Ready Capital (RC) 7 Aug 202020 Q2 Earnings call transcript

Thank you for standing by. This is the conference operator. Welcome to the Ready Capital Corporation Second Quarter 2020 Earnings Conference Call. [Operator Instructions]. I would now like to turn the conference over to Andrew Ahlborn, Chief Financial Officer. ahead. go Please

and you operator, morning. and to thanks Thank the good call of on this for those you, morning, joining us

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

earnings can Investor the second information. Capital financial we XXXX plan presentation. operating release in website financial materials results non-GAAP a directly During have which quarter quarter our a press A comparable in with GAAP our can our we in performance. our found the isolation substitute is these of should Yesterday for the accordance of XX-Q along in information supplemental believe release most in company's presentation reconciliation and useful to These be issued with supplemental our file second filed not been the These evening, or of Relations results XXXX section we this call, the to be our measures available measures discuss as with considered our GAAP. with We and measures, be prepared the will measure evaluating Ready the evening. SEC.

I Tom our of Zausmer, also are it CEO. joined over Credit, to to Adam Capasse, addition In we turn myself, on call. today's now and Head will Tom by

continue We the appreciate times. and to you Andrew, what joining Thanks, unprecedented and be challenging in good call, morning.

your and and help safe are -- ones that thoughts and loved you healthy. hope you with remain Our

equal much businesses or Phase was phase of adept pandemic, liquidity team as of large Phase balance environment, had to response greater greater business defense. with the XX% current the XX-day lending during loss chart historically second a value was with the We the we from COVID productivity. we aggressive our our path book rate at peers. we've process. first management Armed holistic with completed versus managing the diverse X adapted for $XXX our preserved work X a quarter book readily to million operations, via harvested to is In asset demands the our over the strategic mitigation value preserved remote X management today, As have with and over review only quarter, delinquency forward. offense. of X.X% decline X% commercial liquidity a of undertook

our lending of including lending We to also products. expenses segments third introduction will early implementation were reliance acquisition loan and the continue Operating government-sponsored to the relaunch and a volume CRE with businesses, year-end. and planned Phase is quarter our X from in reduced on technology. line of expand CRE plan greater new reduced

gain Paycheck Phase Protection In leveraging of the from redeployment normalized or restore to net our opportunities from post-COVID businesses, by quarter, acquisition achieved current lending resources We and on substantial lending record X the our objectives CRE allocating core will results the government gain we and combination including our Program, businesses. earnings, PPP. sale cash a interest liquidity sale excess to of our comprising margin on into income seek robust and

and by increasing management focused our liquidity balance our on we decreasing and small existing commercial Additionally, the of sheet liabilities. mark-to-market portfolio loan balance de-risked asset

government-sponsored Our posted businesses three quarterly results. strong lending

was other purchases demand and quarter million approximately supported This realized than history, an for by by larger volume, home further First, a record $XXX our $X.X residential billion GMFS, both margins. environment. company's attractive originations, supported mortgage banking record in any a refinances strong rate in segment, the in

Freddie originations XXXX Freddie quarterly XX% with our $XXX experienced Mac Second, multifamily record year-to-date business million reducing origination total supported production. also points, representing by second multifamily quarter, of of basis XX volumes rates Mac through the

to in business continued loans. addition SBA new our efforts, originate PPP to X(a) our Lastly,

that by SBA be limited the loans Although both $XX fund quarter. managed the operational, in requirements, program we which and million the require businesses to of open X(a)

On the the $X.X businesses helped loans. over through of of PPP front, XX,XXX our company origination billion

owners we said of our time staff they during a doing to internal dedicated to efforts. technology, and call, formed to most. everything As our various small a quarterly we on financial do To could these it we majority when the new committed partnerships needed business we across support provide this, developed first America to

