Ready Capital Q3 2026 loss widens to $66.1M

Nine-month operating cash flow was $640.197 million, while loans 60 or more days past due represented 15.6% of loans outstanding at September 30, 2026.

Available on EDGAR 11/06/2026 - 04:19 PM EST Accepted by SEC EDGAR 11/06/2026 - 04:18 PM EST Learn about SEC filing dates

Rhea-AI Filing Summary

Ready Capital Corporation (RC) reported a net loss attributable to the company of $66.148 million for the three months ended September 30, 2026, compared with $20.744 million a year earlier; basic and diluted earnings per share were $(0.40), versus $(0.13). Quarterly interest income was $83.828 million, compared with $137.491 million, and net realized losses on financial instruments and real estate owned were $16.813 million, compared with $160.396 million.

For the nine months ended September 30, 2026, Ready Capital reported a net loss attributable to it of $373.406 million, versus a $0.728 million loss a year earlier, while net cash provided by operating activities was $640.197 million versus $442.879 million. Common dividends declared were $0.01 per share in the quarter, versus $0.125. At September 30, 2026, loans 60 or more days past due were 15.6% of loans outstanding, versus 10.2% at December 31, 2025; non-accrual loans were 26.1%, versus 25.5%.

1 point · 0 major

NegativeiHow this balance works

How this balance works

Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.

It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.

Rhea-AI Sentiment measures something else, the tone of the wording.

How the balance worksHow Sentiment works

1 major · 3 points

How the balance works

Positive

• Moderate pointNine-month net cash provided by operating activities: $640.197 million vs. $442.879 million.

Negative

• Major pointQuarterly attributable loss: $66.148 million vs. $20.744 million.
• Moderate pointQuarterly common dividend declared: $0.01 per share vs. $0.125.
• Moderate pointLoans 60+ days past due: 15.6% vs. 10.2%.

Filing Explained

At September 30, Ready Capital reported $157,130 thousand in cash and equivalents; another $50,775 thousand was restricted and unavailable for general corporate purposes.

This unaudited Form 10-Q reports Ready Capital's position at September 30, 2026 and records nine-month cash proceeds of $223,875 thousand from a senior secured note and repayments of $350,000 thousand of senior secured notes. The cash-flow statement records those proceeds and repayments as cash movements; the September 30 balance sheet still lists $598,739 thousand in senior secured notes.

A Form 10-Q is an unaudited quarterly report presenting interim financial statements and updates on risks and liquidity. At September 30, Ready Capital reported $157,130 thousand in cash and equivalents and $50,775 thousand in restricted cash; the filing says restricted cash is unavailable for general corporate purposes.

The same balance sheet lists $1,691,519 thousand in secured borrowings, $607,600 thousand in securitized debt, $446,097 thousand in corporate debt, and $911,288 thousand in guaranteed loan financing.

Key Figures

Quarterly net loss attributable to Ready Capital: $66.148 million Basic and diluted earnings per share: $(0.40) Interest income: $83.828 million +5 more

8 metrics

Quarterly net loss attributable to Ready Capital $66.148 million Three months ended September 30, 2026; $20.744 million in the 2025 period

Basic and diluted earnings per share $(0.40) Three months ended September 30, 2026; $(0.13) in the 2025 period

Interest income $83.828 million Three months ended September 30, 2026; $137.491 million in the 2025 period

Nine-month net loss attributable to Ready Capital $373.406 million loss Nine months ended September 30, 2026; $0.728 million loss in the 2025 period

Net cash provided by operating activities $640.197 million Nine months ended September 30, 2026; $442.879 million in the 2025 period

Common dividends declared per share $0.01 Three months ended September 30, 2026; $0.125 in the 2025 period

Loans 60 or more days past due 15.6% September 30, 2026; 10.2% at December 31, 2025

Non-accrual loans 26.1% September 30, 2026; 25.5% at December 31, 2025

Key Terms

Current Expected Credit Loss, Non-Accrual Loans, loan-to-value (“LTV”) ratio, variable interest entities, +1 more

5 terms

Current Expected Credit Loss financial

"Current Expected Credit Loss (“CECL”) forecasting methods"

An accounting approach that requires lenders and companies to estimate and record the credit losses they expect on loans and receivables now, using current conditions and reasonable forecasts rather than waiting for a default to occur. It matters to investors because it changes reported reserves and profits up front and gives an earlier, more forward-looking signal of credit quality—like packing an umbrella today because the forecast predicts rain, which affects a company’s cushion against bad loans.

Non-Accrual Loans financial

"Non-Accrual Loans"

A non-accrual loan is a loan a lender has decided is unlikely to produce the scheduled interest payments, so the lender stops counting future interest as income and may record the loan at a reduced value. Think of it like renting out a house where the tenant has stopped paying: you stop counting future rent as earnings because it’s uncertain you’ll get it. For investors, a rise in non-accrual loans signals worsening credit quality, lower reported income and higher potential losses that can weaken a bank’s capital and share price.

loan-to-value (“LTV”) ratio financial

"loan-to-value (“LTV”) ratio"

variable interest entities financial

"Variable interest entities (“VIEs”)"

A variable interest entity (VIE) is a business that a company controls through contracts or special arrangements instead of owning a majority of its shares, like steering a puppet without holding its ticket. Investors care because these arrangements can hide who really bears the financial risks and rewards, affect how assets and liabilities appear on financial statements, and create extra legal or enforcement uncertainty that can change the value and risk of an investment.

purchased credit deteriorated financial

"Purchased credit deteriorated (“PCD”) loans"

Purchased credit deteriorated (PCD) describes a debt asset bought when its borrower’s ability to repay has already worsened since the loan was first issued. Under accounting rules, buyers must immediately account for the full expected loss rather than spreading it out, so PCD holdings lower reported earnings and capital right away and signal higher credit risk—similar to buying a used car with known damage that you must account for in your budget.

FAQ

AI-generated questions and answers. How Rhea-AI works. Not financial advice.

What was Ready Capital's third-quarter 2026 loss?

Ready Capital reported a net loss attributable to the company of $66.148 million for the three months ended September 30, 2026. That compared with a $20.744 million loss in the 2025 period, and basic and diluted earnings per share were $(0.40), versus $(0.13).

How much operating cash did RC generate in the first nine months of 2026?

Net cash provided by operating activities was $640.197 million for the nine months ended September 30, 2026, versus $442.879 million in the 2025 period.

How much of RC's loan portfolio was 60 or more days past due?

Loans 60 or more days past due were 15.6% of loans outstanding at September 30, 2026, compared with 10.2% at December 31, 2025. Non-accrual loans were 26.1% at September 30, 2026.

AI-generated analysis. How Rhea-AI works. Not financial advice.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2026

Commission File Number:  001-35808

READY CAPITAL CORPORATION

(Exact Name of Registrant as Specified in its Charter)

Maryland	90-0729143
(State or Other Jurisdiction of Incorporation or Organization)	(IRS Employer Identification No.)
1251 Avenue of the Americas, 50th Floor, New York, NY 10020
(Address of Principal Executive Offices, Including Zip Code)
(212) 257-4600
(Registrant's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.0001 par value per share	RC	New York Stock Exchange
Preferred Stock, 6.25% Series C Cumulative Convertible, par value $0.0001 per share	RC PRC	New York Stock Exchange
Preferred Stock, 6.50% Series E Cumulative Redeemable, par value $0.0001 per share	RC PRE	New York Stock Exchange
9.00% Senior Notes due 2029	RCD	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of

1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such

filing requirements for the past 90 days. Yes ☒   No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of

Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such

files).  Yes ☒   No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or

an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth

company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒    Accelerated filer ☐    Non-accelerated filer ☐Smaller reporting company ☐Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any

new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐   No ☒

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date:

The Company has 160,228,768 shares of common stock, par value $0.0001 per share, outstanding as of November 5, 2026.

2

TABLE OF CONTENTS

Page

PART I. FINANCIAL INFORMATION 4

Item 1. Financial Statements (Unaudited)	4
UNAUDITED CONSOLIDATED BALANCE SHEETS	4
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS	5
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)	6
UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY	8
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS	9
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)	11
Note 1. Organization	11
Note 2. Basis of Presentation	11
Note 3. Summary of Significant Accounting Policies	12
Note 4. Recent Accounting Pronouncements	23
Note 5. Business Combinations	24
Note 6. Loans and Allowance for Credit Losses	25
Note 7. Fair Value Measurements	33
Note 8. Servicing Rights	38
Note 9. Discontinued Operations and Assets and Liabilities Held for Sale	40
Note 10. Secured Borrowings	41
Note 11. Senior Secured Notes and Corporate Debt, net	42
Note 12. Guaranteed Loan Financing	45
Note 13. Variable Interest Entities and Securitization Activities	46
Note 14. Interest Income and Interest Expense	48
Note 15. Derivative Instruments	49
Note 16. Real Estate Owned	50
Note 17. Agreements and Transactions with Related Parties	51
Note 18. Other Assets and Other Liabilities	53
Note 19. Other Income and Operating Expenses	55
Note 20. Redeemable Preferred Stock and Stockholders’ Equity	56
Note 21. Earnings per Share of Common Stock	60
Note 22. Offsetting Assets and Liabilities	60
Note 23. Financial Instruments with Off-Balance Sheet Risk, Credit Risk, and Certain Other Risks	62
Note 24. Commitments, Contingencies and Indemnifications	64
Note 25. Income Taxes	67
Note 26. Segment Reporting	68
Note 27. Subsequent Events	72

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 73

Item 3. Quantitative and Qualitative Disclosures About Market Risk 95

Item 4. Controls and Procedures 99

3

PART II. OTHER INFORMATION 99

Item 1. Legal Proceedings 99

Item 1A. Risk Factors 99

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 99

Item 3. Defaults Upon Senior Securities 100

Item 4. Mine Safety Disclosures 100

Item 5. Other Information 100

Item 6. Exhibits 100

SIGNATURES 102

4

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

READY CAPITAL CORPORATION

UNAUDITED CONSOLIDATED BALANCE SHEETS

(in thousands)	September 30, 2026		December 31, 2025
Assets
Cash and cash equivalents	$157,130		$207,841
Restricted cash	50,775		39,746
Loans, net (including $382 and $737 held at fair value)	3,122,504		3,500,298
Loans, held for sale (including $67,123 and $73,094 held at fair value and net of valuation allowance of $56,734 and $67,612)	112,766		585,820
Mortgage-backed securities	32,143		34,501
Investment in unconsolidated joint ventures (including $5,068 and $5,737 held at fair value)	155,086		161,424
Derivative instruments	3,232		6,740
Servicing rights	115,015		126,279
Real estate owned	563,512		620,225
Other assets	466,283		508,238
Assets of consolidated VIEs	1,004,891		1,978,684
Total Assets	$5,783,337		$7,769,796
Liabilities
Secured borrowings	1,691,519		2,788,926
Securitized debt obligations of consolidated VIEs, net	607,600		1,174,785
Senior secured notes, net	598,739		722,729
Corporate debt, net	446,097		652,487
Guaranteed loan financing	911,288		524,091
Contingent consideration	23,008		18,698
Derivative instruments	340		1,432
Dividends payable	3,687		3,633
Loan participations sold	56,616		56,616
Due to third parties	4,289		3,135
Accounts payable and other accrued liabilities	152,643		171,636
Total Liabilities	$4,495,826		$6,118,168
Preferred stock Series C, liquidation preference $25.00 per share (refer to Note 20)	8,361		8,361
Commitments & contingencies (refer to Note 24)
Stockholders’ Equity
Preferred stock Series E, liquidation preference $25.00 per share (refer to Note 20)	111,378		111,378
Common stock, $0.0001 par value, 500,000,000 shares authorized, 165,168,630 and 163,010,012 shares issued and outstanding, respectively	17		17
Additional paid-in capital	2,268,714		2,264,355
Retained deficit	(1,185,833)		(807,522)
Accumulated other comprehensive loss	(19,755)		(24,196)
Total Ready Capital Corporation equity	1,174,521		1,544,032
Non-controlling interests	104,629		99,235
Total Stockholders’ Equity	$1,279,150		$1,643,267
Total Liabilities, Redeemable Preferred Stock, and Stockholders’ Equity	$5,783,337		$7,769,796

See Notes To Unaudited Consolidated Financial Statements

5

READY CAPITAL CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except share data)	2026		2025		2026		2025
Interest income	$83,828		$137,491		$242,959		$445,193
Interest expense	(83,827)		(126,971)		(263,514)		(403,274)
Net interest income (loss) before (provision for) recovery of loan losses	$1		$10,520		$(20,555)		$41,919
(Provision for) recovery of loan losses	(12,659)		(37,977)		(105,120)		62,951
Net interest income (loss) after (provision for) recovery of loan losses	$(12,658)		$(27,457)		$(125,675)		$104,870
Non-interest income
Net realized gain (loss) on financial instruments and real estate owned	(16,813)		(160,396)		(99,119)		(131,513)
Net unrealized gain (loss) on financial instruments	2,174		2,914		(8,919)		(450)
Valuation recovery, loans held for sale	12,877		178,225		8,767		38,761
Servicing income, net of amortization and impairment of $5,704 and $23,498 for the three and nine months ended September 30, 2026, and $4,514 and $22,682 for the three and nine months ended September 30, 2025, respectively	6,123		7,509		11,616		13,661
Gain on bargain purchase	—		24,472		—		112,562
Income (loss) on unconsolidated joint ventures	(173)		7,417		3,162		3,291
Other income	21,138		14,773		53,417		37,667
Total non-interest income (expense)	$25,326		$74,914		$(31,076)		$73,979
Non-interest expense
Employee compensation and benefits	(21,878)		(21,151)		(70,316)		(65,564)
Allocated employee compensation and benefits from related party	(3,600)		(3,602)		(10,576)		(10,478)
Professional fees	(5,630)		(6,008)		(19,956)		(17,864)
Management fees – related party	(3,711)		(5,156)		(11,552)		(15,805)
Loan servicing expense	(7,720)		(9,771)		(26,833)		(36,653)
Transaction related expenses	(471)		(1,910)		(1,318)		(5,243)
Impairment on real estate	(4,681)		(1,862)		(5,164)		(8,476)
Other operating expenses	(29,961)		(24,879)		(92,243)		(57,135)
Total non-interest expense	$(77,652)		$(74,339)		$(237,958)		$(217,218)
Loss from continuing operations before benefit for income taxes	(64,984)		(26,882)		(394,709)		(38,369)
Income tax benefit	2,792		9,935		32,747		55,081
Net income (loss) from continuing operations	$(62,192)		$(16,947)		$(361,962)		$16,712
Discontinued operations (refer to Note 9)
Income (loss) from discontinued operations before benefit (provision) for income taxes	—		280		—		(6,881)
Income tax benefit (provision)	—		(70)		—		1,720
Net income (loss) from discontinued operations	$—		$210		$—		$(5,161)
Net income (loss)	$(62,192)		$(16,737)		$(361,962)		$11,551
Less: Dividends on preferred stock	1,999		1,999		5,997		5,997
Less: Net income attributable to non-controlling interest	1,957		2,008		5,447		6,282
Net loss attributable to Ready Capital Corporation	$(66,148)		$(20,744)		$(373,406)		$(728)
Earnings per common share from continuing operations - basic	$(0.40)		$(0.13)		$(2.27)		$0.02
Earnings per common share from discontinued operations - basic	$0.00		$0.00		$0.00		$(0.03)
Total earnings per common share - basic	$(0.40)		$(0.13)		$(2.27)		$(0.01)
Earnings per common share from continuing operations - diluted	$(0.40)		$(0.13)		$(2.27)		$0.02
Earnings per common share from discontinued operations - diluted	$0.00		$0.00		$0.00		$(0.03)
Total earnings per common share - diluted	$(0.40)		$(0.13)		$(2.27)		$(0.01)
Weighted-average shares outstanding
Basic	165,101,912		163,574,703		164,614,035		165,491,135
Diluted	173,301,133		165,873,807		172,264,093		167,790,240
Dividends declared per share of common stock	$0.01		$0.125		$0.03		$0.375

See Notes To Unaudited Consolidated Financial Statements

6

READY CAPITAL CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2026		2025		2026		2025
Net income (loss)	$(62,192)		$(16,737)		$(361,962)		$11,551
Other comprehensive income (loss) - net change by component:
Derivative financial instruments (cash flow hedges)	1,784		(872)		5,241		(8,157)
Foreign currency translation	(87)		64		(790)		2,624
Other comprehensive income (loss)	$1,697		$(808)		$4,451		$(5,533)
Comprehensive income (loss)	$(60,495)		$(17,545)		$(357,511)		$6,018
Less: Comprehensive income attributable to non-controlling interests	1,961		2,011		5,456		6,257
Comprehensive loss attributable to Ready Capital Corporation	$(62,456)		$(19,556)		$(362,967)		$(239)

See Notes To Unaudited Consolidated Financial Statements

7

READY CAPITAL CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

	Three Months Ended September 30, 2026
	Preferred Series E				Common Stock				Additional Paid- In Capital		Retained Earnings (Deficit)		Accumulated Other Comprehensive Income (Loss)		Total Ready Capital Corporation Equity		Non-controlling Interests		Total Stockholders' Equity
(in thousands, except share data)	Shares		Amount		Shares		Amount
Balance at June 30, 2026	4,600,000		$111,378		165,209,516		$17		$2,267,394		$(1,118,135)		$(21,448)		$1,239,206		$102,670		$1,341,876
Dividend declared:
Common stock ($0.01 per share)	—		—		—		—		—		(1,550)		—		(1,550)		—		(1,550)
OP units	—		—		—		—		—		—		—		—		(3)		(3)
$0.390625 per Series C preferred share	—		—		—		—		—		(131)		—		(131)		—		(131)
$0.406250 per Series E preferred share	—		—		—		—		—		(1,868)		—		(1,868)		—		(1,868)
Stock-based compensation	—		—		(39,397)		—		1,323		—		—		1,323		—		1,323
Share repurchases	—		—		(1,489)		—		(2)		—		—		(2)		—		(2)
Reallocation of non-controlling interest	—		—		—		—		(1)		—		—		(1)		1		—
Net income (loss)	—		—		—		—		—		(64,149)		—		(64,149)		1,957		(62,192)
Other comprehensive income	—		—		—		—		—		—		1,693		1,693		4		1,697
Balance at September 30, 2026	4,600,000		$111,378		165,168,630		$17		$2,268,714		$(1,185,833)		$(19,755)		$1,174,521		$104,629		$1,279,150

	Three Months Ended September 30, 2025
	Preferred Series E				Common Stock				Additional Paid- In Capital		Retained Earnings (Deficit)		Accumulated Other Comprehensive Income (Loss)		Total Ready Capital Corporation Equity		Non-controlling Interests		Total Stockholders' Equity
(in thousands, except share data)	Shares		Amount		Shares		Amount
Balance at June 30, 2025	4,600,000		$111,378		164,326,387		$17		$2,267,540		$(528,524)		$(23,293)		$1,827,118		$98,544		$1,925,662
Dividend declared:
Common stock ($0.125 per share)	—		—		—		—		—		(20,441)		—		(20,441)		—		(20,441)
OP units	—		—		—		—		—		—		—		—		(75)		(75)
$0.390625 per Series C preferred share	—		—		—		—		—		(131)		—		(131)		—		(131)
$0.406250 per Series E preferred share	—		—		—		—		—		(1,868)		—		(1,868)		—		(1,868)
Stock-based compensation	—		—		23,704		—		182		—		—		182		—		182
Share repurchases	—		—		(2,515,254)		—		(10,586)		—		—		(10,586)		—		(10,586)
Reallocation of non-controlling interest	—		—		—		—		(58)		—		8		(50)		50		—
Net income (loss)	—		—		—		—		—		(18,745)		—		(18,745)		2,008		(16,737)
Other comprehensive income (loss)	—		—		—		—		—		—		(811)		(811)		3		(808)
Balance at September 30, 2025	4,600,000		$111,378		161,834,837		$17		$2,257,078		$(569,709)		$(24,096)		$1,774,668		$100,530		$1,875,198

See Notes To Unaudited Consolidated Financial Statements

8

READY CAPITAL CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

	Nine Months Ended September 30, 2026
	Preferred Series E				Common Stock				Additional Paid- In Capital		Retained Earnings (Deficit)		Accumulated Other Comprehensive Income (Loss)		Total Ready Capital Corporation Equity		Non-controlling Interests		Total Stockholders' Equity
(in thousands, except share data)	Shares		Amount		Shares		Amount
Balance at December 31, 2025	4,600,000		$111,378		163,010,012		$17		$2,264,355		$(807,522)		$(24,196)		$1,544,032		$99,235		$1,643,267
Dividend declared:
Common stock ($0.03 per share)	—		—		—		—		—		(4,905)		—		(4,905)		—		(4,905)
OP units	—		—		—		—		—		—		—		—		(9)		(9)
$1.17188 per Series C preferred share	—		—		—		—		—		(393)		—		(393)		—		(393)
$1.21875 per Series E preferred share	—		—		—		—		—		(5,604)		—		(5,604)		—		(5,604)
Stock-based compensation	—		—		2,475,722		—		4,846		—		—		4,846		—		4,846
Share repurchases	—		—		(317,104)		—		(541)		—		—		(541)		—		(541)
Reallocation of non-controlling interest	—		—		—		—		54		—		(1)		53		(53)		—
Net income (loss)	—		—		—		—		—		(367,409)		—		(367,409)		5,447		(361,962)
Other comprehensive income	—		—		—		—		—		—		4,442		4,442		9		4,451
Balance at September 30, 2026	4,600,000		$111,378		165,168,630		$17		$2,268,714		$(1,185,833)		$(19,755)		$1,174,521		$104,629		$1,279,150

	Nine Months Ended September 30, 2025
	Preferred Series E				Common Stock				Additional Paid- In Capital		Retained Earnings (Deficit)		Accumulated Other Comprehensive Loss		Total Ready Capital Corporation Equity		Non-controlling Interests		Total Stockholders' Equity
(in thousands, except share data)	Shares		Amount		Shares		Amount
Balance at December 31, 2024	4,600,000		$111,378		162,792,372		$17		$2,250,291		$(505,089)		$(18,552)		$1,838,045		$97,697		$1,935,742
Dividend declared:
Common stock ($0.375 per share)	—		—		—		—		—		(63,892)		—		(63,892)		—		(63,892)
OP units	—		—		—		—		—		—		—		—		(261)		(261)
$1.17188 per Series C preferred share	—		—		—		—		—		(393)		—		(393)		—		(393)
$1.21875 per Series E preferred share	—		—		—		—		—		(5,604)		—		(5,604)		—		(5,604)
Distributions, net	—		—		—		—		—		—		—		—		(187)		(187)
Shares issued pursuant to merger transaction	—		—		12,766,819		—		64,600		—		—		64,600		—		64,600
Stock-based compensation	—		—		760,794		—		6,860		—		—		6,860		—		6,860
Conversion of OP units into common stock	—		—		282,614		—		1,197		—		—		1,197		(1,197)		—
Share repurchases	—		—		(14,767,762)		—		(67,685)		—		—		(67,685)		—		(67,685)
Reallocation of non-controlling interest	—		—		—		—		1,815		—		(36)		1,779		(1,779)		—
Net income	—		—		—		—		—		5,269		—		5,269		6,282		11,551
Other comprehensive loss	—		—		—		—		—		—		(5,508)		(5,508)		(25)		(5,533)
Balance at September 30, 2025	4,600,000		$111,378		161,834,837		$17		$2,257,078		$(569,709)		$(24,096)		$1,774,668		$100,530		$1,875,198

See Notes To Unaudited Consolidated Financial Statements

9

READY CAPITAL CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Nine Months Ended September 30,
(in thousands)	2026		2025
Cash Flows From Operating Activities:
Net income (loss)	$(361,962)		$11,551
Net loss from discontinued operations, net of tax	—		(5,161)
Net income (loss) from continuing operations	(361,962)		16,712
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Amortization of premiums, discounts, and debt issuance costs, net	40,461		33,208
Stock-based compensation	5,824		5,010
Provision for (recovery of) loan losses	105,120		(62,951)
Impairment on real estate owned, held for sale	5,164		8,476
Depreciation and amortization on real estate owned	4,731		1,100
Repair and denial reserve	2,334		1,627
Paid-in-kind accrued interest	(857)		(4,061)
Valuation recovery, loans held for sale	(8,767)		(38,761)
Net income in unconsolidated joint ventures, net of distributions	(1,464)		(1,509)
Realized (gains) losses, net	99,400		132,945
Unrealized (gains) losses, net	8,672		(626)
Loss on deconsolidation of securitization trust	2,840		—
Bargain purchase gain	—		(112,562)
Loans, held for sale, net	745,136		556,246
Changes in operating assets and liabilities:
Derivative instruments	8,580		(457)
Assets of consolidated VIEs (excluding loans, net), accrued interest and due from servicers	(22,997)		41,127
Receivable from third parties	(4,407)		(6,209)
Other assets	16,625		(111,574)
Accounts payable and other accrued liabilities	(4,236)		8,922
Net cash provided by operating activities from continuing operations	$640,197		$466,663
Net cash used for operating activities from discontinued operations	—		(23,784)
Net cash provided by operating activities	$640,197		$442,879
Cash Flows From Investing Activities:
Origination of loans	(230,945)		(420,697)
Proceeds from disposition and principal payment of loans	1,543,768		1,593,480
Funding of investments held to maturity	—		(2,385)
Proceeds from sale and principal payment of mortgage-backed securities	3,747		—
Funding of real estate, held for sale	(1,194)		(964)
Proceeds from sale of real estate, held for sale	102,172		57,743
Investment in unconsolidated joint ventures	(10,252)		(20,280)
Distributions in excess of cumulative earnings from unconsolidated joint ventures	18,054		9,800
Payment of liabilities under participation agreements	—		(1,335)
Net cash provided by disposal of discontinued operations	—		3,521
Net cash provided by asset acquisitions	—		4,249
Net cash provided by business acquisitions	—		16,020
Net cash provided by investing activities from continuing operations	$1,425,350		$1,239,152
Net cash provided by investing activities from discontinued operations	—		43,316
Net cash provided by investing activities	$1,425,350		$1,282,468
Cash Flows From Financing Activities:
Proceeds from secured borrowings	1,749,988		2,710,938
Repayment of secured borrowings	(2,846,492)		(1,870,521)
Repayment of the Paycheck Protection Program Liquidity Facility borrowings	(8,592)		(10,451)
Proceeds from issuance of securitized debt obligations of consolidated VIEs	145,211		—
Repayment of securitized debt obligations of consolidated VIEs	(718,053)		(2,295,827)
Proceeds from sale of retained beneficial interests	24,065		—
Repayment of corporate debt	(208,994)		(232,140)
Proceeds from senior secured note	223,875		290,250
Repayment of senior secured note	(350,000)		—
Repayment of guaranteed loan financing	(88,711)		(147,002)
Payment of deferred financing costs	(14,708)		(25,940)
Common stock repurchased	—		(65,721)
Settlement of share-based awards in satisfaction of withholding tax requirements	(541)		(1,964)
Dividend payments	(10,857)		(90,716)
Net cash used for financing activities from continuing operations	$(2,103,809)		$(1,739,094)
Net cash used for financing activities from discontinued operations	—		(4,324)
Net cash used for financing activities	$(2,103,809)		$(1,743,418)
Net decrease in cash, cash equivalents, and restricted cash including cash classified within assets held for sale	(38,262)		(18,071)
Less: Net decrease in cash and cash equivalents within assets held for sale	—		(29,792)
Net increase (decrease) in cash, cash equivalents, and restricted cash	(38,262)		11,721
Cash, cash equivalents, and restricted cash beginning balance	249,534		182,774
Cash, cash equivalents, and restricted cash ending balance	$211,272		$194,495

See Notes To Unaudited Consolidated Financial Statements

10

READY CAPITAL CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Nine Months Ended September 30,
(in thousands)	2026		2025
Supplemental disclosures:
Cash paid for interest	$219,481		$385,608
Cash received for income taxes	$(285)		$(228)
Non-cash investing activities
Loans transferred from loans, held for sale to loans, net	$198,555		$130,126
Loans transferred from loans, net to loans, held for sale	$349,952		$722,797
Loans transferred to real estate owned, held for sale	$58,593		$519,824
Deconsolidation of assets in securitization trusts	$26,300		$—
Consolidation of assets in securitization trusts	$475,919		$—
Contingent consideration in connection with acquisitions	$—		$15,242
Non-cash financing activities
Deconsolidation of borrowings in securitization trusts	$22,973		$—
Consolidation of borrowings in securitization trusts	$475,919		$—
Shares and OP units issued in connection with merger transactions	$—		$64,600
Conversion of OP units to common stock	$—		$1,197
Cash, cash equivalents, and restricted cash reconciliation
Cash and cash equivalents	$157,130		$147,505
Restricted cash	50,775		44,491
Cash, cash equivalents, and restricted cash in assets of consolidated VIEs	3,367		2,499
Cash, cash equivalents, and restricted cash ending balance	$211,272		$194,495

See Notes To Unaudited Consolidated Financial Statements

11

READY CAPITAL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1. Organization

Ready Capital Corporation (the “Company” or “Ready Capital” and together with its subsidiaries “we,” “us” and “our”),

is a Maryland corporation. The Company is a multi-strategy real estate finance company that originates, acquires,

finances and services lower-to-middle-market commercial real estate (“LMM”) loans, Small Business Administration

(“SBA”) loans, construction loans, and to a lesser extent, mortgage-backed securities (“MBS”) collateralized primarily

by LMM loans, or other real estate-related investments. LMM loans represent a special category of commercial loans,

sharing both commercial and residential loan characteristics. LMM loans are generally secured by first mortgages on

commercial properties, but because LMM loans are also often accompanied by collateralization of personal assets and

subordinate lien positions, aspects of residential mortgage credit analysis are utilized in the underwriting process.

The Company is externally managed and advised by Waterfall Asset Management, LLC (“Waterfall” or the “Manager”),

an investment advisor registered with the United States Securities and Exchange Commission (“SEC”) under the

Investment Advisers Act of 1940, as amended.

Sutherland Partners, L.P. (the “operating partnership”) holds substantially all of the Company’s assets and conducts

substantially all of the Company’s business. As of both September 30, 2026 and December 31, 2025, the Company

owned approximately 99.8% of the operating partnership. The Company, as sole general partner of the operating

partnership, has responsibility and discretion in the management and control of the operating partnership, and the limited

partners of the operating partnership, in such capacity, have no authority to transact business for, or participate in the

management activities of the operating partnership. Therefore, the Company consolidates the operating partnership.

Acquisitions

United Development Funding IV. On March 13, 2025, pursuant to the terms of the Agreement and Plan of Merger,

dated as of November 29, 2024, by and among the Company, United Development Funding IV (“UDF IV”), and RC

Merger Sub IV, LLC, a wholly owned subsidiary of the Company (“RC Merger Sub IV”), the Company acquired UDF

IV, a real estate investment trust providing capital solutions to residential real estate developers and regional

homebuilders, (the “UDF IV Merger”). At the effective time of the UDF IV Merger (the “Effective Time”), each

outstanding common share of beneficial interest, par value $0.01 per share, of UDF IV (“UDF IV Common Shares”),

excluding any UDF IV Common Shares held by UDF IV, the Company, RC Merger Sub IV or their subsidiaries, was

automatically cancelled and retired and converted into the right to receive (i) 0.416 shares of Company common stock,

(ii) 0.416 contingent value rights (“CVRs”) representing the potential right to receive additional shares of Company

common stock after the end of each of (1) the period beginning on October 1, 2024, and ending on December 31, 2025

and (2) the three subsequent calendar years, based, in part, upon cash proceeds received by the Company and its

subsidiaries in respect of a portfolio of five UDF IV loans and (iii) cash consideration in lieu of any fractional shares of

Company common stock. Refer to Note 5 for assets acquired and liabilities assumed in the UDF IV Merger.

REIT Status

The Company qualifies as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended

(the “Internal Revenue Code”), commencing with its first taxable year ended December 31, 2011. To maintain its tax

status as a REIT, the Company distributes dividends equal to at least 90% of its taxable income in the form of

distributions to shareholders.

Note 2. Basis of Presentation

The unaudited interim consolidated financial statements herein, referred to as the “consolidated financial statements”, as

of September 30, 2026 and December 31, 2025 and for the three and nine months ended September 30, 2026 and 2025,

have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

GAAP”)—as prescribed by the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification

(“ASC”) and the rules and regulations of the SEC.

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The accompanying consolidated financial statements, including the notes thereto, are unaudited and exclude some of the

disclosures required in audited financial statements. Accordingly, certain information and footnote disclosures normally

included in consolidated financial statements have been condensed or omitted. In the opinion of management, the

accompanying consolidated financial statements contain all normal recurring adjustments necessary for a fair statement

of the results for the interim periods presented. Such operating results may not be indicative of the expected results for

any other interim period or the entire year. The accompanying consolidated financial statements should be read in

conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K

for the fiscal year ended December 31, 2025, as filed with the SEC.

Note 3. Summary of Significant Accounting Policies

Use of estimates

Preparation of the Company’s consolidated financial statements in conformity with U.S. GAAP requires certain

estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and

liabilities as of the date of the consolidated financial statements and the reported amounts of income and expenses during

the reporting period. These estimates and assumptions are based on the best available information however, actual results

could be materially different.

