by the Board of Directors | The following table presents cash dividends declared by our board of directors on our common stock from March 31, 2020 through March 31, 2021: Declaration Date Record Date Payment Date Dividend per Share June 15, 2020 June 30, 2020 July 31, 2020 $ 0.25 September 16, 2020 September 30, 2020 October 30, 2020 $ 0.30 December 14, 2020 December 31, 2020 January 29, 2021 $ 0.35 March 1, 2021 March 15, 2021 March 18, 2021 $ 0.30 March 24, 2021 April 5, 2021 April 30, 2021 $ 0.10 |
Schedule of Restricted Stock Unit RSU and RSA activity | Restricted Stock Awards (In Thousands, except share data) Number of Grant date fair value Weighted-average grant date fair value (per share) Outstanding, December 31, 2020 872,079 $ 13,737 $ 15.75 Granted 185,586 2,379 12.82 Vested (115,604) (1,801) 15.58 Canceled (1,547) (21) 13.50 Outstanding, March 31, 2021 940,514 $ 14,294 $ 15.20 |
Schedule of preferred stock outstanding | Preferential Cash Dividends (1)(2) Carrying Value (in thousands) Series Shares Issued and Outstanding (in thousands) Par Value Liquidation Preference (3) Rate per Annum Annual Dividend (per share) March 31, 2021 B 1,919 $ 0.0001 $ 25.00 8.63% $ 2.16 $ 47,984 C 780 0.0001 25.00 6.25% 1.56 $ 19,494 D 2,010 0.0001 25.00 7.63% 1.91 $ 50,257 (1) (2) (3) |
Earnings per Share of Common _2
Earnings per Share of Common Stock (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Earnings per Share of Common Stock | |
Schedule of computation of basic and diluted earnings per share | Three Months Ended March 31, (In Thousands, except for share and per share amounts) 2021 2020 Basic Earnings Net income (loss) $ 28,947 $ (51,516) Less: Income (loss) attributable to non-controlling interest 659 (1,064) Less: Income attributable to participating shares 657 463 Basic earnings $ 27,631 $ (50,915) Diluted Earnings Net income (loss) $ 28,947 $ (51,516) Less: Income (loss) attributable to non-controlling interest 659 (1,064) Less: Income attributable to participating shares 657 463 Diluted earnings $ 27,631 $ (50,915) Number of Shares Basic — Average shares outstanding 56,817,632 51,984,040 Effect of dilutive securities — Unvested participating shares 25,816 5,973 Diluted — Average shares outstanding 56,843,448 51,990,013 Earnings Per Share Attributable to RC Common Stockholders: Basic $ 0.49 $ (0.98) Diluted $ 0.49 $ (0.98) |
Offsetting assets and liabili_2
Offsetting assets and liabilities (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
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 recognized Assets / Liabilities Gross amounts offset in the Consolidated Balance Sheets Amounts presented in the Consolidated Balance Sheets Financial Instruments Cash Collateral Received / Paid Net Amount March 31, 2021 Assets Derivative instruments - Interest rate lock commitments 11,724 — 11,724 — $ — $ 11,724 Derivative instruments - FX forwards 805 — 805 — $ — $ 805 Total $ 12,529 $ — $ 12,529 $ — $ — $ 12,529 Liabilities Derivative instruments - Interest rate swaps $ 7,651 $ 3,476 $ 4,175 $ — $ 4,175 $ — Derivative instruments - Credit default swaps 131 — 131 — 131 — Derivative instruments - TBA Agency Securities 97 — 97 — — 97 Derivative instruments - FX forwards — — — — — — Secured borrowings 2,064,785 — 2,064,785 2,064,785 — — Total $ 2,072,664 $ 3,476 $ 2,069,188 $ 2,064,785 $ 4,306 $ 97 December 31, 2020 Assets Derivative instruments - Interest rate lock commitments $ 16,363 — 16,363 — $ — $ 16,363 Total $ 16,363 $ — $ 16,363 $ — $ — $ 16,363 Liabilities Derivative instruments - Interest rate swaps $ 11,670 $ 5,017 $ 6,653 $ — $ 6,653 $ — Derivative instruments - TBA Agency Securities 174 — 174 — 174 — Derivative instruments - Credit default swaps 4,004 — 4,004 — — 4,004 Derivative instruments - FX forwards 773 773 — — 773 Secured borrowings 1,294,243 — 1,294,243 1,294,243 — — Total $ 1,310,864 $ 5,017 $ 1,305,847 $ 1,294,243 $ 6,827 $ 4,777 (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 we have 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 us that exceeds our corresponding financial assets. In each case, any of these excess amounts are excluded from the table although they are separately reported in our consolidated balance sheets as assets or liabilities, respectively. |
Commitments, Contingencies an_2
Commitments, Contingencies and Indemnifications (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Commitments, Contingencies and Indemnifications | |
Schedule of unfunded loan commitments and commitments to originate loans | (In Thousands) March 31, 2021 December 31, 2020 Loans, net $ 293,919 $ 285,389 Loans, held for sale at fair value $ 11,123 $ 7,809 (In Thousands) March 31, 2021 December 31, 2020 Commitments to originate residential agency loans $ 590,612 $ 575,600 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Segment Reporting | |
Schedule of segment reporting information | Results of business segments and all other. SBA Originations, Residential Loan SBC Acquisitions, Mortgage Corporate- (In Thousands) Acquisitions Originations and Servicing Banking Other Consolidated Interest income $ 14,534 $ 39,693 $ 15,432 $ 2,044 $ 1,668 $ 73,371 Interest expense (11,971) (24,998) (9,207) (2,328) (2,257) (50,761) Net interest income before provision for loan losses $ 2,563 $ 14,695 $ 6,225 $ (284) $ (589) $ 22,610 Recovery of (provision for) loan losses 1,262 (1,609) 355 — — 8 Net interest income after (provision for) recovery of loan losses $ 3,825 $ 13,086 $ 6,580 $ (284) $ (589) $ 22,618 Non-interest income Residential mortgage banking activities $ — $ — $ — $ 41,409 $ — $ 41,409 Net realized gain on financial instruments and real estate owned (1,493) 5,565 4,900 — (126) 8,846 Net unrealized gain (loss) on financial instruments 897 3,033 514 15,355 1,197 20,996 Other income 1,183 1,288 (1,960) 15 45 571 Servicing income 21 726 7,782 7,106 — 15,635 Income on purchased future receivables, net of allowance for doubtful accounts 2,317 — — — — 2,317 Income (loss) on unconsolidated joint ventures (809) — — — — (809) Total non-interest income $ 2,116 $ 10,612 $ 11,236 $ 63,885 $ 1,116 $ 88,965 Non-interest expense Employee compensation and benefits (1,485) (2,252) (4,561) (13,588) (891) (22,777) Allocated employee compensation and benefits from related party (212) — — — (1,911) (2,123) Variable expenses on residential mortgage banking activities — — — (15,485) — (15,485) Professional fees (786) (323) (380) (251) (1,242) (2,982) Management fees – related party — — — — (2,693) (2,693) Loan servicing expense (1,751) (2,052) 102 (2,364) (39) (6,104) Merger related expenses — — — — (6,307) (6,307) Other operating expenses (2,364) (3,916) (6,285) (2,204) (715) (15,484) Total non-interest expense $ (6,598) $ (8,543) $ (11,124) $ (33,892) $ (13,798) $ (73,955) Income (loss) before provision for income taxes $ (657) $ 15,155 $ 6,692 $ 29,709 $ (13,271) $ 37,628 Total assets $ 1,121,590 $ 3,128,924 $ 1,983,098 $ 672,255 $ 1,111,088 $ 8,016,955 Reportable business segments, along with remaining unallocated amounts recorded within Corporate- Other, for the three months ended March 31, 2020 are summarized in the below table. SBA Originations, Residential Loan SBC Acquisitions, Mortgage Corporate- (In Thousands) Acquisitions Originations and Servicing Banking Other Consolidated Interest income $ 16,494 $ 39,269 $ 12,471 $ 1,317 $ — $ 69,551 Interest expense (11,205) (25,627) (8,513) (1,585) — (46,930) Net interest income before provision for loan losses $ 5,289 $ 13,642 $ 3,958 $ (268) $ — $ 22,621 Recovery of (provision for) loan losses (5,722) (29,828) (4,254) — — (39,804) Net interest income after provision for loan losses $ (433) $ (16,186) $ (296) $ (268) $ — $ (17,183) Non-interest income Residential mortgage banking activities $ — $ — $ — $ 36,669 $ $ 36,669 Net realized gain on financial instruments (739) 3,649 4,262 — — 7,172 Net unrealized gain (loss) on financial instruments (9,423) (6,491) (1,082) (16,438) — (33,434) Other income 2,336 1,283 295 60 99 4,073 Income on purchased future receivables, net 3,483 — — — — 3,483 Servicing income 355 532 1,074 6,136 — 8,097 Income from unconsolidated joint ventures (3,537) — — — — (3,537) Total non-interest income $ (7,525) $ (1,027) $ 4,549 $ 26,427 $ 99 $ 22,523 Non-interest expense Employee compensation and benefits $ (2,833) $ (2,710) $ (3,910) $ (8,741) $ (742) (18,936) Allocated employee compensation and benefits from related party (125) — — — (1,125) (1,250) Variable expenses on residential mortgage banking activities — — — (20,129) — (20,129) Professional fees (235) (338) (289) (287) (1,407) (2,556) Management fees – related party — — — — (2,561) (2,561) Loan servicing (expense) income (1,365) (1,580) (335) (2,258) (32) (5,570) Merger related expenses — — — — (47) (47) Other operating expenses (6,245) (3,457) (1,559) (1,785) (698) (13,744) Total non-interest expense $ (10,803) $ (8,085) $ (6,093) $ (33,200) $ (6,612) $ (64,793) Net income (loss) before provision for income taxes $ (18,761) $ (25,298) $ (1,840) $ (7,041) $ (6,513) $ (59,453) Total assets $ 1,209,617 $ 2,704,301 $ 703,331 $ 418,421 $ 234,380 $ 5,270,050 |
Organization (Details)
Organization (Details) - segment | 3 Months Ended | 12 Months Ended |
Mar. 31, 2021 | Dec. 31, 2020 | |
Number of reporting units | 4 | |
Number of operating segments | 4 | |
Operating Partnership | ||
Ownership percentage in operating partnership | 98.40% | 97.90% |
Organization - Acquisitions (De
Organization - Acquisitions (Details) | Mar. 19, 2021USD ($)item$ / sharesshares | Mar. 31, 2021USD ($)$ / shares | Mar. 31, 2021$ / shares |
Acquisitions | |||
Financial assets liquidated | $ | $ 1,400,000,000 | ||
Extinguishment of indebtedness on the RMDS portfolio | $ | $ 1,300,000,000 | ||
Temporary reduction in the quarterly base management fee following the effective date of the merger | $ | $ 1,000,000 | ||
Number of quarters the temporary reduction in quarterly base management fee is effective | item | 4 | ||
Minimum | |||
Acquisitions | |||
Percentage of taxable income distributed in the form of qualifying distributions | 90.00% | ||
Series B Preferred Stock | |||
Acquisitions | |||
Rate per Annum | 8.63% | ||
Par Value per Share | $ 0.0001 | $ 0.0001 | |
Series B Preferred Stock | ANH | |||
Acquisitions | |||
Rate per Annum | 6.25% | ||
Series C Preferred Stock | |||
Acquisitions | |||
Rate per Annum | 6.25% | ||
Par Value per Share | 0.0001 | $ 0.0001 | |
Series C Preferred Stock | ANH | |||
Acquisitions | |||
Rate per Annum | 7.625% | ||
Series D Preferred Stock | |||
Acquisitions | |||
Rate per Annum | 7.63% | ||
Par Value per Share | $ 0.0001 | $ 0.0001 | |
Series A Preferred Stock | ANH | |||
Acquisitions | |||
Rate per Annum | 8.625% | ||
ANH | |||
Acquisitions | |||
Shares issued | shares | 16,774,000 | ||
Cash paid | $ | $ 60,626,000 | ||
Exchange ratio | 0.1688 | ||
Cash paid per share | $ 0.61 | ||
Total purchase price | $ | $ 417,898,000 | ||
Market price as of March 19, 2021 | $ 14.28 | ||
Common stock consideration | $ | $ 239,537,000 | ||
ANH | Ready Capital Shareholders | |||
Acquisitions | |||
Percentage of equity interests held after closing | 77.00% | ||
ANH | ANH Shareholders | |||
Acquisitions | |||
Percentage of equity interests held after closing | 23.00% | ||
ANH | Series B Preferred Stock | |||
Acquisitions | |||
Shares issued | shares | 1,919,378 | ||
Market price as of March 19, 2021 | $ 25 | ||
Rate per Annum | 8.625% | ||
Par Value per Share | $ 0.0001 | ||
Common stock consideration | $ | $ 47,984,000 | ||
ANH | Series C Preferred Stock | |||
Acquisitions | |||
Shares issued | shares | 779,743 | ||
Market price as of March 19, 2021 | $ 25 | ||
Rate per Annum | 6.25% | ||
Par Value per Share | $ 0.0001 | ||
Common stock consideration | $ | $ 19,494,000 | ||
ANH | Series D Preferred Stock | |||
Acquisitions | |||
Shares issued | shares | 2,010,278 | ||
Market price as of March 19, 2021 | $ 25 | ||
Rate per Annum | 7.625% | ||
Par Value per Share | $ 0.0001 | ||
Common stock consideration | $ | $ 50,257,000 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2021USD ($)classsegmentitem | Mar. 31, 2020segment | Dec. 31, 2020USD ($)item | |
Number of reportable segments | segment | 4 | 4 | |
Cash collateral offset against derivative liability positions | $ 3.5 | ||
Number of separate classes of servicing rights used for risk management purposes | class | 2 | ||
Number of repurchase agreements accounted for as components of linked transactions | item | 0 | ||
Unrecognized accrued taxes, interest and penalties | $ 0 | $ 0 | |
The number of consecutive months contractual payments that must be received on a loan in non-accrual status before resuming recognition of interest income | item | 3 | ||
Borrowings under credit facilities | Maximum | |||
Maturity period | 2 years | ||
Restricted cash | |||
Cash collateral not offset against derivative liability positions | $ 6.4 | $ 10.5 |
Recently Issued Accounting Pron
Recently Issued Accounting Pronouncements (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2020 | Dec. 31, 2019 |
Stockholders' equity | $ 1,178,752 | $ 834,208 | $ 775,559 | $ 844,784 |
Retained earnings (deficit) | (20,027) | (24,203) | ||
Retained Earnings (Deficit) | ||||
Stockholders' equity | $ (20,027) | $ (24,203) | $ (69,605) | $ 8,746 |
Business Combinations - Fair Va
Business Combinations - Fair Value of Assets and Liabilities Assumed (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Mar. 19, 2021 | Dec. 31, 2020 |
Assets: | |||
Real estate, held for sale | $ 42,495 | $ 43,434 | |
ANH | |||
Assets: | |||
Cash and cash equivalents | $ 110,545 | ||
Mortgage backed securities, at fair value | 2,010,504 | ||
Loans, held for sale, at fair value | 102,798 | ||
Real estate, held for sale | 26,107 | ||
Accrued interest | 8,453 | ||
Other assets | 38,707 | ||
Total assets acquired | 2,297,114 | ||
Liabilities: | |||
Secured borrowings | 1,784,047 | ||
Corporate debt | 36,250 | ||
Derivative instruments, at fair value | 60,719 | ||
Accounts payable and other accrued liabilities | 4,811 | ||
Total liabilities assumed | 1,885,827 | ||
Net assets acquired | 411,287 | ||
Gross contractual principal of acquired loan receivables. | $ 98,300 |
Business Combinations - Aggrega
Business Combinations - Aggregate Consideration Transferred (Details) $ / shares in Units, $ in Thousands | Mar. 19, 2021USD ($)$ / sharesshares | Mar. 31, 2021USD ($) | Dec. 31, 2020USD ($) |
Acquisitions | |||
Goodwill | $ 17,817 | $ 11,206 | |
ANH | |||
Acquisitions | |||
Common stock consideration | $ 239,537 | ||
Fair value of net assets acquired | $ 411,287 | ||
Exchange ratio | 0.1688 | ||
Shares issued | shares | 16,774,000 | ||
Market price as of March 19, 2021 | $ / shares | $ 14.28 | ||
Cash paid per share | $ / shares | $ 0.61 | ||
Cash paid based on outstanding ANH shares | $ 60,626 | ||
Consideration transferred based on value of stock issued | 239,537 | ||
Total consideration transferred | 417,898 | ||
Goodwill | 6,611 | ||
Acquisition related costs | $ 6,300 | ||
ANH | Series B Preferred Stock | |||
Acquisitions | |||
Common stock consideration | $ 47,984 | ||
Shares issued | shares | 1,919,378 | ||
Market price as of March 19, 2021 | $ / shares | $ 25 | ||
Consideration transferred based on value of stock issued | $ 47,984 | ||
ANH | Series C Preferred Stock | |||
Acquisitions | |||
Common stock consideration | $ 19,494 | ||
Shares issued | shares | 779,743 | ||
Market price as of March 19, 2021 | $ / shares | $ 25 | ||
Consideration transferred based on value of stock issued | $ 19,494 | ||
ANH | Series D Preferred Stock | |||
Acquisitions | |||
Common stock consideration | $ 50,257 | ||
Shares issued | shares | 2,010,278 | ||
Market price as of March 19, 2021 | $ / shares | $ 25 | ||
Consideration transferred based on value of stock issued | $ 50,257 | ||
ANH | ANH | |||
Acquisitions | |||
ANH shares outstanding at March 19, 2021 | shares | 99,374 |
Business Combinations - Pro-for
Business Combinations - Pro-forma Information (Details) - ANH - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Pro-forma information | ||
Interest income | $ 85,120 | $ 105,314 |
Interest expense | (54,289) | (70,317) |
Recovery of (provision for) loan losses | 8 | (39,860) |
Non-interest income | 91,690 | 19,463 |
Non-interest expense | (79,584) | (296,474) |
Income (loss) before provision for income taxes | 42,945 | (281,874) |
Income tax benefit (expense) | (8,681) | 7,937 |
Net income (loss) | 34,264 | $ (273,937) |
Nonrecurring transaction costs excluded from pro forma non-interest expense | $ 6,300 |
Loans and Allowance for Credi_3
Loans and Allowance for Credit Losses - Classification, unpaid principal balance, and carrying value (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2020 | Dec. 31, 2019 |
Carrying Value | ||||
Total Loans, before allowance for loan losses | $ 1,645,160 | $ 1,583,848 | ||
Allowance for loan losses | (33,334) | (33,224) | ||
Total Loans, net | 1,611,826 | 1,550,624 | ||
Allowance for loan losses on loans in consolidated VIEs | (45,649) | (46,732) | $ (57,968) | $ (7,441) |
Total Loans, net of allowance for loan losses, including loans in consolidated VIEs | 4,489,663 | 4,023,431 | ||
Loans, held for sale, at fair value | 473,078 | 340,288 | ||
Total Loans, net and Loans held for sale, at fair value | 4,962,741 | 4,363,719 | ||
Paycheck Protection Program loans | 1,292,808 | 74,931 | ||
Total loan portfolio | 6,255,549 | 4,438,650 | ||
UPB | ||||
