# Ready Capital Corp: Form 10-Q for the period ended Sep 30, 2023

- Company: [Ready Capital Corp](/companies/rc.md) (CIK 1527590)
- Form: 10-Q
- Filed: 2023-11-08
- Accepted by EDGAR: Nov 8, 2023, 16:33 ET
- Period: 2023-09-30
- Accession: 0001558370-23-018295
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1527590/000155837023018295/rc-20230930x10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1527590/000155837023018295/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Interest expense | 3 months, 2023-07-01 to 2023-09-30 | $191.6m | us-gaap:InterestExpense |
| Interest expense | 9 months, 2023-01-01 to 2023-09-30 | $524.5m | us-gaap:InterestExpense |
| Income tax | 3 months, 2023-07-01 to 2023-09-30 | $4.0m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2023-01-01 to 2023-09-30 | $9.6m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-07-01 to 2023-09-30 | $47.2m | us-gaap:ProfitLoss |
| Net income | 9 months, 2023-01-01 to 2023-09-30 | $337.5m | us-gaap:ProfitLoss |
| Diluted EPS | 3 months, 2023-07-01 to 2023-09-30 | $0.25 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2023-01-01 to 2023-09-30 | $2.30 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-07-01 to 2023-09-30 | $0.25 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2023-01-01 to 2023-09-30 | $2.33 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-07-01 to 2023-09-30 | 174,440,869 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2023-01-01 to 2023-09-30 | 140,628,545 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2023-01-01 to 2023-09-30 | $80.8m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Dividends paid | 9 months, 2023-01-01 to 2023-09-30 | $150.3m | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 9 months, 2023-01-01 to 2023-09-30 | $18.1m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2023-09-30 | $181.9m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Total assets | at 2023-09-30 | $12.80bn | us-gaap:Assets |
| Total liabilities | at 2023-09-30 | $10.10bn | us-gaap:Liabilities |
| Long-term debt | at 2023-09-30 | $1.11bn | us-gaap:LongTermDebt |
| Shareholders' equity | at 2023-09-30 | $2.59bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 107,131 characters.

### Forward-Looking Statements

Except where the context suggests otherwise, the terms “Company,” “we,” “us” and “our” refer to Ready Capital Corporation and its subsidiaries. We make forward-looking statements in this Quarterly Report on Form 10-Q (the “Form 10-Q”) within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We intend such statements to be covered by the safe harbor provisions for forward-looking statements contained therein. Forward-looking statements contained in this Form 10-Q reflect our current views about future events and are inherently subject to substantial risks and uncertainties, many of which are difficult to predict and beyond our control, that may cause our actual results to materially differ. These forward-looking statements include information about possible or assumed future results of our operations, financial condition, liquidity, plans and objectives. When we use the words “believe,” “expect,” “anticipate,” “estimate,” “plan,” “continue,” “intend,” “should,” “could,” “would,” “may,” “potential” or other comparable terminology, we intend to identify forward-looking statements, although not all forward-looking statements may contain such words. Statements regarding the following subjects, among others, may be forward-looking, and the occurrence of events impacting these subjects, or otherwise impacting our business, may cause our financial condition, liquidity and consolidated results of operations to vary materially from those expressed in, or implied by, any such forward-looking statements:

- our investment objectives and business strategy;
- our ability to borrow funds or otherwise raise capital on favorable terms;
- our expected leverage;
- our expected investments;
- estimates or statements relating to, and our ability to make, future distributions;
- projected capital and operating expenditures;
- availability of qualified personnel;
- prepayment rates;
- projected default rates;
- increased rates of default and/or decreased recovery rates on our investments;
- changes in interest rates, interest rate spreads, the yield curve or prepayment rates;
- the impact of inflation on our business;
- changes in prepayments of our assets;
- our ability to achieve the expected synergies, cost savings and other benefits from the acquisition of a group of privately-held real estate structured finance opportunities funds with a focus on construction lending (collectively, the “Mosaic Funds”);
- our ability to achieve the expected synergies, cost savings and other benefits from the acquisition of Broadmark Realty Capital Inc. (“Broadmark”), a specialty real estate finance company that specialized in originating and servicing residential and commercial construction loans;
- risks associated with achieving expected synergies, cost savings and other benefits from acquisitions and our increased scale;
- risks related to integrating a construction lending platform into our existing operations and the origination and ownership of construction loans, which are subject to additional risks as compared to loans secured by existing structures or land, following the Broadmark Merger and the acquisition of the Mosaic Funds;
- market, industry and economic trends;
- our ability to compete in the marketplace;
- the availability of attractive risk-adjusted investment opportunities in small to medium balance commercial loans (“SBC loans”), loans guaranteed by the U.S. Small Business Administration (the “SBA”) under its Section 7(a) loan program (the “SBA Section 7(a) Program”), mortgage backed securities (“MBS”), residential mortgage loans and other real estate-related investments that satisfy our investment objectives and strategies;
- general volatility of the capital markets;
- changes in our investment objectives and business strategy;
- the availability, terms and deployment of capital;
- the availability of suitable investment opportunities;
- market developments and actions recently taken and which may be taken by the U.S. Government, the U.S. Department of the Treasury (“Treasury”) and the Board of Governors of the Federal Reserve System, the Federal Depositary Insurance Corporation, the Federal National Mortgage Association (“Fannie Mae”), the Federal Home Loan Mortgage Corporation (“Freddie Mac”), the Government National Mortgage Association (“Ginnie Mae”), Federal Housing Administration (“FHA”) Mortgagee, U.S. Department of Agriculture (“USDA”), U.S. Department of Veterans Affairs (“VA”) and the U.S. Securities and Exchange Commission (“SEC”);
- applicable regulatory changes;
- changes in our assets, interest rates or the general economy;
- mortgage loan modification programs and future legislative actions;
- our ability to maintain our qualification as a real estate investment trust (“REIT”) and limitations on our business as a result of our qualifications as a REIT;
- our ability to maintain our exemption from qualification under the Investment Company Act of 1940, as amended (the “1940 Act”);
- factors described in our annual report on Form 10-K, including those set forth under the captions “Risk Factors” and “Business”;
- our dependence on our external advisor, Waterfall Asset Management, LLC (“Waterfall” or the “Manager”), and our ability to find a suitable replacement if we or Waterfall were to terminate the management agreement we have entered into with Waterfall (the “management agreement”);
- the degree and nature of our competition, including competition for SBC loans, MBS, residential mortgage loans, construction loans and other real estate-related investments that satisfy our investment objectives and strategies;
- the impact of the coronavirus (“COVID-19”) pandemic and the emergence and severity of COVID-19 variants on our business and operations, financial condition, results of operations, liquidity and capital resources; and
- the impact of pandemics or epidemics on our borrowers, the real estate industry and global markets.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements, and we caution readers not to place undue reliance on any forward-looking statements. These forward-looking statements apply only as of the date of this Form 10-Q. We are not obligated, and do not intend, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent required by law. See Item 1A. “Risk Factors” and Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our annual report on Form 10-K.

### Introduction

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide a reader of our interim consolidated financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity and certain other factors that may affect our future results. Our MD&A is presented in five main sections:

- Overview
- Results of Operations
- Liquidity and Capital Resources
- Contractual Obligations and Off-Balance Sheet Arrangements
- Critical Accounting Estimates

The following discussion should be read in conjunction with our unaudited interim consolidated financial statements and accompanying Notes included in Part I, Item 1, “Financial Statements,” of this Form 10-Q and with Items 6, 7, 8, and 9A of our annual report on Form 10-K. See “Forward-Looking Statements” in this Form 10-Q and in our annual report on Form 10-K and “Critical Accounting Estimates” in our annual report on Form 10-K for certain other factors that may cause actual results to differ, materially, from those anticipated in the forward-looking statements included in this Form 10-Q.

### Overview

### Our Business

We are a multi-strategy real estate finance company that originates, acquires, finances, and services SBC loans, SBA loans, residential mortgage loans, construction loans, and to a lesser extent, MBS collateralized primarily by SBC loans, or other real estate-related investments. Our loans generally range in original principal amounts up to $40 million and are used by businesses to purchase real estate used in their operations or by investors seeking to acquire multi-family, office, retail, mixed use or warehouse properties. Our objective is to provide attractive risk-adjusted returns to our stockholders, primarily through dividends as well as through capital appreciation. In order to achieve this objective, we continue to grow our investment portfolio and believe that the breadth of our full service real estate finance platform will allow us to adapt to market conditions and deploy capital in our asset classes and segments with the most attractive risk-adjusted returns. We report our activities in the following three operating segments:

- ***SBC Lending and Acquisitions.*** We originate SBC loans across the full life-cycle of an SBC property including construction, bridge, stabilized and agency loan origination channels through our wholly-owned subsidiary, ReadyCap Commercial. These originated loans are generally held-for-investment or placed into securitization structures. As part of this segment, we originate and service multi-family loan products under the Freddie Mac SBL program. These originated loans are held for sale, then sold to Freddie Mac. We provide construction and permanent financing for the preservation and construction of affordable housing, primarily utilizing tax-exempt bonds through Red Stone, a wholly owned subsidiary. In addition, we acquire small balance commercial loans as part of our business strategy. We hold performing SBC loans to term and seek to maximize the value of the non-performing SBC loans acquired by us through borrower-based resolution strategies. We typically acquire non-performing loans at a discount to their unpaid principal balance when we believe that resolution of the loans will provide attractive risk-adjusted returns.
- ***Small Business Lending.*** We acquire, originate and service owner-occupied loans guaranteed by the SBA under the SBA Section 7(a) Program through our wholly-owned subsidiary, ReadyCap Lending. We hold an SBA license as one of only 14 non-bank SBLCs and have been granted preferred lender status by the SBA. These originated loans are either held-for-investment, placed into securitization structures, or sold. We also acquire purchased future receivables through Knight Capital, which is a technology-driven platform that provides working capital to small and medium sized businesses across the U.S.
- ***Residential Mortgage Banking.*** We operate our residential mortgage loan origination segment through our wholly-owned subsidiary, GMFS. GMFS originates residential mortgage loans eligible to be purchased, guaranteed or insured by Fannie Mae, Freddie Mac, FHA, USDA and VA through retail, correspondent and broker channels. These originated loans are then sold to third parties, primarily agency lending programs.

We are organized and conduct our operations to qualify as a REIT under the Code. So long as we qualify as a REIT, we are generally not subject to U.S. federal income tax on our net taxable income to the extent that we annually distribute substantially all of our net taxable income to stockholders. We are organized in a traditional UpREIT format pursuant to which we serve as the general partner of, and conduct substantially all of our business through, our operating partnership. We also intend to operate our business in a manner that will permit us to be excluded from registration as an investment company under the 1940 Act.

For additional information on our business, refer to Part I, Item 1, “Business” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (the “Form 10-K”).

### Acquisitions

***Broadmark.*** On May 31, 2023, the Company, Broadmark Realty Capital Inc., a Maryland corporation (“Broadmark”), and RCC Merger Sub, LLC, a Delaware limited liability company and a wholly owned subsidiary of Ready Capital (“RCC Merger Sub”), completed a merger (such transaction, the “Broadmark Merger”), in which Broadmark merged with and into RCC Merger Sub, with RCC Merger Sub remaining as a wholly owned subsidiary of the Company. As a result of the Broadmark Merger, the number of directors on the Company's board of directors (the “Board”) increased by three members, from nine to twelve, with the three additional directors each having served on the board of directors of Broadmark immediately prior to the effective time of the Broadmark Merger. The Broadmark Merger further diversified our business by expanding on our residential and commercial construction lending platforms. Refer to Notes 1 and 5, included in Part I, Item 1, “Financial Statements,” of this Form 10-Q, for more information about the Broadmark Merger and the assets acquired and liabilities assumed as a result of the Broadmark Merger.

***Mosaic.*** On March 16, 2022, pursuant to the terms of that certain Merger Agreement, dated as of November 3, 2021, as amended on February 7, 2022, the Company acquired, in a series of mergers (collectively, the “Mosaic Mergers”), a group of privately held, real estate structured finance opportunities funds, with a focus on construction lending (collectively, the “Mosaic Funds”), managed by MREC Management, LLC. The acquisition further expanded the Company’s investment portfolio and origination platform to include a diverse portfolio of construction assets with attractive portfolio yields. Refer to Notes 1 and 5, included in Part I, Item 1, “Financial Statements,” of this Form 10-Q, for more information about the Mosaic Mergers and assets acquired and liabilities assumed in the Mosaic Mergers.

### Factors Impacting Operating Results

We expect that our results of operations will be affected by a number of factors and will primarily depend on the level of interest income from our assets, the market value of our assets and the supply of, and demand for, SBC loans, SBA loans, residential loans, construction loans, MBS and other assets we may acquire in the future, demand for housing, population trends, construction costs, the availability of alternative real estate financing from other lenders and the financing and other costs associated with our business. These factors may have an impact on our ability to originate new loans or the performance of our existing loan portfolio. Our net investment income, which includes the amortization of purchase premiums and accretion of purchase discounts, varies primarily as a result of changes in market interest rates, the rate at which our distressed assets are liquidated and the prepayment speed of our performing assets. Interest rates and prepayment speeds vary according to the type of investment, conditions in the financial markets, competition and other factors, none of which can be predicted with any certainty. Our operating results may also be impacted by our available borrowing capacity, conditions in the financial markets, credit losses in excess of initial estimates or unanticipated credit events experienced by borrowers whose loans are held directly by us or are included in our MBS. Difficult market conditions as well as inflation, energy costs, geopolitical issues, health epidemics and outbreaks of contagious diseases, such as the outbreak of COVID-19 and the emergence and severity of variants, unemployment and the availability and cost of credit are factors which could also impact our operating results.

***Changes in Market Interest Rates.*** We own and expect to acquire or originate fixed rate mortgages and floating rate mortgages with maturities ranging from two to 30 years. Our loans typically have amortization periods of 15 to 30 years or balloon payments due in two to 10 years. Fixed rate mortgage loans bear interest that is fixed for the term of the loan and we typically utilize derivative financial and hedging instruments in an effort to hedge the interest rate risk associated with such fixed rate mortgages. As of September 30, 2023, 73% of fixed rate loans are match funded in securitization. Floating rate mortgage loans generally have an adjustable interest rate equal to the sum of a fixed spread plus an index rate, such as the Secured Overnight Financing Rate (“SOFR”), which typically resets monthly. As of September 30, 2023, approximately 81% of the loans in our portfolio were floating rate mortgages, and 19% were fixed rate mortgages, based on UPB.

With respect to our business operations, increases in interest rates may generally over time cause the interest expense associated with our variable-rate borrowings to increase, the value of fixed-rate loans, MBS and other real estate-related assets to decline, coupons on variable-rate loans and MBS to reset to higher interest rates, and prepayments on loans and MBS to slowdown. Conversely, decreases in interest rates generally tend to have the opposite effect.

