Sutherland Asset Management Corporation Announces Third Quarter 2017 Results
- Quarterly Net Income of $0.37 per share of common stock -
- Quarterly Core Earnings of $0.38 per share of common stock -
- Originated $808.6 Million of Loans During Third Quarter 2017 -
- Declared and Paid Third Quarter Dividend of $0.37 Per Share -
NEW YORK, Nov. 8, 2017 /PRNewswire/ -- Sutherland Asset Management Corporation ("Sutherland" or the "Company") (NYSE: SLD) today reported financial results for the quarter ended September 30, 2017.
Third Quarter Highlights:
- Net income of $12.4 million, or $0.37 per share of common stock
- Core earnings of $12.9 million, or $0.38 per share of common stock
- Adjusted net book value of $16.68 per share of common stock as of September 30, 2017
- Originated $278.8 million of small balance commercial ("SBC") loans
- Originated $38.9 million of loans guaranteed by the U.S. Small Business Administration (the "SBA") under its Section 7(a) loan program
- Originated $490.9 million of residential mortgage loans
- Completed the securitization of $154.9 million of acquired SBC owner-occupied loans and sold $139.4 million of the senior bonds at a weighted average pass-through rate of 3.3%
- Completed issuance of a Collateralized Loan Obligation ("CLO") of $243.8 million of originated transitional loans and sold $198.8 million of the senior bonds at a floating rate of LIBOR plus 139 basis points.
A summary of Sutherland's operating results for the quarter ended September 30, 2017 is presented below. Sutherland reported U.S. GAAP net income for the three months ended September 30, 2017 of $12.4 million, or $0.37 per share of common stock, and Core Earnings (a non-GAAP financial measure) of $12.9 million, or $0.38 per share of common stock.
Thomas Capasse, Chairman and Chief Executive Officer commented, "We are quite energized by the team's ability to originate over $800 million in the third quarter which resulted in quarterly per share earnings growth of 9%. Our ongoing effort to grow our platform and strengthen our balance sheet was supported by a successful Convertible Note offering, which further strengthened our funding mix. As we look to the remainder of 2017 and beyond, we remain committed to executing on our strategic objectives to raise funds in an accretive manner to continue to expand our platform and build long term value for our shareholders."
Common Dividends
During the third quarter of 2017, the Company's Board of Directors declared a quarterly cash dividend of $0.37 per share of common stock and operating partnership unit ("OP unit") in its operating partnership subsidiary for the quarter ended September 30, 2017 to common stockholders and OP unit holders of record as of September 30, 2017. The dividend was paid on October 20, 2017.
The Company issued a full detailed presentation of its third quarter 2017 results, which can be viewed in the investor relations section at www.sutherlandam.com.
Use of Non-GAAP Financial Information
In addition to the results presented in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"), this press release includes Core Earnings which is a non-U.S. GAAP financial measure. The Company defines Core Earnings as net income adjusted for unrealized or realized gains (losses) related to mortgage backed securities, unrealized gains (losses) related to residential mortgage servicing rights, and one-time non-recurring gains or losses, such as gains or losses on discontinued operations, bargain purchase gains or merger related expenses.
The Company believes that providing investors with this non-U.S. GAAP financial information, in addition to the related U.S. GAAP measures, gives investors greater transparency into the information used by management in its financial and operational decision-making. However, because Core Earnings is an incomplete measure of the Company's financial performance and involves differences from net income computed in accordance with U.S. GAAP, it should be considered along with, but not as an alternative to, the Company's net income computed in accordance with U.S. GAAP as a measure of the Company's financial performance. In addition, because not all companies use identical calculations, the Company's presentation of Core Earnings may not be comparable to other similarly-titled measures of other companies.
The following table reconciles net income computed in accordance with U.S. GAAP to Core Earnings for the three months ended September 30, 2017:
| (In Millions) |
Three Months Ended September 30, 2017 |
||
| Net Income |
$ |
12.4 |
|
| Reconciling items: |
|||
| Unrealized (gain) loss on mortgage-backed securities |
(0.2) |
||
| Unrealized (gain) loss on mortgage servicing rights |
1.7 |
||
| Total reconciling items |
1.5 |
||
| Income tax adjustments |
(1.0) |
||
| Core earnings |
$ |
12.9 |
|
Webcast and Earnings Conference Call
Management will host a webcast and conference call on Thursday, November 9, 2017 at 8:30 am ET to provide a general business update and discuss the financial results for the quarter ended September 30, 2017. The conference call can be accessed by dialing 877-545-1402 (domestic) or 719-457-2716 (international).
