Ready Capital (RC) Q2 2024 earnings summary

Executive summary

• Reported a Q2 2024 GAAP net loss of $34.2 million, or $(0.21) per share, primarily due to the absence of a prior-year bargain purchase gain and a valuation allowance on loans transferred to held for sale.

• Distributable earnings for Q2 2024 were $16.6 million, or $0.07 per share, with distributable earnings before realized losses at $0.19 per share.

• Completed acquisitions of Madison One (USDA/SBA lender) and Funding Circle USA, expanding small business lending capabilities.

• Management executed strategic initiatives including asset sales, portfolio repositioning, and exit from residential mortgage banking to position for 2025 earnings growth.

• Record growth in Small Business Lending, with SBA 7(a) originations reaching $217 million.

Financial highlights

• Net book value per share was $12.97 at quarter-end, down from $14.52 a year ago.

• Declared and paid a $0.30 per share dividend, with a dividend yield of 14.7%.

• Net interest income after provision for loan losses was $50.9 million; net interest income after loan loss recovery was $69.8 million.

• Total assets were $11.8 billion as of June 30, 2024, with total liabilities of $9.4 billion.

• Operating costs improved 15% to $65.8 million, with a normalized operating expense ratio of 6.7%.

Outlook and guidance

• Management expects improved earnings toward year-end and aims to cover the $0.30 dividend and achieve a 10% ROE target by 2025, driven by asset sales, reinvestment, and small business lending growth.

• Full financial effects of strategic initiatives will be realized in 2025, with some benefits in late 2024.

• Results will be influenced by interest rates, credit spreads, loan demand, and synergies from recent acquisitions.

• Book value per share is expected to reflect portfolio repositioning efforts.