Non-performing loans are not as interest rate sensitive as performing loans, as earnings on non-performing loans are often generated from restructuring the assets through loss mitigation strategies and opportunistically disposing of them. Because non-performing loans are short-term assets, the discount rates used for valuation are based on short-term market interest rates, which may not move in tandem with long-term market interest rates.

***Changes in Fair Value of Our Assets.*** Certain originated loans, MBS, and servicing rights are carried at fair value, while future assets may also be carried at fair value. Accordingly, changes in the fair value of our assets may impact the results of our operations in the period such changes occur. The expectation of changes in real estate prices is a key determinant for the value of loans and ABS. This factor is beyond our control.

***Prepayment Speeds.*** Prepayment speeds on loans vary according to interest rates, the type of investment, conditions in the financial markets, competition, foreclosures and other factors that cannot be predicted with any certainty. In general, when interest rates rise, it is relatively less attractive for borrowers to refinance their mortgage loans and, as a result, prepayment speeds tend to decrease. This can extend the period over which we earn interest income and servicing fee income. When interest rates fall, prepayment speeds increase on loans, thereby decreasing the period over which we earn interest income or servicing fee income. Additionally, other factors such as the credit rating of the borrower, the rate of property value appreciation or depreciation, financial market conditions, foreclosures and lender competition, none of which can be predicted with any certainty, may affect prepayment speeds on loans.

***Credit Spreads.*** Our investment portfolio may be subject to changes in credit spreads. Credit spreads measure the yield demanded on loans and securities by the market based on their credit relative to a specific benchmark and is a measure of the perceived risk of the investment. Fixed rate loans and securities are valued based on a market credit spread over the rate payable on fixed rate swaps or fixed rate U.S. Treasuries of similar maturity. Floating rate securities are typically valued based on a market credit spread over SOFR (or another floating rate index) and are affected similarly by changes in SOFR spreads. Excessive supply of these loans and securities, or reduced demand, may cause the market to require a higher yield on these securities, resulting in the use of a higher, or “wider,” spread over the benchmark rate to value such assets. Under such conditions, the value of our portfolios would tend to decline. Conversely, if the spread used to value such assets were to decrease, or “tighten,” the value of our loans and securities would tend to increase. Such changes in the market value of these assets may affect our net equity, net income or cash flow directly through their impact on unrealized gains or losses.

The spread between the yield on our assets and our funding costs is an important factor in the performance of this aspect of our business. Wider spreads imply greater income on new asset purchases but may have a negative impact on our stated book value. Wider spreads generally negatively impact asset prices. In an environment where spreads are widening, counterparties may require additional collateral to secure borrowings which may require us to reduce leverage by selling assets. Conversely, tighter spreads imply lower income on new asset purchases but may have a positive impact on our stated book value. Tighter spreads generally have a positive impact on asset prices. In this case, we may be able to reduce the amount of collateral required to secure borrowings.

***Loan and ABS Extension Risk.*** The Company estimates the projected weighted-average life of our investments based on assumptions regarding the rate at which the borrowers will prepay the underlying mortgages and/or the speed at which we are able to liquidate an asset. If the timeline to resolve non-performing assets extends, this could have a negative impact on our results of operations, as carrying costs may therefore be higher than initially anticipated. This situation may also cause the fair market value of our investment to decline if real estate values decline over the extended period. In extreme situations, we may be forced to sell assets to maintain adequate liquidity, which could cause us to incur losses.

***Credit Risk.*** We are subject to credit risk in connection with our investments in loans and ABS and other target assets we may acquire in the future. Increases in defaults and delinquencies will adversely impact our operating results, while declines in rates of default and delinquencies will improve our operating results from this aspect of our business. Default rates are influenced by a wide variety of factors, including, property performance, property management, supply and demand factors, construction trends, consumer behavior, regional economics, interest rates, the strength of the United States economy and other factors beyond our control. All loans are subject to the possibility of default. We seek to mitigate this inherent risk by seeking to acquire assets at appropriate prices given anticipated and unanticipated losses and by deploying a value-driven approach to underwriting and diligence, consistent with our historical investment strategy, with a focus on projected cash flows and potential risks to cash flow. We further mitigate our risk of potential losses while managing and servicing our loans by performing various workout and loss mitigation strategies with delinquent borrowers. Nevertheless, unanticipated credit losses could occur which could adversely impact operating results.

***Current market conditions.*** The third quarter was generally characterized by continued market volatility, including inflationary pressures, persisting macroeconomic concerns and geopolitical tensions. In an effort to restore price stability and combat inflation, the U.S. Federal Reserve continues to raise interest rates. Although the full impact of recent changes remains uncertain and difficult to predict, there has been a shift toward a less aggressive monetary policy amid easing inflation. In addition, the persistence of COVID-19 and its impact on us and our borrowers will largely depend on future developments beyond our control including, but not limited to, the emergence and severity of variants, the efficacy of vaccinations and booster programs, the impact and reactions on the U.S. and global economies, the effectiveness of governmental responses thereto and the timing and speed of economic recovery. Concerns and uncertainties about the economic outlook may adversely impact our financial condition, results of operations and cash flows.

### Results of Operations

### Key Financial Measures and Indicators

As a real estate finance company, we believe the key financial measures and indicators for our business are earnings per share, dividends declared per share, distributable earnings, and net book value per share. As further described below, distributable earnings is a measure that is not prepared in accordance with GAAP. We use distributable earnings to evaluate our performance and determine dividends, excluding the effects of certain transactions and GAAP adjustments that we believe are not necessarily indicative of our current loan activity and operations. See “—Non-GAAP Financial Measures” below for a reconciliation of net income to distributable earnings.

The table below sets forth certain information on our operating results.

*($ in thousands, except share data)*

| ​ ​ | ​ ​ ​ Three Months Ended September 30, 2023 | ​ ​ ​ 2022 | ​ ​ ​ | ​ ​ ​ Nine Months Ended September 30, 2023 | ​ ​ ​ 2022 | ​ ​ ​ |
| --- | ---: | ---: | --- | ---: | ---: | --- |
| Net Income | $47,179 ​ | $66,253 ​ | ​ | $337,530 ​ | $189,481 ​ | ​ |
| Earnings per common share - basic | $0.25 ​ | $0.53 ​ | ​ | $2.33 ​ | $1.66 ​ | ​ |
| Earnings per common share - diluted | $0.25 ​ | $0.50 ​ | ​ | $2.30 ​ | $1.56 ​ | ​ |
| Distributable earnings | $52,164 ​ | $58,186 ​ | ​ | $141,596 ​ | $167,151 ​ | ​ |
| Distributable earnings per common share - basic | $0.28 ​ | $0.46 ​ | ​ | $0.93 ​ | $1.46 ​ | ​ |
| Distributable earnings per common share - diluted | $0.28 ​ | $0.44 ​ | ​ | $0.92 ​ | $1.38 ​ | ​ |
| Dividends declared per common share | $0.36 ​ | $0.42 ​ | ​ | $1.16 ​ | $1.26 ​ | ​ |
| Dividend yield | ​ 14.2% | ​ 16.6% | ​ | ​ 14.2% | ​ 16.6% | ​ |
| Return on equity | ​ 7.2% | ​ 14.5% | ​ | ​ 21.0% | ​ 15.1% | ​ |
| Distributable return on equity | ​ 8.0% | ​ 12.7% | ​ | ​ 8.6% | ​ 13.3% | ​ |
| Book value per common share | $14.42 ​ | $15.40 ​ | ​ | $14.42 ​ | $15.40 ​ | ​ |
| Adjusted net book value per common share | $14.42 ​ | $15.40 ​ | ​ | $14.42 ​ | $15.40 ​ | ​ |

In the table above,

- Dividend yield is based on the respective period end closing share price.
- Adjusted net book value per common share excludes the equity component of our 2017 convertible note issuance.

### Our Loan Pipeline

We have a large and active pipeline of potential acquisition and origination opportunities that are in various stages of our investment process. We refer to assets as being part of our acquisition or origination pipeline if (i) an asset or portfolio opportunity has been presented to us and we have determined, after a preliminary analysis, that the assets fit within our investment strategy and exhibit the appropriate risk/reward characteristics (ii) in the case of acquired loans, we have executed a non-disclosure agreement (“NDA”) or an exclusivity agreement and commenced the due diligence process or we have executed more definitive documentation, such as a letter of intent (“LOI”); and (iii) in the case of originated loans, we have issued an LOI, and the borrower has paid a deposit.

We operate in a competitive market for investment opportunities and competition may limit our ability to originate or acquire the potential investments in the pipeline. The consummation of any of the potential loans in the pipeline depends upon, among other things, one or more of the following: available capital and liquidity, our Manager’s allocation policy, satisfactory completion of our due diligence investigation and investment process, approval of our Manager’s Investment Committee, market conditions, our agreement with the seller on the terms and structure of such potential loan, and the execution and delivery of satisfactory transaction documentation. Historically, we have acquired less than a majority of the assets in our pipeline at any one time and there can be no assurance the assets currently in our pipeline will be acquired or originated by us in the future.

The table below presents information on our investment portfolio originations and acquisitions (based on fully committed amounts).

*(in thousands)*

| ​ ​ Loan originations: | ​ ​ ​ ​ | ​ ​ ​ Three Months Ended September 30, ​ 2023 ​ ​ | ​ ​ ​ | ​ ​ ​ 2022 ​ ​ | ​ ​ ​ ​ | ​ ​ Nine Months Ended September 30, 2023 ​ ​ | ​ ​ ​ | ​ ​ 2022 ​ ​ | ​ ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- |
| SBC loans | ​ | $464,394 | ​ | $831,104 | ​ | $1,386,513 | ​ | $3,629,775 | ​ |
| SBA loans | ​ | ​ 128,642 | ​ | ​ 133,571 | ​ | ​ 341,777 | ​ | ​ 362,698 | ​ |
| Residential agency mortgage loans | ​ | ​ 390,756 | ​ | ​ 534,339 | ​ | ​ 1,140,359 | ​ | ​ 2,050,568 | ​ |
| **Total loan originations** | **​** | **$983,792** | **​** | **$1,499,014** | **​** | **$2,868,649** | **​** | **$6,043,041** | **​** |
| **Total loan acquisitions** | **​** | **$—** | **​** | **$—** | **​** | **$—** | **​** | **$659,636** | ​ |
| **Total loan investment activity** | **​** | **$983,792** | **​** | **$1,499,014** | **​** | **$2,868,649** | **​** | **$6,702,677** | ​ |

### Balance Sheet Analysis and Metrics

*(in thousands)*

| ​ ​ Assets | ​ ​ ​ ​ | ​ ​ ​ ​ September 30, 2023 ​ ​ | ​ ​ ​ ​ | ​ ​ ​ ​ December 31, 2022 ​ ​ | ​ ​ ​ ​ | ​ ​ ​ ​ | ​ ​ ​ ​ $ Change ​ ​ | ​ ​ ​ ​ | ​ ​ ​ ​ % Change ​ ​ |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | ---: |
| Cash and cash equivalents | ​ | $181,913 | ​ | $163,041 | ​ | ​ | $18,872 | ​ | 11.6% |
| Restricted cash | ​ | 36,576 | ​ | 55,927 | ​ | ​ | ​ (19,351) | ​ | (34.6) ​ |
| Loans, net (including $9,221 and $9,786 held at fair value) | ​ | 4,151,923 | ​ | 3,576,310 | ​ | ​ | ​ 575,613 | ​ | 16.1 ​ |
| Loans, held for sale, at fair value | ​ | 184,989 | ​ | 258,377 | ​ | ​ | ​ (73,388) | ​ | (28.4) ​ |
| Paycheck Protection Program loans (including $168 and $576 held at fair value) | ​ | 58,145 | ​ | 186,985 | ​ | ​ | ​ (128,840) | ​ | (68.9) ​ |
| Mortgage-backed securities, at fair value | ​ | 33,339 | ​ | ​ 32,041 | ​ | ​ | ​ 1,298 | ​ | 4.1 ​ |
| Loans eligible for repurchase from Ginnie Mae | ​ | ​ 72,401 | ​ | ​ 66,193 | ​ | ​ | ​ 6,208 | ​ | 9.4 ​ |
| Investment in unconsolidated joint ventures (including $7,547 and $8,094 held at fair value) | ​ | ​ 136,113 | ​ | ​ 118,641 | ​ | ​ | ​ 17,472 | ​ | 14.7 ​ |
| Derivative instruments | ​ | ​ 8,620 | ​ | ​ 12,963 | ​ | ​ | ​ (4,343) | ​ | (33.5) ​ |
| Servicing rights (including $207,495 and $192,203 held at fair value) | ​ | ​ 307,779 | ​ | ​ 279,320 | ​ | ​ | ​ 28,459 | ​ | 10.2 ​ |
| Real estate owned, held for sale | ​ | ​ 281,941 | ​ | ​ 117,098 | ​ | ​ | ​ 164,843 | ​ | 140.8 ​ |
| Other assets | ​ | ​ 265,428 | ​ | ​ 201,321 | ​ | ​ | ​ 64,107 | ​ | 31.8 ​ |
| Assets of consolidated VIEs | ​ | ​ 7,080,266 | ​ | ​ 6,552,760 | ​ | ​ | ​ 527,506 | ​ | 8.1 ​ |
| **Total Assets** | ​ | **$12,799,433** | **​** | **$11,620,977** | **​** | **​** | **$1,178,456** | **​** | **10.1%** |
| **Liabilities** | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ | ​ ​ | ​ | ​ ​ |
| Secured borrowings | ​ | ​ 2,385,070 | ​ | ​ 2,846,293 | ​ | ​ | ​ (461,223) | ​ | (16.2) ​ |
| Paycheck Protection Program Liquidity Facility (PPPLF) borrowings | ​ | ​ 76,333 | ​ | ​ 201,011 | ​ | ​ | ​ (124,678) | ​ | (62.0) ​ |
| Securitized debt obligations of consolidated VIEs, net | ​ | ​ 5,264,037 | ​ | ​ 4,903,350 | ​ | ​ | ​ 360,687 | ​ | 7.4 ​ |
| Convertible notes, net | ​ | ​ — | ​ | ​ 114,397 | ​ | ​ | ​ (114,397) | ​ | (100.0) ​ |
| Senior secured notes, net | ​ | ​ 344,684 | ​ | ​ 343,355 | ​ | ​ | ​ 1,329 | ​ | 0.4 ​ |
| Corporate debt, net | ​ | ​ 763,828 | ​ | ​ 662,665 | ​ | ​ | ​ 101,163 | ​ | 15.3 ​ |
| Guaranteed loan financing | ​ | ​ 886,916 | ​ | ​ 264,889 | ​ | ​ | ​ 622,027 | ​ | 234.8 ​ |
| Contingent consideration | ​ | ​ 13,408 | ​ | ​ 28,500 | ​ | ​ | ​ (15,092) | ​ | (53.0) ​ |
| Liabilities for loans eligible for repurchase from Ginnie Mae | ​ | ​ 72,401 | ​ | ​ 66,193 | ​ | ​ | ​ 6,208 | ​ | 9.4 ​ |
| Derivative instruments | ​ | ​ — | ​ | ​ 1,586 | ​ | ​ | ​ (1,586) | ​ | (100.0) ​ |
| Dividends payable | ​ | ​ 64,777 | ​ | ​ 47,177 | ​ | ​ | ​ 17,600 | ​ | 37.3 ​ |
| Loan participations sold | ​ | ​ 57,465 | ​ | ​ 54,641 | ​ | ​ | ​ 2,824 | ​ | 5.2 ​ |
| Due to third parties | ​ | ​ 2,436 | ​ | ​ 11,805 | ​ | ​ | ​ (9,369) | ​ | (79.4) ​ |
| Accounts payable and other accrued liabilities | ​ | ​ 168,298 | ​ | ​ 176,520 | ​ | ​ | ​ (8,222) | ​ | (4.7) ​ |
| **Total Liabilities** | ​ | **$10,099,653** | **​** | **$9,722,382** | **​** | **​** | **$377,271** | **​** | **3.9%** |
| Preferred stock Series C, liquidation preference $25.00 per share | ​ | ​ 8,361 | ​ | ​ 8,361 | ​ | ​ | ​ — | ​ | — ​ |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ | ​ ​ | ​ | ​ ​ |
| **Commitments & contingencies** | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ | ​ ​ | ​ | ​ ​ |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ | ​ ​ | ​ | ​ ​ |
| **Stockholders’ Equity** | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ | ​ ​ | ​ | ​ ​ |
| Preferred stock Series E liquidation preference $25.00 per share | ​ | ​ 111,378 | ​ | ​ 111,378 | ​ | ​ | ​ — | ​ | — ​ |
| Common stock, $0.0001 par value, 500,000,000 shares authorized, 172,023,871 and 110,523,641 shares issued and outstanding, respectively | ​ | ​ 17 | ​ | 11 | ​ | ​ | ​ 6 | ​ | 54.5 ​ |
| Additional paid-in capital | ​ | ​ 2,318,109 | ​ | ​ 1,684,074 | ​ | ​ | ​ 634,035 | ​ | 37.6 ​ |
| Retained earnings | ​ | ​ 168,539 | ​ | ​ 4,994 | ​ | ​ | ​ 163,545 | ​ | 3,274.8 ​ |
| Accumulated other comprehensive loss | ​ | ​ (5,928) | ​ | ​ (9,369) | ​ | ​ | ​ 3,441 | ​ | (36.7) ​ |
| Total Ready Capital Corporation equity | ​ | ​ 2,592,115 | ​ | 1,791,088 | ​ | ​ | ​ 801,027 | ​ | 44.7 ​ |
| Non-controlling interests | ​ | ​ 99,304 | ​ | 99,146 | ​ | ​ | ​ 158 | ​ | 0.2 ​ |
| **Total Stockholders’ Equity** | **​** | **$2,691,419** | **​** | **$1,890,234** | **​** | **​** | **$801,185** | **​** | **42.4%** |
| **Total Liabilities, Redeemable Preferred Stock, and Stockholders’ Equity** | **​** | **$12,799,433** | **​** | **$11,620,977** | **​** | **​** | **$1,178,456** | **​** | **10.1%** |