The conference call will also be available in the Investor Relations section of the Company's website at www.sutherlandam.com. To listen to a live broadcast, go to the site at least 15 minutes prior to the scheduled start time in order to register, download and install any necessary audio software. A replay of the call will also be available on the Company's website approximately two hours after the live call through November 23, 2017. To access the replay, dial 844-512-2921 (domestic) or 412-317-6671 (international). The replay pin number is 1816994.
Safe Harbor Statement
This press release contains statements that constitute "forward-looking statements," as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and such statements are intended to be covered by the safe harbor provided by the same. These statements are based on management's current expectations and beliefs and are subject to a number of trends and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements; the Company can give no assurance that its expectations will be attained. Factors that could cause actual results to differ materially from the Company's expectations include, but are not limited to, applicable regulatory changes; general volatility of the capital markets; changes in the Company's investment objectives and business strategy; the availability of financing on acceptable terms or at all; the availability, terms and deployment of capital; the availability of suitable investment opportunities; changes in the interest rates or the general economy; increased rates of default and/or decreased recovery rates on investments; changes in interest rates, interest rate spreads, the yield curve or prepayment rates; changes in prepayments of Company's assets; the degree and nature of competition, including competition for the Company's target assets; and other factors, including those set forth in the Risk Factors section of the Company's most recent Annual Report on Form 10-K filed with the SEC, and other reports filed by the Company with the SEC, copies of which are available on the SEC's website, www.sec.gov. The Company undertakes no obligation to update these statements for revisions or changes after the date of this release, except as required by law.
Contact
Investor Relations
Sutherland Asset Management
212-257-4666
[email protected]
Additional information can be found on the Company's website at www.sutherlandam.com.
| SUTHERLAND ASSET MANAGEMENT CORPORATION UNAUDITED CONSOLIDATED BALANCE SHEETS |
||||||
| (In Thousands) |
September 30, 2017 |
December 31, 2016 |
||||
| Assets |
||||||
| Cash and cash equivalents |
$ |
70,590 |
$ |
59,566 |
||
| Restricted cash |
16,057 |
20,190 |
||||
| Short-term investments |
99,994 |
319,984 |
||||
| Loans, net (including $158,393 and $81,592 held at fair value) |
892,896 |
1,011,121 |
||||
| Loans, held for sale, at fair value |
200,318 |
181,797 |
||||
| Mortgage backed securities, at fair value |
41,371 |
32,391 |
||||
| Loans eligible for repurchase from Ginnie Mae |
101,408 |
137,986 |
||||
| Derivative instruments |
4,131 |
5,785 |
||||
| Servicing rights (including $68,815 and $61,376 held at fair value) |
89,372 |
83,854 |
||||
| Receivable from third parties |
6,756 |
7,220 |
||||
| Other assets |
35,356 |
54,277 |
||||
| Assets of consolidated VIEs |
944,894 |
691,096 |
||||
| Total Assets |
$ |
2,503,143 |
$ |