Basis of consolidation

The accompanying consolidated financial statements of the Company include the accounts and results of operations of

the operating partnership and other consolidated subsidiaries and variable interest entities (“VIEs”) in which the

Company is the primary beneficiary. The consolidated financial statements are prepared in accordance with ASC 810,

Consolidation (“ASC 810”). Intercompany balances and transactions have been eliminated.

Reclassifications

Certain amounts reported for the prior periods in the accompanying consolidated financial statements have been

reclassified in order to conform to the current period’s presentation.

Cash and cash equivalents

The Company accounts for cash and cash equivalents in accordance with ASC 305, Cash and Cash Equivalents. The

Company defines cash and cash equivalents as cash, demand deposits, and short-term, highly liquid investments with

original maturities of 90 days or less when purchased. Cash and cash equivalents are exposed to concentrations of credit

risk. The Company deposits cash with institutions believed to have highly valuable and defensible business franchises,

strong financial fundamentals, and predictable and stable operating environments.

Restricted cash

Restricted cash represents cash held by the Company as collateral against its derivatives, borrowings under repurchase

agreements, borrowings under credit facilities and other financing agreements with counterparties, construction and

mortgage escrows, as well as cash held for remittance on loans serviced for third parties. Restricted cash is not available

for general corporate purposes but may be applied against amounts due to counterparties under existing swaps and

repurchase agreement borrowings, returned to the Company when the restriction requirements no longer exist or at the

maturity of the swap or repurchase agreement.

Loans, net

Loans, net consists of loans, held-for-investment, net of allowance for credit losses, and loans, held at fair value.

Loans, held-for-investment. Loans, held-for-investment are loans acquired from third parties (“acquired loans”), loans

originated by the Company that it does not intend to sell, or securitized loans that were previously originated. Certain

securitized loans remain on the Company’s balance sheet because the securitization vehicles are consolidated under ASC

810. Acquired loans are recorded at the valuation at the time of acquisition and are accounted for under ASC 310,

Receivables (“ASC 310”).

The Company uses the interest method to recognize, as a constant effective yield adjustment, the difference between the

initial recorded investment in the loan and the principal amount of the loan. The calculation of the constant effective

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yield necessary to apply the interest method uses the payment terms required by the loan contract, and prepayments of

principal are not anticipated to shorten the loan term.

Purchased credit deteriorated (“PCD”) loans are purchased loans that, as of the acquisition date, have experienced a

more-than-insignificant deterioration in credit quality since origination, as determined by the Company’s assessment

under ASC 326, Financial Instruments-Credit Losses. An allowance for credit losses is determined using the same

methodology as loans held for investment. When a discounted cash flow model is used to determine the allowance for

credit losses, the change in the allowance associated with the time value of money is presented as an adjustment to

interest income. The sum of a loan's purchase price and allowance for credit losses becomes its initial amortized cost

basis. The difference between the initial amortized cost basis and the unpaid principal balance of a loan is a non-credit

discount or premium which is amortized into interest income over the life of the loan. Subsequent changes to the

allowance for credit losses are recorded through provision for loan losses.

Loans, held at fair value. Loans, held at fair value represent certain loans originated by the Company for which the fair

value option has been elected. Interest is recognized as interest income in the consolidated statements of operations when

earned and deemed collectible. Changes in fair value are recurring and are reported as net unrealized gain (loss) on

financial instruments in the consolidated statements of operations. Loans, held at fair value are classified as Level 3 in

the fair value hierarchy.

Allowance for credit losses. The allowance for credit losses consists of the allowance for losses on loans, accounted for

at amortized cost, and lending commitments. Such loans and lending commitments are reviewed quarterly considering

credit quality indicators, including probable and historical losses, collateral values, loan-to-value (“LTV”) ratio and

economic conditions. The allowance for credit losses increases through provisions charged to earnings and reduced by

charge-offs, net of recoveries.

The Company utilizes loan loss forecasting models for estimating expected life-time credit losses, at the individual loan

level, for its loan portfolio. The Current Expected Credit Loss (“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

databases 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. The Company 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.

Significant inputs to the Company’s forecasting methods include (i) key loan-specific inputs such as LTV, vintage year,

loan-term, underlying property type, geographic location, and others, and (ii) a macro-economic forecast, including

unemployment rates, interest rates, commercial real estate prices, and others. These estimates may change in future

periods based on available future macro-economic data and might result in a material change in the Company’s future

estimates of expected credit losses for its loan portfolio.

In certain instances, the Company considers relevant loan-specific qualitative factors to certain loans to estimate its

CECL expected credit losses. The Company considers loan investments to be “collateral-dependent” loans if they 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. For such loans that the Company determines that foreclosure of the

collateral is probable, the Company measures 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 the Company determines foreclosure is

not probable, the Company applies 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 the Company has 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. The Company’s determination of adequacy of the allowance for credit losses is based on quarterly

evaluations of the above factors. Accordingly, the provision for credit losses will vary from period to period based on

management’s ongoing assessment of the adequacy of the allowance for credit losses.

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Non-accrual loans. A loan is generally placed on non-accrual status when it is probable that principal and interest will

not be collected under the original contractual terms. At that time, interest income is no longer accrued. Non-accrual

loans consist of loans for which principal or interest has been delinquent for 90 days or more and for which specific

reserves are recorded. Interest income accrued, but not collected, at the date loans are placed on non-accrual status is

reversed, unless the loan is expected to be fully recoverable by the collateral or is in the process of being collected.

Interest income is subsequently recognized only to the extent it is received in cash or until the loan qualifies for return to

accrual status. However, where there is doubt regarding the ultimate collectability of loan principal, all cash received is

applied to reduce the carrying value of such loans under the cost recovery method. Loans are restored to accrual status

when contractually current and the collection of future payments is reasonably assured. In certain instances, the

Company may make exceptions to placing a loan on non-accrual status if the loan is in the process of a modification. For

construction loans that have been delinquent for 90 days or more, interest income may continue to accrue if it is probable

that principal and interest will be collected in full.

Paid-In-Kind (“PIK”) Interest. PIK interest is computed at the contractual rate specified in each loan agreement and

added to the principal balance of the loan, and is recorded as interest income over the life of the loan on the consolidated

statement of operations. The Company will generally cease accruing PIK interest if there is insufficient value to support

the accrual or management does not expect the borrower to be able to pay all principal and interest due. To maintain the

Company's status as a REIT, this non-cash source of income is included within the 90% of its taxable income required to

be distributed to shareholders.

Loan modifications made to borrowers experiencing financial difficulty. In situations where economic or legal

circumstances may cause a borrower to experience significant financial difficulties, the Company may grant concessions

for a period of time to the borrower that it would not otherwise consider. These modified terms may include interest rate

reductions, principal forgiveness, term extensions, and other-than-insignificant payment delay intended to minimize the

Company’s economic loss and to avoid foreclosure or repossession of collateral. The Company monitors the

performance of loans modified to borrowers experiencing financial difficulty and considers loans that are 90 days past

due to be in payment default. To the extent the modified loan is contractually current and ultimately deemed collectible,

the Company will continue to accrue interest.

Loans, held for sale

Loans are classified as held for sale if there is an intent to sell in the near-term. These loans are recorded at the lower of

amortized cost or fair value, unless the fair value option has been elected at the time of origination or acquisition. If the

loan’s fair value is determined to be less than its amortized cost, a non-recurring fair value adjustment may be recorded

through a valuation allowance. Changes in fair value on originated loans for which the fair value option has been elected,

are recurring and are reported as net unrealized gain (loss) on financial instruments in the consolidated statements of

operations. Loans, held for sale for which the fair value option has been elected are classified as Level 2 in the fair value

hierarchy. For originated SBA loans, the guaranteed portion is held at fair value. Interest is recognized as interest income

in the consolidated statements of operations when earned and deemed collectible. When loans classified as held for sale

are sold, the proceeds, less the costs to sell, in excess (or deficiency) of the net carrying value, including accrued interest,

are recognized as a realized gain (loss) in the consolidated statements of operations.

Paycheck Protection Program loans

Paycheck Protection Program (“PPP”) loans were originated in response to the COVID-19 pandemic. The Company has

elected the fair value option for the loans originated by the Company for the first round of the program. Interest is

recognized in the consolidated statements of operations as interest income when earned and deemed collectible.

Although PPP includes a 100% guarantee from the federal government and principal forgiveness for borrowers if the

funds were used for defined purposes, changes in fair value are recurring and are reported as net unrealized gains (losses)

on financial instruments in the consolidated statements of operations.

The Company’s loan originations in the second round of the program are accounted for as loans, held-for-investment

under ASC 310. 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 Company recognizes the difference between the initial

recorded investment and the principal amount of the loan as interest income using the effective yield method. The

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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.

Mortgage-backed securities

The Company accounts for MBS as trading securities and carries them at fair value under ASC 320, Investments-Debt

and Equity Securities (“ASC 320”). The Company’s MBS portfolio is comprised of asset-backed securities collateralized

by interest in, or obligations backed by, pools of LMM loans, which are guaranteed by the U.S. government, such as the

Government National Mortgage Association (“Ginnie Mae”), or guaranteed by federally sponsored enterprises, such as

the Federal National Mortgage Association (“Fannie Mae”) or the Federal Home Loan Mortgage Corporation (“Freddie

Mac”). Purchases and sales of MBS are recorded as of the trade date. MBS securities pledged as collateral against

borrowings under repurchase agreements are included in mortgage-backed securities on the consolidated balance sheets.

MBS are recorded at fair value as determined by market prices provided by independent broker dealers or other

independent valuation service providers. The fair values assigned to these investments are based upon available

information and may not reflect amounts that may be realized. The fair value adjustments on MBS are reported within

net unrealized gain (loss) on financial instruments in the consolidated statements of operations. Mortgage-backed

securities are classified as Level 2 in the fair value hierarchy.

Derivative instruments

Subject to maintaining qualification as a REIT for U.S. federal income tax purposes, the Company utilizes derivative

financial instruments, comprised of interest rate swaps and FX forwards as part of its risk management strategy. The

Company accounts for derivative instruments under ASC 815, Derivatives and Hedging (“ASC 815”). All derivatives

are reported as either assets or liabilities in the consolidated balance sheets at the estimated fair value with the changes in

the fair value recorded in earnings unless hedge accounting is elected. As of September 30, 2026 and December 31,

2025, the Company had offset $12.2 million and $13.0 million of cash collateral payable against gross derivative asset

positions, respectively.

Interest rate swap agreements. An interest rate swap is an agreement between two counterparties to exchange periodic

interest payments where one party to the contract makes a fixed-rate payment in exchange for a floating-rate payment

from the other party. The dollar amount each party pays is an agreed-upon periodic interest rate multiplied by a pre-

determined dollar principal (notional amount). No principal (notional amount) is exchanged between the two parties at

the trade initiation date and only interest payments are exchanged over the life of the contract. The fair value adjustments

are reported within net unrealized gain (loss) on financial instruments, while the related interest income or interest

expense are reported within net realized gain (loss) on financial instruments in the consolidated statements of operations.

Interest rate swaps are classified as Level 2 in the fair value hierarchy.

FX forwards. FX forwards are agreements between two counterparties to exchange a pair of currencies at a set rate on a

future date. Such contracts are used to convert the foreign currency risk to U.S. dollars to mitigate exposure to

fluctuations in FX rates. The fair value adjustments are reported within net unrealized gain (loss) on financial

instruments in the consolidated statements of operations. FX forwards are classified as Level 2 in the fair value

hierarchy.

Hedge accounting. As a general rule, hedge accounting is permitted where the Company is exposed to a particular risk,

such as interest rate risk, that causes changes in the fair value of an asset or liability or variability in the expected future

cash flows of an existing asset, liability, or forecasted transaction that may affect earnings.

To qualify as an accounting hedge under the hedge accounting rules (versus an economic hedge where hedge accounting

is not applied), a hedging relationship must be highly effective in offsetting the risk designated as being hedged. Cash

flow hedges are used to hedge the exposure to the variability in cash flows from forecasted transactions, including the

anticipated issuance of securitized debt obligations. ASC 815 requires that a forecasted transaction be identified as

either: 1) a single transaction, or 2) a group of individual transactions that share the same risk exposures for which they

are designated as being hedged. Hedges of forecasted transactions are considered cash flow hedges since the price is not

fixed, hence involve variability of cash flows.

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For qualifying cash flow hedges, the change in the fair value of the derivative (the hedging instrument) is recorded in

other comprehensive income (loss) (“OCI”) and is reclassified out of OCI and into the consolidated statements of

operations when the hedged cash flows affect earnings. These amounts are recognized consistent with the classification

of the hedged item, primarily interest expense (for hedges of interest rate risk). If the hedge relationship is terminated,

then the value of the derivative recorded in accumulated other comprehensive income (loss) (“AOCI”) is recognized in

earnings when the cash flows that were hedged affect earnings, so long as the forecasted transaction remains probable of

occurring.

Hedge accounting is generally terminated at the debt issuance date because the Company is no longer exposed to cash

flow variability subsequent to issuance. Accumulated amounts recorded in AOCI at that date are then released to

earnings in future periods to reflect the difference in 1) the fixed rates economically locked in at the inception of the

hedge and 2) the actual fixed rates established in the debt instrument at issuance. Because of the effects of the time value

of money, the actual interest expense reported in earnings will not equal the effective yield locked in at hedge inception

multiplied by the par value. Similarly, this hedging strategy does not actually fix the interest payments associated with

the forecasted debt issuance.

Servicing rights

Servicing rights initially represent the fair value of expected future cash flows for performing servicing activities for

others. The fair value considers estimated future servicing fees and ancillary revenue, offset by estimated costs to service

the loans, and generally declines over time as net servicing cash flows are received, effectively amortizing the servicing

right asset against contractual servicing and ancillary fee income.

Servicing rights are recognized upon sale of loans, including a securitization of loans accounted for as a sale in

accordance with U.S. GAAP, if servicing is retained. Gains (losses) related to servicing rights retained is included in net

realized gain (loss) in the consolidated statements of operations.

Servicing rights are accounted for under ASC 860, Transfers and Servicing (“ASC 860”). A significant portion of the

Company’s multi-family servicing rights are under the Freddie Mac program.

Servicing rights are initially recorded at fair value and subsequently carried at amortized cost. Servicing rights are

amortized in proportion to and over the expected service period, or term of the loans, and are evaluated for potential

impairment quarterly.

For purposes of testing servicing rights for impairment, the Company first determines whether facts and circumstances

exist that would suggest the carrying value of the servicing asset is not recoverable. If so, the Company then compares

the net present value of servicing cash flow to its carrying value. The estimated net present value of servicing cash flows

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 the

consolidated statements of operations for the amount by which carrying value exceeds the net present value of servicing

cash flows.

The Company estimates the fair value of servicing rights by determining the present value of future expected servicing

cash flows using modeling techniques that incorporate management’s best estimates of key variables including estimates

regarding future net servicing cash flows, forecasted loan prepayment rates, delinquency rates, and return requirements

commensurate with the risks involved. Cash flow assumptions are modeled using internally forecasted revenue and

expenses, and where possible, the reasonableness of assumptions is periodically validated through comparisons to

market data. Prepayment speed estimates are determined from historical prepayment rates or obtained from third-party

industry data. Return requirement assumptions are determined using data obtained from market participants, where

available, or based on current relevant interest rates plus a risk-adjusted spread. The Company also considers other

factors that can impact the value of the servicing rights, such as surety provider termination clauses and servicer

terminations that could result if the Company failed to materially comply with the covenants or conditions of its

servicing agreements and did not remedy the failure. Since many factors can affect the estimate of the fair value of

servicing rights, the Company regularly evaluates the major assumptions and modeling techniques used in its estimate

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and reviews these assumptions against market comparables, if available. The Company monitors the actual performance

of its servicing rights by regularly comparing actual cash flow, credit, and prepayment experience to modeled estimates.

Real estate owned

The Company generally acquires real estate assets through foreclosure or deed-in-lieu of foreclosure in full or partial

settlement of loan obligations. Based on the Company’s strategic plan to realize the maximum value from the real estate

acquired, properties are either classified as real estate owned, held for use if the Company intends to hold, operate or

develop the property for a period of at least 12 months or real estate owned, held for sale if the Company intends to

market these properties for sale in the near term.

Real estate owned, held for use. Upon acquisition of a property, the Company assesses the fair value of acquired

tangible and intangible assets (including above and below-market leases) and allocates the fair value of the acquired

assets and assumed liabilities.

The fair value of tangible assets of an acquired property considers the value of the property as if it were vacant. Real

estate owned, held for use is recorded at acquisition cost less any accumulated depreciation. Depreciation is computed

using a straight-line method over the estimated useful life of 50 years for building and improvements and 8 years for

furniture, fixtures and equipment. On a quarterly basis, management assesses whether there are any indicators that the

value of the Company’s properties classified as held for use may be impaired. Such indicators include occupancy trends,

revenue per available room trends, leasing trends, current and estimated future cash flows associated with the property

and other quantitative and qualitative factors. A property is considered impaired if management’s estimate of the

aggregate future cash flows is less than the carrying value of the property. To the extent impairment has occurred, the

loss shall be measured as the excess of the carrying amount of the property over the fair value of the property. The

Company’s estimates of aggregate future cash flows involve significant judgment and assumptions, including current

economic conditions and therefore, actual results could be materially different.

The fair value of intangible assets is based on estimated cash flow projections, as well as other available market

information. Intangible assets (including above and below-market leases) are amortized on a straight-line basis over the

remaining term of the lease and amortization is recorded as an adjustment to income on the consolidated statements of

operations.

Real estate owned, held for sale. Real estate owned, held for sale is recorded at acquisition at the property’s estimated

fair value less estimated costs to sell. After acquisition, costs incurred relating to the development and improvement of

property are capitalized to the extent they do not cause the recorded value to exceed the net realizable value, whereas

costs relating to holding and disposition of the property are expensed as incurred. After acquisition, real estate owned,

held for sale is analyzed periodically for changes in fair values and any subsequent write down is charged through

impairment on real estate on the consolidated statements of operations.

The Company records a gain or loss from the sale of real estate when control of the property transfers to the buyer,

which generally occurs at the time of an executed deed. When the Company finances the sale of real estate to the buyer,

the Company assesses whether the buyer is committed to perform their obligations under the contract and whether the

collectability of the transaction price is probable. Once these criteria are met, the real estate is derecognized and the gain

or loss on sale is recorded upon transfer of control of the property to the buyer. In determining the gain or loss on the

sale, the Company adjusts the transaction price and related gain (loss) on sale if a significant financing component is

present. This adjustment is based on management’s estimate of the fair value of the loan extended to the buyer to finance

the sale.

Investment in unconsolidated joint ventures

According to ASC 323, Equity Method and Joint Ventures, investors in unincorporated entities such as partnerships and

unincorporated joint ventures generally shall account for their investments using the equity method of accounting if the

investor has the ability to exercise significant influence over the investee. Under the equity method, the Company

recognizes its allocable share of the earnings or losses of the investment monthly in earnings and adjusts the carrying

amount for its share of the distributions that exceeds its allocable share of earnings. The fair value adjustments are

reported within income on unconsolidated joint ventures in the consolidated statements of operations. Investments in

unconsolidated joint ventures are classified as Level 3 in the fair value hierarchy.

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Intangible assets

The Company accounts for intangible assets under ASC 350, Intangibles- Goodwill and Other (“ASC 350”). The

Company’s intangible assets include an SBA license, capitalized software, a broker network, trade names, above and

below market leases and customer relationships. The Company capitalizes software costs expected to result in long-term

operational benefits, such as replacement systems or new applications that result in significantly increased operational

efficiencies or functionality as well as costs related to internally developed software expected to be sold, leased or

otherwise marketed under ASC 985-20, Software- costs of software to be sold, leased, or marketed. All other costs

incurred in connection with internal use software are expensed as incurred. The Company initially records its intangible

assets at cost or fair value and will test for impairment if a triggering event occurs. Intangible assets are included within

other assets in the consolidated balance sheets. The Company amortizes intangible assets with identified estimated useful

lives on a straight-line basis over their estimated useful lives.

Goodwill

Goodwill represents the excess of the consideration transferred over the fair value of net assets, including identifiable

intangible assets, at the acquisition date. Goodwill is assessed for impairment annually in the fourth quarter or more

frequently if events or changes in circumstances indicate a potential impairment exists.

In assessing goodwill for impairment, the Company follows ASC 350, which permits a qualitative assessment of whether

it is more likely than not that the fair value of the reporting unit is less than its carrying value including goodwill. If the

qualitative assessment determines that it is not more likely than not that the fair value of a reporting unit is less than its

carrying value, including goodwill, then no impairment is determined to exist for the reporting unit. However, if the

qualitative assessment determines that it is more likely than not that the fair value of the reporting unit is less than its

carrying value, including goodwill, or the Company chooses not to perform the qualitative assessment, then the

Company compares the fair value of that reporting unit with its carrying value, including goodwill, in a quantitative

assessment. If the carrying value of a reporting unit exceeds its fair value, goodwill is considered impaired with the

impairment loss measured as the excess of the reporting unit’s carrying value, including goodwill, over its fair value.

The estimated fair value of the reporting unit is derived based on valuation techniques the Company believes market

participants would use for each of the reporting units.

The qualitative assessment requires judgment to be applied in evaluating the effects of multiple factors, including actual

and projected financial performance of the reporting unit, macroeconomic conditions, industry and market conditions

and relevant entity specific events in determining whether it is more likely than not that the fair value of the reporting

unit is less than its carrying amount, including goodwill. In the fourth quarter of 2025, as a result of the qualitative

assessment, the Company determined that it was more likely than not that the estimated fair value of each of the

reporting units exceeded its respective estimated carrying value. Therefore, goodwill for each reporting unit was not

impaired and a quantitative test was not required.

There were no events or changes in circumstances during the three months ended September 30, 2026 that would

indicate that it was more likely than not that the fair value of each of the reporting units did not exceed its respective

carrying value as of September 30, 2026.

Deferred financing costs

Costs incurred in connection with secured borrowings are accounted for under ASC 340, Other Assets and Deferred

Costs. Deferred costs are capitalized and amortized using the effective interest method over the respective financing term

with such amortization reflected on the Company’s consolidated statements of operations as a component of interest

expense. Establishing secured borrowings may include legal, accounting and other related fees. Unamortized deferred

financing costs are expensed when the associated debt is refinanced or repaid before maturity. Unamortized deferred

financing costs related to securitizations and note issuances are presented in the consolidated balance sheets as a direct

deduction from the associated liability.

Due from servicers

The loan-servicing activities of the Company’s LMM Commercial Real Estate segment are performed primarily by third-

party servicers. Small Business Lending (“SBL”) loans originated and held by the Company are internally serviced. The

Company’s servicers hold substantially all of the cash owned by the Company related to loan servicing activities. These

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amounts include principal and interest payments made by borrowers, net of advances and servicing fees. Cash is

generally received within 30 days of recording the receivable.

The Company is subject to credit risk to the extent any servicer with whom the Company conducts business is unable to

deliver cash balances or process loan-related transactions on the Company’s behalf. The Company monitors the financial

condition of the servicers with whom the Company conducts business and believes the likelihood of loss under the

aforementioned circumstances is remote.

Secured borrowings

Secured borrowings include borrowings under credit facilities and other financing agreements and repurchase

agreements.

Borrowings under credit facilities and other financing agreements. Borrowings under credit facilities and other

financing agreements are accounted for under ASC 470, Debt (“ASC 470”). The Company partially finances its loans,

net through credit agreements and other financing agreements with various counterparties. These borrowings are

collateralized by loans, held-for-investment and loans, held for sale and have maturity dates within two years from the

consolidated balance sheet date. If the fair value (as determined by the applicable counterparty) of the collateral securing

these borrowings decreases, the Company may be subject to margin calls during the period the borrowings are

outstanding. In instances where margin calls are not satisfied within the required time frame the counterparty may retain

the collateral and pursue collection of any outstanding debt. Interest accrued in connection with credit facilities is

recorded as interest expense in the consolidated statements of operations.

Borrowings under repurchase agreements. Borrowings under repurchase agreements are accounted for under ASC 860.

Investment securities financed under repurchase agreements are treated as collateralized borrowings, unless they meet

sale treatment or are deemed to be linked transactions. As of the current period ended, the Company had no such

repurchase agreements that have been accounted for as components of linked transactions. All securities financed

through a repurchase agreement have remained on the Company’s consolidated balance sheets as an asset and cash

received from the lender has been recorded on the Company’s consolidated balance sheets as a liability. Interest accrued

in connection with repurchase agreements is recorded as interest expense in the consolidated statements of operations.

Paycheck Protection Program Liquidity Facility borrowings

The Paycheck Protection Program Liquidity Facility (“PPPLF”) is a government loan facility created to enable the

distribution of funds for PPP whereby the Company received advances from the Federal Reserve through the PPPLF.

The Company accounts for borrowings under the PPPLF under ASC 470. Interest accrued in connection with PPPLF is

recorded as interest expense in the consolidated statements of operations.

Securitized debt obligations of consolidated VIEs, net

The Company has engaged in several securitization transactions accounted for under ASC 810. Securitization involves

transferring assets to a special purpose entity or securitization trust, which typically qualifies as a VIE. The entity that

has a controlling financial interest in a VIE is referred to as the primary beneficiary and is required to consolidate the

VIE. The consolidation of the VIE includes the VIE’s issuance of senior securities to third parties, which are shown as

securitized debt obligations of consolidated VIEs in the consolidated balance sheets.

Debt issuance costs related to securitizations are presented as a direct deduction from the carrying value of the related

debt liability. Debt issuance costs are amortized using the effective interest method and are included in interest expense

in the consolidated statements of operations.

Senior secured notes, net

The Company accounts for secured debt offerings net of issuance costs, under ASC 470. These senior secured notes are

collateralized by loans, MBS, and retained interests of consolidated VIE’s. Interest accrued in connection with senior

secured notes is recorded as interest expense in the consolidated statements of operations.

Corporate debt, net

The Company accounts for corporate debt offerings net of issuance costs, under ASC 470. Interest accrued in connection

with corporate debt is recorded as interest expense in the consolidated statements of operations.

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Guaranteed loan financing

Certain partial loan sales do not meet the definition of a “participating interest” under ASC 860 and therefore, do not

qualify as a sale. Participations or other partial loan sales which do not meet the definition of a participating interest

remain as an investment in the consolidated balance sheets and the proceeds from the portion sold is recorded as

guaranteed loan financing in the liabilities section of the consolidated balance sheets. For these partial loan sales, the

interest earned on the entire loan balance is recorded as interest income and the interest earned by the buyer in the partial

loan sale is recorded within interest expense in the accompanying consolidated statements of operations.

Contingent consideration

The Company accounts for certain liabilities recognized in relation to mergers and acquisitions as contingent

consideration whereby the fair value of this liability is dependent on certain criteria. Contingent consideration is

classified as Level 3 in the fair value hierarchy with fair value adjustments reported within other income (loss) in the

consolidated statements of operations.

Loan participations sold

The Company accounts for loan participations sold, which represents an interest in a loan receivable sold, as a liability

on the consolidated balance sheets as these arrangements do not qualify as a sale under U.S. GAAP. Such liabilities are

non-recourse and remain on the consolidated balance sheets until the loan is repaid.

Due to third parties

Due to third parties primarily relates to funds held by the Company to advance certain expenditures necessary to fulfill

the Company’s obligations under its existing indebtedness or to be released at the Company’s discretion upon the

occurrence of certain pre-specified events, and to serve as additional collateral for borrowers’ loans. While retained,

these balances earn interest in accordance with the specific loan terms with which they are associated.

Repair and denial reserve

The repair and denial reserve represents the potential liability to the SBA in the event that the Company is required to

make the SBA whole for reimbursement of the guaranteed portion of SBA loans. The Company may be responsible for

the guaranteed portion of SBA loans if there are lien and collateral issues, unauthorized use of proceeds, liquidation

deficiencies, undocumented servicing actions or denial of SBA eligibility. This reserve is calculated using an estimated

frequency of a repair and denial event upon default, as well as an estimate of the severity of the repair and denial as a

percentage of the guaranteed balance.

Variable interest entities

VIEs are entities that, by design, either (i) lack sufficient equity to permit the entity to finance its activities without

additional subordinated financial support from other parties; or (ii) have equity investors that do not have the ability to

make significant decisions relating to the entity’s operations through voting rights, or do not have the obligation to

absorb the expected losses, or do not have the right to receive the residual returns of the entity. The entity that is the

primary beneficiary is required to consolidate the VIE. An entity is deemed to be the primary beneficiary of a VIE if the

entity has both (i) the power to direct the activities that most significantly impact the VIE’s economic performance and

(ii) the right to receive benefits from the VIE or the obligation to absorb losses of the VIE that could be significant to the

VIE.

In determining whether the Company is the primary beneficiary of a VIE, both qualitative and quantitative factors are

considered regarding the nature, size and form of its involvement with the VIE, such as its role establishing the VIE and

ongoing rights and responsibilities, the design of the VIE, its economic interests, servicing fees and servicing

responsibilities, and other factors. The Company performs ongoing reassessments to evaluate whether changes in the

entity’s capital structure or changes in the nature of its involvement with the entity result in a change to the VIE

designation or a change to its consolidation conclusion.

Non-controlling interests

Non-controlling interests are presented on the consolidated balance sheets and the consolidated statements of operations

and represent direct investment in the operating partnership by third parties, including operating partnership units issued

to satisfy a portion of the purchase price in connection with a series of mergers (collectively, the “Mosaic Mergers”),

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pursuant to which the company acquired a group of privately held, real estate structured finance opportunities funds,

with a focus on construction lending, managed by MREC Management, LLC. In addition, the Company has non-

controlling interests from investments in consolidated joint ventures whereby, net income or loss is generally based upon

relative ownership interests or contractual arrangements.

Fair value option

ASC 825, Financial Instruments (“ASC 825”) provides a fair value option election that allows entities to make an

election of fair value as the initial and subsequent measurement attribute for certain eligible financial assets and

liabilities. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings.

The decision to elect the fair value option is determined on an instrument by instrument basis and must be applied to an

entire instrument and is irrevocable once elected. Assets and liabilities measured at fair value pursuant to this guidance

are required to be reported separately in the consolidated balance sheets from those instruments using another accounting

method.

The Company has elected the fair value option for certain loans held-for-sale originated by the Company that it intends

to sell in the near term. The fair value elections for loans, held for sale originated by the Company were made due to the

short-term nature of these instruments. The Company additionally elected the fair value option for certain investments in

unconsolidated joint ventures due to their short-term tenor.

Earnings per share

Basic EPS is computed by dividing income available to common stockholders by the weighted-average number of shares

of common stock outstanding for the period. Diluted EPS reflects the maximum potential dilution that could occur from

the Company’s share-based compensation, consisting of unvested restricted stock units (“RSUs”), unvested restricted

stock awards (“RSAs”), performance-based equity awards, as well as the dilutive impact of convertible preferred stock

and CVRs under the if-converted method. Potential dilutive shares are excluded from the calculation if they have an anti-

dilutive effect in the period.

All of the Company’s RSAs, time-based RSUs, and preferred stock contain rights to receive non-forfeitable dividends or

dividend equivalents and, thus, are participating securities. Due to the existence of these participating securities, the two-

class method of computing EPS is required, unless another method is determined to be more dilutive. Under the two-

class method, undistributed earnings are reallocated between shares of common stock and participating securities.

Income taxes

The objectives of accounting for income taxes are to recognize the amount of taxes payable or refundable for the current

period and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in an

entity’s consolidated financial statements or tax returns. The Company assesses the recoverability of deferred tax assets

through evaluation of carryback availability, projected taxable income and other factors as applicable. Significant

judgment is required in assessing the future tax consequences of events that have been recognized in the consolidated

financial statements or tax returns as well as the recoverability of amounts recorded, including deferred tax assets.

The Company provides for exposure in connection with uncertain tax positions, which requires significant judgment by

management including determination, based on the weight of the tax law and available evidence, that it is more-likely-

than-not that a tax result will be realized. The Company’s policy is to recognize interest and/or penalties related to

income tax matters in income tax expense on the consolidated statements of operations. As of the date of the

consolidated balance sheets, the Company has accrued no taxes, interest or penalties related to uncertain tax positions. In

addition, changes in this position in the next 12 months are not anticipated.

Revenue recognition

Under ASC 606 Revenue Recognition (“ASC 606”), revenue is recognized upon the transfer of promised goods or

services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange

for those goods or services. Revenue is recognized through the following five-step process:

Step 1: Identify the contract(s) with a customer.

Step 2: Identify the performance obligations in the contract.

Step 3: Determine the transaction price.

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Step 4: Allocate the transaction price to the performance obligations in the contract.

Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.

Most of the Company’s revenue streams, such as revenue associated with financial instruments, including interest

income, realized or unrealized gains on financial instruments, loan servicing fees, loan origination fees, hotel income,

among other revenue streams, follow specific revenue recognition criteria and therefore the guidance referenced above

does not have a material impact on the consolidated financial statements. In addition, revisions to existing accounting

rules regarding the determination of whether a company is acting as a principal or agent in an arrangement and

accounting for sales of nonfinancial assets where the seller has continuing involvement, did not materially impact the

Company. A further description of the revenue recognition criteria is outlined below.