We and borrowers. intend to second through proposed Act. times so-called organized Ready programs how difficult includes Capital CARES evaluate will assist to need PPP $XXX can X these The for the in existing continue loans in legislation under billion to participate businesses

areas. low small bill receive underwriting, to segments, relative superior term performance from In borrowers reflected peers. balanced this COVID. proactively guarantee. in would the business along difficulties for sector by Eligible relative commercial stronger and addition, focused is SBA low-income our credit X(a) facing on acquisition The to program eligible arising recession, balance fundamentals would targeting new SBC interest years, of small be entering create in loan COVID our of large lending we engaging In the the our with XX our businesses damaged XXX% the supported with a a loans conservative

portfolio X the increase X.X%. scale X scores As of X.X%, loss. with portfolio loans representing from delinquencies a in of in the year-end the of X, of risk mid-July, a of on the principal X XX-day the delinquencies to portfolio with each were scoring to by highest monitor total risk in slight We CRE plus loan

loans in X X.X% from the to onset bucket X the of the COVID, increased pre-COVID. X.X% With have to portfolio of

levels. approximately reserve in current at of gives history the this loans will management not comfort SBC Our us loans, problem recession, resolving the in losses last extensive including X,XXX exceed that time,

portfolio of the significant largest X% the diversity the the of is representing with portfolio. mitigant, under a Additionally, loan

sectors not strips small exposure underperforming at the our with minimal loan have at a to portfolio. $X.X of and but X% retail note, average CRE malls, balance. million with Of XX% hospitality also We retail is

million at and asset management in we financed is acquired or and and on our due legacy mark-to-market means, $XXX extended cash portfolio now liabilities. execution lending obligation program matured bridge by decreasing of lines XX% nonrecourse comparable the a $XX increased reduced debt, and through $X.XX the billion. warehouse securitization. to million spreads mark-to-market million, liquidity hand we inside while to quarter, these was successful successfully part liabilities The to These initiatives, market increased year-end. senior loan $XXX we our $XXX equivalised that securitization reduced raised loan and loan bond the of Beyond quarter execution in securitizations through evident of a warehouse offerings. This in our million. support cash both was XX% in CRE In

COVID, resulting navigating positioned Phase Our strategic of the pandemic difficulties our from which review. company this efforts me COVID from to the X the to our reemerge in stronger, recent initiatives have leads period

premiums to are are the fixed to to this First, plan launch balance retain bridge tranches. lending retaining our small is loans high point with credit In platform XXX the we company enhancements quarter, where in restart increased product, price National rate We cost-effective to the way loan levels. of in keep with partnering believe opportunities we to originating active yield yields teens. at in third with to basis lending seeing business, a Bank our and the subordinated we retain pre-COVID our currently securitization to expect core commercial with starting our products

Our up $XX current money pipeline totaled our CRE core origination in channels million.

PPP business program X(a) a catalyst Second, SBA we lending COVID. existing the will will X(a) to small of with program for recovery expand experience The from leverage SBA's business. the our our be

verticals. balance targeting technology grow developed large our through PPP, X(a) will and for by pursuit specific of relationships of accordingly of the new volume We the affinity application industry

X(a) only front-end the plan X(a) program on under X(a) for XX% also in launching our on program. excess SBA a million overall. PPP loan rely expedited Historically, scoring heavily per SBA program XX% our incremental of and $XXX,XXX processing with will This volume $XXX year. through of balances use the loan small model versus technology had of X(a) production We

money X(a) $XXX current Our exceeds up million. pipeline

banking acquisition Through earnings and continue decline we our July, the opportunities. absolute on less exceeded million, capital downside servicing rights rates expect segment mortgage margins. rates plan the third floor due experience the and XX-year $XXX continue to expect to deploying and we we if production facto at afforded high-volume into primary rates to mortgage treasury. the on Fourth, mark quarter, to the de elevated level residential even Third, in by refinancing of

We which to only are of wide of loan SBC pool billion $X have due traded X/X spreads. post-COVID tracking bid/ask offerings,

forbearance the quarter year wave increase to volume first transaction next expect in fourth as quarter and the subsides. We

executable levered primarily season mid-teens. low pools and in yields current performing of with $XXX of Our million pipeline the LTVs consists

context in greatest to Lastly, we evaluate the our shareholders. of cash continue use providing the the return best to of

