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Broadmark Realty Capital (BRMK)

Participants
Jeff Pyatt Chief Executive Officer
Nevin Boparai Chief Legal Officer
David Schneider Chief Financial Officer
Tim Hayes BTIG
Steve Delaney JMP Securities
Stephen Laws Raymond James
Matthew Howlett B. Riley
Call transcript
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Operator

Greetings, ladies and gentlemen, and welcome to Broadmark Realty Capital Third Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]. It is now my pleasure to introduce your host, Mr. Boparai. Nevin sir. you, Thank

begin may You

Nevin Boparai

afternoon. Thank Realty today Broadmark joining you Third Quarter for Capital's Call. us XXXX for Good Earnings Conference

to available www. in broadmark.com. issued release investors section supplemental detail the website we the our addition at our on is a additional package this which results, on filed with In afternoon, press

As remarks today's on statements. made a forward-looking conference reminder, call may include

not discussed results to any do Forward-looking uncertainties actual future or materially and update subject to of forward-looking undertake cause risks in to statements today. from our those are may that differ events. light We information obligation statement new

For filings. Please factors refer the a our this that results. earnings our the to release for Company's discussion more to detailed quarter SEC may recent of and affect most

be the call most Broadmark's which in comparable are questions. we call, Schneider. up non-GAAP these This some our after Management and will comments is David filings. call certain earnings about information to prepared the measures hosted this financial will directly Officer, to Officer, financial More we conference Chief Jeff will and Financial measures reconciliations release by afternoon's contained non-GAAP also make discussing GAAP Chief financial and measures. Pyatt, your Executive open During SEC

over Jeff. Now, I'll turn the call to

Jeff Pyatt

over Thank afternoon. market and overview. you, quarter I David third discussion loan financial portfolio. Nevin. This provide our And turn results to on quarterly performance our And call welcome earnings will the a call. to to additional our and I'll of begin detail with then

the efforts and sustained scale $XXX and demand reflects amid questions. construction. we the year in open the then your borrowers and million amendments. largest reach third to new our our volume generated up repeat and XX will of new operations We origination for history originations our new In This is for quarter, call

Columbia, providing expansion, plus We now greater We projects. in of first borrowers excellent XX the operate Nevada, states in have to targeted continued loans our and our and District also making geographic Arizona, Minnesota. access

secured by average the consisted September XX, portfolio of weighted estate As time real our of at high-quality billion loans of XX%. origination with of a of $X.X loan-to-value

property and multi-family residential the powerful of of from should portfolio. the and diversified We residential making demand geographies our types with because sector drive well population construction the favor are our shortage of drivers target which the a We as across future. in majority growth pervasive as markets, resulting continue to housing, up into well single-family

of be effectively value opportunity from of not superior to investments has continued or collateral. real active reach and this but of We also significant which a loan-to-value, also benefit is have to also the our us have a we dynamic have implemented in which pricing tend which system, particularly XX% borrowers midst select the standards to market, lending One expand competitive pursue overruns event capitalized set commercial a credit our some and and that to not gives discussed, in cost with We've better that only more experienced disciplined of year, pool stay estate buffer maximum underwriting impacts. projects the previously our through long-term highly tailwinds. same our us changed, other constant as this allowed we larger

range wider relationships unlock our progressively maintain to borrowers it continue of with builders pool of We with projects. we as broader smaller opportunities even and

a of from we third size us loans an million of percentage average year-ago. low. or increasing borrower million $X.X grow keeping to $X.X with have an originated individual loan loan to the while exposure quarter, our alone In enabled average new XX scale Our size and size very our up average any

origination of It XX.X that or interest portfolio funding remained as our in weighted have time fund changes to and of short-term loans more duration well stream The that as exposure means of nimble average our also at over although allocate we to with larger a loans. and new turns limited means steady our Additionally, active markets. projects, we rates. short-term payoffs term duration our projects, in are the we loans complex allowing across us relatively loan as of us to the our with pivot be frequently, a quickly capital months providing

will our the a mid under and do weighted noted, on that average our previously a over we model all-in time. expect environment, we portfolio As new be competitive reduced yield pricing