As of September 30, 2023, total assets in our consolidated balance sheet were $12.8 billion, an increase of $1.2 billion from December 31, 2022, primarily reflecting an increase in Loans, net, Assets of consolidated VIEs, and Real estate owned, held for sale, partially offset by a decrease in PPP loans. Loans, net increased $576 million, primarily due to the closing of the Broadmark Merger, partially offset by the closing of RCMF 2023-FL11, RCMF 2023-FL12 and RCLT 2023-3 and paydowns. Assets of consolidated VIEs increased $528 million, due to the closing of RCMF 2023-FL11, RCMF 2023-FL12 and RCLT 2023-3, partially offset by paydowns including the collapse of RCMF 2019-FL3 and RCMF 2019-FL4. Real estate owned, held for sale increased $165 million primarily due to the closing of the Broadmark Merger. PPP loans decreased $129 million due to principal forgiveness. The Broadmark Merger added $852 million of assets.

As of September 30, 2023, total liabilities in our consolidated balance sheet were $10.1 billion, an increase of $377 million from December 31, 2022, primarily reflecting an increase in Guaranteed loan financing and Securitized debt obligations of consolidated VIEs, net, partially offset by a decrease in Secured borrowings. Guaranteed loan financing increased $622 million, primarily due to the closing of RCLT 2023-3. Securitized debt obligations of consolidated VIEs, net increased $361 million due to the closing of RCMF 2023-FL11, RCMF 2023-FL12 and RCLT 2023-3, partially offset by paydowns including the collapse of RCMF 2019-FL3 and RCMF 2019-FL4. Secured borrowings decreased $461 million due to the closing of RCMF 2023-FL11 and RCMF 2023-FL12.

As of September 30, 2023, total stockholders’ equity was $2.7 billion, an increase of $801 million from December 31, 2022, primarily due to equity raised in connection with the Broadmark Merger, partially offset by common stock repurchased through the Company’s share repurchase program.

***Selected Balance Sheet Information by Business Segment.*** The table below presents certain selected balance sheet data by each of our three business segments, with the remaining amounts reflected in *Corporate –Other.*

*(in thousands)*

| ​ September 30, 2023 Assets | ​ ​ ​ ​ | ​ ​ SBC Lending and Acquisitions ​ ​ ​ ​ | ​ ​ ​ ​ | ​ ​ Small Business Lending ​ ​ ​ ​ | ​ ​ ​ ​ | ​ ​ Residential Mortgage Banking ​ ​ ​ ​ | ​ ​ ​ ​ | ​ ​ Total ​ ​ ​ ​ |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Loans, net | ​ | $9,824,662 | ​ | $1,230,497 | ​ | $1,672 | ​ | $11,056,831 |
| Loans, held for sale, at fair value | ​ | ​ 29,065 | ​ | ​ 45,590 | ​ | ​ 110,334 | ​ | ​ 184,989 |
| Paycheck Protection Program loans | ​ | ​ — | ​ | ​ 58,145 | ​ | ​ — | ​ | ​ 58,145 |
| MBS, at fair value | ​ | ​ 33,339 | ​ | ​ — | ​ | ​ — | ​ | ​ 33,339 |
| Servicing rights | ​ | ​ 71,961 | ​ | ​ 28,323 | ​ | ​ 207,495 | ​ | ​ 307,779 |
| Investment in unconsolidated joint ventures | ​ | ​ 136,113 | ​ | ​ — | ​ | ​ — | ​ | ​ 136,113 |
| Real estate owned, held for sale | ​ | ​ 283,774 | ​ | ​ 40 | ​ | ​ — | ​ | ​ 283,814 |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| **Liabilities** | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Secured borrowings | ​ | $2,090,881 | ​ | $84,464 | ​ | $209,725 | ​ | $2,385,070 |
| Paycheck Protection Program Liquidity Facility (PPPLF) borrowings | ​ | ​ — | ​ | ​ 76,333 | ​ | ​ — | ​ | ​ 76,333 |
| Securitized debt obligations of consolidated VIEs | ​ | ​ 5,102,301 | ​ | ​ 161,736 | ​ | ​ — | ​ | ​ 5,264,037 |
| Guaranteed loan financing | ​ | ​ — | ​ | ​ 886,916 | ​ | ​ — | ​ | ​ 886,916 |
| Senior secured notes, net | ​ | ​ 331,168 | ​ | ​ 13,516 | ​ | ​ — | ​ | ​ 344,684 |
| Corporate debt, net | ​ | ​ 763,828 | ​ | ​ — | ​ | ​ — | ​ | ​ 763,828 |
| Loan participations sold | ​ | ​ 57,465 | ​ | ​ — | ​ | ​ — | ​ | ​ 57,465 |

In the table above, Loans, net includes assets of consolidated VIEs and excludes allowance for loan losses and Real estate owned, held for sale include assets of consolidated VIEs.

### Income Statement Analysis and Metrics

*(in thousands)*

| ​ ​ ​ Interest income | ​ ​ ​ ​ ​ | ​ ​ ​ ​ Three Months Ended September 30, 2023 ​ ​ | ​ ​ ​ ​ | ​ ​ ​ ​ 2022 ​ ​ | ​ ​ ​ ​ ​ | ​ ​ ​ ​ $ Change ​ ​ | ​ ​ ​ ​ ​ | ​ ​ ​ ​ Nine Months Ended September 30, 2023 ​ ​ | ​ ​ ​ ​ | ​ ​ ​ ​ 2022 ​ ​ | ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ $ Change ​ ​ |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| SBC lending and acquisitions | ​ | $219,414 | ​ | $159,307 | ​ | $60,107 | ​ | $629,686 | ​ | $378,077 | ​ | $251,609 |
| Small business lending | ​ | ​ 29,297 | ​ | ​ 24,605 | ​ | ​ 4,692 | ​ | ​ 65,997 | ​ | ​ 79,866 | ​ | ​ (13,869) |
| Residential mortgage banking | ​ | ​ 1,879 | ​ | ​ 2,114 | ​ | ​ (235) | ​ | ​ 5,364 | ​ | ​ 6,159 | ​ | ​ (795) |
| **Total interest income** | **​** | **$250,590** | **​** | **$186,026** | **​** | **$64,564** | **​** | **$701,047** | **​** | **$464,102** | **​** | **$236,945** |
| **Interest expense** | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| SBC lending and acquisitions | ​ | ​ (169,008) | ​ | ​ (105,560) | ​ | ​ (63,448) | ​ | ​ (479,006) | ​ | ​ (231,338) | ​ | ​ (247,668) |
| Small business lending | ​ | ​ (20,769) | ​ | ​ (7,097) | ​ | ​ (13,672) | ​ | ​ (39,861) | ​ | ​ (18,703) | ​ | ​ (21,158) |
| Residential mortgage banking | ​ | ​ (1,835) | ​ | ​ (2,479) | ​ | ​ 644 | ​ | ​ (5,673) | ​ | ​ (6,663) | ​ | ​ 990 |
| Corporate - other | ​ | ​ — | ​ | ​ (359) | ​ | ​ 359 | ​ | ​ — | ​ | ​ (635) | ​ | ​ 635 |
| **Total interest expense** | **​** | **$(191,612)** | **​** | **$(115,495)** | **​** | **$(76,117)** | **​** | **$(524,540)** | **​** | **$(257,339)** | **​** | **$(267,201)** |
| **Net interest income before recovery of (provision for) loan losses** | **​** | **$58,978** | **​** | **$70,531** | **​** | **$(11,553)** | **​** | **$176,507** | **​** | **$206,763** | **​** | **$(30,256)** |
| **Recovery of (provision for) loan losses** | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| SBC lending and acquisitions | ​ | ​ 14,465 | ​ | ​ (3,231) | ​ | ​ 17,696 | ​ | ​ 5,179 | ​ | ​ 1,108 | ​ | ​ 4,071 |
| Small business lending | ​ | ​ (2,314) | ​ | ​ (200) | ​ | ​ (2,114) | ​ | ​ (5,721) | ​ | ​ (1,691) | ​ | ​ (4,030) |
| **Total recovery of (provision for) loan losses** | **​** | **$12,151** | **​** | **$(3,431)** | **​** | **$15,582** | **​** | **$(542)** | **​** | **$(583)** | **​** | **$41** |
| **Net interest income after recovery of (provision for) loan losses** | **​** | **$71,129** | **​** | **$67,100** | **​** | **$4,029** | **​** | **$175,965** | **​** | **$206,180** | **​** | **$(30,215)** |
| **Non-interest income** | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| SBC lending and acquisitions | ​ | ​ 31,392 | ​ | ​ 19,446 | ​ | ​ 11,946 | ​ | ​ 65,716 | ​ | ​ 65,740 | ​ | ​ (24) |
| Small business lending | ​ | ​ 23,391 | ​ | ​ 21,342 | ​ | ​ 2,049 | ​ | ​ 66,256 | ​ | ​ 52,314 | ​ | ​ 13,942 |
| Residential mortgage banking | ​ | ​ 18,831 | ​ | ​ 37,722 | ​ | ​ (18,891) | ​ | ​ 59,418 | ​ | ​ 98,412 | ​ | ​ (38,994) |
| Corporate - other | ​ | ​ (14,023) | ​ | ​ 18 | ​ | ​ (14,041) | ​ | ​ 216,482 | ​ | ​ 635 | ​ | ​ 215,847 |
| **Total non-interest income** | **​** | **$59,591** | **​** | **$78,528** | **​** | **$(18,937)** | **​** | **$407,872** | **​** | **$217,101** | **​** | **$190,771** |
| **Non-interest expense** | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| SBC lending and acquisitions | ​ | ​ (29,681) | ​ | ​ (22,842) | ​ | ​ (6,839) | ​ | ​ (76,343) | ​ | ​ (70,503) | ​ | ​ (5,840) |
| Small business lending | ​ | ​ (17,522) | ​ | ​ (19,340) | ​ | ​ 1,818 | ​ | ​ (53,844) | ​ | ​ (50,691) | ​ | ​ (3,153) |
| Residential mortgage banking | ​ | ​ (14,010) | ​ | ​ (18,875) | ​ | ​ 4,865 | ​ | ​ (44,496) | ​ | ​ (39,443) | ​ | ​ (5,053) |
| Corporate - other | ​ | ​ (18,301) | ​ | ​ (13,542) | ​ | ​ (4,759) | ​ | ​ (62,065) | ​ | ​ (40,220) | ​ | ​ (21,845) |
| **Total non-interest expense** | **​** | **$(79,514)** | **​** | **$(74,599)** | **​** | **$(4,915)** | **​** | **$(236,748)** | **​** | **$(200,857)** | **​** | **$(35,891)** |
| **Net income before provision for income taxes** | **​** | **​** **​** | **​** | **​** **​** | **​** | **​** **​** | **​** | **​** **​** | **​** | **​** **​** | **​** | **​** **​** |
| SBC lending and acquisitions | ​ | ​ 66,582 | ​ | ​ 47,120 | ​ | ​ 19,462 | ​ | ​ 145,232 | ​ | ​ 143,084 | ​ | ​ 2,148 |
| Small business lending | ​ | ​ 12,083 | ​ | ​ 19,310 | ​ | ​ (7,227) | ​ | ​ 32,827 | ​ | ​ 61,095 | ​ | ​ (28,268) |
| Residential mortgage banking | ​ | ​ 4,865 | ​ | ​ 18,482 | ​ | ​ (13,617) | ​ | ​ 14,613 | ​ | ​ 58,465 | ​ | ​ (43,852) |
| Corporate - other | ​ | ​ (32,324) | ​ | ​ (13,883) | ​ | ​ (18,441) | ​ | ​ 154,417 | ​ | ​ (40,220) | ​ | ​ 194,637 |
| **Total net income before provision for income taxes** | **​** | **$51,206** | **​** | **$71,029** | **​** | **$(19,823)** | **​** | **$347,089** | **​** | **$222,424** | **​** | **$124,665** |
| **​** | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |

***Results of Operations – Supplemental Information.*** Realized and unrealized gains (losses) on financial instruments are recorded in the consolidated statements of income and classified based on the nature of the underlying asset or liability.