Total Loans, before allowance for loan losses | 1,660,249 | 1,598,328 | ||
Total Loans, net | 1,660,249 | 1,598,328 | ||
Total Loans, held for sale, at fair value | 461,728 | 328,045 | ||
Total Loans, net and Loans held for sale, at fair value | 5,032,856 | 4,430,080 | ||
Total Paycheck Protection Program loans | 1,360,576 | 74,931 | ||
Total Loan portfolio | 6,393,432 | 4,505,011 | ||
Consolidated VIEs | ||||
Carrying Value | ||||
Total Loans, in consolidated VIEs, before allowance for loan losses | 2,890,152 | 2,486,315 | ||
Allowance for loan losses on loans in consolidated VIEs | (12,315) | (13,508) | ||
Total Loans, net, in consolidated VIEs | 2,877,837 | 2,472,807 | ||
UPB | ||||
Total Loans, in consolidated VIEs, before allowance for loan losses | 2,910,879 | 2,503,707 | ||
Total Loans, net, in consolidated VIEs | 2,910,879 | 2,503,707 | ||
Originated Transitional loans | ||||
Carrying Value | ||||
Total Loans, before allowance for loan losses | 522,747 | 530,671 | ||
Allowance for loan losses on loans in consolidated VIEs | (17,043) | (14,995) | (24,264) | (188) |
UPB | ||||
Total Loans, before allowance for loan losses | 525,615 | 535,963 | ||
Originated Transitional loans | Consolidated VIEs | ||||
Carrying Value | ||||
Total Loans, in consolidated VIEs, before allowance for loan losses | 1,352,642 | 788,403 | ||
UPB | ||||
Total Loans, in consolidated VIEs, before allowance for loan losses | 1,363,543 | 792,432 | ||
Originated SBA 7(a) loans | ||||
Carrying Value | ||||
Total Loans, before allowance for loan losses | 309,487 | 310,537 | ||
Allowance for loan losses on loans in consolidated VIEs | (9,277) | (10,051) | (7,074) | (1,781) |
Loans, held for sale, at fair value | 14,571 | 10,232 | ||
UPB | ||||
Total Loans, before allowance for loan losses | 314,182 | 314,938 | ||
Total Loans, held for sale, at fair value | 13,261 | 9,436 | ||
Originated SBA 7(a) loans | Consolidated VIEs | ||||
Carrying Value | ||||
Total Loans, in consolidated VIEs, before allowance for loan losses | 67,214 | 68,625 | ||
UPB | ||||
Total Loans, in consolidated VIEs, before allowance for loan losses | 70,902 | 72,451 | ||
Acquired SBA 7(a) loans | ||||
Carrying Value | ||||
Total Loans, before allowance for loan losses | 188,462 | 201,066 | ||
Allowance for loan losses on loans in consolidated VIEs | (4,322) | (4,549) | (5,622) | (2,114) |
UPB | ||||
Total Loans, before allowance for loan losses | 196,983 | 210,115 | ||
Acquired SBA 7(a) loans | Consolidated VIEs | ||||
Carrying Value | ||||
Total Loans, in consolidated VIEs, before allowance for loan losses | 40,253 | 42,154 | ||
UPB | ||||
Total Loans, in consolidated VIEs, before allowance for loan losses | 49,795 | 52,456 | ||
Originated SBC loans | ||||
Carrying Value | ||||
Total Loans, before allowance for loan losses | 167,772 | 173,190 | ||
Allowance for loan losses on loans in consolidated VIEs | (7,972) | (8,840) | (10,362) | (304) |
Loans, held for sale, at fair value | 23,661 | 17,850 | ||
UPB | ||||
Total Loans, before allowance for loan losses | 161,763 | 167,470 | ||
Total Loans, held for sale, at fair value | 23,822 | 17,850 | ||
Originated SBC loans | Consolidated VIEs | ||||
Carrying Value | ||||
Total Loans, in consolidated VIEs, before allowance for loan losses | 877,461 | 889,566 | ||
UPB | ||||
Total Loans, in consolidated VIEs, before allowance for loan losses | 873,517 | 885,235 | ||
Acquired loans | ||||
Carrying Value | ||||
Total Loans, before allowance for loan losses | 439,936 | 351,381 | ||
Allowance for loan losses on loans in consolidated VIEs | (7,035) | (8,297) | $ (10,646) | $ (3,054) |
Loans, held for sale, at fair value | 99,247 | 511 | ||
UPB | ||||
Total Loans, before allowance for loan losses | 444,742 | 352,546 | ||
Total Loans, held for sale, at fair value | 94,898 | 499 | ||
Acquired loans | Consolidated VIEs | ||||
Carrying Value | ||||
Total Loans, in consolidated VIEs, before allowance for loan losses | 552,582 | 697,567 | ||
UPB | ||||
Total Loans, in consolidated VIEs, before allowance for loan losses | 553,122 | 701,133 | ||
Originated SBC loans, at fair value | ||||
Carrying Value | ||||
Total Loans, before allowance for loan losses | 13,618 | 13,795 | ||
UPB | ||||
Total Loans, before allowance for loan losses | 13,881 | 14,088 | ||
Originated Residential Agency loans | ||||
Carrying Value | ||||
Total Loans, before allowance for loan losses | 3,138 | 3,208 | ||
Loans, held for sale, at fair value | 310,892 | 260,447 | ||
UPB | ||||
Total Loans, before allowance for loan losses | 3,083 | 3,208 | ||
Total Loans, held for sale, at fair value | 305,487 | 249,852 | ||
Originated Freddie Mac loans | ||||
Carrying Value | ||||
Loans, held for sale, at fair value | 24,707 | 51,248 | ||
UPB | ||||
Total Loans, held for sale, at fair value | 24,260 | 50,408 | ||
Paycheck Protection Program Loans, Held For Investment | ||||
Carrying Value | ||||
Paycheck Protection Program loans | 1,254,420 | |||
UPB | ||||
Total Paycheck Protection Program loans | 1,322,188 | |||
Paycheck Protection Program loans, at fair value | ||||
Carrying Value | ||||
Paycheck Protection Program loans | 38,388 | 74,931 | ||
UPB | ||||
Total Paycheck Protection Program loans | $ 38,388 | $ 74,931 |
Loans and Allowance for Credi_4
Loans and Allowance for Credit Losses - Loan Vintage (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Loan classification and delinquency by year of origination | ||
UPB | $ 4,571,128 | $ 4,102,035 |
Current fiscal year | 606,835 | 522,961 |
Year before current fiscal year | 529,003 | 1,229,069 |
Two years before current fiscal year | 1,208,044 | 735,604 |
Three years before current fiscal year | 699,588 | 243,042 |
Four years before current fiscal year | 224,498 | 110,314 |
Five or more years before current fiscal year | 1,249,098 | 1,211,980 |
Total | 4,517,066 | 4,052,970 |
General allowance for loan losses | (27,403) | (29,539) |
Total Loans, net of allowance for loan losses, including loans in consolidated VIEs | 4,489,663 | 4,023,431 |
Specific allowance for loan losses | 18,200 | 17,200 |
Current and less than 30 days past due | ||
Loan classification and delinquency by year of origination | ||
UPB | 4,351,956 | 3,904,294 |
Current fiscal year | 606,638 | 516,474 |
Year before current fiscal year | 512,632 | 1,221,227 |
Two years before current fiscal year | 1,178,806 | 707,068 |
Three years before current fiscal year | 632,881 | 203,331 |
Four years before current fiscal year | 205,280 | 100,003 |
Five or more years before current fiscal year | 1,178,466 | 1,125,100 |
Total | 4,314,703 | 3,873,203 |
30-59 Days Past Due | ||
Loan classification and delinquency by year of origination | ||
UPB | 79,654 | 38,836 |
Current fiscal year | 5,812 | |
Year before current fiscal year | 15,711 | 5,191 |
Two years before current fiscal year | 24,790 | 15,097 |
Three years before current fiscal year | 21,139 | 401 |
Four years before current fiscal year | 4,841 | 2 |
Five or more years before current fiscal year | 12,081 | 11,933 |
Total | 78,562 | 38,436 |
60+ Days Past Due | ||
Loan classification and delinquency by year of origination | ||
UPB | 139,518 | 158,905 |
Current fiscal year | 197 | 675 |
Year before current fiscal year | 660 | 2,651 |
Two years before current fiscal year | 4,448 | 13,439 |
Three years before current fiscal year | 45,568 | 39,310 |
Four years before current fiscal year | 14,377 | 10,309 |
Five or more years before current fiscal year | 58,551 | 74,947 |
Total | 123,801 | 141,331 |
Originated Transitional loans | ||
Loan classification and delinquency by year of origination | ||
UPB | 1,889,158 | 1,328,395 |
Current fiscal year | 599,301 | 385,183 |
Year before current fiscal year | 397,349 | 583,593 |
Two years before current fiscal year | 570,278 | 306,971 |
Three years before current fiscal year | 277,650 | 23,783 |
Four years before current fiscal year | 13,292 | 18,480 |
Five or more years before current fiscal year | 15,294 | 1,064 |
Total | 1,873,164 | 1,319,074 |
General allowance for loan losses | (14,848) | (14,995) |
Originated Transitional loans | Current and less than 30 days past due | ||
Loan classification and delinquency by year of origination | ||
Total | 1,794,270 | 1,281,579 |
Originated Transitional loans | 30-59 Days Past Due | ||
Loan classification and delinquency by year of origination | ||
Total | 30,315 | 17,713 |
Originated Transitional loans | 60+ Days Past Due | ||
Loan classification and delinquency by year of origination | ||
Total | 48,579 | 19,782 |
Originated SBC loans | ||
Loan classification and delinquency by year of origination | ||
UPB | 1,035,280 | 1,052,705 |
Current fiscal year | 66,715 | |
Year before current fiscal year | 62,606 | 486,033 |
Two years before current fiscal year | 479,979 | 237,313 |
Three years before current fiscal year | 235,716 | 110,354 |
Four years before current fiscal year | 105,628 | 43,696 |
Five or more years before current fiscal year | 155,608 | 112,444 |
Total | 1,039,537 | 1,056,555 |
General allowance for loan losses | (2,729) | (2,640) |
Originated SBC loans | Current and less than 30 days past due | ||
Loan classification and delinquency by year of origination | ||
Total | 993,570 | 1,000,878 |
Originated SBC loans | 30-59 Days Past Due | ||
Loan classification and delinquency by year of origination | ||
Total | 16,953 | 6,591 |
Originated SBC loans | 60+ Days Past Due | ||
Loan classification and delinquency by year of origination | ||
Total | 29,014 | 49,086 |
Acquired loans | ||
Loan classification and delinquency by year of origination | ||
UPB | 997,864 | 1,053,679 |
Current fiscal year | 21,414 | |
Year before current fiscal year | 21,042 | 40,572 |
Two years before current fiscal year | 40,618 | 42,167 |
Three years before current fiscal year | 41,301 | 38,649 |
Four years before current fiscal year | 37,507 | 19,533 |
Five or more years before current fiscal year | 849,833 | 883,774 |
Total | 990,301 | 1,046,109 |
General allowance for loan losses | (4,335) | (5,457) |
Acquired loans | Current and less than 30 days past due | ||
Loan classification and delinquency by year of origination | ||
Total | 934,265 | 978,346 |
Acquired loans | 30-59 Days Past Due | ||
Loan classification and delinquency by year of origination | ||
Total | 14,485 | 7,729 |
Acquired loans | 60+ Days Past Due | ||
Loan classification and delinquency by year of origination | ||
Total | 41,551 | 60,034 |
Originated SBA 7(a) loans | ||
Loan classification and delinquency by year of origination | ||
UPB | 385,084 | 387,389 |
Current fiscal year | 6,599 | 47,939 |
Year before current fiscal year | 47,218 | 98,568 |
Two years before current fiscal year | 97,040 | 133,812 |
Three years before current fiscal year | 129,904 | 68,375 |
Four years before current fiscal year | 66,195 | 22,056 |
Five or more years before current fiscal year | 25,332 | 4,041 |
Total | 372,288 | 374,791 |
General allowance for loan losses | (4,864) | (5,680) |
Originated SBA 7(a) loans | Current and less than 30 days past due | ||
Loan classification and delinquency by year of origination | ||
Total | 356,600 | 369,416 |
Originated SBA 7(a) loans | 30-59 Days Past Due | ||
Loan classification and delinquency by year of origination | ||
Total | 14,789 | 1,741 |
Originated SBA 7(a) loans | 60+ Days Past Due | ||
Loan classification and delinquency by year of origination | ||
Total | 899 | 3,634 |
Acquired SBA 7(a) loans | ||
Loan classification and delinquency by year of origination | ||
UPB | 246,778 | 262,571 |
Current fiscal year | 139 | |
Year before current fiscal year | 129 | 19,658 |
Two years before current fiscal year | 19,485 | 14,636 |
Three years before current fiscal year | 14,315 | 283 |
Four years before current fiscal year | 279 | 19 |
Five or more years before current fiscal year | 190,812 | 204,703 |
Total | 225,020 | 239,438 |
General allowance for loan losses | (627) | (767) |
Acquired SBA 7(a) loans | Current and less than 30 days past due | ||
Loan classification and delinquency by year of origination | ||
Total | 221,444 | 228,651 |
Acquired SBA 7(a) loans | 30-59 Days Past Due | ||
Loan classification and delinquency by year of origination | ||
Total | 2,020 | 4,008 |
Acquired SBA 7(a) loans | 60+ Days Past Due | ||
Loan classification and delinquency by year of origination | ||
Total | 1,556 | 6,779 |
Originated SBC loans, at fair value | ||
Loan classification and delinquency by year of origination | ||
UPB | 13,881 | 14,088 |
Three years before current fiscal year | 1,598 | |
Four years before current fiscal year | 1,597 | 6,442 |
Five or more years before current fiscal year | 12,021 | 5,755 |
Total | 13,618 | 13,795 |
Originated SBC loans, at fair value | Current and less than 30 days past due | ||
Loan classification and delinquency by year of origination | ||
Total | 13,618 | 13,795 |
Originated Residential Agency loans | ||
Loan classification and delinquency by year of origination | ||
UPB | 3,083 | 3,208 |
Current fiscal year | 935 | 1,571 |
Year before current fiscal year | 659 | 645 |
Two years before current fiscal year | 644 | 705 |
Three years before current fiscal year | 702 | |
Four years before current fiscal year | 88 | |
Five or more years before current fiscal year | 198 | 199 |
Total | 3,138 | 3,208 |
Originated Residential Agency loans | Current and less than 30 days past due | ||
Loan classification and delinquency by year of origination | ||
Total | 936 | 538 |
Originated Residential Agency loans | 30-59 Days Past Due | ||
Loan classification and delinquency by year of origination | ||
Total | 654 | |
Originated Residential Agency loans | 60+ Days Past Due | ||
Loan classification and delinquency by year of origination | ||
Total | $ 2,202 | $ 2,016 |
Loans and Allowance for Credi_5
Loans and Allowance for Credit Losses - Delinquency (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2021 | Dec. 31, 2020 | |
Loan delinquency information | ||
Total Loans Carrying Value | $ 4,517,066 | $ 4,052,970 |
Non-Accrual Loans | 150,637 | 134,158 |
General allowance for loan losses | (27,403) | (29,539) |
Total Loans, net of allowance for loan losses, including loans in consolidated VIEs | $ 4,489,663 | $ 4,023,431 |
Percentage of loans outstanding | 100.00% | 100.00% |
Percentage of outstanding, Non-Accrual Loans | 3.30% | 3.30% |
Percentage of outstandings - Accruing | 0.00% | 0.00% |
Specific allowance for loan losses | $ 18,200 | $ 17,200 |
Current and less than 30 days past due | ||
Loan delinquency information | ||
Total Loans Carrying Value | $ 4,314,703 | $ 3,873,203 |
Percentage of loans outstanding | 95.60% | 95.60% |
30-59 Days Past Due | ||
Loan delinquency information | ||
Total Loans Carrying Value | $ 78,562 | $ 38,436 |
Percentage of loans outstanding | 1.70% | 0.90% |
60+ Days Past Due | ||
Loan delinquency information | ||
Total Loans Carrying Value | $ 123,801 | $ 141,331 |
Percentage of loans outstanding | 2.70% | 3.50% |
Originated Transitional loans | ||
Loan delinquency information | ||
Total Loans Carrying Value | $ 1,873,164 | $ 1,319,074 |
Non-Accrual Loans | 39,574 | 19,416 |
General allowance for loan losses | (14,848) | (14,995) |
Originated Transitional loans | Current and less than 30 days past due | ||
Loan delinquency information | ||
Total Loans Carrying Value | 1,794,270 | 1,281,579 |
Originated Transitional loans | 30-59 Days Past Due | ||
Loan delinquency information | ||
Total Loans Carrying Value | 30,315 | 17,713 |
Originated Transitional loans | 60+ Days Past Due | ||
Loan delinquency information | ||
Total Loans Carrying Value | 48,579 | 19,782 |
Originated SBC loans | ||
Loan delinquency information | ||
Total Loans Carrying Value | 1,039,537 | 1,056,555 |
Non-Accrual Loans | 38,599 | 37,635 |
General allowance for loan losses | (2,729) | (2,640) |
Originated SBC loans | Current and less than 30 days past due | ||
Loan delinquency information | ||
Total Loans Carrying Value | 993,570 | 1,000,878 |
Originated SBC loans | 30-59 Days Past Due | ||
Loan delinquency information | ||
Total Loans Carrying Value | 16,953 | 6,591 |
Originated SBC loans | 60+ Days Past Due | ||
Loan delinquency information | ||
Total Loans Carrying Value | 29,014 | 49,086 |
Acquired loans | ||
Loan delinquency information | ||
Total Loans Carrying Value | 990,301 | 1,046,109 |
Non-Accrual Loans | 54,750 | 57,020 |
General allowance for loan losses | (4,335) | (5,457) |
Acquired loans | Current and less than 30 days past due | ||
Loan delinquency information | ||
Total Loans Carrying Value | 934,265 | 978,346 |
Acquired loans | 30-59 Days Past Due | ||
Loan delinquency information | ||
Total Loans Carrying Value | 14,485 | 7,729 |
Acquired loans | 60+ Days Past Due | ||
Loan delinquency information | ||
Total Loans Carrying Value | 41,551 | 60,034 |
Acquired SBA 7(a) loans | ||
Loan delinquency information | ||
Total Loans Carrying Value | 225,020 | 239,438 |
Non-Accrual Loans | 8,436 | 9,001 |
General allowance for loan losses | (627) | (767) |
Acquired SBA 7(a) loans | Current and less than 30 days past due | ||
Loan delinquency information | ||
Total Loans Carrying Value | 221,444 | 228,651 |
Acquired SBA 7(a) loans | 30-59 Days Past Due | ||
Loan delinquency information | ||
Total Loans Carrying Value | 2,020 | 4,008 |
Acquired SBA 7(a) loans | 60+ Days Past Due | ||
Loan delinquency information | ||
Total Loans Carrying Value | 1,556 | 6,779 |
Originated SBC loans, at fair value | ||
Loan delinquency information | ||