quarter. stabilize the to risk of increasing wider expect we a our grow power As approach, to of strong record utilizing our year expect third range portfolio assertively again business a XXth, already second demonstrated platform but XX.X% XX% we And the adjusted volume loan was yield coming portfolio off the disciplined a coming our down quarter, at yields. our an September a the after to underwriting we range amount origination while XX% In and XX% in from of the of quarters, originated in loans of yield ago. by over However, still

of to add seem that by The of One growth we scale on is cost our that supportive we new current environment over feel the significant persist states. origination into existing to can build are continue fundamentals as support activities our expansion time confident into Year-to-date, the states, and we operations macro originations as scale. platform to sales of well hired likely headcount. benefits without that X supply And our to highly remains with personnel have this our well well demand our our in future. staffed lending and needing as we we driven to

demand for and the underlining new single is That side, the demand for with both On construction. multi-family. units, supply of actually new a outstrip deficit widening far to housing continues residential

shift Americans sheets are operate. results the household we balance relocate strong, And addition, and In to many that arrangements to to remain high-growth to given states the fundamental very from free COVID, move, in upsize where working

flows which for as and loans. All construction, of drive demand to continue through multi-family our these demographic trends single-family new

well us demand and strong supply market consumer give fundamentals the factors by credit. supported these and together, Taken confidence is housing that

We pressure ceilings The we our projects. generally major short-term costs, tight include timeline and contracts continue to as supply input the shortages, which can inflation, changing are means costs process of changing from respond part on in protect to labor the helps that potentially hearing to overruns. labor able with guaranteed issues cost market. we majority impact environment. construction to quickly conversations have borrowers, of our us supplies underwriting our the our source which of nature chain assess our that disruptions monitor could continuously from they In with of coming We and without loans been

most the extended current We majority receive. into and translate loans such without placed remind protected are requirements interest our payments the fees we than typically default. While are is the these factors vast of you environment. are delays that as into better The in we resolved maturity issue. feel modify loan the can cases that But length to them of

Our diversification housing, Approximately portfolio across quarter, portfolio residential. XX% the consisted types our the hotels also benefits of retail, of from end third property and commercial of geographies at storage, senior and land. including beyond projects,

generating very markets. COVID. have real estate our locations To quarter record continuing focused new progress with origination's, we into remained during resilient that expansion excited on and our are and conclude, third are uses We

to for excellent tools With we the platform continue leading have highly further and loans. choice to upon balance of pace represents of to place this activity to repeat best-in-class as drive experienced to an We be have opportunities customers continue all borrowers scale of lender value. construction additional team, sheet, every revenue the our new we our record build future in shareholder

the we Lastly, and performance. of included to have metrics also in as David. provide our organization disclosures, These our our financials. X To that, that slides expand core the at efforts some ESG cover are on slides new part of enhance to over our earnings turn I the it presentation. will Broadmark's ESG With principles ongoing and review

David Schneider

Thanks, Jeff everyone. good and afternoon,

X detailed our are operating presentation. earnings Our results of Slide on

For quarter a the per-share diluted net basis, $X.XX million. reflects impact XXXX, third items. reported of of non-cash common $XX.X income of of On share, income million and this net the per costs we GAAP for a adjusting $XX.X and non-recurring total revenue of other approximately

quarter on million. Our income distributable common was $X.XX income share. the quarter fee third diluted realize on were the million prior in to and investments third was $X.X for loans Interest million $XX.X per our $XX.X earnings or loss

On support our continue to headcount side, to as growth we efforts with expense balance expansion mentioned. the modest our G&A Jeff reduction

We For remain our of decrease had in expense for $XX.X the year-to-date. we with G&A million and XXXX, cash XXXX. from third quarter, compensation of expected and expense line with of $XX million $X expense an of G&A million compensation million estimated previously cash $X.X $X.X million

record volumes, the achieved winter our pace million is volumes in-place reiterate enter amendments. and which will season, revenue operations quarter-to-quarter of moderate We reduce origination of of our G&A expense team. the we we from regards based for a presented to With presentation, which may $XXX on that origination expect traditionally construction. a we originations vary we timing the further Slide addition, as on percentage loan slower closings. our This as earnings with likely grow ten In to are of as

had our XX of no to reflects Slide than quarter presentation, cash the XXth, the cash $XX.X turning third debt as balance Now, and in two sheet balance of in outstanding lower developments million September on our usual of earnings as we detailed October.

