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READY CAPITAL CORPORATION REPORTS THIRD QUARTER 2022 RESULTS

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Ready Capital Corporation (NYSE: RC) reported financial results for Q3 2022, highlighting a GAAP earnings per share of $0.53 and distributable earnings of $0.46 per share. The company achieved total investments of $1.5 billion during the quarter, including significant originations and acquisitions. Notably, it increased its stock repurchase program to $50 million and issued $100 million in senior unsecured notes. The net book value per share stood at $15.40 as of September 30, 2022. The company maintains a distributable return on average stockholders' equity of 12.7%.

Positive
  • Q3 GAAP earnings per share of $0.53 and distributable earnings per share of $0.46.
  • Total investments of $1.5 billion in Q3 2022.
  • Increased stock repurchase program to $50 million.
  • Issued $100 million in senior unsecured notes.
  • Net book value of $15.40 per share as of September 30, 2022.
  • 12.7% distributable return on average stockholders' equity.
Negative
  • Market volatility and rising interest rates could impact future financial performance.

- GAAP EARNINGS PER COMMON SHARE OF $0.53 -
- DISTRIBUTABLE EARNINGS PER COMMON SHARE OF $0.46 -
- DISTRIBUTABLE RETURN ON AVERAGE STOCKHOLDERS' EQUITY OF 12.7% -

NEW YORK, Nov. 7, 2022 /PRNewswire/ -- Ready Capital Corporation ("Ready Capital" or the "Company") (NYSE: RC), a multi-strategy real estate finance company that originates, acquires, finances, and services small-to-medium balance commercial loans, today reported financial results for the quarter ended September 30, 2022.

"Against the backdrop of market volatility, rising rates and inflationary pressures, Ready Capital remains focused on finding accretive ways to grow the Company's platform while prudently managing our resources by taking a conservative stance on liquidity, leverage and credit," commented Thomas Capasse, Ready Capital's Chairman and Chief Executive Officer.

Third Quarter Highlights

  • Total investments of $1.5 billion, including $831.1 million of SBC originations and acquisitions, $534.3 million of residential mortgage loans, and $133.6 million of U.S. Small Business Administration 7(a) loans
  • Total year-to-date investment activity of $6.7 billion
  • Increased the size of the Company's existing stock repurchase program by an additional $25 million, bringing the total amount authorized under the program to $50 million
  • Issued $100.0 million in aggregate principal amount of 7.375% Senior Unsecured Notes due 2027
  • Declared and paid dividend of $0.42 per share in cash with distributable earnings coverage of the common dividend at 1.1x
  • Net book value of $15.40 per share of common stock as of September 30, 2022

Subsequent Events

  • During October 2022, the Company acquired approximately 3.6 million shares of the Company's common stock, par value $0.0001 per share, at an average price of $10.34 through the Company's share repurchase program.
  • On October 19, 2022, the Company completed the securitization of $860.1 million of floating rate SBC loans and sold $656.9 million of senior bonds with a weighted average cost of debt of SOFR + 3.0%.

Use of Non-GAAP Financial Information

In addition to the results presented in accordance with U.S. GAAP, this press release includes distributable earnings, formerly referred to as core earnings, which is a non-U.S. GAAP financial measure. The Company defines distributable earnings as net income adjusted for unrealized gains and losses related to certain mortgage backed securities ("MBS") not retained by us as part of our loan origination business, realized gains and losses on sales of certain MBS, unrealized gains and losses related to residential mortgage servicing rights ("MSR"), unrealized current non-cash provision for credit losses on accrual loans and one-time non-recurring gains or losses, such as gains or losses on discontinued operations, bargain purchase gains, merger related expenses, or other one-time items.

The Company believes that this non-U.S. GAAP financial information, in addition to the related U.S. GAAP measures, provides investors greater transparency into the information used by management in its financial and operational decision-making, including the determination of dividends. However, because Distributable 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 Distributable Earnings may not be comparable to other similarly-titled measures of other companies.