Total Loans Carrying Value | 13,618 | 13,795 |
Originated SBC loans, at fair value | Current and less than 30 days past due | ||
Loan delinquency information | ||
Total Loans Carrying Value | 13,618 | 13,795 |
Originated SBA 7(a) loans | ||
Loan delinquency information | ||
Total Loans Carrying Value | 372,288 | 374,791 |
Non-Accrual Loans | 7,076 | 8,668 |
General allowance for loan losses | (4,864) | (5,680) |
Originated SBA 7(a) loans | Current and less than 30 days past due | ||
Loan delinquency information | ||
Total Loans Carrying Value | 356,600 | 369,416 |
Originated SBA 7(a) loans | 30-59 Days Past Due | ||
Loan delinquency information | ||
Total Loans Carrying Value | 14,789 | 1,741 |
Originated SBA 7(a) loans | 60+ Days Past Due | ||
Loan delinquency information | ||
Total Loans Carrying Value | 899 | 3,634 |
Originated Residential Agency loans | ||
Loan delinquency information | ||
Total Loans Carrying Value | 3,138 | 3,208 |
Non-Accrual Loans | 2,202 | 2,418 |
Originated Residential Agency loans | Current and less than 30 days past due | ||
Loan delinquency information | ||
Total Loans Carrying Value | 936 | 538 |
Originated Residential Agency loans | 30-59 Days Past Due | ||
Loan delinquency information | ||
Total Loans Carrying Value | 654 | |
Originated Residential Agency loans | 60+ Days Past Due | ||
Loan delinquency information | ||
Total Loans Carrying Value | $ 2,202 | $ 2,016 |
Loans and Allowance for Credi_6
Loans and Allowance for Credit Losses - Credit Quality (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2021 | Dec. 31, 2020 | |
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | $ 4,517,066 | $ 4,052,970 |
General allowance for loan losses | (27,403) | (29,539) |
Total Loans, net of allowance for loan losses, including loans in consolidated VIEs | $ 4,489,663 | $ 4,023,431 |
Percentage of loans outstanding | 100.00% | 100.00% |
Carrying amount of loan foreclosure in process | $ 1,100 | $ 2,200 |
0.0 - 20.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | $ 285,667 | $ 285,928 |
Percentage of loans outstanding | 6.30% | 7.10% |
20.1 - 40.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | $ 515,154 | $ 532,200 |
Percentage of loans outstanding | 11.40% | 13.00% |
40.1 - 60.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | $ 1,109,080 | $ 1,075,306 |
Percentage of loans outstanding | 24.60% | 26.50% |
60.1 - 80.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | $ 2,080,943 | $ 1,728,645 |
Percentage of loans outstanding | 46.10% | 42.70% |
80.1 - 100.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | $ 363,683 | $ 289,919 |
Percentage of loans outstanding | 8.10% | 7.20% |
Greater than 100.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | $ 162,539 | $ 140,972 |
Percentage of loans outstanding | 3.50% | 3.50% |
Originated Transitional loans | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | $ 1,873,164 | $ 1,319,074 |
General allowance for loan losses | (14,848) | (14,995) |
Originated Transitional loans | 0.0 - 20.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 11,669 | 5,485 |
Originated Transitional loans | 20.1 - 40.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 11,319 | 8,269 |
Originated Transitional loans | 40.1 - 60.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 237,489 | 252,798 |
Originated Transitional loans | 60.1 - 80.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 1,359,157 | 891,895 |
Originated Transitional loans | 80.1 - 100.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 236,062 | 157,900 |
Originated Transitional loans | Greater than 100.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 17,468 | 2,727 |
Originated SBC loans | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 1,039,537 | 1,056,555 |
General allowance for loan losses | (2,729) | (2,640) |
Originated SBC loans | 0.0 - 20.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 5,248 | 5,372 |
Originated SBC loans | 20.1 - 40.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 73,432 | 76,899 |
Originated SBC loans | 40.1 - 60.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 520,800 | 453,381 |
Originated SBC loans | 60.1 - 80.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 428,041 | 515,023 |
Originated SBC loans | 80.1 - 100.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 6,136 | |
Originated SBC loans | Greater than 100.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 5,880 | 5,880 |
Acquired loans | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 990,301 | 1,046,109 |
General allowance for loan losses | (4,335) | (5,457) |
Acquired loans | 0.0 - 20.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 261,037 | 266,345 |
Acquired loans | 20.1 - 40.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 373,055 | 385,579 |
Acquired loans | 40.1 - 60.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 224,470 | 228,262 |
Acquired loans | 60.1 - 80.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 94,011 | 113,023 |
Acquired loans | 80.1 - 100.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 25,307 | 40,838 |
Acquired loans | Greater than 100.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 12,421 | 12,062 |
Originated SBA 7(a) loans | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 372,288 | 374,791 |
General allowance for loan losses | (4,864) | (5,680) |
Originated SBA 7(a) loans | 0.0 - 20.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 1,138 | 1,203 |
Originated SBA 7(a) loans | 20.1 - 40.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 15,519 | 15,013 |
Originated SBA 7(a) loans | 40.1 - 60.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 46,789 | 51,133 |
Originated SBA 7(a) loans | 60.1 - 80.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 138,676 | 147,020 |
Originated SBA 7(a) loans | 80.1 - 100.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 66,520 | 61,297 |
Originated SBA 7(a) loans | Greater than 100.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 103,646 | 99,125 |
Acquired SBA 7(a) loans | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 225,020 | 239,438 |
General allowance for loan losses | (627) | (767) |
Acquired SBA 7(a) loans | 0.0 - 20.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 6,575 | 7,523 |
Acquired SBA 7(a) loans | 20.1 - 40.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 33,186 | 39,086 |
Acquired SBA 7(a) loans | 40.1 - 60.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 79,334 | 89,644 |
Acquired SBA 7(a) loans | 60.1 - 80.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 55,506 | 54,007 |
Acquired SBA 7(a) loans | 80.1 - 100.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 27,673 | 28,332 |
Acquired SBA 7(a) loans | Greater than 100.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 22,746 | 20,846 |
Originated SBC loans, at fair value | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 13,618 | 13,795 |
Originated SBC loans, at fair value | 20.1 - 40.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 8,643 | 7,354 |
Originated SBC loans, at fair value | 60.1 - 80.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 4,975 | 6,441 |
Originated Residential Agency loans | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 3,138 | 3,208 |
Originated Residential Agency loans | 40.1 - 60.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 198 | 88 |
Originated Residential Agency loans | 60.1 - 80.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 577 | 1,236 |
Originated Residential Agency loans | 80.1 - 100.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | 1,985 | 1,552 |
Originated Residential Agency loans | Greater than 100.0% | ||
Credit quality of loans | ||
Total Loans, before allowance for loan losses, including loans in consolidated VIEs | $ 378 | $ 332 |
Loans and Allowance for Credi_7
Loans and Allowance for Credit Losses - Geographic and Collateral Concentration (Details) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2021 | Dec. 31, 2020 | |
Geographical concentration | ||
Concentration risk | ||
Percentage of loan | 100.00% | 100.00% |
Geographical concentration | California | ||
Concentration risk | ||
Percentage of loan | 19.20% | 18.10% |
Geographical concentration | Texas | ||
Concentration risk | ||
Percentage of loan | 14.30% | 14.20% |
Geographical concentration | New York | ||
Concentration risk | ||
Percentage of loan | 10.50% | 9.80% |
Geographical concentration | Florida | ||
Concentration risk | ||
Percentage of loan | 7.40% | 7.80% |
Geographical concentration | Illinois | ||
Concentration risk | ||
Percentage of loan | 6.00% | 5.20% |
Geographical concentration | Georgia | ||
Concentration risk | ||
Percentage of loan | 6.30% | 4.90% |
Geographical concentration | North Carolina | ||
Concentration risk | ||
Percentage of loan | 3.10% | 3.10% |
Geographical concentration | Arizona | ||
Concentration risk | ||
Percentage of loan | 3.10% | 2.80% |
Geographical concentration | Washington | ||
Concentration risk | ||
Percentage of loan | 2.70% | 3.10% |
Geographical concentration | Colorado | ||
Concentration risk | ||
Percentage of loan | 2.60% | 2.80% |
Geographical concentration | Other | ||
Concentration risk | ||
Percentage of loan | 24.80% | 28.20% |
Collateral concentration | ||
Concentration risk | ||
Percentage of loan | 100.00% | 100.00% |
Percentage of SBA loan | 100.00% | 100.00% |
Collateral concentration | Lodging | ||
Concentration risk | ||
Percentage of SBA loan | 19.30% | 17.20% |
Collateral concentration | Offices of Physicians | ||
Concentration risk | ||
Percentage of SBA loan | 12.90% | 12.00% |
Collateral concentration | Child Day Care Services | ||
Concentration risk | ||
Percentage of SBA loan | 8.00% | 7.20% |
Collateral concentration | Eating Places | ||
Concentration risk | ||
Percentage of SBA loan | 5.60% | 5.30% |
Collateral concentration | Gasoline Service Stations | ||
Concentration risk | ||
Percentage of SBA loan | 3.90% | 3.40% |
Collateral concentration | Veterinarians | ||
Concentration risk | ||
Percentage of SBA loan | 3.40% | 3.30% |
Collateral concentration | Funeral Service and Crematories | ||
Concentration risk | ||
Percentage of SBA loan | 2.00% | 1.80% |
Collateral concentration | Grocery Stores | ||
Concentration risk | ||
Percentage of SBA loan | 2.00% | 1.70% |
Collateral concentration | Car Washes | ||
Concentration risk | ||
Percentage of SBA loan | 1.60% | 1.40% |
Collateral concentration | Couriers | ||
Concentration risk | ||
Percentage of SBA loan | 1.10% | 1.00% |
Collateral concentration | Other | ||
Concentration risk | ||
Percentage of SBA loan | 40.20% | 45.70% |
Collateral concentration | Multi-family | ||
Concentration risk | ||
Percentage of loan | 31.40% | 23.80% |
Collateral concentration | SBA | ||
Concentration risk | ||
Percentage of loan | 13.80% | 17.40% |
Collateral concentration | Retail | ||
Concentration risk | ||
Percentage of loan | 15.70% | 17.30% |
Collateral concentration | Office | ||
Concentration risk | ||
Percentage of loan | 12.80% | 13.10% |
Collateral concentration | Mixed Use | ||
Concentration risk | ||
Percentage of loan | 11.90% | 12.90% |
Collateral concentration | Industrial | ||
Concentration risk | ||
Percentage of loan | 6.70% | 7.10% |
Collateral concentration | Lodging/Residential | ||
Concentration risk | ||
Percentage of loan | 2.80% | 3.20% |
Collateral concentration | Other | ||
Concentration risk | ||
Percentage of loan | 4.90% | 5.20% |
Loans and Allowance for Credi_8
Loans and Allowance for Credit Losses - Allowance for loan losses by loan product and impairment methodology (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2020 | Dec. 31, 2019 |
Allowance for loan losses | ||||
General | $ 27,403 | $ 29,539 | ||
Specific | 18,246 | 17,193 | ||
Ending Balance | 45,649 | 46,732 | $ 57,968 | $ 7,441 |
Originated SBC loans | ||||
Allowance for loan losses | ||||
General | 2,729 | 2,640 | ||
Specific | 5,243 | 6,200 | ||
Ending Balance | 7,972 | 8,840 | 10,362 | 304 |
Originated Transitional loans | ||||
Allowance for loan losses | ||||
General | 14,848 | 14,995 | ||
Specific | 2,195 | |||
Ending Balance | 17,043 | 14,995 | 24,264 | 188 |
Acquired loans | ||||
Allowance for loan losses | ||||
General | 4,335 | 5,457 | ||
Specific | 2,700 | 2,840 | ||
Ending Balance | 7,035 | 8,297 | 10,646 | 3,054 |
Acquired SBA 7(a) loans | ||||
Allowance for loan losses | ||||
General | 627 | 767 | ||
Specific | 3,695 | 3,782 | ||
Ending Balance | 4,322 | 4,549 | 5,622 | 2,114 |
Originated SBA 7(a) loans | ||||
Allowance for loan losses | ||||
General | 4,864 | 5,680 | ||
Specific | 4,413 | 4,371 | ||
Ending Balance | $ 9,277 | $ 10,051 | $ 7,074 | $ 1,781 |
Loans and Allowance for Credi_9
Loans and Allowance for Credit Losses - Investment Loans Allowance Activity (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Allowance for loan losses | ||
Beginning Balance | $ 46,732 | $ 7,441 |
Provision for (recoveries of) loan losses | 563 | 39,804 |
Charge-offs and sales | (1,658) | (468) |
Recoveries | 12 | 66 |
Ending Balance | 45,649 | 57,968 |
Cumulative Effect, Period of Adoption, Adjustment | ||
Allowance for loan losses | ||
Beginning Balance | 11,125 | |
Originated SBC loans | ||
Allowance for loan losses | ||
Beginning Balance | 8,840 | 304 |
Provision for (recoveries of) loan losses | 132 | 7,658 |
Charge-offs and sales | (1,000) | |
Ending Balance | 7,972 | 10,362 |
Originated SBC loans | Cumulative Effect, Period of Adoption, Adjustment | ||
Allowance for loan losses | ||
Beginning Balance | 2,400 | |
Originated Transitional loans | ||
Allowance for loan losses | ||
Beginning Balance | 14,995 | 188 |
Provision for (recoveries of) loan losses | 2,048 | 22,170 |
Ending Balance | 17,043 | 24,264 |
Originated Transitional loans | Cumulative Effect, Period of Adoption, Adjustment | ||
Allowance for loan losses | ||
Beginning Balance | 1,906 | |
Acquired loans | ||
Allowance for loan losses | ||
Beginning Balance | 8,297 | 3,054 |
Provision for (recoveries of) loan losses | (1,262) | 5,722 |
Charge-offs and sales | (8) | |
Ending Balance | 7,035 | 10,646 |
Acquired loans | Cumulative Effect, Period of Adoption, Adjustment | ||
Allowance for loan losses | ||
Beginning Balance | 1,878 | |
Acquired SBA 7(a) loans | ||
Allowance for loan losses | ||
Beginning Balance | 4,549 | 2,114 |
Provision for (recoveries of) loan losses | 47 | 12 |
Charge-offs and sales | (283) | (131) |
Recoveries | 9 | 65 |
Ending Balance | 4,322 | 5,622 |
Acquired SBA 7(a) loans | Cumulative Effect, Period of Adoption, Adjustment | ||
Allowance for loan losses | ||
Beginning Balance | 3,562 | |
Originated SBA 7(a) loans | ||
Allowance for loan losses | ||
Beginning Balance | 10,051 | 1,781 |
Provision for (recoveries of) loan losses | (402) | 4,242 |
Charge-offs and sales | (375) | (329) |
Recoveries | 3 | 1 |
Ending Balance | 9,277 | 7,074 |
Originated SBA 7(a) loans | Cumulative Effect, Period of Adoption, Adjustment | ||
Allowance for loan losses | ||
Beginning Balance | $ 1,379 | |
Unfunded Loan Commitment | ||
Allowance for loan losses | ||
Beginning Balance | 900 | |
Ending Balance | $ 400 |
Loans and Allowance for Cred_10
Loans and Allowance for Credit Losses - Non-accrual Loans (Details) - Non-accrual loans - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2021 | Dec. 31, 2020 | |
Non-accrual loans | ||
Non-accrual loans with an allowance | $ 105,141 | $ 75,862 |
Non-accrual loans without an allowance | 45,496 | 58,296 |
Total recorded carrying value of non-accrual loans | 150,637 | 134,158 |
Allowance for loan losses related to non-accrual loans | (18,433) | (17,367) |
Unpaid principal balance of non-accrual loans | 175,570 | 158,471 |
Interest income on non-accrual loans | $ 615 | $ 157 |
Loans and Allowance for Cred_11
Loans and Allowance for Credit Losses - TDR Accrual Status (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2021 | Dec. 31, 2020 | |
Troubled debt restructurings (TDRs) | ||
Recorded carrying value modified loans classified as TDR | $ 24,364 | $ 25,259 |
Allowance for loan losses on loans classified as TDRs | 3,717 | 3,340 |
Carrying value of modified loans classified as TDRs | ||
Carrying value of modified loans classified as TDRs on accrual status | 6,965 | 7,195 |
Carrying value of modified loans classified as TDRs on non-accrual status | 17,399 | 18,064 |
Total carrying value of modified loans classified as TDRs | 24,364 | 25,259 |
SBC | ||
Troubled debt restructurings (TDRs) | ||
Recorded carrying value modified loans classified as TDR | 8,595 | 7,327 |
Allowance for loan losses on loans classified as TDRs | 16 | 17 |
Carrying value of modified loans classified as TDRs | ||
Carrying value of modified loans classified as TDRs on accrual status | 304 | 307 |
Carrying value of modified loans classified as TDRs on non-accrual status | 8,291 | 7,020 |
Total carrying value of modified loans classified as TDRs | 8,595 | 7,327 |
SBA | ||
Troubled debt restructurings (TDRs) | ||
Recorded carrying value modified loans classified as TDR | 15,769 | 17,932 |
Allowance for loan losses on loans classified as TDRs | 3,701 | 3,323 |
Carrying value of modified loans classified as TDRs | ||
Carrying value of modified loans classified as TDRs on accrual status | 6,661 | 6,888 |
Carrying value of modified loans classified as TDRs on non-accrual status | 9,108 | 11,044 |
Total carrying value of modified loans classified as TDRs | $ 15,769 | $ 17,932 |