Given the a this shares. current repurchase price, program share to includes

over of financial the Board I'll in which coming common hand a months. million up program, Directors to approved Our Andrew us to the of stock allows repurchase discuss to has to $XX now results. repurchase it

Thank you, Tom.

earnings effects. quarterly We are per pleased business share, of records of combination $X.XX GAAP share $X.XX and per normalizing earnings both core to when report for

gain due resources on performance of economic sources of $X.X million margin small our mortgage in use businesses, from earnings a the sale residential net CECL adjustments to to company's performing a on XX% on our Included from coming and participation strong coming and on Revenue PPP gain climate. highlights portfolio. net MSR core interest diverse servicing, elevated our activities, coming markdown varying $X million ability is best company's continued The quarter PPP by their increase core portfolio, balance production were coming in stable in core results X% included sale loans. Key net capital offset the to CECL This were earnings and our from recovery nonperforming the reserves from in reserves loan efforts and in XX% a loans. XX% quarter of $X.X allocate with to financial into commercial million elevated activities. banking our

XX% quarter. GMFS, to numbers in the $XX in business, $X.X commitments CPR with mitigated in and million. million, decline points, combination banking QX. we retention a in valuation a $XX.X mortgage XXX% elevated residential a into residential increase resulted was point originate million assumptions rate. in The will quarter to exceeding net banking Our of partially margins excellent by billion $XXX At to mortgage basis performance reached production revenue MSR in Record XXX the believe quarterly posted end, continue increase XXX due basis

economics PPP PPP of forgiveness recognition of periods. accounted Under arrangement, of financing efforts $XX and we've Certain the facilitated partners deliverables, under multiple Our incurred the of Total PPP XX,XXX the the PPP us businesses time to by quarter. booked $XX.X recognized program allocate maintain loans. to jobs revenue loans, the We've beginning most. helped when million the PPP process it paid at and of they required $X.X ongoing small $X.X the was of which deferred future net to the program, the a loans million, Since thousands original fees were needed loans the totaling tens the we between million servicing in to sourcing $XX.X SBA, with equaled million expenses the of gross for the which agents the funding in meaning payments totaling less arrangements of this in PPP billion. quarter. revenue, PPP of to process

SBA quarterly of SBA in our businesses government totaled to We originations revenue $X.X loan part X(a) business. SBA in as to to sales on Gain lending Freddie a increase to gain lending by continue on Mac our million. quarterly participate COVID, due will Freddie the Mac and initiatives in was profitability $X.X million offset future efforts sale in million. reduced decline related The from which COVID $X.X of

and On certain levels and At activities. PPP staffing projected residential segment quarter, onset bonus actions certain due well employee activities. as business compensation rightsize we as increased in the the employee benefits payments mortgage of undertook to banking the commissions expense to to side, related to third accruals the

benefit reduction $X.X expenses in elevated in million hires We reserves provision actions, to costs loans quarterly $XX.X operating inclusion the in due related expenses compensation additional or increased booked in taxes due forbearance PPP. due increase REIT and a absent XX% income COVID. costs base in default servicing going to Other our expect result taxable key subsidiaries. at to included forward. on increase Loan Ginnie of to to due to a items the activities million Quarterly for are these

Additionally, certain the fees manager the in booked to due investment were quarter.

the balance to now. Turning sheet

provide the to our meet is liquidity financial increase actions mark-to-market increase Our all exposure and quarter main those balance. liabilities. reflective XX Current we for to to market reported objective We reduce cash unencumbered to in uncertainty, from our to the of $XXX future position objectives. investment meet account strong million, XXX% and totaled undertook financial to current was for obligations, March a and our believe opportunities

is position And significant We Although this successful financing reduced million in it points, amounts, X.Xx. in to has million $XXX note support these on a be lending and not securitizations, do basis approximately It X The X.Xx. billion a had to loan CMBS, government-sponsored $X.XX important pursue equity downside opportunities completion leverage secured to additional legacy leverage believe reducing is impact weather and that borrowings and these believe at $XXX to recourse return is acquisition we risk. million that positioned of included by our to of down $XXX absent businesses. cash forward. bridge recourse over that the XXX balance accretive going CLO company a and

we Additionally, CRE extended our have our successfully lines, displaying continued since warehouse QX, maturing lending X support lenders for the programs.