Interest income. Interest income on loans, held-for-investment, loans, held at fair value, loans, held for sale, and MBS,

at fair value is accrued based on the outstanding principal amount and contractual terms of the instrument, including

loans with contractual PIK interest for which the Company has not yet collected cash. Discounts or premiums associated

with the loans and investment securities are amortized or accreted into interest income as a yield adjustment on the

effective interest method, based on contractual cash flows through the maturity date of the investment.

Lease rental income. Revenue from real estate owned operations primarily includes lease rental income which arises

from base rent income, net of concessions, from tenant leases. Base rent is recognized on a straight-line basis over the

term of the lease and recorded as other income in the consolidated statement of operations. Such income for the three and

nine months ended September 30, 2026, was not material.

Realized gains (losses). Upon the sale or disposition (not including the prepayment of outstanding principal balance) of

loans or securities, the excess (or deficiency) of net proceeds over the net carrying value or cost basis of such loans or

securities is recognized as a realized gain (loss) in the consolidated statements of operations.

Origination income and expense. Origination income represents fees received for origination of either loans, held at fair

value, loans, held for sale, or loans, held-for-investment. For loans held, at fair value, and loans, held for sale, pursuant

to ASC 825 the Company reports origination fee income as revenue and fees charged and costs incurred as expenses.

These fees and costs are excluded from the fair value. For originated loans, held-for-investment, under ASC 310 the

Company defers these origination fees and costs at origination and amortizes them under the effective interest method

over the life of the loan. Origination fees and expenses for loans, held at fair value and loans, held for sale, are presented

in the consolidated statements of operations as components of other income and operating expenses. The amortization of

net origination fees and expenses for loans, held-for-investment are presented in the consolidated statements of

operations as a component of interest income.

Assets and liabilities held for sale

The Company classifies long-lived assets or a disposal group to be sold as held for sale in the period when all the

necessary criteria are met. The criteria includes (i) management, having the authority to approve the action, commits to a

plan to sell the asset or the disposal group (ii) the asset or disposal group is available for immediate sale in its present

condition subject only to terms that are usual and customary for sales of such assets (iii) an active program to locate a

buyer and other actions required to complete the plan to sell the asset or disposal group have been initiated (iv) the sale

of the asset or disposal group is probable, and transfer of the asset or disposal group is expected to qualify for

recognition as a completed sale within one year (v) the asset or disposal group is being actively marketed for sale at a

price that is reasonable in relation to its current fair value and (vi) actions required to complete the plan indicate that it is

unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

Upon determining that a long-lived asset or disposal group meets the criteria to be classified as held for sale, the

Company reports the assets and liabilities of the disposal group, if material, in the line items assets or liabilities held for

sale, respectively, on the consolidated balance sheets. A long-lived asset or disposal group that is classified as held for

sale is measured at the lower of its cost or estimated fair value less any costs to sell. The fair values of assets held for

sale are assessed each reporting period and changes in such fair values are reported as an adjustment to the carrying

value of the asset or disposal group with an offset on the consolidated statements of operations, to the extent that any

subsequent changes in fair value do not exceed the cost basis of the asset or disposal group. Any loss resulting from the

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transfer of long-lived assets or disposal groups to assets held for sale is recognized in the period in which the held for

sale criteria are met.

Discontinued operations

The results of operations of long-lived assets or a disposal group that the Company has either disposed of or has

classified as held for sale is reported as discontinued operations on the consolidated statements of operations if the

disposal represents a strategic shift that has or will have a major effect on the Company’s operations and financial

results.

Foreign currency transactions

Assets and liabilities denominated in non-U.S. currencies are translated into U.S. dollars using foreign currency

exchange rates prevailing at the end of the reporting period. Revenue and expenses are translated at the average

exchange rates for each reporting period. Foreign currency remeasurement gains or losses on transactions in

nonfunctional currencies are recognized in earnings. Gains or losses on translation of the financial statements of a non-

U.S. operation, when the functional currency is other than the U.S. dollar, are included, net of taxes, in the consolidated

statements of comprehensive income (loss).

Note 4. Recent Accounting Pronouncements

ASU 2025-09, Derivatives and Hedging (Topic 815): Hedge Accounting Improvements Issued November 2025

This ASU clarifies certain aspects of the guidance on hedge accounting and addresses several incremental hedge

accounting issues arising from global reference rate reform. The ASU is effective in reporting periods beginning after

December 15, 2026, including interim periods within the fiscal year, on a prospective basis. Early adoption is permitted.

The Company is currently assessing the impact upon adoption of this standard on the consolidated financial statements.

ASU 2025-08, Financial Instruments – Credit Losses (Topic 326): Purchased Loans Issued November 2025

This ASU expands the gross-up approach for initial recognition and measurement of acquired financial assets to

purchased seasoned loans. The ASU is effective in reporting periods beginning after December 15, 2026, including

interim periods within the fiscal year, on a prospective basis. Early adoption is permitted. The Company is currently

assessing the impact upon adoption of this standard on the consolidated financial statements.

ASU 2025-06, Intangibles - Goodwill and Other-Internal-Use Software (Subtopic 350-40): Targeted

Improvements to the Accounting for Internal-Use Software Issued September 2025

This ASU makes targeted improvements to increase the operability of the recognition guidance considering different

methods of software development. The ASU is effective in reporting periods beginning after December 15, 2027,

including interim periods within the fiscal year, on a prospective or retrospective basis, or using a modified transition

method. Early adoption is permitted. The Company is currently assessing the impact upon adoption of this standard on

the consolidated financial statements.

ASU 2025-05, Financial Instruments-Credit Losses (Topic 326): Measurements of Credit Losses for Accounts

Receivable and Contract Assets Issued July 2025

This ASU provides a practical expedient related to the estimation of expected credit losses. The ASU is effective in

reporting periods beginning after December 15, 2025, including interim periods within the fiscal year, on a prospective

basis. Early adoption is permitted. The adoption of this standard did not have an impact on the Company's consolidated

financial statements.

ASU 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810) Determining the Accounting

Acquirer in the Acquisition of a Variable Interest Entity Issued May 2025

This ASU clarifies the guidance in determining the accounting acquirer in certain transactions involving VIEs. The ASU

is effective in reporting periods beginning after December 15, 2026, including interim periods within the fiscal year, on a

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prospective basis. Early adoption is permitted. The Company is currently assessing the impact upon adoption of this

standard on the consolidated financial statements.

ASU 2024-04, Compensation – Debt Conversion and Other Topics (Subtopic 470-20) Induced Conversions of

Convertible Debt Instruments Issued November 2024

This ASU clarifies the requirements for settlement of a convertible debt instrument as an induced conversion. The ASU

is effective in reporting periods beginning after December 15, 2025, including interim periods within the fiscal year, on a

prospective or retrospective basis. Early adoption is permitted. The adoption of this standard did not have an impact on

the Company's consolidated financial statements.

ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures

(Subtopic 220-40) Issued November 2024

This ASU requires additional disclosure in the notes to financial statements of specified information about certain costs

and expenses. The ASU is effective in reporting periods beginning after December 15, 2026, and interim periods within

annual reporting periods beginning after December 15, 2027, on a prospective or retrospective basis. Early adoption is

permitted. The Company is currently assessing the impact upon adoption of this standard on the consolidated financial

statements.

ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures Issued December 2023

This ASU improves income tax disclosure requirements, primarily through standardization of rate reconciliation

categories and disaggregation of income taxes paid by jurisdiction. The ASU is effective in reporting periods beginning

after December 15, 2024 on a prospective or retrospective basis. Early adoption is permitted. The adoption of this

standard did not have a material impact on the Company's consolidated financial statements.

Note 5. Business Combinations

UDF IV Merger

On March 13, 2025 the Company acquired UDF IV, a real estate investment trust providing capital solutions to

residential real estate developers and regional homebuilders. Refer to Note 1 for more information about the UDF IV

Merger. The purchase price was allocated to the assets acquired and liabilities assumed based on their respective fair

values. The methodologies used, and key assumptions made, to estimate the fair value of the assets acquired and

liabilities assumed are primarily based on future cash flows and discount rates.

The table below summarizes the fair value of assets acquired and liabilities assumed from the UDF IV Merger.

(in thousands)	Preliminary Purchase Price Allocation		Measurement Period Adjustments		Updated Purchase Price Allocation
Assets
Cash and cash equivalents	$16,020		$—		$16,020
Loans, net	158,469		10,836		169,305
Investment in unconsolidated joint ventures	5,290		—		5,290
Other Assets:
Accrued interest	1,231		—		1,231
Receivable from third party	738		—		738
Other	1,946		—		1,946
Total assets acquired	$183,694		$10,836		$194,530
Liabilities
Accounts payable and other accrued liabilities	1,214		(605)		609
Contract liability	—		4,529		4,529
Total liabilities assumed	$1,214		$3,924		$5,138
Net assets acquired	$182,480		$6,912		$189,392

In a business combination, the initial allocation of the purchase price is considered preliminary and therefore, is subject

to change until the end of the measurement period. The final determination must occur within one year of the merger

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date. Because the measurement period for the UDF IV Merger remained open until March 13, 2026, certain fair value

estimates changed once all information necessary to make a final fair value assessment was received. The amounts

presented in the table above pertained to the preliminary purchase price allocation reported at the time of the UDF IV

Merger based on information that was available to management at the time the consolidated financial statements were

prepared. The preliminary purchase price allocation changed as the Company completed its analysis of the fair value of

the assets acquired and liabilities assumed, which impacts the consolidated financial statements. Subsequent to the

determination of the preliminary purchase price allocation, the Company recorded a measurement period adjustment

based on the updated valuations obtained by increasing net assets acquired, decreasing the consideration transferred and

increasing the bargain purchase gain related to this transaction by $7.1 million.

The table below illustrates the aggregate consideration transferred, net assets acquired, and the related bargain purchase

gain, which was primarily driven by a discount in UDF IV’s market valuation due to factors such as the illiquid nature of

UDF IV’s shares, and a change in our stock price between the date of the agreement and the closing date of the UDF IV

Merger.

(in thousands)	Preliminary Purchase Price Allocation		Measurement Period Adjustments		Updated Purchase Price Allocation
Fair value of net assets acquired	$182,480		$6,912		$189,392
Consideration transferred based on the value of common stock issued	64,600		—		64,600
Contingent consideration	15,409		(167)		15,242
Total consideration transferred	$80,009		$(167)		$79,842
Bargain purchase gain	$102,471		$7,079		$109,550

The table above includes contingent consideration in the form of CVRs valued at approximately $15.4 million or $1.21

per CVR. Subsequent to the determination of the preliminary purchase price allocation, based on updated valuations

obtained, the Company recorded a measurement period adjustment of $0.2 million to decrease the value of the CVR.

Upon the close of the measurement period on March 13, 2026, the updated purchase price of the CVRs was valued at

approximately $15.2 million or $1.19 per CVR. See Note 7 for more information about the valuation of the CVRs.

Note 6. Loans and Allowance for Credit Losses

Loans includes (i) loans held for investment that are accounted for at amortized cost net of allowance for credit losses,

(ii) loans held at fair value under the fair value option, (iii) loans held for sale that are accounted for at the lower of cost

or fair value net of valuation allowance and (iv) loans held for sale at fair value under the fair value option. The

classification for a loan is based on product type and management’s strategy for the loan.

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Loan portfolio

The table below summarizes the classification, unpaid principal balance (“UPB”), and carrying value of loans held by

the Company including loans of consolidated VIEs.

	September 30, 2026				December 31, 2025
(in thousands)	Carrying Value		UPB		Carrying Value		UPB
Loans
Bridge	$1,552,538		$1,640,315		$2,024,033		$2,082,823
Fixed rate	78,943		79,998		93,002		93,828
Construction	241,733		348,022		388,042		509,085
Freddie Mac	10,975		10,801		3,945		3,756
SBA - 7(a)	1,183,765		1,223,735		908,714		958,755
Other	54,550		83,804		82,562		112,194
Total Loans, net	$3,122,504		$3,386,675		$3,500,298		$3,760,441
Loans in consolidated VIEs
Bridge	—		—		834,426		858,833
Fixed rate	456,381		459,865		558,119		560,230
SBA - 7(a)	263,623		282,321		134,761		145,185
Other	119,117		119,217		166,773		167,191
Total Loans, net, in consolidated VIEs	$839,121		$861,403		$1,694,079		$1,731,439
Loans, held for sale
Bridge	—		44,400		457,336		521,116
Fixed rate	—		—		55,390		58,000
Construction	20,400		27,000		—		—
Freddie Mac	—		—		16,555		16,425
SBA - 7(a)	50,995		47,415		52,598		49,203
Other	41,371		44,875		3,941		3,622
Total Loans, held for sale	$112,766		$163,690		$585,820		$648,366
Loans, held for sale in consolidated VIEs
Bridge	—		—		125,107		129,238
Total Loans, held for sale in consolidated VIEs	$—		$—		$125,107		$129,238
Total	$4,074,391		$4,411,768		$5,905,304		$6,269,484

In the table above, loans with the “Other” classification are generally LMM acquired loans that have nonconforming

characteristics for the Fixed rate, Bridge, Construction, or Freddie Mac classifications due to loan size, rate type,

collateral, or borrower criteria.

Loan vintage and credit quality indicators

The Company monitors the credit quality of its loan portfolio based on primary credit quality indicators, such as

delinquency rates. Loans that are 30 days or more past due, provide an indication of the borrower’s capacity and

willingness to meet its financial obligations.

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The tables below summarize the classification, UPB, carrying value and gross write-offs of loans by year of origination.

			Carrying Value by Year of Origination
(in thousands)	UPB		2026		2025		2024		2023		2022		Pre 2022		Total
September 30, 2026
Bridge	$1,640,315		$—		$13,893		$201,725		$45,749		$724,138		$567,033		$1,552,538
Fixed rate	539,863		—		—		—		—		25,567		509,757		535,324
Construction	348,022		—		21,513		41,494		—		63,737		114,989		241,733
Freddie Mac	10,801		—		—		2,568		7,011		1,396		—		10,975
SBA - 7(a)	1,506,056		69,515		282,957		351,483		186,070		226,807		330,556		1,447,388
Other	203,021		4,043		21,391		15,737		3,040		4,816		124,640		173,667
Total Loans, net	$4,248,078		$73,558		$339,754		$613,007		$241,870		$1,046,461		$1,646,975		$3,961,625
Gross write-offs			$—		$2,369		$9,983		$4,193		$46,891		$26,749		$90,185
	UPB		2025		2024		2023		2022		2021		Pre 2021		Total
December 31, 2025
Bridge	$2,941,656		$86,350		$295,040		$186,723		$1,126,875		$1,089,802		$73,669		$2,858,459
Fixed rate	654,058		—		—		—		35,383		175,988		439,750		651,121
Construction	509,085		32,342		70,551		19,300		108,931		18,341		138,577		388,042
Freddie Mac	3,756		—		2,568		—		1,377		—		—		3,945
SBA - 7(a)	1,103,940		150,888		162,885		115,567		244,353		160,780		209,002		1,043,475
Other	279,385		21,197		16,220		3,130		5,026		581		203,181		249,335
Total Loans, net	$5,491,880		$290,777		$547,264		$324,720		$1,521,945		$1,445,492		$1,064,179		$5,194,377
Gross write-offs			$262		$4,515		$5,993		$1,438		$5,900		$184,402		$202,510

The tables below present delinquency information on loans, net by year of origination.

			Carrying Value by Year of Origination
(in thousands)	UPB		2026		2025		2024		2023		2022		Pre 2022		Total
September 30, 2026
Current	$3,487,892		$73,254		$337,194		$520,701		$214,797		$782,953		$1,360,688		$3,289,587
30 - 59 days past due	55,658		—		49		173		95		36,793		17,125		54,235
60+ days past due	704,528		304		2,511		92,133		26,978		226,715		269,162		617,803
Total Loans, net	$4,248,078		$73,558		$339,754		$613,007		$241,870		$1,046,461		$1,646,975		$3,961,625
	UPB		2025		2024		2023		2022		2021		Pre 2021		Total
December 31, 2025
Current	$4,478,531		$286,900		$386,892		$293,829		$1,152,549		$1,171,991		$983,329		$4,275,490
30 - 59 days past due	392,885		1,788		126,870		9,336		147,167		92,247		11,691		389,099
60+ days past due	620,464		2,089		33,502		21,555		222,229		181,254		69,159		529,788
Total Loans, net	$5,491,880		$290,777		$547,264		$324,720		$1,521,945		$1,445,492		$1,064,179		$5,194,377

The table below presents delinquency information on loans, net by portfolio.

(in thousands)	Current		30 - 59 days past due		60+ days past due		Total		Non-Accrual Loans		90+ days past due and Accruing
September 30, 2026
Bridge	$1,020,364		$36,743		$495,431		$1,552,538		$836,118		$7,596
Fixed rate	498,296		10,917		26,111		535,324		22,765		—
Construction	196,347		1,540		43,846		241,733		68,692		—
Freddie Mac	—		—		10,975		10,975		10,975		—
SBA - 7(a)	1,409,701		428		37,259		1,447,388		93,556		1,143
Other	164,879		4,607		4,181		173,667		3,017		—
Total Loans, net	$3,289,587		$54,235		$617,803		$3,961,625		$1,035,123		$8,739
Percentage of loans outstanding	83.0%		1.4%		15.6%		100%		26.1%		0.2%
December 31, 2025
Bridge	$2,099,318		$358,838		$400,303		$2,858,459		$1,151,022		$—
Fixed rate	621,708		3,279		26,134		651,121		20,738		—
Construction	343,450		1,496		43,096		388,042		62,395		—
Freddie Mac	—		—		3,945		3,945		3,945		—
SBA - 7(a)	971,069		20,669		51,737		1,043,475		84,795		90
Other	239,945		4,817		4,573		249,335		4,229		—
Total Loans, net	$4,275,490		$389,099		$529,788		$5,194,377		$1,327,124		$90
Percentage of loans outstanding	82.3%		7.5%		10.2%		100%		25.5%		—%

28

In addition to delinquency rates, the current estimated LTV ratio, geographic distribution of the loan collateral and

collateral concentration are primary credit quality indicators that provide insight into a borrower’s capacity and

willingness to meet its financial obligation. High LTV loans tend to have higher delinquency rates than loans where the

borrower has equity in the collateral. The geographic distribution of the loan collateral considers factors such as the

regional economy, property price changes and specific events such as natural disasters, which will affect credit quality.

The collateral concentration of the loan portfolio considers economic factors or events may have a more pronounced

impact on certain sectors or property types.

The table below presents quantitative information on the credit quality of loans, net.

	LTV(1)
(in thousands)	0.0 – 20.0%		20.1 – 40.0%		40.1 – 60.0%		60.1 – 80.0%		80.1 – 100.0%		Greater than 100.0%		Total
September 30, 2026
Bridge	$—		$17,736		$90,111		$339,318		$543,759		$561,614		$1,552,538
Fixed rate	—		22,036		248,555		239,679		20,104		4,950		535,324
Construction	1,132		—		53,162		58,709		68,627		60,103		241,733
Freddie Mac	—		—		7,011		3,964		—		—		10,975
SBA - 7(a)	14,280		72,493		192,410		454,618		261,029		452,558		1,447,388
Other	47,994		57,110		30,298		24,164		11,942		2,159		173,667
Total Loans, net	$63,406		$169,375		$621,547		$1,120,452		$905,461		$1,081,384		$3,961,625
Percentage of loans outstanding	1.6%		4.2%		15.7%		28.3%		22.9%		27.3%		100%
December 31, 2025
Bridge	$1,463		$29,207		$188,215		$1,235,997		$906,428		$497,149		$2,858,459
Fixed rate	19		23,042		294,209		308,158		17,368		8,325		651,121
Construction	11,162		14,708		84,525		147,776		49,540		80,331		388,042
Freddie Mac	—		—		—		3,945		—		—		3,945
SBA - 7(a)	13,516		58,812		148,369		305,993		158,710		358,075		1,043,475
Other	66,133		77,651		63,158		28,114		11,347		2,932		249,335
Total Loans, net	$92,293		$203,420		$778,476		$2,029,983		$1,143,393		$946,812		$5,194,377
Percentage of loans outstanding	1.8%		3.9%		15.0%		39.1%		22.0%		18.2%		100%

(1)LTV is calculated by dividing the current UPB by the most recent collateral value received. The most recent value for performing loans is often the third-party as-is

valuation utilized during the original underwriting process.

The table below presents the geographic concentration of loans, net, secured by real estate.

Geographic Concentration (% of UPB)	September 30, 2026		December 31, 2025
Texas	27.1%		25.8%
California	10.3		12.7
Arizona	10.1		9.2
Florida	5.4		8.9
Washington	6.1		3.1
Georgia	5.0		6.0
New York	4.4		3.7
South Carolina	2.6		1.7
Ohio	2.6		1.8
Oregon	2.3		1.3
Other	24.1		25.8
Total	100%		100%

The table below presents the collateral type concentration of loans, net.

Collateral Concentration (% of UPB)	September 30, 2026		December 31, 2025
Multi-family	43.5%		56.6%
SBA	35.5		20.1
Land	5.3		4.3
Retail	4.0		4.7
Industrial	3.4		4.0
Office	2.9		3.2
Mixed Use	2.4		3.0
Other	3.0		4.1
Total	100%		100%

29

The table below presents the collateral type concentration of SBA loans within loans, net.

Collateral Concentration (% of UPB)	September 30, 2026		December 31, 2025
Lodging	20.0%		19.3%
Gasoline Service Stations	16.5		13.8
Eating Places	6.9		6.8
Child Day Care Services	4.6		3.9
General Freight Trucking, Local	2.6		3.8
Grocery Stores	2.7		2.2
Car Washes	2.3		1.7
Offices of Physicians	2.1		2.6
Coin-Operated Laundries and Drycleaners	2.1		2.1
Pet Care Services	1.1		—
Other	39.1		43.8
Total	100%		100%

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 ratios, and economic conditions.

The table below presents the allowance for loan losses by loan product and impairment methodology.

(in thousands)	Bridge		Fixed rate		Construction		SBA - 7(a)		Other		Total
September 30, 2026
General	$19,609		$2,868		$373		$24,914		$2,231		$49,995
Specific	66,368		1,700		12,919		13,157		10,125		104,269
PCD	—		—		80,229		—		—		80,229
Ending balance	$85,977		$4,568		$93,521		$38,071		$12,356		$234,493
December 31, 2025
General	$7,921		$1,749		$587		$28,615		$1,427		$40,299
Specific	72,714		1,596		22,917		10,039		10,091		117,357
PCD	—		—		60,861		—		—		60,861
Ending balance	$80,635		$3,345		$84,365		$38,654		$11,518		$218,517

30

The table below presents a summary of the changes in the allowance for loan losses.

(in thousands)	Bridge	Fixed rate	Construction	SBA - 7(a)	Other	Total
Three Months Ended September 30, 2026
Beginning balance	$96,011	$3,791	$98,051	$41,119	$11,754	$250,726
Provision for (recoveries of) loan losses	14,322	777	(6,584)	3,040	602	12,157
Time value of money adjustment	—	—	3,992	—	—	3,992
Charge-offs and sales	(24,356)	—	(1,938)	(6,139)	—	(32,433)
Recoveries	—	—	—	51	—	51
Ending balance	$85,977	$4,568	$93,521	$38,071	$12,356	$234,493
Three Months Ended September 30, 2025
Beginning balance	$40,710	$5,115	$150,137	$33,335	$3,282	$232,579
Provision for (recoveries of) loan losses	300	(498)	31,536	6,942	315	38,595
Measurement period adjustment	—	—	43,107	—	—	43,107
Time value of money adjustment	—	—	6,319	—	—	6,319
Charge-offs and sales	(226)	(514)	(146,548)	(2,590)	(1,861)	(151,739)
Recoveries	—	—	—	189	—	189
Ending balance	$40,784	$4,103	$84,551	$37,876	$1,736	$169,050
Nine Months Ended September 30, 2026
Beginning balance	$80,635	$3,345	$84,365	$38,654	$11,518	$218,517
Provision for (recoveries of) loan losses	72,217	1,223	5,667	15,052	838	94,997
Time value of money adjustment	—	—	10,767	—	—	10,767
Charge-offs and sales	(66,875)	—	(7,278)	(16,032)	—	(90,185)
Recoveries		—	—	397	—	397
Ending balance	$85,977	$4,568	$93,521	$38,071	$12,356	$234,493
Nine Months Ended September 30, 2025
Beginning balance	$170,445	$5,114	$140,139	$22,087	$2,154	$339,939
Provisions for (recoveries of) loan losses	(129,435)	1,305	41,192	18,442	1,443	(67,053)
PCD(1)	—	—	52,535	—	—	52,535
Time value of money adjustment	—	—	6,319	—	—	6,319
Charge-offs and sales	(226)	(2,316)	(155,634)	(3,212)	(1,861)	(163,249)
Recoveries	—	—	—	559	—	559
Ending balance	$40,784	$4,103	$84,551	$37,876	$1,736	$169,050

(1)Includes the impact of a measurement period adjustment related to the UDF IV Merger. Refer to Note 5 for further details on assets acquired and liabilities assumed in

connection with the UDF IV Merger.

The table above excludes $3.2 million and $1.8 million of allowance for loan losses on unfunded lending commitments

as of September 30, 2026 and September 30, 2025, respectively. Refer to Note 3 – Summary of Significant Accounting

Policies for more information on accounting policies, methodologies and judgment applied to determine the allowance

for loan losses and lending commitments.

Non-accrual loans

A loan is placed on nonaccrual status when it is probable that principal and interest will not be collected under the

original contractual terms. At that time, interest income is no longer accrued.

The table below presents information on non-accrual loans.

(in thousands)	September 30, 2026		December 31, 2025
Non-accrual loans
With an allowance	$977,297		$1,290,859
Without an allowance	57,826		36,265
Total carrying value of non-accrual loans	$1,035,123		$1,327,124
Allowance for loan losses related to non-accrual loans	$(117,010)		$(133,750)
UPB of non-accrual loans	$1,164,955		$1,466,969
	September 30, 2026		September 30, 2025
Interest income on non-accrual loans for the three months ended	$14,341		$2,510
Interest income on non-accrual loans for the nine months ended	$31,041		$13,009

31

Loan modifications made to borrowers experiencing financial difficulty

In certain situations, the Company may provide loan modifications to borrowers experiencing financial difficulty. These

modifications may include interest rate reductions, principal forgiveness, term extensions, and other-than-insignificant

payment delays intended to minimize the Company’s economic loss and to avoid foreclosure or repossession of

collateral.

Three months ended September 30, 2026. During the three months ended September 30, 2026, the Company entered into

17 loan modifications with an aggregate carrying value of $229.9 million, or 5.8% of total loans, net. These modified

loans include a combination of changes to the contractual terms which were in the form of interest rate reductions, term

extensions and other-than-insignificant payment delays.

There were 5 loans with an aggregate carrying value of $154.4 million, or 3.9% of loans, net that were modified to

include interest payment deferrals which ranged between 2 and 19 months with a weighted average of 2 months and

include payments for periods before the modification date. There were 2 loans with an aggregate carrying value of $73.9

million, or 1.9% of loans, net that were modified to include both term extensions which ranged between 9 and 108

months with a weighted average of 9 months added to the original loan term and interest payment deferrals which ranged

between 2 and 10 months with a weighted average of 10 months. There were 9 loans with an aggregate carrying value of

$1.6 million, or less than 0.1% of loans, net that were modified to include term extensions which ranged between 10 and

234 months with a weighted average of 70 months added to the original loan term. There was 1 loan with a carrying

value of less than $0.1 million, or less than 0.1% of loans, net that was modified to include an interest rate reduction

from Prime + 6.00% to a fixed rate of 8.00% from July 2026 to December 2031. Interest payment deferral payment

modifications generally include the reduction of interest payments to equal excess net operating income with the

difference between the original rate and the interest collected due at maturity.

During the three months ended September 30, 2026, no capital was invested by the borrowers.

Nine months ended September 30, 2026. During the nine months ended September 30, 2026, the Company entered into

82 loan modifications with an aggregate carrying value of $384.3 million, or 9.7% of total loans, net. These modified

loans include a combination of changes to the contractual terms which were in the form of interest rate reductions,

principal forgiveness, term extensions and other-than-insignificant payment delays.

There were 7 loans with an aggregate carrying value of $292.3 million, or 7.4% of loans, net that were modified to

include both term extensions which ranged between 12 and 108 months with a weighted average of 15 months added to

the original loan term and interest payment deferrals which ranged between 2 and 21 months with a weighted average of

10 months. There was 1 loan with a carrying value of $60.4 million, or 1.5% of loans, net that was modified to include a

25 month term extension added to the original loan term, a 4 month interest payment deferral, and an interest rate

reduction from SOFR + 5.85% to SOFR + 4.00% from May 2026 to November 2027. There was 1 loan with a carrying

value of $17.7 million, or 0.4% of loans, net that was modified to include a 39 month term extension added to the

original loan term, a 24 month interest payment deferral, an interest rate reduction from SOFR + 3.65% to SOFR +

3.50% from June 2026 to June 2028, and principal forgiveness of $1.2 million. There were 61 loans with an aggregate

carrying value of $11.8 million, or 0.3% of loans, net that were modified to include interest payment deferrals which

ranged between 3 and 30 months with a weighted average of 8 months and include payments for periods before the

modification date. There were 10 loans with an aggregate carrying value of $2.1 million, or 0.1% of loans, net that were

modified to include term extensions which ranged between 10 and 234 months with a weighted average of 68 months

added to the original loan term. There was 1 loan with a carrying value of less than $0.1 million, or less than 0.1% of

loans, net that was modified to include both a 26 month interest payment deferral and an interest rate reduction from

Prime + 2.75% to a fixed rate of 9.00% from February 2026 to May 2033. There was 1 loan with a carrying value of less

than $0.1 million, or less than 0.1% of loans, net that was modified to include an interest rate reduction from Prime +

6.00% to a fixed rate of 8.00% from July 2026 to December 2031. Interest payment deferral payment modifications

generally include the reduction of interest payments to equal excess net operating income with the difference between

the original rate and the interest collected due at maturity.

During the nine months ended September 30, 2026, $2.6 million of total capital was invested by the borrowers in the

form of payment towards principal and contribution to a reserve account.

32

Three months ended September 30, 2025. During the three months ended September 30, 2025, the Company entered into

50 loan modifications with an aggregate carrying value of $491.6 million, or 7.8% of total loans, net. These modified

loans include a combination of changes to the contractual terms which were in the form of interest rate reductions, term

extensions and other-than-insignificant payment delays.

There were 6 loans with an aggregate carrying value of $187.2 million, or 2.9% of loans, net that were modified to

include term extensions which ranged between 2 and 120 months with a weighted average of 5 months added to the

original loan term. Included within these modifications was 1 SBA loan with a carrying value of $0.7 million with a 120

month term extension, which is included in the range mentioned above. There were 34 loans with an aggregate carrying

value of $135.7 million, or 2.2% of loans, net that were modified to include interest payment deferrals which ranged

between 5 and 26 months with a weighted average of 8 months and include payments for periods before the modification

date. There were 7 loans with an aggregate carrying value of $79.6 million, or 1.3% of loans, net that were modified to

include both term extensions and interest payment deferrals. The term extensions ranged between 2 and 60 months with

a weighted average of 11 months added to the original loan term. Interest payment deferrals ranged between 2 and 25

months with a weighted average of 11 months. Payment modifications include the reduction of interest payments to

equal excess net operating income with the difference between the original rate and the interest collected due at maturity.

In most cases, default interest is waived. There was 1 loan with a carrying value of $71.0 million, or 1.1% of loans, net

that was modified to include both a 4 month term extension added to the original loan term and an interest rate reduction

from SOFR + 5.50% to SOFR + 4.00% from July 2025 to June 2026. There was 1 loan with a carrying value of $18.0

million, or 0.3% of loans, net that was assumed by a new borrower with a 23 month term extension added to the original

loan term and a 10 month interest payment deferral. There was 1 loan with a carrying value of $0.1 million, or less than

0.1% of loans, net that was modified to include both a 7 month interest payment deferral and an interest rate reduction

from a fixed rate of 10.25% to a fixed rate of 6.0% from June 2025 to October 2026.

During the three months ended September 30, 2025, $2.8 million of total capital was invested by the borrowers,

substantially all in the form of payments in contribution to interest reserve accounts and equity in the projects.

Nine months ended September 30, 2025. During the nine months ended September 30, 2025, the Company entered into

104 loan modifications with an aggregate carrying value of $857.2 million, or 13.6% of total loans, net. These modified

loans include a combination of changes to the contractual terms which were in the form of interest rate reductions, term

extensions and other-than-insignificant payment delays.