Loans and Allowance for Cred_12
Loans and Allowance for Credit Losses - TDR Activity (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021USD ($)loan | Mar. 31, 2020USD ($)loan | |
Troubled debt restructurings (TDRs) | ||
Number of loans permanently modified | loan | 8 | 8 |
Pre-modification recorded balance | $ 2,718 | $ 2,918 |
Post-modification recorded balance | $ 2,251 | $ 2,920 |
Number of loans that remain in default | loan | 1 | 4 |
Balance of loans that remain in default | $ 1,276 | $ 311 |
TDR Modifications including financial effects | $ 2,250 | $ 1,867 |
SBC | ||
Troubled debt restructurings (TDRs) | ||
Number of loans permanently modified | loan | 1 | 1 |
Pre-modification recorded balance | $ 1,276 | $ 151 |
Post-modification recorded balance | $ 1,276 | $ 151 |
Number of loans that remain in default | loan | 1 | 1 |
Balance of loans that remain in default | $ 1,276 | $ 151 |
TDR Modifications including financial effects | $ 1,276 | $ 151 |
SBA | ||
Troubled debt restructurings (TDRs) | ||
Number of loans permanently modified | loan | 7 | 7 |
Pre-modification recorded balance | $ 1,442 | $ 2,767 |
Post-modification recorded balance | 975 | $ 2,769 |
Number of loans that remain in default | loan | 3 | |
Balance of loans that remain in default | $ 160 | |
TDR Modifications including financial effects | 974 | 1,716 |
Term Extension | ||
Troubled debt restructurings (TDRs) | ||
TDR Modifications including financial effects | 974 | 1,564 |
Term Extension | SBA | ||
Troubled debt restructurings (TDRs) | ||
TDR Modifications including financial effects | 974 | 1,564 |
Foreclosure | ||
Troubled debt restructurings (TDRs) | ||
TDR Modifications including financial effects | 1,276 | 303 |
Foreclosure | SBC | ||
Troubled debt restructurings (TDRs) | ||
TDR Modifications including financial effects | $ 1,276 | 151 |
Foreclosure | SBA | ||
Troubled debt restructurings (TDRs) | ||
TDR Modifications including financial effects | $ 152 |
Fair Value Measurements - Finan
Fair Value Measurements - Financial Instruments Carried at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Assets: | ||
Loans, held for sale, at fair value | $ 473,078 | $ 340,288 |
Paycheck Protection Program loans | 38,388 | 74,931 |
Derivative instruments, at fair value | 12,529 | 16,363 |
Residential mortgage servicing rights, at fair value | 98,542 | 76,840 |
Liabilities: | ||
Derivative instruments, at fair value | 4,403 | 11,604 |
Recurring | ||
Assets: | ||
Loans, held for sale, at fair value | 473,078 | 340,288 |
Loans, net at fair value | 13,618 | 13,795 |
Paycheck Protection Program loans | 38,388 | 74,931 |
Mortgage backed securities, at fair value | 682,948 | 88,011 |
Derivative instruments, at fair value | 12,529 | 16,363 |
Residential mortgage servicing rights, at fair value | 98,542 | 76,840 |
Total assets | 1,319,103 | 610,228 |
Liabilities: | ||
Derivative instruments, at fair value | 4,403 | 11,604 |
Total liabilities | 4,403 | 11,604 |
Recurring | Level 2 inputs | ||
Assets: | ||
Loans, held for sale, at fair value | 473,078 | 340,288 |
Mortgage backed securities, at fair value | 677,315 | 62,880 |
Derivative instruments, at fair value | 805 | |
Total assets | 1,151,198 | 403,168 |
Liabilities: | ||
Derivative instruments, at fair value | 4,403 | 11,604 |
Total liabilities | 4,403 | 11,604 |
Recurring | Level 3 inputs | ||
Assets: | ||
Loans, net at fair value | 13,618 | 13,795 |
Paycheck Protection Program loans | 38,388 | 74,931 |
Mortgage backed securities, at fair value | 5,633 | 25,131 |
Derivative instruments, at fair value | 11,724 | 16,363 |
Residential mortgage servicing rights, at fair value | 98,542 | 76,840 |
Total assets | $ 167,905 | $ 207,060 |
Fair Value Measurements - Chang
Fair Value Measurements - Changes in Fair Value (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Changes in fair value of assets | ||
Beginning Balance | $ 207,060 | $ 114,660 |
Originations | 3,866 | |
Accreted discount, net | 58 | |
Additions due to loans sold, servicing retained | 12,048 | 7,147 |
Sales / Principal payments | (46,402) | (3,263) |
Realized gains (losses), net | (5) | |
Unrealized gains (losses), net | 11,813 | (2,432) |
Transfer to (from) Level 3 | (20,533) | (315) |
Ending Balance | 167,905 | 115,797 |
Total unrealized gain (loss) | (20,713) | (8,888) |
Mortgage backed securities | ||
Changes in fair value of assets | ||
Beginning Balance | 25,131 | 460 |
Accreted discount, net | 58 | |
Sales / Principal payments | (92) | (2) |
Unrealized gains (losses), net | 1,069 | (40) |
Transfer to (from) Level 3 | (20,533) | (315) |
Ending Balance | 5,633 | 103 |
Total unrealized gain (loss) | (319) | (1) |
Derivatives | ||
Changes in fair value of assets | ||
Beginning Balance | 16,363 | 2,814 |
Unrealized gains (losses), net | (4,639) | 14,436 |
Ending Balance | 11,724 | |
Total unrealized gain (loss) | 11,724 | 17,250 |
Changes in fair value of liabilities | ||
Ending Balance | 17,250 | |
Loans, held at fair value | ||
Changes in fair value of assets | ||
Beginning Balance | 13,795 | 20,212 |
Sales / Principal payments | (201) | (8) |
Realized gains (losses), net | (5) | |
Unrealized gains (losses), net | 29 | (391) |
Ending Balance | 13,618 | 19,813 |
Total unrealized gain (loss) | (263) | 255 |
Paycheck Protection Program loans, at fair value | ||
Changes in fair value of assets | ||
Beginning Balance | 74,931 | |
Originations | 3,866 | |
Sales / Principal payments | (40,409) | |
Ending Balance | 38,388 | |
Mortgage servicing rights | ||
Changes in fair value of assets | ||
Beginning Balance | 76,840 | 91,174 |
Additions due to loans sold, servicing retained | 12,048 | 7,147 |
Sales / Principal payments | (5,700) | (3,253) |
Unrealized gains (losses), net | 15,354 | (16,437) |
Ending Balance | 98,542 | 78,631 |
Total unrealized gain (loss) | $ (31,855) | $ (26,392) |
Fair Value Measurements - Valua
Fair Value Measurements - Valuation and Inputs, at FV (Details) $ in Thousands | Mar. 31, 2021USD ($) | Dec. 31, 2020USD ($) | Mar. 31, 2020USD ($) | Dec. 31, 2019USD ($) |
Fair value inputs, quantitative information | ||||
Assets valued using quoted or transaction prices in which quantitative unobservable inputs are not developed | $ 167,905 | $ 207,060 | $ 115,797 | $ 114,660 |
Recurring | ||||
Fair value inputs, quantitative information | ||||
Asset, fair value | 1,319,103 | 610,228 | ||
Liabilities, fair value | 4,403 | 11,604 | ||
Recurring | Level 3 inputs | ||||
Fair value inputs, quantitative information | ||||
Asset, fair value | 167,905 | 207,060 | ||
Assets valued using quoted or transaction prices in which quantitative unobservable inputs are not developed | 57,700 | 113,900 | ||
Loans, held at fair value | ||||
Fair value inputs, quantitative information | ||||
Assets valued using quoted or transaction prices in which quantitative unobservable inputs are not developed | 13,618 | 13,795 | 19,813 | 20,212 |
Mortgage backed securities | ||||
Fair value inputs, quantitative information | ||||
Assets valued using quoted or transaction prices in which quantitative unobservable inputs are not developed | 5,633 | 25,131 | 103 | 460 |
Mortgage servicing rights | ||||
Fair value inputs, quantitative information | ||||
Assets valued using quoted or transaction prices in which quantitative unobservable inputs are not developed | 98,542 | 76,840 | $ 78,631 | $ 91,174 |
Mortgage servicing rights | Recurring | Level 3 inputs | ||||
Fair value inputs, quantitative information | ||||
Asset, fair value | $ 98,542 | 76,840 | ||
Servicing Asset, Valuation Technique [Extensible List] | us-gaap:ValuationTechniqueDiscountedCashFlowMember | |||
Mortgage servicing rights | Recurring | Level 3 inputs | Discounted Cash Flow | ||||
Fair value inputs, quantitative information | ||||
Servicing Asset, Valuation Technique [Extensible List] | us-gaap:ValuationTechniqueDiscountedCashFlowMember | |||
Derivative instruments | Recurring | Level 3 inputs | Market Approach | ||||
Fair value inputs, quantitative information | ||||
Asset, fair value | $ 11,724 | $ 16,363 | ||
Derivative instruments | Recurring | Level 3 inputs | Origination Pull-Through Rate | Minimum | ||||
Fair value inputs, quantitative information | ||||
Derivative Asset, Measurement Input | 0.650 | 0.476 | ||
Derivative instruments | Recurring | Level 3 inputs | Origination Pull-Through Rate | Maximum | ||||
Fair value inputs, quantitative information | ||||
Derivative Asset, Measurement Input | 1 | 1 | ||
Derivative instruments | Recurring | Level 3 inputs | Origination Pull-Through Rate | Weighted Average | ||||
Fair value inputs, quantitative information | ||||
Derivative Asset, Measurement Input | 0.865 | 0.841 | ||
Derivative instruments | Recurring | Level 3 inputs | Servicing Fee Multiple | Minimum | ||||
Fair value inputs, quantitative information | ||||
Derivative Asset, Measurement Input | 0.005 | |||
Derivative instruments | Recurring | Level 3 inputs | Servicing Fee Multiple | Maximum | ||||
Fair value inputs, quantitative information | ||||
Derivative Asset, Measurement Input | 0.050 | 0.128 | ||
Derivative instruments | Recurring | Level 3 inputs | Servicing Fee Multiple | Weighted Average | ||||
Fair value inputs, quantitative information | ||||
Derivative Asset, Measurement Input | 0.039 | 0.036 | ||
Derivative instruments | Recurring | Level 3 inputs | Percentage of Unpaid Principal Balance | Minimum | ||||
Fair value inputs, quantitative information | ||||
Derivative Asset, Measurement Input | 0.001 | 0.001 | ||
Derivative instruments | Recurring | Level 3 inputs | Percentage of Unpaid Principal Balance | Maximum | ||||
Fair value inputs, quantitative information | ||||
Derivative Asset, Measurement Input | 0.029 | 0.029 | ||
Derivative instruments | Recurring | Level 3 inputs | Percentage of Unpaid Principal Balance | Weighted Average | ||||
Fair value inputs, quantitative information | ||||
Derivative Asset, Measurement Input | 0.012 | 0.011 |
Fair Value Measurements - Asset
Fair Value Measurements - Assets and Liabilities, Not at FV (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Assets: | ||
Paycheck Protection Program loans | $ 38,388 | $ 74,931 |
Purchased future receivables, net | 13,240 | 17,308 |
Liabilities: | ||
Paycheck Protection Program Liquidity Facility (PPPLF) borrowings | 1,132,536 | 76,276 |
Senior secured notes, net | 179,744 | 179,659 |
Carrying Amount | ||
Assets: | ||
Loans, held-for-investment | 4,476,045 | 4,009,636 |
Paycheck Protection Program loans | 1,254,420 | |
Purchased future receivables, net | 13,240 | 17,308 |
Servicing rights | 40,399 | 37,823 |
Total assets | 5,784,104 | 4,064,767 |
Liabilities: | ||
Secured borrowings | 2,064,785 | 1,294,243 |
Paycheck Protection Program Liquidity Facility (PPPLF) borrowings | 1,132,536 | 76,276 |
Securitized debt obligations of consolidated VIEs | 2,211,923 | 1,905,749 |
Senior secured notes, net | 179,744 | 179,659 |
Guaranteed loan financing | 386,036 | 401,705 |
Convertible note, net | 112,405 | 112,129 |
Corporate debt, net | 333,317 | 150,989 |
Total liabilities | 6,420,746 | 4,120,750 |
Carrying Amount | Level 3 inputs | ||
Assets: | ||
Due from servicers and accrued interest | 32,600 | 23,800 |
Receivable from third parties | 11,100 | 1,200 |
Liabilities: | ||
Payable to related parties and accrued interest payable | 24,000 | 23,800 |
Fair Value | ||
Assets: | ||
Loans, held-for-investment | 4,581,610 | 4,103,200 |
Paycheck Protection Program loans | 1,322,188 | |
Purchased future receivables, net | 13,240 | 17,308 |
Servicing rights | 50,365 | 47,567 |
Total assets | 5,967,403 | 4,168,075 |
Liabilities: | ||
Secured borrowings | 2,064,785 | 1,294,243 |
Paycheck Protection Program Liquidity Facility (PPPLF) borrowings | 1,132,536 | 76,276 |
Securitized debt obligations of consolidated VIEs | 2,145,650 | 1,907,541 |
Senior secured notes, net | 185,277 | 188,114 |
Guaranteed loan financing | 412,644 | 426,348 |
Convertible note, net | 66,544 | 68,186 |
Corporate debt, net | 351,865 | 151,209 |
Total liabilities | $ 6,359,301 | $ 4,111,917 |
Mortgage Backed Securities (Det
Mortgage Backed Securities (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2021 | Dec. 31, 2020 | |
Mortgage Backed Securities | ||
Fair Value | $ 682,948 | $ 88,011 |
Mortgage backed securities | ||
Mortgage Backed Securities | ||
Weighted Average Interest Rate | 3.60% | 4.10% |
Principal Balance | $ 841,706 | $ 212,574 |
Amortized Cost | 684,745 | 91,636 |
Fair Value | 682,948 | 88,011 |
Gross Unrealized Gains | 3,766 | 2,106 |
Gross Unrealized Losses | $ (5,563) | $ (5,731) |
Mortgage Backed Securities Weighted Average Interest Rate | ||
After five years through ten years (as percent) | 2.90% | 6.00% |
After ten years (as percent) | 3.40% | 2.80% |
Mortgage Backed Securities Principal Balance | ||
After five years through ten years | $ 8,500 | $ 92 |
After ten years | 833,206 | 212,482 |
Mortgage Backed Securities Amortized Cost | ||
After five years through ten years | 8,500 | 92 |
After ten years | 676,245 | 91,544 |
Mortgage Backed Securities Estimated Fair Value | ||
After five years through ten years | 8,500 | 91 |
After ten years | $ 674,448 | $ 87,920 |
Freddie Mac Loans | ||
Mortgage Backed Securities | ||
Weighted Average Interest Rate | 3.80% | 3.70% |
Principal Balance | $ 131,326 | $ 139,408 |
Amortized Cost | 51,390 | 52,320 |
Fair Value | 54,693 | 53,509 |
Gross Unrealized Gains | 3,433 | 1,880 |
Gross Unrealized Losses | $ (130) | $ (691) |
Commercial Loans | ||
Mortgage Backed Securities | ||
Weighted Average Interest Rate | 4.60% | 4.50% |
Principal Balance | $ 72,985 | $ 73,074 |
Amortized Cost | 39,162 | 39,224 |
Fair Value | 34,062 | 34,411 |
Gross Unrealized Gains | 333 | 226 |
Gross Unrealized Losses | $ (5,433) | $ (5,039) |
Tax Liens | ||
Mortgage Backed Securities | ||
Weighted Average Interest Rate | 3.50% | 6.00% |
Principal Balance | $ 637,395 | $ 92 |
Amortized Cost | 594,193 | 92 |
Fair Value | $ 594,193 | 91 |
Gross Unrealized Losses | $ (1) |
Servicing rights (Details)
Servicing rights (Details) - USD ($) $ in Thousands | 3 Months Ended | ||||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2020 | |
Servicing rights | |||||
Unpaid Principal Amount | $ 2,303,659 | $ 2,145,133 | |||
Carrying Value | $ 37,823 | 40,399 | 37,823 | ||
Total servicing rights | 138,941 | 114,663 | $ 110,111 | ||
Servicing rights activity at amortized cost | |||||
Beginning net carrying value at amortized cost | 37,823 | ||||
Ending net carrying value at amortized cost | 40,399 | ||||
Servicing rights activity at fair value | |||||
Additions due to loans sold, servicing retained | 12,048 | $ 7,147 | |||
Residential MSRs | |||||
Servicing rights | |||||
Unpaid Principal Amount | 9,948,195 | 9,528,886 | |||
Servicing rights activity at fair value | |||||
Beginning net carrying value at fair value | 76,840 | 91,174 | |||
Additions due to loans sold, servicing retained | 12,048 | 7,147 | |||
Loan pay-offs | (5,700) | (3,253) | |||
Unrealized gains (losses) | 15,354 | (16,437) | |||
Ending net carrying value at fair value | 98,542 | 78,631 | |||
Freddie Mac | |||||
Servicing rights | |||||
Unpaid Principal Amount | 1,647,443 | 1,501,998 | |||
Carrying Value | 19,059 | 13,944 | 21,757 | 19,059 | 13,944 |
Servicing rights activity at amortized cost | |||||
Beginning net carrying value at amortized cost | 19,059 | 13,135 | |||
Additions due to loans sold, servicing retained | 3,559 | 1,449 | |||
Amortization | (861) | (640) | |||
Ending net carrying value at amortized cost | 21,757 | 13,944 | |||
Freddie Mac | Residential MSRs | |||||
Servicing rights | |||||
Unpaid Principal Amount | 3,357,437 | 3,071,312 | |||
Servicing rights activity at fair value | |||||
Beginning net carrying value at fair value | 23,309 | ||||
Ending net carrying value at fair value | 32,812 | ||||
SBA | |||||
Servicing rights | |||||
Unpaid Principal Amount | 656,216 | 643,135 | |||
Carrying Value | 18,642 | 17,536 | 18,642 | $ 18,764 | 17,536 |
Servicing rights activity at amortized cost | |||||
Beginning net carrying value at amortized cost | 18,764 | 17,660 | |||
Additions due to loans sold, servicing retained | 959 | 961 | |||
Amortization | (1,047) | (873) | |||
Impairment | (34) | (212) | |||
Ending net carrying value at amortized cost | 18,642 | 17,536 | |||
SBA | Freddie Mac | |||||
Servicing rights | |||||
Carrying Value | 40,399 | 31,480 | $ 40,399 | $ 31,480 | |
Servicing rights activity at amortized cost | |||||
Ending net carrying value at amortized cost | $ 40,399 | $ 31,480 |
Servicing rights - Estimated va
Servicing rights - Estimated valuation (Details) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2021 | Dec. 31, 2020 | |
Freddie Mac | Minimum | ||
Servicing rights, valuation assumptions | ||
Forward prepayment assumptions | 0.10% | 0.10% |
Forward default rate | 0.00% | 0.00% |
Discount rate | 6.00% | 6.00% |
Servicing expense (as a percent) | 0.20% | 0.20% |
Freddie Mac | Maximum | ||
Servicing rights, valuation assumptions | ||
Forward prepayment assumptions | 5.10% | 5.10% |
Forward default rate | 0.40% | 0.40% |
Discount rate | 6.00% | 6.00% |
Servicing expense (as a percent) | 0.30% | 0.30% |
Freddie Mac | Weighted Average | ||
Servicing rights, valuation assumptions | ||
Forward prepayment assumptions | 2.40% | 2.40% |
Forward default rate | 0.30% | 0.30% |
Discount rate | 6.00% | 6.00% |
Servicing expense (as a percent) | 0.20% | 0.20% |
SBA | Minimum | ||
