Ready Capital Corporation 9.00% Senior Notes due 2029 Q4 FY2024 earnings call

• Undertaken a $284 million combined CECL and valuation allowances, reducing book value per share to $10.61 and ring-fencing non-performing loans. - Reduced dividend to $0.125 per share for Q1 2025. - Split CRE portfolio into core (hold to maturity) and non-core (aggressive liquidation). - Small business lending had 1.7x origination growth in 2024. - Plan to originate $1-$1.5 billion of new lower middle market CRE loans in 2025 through liquidity initiatives. - CLO book collapse and reissuance to generate liquidity and reduce liability costs. - Closing of UDF IV merger expected in March, estimated to add $0.17 per share to earnings.

The core CRE loan portfolio totaled $7.2 billion at year-end, split 83% core and 17% non-core. The $6 billion core portfolio had strong credit metrics: contractual yield 8%, 93% pay rate, 2% 60 day plus delinquencies, average risk rating 2.2, 86% multifamily/mixed use/industrial, average LTV 78%, average debt yield 9.7%, average maturity 20 months. In 2024, the core portfolio contracted $1.3 billion with $485 million reinvestment. The non-core $1.2 billion portfolio had a cash yield of 3.1%, 60 day delinquencies of 36%, and specific credit profile details. The small business lending operations had fourth quarter originations of $350 million, capping a record year of $1.2 billion, representing 8% of capital but contributing $0.08 per share or 290 basis points of ROE.

• Expect recovery to 10% stabilized core return in 2025. - Liquidation of non-core portfolio to provide $0.18 per share annual benefit by 2026. - Serial disposition of Ritz project components to add $0.31 per share annual benefit. - CLO reissuance to generate $60 million liquidity, increasing earnings $0.05 per share. - Anticipate $1.5 billion SBA 7(a) origination in 2025, contributing $0.05 per share. - Madison One USDA lender expected to originate $300 million, adding $0.05 per share. - UDF IV merger closing in March, adding $0.17 per share.

• Potential for additional problem loans in the core portfolio despite low risk ratings. - Market uncertainties affecting CRE lending and liquidity. - Credit challenges in the non-core portfolio and potential need for further reserving. - Liability management risks related to CLOs and debt maturities.

Q: About dividend and core earnings, A: First quarter to be the lowest, but earnings to ramp up over the year with various initiatives like OpEx savings, Madison One coming online, SBA growth, and UDF merger.

Q: About UDF acquisition and distressed portfolios, A: Aggressive discounts on the portfolio basis, good knowledge base and historical performance of the loans in the projects.

Q: About 2026 maturities, A: Plan to use cash flow, access markets, and align with asset maturity ladder to address maturities.

Q: About SBA credit trends, A: 60+ day delinquencies are moderate, monitoring the portfolio, and small balance/micro loans have expected higher delinquencies.

Q: About SBA cash flow and gain on sale, A: SBA business is highly positive, with warehouse lines in process and incremental growth improving free cash flow.

Q: About UDF portfolio delinquencies, A: The portfolio is fully performing today with loans maturing through 2028 and no expected delinquencies.

Q: About share repurchases, A: Pace dependent on liquidity events like CLO reissuance and non-core portfolio sales, and will be active throughout the year.