There were 18 loans with an aggregate carrying value of $267.2 million, or 4.3% of loans, net, that were modified to

include term extensions which ranged between 2 and 120 months with a weighted average of 10 months added to the

original loan term. Included within these modifications was 1 SBA loan with a carrying value of $0.7 million with a 120

month term extension, which is included in the range mentioned above. There were 60 loans with an aggregate carrying

value of $149.2 million, or 2.4% of loans, net that were modified to include interest payment deferrals which ranged

between 3 and 28 months with a weighted average of 8 months and include payments for periods before the modification

date. There were 16 loans with an aggregate carrying value of $121.2 million, or 1.9% of loans, net that were modified to

include both term extensions and interest payment deferrals. The term extensions ranged between 3 and 60 months with

a weighted average of 14 months added to the original loan term. Interest payment deferrals ranged between 6 and 25

months with a weighted average of 14 months. Payment modifications include the reduction of interest payments to

equal excess net operating income with the difference between the original rate and the interest collected due at maturity.

In most cases, default interest is waived. There were 2 loans with an aggregate carrying value of $99.8 million, or 1.6%

of loans, net that were modified to include both term extensions which ranged between 4 and 24 months with a weighted

average of 10 months added to the original loan term and interest rate reductions from SOFR + 5.50% to SOFR + 4.00%

from May 2025 to October 2027. There were 3 loans with an aggregate carrying value of $81.8 million, or 1.3% of

loans, net that were assumed by new borrowers and modified to include both term extensions and interest payment

deferrals. The term extensions ranged between 19 and 32 months with a weighted average of 25 months added to the

original loan term. Interest payment deferrals ranged between 10 and 24 months with a weighted average of 16 months.

There were 2 loans with an aggregate carrying value of $78.2 million, or 1.2% of loans, net that were assumed by new

borrowers and modified to include term extensions. The term extensions ranged between 18 and 35 months with a

weighted average of 28 months added to the original loan term. There were 2 loans with an aggregate carrying value of

$34.4 million, or 0.5% of loans, net that were modified to include both interest payment deferrals which ranged between

7 and 26 months with a weighted average of 26 months and interest rate reductions which range between a fixed rate of

33

10.25% to a fixed rate of 6.0% from June 2024 to September 2027. There was 1 loan with a carrying value of $25.4

million, or 0.4% of loans, net that was modified to include a 12 month term extension added to the original loan term, a 7

month interest payment deferral, and an interest rate reduction from SOFR + 5.75% to SOFR + 3.50% from June 2025 to

March 2026.

During the nine months ended September 30, 2025, $13.4 million of total capital was invested by the borrowers,

substantially all in the form of payments in contribution to various reserve accounts.

The remaining elements of the Company’s modification programs are generally considered insignificant and do not have

a material impact on financial results.

Allowance for loan losses. The Company’s allowance for loan losses reflects estimates of expected life-time loan losses,

which considers historical loan losses including losses from modified loans to borrowers experiencing financial

difficulty. The Company continues to estimate the allowance for loan losses after modification using loan-specific

inputs. Substantially all of the modified loans during the three and nine months ended September 30, 2026 were

performing in accordance with the modified contractual terms, however, $229.9 million and $242.1 million, respectively

were on nonaccrual status regarding the ultimate collectability of the contractually due principal and interest. Majority of

the modified loans during the three and nine months ended September 30, 2025 were on accrual status and performing in

accordance with the modified contractual terms.

Loans with modifications disclosed in the previous twelve months are performing in accordance with their modified

terms as of September 30, 2026, except for 35 loans with a carrying value of $4.3 million which did not make payments

in accordance with their modified terms during the three months ended September 30, 2026.

On loans for which the Company determines foreclosure of the collateral is probable, expected losses are measured

based on the difference between the fair value of the collateral and the amortized cost basis of the loan as of the

measurement date. As of September 30, 2026 and December 31, 2025, the Company’s total carrying amount of loans in

the foreclosure process was $11.2 million and $17.9 million, respectively.

Lending commitments. For the three and nine months ended September 30, 2026, lending commitments to borrowers

experiencing financial difficulty for which the Company has modified the loan terms were $1.7 million and $2.1 million,

respectively. For the three and nine months ended September 30, 2025, lending commitments to borrowers experiencing

financial difficulty for which the Company has modified the loan terms were $10.9 million and $37.9 million,

respectively.

PCD loans

On March 13, 2025, the Company acquired PCD loans in connection with the UDF IV Merger. Subsequent to the

determination of the preliminary purchase price allocation, based on updated valuations obtained, the Company recorded

a measurement period adjustment of $36.3 million to increase the PCD allowance. Refer to Note 5 for further details on

assets acquired and liabilities assumed in connection with the UDF IV Merger. The table below presents a reconciliation

of the Company’s purchase price with the par value of the purchased loans.

(in thousands)	Preliminary Purchase Price Allocation		Measurement Period Adjustments		Updated Purchase Price Allocation
UPB	$200,729		$(37,205)		$163,524
Allowance for credit losses	(16,626)		(36,291)		(52,917)
Non-credit discount	(87,141)		48,456		(38,685)
Purchase price of loans classified as PCD	$96,962		$(25,040)		$71,922

The Company did not acquire any PCD loans during the three months ended September 30, 2026 or September 30, 2025.

Note 7. Fair Value Measurements

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction

between market participants at the measurement date. U.S. GAAP has a three-level hierarchy that prioritizes and ranks

the level of market price observability used in measuring financial instruments at fair value. Market price observability is

34

impacted by a number of factors, including the type of investment, the characteristics specific to the investment, and the

state of the marketplace (including the existence and transparency of transactions between market participants). The

Company’s valuation techniques for financial instruments use observable and unobservable inputs. Investments with

readily available, actively quoted prices or for which fair value can be measured from actively quoted prices in an

orderly market will generally have a higher degree of market price observability and a lesser degree of judgment used in

measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical

assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

Investments measured and reported at fair value are classified and disclosed into one of the following categories:

Level 1 — Quoted prices (unadjusted) in active markets for identical assets and liabilities that the Company has the

ability to access.

Level 2 — Pricing inputs are other than quoted prices in active markets, including, but not limited to, quoted prices for

similar assets and liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets

that are not active, inputs other than quoted prices that are observable for the assets or liabilities (such as interest rates,

yield curves, volatilities, prepayment speeds, loss severities, credit risks and default rates) or other market corroborated

inputs.

Level 3 — One or more pricing inputs is significant to the overall valuation and unobservable. Significant unobservable

inputs are based on the best information available in the circumstances, to the extent observable inputs are not available,

including the Company’s own assumptions used in determining the fair value of financial instruments. Fair value for

these investments is determined using valuation methodologies that consider a range of factors including, but not limited

to, the price at which the investment was acquired, the nature of the investment, local market conditions, trading values

on public exchanges for comparable securities, current and projected operating performance, and financing transactions

subsequent to the acquisition of the investment. The inputs into the determination of fair value require significant

management judgment.

Valuation techniques of Level 3 investments vary by instrument type, but are generally based on an income, market or

cost-based approach. The income approach predominantly considers discounted cash flows which is the measure of

expected future cash flows in a default scenario, implied by the value of the underlying collateral, where applicable, and

current performance whereas the market-based approach predominantly considers pull-through rates, industry multiples

and the UPB. Fair value measurements of loans are sensitive to changes in assumptions regarding prepayments,

probability of default, loss severity in the event of default, forecasts of home prices, and significant activity or

developments in the real estate market.

Contingent consideration primarily consists of CVRs issued pursuant to the UDF IV Merger. Pursuant to the Contingent

Value Rights Agreement, dated as of March 13, 2025, by and among the Company and Computershare Inc. and its

affiliate Computershare Trust Company, N.A., on the issuance date following the end of each CVR accrual period, the

Company will issue to the CVR holders, with respect to each CVR, a number of shares of Company common stock equal

to 60% of any cash proceeds received between October 1, 2024 and December 31, 2028 from select loans in excess of

the outstanding amounts of such loans and net of certain costs, divided by the Company’s tangible book value per share,

with cash being paid in lieu of any fractional shares of Company common stock otherwise due to such holder. In

addition, each CVR holder will be entitled to receive (i) an amount in cash equal to the amount of any dividends or other

distributions paid with respect to the number of whole shares of Company common stock received by such holder in

respect of such holder’s CVRs and having a record date on or after the Effective Time and a payment date prior to the

issuance date of such shares of Company common stock (the “Catch-up Dividend Amount”) or (ii) a number of shares of

Company common stock equal to (A) the Catch-up Dividend Amount, divided by (B) the most recently publicly reported

tangible book value per share of Company common stock immediately preceding the issuance date of such shares of

Company common stock and (y) the amount of any dividends or other distributions payable with respect to such shares

of Company common stock and having a record date prior to the issuance date of such Company common stock and a

payment date on or after the relevant issuance date of such Company common stock. The fair value of the contingent

consideration in connection with the UDF IV Merger was determined using a discounted cash flow model which is based

on Level 3 inputs, including estimates of future cash proceeds generated from the underlying collateral of such loans and

discount rate. Fair value measurements of the contingent consideration liability are sensitive to changes in assumptions

related to future cash proceeds and discount rate.

35

As of September 30, 2026, the CVRs associated with the closing of the UDF IV Merger were valued at approximately

$22.5 million or $1.76 per CVR.

In addition, the fair value of certain contingent consideration in connection with mergers and acquisitions was

determined using a Monte Carlo simulation model which considers various potential results based on Level 3 inputs,

including management’s latest estimates of future operating results. Fair value measurements of the contingent

consideration liability are sensitive to changes in assumptions related to earnings before tax, discount rate and risk-free

rate of return.

The final purchase price allocation associated with the closing of the Mosaic Mergers valued the contingent equity rights

at approximately $25.0 million or $0.83 per contingent equity right. On March 17, 2025, the contingent equity rights

expired with an aggregate consideration of zero.

In certain cases, the inputs used to measure fair value may be categorized into different levels of the fair value hierarchy.

In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant

to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value

measurement in its entirety requires judgment and considers factors specific to the investment.

The table below presents financial instruments carried at fair value on a recurring basis.

(in thousands)	Level 1		Level 2		Level 3		Total
September 30, 2026
Assets:
Money market funds (1)	$32,553		$—		$—		$32,553
Loans, net	—		—		382		382
Loans, held for sale	—		67,123		—		67,123
PPP loans (2)	—		111		—		111
MBS	—		32,143		—		32,143
Derivative instruments	—		3,232		—		3,232
Investment in unconsolidated joint ventures	—		—		5,068		5,068
Preferred equity investment (3)	—		—		62,451		62,451
Receivable from third party (2)	—		—		11,132		11,132
Total assets	$32,553		$102,609		$79,033		$214,195
Liabilities:
Derivative instruments	—		340		—		340
Contingent consideration	—		—		23,008		23,008
Total liabilities	$—		$340		$23,008		$23,348
December 31, 2025
Assets:
Money market funds (1)	$136,496		$—		$—		$136,496
Loans, net	—		—		737		737
Loans, held for sale	—		73,094		—		73,094
PPP loans (2)	—		208		—		208
MBS	—		34,501		—		34,501
Derivative instruments	—		6,740		—		6,740
Investment in unconsolidated joint ventures	—		—		5,737		5,737
Preferred equity investment (3)	—		—		79,887		79,887
Receivable from third party (2)	—		—		12,360		12,360
Total assets	$136,496		$114,543		$98,721		$349,760
Liabilities:
Derivative instruments	—		1,432		—		1,432
Contingent consideration	—		—		18,698		18,698
Total liabilities	$—		$1,432		$18,698		$20,130

(1) Money market funds are included in cash and cash equivalents on the consolidated balance sheets

(2) Asset is included in other assets on the consolidated balance sheets

(3) Preferred equity investment held through consolidated joint ventures is included in assets of consolidated VIEs on the consolidated balance sheets

The table below presents the valuation techniques and significant unobservable inputs used to value Level 3 financial

instruments, using third party information without adjustment.

36

(in thousands)	Fair Value		Predominant Valuation Technique (1)		Type		Range		Weighted Average
September 30, 2026
Assets:
Investment in unconsolidated joint ventures	$5,068		Income Approach		Discount rate		9.0%		9.0%
Preferred equity investment	62,451		Income Approach		Discount rate		12.0%		12.0%
Receivable from third party	11,132		Income Approach		Debt Yield | Capitalization Rate		7.3% | 6.0%		7.3% | 6.0%
Total assets	$78,651
Liabilities:
Contingent consideration- Madison One (2)	$496		Monte Carlo Simulation Model		Net income volatility | Risk- adjusted discount rate		64.0% | 47.3%		64.0% | 47.3%
Contingent consideration - UDF	22,512		Distributable Cash Flow Approach		Discount factor		18.0%		18.0%
Total liabilities	$23,008
December 31, 2025
Assets:
Investment in unconsolidated joint ventures	$5,737		Income Approach		Discount rate		9.0%		9.0%
Preferred equity investment	79,887		Income Approach		Discount rate		12.0%		12.0%
Receivable from third party	12,360		Income Approach		Debt Yield | Capitalization Rate		7.3% | 6.0%		7.3% | 6.0%
Total assets	$97,984
Liabilities:
Contingent consideration- Madison One (2)	$526		Monte Carlo Simulation Model		Net income volatility | Risk- adjusted discount rate		64.0% | 50.8%		64.0% | 50.8%
Contingent consideration - UDF	18,172		Distributable Cash Flow Approach		Discount factor		18%		18%
Total liabilities	$18,698

(1) Prices are weighted based on the UPB of the loans and securities included in the range for each class.

(2) Contingent Consideration- Madison One refers to the contingent consideration in connection with the acquisition of Madison One Capital, M1 CUSO and Madison One

Lender Services (“Madison One”) on June 5, 2024.

Included within Level 3 assets of $79.0 million as of September 30, 2026 and $98.7 million as of December 31, 2025, is

$0.4 million and $0.7 million, respectively, of transaction prices in which quantitative unobservable inputs are not

developed by the Company when measuring fair value.

37

The table below presents a summary of changes in fair value for Level 3 assets and liabilities.

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2026		2025		2026		2025
Assets:
Loans, net
Beginning balance	$388		$1,263		$737		$3,533
Purchases or Originations	—		—		122		—
Sales / Principal payments	(1)		(81)		(477)		(1,070)
Unrealized gains (losses), net	(5)		(94)		—		(1,375)
Ending balance	$382		$1,088		$382		$1,088
Loans, held for sale
Beginning balance	—		—		—		2,750
Unrealized gains (losses), net	—		—		—		10
Transfer to (from) Level 3	—		—		—		(2,760)
Ending balance	$—		$—		$—		$—
Investment in unconsolidated joint ventures
Beginning balance	5,294		6,163		5,737		6,577
Unrealized gains (losses), net	(226)		(211)		(669)		(625)
Ending balance	$5,068		$5,952		$5,068		$5,952
Preferred equity investment (1)
Beginning balance	62,586		88,583		79,887		92,810
Unrealized gains (losses), net	(135)		1,949		(17,436)		(2,278)
Ending balance	$62,451		$90,532		$62,451		$90,532
Receivable from third party
Beginning balance	12,360		—		12,360		—
Unrealized gains (losses), net	$(1,228)		$—		$(1,228)		$—
Ending balance	$11,132		$—		$11,132		$—
Total assets
Beginning balance	80,628		96,009		98,721		105,670
Purchases or Originations	—		—		122		—
Sales / Principal payments	(1)		(81)		(477)		(1,070)
Unrealized gains (losses), net	(1,594)		1,644		(19,333)		(4,268)
Transfer to (from) Level 3	—		—		—		(2,760)
Ending balance	$79,033		$97,572		$79,033		$97,572
Liabilities:
Contingent consideration
Beginning balance	22,265		17,189		18,698		573
Unrealized (gains) losses, net	743		1,196		4,310		2,403
Mergers and acquisitions (2)	—		—		—		15,409
Ending balance	$23,008		$18,385		$23,008		$18,385

(1)Preferred equity investment held through consolidated joint ventures is included in assets of consolidated VIE's on the consolidated balance sheets.

(2)Includes assets acquired and liabilities assumed as a result of the UDF IV Merger in 2025. Refer to Note 5 for further details on assets acquired and liabilities assumed in

connection with the UDF IV Merger.

The Company’s policy is to recognize transfers in and transfers out as of the end of the period of the event or the date of

the change in circumstances that caused the transfer. Transfers between Level 2 and Level 3 generally relate to whether

there were changes in the significant relevant observable and unobservable inputs that are available for the fair value

measurements of such financial instruments.

Financial instruments not carried at fair value

The table below presents the carrying value and estimated fair value of financial instruments that are not carried at fair

value and are classified as Level 3.

38

	September 30, 2026				December 31, 2025
(in thousands)	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Assets:
Loans, net	$3,961,243		$3,785,203		$5,193,640		$5,022,286
Loans, held for sale	45,643		45,643		637,833		637,833
Servicing rights	115,015		130,591		126,279		143,179
Total assets	$4,121,901		$3,961,437		$5,957,752		$5,803,298
Liabilities:
Secured borrowings	1,691,519		1,691,519		2,788,926		2,788,926
Securitized debt obligations of consolidated VIEs, net	607,600		579,608		1,174,785		1,150,551
Senior secured notes, net	598,739		600,218		722,729		711,705
Guaranteed loan financing	911,288		968,824		524,091		550,556
Corporate debt, net	446,097		435,651		652,487		617,477
Total liabilities	$4,255,243		$4,275,820		$5,863,018		$5,819,215

As of both September 30, 2026 and December 31, 2025, other assets and accounts payable and accrued liabilities are not

carried at fair value but generally approximate fair value. Further details are presented in Note 18 – Other Assets and

Other Liabilities.

Note 8. Servicing Rights

The Company performs servicing activities for third parties, which primarily include collecting principal, interest and

other payments from borrowers, remitting the corresponding payments to investors and monitoring delinquencies. The

Company’s servicing fees are specified by pooling and servicing agreements.

The table below presents information about servicing rights at amortized cost.

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2026		2025		2026		2025
SBA
Beginning net carrying amount	$38,817		$39,193		$41,056		$39,227
Additions	1,517		2,534		4,700		9,626
Amortization	(1,756)		(1,623)		(5,227)		(5,203)
Recovery (impairment)	922		339		(1,029)		(3,207)
Ending net carrying amount	$39,500		$40,443		$39,500		$40,443
Multi-family
Beginning net carrying amount	59,027		64,627		61,331		67,996
Additions	1,026		681		4,644		3,367
Amortization	(2,859)		(3,046)		(8,781)		(9,101)
Ending net carrying amount	$57,194		$62,262		$57,194		$62,262
USDA
Beginning net carrying amount	16,993		16,404		20,620		16,465
Additions	20		3,506		1,281		6,615
Amortization	(722)		(732)		(2,331)		(2,064)
Recovery (impairment)	(424)		1,371		(3,703)		(467)
Ending net carrying amount	$15,867		$20,549		$15,867		$20,549
Small business loans
Beginning net carrying amount	2,626		4,059		3,272		4,752
Additions	693		476		1,609		1,600
Amortization	(609)		(728)		(1,892)		(2,279)
Impairment	(256)		(95)		(535)		(361)
Ending net carrying amount	$2,454		$3,712		$2,454		$3,712
Total servicing rights	$115,015		$126,966		$115,015		$126,966

The Company’s servicing rights are carried at amortized cost and evaluated quarterly for impairment. The Company

estimates the fair value of these servicing rights by using a combination of internal models and data provided by third-

party valuation experts. The assumptions used in the Company’s internal models include forward prepayment rates,

forward default rates, discount rates, and servicing expenses.

39

The Company’s models calculate the present value of expected future cash flows utilizing assumptions that it believes

are used by market participants. Forward prepayment rates, forward default rates and discount rates are derived from

historical experiences adjusted for prevailing market conditions. Components of the estimated future cash flows include

servicing fees, late fees, other ancillary fees and cost of servicing.

The table below presents additional information about servicing rights at amortized cost.

	As of September 30, 2026				As of December 31, 2025
(in thousands)	UPB		Carrying Value		UPB		Carrying Value
SBA	$1,862,123		$39,500		$1,916,211		$41,056
Multi-family	5,983,743		57,194		6,318,735		61,331
USDA	587,143		15,867		699,779		20,620
Small business loans	390,558		2,454		419,016		3,272
Total	$8,823,567		$115,015		$9,353,741		$126,279

The table below presents significant assumptions used in the estimated valuation of servicing rights at amortized cost.

	September 30, 2026						December 31, 2025
	Range of input values				Weighted Average		Range of input values				Weighted Average
SBA
Forward prepayment rate	3.0%	-	21.7%		8.9%		6.0%	-	21.6%		9.8%
Forward default rate	0.0%	-	2.7%		1.1%		0.0%	-	3.8%		1.3%
Discount rate	9.1%	-	20.8%		12.2%		7.4%	-	19.0%		11.9%
Servicing expense	0.4%	-	0.4%		0.4%		0.4%	-	0.4%		0.4%
Multi-family
Forward prepayment rate	0.0%	-	7.6%		2.4%		0.0%	-	7.6%		7.3%
Forward default rate	0.0%	-	0.2%		0.1%		0.0%	-	0.2%		0.1%
Discount rate	5.2%	-	5.2%		5.2%		5.2%	-	5.2%		5.2%
Servicing expense	0.0%	-	0.7%		0.1%		0.0%	-	0.8%		0.1%
USDA
Forward prepayment rate	6.8%	-	19.9%		13.9%		5.5%	-	16.9%		12.1%
Discount rate	3.3%	-	4.4%		4.3%		4.9%	-	6.0%		5.8%
Servicing expense	0.1%	-	0.3%		0.2%		0.1%	-	0.3%		0.2%
Small business loans
Discount rate	6.0%	-	6.0%		6.0%		6.0%	-	6.0%		6.0%
Servicing expense	0.5%	-	0.5%		0.5%		0.5%	-	0.5%		0.5%

Assumptions can change between and at each reporting period as market conditions and projected interest rates change.

40

The table below presents the possible impact of 10% and 20% adverse changes to key assumptions on servicing rights.

(in thousands)	September 30, 2026		December 31, 2025
SBA
Forward prepayment rate
Impact of 10% adverse change	$(1,155)		$(1,228)
Impact of 20% adverse change	$(2,239)		$(2,390)
Forward default rate
Impact of 10% adverse change	$(155)		$(199)
Impact of 20% adverse change	$(308)		$(396)
Discount rate
Impact of 10% adverse change	$(1,167)		$(1,356)
Impact of 20% adverse change	$(2,260)		$(2,621)
Servicing expense
Impact of 10% adverse change	$(2,458)		$(2,697)
Impact of 20% adverse change	$(4,916)		$(5,394)
Multi-family
Forward prepayment rate
Impact of 10% adverse change	$(414)		$(470)
Impact of 20% adverse change	$(815)		$(923)
Forward default rate
Impact of 10% adverse change	$(24)		$(28)
Impact of 20% adverse change	$(49)		$(56)
Discount rate
Impact of 10% adverse change	$(1,739)		$(1,852)
Impact of 20% adverse change	$(3,407)		$(3,625)
Servicing expense
Impact of 10% adverse change	$(2,214)		$(2,422)
Impact of 20% adverse change	$(4,429)		$(4,845)
USDA
Forward prepayment rate
Impact of 10% adverse change	$(938)		$(1,066)
Impact of 20% adverse change	$(1,784)		$(2,040)
Discount rate
Impact of 10% adverse change	$(300)		$(526)
Impact of 20% adverse change	$(590)		$(1,027)
Servicing expense
Impact of 10% adverse change	$(634)		$(797)
Impact of 20% adverse change	$(1,268)		$(1,593)
Small business loans
Discount rate
Impact of 10% adverse change	$(5)		$(15)
Impact of 20% adverse change	$(11)		$(29)
Servicing expense
Impact of 10% adverse change	$(279)		$(280)
Impact of 20% adverse change	$(558)		$(560)

The table below presents estimated future amortization expense for servicing rights.

(in thousands)	September 30, 2026
2026	$5,765
2027	20,721
2028	17,257
2029	14,970
2030	13,122
Thereafter	43,180
Total	$115,015

Note 9. Discontinued Operations and Assets and Liabilities Held for Sale

In the fourth quarter of 2023, the Company’s board of directors (the “Board”) approved a plan to strategically shift the

Company’s core focus to LMM commercial real estate lending and small business loans, which contemplates the

disposition of assets and liabilities of the Company’s Residential Mortgage Banking segment. Accordingly, the then

Residential Mortgage Banking segment met the criteria to be classified as held for sale on the consolidated balance

41

sheets, presented as discontinued operations on the consolidated statements of operations, and excluded from continuing

operations for all periods presented. In the second and fourth quarters of 2024, the Company sold $4.7 billion and

$2.9 billion of residential mortgage servicing rights for net proceeds of $61.8 million and $47.4 million, respectively, as

part of the Company’s disposition of its Residential Mortgage Banking segment. In the first quarter of 2025, the

Company sold $4.2 billion of residential mortgage servicing rights for net proceeds of $9.8 million. The Company

completed the disposition of its Residential Mortgage Banking segment effective on June 30, 2025 through the sale of all

of the issued and outstanding equity of GMFS, LLC. The aggregate consideration consists of approximately $3.5 million

paid at closing, as adjusted for closing and other costs related to the disposition and subject to customary post-closing

adjustments, plus certain deferred payments related to the sale of MSRs and an earnout opportunity not to exceed

$5.5 million in the approximately 30 months after closing based on the performance of the sold business.

The table below presents the operating results of the Residential Mortgage Banking segment presented as discontinued

operations.

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2026		2025		2026		2025
Interest income	$—		$—		$—		$4,693
Interest expense	—		—		—		(4,515)
Net interest income	$—		$—		$—		$178
Non-interest income
Residential mortgage banking activities	—		(556)		—		20,399
Net realized gain (loss) on financial instruments	—		—		—		9,832
Net unrealized gain (loss) on financial instruments	—		—		—		(8,952)
Servicing income, net of amortization and impairment	—		—		—		1,776
Other income	—		—		—		8
Total non-interest income	$—		$(556)		$—		$23,063
Non-interest expense
Employee compensation and benefits	—		(38)		—		(6,391)
Variable expenses on residential mortgage banking activities	—		—		—		(13,599)
Professional fees	—		(3)		—		(827)
Loan servicing expense	—		—		—		(3,702)
Other operating expenses	—		(13)		—		(3,483)
Total non-interest expense	$—		$(54)		$—		$(28,002)
Loss from discontinued operations before income tax benefit (provision)	—		(610)		—		(4,761)
Income (loss) from disposal of discontinued operations before income tax benefit (provision)	—		890		—		(2,120)
Net income (loss) from discontinued operations before income tax benefit (provision)	$—		$280		$—		$(6,881)
Income tax benefit (provision)	—		(70)		—		1,720
Net income (loss) from discontinued operations	$—		$210		$—		$(5,161)

Note 10. Secured Borrowings

42

The table below presents certain characteristics of secured borrowings.

						Pledged Assets		Carrying Value at
Lenders (1)	Asset Class	Current Maturity (2)	Pricing (3)	Facility Size		Carrying Value		September 30, 2026		December 31, 2025
2	SBA loans	November 2026 to June 2027	SOFR + 2.50% Prime - 0.82%	$275,000		$225,257		$222,825		$307,522
1	LMM loans - USD	Matured	SOFR + 1.75%	—		—		—		16,425
1	LMM loans - Non-USD (4)	Matured	EURIBOR + 3.00%	—		—		—		29,965
2	USDA loans	June 2027 - August 2028	SOFR + 2.75%	198,500		41,009		24,514		31,204
1	Real estate owned	November 2056	7.81%	140,569		385,532		139,397		—
Total borrowings under credit facilities and other financing agreements				$614,069		$651,798		$386,736		$385,116
5	LMM loans	February 2027 to August 2029	SOFR + 2.74%	3,150,000		1,848,634		1,205,741		2,277,028
3	MBS	October 2026 to February 2027	5.53%	99,042		175,070		99,042		126,782
Total borrowings under repurchase agreements				$3,249,042		$2,023,704		$1,304,783		$2,403,810
Total secured borrowings				$3,863,111		$2,675,502		$1,691,519		$2,788,926

(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 and repurchase agreements have been converted into USD for purposes of this disclosure.

In the table above, the agreements governing secured borrowings require maintenance of certain financial and debt

covenants. As of December 31, 2025, certain financing counterparties' covenant calculations were amended to exclude

the PPPLF from certain covenant calculations. As of both September 30, 2026 and December 31, 2025 the Company

was in compliance with all debt and financial covenants, as amended.

The table below presents the carrying value of collateral pledged with respect to secured borrowings outstanding.

	Pledged Assets Carrying Value
(in thousands)	September 30, 2026		December 31, 2025
Collateral pledged - borrowings under credit facilities and other financing agreements
Loans, held for sale	$16,266		$28,516
Loans, net	250,000		423,151
Real estate owned	385,532		—
Total	$651,798		$451,667
Collateral pledged - borrowings under repurchase agreements
Loans, net	1,730,375		2,284,251
MBS	32,143		34,501
Retained interest in assets of consolidated VIEs	142,927		188,113
Loans, held for sale	25,244		506,883
Real estate acquired in settlement of loans	93,015		546,835
Total	$2,023,704		$3,560,583
Total collateral pledged on secured borrowings	$2,675,502		$4,012,250

Note 11. Senior Secured Notes and Corporate Debt, net

Senior secured notes, net

ReadyCap Holdings II, LLC (“ReadyCap Holdings II”) 10.00% senior secured notes due 2031. On September 28,

2026, ReadyCap Holdings II, LLC, an indirect subsidiary of the Company, completed the offer and sale of

$225.0 million of its 10.00% Senior Secured Notes due 2031 (the “2031 Senior Secured Notes”). The 2031 Senior

Secured Notes are fully and unconditionally guaranteed by the Company, each direct parent entity of ReadyCap

Holdings II, and each other direct or indirect subsidiary of the Company that, from time to time, guarantees the 2031

Senior Secured Notes or otherwise pledges collateral to secure the 2031 Senior Secured Notes (collectively, the “2031

SSN Guarantors”).

43

ReadyCap Holdings II’s and the 2031 SSN Guarantors’ respective obligations under the 2031 Senior Secured Notes are

secured by a perfected first-priority lien on certain capital stock and assets (collectively, the “2031 SSN Collateral”)

owned by certain subsidiaries of the Company.

The 2031 Senior Secured Notes are redeemable by ReadyCap Holdings II prior to September 30, 2030 through the

payment of the outstanding principal balance of the 2031 Senior Secured Notes plus a “make-whole” premium. On or

after September 30, 2030, the 2031 Senior Secured Notes are redeemable by ReadyCap Holdings II at a redemption price

equal to 100% of the outstanding principal amount of the 2031 Senior Secured Notes, plus accrued and unpaid interest

thereon. ReadyCap Holdings II is required to repurchase the 2031 Senior Secured Notes in the event of a change of

control, at a redemption price equal to 100% of the principal balance of the 2031 Senior Secured Notes plus a “make-

whole premium” if such prepayment occurs on or prior to September 30, 2030, and at 102% of the principal balance of

the 2031 Senior Secured Notes if such prepayment occurs after September 30, 2030, as set forth more fully in the note

purchase agreement governing the 2031 Senior Secured Notes.

The 2031 Senior Secured Notes were issued pursuant to a note purchase agreement, which contains certain customary

negative covenants and requirements relating to the collateral and the Company, ReadyCap Holdings II, and the 2031

SSN Guarantors, including maintenance of minimum liquidity, minimum tangible net worth, minimum collateral

coverage, minimum unencumbered cash and assets, maximum debt to net worth ratio, minimum interest coverage ratio,

and limitations on transactions with affiliates.

ReadyCap Holdings, LLC (“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 “2026 Senior Secured Notes”). The 2026 Senior Secured Notes are fully and

unconditionally guaranteed by the Company, each direct parent entity of ReadyCap Holdings, and each other direct or

indirect subsidiary 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 2026 Senior Secured Notes (collectively, the “2026 SSN Guarantors”).

ReadyCap Holdings’ and the 2026 SSN Guarantors’ respective obligations under the 2026 Senior Secured Notes are

secured by a perfected first-priority lien on certain capital stock and assets (collectively, the “2026 SSN Collateral”)

owned by certain subsidiaries of the Company.

The 2026 Senior Secured Notes are redeemable by ReadyCap Holdings following a non-call period, through the

payment of the outstanding principal balance of the 2026 Senior Secured Notes plus a “make-whole” or other premium

that decreases the closer the 2026 Senior Secured Notes are to maturity. ReadyCap Holdings is required to offer to

repurchase the 2026 Senior Secured Notes at 101% of the principal balance of the 2026 Senior Secured Notes in the

event of a change in control and a downgrade of the rating on the 2026 Senior Secured Notes in connection therewith, as

set forth more fully in the note purchase agreement governing the 2026 Senior Secured Notes.

The 2026 Senior Secured Notes were issued pursuant to a note purchase agreement, which contains certain customary

negative covenants and requirements relating to the collateral and the Company, ReadyCap Holdings, and the 2026 SSN

Guarantors, including maintenance of minimum liquidity, minimum tangible net worth, maximum debt to net worth

ratio, and limitations on transactions with affiliates.

On September 28, 2026, ReadyCap Holdings redeemed all of its outstanding 2026 Senior Secured Notes.

