READY CAPITAL CORPORATION REPORTS FOURTH QUARTER 2021 RESULTS

NEW YORK, Feb. 24, 2022 /PRNewswire/ -- Ready Capital Corporation ("Ready Capital" or the "Company") 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 December 31, 2021.

"Ready Capital's record fourth quarter results concluded an exceptional year highlighted by record originations in our SBC and SBA 7(a) lending businesses, growth in our equity and debt capitalization and strong credit performance," commented Thomas Capasse, Ready Capital's Chairman and Chief Executive Officer. "Our unique business model, diversified revenue streams and increased scale position the Company well to continue to deliver results for our shareholders going forward."

Fourth Quarter Highlights

  • Total investments of $3.3 billion, including $2.3 billion of SBC originations and acquisitions, $876.3 million of residential mortgage loans, and $135.7 million of U.S. Small Business Administration 7(a) loans
  • Closed a $927.2 million commercial mortgage collateralized loan obligation with an 81% advance rate and a 153bps weighted average cost
  • Issued $350.0 million of 4.50% Senior Secured Notes due 2026 and $110.0 million of 5.50% Senior Unsecured Notes due 2028
  • Declared and paid dividend of $0.42 per share in cash with distributable earnings coverage of the common dividend at 1.6x
  • Adjusted net book value of $15.35 per share of common stock as of December 31, 2021, 2.5% year-over-year growth

Full Year Highlights

  • GAAP earnings per common share of $2.17 and distributable earnings per common share of $2.29
  • Distributable return on average stockholders' equity of 15.4%
  • Total SBC originations and acquisitions of $5.5 billion, 298% year-over-year growth
  • Total SBA 7(a) originations of $480.8 million, 122% year-over-year growth
  • $3.4 billion in equity and debt capital raised to support investment pipeline

Subsequent Events

  • In January 2022, completed a public offering of 7 million shares of common stock for total gross proceeds of $108.9 million

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 December 31, 2021

Net Income

$

53,588

Reconciling items:





Unrealized gain on mortgage servicing rights



(6,119)

Impact of ASU 2016-13 on accrual loans



845

Non-recurring REO recovery



(1,441)

Merger transaction costs and other non-recurring expenses



5,036

Total reconciling items

$

(1,679)

Income tax adjustments



626

Distributable earnings

$

52,535

Less: Distributable earnings attributable to non-controlling interests



364

Less: Income attributable to participating shares



2,376

Distributable earnings attributable to common stockholders

$

49,795

Distributable earnings per common share - basic and diluted

$

0.67

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, February 25, 2021 at 8:30 am ET to provide a general business update and discuss the financial results for the quarter ended December 31, 2021.

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 #: 13726423

The playback can be accessed through March 11, 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 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)



December 31, 2021



December 31, 2020

Assets













Cash and cash equivalents



$

229,531



$

138,975

Restricted cash





51,569





47,697

Loans, net (including $10,766 and $13,795 held at fair value)





2,915,446





1,550,624

Loans, held for sale, at fair value





552,935





340,288

Paycheck Protection Program loans (including $3,243 and $74,931 held at fair value)





870,352





74,931

Mortgage backed securities, at fair value





99,496





88,011

Loans eligible for repurchase from Ginnie Mae





94,111





250,132

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





141,148





79,509

Purchased future receivables, net





7,872





17,308

Derivative instruments





7,022





16,363

Servicing rights (including $120,142 and $76,840 held at fair value)





204,599





114,663

Real estate owned, held for sale





42,288





45,348

Other assets





172,098





89,503

Assets of consolidated VIEs





4,145,564





2,518,743

Total Assets



$

9,534,031



$

5,372,095

Liabilities













Secured borrowings





2,517,600





1,294,243

Paycheck Protection Program Liquidity Facility (PPPLF) borrowings





941,505





76,276

Securitized debt obligations of consolidated VIEs, net





3,214,303





1,905,749

Convertible notes, net





113,247





112,129

Senior secured notes, net





342,035





179,659

Corporate debt, net





441,817





150,989

Guaranteed loan financing





345,217





401,705

Contingent consideration





16,400





Liabilities for loans eligible for repurchase from Ginnie Mae





94,111





250,132

Derivative instruments





410





11,604

Dividends payable





34,348





19,746

Accounts payable and other accrued liabilities





184,079





135,655

Total Liabilities



$

8,245,072



$

4,537,887

Preferred stock Series C, liquidation preference $25.00 per share (refer to Note 21)





