Sutherland Asset Management Corporation Announces Fourth Quarter 2017 Results

- Fourth Quarter Net Income of $0.38 per share of common stock -

- Fourth Quarter Core Earnings of $0.37 per share of common stock -

- Added $376.4 Million of SBC Loans During Fourth Quarter 2017 -

- Declared and Paid Fourth Quarter Dividend of $0.37 Per Share -

- Declared First Quarter 2018 Dividend of $0.37 Per Share -

- Board Approves $20.0 Million Share Repurchase Program -

News provided by

Sutherland Asset Management Corporation

Mar 14, 2018, 05:22 ET

NEW YORK, March 14, 2018 /PRNewswire/ -- Sutherland Asset Management Corporation ("Sutherland" or the "Company") (NYSE: SLD) today reported financial results for the quarter ended December 31, 2017.   

Fourth Quarter Highlights:

  • Net income of $12.7 million, or $0.38 per share of common stock
  • Core earnings of $12.4 million, or $0.37 per share of common stock
  • Adjusted net book value of $16.69 per share of common stock as of December 31, 2017
  • Originated $216.5 million of small balance commercial ("SBC") loans
  • Originated $38.3 million of loans guaranteed by the U.S. Small Business Administration (the "SBA") under its Section 7(a) loan program
  • Originated $458.7 million of residential mortgage loans
  • Acquired $121.6 million of SBC loans

Highlights Subsequent to Quarter End:

  • Issued $40.0 million in aggregate principal of 7.50% Senior Secured Notes due 2022 with a yield to par call date of 6.50%
  • Declared First Quarter 2018 dividend of $0.37 per share of common stock and operating partnership unit ("OP unit").
  • Approved $20.0 million share repurchase program

A summary of Sutherland's operating results for the quarter ended December 31, 2017 is presented below. Sutherland reported U.S. GAAP net income for the three months ended December 31, 2017 of $12.7 million, or $0.38 per share of common stock, and Core Earnings (a non-GAAP financial measure) of $12.4 million, or $0.37 per share of common stock.

"With over $1.0 billion in capital deployed during 2017 through new loan originations, including $130 million in our growing SBA loan business, the Company significantly outperformed expectations in its first full year as a publicly traded company", stated Thomas Capasse, Chairman and Chief Executive Officer. "In the fourth quarter we grew quarterly per share earnings 3% from the third quarter as we leveraged our multiple platforms to originate loans. We also aligned our balance sheet during the year with successful non-recourse debt offerings and multiple securitizations. As we move into 2018 we are focused on achieving our strategic objective to expand our platform and create additional value for our shareholders." 

For the first quarter 2018 the Company declared a dividend of $0.37 per share of common stock and operating partnership unit. This dividend is payable on April 30, 2018 to shareholders of record as of the close of business on March 30, 2018.

Common Dividends

During the fourth quarter of 2017, the Company's Board of Directors declared a quarterly cash dividend of $0.37 per share of common stock and OP unit in its operating partnership subsidiary for the quarter ended December 31, 2017 to common stockholders and OP unit holders of record as of December 31, 2017.  The dividend was paid on January 31, 2018.

Approval of Stock Repurchase Program

On March 6, 2018, the Board of Directors approved a share repurchase program authorizing, but not obligating, the repurchase of up to $20.0 million of the Company's common stock from time to time. The Company expects to acquire shares through open market or privately negotiated transactions. The timing and amount of repurchase transactions will be determined by the Company's management based on its evaluation of market conditions, share price, legal requirements and other factors.  Repurchases are expected to be made from available cash on hand.

The Company issued a full detailed presentation of its fourth 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 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 certain 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 December 31, 2017:





(In Thousands)

Three Months Ended
December 31, 2017

Net Income

$

12,730

Reconciling items:


Unrealized loss on mortgage-backed securities

24

Unrealized loss on mortgage servicing rights

47

Total reconciling items

$

71

Core earnings before income taxes

$

12,801

      Income tax adjustments

(359)

Core earnings

$

12,442

Webcast and Earnings Conference Call

Management will host a webcast and conference call on Thursday, March 15, 2018 at 8:30 am ET to provide a general business update and discuss the financial results for the quarter ended December 31, 2017.  The conference call can be accessed by dialing 888-394-8218 (domestic) or 323-701-0225 (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 March 29, 2018.  To access the replay, dial 844-512-2921 (domestic) or 412-317-6671 (international). The replay pin number is 2087148.

