Ready Capital (US:RC)2025-08-07 21:57markdown [Financial & Operational Highlights](index=1&type=section&id=Financial%20%26%20Operational%20Highlights) Ready Capital reported a GAAP net loss of **$(0.31)** per common share and a distributable loss of **$(0.14)** per common share for the second quarter of 2025, actively pursuing a liquidation strategy for underperforming assets to fund reinvestment into its core multi-family bridge portfolio, alongside significant loan originations, the sale of its Residential Mortgage Banking segment, and a substantial stock repurchase program | Metric | Value per Common Share | | :--- | :--- | | GAAP Loss from Continuing Operations | $(0.31) | | Distributable Loss | $(0.14) | | Distributable Loss before Realized Losses | $(0.10) | | Book Value (as of June 30, 2025) | $10.44 | - The company is implementing a targeted liquidation strategy on underperforming assets to generate liquidity for reinvestment in its Core multi-family bridge portfolio[2](index=2&type=chunk) | Operational Highlight | Value | | :--- | :--- | | LMM Commercial Real Estate Originations | $173 million | | Small Business Lending (SBL) Loan Originations | $359 million | | Stock Repurchase | ~8.5 million shares @ $4.41/share | | Senior Secured Notes Issuance | $50 million (9.375% due 2028) | - The company completed the sale of its Residential Mortgage Banking segment during the quarter[8](index=8&type=chunk) [Reconciliation of GAAP to Non-GAAP Measures](index=1&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Measures) The company utilizes "Distributable Earnings," a non-GAAP financial measure, to offer investors greater insight into the operational performance used by management for decision-making and dividend determination, adjusting GAAP net income by excluding items such as certain unrealized gains and losses, non-cash stock compensation, and non-recurring expenses, resulting in a Distributable Loss of **$(19.8) million** for Q2 2025 from a GAAP Net Loss of **$(53.7) million** - Distributable earnings is a non-GAAP measure defined as net income adjusted for items like unrealized gains/losses on certain MBS and MSRs, changes in CECL reserve, non-cash compensation, and other non-recurring items[5](index=5&type=chunk) | (in thousands) | Three Months Ended June 30, 2025 | | :--- | :--- | | **Net Loss (GAAP)** | **$ (53,677)** | | Total reconciling items | $ 78,469 | | Income tax adjustments | $ (37,496) | | **Distributable earnings before realized losses** | **$ (12,704)** | | Realized losses on sale of investments, net of tax | $ (7,088) | | **Distributable loss** | **$ (19,792)** | [Consolidated Financial Statements](index=5&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements show a reduction in the company's balance sheet size from year-end 2024 to June 30, 2025, with both total assets and liabilities decreasing, while the statement of operations for Q2 2025 reveals a larger net loss compared to the prior-year period, influenced by lower net interest income and significant non-interest expenses, including a substantial valuation allowance on loans held for sale [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, Ready Capital's total assets stood at **$9.31 billion**, a decrease from **$10.14 billion** at December 31, 2024, with total liabilities similarly decreasing to **$7.37 billion** from **$8.20 billion** over the same period, primarily driven by a reduction in assets of consolidated VIEs and a corresponding decrease in securitized debt obligations | (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$ 9,308,797** | **$ 10,141,921** | | Total Liabilities | $ 7,374,774 | $ 8,197,818 | | **Total Stockholders' Equity** | **$ 1,925,662** | **$ 1,935,742** | [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) For the second quarter of 2025, the company reported a net loss of **$(53.7) million**, or **$(0.34)** per basic share, compared to a net loss of **$(34.2) million**, or **$(0.23)** per basic share, in Q2 2024, with the wider loss primarily due to a significant valuation allowance on loans held for sale of **$(39.7) million** and a loss on bargain purchase of **$(14.4) million**, and dividends declared per common share reduced to **$0.125** from **$0.30** in the prior-year quarter | (in thousands, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net interest income | $ 16,898 | $ 50,952 | | Total non-interest income (expense) | $ (26,671) | $ (82,393) | | **Net income (loss)** | **$ (53,677)** | **$ (34,201)** | | **Total earnings per common share - basic** | **$ (0.34)** | **$ (0.23)** | | Dividends declared per share of common stock | $ 0.125 | $ 0.30 | [Segment Performance](index=7&type=section&id=Segment%20Performance) In Q2 2025, segment performance varied significantly, with the Small Business Lending (SBL) segment generating **$3.6 million** in pre-tax income, while the LMM Commercial Real Estate segment incurred a substantial pre-tax loss of **$(63.0) million** due to valuation allowances and real estate impairments, and the Corporate-Other segment also reported a loss mainly from a loss on bargain purchase | Segment (Q2 2025, in thousands) | Income (Loss) Before Income Taxes | Total Assets | | :--- | :--- | :--- | | LMM Commercial Real Estate | $ (63,044) | $ 7,377,104 | | Small Business Lending | $ 3,627 | $ 1,530,810 | | Corporate-Other | $ (29,273) | $ 400,883 | - The LMM segment's Q2 loss was driven by a **$(39.7) million** valuation allowance on loans held for sale and a **$(4.3) million** impairment on real estate[26](index=26&type=chunk) - The SBL segment's profitability in Q2 was supported by **$15.4 million** in net realized gains on financial instruments and real estate owned[26](index=26&type=chunk) [Subsequent Events](index=1&type=section&id=Subsequent%20Events) Following the end of the second quarter, Ready Capital engaged in significant asset disposition and acquisition activities, taking ownership of a mixed-use property in Portland, OR, via a deed-in-lieu arrangement and selling a portfolio of **21 loans**, generating substantial proceeds - On July 21, 2025, the company acquired ownership of a mixed-use asset in Portland, OR, through a consensual deed-in-lieu arrangement[3](index=3&type=chunk) - On August 6, 2025, the company sold **21 loans** with a carrying value of **$494 million**, receiving net proceeds of **$85 million**[4](index=4&type=chunk) [Other Information](index=3&type=section&id=Other%20Information) This section contains logistical details for the company's Q2 2025 earnings conference call, a standard safe harbor statement regarding forward-looking information, and a corporate profile describing Ready Capital's business focus - Management will host a conference call on August 8, 2025, to discuss the quarterly financial results[14](index=14&type=chunk) - Ready Capital Corporation is a multi-strategy real estate finance company specializing in originating, acquiring, financing, and servicing lower-to-middle-market commercial real estate loans[18](index=18&type=chunk)