Ready Capital Corp [RC-PE] Filings

10-Q 1 rc-20240930.htm 10-Q rc-20240930

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 September 30, 2024

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, 50th 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 Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.0001 par value per share	RC	New York Stock Exchange
Preferred Stock, 6.25% Series C Cumulative Convertible, par value $0.0001 per share	RC PRC	New York Stock Exchange
Preferred Stock, 6.50% Series E Cumulative Redeemable, par value $0.0001 per share	RC PRE	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 168,530,704 shares of common stock, par value $0.0001 per share, outstanding as of November 7, 2024.

TABLE OF CONTENTS


	Page


PART I. FINANCIAL INFORMATION	4


Item 1. Financial Statements (Unaudited)	4
UNAUDITED CONSOLIDATED BALANCE SHEETS	4
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS	5
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)	6
UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY	8
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS	9
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)	11
Note 1. Organization	11
Note 2. Basis of Presentation	12
Note 3. Summary of Significant Accounting Policies	13
Note 4. Recent Accounting Pronouncements	24
Note 5. Business Combinations	24
Note 6. Loans and Allowance for Credit Losses	27
Note 7. Fair Value Measurements	35
Note 8. Servicing Rights	40
Note 9. Discontinued Operations and Assets and Liabilities Held for Sale	42
Note 10. Secured Borrowings	43
Note 11. Senior Secured Notes, and Corporate Debt, net	44
Note 12. Guaranteed Loan Financing	46
Note 13. Variable Interest Entities and Securitization Activities	47
Note 14. Interest Income and Interest Expense	49
Note 15. Derivative Instruments	50
Note 16. Real Estate Owned, Held for Sale	52
Note 17. Agreements and Transactions with Related Parties	52
Note 18. Other Assets and Other Liabilities	54
Note 19. Other Income and Operating Expenses	55
Note 20. Redeemable Preferred Stock and Stockholders’ Equity	56
Note 21. Earnings per Share of Common Stock	59
Note 22. Offsetting Assets and Liabilities	60
Note 23. Financial Instruments with Off-Balance Sheet Risk, Credit Risk, and Certain Other Risks	62
Note 24. Commitments, Contingencies and Indemnifications	64
Note 25. Income Taxes	65
Note 26. Segment Reporting	65
Note 27. Subsequent Events	68


Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	69


Item 3. Quantitative and Qualitative Disclosures About Market Risk	90


Item 4. Controls and Procedures	94


PART II. OTHER INFORMATION	94


Item 1. Legal Proceedings	94


Item 1A. Risk Factors	94


Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	94


Item 3. Default Upon Senior Securities	95


Item 4. Mine Safety Disclosures	95


Item 5. Other Information	95


Item 6. Exhibits	95


SIGNATURES	99

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

READY CAPITAL CORPORATION

UNAUDITED CONSOLIDATED BALANCE SHEETS


(in thousands)	September 30, 2024	December 31, 2023
Assets
Cash and cash equivalents	$181,315	$138,532
Restricted cash	31,331	30,063
Loans, net (including $4,851 and $9,348 held at fair value)	3,555,928	4,020,160
Loans, held for sale (including $101,364 and $81,599 held at fair value and net of valuation allowance of $156,107 and $0)	320,082	81,599
Mortgage-backed securities	30,780	27,436
Investment in unconsolidated joint ventures (including $6,777 and $7,360 held at fair value)	146,397	133,321
Derivative instruments	11,032	2,404
Servicing rights	127,989	102,837
Real estate owned, held for sale	166,697	252,949
Other assets	412,238	300,175
Assets of consolidated VIEs	5,794,720	6,897,145
Assets held for sale (refer to Note 9)	474,535	454,596
Total Assets	$11,253,044	$12,441,217
Liabilities
Secured borrowings	2,184,280	2,102,075
Securitized debt obligations of consolidated VIEs, net	3,960,185	5,068,453
Senior secured notes, net	437,689	345,127
Corporate debt, net	768,470	764,908
Guaranteed loan financing	742,631	844,540
Contingent consideration	2,007	7,628
Derivative instruments	2,085	212
Dividends payable	44,602	54,289
Loan participations sold	99,737	62,944
Due to third parties	1,239	3,641
Accounts payable and other accrued liabilities	279,014	207,481
Liabilities held for sale (refer to Note 9)	392,697	333,157
Total Liabilities	$8,914,636	$9,794,455
Preferred stock Series C, liquidation preference $25.00 per share (refer to Note 20)	8,361	8,361

Commitments & contingencies (refer to Note 24)

Stockholders’ Equity
Preferred stock Series E, liquidation preference $25.00 per share (refer to Note 20)	111,378	111,378
Common stock, $0.0001 par value, 500,000,000 shares authorized, 168,530,704 and 172,276,105 shares issued and outstanding, respectively	17	17
Additional paid-in capital	2,292,229	2,321,989
Retained earnings (deficit)	(146,003)	124,413
Accumulated other comprehensive loss	(24,232)	(17,860)
Total Ready Capital Corporation equity	2,233,389	2,539,937
Non-controlling interests	96,658	98,464
Total Stockholders’ Equity	$2,330,047	$2,638,401
Total Liabilities, Redeemable Preferred Stock, and Stockholders’ Equity	$11,253,044	$12,441,217