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 Corporation
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)

December 31, 2017

December 31, 2016

Assets





Cash and cash equivalents

$

63,425

$

59,566

Restricted cash

11,666

20,190

Short-term investments

—

319,984

Loans, net (including $188,150 and $81,592 held at fair value)

1,017,920

1,011,121

Loans, held for sale, at fair value

216,022

181,797

Mortgage backed securities, at fair value

39,922

32,391

Loans eligible for repurchase from Ginnie Mae

95,158

137,986

Investment in unconsolidated joint venture

55,369

—

Derivative instruments

4,725

5,785

Servicing rights (including $72,295 and $61,376 held at fair value)

94,038

83,854

Receivable from third parties

6,756

7,220

Other assets

56,840

54,277

Assets of consolidated VIEs

861,662

691,096

Total Assets

$

2,523,503

$

2,605,267

Liabilities





Secured borrowings

631,286

927,462

Promissory note

6,107

7,378

Securitized debt obligations of consolidated VIEs, net

598,148

492,942

Convertible notes, net

108,991

—

Senior secured notes, net

138,078

—

Guaranteed loan financing

293,045

390,555

Contingent consideration

10,016

14,487

Liabilities for loans eligible for repurchase from Ginnie Mae

95,158

137,986

Derivative instruments

282

643

Dividends payable

12,289

11,505

Accounts payable and other accrued liabilities

74,636

70,207

Total Liabilities

$

1,968,036

$

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

539,455

513,295

Deficit

(3,385)

(201)

Total Sutherland Asset Management Corporation equity

536,073

513,097

Non-controlling interests

19,394

39,005

Total Stockholders' Equity

$

555,467

$

552,102

Total Liabilities and Stockholders' Equity

$

2,523,503

$

2,605,267

SUTHERLAND ASSET MANAGEMENT CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME










Three Months Ended
December 31, 

Year Ended 
December 31, 

(In Thousands, except share data)

2017

2017

Interest income

$

36,135

$

138,305

Interest expense

(21,067)

(74,646)

Net interest income before provision for loan losses

$

15,068

$

63,659

Provision for loan losses

(506)

(2,363)

Net interest income after provision for loan losses

$

14,562

$

61,296

Non-interest income






Gains on residential mortgage banking activities, net of variable loan expenses

$

9,470

$

41,700

Other income

4,178

8,458

Servicing income, net of amortization and impairment

6,787

22,994

Total non-interest income

$

20,435

$

73,152

Non-interest expense






Employee compensation and benefits

$

(14,409)

$

(55,039)

Allocated employee compensation and benefits from related party

(833)

(3,843)

Professional fees

(2,588)

(8,921)

Management fees – related party

(2,041)

(8,059)

Loan servicing expense

(2,811)

(10,323)

Other operating expenses

(7,752)

(26,939)

Total non-interest expense

$

(30,434)

$

(113,124)

Net realized gain on financial instruments

6,177

19,329

Net unrealized gain on financial instruments

2,066

7,000

Income from continuing operations before provision for income taxes

$

12,806

$

47,653

Provision for income taxes

(76)

(1,839)

Net income


$

12,730

$

45,814

Less: Net income attributable to non-controlling interest

633

2,524

Net income attributable to Sutherland Asset Management Corporation

$

12,097

$

43,290








Earnings (loss) per basic common share






Continuing operations

$

0.38

$

1.38

Discontinued operations

$

—

$

—

Earnings per basic common share

$

0.38

$

1.38








Earnings (loss) per diluted common share






Continuing operations

$

0.38

$

1.38

Discontinued operations

$

—

$

—

Earnings per diluted common share

$

0.38

$

1.38

SUTHERLAND ASSET MANAGEMENT CORPORATION

UNAUDITED SEGMENT REPORTING

FOR THE THREE MONTHS ENDED DECEMBER 31, 2017


























SBA Originations,

Residential






Loan

SBC


Acquisitions,

Mortgage

Corporate-




(In Thousands)

Acquisitions

Originations

and Servicing

Banking

Other

Consolidated

Interest income

$

8,954

$

17,050

$

9,174

$

957

$

—

$

36,135

Interest expense

(3,859)

(11,160)

(3,966)

(835)

(1,247)

(21,067)

Net interest income before provision for loan losses

$

5,095

$

5,890

$

5,208

$

122

$

(1,247)

$

15,068

Provision for loan losses

(239)