The table below presents the components of realized and unrealized gains (losses) on financial instruments.

*(in thousands)*

| ​ ​ Realized gain (loss) on financial instruments | ​ ​ ​ | ​ ​ Three Months Ended September 30, 2023 ​ ​ | ​ ​ | ​ ​ 2022 ​ ​ | ​ ​ ​ ​ | ​ ​ ​ $ Change ​ ​ | ​ ​ ​ | ​ ​ Nine Months Ended September 30, 2023 ​ ​ | ​ ​ | ​ ​ 2022 ​ ​ | ​ ​ ​ ​ | ​ ​ ​ $ Change ​ ​ |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Realized gain on loans - Freddie Mac and CMBS | ​ | $567 | ​ | $1,209 | ​ | $(642) | ​ | $1,462 | ​ | $4,817 | ​ | $(3,355) |
| Creation of MSRs - Freddie Mac | ​ | ​ 512 | ​ | ​ 1,903 | ​ | ​ (1,391) | ​ | ​ 1,294 | ​ | ​ 5,810 | ​ | ​ (4,516) |
| Realized gain on loans - SBA | ​ | ​ 5,751 | ​ | ​ 6,137 | ​ | ​ (386) | ​ | ​ 17,469 | ​ | ​ 18,507 | ​ | ​ (1,038) |
| Creation of MSRs - SBA | ​ | ​ 1,599 | ​ | ​ 1,920 | ​ | ​ (321) | ​ | ​ 5,154 | ​ | ​ 5,699 | ​ | ​ (545) |
| Creation of MSRs - Red Stone | ​ | ​ 3,604 | ​ | ​ 979 | ​ | ​ 2,625 | ​ | ​ 11,213 | ​ | ​ 2,698 | ​ | ​ 8,515 |
| Realized gain on derivatives, at fair value | ​ | ​ 2,303 | ​ | ​ 9,877 | ​ | ​ (7,574) | ​ | ​ 16,419 | ​ | ​ 9,610 | ​ | ​ 6,809 |
| Realized gain (loss) on MBS, at fair value | ​ | ​ — | ​ | ​ (179) | ​ | ​ 179 | ​ | ​ — | ​ | ​ 6,305 | ​ | ​ (6,305) |
| Net realized gain (loss) - all other | ​ | ​ 66 | ​ | ​ (729) | ​ | ​ 795 | ​ | ​ (3,156) | ​ | ​ (3,208) | ​ | ​ 52 |
| **Net realized gain (loss) on financial instruments** | **​** | **$14,402** | **​** | **$21,117** | **​** | **$(6,715)** | **​** | **$49,855** | **​** | **$50,238** | **​** | **$(383)** |
| **Unrealized gain (loss) on financial instruments** | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Unrealized gain (loss) on loans - Freddie Mac and CMBS | ​ | $11,889 | ​ | $(12,876) | ​ | $24,765 | ​ | $7,838 | ​ | $(31,696) | ​ | $39,534 |
| Unrealized gain (loss) on loans - SBA | ​ | ​ 606 | ​ | ​ (509) | ​ | ​ 1,115 | ​ | ​ 346 | ​ | ​ (943) | ​ | ​ 1,289 |
| Unrealized gain on residential MSRs, at fair value | ​ | 2,563 | ​ | 16,647 | ​ | (14,084) | ​ | 5,288 | ​ | 49,230 | ​ | (43,942) |
| Unrealized gain on derivatives, at fair value | ​ | ​ 3,984 | ​ | ​ 16,112 | ​ | ​ (12,128) | ​ | ​ 366 | ​ | ​ 56,999 | ​ | ​ (56,633) |
| Unrealized gain (loss) on MBS, at fair value | ​ | ​ (734) | ​ | ​ (2,583) | ​ | ​ 1,849 | ​ | ​ 322 | ​ | ​ (11,947) | ​ | ​ 12,269 |
| Net unrealized gain (loss) - all other | ​ | ​ (624) | ​ | ​ (331) | ​ | ​ (293) | ​ | ​ (797) | ​ | ​ (3,121) | ​ | ​ 2,324 |
| **Net unrealized gain (loss) on financial instruments** | **​** | **$17,684** | **​** | **$16,460** | **​** | **$1,224** | **​** | **$13,363** | **​** | **$58,522** | **​** | **$(45,159)** |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |

### SBC Lending and Acquisitions Segment Results.

***Q3 2023 versus Q3 2022.*** Interest income of $219.4 million represented an increase of $60.1 million, primarily due to increased loan balances and increases in interest rates. Interest expense of $169.0 million represented an increase of $63.4 million, driven by increases in interest rates. Recovery of loan losses of $14.5 million represented an increase of $17.7 million, due to changes in the forecasted macroeconomic inputs for reserve modeling, particularly increases in CRE price index assumptions. Non-interest income of $31.4 million represented an increase of $11.9 million, primarily due to increases in net realized and unrealized gains on financial instruments. Non-interest expense of $29.7 million represented an increase of $6.8 million, due to an increase in loan servicing expense and employee compensation and benefits.

***YTD 2023 versus YTD 2022.*** Interest income of $629.7 million represented an increase of $251.6 million, primarily due to increased loan balances and increases in interest rates. Interest expense of $479.0 million represented an increase of $247.7 million, driven by increases in interest rates. Recovery of loan losses of $5.2 million represented an increase of $4.1 million, due to changes in the forecasted macroeconomic inputs for reserve modeling, particularly increases in CRE price index assumptions. Non-interest income of $65.7 million was essentially unchanged from the respective prior year period. Non-interest expense of $76.3 million represented an increase of $5.8 million, primarily due to an increase in loan servicing expense and employee compensation and benefits, partially offset by a decrease in other operating expenses.

### Small Business Lending Segment Results.

***Q3 2023 versus Q3 2022.*** Interest income of $29.3 million represented an increase of $4.7 million, primarily due to increased loan balances. Interest expense of $20.8 million represented an increase of $13.7 million, driven by an increase in interest rates. Provision for loan losses of $2.3 million represented an increase of $2.1 million, primarily due to increased loan originations. Non-interest income of $23.4 million represented an increase of $2.0 million, due to an increase in servicing income, primarily due to recoveries of impairment. Non-interest expense of $17.5 million represented a decrease of $1.8 million, primarily due to a decrease in employee compensation and benefits, partially offset by an increase in professional fees.

***YTD 2023 versus YTD 2022.*** Interest income of $66.0 million represented a decrease of $13.9 million, primarily due to decreased loan balances. Interest expense of $39.9 million represented an increase of $21.2 million, driven by an increase in interest rates. Provision for loan losses of $5.7 million represented an increase of $4.0 million, primarily due to an increase in specific loan reserves. Non-interest income of $66.3 million represented an increase of $13.9 million, primarily due to increases in other income driven by employee tax credit consulting and servicing income due to recoveries of impairment, partially offset by decreases in income on purchased future receivables. Non-interest expense of $53.8 million represented an increase of $3.2 million, primarily due to an increase in professional fees related to employee tax credit consulting, partially offset by a decrease in employee compensation and benefits.

### Residential Mortgage Banking Segment Results.

***Q3 2023 versus Q3 2022.*** Interest income of $1.9 million and interest expense of $1.8 million was essentially unchanged from the respective prior year period. Non-interest income of $18.8 million represented a decrease of $18.9 million, primarily due to a decrease in residential mortgage banking activities and decreases in unrealized gains on MSRs. Non-interest expense of $14.0 million represented a decrease of $4.9 million, primarily due to a decrease in variable expenses on residential mortgage banking activities.

***YTD 2023 versus YTD 2022.*** Interest income of $5.4 million and interest expense of $5.7 million was essentially unchanged from the respective prior year period. Non-interest income of $59.4 million represented a decrease of $39.0 million, primarily due to a decrease in unrealized gains on MSRs. Non-interest expense of $44.5 million represented an increase of $5.1 million, primarily due to an increase in variable expenses on residential mortgage banking activities, partially offset by decreases in employee compensation and benefits.

### Corporate – Other.

***Q3 2023 versus Q3 2022.*** Non-interest loss of $14.0 million represented a decrease of $14.0 million, primarily due to a reduction to the bargain purchase gain recognized from the Broadmark Merger. Non-interest expense of $18.3 million represented an increase of $4.8 million, primarily due to transaction related expenses for the Broadmark Merger.

***YTD 2023 versus YTD 2022.*** Non-interest income of $216.5 million represented an increase of $215.8 million, primarily due to a bargain purchase gain recognized from the Broadmark Merger. Non-interest expense of $62.1 million represented an increase of $21.8 million, primarily due to transaction related expenses for the Broadmark Merger.

### Non-GAAP financial measures

We believe that providing investors with distributable earnings, formerly referred to as core earnings, gives investors greater transparency into the information used by management in our financial and operational decision-making, including the determination of dividends. Distributable earnings is a non-U.S. GAAP financial measure and because distributable earnings is an incomplete measure of our financial performance and involves differences from net income computed in accordance with U.S. GAAP, it should be considered along with, but not as an alternative to, our net income as a measure of our financial performance. In addition, because not all companies use identical calculations, our presentation of distributable earnings may not be comparable to other similarly-titled measures of other companies.

We calculate distributable earnings as GAAP net income (loss) excluding the following:

i) any unrealized gains or losses on certain MBS not retained by us as part of our loan origination businesses

ii) any realized gains or losses on sales of certain MBS

iii) any unrealized gains or losses on Residential MSRs

iv) any unrealized change in current expected credit loss reserve

v) any unrealized gains or losses on de-designated cash flow hedges

vi) any non-cash compensation expense related to stock-based incentive plan

vii) one-time non-recurring gains or losses, such as gains or losses on discontinued operations, bargain purchase gains, or merger related expenses

In calculating distributable earnings, net income (in accordance with GAAP) is adjusted to exclude unrealized gains and losses on MBS acquired by us in the secondary market but is not adjusted to exclude unrealized gains and losses on MBS retained by us as part of our loan origination businesses, where we transfer originated loans into an MBS securitization and retain an interest in the securitization. In calculating distributable earnings, we do not adjust net income (in accordance with GAAP) to take into account unrealized gains and losses on MBS retained by us as part of our loan origination businesses because we consider the unrealized gains and losses that are generated in the loan origination and securitization process to be a fundamental part of this business and an indicator of the ongoing performance and credit quality of our historical loan originations. In calculating distributable earnings, net income (in accordance with GAAP) is adjusted to exclude realized gains and losses on certain MBS securities due to a variety of reasons which may include collateral type, duration, and size. In 2016, we liquidated the majority of our MBS portfolio excluded from distributable earnings to fund our recurring operating segments.

In addition, in calculating distributable earnings, net income (in accordance with GAAP) is adjusted to exclude unrealized gains or losses on residential MSRs, held at fair value. We treat our commercial MSRs and residential MSRs as two separate classes based on the nature of the underlying mortgages and our treatment of these assets as two separate pools for risk management purposes. Servicing rights relating to our small business commercial business are accounted for under ASC 860 while our residential MSRs are accounted for under the fair value option under ASC 825. In calculating distributable earnings, we do not exclude realized gains or losses on either commercial MSRs or residential MSRs, held at fair value, as servicing income is a fundamental part of our business and an indicator of the ongoing performance.

To qualify as a REIT, we must distribute to our stockholders each calendar year dividends equal to at least 90% of our REIT taxable income (including certain items of non-cash income), determined without regard to the deduction for dividends paid and excluding net capital gain. There are certain items, including net income generated from the creation of MSRs, that are included in distributable earnings but are not included in the calculation of the current year’s taxable income. These differences may result in certain items that are recognized in the current period’s calculation of distributable earnings not being included in taxable income, and thus not subject to the REIT dividend distribution requirement, until future years.

The table below presents a reconciliation of net income to distributable earnings.

*(in thousands)*

| ​ ​ | ​ ​ Three Months Ended September 30, 2023 | ​ ​ | ​ ​ 2022 | ​ ​ ​ | ​ ​ ​ ​ Change | ​ ​ ​ | ​ ​ Nine Months Ended September 30, 2023 | ​ ​ | ​ ​ 2022 | ​ ​ ​ | ​ ​ ​ ​ Change |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| **Net Income** | **$47,179** | **​** | **$66,253** | **​** | **$(19,074)** | **​** | **$337,530** | **​** | **$189,481** | **​** | **$148,049** |
| **Reconciling items:** | **​** ​ | ​ | **​** ​ | ​ | **​** ​ | ​ | **​** ​ | ​ | **​** ​ | ​ | **​** ​ |
| Unrealized gain on MSR | ​ (2,563) | ​ | ​ (16,649) | ​ | ​ 14,086 | ​ | ​ (5,288) | ​ | ​ (49,232) | ​ | ​ 43,944 |
| Increase (decrease) in CECL reserve | ​ (12,151) | ​ | ​ 2,462 | ​ | ​ (14,613) | ​ | ​ (62) | ​ | ​ 2,320 | ​ | ​ (2,382) |
| Non-recurring REO impairment | ​ — | ​ | ​ — | ​ | ​ — | ​ | ​ — | ​ | ​ 2,267 | ​ | ​ (2,267) |
| Non-cash compensation | ​ 2,275 | ​ | ​ 1,392 | ​ | ​ 883 | ​ | ​ 6,190 | ​ | ​ 4,224 | ​ | ​ 1,966 |
| Merger transaction costs and other non-recurring expenses | ​ 2,536 | ​ | ​ 1,535 | ​ | ​ 1,001 | ​ | ​ 18,446 | ​ | ​ 8,606 | ​ | ​ 9,840 |
| Bargain purchase (gain) loss | ​ 14,862 | ​ | ​ — | ​ | ​ 14,862 | ​ | ​ (215,032) | ​ | ​ — | ​ | ​ (215,032) |
| **Total reconciling items** | **$4,959** | **​** | **$(11,260)** | **​** | **$16,219** | **​** | **$(195,746)** | **​** | **$(31,815)** | **​** | **$(163,931)** |
| Income tax adjustments | **​** 26 | **​** | **​** 3,193 | **​** | **​** (3,167) | ​ | **​** (188) | **​** | **​** 9,485 | **​** | **​** (9,673) |
| **Distributable earnings** | **$52,164** | **​** | **$58,186** | **​** | **$(6,022)** | **​** | **$141,596** | **​** | **$167,151** | **​** | **$(25,555)** |
| Less: Distributable earnings attributable to non-controlling interests | **​** 1,566 | **​** | ​ 2,655 | ​ | **​** (1,089) | ​ | **​** 5,582 | **​** | **​** 6,173 | ​ | **​** (591) |
| Less: Income attributable to participating shares | **​** 2,334 | **​** | ​ 2,407 | ​ | **​** (73) | ​ | **​** 7,078 | **​** | **​** 7,231 | ​ | **​** (153) |
| **Distributable earnings attributable to common stockholders** | **$48,264** | **​** | **$53,124** | **​** | **$(4,860)** | **​** | **$128,936** | **​** | **$153,747** | **​** | **$(24,811)** |
| **Distributable earnings per common share - basic** | **$0.28** | **​** | **$0.46** | **​** | **$(0.18)** | **​** | **$0.93** | **​** | **$1.46** | **​** | **$(0.53)** |
| **Distributable earnings per common share - diluted** | **$0.28** | **​** | **$0.44** | **​** | **$(0.16)** | **​** | **$0.92** | **​** | **$1.38** | **​** | **$(0.46)** |

***Q3 2023 versus Q3 2022.*** Consolidated net income of $47.2 million for the third quarter of 2023 represented a decrease of $19.1 million from the third quarter of 2022, primarily due to a reduction in the bargain purchase gain in connection with the Broadmark Merger, net realized losses on financial instruments and real estate owned and an increase in loan servicing expenses. These decreases were partially offset by an increase in net interest income due to an increase in interest rates and an increase in the recovery for loan losses driven by changes in the forecasted macroeconomic inputs for reserve modeling, particularly decreases in CRE price index assumptions. Consolidated distributable earnings of $52.2 million for the third quarter of 2023 represented a decrease of $6.0 million from the third quarter of 2022. The increase in the distributable earnings reconciling items is primarily due to decreases in the unrealized gain on MSRs and the bargain purchase gain, partially offset by an increase in the recovery for loan losses.

