Ready Capital Corp [RCB] Filings

10-Q 1 rc-20230930x10q.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 September 30, 2023

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	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 172,124,669 shares of common stock, par value $0.0001 per share, outstanding as of November 7, 2023.

Table of Contents

TABLE OF CONTENTS

		Page

PART I.	FINANCIAL INFORMATION	3

Item 1.	Financial Statements	3

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	61

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	82

Item 4.	Controls and Procedures	85

PART II.	OTHER INFORMATION	86

Item 1.	Legal Proceedings	86

Item 1A.	Risk Factors	86

Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities	87

Item 3.	Default Upon Senior Securities	87

Item 4.	Mine Safety Disclosures	88

Item 5.	Other Information	88

Item 6.	Exhibits	88

SIGNATURES		92

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)	September 30, 2023		December 31, 2022
Assets
Cash and cash equivalents	$	181,913	$	163,041
Restricted cash		36,576		55,927
Loans, net (including $9,221 and $9,786 held at fair value)		4,151,923		3,576,310
Loans, held for sale, at fair value		184,989		258,377
Paycheck Protection Program loans (including $168 and $576 held at fair value)		58,145		186,985
Mortgage-backed securities, at fair value		33,339		32,041
Loans eligible for repurchase from Ginnie Mae		72,401		66,193
Investment in unconsolidated joint ventures (including $7,547 and $8,094 held at fair value)		136,113		118,641
Derivative instruments		8,620		12,963
Servicing rights (including $207,495 and $192,203 held at fair value)		307,779		279,320
Real estate owned, held for sale		281,941		117,098
Other assets		265,428		201,321
Assets of consolidated VIEs		7,080,266		6,552,760
Total Assets	$	12,799,433	$	11,620,977
Liabilities
Secured borrowings		2,385,070		2,846,293
Paycheck Protection Program Liquidity Facility (PPPLF) borrowings		76,333		201,011
Securitized debt obligations of consolidated VIEs, net		5,264,037		4,903,350
Convertible notes, net		—		114,397
Senior secured notes, net		344,684		343,355
Corporate debt, net		763,828		662,665
Guaranteed loan financing		886,916		264,889
Contingent consideration		13,408		28,500
Liabilities for loans eligible for repurchase from Ginnie Mae		72,401		66,193
Derivative instruments		—		1,586
Dividends payable		64,777		47,177
Loan participations sold		57,465		54,641
Due to third parties		2,436		11,805
Accounts payable and other accrued liabilities		168,298		176,520
Total Liabilities	$	10,099,653	$	9,722,382
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, 172,023,871 and 110,523,641 shares issued and outstanding, respectively		17		11
Additional paid-in capital		2,318,109		1,684,074
Retained earnings		168,539		4,994
Accumulated other comprehensive loss		(5,928)		(9,369)
Total Ready Capital Corporation equity		2,592,115		1,791,088
Non-controlling interests		99,304		99,146
Total Stockholders’ Equity	$	2,691,419	$	1,890,234
Total Liabilities, Redeemable Preferred Stock, and Stockholders’ Equity	$	12,799,433	$	11,620,977

See Notes To Unaudited Consolidated Financial Statements

Table of Contents

READY CAPITAL CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except share data)	2023		2022		2023		2022
Interest income	$	250,590	$	186,026	$	701,047	$	464,102
Interest expense		(191,612)		(115,495)		(524,540)		(257,339)
Net interest income before recovery of (provision for) loan losses	$	58,978	$	70,531	$	176,507	$	206,763
Recovery of (provision for) loan losses		12,151		(3,431)		(542)		(583)
Net interest income after recovery of (provision for) loan losses	$	71,129	$	67,100	$	175,965	$	206,180
Non-interest income
Residential mortgage banking activities		7,059		12,053		26,112		23,424
Net realized gain (loss) on financial instruments and real estate owned		14,402		21,117		49,855		50,238
Net unrealized gain (loss) on financial instruments		17,684		16,460		13,363		58,522
Servicing income, net of amortization and impairment of $324 and $4,495 for the three and nine months ended September 30, 2023, and $4,123 and $13,128 for the three and nine months ended September 30, 2022, respectively		16,033		12,189		44,468		37,282
Income on purchased future receivables, net of allowance for (recovery of) credit losses of $2,658 and $6,890 for the three and nine months ended September 30, 2023, and $(941) and $(1,381) for the three and nine months ended September 30, 2022, respectively		904		1,162		1,530		5,490
Gain (loss) on bargain purchase		(14,862)		—		215,032		—
Income (loss) on unconsolidated joint ventures		56		(603)		745		11,160
Other income		18,315		16,150		56,767		30,985
Total non-interest income	$	59,591	$	78,528	$	407,872	$	217,101
Non-interest expense
Employee compensation and benefits		(24,868)		(25,941)		(77,716)		(79,998)
Allocated employee compensation and benefits from related party		(3,001)		(1,745)		(7,827)		(6,549)
Variable expenses on residential mortgage banking activities		(4,091)		(9,061)		(16,150)		(5,508)
Professional fees		(7,810)		(3,865)		(19,183)		(12,842)
Management fees – related party		(7,229)		(5,410)		(18,070)		(14,071)
Incentive fees – related party		—		(949)		(1,791)		(949)
Loan servicing expense		(15,818)		(10,697)		(38,896)		(29,913)
Transaction related expenses		(2,329)		(1,535)		(17,188)		(8,606)
Other operating expenses		(14,368)

Ready Capital Corp [RCB] Filings
Ready Capital Corp [RC] Filings
Ready Capital Corp [RCC] Filings
Ready Capital Corp [RC-PC] Filings
Ready Capital Corp [RC-PE] Filings
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10-Q	[2019-05-09]
10-K	[2019-03-13]
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10-Q	[2018-08-08]
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10-Q	[2015-05-11]
10-K	[2015-03-16]
10-Q	[2014-11-13]
10-Q	[2014-08-12]
10-Q	[2014-05-14]
10-K	[2014-03-13]
10-Q	[2013-11-12]
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Ready Capital Corp [RCB] Filings

Ready Capital Corp [RC] Filings

Ready Capital Corp [RCC] Filings

Ready Capital Corp [RC-PC] Filings

Ready Capital Corp [RC-PE] Filings