2,605,267 |
||
| Liabilities |
||||||
| Secured short-term borrowings |
522,767 |
927,462 |
||||
| Promissory note, net |
6,494 |
7,378 |
||||
| Securitized debt obligations of consolidated VIEs, net |
680,282 |
492,942 |
||||
| Convertible note, net |
109,414 |
— |
||||
| Senior secured note, net |
138,074 |
— |
||||
| Guaranteed loan financing |
313,388 |
390,555 |
||||
| Contingent consideration |
9,037 |
14,487 |
||||
| Liabilities for loans eligible for repurchase from Ginnie Mae |
101,408 |
137,986 |
||||
| Derivative instruments |
358 |
643 |
||||
| Dividends payable |
12,289 |
11,505 |
||||
| Accounts payable and other accrued liabilities |
54,579 |
70,207 |
||||
| Total Liabilities |
$ |
1,948,090 |
$ |
2,053,165 |
||
| Stockholders' Equity |
||||||
| Common stock, $0.0001 par value, 500,000,000 shares authorized, 31,996,440 and 30,549,084 |
3 |
3 |
||||
| Additional paid-in capital |
539,664 |
513,295 |
||||
| Deficit |
(3,952) |
(201) |
||||
| Total Sutherland Asset Management Corporation equity |
535,715 |
513,097 |
||||
| Non-controlling interests |
19,338 |
39,005 |
||||
| Total Stockholders' Equity |
$ |
555,053 |
$ |
552,102 |
||
| Total Liabilities and Stockholders' Equity |
$ |
2,503,143 |
$ |
2,605,267 |
||
| SUTHERLAND ASSET MANAGEMENT CORPORATION UNAUDITED CONSOLIDATED STATEMENTS OF INCOME |
||||||||||||
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||
| (In Thousands, except share data) |
2017 |
2016 |
2017 |
2016 |
||||||||
| Interest income |
$ |
35,038 |
$ |
31,890 |
$ |
102,169 |
$ |
104,282 |
||||
| Interest expense |
(19,908) |
(14,097) |
(53,579) |
(42,043) |
||||||||
| Net interest income before provision for loan losses |
$ |
15,130 |
$ |
17,793 |
$ |
48,590 |
$ |
62,239 |
||||
| Provision for loan losses |
(466) |
(488) |
(1,857) |
(4,689) |
||||||||
| Net interest income after provision for loan losses |
$ |
14,664 |
$ |
17,305 |
$ |
46,733 |
$ |
57,550 |
||||
| Non-interest income (expense) |
||||||||||||
| Gains on residential mortgage banking activities, net of variable loan expenses |
10,735 |
— |
32,229 |
— |
||||||||
| Other income |
1,853 |
1,729 |
4,281 |
5,335 |
||||||||
| Servicing income, net of amortization and impairment of $976 and $5,252 |
6,134 |
1,661 |
16,208 |
4,420 |
||||||||
| Employee compensation and benefits |
(13,715) |
(4,822) |
(40,630) |
(14,005) |
||||||||
| Allocated employee compensation and benefits from related party |
(990) |
(900) |
(3,010) |
(2,700) |
||||||||
| Professional fees |
(2,151) |
(3,120) |
(6,334) |
(8,573) |
||||||||
| Management fees – related party |
(2,034) |
(1,793) |
(6,018) |
(5,464) |
||||||||
| Loan servicing expense |
(3,388) |
(1,830) |
(7,513) |
(3,889) |
||||||||
| Other operating expenses |
(7,447) |
(3,373) |
(19,183) |
(11,185) |
||||||||
| Total non-interest income (expense) |
$ |
(11,003) |
$ |
(12,448) |
$ |
(29,970) |
$ |
(36,061) |
||||
| Net realized gain on financial instruments |
5,695 |
2,454 |
13,151 |
3,720 |
||||||||
| Net unrealized gain on financial instruments |
2,678 |
3,557 |
4,933 |
5,800 |
||||||||
| Income from continued operations before provision for income (taxes) benefit |
$ |
12,034 |
$ |
10,868 |
$ |
34,847 |
$ |
31,009 |
||||
| Provision for income (taxes) benefit |
340 |
(1,297) |
(1,763) |
(3,326) |
||||||||
| Net income from continuing operations |
$ |
12,374 |
$ |
9,571 |
$ |
33,084 |
$ |
27,683 |
||||
