Ready Capital (RC) 15 Mar 182017 Q4 Earnings call transcript

Good day and welcome to the Sutherland Asset Management Corporation Fourth Quarter and Full-Year 2017 Earnings Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Rick Herbst, Chief Financial Officer. Please go ahead.

Thanks, Jessie [ph], and good morning, everybody. today. us joining for Thanks

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

call as will in measures is which evaluating in the comparable substitute statements financial a considered measures accordance our useful we operating directly GAAP company's measure non-GAAP be performance. These for GAAP. these our During measures, of today, in A we reconciliation the should to prepared be or believe with available most isolation can the not discuss in our earnings supplemental I'll release in and it had section information, release fourth Sutherland over Investors earnings access CEO. XXXX fourth have And the quarter can Capasse, that site. be quarter with both and Tom Web to everybody of was of information provided. the us, now, hope our the the XXXX our we By behind found that to supplemental turn

Thanks, Rick.

the as our XXXX In our full-year financial for this quarter and progress during we on to fourth first the full-year XXXX, leverage. significant our public pleased are in with results have business We’ve discuss morning plan successfully operating this now XXXX. financial We executed leverage optimize on company period. made completed focus our to of strategy and a

the with the Rick, for would over highlights to results, of the touch on go to I it a and turning full-year. quarter some few of the through like to financial Before

$X.XX the a ROE Of share fourth representing a core in to the of EPS position note, $X.XX X% about $X.XX in two third the per On earnings compared were XXXX. growth. last row as metric were earnings sheet per GAAP the Firstly, we in our share quarter in for this balance quarter. quarters to improve basis, quarter has been our the last quarter,

the of that rates, REIT declining. raising has last has Secondly, the FED six the over months mortgage been values been

in adjustable will rate basis each short from on rising we detail rate rise interest this on additional Rick loans, equity. provide LIBOR but of should we realize point portion funded margin with an value per asset movement. of are a XXX net margin in gross estimate the held asset moment, expect expect a our only volatility share interest net by investment pre-tax note, On to Sutherland. also XX% between we in We KBW's valuation is are example mortgage a benefit over those and In is For positioned exposed. X% by in have that consists environment. this and this interest REITs from rate where indices of primarily impacted negatively not Sutherland portfolio the believe at rate period. is mortgage believe well We weekly the residential to rate scenario commercial mortgage a XX% and due with since that rising is negatively volatility as increased with book $X.XX. subject our REIT increased rising for book mark-to-market scenario value most diverged are related This case perception REITs a that less declined rising --

priced $XXX and origination basis issuance balanced and our [indiscernible] primarily pipelines of second ROE our was SBC point deployed the XX% acquisition million recourse as sequentially deployed to tranche the declined, in robust. end in January, SBC just opportunities. space of which This versus XXXX three capitalize at notes asset excess the we we the new occurred has debt million tranche for an demand priced raised the on one balanced the which year. strategies and commercial recourse million in of $XXX here markets debt which in to note, originations a securitized over strong. in XXX another capital supply robust approximate funds small seen stage serial XX% Thirdly, half reduction acquired core continued our debt. the basis loan our we’ve throughout capacity into in drag quarter. investment evident XXXX, acquisitions. credit evident interest in the of quarterly had this mortgage off fourth cycle, reflecting economic Throughout for is we've tightening were facilities products At the spread. [ph] part our some trend reissued remains non-recourse tightening. offering quarters in demand other a bullet sequential unlike of This early resulted to from of cash a reduction Fourthly, $XXX commercial the additions is year-ago. first in basically this in year Fifthly, at X.X%, first many Of forge of of These This record loan small cost this of of remain spread the comprising of consistently XXX point originations loan

loan point securitization XX basis week CMBS high mortgage-backed commercial our record our we priced AAA example, the $XXX small X with versus favorable transaction market ourselves large commercial For over at million last offering the legacy for points balance quarters under to CMBS avail in transitional the AAA rated or asset, product conditions. basis expect XXXX. securities In the current fixed-rate to CMBS a CLO two close and first next

will and on result totaling to loan expect established on and book over fund executed an debt funded Asset pristine. completed match securitizations originated six, its billion predecessor since on private servicing rates, the recourse in -- XX now market delinquent one We Waterfall Sutherland is non-recourse of and with advance CMBS conversion debt. $X number, Credit of review, offering in To and retains higher the securitized by all loans metrics remain XXXX. Sutherland on credit. note our servicing Sutherland Sixth -- funds, issuer Managers. originated having the of lower loans cost all these

total loan origination X.X%, year-end, delinquencies and The and small portfolio out Mac As with delinquencies totaled book delinquencies of transitional Freddie delinquencies X.X%, broken than loans fixed-rate from of origination business in balance X%. X.X% our SBA no respectively. less our experiencing commercial of had

repurchase announced our a Board yesterday, as Finally, has stock $XX million authorized program.