carrying we repurchased in originations our from of $XX to funds Private value as part previously addition participations the high million a as record of loan in at retiring. First, the quarter, announced, REIT third

facility. we Second, our use our credit made of first revolving in October,

levels the facility With new Subsequent to during on while paid would historically, October as cash September balance We in several to we advantage down our drew in credit facility million of receipt our opportunities $XX demonstrates cash quarter-end, timing by tap XXst of gave the the million the our have awaited credit $XX loan value borrower the This in loan the been we to we and maintaining tool. large It line then off the flexibility Whereas the draws full take the support management the place, needing to without by had quarter. repayments. the payouts, payoffs. facility originations to in of pipeline operating while ability bring to we constrained us of liquidity. following loan a

As on we of facility. fully the capacity undrawn of $XXX credit XXst, million October remain with

quarter. quarter, may cash target any future, We considerations a we issue $XX of when saw the only million long-term program result to in lower cash in the shareholders. under not this that is it shares level believe we in to balance capital past approximately we that Broadmark quarter-end. access and at note a timing ATM the $XXX of our as continue did We third of would And interest

to credit continue sources are rate deliberate we in at a have including will our of attractively approach which be our not is debt, long-term the support previously, our leverage and our of And growth Maintaining are industry priced patient levels our environment, overall very DNA. balance will capital Even structure. capital, we amount and low of shareholders. capital to lower marketplace. we believe change. As and But would by we contemplating, sheet assessing work been will to optimize conservative discussed a standards. will make we interest very part today's even multiple be it of has this a as us we this low remain in to will help future competitive as always And cost fortress the more

XX% adjustments our of XX% to yield to our approximately mentioned, that portfolio to being will we from expect XX% pricing overall Jeff XX%. result current their in reduced levels As

and these reduced up Slide effect the seen that to with peers. conservative remain leverage a volumes than help over And growth in to As tandem we time. offset increased XX, of yields set already those should origination realizing of the our asset amount higher yields us on earnings drive lower are

During and participations value the loan's a repurchase private quarter, the not to therefore its $XX we repurchase REIT million. price and was have retired did for approximately significant equal impact our to The loan earnings. our carrying

our Turning managing. to portfolio

reflects value. for historically some loans, of from XXth, of course quarter up we us As which in second This total XX.X% quickly. slightly and total be the XX September resolved are new or portfolio been normal and maturity contractual default to have million defaults, in the was had commitments, expected primarily representing $XXX

we one of More we of of a $XX and total legacy, principal. which to of related resolved zero defaults, importantly, million with larger to resolution subsequent are loss quarter-end, pleased commitment which our COVID the announce had

default defaults management the moment by rig to Oregon, loan default taking following. were deteriorated April unable an cross in detail with in unavailable, incomplete pandemic, collateralized of that of reflects to three resolution in And located a making loss. The offices during this take with loans finally, the borrower one Broadmark moratorium one office default building start capabilities. specifically, consisted and moratorium the the - principal and Oregon, borrow highlight the full with incentivized the me default foreclosure entered in it Broadmark two banks, associated with and borrower foreclosure And in loans valuation was XXXX. Let of More given Portland, refinancing with including worked borrowers The with we as both success discuss I the resulting refinancing delays to refinancing. to would identify patient, of loans. further steps the closure remained available, and lifted the found no a for payoff 's collateralized

default and make on actions says, construction to them. easy proof our These underwriting it's resolute of model As and collect often to are Jeff harder loans lot management. a strong

to as left September. there's quarters. large XX% $XXX October still coming confidence we and done or us be progress on loan down to expect XXst, a this default gives pool a over result, the million recent resolution But our of meaningfully our we pool reducing further to from default commitment added clearing defaults. make work As of total reduced Ultimately, and

earnings. to As a reminder, drag accrual status on have on loans. a continued

third end, carrying in with For per properties drag quarter, million $X.XX the own foreclosed quarter earnings seven At was approximately the share. $XX.X value. we

two quarter, of total and loans foreclosed the on million. in seven a During default, total payoffs we representing on third loans $XX.X commitment received

deployed previously capital that Finally, X. continued on to the resolution earnings update currently on provide we like be I our would have defaults. principles to four for Maximize an of growth outlined.