Servicing rights, valuation assumptions | ||
Forward prepayment assumptions | 6.70% | 6.70% |
Forward default rate | 0.00% | 0.00% |
Discount rate | 4.50% | 4.50% |
Servicing expense (as a percent) | 0.40% | 0.40% |
SBA | Maximum | ||
Servicing rights, valuation assumptions | ||
Forward prepayment assumptions | 20.90% | 20.80% |
Forward default rate | 10.40% | 10.50% |
Discount rate | 4.50% | 4.50% |
Servicing expense (as a percent) | 0.40% | 0.40% |
SBA | Weighted Average | ||
Servicing rights, valuation assumptions | ||
Forward prepayment assumptions | 8.40% | 8.50% |
Forward default rate | 8.30% | 8.20% |
Discount rate | 4.50% | 4.50% |
Servicing expense (as a percent) | 0.40% | 0.40% |
Servicing rights - Assumptions
Servicing rights - Assumptions (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Freddie Mac | ||
Adverse changes to key assumptions on the carrying amount of the servicing rights | ||
Prepayment rate (10% adverse change) | $ (188) | $ (163) |
Prepayment rate (20% adverse change) | (373) | (324) |
Default rate (10% adverse change) | (7) | (6) |
Default rate (20% adverse change) | (14) | (13) |
Discount rate (10% adverse change) | (761) | (678) |
Discount rate (20% adverse change) | (1,487) | (1,324) |
SBA | ||
Adverse changes to key assumptions on the carrying amount of the servicing rights | ||
Prepayment rate (10% adverse change) | (730) | (729) |
Prepayment rate (20% adverse change) | (1,421) | (1,420) |
Default rate (10% adverse change) | (154) | (150) |
Default rate (20% adverse change) | (305) | (298) |
Discount rate (10% adverse change) | (401) | (395) |
Discount rate (20% adverse change) | $ (789) | $ (777) |
Servicing rights - Amortization
Servicing rights - Amortization (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Future amortization expense for the servicing rights | ||
2021 | $ 5,672 | |
2022 | 6,760 | |
2023 | 5,944 | |
2024 | 5,228 | |
2025 | 4,596 | |
Thereafter | 12,199 | |
Total | $ 40,399 | $ 37,823 |
Servicing rights - Residential
Servicing rights - Residential mortgage servicing rights (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | |
Servicing rights | ||||
Unpaid Principal Amount | $ 2,303,659 | $ 2,145,133 | ||
Residential MSRs | ||||
Servicing rights | ||||
Unpaid Principal Amount | 9,948,195 | 9,528,886 | ||
Fair Value | 98,542 | 76,840 | $ 78,631 | $ 91,174 |
Possible impact of adverse changes to key assumptions | ||||
Prepayment rate (10% adverse change) | (4,958) | (5,049) | ||
Prepayment rate (20% adverse change) | (9,568) | (9,701) | ||
Discount rate (10% adverse change) | (3,623) | (2,601) | ||
Discount rate (20% adverse change) | (6,992) | (5,028) | ||
Cost of servicing (10% adverse change) | (1,785) | (1,469) | ||
Cost of servicing (20% adverse change) | (3,571) | (2,938) | ||
Fannie Mae | Residential MSRs | ||||
Servicing rights | ||||
Unpaid Principal Amount | 3,787,761 | 3,700,450 | ||
Fair Value | 35,390 | 27,632 | ||
Ginnie Mae | Residential MSRs | ||||
Servicing rights | ||||
Unpaid Principal Amount | 2,802,997 | 2,757,124 | ||
Fair Value | 30,340 | 25,899 | ||
Freddie Mac | ||||
Servicing rights | ||||
Unpaid Principal Amount | 1,647,443 | 1,501,998 | ||
Possible impact of adverse changes to key assumptions | ||||
Prepayment rate (10% adverse change) | (188) | (163) | ||
Prepayment rate (20% adverse change) | (373) | (324) | ||
Discount rate (10% adverse change) | (761) | (678) | ||
Discount rate (20% adverse change) | (1,487) | (1,324) | ||
Freddie Mac | Residential MSRs | ||||
Servicing rights | ||||
Unpaid Principal Amount | 3,357,437 | 3,071,312 | ||
Fair Value | $ 32,812 | $ 23,309 | ||
Minimum | Residential MSRs | ||||
Servicing rights, valuation assumptions | ||||
Forward prepayment assumptions | 10.50% | 12.60% | ||
Discount rate | 9.00% | 9.10% | ||
Servicing expense | $ 70 | $ 70 | ||
Minimum | Freddie Mac | ||||
Servicing rights, valuation assumptions | ||||
Forward prepayment assumptions | 0.10% | 0.10% | ||
Discount rate | 6.00% | 6.00% | ||
Servicing expense (as a percent) | 0.20% | 0.20% | ||
Maximum | Residential MSRs | ||||
Servicing rights, valuation assumptions | ||||
Forward prepayment assumptions | 28.80% | 31.40% | ||
Discount rate | 11.60% | 11.70% | ||
Servicing expense | $ 85 | $ 85 | ||
Maximum | Freddie Mac | ||||
Servicing rights, valuation assumptions | ||||
Forward prepayment assumptions | 5.10% | 5.10% | ||
Discount rate | 6.00% | 6.00% | ||
Servicing expense (as a percent) | 0.30% | 0.30% | ||
Weighted Average | Residential MSRs | ||||
Servicing rights, valuation assumptions | ||||
Forward prepayment assumptions | 11.20% | 14.30% | ||
Discount rate | 9.80% | 9.80% | ||
Servicing expense | $ 74 | $ 74 | ||
Weighted Average | Freddie Mac | ||||
Servicing rights, valuation assumptions | ||||
Forward prepayment assumptions | 2.40% | 2.40% | ||
Discount rate | 6.00% | 6.00% | ||
Servicing expense (as a percent) | 0.20% | 0.20% |
Residential mortgage banking _3
Residential mortgage banking activities and variable expenses on residential mortgage banking activities (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Residential mortgage banking activities | ||
Realized and unrealized gain (loss) of residential mortgage loans held for sale, at fair value | $ 29,560 | $ 25,166 |
Creation of new mortgage servicing rights, net of payoffs | 6,348 | 3,894 |
Loan origination fee income on residential mortgage loans | 6,232 | 3,303 |
Unrealized gains (loss) on IRLCs and other derivatives | (731) | 4,306 |
Residential mortgage banking activities | 41,409 | 36,669 |
Variable expenses on residential mortgage banking activities | $ (15,485) | $ (20,129) |
Secured Borrowings (Details)
Secured Borrowings (Details) $ in Thousands, € in Millions | 3 Months Ended | ||
Mar. 31, 2021USD ($) | Mar. 31, 2021EUR (€) | Dec. 31, 2020USD ($) | |
Secured borrowings and promissory note | |||
Carrying Value, Secured borrowings | $ 2,064,785 | $ 1,294,243 | |
Secured borrowings | |||
Secured borrowings and promissory note | |||
Current facility size | 4,136,945 | ||
Pledged Assets Carrying Value | 2,635,783 | 1,767,319 | |
Carrying Value, Secured borrowings | 2,064,785 | 1,294,243 | |
Borrowings under credit facilities | |||
Secured borrowings and promissory note | |||
Current facility size | 1,802,220 | ||
Pledged Assets Carrying Value | 829,797 | 631,014 | |
Carrying Value, Secured borrowings | $ 744,141 | $ 466,674 | |
Weighted average interest rate of borrowings (as a percent) | 2.00% | 2.00% | 2.80% |
Borrowings under repurchase agreements | |||
Secured borrowings and promissory note | |||
Current facility size | $ 2,334,725 | ||
Pledged Assets Carrying Value | 1,805,986 | $ 1,136,305 | |
Carrying Value, Secured borrowings | $ 1,320,644 | $ 827,569 | |
Weighted average interest rate of borrowings (as a percent) | 2.10% | 2.10% | 3.30% |
Paycheck Protection Program loans | |||
Secured borrowings and promissory note | |||
Carrying Value, Secured borrowings | $ 230,483 | ||
Paycheck Protection Program loans | Borrowings under credit facilities | |||
Secured borrowings and promissory note | |||
Pledged Assets Carrying Value | 221,940 | ||
Purchased future receivables | Borrowings under credit facilities | |||
Secured borrowings and promissory note | |||
Pledged Assets Carrying Value | 13,240 | ||
Mortgage backed securities | Borrowings under repurchase agreements | |||
Secured borrowings and promissory note | |||
Pledged Assets Carrying Value | 742,299 | $ 72,179 | |
JPMorgan | Acquired SBA Loans | Borrowings under credit facilities | |||
Secured borrowings and promissory note | |||
Current facility size | 200,000 | ||
Pledged Assets Carrying Value | 56,867 | ||
Carrying Value, Secured borrowings | $ 41,822 | 36,604 | |
JPMorgan | Acquired SBA Loans | Borrowings under credit facilities | One Month LIBOR | Minimum | |||
Secured borrowings and promissory note | |||
Pricing, spread on variable (as a percent) | 2.25% | ||
JPMorgan | Acquired SBA Loans | Borrowings under credit facilities | One Month LIBOR | Maximum | |||
Secured borrowings and promissory note | |||
Pricing, spread on variable (as a percent) | 2.875% | ||
JPMorgan | Transitional loans | Borrowings under repurchase agreements | |||
Secured borrowings and promissory note | |||
Current facility size | $ 650,000 | ||
Pledged Assets Carrying Value | 414,099 | ||
Carrying Value, Secured borrowings | $ 282,974 | 247,616 | |
JPMorgan | Transitional loans | Borrowings under repurchase agreements | One Month LIBOR | Minimum | |||
Secured borrowings and promissory note | |||
Pricing, spread on variable (as a percent) | 2.25% | ||
JPMorgan | Transitional loans | Borrowings under repurchase agreements | One Month LIBOR | Maximum | |||
Secured borrowings and promissory note | |||
Pricing, spread on variable (as a percent) | 4.00% | ||
JPMorgan | Mortgage backed securities | Borrowings under repurchase agreements | |||
Secured borrowings and promissory note | |||
Current facility size | $ 62,300 | ||
Pledged Assets Carrying Value | 99,088 | ||
Carrying Value, Secured borrowings | $ 62,300 | 65,407 | |
JPMorgan | Mortgage backed securities | Borrowings under repurchase agreements | Minimum | |||
Secured borrowings and promissory note | |||
Pricing, stated rate (as a percent) | 1.39% | 1.39% | |
JPMorgan | Mortgage backed securities | Borrowings under repurchase agreements | Maximum | |||
Secured borrowings and promissory note | |||
Pricing, stated rate (as a percent) | 2.33% | 2.33% | |
Performance Trust | Acquired loans | Borrowings under repurchase agreements | |||
Secured borrowings and promissory note | |||
Current facility size | $ 113,000 | ||
Pledged Assets Carrying Value | 105,627 | ||
Carrying Value, Secured borrowings | $ 93,532 | ||
Performance Trust | Acquired loans | Borrowings under repurchase agreements | One Month LIBOR | |||
Secured borrowings and promissory note | |||
Pricing, spread on variable (as a percent) | 2.00% | ||
Keybank | Freddie Mac Loans | Borrowings under credit facilities | |||
Secured borrowings and promissory note | |||
Current facility size | $ 100,000 | ||
Pledged Assets Carrying Value | 24,707 | ||
Carrying Value, Secured borrowings | $ 24,260 | 50,408 | |
Keybank | Freddie Mac Loans | Borrowings under credit facilities | Secured Overnight Financing Rate | |||
Secured borrowings and promissory note | |||
Pricing, spread on variable (as a percent) | 1.41% | ||
East West Bank | SBA loans | Borrowings under credit facilities | |||
Secured borrowings and promissory note | |||
Current facility size | $ 50,000 | ||
Pledged Assets Carrying Value | 45,717 | ||
Carrying Value, Secured borrowings | $ 39,623 | 40,542 | |
East West Bank | SBA loans | Borrowings under credit facilities | Prime rate | Minimum | |||
Secured borrowings and promissory note | |||
Pricing, spread on variable (as a percent) | (0.821%) | ||
East West Bank | SBA loans | Borrowings under credit facilities | Prime rate | Maximum | |||
Secured borrowings and promissory note | |||
Pricing, spread on variable (as a percent) | 0.29% | ||
East West Bank | Residential MSRs | Borrowings under credit facilities | |||
Secured borrowings and promissory note | |||
Current facility size | $ 50,000 | ||
Pledged Assets Carrying Value | 68,202 | ||
Carrying Value, Secured borrowings | $ 49,400 | 34,400 | |
East West Bank | Residential MSRs | Borrowings under credit facilities | One Month LIBOR | |||
Secured borrowings and promissory note | |||
Pricing, spread on variable (as a percent) | 2.50% | ||
Credit Suisse | Acquired loans (non USD) | Borrowings under credit facilities | |||
Secured borrowings and promissory note | |||
Current facility size | $ 234,470 | € 200 | |
Pledged Assets Carrying Value | 56,895 | ||
Carrying Value, Secured borrowings | $ 35,372 | 36,840 | |
Credit Suisse | Acquired loans (non USD) | Borrowings under credit facilities | Euribor Rate | Minimum | |||
Secured borrowings and promissory note | |||
Pricing, spread on variable (as a percent) | 2.50% | ||
Credit Suisse | Acquired loans (non USD) | Borrowings under credit facilities | Euribor Rate | Maximum | |||
Secured borrowings and promissory note | |||
Pricing, spread on variable (as a percent) | 3.00% | ||
Credit Suisse | Acquired loans | Borrowings under repurchase agreements | |||
Secured borrowings and promissory note | |||
Current facility size | $ 100,000 | ||
Pledged Assets Carrying Value | 98,751 | ||
Carrying Value, Secured borrowings | $ 81,485 | ||
Credit Suisse | Acquired loans | Borrowings under repurchase agreements | LIBOR | |||
Secured borrowings and promissory note | |||
Pricing, spread on variable (as a percent) | 2.25% | ||
Credit Suisse | Purchased future receivables | Borrowings under credit facilities | |||
Secured borrowings and promissory note | |||
Current facility size | $ 150,000 | ||
Pledged Assets Carrying Value | 13,240 | ||
Carrying Value, Secured borrowings | $ 1,000 | ||
Credit Suisse | Purchased future receivables | Borrowings under credit facilities | One Month LIBOR | |||
Secured borrowings and promissory note | |||
Pricing, spread on variable (as a percent) | 4.50% | ||
Comerica Bank | Residential loans | Borrowings under credit facilities | |||
Secured borrowings and promissory note | |||
Current facility size | $ 125,000 | ||
Pledged Assets Carrying Value | 83,075 | ||
Carrying Value, Secured borrowings | $ 78,687 | 78,312 | |
Comerica Bank | Residential loans | Borrowings under credit facilities | One Month LIBOR | |||
Secured borrowings and promissory note | |||
Pricing, spread on variable (as a percent) | 1.75% | ||
TBK Bank | Residential loans | Borrowings under credit facilities | |||
Secured borrowings and promissory note | |||
Current facility size | $ 150,000 | ||
Pledged Assets Carrying Value | 141,092 | ||
Carrying Value, Secured borrowings | 139,426 | 123,951 | |
Origin Bank | Residential loans | Borrowings under credit facilities | |||
Secured borrowings and promissory note | |||
Current facility size | 60,000 | ||
Pledged Assets Carrying Value | 35,251 | ||
Carrying Value, Secured borrowings | 33,899 | 27,450 | |
Associated Bank | Residential loans | Borrowings under credit facilities | |||
Secured borrowings and promissory note | |||
Current facility size | 60,000 | ||
Pledged Assets Carrying Value | 49,863 | ||
Carrying Value, Secured borrowings | $ 47,670 | 15,556 | |
Associated Bank | Residential loans | Borrowings under credit facilities | One Month LIBOR | |||
Secured borrowings and promissory note | |||
Pricing, spread on variable (as a percent) | 1.50% | ||
Payroll Protection Plan Participant | Paycheck Protection Program loans | Borrowings under credit facilities | |||
Secured borrowings and promissory note | |||
Current facility size | $ 600,000 | ||
Pledged Assets Carrying Value | 221,940 | ||
Carrying Value, Secured borrowings | 230,483 | ||
Bank of the Sierra | Real estate | Borrowings under credit facilities | |||
Secured borrowings and promissory note | |||
Current facility size | 22,750 | ||
Pledged Assets Carrying Value | 32,948 | ||
Carrying Value, Secured borrowings | $ 22,499 | 22,611 | |
Bank of the Sierra | Real estate | Borrowings under credit facilities | Minimum | |||
Secured borrowings and promissory note | |||
Pricing, stated rate (as a percent) | 3.25% | 3.25% | |
Bank of the Sierra | Real estate | Borrowings under credit facilities | Maximum | |||
Secured borrowings and promissory note | |||
Pricing, stated rate (as a percent) | 3.45% | 3.45% | |
Citibank | Fixed rate, Transitional, Acquired loans | Borrowings under repurchase agreements | |||
Secured borrowings and promissory note | |||
Current facility size | $ 500,000 | ||
Pledged Assets Carrying Value | 247,895 | ||
Carrying Value, Secured borrowings | $ 152,097 | 210,735 | |
Citibank | Fixed rate, Transitional, Acquired loans | Borrowings under repurchase agreements | One Month LIBOR | Minimum | |||
Secured borrowings and promissory note | |||
Pricing, spread on variable (as a percent) | 2.50% | ||
Citibank | Fixed rate, Transitional, Acquired loans | Borrowings under repurchase agreements | One Month LIBOR | Maximum | |||
Secured borrowings and promissory note | |||
Pricing, spread on variable (as a percent) | 3.25% | ||
Citibank | Mortgage backed securities | Borrowings under repurchase agreements | |||
Secured borrowings and promissory note | |||
Pricing, stated rate (as a percent) | 2.72% | 2.72% | |
Current facility size | $ 46,847 | ||
Pledged Assets Carrying Value | 85,593 | ||
Carrying Value, Secured borrowings | 46,847 | 58,076 | |
Deutsche Bank | Fixed rate, Transitional loans | Borrowings under repurchase agreements | |||
Secured borrowings and promissory note | |||
Current facility size | 350,000 | ||
Pledged Assets Carrying Value | 96,830 | ||
Carrying Value, Secured borrowings | $ 88,831 | 190,567 | |
Deutsche Bank | Fixed rate, Transitional loans | Borrowings under repurchase agreements | Three Month LIBOR | Minimum | |||
Secured borrowings and promissory note | |||
Pricing, spread on variable (as a percent) | 2.00% | ||
Deutsche Bank | Fixed rate, Transitional loans | Borrowings under repurchase agreements | Three Month LIBOR | Maximum | |||
Secured borrowings and promissory note | |||
Pricing, spread on variable (as a percent) | 2.40% | ||
Deutsche Bank | Mortgage backed securities | Borrowings under repurchase agreements | |||
Secured borrowings and promissory note | |||
Pricing, stated rate (as a percent) | 2.47% | 2.47% | |
Current facility size | $ 13,227 | ||
Pledged Assets Carrying Value | 20,083 | ||