loans portfolio modest XX-plus within Mac loan stable XX% day X% a year-end current. XXXX collateral, Of X.X%, from to delinquencies during of forbearance, increase of to these Total CRE time. CRE inclusive levels. remained perform the portfolio, continue Freddie Our the stress continues pay at well in

core we We on assets the earnings. CECL increase in March do $X.X in the with not performing performance, decreasing count increased improvements to reflective $XX.XX this per value in assumptions where due slight in of $X.X reserves reserves million, on loans, calculation modeled change reserves nonperforming to in associated on declined Our dividend. share performing to Book share loans, million, XX. include the of from is per $X.XX due changes share provisions QX while

We aid expect dilution. implementation our of the repurchase in efforts the that of recovery will that share

taking company's XX in is profile, to remarks. to corporate I ones provides Slide hope through like attention done provided operating XX, the which well I previous CRE additional to Tom and to Slide supplemental various your draw XX summary these for and insight distribution unprecedented times. reserves. now earnings be into and various the it CECL X our metrics. in of I outlines information you As loved includes the on key current in new, Slide risk the information portfolio. have continue financial deck, provides the And segments we deck closing quarters, on over will Instead X, you slides would turn XX. your updates.

Andrew. Thanks, through We quarter productive had managing a this pandemic recession.

the period featuring Our the pending provided to programs, Act earnings with together government-sponsored personal business businesses volatility. earnings segments model and based, relaunch net will to balanced excess liquidity Further capital markets these a CARES margin of into provide redeployment interest quarters. of during lending subsequent small of expansion core including bridge liquidity harvested normalized businesses, our of commercial in direct ramp crisis

earnings loan as crisis in to believe our to cut volume. successful Our costs execution technology acquisition an refocus applying for and that, bonds, sees can strategies time opportunity for operator, by design management over of increasing acquisition provide businesses We will we shareholders. these lending core the of opportunities questions. team benefit the to With while growth lending alongside the open plans line pandemic

Instructions]. [Operator

Our comes Laws from Raymond question with first James. Stephen

hitting water-filled XQ? I that future to this Page Or Tom, out X $XX be with that? in million periods. maybe talks recognized going to all gains, guess PPP earnings to be start of Was off about is more the than

address Andrew, you to do want that?

Sure. to things. dependent going two be It's on

be we quarter. revenue XXXX, the year, process, sometime So the expect be and so which be third the of but to the within ongoing X of a next allocated will we expect entirety be to amount The quarters. to portion allocated the fourth completed over deferred that over may servicing will that into to amount the remaining extend costs, recognized and any forgiveness

outlook levels are of Are Great. we I those there are July? banking of mortgage loan holding mean, the residential get guess talked that for margins, before I kind margin on margins half, a kind bit Resi will gradually they the good and we Or in your What through -- income even remarks. do here stronger margins. pullback? you outlook you prepared second your about staying margins? expect normalize? to strength

levels Margins than not but in first much the quite Yes. at they July. the April remained Certainly, where we May, were in elevated higher in and saw quarter.

throughout expect margins that. third you we to more to forward-looking quarter color think the elevated. continue I do on Tom, to our give and be want statements

Yes, sure.