default deployment capital and with our just the facility in meaningful maximum by XXst, line now our with we advantage by XXXX October, sheet progress credit in our X% enhanced September high pool in since of credit made a the took As October quarter-end reducing cash given as payoffs. of credit loan in after from March place. XXXX, discussed, balance facility tandem XX% on flexibility existing and then deploying to We X. existing of by it early us drawing repaying August

are better of the and various we through tangible sources. of now able zones, cash payoffs means to discussed, Ensures management having constrained sufficient operating place, for funding the in less short-term As capital which advantage to tool X. we timing our this seeing loan are opportunities benefits of available by deployment take

for capital of power quarter. quarter, long-term finally, cost our new average debt And growth. We lowest to focus the and This are likely third evaluating expanding the X. the in capacity great earnings, most Identify the the amount of weighted And a proving Company. platform. on include sources will fourth shareholders. and originations accretive the available operations for available modest made of increased the for our our in capital raising we In opportunities progress of

with in both We customers opportunity set have the a new tools it. large all on existing to and and capitalize place

the turn comments. will I back closing Now, for Jeff call a to few

Jeff Pyatt

Thank you, David.

we many beyond. different positioning made ahead out have the and and progress close to new well for fronts, the us XXXX, year look we As year on

platform demonstrated our The expansion into power and quarter the record with third markets. originations new of

underwriting the remains This same. remarks. And so to have fortified continue these non-accrual us given and and we same attractive, light opportunities business our to have milestones, of credit, capital operate We've growth and to fund allow our arise. have more us multiple returns. completes our flexibility made that balance fundamental our well our progress in our We additional supported on loans. deliver risk-adjusted standards approach prepared population also and portfolio to sources will our apply ourselves sheet to as the In reducing of prudent practices place we

Operator. up We open the will for line questions. now

Operator

we will and gentlemen, a Ladies question-and-answer be now session. you. conducting Thank

like a to question, questions. Instructions]. please, [Operator moment, we while you'd poll for One ask If

Our first with the please question BTIG, comes Tim proceed from line with Hayes of question. your

Tim Hayes

Thanks guys. X first for liquidity Hey, here. questions. good my position on My evening, taking the

on cash of the quite management be see just proven using than of down have line. So I to you for has at holdbacks. a end the you're line. XX% million And quarter, come bit cash know nice fruitful you touch cash tool to credit at but start when $XX of certainly -- you, nice guys that construction capacity the has Can the less on you

about fourth and options of the you talked capital in the You some the markets in the to ATM. quarter

see idea quarters. considering so just position right maybe how of Just an the evolve of any idea over give trending corporate you coming us are Maybe liquidity sheet have an going, we should the coming you what quarters? other over type leverage options or is the balance of how now, where debt

Jeff Pyatt

for thanks And and question. take joining Sure. Tim

the a $XX little to prepared September We of down million. million. the remarks, on about got So bit $XX talked we've as We line position. in draw yes, XX, liquidity but for

we'll we've as exactly paid in credit payoffs, to facility we million things very post this One tool, when XXX. of got particularly predicting and whole reason the large the this going got full see, cash that management It's defaults off case, that $XX difficult. a the the and is a we're in get

able on cash So was back strategically come to intent us draw behind being for when a from in, us the line, it a such focus the pay perspective. was the payoffs management achieving and exactly it why

$XX about over pipeline have of weeks. movement we the the next million today, good from of couple expecting cash. origination some of We're As

the on. -- about As we're we Eric as mentioned quarter, raising think the capital, fourth marks we in in focused

going not same earnings the last put -- the not we're to in $XXX sizing, putting we've out $XXX, quarter. in things of calls, think out the said flexibility in couple I we're where million

We don't drag capital around important sense. million can we're in want which and our X out of overtime, to to introducing Sheet. that in obviously, us. $XXX to then X.X $XX the onto the We So increase put expense. something strategically to really makes Balance on is bringing interest some cost focused earnings as capital X, leverage on from we said, quarters, And down

through seeing Being origination as the would So reductions bond unsecured introduce we're the very increased tap markets, issuance volume kind lower the allow recurring to that offset conjunction think help something any EBTIDA with in Sheet yields. going to us can like of out that's cost reasonable of capital on to get of into we in an that slowly leverage Balance overtime, amounts those needed. will we the something basis a do asset that able to And