***YTD 2023 versus YTD 2022.*** Consolidated net income of $337.5 million for the nine months ended September 30, 2023 represented an increase of $148.0 million from the nine months ended September 30, 2022, primarily due to the bargain purchase gain in connection with the Broadmark Merger and an increase in other income, partially offset by a decrease in net unrealized gains on financial instruments and net interest income. Consolidated distributable earnings of $141.6 million for the nine months ended September 30, 2023 represented a decrease of $25.6 million from the nine months ended September 30, 2022. The decrease in the distributable earnings reconciling items is primarily due to the bargain purchase gain, partially offset by a decrease in the unrealized gains on MSRs.

### COVID-19 Impact on Operating Results

There has been a wide-ranging response of international, federal, state and local public health and governmental authorities to the COVID-19 pandemic in regions across the United States and the world. The full magnitude and duration of the COVID-19 pandemic and the extent to which it impacts our financial condition, results of operations and cash flows will depend on future developments, which continue to be uncertain. We will continue to monitor for any material or adverse effects on our business resulting from the COVID-19 pandemic. Further discussion of the potential impacts on our business from the COVID-19 pandemic is provided in the section entitled “Risk Factors” in Part I, Item 1A of our Form 10-K.

### Incentive distribution payable to our Manager

Under the partnership agreement of our operating partnership, our Manager, the holder of the Class A special unit in our operating partnership, is entitled to receive an incentive distribution, distributed quarterly in arrears in an amount, not less than zero, equal to the difference between (i) the product of (A) 15% and (B) the difference between (x) distributable earnings (as described below) of our operating partnership, on a rolling four-quarter basis and before the incentive distribution for the current quarter, and (y) the product of (1) the weighted average of the issue price per share of common stock or operating partnership unit (“OP unit”) (without double counting) in all of our offerings multiplied by the weighted average number of shares of common stock outstanding (including any restricted shares of common stock and any other shares of common stock underlying awards granted under our 2013 Equity Incentive Plan and our 2023 Equity Incentive Plan) and OP units (without double counting) in such quarter and (2) 8%, and (ii) the sum of any incentive distribution paid to our Manager with respect to the first three quarters of such previous four quarters; provided, however, that no incentive distribution is payable with respect to any calendar quarter unless cumulative distributable earnings is greater than zero for the most recently completed 12 calendar quarters.

The incentive distribution shall be calculated within 30 days after the end of each quarter and such calculation shall promptly be delivered to our Company. We are obligated to pay the incentive distribution 50% in cash and 50% in either common stock or OP units, as determined in our discretion, within five business days after delivery to our Company of the written statement from the holder of the Class A special unit setting forth the computation of the incentive distribution for such quarter. Subject to certain exceptions, our Manager may not sell or otherwise dispose of any portion of the incentive distribution issued to it in common stock or OP units until after the three-year anniversary of the date that such shares of common stock or OP units were issued to our Manager. The price of shares of our common stock for purposes of determining the number of shares payable as part of the incentive distribution is the closing price of such shares on the last trading day prior to the approval by our Board of the incentive distribution.

For purposes of determining the incentive distribution payable to our Manager, distributable earnings (which is referred to as core earnings in the partnership agreement of our operating partnership) is defined under the partnership agreement of our operating partnership in a manner that is similar to the definition of distributable earnings described above under "Non-GAAP Financial Measures" but with the following additional adjustments which (i) further exclude: (a) the incentive distribution, (b) non-cash equity compensation expense, if any, (c) unrealized gains or losses on SBC loans (not just MBS and MSRs), (d) depreciation and amortization (to the extent we foreclose on any property), and (e) one-time events pursuant to changes in U.S. GAAP and certain other non-cash charges after discussions between our Manager and our independent directors and after approval by a majority of the independent directors and (ii) add back any realized gains or losses on the sales of MBS and on discontinued operations which were excluded from the definition of distributable earnings described above under "Non-GAAP Financial Measures".

### Liquidity and Capital Resources

Liquidity is a measure of our ability to turn non-cash assets into cash and to meet potential cash requirements. We use significant cash to purchase SBC loans and other target assets, originate new SBC loans, pay dividends, repay principal and interest on our borrowings, fund our operations and meet other general business needs. Our primary sources of liquidity will include our existing cash balances, borrowings, including securitizations, re-securitizations, repurchase agreements, warehouse facilities, bank credit facilities and other financing agreements (including term loans and revolving facilities), the net proceeds of offerings of equity and debt securities, including our senior secured notes, corporate debt, and convertible notes, and net cash provided by operating activities.

We are continuing to monitor the impact of rising interest rates, credit spreads and inflation on the Company, the borrowers underlying our real estate-related assets, the tenants in the properties we own, our financing sources, and the economy as a whole. Because the severity, magnitude and duration of these economic events remain uncertain, rapidly changing and difficult to predict, the impact on our operations and liquidity also remains uncertain and difficult to predict.

### Cash flow

***Nine Months Ended September 30, 2023.*** Cash and cash equivalents as of September 30, 2023, increased by $15.0 million to $312.0 million from December 31, 2022, primarily due to net cash provided by investing and operating activities, partially offset by net cash used for financing activities. The net cash provided by investing activities primarily reflected proceeds from dispositions and paydowns, partially offset by loan originations. The net cash provided by operating activities reflected net income, partially offset by a bargain purchase gain in connection with the Broadmark Merger. The net cash used for financing activities primarily reflected the repayments of secured borrowings, PPPLF borrowings and the convertible note, partially offset by proceeds from secured borrowings and net proceeds from the issuance of securitized debt obligations of consolidated VIEs.

***Nine Months Ended September 30, 2022.*** Cash and cash equivalents as of September 30, 2022, decreased by $4.0 million to $319.3 million from December 31, 2021, primarily due to net cash used for investing activities, partially offset by net cash provided by financing and operating activities. The net cash used for investing activities primarily reflected loan originations and purchases, partially offset by paydowns and principal forgiveness. The net cash provided by financing activities primarily reflected net proceeds from issuances of securitized debt and net proceeds from secured borrowings as a result of an increase in origination activities, partially offset by repayment of PPPLF borrowings. The net cash provided by operating activities primarily reflected net proceeds on disposition and principal payments of loans, held for sale, at fair value and an increase in operating assets, partially offset by an increase in operating liabilities and realized and unrealized gains on financial instruments.

### Financing Strategy and Leverage

In addition to raising capital through offerings of our public equity and debt securities, we finance our investment portfolio through securitization and secured borrowings. We generally seek to match-fund our investments to minimize the differences in the terms of our investments and our liabilities. Our secured borrowings have various recourse levels including full recourse, partial recourse and non-recourse, as well as varied mark-to-market provisions including full mark-to-market, credit mark only and non-mark-to-market. Securitizations allow us to match fund loans pledged as collateral on a long-term, non-recourse basis. Securitization structures typically consist of trusts with principal and interest collections allocated to senior debt and losses on liquidated loans to equity and subordinate tranches, and provide debt equal to 50% to 90% of the cost basis of the assets.

We also finance originated Freddie Mac SBL and residential loans with secured borrowings until the loans are sold, generally within 30 days.

As of September 30, 2023, we had a total leverage ratio of 3.4x and recourse leverage ratio of 0.9x. Our operating segments have different levels of recourse debt according to the differentiated nature of each segment. Our SBC Lending and Acquisitions, Small Business Lending and Residential Mortgage Banking segments have recourse leverage ratios of 0.3x, 0.6x and 2.0x, respectively. The remaining recourse leverage ratio is from our corporate debt offerings.

### Secured Borrowings

***Credit Facilities and Other Financing Agreements.*** We utilize credit facilities and other financing arrangements to finance our business. The financings are collateralized by the underlying mortgages, assets, related documents, and instruments, and typically contain index-based financing rate and terms, haircut and collateral posting provisions which depend on the types of collateral and the counterparties involved. These agreements often contain customary negative covenants and financial covenants, including maintenance of minimum liquidity, minimum tangible net worth, maximum debt to net worth ratio and current ratio and limitations on capital expenditures, indebtedness, distributions, transactions with affiliates and maintenance of positive net income.

The table below presents certain characteristics of our credit facilities and other financing arrangements.

| ​ ​ ​ ​ ​ ​ Lenders (1) Asset Class Current Maturity (2) | ​ ​ Pricing (3) | ​ ​ ​ ​ Facility Size | ​ ​ Pledged Assets Carrying Value | ​ ​ Carrying Value at September 30, 2023 | ​ ​ December 31, 2022 |
| ---: | --- | --- | --- | --- | --- |
| 3 SBA loans October 2024 - March 2025 | SOFR + 2.82% Prime - 0.82% | $250,000 | $114,788 | $84,465 | $160,903 |
| 2 SBC loans - USD February 2024 – December 2024 | SOFR + 6.52% | ​ 360,000 | ​ 392,384 | ​ 153,924 | ​ 111,966 |
| 1 SBC loans - Non-USD (4) June 2026 | SONIA + 3.75% | ​ 122,026 | ​ 28,742 | ​ 11,577 | ​ 61,596 |
| 5 Residential loans November 2023 – November 2024 | Variable Pricing | ​ 390,000 | ​ 110,373 | ​ 107,845 | ​ 132,658 |
| 1 Residential MSRs February 2026 | SOFR + 3.00% | ​ 120,000 | ​ 142,496 | ​ 101,881 | ​ 49,900 |
| 1 Purchased future receivables October 2025 | SOFR + 4.50% | ​ 50,000 | ​ 15,948 | ​ 9,500 | ​ — |
| **Total borrowings under credit facilities and other financing agreements** | **​** | **$1,292,026** | **$804,731** | **$469,192** | **$517,023** |

(1) Represents the total number of facility lenders.

(2) Current maturity does not reflect extension options available beyond original commitment terms.

(3) Asset class pricing is determined using an index rate plus a weighted average spread.

(4) Non-USD denominated credit facilities have been converted into USD for purposes of this disclosure.

***Repurchase Agreements.*** Under the loan repurchase facilities and securities repurchase agreements, we may be required to pledge additional assets to our counterparties in the event that the estimated fair value of the existing pledged collateral under such agreements declines and such lenders demand additional collateral, which may take the form of additional assets or cash. Generally, the loan repurchase facilities and securities repurchase agreements contain a SOFR-based financing rate, term and haircuts depending on the types of collateral and the counterparties involved. The loan repurchase facilities also include financial maintenance covenants.

If the estimated fair values of the assets increase due to changes in market interest rates or other market factors, lenders may release collateral back to us. Margin calls may result from a decline in the value of the investments securing the loan repurchase facilities and securities repurchase agreements, prepayments on the loans securing such investments and from changes in the estimated fair value of such investments generally due to principal reduction of such investments from scheduled amortization and resulting from changes in market interest rates and other market factors. Counterparties also may choose to increase haircuts based on credit evaluations of our Company and/or the performance of the assets in question. Historically, disruptions in the financial and credit markets have resulted in increased volatility in these levels, and this volatility could persist as market conditions continue to change. Should prepayment speeds on the mortgages underlying our investments or market interest rates suddenly increase, margin calls on the loan repurchase facilities and securities repurchase agreements could result, causing an adverse change in our liquidity position. To date, we have satisfied all of our margin calls and have never sold assets in response to any margin call under these borrowings.

Our borrowings under repurchase agreements are renewable at the discretion of our lenders and, as such, our ability to roll-over such borrowings are not guaranteed. The terms of the repurchase transaction borrowings under our repurchase agreements generally conform to the terms in the standard master repurchase agreement as published by the Securities Industry and Financial Markets Association, as to repayment, margin requirements and the segregation of all assets we have initially sold under the repurchase transaction. In addition, each lender typically requires that we include supplemental terms and conditions to the standard master repurchase agreement. Typical supplemental terms and conditions, which differ by lender, may include changes to the margin maintenance requirements, required haircuts and purchase price maintenance requirements, requirements that all controversies related to the repurchase agreement be litigated in a particular jurisdiction, and cross default and setoff provisions.

We maintain certain assets, which, from time to time, may include cash, unpledged SBC loans, SBC ABS and short-term investments (which may be subject to various haircuts if pledged as collateral to meet margin requirements) and collateral in excess of margin requirements held by our counterparties, or collectively, the “Cushion”, to meet routine margin calls and protect against unforeseen reductions in our borrowing capabilities. Our ability to meet future margin calls will be impacted by the Cushion, which varies based on the fair value of our investments, our cash position and margin requirements. Our cash position fluctuates based on the timing of our operating, investing and financing activities and is managed based on our anticipated cash needs.

The table below presents certain characteristics of our repurchase agreements.

| ​ ​ ​ ​ ​ ​ ​ ​ Lenders (1) Asset Class Current Maturity Pricing (2) | ​ ​ ​ ​ Facility Size | ​ ​ Pledged Assets Carrying Value | ​ ​ Carrying Value at September 30, 2023 | ​ ​ December 31, 2022 |
| ---: | ---: | ---: | ---: | ---: |
| 9 SBC loans November 2023 – July 2026 1 MT + 2.00% SOFR + 2.76% | $4,545,500 | $2,171,164 | $1,506,136 | $1,905,358 |
| 1 SBC loans - Non-USD (3) January 2024 EURIBOR + 2.75% | ​ 211,450 | ​ 57,941 | ​ 42,557 | ​ — |
| 6 MBS October 2023 - January 2024 7.77% | ​ 367,185 | ​ 753,336 | ​ 367,185 | ​ 423,912 |
| **Total borrowings under repurchase agreements** | **$5,124,135** | **$2,982,441** | **$1,915,878** | **$2,329,270** |

(1) Represents the total number of facility lenders

(2) Asset class pricing is determined using an index rate plus a weighted average spread.

(3) Non-USD denominated repurchase agreements have been converted into USD for purposes of this disclosure.