given a capacity you. and -- historic the I mortgage the A less for convexity mortgage historic I IPO the share you, point, staff broadly, they of have have number purchase-oriented refinancing, a efficient have decline think function is a are of in and in in what just the a banker more think prepayments more imbalance atypical had market refinancing -- demand as industry, imbalance. it's the just today, Louisiana, industry. where but versus rocket But -- this pricing elevated evidenced we the expect GMFS, is XX-year of what margins Alabama with that in those are terms have Mississippi, supply-demand lot reposition really of a to production broadly, area the for dominant versus you which at of just very function elasticity, companies the very by

by FICO normalization that, over given gradual as the -- volume obviously, the will the next, fruit. low-hanging inventory equals you higher the of say, the production borrowers next quarter a the capacity that we the So refinancing through the of work of decline probably year margins expect be will that first let's when

so yes, first going next gradual of quarter into the And expect normalization so we over year. a

kind of missed of resumed But lending if a lending in of you'll question do to kind you it you back what up -- talked outlook Tom, bit toe you I Great. ramp prepared the activity. Kind And up in good I know the water, guess, CRE second you quickly the more how in the remarks. this. half? of and activity? lending one about kind Is volumes putting will I how put CRE ask just think back apologies the

from -- It's providers are -- about terms lending basically back our Right color our interesting. London. estimates of in team, demand research. that the larger it's pulled work. there's bridge There's capital definitely have X/X -- demand our a -- transitional XX not doing now, team that our still in supply as well factor lenders own at hear as of We almost

expect and the oriented. on subdued, side, flip focus, somewhat demand of affected we we the is we're multifamily have by more are that then hospitality, retail really -- So where of particularly don't a as much most areas and pandemic

reduced supply. there's but demand, So reduced

So XXXX. before of it in our you the until quarter say, in back year let's quarter of to volume think it's I long-winded levels of was last saying, first be to year, next the way going first the see this quarter

Our Delaney comes Securities. question from JMP next Steve with

guess, XX% liquidity. meets that, I'm of buyback shares at the And that current the repurchasing to seems deploy and in level your and the to well from with congratulations challenges authorization, return lowering big really market, on shares survived it looks would the you requirement tempest first where I cap to leverage. but to liquidity curious say X% storm you're that me your your level? your have me terms book. Tom, this and today. decision It that if at your that big in capital And And to seeing market well not Phase accretion the X. don't you've positioned that fairly X plan, We're of the the decision, success, X is of And on about you for and valuation, looking given your this

does. Yes, it

just to would say, have you realize I balance. I No,

But balance I You lower. what think level at this is you're have saying that. to or

might quarter standpoint, next modeling a level here to of or over buybacks X? from think want assume I some we the

Yes.

I think yes. Go or So Andrew, -- ahead, sorry.

that's right. I Steve, think Yes,

activity. Over the think I will next see you quarter or X, repurchase

Very good.

go through That's be place, guys first in securitizations your it not and the just demeaning seen able you okay. to between intended call we I'm to get of now or Okay. X Then being going and companies have just to -- the ahead were not but transactions. capital. the Tom, transactions. rescue And over-levered

question with people talking I but doesn't just you would And one there of common have would even on consider on that opportunities, rather partnering to sides, than advantage transactions. you think capital those taking both the guys you capital. to looking to about if another they're share some entity? -- that or appear most certainly partner It opportunities. other But market need out is, there's defensive with defensive you returns on any me money or your with the not opportunistic consider have equity, capital to take winners

Yes.

straight-up good do One debt fact -- that's I a that on that corporate that question. actually to in $XXX X there's point. transactions, the number answers are regard, we We capacity some we -- think working have probably is a given the of million-ish.

front, of moving are we have you our deployable book X/X REITs, on forward equal out, on effect given value. in capital. investment more position the that to have we So and then book -- -- that And of to cash as opportunities almost the a relation equity stabilized, number value the capital our that that pointed we've GAAP

manager JV have to which few we $X A funds, done We X of in the have capital, the opportunity years. X -- that last we deploy with companies undertaken -- number JVs billion with external could think over I other external mantra. has private around our a the

split the door yes, is I that with has and we've So done think always fourth Louisiana actually we example, manager. been -- Andrew, would purchase external example, -- -- was the that was the for the when that And -- that, that of loans, historically was a nonperforming be open. for that. the XX-XX that would

any that capital, right where income and we on think leverage would investment. capital ample on or of have limits promotion the -- concentration allocate but we're fee of and now then external in between working yet manager, sort corporate capacity the have the and debt limitations get platform the ReadyCap the on to overall I we that terms capitalized we So

at $XX on an Great. which housekeeping. rate helpful. look when Andrew, PPP be fees, just what tax And That's very remaining we million approximate that? would one the you put

XX%.