David Schneider

attractive perspective, at revolve incredibly our our our the levels time, right compared be and still responsibly capital to And over markets peers. are are from coupons have really Chief that debt slowly structure now. really, reasonable

Tim Hayes

sense. makes to That I Clearly but have of you ask a the the asset in the which I ratio appreciate loan I evolving to mean, wanted there, side David. balance sheet is comments new types mind? some about. target do leverage

I follow-up a thoughts any levels. helps mean, I right? on accretive know target, would and it's leverage leverage your you moving could as just it's where of kind a then to you and So to trade ATM, but you so premium issue value, preliminary equity just book the stock be to wanted manage see -- that just migrate a at

think using line. that curious and tandem how about issuance in Just you corporate type credit with debt the some of

David Schneider

Tim. a Sure. question, Yeah. pretty That's

low, So this million we do we over out, hypothetically, is out industry years. and go equity we the ratio, equity billion to debt go ratio the to standards debt-to-equity of next several for year. If mean have $X.X to again, when low we were by $XXX very going

around looking Let's million XX%, XX% debt-to-equity ratio. somewhere of at next say We're still we year. do $XXX

So evolve. will over I time, think that

that That's Do see I got what being bringing achieving not. focus we're us simultaneously amount our see We've in by well attractive over be ATM as needs being think over there. capital. out driven able -- Absolutely model, us source time, pricing while quickly of out one-times factory a capital of put at we the capital targeting I primary at I it and cost the of that can The is point down this but do to us time moment. this remains right levered? to not somewhat very focus will our

balancing I of the think reasonable, responsible over a approach slow, time. of our it's debt capital going structure and be introduction to to

have still peers. So I a from a think leverage will advantage from our years low relative now to competitive we

Tim Hayes

the Yes, then that's bridging me of great. be to But and loans hop new you think rehab And on quarter, that for in types queue. the one more and originated just this I that saw just us When the give just type I'll of X flip, some the here. categories you're in of say fixed ready -- we collateral and working other supplement. types is you any with rehab, examples back maybe

So loan these what we are. get types feel for a new

David Schneider

Sure. Yes.

think It origination. really was a refining. new just QX I wasn't that us necessarily

the That really I Maybe construction some bridge we've done the a is, argue certificate like no definition that what available. of and occupancy a bridge loans look but in loan loan think past. we there's can of more over is risk.

lower to begin that. coupon a and get fee You on like can something

of in there is I'd lot that, QX, like bit looks little but past. a the it seen for So what say a we've

collateral the we that types model pivot, what focus. focus benefits focus, of on we terribly continue like, then commercial at not it to depending great in types. think the time a think a all certainly there's of commercial while definitely looking look that. about is existing bit XX% portfolio mixed-use or did the our call primary primarily residential look XX% X our different sub let's we good to it's but to think a could of of still if look is And We more than about didn't things the little residential focus I deal originations. we're were the residential. a new get borrower, shift different where XX% space. XX% residential, for hotel. in going deals can hotels, We that to collateral taking at for on hotel do do We collateral, market that's the I still opportunistic it like slightly operating had for focus that, probably about our we But But and than can the space rent sale be between

existing portfolio. like QX say would I looked the a lot So

some categorizations, what not is but different seeing out our and supplement the doing loans of just you're going necessarily QX. us think refinement in I of in

Tim Hayes

the appreciate it. Got David, thanks Well, for all I it. color,

David Schneider

Thanks, Tim.

Operator

you. Thank

comes question with with Securities. next Please the JMP proceed line from Our questions. your of Delaney Steve

Steve Delaney

Thank Jeff be good you. and you. Hello, David with on to

Jeff Pyatt

you. Steve Thanks, Thank

Steve Delaney

First thing -- thanks, Jeff.

thing is realized a penny year about I ask and your would took losses $X.XX. you to that first like this down The had that to gap

fair Was the So owned, on real And that's addition write-downs came that realized that foreclosure. loss where $XX million I value had primarily $XXX,XXX. to a estate that you is particular guess from?