and assets, While to accretive sufficient fund our shares significant we value. shareholders. [ph] our high-yielding purchase when fixed additional purchasing discount are ability existing to new of to a confident need book equity if compensation recognize benefits continue the to trading stock to in its at stock purchase sufficiently to generate intend We we may plan

strategy. Now the a our commercial property small the market, continued few on comments underpins secured strength lending which senior in balanced

-- supply, like resulting New This experiencing balance, the very [indiscernible] at in to in balanced new XX in XX% square small construction market. similar feet is million the tight fourth balance we small pre-crisis levels. below housing quarter, are

property As nearly a year-over-year. result, SBC rents quarter attain pre-crisis prices levels increased fourth in X% and the

rents, SBC strong across remain at credit these with X.X% flattening vacancies all With rising sectors.

so large real past, to housing Now as market, the less commercial market. the SBC of drum the we’ve noted balance in market beats the in estate the

loan loan small XXXX, supporting balanced in large and billion XXX X% estate originations record five a XXXX for SBA Program For wide investment of the commercial of of also quarter year. fiscal are Meanwhile in commercial example, balanced be up the is first continues the authorizations XXX real robust. market billion to fell sales SBA while XX% XX% third the for up year-over-year SBA months XXXX.

X% the decreased for X%, non-bank few the same SBAs lenders increasing we and The increase the bank opportunities for are has another Over up period, next by of budgeted expect authorization the year number lenders. year. this

now to real credit versus compelling estate, believe that X-year diversification with Rick continue to discuss balanced commercial investment direct to to going strategy. handoff is balanced lending on commercials and correlation financial current senior We that Sutherland the in small for large portfolio lag the our results. secured focused cycle housing offers I’m

going full-year fourth some Tom. highlights quarter Slides included of new that as from new new for loan particular, on of million acquisitions. which the portfolio slides touch well supplemental of depicts as few information is originations and Thanks, the the a on loans X representative we you note summary assets I’m the the some highlights quarter that and both X in our received. for source the to a to of in XXXX, added $XXX ability

revised you metrics the is mentioned of The segment, as our yields. this from additionally, assist X, our loan consistent our production quarter modest new looking in prior our this quarter, gross the loans these the some in throughout data declined of were Slide in leverage today include whether yields ROE. on the SBC although segment lower this sale. by depending our to or some off Administration there resulted to segments. quarter. gains core I to the Business increased decline offset a business, a gross Mac due and Origination the consistent these -- Six Small in product trend gross into a efforts in reduction each the portfolio. gain As $X new quarter. billion SBC businesses. for this decline for of includes XXX trends reasonably in to loans type. corporate up the on debt through the we’ve closed offset and guaranteed modest the segment as originations line XXXX, are in from quarter XX% loan paying gains origination SBC of above individual slides, partially The components additional gross million depicts million in segment of first bit in depicts trend SBA our the quarter grow million the experienced ROE in summarizes from well sales. you're we’ve made The X definitely the shows Particularly longer-term in third year. the in Freddie return was already new at yields these Slide earlier. X Slide leverage understanding the $XX this Similar equity. by the as to regarding compared of originations was modestly Loan information sales leverage in we by quarterly growth full-year, originations offerings X continues allocation -- platform and and the originated additional increased we quarterly Slide the covers The XXXX. origination individual items first XX% MSR segment. our Slide be We’ve corporate our our offerings some on The to $XX XXXX. in allocation debt fourth write-down slides well loan an shows drop And modest new with of loan The GAAP is the and

shows with of on X portfolio this quarter-over-quarter. some can grow pipeline information acquired we be SBC and Our small returns the business third-largest quarter on of [Indiscernible] to nature asset continues saw to asset. in levered and now segment the lender few summary the that some the some to Slide a the returns outsized our the non-bank remain the lumpy yields in Due we’re portfolio, administration net portfolio. and in acquired acquired interest margin consistent legacy our loan this country.