ReadyCap Holdings 9.375% senior secured notes due 2028. On February 21, 2025, ReadyCap Holdings completed the

offer and sale of $220.0 million of its 9.375% Senior Secured Notes due 2028 (the “2028 Senior Secured Notes” and,

with the 2031 Senior Secured Notes, collectively, the “Senior Secured Notes”) for net proceeds of $216.7 million before

expenses. The 2028 Senior Secured Notes are fully and unconditionally guaranteed by the Company and each other

direct or indirect subsidiary of the Company that, from time to time, pledges collateral to secure the 2028 Senior Secured

Notes (collectively, the “2028 SSN Guarantors”).

ReadyCap Holdings’ and the 2028 SSN Guarantors’ respective obligations under the 2028 Senior Secured Notes are

secured by a perfected first-priority lien on certain capital stock and assets (collectively, the “2028 SSN Collateral”)

owned by certain subsidiaries of the Company.

44

The 2028 Senior Secured Notes are redeemable by ReadyCap Holdings following a non-call period, through the

payment of the outstanding principal balance of the 2028 Senior Secured Notes plus a “make-whole” or other premium

that decreases the closer the 2028 Senior Secured Notes are to maturity. ReadyCap Holdings is required to offer to

repurchase the 2028 Senior Secured Notes at 101% of the principal balance of the 2028 Senior Secured Notes in the

event of a change in control and a downgrade of the rating on the 2028 Senior Secured Notes in connection therewith, as

set forth more fully in the note purchase agreement governing the 2028 Senior Secured Notes.

The 2028 Senior Secured Notes were issued pursuant to a note purchase agreement, which contains certain customary

negative covenants and requirements relating to the collateral and the Company, ReadyCap Holdings, and the 2028 SSN

Guarantors, including maintenance of minimum tangible net worth, maximum debt to net worth ratio, unencumbered

cash and asset requirements, and limitations on transactions with affiliates.

On April 16, 2025, ReadyCap Holdings issued an additional $50.0 million in aggregate principal amount of its 2028

Senior Secured Notes for net proceeds of $49.3 million before expenses. The additional notes are fungible with and

treated as a single series of debt securities as the Company’s 2028 Senior Secured Notes issued on February 21, 2025.

The Company used the net proceeds from the issuance of the additional notes to repay its indebtedness and for general

corporate purposes.

Ready Term Holdings, LLC (“Ready Term Holdings”) term loan due 2029. On April 12, 2024, Ready Term Holdings,

an indirect subsidiary of the Company, entered into a credit agreement which provides for a delayed draw term loan to

the Company in an aggregate principal amount not to exceed $115.25 million (the “Term Loan”). The Term Loan is fully

and unconditionally guaranteed by the Company and each other direct or indirect subsidiary of the Company that, from

time to time, pledges collateral to secure the Term Loan (collectively, the “Term Loan Guarantors”).

Ready Term Holdings’ and the Term Loan Guarantors’ respective obligations under the Term Loan are secured by a

perfected first-priority lien on certain capital stock and assets (collectively, the “Term Loan Collateral”) owned by

certain subsidiaries of the Company.

The Term Loan matures on April 12, 2029, and may be drawn at any time on or prior to January 12, 2025, subject to the

satisfaction of customary conditions. The Company borrowed $75.0 million in connection with the initial closing of the

Term Loan. On August 19, 2024, the Company borrowed an additional $20.0 million. On January 10, 2025, the

Company borrowed an additional $20.25 million. The Term Loan bears interest on the outstanding principal amount

thereof at a rate equal to (a) SOFR plus 6.50% per annum or (b) base rate plus 5.50% per annum; provided that if at any

time the Term Loan is rated below investment grade, the interest rate shall increase to (x) SOFR plus 7.50% per annum

or (y) base rate plus 6.50% per annum until the rating is no longer below investment grade. In connection with the entry

into the credit agreement, the Company also agreed to pay certain upfront fees on the initial borrowing date. The

Company will also pay, with respect to any unused portion of the Term Loan, a commitment fee of 1.00% per annum.

The Term Loan was issued pursuant to a credit agreement, which contains certain customary representations and

warranties and affirmative and negative covenants and requirements relating to the collateral and the Company, Ready

Term Holdings, and the Term Loan Guarantors, including maintenance of a minimum asset coverage ratio and a

maximum debt to equity ratio.

As of September 30, 2026, the Company was in compliance with all covenants with respect to the Senior Secured Notes

and the Term Loan.

Corporate debt, net

The Company issues 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. The Company often is 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 its existing and

future unsecured and unsubordinated indebtedness; effectively junior in right of payment to any of its existing and future

45

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 merger among the Company, Broadmark Realty Capital Inc. (“Broadmark”), and

Ready Capital Investments, LLC (formerly known as “RCC Merger Sub, LLC”), a wholly owned subsidiary of the

operating partnership (“Ready Capital Investments”), in which Broadmark merged with and into Ready Capital

Investments, with Ready Capital Investments remaining as a wholly owned subsidiary of the operating partnership (the

“Broadmark Merger”), Ready Capital Investments 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.

As of September 30, 2026, the Company was in compliance with all covenants with respect to its Corporate debt.

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, 2026
Senior secured notes principal amount(1)	10.00%		9/30/2031		$225,000
Senior secured notes principal amount(2)	9.375%		3/1/2028		270,000
Term loan principal amount(3)	SOFR + 6.50%		4/12/2029		115,250
Unamortized discount					(2,589)
Unamortized deferred financing costs					(8,922)
Total senior secured notes, net					$598,739
Corporate debt principal amount(4)	5.50%		12/30/2028		85,000
Corporate debt principal amount(5)	7.375%		7/31/2027		100,000
Corporate debt principal amount(6)	5.00%		11/15/2026		100,000
Corporate debt principal amount(7)	9.00%		12/15/2029		129,371
Unamortized discount - corporate debt					(3,742)
Unamortized deferred financing costs - corporate debt					(782)
Junior subordinated notes principal amount(8)	SOFR + 3.10%		3/30/2035		15,000
Junior subordinated notes principal amount(9)	SOFR + 3.10%		4/30/2035		21,250
Total corporate debt, net					$446,097
Total carrying amount of debt					$1,044,836

(1)Interest on the senior secured notes is payable semiannually on March 30 and September 30 of each year.

(2)Interest on the senior secured notes is payable semiannually on March 1 and September 1 of each year.

(3)Interest on the term loan is payable quarterly on January 12, April 12, July 12 and October 12 of each year.

(4)Interest on the corporate debt is payable semiannually on June 30 and December 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 (as defined above).

(7)Interest on the corporate debt is payable quarterly on March 15, June 15, September 15, and December 15 of each year.

(8) Interest on the Junior subordinated notes I-A is payable quarterly on March 30, June 30, September 30, and December 30 of each year.

(9) 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, 2026
2026	$100,000
2027	100,000
2028	355,000
2029	244,621
2030	—
Thereafter	261,250
Total contractual amounts	$1,060,871
Unamortized deferred financing costs, discounts, and premiums, net	(16,035)
Total carrying amount of debt	$1,044,836

Note 12. Guaranteed Loan Financing

46

Participations or other partial loan sales which do not meet the definition of a participating interest remain as an

investment in the consolidated balance sheets and the portion sold is recorded as guaranteed loan financing in the

liabilities section of the consolidated balance sheets. For these partial loan sales, the interest earned on the entire loan

balance is recorded as interest income and the interest earned by the buyer in the partial loan sale is recorded within

interest expense in the accompanying consolidated statements of operations. Guaranteed loan financings are secured by

loans of $911.5 million and $524.3 million as of September 30, 2026 and December 31, 2025, respectively.

The table below presents guaranteed loan financing and the related interest rates and maturity dates.

(in thousands)	Weighted Average Interest Rate		Range of Interest Rates		Range of Maturities (Years)		Ending Balance
September 30, 2026	7.51%		1.45-13.25%		2026-2051		$911,288
December 31, 2025	7.97%		1.45-12.75%		2026-2048		$524,091

The table below presents the contractual maturities of guaranteed loan financing.

(in thousands)	September 30, 2026
2026	$26
2027	1,373
2028	2,714
2029	5,255
2030	8,588
Thereafter	893,332
Total	$911,288

Note 13. Variable Interest Entities and Securitization Activities

In the normal course of business, the Company enters into certain types of transactions with entities that are considered

to be VIEs. The Company’s primary involvement with VIEs has been related to its securitization transactions in which it

transfers assets to securitization vehicles, most notably trusts. The Company primarily securitizes its acquired and

originated loans, which provides a source of funding and has enabled it to transfer a certain portion of economic risk on

loans or related debt securities to third parties. The Company also transfers originated loans to securitization trusts

sponsored by third parties. Third-party securitizations are securitization entities in which it maintains an economic

interest but does not sponsor. The entity that has a controlling financial interest in a VIE is referred to as the primary

beneficiary and is required to consolidate the VIE. The majority of the VIE activity in which the Company is involved in

are consolidated within its financial statements. Refer to Note 3 – Summary of Significant Accounting Policies for a

discussion of accounting policies applied to the consolidation of the VIE and transfer of the loans in connection with the

securitization.

Consolidated VIEs

The Company consolidates variable interests held in an acquired joint venture investment for which it is the primary

beneficiary. The equity held by the remaining owners and their portions of net income (loss) are reflected in

stockholders’ equity on the consolidated balance sheets as Non-controlling interests and in the consolidated statements of

operations as Net income attributable to noncontrolling interests, respectively. Income and expenses on joint venture

investments identified as consolidated VIEs for the three and nine months September 30, 2026 and September 30, 2025,

were not material.

47

The table below presents assets and liabilities of consolidated VIEs.

(in thousands)	September 30, 2026		December 31, 2025
Assets:
Cash and cash equivalents	$5		$3
Restricted cash	3,362		1,944
Loans, net	839,121		1,694,079
Loans, held for sale	—		125,107
Preferred equity investment (1)	62,451		79,887
Receivable from third parties (1)	26,180		8,346
Accrued interest (1)	58,484		54,030
Real estate owned	15,288		15,288
Total assets	$1,004,891		$1,978,684
Liabilities:
Securitized debt obligations of consolidated VIEs, net	607,600		1,174,785
Due to third parties (2)	2,501		2,517
Accounts payable and other accrued liabilities	13		—
Total liabilities	$610,114		$1,177,302

(1)Assets are included in Assets of consolidated VIEs on the consolidated balance sheets.

(2)Due to third parties held through consolidated VIEs are included in Accounts payable and other accrued liabilities on the consolidated balance sheets.

Securitization-related VIEs

Company sponsored securitizations. In a securitization transaction, assets are transferred to a trust, which generally

meets the definition of a VIE. The Company’s primary securitization activity is in the form of LMM and SBL loan

securitizations, conducted through securitization trusts, which are typically consolidated, as the company is the primary

beneficiary.

As a result of the consolidation, the securitization is viewed as a loan financing to enable the creation of the senior

security and ultimately, sale to a third-party investor. As such, the senior security is presented in the consolidated balance

sheets as securitized debt obligations of consolidated VIEs. The third-party beneficial interest holders in the VIE have no

recourse against the Company, with the exception of an obligation to repurchase assets from the VIE in the event that

certain representations and warranties in relation to the loans sold to the VIE are breached. In the absence of such a

breach, the Company has no obligation to provide any other explicit or implicit support to any VIE.

The securitization trust receives principal and interest on the underlying loans and distributes those payments to the

certificate holders. The assets and other instruments held by the securitization trust are restricted in that they can only be

used to fulfill the obligations of the securitization trust. The risks associated with the Company’s involvement with the

VIE is limited to the risks and rights as a certificate holder of the securities retained by the Company.

The consolidation of securitization transactions includes the senior securities issued to third parties which are shown as

securitized debt obligations of consolidated VIEs in the consolidated balance sheets.

48

The table below presents additional information on the Company’s securitized debt obligations.

	September 30, 2026						December 31, 2025
(in thousands)	Current Principal Balance		Carrying Value		Weighted Average Interest Rate		Current Principal Balance		Carrying Value		Weighted Average Interest Rate
ReadyCap Lending Small Business Loan Trust 2019-2	$2,716		$2,716		6.3%		$6,446		$6,446		6.9%
ReadyCap Lending Small Business Loan Trust 2023-3	52,506		49,209		6.8		63,505		62,534		7.4
ReadyCap Lending Small Business Loan Trust 2026-4	136,943		136,943		6.1		—		—		—
Sutherland Commercial Mortgage Trust 2019-SBC8	60,393		59,566		2.9		73,286		72,280		2.9
Sutherland Commercial Mortgage Trust 2021-SBC10	48,592		48,168		2.2		45,769		45,157		1.7
ReadyCap Commercial Mortgage Trust 2018-4	40,103		39,672		4.8		42,907		42,112		4.8
ReadyCap Commercial Mortgage Trust 2019-5	39,702		37,545		5.2		42,233		39,341		5.1
ReadyCap Commercial Mortgage Trust 2019-6	104,928		103,183		3.8		133,104		130,847		3.6
ReadyCap Commercial Mortgage Trust 2022-7	133,514		130,598		4.1		165,203		161,139		4.1
Ready Capital Mortgage Financing 2021-FL7	—		—		—		270,204		270,204		6.3
Ready Capital Mortgage Financing 2023-FL11	—		—		—		136,698		136,698		7.6
Ready Capital Mortgage Financing 2023-FL12	—		—		—		208,060		208,027		7.9
Total	$619,397		$607,600		4.6%		$1,187,415		$1,174,785		5.7%

Repayment of securitized debt will be dependent upon the cash flows generated by the loans in the securitization trust

that collateralize such debt. The actual cash flows from the securitized loans are comprised of coupon interest, scheduled

principal payments, prepayments and liquidations of the underlying loans. The actual term of the securitized debt may

differ significantly from the Company’s estimate given that actual interest collections, mortgage prepayments and/or

losses on liquidation of mortgages may differ significantly from those expected.

Third-party sponsored securitizations. For most third-party sponsored securitizations, the Company determined that it is

not the primary beneficiary because it does not have the power to direct the activities that most significantly impact the

economic performance of these entities. Specifically, the Company does not manage these entities or otherwise solely

hold decision making powers that are significant, which include special servicing decisions. As a result of this

assessment, the Company does not consolidate any of the underlying assets and liabilities of these trusts and only

accounts for its specific interests in them.

Unconsolidated VIEs

The Company does not consolidate variable interests held in an acquired joint venture investment accounted for as an

equity method investment as it does not have the power to direct the activities that most significantly impact their

economic performance and therefore, the Company only accounts for its specific interest in them.

The table below reflects variable interests in identified VIEs for which the Company is not the primary beneficiary.

	Carrying Amount				Maximum Exposure to Loss (1)
(in thousands)	September 30, 2026		December 31, 2025		September 30, 2026		December 31, 2025
MBS (2)	$32,143		$31,161		$32,143		$31,161
Investment in unconsolidated joint ventures	155,086		161,424		155,086		161,424
Total assets in unconsolidated VIEs	$187,229		$192,585		$187,229		$192,585

(1)Maximum exposure to loss is limited to the greater of the fair value or carrying value of the assets as of the consolidated balance sheet date.

(2)Retained interest in other third party sponsored securitizations.

Note 14. Interest Income and Interest Expense

Interest income and expense are recorded in the consolidated statements of operations and classified based on the nature

of the underlying asset or liability.

The table below presents the components of interest income and expense.

49

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2026		2025		2026		2025
Interest income
Loans, net
Bridge	$32,436		$74,076		$85,164		$253,398
Fixed rate	6,499		9,260		20,990		29,444
Construction	5,873		12,349		29,153		35,353
SBA - 7(a)	29,382		27,595		70,071		82,271
PPP (1)	—		146		51		934
Other	3,829		6,376		13,457		18,748
Total loans, net (2)	$78,019		$129,802		$218,886		$420,148
Loans, held for sale
Bridge	—		(73)		5,405		3,457
Fixed rate	—		—		411		26
Construction	—		(1)		—		326
SBA - 7(a)	974		2,461		3,573		6,764
Other	291		622		860		1,112
Total loans, held for sale (2)	$1,265		$3,009		$10,249		$11,685
Loans, held at fair value
Other	16		31		41		107
Total loans, held at fair value	$16		$31		$41		$107
Preferred equity investment (2)	3,324		3,325		9,866		9,916
MBS	1,204		1,324		3,917		3,337
Total interest income	$83,828		$137,491		$242,959		$445,193
Interest expense
Secured borrowings	(33,302)		(64,005)		(123,742)		(159,416)
PPPLF borrowings (3)	—		(10)		(7)		(35)
Securitized debt obligations of consolidated VIEs	(9,413)		(23,450)		(30,763)		(126,284)
Guaranteed loan financing	(16,330)		(11,659)		(34,305)		(37,078)
Senior secured notes	(15,893)		(15,504)		(45,453)		(39,183)
Corporate debt	(8,889)		(12,343)		(29,244)		(41,278)
Total interest expense	$(83,827)		$(126,971)		$(263,514)		$(403,274)
Net interest income (loss) before provision for loan losses	$1		$10,520		$(20,555)		$41,919

(1)Included in Other assets on the consolidated balance sheets.

(2)Includes interest income on assets in consolidated VIEs.

(3)Included in Other liabilities on the consolidated balance sheets.

Note 15. Derivative Instruments

The Company is exposed to changing interest rates and market conditions, which affect cash flows associated with

borrowings. The Company uses derivative instruments to manage interest rate risk and conditions in the commercial

mortgage market and, as such, views them as economic hedges. 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

making payments based on a fixed interest rate over the life of the swap contract.

For derivative instruments where the Company has not elected hedge accounting, fair value adjustments are recorded in

earnings. The fair value adjustments for interest rate swaps, along with the related interest income, interest expense and

gains (losses) on termination of such instruments, are reported as a net realized gain on financial instruments in the

consolidated statements of operations.

As described in Note 3, for qualifying cash flow hedges, the change in the fair value of derivatives is recorded in OCI

and not recognized in the consolidated statements of operations. Derivative movements impacting earnings are

recognized on a consistent basis with the classification of the hedged item, primarily interest expense. The ineffective

portions of the cash flow hedges are immediately recognized in earnings.

50

The table below presents average notional derivative amounts, as this is the most relevant measure of volume, and

derivative assets and liabilities by type. Refer to Note 22 for further details on derivative assets and liabilities by product

type.

		September 30, 2026						December 31, 2025
(in thousands)	Primary Underlying Risk	Notional Amount		Derivative Asset		Derivative Liability		Notional Amount		Derivative Asset		Derivative Liability
Interest Rate Swaps - not designated as hedges	Interest rate risk	$26,300		$3,014		$—		$26,300		$2,085		$—
Interest Rate Swaps - designated as hedges	Interest rate risk	113,693		11,828		—		391,693		17,322		(224)
FX forwards	Foreign exchange rate risk	4,355		550		(340)		20,731		340		(1,208)
Total		$144,348		$15,392		$(340)		$438,724		$19,747		$(1,432)

The table below presents gains and losses on derivatives.

(in thousands)	Net Realized Gain (Loss)		Net Unrealized Gain (Loss)
Three Months Ended September 30, 2026
Interest rate swaps	$695		$366
Total	$695		$366
Three Months Ended September 30, 2025
Interest rate swaps	$2,030		$(199)
FX forwards	(223)		428
Total	$1,807		$229
Nine Months Ended September 30, 2026
Interest rate swaps	$(8,881)		$9,856
Total	$(8,881)		$9,856
Nine Months Ended September 30, 2025
Interest rate swaps	$5,995		$(1,111)
FX forwards	(223)		428
Total	$5,772		$(683)

In the table above:

•Gains (losses) on interest rate swaps and FX forwards are recorded in net unrealized gain (loss) on financial

instruments or net realized gain (loss) on financial instruments in the consolidated statements of operations.

•For qualifying hedges of interest rate risk on interest rate swaps, the effective portion relating to the unrealized

gain (loss) on derivatives are recorded in AOCI.

The table below summarizes the gains and losses on derivatives which have qualified for hedge accounting.

(in thousands)	Derivatives - effective portion reclassified from AOCI to income		Derivatives - effective portion recorded in OCI		Total change in OCI for period
Interest rate swaps
Three Months Ended September 30, 2026	$(199)		$1,585		$1,784
Three Months Ended September 30, 2025	$(233)		$(1,105)		$(872)
Nine Months Ended September 30, 2026	$(623)		$4,618		$5,241
Nine Months Ended September 30, 2025	$(729)		$(8,886)		$(8,157)

In the table above:

•Forecasted transactions on interest rates consists of benchmark interest rate hedges of SOFR indexed floating-

rate liabilities.

•Hedge ineffectiveness is the amount by which the cumulative gain or loss on the designated derivative

instrument exceeds the present value of the cumulative expected change in cash flows on the hedged item

attributable to the hedged risk.

•Amounts recorded in OCI for the period represents after tax amounts.

Note 16. Real Estate Owned

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The table below presents details on the real estate owned portfolio.

(in thousands)	September 30, 2026		December 31, 2025
REO, held for sale:
Mixed use	$7,420		$19,709
Multi-family	82,218		79,141
Lodging	25,030		8,730
Residential	130,085		168,659
Office	4,725		9,686
Retail	6,217		3,880
Land	51,806		70,152
Other	564		187
Total REO, held for sale	$308,065		$360,144
REO, held for use:
Land	21,469		21,469
Building and improvements, net	222,037		225,355
Furniture, fixtures and equipment, net	11,941		13,257
Total REO, held for use	$255,447		$260,081
Total real estate owned	$563,512		$620,225

In the table above:

•Depreciation expense related to REO, held for use was $1.6 million and $4.8 million for the three and nine

months ended September 30, 2026. Depreciation expense related to REO, held for use was $1.1 million for both

the three and nine months ended September 30, 2025. Accumulated depreciation related to REO, held for use

was $7.6 million as of September 30, 2026. There was no such accumulated depreciation related to REO, held

for use as of September 30, 2025.

•Other REO excludes $15.3 million as of both September 30, 2026 and December 31, 2025, of real estate

owned, held for sale within consolidated VIEs.

Note 17. Agreements and Transactions with Related Parties

Management Agreement

The Company has entered into a management agreement with its Manager (the “Management Agreement”), which

describes the services to be provided to the Company by its Manager and compensation for such services. The

Company’s Manager is responsible for managing the Company’s day-to-day operations, subject to the direction and

oversight of the Board.

Management fee. Pursuant to the terms of the Management Agreement, the Manager is paid a management fee

calculated and payable quarterly in arrears equal to 1.5% per annum of the Company’s stockholders’ equity (as defined

in the Management Agreement) up to $500 million and 1.00% per annum of stockholders’ equity in excess of

$500 million.

The table below presents the management fee payable to the Manager.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2026		2025		2026		2025
Management fee - total	$3.7million		$5.2million		$11.6million		$15.8million
Management fee - amount unpaid	$6.1million		$5.2million		$6.1million		$5.2million

Incentive distribution. The Manager is entitled to an incentive distribution in an amount equal to the product of (i) 15%

and (ii) the excess of (a) core earnings as defined in the partnership agreement (IFCE) on a rolling four-quarter basis

over (b) an amount equal to 8.00% per annum multiplied by the weighted average of the issue price per share of the

common stock or OP units multiplied by the weighted average number of shares of common stock outstanding, provided

that IFCE over the prior twelve calendar quarters is greater than zero. For purposes of determining the incentive

distribution payable to the Manager, incentive fee core earnings (“IFCE”) is defined under the partnership agreement of

the operating partnership as GAAP net income (loss) of the Operating Partnership excluding non-cash equity

compensation expense, the expenses incurred in connection with the Operating Partnership's formation or continuation,

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the incentive distribution, real estate depreciation and amortization (to the extent that the Company forecloses on any

properties underlying its assets) and any unrealized gains, losses, or other non-cash items recorded in the period,

regardless of whether such items are included in other comprehensive income or loss, or in net income. The amount will

be adjusted to exclude one-time events pursuant to changes in GAAP and certain other non-cash charges after

discussions between the Manager and the Company’s independent directors and after approval by a majority of the

independent directors.

The table below presents the Incentive fee payable to the Manager.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2026		2025		2026		2025
Incentive fee distribution - total	$—		$—		$—		$—
Incentive fee distribution - amount unpaid	$—		$—		$—		$—

The Management Agreement may be terminated upon the affirmative vote of at least two-thirds of the Company’s

independent directors or the holders of a majority of the outstanding common stock (excluding shares held by employees

and affiliates of the Manager), based upon (1) unsatisfactory performance by the Manager that is materially detrimental

to the Company or (2) a determination that the management fee payable to the Manager is not fair, subject to the

Manager’s right to prevent such a termination based on unfair fees by accepting a mutually acceptable reduction of

management fees agreed to by at least two-thirds of the Company’s independent directors. The Manager must be

provided with written notice of any such termination at least 180 days prior to the expiration of the then existing term.

Additionally, upon such a termination by the Company without cause (or upon termination by the Manager due to the

Company’s material breach), the management agreement provides that the Company will pay the Manager a termination

fee equal to three times the average annual base management fee earned by the Manager during the prior 24 month

period immediately preceding the date of termination, calculated as of the end of the most recently completed fiscal

quarter prior to the date of termination, except upon an internalization. Additionally, if the management agreement is

terminated under circumstances in which the Company is obligated to make a termination payment to the Manager, the

operating partnership shall repurchase, concurrently with such termination, the Class A special unit for an amount equal

to three times the average annual amount of the incentive distribution paid or payable in respect of the Class A special

unit during the 24 month period immediately preceding such termination, calculated as of the end of the most recently

completed fiscal quarter before the date of termination.

The current term of the Management Agreement will expire on October 31, 2027 and is automatically renewed for

successive one-year terms on each anniversary thereafter; provided, however, that either the Company or the Manager

may terminate the Management Agreement annually upon 180 days prior notice. Under certain limited circumstances

described above, the Company and the operating partnership are required to make certain payments to the Manager upon

termination.

Expense reimbursement. In addition to the management fees and incentive distribution described above, the Company is

also responsible for reimbursing the Manager for certain expenses paid by the Manager on behalf of the Company and

for certain services provided by the Manager to the Company. Expenses incurred by the Manager and reimbursed by the

Company are typically included in salaries and benefits or general and administrative expense in the consolidated

statements of operations.

The table below presents reimbursable expenses payable to the Manager.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2026		2025		2026		2025
Reimbursable expenses payable to Manager - total	$4.3million		$4.0million		$13.1million		$12.9million
Reimbursable expenses payable to Manager - amount unpaid	$11.5million		$7.7million		$11.5million		$7.7million

Co-Investment with Manager

On July 15, 2022, the Company closed on a $125.0 million commitment to invest into a parallel vehicle, Waterfall Atlas

Anchor Feeder, LLC (the “Fund”), a fund managed by the Manager, in exchange for interests in the Fund. In exchange

for the Company’s commitment, the Company is entitled to 15% of any carried interest distributions received by the

general partner of the Fund such that over the life of the Fund, the Company receives an internal rate of return of 1.5%

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over the internal rate of return of the Fund. The Fund focuses on commercial real estate equity through the acquisition of

distressed and value-add real estate across property types with local operating partners. As of September 30, 2026, the

Company has contributed $95.8 million of cash into the Fund for a remaining commitment of $29.2 million.

Loan Referrals with Clients of the Manager

As of September 30, 2026 the Company sourced five loan opportunities that were referred to and funded by clients of the

Manager. These opportunities were for loans with a total UPB of approximately $266.5 million, of which $23.5 million

was the refinance of one of the Company’s existing loans.

The Company received a fee of 0.6% of UPB in exchange for these referrals.

Participation in Senior Secured Notes Offering

On September 28, 2026, in connection with the offering of the 2031 Senior Secured Notes described in Note 11,

investment vehicles managed by the Manager purchased $10.0 million in aggregate principal amount of the 2031 Senior

Secured Notes at a purchase price of 99.50% of the principal amount thereof (the “Waterfall Participation”), on the same

terms and conditions as the unaffiliated purchasers in the offering. The 2031 Senior Secured Notes bear interest at

10.00% per annum, subject to adjustment based on changes in the ratings of the notes, payable semiannually on March

30 and September 30 of each year, and mature on September 30, 2031. Thomas E. Capasse, the Company’s Chairman of

the Board, Chief Executive Officer and Chief Investment Officer, and Jack J. Ross, a director of the Company, are

principals of the Manager and, accordingly, may be deemed to have an indirect interest in the Waterfall Participation.

Because the Manager is a related party, the Waterfall Participation was reviewed and approved in advance in accordance

with the Company’s Related Party Transaction Policies and Procedures by a special committee of the Board consisting

solely of the Company’s independent directors, with Messrs. Capasse and Ross recused, and the final amount of the

Waterfall Participation was approved by the pricing committee of the Board, which consisted solely of directors who

were disinterested with respect to the Waterfall Participation. As of September 30, 2026, $10.0 million in aggregate

principal amount of the 2031 Senior Secured Notes was held by vehicles managed by the Manager.

Investment Rebalancing

The Company and certain other accounts managed by the Manager hold interests in an investment vehicle named

Powerscourt Investments 76, LP (“PI76”).

In August 2026, in connection with a financing transaction, certain PI76 investors, including accounts managed by the

Manager, contributed commercial real estate-related assets with an aggregate fair value of approximately $11.5 million

to PI76 in exchange for additional interests in PI76. The Company did not contribute any assets. As a result, the

Company’s percentage ownership of PI76’s interests decreased, but the fair value of its interests increased. The net effect

did not change the value of the Company’s investment in PI76 as of the effective date.

The transaction was reviewed and approved by the Company’s independent directors in accordance with the Company’s

Related Party Transaction Policies and Procedures.

Note 18. Other Assets and Other Liabilities

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The table below presents the composition of other assets and other liabilities.

(in thousands)	September 30, 2026		December 31, 2025
Other assets:
Goodwill	$49,501		$49,501
Deferred loan exit fees	4,487		19,179
Accrued interest	26,972		42,143
Due from servicers	20,378		71,999
Intangible assets	35,843		38,172
Receivable from third party	48,375		43,968
Deferred financing costs	11,846		12,489
Deferred tax asset	201,573		201,573
Tax receivable	31,321		719
Right-of-use lease asset	2,856		3,368
PPP receivables	3,779		8,783
Other	29,352		16,344
Other assets	$466,283		$508,238
Accounts payable and other accrued liabilities:
Accrued salaries, wages and commissions	31,331		35,691
Accrued interest payable	28,341		40,306
Servicing principal and interest payable	16,700		19,388
Repair and denial reserve	14,662		12,328
Payable to related parties	3,974		9,720
PPP liabilities	—		8,592
Accrued professional fees	308		2,697
Lease payable	7,588		8,565
Liabilities of consolidated VIEs	2,514		2,517
Other	47,225		31,832
Total accounts payable and other accrued liabilities	$152,643		$171,636

Goodwill

The table below presents the carrying value of goodwill by reportable segment.

(in thousands)	September 30, 2026		December 31, 2025
LMM Commercial Real Estate	$27,324		$27,324
Small Business Lending	22,177		22,177
Total	$49,501		$49,501

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Intangible assets

The table below presents information on intangible assets.

(in thousands)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Value
September 30, 2026
Amortized intangible assets:
Internally developed software	$29,314		$14,798		$14,516
Customer relationships	10,299		2,832		7,467
Broker network	9,000		2,250		6,750
Trade name	2,500		625		1,875
Above market leases	1,958		239		1,719
Other	3,536		1,282		2,254
Unamortized intangible assets:
Trademark	262		—		262
SBA license	1,000		—		1,000
Total intangible assets	$57,869		$22,026		$35,843
Amortized intangible liabilities:
Below market leases	$(418)		$(36)		$(382)
Total intangible liabilities	$(418)		$(36)		$(382)
December 31, 2025
Amortized intangible assets:
Internally developed software	$26,120		$11,520		$14,600
Customer relationships	10,299		2,236		8,063
Broker network	9,000		1,500		7,500
Above market leases	1,958		89		1,869
Other	3,536		1,158		2,378
Unamortized intangible assets:
Trade name	2,500		—		2,500
Trademark	262		—		262
SBA license	1,000		—		1,000
Total intangible assets	$54,675		$16,503		$38,172
Amortized intangible liabilities:
Below market leases	$(418)		$(14)		$(404)
Total intangible liabilities	$(418)		$(14)		$(404)

The amortization expense related to intangible assets was $1.8 million and $5.4 million for the three and nine months

ended September 30, 2026 and $1.8 million and $5.1 million for the three and nine months ended September 30, 2025,

respectively. Such amounts are recorded as other operating expenses in the consolidated statements of operations.

The table below presents amortization expense related to finite-lived intangible assets for the subsequent five years.

(in thousands)	September 30, 2026
2026	$1,850
2027	7,282
2028	6,256
2029	4,053
2030	2,630
Thereafter	12,128
Total	$34,199

Note 19. Other Income and Operating Expenses

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The table below presents the composition of other income and operating expenses.