Timothy Our Hayes B. comes next from with question Riley.

more And lending question, maybe credit you constructive some focused kind and year environment. line here. and some strategies into talking opportunities And considered you wondering about estate of you housing some the seeing if staying anticipate resi comments commercial you've first the opportunistic on made my Tom, with just in being resi just back of on in balance expect acquisition expanding the like the good real side? half small

Yes.

On and broaden the looking expand the financing opportunistically, the property has lot at the our been -- radar market, and financing those builder -- we looked strategies, activities loans been on SFR definitely activities on investment, lending screen. have front. to some rental -- flip single-family residential market, the our not but We've investment fix market, of

around there's to the set. opportunity yes, So definitely expand ways

of We because the view focused a risk the liquidity residentially it number space as have REITs. high, occurred. we avoided non-QM what as having very significant With a --

yes. So

will sorry, the And the we opportunistically, space on lines there C-REIT that -- to did, with to last public expand will pursue that I'm what we definitely think, year. REIT for in the residential the of side side commercial Owens merger along private M&A the the we continue both some and think platform. example, I are we So off and then GMFS opportunities look leveraging distressed

spreads I'm haven't seeing will to they curious, seen little drivers acquisition the lot you of really tighten do I like you -- half from? a expect be And here. sounds a And you just And come acquisition trade the more And bid-ask some lot a of bit? are do where the guess, back seeing starting in portfolios front, think on might -- of you it just you've opportunities you Okay. main the expect what year? seen

them -- -- taken lot CECL call either lot of and have to turn community larger was And which view dent is think regulatory of top performing have banks the much they that of regional which small do that they what reserves seeing banks are it, sales so on portfolios, A what noncore. scratch and pandemic, you a the due -- implementation. as or the which forbearance. balance we're granted, I But have

about about currently right And million. -- currently week, engaged -- But that billion so I traded. a had that forbearance. about tracked $XXX X/X that And now, we significant we're think there's we're is the $X of last we to And on due as had the we're its around portfolio to out paying, running the bid-ask roll you're quite now, forbearance sorry, about -- around running SBC I XX%. at rates, at delinquency out seeing example, think XX%, our officers back two of but peak where -- were is on rates -- for our of XX%. But right roll credit was

So in third that a fourth to volume and you're comes down, see I going volume quarter. think when lot more the

resi situation past, market scenarios to where SEC whether good that see your broken bit case just into little be That's balance CRE Got a large know and the just wondering eating it. the And type. bear But will tracked how we're mass in commercial going estate it. at broadly as Got relationship LTVs? color. prices balance then market. out like a closer the than in trend really I and have prices, we differ But historically small real it's estate you And by this. think market, you real pointed

Yes.

I think in mean sure data not the last shortages. Housing the that, over correlation XX been to due extremely years I'm using has supply X.X% XX And decoupling that the recession. Case-Shiller. this -- is versus strong the Boston significantly

year decline of Our in a this is forecast Case-Shiller. now X.X% house for

hospitality a we're a index sectors. that Moody's the the increase and last XX-ish of recession, XX% retail in and XX% versus balance, lot large decline percent For is expecting is of that

a a We're down X.X% maybe balance. XX% Given and housing that expecting -- commercial for for small down large balance. for see XX%

you -- XXs? our Andrew, that, compare what, portfolio X is, in upper late So now LTV -- our current if

Yes.

Yes.