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





Common stock, $0.0001 par value, 500,000,000 shares authorized, 75,838,050 and 54,368,999 shares issued and outstanding, respectively





8





5

Additional paid-in capital





1,161,853





849,541

Retained earnings (deficit)





8,598





(24,203)

Accumulated other comprehensive loss





(5,733)





(9,947)

Total Ready Capital Corporation equity





1,276,104





815,396

Non-controlling interests





4,494





18,812

Total Stockholders' Equity



$

1,280,598



$

834,208

Total Liabilities, Redeemable Preferred Stock, and Stockholders' Equity



$

9,534,031



$

5,372,095

 

 

READY CAPITAL CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME





















Three Months Ended



For the Year Ended 

(in thousands, except share data)



December 31, 2021



December 31, 2021

Interest income



$

121,942



$

403,496

Interest expense





(57,249)





(213,561)

Net interest income before provision for loan losses



$

64,693



$

189,935

  Provision for loan losses





(961)





(8,049)

Net interest income after provision for loan losses



$

63,732



$

181,886

Non-interest income













Residential mortgage banking activities





21,928





137,297

Net realized gain on financial instruments and real estate owned





19,642





68,881

Net unrealized gain on financial instruments





8,081





39,377

Servicing income, net of amortization and impairment of $3,244 and $10,588





10,209





48,015

Income on purchased future receivables, net of allowance for doubtful accounts of $36 and $1,296





2,323





10,257

Income on unconsolidated joint ventures





816





6,916

Other income





3,452





9,009

Total non-interest income



$

66,451



$

319,752

Non-interest expense













Employee compensation and benefits





(18,481)





(90,065)

Allocated employee compensation and benefits from related party





(2,805)





(12,031)

Variable expenses on residential mortgage banking activities





(13,847)





(75,133)

Professional fees





(3,585)





(16,339)

Management fees – related party





(2,867)





(10,928)

Incentive fees – related party





(2,358)





(5,419)

Loan servicing expense





(8,904)





(29,983)

Transaction related expenses





(4,080)





(14,282)

Other operating expenses





(12,801)





(58,401)

Total non-interest expense



$

(69,728)



$

(312,581)

Income before provision for income taxes





60,455





189,057

Income tax provision





(6,867)





(29,083)

Net income



$

53,588



$

159,974

Less: Dividends on preferred stock





1,999





7,503

Less: Net income attributable to non-controlling interest





371





2,230

Net income attributable to Ready Capital Corporation



$

51,218



$

150,241















Earnings per common share - basic



$

0.69



$

2.17

Earnings per common share - diluted



$

0.68



$

2.17















Weighted-average shares outstanding













Basic





74,163,951





68,511,578

Diluted





74,326,672





68,660,906















Dividends declared per share of common stock



$

0.42



$

1.66

 

 

READY CAPITAL CORPORATION

UNAUDITED SEGMENT REPORTING

FOR THE THREE MONTHS ENDED DECEMBER 31, 2021









































SBC



Small



Residential



















Lending and



Business



Mortgage



Corporate-







(in thousands)



Acquisitions



Lending



Banking



Other



Consolidated



Interest income



$

83,496



$

36,437



$

2,009



$



$

121,942



Interest expense





(47,189)





(7,174)





(2,196)





(690)





(57,249)



Net interest income before provision for loan losses



$

36,307



$

29,263



$

(187)



$

(690)



$

64,693



  Provision for loan losses





(760)





(201)













(961)



Net interest income after provision for loan losses



$

35,547



$

29,062



$

(187)



$

(690)



$

63,732



Non-interest income

































Residential mortgage banking activities



$



$



$

21,928



$



$

21,928



Net realized gain on financial instruments and real estate owned





9,356





10,286













19,642



Net unrealized gain (loss) on financial instruments





2,020





(56)