Carrying Value, Secured borrowings | 13,227 | 16,354 | |
RBC | Mortgage backed securities | Borrowings under repurchase agreements | |||
Secured borrowings and promissory note | |||
Current facility size | 39,053 | ||
Pledged Assets Carrying Value | 60,495 | ||
Carrying Value, Secured borrowings | $ 39,053 | $ 38,814 | |
RBC | Mortgage backed securities | Borrowings under repurchase agreements | Minimum | |||
Secured borrowings and promissory note | |||
Pricing, stated rate (as a percent) | 2.39% | 2.39% | |
RBC | Mortgage backed securities | Borrowings under repurchase agreements | Maximum | |||
Secured borrowings and promissory note | |||
Pricing, stated rate (as a percent) | 2.59% | 2.59% | |
CSFB | Mortgage backed securities | Borrowings under repurchase agreements | |||
Secured borrowings and promissory note | |||
Pricing, stated rate (as a percent) | 2.45% | 2.45% | |
Current facility size | $ 4,078 | ||
Pledged Assets Carrying Value | 6,549 | ||
Carrying Value, Secured borrowings | 4,078 | ||
Various | Mortgage backed securities | Borrowings under repurchase agreements | |||
Secured borrowings and promissory note | |||
Current facility size | 106,737 | ||
Pledged Assets Carrying Value | 183,588 | ||
Carrying Value, Secured borrowings | 106,737 | ||
Various | Mortgage backed securities, agency | Borrowings under repurchase agreements | |||
Secured borrowings and promissory note | |||
Current facility size | 349,483 | ||
Pledged Assets Carrying Value | 387,388 | ||
Carrying Value, Secured borrowings | $ 349,483 |
Secured Borrowings - Collateral
Secured Borrowings - Collateral Pledged (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Secured borrowings | ||
Collateral pledged | ||
Pledged Assets Carrying Value | $ 2,635,783 | $ 1,767,319 |
Borrowings under credit facilities | ||
Collateral pledged | ||
Pledged Assets Carrying Value | 829,797 | 631,014 |
Borrowings under repurchase agreements | ||
Collateral pledged | ||
Pledged Assets Carrying Value | 1,805,986 | 1,136,305 |
Paycheck Protection Program loans | Borrowings under credit facilities | ||
Collateral pledged | ||
Pledged Assets Carrying Value | 221,940 | |
Real estate, held for sale | Borrowings under credit facilities | ||
Collateral pledged | ||
Pledged Assets Carrying Value | 32,948 | 32,948 |
Real estate acquired in settlement of loans | Borrowings under repurchase agreements | ||
Collateral pledged | ||
Pledged Assets Carrying Value | 2,507 | 829 |
Loans, held for sale, at fair value | Borrowings under credit facilities | ||
Collateral pledged | ||
Pledged Assets Carrying Value | 192,492 | 313,844 |
Loans, held for sale, at fair value | Borrowings under repurchase agreements | ||
Collateral pledged | ||
Pledged Assets Carrying Value | 122,413 | 17,850 |
Loans, net | Borrowings under credit facilities | ||
Collateral pledged | ||
Pledged Assets Carrying Value | 159,883 | 159,482 |
Loans, net | Borrowings under repurchase agreements | ||
Collateral pledged | ||
Pledged Assets Carrying Value | 835,211 | 815,603 |
Loans, held at fair value | Borrowings under credit facilities | ||
Collateral pledged | ||
Pledged Assets Carrying Value | 141,092 | 73,799 |
Loans, held at fair value | Borrowings under repurchase agreements | ||
Collateral pledged | ||
Pledged Assets Carrying Value | 3,071 | 3,071 |
Mortgage servicing rights | Borrowings under credit facilities | ||
Collateral pledged | ||
Pledged Assets Carrying Value | 68,202 | 50,941 |
Purchased future receivables | Borrowings under credit facilities | ||
Collateral pledged | ||
Pledged Assets Carrying Value | 13,240 | |
Mortgage backed securities | Borrowings under repurchase agreements | ||
Collateral pledged | ||
Pledged Assets Carrying Value | 742,299 | 72,179 |
Retained interest in assets of consolidated VIEs | Borrowings under repurchase agreements | ||
Collateral pledged | ||
Pledged Assets Carrying Value | $ 100,485 | $ 226,773 |
Senior secured notes, convert_3
Senior secured notes, convertible notes, and corporate debt, net (Details) | Feb. 10, 2021USD ($) | Jul. 22, 2019USD ($) | Apr. 27, 2018USD ($) | Aug. 09, 2017USD ($)$ / shares | Mar. 15, 2005USD ($) | Mar. 31, 2021USD ($)item | Dec. 31, 2020USD ($) | Dec. 02, 2019USD ($) | Jan. 30, 2018USD ($) | Dec. 31, 2017USD ($) |
Senior secured notes, Convertible notes, and Corporate debt | ||||||||||
Unamortized deferred financing costs | $ (4,611,000) | $ (2,612,000) | ||||||||
Total Senior secured notes, net | 179,744,000 | 179,659,000 | ||||||||
Total Corporate debt, net | 333,317,000 | 150,989,000 | ||||||||
Total Convertible notes, net | 112,405,000 | $ 112,129,000 | ||||||||
Total carrying amount of debt components | 625,466,000 | |||||||||
Total carrying amount of conversion option of equity components recorded in equity | 958,000 | |||||||||
Contractual maturities of the Senior Secured Notes, Convertible Notes, and Corporate debt | ||||||||||
2022 | 180,000,000 | |||||||||
2023 | 115,000,000 | |||||||||
Thereafter | 341,750,000 | |||||||||
Total contractual amounts | 636,750,000 | |||||||||
Unamortized deferred financing costs, discounts, and premiums, net | (11,284,000) | |||||||||
Total carrying amount of debt components | 625,466,000 | |||||||||
Senior Secured Notes | ||||||||||
Senior secured notes, Convertible notes, and Corporate debt | ||||||||||
Debt instrument, face value | $ 180,000,000 | |||||||||
Interest rate (as a percent) | 7.50% | |||||||||
Unamortized premium | $ 695,000 | |||||||||
Unamortized deferred financing costs | (951,000) | |||||||||
Total Senior secured notes, net | 179,744,000 | |||||||||
Convertible Notes | ||||||||||
Senior secured notes, Convertible notes, and Corporate debt | ||||||||||
Debt instrument, face value | $ 115,000,000 | $ 115,000,000 | ||||||||
Interest rate (as a percent) | 7.00% | 7.00% | ||||||||
Conversion ratio | 1.5994 | |||||||||
Principal amount of notes for conversion | $ 25 | |||||||||
Initial conversion price | $ / shares | $ 15.63 | |||||||||
Principal amount of the notes to be redeemed (as a percent) | 100.00% | |||||||||
Threshold period of specified consecutive trading days within which common stock price to conversion price of convertible debt instruments must exceed threshold percentage for a specified number of trading days to trigger conversion feature | item | 30 | |||||||||
Threshold period of specified consecutive trading days within which the common stock price, used in a calculation with with the conversion rate, the result of which must exceed the threshold percentage | 5 days | |||||||||
Specified period of time used to calculate average closing market price of common stock to be used as a factor in determining potential trigger of conversion feature | 10 days | |||||||||
Gross carrying value of convertible notes | $ 112,700,000 | |||||||||
Gross carrying value of the equity component | $ 2,300,000 | |||||||||
Unamortized discount | $ (958,000) | |||||||||
Unamortized deferred financing costs | (1,637,000) | |||||||||
Total Convertible notes, net | $ 112,405,000 | |||||||||
Convertible Notes | Minimum | ||||||||||
Senior secured notes, Convertible notes, and Corporate debt | ||||||||||
Percentage of common stock price to conversion price of convertible debt instruments to determine eligibility of conversion | 120.00% | |||||||||
Threshold number of specified trading days that common stock price to conversion price of convertible debt instruments must exceed threshold percentage within a specified consecutive trading period to trigger conversion feature | item | 20 | |||||||||
The threshold percentage that per share value of distributions exceeds the average market price which may trigger the conversion feature | 10.00% | |||||||||
Convertible Notes | Maximum | ||||||||||
Senior secured notes, Convertible notes, and Corporate debt | ||||||||||
Threshold percentage of the trading price of the convertible debt instrument to the product of the conversion rate and the closing stock price during any five consecutive trading day period | 98.00% | |||||||||
Corporate Debt | ||||||||||
Senior secured notes, Convertible notes, and Corporate debt | ||||||||||
Unamortized discount | $ (4,966,000) | |||||||||
Unamortized deferred financing costs | (3,467,000) | |||||||||
Total Corporate debt, net | 333,317,000 | |||||||||
6.20% Senior Notes due 2026 | ||||||||||
Senior secured notes, Convertible notes, and Corporate debt | ||||||||||
Debt instrument, face value | $ 57,500,000 | $ 104,250,000 | $ 45,000,000 | |||||||
Interest rate (as a percent) | 6.20% | 6.20% | 6.20% | |||||||
Proceeds from note offerings | $ 55,300,000 | |||||||||
6.20% Senior Notes due 2026 | On or after July 30, 2022 and before July 30, 2025 | ||||||||||
Senior secured notes, Convertible notes, and Corporate debt | ||||||||||
Principal amount of the notes to be redeemed (as a percent) | 101.00% | |||||||||
6.20% Senior Notes due 2026 | On or after July 30, 2025 | ||||||||||
Senior secured notes, Convertible notes, and Corporate debt | ||||||||||
Principal amount of the notes to be redeemed (as a percent) | 100.00% | |||||||||
6.20% Senior Notes due 2026 | Over-allotment option | ||||||||||
Senior secured notes, Convertible notes, and Corporate debt | ||||||||||
Debt instrument, face value | $ 7,500,000 | |||||||||
5.75% Senior Notes due 2026 | ||||||||||
Senior secured notes, Convertible notes, and Corporate debt | ||||||||||
Debt instrument, face value | $ 201,300,000 | $ 201,250,000 | ||||||||
Interest rate (as a percent) | 5.75% | 5.75% | ||||||||
Proceeds from note offerings | $ 195,200,000 | |||||||||
5.75% Senior Notes due 2026 | Over-allotment option | ||||||||||
Senior secured notes, Convertible notes, and Corporate debt | ||||||||||
Debt instrument, face value | $ 26,300,000 | |||||||||
6.50% Senior Notes due 2021 | ||||||||||
Senior secured notes, Convertible notes, and Corporate debt | ||||||||||
Debt instrument, face value | $ 50,000,000 | |||||||||
Interest rate (as a percent) | 6.50% | |||||||||
6.50% Senior Notes due 2021 | On or after April 30, 2019 and before April 30, 2020 | ||||||||||
Senior secured notes, Convertible notes, and Corporate debt | ||||||||||
Principal amount of the notes to be redeemed (as a percent) | 100.00% | |||||||||
Junior Subordinated I-A Notes | ||||||||||
Senior secured notes, Convertible notes, and Corporate debt | ||||||||||
Debt instrument, face value | $ 15,000,000 | |||||||||
Junior Subordinated I-A Notes | Three Month LIBOR | ||||||||||
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 | $ 21,250,000 | |||||||||
Junior Subordinated I-B Notes | Three Month LIBOR | ||||||||||
Senior secured notes, Convertible notes, and Corporate debt | ||||||||||
Pricing, spread on variable (as a percent) | 3.10% | |||||||||
ReadyCap Holdings LLC | Senior Secured Notes | ||||||||||
Senior secured notes, Convertible notes, and Corporate debt | ||||||||||
Debt instrument, face value | $ 40,000,000 | $ 140,000,000 | ||||||||
Interest rate (as a percent) | 7.50% | 7.50% | ||||||||
Yield-to-maturity (as a percent) | 6.50% | |||||||||
ANH | Junior Subordinated Notes | ||||||||||
Senior secured notes, Convertible notes, and Corporate debt | ||||||||||
Debt instrument, face value | $ 37,380,000 | |||||||||
Anworth Capital Trust I | Junior Subordinated Notes | ||||||||||
Senior secured notes, Convertible notes, and Corporate debt | ||||||||||
Debt instrument, face value | $ 36,250,000 | |||||||||
Anworth Capital Trust I | Junior Subordinated Notes | Three Month LIBOR | ||||||||||
Senior secured notes, Convertible notes, and Corporate debt | ||||||||||
Pricing, spread on variable (as a percent) | 3.10% | |||||||||
Anworth Capital Trust I | Junior Subordinated I-A Notes | ||||||||||
Senior secured notes, Convertible notes, and Corporate debt | ||||||||||
Debt instrument, face value | $ 15,000,000 | |||||||||
Anworth Capital Trust I | Junior Subordinated I-B Notes | ||||||||||
Senior secured notes, Convertible notes, and Corporate debt | ||||||||||
Debt instrument, face value | $ 21,250,000 |
Guaranteed Loan Financing (Deta
Guaranteed Loan Financing (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2021 | Dec. 31, 2020 | |
Ending balance | $ 386,036 | $ 401,705 |
Guaranteed loan financing | ||
Ending balance | $ 386,036 | $ 401,705 |
Guaranteed loan financing | Weighted Average | ||
Interest Rates | 3.78% | 3.76% |
Guaranteed loan financing | Minimum | ||
Interest Rates | 0.99% | 0.99% |
Guaranteed loan financing | Maximum | ||
Interest Rates | 6.50% | 6.50% |
Guaranteed Loan Financing - Mat
Guaranteed Loan Financing - Maturities (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Contractual maturities of total guaranteed loan financing outstanding | ||
2021 | $ 212 | |
2022 | 1,257 | |
2023 | 1,998 | |
2024 | 3,242 | |
2025 | 3,410 | |
Thereafter | 375,917 | |
Total | 386,036 | |
Guaranteed loan financing | ||
Contractual maturities of total guaranteed loan financing outstanding | ||
Loans held-for-investment pledged as security against guaranteed loan financing | $ 387,200 | $ 403,000 |
Variable interest entities an_3
Variable interest entities and securitization activities - Securitized Debt Obligations (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Variable interest entities | ||
Current Principal Balance | $ 2,303,659 | $ 2,145,133 |
Current principal balance of non-company sponsored securitized loans | 56,100 | 63,100 |
Consolidated VIEs | ||
Variable interest entities | ||
Current Principal Balance | 2,151,839 | 1,891,797 |
Carrying value | $ 2,155,848 | $ 1,842,680 |
Weighted Average Rate | 2.90% | 3.30% |
Waterfall Victoria Mortgage Trust 2011-SBC2 | ||
Variable interest entities | ||
Current Principal Balance | $ 2,869 | $ 4,055 |
Carrying value | $ 2,869 | $ 4,055 |
Weighted Average Rate | 5.50% | 5.50% |
ReadyCap Lending Small Business Trust 2019-2 | ||
Variable interest entities | ||
Current Principal Balance | $ 103,030 | $ 103,030 |
Carrying value | $ 97,078 | $ 101,468 |
Weighted Average Rate | 2.60% | 3.10% |
Sutherland Commercial Mortgage Trust 2017-SBC6 | ||
Variable interest entities | ||
Current Principal Balance | $ 24,747 | $ 27,035 |
Carrying value | $ 24,334 | $ 26,555 |
Weighted Average Rate | 3.70% | 3.60% |
Sutherland Commercial Mortgage Trust 2018-SBC7 | ||
Variable interest entities | ||
Current Principal Balance | $ 79,302 | |
Carrying value | $ 78,168 | |
Weighted Average Rate | 4.70% | |
Sutherland Commercial Mortgage Trust 2019-SBC8 | ||
Variable interest entities | ||
Current Principal Balance | $ 170,678 | $ 178,911 |
Carrying value | $ 168,180 | $ 176,307 |
Weighted Average Rate | 2.90% | 2.90% |
Sutherland Commercial Mortgage Trust 2020-SBC9 | ||
Variable interest entities | ||
Current Principal Balance | $ 124,621 | $ 131,729 |
Carrying value | $ 122,129 | $ 129,014 |
Weighted Average Rate | 3.90% | 3.80% |
ReadyCap Commercial Mortgage Trust 2014-1 | ||
Variable interest entities | ||
Current Principal Balance | $ 10,703 | $ 10,880 |
Carrying value | $ 10,681 | $ 10,858 |
Weighted Average Rate | 5.70% | 5.80% |
ReadyCap Commercial Mortgage Trust 2015-2 | ||
Variable interest entities | ||
Current Principal Balance | $ 35,894 | $ 45,075 |
Carrying value | $ 33,864 | $ 35,183 |
Weighted Average Rate | 5.10% | 4.80% |
ReadyCap Commercial Mortgage Trust 2016-3 | ||
Variable interest entities | ||
Current Principal Balance | $ 26,083 | $ 26,371 |
Carrying value | $ 25,068 | $ 25,286 |
Weighted Average Rate | 4.80% | 4.70% |
ReadyCap Commercial Mortgage Trust 2018-4 | ||
Variable interest entities | ||
Current Principal Balance | $ 89,739 | $ 94,273 |
Carrying value | $ 86,702 | $ 91,098 |
Weighted Average Rate | 4.10% | 4.00% |
ReadyCap Commercial Mortgage Trust 2019-5 | ||
Variable interest entities | ||
Current Principal Balance | $ 225,934 | $ 229,232 |
Carrying value | $ 217,636 | $ 220,605 |
Weighted Average Rate | 4.20% | 4.20% |
ReadyCap Commercial Mortgage Trust 2019-6 | ||
Variable interest entities | ||
Current Principal Balance | $ 348,901 | $ 359,266 |
Carrying value | $ 342,606 | $ 348,773 |
Weighted Average Rate | 3.20% | 3.20% |
Ready Capital Mortgage Financing 2018-FL2 | ||
Variable interest entities | ||
Current Principal Balance | $ 48,979 | |
Carrying value | $ 48,975 | |
Weighted Average Rate | 2.40% | |
Ready Capital Mortgage Financing 2019-FL3 | ||
Variable interest entities | ||
Current Principal Balance | $ 202,993 | $ 229,440 |
Carrying value | $ 202,043 | $ 227,950 |
Weighted Average Rate | 1.50% | 2.00% |
Ready Capital Mortgage Financing 2020-FL4 | ||
Variable interest entities | ||
Current Principal Balance | $ 324,215 | $ 324,219 |
Carrying value | $ 319,075 | $ 318,385 |
Weighted Average Rate | 3.00% | 3.10% |
Ready Capital Mortgage Financing 2021-FL5 | ||
Variable interest entities | ||
Current Principal Balance | $ 461,432 | |
Carrying value | $ 503,583 | |
Weighted Average Rate | 1.50% |
Variable interest entities an_4
Variable interest entities and securitization activities - Consolidated VIE Assets and Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2020 |
Assets | |||
Cash and cash equivalents | $ 308,428 | $ 122,265 | |
Restricted cash | 62,961 | $ 93,164 | |
Loans, held for sale, at fair value | 473,078 | $ 340,288 | |
Accrued interest | 16,120 | 12,656 | |
Other assets | 20,134 | 9,346 | |
Total Assets | 8,016,955 | 5,372,095 | |
Liabilities | |||
Secured borrowings | 2,064,785 | 1,294,243 | |
Total Liabilities | 6,818,709 | 4,537,887 | |
Consolidated VIEs | |||