| Discontinued operations |
||||||||||||
| Loss from discontinued operations (including gain on disposal of $267 in |
— |
— |
— |
(576) |
||||||||
| Income tax benefit |
— |
— |
— |
225 |
||||||||
| Loss from discontinued operations |
— |
— |
— |
(351) |
||||||||
| Net income |
$ |
12,374 |
$ |
9,571 |
$ |
33,084 |
$ |
27,332 |
||||
| Less: Net income attributable to non-controlling interest |
533 |
777 |
1,891 |
2,217 |
||||||||
| Net income attributable to Sutherland Asset Management Corporation |
$ |
11,841 |
$ |
8,794 |
$ |
31,193 |
$ |
25,115 |
||||
| Earnings (loss) per basic common share |
||||||||||||
| Continuing operations |
$ |
0.37 |
$ |
0.34 |
$ |
1.00 |
$ |
0.98 |
||||
| Discontinued operations |
— |
— |
— |
(0.01) |
||||||||
| Earnings per basic common share |
$ |
0.37 |
$ |
0.34 |
$ |
1.00 |
$ |
0.97 |
||||
| Earnings (loss) per diluted common share |
||||||||||||
| Continuing operations |
$ |
0.37 |
$ |
0.34 |
$ |
1.00 |
$ |
0.98 |
||||
| Discontinued operations |
$ |
— |
$ |
— |
$ |
— |
$ |
(0.01) |
||||
| Earnings per diluted common share |
$ |
0.37 |
$ |
0.34 |
$ |
1.00 |
$ |
0.97 |
||||
| Weighted-average shares outstanding |
||||||||||||
| Basic |
32,026,494 |
25,870,485 |
31,120,476 |
25,870,485 |
||||||||
| Diluted |
32,028,980 |
25,870,485 |
31,121,449 |
25,870,485 |
||||||||
| Dividends declared per share of common stock |
$ |
0.37 |
$ |
0.45 |
$ |
1.11 |
$ |
0.90 |
||||
| SUTHERLAND ASSET MANAGEMENT CORPORATION UNAUDITED SEGMENT REPORTING FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2017 |
||||||||||||||||||
| SBA Originations, |
Residential |
|||||||||||||||||
| Loan |
SBC |
Acquisitions, |
Mortgage |
Corporate- |
||||||||||||||
| (In Thousands) |
Acquisitions |
Originations |
and Servicing |
Banking |
Other |
Consolidated |
||||||||||||
| Interest income |
$ |
7,800 |
$ |
17,258 |
$ |
9,039 |
$ |
941 |
$ |
— |
$ |
35,038 |
||||||
| Interest expense |
(3,937) |
(10,252) |
(3,795) |
(797) |
(1,127) |
(19,908) |
||||||||||||
| Net interest income before provision for loan losses |
$ |
3,863 |
$ |
7,006 |
$ |
5,244 |
$ |
144 |
$ |
(1,127) |
$ |
15,130 |
||||||
| Provision for loan losses |
(1,063) |
168 |
429 |
— |
— |
(466) |
||||||||||||
| Net interest income after provision for loan losses |
$ |
2,800 |
$ |
7,174 |
$ |
5,673 |
$ |
144 |
$ |
(1,127) |
$ |
14,664 |
||||||
| Non-interest income (expense) |
||||||||||||||||||
| Gains on residential mortgage banking activities, net of |
$ |
— |
$ |
— |
$ |
— |
$ |
10,735 |
$ |
— |
$ |
10,735 |
||||||
| Other income (loss) |
402 |
961 |
444 |
46 |
— |
1,853 |
||||||||||||
| Servicing income |
4 |
166 |
1,556 |
4,408 |
— |
6,134 |
||||||||||||
| Employee compensation and benefits |
(106) |
(1,879) |
(2,862) |
(8,735) |
(133) |
(13,715) |
||||||||||||
| Allocated employee compensation and benefits from related party |
(99) |
— |
— |
— |
(891) |
(990) |
||||||||||||
| Professional fees |
(343) |
(446) |
(534) |
(264) |
(564) |
(2,151) |
||||||||||||
| Management fees – related party |
— |
— |
— |
— |
(2,034) |
(2,034) |
||||||||||||
| Loan servicing expense |
(787) |
(661) |
(228) |
(1,712) |
— |
(3,388) |
||||||||||||
| Other operating expenses |
(1,467) |
(2,750) |
(993) |
(1,677) |
(560) |
(7,447) |
||||||||||||
| Total non-interest income (expense) |
$ |
(2,396) |
$ |
(4,609) |
$ |
(2,617) |
$ |
2,801 |
$ |
(4,182) |
$ |
(11,003) |
||||||