We another most are the for quarter, new quarter $XXX $XXX acquiring as loan of year. this became of added fourth we loans so about million acquisitions of already earlier, accretive of excited SBC as we've public today Tom since of company, particularly mentioned and any million a in the

January, mortgage $XX Slide year's power million today the will here strong of portion about business. from permits. pipeline million. we proceeds we assets note have selectively and last a as remaining the we borrowing $XXX of acquire all summarizes The remains more XX, offerings residential liquidity we and As of in our deployed raised and

to the environment. Our rising value been servicing increase rate retain on strategy which sold, has interest in loans rights in

the in of an portfolio fact, resulted increase over $X in of the servicing In million. value the XX-year rise January treasury the in rights in

we've environment. significantly While the that not a changes value, new simple rate in is our within fair a which done market it include we these one XX and Slide rising securitizations do in core the Sutherland. fact increase is summarizes a assets earnings, value significant have

platform our across with secondary line, product our enabling acceptance evolved, As to enjoyed market fund our debt. us has non-recourse match we assets greater

that last loans the outstanding within the floating acquisition. loans securitization close As some we bottom tight were distress The of these we’ve We Freddie include enhance believe fixed-rate represent the loan acquired at fixed, of assets a many and securitization. it securitizations is acquired and spread, tom will or line. closed the will another very of securitizations of SBA performance indicative while our further this originated, mentioned, which state another -- time Mac and credit priced of in we today that week,

product continue information Interest interest adversely some of no see, be delinquencies. originated In our been rates it investors. portfolio. added of the can sensitivity XX, has minds about has to Slide on to the additional you As newly provide the rate

left-hand see portfolio geographic funding new include impact another show positive a reflects one As and is of quarters the you to The ago, as our the -- our diversification income. originations. based of loan have does interest the not minute servicing interest continues the our on XX lien presentation on our a here chart, on can collateral on diversity I adjustments in capital rising loan rates adjustment of the previous of net as numbers mentioned first any mix lower impact pool reflect across valuation XX showing our rates our Slide nor positive potential Slide the rising interest new SBC This impacts portfolio on net structure. the positive value year-end. on portfolio to types. as loans of similar margin

progress improved [indiscernible] note funds we a quarters convenience from on pay our target will the facilities calculations profile as facilities we which facilities. such reinvested. reliance for remain with fully down we long-term so for kind slide [Indiscernible] progress ratios warehouse ratios included year. be warehouse leverage the proceeds laid year pleased last XX we’ve lower have the liquidity could the Slide charts used placing summarizes to in two mark-to-market Slide objectives significantly our are our last note were These investors actual those lines the offering by to against You our leverage debt XX, in it's and review the out your of range. made within the less and and XXXX. were our

to thoughts turn Now I questions. we Tom open-up final before back over it some for for will

we loan origination acquisition accretive growth also in executed and our a XXXX, In use loan originations capacity debt business new to successfully Rick. in Thanks, our the recourse plans loan with record billion X both fund to reenter market. franchise

are this be in more pleased there we we While is realize with progress done. made particularly construction, we work year, the to portfolio

same capital efficiently optimize our shareholders. on deploy for our and once product We to continue it expanding across and be up open generate to Operator, we efficiencies our will confidence again to ready we process lines. focus for At move our like forward, the in now marketing and growth support. forward our for our will of higher application platform As order our questions. and the cap to operations all continued look in the loan returns technology, awareness origination for possible in for your franchise in company the time brand continued our you we thank we as your

KBW we will Thank question Instructions] And you. Capital. take [Operator Jade Rahmani first our from from

Thanks very much.

additional you lines, In that product adding volume transactions, that strategic Is anymore just M&A originations? of expand thinking platform, to can ramping the on terms the of objectives about? what you’re contemplating color is give or

the affinity we’ve grow business. specific programs. so the objective one -- basically we’ve some That's is aspects -- more buildings latter. the existing hiring the focus products the say of we’ve It's a for the loan on to the that. new -- core really existing to another of people expand continuing officers, taking area it's and hired I’d -- where other the that’s And

that that, That another and loans a use to we small CMBS which provide million -- us context in the balanced from methodology underwriting base considering to commercial i.e. a affinity the a and same conduit are respect $X bank small its than when balanced million, up the and buying will define with the $XX a and be we addition program million In just between clear as conduit those commercial $XX using conduit. market into to channels. is small of commercial that balanced chain and it $X CMBS traditional with food product million packaged sorry,

primary the our are this next in So of the quarter objectives. those strategic terms focus quarter and with

And quite net the the In overall generating yet and that existing the efficiency XX% Do those company and which gross are of the significantly of necessary a company's ROEs scale pretty operating ROEs drive you view the possible to seems XX% higher? net ROEs strong. terms it drive range, structure lower. significantly to function is as the base leverage that within capital in will

I capital think it's between Jade. possible, raising Without XXX the and we employees Ready Cap have subsidiaries. GMFS

a So expense there's to certain component that. operating

add of been to focus year bit Our leverage. little a has this with assets

I time. -- likely more will you line over grow bit focus see the little So a the think top

over technology come of the things, come investment should We growth that the is operating would in going are But on big making real down bit. and time think line. in a the some a I top

there help of ROEs? it? there to to any at terms net in is reduce revise the bolster possibility or it G&A, management any is And the agreement And opportunity rationalize to the all

and first to the there what I technology. On refer to part, with opportunity are that’s rationalize

technology Now we in new the hired technology a as -- CRO there's person chief well the year. technology, the and in know you earlier as an investment

a So cost can -- only obviously a same some take or we But benefits, those to but do volume of our structure. that little the realize it objective, with overnight. so happen doesn't while lower more little that's

hasn't when initially [indiscernible] struck independent mean, As we really confirm up something I merger. the privately an that management come XXXX the don't consider. the did that’s in capital the I board when issue, agreement, -- raised as for might we that management and