Jeff Pyatt

you for is, actually, -- over and Thanks your borrower times about borrower Great. area. of does It It's not like borrower, default? relate XXXX such it drives Steve lot was high-touch loan when question. REO legacy great defaults, ask to It Seattle are loan, joining that will something in most either error, the what the typically a we that. from loan talked high-touch -- budgeting, single-family what

that able specific and loans housing don't it. like to like large obviously small off that any that overall redeploy we one was in of Seattle during pre the portfolio, in third have. see from good fees. loss the to resolve of on able and a new to payoff were generating into even the been books, default interest capital more we don't but get But quarter are single-family took it to type the of those while, that we that so to We defaults a of value the that were We So always layout area and -COVID. to has from those for learn the

Steve Delaney

had I get forgive $XX if of the didn't was amount, that So but nice million heavy one or a me resolution exact resolutions. you've the

at think had did out Some there but was got of you this them or write-off you close so take a -- to a suggested case, deficiency, whole, in whole [Indiscernible] you you I little the one

David Schneider

would million And XXX, of $XX we out can avoiding of defaults. losses, never it of under but correct. fix off $XXX,XXX, all them, just we a if we have want million That's and was say I $XX history a having getting and Yes. principal of

generally think I a win for that's us.

Steve Delaney

to not quarter. record with forward, quarter, then going live can That's And Jeff, win. you're looking every have that. that You a

XXXX mean, XXXX, of For would David or I hires, I be as to when of have But COVID around out sure intentionally maybe is in but a new -- this for approaching, pre I states, couple you Is want the - billion new don't you've right in set range number numbers, and you -- out something XXXX to winter a but dollars to don't, and I enough you me of said, got anything, X got near more guidance states, but if front months or phrase, so X some a forgive that it's look and me, terms and that realistic -- least nowhere year. realistically, a the be originations. that might like that full-year. your expectations XXXX. what at for of Is a that or figure in be were goals a vague

Jeff Pyatt

close Steve. guidance, perilously get might to one that so, giving And

Steve Delaney

it. I to right. All paint was Okay. trying

Jeff Pyatt

with go this. let's So,

a been in were you table a candidly have And introduced people sticky to enough us. my tiny we've leader so since fraction. look there's us Since I we're we our as dynamic just out -- our our segment pricing if notice is have big have We had such to brought new opinion, funds we loan And say we're we're at when pricing that and borrowers us we market documents And construction down, make as a we going that of what lending quarter close going say do, we that I there. and much leader. People know and think have market a last we're switch demand to and market, are closing We expect a just of why the that continue -- borrowers. lot repeat historically of available for going reemerged that to model you all all to we loans. the going to to why we're if promise, that we do we at deliver not

an and certainly pace. that that nice expect, answer? to we're in anomaly in not we grow so for setting is that close continue and to I record grow so breaking Is an ourselves And enough up quarter a third healthy a the

Steve Delaney

David, very elegant. got I'm echo one clear. comment was And it. Tim's That then comment. to And Thanks. I just

sheet at just and think positioned. looking I how balance you're your

debt. that I be on X and just I corporate time, think the those your Thanks, base this appreciate unsecured think I would bankers whatever, pick your given -- an you years, at and to complement X coupons securities. to board comments. your capital ideal

David Schneider

Thanks, Steve.

Operator

Thank you.

question with next question. Laws from with the James, of proceed line Raymond Our Stephen please comes your

Stephen Laws

from will Hi. To mix as mentioned, follow both or Good you you you guys the and products, afternoon, do and XX didn't months the Tim's you expanded how know so? change I and question, much rehab hope, next percentage as the but do offer answer, go the well. portfolio you up of sheets X it over bridge an rehab. doing pricing bridge are continue to the of David, to on a think big how see becoming other X%, the

David Schneider

for Thanks question. Great joining Stephen.

think I a we'll not spots. focus. certainly It's pick our

when currently said are I think talked And talked construction want, a quarter privately, you our we at? probably our to little well, bit the about we do before or we're we quarter borrowers offering. at last the with looking products that not going and looking we're to what are you what complimentary guys loans

that bridge list. of probably So of is them. the a lot see is We loan definitely top do