(279)

12

—

—

(506)

Net interest income after provision for loan losses

$

4,856

$

5,611

$

5,220

$

122

$

(1,247)

$

14,562

Non-interest income


















Gains on residential mortgage banking activities, net of variable loan expenses

$

—

$

—

$

—

$

9,470

$

—

$

9,470

Other income

2,045

1,275

808

50

—

4,178

Servicing income

163

1,020

1,026

4,578

—

6,787

      Total non-interest income

$

2,208

$

2,295

$

1,834

$

14,098

$

—

$

20,435

Non-interest expense


















Employee compensation and benefits

(189)

(2,797)

(3,048)

(8,242)

(133)

(14,409)

Allocated employee compensation and benefits from related party

(84)

—

—

—

(749)

(833)

Professional fees

(676)

(241)

(473)

(112)

(1,086)

(2,588)

Management fees – related party

—

—

—

—

(2,041)

(2,041)

Loan servicing expense

(826)

(631)

94

(1,448)

—

(2,811)

Other operating expenses

(1,410)

(3,179)

(1,124)

(1,559)

(480)

(7,752)

    Total non-interest expense

$

(3,185)

$

(6,848)

$

(4,551)

$

(11,361)

$

(4,489)

$

(30,434)

Net realized gain (loss) on financial instruments

(217)

3,583

2,795

—

16

6,177

Net unrealized gain (loss) on financial instruments

(19)

1,454

690

(47)

(12)

2,066

Income from continuing operations before provision for
income taxes

$

3,643

$

6,095

$

5,988

$

2,812

$

(5,732)

$

12,806

Total Assets

$

511,427

$

1,154,509

$

510,006

$

324,392

$

23,169

$

2,523,503

SUTHERLAND ASSET MANAGEMENT CORPORATION

UNAUDITED SEGMENT REPORTING

FOR THE YEAR ENDED DECEMBER 31, 2017

























SBA Originations,

Residential





Loan

SBC

Acquisitions,

Mortgage

Corporate-



(In Thousands)

Acquisitions

Originations

and Servicing

Banking

Other

Consolidated

  Interest income

$

37,198

$

59,021

$

38,108

$

3,978

$

—

$

138,305

  Interest expense

(16,741)

(35,121)

(16,098)

(3,145)

(3,541)

(74,646)

Net interest income before provision for loan losses

$

20,457

$

23,900

$

22,010

$

833

$

(3,541)

$

63,659

Provision for loan losses

(2,026)

(195)

(142)

—

—

(2,363)

Net interest income after provision for loan losses

$

18,431

$

23,705

$

21,868

$

833

$

(3,541)

$

61,296

Non-interest income

















Gains on residential mortgage banking activities, net of variable loan expenses

$

—

$

—

$

—

$

41,700

$

—

$

41,700

Other income

2,814

3,983

1,513

148

—

8,458

Servicing income

197

824

4,624

17,349

—

22,994

Gain on bargain purchase

—

—

—

—

—

—

Total non-interest income

$

3,011

$

4,807

$

6,137

$

59,197

$

—

$

73,152

Non-interest expense

















Employee compensation and benefits

(576)

(8,509)

(10,505)

(34,601)

(848)

(55,039)

Allocated employee compensation and benefits from related party

(384)

—

—

—

(3,459)

(3,843)

Professional fees

(1,501)

(1,351)

(1,973)

(865)

(3,231)

(8,921)

Management fees – related party

—

—

—

—

(8,059)

(8,059)

Loan servicing expense

(2,981)

(2,355)

1,454

(6,441)

—

(10,323)

Other operating expenses

(4,285)

(9,666)

(4,076)

(6,677)

(2,235)

(26,939)

Total non-interest expense

$

(9,727)

$

(21,881)

$

(15,100)

$

(48,584)

$

(17,832)

$

(113,124)

Net realized (loss) gain on financial instruments

(323)

9,665

9,509

—

478

19,329

Net unrealized gain (loss) on financial instruments

1,628

8,125

1,315

(4,000)

(68)

7,000

Income from continuing operations before provision for
income taxes

$

13,020

$

24,421

$

23,729

$

7,446

$

(20,963)

$

47,653

Total Assets

$

511,427

$

1,154,509

$

510,006

$

324,392

$

23,169

$

2,523,503

SOURCE Sutherland Asset Management Corporation

Related Links

http://www.sutherlandam.com

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