| Net realized (loss) gain on financial instruments |
(377) |
2,768 |
3,304 |
— |
— |
5,695 |
||||||||||||
| Net unrealized gain (loss) on financial instruments |
173 |
3,807 |
414 |
(1,728) |
12 |
2,678 |
||||||||||||
| Net income (loss) before provision for income taxes |
$ |
200 |
$ |
9,140 |
$ |
6,774 |
$ |
1,217 |
$ |
(5,297) |
$ |
12,034 |
||||||
| Provision for income taxes |
— |
(352) |
(2,169) |
(282) |
3,143 |
340 |
||||||||||||
| Net income (loss) |
$ |
200 |
$ |
8,788 |
$ |
4,605 |
$ |
935 |
$ |
(2,154) |
$ |
12,374 |
||||||
| Total Assets |
$ |
426,699 |
$ |
1,152,153 |
$ |
525,862 |
$ |
298,435 |
$ |
99,994 |
$ |
2,503,143 |
||||||
| SUTHERLAND ASSET MANAGEMENT CORPORATION UNAUDITED SEGMENT REPORTING FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 |
||||||||||||||||||
| SBA Originations, |
Residential |
|||||||||||||||||
| Loan |
SBC |
Acquisitions, |
Mortgage |
Corporate- |
||||||||||||||
| (In Thousands) |
Acquisitions |
Originations |
and Servicing |
Banking |
Other |
Consolidated |
||||||||||||
| Interest income |
$ |
28,242 |
$ |
41,972 |
$ |
28,935 |
$ |
3,020 |
$ |
— |
$ |
102,169 |
||||||
| Interest expense |
(12,472) |
(23,798) |
(12,120) |
(2,310) |
(2,879) |
(53,579) |
||||||||||||
| Net interest income before provision for loan losses |
$ |
15,770 |
$ |
18,174 |
$ |
16,815 |
$ |
710 |
$ |
(2,879) |
$ |
48,590 |
||||||
| Provision for loan losses |
(1,787) |
84 |
(154) |
— |
— |
(1,857) |
||||||||||||
| Net interest income after provision for loan losses |
$ |
13,983 |
$ |
18,258 |
$ |
16,661 |
$ |
710 |
$ |
(2,879) |
$ |
46,733 |
||||||
| Non-interest income (expense) |
||||||||||||||||||
| Gains on residential mortgage banking activities, net of |
$ |
— |
$ |
— |
$ |
— |
$ |
32,229 |
$ |
— |
$ |
32,229 |
||||||
| Other income (loss) |
769 |
2,708 |
706 |
98 |
— |
4,281 |
||||||||||||
| Servicing income |
37 |
(197) |
3,598 |
12,770 |
— |
16,208 |
||||||||||||
| Employee compensation and benefits |
(386) |
(5,713) |
(7,457) |
(26,359) |
(715) |
(40,630) |
||||||||||||
| Allocated employee compensation and benefits from |
(301) |
— |
— |
— |
(2,709) |
(3,010) |
||||||||||||
| Professional fees |
(868) |
(1,110) |
(1,499) |
(753) |
(2,104) |
(6,334) |
||||||||||||
| Management fees – related party |
— |
— |
— |
— |
(6,018) |
(6,018) |
||||||||||||
| Loan servicing expense |
(2,155) |
(1,724) |
1,359 |
(4,993) |
— |
(7,513) |
||||||||||||
| Other operating expenses |
(2,871) |
(6,486) |
(2,951) |
(5,116) |
(1,759) |
(19,183) |
||||||||||||
| Total non-interest income (expense) |
$ |
(5,775) |
$ |
(12,522) |
$ |
(6,244) |
$ |
7,876 |
$ |
(13,305) |
$ |
(29,970) |
||||||
| Net realized (loss) gain on financial instruments |
(106) |
6,082 |
6,714 |
— |
461 |
13,151 |
||||||||||||
| Net unrealized gain (loss) on financial instruments |
1,647 |
6,671 |
625 |
(3,953) |
(57) |
4,933 |
||||||||||||
| Net income (loss) before provision for income taxes |
$ |
9,749 |
$ |
18,489 |
$ |
17,756 |
$ |
4,633 |
$ |
(15,780) |
$ |
34,847 |
||||||
| Provision for income taxes |
— |
(10) |
(4,999) |
(1,252) |
4,498 |
(1,763) |
||||||||||||
| Net income (loss) |
$ |
9,749 |
$ |
18,479 |
$ |
12,757 |
$ |
3,381 |
$ |
(11,282) |
$ |
33,084 |
||||||
| Total Assets |
$ |
426,699 |
$ |
1,152,153 |
$ |
525,862 |
$ |
298,435 |
$ |
99,994 |
$ |
2,503,143 |
||||||
SOURCE Sutherland Asset Management Corporation
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