Q2 2024 Ready Capital Corp Earnings Call Transcript
Key Points
- Ready Capital Corp (RC) successfully executed several strategic initiatives, including active asset management and reallocation of low-yield assets, which better positioned the company for future earnings growth.
- The company reported improvements in credit metrics across its $7.9 billion originated CRE loan book, with 60-day-plus delinquencies improving by 270 basis points to 5.2%.
- RC's small business lending platform showed significant growth, with SBA 7(a) loan origination increasing by 80% year over year, putting the company on track to achieve a $1 billion target run rate by the fourth quarter.
- The company completed strategic acquisitions, such as Madison One and Funding Circle US, which are expected to enhance product offerings and increase market share in the small business lending segment.
- RC's efforts in selling underperforming assets are expected to generate incremental annual earnings of $0.24 per share, contributing to improved financial performance.
- Ready Capital Corp (RC) reported a quarterly GAAP loss of $0.21 per common share, indicating financial challenges during the quarter.
- The company faced a net increase in the combined provision for loan loss and valuation allowance of $57.5 million, impacting overall earnings.
- RC's office loan portfolio continues to underperform, with office loans constituting 16% of delinquencies despite only representing 4% of the portfolio.
- The company's book value per share decreased by 3.5% to $12.97, primarily due to mark-to-market or realized losses on loans and REO liquidations.
- RC anticipates a negative earnings drag from the Funding Circle acquisition for the next two quarters before it turns profitable, impacting short-term earnings.
Greetings, and welcome to the Ready Capital second-quarter 2024 earnings call. (Operator Instructions) As a reminder, this conference is being recorded.
It is now my pleasure to introduce your host, Andrew Ahlborn, Chief Financial Officer. Thank you. You may begin.
Thank you, operator, and good morning to those of you on the call. Some of our comments today will be forward-looking statements within the meaning of the federal securities laws. Such statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. Therefore, you should exercise caution in interpreting and relying on them. We refer you to our SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial condition.
During the call, we will discuss our non-GAAP measures, which we believe to be useful in evaluating the company's operating performance. These measures should not be considered in isolation or as a substitute
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