Ready Capital Corp [RC] Filings

10-Q 1 rc-20220331x10q.htm 10-Q

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

Commission File Number: 001-35808

READY CAPITAL CORPORATION

(Exact Name of Registrant as Specified in its Charter)


Maryland	90-0729143
(State or Other Jurisdiction of Incorporation or Organization)	(IRS Employer Identification No.)

1251 Avenue of the Americas, 50^th Floor, New York, NY 10020
(Address of Principal Executive Offices, Including Zip Code)
(212) 257-4600
(Registrant's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Exchange Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.0001 par value per share Preferred Stock, 6.25% Series C Cumulative Convertible, par value $0.0001 per share Preferred Stock, 6.50% Series E Cumulative Redeemable, par value $0.0001 per share 7.00% Convertible Senior Notes due 2023	RC RC PRC RC PRE RCA	New York Stock Exchange New York Stock Exchange New York Stock Exchange New York Stock Exchange
6.20% Senior Notes due 2026	RCB	New York Stock Exchange
5.75% Senior Notes due 2026	RCC	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☒	Accelerated filer ☐	Non-accelerated filer ☐	Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date:

The Company has 84,107,749 shares of common stock, par value $0.0001 per share, 7,563,191 shares of Class B-1 common stock, par value $0.0001 per share, 7,563,191 shares of Class B-2 common stock, par value $0.0001 per share, 7,563,191 shares of Class B-3 common stock, par value $0.0001 per share and 7,563,191 shares of Class B-4 common stock, par value $0.0001 per share, outstanding as of May 5, 2022.

Table of Contents

TABLE OF CONTENTS

		Page

PART I.	FINANCIAL INFORMATION	3

Item 1.	Financial Statements	3

Item 1A.	Forward-Looking Statements	63

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	65

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	90

Item 4.	Controls and Procedures	93

PART II.	OTHER INFORMATION	94

Item 1.	Legal Proceedings	94

Item 1A.	Risk Factors	95

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	95

Item 3.	Default Upon Senior Securities	95

Item 4.	Mine Safety Disclosures	95

Item 5.	Other Information	96

Item 6.	Exhibits	96

SIGNATURES		99

EXHIBIT 31.1 CERTIFICATIONS

EXHIBIT 31.2 CERTIFICATIONS

EXHIBIT 32.1 CERTIFICATIONS PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002, 10 U.S.C. SECTION 1350

EXHIBIT 32.2 CERTIFICATIONS PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002, 10 U.S.C. SECTION 1350

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

READY CAPITAL CORPORATION

UNAUDITED CONSOLIDATED BALANCE SHEETS


(in thousands)	March 31, 2022		December 31, 2021
Assets
Cash and cash equivalents	$	211,369	$	229,531
Restricted cash		56,963		51,569
Loans, net (including $10,722 and $10,766 held at fair value)		4,062,335		2,915,446
Loans, held for sale, at fair value		523,214		552,935
Paycheck Protection Program loans (including $1,843 and $3,243 held at fair value)		554,656		870,352
Mortgage-backed securities, at fair value		93,259		99,496
Loans eligible for repurchase from Ginnie Mae		82,975		94,111
Investment in unconsolidated joint ventures (including $8,610 and $8,894 held at fair value)		149,475		141,148
Investments held to maturity (including $17,053 held at fair value)		57,285		—
Purchased future receivables, net		8,753		7,872
Derivative instruments		36,852		7,022
Servicing rights (including $159,834 and $120,142 held at fair value)		244,143		204,599
Real estate owned, held for sale		119,207		42,288
Other assets		186,089		172,098
Assets of consolidated VIEs		5,089,669		4,145,564
Total Assets	$	11,476,244	$	9,534,031
Liabilities
Secured borrowings		3,274,324		2,517,600
Paycheck Protection Program Liquidity Facility (PPPLF) borrowings		627,445		941,505
Securitized debt obligations of consolidated VIEs, net		3,864,150		3,214,303
Convertible notes, net		113,531		113,247
Senior secured notes, net		342,454		342,035
Corporate debt, net		446,118		441,817
Guaranteed loan financing		332,398		345,217
Contingent consideration		92,148		16,400
Liabilities for loans eligible for repurchase from Ginnie Mae		82,975		94,111
Derivative instruments		2,620		410
Dividends payable		51,161		34,348
Loan participations sold		56,386		—
Due to third parties		38,846		668
Accounts payable and other accrued liabilities		184,592		183,411
Total Liabilities	$	9,509,148	$	8,245,072
Preferred stock Series C, liquidation preference $25.00 per share (refer to Note 21)		8,361		8,361

Commitments & contingencies (refer to Note 25)