We effort a on of loan. bridge kind haven't put doing focused

alone it pretty small often will not term. they longer to but makes primarily But our think it XX% near-term. I the like happen. all loan, I a just in sense criteria, does percentage Sometimes LTV, remain the looks which maybe that think But of bridge fits

add the our than I, construction products that portfolio we us in for product, make we beyond loans Jeff I additional that will will add. borrowers having more both to right? sense think imagine segments that there's said I portfolio complementary X think and are to have that our that and other want ultimately

that that's potential, opportunities something growth So think in be bring that as we same set, borrowers. as I when well continue there the talk will to new borrower to different for about products offering

Stephen Laws

David. I (ph). appreciate comments, [Indiscernible] those

and On there kind to and let's kind to you've forward? like are active the states then on ago, states new say, guess of expansion you two-part looked other there states, look less decide as that moved what I now be and Conversely, you've that other you of and you you'd those? geographic into that -- identified going there it at you're not years Are two you that question. are active be two yet, are back want more are

David Schneider

and Jeff expense take It the jump seems so. will Yes. the that comments. let I into additional I'll of

think Maybe being when state we're we're very attractive maybe opportunity. a has but come the mindful list. and that focused strategic really you states, on actually lower and that opportunities I we was up enter also

Credit perspective, There's long I we've So list it's of Officer both our looking still been done constantly at pretty states lender-friendly analysis focused think a from Chief has evolving quarter-over-quarter. a states. significant legal of that on

Our preference non-judicial is always going foreclosures. to be

non-judicial from traditional there's a timeline like a foreclosures perspective. looks Sometimes, lot it foreclosure ultimately but

we're business we in as So But rates. open-minded ultimately have the that to that that migration business focused we're multiple on sometimes do in, well, borrowers in states.

with us us. borrowers into existing continue and expand want doing will business state are come looking to to So to and new a

as X This and great There Nevada been Minnesota. mind a that we've we'll more complicated on quarter, was Midwest two a we Arizona perspective, is a the much obviously -- and lending had a I example. were have Whereas and done there's our slightly Arizona that that Minnesota, at states the pick Arizona, but we Nevada, lot for and in entered we licensing we opportunities are entered, have a historically a and we in additional the states, there's something while. of there. gap X those are that that not this lending for from eyes think that's X while. or So looking

they So do then new loan. become states to borrowers piece opportunistic investments markets. the get and portfolio made great repeat our of then just I enter that was think a to We near-term, great any of these to will large market just not these borrowers, start ultimately And takes it from to We relationships. word portion sense mouth one We that a a an borrower. of us some time. find that collateral, And local in become deal you're the We new Minnesota going new of experts. a came travel. it see in develop

expect beyond probably be X states right to of expansion. that to I to would significantly in a there there the loans XX say I build say longer-term, out will significantly to But time year I of Columbia. of don't be each in it think as District is grow think to a So handful would expansion would Stephen, I more And I grow now, new we're now I from on in you'll start at states at. more look portfolio, see and will for to the states. us a more relationships. But X loans than But more think states Nevada We're Arizona, to be always continuing right to to stepping just -- going this or focus. take focus XXXX, are each state those continuing going make look states. to to look those we I and that sense here. be states Minnesota, the continue those, think states.

Stephen Laws

compensation of from little the this to about up slightly a question Last we we run talked was identified or about you've move think going couple I the that bit think adding to on headcount Great. quarter bit know me, ads, where sequentially. tied from rate markets. should the but little the ahead? third headcount plan you right a forward increasing that more as Is additions about especially

David Schneider

Yeah.

So it's difficult. always bit little a

compensation. like I we always did the in So focus remarks to around as prepared cash

you So, assets. since RSU amortization on have expense once tangible out, you back the

at between G&A. of total about ended and expense -- we call between million think I up what cash compensation So I'll cash X.X

puts the that year around us For $XX just million.

compensation. million So with and still of target cash of of kind that $XX in line

to just just I somewhere target different significant. QX nothing probably and and going numbers in and XXXX. headcount in the either similar kind That's beyond, we'll make cash probably XXXX than there think think XXXX or but terms be $XX looks look to in slight of come might significantly expense there of -- will million that between be X.X I above slightly that QX, will probably So X be increases, will

our I of platform headcount the beauty state think expansion. some in is for its scalability. sales added We

we're sales any think headcount not new expecting for XXXX. I

hoping that. on cash be not to impact for with think We'll the a there our are can total so which think a have compensation you number, bit cash I little back-office marginal functions of I operations going. running Would as that we it expense long we're call number that $XX to continue can. $XX probably near-term of keep at million as and might

Stephen Laws

Great. Appreciate [Indiscernible]

Operator

you. Thank

Matthew Our of B. next question with your line the proceed Please comes Howlett from question. with Riley.