In calculating Distributable Earnings, Net Income (in accordance with U.S. GAAP) is adjusted to exclude unrealized gains and losses on MBS acquired by the Company in the secondary market but is not adjusted to exclude unrealized gains and losses on MBS retained by Ready Capital as part of its loan origination businesses, where the Company transfers originated loans into an MBS securitization and the Company retains an interest in the securitization. In calculating Distributable Earnings, the Company does not adjust Net Income (in accordance with U.S. GAAP) to take into account unrealized gains and losses on MBS retained by us as part of the loan origination businesses because the unrealized gains and losses that are generated in the loan origination and securitization process are considered to be a fundamental part of this business and an indicator of the ongoing performance and credit quality of the Company's historical loan originations. In calculating Distributable Earnings, Net Income (in accordance with U.S. GAAP) is adjusted to exclude realized gains and losses on certain MBS securities considered to be non-distributable. Certain MBS positions are considered to be non-distributable due to a variety of reasons which may include collateral type, duration, and size.

In addition, in calculating Distributable Earnings, Net Income (in accordance with U.S. GAAP) is adjusted to exclude unrealized gains or losses on residential MSRs, held at fair value. The Company treats its commercial MSRs and residential MSRs as two separate classes based on the nature of the underlying mortgages and the treatment of these assets as two separate pools for risk management purposes. Servicing rights relating to the Company's small business commercial business are accounted for under ASC 860, Transfer and Servicing, while the Company's residential MSRs are accounted for under the fair value option under ASC 825, Financial Instruments. In calculating Distributable Earnings, the Company does not exclude realized gains or losses on either commercial MSRs or residential MSRs, held at fair value, as servicing income is a fundamental part of Ready Capital's business and is an indicator of the ongoing performance.

To qualify as a REIT, the Company must distribute to its stockholders each calendar year at least 90% of its REIT taxable income (including certain items of non-cash income), determined without regard to the deduction for dividends paid and excluding net capital gain. There are certain items, including net income generated from the creation of MSRs, that are included in distributable earnings but are not included in the calculation of the current year's taxable income. These differences may result in certain items that are recognized in the current period's calculation of distributable earnings not being included in taxable income, and thus not subject to the REIT dividend distribution requirement until future years.

The table below reconciles Net Income computed in accordance with U.S. GAAP to Distributable Earnings.

(in thousands)

Three Months Ended September 30, 2022

Net Income

$

66,253

Reconciling items:



Unrealized gain on MSR


(16,649)

Impact of CECL on accrual loans


2,462

Merger transaction costs and other non-recurring expenses


2,927

Total reconciling items

$

(11,260)

Income tax adjustments


3,193

Distributable earnings

$

58,186

Less: Distributable earnings attributable to non-controlling interests


2,655

Less: Income attributable to participating shares


2,407

Distributable earnings attributable to common stockholders

$

53,124

Distributable earnings per common share - basic

$

0.46

Distributable earnings per common share - diluted

$

0.44

 

U.S. GAAP return on equity is based on U.S. GAAP net income, while distributable return on equity is based on distributable earnings, which adjusts U.S. GAAP net income for the items in the distributable earnings reconciliation above.

Webcast and Earnings Conference Call

Management will host a webcast and conference call on Tuesday, November 8, 2022 at 8:30 am ET to provide a general business update and discuss the financial results for the quarter ended September 30, 2022.

The Company encourages use of the webcast due to potential extended wait times to access the conference call via dial-in. The webcast of the conference call will be available in the Investor Relations section of the Company's website at www.readycapital.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. 

To Participate in the Telephone Conference Call:

Dial in at least five minutes prior to start time.

Domestic: 1-877-407-0792
International: 1-201-689-8263

Conference Call Playback:

Domestic: 1-844-512-2921
International: 1-412-317-6671
Replay Pin #: 13733002

The playback can be accessed through November 22, 2022.           

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.