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2026		2025		2026		2025
Other income:
Origination income	$7,557		$6,944		$19,851		$23,486
Hotel income	11,938		5,885		30,471		5,885
Change in repair and denial reserve	(869)		(488)		(3,541)		(1,822)
Loss on deconsolidation of trust	—		—		(2,840)		—
Other	2,512		2,432		9,476		10,118
Total other income	$21,138		$14,773		$53,417		$37,667
Other operating expenses:
Origination costs	3,488		4,438		9,853		16,465
Hotel expense	10,701		5,735		28,139		5,735
Technology expense	3,305		3,405		11,207		9,197
Rent and property tax expense	2,514		2,827		8,306		6,518
Depreciation and amortization expense	3,473		2,973		10,395		6,339
Recruiting, training and travel expense	442		462		2,238		1,907
Marketing expense	702		357		1,805		1,060
Other	5,336		4,682		20,300		9,914
Total other operating expenses	$29,961		$24,879		$92,243		$57,135

Note 20. Redeemable Preferred Stock and Stockholders’ Equity

Common stock dividends

The table below presents dividends declared by the Board on common stock during the last twelve months.

Declaration Date		Record Date		Payment Date		Dividend per Share
December 15, 2025		December 31, 2025		January 30, 2026		$0.010
March 13, 2026		March 31, 2026		April 30, 2026		$0.010
June 15, 2026		June 30, 2026		July 31, 2026		$0.010
September 15, 2026		September 30, 2026		October 30, 2026		$0.010

Stock incentive plans

The Company currently maintains the Amended and Restated Ready Capital Corporation 2023 Equity Incentive Plan

(the “2023 Equity Incentive Plan”) which authorizes the Compensation Committee of the Board to approve grants of

equity-based awards to the Company’s directors, officers, advisors, consultants, key employees, and others expected to

provide significant services to the Company and its subsidiaries, including the Manager and personnel, employees,

officers and directors of certain participating companies. On July 17, 2026, the Company’s stockholders approved the

2023 Equity Incentive Plan which provided for grants of equity-based awards up to 20.5 million shares of the

Company’s common stock. The Company currently settles stock-based incentive awards with newly issued shares. The

fair value of the RSUs and RSAs granted, which is generally determined based upon the stock price on the grant date, is

recorded as compensation expense on a straight-line basis over the vesting periods for the awards, with an offsetting

increase in stockholders’ equity.

In 2026, 2025, and 2024, the Company granted 2,185,687, 1,210,374, and 774,097, respectively, of time-based RSAs

under the 2023 Equity Incentive Plan to certain key employees. These awards generally vest ratably in equal annual

installments over a three-year period based solely on continued employment or service. In 2026, the Company also

granted 2,550,000 time-based RSUs (the “Employee RSUs”) under the 2023 Equity Incentive Plan to certain key

employees at a grant date fair value of $1.85 per Employee RSU. The Employee RSUs will vest, in full, on December

31, 2028, based solely upon continued employment or service. The Company also granted in 2026, 2025 and 2024

291,260, 89,285, and 126,930, respectively, time-based RSAs and RSUs to non-employee directors of the Company,

which vest ratably in equal installments quarterly over a one-year period. Directors may elect to receive time-based

RSAs or time-based RSUs that have a deferred settlement date of their choosing. Dividends or dividend equivalents are

currently paid on all time-based RSAs and Employee RSUs, and dividend equivalents are paid on deferred RSU awards

during their deferral period.

57

The table below summarizes RSU and RSA activity, excluding Employee RSUs and performance-based equity awards.

See above and below for further details on Employee RSUs and performance-based equity awards, respectively.

	Restricted Stock Units/Awards
(in thousands, except share data)	Number of shares		Grant date fair value		Weighted-average grant date fair value (per share)
Outstanding, December 31, 2025	1,553,572		$11,940		$7.69
Granted	2,476,947		5,103		2.06
Vested	(605,926)		(4,614)		7.61
Forfeited	(16,628)		(75)		4.51
Outstanding, March 31, 2026	3,407,965		$12,354		$3.63
Vested	(214,448)		(1,269)		5.92
Forfeited	(78,636)		(282)		3.59
Outstanding, June 30, 2026	3,114,881		$10,803		$3.47
Vested	(77,669)		(160)		2.06
Forfeited	(39,397)		(191)		4.85
Outstanding, September 30, 2026	2,997,815		$10,452		$3.49

The Company recognized $1.7 million and $5.8 million for the three and nine months ended September 30, 2026,

respectively and $1.6 million and $5.0 million for the three and nine months ended September 30, 2025, respectively, of

non-cash compensation expense related to its stock-based incentive plan in the consolidated statements of operations. As

of September 30, 2026 and December 31, 2025, approximately $10.5 million and $11.9 million, respectively, of non-

cash compensation expense related to unvested awards had not yet been charged to net income. These costs are expected

to be amortized into compensation expense ratably over the course of the remaining vesting periods.

Performance-based equity awards under the 2023 Equity Incentive Plan

2026 performance-based RSUs. In March of 2026, the Company granted, to certain key employees, 7,650,000

performance-based RSUs at a grant date fair value of $0.25 per performance-based RSU, based on an option pricing

model. These performance-based RSUs were designed based on total stockholder return, and will vest if the Company’s

common stock equals or exceeds certain milestones during the performance period commencing on March 1, 2026 and

ending December 31, 2028. The performance-based RSUs may vest in up to ten, approximately equal parts, provided

that the 30-day volume weighted average price of the Company’s common stock equals or exceeds ten, approximately

equally spaced milestones between specified points, and further conditioned upon the key employee’s continued

employment (with certain exceptions) with the Company or our Manager, as applicable. The actual number of shares that

the key employees receive at the end of the performance period may range from 0% to 100% of the total award. The fair

value of the performance-based RSUs is recorded as compensation expense over the performance period and will cliff

vest at the end of the three-year performance period, with an offsetting increase in stockholders’ equity. Dividend

equivalents are accrued by the Company during the performance period and paid to the holder if and when the

performance-based RSUs vest.

2025 performance-based RSUs. In February 2025, the Company granted, to certain key employees, 238,096

performance-based RSUs at a grant date fair value of $6.72 per performance-based RSU. The performance-based RSUs

are allocated 50% to awards that may be earned based on achievement of performance goals related to distributable

return on equity (“ROE”) for the three-year forward-looking period ending December 31, 2027 and 50% to awards that

may be earned based on achievement of performance goals related to relative TSR for such three-year forward-looking

performance period relative to the performance of a designated peer group. Subject to the distributable ROE metric and

relative TSR achieved during the performance period, the actual number of shares that the key employees receive at the

end of the performance period may range from 0% to 200% of the target award. The fair value of the performance-based

RSUs is recorded as compensation expense over the performance period and will cliff vest at the end of the three-year

performance period, with an offsetting increase in stockholders’ equity. Dividend equivalents are accrued by the

Company during the performance period and paid to the holder if and when the performance-based RSUs vest. In

connection with a previously announced mutual separation of a former officer and the Company (the “Separation”) on

February 26, 2026 (the “Separation Date”), the former officer was entitled to the accelerated vesting, as of the Separation

Date, of 89,286 performance-based RSUs (at target) that he held as of the Separation Date.

2024 performance-based RSUs. In February 2024, the Company granted, to certain key employees, 132,450

performance-based RSUs at a grant date fair value of $9.06 per performance-based RSU. The performance-based RSUs

are allocated 50% to awards that may be earned based on achievement of performance goals related to distributable ROE

58

for the three-year forward-looking period ending December 31, 2026 and 50% to awards that may be earned based on

achievement of performance goals related to relative TSR for such three-year forward-looking performance period

relative to the performance of a designated peer group. Subject to the distributable ROE metric and relative TSR

achieved during the performance period, the actual number of shares that the key employees receive at the end of the

performance period may range from 0% to 200% of the target award. The fair value of the performance-based RSUs is

recorded as compensation expense over the performance period and will cliff vest at the end of the three-year

performance period, with an offsetting increase in stockholders’ equity. Dividend equivalents are accrued by the

Company during the performance period and paid to the holder if and when the performance-based RSUs vest. In

connection with the Separation, the former officer was entitled to the accelerated vesting, as of the Separation Date, of

44,150 performance-based RSUs (at target) that he held as of the Separation Date.

Performance-based equity awards under the 2013 Equity Incentive Plan

2023 performance-based RSUs. In June 2023, the Company granted, to certain key employees, 222,552 performance-

based RSUs at a grant date fair value of $10.11 per performance-based RSU, which could have been earned based on the

achievement of performance goals by the end of 2024 in relation to the Broadmark Merger. The awards were allocated

30% to awards that may be earned based on cost savings in 2024 as a percentage of the pre-merger Broadmark expense

run rate, 15% to awards that could have been earned based on the volume of Broadmark product originated from the

time of the merger through the end of 2024, 30% to awards that could have been earned based on the generation of

incremental liquidity from asset level financing, portfolio run-off, sales or corporate re-levering through the end of 2024,

and 25% to awards that could have been earned based on distributable ROE for 2024. Subject to the level of

achievement of these goals during the performance period, the actual number of shares that the key employees could

have received ranged from 0% to 200% of the target award. The fair value of the performance-based RSUs granted was

recorded as compensation expense over the performance period and vested 2/3rds on December 31, 2024, and 1/3rd on

December 31, 2025, with an offsetting increase in stockholders’ equity. Awards earned on December 31, 2024 based on

achievement of the applicable performance metrics but vesting on December 31, 2025 were converted into RSAs that

were eligible to vest on December 31, 2025 based on the key employee’s continued employment or service through that

date. Dividend equivalents were accrued by the Company during the performance period and paid to the holder if and

when the performance-based RSUs vested. Following the conclusion of the performance period on December 31, 2024,

the Board determined that the cost savings, product origination volumes and incremental liquidity generation goals were

achieved at maximum payout and the distributable ROE goal was not achieved. As such, on February 3, 2025, the Board

approved the settlement of 333,828 performance-based RSUs. The fair value of the performance-based RSUs granted

was recorded as compensation expense over the performance period with an offsetting increase in stockholders’ equity.

In February 2023, the Company granted, to certain key employees, 92,451 performance-based RSUs at a grant date fair

value of $12.98 per performance-based RSU. The performance-based RSUs were allocated 50% to awards that could

have been earned based on achievement of performance goals related to distributable ROE for the three-year forward-

looking period ending December 31, 2025 and 50% to awards that could have been earned based on achievement of

performance goals related to relative TSR for such three-year forward-looking performance period relative to the

performance of a designated peer group. Subject to the distributable ROE metric and relative TSR achieved during the

performance period, the actual number of shares that the key employees received at the end of the performance period

could have ranged from 0% to 200% of the target award. The fair value of the performance-based RSUs was recorded as

compensation expense over the performance period and vested at the end of the three-year performance period, with an

offsetting increase in stockholders’ equity. Dividend equivalents were accrued by the Company during the performance

period and paid to the holder if and when the performance-based RSUs vested. Following the conclusion of the

performance period on December 31, 2025, the Board determined that the distributable ROE and relative TSR goals

were not achieved and were therefore forfeited.

2022 performance-based RSUs. In February 2022, the Company granted, to certain key employees, 84,566

performance-based RSUs at a grant date fair value of $14.19 per performance-based RSU. During April 2024, 8,809

performance-based RSUs were forfeited. The performance-based RSUs were allocated 50% to awards that could have

been earned based on achievement of performance goals related to distributable ROE for the three-year forward-looking

period ending December 31, 2024 and 50% to awards that could have been earned based on achievement of performance

goals related to relative TSR for such three-year forward-looking performance period relative to the performance of a

designated peer group. Subject to the distributable ROE metric and relative TSR achieved during the vesting period, the

actual number of shares that the key employees received at the end of the performance period could have ranged from

0% to 200% of the target award. The fair value of the performance-based RSUs was recorded as compensation expense

over the performance period and vested at the end of a three-year performance period, with an offsetting increase in

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stockholders’ equity. Dividend equivalents were accrued by the Company during the performance period and paid to the

holder if and when the performance-based RSUs vested. Following the conclusion of the performance period on

December 31, 2024, the Board determined that the distributable ROE threshold goal was achieved and the relative TSR

threshold goal was achieved. As such, on February 22, 2025, the Board approved the settlement of 57,029 performance-

based RSUs. The fair value of the performance-based RSUs granted was recorded as compensation expense over the

performance period with an offsetting increase in stockholders’ equity.

Preferred Stock

In the event of a liquidation or dissolution of the Company, any outstanding preferred stock ranks senior to the

outstanding common stock with respect to payment of dividends and the distribution of assets.

The Company classifies Series C Cumulative Convertible Preferred Stock, or Series C Preferred Stock, on the balance

sheets using the guidance in ASC 480‑10‑S99. The Series C Preferred Stock contains certain fundamental change

provisions that allow the holder to redeem the preferred stock for cash only if certain events occur, such as a change in

control. As of September 30, 2026, the conversion rate was 1.8391 shares of common stock per share of the Series C

Preferred Stock, based on a liquidation preference of $25.00 per share, which is equivalent to a conversion price of

approximately $13.59 per share of common stock. As redemption under these circumstances is not solely within the

Company’s control, the Series C Preferred Stock has been classified as temporary equity. The Company has analyzed

whether the conversion features should be bifurcated under the guidance in ASC 815 and has determined that bifurcation

is not necessary.

The table below presents details on preferred equity by series.

					Preferential Cash Dividends						Carrying Value (in thousands)
Series	Shares Issued and Outstanding (in thousands)		Par Value		Liquidation Preference		Rate per Annum		Annual Dividend (per share)		September 30, 2026
C	335		0.0001		$25.00		6.25%		$1.56		$8,361
E	4,600		0.0001		$25.00		6.50%		$1.63		$111,378

In the table above,

•Shareholders are entitled to receive dividends, when and as authorized by the Board, out of funds legally

available for the payment of dividends. Dividends for Series C Preferred Stock are payable quarterly on the

15th day of January, April, July and October of each year or if not a business day, the next succeeding business

day. Dividends for Series E preferred stock are payable quarterly on or about the last day of each January,

April, July and October of each year. Any dividend payable on the preferred stock for any partial dividend

period will be computed on the basis of a 360-day year consisting of twelve 30-day months. Dividends will be

payable in arrears to holders of record as they appear on the Company’s records at the close of business on the

last day of each of March, June, September and December, as the case may be, immediately preceding the

applicable dividend payment date.

•The Company declared dividends of $0.1 million and $1.9 million on its Series C Preferred Stock and Series E

Preferred Stock, respectively, during the three months ended September 30, 2026. The dividends were paid on

October 15, 2026 for Series C Preferred Stock and on October 30, 2026 for Series E Preferred Stock to the

holders of record as of the close of business on September 30, 2026.

•The Company may, at its option, redeem the Series E Preferred Stock, in whole or in part, at any time and from

time to time, for cash at a redemption price equal to 100% of the liquidation preference of $25.00 per share,

plus accrued and unpaid dividends, if any, to the redemption date.

Equity ATM Program

On July 9, 2021, the Company, the operating partnership and the Manager entered into an Equity Distribution

Agreement, as amended on March 8, 2022 (the “Equity Distribution Agreement”), with JMP Securities LLC (the “Sales

Agent”), pursuant to which the Company may sell, from time to time, shares of the Company’s common stock, par value

$0.0001 per share, having an aggregate offering price of up to $150 million, through the Sales Agent either as agent or

principal (the “Equity ATM Program”). The Company made no such sales through the Equity ATM Program during the

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three and nine months ended September 30, 2026 or September 30, 2025. As of September 30, 2026, shares representing

approximately $78.4 million remain available for sale under the Equity ATM Program.

Note 21. Earnings per Share of Common Stock

The table below provides information on the basic and diluted EPS computations, including the number of shares of

common stock used for purposes of these computations.

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except for share and per share amounts)	2026		2025		2026		2025
Basic Earnings
Net income (loss) from continuing operations	$(62,192)		$(16,947)		$(361,962)		$16,712
Less: Income attributable to non-controlling interest	1,957		2,008		5,447		6,282
Less: Income attributable to participating shares	2,054		2,210		6,168		6,652
Basic earnings - continuing operations	$(66,203)		$(21,165)		$(373,577)		$3,778
Basic earnings - discontinued operations	$—		$210		$—		$(5,161)
Diluted Earnings
Net income (loss) from continuing operations	(62,192)		(16,947)		(361,962)		16,712
Less: Income attributable to non-controlling interest	1,957		2,008		5,447		6,282
Less: Income attributable to participating shares	2,054		2,210		6,168		6,652
Add: Expenses attributable to dilutive instruments	131		131		393		393
Diluted earnings - continuing operations	$(66,072)		$(21,034)		$(373,184)		$4,171
Diluted earnings - discontinued operations	$—		$210		$—		$(5,161)
Number of Shares
Basic — Average shares outstanding	165,101,912		163,574,703		164,614,035		165,491,135
Effect of dilutive securities — Unvested participating shares	8,199,221		2,299,104		7,650,058		2,299,105
Diluted — Average shares outstanding	173,301,133		165,873,807		172,264,093		167,790,240
EPS Attributable to RC Common Stockholders:
Basic - continuing operations	$(0.40)		$(0.13)		$(2.27)		$0.02
Basic - discontinued operations	$0.00		$0.00		$0.00		$(0.03)
Basic - total	$(0.40)		$(0.13)		$(2.27)		$(0.01)
Diluted - continuing operations	$(0.40)		$(0.13)		$(2.27)		$0.02
Diluted - discontinued operations	$0.00		$0.00		$0.00		$(0.03)
Diluted - total	$(0.40)		$(0.13)		$(2.27)		$(0.01)

In the table above, participating unvested RSAs and unvested RSUs, granted to non-employee directors of the Company,

were excluded from the computation of diluted shares as their effect was already considered under the more dilutive two-

class method used above.

Certain investors own OP units in the operating partnership. An OP unit and a share of common stock of the Company

have substantially the same economic characteristics in as much as they effectively share equally in the net income or

loss of the operating partnership. OP unit holders have the right to redeem their OP units, subject to certain restrictions.

The redemption is required to be satisfied in shares of common stock or cash at the Company’s option, calculated as

follows: one share of the Company’s common stock, or cash equal to the fair value of a share of the Company’s common

stock at the time of redemption, for each OP unit. When an OP unit holder redeems an OP unit, non-controlling interests

in the operating partnership is reduced and the Company’s equity is increased. As of both September 30, 2026 and

December 31, 2025, the non-controlling interest OP unit holders owned 320,005 OP units.

Note 22. Offsetting Assets and Liabilities

In order to better define its contractual rights and to secure rights that will help the Company mitigate its counterparty

risk, the Company may enter into an International Swaps and Derivatives Association (“ISDA”) Master Agreement with

multiple derivative counterparties. An ISDA Master Agreement, published by ISDA, is a bilateral trading agreement

between two parties that allow both parties to enter into over-the-counter (“OTC”), derivative contracts. The ISDA

Master Agreement contains a Schedule to the Master Agreement and a Credit Support Annex, which governs the

maintenance, reporting, collateral management and default process (netting provisions in the event of a default and/or a

termination event). Under an ISDA Master Agreement, the Company may, under certain circumstances, offset with the

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counterparty certain derivative financial instruments’ payables and/or receivables with collateral held and/or posted and

create one single net payment. The provisions of the ISDA Master Agreement typically permit a single net payment in

the event of default, including the bankruptcy or insolvency of the counterparty. However, bankruptcy or insolvency

laws of a particular jurisdiction may impose restrictions on or prohibitions against the right of offset in bankruptcy,

insolvency or other events. In addition, certain ISDA Master Agreements allow counterparties to terminate derivative

contracts prior to maturity in the event the Company’s stockholders’ equity declines by a stated percentage or the

Company fails to meet the terms of its ISDA Master Agreements, which would cause the Company to accelerate

payment of any net liability owed to the counterparty. As of September 30, 2026 and December 31, 2025, the Company

was in good standing on all of its ISDA Master Agreements or similar arrangements with its counterparties.

For derivatives traded under an ISDA Master Agreement, the collateral requirements are listed under the Credit Support

Annex, which is the sum of the mark to market for each derivative contract, the independent amount due to the

derivative counterparty and any thresholds, if any. Collateral may be in the form of cash or any eligible securities, as

defined in the respective ISDA agreements. Cash collateral pledged to and by the Company with the counterparty, if any,

is reported separately in the consolidated balance sheets as restricted cash. All margin call amounts must be made before

the notification time and must exceed a minimum transfer amount threshold before a transfer is required. All margin

calls must be responded to and completed by the close of business on the same day of the margin call, unless otherwise

specified. Any margin calls after the notification time must be completed by the next business day. Typically, the

Company and its counterparties are not permitted to sell, rehypothecate or use the collateral posted. To the extent

amounts due to the Company from its counterparties are not fully collateralized, the Company bears exposure and the

risk of loss from a defaulting counterparty. The Company attempts to mitigate counterparty risk by establishing ISDA

agreements with only high-grade counterparties that have the financial health to honor their obligations and

diversification by entering into agreements with multiple counterparties.

The Company discloses the impact of offsetting of assets and liabilities represented in the consolidated balance sheets to

enable users of the consolidated financial statements to evaluate the effect or potential effect of netting arrangements on

its financial position for recognized assets and liabilities. These recognized assets and liabilities are financial instruments

and derivative instruments that are either subject to enforceable master netting arrangements or ISDA Master

Agreements or meet the following right of setoff criteria: (a) the amounts owed by the Company to another party are

determinable, (b) the Company has the right to set off the amounts owed with the amounts owed by the counterparty, (c)

the Company intends to offset, and (d) the Company’s right of offset is enforceable at law. As of September 30, 2026

and December 31, 2025, the Company has elected to offset assets and liabilities associated with its OTC derivative

contracts in the consolidated balances sheets.

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The table below presents the gross fair value of derivative contracts by product type, Paycheck Protection Program

Liquidity Facility borrowings and secured borrowings, the amount of netting reflected in the consolidated balance sheets,

as well as the amount not offset in the consolidated balance sheets as they do not meet the enforceable credit support

criteria for netting under U.S. GAAP.

							Gross amounts not offset in the Consolidated Balance Sheets(1)
(in thousands)	Gross amounts of Assets / Liabilities		Gross amounts offset		Balance in Consolidated Balance Sheets		Financial Instruments		Cash Collateral Received / Paid		Net Amount
September 30, 2026
Assets
FX forwards	$550		$—		$550		$—		$—		$550
Interest rate swaps	14,842		12,160		2,682		—		—		2,682
Total	$15,392		$12,160		$3,232		$—		$—		$3,232
Liabilities
FX forwards	340		—		340		—		—		340
Secured borrowings	1,691,519		—		1,691,519		1,691,519		—		—
Total	$1,691,859		$—		$1,691,859		$1,691,519		$—		$340
December 31, 2025
Assets
FX forwards	340		—		340		—		—		340
Interest rate swaps	19,407		13,007		6,400		—		—		6,400
Total	$19,747		$13,007		$6,740		$—		$—		$6,740
Liabilities
FX forwards	1,208		—		1,208		—		—		1,208
Interest rate swaps	224		—		224		—		—		224
Secured borrowings	2,788,926		—		2,788,926		2,788,926		—		—
PPPLF	8,592		—		8,592		8,592		—		—
Total	$2,798,950		$—		$2,798,950		$2,797,518		$—		$1,432

(1)Amounts presented in these columns are limited in total to the net amount of assets or liabilities presented in the prior column by instrument. In certain cases, there is

excess cash collateral or financial assets the Company has pledged to a counterparty that exceed the financial liabilities subject to a master netting repurchase

arrangement or similar agreement. Additionally, in certain cases, counterparties may have pledged excess cash collateral to the Company that exceeds the Company’s

corresponding financial assets. In each case, any of these excess amounts are excluded from the table although they are separately reported in the Company’s

consolidated balance sheets as assets or liabilities, respectively.

Note 23. Financial Instruments with Off-Balance Sheet Risk, Credit Risk, and Certain Other Risks

In the normal course of business, the Company enters into transactions that expose us to various types of risk, both on

and off-balance sheet. Such risks are associated with financial instruments and markets in which the Company invests.

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.

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. The Company attempts to mitigate its exposure to market risk by entering into offsetting

transactions, which may include purchase or sale of interest-bearing securities and equity securities.

Credit Risk — The Company is subject to credit risk in connection with its investments in LMM loans and LMM MBS

and other target assets it 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. The Company believes that loan credit quality is primarily determined by the

borrowers' credit profiles and loan characteristics and seeks 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 its historical investment strategy, with a focus on projected cash flows and potential risks

to cash flow. The Company further mitigates its risk of potential losses while managing and servicing loans by

performing various workout and loss mitigation strategies with delinquent borrowers. Nevertheless, unanticipated credit

losses could occur, which may adversely impact operating results.

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The Company is also subject to credit risk with respect to the counterparties to derivative contracts. If a counterparty

fails to perform its obligation under a derivative contract due to financial difficulties, the Company may experience

significant delays in obtaining any recovery under the derivative contract in a dissolution, assignment for the benefit of

creditors, liquidation, winding-up, bankruptcy, or other analogous proceeding. In the event of the insolvency of a

counterparty to a derivative transaction, the derivative transaction would typically be terminated at its fair market value.

If the Company is owed this fair market value in the termination of the derivative transaction and its claim is unsecured,

it will be treated as a general creditor of such counterparty and will not have any claim with respect to the underlying

security. The Company may obtain only a limited recovery or may obtain no recovery in such circumstances. In

addition, the business failure of a counterparty with whom it enters a hedging transaction will most likely result in its

default, which may result in the loss of potential future value and the loss of our hedge and force the Company to cover

its commitments, if any, at the then current market price.

Counterparty credit risk is the risk that counterparties may fail to fulfill their obligations, including their inability to post

additional collateral in circumstances where their pledged collateral value becomes inadequate. The Company attempts

to manage its exposure to counterparty risk through diversification, use of financial instruments and monitoring the

creditworthiness of counterparties.

The Company finances the acquisition of a significant portion of its loans and investments with repurchase agreements

and borrowings under credit facilities and other financing agreements. In connection with these financing arrangements,

the Company pledges its loans, securities and cash 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, the Company is exposed to the counterparty if, during the term of the repurchase agreement

financing, a lender should default on its obligation and the Company is not able to recover its pledged assets. The

amount of this exposure is the difference between the amount loaned to the Company plus interest due to the

counterparty and the fair value of the collateral pledged by the Company to the lender including accrued interest

receivable on such collateral.

The Company is exposed to changing interest rates and market conditions, which affects cash flows associated with

borrowings. The Company enters 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 making payments based on a fixed interest rate over the life of the swap

contract.

Certain subsidiaries have entered into 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, the Company remains

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, the Company’s subsidiary would not receive payments due under that

agreement, the Company 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 the Company 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 the Company would be able to recover such amounts or to replace the relevant swap on economically

viable terms or at all. In such case, the Company could be forced to cover its unhedged liabilities at the then current

market price. The Company may also be at risk for any pledged collateral to secure its 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.

Liquidity Risk — Liquidity risk arises from investments and the general financing of the Company’s 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 reasonable prices, in addition to potential increases in collateral requirements during

times of heightened market volatility. It also includes risk stemming from PIK interest loans and loan modifications the

Company may grant to borrowers which are intended to minimize its economic loss and to avoid foreclosure or

repossession of collateral. Such modifications may include interest rate reductions, principal forgiveness, term

extensions, and other-than-insignificant payment delay, which may impact the Company’s ability to meet potential cash

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requirements and make it more reliant on financing strategies. Additionally, if the Company was forced to dispose of an

illiquid investment at an inopportune time, it might be forced to do so at a substantial discount to the market value,

resulting in a realized loss. The Company attempts to mitigate its liquidity risk by regularly monitoring the liquidity of

its investments in LMM loans, MBS and other financial instruments. Factors such as 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 the Company invests, it attempts to minimize its reliance on short-term

financing arrangements. While the Company 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 it with sources of long-term financing.

Off-Balance Sheet Risk —The Company has undrawn commitments on outstanding loans. Refer to Note 24 for further

information.

Interest Rate Risk — Interest rates are highly sensitive to many factors, including governmental monetary and tax

policies, domestic and international economic and political considerations and other factors beyond the Company’s

control.

The Company’s operating results will depend, in part, on differences between the income from its investments and

financing costs. Generally, 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. 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 the Company’s business, financial condition, liquidity, results of operations

and prospects. Furthermore, such defaults could have an adverse effect on the spread between the Company’s interest-

earning assets and interest-bearing liabilities.

Additionally, non-performing LMM 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 LMM 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.

Prepayment Risk — As the Company receives prepayments of principal on its 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.

Note 24. Commitments, Contingencies and Indemnifications

Litigation

From time to time, the Company may be involved in various claims and legal actions in the ordinary course of business.

In addition, the Company or a party it indemnifies is a defendant in the lawsuits described below. With respect to the

below lawsuits, management does not currently have sufficient information to estimate a reasonably possible loss or

range of loss, if any. Factors that make such an estimate difficult include, among others, uncertainties as to the amount,

or claimed amount, of any monetary damages; uncertainties as to whether a class will be certified and, if so, the ultimate

size and composition of the class; uncertainties as to the outcome of pending motions and appeals; uncertainties as to

significant factual issues that remain to be resolved; uncertainties as to novel or unsettled legal theories that remain to be

resolved; and/or uncertainties as to multiple related actions in different courts involving multiple parties. However,

management does not believe that the aggregate amount of such liabilities, if any, in excess of amounts covered by

insurance, will have a material adverse effect on the Company’s financial condition or results of operations.

Merger litigation

65

On March 18, 2025, a purported former stockholder of UDF IV filed a class action lawsuit in the Circuit Court for

Baltimore City, Maryland, captioned The Lawrence C. Headley Living Trust v. Jones, et al., No. C-24-CV-25-002222

(Md. Cir. Ct. Balt. City) (the “UDF IV Merger Action”). The UDF IV Merger Action names as defendants UDF IV’s

former board of trustees and alleges they breached their fiduciary duties in connection with the UDF IV Merger by

failing to properly consider an acquisition proposal that was purportedly superior to the UDF IV Merger, by relying on

purportedly false and misleading valuation analyses, by authorizing the issuance of a purportedly false and misleading

proxy statement, and by obtaining improper personal benefits that were not shared with all UDF IV stockholders. The

complaint also asserts claims against UDF IV’s former advisor, UMTH General Services, L.P., for aiding and abetting

these alleged breaches of fiduciary duty. The complaint seeks compensatory damages, rescissory damages, and

unwinding of the UDF IV Merger, as well as attorneys’ fees and costs. On April 11, 2025, the UDF IV Merger Action

was assigned to the Business and Technology Case Management Program of the Circuit Court for Baltimore City,

Maryland. Thereafter, on May 16, 2025, the defendants moved to dismiss the initial complaint. In response, the plaintiff

filed an amended complaint on July 11, 2025, which the defendants subsequently moved to dismiss on September 9,

2025. Briefing on the defendants’ motion to dismiss the amended complaint was completed on December 18, 2025.

Although the Company is not a defendant in the UDF IV Merger Action, it is subject to contractual indemnification

obligations (conditioned on the satisfaction of various contractual requirements) in connection therewith, including with

respect to the defendants’ service as UDF IV trustees and the provision of services to UDF IV, as applicable. The

defendants and the Company intend to vigorously defend against the UDF IV Merger Action.

Securities and derivative litigation

On March 6, 2025 and April 23, 2025, the Company and certain of its executive officers were named as defendants in

two separate but largely identical putative stockholder class action lawsuits filed in the United States District Court for

the Southern District of New York (the “Exchange Act Class Actions”). The Exchange Act Class Actions were filed

under the captions Quinn v. Ready Capital Corp., et al., No. 1:25-cv-01883 (S.D.N.Y.) and Goebel v. Ready Capital

Corp., et al., No. 1:25-cv-3373 (S.D.N.Y.). The Exchange Act Class Actions allege that the defendants violated Section

10(b) of the Securities Exchange of 1934, as amended (the "Exchange Act"), and SEC Rule 10b-5 promulgated

thereunder by making false and misleading statements and omissions regarding the performance of the Company’s loan

portfolio and related matters, and that the executive officers named as defendants violated Section 20(a) of the Exchange

Act as control persons of the Company. The Exchange Act Class Actions seek compensatory damages, costs, and

expenses on behalf of the purported classes. On July 8, 2025, the court entered an order consolidating the Exchange Act

Class Actions under the caption In re Ready Capital Securities Litigation, No. 1:25-cv-01883 (S.D.N.Y.) (the “Exchange

Act Litigation”) and appointing lead plaintiff and lead counsel. The lead plaintiff filed an amended complaint on

September 8, 2025, which the defendants moved to dismiss on November 10, 2025. Briefing on the defendants’ motion

to dismiss was completed on February 9, 2026. On September 18, 2026, the court entered an order granting the

defendants’ motion to dismiss in its entirety and dismissing the amended complaint with prejudice. On September 22,

2026, the court entered judgment in favor of the defendants and closed the case. On October 16, 2026, lead plaintiff filed

a notice of appeal in the United States Court of Appeals for the Second Circuit under the caption In re Ready Capital

Securities Litigation, No. 26-2964 (2d Cir.).

Between March and July 2025, the Company was named as a nominal defendant and certain of its executive officers and

directors were named as defendants in parallel derivative lawsuits captioned Pittrof v. Capasse, et al., No. 1:25-cv-02274

(S.D.N.Y.) and Vancampenhout v. Capasse, et al., No. 1:25-cv-02930 (S.D.N.Y.) respectively, filed in the United States

District Court for the Southern District of New York (collectively, the “New York Derivative Actions”), and Poon v.