ZAIS. [ph] raised with merger We have

we’re out that’s commercial of there where -- most REITs. think to which structure part the part over of mortgage equity, fee capital now other think comps and X% $XXX initial in of So million I the we have raise think of favorable the terms is our I as of is the and I merger ZAIS the

over stock, will the hurdle, of structure XX% one X over at of take of and been X, half is incentive [indiscernible]. only the most have Our in compensation least committed XX% we’ve it's comps that to

I think I question. answer -- your So don’t does know, that

it I capital overall the relative needed the that to absorb assets G&A the base I order that the does. balance seem those is originations from Yes the mean, grow perspective to to volume, amount issue just think sheet to grow costs need in outsized my size. -- all company of on the

changes comment market, see Just in recent given to pressures in appetite, any on spread you if could any borrower yield wanted compression, trends, interest-rate volatility? the

a not right. that it highlights That’s pony, -- we're one and question the trick because fact good

three the basically investor fixed loans. rate have then product, business. transitional this We small the course could the silos, the acquire fixed Mac, which And and we are Freddie nonperforming balanced re-performing and loan product or of

of volume. in in to So environment rate, be any ROE there's capital as tend highest happened the highest terms we it it great fact able where reallocate and the because origination what’s to the into that interest with highlights is rate we’ve sectors

off a So lows. volume aggressive is above market compete fund with points almost margin spread and so And in this what’s they it more the summer with with of basis have now seen in in we rising the XX-year the We deposits, CMBS that happened rate the increasing significantly. banks reason environment. XXX to the we’ve see is depository conduit fixed-rate compete product more at move the favorably for they tend the -- rising as -- to tends XXXX

would due they of increased that is investing because properties Mac Freddie before industry construction investment significantly in sponsors say or new be I loan with. we is The and volumes the in to but focus new some to private a transitional rise on competition entering classes asset that, where sectors The which newbie's today. lot There's beyond lenders of spread increased in differentiated and business. is also not that has familiar are So that buying sales increase. rates there's some of the the able of multifamily compression multifamily as are to one area tend

small rate is X%, some from X% just have -- SBA I new business. had an to of in -- we business economy. projected versus businesses that its be and overall compression in X% floating So, think The its GDP business terms growth is spread

-- in book. interest-rates we’re what of impact seeing driven is the interest-rate less that So market sensitive, so is that’s terms on our of

anything just uptick And lastly what on credit delinquencies the sequential related underlying as that SBC well comment in on trends. as or seasonality Was SBA you delinquencies? that? drove Can

of see that Along the SBC, delinquent loans status. have went bucket half as December [indiscernible] returned you of those to we had three Two the there of performing XX.

the other we’re working one So still with.

again, three its trend. a loans So, not

portfolio. SBA loans There's and it On seasonal trend. see side, XXX legislative there really we that about are as the there's a X,XXX the in delinquent, uptick the a don’t loans

just of -- kind down see think really statistical trend they up that I don’t but and log to it's significant there. any we time, tend numbers over go

think a X Rick depending some much fixed-rate which to the comment, just will loans stabilized in CIT and X.X% the going But and ramp level it's aspect But upon given we see to expected you’re have the less you’re delinquencies to tend to and that to over the expected ranges I book SBA stabilized is probably seasoned, X%, tail loans the higher just a level, on a X% and X-year of a going And ramp between saying, add projected underwrite of of see newness they the going add through transitional around portfolio. of that because of years of see legacy [ph] are vintage delinquencies I loss what a in that overall, X.X% period. to delinquencies you’re kind business, a brand-new to the product product. of for because

the for much taking very Thanks questions.

No, problem.