About Ready Capital Corporation

Ready Capital Corporation (NYSE: RC) is a multi-strategy real estate finance company that originates, acquires, finances and services small- to medium-sized balance commercial loans. The Company specializes in loans backed by commercial real estate, including agency multifamily, investor and bridge as well as U.S. Small Business Administration loans under its Section 7(a) program. Headquartered in New York, New York, the Company employs over 600 professionals nationwide.

Contact

Investor Relations
Ready Capital Corporation
212-257-4666
InvestorRelations@readycapital.com

Additional information can be found on the Company's website at www.readycapital.com

 

READY CAPITAL CORPORATION
UNAUDITED CONSOLIDATED BALANCE SHEETS








(in thousands)


September 30, 2022


December 31, 2021

Assets







Cash and cash equivalents


$

208,037


$

229,531

Restricted cash



57,675



51,569

Loans, net (including $9,582 and $10,766 held at fair value)



4,158,807



2,915,446

Loans, held for sale, at fair value



403,609



552,935

Paycheck Protection Program loans (including $599 and $3,243 held at fair value)



275,761



870,352

Mortgage-backed securities, at fair value



37,895



99,496

Loans eligible for repurchase from Ginnie Mae



65,188



94,111

Investment in unconsolidated joint ventures (including $8,268 and $8,894 held at fair value)



119,272



141,148

Investments held to maturity



40,089



Purchased future receivables, net



8,593



7,872

Derivative instruments



26,212



7,022

Servicing rights (including $192,153 and $120,142 held at fair value)



277,692



204,599

Real estate owned, held for sale



82,977



42,288

Other assets



213,030



172,098

Assets of consolidated VIEs



5,883,374



4,145,564

Total Assets


$

11,858,211


$

9,534,031

Liabilities







Secured borrowings



3,348,249



2,517,600

Paycheck Protection Program Liquidity Facility (PPPLF) borrowings



305,797



941,505

Securitized debt obligations of consolidated VIEs, net



4,429,846



3,214,303

Convertible notes, net



114,108



113,247

Senior secured notes, net



342,912



342,035

Corporate debt, net



662,247



441,817

Guaranteed loan financing



283,822



345,217

Contingent consideration



33,200



16,400

Liabilities for loans eligible for repurchase from Ginnie Mae



65,188



94,111

Derivative instruments



4,345



410

Dividends payable



51,136



34,348

Loan participations sold



54,104



Due to third parties



14,881



668

Accounts payable and other accrued liabilities



171,152



183,411

Total Liabilities


$

9,880,987


$

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, 114,015,355 and 75,838,050 shares issued and
outstanding, respectively



11



8

Additional paid-in capital



1,720,019



1,161,853

Retained earnings



40,079



8,598

Accumulated other comprehensive loss



(4,505)



(5,733)

Total Ready Capital Corporation equity



1,866,982



1,276,104

Non-controlling interests



101,881



4,494

Total Stockholders' Equity


$

1,968,863


$

1,280,598

Total Liabilities, Redeemable Preferred Stock, and Stockholders' Equity


$

11,858,211


$

9,534,031

 

READY CAPITAL CORPORATION
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
















Three Months Ended September 30, 


Nine Months Ended September 30, 

(in thousands, except share data)


2022


2021


2022


2021

Interest income


$

186,026


$

105,136


$

464,102


$

281,554

Interest expense



(115,495)



(50,136)



(257,339)



(156,312)

Net interest income before provision for loan losses


$

70,531


$

55,000


$

206,763


$

125,242

Provision for loan losses



(3,431)



(1,579)



(583)



(7,088)

Net interest income after provision for loan losses


$

67,100


$

53,421


$

206,180


$

118,154

Non-interest income













Residential mortgage banking activities



12,053



37,270



23,424



115,369

Net realized gain on financial instruments and real estate owned



21,117



23,210



50,238



49,239

Net unrealized gain on financial instruments



16,460



5,688



58,522



31,296

Servicing income, net of amortization and impairment of $4,123 and $13,128 for
the three and nine months ended September 30, 2022, and $2,798 and $7,344 for
three and nine months ended September 30, 2021, respectively