Assets | |||
Loans, net | 2,877,837 | 2,472,807 | |
Total Assets | 2,898,727 | 2,518,743 | |
Liabilities | |||
Secured borrowings | 2,211,923 | 1,905,749 | |
Reportable Legal Entities | Consolidated VIEs | |||
Assets | |||
Cash and cash equivalents | 14 | 20 | |
Restricted cash | 631 | 13,790 | |
Loans, net | 2,877,837 | 2,472,807 | |
Real estate, held for sale | 2,778 | 4,456 | |
Other assets | 17,467 | 27,670 | |
Total Assets | 2,898,727 | 2,518,743 | |
Liabilities | |||
Secured borrowings | 2,211,923 | 1,905,749 | |
Total Liabilities | $ 2,211,923 | $ 1,905,749 |
Variable interest entities an_5
Variable interest entities and securitization activities - Assets of Unconsolidated VIEs (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Carrying amount | ||
Mortgage backed securities, at fair value | $ 682,948 | $ 88,011 |
Investment in unconsolidated joint ventures | 75,048 | 79,509 |
Total Assets | 8,016,955 | 5,372,095 |
Unconsolidated VIEs | ||
Carrying amount | ||
Mortgage backed securities, at fair value | 82,158 | 80,690 |
Investment in unconsolidated joint ventures | 26,298 | 28,290 |
Total Assets | 108,456 | 108,980 |
Maximum Exposure to Loss | ||
Mortgage backed securities, at fair value | 82,158 | 80,690 |
Investment in unconsolidated joint venture | 26,298 | 28,290 |
Total assets in unconsolidated VIEs maximum exposure to loss | $ 108,456 | $ 108,980 |
Interest income and interest _3
Interest income and interest expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Interest income | ||
Total loans | $ 60,617 | $ 66,436 |
Total loans, held for sale, at fair value | 2,730 | 1,636 |
Total Paycheck Protection Program loans | 6,892 | |
Mortgage backed securities, at fair value | 3,132 | 1,479 |
Total interest income | 73,371 | 69,551 |
Interest expense | ||
Secured borrowings | (17,574) | (12,758) |
Paycheck Protection Program Liquidity Facility borrowings | (334) | |
Securitized debt obligations of consolidated VIEs | (19,093) | (19,529) |
Guaranteed loan financing | (3,651) | (6,243) |
Senior secured note | (3,459) | (3,472) |
Convertible note | (2,188) | (2,188) |
Corporate debt | (4,462) | (2,740) |
Total interest expense | (50,761) | (46,930) |
Net interest income before provision for loan losses | 22,610 | 22,621 |
Acquired SBA 7(a) loans | ||
Interest income | ||
Total loans | 4,926 | 6,202 |
Acquired loans | ||
Interest income | ||
Total loans | 13,810 | 15,411 |
Total loans, held for sale, at fair value | 2 | 68 |
Originated Transitional loans | ||
Interest income | ||
Total loans | 25,560 | 22,219 |
Originated SBC loans, at fair value | ||
Interest income | ||
Total loans | 229 | 317 |
Originated SBC loans | ||
Interest income | ||
Total loans | 12,441 | 15,998 |
Originated SBA 7(a) loans | ||
Interest income | ||
Total loans | 3,614 | 6,269 |
Paycheck Protection Program Loans, Held For Investment | ||
Interest income | ||
Total Paycheck Protection Program loans | 6,721 | |
Paycheck Protection Program loans, at fair value | ||
Interest income | ||
Total Paycheck Protection Program loans | 171 | |
Originated Residential Agency loans | ||
Interest income | ||
Total loans | 37 | 20 |
Total loans, held for sale, at fair value | 2,121 | 1,297 |
Originated Freddie Mac loans | ||
Interest income | ||
Total loans, held for sale, at fair value | $ 607 | $ 271 |
Derivative instruments (Details
Derivative instruments (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Notional Amount | $ 1,949,968 | $ 1,491,350 | |
Asset Derivatives Fair Value | 12,529 | 16,363 | |
Liabilities Derivatives Fair Value | (4,403) | (11,604) | |
Derivative gain (loss) | |||
Net Realized Gain (Loss) | (1,825) | $ (384) | |
Unrealized Gain (Loss) | 7,411 | (4,826) | |
Total change in OCI for period | 1,978 | (3,128) | |
Designated as Hedging | |||
Derivative gain (loss) | |||
Derivatives - effective portion reclassified from AOCI to income | (298) | (367) | |
Hedge ineffectiveness recorded directly in income | (1,694) | ||
Total income statement impact | (298) | (2,061) | |
Derivatives- effective portion recorded in OCI | 1,680 | (5,189) | |
Total change in OCI for period | 1,978 | (3,128) | |
Credit default swaps | |||
Liabilities Derivatives Fair Value | (131) | (4,004) | |
Derivative gain (loss) | |||
Unrealized Gain (Loss) | 42 | 370 | |
Credit default swaps | Credit Risk | |||
Notional Amount | 189,525 | 15,000 | |
Liabilities Derivatives Fair Value | (131) | (174) | |
Interest rate swap | |||
Liabilities Derivatives Fair Value | (7,651) | (11,670) | |
Derivative gain (loss) | |||
Net Realized Gain (Loss) | (1,297) | (247) | |
Unrealized Gain (Loss) | 6,523 | (20,168) | |
Interest rate swap | Not Designated as Hedging | Interest Rate Risk | |||
Notional Amount | 429,181 | 160,801 | |
Liabilities Derivatives Fair Value | (784) | (952) | |
Interest rate swap | Designated as Hedging | |||
Derivative gain (loss) | |||
Derivatives - effective portion reclassified from AOCI to income | (298) | (367) | |
Hedge ineffectiveness recorded directly in income | (1,694) | ||
Total income statement impact | (298) | (2,061) | |
Derivatives- effective portion recorded in OCI | 1,680 | (83) | |
Total change in OCI for period | 1,978 | 1,978 | |
Interest rate swap | Designated as Hedging | Interest Rate Risk | |||
Notional Amount | 132,325 | 132,325 | |
Liabilities Derivatives Fair Value | (3,391) | (5,701) | |
TBA agency securities | |||
Liabilities Derivatives Fair Value | (97) | (174) | |
Derivative gain (loss) | |||
Unrealized Gain (Loss) | 3,908 | ||
TBA agency securities | Interest Rate Risk | |||
Notional Amount | 592,000 | 565,000 | |
Liabilities Derivatives Fair Value | (97) | (4,004) | |
Interest rate lock commitments (IRLCs) | |||
Derivative gain (loss) | |||
Unrealized Gain (Loss) | (4,639) | 14,487 | |
Interest rate lock commitments (IRLCs) | Interest Rate Risk | |||
Notional Amount | 581,383 | 614,358 | |
Asset Derivatives Fair Value | 11,724 | 16,363 | |
FX forwards | |||
Liabilities Derivatives Fair Value | (773) | ||
Derivative gain (loss) | |||
Net Realized Gain (Loss) | (528) | (137) | |
Unrealized Gain (Loss) | 1,577 | $ 485 | |
FX forwards | Foreign Exchange Rate Risk | |||
Notional Amount | 25,554 | 3,866 | |
Asset Derivatives Fair Value | $ 805 | ||
Liabilities Derivatives Fair Value | $ (773) |
Real estate, held for sale (Det
Real estate, held for sale (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Real estate acquired | ||
Acquired ORM portfolio | $ 42,495 | $ 43,434 |
Other REO held for sale | 30,959 | 1,914 |
Total Real estate, held for sale | 73,454 | 45,348 |
Consolidated VIEs | ||
Real estate acquired | ||
Other REO held for sale | 2,800 | 4,500 |
Retail | ||
Real estate acquired | ||
Acquired ORM portfolio | 18,700 | 18,700 |
Other REO held for sale | 3,614 | 660 |
Mixed Use | ||
Real estate acquired | ||
Acquired ORM portfolio | 14,248 | 14,248 |
Land | ||
Real estate acquired | ||
Acquired ORM portfolio | 6,317 | 7,256 |
Lodging/Residential | ||
Real estate acquired | ||
Acquired ORM portfolio | 3,230 | 3,230 |
Office | ||
Real estate acquired | ||
Other REO held for sale | 829 | 829 |
SBA | ||
Real estate acquired | ||
Other REO held for sale | 409 | $ 425 |
Single family | ||
Real estate acquired | ||
Other REO held for sale | $ 26,107 |
Agreements and transactions w_3
Agreements and transactions with related parties (Details) | Mar. 19, 2021USD ($)item | Mar. 31, 2021USD ($)item | Mar. 31, 2020USD ($) | Dec. 31, 2020USD ($) |
Related-party transactions | ||||
Temporary reduction in the quarterly base management fee following the effective date of the merger | $ 1,000,000 | |||
Number of quarters the temporary reduction in quarterly base management fee is effective | item | 4 | |||
Amount unpaid | $ 6,769,000 | $ 4,088,000 | ||
Purchase of loans, held-for-investment | 2,316,000 | $ 52,067,000 | ||
Investment in unconsolidated joint ventures | $ 75,048,000 | $ 79,509,000 | ||
Management agreement | ||||
Related-party transactions | ||||
Automatically renewal period | 1 year | |||
Minimum notice period for termination | 180 days | |||
Termination fee multiplier | 3 | |||
Period immediately preceding the termination used as basis for determination of the termination fee due | 24 months | |||
Management fee | ||||
Related-party transactions | ||||
Fee percentage for results up to threshold | 1.50% | |||
Fee threshold | $ 500,000,000 | |||
Fee percentage for results in excess of threshold | 1.00% | |||
Temporary reduction in the quarterly base management fee following the effective date of the merger | $ 1,000,000 | |||
Number of quarters the temporary reduction in quarterly base management fee is effective | item | 4 | |||
Incentive distribution | ||||
Related-party transactions | ||||
Incentive multiplier | 15.00% | |||
Core earnings period | 12 months | |||
Percentage of Incentive fee multiplied by the weighted average of issue price | 8.00% | |||
The period over which core earnings must exceed the minimum threshold per the terms of the agreement | 48 months | |||
Minimum core earnings threshold | $ 0 | |||
Minimum | Management agreement | ||||
Related-party transactions | ||||
Independent director votes required for approval | 0.667% | |||
Manager | Management fee | ||||
Related-party transactions | ||||
Fees | $ 2,700,000 | 2,600,000 | ||
Amount unpaid | 5,400,000 | 2,600,000 | ||
Manager | Incentive distribution | ||||
Related-party transactions | ||||
Amount unpaid | 1,300,000 | |||
Manager | Expense reimbursement | ||||
Related-party transactions | ||||
Reimbursable expenses | 2,000,000 | 1,300,000 | ||
Amount unpaid | $ 2,300,000 | $ 200,000 |
Other assets and other liabil_3
Other assets and other liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Other assets: | ||
Deferred tax asset | $ 18,396 | $ 18,396 |
Deferred loan exit fees | 16,725 | 13,940 |
Accrued interest | 16,120 | 12,656 |
Due from servicers | 16,487 | 11,171 |
Right-of-use assets | 3,138 | 3,172 |
Goodwill | 17,817 | 11,206 |
Intangible assets | 6,662 | 6,986 |
Deferred financing costs | 4,611 | 2,612 |
PPP fee receivable | 31,413 | 18 |
Other assets | 20,134 | 9,346 |
Total other assets | 151,503 | 89,503 |
Accounts payable and other accrued liabilities: | ||
Deferred tax liability | 16,839 | 16,839 |
Accrued salaries, wages and commissions | 24,442 | 35,724 |
Accrued interest payable | 17,250 | 19,695 |
Servicing principal and interest payable | 10,028 | 7,318 |
Repair and denial reserve | 11,626 | 9,557 |
Payable to related parties | 6,769 | 4,088 |
Accrued professional fees | 5,014 | 1,365 |
Lease payable | 4,349 | 3,670 |
Deferred LSP revenue | 3,959 | 10,700 |
Accrued PPP related costs | 30,620 | 498 |
Other liabilities | 31,569 | 26,201 |
Total accounts payable and other accrued liabilities | 162,465 | 135,655 |
Loan indemnification reserve | ||
Loan indemnification reserve | $ 4,500 | $ 4,100 |
Other Asset and Other Liabiliti
Other Asset and Other Liabilities - Intangible assets (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Finite-lived intangible assets | $ 5,662 | ||
Total Intangible Assets | 6,662 | $ 6,986 | |
Amortization expense | $ 300 | ||
Total Accumulated Amortization | 2,921 | ||
Future amortization of lease intangibles | |||
2021 | 971 | ||
2022 | 1,268 | ||
2023 | 1,242 | ||
2024 | 1,032 | ||
2025 | 786 | ||
2026 | 119 | ||
Thereafter | 244 | ||
Net amount | 5,662 | ||
SBA license | |||
Indefinite-lived intangible assets | 1,000 | 1,000 | |
Internally developed software | Knight Capital | |||
Finite-lived intangible assets | $ 2,903 | 3,061 | |
Estimated Useful Life | 6 years | ||
Total Accumulated Amortization | $ 897 | ||
Future amortization of lease intangibles | |||
Net amount | 2,903 | 3,061 | |
Broker network | Knight Capital | |||
Finite-lived intangible assets | $ 822 | 889 | |
Estimated Useful Life | 4 years 6 months | ||
Total Accumulated Amortization | $ 378 | ||
Future amortization of lease intangibles | |||
Net amount | 822 | 889 | |
Trade name | Knight Capital | |||
Finite-lived intangible assets | $ 672 | 709 | |
Estimated Useful Life | 6 years | ||
Total Accumulated Amortization | $ 208 | ||
Future amortization of lease intangibles | |||
Net amount | 672 | 709 | |
Trade name | GMFS | |||
Finite-lived intangible assets | $ 529 | 559 | |
Estimated Useful Life | 15 years | ||
Total Accumulated Amortization | $ 694 | ||
Future amortization of lease intangibles | |||
Net amount | 529 | 559 | |
Favorable lease | |||
Finite-lived intangible assets | $ 736 | 768 | |
Estimated Useful Life | 12 years | ||
Total Accumulated Amortization | $ 744 | ||
Future amortization of lease intangibles | |||
Net amount | $ 736 | $ 768 |
Other income and operating ex_3
Other income and operating expenses - Paycheck Protection Program (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | |||
Apr. 30, 2020 | Mar. 31, 2021 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2020 | |
Paycheck Protection Program (PPP) | |||||
Unrecognized net service fees | $ 3,959 | $ 10,700 | |||
Origination costs | 8,145 | $ 3,025 | |||
Paycheck Protection Program loans | |||||
Paycheck Protection Program (PPP) | |||||
Unrecognized net service fees | 3,959 | ||||
PPP Loans - CARES Act | |||||
Paycheck Protection Program (PPP) | |||||
PPP loans originated | $ 109,500 | ||||
PPP processing fees | $ 5,200 | ||||
Unrecognized net service fees | 4,000 | ||||
PPP Loans - Economic Aid Act | |||||
Paycheck Protection Program (PPP) | |||||
PPP loans originated | 1,300,000 | ||||
Origination fee and fee income | 73,300 | ||||
Unrecognized net service fees | $ 67,800 | ||||
Lender Service Provider Agreement | PPP Loans - CARES Act | |||||
Paycheck Protection Program (PPP) | |||||
Amount of PPP loans underwritten and sold to third party | $ 2,500,000 | ||||
Origination fee and fee income | $ 43,300 |
Other income and operating ex_4
Other income and operating expenses - Balance Sheet Impact of PPP Activities (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2020 |
Assets | |||
Restricted cash | $ 62,961 | $ 93,164 | |
Paycheck Protection Program loans | 1,292,808 | $ 74,931 | |
Other assets | |||
PPP fee receivable | 31,413 | 18 | |
Deferred financing costs | 4,611 | 2,612 | |
Accrued interest | 16,120 | 12,656 | |
Total Assets | 8,016,955 | 5,372,095 | |
Liabilities | |||
Secured borrowings | 2,064,785 | 1,294,243 | |
Paycheck Protection Program Liquidity Facility (PPPLF) borrowings | 1,132,536 | 76,276 | |
Interest payable | 17,250 | 19,695 | |
Deferred LSP revenue | 3,959 | 10,700 | |
Accrued PPP Related Costs | 30,620 | 498 | |
Repair and denial reserve | 11,626 | 9,557 | |
Total Liabilities | 6,818,709 | 4,537,887 | |
Paycheck Protection Program loans | |||
Assets | |||
Restricted cash | 10,000 | ||
Other assets | |||
Prepaid expenses | 13 | ||
PPP fee receivable | 31,413 | ||
Deferred financing costs | 1,065 | ||
Accrued interest | 1,554 | ||
Total Assets | 1,336,853 | ||
Liabilities | |||
Secured borrowings | 230,483 | ||
Paycheck Protection Program Liquidity Facility (PPPLF) borrowings | 1,132,536 | ||
Interest payable | 364 | ||
Deferred LSP revenue | 3,959 | ||
Accrued PPP Related Costs | 30,620 | ||
Payable to third parties | 365 | ||
Repair and denial reserve | 4,961 | ||
Total Liabilities | 1,403,288 | ||
Paycheck Protection Program Loans, Held For Investment | |||
Assets | |||
Paycheck Protection Program loans | 1,254,420 | ||
Paycheck Protection Program Loans, Held For Investment | Paycheck Protection Program loans | |||
Assets | |||
Paycheck Protection Program loans | 1,254,420 | ||
Paycheck Protection Program loans, at fair value | |||
Assets | |||
Paycheck Protection Program loans | 38,388 | $ 74,931 | |
Paycheck Protection Program loans, at fair value | Paycheck Protection Program loans | |||
Assets | |||
Paycheck Protection Program loans | $ 38,388 |
Other income and operating ex_5
Other income and operating expenses - Income and Expenses Related to Activities (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Other income | ||
LSP origination fees | $ 1,613 | $ 2,495 |
Interest income | 73,371 | 69,551 |
Interest and Fee Income | 60,617 | 66,436 |
Other operating expenses | ||
Direct operating expenses | 8,145 | 3,025 |
R&D reserve | (2,069) | 136 |
Interest expense | 50,761 | 46,930 |
Total other operating expenses | 15,484 | 13,744 |
Net income (loss) | 28,947 | $ (51,516) |
Paycheck Protection Program loans | ||
Other income | ||
Interest and Fee Income | 13,633 | |
Other operating expenses | ||
Total other operating expenses | 10,062 | |
Net income (loss) | 3,571 | |
Paycheck Protection Program loans | Other Income | ||
Other operating expenses | ||
R&D reserve | 1,656 | |
Paycheck Protection Program loans | Servicing income | ||
Other income | ||
LSP fee income | 6,741 | |
Paycheck Protection Program loans | Interest income | ||
Other income | ||
Interest income | 6,892 | |
Paycheck Protection Program loans | Other operating expenses | ||
Other operating expenses | ||
Direct operating expenses | 4,545 | |
Paycheck Protection Program loans | Interest expense | ||
Other operating expenses | ||
Interest expense | $ 3,861 |
Other income and operating ex_6
Other income and operating expenses - Components of Other Income and Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Other income | ||
Origination income | $ 1,613 | $ 2,495 |
Change in repair and denial reserve | (2,069) | 136 |
Other | 1,027 | 1,442 |
Total other income | 571 | 4,073 |
Other operating expenses | ||
Origination costs | 8,145 | 3,025 |