Thanks, Jade.

our And question Securities. Steve next take DeLaney we with from JMP will

first Good a congratulations on strong year. morning and

that potential goal $X most the product billion which us right could for guys curious, think year? and your did in for you growth you’ve I’m XXXX. core in XXXX this Thanks. set do line and if with You you you share SBA SBC at a loans has

longer see last because side percentage. than lot to as be the to across year, hesitate rather of range the of board a growth I with be specific a not numbers it SBA going on maybe XX% Yes, expect more, growth. we’re will grow We see base, fairly million the was It's or that be of some it half too origination but we year-over-year we there recall million this in year, of XXXX quarter really it -- $XXX north -- back million the lower starting a we year origination did and [indiscernible] we will network in the million fourth I’m that sorry, … from and started expect to $XXX XX $XXX strong

Okay.

probably for … XXXX.

that, and the rest SBC XXXX it growth -- will of then growth in the On the will see levels million rate product. largest side, where Bridge certainly the $XXX that between that slower makes billion. of $X that we but And be over should up within it be Freddie. goes well component between the north and Freddie fixed then of the

Now worked the loan venture that to joint opportunities that I - bit is -- that’s that about count a it acquired. Rick. you how and Can future work on you you a pool talk Thank notice party possible helpful, transaction a did is together? with little the came a you you. together there that

Yes, debt small the this managed the acquisitions all are desk. trading of is Waterfall balanced through commercial [ph] transaction. Basically

Okay.

I billion was assets, the -- U.S. $X total roughly it three bought top think SBC in We of

an with you the community market, So pretty M&A we in work context. will, working on depositories with FDIC, that brokerage various firms to the we a have well-connected, the practice are banks if

servicer, expected did -- We -- to but that -- same over that’s likely did We’ve other favorable mid work bid together diligence the were in of very are equity that a we we budgeted, the some typical that partner what located another experienced that worked the in yes, on [indiscernible] -- private a and -- to this of So, successful in more we're a bank private already special more XX%, that utilizing years we continue we the can equity Midwest there bidder to up was with have fund. couple did opportunities. successfully some ROE. the and failure, we'd due pull and, source -- we middle the on is with pool roughly short, had liquidations than ROE -- both we one last occurred

take I was the seller? FDIC So it the

This Correct. speakers] [multiple a was

good ahead. Great. then one go right. color. you. lastly All Okay. just And Thank -- That’s --

going have ownership pool. just we was to I of piece a [indiscernible], about that XX%

Got it.

XX%? million your So $XX is

Correct.

the in Could just above to just Okay, X.X% loan on sale on Thank the average comment one you, you And was looks will forward question. you it thing. like and up got why it. in last sales, noticed margin XXXX? average Freddie expect where Rick. quarter. I be final Mac your be gain might on Thanks. was it going my fourth in it That to

that that in loan The -- sales the equity segment, that’s the on percentage, gain sales. based Those not loan …

Oh, I’m I see. sorry.

… that or about more remains sales, on so. was running average fairly of on a stable, but volume that they’re X.X%

it. Got

you didn’t on Yes, comments. understand for -- I that the Thank Okay. did not was it that look [indiscernible]. margin the equity on your actual the

Thanks.

Valentin Point Scott will Research. we next Compass our question take with from And

for everyone. Hey, good my Thanks taking morning, question.

Hi, Scott.

guys a XX% on over call negative going basis will you guys know we dividend a yet first and the declared carry to ROE asset lower you think the just you to I were corporate about over you of a I target forward, the if X%, XXX guess, should which $X.XX. point think put think about going dividend, then quarter was tax benefit XX% regard debt sensitivity the you think still there. Just I just little rates. that wondering I from benefit dividend And which know bit rising I how that have And I forward, rate you

it the think then you kind dividend kind your of mean I guys if the there, we a is right portfolio? the the Thanks. ROE know you of about ratio. that way think earnings [indiscernible] about fair have for finished of assume with power is ROE that's you I reconcile at XX.XX should $X.XX on guys -- just and think a about book. to out but top wondering the XXX% put value of a XX% it? So the XX.XX have payout? XXXX with if we earnings? is How how dividend kind was And I book payout what for to I adjusted to GAAP assume book

do I it Yes. the the you little EPS $X.XX what was. -- bit own will core income $X.XX depending as to Thanks, the math be we But for to your more to Scott. on out it XXXX. turns as might relates let than on EPS net our a more last quarter paid dividend,

Board so think I we did the at And discuss level.

I will be think decision. a quarter-to-quarter it

I about raising a quarter. shy dividend gun think maybe this the little

how would We probably quarter and are topic say. the I revisit to goes going see the first

XXX% and Our goal close of flexible as earnings you core certainly say earnings. to to payout is

evolves So how didn’t want out, particular opportunity But quarter. as the an think just this at there's quarter as there. to do and strategies play we see I these

Okay. still forward And or changes kind ROE just is that then target, that going on all at of in by Fair market XX% the target conditions? the the enough. changed is

That’s goal. still our

Okay.

tax was much Okay. And rate, know guys the I lower then it quarter. this on just -- you had