### Collateralized borrowings under repurchase agreements

The table below presents collateralized borrowings outstanding under repurchase agreements as of the end of each quarter, the average amount of collateralized borrowings outstanding under repurchase agreements during the quarter and the highest balance of any month end during the quarter.

*(in thousands)*

| ​ | ​ ​ | ​ Quarter End Balance | ​ | ​ ​ | ​ Average Balance in Quarter | ​ | ​ ​ | ​ Highest Month End Balance in Quarter | ​ |
| --- | --- | --- | ---: | --- | --- | ---: | --- | --- | ---: |
| Q4 2020 | ​ | ​ | 827,569 | ​ | ​ | 726,059 | ​ | ​ | 827,569 |
| Q1 2021 | ​ | ​ | 1,320,644 | ​ | ​ | 1,785,656 | ​ | ​ | 2,481,436 |
| Q2 2021 | ​ | ​ | 1,223,527 | ​ | ​ | 1,145,354 | ​ | ​ | 1,223,527 |
| Q3 2021 | ​ | ​ | 1,552,135 | ​ | ​ | 1,497,324 | ​ | ​ | 1,552,135 |
| Q4 2021 | ​ | ​ | 2,045,717 | ​ | ​ | 1,824,260 | ​ | ​ | 2,045,717 |
| Q1 2022 | ​ | ​ | 2,771,038 | ​ | ​ | 2,835,212 | ​ | ​ | 3,065,412 |
| Q2 2022 | ​ | ​ | 2,701,180 | ​ | ​ | 2,805,935 | ​ | ​ | 3,009,961 |
| Q3 2022 | ​ | ​ | 2,870,807 | ​ | ​ | 2,887,318 | ​ | ​ | 2,940,474 |
| Q4 2022 | ​ | ​ | 2,329,270 | ​ | ​ | 2,295,348 | ​ | ​ | 2,329,270 |
| Q1 2023 | ​ | ​ | 1,959,888 | ​ | ​ | 2,094,621 | ​ | ​ | 2,371,413 |
| Q2 2023 | ​ | ​ | 1,792,366 | ​ | ​ | 1,945,290 | ​ | ​ | 2,022,433 |
| Q3 2023 | ​ | ​ | 1,915,878 | ​ | ​ | 1,876,204 | ​ | ​ | 1,915,879 |

The net increase in the outstanding balances during the third quarter of 2023 was primarily due to ­­the collapse of RCMF

2019-FL3.

***Paycheck Protection Program Facility borrowings.*** The Company uses the Paycheck Protection Program Liquidity Facility (“PPPLF”) from the Federal Reserve to finance PPP loans. The program charges an interest rate of 0.35%. As of September 30, 2023, we had approximately $73.3 million outstanding under this credit facility.

### Senior Secured Notes, Convertible Notes and Corporate Debt, Net

The table below presents information about senior secured notes and corporate debt issued through public and private transactions.

*(in thousands)*

| ​ | ​ | ​ ​ Coupon Rate | ​ ​ | ​ Maturity Date | ​ | ​ ​ September 30, 2023 |
| --- | --- | --- | --- | --- | --- | --- |
| Senior secured notes principal amount(1) | ​ | 4.50% | ​ | 10/20/2026 | ​ | $350,000 |
| Unamortized deferred financing costs - Senior secured notes | ​ | ​ ​ | ​ | ​ | ​ | ​ (5,316) |
| **Total Senior secured notes, net** | **​** | **​** **​** | **​** | ​ | ​ | **$344,684** |
| Corporate debt principal amount(2) | ​ | 5.50% | ​ | 12/30/2028 | ​ | ​ 110,000 |
| Corporate debt principal amount(3) | ​ | 6.20% | ​ | 7/30/2026 | ​ | ​ 104,613 |
| Corporate debt principal amount(3) | ​ | 5.75% | ​ | 2/15/2026 | ​ | ​ 206,270 |
| Corporate debt principal amount(4) | ​ | 6.125% | ​ | 4/30/2025 | ​ | ​ 120,000 |
| Corporate debt principal amount(5) | ​ | 7.375% | ​ | 7/31/2027 | ​ | ​ 100,000 |
| Corporate debt principal amount(6) | ​ | 5.00% | ​ | 11/15/2026 | ​ | ​ 100,000 |
| Unamortized discount - corporate debt | ​ | ​ ​ | ​ | ​ | ​ | ​ (7,800) |
| Unamortized deferred financing costs - corporate debt | ​ | ​ ​ | ​ | ​ | ​ | ​ (5,505) |
| Junior subordinated notes principal amount(7) | ​ | SOFR + 3.10% | ​ | 3/30/2035 | ​ | ​ 15,000 |
| Junior subordinated notes principal amount(8) | ​ | SOFR + 3.10% | ​ | 4/30/2035 | ​ | ​ 21,250 |
| **Total corporate debt, net** | **​** | **​** **​** | **​** | ​ | ​ | **$763,828** |
| **Total carrying amount of debt** | **​** | **​** **​** | **​** | ​ | ​ | **$1,108,512** |
| (1) Interest on the senior secured notes is payable semiannually on April 20 and October 20 of each year. |  |  |  |  |  |  |
| (2) Interest on the corporate debt is payable semiannually on June 30 and December 30 of each year. |  |  |  |  |  |  |
| (3) Interest on the corporate debt is payable quarterly on January 30, April 30, July 30, and October 30 of each year. |  |  |  |  |  |  |
| (4) Interest on the corporate debt is payable semiannually on April 30 and October 30 of each year. |  |  |  |  |  |  |
| (5) Interest on the corporate debt is payable semiannually on January 31 and July 31 of each year. |  |  |  |  |  |  |
| (6) Interest on the corporate debt is payable semiannually on May 15 and November 15 of each year; assumed as part of the Broadmark Merger. |  |  |  |  |  |  |
| (7) Interest on the Junior subordinated notes I-A is payable quarterly on March 30, June 30, September 30, and December 30 of each year. |  |  |  |  |  |  |
| (8) Interest on the Junior subordinated notes I-B is payable quarterly on January 30, April 30, July 30, and October 30 of each year. |  |  |  |  |  |  |

The table below presents the contractual maturities for senior secured notes and corporate debt.

*(in thousands)*

| ​ | ​ | ​ ​ September 30, 2023 |
| --- | --- | --- |
| 2023 |  | $— |
| 2024 |  | ​ — |
| 2025 |  | ​ 120,000 |
| 2026 |  | ​ 760,883 |
| 2027 | ​ | ​ 100,000 |
| Thereafter |  | ​ 146,250 |
| **Total contractual amounts** | **​** | **$1,127,133** |
| Unamortized deferred financing costs, discounts, and premiums, net | ​ | ​ (18,621) |
| **Total carrying amount of debt** | **​** | **$1,108,512** |

***ReadyCap Holdings 4.50% senior secured notes due 2026.*** On October 20, 2021, ReadyCap Holdings, an indirect subsidiary of the Company, completed the offer and sale of $350.0 million of its 4.50% Senior Secured Notes due 2026 (the “Senior Secured Notes”). The Senior Secured Notes are fully and unconditionally guaranteed by the Company, each direct parent entity of ReadyCap Holdings, and other direct or indirect subsidiaries of the Company from time to time that is a direct parent entity of Sutherland Asset III, LLC or otherwise pledges collateral to secure the Senior Secured Notes (collectively, the “Guarantors”).

ReadyCap Holdings’ and the Guarantors’ respective obligations under the Senior Secured Notes are secured by a perfected first-priority lien on certain capital stock and assets (collectively, the “SSN Collateral”) owned by certain subsidiaries of the Company.

The Senior Secured Notes are redeemable by ReadyCap Holdings’ following a non-call period, through the payment of the outstanding principal balance of the Senior Secured Notes plus a “make-whole” or other premium that decreases the closer the Senior Secured Notes are to maturity. ReadyCap Holdings is required to offer to repurchase the Senior Secured Notes at 101% of the principal balance of the Senior Secured Notes in the event of a change in control and a downgrade of the rating on the Senior Secured Notes in connection therewith, as set forth more fully in the note purchase agreement.

The Senior Secured Notes were issued pursuant to a note purchase agreement, which contains certain customary negative covenants and requirements relating to the collateral and our company, including maintenance of minimum liquidity, minimum tangible net worth, maximum debt to net worth ratio and limitations on transactions with affiliates.

***Convertible notes.*** On August 9, 2017, we closed an underwritten public sale of $115.0 million aggregate principal amount of our 7.00% convertible senior notes due 2023 (the “Convertible Notes”). Pursuant to the terms of the base indenture, dated August 9, 2017, as supplemented by the first supplemental indenture, dated August 9, 2017, between us and U.S. Bank National Association, as trustee, we could redeem all or any portion of the Convertible Notes on or after August 15, 2021, if the last reported sale price of our common stock was at least 120% of the conversion price in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provided notice of redemption, at a redemption price payable in cash equal to 100% of the principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid interest. Additionally, upon the occurrence of certain corporate transactions, holders could have required us to purchase the Convertible Notes for cash at a purchase price equal to 100% of the principal amount of the Convertible Notes to be purchased, plus accrued and unpaid interest.

The Convertible Notes were convertible only upon satisfaction of one or more of the following conditions: (1) the closing market price of our common stock was greater than or equal to 120% of the conversion price of the respective Convertible Notes for at least 20 out of 30 days prior to the end of the preceding fiscal quarter, (2) the trading price of the Convertible Notes was less than 98% of the product of (i) the conversion rate and (ii) the closing price of our common stock during any five consecutive trading day period, (3) we issued certain equity instruments at less than the 10 day average closing market price of our common stock or the per-share value of certain distributions exceeded the market price of our common stock by more than 10%, or (4) certain other specified corporate events (significant consolidation, sale, merger share exchange, etc.) occurred.

On August 15, 2023, the Company’s outstanding Convertible Notes were repaid in full.

### Corporate debt

We issue senior unsecured notes in public and private transactions. The notes are governed by a base indenture and supplemental indentures. Often, the notes are redeemable by us following a non-call period, through the payment of the outstanding principal balance plus a “make-whole” or other premium that typically decreases the closer the notes are to maturity. We are often required to offer to repurchase the notes, in some cases at 101% of the principal balance of the notes, in the event of a change in control or fundamental change pertaining to our company, as defined in the applicable supplemental indentures. The notes rank equal in right of payment to any of our existing and future unsecured and unsubordinated indebtedness; effectively junior in right of payment to any of our existing and future secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all existing and future indebtedness, other liabilities (including trade payables) and (to the extent not held by us) preferred stock, if any, of our subsidiaries. The supplemental indentures governing the notes often contain customary negative covenants and financial covenants relating to maintenance of minimum liquidity, minimum tangible net worth, maximum debt to net worth ratio and limitations on transactions with affiliates.

In addition, in connection with the Broadmark Merger, RCC Merger Sub, a wholly owned subsidiary of the Company, assumed Broadmark’s obligations on certain senior unsecured notes. The note purchase agreement governing these notes contains financial covenants that require compliance with leverage and coverage ratios and maintenance of minimum tangible net worth, as well as other customary affirmative and negative covenants.

### The Debt ATM Agreement

On May 20, 2021, the Company entered into an At Market Issuance Sales Agreement (the “Sales Agreement”) with B. Riley Securities, Inc. (the “Agent”), pursuant to which it may offer and sell, from time to time, up to $100.0 million of the 6.20% 2026 Notes and the 5.75% 2026 Notes. Sales of the 6.20% 2026 Notes and the 5.75% 2026 Notes pursuant to the Sales Agreement, if any, may be made in transactions that are deemed to be “at the market offerings” as defined in Rule 415 under the Securities Act (the “Debt ATM Program”). The Agent is not required to sell any specific number of the notes, but the Agent will make all sales using commercially reasonable efforts consistent with its normal trading and sales practices on mutually agreed terms between the Agent and the Company. No such sales through the Debt ATM Program were made during the three or nine months ended September 30, 2023.

### Securitization transactions

Our Manager’s extensive experience in loan acquisition, origination, servicing and securitization strategies has enabled us to complete several securitizations of SBC and SBA loan assets since January 2011. These securitizations allow us to match fund the SBC and SBA loans on a long-term, non-recourse basis. The assets pledged as collateral for these securitizations were contributed from our portfolio of assets. By contributing these SBC and SBA assets to the various securitizations, these transactions created capacity for us to fund other investments.

The table below presents information on the securitization structures and related issued tranches of notes to investors.

