Sutherland Asset Management Corporation Announces Third Quarter 2017 Results

By , in PR PR Economy on .

NEW YORK, Nov. 8, 2017 — 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
shares issued and outstanding, respectively

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
for the three and nine months ended September 30, 2017, and $1,850 and
$6,079 for the three and nine months ended September 30, 2016,
respectively

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
the nine months ended September 30, 2016)

(576)

Income tax benefit

225

Loss from discontinued operations

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Maria Burns

Maria Burns

Maria is a Viral News Editor who graduated from the University Of California. She likes social media trends, being semi-healthy, Buffalo Wild Wings and vodka with lime. When she isn’t writing, Maria loves to travel. She last went to Thailand to play with elephants and is planning a trip to Bali.
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