Ready Capital: 3 Key Takeaways for Long-Term Investors
Management has stopped selling distressed commercial real estate loans at steep discounts and is now working to stabilize nonperforming loans and foreclosed properties first.
Ready Capital completed its balance sheet repositioning and liquidity plan on its third-quarter 2026 earnings call, marking a shift from defensive cash conservation to earnings recovery. The company reported a $2.3 billion liquidity generation, achieved through dividend cuts and book value write-downs.
The SBA 7(a) program, which offers government-guaranteed small business loans, saw a 33% increase in originations to $109 million and a 56% rise in gain-on-sale revenue to $6.1 million. The CEO expects a quarterly revenue gain of approximately $8 million once the target level of originations is reached.
Management stopped selling distressed CRE loans at steep discounts to preserve capital and now focuses on stabilizing nonperforming loans and REO properties. The asset management team is transitioning from selling loans at discounts to managing these assets to stabilize net operating income.
Expense reductions are being prioritized as the company aligns its operations with a smaller balance sheet. Operating expenses are expected to decrease in nonrevenue-producing businesses and through staff rightsizing. Additionally, specific noncore business divestitures are anticipated in future quarters.
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