*(in millions)*

| ​ Trusts (Firm sponsored) | ​ Collateral Asset Class ​ | ​ Issuance ​ | ​ Active / Collapsed ​ | ​ ​ ​ | ​ ​ Bonds Issued ​ ​ |
| --- | --- | --- | --- | --- | --- |
| Waterfall Victoria Mortgage Trust 2011-1 (SBC1) | SBC Acquired loans | February 2011 | Collapsed | ​ | $40.5 |
| Waterfall Victoria Mortgage Trust 2011-3 (SBC3) | SBC Acquired loans | October 2011 | Collapsed | ​ | ​ 143.4 |
| Sutherland Commercial Mortgage Trust 2015-4 (SBC4) | SBC Acquired loans | August 2015 | Collapsed | ​ | ​ 125.4 |
| Sutherland Commercial Mortgage Trust 2018 (SBC7) | SBC Acquired loans | November 2018 | Collapsed | ​ | ​ 217.0 |
| ReadyCap Lending Small Business Trust 2015-1 (RCLT 2015-1) | Acquired SBA 7(a) loans | June 2015 | Collapsed | ​ | ​ 189.5 |
| ReadyCap Lending Small Business Loan Trust 2019-2 (RCLT 2019-2) | Originated SBA 7(a) loans, Acquired SBA 7(a) loans | December 2019 | Active | ​ | ​ 131.0 |
| ReadyCap Lending Small Business Loan Trust 2023-3 (RCLT 2023-3) | Originated SBA 7(a) loans, Acquired SBA 7(a) loans | July 2023 | Active | ​ | ​ 132.0 |
| ​ | ​ | ​ | ​ | ​ | ​ ​ |
| **Real Estate Mortgage Investment Conduits (REMICs)** | ​ | ​ | ​ | ​ | ​ ​ |
| ReadyCap Commercial Mortgage Trust 2014-1 (RCMT 2014-1) | SBC Originated conventional | September 2014 | Collapsed | ​ | $181.7 |
| ReadyCap Commercial Mortgage Trust 2015-2 (RCMT 2015-2) | SBC Originated conventional | November 2015 | Active | ​ | ​ 218.8 |
| ReadyCap Commercial Mortgage Trust 2016-3 (RCMT 2016-3) | SBC Originated conventional | November 2016 | Active | ​ | ​ 162.1 |
| ReadyCap Commercial Mortgage Trust 2018-4 (RCMT 2018-4) | SBC Originated conventional | March 2018 | Active | ​ | ​ 165.0 |
| Ready Capital Mortgage Trust 2019-5 (RCMT 2019-5) | SBC Originated conventional | January 2019 | Active | ​ | ​ 355.8 |
| Ready Capital Mortgage Trust 2019-6 (RCMT 2019-6) | SBC Originated conventional | November 2019 | Active | ​ | ​ 430.7 |
| Ready Capital Mortgage Trust 2022-7 (RCMT 2022-7) | SBC Originated conventional | April 2022 | Active | ​ | ​ 276.8 |
| Waterfall Victoria Mortgage Trust 2011-2 (SBC2) | SBC Acquired loans | March 2011 | Collapsed | ​ | ​ 97.6 |
| Sutherland Commercial Mortgage Trust 2018 (SBC6) | SBC Acquired loans | August 2017 | Active | ​ | ​ 154.9 |
| Sutherland Commercial Mortgage Trust 2019 (SBC8) | SBC Acquired loans | June 2019 | Active | ​ | ​ 306.5 |
| Sutherland Commercial Mortgage Trust 2020 (SBC9) | SBC Acquired loans | June 2020 | Collapsed | ​ | ​ 203.6 |
| Sutherland Commercial Mortgage Trust 2021 (SBC10) | SBC Acquired loans | May 2021 | Active | ​ | ​ 232.6 |
| ​ | ​ | ​ | ​ | ​ | ​ ​ |
| **Collateralized Loan Obligations (CLOs)** | ​ | ​ | ​ | ​ | ​ ​ |
| Ready Capital Mortgage Financing 2017– FL1 | SBC Originated bridge | August 2017 | Collapsed | ​ | $198.8 |
| Ready Capital Mortgage Financing 2018 – FL2 | SBC Originated bridge | June 2018 | Collapsed | ​ | ​ 217.1 |
| Ready Capital Mortgage Financing 2019 – FL3 | SBC Originated bridge | April 2019 | Collapsed | ​ | ​ 320.2 |
| Ready Capital Mortgage Financing 2020 – FL4 | SBC Originated bridge | June 2020 | Collapsed | ​ | ​ 405.3 |
| Ready Capital Mortgage Financing 2021 – FL5 | SBC Originated bridge | March 2021 | Active | ​ | ​ 628.9 |
| Ready Capital Mortgage Financing 2021 – FL6 | SBC Originated bridge | August 2021 | Active | ​ | ​ 652.5 |
| Ready Capital Mortgage Financing 2021 – FL7 | SBC Originated bridge | November 2021 | Active | ​ | ​ 927.2 |
| Ready Capital Mortgage Financing 2022 – FL8 | SBC Originated bridge | March 2022 | Active | ​ | ​ 1,135.0 |
| Ready Capital Mortgage Financing 2022 – FL9 | SBC Originated bridge | June 2022 | Active | ​ | ​ 754.2 |
| Ready Capital Mortgage Financing 2022 – FL10 | SBC Originated bridge | October 2022 | Active | ​ | ​ 860.1 |
| Ready Capital Mortgage Financing 2023 – FL11 | SBC Originated bridge | February 2023 | Active | ​ | ​ 586.0 |
| Ready Capital Mortgage Financing 2023 – FL12 | SBC Originated bridge | June 2023 | Active | ​ | ​ 648.6 |
| ​ | ​ | ​ | ​ | ​ | ​ ​ |
| **Trusts (Non-firm sponsored)** | ​ | ​ | ​ | ​ | ​ ​ |
| Freddie Mac Small Balance Mortgage Trust 2016-SB11 | Originated agency multi-family | January 2016 | Active | ​ | $110.0 |
| Freddie Mac Small Balance Mortgage Trust 2016-SB18 | Originated agency multi-family | July 2016 | Active | ​ | ​ 118.0 |
| Freddie Mac Small Balance Mortgage Trust 2017-SB33 | Originated agency multi-family | June 2017 | Active | ​ | ​ 197.9 |
| Freddie Mac Small Balance Mortgage Trust 2018-SB45 | Originated agency multi-family | January 2018 | Active | ​ | ​ 362.0 |
| Freddie Mac Small Balance Mortgage Trust 2018-SB52 | Originated agency multi-family | September 2018 | Active | ​ | ​ 505.0 |
| Freddie Mac Small Balance Mortgage Trust 2018-SB56 | Originated agency multi-family | December 2018 | Active | ​ | ​ 507.3 |
| Key Commercial Mortgage Trust 2020-S3(1) | SBC Originated conventional | September 2020 | Active | ​ | ​ 263.2 |
| (1) Contributed portion of assets into trust | ​ | ​ | ​ | ​ | ​ ​ |

We used the proceeds from the sale of the tranches issued to purchase and originate SBC and SBA loans. We are the primary beneficiary of all firm sponsored securitizations; therefore they are consolidated in our financial statements.

### Contractual Obligations and Off-Balance Sheet Arrangements

Other than the items referenced above, there have been no material changes to our contractual obligations for the three months ended September 30, 2023. See Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations – Contractual Obligations," in the Company's Form 10-K for further details. As of the date of this Form 10-Q, we had no off-balance sheet arrangements, other than as disclosed.

### Critical Accounting Estimates

Our consolidated financial statements are prepared in accordance with GAAP, which requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. We believe that all of the decisions and assessments upon which our consolidated financial statements are based were reasonable at the time made, based upon information available to us at that time. The following discussion describes the critical accounting estimates that apply to our operations and require complex management judgment. This summary should be read in conjunction with our accounting policies and use of estimates included in “Notes to Consolidated Financial Statements, Note 3 – Summary of

Significant Accounting Policies” included in Item 8, “Financial Statements and Supplementary Data,” in the Company’s Form 10-K.

### Allowance for credit losses

The allowance for credit losses consists of the allowance for losses on loans and lending commitments accounted for at amortized cost. Such loans and lending commitments are reviewed quarterly considering credit quality indicators, including probable and historical losses, collateral values, LTV ratio and economic conditions. The allowance for credit losses increases through provisions charged to earnings and reduced by charge-offs, net of recoveries.

ASC 326, *Financial Instruments-Credit Losses (“ASC 326”)*, became effective for us on January 1, 2020 and replaced the “incurred loss” methodology previously required by GAAP with an expected loss model known as the Current Expected Credit Loss (“CECL”) model. CECL amends the previous credit loss model to reflect a reporting entity's current estimate of all expected credit losses, not only based on historical experience and current conditions, but also by including reasonable and supportable forecasts incorporating forward-looking information. The measurement of expected credit losses under CECL is applicable to financial assets measured at amortized cost. The allowance for credit losses required under ASC 326 is deducted from the respective loans’ amortized cost basis on our consolidated balance sheets. The related Accounting Standards Update No. 2016-13 (“ASU 2016-13”) also requires a cumulative-effect adjustment to retained earnings as of the beginning of the reporting period of adoption.

In connection with ASU 2016-13, we implemented new processes including the utilization of loan loss forecasting models, updates to our reserve policy documentation, changes to internal reporting processes and related internal controls. We implemented loan loss forecasting models for estimating expected life-time credit losses, at the individual loan level, for its loan portfolio. The CECL forecasting methods used by the Company include (i) a probability of default and loss given default method using underlying third-party CMBS/CRE loan database with historical loan losses and (ii) probability weighted expected cash flow method, depending on the type of loan and the availability of relevant historical market loan loss data. We might use other acceptable alternative approaches in the future depending on, among other factors, the type of loan, underlying collateral, and availability of relevant historical market loan loss data.

We estimate the CECL expected credit losses for our loan portfolio at the individual loan level. Significant inputs to our forecasting methods include (i) key loan-specific inputs such as LTV, vintage year, loan-term, underlying property type, occupancy, geographic location, and others, and (ii) a macro-economic forecast. These estimates may change in future periods based on available future macro-economic data and might result in a material change in our future estimates of expected credit losses for its loan portfolio.

In certain instances, we consider relevant loan-specific qualitative factors to certain loans to estimate its CECL expected credit losses. We consider loan investments that are both (i) expected to be substantially repaid through the operation or sale of the underlying collateral, and (ii) for which the borrower is experiencing financial difficulty, to be “collateral-dependent” loans. For such loans that we determine that foreclosure of the collateral is probable, we measure the expected losses based on the difference between the fair value of the collateral (less costs to sell the asset if repayment is expected through the sale of the collateral) and the amortized cost basis of the loan as of the measurement date. For collateral-dependent loans that we determine foreclosure is not probable, we apply a practical expedient to estimate expected losses using the difference between the collateral’s fair value (less costs to sell the asset if repayment is expected through the sale of the collateral) and the amortized cost basis of the loan.

While we have a formal methodology to determine the adequate and appropriate level of the allowance for credit losses, estimates of inherent loan losses involve judgment and assumptions as to various factors, including current economic conditions. Our determination of adequacy of the allowance for credit losses is based on quarterly evaluations of the above factors. Accordingly, the provision for loan losses will vary from period to period based on management's ongoing assessment of the adequacy of the allowance for credit losses.

Significant judgment is required when evaluating loans for impairment; therefore, actual results over time could be materially different. Refer to “Notes to Consolidated Financial Statements, Note 6 – Loans and Allowance for Credit Losses” included in this Form 10-Q for results of our loan impairment evaluation.

### Accretion of discounts associated with PPP loans, held for investment

The Company’s loan originations in the second round of the program are accounted for as loans, held-for-investment under ASC 310, *Receivables*. Loan origination fees and related direct loan origination costs are capitalized into the initial recorded investment in the loan and are deferred over the loan term. The net amount between the loan origination fees and direct loan origination costs is recognized as a discount in the carrying value of the loans, and the discount is required to be recognized in income at a constant effective yield over the life of the instrument.

The effective yield is determined based on the payment terms required by the loan contract as well as with actual and expected prepayments from loan forgiveness by the federal government. Because prepayments from loan forgiveness often deviate from the estimates, the Company periodically recalculates the effective yield to reflect actual prepayments to date and anticipated future prepayments. Anticipated future prepayments are estimated based on past prepayment patterns, historical, current, and projected interest rate environments, among other factors, to predict future cash flows.

Adjustments to anticipated future prepayments are recorded on a retrospective basis, meaning that the net investment or liability is adjusted to the amount that would have existed had the new effective yield been applied since the initial recognition of the instrument. As prepayment speeds change, these accounting requirements can be a source of income volatility. Accelerations of prepayments accelerate the accretion and increase current earnings. Conversely, when prepayments decline, thus lengthening the effective maturity of the instruments and shifting some of the discount accretion to future periods.

Significant judgment is required when evaluating the effective yield on PPP loans; therefore, actual results over time could be materially different. Refer to “Notes to Consolidated Financial Statements, Note 19 – Other Income and Operating Expenses” included in Item 8, “Financial Statements and Supplementary Data,” in the Company’s Form 10-K for a more complete discussion of PPP loans, held for investment.

### Valuation of financial assets and liabilities carried at fair value

We measure our MBS, derivative assets and liabilities, residential MSRs, and any assets or liabilities where we have elected the fair value option at fair value, including certain loans we have originated that are expected to be sold to third parties or securitized in the near term.

We have established valuation processes and procedures designed so that fair value measurements are appropriate and reliable, that they are based on observable inputs where possible, that the valuation approaches are consistently applied, and the assumptions and inputs are reasonable. We also have established processes to provide that the valuation methodologies, techniques and approaches for investments that are categorized within Level 3 of the ASC 820 *Fair Value Measurement* fair value hierarchy (the “fair value hierarchy”) are fair, consistent and verifiable. Our processes provide a framework that ensures the oversight of our fair value methodologies, techniques, validation procedures, and results.

When actively quoted observable prices are not available, we either use implied pricing from similar assets and liabilities or valuation models based on net present values of estimated future cash flows, adjusted as appropriate for liquidity, credit, market and/or other risk factors. Refer to “Notes to Consolidated Financial Statements, Note 7 – Fair Value Measurements” included in Item 8, “Financial Statements and Supplementary Data,” in the Form 10-K for a more complete discussion of our critical accounting estimates as they pertain to fair value measurements.

### Servicing rights impairment

Servicing rights, at amortized cost, are initially recorded at fair value and subsequently carried at amortized cost. We have elected the fair value option on our residential MSRs, which are not subject to impairment.

For purposes of testing our servicing rights, carried at amortized cost, for impairment, we first determine whether facts and circumstances exist that would suggest the carrying value of the servicing asset is not recoverable. If so, we then compare the net present value of servicing cash flow with its carrying value. The estimated net present value of servicing cash flows of the intangibles is determined using discounted cash flow modeling techniques which require management to make estimates regarding future net servicing cash flows, taking into consideration historical and forecasted loan prepayment rates, delinquency rates and anticipated maturity defaults. If the carrying value of the servicing rights exceeds the net present value of servicing cash flows, the servicing rights are considered impaired and an impairment loss is recognized in earnings for the amount by which carrying value exceeds the net present value of servicing cash flows. We monitor the actual performance of our servicing rights by regularly comparing actual cash flow, credit, and prepayment experience to modeled estimates.

Significant judgment is required when evaluating servicing rights for impairment; therefore, actual results over time could be materially different. Refer to “Notes to Consolidated Financial Statements, Note 8 – Servicing Rights” included in this

Form 10-Q for a more complete discussion of our critical accounting estimates as they pertain to servicing rights impairment.

Refer to “Notes to Consolidated Financial Statements, Note 4– Recently Issued Accounting Pronouncements” included in Item 8, “Financial Statements and Supplementary Data,” in the Company’s Form 10-K for a discussion of recent accounting developments and the expected impact to the Company.

## Market risk

As filed, 17,788 characters.

In the normal course of business, we enter into transactions in various financial instruments that expose us to various types of risk, both on and off-balance sheet, which are associated with such financial instruments and markets for which we invest. These financial instruments expose us to varying degrees of market risk, credit risk, interest rate risk, liquidity risk, off-balance sheet risk and prepayment risk. Many of these risks have been augmented due to the continuing economic disruptions caused by the COVID-19 pandemic which remain uncertain and difficult to predict. We continue to monitor the impact of the pandemic and the effect of these risks in our operations.

***Market risk.*** Market risk is the potential adverse changes in the values of the financial instrument due to unfavorable changes in the level or volatility of interest rates, foreign currency exchange rates, or market values of the underlying financial instruments. We attempt to mitigate our exposure to market risk by entering into offsetting transactions, which may include purchase or sale of interest-bearing securities and equity securities.

***Credit risk.*** We are subject to credit risk in connection with our investments in SBC loans and SBC ABS and other target assets we may acquire in the future. The credit risk related to these investments pertains to the ability and willingness of the borrowers to pay, which is assessed before credit is granted or renewed and periodically reviewed throughout the loan or security term. We believe that loan credit quality is primarily determined by the borrowers’ credit profiles and loan characteristics. We seek to mitigate this risk by seeking to acquire assets at appropriate prices given anticipated and unanticipated losses and by deploying a value-driven approach to underwriting and diligence, consistent with our historical investment strategy, with a focus on projected cash flows and potential risks to cash flow. We further mitigate our risk of potential losses while managing and servicing our loans by performing various workout and loss mitigation strategies with delinquent borrowers. Nevertheless, unanticipated credit losses could occur which could adversely impact operating results.