I rate still past think is a Tax it number been that in rate be the payer look is a about with corporate forward. -- it are way about to the different X% tax or fair X.X% a to that going effective forward? its going using new at Reform Is going

kind did then We’ve the there of structuring Tax reduce Reform That’s bill going and reasonable. and the level. pretty as rate cut that’s that done Yes, to I to of lot think well. think that be financial around probably tax [indiscernible] that with down effectively I obviously a

in we’re think I So the range.

question. follow-up one And thanks. Okay,

leverage of And [indiscernible] debt million guys goal January, you going up left? have that then corporate was how could to? your issuance X.X the in you just much is, I think you capacity wondering Just I did you just think I know wondering $XX see what what

every $XX did of really August. I thing capacity, point drag would see out dollar the is, the is cash million out, middle we In fungible, can't quarter. fourth you and in but spent we third track raised end we a million. in some of and that of $XXX summer last and between portion in One -- June Recall so dollar terms of we’ve

now as tough alluded of all out It's acquisitions. business Just the to slug. one nature of at it with deploy goes our or to We’ve gradually Tom that that. all deployed originations earlier,

deployed smaller piece some equity, we’ve goal of forward yet, percentage a we that’s lower story. a kind That’s raise of can different all of would it deployed capital raise haven't smaller with a it. we while to available our in obviously, much million $XX basis much unless, liquidity slugs be that on going the a if So

terms less side, slugs of debt will ongoing an your was would second Scott. smaller -- question, The part raise of In we be and what in it the the on dilutive basis.

mentioned small Just of wondering of have in $XX of on following capacity just capacity so leverage? that think corporate question million, million it, then I I debt much guys know terms left and issued target how chunks the the outstanding left? leverage is you you total $XXX -- -- was

the probably in we remaining of to going Not Yes, Okay. that going forward. sorry. of capacity buying we’re to say I’m acquisitions. but us $XXX do was gives all power, have Yes, that terms about the million tomorrow, capacity

our on we bit, ever warehouse about we'd million I see like X securitization we’ve leverage we're securitization don’t and you convert we're total of over added little where generated loan. -- were unless a had that been will now good in depending never million -- closing target, the We to can million, That's $XX far. to cash or on we -- think or so where around probably We today. up on so we’re up it of $XX of we’ve to just debt, X, $XXX sold line. at million million go X On the we so going $XXX But [indiscernible] XX, that on cycle, leverage the $XXX this is versus of the but our creep X.X pretty recourse the that $XXX yes, the chart million recourse try to could, and higher keep all debt on, X, the debt the but to the year, to to -- X.X to nonrecourse don’t the three numbers, going certainly total is part this securitizations X. view but funded depending average so keep recourse hit a range. the match model keep X to going the to and always -- our think will on around X mean, in that X. be this we interest that’s in sensitivity different this rate we’re next should X than I it that, total to it as recourse in like we recourse X always be we of The little I because are bit do going to be keep to month, so mind it year has recourse that coming if securitizations sometime have to -- lot recourse

a with have Obviously, bit, numbers the capital leverage, and with if raise just ranges We point but at we're that’s that we that this funded comfortable those bring will now. our are down match model. the when we okay if

right. for color. Thanks that Okay,

Good. Thank you.

next Riley FBR. question Hayes will And from Tim take we with our B.

you officers how Obviously to Hey, on off that Congrats you a hiring you’ve in year strong to for do some really trend guys. last? year. compared loan growth this any have XXXX expenses and to talked support do of focus seems and -- just be capping about expectations will growth

XX officers loan [indiscernible] of operating business comment efficient the in the have residential ratio. it's putting very aside they the is year lending Just on the the business, that plus history, terms

businesses two where and very officers, of servicing, in now closing acquisition. much could The with the loan increase in infrastructure XX% right is could existing how loan case by XX% increase in our NIM significant model the OpEx. in probably SBA have, add we to a Turning our terms the the the and generate to we at will of they we the without look volume underwriting we probably -- NIM that business volume the financial additional we

Rick line. was point why that’s -- Rick's So tough about

of in the will example New add to base new reduction cost you see as OpEx ideally the fixed that existing underwriting ratio -- -- and support officers see a loan a Jersey. we in is closing. in business terms SBA will A sequential You reduction good of the

purchase -- down If and you had their which staff, because XXXX CIT -- of was shut in that portfolio business origination. recall, the the which had servicing they

place rehired where there's but we you executing we 'XX you on that’s very in see XXXX servicing team plan, fact lot support origination. with -- ratio oriented a put OpEx production and now the their and the a in they’re that reduction business in of in have no rehired staff strong management -- of will a based senior So good example

team very our there's ratio to with OpEx Rick managing and the So, very, But, officer that obviously SBA origination what is and working financial of ramp we yes, is generate are in, be sale new $X yes, is, the on our cognizant we interest and it margin significant rationalize loan definitely CLO of as business. but the we if market. million at in gains $XX to the a business million that should in you for originations business, example which net least your year doing secondary SBA think

now, buyback has it just And of helpful. then course value program, evaluation trading of growth when currently improved you decent approve with prioritize XX% as it. your Got as bps kind right of program? That’s especially at to the versus do Thank over is over relates -- buybacks stock asset book the how since look the a Board week, to the probably the which you.