So question. to answer your

yes. So,

on So in our rates a relation very we're in if to CECL in of that terms liquidation reserves. place strong you and default reserves think I yes, layer -- in impairment, look our stress at expenses, principal particular,

KBW. Rahmani question Jade next comes from Our with

portfolio loan is in after real uptick of that loans Their loans, would million. advisory sales balance the that real strategic I including Day. commercial wondering -- something the brokers estate $X.X if commercial ReadyCap assignments. pipeline One if those estate more around anticipating was was totals overall major in look Is a say, average sizable billion in? Labor around line participate $XX with to

knitting. say would to our stick we I

term trading be opportunities have And levered basis, it to -- ample a or banks the of on securitization probably a XXX yield basis from SBC We levels we point these have loans premium. XXX have we is exit financing there.

drift out large strategy I fairway So would and say our wouldn't balance. we into of get

have in SBC market. our We ample opportunities core acquisition

Okay. And that of roughly earnings in there's you've estimated core included from when fees. think remaining we $X.X of said And a the quarter that PPP $XX.X the about program. million $X.XX PPP an earnings,

I that X quarter, X million is out that X/X that $XX earnings mentioned So project you the Are should there we If assume for place of around we after-tax quarters. thinking with amount. the $X.XX. the of end you third in took the as that to assume we next any adjustments would up be about

incentive the in other PPP, the were items such I'd point by you one when is was booking fees, higher. taxes there economics the calculation out look the much current of that quarter, at the Jade, the thing PPP heavily certain as of influenced obviously, are

true again. will smaller elevate earnings $XX We'll are which could over will Jade. which And paid-off. impact banking so a a or some PPP, then recognition, quarter. go-forward quickly then basis, timing participation the it is out, you dependent the how residential are down forgiven volatile be quarter, pretax undertake the programs the little on On and whittle depending million, that a third in obviously, whatever I obviously loans the upon the increased we a revenue the when of it large PPP number, of how these current becomes lead activity new next once be absence, depending to of suspect in With And the X quarters. high rolled mortgage results in

of to on upside combination add the earnings. think those things I some X So the volatility could

[indiscernible] quarter. I where It an And for that the PPP say Okay. when current you're quarter, referring when like sounds impact quarter, you $X.XX that you estimate. estimate to too in the said provided second the that's second

Yes.

effects When of across I EPS the the cumulative totality that. you incentive take lower a on the things PPP think and little the taxes, than $X.XX. fees the effects of like are

that be -- the were to past Is $X.XX that. mentioned the impact double-digit Are and of that. alignments, you dissipate, other still was ROEs on we there programs that G&A could or targeting PPP range -- to if ROE. than the annualized, mean seeing you And I execution higher that pre-COVID completely earnings kind the based represents replace that dividend technology the still would the new Okay. weren't target

Yes.

in level goal the up to is at the and there. think that from short-term get stabilized $X.XX to earnings back then the company grow I to

Okay.

the of economic that question in of In performance the Is If some is terms did the terms any and of follow-up, fall. in about in? see levels offense something were thinking related the in back we the in wave balancing to of And of elevated book, a how recent defense. unemployment. credit any a you're you're deterioration pull seasoning also for [indiscernible] you markets that see second a is, in operating weeks, prepared

Adam is this Zausmer. Jade,

Adam. ahead, Go Yes.

Yes. Zausmer. Jade, it's Adam

market. still XX% our granular the So profile do in Tom significant I and remain uncertainty of the We portfolio. optimistic mentioned credit LTV. mean, that diverse

yield. average weighted debt XX% have we Additionally,

significant forbearances So hospitality to keep tailed ground. sponsored lending generally large And where Tom solid mentioned current. think loans. that collateral. cushion going XX% just is to July remained month geographies then business structure help also these also expired. solid flow properties the was mentioned plans. We liquid as our portfolio -- that that's There cash We on we're first Strong in. have in loan limited on retail

X.X% our under today. of is only portfolio forbearance Additionally,

We number higher. much be expected that to

sponsors these of our just the commitment properties. of the to that again, and to strength kind speaks So

in securitization authorized just we of loans added terms the protection servicing strategies that agreements give directly sponsors have, can control full we customers. loans. And provide get and so penalties us for unique optimal the that the that experience very needed and [indiscernible]. to as work really here, designed then servicing structures just the to Additionally, we reach of control with of have, good wave to We're prepayment also and complete

these We servicers. that have staff borrowers and the liaises with

flags So and we red usual. resolution optimal identify reach as can

comes Our Sandler. Love with Crispin Piper from next question

of XX you it And June the on of how as much First, was much did sell volume that PPP balance the quarter? on during sheet the is how now?