Stockholders’ Equity
Preferred stock Series E, liquidation preference $25.00 per share (refer to Note 21)		111,378		111,378
Common stock, $0.0001 par value, 500,000,000 shares authorized, 114,335,948 and 75,838,050 shares issued and outstanding, respectively		11		8
Additional paid-in capital		1,723,099		1,161,853
Retained earnings		21,661		8,598
Accumulated other comprehensive loss		(4,704)		(5,733)
Total Ready Capital Corporation equity		1,851,445		1,276,104
Non-controlling interests		107,290		4,494
Total Stockholders’ Equity	$	1,958,735	$	1,280,598
Total Liabilities, Redeemable Preferred Stock, and Stockholders’ Equity	$	11,476,244	$	9,534,031

See Notes To Unaudited Consolidated Financial Statements

Table of Contents

READY CAPITAL CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME


	Three Months Ended March 31,
(in thousands, except share data)	2022		2021
Interest income	$	124,405	$	73,371
Interest expense		(61,017)		(50,761)
Net interest income before provision for loan losses	$	63,388	$	22,610
Recovery of (provision for loan losses)		(1,542)		8
Net interest income after (provision for) recovery of loan losses	$	61,846	$	22,618
Non-interest income
Residential mortgage banking activities		8,424		41,409
Net realized gain on financial instruments and real estate owned		8,007		8,846
Net unrealized gain on financial instruments		45,315		20,996
Servicing income, net of amortization and impairment of $3,345 and $1,942		10,528		15,635
Income on purchased future receivables, net of allowance for doubtful accounts of ($125) and $995		2,469		2,317
Income (loss) on unconsolidated joint ventures		6,563		(809)
Other income		6,501		571
Total non-interest income	$	87,807	$	88,965
Non-interest expense
Employee compensation and benefits		(27,968)		(22,777)
Allocated employee compensation and benefits from related party		(3,000)		(2,123)
Variable expenses on residential mortgage banking activities		(979)		(15,485)
Professional fees		(5,126)		(2,982)
Management fees – related party		(3,196)		(2,693)
Loan servicing expense		(8,920)		(6,104)
Transaction related expenses		(5,699)		(6,307)
Other operating expenses		(12,653)		(15,484)
Total non-interest expense	$	(67,541)	$	(73,955)
Income before provision for income taxes		82,112		37,628
Income tax provision		(17,849)		(8,681)
Net income	$	64,263	$	28,947
Less: Dividends on preferred stock		1,999		281
Less: Net income attributable to non-controlling interest		775		659
Net income attributable to Ready Capital Corporation	$	61,489	$	28,007

Earnings per common share - basic	$	0.70	$	0.49
Earnings per common share - diluted	$	0.66	$	0.49

Weighted-average shares outstanding
Basic		87,707,281		56,817,632
Diluted		95,402,494		56,843,448

Dividends declared per share of common stock	$	0.42	$	0.40

See Notes To Unaudited Consolidated Financial Statements

Table of Contents

READY CAPITAL CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


	Three Months Ended March 31,
(in thousands)		2022		2021
Net income	$	64,263	$	28,947
Other comprehensive income - net change by component
Net change in hedging derivatives (cash flow hedges)		213		1,978
Foreign currency translation adjustment		766		991
Other comprehensive income	$	979	$	2,969
Comprehensive income	$	65,242	$	31,916
Less: Comprehensive income attributable to non-controlling interests		780		723
Comprehensive income attributable to Ready Capital Corporation	$	64,462	$	31,193

See Notes To Unaudited Consolidated Financial Statements

Table of Contents

READY CAPITAL CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Three Months Ended March 31, 2022

Preferred Stock Shares Outstanding

Common Stock

Preferred Stock

Common Stock

Additional Paid-

Retained Earnings

Accumulated Other

Total Ready Capital

Non-controlling

Total Stockholders'

(in thousands, except share data)

Series B

Series D

Series E

Shares Outstanding

Series B

Series D

Series E

Par Value

In Capital

(Deficit)

Comprehensive Loss

Corporation Equity

Interests

Equity

Balance at January 1, 2022

—

4,600,000

75,838,050

—

111,378

1,161,853

Ready Capital Corp [RC] Filings
Ready Capital Corp [RCB] Filings
Ready Capital Corp [RCA] Filings
Ready Capital Corp [RCC] Filings
Ready Capital Corp [RC-PC] Filings
Ready Capital Corp [RC-PE] Filings
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Ready Capital Corp [RC] Filings

Ready Capital Corp [RCB] Filings

Ready Capital Corp [RCA] Filings

Ready Capital Corp [RCC] Filings

Ready Capital Corp [RC-PC] Filings

Ready Capital Corp [RC-PE] Filings