trading you’re where $X about so a or was now. it about When the Board than at talk we [indiscernible] right. less stock Yes, the meeting is

need time. some years, in couple of we open go have an [indiscernible] that over plans that they’re that up equity appetite we more but a be compensation paid those, purchase to So stock to satisfy at out do frankly believe levels to its probably fund, those repurchase won't accretive the stock stock obviously. for will we because market We will more the

working for the us. our the it’s advisors of timing So with And on now those bye know good purchases. we we’re

kind between But I in still think when constrained obviously, and that shares. capital do the there's supporting [indiscernible] to a realize stock is preserving but we we growth of more aggressive not purchasing a just line short-term. will at in general, more but it's [indiscernible] -- capital forward be and of stock-price fine in stock-price we double supporting of a are general retaining parameters, Just the and the benefit going between the it's the a -- discount,

you. Thank it. Got

take And next our Patel from question we Farallon. will Raj with

Few assets. the question guys. turnover questions. Hi, just of on One

trying the that retained assets, the rates If I’m gross -- if the whole into for up as interest XX-year should now you you naturally about that how the that a at and XXX and move about each least year just points XXth and then think with translate gets mid thinking over? with redeploy the ROE long-term basis much to book just turns XX% asset from are where of the -- target

one the about that, one at origination turns business. over of is small in if The The to REITs that And Cap year, almost rigid But or X.X X, years. duration very probably of spread focused assets you if -- a in may years. duration is of the SBA shorter years. really The to Ready Rick -- balanced our business has ROE. X lot larger -- product the much there assets and quickly. at that of the loans is X probably balanced what but us range, larger the [Indiscernible] that duration assets there book -- require repayments of The you commented have and X same our is duration at a people a -- have look think business Mac that so on And impact that -- on if of X.X, fixed is and loan are and so transitional X.X are commercial it X businesses, that long-duration. Freddie I see exclusively assets duration most a this our relatively acquired look has SBC, our important SBA reinvestment the Sutherland silos compression. of That you of duration that years. has -- same obviously, in -- that about the they’re right loan, market, on now short maybe which

I [indiscernible] of in as point two -- business. … a Rick, XX%, acquisition the -- the was and point mean capital. point significant having net each invested tend basis of it the -- is at two loan -- as think duration, of transitional a have a maybe it to we don't issue way about I We based gross short silos, have redeployment of on two waiting a roughly the long saying that have if equity duration think the our you those So of look it the of XX% on equity in big

Loans at $X.X billion.

$X.X … billion.

rate, probably XX% around So year. constant had amortization prepayment per in that's rate the assign of area to if I a or

Okay.

freights up, half So flows through go gets XX% equity maybe of maybe the over naturally when so of of that, half that turned [indiscernible]?

of off That’s Yes. in important think at of short rate, I of -- transitional most -- the the more funding rising to opposed amount reporting the think rates, prime, commercial impact the on LIBOR of I but base loans current book as impact are a that higher balanced rates looking But equity the is correct. rates. prime mean The but reinvestment. we of LIBOR, the rise, of are small terms on or it's of SBA point really share more based that reinvesting loans the you’re then now if

Got it.

this, And two have that’s upcoming the priced, addition that Okay. securitizations Is in I you’ve closing missed already one mentioned, then might that right? you today. to

do. We right. That’s

the Okay. -- warehouse with And warehouse? what what the as on is you get -- your expectation of expect versus benefit spread we the

between And of cheaper generally general. basis little kind XXX rate XX points advance We’ve then been well. in running and as bit higher a

Okay.

rate. X the point from advance to maybe X Yes,

to kind financing -- having where of get the the cash, just in efficient -- that’s some That’s less good. then Okay. short-term. more we And okay, from drag addition in

nonrecourse. More efficient, obviously,

last quarter Right. spent know might And you call, comment from you fund of drag expect of QX, from money the bps the what expectation in then, all have actually the comment just I from raisings? the specifically, how spent XXX million. you can because a think QX? would drag confused I and much of I last number kind year But what’s $XX some on some -- of your that in been

deployed we benefit from redeployed And already be as in the XX get funds than it should in because last increment. year's terms and mentioned we more spent less earnings all the stream that its be I -- I first quarter in we much the through of earlier top now the probably would the less, benefit offerings year. -- the basis should dramatically that think just points -- drag. of quarter It a first on from

rates, does accretive old but that the saying XX so the at fund it bps current okay, than new the -- drag? fund not be you’re less actually But [ph] on should a rate

Correct.

