Ready Capital Corporation

Greetings and welcome to the Ready Capital Corporation second quarter 2026 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the call over to 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 can be useful in evaluating the company's operating performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. A reconciliation of these measures to the most directly comparable gap measure is available in our second quarter 2026 earnings release and our supplemental information, which can be found in the investor section of the Ready Capital website. I will now turn it over to Chief Executive Officer Tom Capasse.

Thank you, Andrew. Good morning, everyone, and thank you for joining today's call. The second quarter of 2026 demonstrates meaningful progress in our balance sheet repositioning strategy. At this juncture, we do not anticipate further large portfolio sales as our completed sales were successful in both raising liquidity and repositioning legacy assets. We have also completed several important financings and believe that multiple initiatives are coming together to meet our corporate obligations as we build towards sustainable profitability. We've been organizing our work this year around four priorities. First, strengthening liquidity to generate free cash flow in excess of our 2026 debt maturities. Second, resolving non- and sub-performing CRE assets to eliminate earnings drag. Third, transitioning to a lower-cost business model by divesting non-core business lines and integrating our CRE lending with our external manager waterfall. And fourth, focusing on growth in our small business SBA 7A lending. On liquidity, we are nearing completion of the initiatives we started at the end of 2025. Since our first quarter earnings, we have completed the following actions. First, the sale of our $167 million construction portfolio, generating $64 million of net liquidity and removing $172 million of future funding obligations. Second, the securitization of $158 million of unguaranteed SBA 7A loans at a 92% advance priced at SOFR plus 240 basis points. The transaction generated $25 million of net liquidity and $500 million of additional funding capacity for 7A production. Third, the disposition of $445 million of CRE assets for net liquidity of $85 million. And fourth, the successful refinance of the Portland Ritz asset into a CPACE loan. These items, together with prior loan sales and portfolio runoff, have generated approximately $1.9 billion of cash has been used to pay down $1.7 billion of asset level and corporate debt. We now have achieved approximately 81% of our target liquidity objective. Three initiatives to complete the final leg of our liquidity plan are underway. Optimizing the financing of approximately $950 million of CRE loans, the sale or financing of our $118 million joint venture position, and the second half anticipated runoff of approximately $900 million of CRE loans. Additionally, we continue to evaluate the potential refinance of a portion of the October maturity, which will help to further accelerate earnings recovery as we move into 2027. On the CRE portfolio, following this quarter's actions, the legacy loan book stands at approximately $2.7 billion across 172 positions, with an additional $218 million of CMBS exposure. 37% or roughly $1 billion of the loan book comprises sub and non-performing assets, whose current status produces a greater net present value for active asset management on our balance sheet versus sales in the secondary market. We continuously monitor assets to determine the best path forward, maximizing value, which may include sales. The sub and non-performing loans have an average duration of 11 months, average mark-to-market LTVs of 82%, and are marked at 85%. The current equity held in sub and non-performing loans is $436 million. In our performing loan book, totaling $572 million in equity, leveraged yields equal 10.1%. As of quarter end, we had $588 million of REO across 24 properties. The risk property remains our largest REO asset, representing 66% of total REO and approximately 22% of quarter end stockholders' equity. We believe our stabilization strategy is working. We now have sold 50 condominiums and have three under contract, bringing the sellout to 40% of the total. Sales progress remains consistent with our phase strategy of building momentum toward a full sellout. On the hotel, we continue to realize linear improvement in operating performance. Hotel NOI was 1 million in the quarter. Trailing 12-month occupancy rose 10% to 52%. ADR decreased 4% to $468 and room rev par increased 20% to $244 compared to the same period last year. As we move forward, we will determine the optimal path forward for the property, whether that's continued stabilization or monetization. The current earnings drag across our non and sub performing in REO was 29 cents per share in the quarter. In our SBA 7A platform, capital constraints at the start of the quarter resulted in second quarter origination volume of 82 million, which is well below production capacity. We've addressed those constraints With the completion of our SBA 7A securitization in June, which we believe will provide capital for approximately $500 million of incremental go-forward volume, and we intend to accelerate our capital levels through more frequent SBA 7A ABS offerings. Since completing the securitization, we have originated $43 million of 7A loans and have a current money-up pipeline of $78 million. We expect steady growth towards our annual target of $1.5 billion originations. Turning to expenses, we are executing a targeted cost optimization program to align our cost structure with our go-forward business model. This includes targeted organizational efficiency initiatives, divestiture of non-core businesses and assets, and deeper integration of our CRE lending platform with Waterfall. We expect these initiatives will materially lower our operating expense ratio and improve operating leverage. In summary, we remain equally focused on the completion of our liquidity plan and the action items needed to return the business to profitability. But we still have steps to complete in order to meet our 2026 corporate obligations, concurrent actions to accelerate resolutions, reduce operating costs, and increase capital deployment into new investments that focus on our SBA 7A and CRE platforms, position the company for improvement as we move forward. With that said, I'll now turn it over to Andrew for a detailed review of the quarterly results.