Ready Capital Corp., et al., No. 1:25-cv-01827 (D. Md.) and Cote v. Ready Capital Corp., et al., No. 1:25-cv-02429-JRR

(D. Md.) filed in the United States District Court for the District of Maryland (the “Maryland Derivative Actions” and,

together with the New York Derivative Actions, the “Ready Capital Derivative Actions”). The Ready Capital Derivative

Actions assert claims for violations of Sections 10(b) and 20(a) of the Exchange Act and SEC Rule 10b-5, contribution

under Sections 10(b) and 21D of the Exchange Act, breach of fiduciary duties, aiding and abetting breach of fiduciary

duties, unjust enrichment, abuse of control, gross mismanagement, and waste of corporate assets for participating and/or

failing to prevent the securities law violations alleged in the Exchange Act Litigation and for purportedly causing the

Company to overpay for certain stock repurchases. The Ready Capital Derivative Actions seek compensatory damages,

disgorgement of compensation and profits, imposition of a constructive trust, revisions to the Company’s corporate

governance and internal procedures, and attorneys’ fees and costs. On July 8, 2025, the United States District Court for

the Southern District of New York consolidated the New York Derivative Actions under the caption In re Ready Capital

Corp. Stockholder Derivative Litigation, No. 1:25-cv-02274 (S.D.N.Y.). The Ready Capital Derivative Actions are

currently stayed, pending: (1) dismissal of the Exchange Act Litigation with prejudice, and the exhaustion of all appeals

66

thereto; or (2) denial, in full or in part, of the defendants’ motion to dismiss the Exchange Act Litigation. The defendants

intend to vigorously defend against the Exchange Act Litigation and the Ready Capital Derivative Actions.

In early August 2025, the Board received a demand letter from a purported Ready Capital stockholder (the “Derivative

Demand Letter”). The Derivative Demand Letter closely mirrors the allegations of the Exchange Act Litigation and

Ready Capital Derivative Actions and demands that the Board investigate the facts alleged in these actions. The

Derivative Demand Letter requests that the directors investigate any purported wrongdoing that occurred between

August 2, 2024, and August 1, 2025, and commence legal proceedings against the Ready Capital executive officers and

directors named in the Exchange Act Litigation and Ready Capital Derivative Actions. The Company and the demanding

stockholder have agreed to hold the Derivative Demand Letter in abeyance until: (i) the defendants’ motion to dismiss in

the Exchange Act Litigation is denied in whole or in part; or (ii) the demanding stockholder or the Company give written

notice that they no longer consent to the voluntary abeyance of the Derivative Demand Letter.

On May 8 and May 14, 2025, the Company and certain of its executive officers and directors were named as defendants

in two separate but largely identical putative class action lawsuits filed by former Broadmark stockholders in the

Superior Court for King County, Washington (the “Broadmark State Court Actions”). Certain former directors and

officers of Broadmark and certain affiliates of the Company and its directors, including Waterfall, were also named as

defendants. The Broadmark State Court Actions were filed under the captions van Wyk et al. v. Ready Capital Corp., et

al., No. 25-2-14038-5 SEA (Wash. Super. Ct. King Cnty.) and Whittlesey v. Ready Capital Corp., et al., No.

25-2-14567-1 SEA (Wash. Super Ct. King Cnty.). On June 20, 2025, the court consolidated the Broadmark State Court

Actions under the caption In re Ready Capital Corporation Securities Litigation, No. 25-2-14038-5 SEA (Wash. Super.

Ct. King Cnty.) (as consolidated, the “Broadmark State Court Litigation”). The Broadmark State Court Litigation alleges

that the defendants violated Sections 11, 12(a)(2), and 15 of the Securities Act of 1933, as amended (the "Securities

Act") by issuing false and misleading statements and omissions in connection with the Broadmark Merger regarding the

performance of the Company’s loan portfolio and related matters and seek disgorgement, compensatory damages, and

the costs and expenses of litigation. On August 19, 2025, the plaintiffs filed a consolidated complaint, which the

defendants subsequently moved to dismiss on October 20, 2025. On February 2, 2026, the defendants moved to stay the

Broadmark State Court Litigation pending resolution of the Broadmark Federal Court Litigation (defined below). On

February 19, 2026, the motions to dismiss and stay were denied. Discovery has since commenced in the Broadmark

State Court Litigation. On May 1, 2026, the plaintiffs in the Broadmark State Court Litigation and the lead plaintiff in

the Broadmark Federal Court Litigation jointly moved for class certification and to be appointed co-class representatives

in the Broadmark State Court Litigation. The defendants filed their opposition to the class certification motion on July 1,

2026, and the plaintiffs filed their class certification reply on September 11, 2026.

On May 28, 2025, the Company and certain of its executive officers and directors were named as defendants in a

putative class action filed by a former Broadmark stockholder in the United States District Court for the Western District

of Washington (the “Broadmark Federal Court Litigation”). Broadmark and certain of its former directors and officers

were also named as defendants. The Broadmark Federal Court Litigation is captioned Grant v. Broadmark Realty Capital

Inc., et al., No. 2:25-cv-1013 (W.D. Wash.). On October 15, 2025, the court entered an order appointing lead plaintiff

and lead counsel. On November 25, 2025, the lead plaintiff filed an amended complaint asserting that the defendants

violated Sections 14(a) and 20(a) of the Exchange Act and Section 11, 12(a)(2), and 15 of the Securities Act by issuing

false and misleading statements and omissions in connection with the Broadmark Merger regarding the performance of

the Company’s loan portfolio and related matters. The amended complaint seeks compensatory and rescissory damages,

as well as attorneys’ fees and litigation expenses. On January 12, 2026, the defendants moved to dismiss the amended

complaint. Briefing on the defendants’ motion to dismiss was completed on March 4, 2026. On January 8, 2026, the

defendants moved to transfer the Broadmark Federal Court Litigation to the U.S. District Court for the Southern District

of New York, where the Exchange Act Litigation is pending. Briefing on the defendants’ motion to transfer was

completed on February 5, 2026. On May 1, 2026, the lead plaintiff in the Broadmark Federal Court Litigation and the

plaintiffs in the Broadmark State Court Litigation jointly moved for class certification and to be appointed co-class

representatives in the Broadmark State Court Litigation. On June 1, 2026, the parties filed a stipulated motion to stay the

Broadmark Federal Court Litigation pending final adjudication of the Broadmark State Court Litigation. The parties’

motion to stay was granted on June 3, 2026.

On July 18, 2025, the Company and Broadmark were named as nominal defendants, and certain of the Company’s and

Broadmark’s current and former executive officers and directors and Waterfall were named as defendants in a double

derivative action filed by a purported former stockholder of Broadmark in the United States District Court for the

District of Maryland (the “Broadmark Derivative Litigation”). The Broadmark Derivative Litigation is captioned

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Murguia v. Broadmark Realty Capital Inc., et al., No. 1:25-cv-02350-JRR (D. Md.). The Broadmark Derivative

Litigation asserts claims for violations of Sections 10(b), 20(a), and 14(a) of the Exchange Act, SEC Rule 10b-5, breach

of fiduciary duties, unjust enrichment, abuse of control, gross mismanagement, waste of corporate assets, and

contribution pursuant to Section 10(b) and 21D of the Exchange Act for participating in and/or failing to prevent the

securities law violations alleged in the Broadmark Federal Court Litigation and for purportedly causing the Company to

overpay for certain stock repurchases. The Broadmark Derivative Litigation seeks revisions to the Company’s corporate

governance and internal procedures, disgorgement, compensatory damages, and attorney’s fees and costs of litigation.

The Broadmark Derivative Litigation is currently stayed, pending: (1) dismissal of the Broadmark Federal Court

Litigation with prejudice, and the exhaustion of all appeals thereto; or (2) denial, in full or in part, of the defendants’

motion to dismiss the Broadmark Federal Court Litigation. The defendants intend to vigorously defend against the

Broadmark State Court Litigation, the Broadmark Federal Court Litigation, and the Broadmark Derivative Litigation.

Legacy UDF IV litigation

As a result of the UDF IV Merger, the Company assumed certain outstanding litigation against UDF IV and affiliated

parties.

On March 20, 2020, Megatel Homes, LLC and certain of its affiliates filed a lawsuit against Mehrdad Moayedi, United

Development Funding, L.P., United Development Funding II, L.P., United Development Funding III, L.P., UDF IV,

United Development Funding V, and various other affiliates (collectively the “UDF Defendants”) in the United States

District Court for the Northern District of Texas, captioned Megatel Homes LLC, et al. v. Moayedi, et al., No. 3:20-

cv-00688-L-BT (N.D. Tex.) (the “Megatel Action”). The Megatel Action alleges that the UDF Defendants knowingly

participated in a scheme to “prop” up Moayedi’s companies, and thereby defraud the plaintiffs, by lending funds to

Moayedi’s companies, which Moayedi’s companies then used to repay older loans they had received from the UDF

Defendants, rather than using such funds to “advance” real estate projects with the plaintiffs. The plaintiffs assert claims

under the Racketeer Influenced and Corrupt Organizations Act (“RICO”) and for common law fraud, statutory fraud, and

fraudulent inducement. The plaintiffs seek compensatory damages, treble damages, exemplary damages, and attorneys’

fees. On May 18, 2020, the defendants moved to dismiss the plaintiffs’ complaint, which the court granted in part and

denied in part on November 16, 2021. The plaintiffs filed an amended complaint on November 29, 2021, which the

defendants again moved to dismiss. The court denied the motions to dismiss on June 27, 2022. Discovery in the Megatel

Action is complete and summary judgment motions have been filed by all defendants in an attempt to dispose of the

litigation. The court will issue a forthcoming order setting a trial date, likely after the summary judgment motions are

decided. The UDF Defendants and the Company intend to vigorously defend against the Megatel Action.

Unfunded Loan Commitments

The table below presents unfunded loan commitments.

(in thousands)	September 30, 2026		December 31, 2025
Loans, net	$112,506		$438,030
Loans, held for sale	$34,136		$54,327

Note 25. Income Taxes

The Company is a REIT pursuant to Internal Revenue Code Section 856. Qualification as a REIT depends on the

Company’s ability to meet various requirements imposed by the Internal Revenue Code, which relate to its

organizational structure, diversity of stock ownership and certain requirements with regard to the nature of its assets and

the sources of its income. As a REIT, the Company generally must distribute annually dividends equal to at least 90% of

its net taxable income, subject to certain adjustments and excluding any net capital gain, in order for U.S. federal income

tax not to apply to earnings that are distributed. To the extent the Company satisfies this distribution requirement but

distributes less than 100% of its net taxable income, it will be subject to U.S. federal income tax on its undistributed

taxable income. In addition, the Company will be subject to a 4% nondeductible excise tax if the actual amount paid to

stockholders in a calendar year is less than a minimum amount specified under U.S. federal tax laws. Even if the

Company qualifies as a REIT, it may be subject to certain U.S. federal income and excise taxes and state and local taxes

on its income and assets. If the Company fails to maintain its qualification as a REIT for any taxable year, it may be

subject to material penalties as well as federal, state and local income tax on its taxable income at regular corporate rates

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and it would not be able to qualify as a REIT for the subsequent four taxable years. As of September 30, 2026 and

December 31, 2025, the Company was in compliance with all REIT requirements.

Certain subsidiaries have elected to be treated as taxable REIT subsidiaries (“TRSs”). TRSs permit the Company to

participate in certain activities that would not be qualifying income if earned directly by the parent REIT, as long as

these activities meet specific criteria, are conducted within the parameters of certain limitations established by the

Internal Revenue Code and are conducted in entities which elect to be treated as taxable subsidiaries under the Internal

Revenue Code. To the extent these criteria are met, the Company will continue to maintain its qualification as a REIT.

The Company’s TRSs engage in various real estate - related operations, including originating and securitizing

commercial mortgage loans and investments in real property. Such TRSs are not consolidated for federal income tax

purposes but are instead taxed as corporations. For financial reporting purposes, a provision for current and deferred

income taxes is established for the portion of earnings recognized by the Company with respect to its interest in TRSs.

The Company recognizes deferred tax assets and liabilities for the future tax consequences arising from differences

between the carrying amounts of existing assets and liabilities under GAAP and their respective tax bases. The Company

evaluates its deferred tax assets for recoverability using a consistent approach which considers the relative impact of

negative and positive evidence, including historical profitability and projections of future taxable income.

The provisions of ASC 740 require that carrying amounts of deferred tax assets be reduced by a valuation allowance if,

based on the available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be

realized.

The Company’s framework for assessing the recoverability of deferred tax assets requires it to weigh all available

evidence, including the sustainability of profitability required to realize the deferred tax assets, the cumulative net

income or loss in its consolidated statements of operations in recent years, the future reversals of existing taxable

temporary differences, and the carryforward periods for any carryforwards of net operating losses.

Note 26. Segment Reporting

The Company structures its segments based on a number of contributing factors, including customer base and nature of

loan program types, and reports its results of operations through the following two operating and reportable business

segments: i) LMM Commercial Real Estate and ii) Small Business Lending, which is in accordance with how the Chief

Operating Decision Maker (“CODM”), the Chief Executive Officer and Chief Investment Officer, evaluates financial

information for making decisions regarding business operations and assessing Company performance. The CODM's

financial considerations include an analysis of net interest income before provision for loan losses, provision for loan

losses and non-interest income and expenses. In addition, the CODM's analysis includes an evaluation of segment

performance with income (loss) before unallocated expenses and provision for (benefit from) income taxes being the

primary performance measure used for each reportable business segment.

LMM Commercial Real Estate

The Company originates LMM loans across the full life-cycle of an LMM property including construction, bridge,

stabilized and agency channels. As part of this segment, the Company services Freddie Mac multi-family loan products.

LMM originations include construction and permanent financing activities for the preservation and construction of

affordable housing, primarily utilizing tax-exempt bonds. This segment also reflects the impact of LMM securitization

activities. The Company acquires performing and non-performing LMM loans and intends to continue to acquire these

loans as part of the Company’s business strategy.

Small Business Lending

The Company acquires, originates and services loans guaranteed by the SBA under the SBA Section 7(a) Program,

originates and services small business loans and services government guaranteed loans focused on the USDA. This

segment also reflects the impact of SBA securitization activities.

Results of business segments and all other. The tables below present operating and reportable business segments,

allocated employee compensation from the Manager, management and incentive fees paid to the Manager and other

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general corporate overhead expenses. Unallocated assets were $472.8 million and $402.8 million as of September 30,

2026 and September 30, 2025, respectively.

	Three Months Ended September 30, 2026
(in thousands)	LMM Commercial Real Estate		Small Business Lending		Total
Interest income	$51,884		$31,944		$83,828
Interest expense	(59,353)		(24,474)		(83,827)
Net interest income (loss) before provision for loan losses	$(7,469)		$7,470		$1
Provision for loan losses	(9,461)		(3,198)		(12,659)
Net interest income (loss) after provision for loan losses	$(16,930)		$4,272		$(12,658)
Non-interest income
Net realized gain (loss) on financial instruments and real estate owned	(24,919)		8,106		(16,813)
Net unrealized gain (loss) on financial instruments	374		1,800		2,174
Valuation recovery, loans held for sale	12,877		—		12,877
Servicing income, net	1,258		4,865		6,123
Loss on unconsolidated joint ventures	(173)		—		(173)
Other income	13,544		6,195		19,739
Total non-interest income	$2,961		$20,966		$23,927
Non-interest expense
Employee compensation and benefits	(5,640)		(13,733)		(19,373)
Allocated employee compensation and benefits from related party	(360)		—		(360)
Professional fees	(812)		(116)		(928)
Loan servicing expense	(4,536)		(3,184)		(7,720)
Impairment on real estate	(4,681)		—		(4,681)
Other operating expenses	(19,148)		(8,893)		(28,041)
Total non-interest expense	$(35,177)		$(25,926)		$(61,103)
Loss before unallocated expenses and provision for income taxes	$(49,146)		$(688)		$(49,834)
Unallocated corporate expenses
Employee compensation and benefits					(5,745)
Professional fees					(4,702)
Management fees – related party					(3,711)
Transaction related expenses					(471)
Other operating expenses - net					(521)
Total unallocated corporate expenses					$(15,150)
Loss before provision for income taxes					$(64,984)
Total assets	$3,621,747		$1,688,794		$5,310,541

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	Nine Months Ended September 30, 2026
(in thousands)	LMM Commercial Real Estate		Small Business Lending		Total
Interest income	$164,718		$78,241		$242,959
Interest expense	(205,270)		(58,244)		(263,514)
Net interest income (loss) before provision for loan losses	$(40,552)		$19,997		$(20,555)
Provision for loan losses	(89,673)		(15,447)		(105,120)
Net interest income (loss) after provision for loan losses	$(130,225)		$4,550		$(125,675)
Non-interest income
Net realized gain (loss) on financial instruments and real estate owned	(125,126)		26,007		(99,119)
Net unrealized gain (loss) on financial instruments	(11,042)		2,123		(8,919)
Valuation allowance, loans held for sale	8,767		—		8,767
Servicing income, net	4,229		7,387		11,616
Income (loss) on unconsolidated joint ventures	3,151		11		3,162
Other income	35,697		14,580		50,277
Total non-interest income (loss)	$(84,324)		$50,108		$(34,216)
Non-interest expense
Employee compensation and benefits	(19,506)		(43,121)		(62,627)
Allocated employee compensation and benefits from related party	(1,058)		—		(1,058)
Professional fees	(3,215)		(7,301)		(10,516)
Loan servicing expense	(21,213)		(5,620)		(26,833)
Impairment on real estate	(5,164)		—		(5,164)
Other operating expenses	(58,706)		(27,266)		(85,972)
Total non-interest expense	$(108,862)		$(83,308)		$(192,170)
Loss before unallocated expenses and provision for income taxes	$(323,411)		$(28,650)		$(352,061)
Unallocated corporate expenses
Employee compensation and benefits					(17,207)
Professional fees					(9,440)
Management fees – related party					(11,552)
Transaction related expenses					(1,318)
Other operating expenses - net					(3,131)
Total unallocated corporate expenses					$(42,648)
Loss before provision for income taxes					$(394,709)
Total assets	$3,621,747		$1,688,794		$5,310,541

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	Three Months Ended September 30, 2025
(in thousands)	LMM Commercial Real Estate		Small Business Lending		Total
Interest income	$105,856		$31,635		$137,491
Interest expense	(106,556)		(20,415)		(126,971)
Net interest income before provision for loan losses	$(700)		$11,220		$10,520
Provision for loan losses	(30,980)		(6,997)		(37,977)
Net interest income after provision for loan losses	$(31,680)		$4,223		$(27,457)
Non-interest income (loss)
Net realized gain (loss) on financial instruments and real estate owned	(179,279)		18,883		(160,396)
Net unrealized gain (loss) on financial instruments	2,279		845		3,124
Valuation (allowance) recovery, loans held for sale	178,225		—		178,225
Servicing income, net	1,155		6,354		7,509
Income (loss) on unconsolidated joint ventures	7,410		7		7,417
Other income	7,238		6,475		13,713
Total non-interest income	$17,028		$32,564		$49,592
Non-interest expense
Employee compensation and benefits	(5,023)		(13,939)		(18,962)
Allocated employee compensation and benefits from related party	(360)		—		(360)
Professional fees	(790)		(3,255)		(4,045)
Loan servicing expense	(8,081)		(1,690)		(9,771)
Impairment on real estate	(1,862)		—		(1,862)
Other operating expenses	(13,022)		(9,479)		(22,501)
Total non-interest expense	$(29,138)		$(28,363)		$(57,501)
Income (loss) before unallocated expenses and provision for income taxes	$(43,790)		$8,424		$(35,366)
Unallocated corporate income (expenses)
Gain on bargain purchase					24,472
Employee compensation and benefits					(5,431)
Professional fees					(1,963)
Management fees – related party					(5,156)
Transaction related expenses					(1,910)
Other operating expenses - net					(1,528)
Total unallocated corporate income					$8,484
Loss before provision for income taxes					$(26,882)
Total assets	$6,436,175		$1,493,159		$7,929,334

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	Nine Months Ended September 30, 2025
(in thousands)	LMM Commercial Real Estate		Small Business Lending		Total
Interest income	$353,097		$92,096		$445,193
Interest expense	(342,998)		(60,276)		(403,274)
Net interest income before recovery of (provision for) loan losses	$10,099		$31,820		$41,919
Recovery of (provision for) loan losses	81,815		(18,864)		62,951
Net interest income after recovery of (provision for) loan losses	$91,914		$12,956		$104,870
Non-interest income
Net realized gain (loss) on financial instruments and real estate owned	(191,113)		59,600		(131,513)
Net unrealized gain (loss) on financial instruments	(2,453)		3,079		626
Valuation recovery, loans held for sale	38,761		—		38,761
Servicing income, net	4,501		9,160		13,661
Income on unconsolidated joint ventures	3,250		41		3,291
Other income	13,050		21,259		34,309
Total non-interest income (loss)	$(134,004)		$93,139		$(40,865)
Non-interest expense
Employee compensation and benefits	(17,373)		(43,678)		(61,051)
Allocated employee compensation and benefits from related party	(1,048)		—		(1,048)
Professional fees	(2,537)		(9,451)		(11,988)
Loan servicing expense	(34,158)		(2,495)		(36,653)
Impairment on real estate	(8,476)		—		(8,476)
Other operating expenses	(20,830)		(30,522)		(51,352)
Total non-interest expense	$(84,422)		$(86,146)		$(170,568)
Income (loss) before unallocated expenses and provision for income taxes	$(126,512)		$19,949		$(106,563)
Unallocated corporate income (expenses)
Gain on bargain purchase					112,562
Employee compensation and benefits					(13,943)
Professional fees					(5,876)
Management fees – related party					(15,805)
Transaction related expenses					(5,243)
Other operating expenses - net					(3,501)
Total unallocated corporate income					$68,194
Loss before provision for income taxes					$(38,369)
Total assets	$6,436,175		$1,493,159		$7,929,334

Note 27. Subsequent Events

On October 26, 2026, the Company collapsed the RCLT SBLT 2019-2 transaction, a consolidated securitization, by

redeeming all of the outstanding notes issued by ReadyCap Lending Small Business Loan Trust 2019-2, the issuing

entity (the “2019-2 Issuer”). As of September 30, 2026, the 2019-2 Issuer had approximately $2.7 million of securitized

debt obligations outstanding. The underlying loans, with an aggregate unpaid principal balance of approximately $26.5

million as of October 26, 2026, were sold, assigned, and otherwise conveyed, without recourse to ReadyCap Lending,

LLC, an affiliate of the Company.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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 expected leverage;

•our expected investments;

•estimates or statements relating to, and our ability to make, future distributions;

•projected capital and operating expenditures;

•our ability to use our liquidity and capital resources, including cash on hand, anticipated net payments from the

loan portfolio, debt financings and proceeds from the potential disposition of assets, to provide liquidity to fund

ongoing obligations and address upcoming debt maturities;

•our ability to utilize liquidity and capital resources, together with our access to the capital markets and

potentially other balance-sheet actions, such as adjustments to our dividend rate, to meet our liquidity needs;

•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;

•our entry into certain hedging arrangements related to the delivery of shares of common stock upon vesting of

certain performance-based equity awards and restricted stock awards and the risk that such arrangements may

not have the desired impact and may expose us to additional risks, including the failure of the counterparty to

perform under the contracts;

•the impact of inflation on our business;

•tariffs imposed or threatened to be imposed by the current presidential administration;

74

•changes in prepayments or acceleration of the disposition of our assets;

•risks associated with achieving expected synergies, cost savings and other benefits from recent acquisitions,

including the acquisition of United Development Funding IV (“UDF IV”);

•risks associated with the completed divestiture of our Residential Mortgage Banking segment;

•market, industry and economic trends;

•our ability to compete in the marketplace;

•the availability of attractive risk-adjusted investment opportunities in lower-to-middle-market commercial real

estate loans (“LMM”), 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, including

pursuant to policies of the U.S. administration, the U.S. Department of the Treasury (“Treasury”) and the Board

of Governors of the Federal Reserve System, the Federal Deposit 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, USDA, U.S. Department of Veterans Affairs (“VA”) and the U.S. Securities and Exchange

Commission (“SEC”);

•our ability to obtain a license for the Freddie Mac Conventional Small program, which replaced the Freddie

Mac Small Balance Loan program that expired on April 30, 2026;

•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”);

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•the degree and nature of our competition, including competition for LMM loans, MBS, residential mortgage

loans, construction loans and other real estate-related investments that satisfy our investment objectives and

strategies;

•geopolitical events such as acts of terrorism, war or other military conflict, and the related impact on

macroeconomic conditions; and

•the impact of future pandemics and epidemics on our borrowers, the real estate industry and global markets, and

on our business and operations, financial condition, results of operations, liquidity and capital resources.

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. Refer to 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 for the fiscal year ended December 31, 2025 (our “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 Form 10-K. Refer to “Forward-Looking Statements” in this Form 10-Q and in our Form 10-K and “Critical

Accounting Estimates” in our 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 LMM loans, SBA

loans, construction loans and, to a lesser extent, MBS collateralized primarily by LMM 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. In order to achieve

this objective, we intend 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 completed the disposition of our Residential Mortgage Banking segment effective on June 30, 2025. In connection

with this sale, we classified our Residential Mortgage Banking segment as a discontinued operation. For all periods

presented, the operating results for these operations have been removed from continuing operations. Our MD&A has

been adjusted to exclude discontinued operations unless otherwise noted. We report our activities in the following two

operating segments:

76

•LMM Commercial Real Estate. We originate LMM loans across the full life-cycle of an LMM property

including construction, bridge, stabilized and agency loan origination channels through our subsidiary,

ReadyCap Commercial, LLC. These originated loans are generally held-for-investment or placed into

securitization structures. As part of this segment, we service Freddie Mac multi-family loan products. We

provide construction and permanent financing for the preservation and construction of affordable housing,

primarily utilizing tax-exempt bonds through Ready Capital Affordable, a subsidiary. In addition, we

acquire LMM loans as part of our business strategy. We hold performing LMM loans to term and seek to

maximize the value of the non-performing LMM loans acquired by us through borrower-based resolution

strategies. We typically acquire non-performing loans at a discount to their unpaid principal balance

(“UPB”) 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 subsidiary, ReadyCap Lending, LLC. We hold an SBA

license as one of only 16 non-bank Small Business Lending Companies and have been granted preferred

lender status by the SBA. These originated loans are either held-for-investment, placed into securitization

structures, or sold. In addition, we originate and service small business loans through our subsidiary

iBusiness Funding LLC and we service USDA loans through our subsidiary, ReadyCap Commercial.

We are organized and conduct our operations to qualify as a REIT under the Internal Revenue Code of 1986, as

amended. To qualify as a REIT, we are required to annually distribute substantially all of our net taxable income,

excluding capital gain, to stockholders. To the extent that we do not distribute all of our net capital gain, or distribute at

least 90%, but less than 100%, of our REIT taxable income, as adjusted, we will be required to pay U.S. federal

corporate income tax on the undistributed income. We are organized in a traditional umbrella partnership REIT

(UpREIT) format pursuant to which we serve as the general partner of, and conduct substantially all of our business

through, Sutherland Partners, L.P. (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 Form 10-K.

Acquisitions

United Development Funding IV. On March 13, 2025, pursuant to the terms of the Agreement and Plan of Merger,

dated as of November 29, 2024, by and among the Company, UDF IV, and RC Merger Sub IV, LLC, a wholly owned

subsidiary of the Company (“RC Merger Sub IV”), the Company acquired UDF IV, a real estate investment trust

providing capital solutions to residential real estate developers and regional homebuilders, (the “UDF IV Merger”). At

the effective time of the UDF IV Merger (the “Effective Time”), each outstanding common share of beneficial interest,

par value $0.01 per share, of UDF IV (“UDF IV Common Shares”), excluding any UDF IV Common Shares held by

UDF IV, the Company, RC Merger Sub IV or their subsidiaries, was automatically cancelled and retired and converted

into the right to receive (i) 0.416 shares of Company common stock, (ii) 0.416 contingent value rights (“CVRs”)

representing the potential right to receive additional shares of Company common stock after the end of each of (1) the

period beginning on October 1, 2024, and ending on December 31, 2025 and (2) the three subsequent calendar years,

based, in part, upon cash proceeds received by the Company and its subsidiaries in respect of a portfolio of five UDF IV

loans and (iii) cash consideration in lieu of any fractional shares of Company common stock. Refer to Notes 1 and 5,

included in Part I, Item 1, “Financial Statements,” of this Form 10-Q, for more information about the UDF IV Merger

and the assets acquired and liabilities assumed as a result of the UDF IV Merger.

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 and fair value of our assets and the supply of, and demand for, LMM loans,

SBA 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, changes in credit

spreads, 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

77

impacted by changes in our provision for loan losses. Increases in the provision for loan loss are primarily driven by a

deterioration in the contractual performance of a loan. Macroeconomic factors including interest rates and inflation, as

well as supply absorption and cap rate movements, may contribute to a deterioration in a loan’s contractual performance.

In certain circumstances, the Company may choose to modify a loan which had experienced financial difficulty due to

the factors previously described. 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, unemployment and

the availability and cost of credit are factors which could also impact our operating results.

For additional information about certain risks we face, including market risk, credit risk, interest rate risk, liquidity risk,

off-balance sheet risk and prepayment risk, refer to Note 23, included in Part I, Item 1, “Financial Statements,” and Part

I, Item 3, “Quantitative and Qualitative Disclosures About Market Risk,” of this Form 10-Q, as well as Part I, Item 1A,

“Risk Factors” in our Form 10-K.

Changes in Market Interest Rates. We own and expect to acquire or originate fixed rate and floating rate loans 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 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 loans. As of September 30, 2026, fixed rate loans are generally match funded in securitization. Floating rate 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, 2026, approximately 81% of

the loans in our portfolio were floating rate loans, and 19% were fixed rate loans, based on carrying value.

Current market conditions. During the third quarter, macroeconomic concerns persisted including global market

volatility, uncertainty about trade policies, geopolitical tensions, inflationary pressures and interest rates. The U.S.

Federal Reserve increased interest rates during the quarter and there is uncertainty regarding if and when decreases will

occur. Although the full impact of these changes remains uncertain and difficult to predict, 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, return on equity, and net book value per share. As further

described below, distributable earnings and distributable return on equity are measures which are 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. We use distributable return on equity because we believe it is the most relevant metric for

determining ongoing profitability period over period. Refer to “—Non-GAAP Financial Measures” below for a

reconciliation of net income to distributable earnings and for the calculation of distributable return on equity.

78

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

	Three Months Ended September 30,				Nine Months Ended September 30,
($ in thousands, except share data)	2026		2025		2026		2025
Net Income (loss) from continuing operations	$(62,192)		$(16,947)		$(361,962)		$16,712
Earnings per common share from continuing operations - basic	$(0.40)		$(0.13)		$(2.27)		$0.02
Earnings per common share from continuing operations - diluted	$(0.40)		$(0.13)		$(2.27)		$0.02
Distributable earnings before realized losses	$(31,205)		$(2,170)		$(115,538)		$(10,734)
Distributable earnings before realized losses per common share - basic	$(0.21)		$(0.04)		$(0.78)		$(0.14)
Distributable earnings before realized losses per common share - diluted	$(0.21)		$(0.04)		$(0.78)		$(0.14)
Distributable earnings	$(83,144)		$(149,592)		$(316,596)		$(180,768)
Distributable earnings per common share - basic	$(0.53)		$(0.94)		$(1.99)		$(1.17)
Distributable earnings per common share - diluted	$(0.53)		$(0.94)		$(1.99)		$(1.17)
Dividends declared per common share	$0.01		$0.125		$0.03		$0.375
Dividend yield (1)	3.4%		12.9%		3.4%		12.9%
Return on equity from continuing operations	(23.5)%		(4.5)%		(40.1)%		1.2%
Distributable return on equity before realized losses	(12.1)%		(1.0)%		(13.2)%		(2.1)%
Distributable return on equity	(31.0)%		(35.7)%		(35.2)%		(21.6)%
Book value per common share	$6.44		$10.28		$6.44		$10.28

(1)Dividend yield is based on the respective period end closing share price.

Three months ended September 30, 2026. Earnings from continuing operations was a loss of $0.40 per common share,

compared to a loss of $0.63 per common share in the prior quarter, principally due to a decrease in the provision for loan

losses and an increase in the valuation recovery driven by the wind down of non-performing and sub-performing loan

sales. Book value per common share was $6.44, a decline of $0.39 quarter over quarter compared to a decline of $0.60 in

the prior quarter. The quarter over quarter decrease in the rate at which book value per common share decreased was

primarily driven by the wind down of the large portfolio sales that were part of our balance sheet repositioning strategy.

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 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 (based on fully committed amounts).

