READY CAPITAL CORPORATION REPORTS FIRST QUARTER 2022 RESULTS

GAAP EARNINGS PER COMMON SHARE OF $0.70
DISTRIBUTABLE EARNINGS PER COMMON SHARE OF $0.52 –
DISTRIBUTABLE RETURN ON AVERAGE STOCKHOLDERS’ EQUITY OF 13.6% –

NEW YORK, May 5, 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 March 31, 2022.

“Ready Capital’s first quarter results are reflective of our sustained expansion of our core lending channels, the addition of complimentary lending products and the ongoing growth of our business,” commented Thomas Capasse, Ready Capital’s Chairman and Chief Executive Officer. “The quarter was highlighted by record SBC originations in addition to the closing of the merger with Mosaic Real Estate Credit. Both mark significant milestones in achieving the scale necessary to deliver consistent solutions to our customers.”

First Quarter Highlights

  • Completed a $542 million merger with Mosaic Real Estate Credit to expand the Company’s ability to provide full life-cycle lending to small balance commercial (“SBC”) properties
  • Total investments of $3.1 billion, including $2.2 billion of SBC originations and acquisitions, $769.1 million of residential mortgage loans, and $101.0 million of U.S. Small Business Administration 7(a) loans
  • Closed a $1.1 billion commercial mortgage collateralized loan obligation, the Company’s largest CRE CLO to date
  • Raised $107.1 million in gross proceeds in an underwritten public offering of 7,000,000 shares of common stock
  • Declared and paid dividend of $0.42 per share in cash with distributable earnings coverage of the common dividend at 1.3x
  • Net book value of $15.22 per share of common stock as of March 31, 2022

Subsequent Events

  • Closed an underwritten public offering of $120.0 million in aggregate principal amount of 6.125% senior unsecured notes due 2025
  • Completed the securitization of $276.8 million of fixed-rate SBC loans and issued $204.5 million of senior bonds at a weighted average pass-through rate of 4.2%

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 March 31, 2022

Net Income

$

64,263

Reconciling items:



Unrealized gain on mortgage servicing rights


(32,599)

Impact of ASU 2016-13 on accrual loans


1,968

Non-recurring REO impairment


1,567

Merger transaction costs and other non-recurring expenses


6,655

Total reconciling items

$

(22,409)

Income tax adjustments


7,009

Distributable earnings

$

48,863

Less: Distributable earnings attributable to non-controlling interests


589

Less: Income attributable to participating shares


2,412

Distributable earnings attributable to common stockholders

$

45,862

Distributable earnings per common share – basic

$

0.52

Distributable earnings per common share – diluted

$

0.48

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 Friday, May 6, 2022 at 8:30 am ET to provide a general business update and discuss the financial results for the quarter ended March 31, 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: 1-844-825-9789
International: 1-412-317-5180

Conference Call Playback:

Domestic: 1-844-512-2921
International: 1-412-317-6671
Replay Pin #: 10166523

The playback can be accessed through May 20, 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
[email protected]

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

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 income (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

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


READY CAPITAL CORPORATION
UNAUDITED SEGMENT REPORTING
FOR THE THREE MONTHS ENDED MARCH 31, 2022







Small


Residential









SBC Lending


Business


Mortgage


Corporate-



(in thousands)


and Acquisitions


Lending


Banking


Other


Consolidated

Interest income


$

96,343


$

26,237


$

1,825


$


$

124,405

Interest expense



(53,093)



(5,690)



(1,958)



(276)



(61,017)

Net interest income before provision for loan losses


$

43,250


$

20,547


$

(133)


$

(276)


$

63,388

  Provision for loan losses



(270)



(1,272)







(1,542)

Net interest income after provision for loan losses


$

42,980


$

19,275


$

(133)


$

(276)


$

61,846

Non-interest income
















Residential mortgage banking activities


$


$


$

8,424


$


$

8,424

Net realized gain on financial instruments and real estate owned



882



7,125







8,007

Net unrealized gain on financial instruments



12,429



288



32,598





45,315

Servicing income, net



920



1,493



8,115





10,528

Income on purchased future receivables, net





2,469







2,469

Income on unconsolidated joint ventures



6,563









6,563

Other income



3,014



2,871



24



592



6,501

Total non-interest income


$

23,808


$

14,246


$

49,161


$

592


$

87,807

Non-interest expense
















Employee compensation and benefits



(10,160)



(9,518)



(7,534)



(756)



(27,968)

Allocated employee compensation and benefits from related party



(300)







(2,700)



(3,000)

Variable expenses on residential mortgage banking activities







(979)





(979)

Professional fees



(2,401)



(1,468)



(264)



(993)



(5,126)

Management fees – related party









(3,196)



(3,196)

Loan servicing expense



(5,875)



(502)



(2,543)





(8,920)

Transaction related expenses









(5,699)



(5,699)

Other operating expenses



(5,376)



(3,787)



(2,024)



(1,466)



(12,653)

Total non-interest expense


$

(24,112)


$

(15,275)


$

(13,344)


$

(14,810)


$

(67,541)

Income (loss) before provision for income taxes


$

42,676


$

18,246


$

35,684


$

(14,494)


$

82,112

Total assets


$

9,520,677


$

1,217,726


$

493,671


$

244,170


$

11,476,244

SOURCE Ready Capital Corporation

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