12,189



10,243



37,282



37,806

Income on purchased future receivables, net of allowance for (recovery of) doubtful
accounts of $(941) and $(1,381) for the three and nine months ended
September 30, 2022, and $(279) and $1,260 for three and nine months ended
September 30, 2021, respectively



1,162



2,838



5,490



7,934

Income (loss) on unconsolidated joint ventures



(603)



3,548



11,160



6,100

Other income



16,150



5,674



30,985



5,557

Total non-interest income


$

78,528


$

88,471


$

217,101


$

253,301

Non-interest expense













Employee compensation and benefits



(25,941)



(24,537)



(79,998)



(71,584)

Allocated employee compensation and benefits from related party



(1,745)



(3,804)



(6,549)



(9,226)

Variable expenses on residential mortgage banking activities



(9,061)



(24,380)



(5,508)



(61,286)

Professional fees



(3,865)



(6,900)



(12,842)



(12,754)

Management fees – related party



(5,410)



(2,742)



(14,071)



(8,061)

Incentive fees – related party



(949)



(2,775)



(949)



(3,061)

Loan servicing expense



(10,697)



(8,124)



(29,913)



(21,079)

Transaction related expenses



(1,535)



(2,629)



(8,606)



(10,202)

Other operating expenses



(15,396)



(12,926)



(42,421)



(45,600)

Total non-interest expense


$

(74,599)


$

(88,817)


$

(200,857)


$

(242,853)

Income before provision for income taxes



71,029



53,075



222,424



128,602

Income tax provision



(4,776)



(6,540)



(32,943)



(22,216)

Net income


$

66,253


$

46,535


$

189,481


$

106,386

Less: Dividends on preferred stock



1,999



1,999



5,997



5,504

Less: Net income attributable to non-controlling interest



3,023



756



6,672



1,859

Net income attributable to Ready Capital Corporation


$

61,231


$

43,780


$

176,812


$

99,023














Earnings per common share - basic


$

0.53


$

0.61


$

1.66


$

1.47

Earnings per common share - diluted


$

0.50


$

0.60


$

1.56


$

1.46














Weighted-average shares outstanding













Basic



114,371,160



71,618,168



105,576,826



66,606,749

Diluted



125,666,609



71,787,228



116,865,770



66,768,918














Dividends declared per share of common stock


$

0.42


$

0.42


$

1.26


$

1.24

 

READY CAPITAL CORPORATION
UNAUDITED SEGMENT REPORTING
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2022






















Small


Residential









SBC Lending


Business


Mortgage


Corporate-



(in thousands)


and Acquisitions


Lending


Banking


Other


Consolidated

Interest income


$

159,307


$

24,605


$

2,114


$


$

186,026

Interest expense



(105,560)



(7,097)



(2,479)



(359)



(115,495)

Net interest income before provision for loan losses


$

53,747


$

17,508


$

(365)


$

(359)


$

70,531

Provision for loan losses



(3,231)



(200)







(3,431)

Net interest income after provision for loan losses


$

50,516


$

17,308


$

(365)


$

(359)


$

67,100

Non-interest income
















Residential mortgage banking activities


$


$


$

12,053


$


$

12,053

Net realized gain on financial instruments and real estate
owned



13,060



8,057







21,117

Net unrealized gain (loss) on financial instruments



322



(509)



16,647





16,460

Servicing income, net



1,191



1,991



9,007





12,189

Income on purchased future receivables, net





1,162







1,162

Loss on unconsolidated joint ventures



(603)









(603)

Other income



5,476



10,641



15



18



16,150

Total non-interest income


$

19,446


$

21,342


$

37,722


$

18


$

78,528

Non-interest expense
















Employee compensation and benefits


$

(6,603)


$

(12,329)


$

(5,274)


$

(1,735)


$

(25,941)

Allocated employee compensation and benefits from related
party



(175)







(1,570)



(1,745)

Variable expenses on residential mortgage banking activities







(9,061)





(9,061)

Professional fees



(1,630)



(1,426)



(138)



(671)



(3,865)

Management fees – related party









(5,410)