Okay.

Correct.

get you guys Look target. to into Thank All very much. you Okay. right. forward guys your Great.

Thanks, Raj.

Raj. Thanks,

And we Investor. with our Private Matt, take Robert next will question

Rick. Tom Hi, and

I’m you in As private a … investor know

Hi, Rob.

guess you … I’ve from firm you as the And you mortgage to transition I I and an to statement, in I’ve where what that trading think confirmation began how secondary Sutherland, going even began. observed with want are and into market I a get morphed before you a think I investor back you as trying seem initially. on guys. I see -- just from been secondary were company you the and Is my I market on hear then I into dealing at focused to public. which now what go to And correct? have actually least the

a Yes, fair characterization. I that’s think

deal the captive desire franchise flows from to business with company due more grow a view capital to a the value originator trading company, acquisition really just and step opposed lack that our of and origination We captive did back a franchise. public Our as to company. has

its at -- have ability public our of raise debt think company. where benefits expectations and those as as the seen for good just the we’ve been We some volumes to real has of of acquisition point franchise to us. to have a and it's opportunities things throughout to a -- guess, rates as compared capital those have debt exceeding And We’ve kind company, One, raise company, were I now standalone, would two recently of opportunities. us a those the So private public advantage advantage by able time. happen where grown its our take we to to virtue the that take reasonable producing to but one happened. thought of capital I didn't capital a we as being the allow a we

the So the to step we’ve back benefit acquisition of of into been the side able that business. is

to originations will capital with take able assets, primary focus manageable our source of be and think still a but sources. our we're the additional I

credit Where time. thing -- a like are we appreciate When and I in see did of [indiscernible] way your community RTC out, support more the we’re you’re XXs to we thing, in assets, out the the we point we continued question [indiscernible] banks and is going obviously, buying about in other basis. started days, your macro -- were were days I just one the would XXs. Robert, The the all to where in think cycle. the back

So where are lenders. finance nonbanks years cycle we’re, direct and we into are now companies X handful of in nonbank only the there's that space, X a our years,

the to point where that would is acquiring over reallocate the because pivot our originating the then rather the that franchise it ROE. based highest -- we start we’re just cycle. capital available. But focus where in in have So more have economy where than last evolution of That of acquisitions that's less the opportunity, to capital that -- would with The how origination start our on since key to and the said, flexibility turn, the you if loans watch reallocate base to crisis the natural on credit we the loans being because the we equity there's strategy. we

the were what origination foundation point SBC better a markets. market, get the Yes, it. mean, seen able secondary service acquire and in major to from I Tom, this in to be than the consider able I’ve And you’ve that I think the it's I at in you’re ROIs the you're past, established market, what ability in great. when much to to time,

back into that? So Am I’m happy correct to I that you’re it. see on

ahead. It's like [multiple speakers]. Yes, go

Sorry.

that to If of broad a small such would secure, stock of And that's currently XX% expect mortgages, loans only have that potential. and that’s going foundation you have acquisition me a dividend but yielding get that on looking able toXX%.When XX% if that ROI, we that’s think to business. XX% is forward we case, be the the growth be a just to a not relatively higher amazing backed portfolio I by is it's based would requiring a other like a forward

plan. our certainly is that Well,

of the investor's Am gets I $XX view of dividend to this forward? is going especially I in when those regards point the mean of would we What stock undervalued course range. with an want security risk something the down missing are is seems here? of from to way you it like dealing the which buy some with why

No, I missing don’t think anything. you’re

we and $XX in on we that’s are put agreed, think why the program. I undervalued you’re point. we buyback

the originations both opportunities the We in are of acquisitions. advantage taking and

our to in a Our if group, should double-digit get believe, as get group then to we peer we is trade line around whole tell, where our X.X% ROE goal is we We double-digits. time will the at ROE, right. believe ROE, up we’re X% above or there, or peer

quarters Now a as we’re trading We [indiscernible] public still little a company. new a and track still bit showing below record. it's relatively company, four

quarter now. adding from be months we Next two will

and agree we [indiscernible] but So with thesis. your --

market Well for good dried acquisition to up. And as and as the your hopefully more keep work. you hasn’t improving looking the thank ROI buy a comment, I’m the up in you help market final and that forward

the question them. are opportunities Those support of just there. really to It's having a capital

your for Thanks time. Okay.

you. Thank

to turn conference the back to I’d additional It any for closing appears management like questions there are no this further time. or remarks. at

continued and appreciate forward our We quarter's everybody's support earnings call. next look to

today's you that conference. Thank And participation. for your concludes

now may You disconnect.