The COVID-19 pandemic has adversely impacted the commercial real estate markets, causing reduced occupancy, requests from tenants for rent deferral or abatement, and delays in property renovations currently planned or underway. These negative conditions may persist into the future and impair borrower’s ability to pay principal and interest due under our loan agreements. We maintain robust asset management relationships with our borrowers and have leveraged these relationships to address the potential impact of the COVID-19 pandemic on our loans secured by properties experiencing cash flow pressure, most significantly hospitality and retail assets. Some of our borrowers have indicated that due to the impact of the COVID-19 pandemic, they will be unable to timely execute their business plans, have had to temporarily close their businesses, or have experienced other negative business consequences and have requested temporary interest deferral or forbearance, or other modifications of their loans. Accordingly, we have discussed with our borrowers potential near-term defensive loan modifications, which could include repurposing of reserves, temporary deferrals of interest, or performance test or covenant waivers on loans collateralized by assets directly impacted by the COVID-19 pandemic, and which would typically be coupled with an additional equity commitment and/or guaranty from sponsors. As of September 30, 2023, 0.1% of the loans in our commercial real estate portfolio are in forbearance plans. While we believe the principal amounts of our loans are generally adequately protected by underlying collateral value, there is a risk that we will not realize the entire principal value of certain investments.

***Interest rate risk.*** Interest rate risk is highly sensitive to many factors, including governmental monetary and tax policies, domestic and international economic and political considerations and other factors beyond our control.

Our operating results will depend, in part, on differences between the income from our investments and our financing costs. Our debt financing is based on a floating rate of interest calculated on a fixed spread over the relevant index, subject to a floor, as determined by the particular financing arrangement. The general impact of changing interest rates is discussed above under “— Factors Impacting Operating Results — Changes in Market Interest Rates.” In the event of a significant rising interest rate environment and/or economic downturn, defaults could increase and result in credit losses to us, which could materially and adversely affect our business, financial condition, liquidity, results of operations and prospects.

Furthermore, such defaults could have an adverse effect on the spread between our interest-earning assets and interest-bearing liabilities.

Additionally, non-performing SBC loans are not as interest rate sensitive as performing loans, as earnings on non-performing loans are often generated from restructuring the assets through loss mitigation strategies and opportunistically disposing of them. Because non-performing SBC loans are short-term assets, the discount rates used for valuation are based on short-term market interest rates, which may not move in tandem with long-term market interest rates.

The table below projects the impact on our interest income and expense for the twelve-month period following September 30, 2023, assuming an immediate increase or decrease of 25, 50, 75, and 100 basis points in interest rates.

*(in thousands)*

| ​ ​ ​ Assets: | ​ ​ ​ 12-month pretax net interest income sensitivity profiles ​ Instantaneous change in rates ​ 25 basis point increase ​ ​ | ​ ​ ​ 50 basis point increase ​ ​ | ​ ​ ​ 75 basis point increase ​ ​ | ​ ​ ​ 100 basis point increase ​ ​ | ​ ​ ​ 25 basis point decrease ​ ​ | ​ ​ ​ 50 basis point decrease ​ ​ | ​ ​ ​ 75 basis point decrease ​ ​ | ​ ​ ​ 100 basis point decrease ​ ​ |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Loans | $19,922 | $39,845 | $59,768 | $79,692 | $(19,919) | $(39,826) | $(59,678) | $(79,414) |
| Interest rate swap hedges | ​ 1,536 | ​ 3,072 | ​ 4,609 | ​ 6,145 | ​ (1,536) | ​ (3,072) | ​ (4,609) | ​ (6,145) |
| **Total** | **$21,458** | **$42,917** | **$64,377** | **$85,837** | **$(21,455)** | **$(42,898)** | **$(64,287)** | **$(85,559)** |
| **Liabilities:** | ​ ​ | ​ ​ | ​ ​ | ​ ​ | ​ ​ | ​ ​ | ​ ​ | ​ ​ |
| Secured Borrowings | $(4,715) | $(9,429) | $(14,144) | $(18,858) | $4,715 | $9,429 | $14,144 | $18,858 |
| Securitized Debt Obligations | ​ (11,528) | ​ (23,056) | ​ (34,584) | ​ (46,113) | ​ 11,528 | ​ 23,056 | ​ 34,584 | ​ 46,113 |
| **Total** | **$(16,243)** | **$(32,485)** | **$(48,728)** | **$(64,971)** | **$16,243** | **$32,485** | **$48,728** | **$64,971** |
| **Total Net Impact to Net Interest Income (Expense)** | **$5,215** | **$10,432** | **$15,649** | **$20,866** | **$(5,212)** | **$(10,413)** | **$(15,559)** | **$(20,588)** |

Such hypothetical impact of interest rates on our variable rate debt does not consider the effect of any change in overall economic activity that could occur in a rising interest rate environment. Further, in the event of such a change in interest rates, we may take actions to further mitigate our exposure to such a change. However, due to the uncertainty of the specific actions that would be taken and their possible effects, this analysis assumes no changes in our financial structure.

***Liquidity risk.*** Liquidity risk arises in our investments and the general financing of our investing activities. It includes the risk of not being able to fund acquisition and origination activities at settlement dates and/or liquidate positions in a timely manner at a reasonable price, in addition to potential increases in collateral requirements during times of heightened market volatility. If we were forced to dispose of an illiquid investment at an inopportune time, we might be forced to do so at a substantial discount to the market value, resulting in a realized loss. We attempt to mitigate our liquidity risk by regularly monitoring the liquidity of our investments in SBC loans, ABS and other financial instruments. Factors such as our expected exit strategy for, the bid to offer spread of, and the number of broker dealers making an active market in a particular strategy and the availability of long-term funding, are considered in analyzing liquidity risk. To reduce any perceived disparity between the liquidity and the terms of the debt instruments in which we invest, we attempt to minimize our reliance on short-term financing arrangements. While we may finance certain investments in security positions using traditional margin arrangements and reverse repurchase agreements, other financial instruments such as collateralized debt obligations, and other longer-term financing vehicles may be utilized to provide us with sources of long-term financing.

***Prepayment risk.*** Prepayment risk is the risk that principal will be repaid at a different rate than anticipated, causing the return on certain investments to be less than expected. As we receive prepayments of principal on our assets, any premiums paid on such assets are amortized against interest income. In general, an increase in prepayment rates accelerates the amortization of purchase premiums, thereby reducing the interest income earned on the assets. Conversely, discounts on such assets are accreted into interest income. In general, an increase in prepayment rates accelerates the accretion of purchase discounts, thereby increasing the interest income earned on the assets.

***SBC loan and ABS extension risk.*** Our Manager computes the projected weighted-average life of our assets based on assumptions regarding the rate at which the borrowers will prepay the mortgages or extend. If prepayment rates decrease in a rising interest rate environment or extension options are exercised, the life of the fixed-rate assets could extend beyond the term of the secured debt agreements. This could have a negative impact on our results of operations. In some situations, we may be forced to sell assets to maintain adequate liquidity, which could cause us to incur losses.

***Real estate risk***. The market values of residential and commercial assets are subject to volatility and may be affected adversely by a number of factors, including, but not limited to, national, regional and local economic conditions (which may be adversely affected by industry slowdowns and other factors); local real estate conditions (such as an oversupply of housing, retail, industrial, office or other commercial space); changes or continued weakness in specific industry segments; construction quality, construction cost, age and design; demographic factors; and retroactive changes to building or similar codes. In addition, decreases in property values reduce the value of the collateral and the potential proceeds available to a borrower to repay the underlying loans, which could also cause us to suffer losses.

***Fair value risk.*** The estimated fair value of our investments fluctuates primarily due to changes in interest rates. Generally, in a rising interest rate environment, the estimated fair value of the fixed-rate investments would be expected to decrease; conversely, in a decreasing interest rate environment, the estimated fair value of the fixed-rate investments would be expected to increase. As market volatility increases or liquidity decreases, the fair value of our assets recorded and/or disclosed may be adversely impacted. Our economic exposure is generally limited to our net investment position as we seek to fund fixed rate investments with fixed rate financing or variable rate financing hedged with interest rate swaps.

***Counterparty risk.*** We finance the acquisition of a significant portion of our commercial and residential mortgage loans, MBS and other assets with our repurchase agreements, credit facilities, and other financing agreements. In connection with these financing arrangements, we pledge our mortgage loans and securities as collateral to secure the borrowings. The amount of collateral pledged will typically exceed the amount of the borrowings (i.e. the haircut) such that the borrowings will be over-collateralized. As a result, we are exposed to the counterparty if, during the term of the financing, a lender should default on its obligation and we are not able to recover our pledged assets. The amount of this exposure is the difference between the amount loaned to us plus interest due to the counterparty and the fair value of the collateral pledged by us to the lender including accrued interest receivable on such collateral.

We are exposed to changing interest rates and market conditions, which affects cash flows associated with borrowings. We enter into derivative instruments, such as interest rate swaps, to mitigate these risks. Interest rate swaps are used to mitigate the exposure to changes in interest rates and involve the receipt of variable-rate interest amounts from a counterparty in exchange for us making payments based on a fixed interest rate over the life of the swap contract.

Certain of our subsidiaries have entered into over-the-counter (“OTC”) interest rate swap agreements to hedge risks associated with movements in interest rates. Because certain interest rate swaps were not cleared through a central counterparty, we remain exposed to the counterparty's ability to perform its obligations under each such swap and cannot look to the creditworthiness of a central counterparty for performance. As a result, if an OTC swap counterparty cannot perform under the terms of an interest rate swap, our subsidiary would not receive payments due under that agreement, we may lose any unrealized gain associated with the interest rate swap and the hedged liability would cease to be hedged by the interest rate swap. While we would seek to terminate the relevant OTC swap transaction and may have a claim against the defaulting counterparty for any losses, including unrealized gains, there is no assurance that we would be able to recover such amounts or to replace the relevant swap on economically viable terms or at all. In such case, we could be forced to cover our unhedged liabilities at the then current market price. We may also be at risk for any collateral we have pledged to secure our obligations under the OTC interest rate swap if the counterparty becomes insolvent or files for bankruptcy. Therefore, upon a default by an interest rate swap agreement counterparty, the interest rate swap would no longer mitigate the impact of changes in interest rates as intended.

The table below presents information with respect to any counterparty for repurchase agreements for which our Company had greater than 5% of stockholders’ equity at risk in the aggregate.

*(in thousands)*

| ​ ​ | ​ ​ ​ | ​ September 30, 2023 Counterparty Rating | ​ Amount of Risk | ​ ​ | ​ Weighted Average Months to Maturity for Agreement | ​ ​ | ​ Percentage of Stockholders’ Equity |
| --- | --- | --- | ---: | --- | ---: | --- | ---: |
| Credit Suisse AG | ​ | A+/A3 | $ 248,641 | **​** | 1 | **​** | 9.6% |
| JPMorgan Chase Bank, N.A. | ​ | A+/Aa2 | $ 195,783 | **​** | 30 | **​** | 7.6% |
| Wells Fargo Bank, N.A. | ​ | A+/Aa2 | $ 166,667 | **​** | 8 | **​** | 6.4% |

84

In the table above,

- The counterparty ratings presented are the long-term issuer credit rating as rated by S&P and Moody’s, respectively.
- The amount at risk reflects the difference between the amount loaned through repurchase agreements, including interest payable, and the cash and fair value of the assets pledged as collateral, including accrued interest receivable.

***Capital market risk.*** We are exposed to risks related to the equity capital markets, and our related ability to raise capital through the issuance of our common stock or other equity instruments. We are also exposed to risks related to the debt capital markets, and our related ability to finance our business through borrowings under repurchase obligations or other financing arrangements. As a REIT, we are required to distribute a significant portion of our taxable income annually, which constrains our ability to accumulate operating cash flow and therefore requires us to utilize debt or equity capital to finance our business. We seek to mitigate these risks by monitoring the debt and equity capital markets to inform our decisions on the amount, timing, and terms of capital we raise.

***Off-balance sheet risk.*** Off-balance sheet risk refers to situations where the maximum potential loss resulting from changes in the level or volatility of interest rates, foreign currency exchange rates or market values of the underlying financial instruments may result in changes in the value of a particular financial instrument in excess of the reported amounts of such assets and liabilities currently reflected in the accompanying consolidated balance sheets.

***Inflation risk.*** Most of our assets and liabilities are interest rate sensitive in nature. As a result, interest rates and other factors influence our performance significantly more than inflation does. Changes in interest rates may, but do not necessarily, correlate with inflation rates and/or changes in inflation rates. See “Quantitative and Qualitative Disclosures About Market Risk – Interest Rate Risk” in this Form 10-Q for a discussion on interest rate sensitivity.

## Controls and procedures

As filed, 1,810 characters.

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its Securities Exchange Act of 1934, as amended (the "Exchange Act"), reports is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to its management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based on the definition of "disclosure controls and procedures" as promulgated under the Exchange Act and the rules and regulations thereunder. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. The Company, including its Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of its disclosure controls and procedures as of September 30, 2023. Based on the foregoing, the Company's Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective.

### Changes in Internal Control over Financial Reporting

There have been no changes to the Company’s internal control over financial reporting as defined in Exchange Act Rule 13a-15(f) during the quarter ended September 30, 2023, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

## Risk factors

As filed, 2,363 characters.

The following represents important updates to the risk factors previously disclosed in Part I, Item-1A on the Company’s Form 10-K for the year ended December 31, 2022. You should be aware that these risk factors and other information may not describe every risk facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

### Risks Related to the Broadmark Merger

***The Company may be unable to integrate the Company’s existing business and Broadmark’s business successfully and realize the anticipated synergies and other expected benefits of the Broadmark Merger on the anticipated timeframe or at all.***

The Broadmark Merger involves the combination of two companies that previously operated as two separate independent public companies. The newly combined company will be required to devote significant management attention and resources to the integration of the Company’s existing business and Broadmark’s business. The potential difficulties the Company may encounter in the integration process include, but are not limited to, the following:

- the complexities of combining two companies with different histories and portfolio assets;
- the difficulties or delays in redeploying the capital acquired in connection with the Broadmark Merger into the target assets of the combined company;
- potential unknown liabilities and unforeseen increased expenses, delays or conditions associated with the Broadmark Merger; and
- performance shortfalls as a result of the diversion of management’s attention caused by completing the Broadmark Merger and integrating the companies’ operations.

For all these reasons, you should be aware that it is possible that the integration process could result in the distraction of the Company’s management, the disruption of the Company’s ongoing business or inconsistencies in its operations, services, standards, controls, policies and procedures, any of which could adversely affect the Company’s ability to deliver investment returns to stockholders, to maintain relationships with its key stakeholders and employees, to achieve the anticipated benefits of the Broadmark Merger, or could otherwise materially and adversely affect its business and financial results.

Filed Nov 8, 2023.
Source: SEC EDGAR, the filing index for accession 0001558370-23-018295. Last ingested by Listed: Nov 6, 2026, 17:07 ET. No prices; not investment advice.