6,117









8,081



Servicing income, net





593





1,544





8,072









10,209



Income on purchased future receivables, net









2,323













2,323



Income on unconsolidated joint ventures





816

















816



Other income (loss)





4,160





(2,777)





2,069









3,452



Total non-interest income



$

16,945



$

11,320



$

38,186



$



$

66,451



Non-interest expense

































Employee compensation and benefits





(3,002)





(10,660)





(3,859)





(960)





(18,481)



Allocated employee compensation and benefits from related party





(277)













(2,528)





(2,805)



Variable expenses on residential mortgage banking activities













(13,847)









(13,847)



Professional fees





(1,033)





(1,104)





(1,022)





(426)





(3,585)



Management fees – related party

















(2,867)





(2,867)



Incentive fees – related party

















(2,358)





(2,358)



Loan servicing expense





(6,883)





(418)





(1,603)









(8,904)



Transaction related expenses

















(4,080)





(4,080)



Other operating expenses





(5,321)





(4,168)





(2,173)





(1,139)





(12,801)



Total non-interest expense



$

(16,516)



$

(16,350)



$

(22,504)



$

(14,358)



$

(69,728)



Income (loss) before provision for income taxes



$

35,976



$

24,032



$

15,495



$

(15,048)



$

60,455



Total assets



$

7,106,206



$

1,558,641



$

482,185



$

386,999



$

9,534,031





 

 

READY CAPITAL CORPORATION

UNAUDITED SEGMENT REPORTING

For The YEAR ENDED December 31, 2021







































SBC



Small



Residential

















Lending and



Business



Mortgage



Corporate-





(in thousands)



Acquisitions



Lending



Banking



Other



Consolidated

Interest income



$

278,455



$

116,741



$

8,300



$



$

403,496

Interest expense





(164,797)





(36,872)





(9,193)





(2,699)





(213,561)

Net interest income before provision for loan losses



$

113,658



$

79,869



$

(893)



$

(2,699)



$

189,935

  Provision for loan losses





(7,387)





(662)













(8,049)

Net interest income after provision for loan losses



$

106,271



$

79,207



$

(893)



$

(2,699)



$

181,886

Non-interest income































Residential mortgage banking activities



$



$



$

137,297



$



$

137,297

Net realized gain on financial instruments and real estate owned





24,813





44,068













68,881

Net unrealized gain on financial instruments





19,457





2,999





16,921









39,377

Servicing income, net





3,113





14,510





30,392









48,015

Income on purchased future receivables, net









10,257













10,257

Income on unconsolidated joint ventures





6,916

















6,916

Other income (loss)





13,002





(6,231)





2,153





85





9,009

Total non-interest income



$

67,301



$

65,603



$

186,763



$

85



$

319,752

Non-interest expense































Employee compensation and benefits



$

(16,582)



$

(36,757)



$

(32,973)



$

(3,753)



$

(90,065)

Allocated employee compensation and benefits from related party





(1,203)













(10,828)





(12,031)

Variable expenses on residential mortgage banking activities













(75,133)









(75,133)

Professional fees





(4,064)





(3,034)





(2,951)





(6,290)





(16,339)

Management fees – related party

















(10,928)





(10,928)

Incentive fees – related party

















(5,419)





(5,419)

Loan servicing expense





(19,680)





(886)





(9,417)









(29,983)

Transaction related expenses

















(14,282)





(14,282)

Other operating expenses





(21,997)





(23,377)





(8,498)





(4,529)





(58,401)

Total non-interest expense



$

(63,526)



$

(64,054)



$

(128,972)



$

(56,029)



$

(312,581)

Income (loss) before provision for income taxes



$

110,046



$

80,756



$

56,898



$

(58,643)



$

189,057

Total assets



$

7,106,206



$

1,558,641



$

482,185



$

386,999



$

9,534,031

 

 

Cision View original content:https://www.prnewswire.com/news-releases/ready-capital-corporation-reports-fourth-quarter-2021-results-301490184.html

SOURCE Ready Capital Corporation

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