Yes.

remains balance production. So Only the $XXX the around we on overwhelming sheet. majority million sold of

the is banks? there? -- And that buyers it the Is are mostly

Yes.

that to on about from prior you shares just you was you Okay. needed of do authorization? the guess, then repurchasing one couple on And you Why think program. a any even years first authorization though the with is keeping I shares repurchase programs And here ago. was increase think I which there the the repurchased haven't initiated anything any current

behind given an is original appropriate going of that old, discount just are the purely the at last allocation company's wasn't financial mark-to-market X decided to on were that price, to years weren't that quite The was we terms a of exposure the Yes. of Directors, why current utilized in that was the the conservative was more the And terms quarter, at really in I'd than which then over this about liabilities. trading and first in couple program, getting Board share position we say focus environment. we flexibility reasoning the months of level more cash to increase was today. significantly

repurchasing. sufficient to not feel cash in we cash where provide we're deploying position also weather that best shareholders, we in our a includes which So downside for have uncertain only the start any now returns means to share that but

think X X%. currently Tom, one did the That pre-COVID? makes is I say X you percent just risk in that last one. lands around was of and bucket And it sense. said the then What you

that. Adam, you a have number, have don't I do

was yes, Jade, Yes. it X%.

Christopher comes Thalmann. question next with Ladenburg from Nolan Our

closer effects annualized? fair the was PPP ROE on around to is say I'm excluding that it to earnings, of XX% core

Yes, that's correct.

on we forbearance And comments could have with those the CECL expiration you for given reserve the reserves, of expires? reserved Great. forbearance, the do already Tom's to the quarter in losses. Okay. that or the for those Are then higher see

of specific breaks our CECL terms than CECL down, in current of how our lower have the is booked. significantly we we've reserve expectations CECL total It identified, of actually, losses. No, Yes. reserve reflective reserves on that loans

it's believe number. do we captured all the in reserve current So

of Great. given forward? the historically range are, are where thinking I where world, about the direction then mean, you all the you the leverage, you're in in leverage And going risks of

Yes.

where continue they're try I of recourse today. think our at sort leverage It to maintain at look breaks we'll ratio. When ratios we down and around leverage into buckets. X

to first really government-sponsored bucket, The is mentioned, we support as our businesses.

about a So accounts for turn. that half

will at bit size. leverage amount a It try likely short lending The to take segment, of And commercial may the at around levels, advantage offerings, keep maintain real least the these we other which in we'll opportunities. remaining our debt little for supporting parts that are go-forward to same increase is estate recourse acquisition corporate most the core and term.

Great.

rolling his indication you might commercial in Tom of estate mentioned what might give Can be. you Finally, type strategies. be real comments, new this out an guys

taking That's post Yes. expanding program A let's areas, looking that looking a and for couple -- things. agency clean of licenses, our commercial the senior HUD, commercial life new at area is say, correspondent you. example, business have into. Fannie on what or of relationships in balance, we're One with housing assessed multifamily, one at for is unutilized President pandemic the other, Mae, is smaller PACE to have world. which lenders like energy, our the example, small looking that other We're

York New just example, passed For state legislation.

well form equity. very quasi small with balance couples transitional lending that our of So a business as

X to example of In where commercial the -- are area -- another that's examples expand another So space. we're looking those

back like This conference would remarks. for to to management question-and-answer concludes the any I turn closing the over session.

I'd the next forward just next Thank everybody our today, for thank and looking time you. to to we'll call quarterly quarter. earnings like be

call. This concludes conference today's

You a disconnect for Thank you your day. participating, lines. may have and pleasant