Manhattan Bridge Capital, Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024. The company originates, services and manages short-term, first-mortgage loans to real-estate investors, primarily in the New York metropolitan area and Florida.
Financial performance and position
| Metric | Q1 2024 / March 31, 2024 | Comparable period / December 31, 2023 |
|---|---|---|
| Total revenue | $2.573 million | $2.398 million, Q1 2023 |
| Net income | $1.476 million; $0.13 per basic and diluted share | $1.260 million; $0.11 per share, Q1 2023 |
| Net cash from operating activities | $1.253 million | $1.315 million, Q1 2023 |
| Loans receivable | $72.596 million | $73.048 million |
| Total assets | $74.825 million | $76.435 million |
| Cash and restricted cash | $398,642, including $311,545 restricted; unrestricted cash was $87,097 | $1.692 million combined |
| Debt | $23.451 million line of credit and $5.847 million carrying value of senior secured notes | $25.152 million line of credit and $5.828 million carrying value of notes |
| Stockholders’ equity | $43.087 million | $42.933 million |
Revenue increased 7.3% year over year, chiefly from higher interest income on loans; net income rose 17.1%. Interest income was $2.142 million versus $1.954 million, while origination fees were $431,000 versus $444,000. Interest and financing-cost expense increased 7.0% to $691,000; general and administrative expense declined 17.3% to $410,000, partly because Q1 2023 included a special officer bonus. Calculated net margin was approximately 57.4%, versus 52.5% in Q1 2023.
Investing activities provided $452,000, as $10.103 million of loan collections exceeded $9.650 million of new loan issuances. Financing activities used $2.999 million, including $1.702 million of net line-of-credit repayment and $1.287 million of dividends paid. Cash and restricted cash declined by $1.293 million during the quarter.
Material changes and portfolio
- Loans receivable declined approximately $452,000 from year-end. At quarter-end, all reported loans were classified as performing; management reported no impairment or impairment provision. The company said borrowers on loans past their original due dates were paying interest and had signed, or were in the process of signing, extensions.
- The portfolio was concentrated in residential development loans ($59.996 million), with commercial development loans of $10.680 million and mixed-use loans of $1.920 million. No single entity represented more than 10% of loans outstanding.
- The company had $6.883 million of committed construction loans available for borrower draws when conditions are met. It reported that $2.0 million of loans outstanding at March 31 were paid off subsequently.
- At March 31, the $32.5 million credit facility had $23.451 million outstanding and a stated rate of approximately 8.9%; it matures February 28, 2026. The company reported compliance with its covenants. The $6.0 million principal amount of 6% senior secured notes matures April 22, 2026.
- The company repurchased 2,000 shares for $9,800 during Q1. Its buyback program expired April 10, 2024; total purchases under the program were 56,294 shares for approximately $271,000.
Outlook, risks and unusual items
Management expects cash balances, operating cash flows and the credit facility to be sufficient to fund operations for the next 12 months, while expecting working-capital needs to increase as it pursues portfolio growth. No numerical earnings, revenue or portfolio-growth guidance was provided.
The credit facility bears a floating rate and includes collateral, financial-ratio and other covenants, restrictions on dividends and share repurchases, and a cross-default provision. The company’s business depends on available funding and its ability to originate loans at attractive rates; key risks include borrower and collateral credit risk, concentration, competition, interest-rate changes and dependence on the CEO. The company also notes its REIT status requires annual distributions of at least 90% of REIT taxable income to maintain qualification and avoid excise tax on net taxable income.
The board-declared cash dividend of $0.115 per share, totaling $1.315 million, was paid April 15, 2024. Management stated disclosure controls were effective as of March 31, 2024, with no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Loan extensions, maturities, collateral valuations and the collectability of loans—especially given the company’s low unrestricted cash and $6.883 million of construction commitments.
- Credit-facility availability, borrowing-base capacity, covenant compliance and exposure to floating interest rates.
- The timing and amount of dividends relative to REIT distribution requirements, liquidity needs and lender restrictions.
- Whether portfolio growth and loan repayments can sustain earnings and cash generation; interim results are not necessarily indicative of full-year performance.
- Terms and effect of Amendment No. 7 to the credit agreement, identified as an exhibit to the filing.