See Notes To Unaudited Consolidated Financial Statements

READY CAPITAL CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS


	Three Months Ended September 30,		Nine Months Ended September 30,
(in thousands, except share data)	2024	2023	2024	2023
Interest income	$226,537	$248,711	$693,010	$695,683
Interest expense	(175,572)	(189,788)	(542,544)	(518,877)
Net interest income before recovery of (provision for) loan losses	$50,965	$58,923	$150,466	$176,806
Recovery of (provision for) loan losses	(53,166)	12,151	(7,751)	(542)
Net interest income after recovery of (provision for) loan losses	$(2,201)	$71,074	$142,715	$176,264
Non-interest income
Net realized gain (loss) on financial instruments and real estate owned	(69,184)	14,402	(43,066)	49,855
Net unrealized gain (loss) on financial instruments	(1,241)	15,121	2,034	8,075
Valuation allowance, loans held for sale	71,060	—	(156,107)	—
Servicing income, net of amortization and impairment of $5,841 and $14,216 for the three and nine months ended September 30, 2024, and $324 and $4,495 for the three and nine months ended September 30, 2023, respectively	5,415	6,867	12,444	16,548
Gain (loss) on bargain purchase	32,165	(14,862)	13,859	215,032
Income on unconsolidated joint ventures	3,214	56	4,821	745
Other income	14,823	19,176	37,246	58,200
Total non-interest income (expense)	$56,252	$40,760	$(128,769)	$348,455
Non-interest expense
Employee compensation and benefits	(22,989)	(19,979)	(59,202)	(62,120)
Allocated employee compensation and benefits from related party	(2,537)	(3,001)	(8,037)	(7,827)
Professional fees	(6,232)	(7,666)	(19,330)	(18,742)
Management fees – related party	(6,498)	(7,229)	(19,344)	(18,070)
Incentive fees – related party	—	—	—	(1,791)
Loan servicing expense	(10,101)	(12,541)	(33,907)	(31,590)
Transaction related expenses	(2,998)	(2,329)	(5,240)	(17,188)
Other operating expenses	(18,573)	(12,760)	(70,562)	(34,926)
Total non-interest expense	$(69,928)	$(65,505)	$(215,622)	$(192,254)
Income (loss) from continuing operations before benefit (provision) for income taxes	(15,877)	46,329	(201,676)	332,465
Income tax benefit (provision)	8,404	(2,808)	87,194	(5,903)
Net income (loss) from continuing operations	$(7,473)	$43,521	$(114,482)	$326,562
Discontinued operations (refer to Note 9)
Income (loss) from discontinued operations before benefit (provision) for income taxes	258	4,877	(1,554)	14,624
Income tax benefit (provision)	(64)	(1,219)	389	(3,656)
Net income (loss) from discontinued operations	$194	$3,658	$(1,165)	$10,968
Net income (loss)	$(7,279)	$47,179	$(115,647)	$337,530
Less: Dividends on preferred stock	1,999	1,999	5,997	5,998
Less: Net income attributable to non-controlling interest	2,031	1,517	3,968	7,842
Net income (loss) attributable to Ready Capital Corporation	$(11,309)	$43,663	$(125,612)	$323,690

Earnings per common share from continuing operations - basic	$(0.07)	$0.23	$(0.74)	$2.25
Earnings per common share from discontinued operations - basic	$0.00	$0.02	$(0.01)	$0.08
Total earnings per common share - basic	$(0.07)	$0.25	$(0.75)	$2.33

Earnings per common share from continuing operations - diluted	$(0.07)	$0.23	$(0.74)	$2.22
Earnings per common share from discontinued operations - diluted	$0.00	$0.02	$(0.01)	$0.08
Total earnings per common share - diluted	$(0.07)	$0.25	$(0.75)	$2.30
Weighted-average shares outstanding
Basic	168,335,483	171,973,933	169,669,145	138,323,878
Diluted	169,509,208	174,440,869	170,815,080	140,628,545
Dividends declared per share of common stock	$0.25	$0.36	$0.85	$1.16

See Notes To Unaudited Consolidated Financial Statements

READY CAPITAL CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)


	Three Months Ended September 30,		Nine Months Ended September 30,
(in thousands)	2024	2023	2024	2023
Net income (loss)	$(7,279)	$47,179	$(115,647)	$337,530
Other comprehensive income (loss) - net change by component:
Derivative financial instruments (cash flow hedges)	(12,639)	4,626	(7,834)	3,314
Foreign currency translation	2,257	(1,239)	1,534	213

Ready Capital Corp [RC-PE] Filings
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Ready Capital Corp [RC-PE] Filings

Ready Capital Corp [RC] Filings

Ready Capital Corp [RCB] Filings

Ready Capital Corp [RCC] Filings

Ready Capital Corp [RC-PC] Filings