(5,410)

Incentive fees – related party









(949)



(949)

Loan servicing expense



(8,226)



(103)



(2,368)





(10,697)

Transaction related expenses









(1,535)



(1,535)

Other operating expenses



(6,208)



(5,482)



(2,034)



(1,672)



(15,396)

Total non-interest expense


$

(22,842)


$

(19,340)


$

(18,875)


$

(13,542)


$

(74,599)

Income (loss) before provision for income taxes


$

47,120


$

19,310


$

18,482


$

(13,883)


$

71,029

Total assets


$

10,268,015


$

930,577


$

459,058


$

200,561


$

11,858,211

 

READY CAPITAL CORPORATION
UNAUDITED SEGMENT REPORTING
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022






















Small


Residential









SBC Lending


Business


Mortgage


Corporate-



(in thousands)


and Acquisitions


Lending


Banking


Other


Consolidated

Interest income


$

378,077


$

79,866


$

6,159


$


$

464,102

Interest expense



(231,338)



(18,703)



(6,663)



(635)



(257,339)

Net interest income before recovery of (provision for) loan
losses


$

146,739


$

61,163


$

(504)


$

(635)


$

206,763

Recovery of (provision for) loan losses



1,108



(1,691)







(583)

Net interest income after recovery of (provision for) loan
losses


$

147,847


$

59,472


$

(504)


$

(635)


$

206,180

Non-interest income
















Residential mortgage banking activities


$


$


$

23,424


$


$

23,424

Net realized gain on financial instruments and real estate
owned



25,976



24,262







50,238

Net unrealized gain (loss) on financial instruments



10,234



(942)



49,230





58,522

Servicing income, net



3,542



8,042



25,698





37,282

Income on purchased future receivables, net





5,490







5,490

Income on unconsolidated joint ventures



11,160









11,160

Other income



14,828



15,462



60



635



30,985

Total non-interest income


$

65,740


$

52,314


$

98,412


$

635


$

217,101

Non-interest expense
















Employee compensation and benefits


$

(24,666)


$

(32,064)


$

(19,714)


$

(3,554)


$

(79,998)

Allocated employee compensation and benefits from related
party



(655)







(5,894)



(6,549)

Variable expenses on residential mortgage banking activities







(5,508)





(5,508)

Professional fees



(5,128)



(4,513)



(619)



(2,582)



(12,842)

Management fees – related party









(14,071)



(14,071)

Incentive fees – related party









(949)



(949)

Loan servicing expense



(22,013)



(531)



(7,369)





(29,913)

Transaction related expenses









(8,606)



(8,606)

Other operating expenses



(18,041)



(13,583)



(6,233)



(4,564)



(42,421)

Total non-interest expense


$

(70,503)


$

(50,691)


$

(39,443)


$

(40,220)


$

(200,857)

Income (loss) before provision for income taxes


$

143,084


$

61,095


$

58,465


$

(40,220)


$

222,424

Total assets


$

10,268,015


$

930,577


$

459,058


$

200,561


$

11,858,211

 

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/ready-capital-corporation-reports-third-quarter-2022-results-301670730.html

SOURCE Ready Capital Corporation

FAQ

What were Ready Capital's earnings per share for Q3 2022?

Ready Capital reported a GAAP earnings per share of $0.53 and distributable earnings of $0.46 for Q3 2022.

What is the total investment amount reported by Ready Capital for Q3 2022?

Ready Capital reported total investments of $1.5 billion for Q3 2022.

How much did Ready Capital increase its stock repurchase program to?

Ready Capital increased its stock repurchase program to a total of $50 million.

What was the net book value per share for Ready Capital as of September 30, 2022?

The net book value per share for Ready Capital as of September 30, 2022, was $15.40.

What is the distributable return on average stockholders' equity for Ready Capital?

Ready Capital reported a distributable return on average stockholders' equity of 12.7%.

Ready Capital Corporation

NYSE:RC

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11.84%
REIT - Mortgage
Real Estate Investment Trusts
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United States of America
NEW YORK