Matthew Howlett

Hi, you David question. and Thank for taking my Jeff.

was up million, for earnings comments $XX $X.XX that recognized Just drag. the issue, of at penny quarter. back pickup in a just with bigger just quarter I curious the the look over could the the portfolio. portfolio, a growth would've were in with I When in timing on case the just The just issue. would thought there there's an we're growth sequentially been a given closings the you it a have reconciliation But in the if

David Schneider

question Yes. and Sure. Matt. Great for joining, thanks

from was for perspective think heavily was I September, September. in So million $XXX towards a of production out the a our quarter, total $XXX it weighted about million

close that. quarter-end. income happen. fees you the quarter, interest So We on a probably deals throughout and to tend tends bit from to towards It on lost they little that worked

numbers. $X.XX and well continued in I off be your reflected originations think felt million probably nice the got as for. off default hoping QX up numbers hoping elevated I we as or the So -- $XX in then we comments in $XX quarter a we we potentially these the that -- on in QX so that remarks million point, driver a October in We're pick full non-accrual, just that's won't that origination we're on resolutions that prepared happened about QX, X.X the lot to a to saw think based talked the what is and around QX paid fully

of, of quarter the a that off the had quarter about still non-accrual weighted a towards $XX end from full $X.XX call it took let's post-quarter-end. drag million We So, non-accrual, the

in So will hopefully a lead earnings pickup that nice of to QX.

Matthew Howlett

Got it. Great.

Do like So to you profile leverage. modeling I to just tell just in when Company? guidance with old the security, And help introduction here, the it platform get a about of the it think the place do to the mean, the ROEs you the the of issue. Broadmark. yield capital the just new what got think timing debt, you the you versus mean, the look be it's looks with will with increase? expect then us ROE us out a higher covered structure -- and I dividend can generally you

what you the rotate structure? trends or begin how to ROE talked you think Just about do about do curious, as we our trajectory, tell you the with s investors capital

David Schneider

Yeah. Absolutely. Matt. Great question,

weighted We over expect. will in definitely a expect time. answer So capital significant It's to down, cost will next over we yes, -- we slowly. Again, but of sprint, average not think so we a be is it X comes increase X short yes, weighted we a marathon, capital as the which years, ROE cost down. average think of come

and we've future, as The well will Steve issues. seasonality grown growth dollars achievable I think something the as in billion-dollars. I the third and be years that Obviously mentioned is we've remarks, is we we billion as guidance, QX, Our to some did this we'll grown had not targeting that be -- then bit give continue Again, XX% year origination quarter to perspective. so little should our are -- think replicated. volumes but which numbers the expect there's it of year-to-date, to QX is what about in definitely types the grow is definitely think We going I increase. that a the we're mentioned XX%. in can in targeting from more prepared portfolio those something in upcoming something

continuing of capital, average to to default the lower continue resolution. asset growth the increase on any be cost yields, of impact to So focused offset weighted lowering

I'd think going time. to in not to I to going like be going relatively on little really would a I up good but lead equity year over increase a are to bit, every we're we're of It's think like then things believe pick near-term. place all overnight, to and those the to what in return to happen significant going

Matthew Howlett

Thanks a lot, David.

David Schneider

Matt. Thanks,

Operator

Thank back Ladies turn comments. floor at no this there closing questions. the like and further time, are to to for management you. gentlemen, I'd

Jeff Pyatt

forward for thanks part Capital the quarter you our Realty hope for part I seeing Year. to everyone safe earnings you, and and New and we of in after taking healthy stay third you call. all Broadmark look being Thank Bye.

Operator

Ladies teleconference. today's and concludes you. this Thank gentlemen,

for Thank You you this may disconnect participation. at your your time. lines