Technology expense | 1,872 | 1,580 |
Impairment on real estate | 2,969 | |
Rent and property tax expense | 1,686 | 1,184 |
Recruiting, training and travel expenses | 496 | 624 |
Marketing expense | 576 | 546 |
Loan acquisition costs | 34 | 98 |
Financing costs on purchased future receivables | 24 | 624 |
Other | 2,651 | 3,094 |
Total other operating expenses | $ 15,484 | $ 13,744 |
Stockholders Equity - Common St
Stockholders Equity - Common Stock Dividends (Details) - $ / shares | Apr. 30, 2021 | Mar. 24, 2021 | Mar. 18, 2021 | Mar. 01, 2021 | Jan. 29, 2021 | Dec. 14, 2020 | Oct. 30, 2020 | Sep. 16, 2020 | Jul. 31, 2020 | Jun. 15, 2020 | Mar. 31, 2021 | Mar. 31, 2020 |
Dividends | ||||||||||||
Dividend per Share, declared | $ 0.10 | $ 0.30 | $ 0.35 | $ 0.30 | $ 0.25 | $ 0.40 | $ 0.40 | |||||
Dividend per Share, paid | $ 0.10 | $ 0.30 | $ 0.35 | $ 0.30 | $ 0.25 |
Stockholders Equity - RSU and R
Stockholders Equity - RSU and RSA activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2021 | Dec. 31, 2020 | |
Weighted-average grant date fair value (per share) | ||
Stock-based compensation | $ 1,600 | $ 1,400 |
Non-cash compensation expense not yet charged to net income | $ 14,300 | $ 13,700 |
RSAs | Certain employees | ||
Number of shares | ||
Outstanding, Beginning balance | 872,079 | |
Granted (in shares) | 185,586 | |
Vested (in shares) | (115,604) | |
Canceled (in shares) | (1,547) | |
Outstanding, Ending balance | 940,514 | 872,079 |
Grant date fair value | ||
Beginning balance | $ 13,737 | |
Granted | 2,379 | |
Vested | (1,801) | |
Canceled | (21) | |
Ending balance | $ 14,294 | $ 13,737 |
Weighted-average grant date fair value (per share) | ||
Beginning balance | $ 15.75 | |
Granted (in per share) | 12.82 | |
Vested (in per share) | 15.58 | |
Canceled (in per share) | 13.50 | |
Ending balance | $ 15.20 | $ 15.75 |
Stockholders Equity - Performan
Stockholders Equity - Performance-based Equity Awards (Details) - shares | 1 Months Ended | 3 Months Ended |
Feb. 28, 2021 | Mar. 31, 2021 | |
Performance-based equity awards | ||
Percentage of shares of common stock issued and outstanding on a fully diluted basis | 5.00% | |
Performance Shares | ||
Performance-based equity awards | ||
Number of units performance-based equity awards granted | 61,895 | |
Performance Shares | Minimum | ||
Performance-based equity awards | ||
Percentage of target awards that may be achieved. | 0.00% | |
Performance Shares | Maximum | ||
Performance-based equity awards | ||
Percentage of target awards that may be achieved. | 300.00% | |
Performance Shares | Based on absolute TSR | ||
Performance-based equity awards | ||
Vesting percentage allocation | 50.00% | |
Vesting period | 3 years | |
Performance Shares | Based on TSR relative to performance of designated peer group | ||
Performance-based equity awards | ||
Vesting percentage allocation | 50.00% | |
Vesting period | 3 years |
Stockholders Equity - Preferred
Stockholders Equity - Preferred Stock (Details) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended |
Mar. 31, 2021USD ($)$ / sharesshares | |
Preferred stock | |
Liquidation Preference | $ 25 |
Carrying Value | $ | $ 98,241 |
Series B and Series D Preferred Stock | |
Preferred stock | |
Liquidation Preference | $ 25 |
Percentage of the liquidation preference at which the Company can choose to redeem | 100.00% |
Series B Preferred Stock | |
Preferred stock | |
Shares Issued | shares | 1,919 |
Shares outstanding | shares | 1,919 |
Par Value per Share | $ 0.0001 |
Liquidation Preference | $ 25 |
Rate per Annum | 8.63% |
Annual Dividend (per share) | $ 2.16 |
Carrying Value | $ | $ 47,984 |
Dividends declared | $ | $ 1,000 |
Series D Preferred Stock | |
Preferred stock | |
Shares outstanding | shares | 2,010 |
Par Value per Share | $ 0.0001 |
Liquidation Preference | $ 25 |
Rate per Annum | 7.63% |
Annual Dividend (per share) | $ 1.91 |
Carrying Value | $ | $ 50,257 |
Dividends declared | $ | $ 1,000 |
Series C Preferred Stock | |
Preferred stock | |
Shares outstanding | shares | 780 |
Par Value per Share | $ 0.0001 |
Liquidation Preference | $ 25 |
Rate per Annum | 6.25% |
Annual Dividend (per share) | $ 1.56 |
Carrying Value | $ | $ 19,494 |
Dividends declared | $ | $ 300 |
Earnings per Share of Common _3
Earnings per Share of Common Stock (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Continuing Operations | ||
Net income (loss) | $ 28,947 | $ (51,516) |
Less: Income attributable to non-controlling interest | 659 | (1,064) |
Less: Income attributable to participating shares | 657 | 463 |
Basic earnings | 27,631 | (50,915) |
Discontinued Operations | ||
Net income (loss) attributable to Ready Capital Corporation | 28,007 | (50,452) |
Diluted Earnings | ||
Net income (loss) | 28,947 | (51,516) |
Less: Income attributable to non-controlling interest | 659 | (1,064) |
Less: Income attributable to participating shares | 657 | 463 |
Diluted earnings | $ 27,631 | $ (50,915) |
Basic - Average shares outstanding | 56,817,632 | 51,984,040 |
Effect of dilutive securities - Unvested participating shares | 25,816 | 5,973 |
Diluted - Average shares outstanding | 56,843,448 | 51,990,013 |
Earnings Per Share Attributable to RC Common Stockholders: | ||
Basic | $ 0.49 | $ (0.98) |
Diluted | $ 0.49 | $ (0.98) |
Conversion spread value on Convertible Notes | $ 0 | |
Impact of Convertible Notes on diluted EPS | $ 0 |
Earnings per Common Share - Ope
Earnings per Common Share - Operating Partnership Units (Details) - Operating Partnership - Noncontrolling Interests | 3 Months Ended |
Mar. 31, 2021shares | |
Noncontrolling interest | |
Number of common shares issued for OP unit redeemed by a noncontrolling interest unit holder | 1 |
Units held by noncontrolling interest unit holders | 1,175,205 |
Offsetting assets and liabili_3
Offsetting assets and liabilities - Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Effect of offsetting of the Company's recognized assets | ||
Gross Amounts of Recognized Assets | $ 12,529 | $ 16,363 |
Amounts presented in the Consolidated Balance Sheets | 12,529 | 16,363 |
Net Amount | 12,529 | 16,363 |
FX forwards | ||
Effect of offsetting of the Company's recognized assets | ||
Gross Amounts of Recognized Assets | 805 | |
Amounts presented in the Consolidated Balance Sheets | 805 | |
Net Amount | 805 | |
Interest rate lock commitments (IRLCs) | ||
Effect of offsetting of the Company's recognized assets | ||
Gross Amounts of Recognized Assets | 11,724 | 16,363 |
Amounts presented in the Consolidated Balance Sheets | 11,724 | 16,363 |
Net Amount | $ 11,724 | $ 16,363 |
Offsetting assets and liabili_4
Offsetting assets and liabilities - Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Effect of offsetting recognized liabilities, Derivative | ||
Gross Amounts of Recognized Liabilities | $ 4,403 | $ 11,604 |
Effect of offsetting recognized liabilities, Total | ||
Gross Amounts of Recognized Liabilities, Total | 2,072,664 | 1,310,864 |
Gross Amounts Offset in the Consolidated Balance Sheets, Total | 3,476 | 5,017 |
Liabilities Presented in the Consolidated Balance Sheets, Total | 2,069,188 | 1,305,847 |
Financial Instruments, Total | 2,064,785 | 1,294,243 |
Cash Collateral Paid, Total | 4,306 | 6,827 |
Net Amount, Total | 97 | 4,777 |
Interest rate swap | ||
Effect of offsetting recognized liabilities, Derivative | ||
Gross Amounts of Recognized Liabilities | 7,651 | 11,670 |
Gross Amounts Offset in the Consolidated Balance Sheets, Derivative | 3,476 | 5,017 |
Liabilities Presented in the Consolidated Balance Sheets, Derivative | 4,175 | 6,653 |
Cash Collateral Paid, Derivative | 4,175 | 6,653 |
Credit default swaps | ||
Effect of offsetting recognized liabilities, Derivative | ||
Gross Amounts of Recognized Liabilities | 131 | 4,004 |
Liabilities Presented in the Consolidated Balance Sheets, Derivative | 131 | 4,004 |
Cash Collateral Paid, Derivative | 131 | |
Net Amount, Derivative | 4,004 | |
TBA agency securities | ||
Effect of offsetting recognized liabilities, Derivative | ||
Gross Amounts of Recognized Liabilities | 97 | 174 |
Liabilities Presented in the Consolidated Balance Sheets, Derivative | 97 | 174 |
Cash Collateral Paid, Derivative | 174 | |
Net Amount, Derivative | 97 | |
FX forwards | ||
Effect of offsetting recognized liabilities, Derivative | ||
Gross Amounts of Recognized Liabilities | 773 | |
Liabilities Presented in the Consolidated Balance Sheets, Derivative | 773 | |
Net Amount, Derivative | 773 | |
Secured borrowings | ||
Effect of offsetting recognized liabilities, Borrowings | ||
Gross Amounts of Recognized Liabilities, Borrowings | 2,064,785 | 1,294,243 |
Liabilities Presented in the Consolidated Balance Sheets, Borrowings | 2,064,785 | 1,294,243 |
Financial Instruments, Borrowings | $ 2,064,785 | $ 1,294,243 |
Commitments, Contingencies an_3
Commitments, Contingencies and Indemnifications (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Originated Residential Agency loans | ||
Commitments, contingencies and indemnifications | ||
Commitments to originate residential agency loans | $ 590,612 | $ 575,600 |
Unfunded loan commitments | ||
Commitments, contingencies and indemnifications | ||
Loans, net | 293,919 | 285,389 |
Loans, held for sale at fair value | $ 11,123 | $ 7,809 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Mar. 31, 2021 | Dec. 31, 2020 | |
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 | 4.00% | |
Number of taxable years an entity would not be able to qualify as a REIT if qualification lapses | 4 years | |
NOL carryback rate impact | $ 2.7 | $ 2.7 |
Number of years net operating losses can be carried back under provisions of the CARES Act | 5 years | 5 years |
Minimum | ||
REIT requirements and income tax information | ||
Percentage of taxable income distributed in the form of qualifying distributions | 90.00% | |
Maximum | ||
REIT requirements and income tax information | ||
Percentage of taxable income distributed in the form of qualifying distributions | 100.00% |
Segment Reporting (Details)
Segment Reporting (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021USD ($)segment | Mar. 31, 2020USD ($)segment | |
Segment reporting | ||
Number of reportable segments | segment | 4 | 4 |
Interest income | $ 73,371 | $ 69,551 |
Interest expense | (50,761) | (46,930) |
Net interest income before provision for loan losses | 22,610 | 22,621 |
Provision for (recovery of) loan losses | 8 | (39,804) |
Net interest income after provision for (recovery of) loan losses | 22,618 | (17,183) |
Non-interest income | ||
Residential mortgage banking activities | 41,409 | 36,669 |
Net realized gains on financial instruments and real estate owned | 8,846 | 7,172 |
Net unrealized gain (loss) on financial instruments | 20,996 | (33,434) |
Other income | 571 | 4,073 |
Servicing income | 15,635 | 8,097 |
Income on purchased future receivables, net of allowance for doubtful accounts | 2,317 | 3,483 |
Income (Loss) from unconsolidated joint ventures | (809) | (3,537) |
Total non-interest income (loss) | 88,965 | 22,523 |
Non-interest expense | ||
Employee compensation and benefits | (22,777) | (18,936) |
Allocated employee compensation and benefits from related party | (2,123) | (1,250) |
Variable expenses on residential mortgage banking activities | (15,485) | (20,129) |
Professional fees | (2,982) | (2,556) |
Management fees - related party | (2,693) | (2,561) |
Loan servicing expense | (6,104) | (5,570) |
Merger related expenses | (6,307) | (47) |
Other operating expenses | (15,484) | (13,744) |
Total non-interest expense | (73,955) | (64,793) |
Income (loss) before provision for income taxes | 37,628 | (59,453) |
Total assets | 8,016,955 | 5,270,050 |
Corporate- Other | ||
Segment reporting | ||
Interest income | 1,668 | |
Interest expense | (2,257) | |
Net interest income before provision for loan losses | (589) | |
Net interest income after provision for (recovery of) loan losses | (589) | |
Non-interest income | ||
Net realized gains on financial instruments and real estate owned | (126) | |
Net unrealized gain (loss) on financial instruments | 1,197 | |
Other income | 45 | 99 |
Total non-interest income (loss) | 1,116 | 99 |
Non-interest expense | ||
Employee compensation and benefits | (891) | (742) |
Allocated employee compensation and benefits from related party | (1,911) | (1,125) |
Professional fees | (1,242) | (1,407) |
Management fees - related party | (2,693) | (2,561) |
Loan servicing expense | (39) | (32) |
Merger related expenses | (6,307) | (47) |
Other operating expenses | (715) | (698) |
Total non-interest expense | (13,798) | (6,612) |
Income (loss) before provision for income taxes | (13,271) | (6,513) |
Total assets | 1,111,088 | 234,380 |
Loan Acquisitions | Operating Segments | ||
Segment reporting | ||
Interest income | 14,534 | 16,494 |
Interest expense | (11,971) | (11,205) |
Net interest income before provision for loan losses | 2,563 | 5,289 |
Provision for (recovery of) loan losses | 1,262 | (5,722) |
Net interest income after provision for (recovery of) loan losses | 3,825 | (433) |
Non-interest income | ||
Net realized gains on financial instruments and real estate owned | (1,493) | (739) |
Net unrealized gain (loss) on financial instruments | 897 | (9,423) |
Other income | 1,183 | 2,336 |
Servicing income | 21 | 355 |
Income on purchased future receivables, net of allowance for doubtful accounts | 2,317 | 3,483 |
Income (Loss) from unconsolidated joint ventures | (809) | (3,537) |
Total non-interest income (loss) | 2,116 | (7,525) |
Non-interest expense | ||
Employee compensation and benefits | (1,485) | (2,833) |
Allocated employee compensation and benefits from related party | (212) | (125) |
Professional fees | (786) | (235) |
Loan servicing expense | (1,751) | (1,365) |
Other operating expenses | (2,364) | (6,245) |
Total non-interest expense | (6,598) | (10,803) |
Income (loss) before provision for income taxes | (657) | (18,761) |
Total assets | 1,121,590 | 1,209,617 |
SBC Originations | Operating Segments | ||
Segment reporting | ||
Interest income | 39,693 | 39,269 |
Interest expense | (24,998) | (25,627) |
Net interest income before provision for loan losses | 14,695 | 13,642 |
Provision for (recovery of) loan losses | (1,609) | (29,828) |
Net interest income after provision for (recovery of) loan losses | 13,086 | (16,186) |
Non-interest income | ||
Net realized gains on financial instruments and real estate owned | 5,565 | 3,649 |
Net unrealized gain (loss) on financial instruments | 3,033 | (6,491) |
Other income | 1,288 | 1,283 |
Servicing income | 726 | 532 |
Total non-interest income (loss) | 10,612 | (1,027) |
Non-interest expense | ||
Employee compensation and benefits | (2,252) | (2,710) |
Professional fees | (323) | (338) |
Loan servicing expense | (2,052) | (1,580) |
Other operating expenses | (3,916) | (3,457) |
Total non-interest expense | (8,543) | (8,085) |
Income (loss) before provision for income taxes | 15,155 | (25,298) |
Total assets | 3,128,924 | 2,704,301 |
SBA Originations, Acquisitions, and Servicing | Operating Segments | ||
Segment reporting | ||
Interest income | 15,432 | 12,471 |
Interest expense | (9,207) | (8,513) |
Net interest income before provision for loan losses | 6,225 | 3,958 |
Provision for (recovery of) loan losses | 355 | (4,254) |
Net interest income after provision for (recovery of) loan losses | 6,580 | (296) |
Non-interest income | ||
Net realized gains on financial instruments and real estate owned | 4,900 | 4,262 |
Net unrealized gain (loss) on financial instruments | 514 | (1,082) |
Other income | (1,960) | 295 |
Servicing income | 7,782 | 1,074 |
Total non-interest income (loss) | 11,236 | 4,549 |
Non-interest expense | ||
Employee compensation and benefits | (4,561) | (3,910) |
Professional fees | (380) | (289) |
Loan servicing expense | 102 | (335) |
Other operating expenses | (6,285) | (1,559) |
Total non-interest expense | (11,124) | (6,093) |
Income (loss) before provision for income taxes | 6,692 | (1,840) |
Total assets | 1,983,098 | 703,331 |
Residential Mortgage Banking | Operating Segments | ||
Segment reporting | ||
Interest income | 2,044 | 1,317 |
Interest expense | (2,328) | (1,585) |
Net interest income before provision for loan losses | (284) | (268) |
Net interest income after provision for (recovery of) loan losses | (284) | (268) |
Non-interest income | ||
Residential mortgage banking activities | 41,409 | 36,669 |
Net unrealized gain (loss) on financial instruments | 15,355 | (16,438) |
Other income | 15 | 60 |
Servicing income | 7,106 | 6,136 |
Total non-interest income (loss) | 63,885 | 26,427 |
Non-interest expense | ||
Employee compensation and benefits | (13,588) | (8,741) |
Variable expenses on residential mortgage banking activities | (15,485) | (20,129) |
Professional fees | (251) | (287) |
Loan servicing expense | (2,364) | (2,258) |
Other operating expenses | (2,204) | (1,785) |
Total non-interest expense | (33,892) | (33,200) |
Income (loss) before provision for income taxes | 29,709 | (7,041) |
Total assets | $ 672,255 | $ 418,421 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) $ in Millions | Apr. 15, 2021 | Mar. 31, 2021 |
Subsequent Event | ||
Liquidation of Agency RMBS portfolio | $ 1,400 | |
Extinguishment of indebtedness on the RMDS portfolio | $ 1,300 | |
Subsequent event | ||
Subsequent Event | ||
Liquidation of Agency RMBS portfolio | $ 387.4 | |
Extinguishment of indebtedness on the RMDS portfolio | $ 349.5 |