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2026		2025		2026		2025
Loan originations:
LMM loans	$132,912		$139,200		$576,428		$391,213
SBL loans	170,526		282,607		470,113		1,028,746
Total loan investment activity	$303,438		$421,807		$1,046,540		$1,419,959

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Balance Sheet Analysis and Metrics

(in thousands)	September 30, 2026		December 31, 2025		$ Change		% Change
Assets
Cash and cash equivalents	$157,130		$207,841		$(50,711)		(24.4)%
Restricted cash	50,775		39,746		11,029		27.7
Loans, net (including $382 and $737 held at fair value)	3,122,504		3,500,298		(377,794)		(10.8)
Loans, held for sale (including $67,123 and $73,094 held at fair value and net of valuation allowance of $56,734 and $67,612)	112,766		585,820		(473,054)		(80.8)
Mortgage-backed securities	32,143		34,501		(2,358)		(6.8)
Investment in unconsolidated joint ventures (including $5,068 and $5,737 held at fair value)	155,086		161,424		(6,338)		(3.9)
Derivative instruments	3,232		6,740		(3,508)		(52.0)
Servicing rights	115,015		126,279		(11,264)		(8.9)
Real estate owned	563,512		620,225		(56,713)		(9.1)
Other assets	466,283		508,238		(41,955)		(8.3)
Assets of consolidated VIEs	1,004,891		1,978,684		(973,793)		(49.2)
Total Assets	$5,783,337		$7,769,796		$(1,986,459)		(25.6)%
Liabilities
Secured borrowings	1,691,519		2,788,926		(1,097,407)		(39.3)
Securitized debt obligations of consolidated VIEs, net	607,600		1,174,785		(567,185)		(48.3)
Senior secured notes, net	598,739		722,729		(123,990)		(17.2)
Corporate debt, net	446,097		652,487		(206,390)		(31.6)
Guaranteed loan financing	911,288		524,091		387,197		73.9
Contingent consideration	23,008		18,698		4,310		23.1
Derivative instruments	340		1,432		(1,092)		(76.3)
Dividends payable	3,687		3,633		54		1.5
Loan participations sold	56,616		56,616		—		—
Due to third parties	4,289		3,135		1,154		36.8
Accounts payable and other accrued liabilities	152,643		171,636		(18,993)		(11.1)
Total Liabilities	$4,495,826		$6,118,168		$(1,622,342)		(26.5)%
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, 165,168,630 and 163,010,012 shares issued and outstanding, respectively	17		17		—		—
Additional paid-in capital	2,268,714		2,264,355		4,359		0.2
Retained deficit	(1,185,833)		(807,522)		(378,311)		46.8
Accumulated other comprehensive loss	(19,755)		(24,196)		4,441		(18.4)
Total Ready Capital Corporation equity	1,174,521		1,544,032		(369,511)		(23.9)
Non-controlling interests	104,629		99,235		5,394		5.4
Total Stockholders’ Equity	$1,279,150		$1,643,267		$(364,117)		(22.2)%
Total Liabilities, Redeemable Preferred Stock, and Stockholders’ Equity	$5,783,337		$7,769,796		$(1,986,459)		(25.6)%

As of September 30, 2026, total assets in our consolidated balance sheet were $5.8 billion, a decrease of $2.0 billion

from December 31, 2025, primarily reflecting a decrease in Assets of consolidated VIEs, Loans, held for sale and Loans,

net. Assets of consolidated VIEs decreased $1.0 billion, primarily due to the collapse of RCMF 2021-FL7, RCMF 2023-

FL11, RCMF 2023-FL12 and sale of RCMT 2016-3 and paydowns on securitized loans, partially offset by the closing of

RCLT 2026-4. Loans, held for sale decreased $0.5 billion, primarily due to loans sold, partially offset by loans

transferred from Loans, net. Loans, net decreased $0.4 billion, primarily due to loan sales, loans transferred from Loans,

net to Loans, held for sale, and the closing of RCLT 2026-4, partially offset by the collapse of RCMF 2021-FL7, RCMF

2023-FL11, RCMF 2023-FL12 and RCMT 2016-3.

As of September 30, 2026, total liabilities in our consolidated balance sheet were $4.5 billion, a decrease of $1.6 billion

from December 31, 2025, primarily reflecting a decrease in Secured borrowings, Securitized debt obligations of

80

consolidated VIEs, net, Corporate debt, net, and Senior secured notes, net, partially offset by an increase in Guaranteed

loan financing. Secured borrowings decreased $1.1 billion due to the closing of RCLT 2026-4 and payoffs, partially

offset by the collapse of RCMF 2021-FL7, RCMF 2023-FL11, RCMF 2023-FL12 and RCMT 2016-3. Securitized debt

obligations of consolidated VIEs, net decreased $0.6 billion due to the collapse of RCMF 2021-FL7, RCMF 2023-FL11,

RCMF 2023-FL12 and RCMT 2016-3, partially offset by the closing of RCLT 2026-4. Corporate debt, net decreased

$0.2 billion due to the partial repayment of the 5.50% and repayment of the 5.75% and 6.20% Senior unsecured notes.

Senior secured notes, net decreased $0.1 billion due to the repayment of the 4.50% Senior secured notes, partially offset

by the issuance of the 10.00% Senior secured notes due in 2031.Guaranteed loan financing increased $0.4 billion due to

the closing of RCLT 2026-4.

As of September 30, 2026, total stockholders’ equity was $1.3 billion, a decrease of $0.4 billion from December 31,

2025, primarily due to net losses.

Selected Balance Sheet Information by Business Segment. The table below presents certain selected balance sheet data

by business segments, with the remaining amounts reflected in Unallocated –Corporate.

(in thousands)	LMM Commercial Real Estate		Small Business Lending		Total
September 30, 2026
Assets
Loans, net	$2,485,294		$1,476,331		$3,961,625
Loans, held for sale	45,643		67,123		112,766
MBS	32,143		—		32,143
Investment in unconsolidated joint ventures	154,864		222		155,086
Servicing rights	57,194		57,821		115,015
Real estate owned	578,235		565		578,800
Liabilities
Secured borrowings	1,444,179		247,340		1,691,519
Securitized debt obligations of consolidated VIEs	418,731		188,869		607,600
Senior secured notes, net	598,739		—		598,739
Corporate debt, net	446,097		—		446,097
Guaranteed loan financing	—		911,288		911,288
Loan participations sold	56,616		—		56,616

In the table above,

•Loans, net includes assets of consolidated VIEs.

•Loans, held for sale includes assets of consolidated VIEs, net of valuation allowance.

•Real estate owned includes assets of consolidated VIEs.

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Statement of Operations Analysis and Metrics

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2026		2025		$ Change		2026		2025		$ Change
Interest income
LMM commercial real estate	$51,884		$105,856		$(53,972)		$164,718		$353,097		$(188,379)
Small business lending	31,944		31,635		309		78,241		92,096		(13,855)
Total interest income	$83,828		$137,491		$(53,663)		$242,959		$445,193		$(202,234)
Interest expense
LMM commercial real estate	(59,353)		(106,556)		47,203		(205,270)		(342,998)		137,728
Small business lending	(24,474)		(20,415)		(4,059)		(58,244)		(60,276)		2,032
Total interest expense	$(83,827)		$(126,971)		$43,144		$(263,514)		$(403,274)		$139,760
Net interest income before (provision for) recovery of loan losses	$1		$10,520		$(10,519)		$(20,555)		$41,919		$(62,474)
(Provision for) recovery of loan losses
LMM commercial real estate	(9,461)		(30,980)		21,519		(89,673)		81,815		(171,488)
Small business lending	(3,198)		(6,997)		3,799		(15,447)		(18,864)		3,417
Total (provision for) recovery of loan losses	$(12,659)		$(37,977)		$25,318		$(105,120)		$62,951		$(168,071)
Net interest income (loss) after (provision for) recovery of loan losses	$(12,658)		$(27,457)		$14,799		$(125,675)		$104,870		$(230,545)
Non-interest income (loss)
LMM commercial real estate	2,961		17,028		(14,067)		(84,324)		(134,004)		49,680
Small business lending	20,966		32,564		(11,598)		50,108		93,139		(43,031)
Unallocated corporate income	1,399		25,322		(23,923)		3,140		114,844		(111,704)
Total non-interest income (loss)	$25,326		$74,914		$(49,588)		$(31,076)		$73,979		$(105,055)
Non-interest expense
LMM commercial real estate	(35,177)		(29,138)		(6,039)		(108,862)		(84,422)		(24,440)
Small business lending	(25,926)		(28,363)		2,437		(83,308)		(86,146)		2,838
Unallocated corporate expenses	(16,549)		(16,838)		289		(45,788)		(46,650)		862
Total non-interest expense	$(77,652)		$(74,339)		$(3,313)		$(237,958)		$(217,218)		$(20,740)
Net income (loss) before provision for income taxes
LMM commercial real estate	(49,146)		(43,790)		(5,356)		(323,411)		(126,512)		(196,899)
Small business lending	(688)		8,424		(9,112)		(28,650)		19,949		(48,599)
Unallocated corporate expenses	(15,150)		8,484		(23,634)		(42,648)		68,194		(110,842)
Total net income (loss) before provision for income taxes	$(64,984)		$(26,882)		$(38,102)		$(394,709)		$(38,369)		$(356,340)

82

Results of Operations – Supplemental Information. Realized and unrealized gains (losses) on financial instruments are

recorded in the consolidated statements of operations 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.

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2026		2025		$ Change		2026		2025		$ Change
Realized gain (loss) on financial instruments
Creation of mortgage servicing rights
SBA - 7(a)	$1,517		$2,534		$(1,017)		$4,700		$9,623		$(4,923)
Multi-family	1,027		1,102		(75)		4,645		3,730		915
USDA	19		3,085		(3,066)		1,280		6,255		(4,975)
Small business loans	693		476		217		1,609		1,600		9
Total Creation of mortgage servicing rights	$3,256		$7,197		$(3,941)		$12,234		$21,208		$(8,974)
Loans
SBA - 7(a)	5,877		8,608		(2,731)		17,294		36,085		(18,791)
Multi-family	125		374		(249)		592		897		(305)
USDA	—		4,340		(4,340)		1,122		6,197		(5,075)
Total loans	$6,002		$13,322		$(7,320)		$19,008		$43,179		$(24,171)
Gain on sale business
SBA - 7(a)	7,394		11,142		(3,748)		21,994		45,708		(23,714)
Multi-family	1,152		1,476		(324)		5,237		4,627		610
USDA	19		7,425		(7,406)		2,402		12,452		(10,050)
Small business loans	693		476		217		1,609		1,600		9
Total gain on sale business	$9,258		$20,519		$(11,261)		$31,242		$64,387		$(33,145)
Loans, held for sale
Bridge	(12,881)		(178,022)		165,141		(42,842)		(194,907)		152,065
Construction	—		(1,001)		1,001		—		(1,020)		1,020
Other	—		—		—		(3,481)		—		(3,481)
Total loans, held for sale	$(12,881)		$(179,023)		$166,142		$(46,323)		$(195,927)		$149,604
Loans, net
Bridge	(477)		(753)		276		(58,806)		(1,751)		(57,055)
Fixed rate	(43)		(1,701)		1,658		91		(1,717)		1,808
Construction	(10,241)		218		(10,459)		(12,777)		144		(12,921)
Other	(3)		(778)		775		(8)		(879)		871
Total loans, net	$(10,764)		$(3,014)		$(7,750)		$(71,500)		$(4,203)		$(67,297)
Net realized gain (loss) on derivatives, at fair value	$695		$1,807		$(1,112)		$(8,881)		$5,772		$(14,653)
Net realized gain (loss) - all other	$(3,121)		$(685)		$(2,436)		$(3,657)		$(1,542)		$(2,115)
Net realized gain (loss) on financial instruments	$(16,813)		$(160,396)		$143,583		$(99,119)		$(131,513)		$32,394
Unrealized gain (loss) on financial instruments
Loans, held for sale
Fixed rate	—		—		—		—		10		(10)
Freddie Mac	(126)		32		(158)		(130)		(123)		(7)
SBA - 7(a)	795		(597)		1,392		185		1,027		(842)
Other	607		384		223		1,081		622		459
Total Loans, held for sale	$1,276		$(181)		$1,457		$1,136		$1,536		$(400)
Net unrealized gain (loss) on preferred equity, at fair value	$(135)		$1,949		$(2,084)		$(17,436)		$(2,278)		$(15,158)
Net unrealized gain (loss) on derivatives, at fair value	$366		$229		$137		$9,856		$(683)		$10,539
Net unrealized gain (loss) - all other	$667		$917		$(250)		$(2,475)		$975		$(3,450)
Net unrealized gain (loss) on financial instruments	$2,174		$2,914		$(740)		$(8,919)		$(450)		$(8,469)

LMM Commercial Real Estate Segment Results.

Q3 2026 versus Q3 2025. Interest income of $51.9 million represented a decrease of $54.0 million, due to a decrease in

loan balances and an increase in non-accrual loans. Decreased loan balances were primarily driven by reduced

origination activity, portfolio runoff, loan maturities, strategic loan sales, and transfers of loans to held-for-sale

classifications in connection with a broader balance sheet repositioning and liquidity strategy in response to 2026 debt

maturities. The increase in non-accrual loans was principally driven by adverse macroeconomic conditions including

elevated interest rates, inflationary pressures, supply absorption challenges, and cap rate movements. Interest expense of

$59.4 million represented a decrease of $47.2 million, driven by decreased loan balances as described above. Provision

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for loan losses of $9.5 million represented a decrease of $21.5 million, primarily due to a decrease in asset specific

reserves driven by asset resolutions. Non-interest income of $3.0 million represented a decrease of $14.1 million,

primarily due to a decrease in the valuation recovery, partially offset by a decrease in realized losses on financial

instruments related to loan sales. Non-interest expense of $35.2 million represented an increase of $6.0 million, due to an

increase in other operating expenses primarily driven by operating costs and depreciation related to the Portland mixed-

use asset.

YTD 2026 versus YTD 2025. Interest income of $164.7 million represented a decrease of $188.4 million, due to a

decrease in loan balances and an increase in non-accrual loans. Decreased loan balances were primarily driven by

reduced origination activity, portfolio runoff, loan maturities, strategic loan sales, and transfers of loans to held-for-sale

classifications in connection with a broader balance sheet repositioning and liquidity strategy in response to 2026 debt

maturities. The increase in non-accrual loans was principally driven by adverse macroeconomic conditions including

elevated interest rates, inflationary pressures, supply absorption challenges, and cap rate movements. Interest expense of

$205.3 million represented a decrease of $137.7 million, driven by decreased loan balances as described above.

Provision for loan losses of $89.7 million represented an increase of $171.5 million, primarily due to changes in the

forecasted macroeconomic inputs for reserve modeling and an increase in asset specific reserves, partially offset by loans

transferred from Loans, net to Loans, held for sale and by asset resolutions. Non-interest loss of $84.3 million

represented a decrease of $49.7 million, primarily due to a decrease in net realized losses on financial instruments and

income from the Portland mixed-use asset, partially offset by a decrease in the valuation recovery. Non-interest expense

of $108.9 million represented an increase of $24.4 million, due to an increase in other operating expenses primarily

driven by operating costs and depreciation related to the Portland mixed-use asset, partially offset by a decrease in loan

servicing expenses.

Small Business Lending Segment Results.

Q3 2026 versus Q3 2025. Interest income of $31.9 million was essentially unchanged from the prior year period. Interest

expense of $24.5 million represented an increase of $4.1 million, driven by an increase in average loan balances,

partially offset by a decrease in interest rates. Provision for loan losses of $3.2 million represented a decrease of $3.8

million, due to changes in the forecasted macroeconomic inputs for reserve modeling. Non-interest income of $21.0

million represented a decrease of $11.6 million, primarily due to a decrease in realized gains on financial instruments.

Non-interest expense of $25.9 million represented a decrease of $2.4 million, due to a decrease in professional fees,

partially offset by an increase in loan servicing expenses.

YTD 2026 versus YTD 2025. Interest income of $78.2 million represented a decrease of $13.9 million, primarily due to

a decrease in average loan balances and a decrease in interest rates. Interest expense of $58.2 million represented a

decrease of $2.0 million, driven by a decrease in average loan balances and a decrease in interest rates. Provision for loan

losses of $15.4 million represented a decrease of $3.4 million, due to changes in the forecasted macroeconomic inputs

for reserve modeling. Non-interest income of $50.1 million represented a decrease of $43.0 million, primarily due to a

decrease in net realized gains on financial instruments. Non-interest expense of $83.3 million represented a decrease of

$2.8 million, due to decreases in employee compensation and benefits and loan origination expenses, partially offset by

an increase in loan servicing expenses.

Unallocated – Corporate.

Q3 2026 versus Q3 2025. Non-interest income of $1.4 million represented a decrease of $23.9 million, primarily due to

a gain on bargain purchase recognized from the UDF IV Merger in the prior year period. Such gain on bargain purchase

was primarily driven by a discount in UDF IV’s market valuation due to factors such as the illiquid nature of UDF IV’s

shares, and a change in our stock price between the date of the agreement and the closing date of the UDF IV Merger.

Non-interest expense of $16.5 million represented a decrease of $0.3 million, primarily due to a decrease in management

fees and transaction related expenses, partially offset by an increase in professional fees.

YTD 2026 versus YTD 2025. Non-interest income of $3.1 million represented a decrease of $111.7 million, primarily

due to a gain on bargain purchase recognized from the UDF IV Merger in the prior year period, primarily driven by a

discount in UDF IV’s market valuation due to factors such as the illiquid nature of UDF IV’s shares, and a change in our

stock price between the date of the agreement and the closing date of the UDF IV Merger. Non-interest expense of $45.8

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million represented a decrease of $0.9 million, primarily due to decreased management fees and transaction related

expenses, partially offset by an increase in professional fees and employee compensation and benefits.

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.

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 from discontinued operations

iv)any unrealized change in current expected credit loss reserve and valuation allowances

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

vi)any unrealized gains or losses on foreign exchange hedges

vii)any unrealized gains or losses on certain unconsolidated joint ventures

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

ix)any unrealized gains or losses on preferred equity, at fair value

x)any unrealized gain or losses or other non-cash items related to real estate owned

xi)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 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 from discontinued operations. Servicing rights relating

to our small business commercial business are accounted for under ASC 860, Transfer and Servicing. In calculating

distributable earnings, we do not exclude realized gains or losses on commercial MSRs, as servicing income is a

fundamental part of our business and an indicator of the ongoing performance.

Furthermore, we believe it is useful to present distributable earnings before realized losses on certain investments, such

as charge-offs and losses realized on sales of real estate owned assets and LMM loans, to reflect our direct operating

results. We utilize distributable earnings before realized losses as an additional performance metric to consider when

assessing our ability to declare and pay dividends. Distributable earnings and distributable earnings before realized

losses are non-U.S. GAAP financial measures and because these non-U.S. GAAP measures are incomplete measures of

our financial performance and involve differences from net income computed in accordance with U.S. GAAP, they

should be considered along with, but not as alternatives to, our net income as measures of our financial performance. In

addition, because not all companies use identical calculations, our presentations of distributable earnings and

distributable earnings before realized losses may not be comparable to other similarly-titled measures of other

companies.

Distributable return on equity is calculated as distributable earnings (loss) as a percentage of average stockholders’

equity.

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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 before realized losses and distributable

earnings.

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2026		2025		$ Change		2026		2025		$ Change
Net income (loss)	$(62,192)		$(16,737)		$(45,455)		$(361,962)		$11,551		$(373,513)
Reconciling items:
Unrealized (gain) loss on MSR - discontinued operations	—		—		—		—		8,952		(8,952)
Unrealized (gain) loss on joint ventures	(1,408)		(4,336)		2,928		492		2,322		(1,830)
Increase (decrease) in CECL reserve	(16,057)		32,844		(48,901)		18,866		(78,796)		97,662
Increase (decrease) in valuation allowance	(12,877)		(178,225)		165,348		(8,767)		(38,761)		29,994
Non-recurring REO impairment	4,681		1,862		2,819		5,164		8,626		(3,462)
Depreciation and amortization on real estate owned	1,580		1,100		480		4,731		1,100		3,631
Non-cash compensation	1,712		1,591		121		5,825		5,010		815
Unrealized (gain) loss on preferred equity, at fair value	135		(1,949)		2,084		17,436		2,278		15,158
Merger transaction costs and other non-recurring expenses	2,758		2,220		538		5,751		8,874		(3,123)
Bargain purchase (gain) loss	—		(24,472)		24,472		—		(112,562)		112,562
Realized losses on sale of investments	53,870		188,512		(134,642)		214,624		217,492		(2,868)
Total reconciling items	$34,394		$19,147		$15,247		$264,122		$24,535		$239,587
Income tax adjustments	(3,407)		(4,580)		1,173		(17,698)		(46,820)		29,122
Distributable earnings (loss) before realized losses	$(31,205)		$(2,170)		$(29,035)		$(115,538)		$(10,734)		$(104,804)
Realized losses on sale of investments, net of tax	(51,939)		(147,422)		95,483		(201,058)		(170,034)		(31,024)
Distributable earnings (loss)	$(83,144)		$(149,592)		$66,448		$(316,596)		$(180,768)		$(135,828)
Less: Distributable earnings attributable to non-controlling interests	1,919		1,473		446		5,548		5,419		129
Less: Income attributable to participating shares	2,054		2,210		(156)		6,168		6,652		(484)
Distributable earnings (loss) attributable to common stockholders	$(87,117)		$(153,275)		$66,158		$(328,312)		$(192,839)		$(135,473)
Distributable earnings (loss) before realized losses on investments, net of tax per common share - basic	$(0.21)		$(0.04)		$(0.17)		$(0.78)		$(0.14)		$(0.64)
Distributable earnings (loss) before realized losses on investments, net of tax per common share - diluted	$(0.21)		$(0.04)		$(0.17)		$(0.78)		$(0.14)		$(0.64)
Distributable earnings (loss) per common share - basic	$(0.53)		$(0.94)		$0.41		$(1.99)		$(1.17)		$(0.82)
Distributable earnings (loss) per common share - diluted	$(0.53)		$(0.94)		$0.41		$(1.99)		$(1.17)		$(0.82)

Q3 2026 versus Q3 2025. Consolidated net loss of $62.2 million for the third quarter of 2026 represented an increase of

$45.5 million from the third quarter of 2025, primarily due to a decrease in the valuation allowance, a gain on bargain

purchase recognized from the UDF IV Merger in the prior year period driven by a discount in UDF IV’s market

valuation due to factors such as the illiquid nature of UDF IV’s shares, and a change in our stock price between the date

of the agreement and the closing date of the UDF IV Merger, and a decrease in net interest income, partially offset by a

decrease in the provision for loan losses. Consolidated distributable loss before realized losses of $31.2 million for the

third quarter of 2026 represented an increase of $29.0 million from the third quarter of 2025. The increase in the

distributable earnings reconciling items is primarily due to a decrease in the valuation allowance, partially offset by a

decrease in realized losses on sale of investments. Consolidated distributable loss of $83.1 million for the third quarter of

2026 represented a decrease of $66.4 million from the third quarter of 2025 due to lower charge-offs and losses realized

on sales of real estate owned assets and LMM loans.

YTD 2026 versus YTD 2025. Consolidated net loss of $362.0 million for the nine months ended September 30, 2026

represented an increase of $373.5 million from the nine months ended September 30, 2025, primarily due to an increase

in the provision for loan losses, a gain on bargain purchase recognized from the UDF IV Merger in the prior year period,

primarily driven by a discount in UDF IV’s market valuation due to factors such as the illiquid nature of UDF IV’s

shares, and a change in our stock price between the date of the agreement and the closing date of the UDF IV Merger,

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and a decrease in net interest income. Consolidated distributable loss before realized losses of $115.5 million for the nine

months ended September 30, 2026 represented an increase of $104.8 million from the nine months ended September 30,

2025. The increase in the distributable earnings reconciling items is primarily due to a gain on bargain purchase

recognized from the UDF IV Merger in the prior year period, primarily driven by a discount in UDF IV’s market

valuation due to factors such as the illiquid nature of UDF IV’s shares, and a change in our stock price between the date

of the agreement and the closing date of the UDF IV Merger and an increase in the provision for loan losses.

Consolidated distributable loss of $316.6 million for the nine months ended September 30, 2026 represented an increase

of $135.8 million from the nine months ended September 30, 2025 due to certain charge-offs and losses realized on sales

of real estate owned assets and LMM loans.

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) IFCE (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, our 2023 Equity Incentive Plan and

Broadmark's 2019 Stock Incentive Plan (the “Broadmark Equity 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 IFCE 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, incentive fee core earnings (“IFCE”) is

defined under the partnership agreement of the operating partnership as GAAP net income (loss) of the operating

partnership excluding non-cash equity compensation expense, the expenses incurred in connection with the operating

partnership's formation or continuation, the incentive distribution, real estate depreciation and amortization (to the extent

that we foreclose on any properties underlying our assets) and any unrealized gains, losses, or other non-cash items

recorded in the period, regardless of whether such items are included in other comprehensive income or loss, or in net

income. The amount will be adjusted to exclude one-time events pursuant to changes in 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.

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 LMM loans and other target assets, originate new LMM loans, pay dividends, repay

principal and interest on our borrowings, fund our operations and meet other general business needs. Certain of our loans

pay PIK interest rather than cash interest payments and from time to time, we may grant concessions to borrowers

experiencing significant financial difficulties in the form of modified terms such as interest rate reductions and other

terms described elsewhere in this Form 10-Q. These factors may increase our reliance on our primary sources of

liquidity, including our existing cash balances, borrowings, including securitizations, re-securitizations, repurchase

agreements, warehouse facilities, bank credit facilities and other financing agreements (including term loans and

87

revolving facilities), the net proceeds of offerings of equity and secured and unsecured debt securities, and net cash

provided by operating and investing activities.

We believe that our ability to extend our credit and warehouse facilities and our sources of capital will provide sufficient

liquidity to fund ongoing obligations. On September 28, 2026, we redeemed all $350.0 million of the outstanding 2026

Senior Secured Notes, using the net proceeds from the issuance of the 2031 Senior Secured Notes together with cash on

hand. Following the redemption, approximately $200.0 million of debt is maturing in the next twelve months. We had

approximately $157.0 million of unrestricted cash and approximately $606.0 million of unencumbered assets as of

September 30, 2026. With the successful execution of our liquidity initiatives including portfolio sales and runoff, along

with optimizing financing on CRE loans, we expect to be well positioned to address our remaining upcoming debt

maturities. We expect to utilize these resources, together with our access to the capital markets, to meet our liquidity

needs.

We are continuing to monitor the impact of shifts in 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, 2026. Cash, cash equivalents and restricted cash as of September 30, 2026,

decreased by $38.3 million to $211.3 million from December 31, 2025, primarily due to net cash used for financing

activities, partially offset by net cash provided by investing and operating activities. The net cash used for financing

activities primarily reflected net repayments of secured borrowings, repayments of securitized debt obligations of

consolidated VIEs, repayments of senior secured notes and repayments of corporate debt, partially offset by proceeds

from senior secured notes. The net cash provided by investing activities primarily reflected proceeds from disposition

and principal payments of loans, partially offset by net cash used for loan originations. The net cash provided by

operating activities primarily reflected the sale of Loans, held for sale, realized losses on financial instruments and

provision for loan losses, partially offset by net losses.

Nine Months Ended September 30, 2025. Cash, cash equivalents and restricted cash as of September 30, 2025,

increased by $11.7 million to $194.5 million from December 31, 2024, 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 disposition and principal payments of loans, partially offset by net cash used

for loan originations. The net cash provided by operating activities reflected the sale of Loans, held for sale and realized

losses, partially offset by a bargain purchase gain in connection with the UDF IV Merger which was primarily driven by

a discount in UDF IV’s market valuation due to factors such as the illiquid nature of UDF IV’s shares and a change in

our stock price between the date of the agreement and the closing date of the merger, and a recovery of loan losses

related to the transfer of Loans, net to Loans, held for sale. The net cash used for financing activities primarily reflected

repayments of securitized debt obligations of consolidated VIEs, partially offset by net proceeds from secured

borrowings.

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 SBL with secured borrowings until the loans are sold, generally within 30 days.

88

As of September 30, 2026, we had a total leverage ratio of 2.8x and recourse leverage ratio of 1.5x. Our operating

segments have different levels of recourse debt according to the differentiated nature of each segment. Our LMM

Commercial Real Estate and Small Business Lending segments have recourse leverage ratios of 0.4x and 0.2x,

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.

						Pledged Assets		Carrying Value at
Lenders (1)	Asset Class	Current Maturity (2)	Pricing (3)	Facility Size		Carrying Value		September 30, 2026		December 31, 2025
2	SBA loans	November 2026 to June 2027	SOFR + 2.50% Prime - 0.82%	$275,000		$225,257		$222,825		$307,522
1	LMM loans - USD	Matured	SOFR + 1.75%	—		—		—		16,425
1	LMM loans - Non-USD (4)	Matured	EURIBOR + 3.00%	—		—		—		29,965
2	USDA loans	June 2027 - August 2028	SOFR + 2.75%	198,500		41,009		24,514		31,204
1	Real estate owned	November 2056	7.81%	140,569		385,532		139,397		—
Total borrowings under credit facilities and other financing agreements				$614,069		$651,798		$386,736		$385,116

(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

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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 LMM loans, LMM 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.

						Pledged Assets		Carrying Value at
Lenders (1)	Asset Class	Current Maturity (2)	Pricing (3)	Facility Size		Carrying Value		September 30, 2026		December 31, 2025
5	LMM loans	February 2027 to August 2029	SOFR + 2.74%	$3,150,000		$1,848,634		$1,205,741		$2,277,028
3	MBS	October 2026 to February 2027	5.53%	99,042		175,070		99,042		126,782
Total borrowings under repurchase agreements				$3,249,042		$2,023,704		$1,304,783		$2,403,810

(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.

Collateralized borrowings under repurchase agreements

The table below presents the amount of 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 2024	1,718,131		1,795,627		1,846,677
Q1 2025	2,425,258		1,922,525		2,425,258
Q2 2025	3,135,931		2,673,449		3,135,931
Q3 2025	2,460,953		2,699,935		3,021,745
Q4 2025	2,403,810		2,402,929		2,431,561
Q1 2026	1,963,443		2,178,978		2,628,893
Q2 2026	1,662,849		1,788,459		1,873,815
Q3 2026	1,304,783		1,405,097		1,471,418

The net decrease in the outstanding balances during the third quarter of 2026 was primarily due to paydowns and sales of

warehouse loans.

Paycheck Protection Program Liquidity Facility borrowings. The Company uses the PPPLF from the Federal Reserve

to finance PPP loans. The program charges an interest rate of 0.35%. As of September 30, 2026, this credit facility was

fully repaid.

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Senior Secured 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, 2026
Senior secured notes principal amount(1)	10.00%		9/30/2031		$225,000
Senior secured notes principal amount(2)	9.375%		3/1/2028		270,000
Term loan principal amount(3)	SOFR + 6.50%		4/12/2029		115,250
Unamortized discount					(2,589)
Unamortized deferred financing costs					(8,922)
Total senior secured notes, net					$598,739
Corporate debt principal amount(4)	5.50%		12/30/2028		85,000
Corporate debt principal amount(5)	7.375%		7/31/2027		100,000
Corporate debt principal amount(6)	5.00%		11/15/2026		100,000
Corporate debt principal amount(7)	9.00%		12/15/2029		129,371
Unamortized discount - corporate debt					(3,742)
Unamortized deferred financing costs - corporate debt					(782)
Junior subordinated notes principal amount(8)	SOFR + 3.10%		3/30/2035		15,000
Junior subordinated notes principal amount(9)	SOFR + 3.10%		4/30/2035		21,250
Total corporate debt, net					$446,097
Total carrying amount of debt					$1,044,836

(1)Interest on the senior secured notes is payable semiannually on March 30 and September 30 of each year.

(2)Interest on the senior secured notes is payable semiannually on March 1 and September 1 of each year.

(3)Interest on the term loan is payable quarterly on January 12, April 12, July 12 and October 12 of each year.

(4)Interest on the corporate debt is payable semiannually on June 30 and December 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 (as defined below).

(7) Interest on the corporate debt is payable quarterly on March 15, June 15, September 15, and December 15 of each year.

(8) Interest on the Junior subordinated notes I-A is payable quarterly on March 30, June 30, September 30, and December 30 of each year.

(9) 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, 2026
2026	$100,000
2027	100,000
2028	355,000
2029	244,621
2030	—
Thereafter	261,250
Total contractual amounts	$1,060,871
Unamortized deferred financing costs, discounts, and premiums, net	(16,035)
Total carrying amount of debt	$1,044,836

ReadyCap Holdings II, LLC (“ReadyCap Holdings II”) 10.00% senior secured notes due 2031. On September 28,

2026, ReadyCap Holdings II, LLC, an indirect subsidiary of the Company, completed the offer and sale of $225.0

million of its 10.00% Senior Secured Notes due 2031 (the “2031 Senior Secured Notes”). The 2031 Senior Secured

Notes are fully and unconditionally guaranteed by the Company, each direct parent entity of ReadyCap Holdings II, and

each other direct or indirect subsidiary of the Company that, from time to time, guarantees the 2031 Senior Secured

Notes or otherwise pledges collateral to secure the 2031 Senior Secured Notes (collectively, the “2031 SSN

Guarantors”).

ReadyCap Holdings II’s and the 2031 SSN Guarantors’ respective obligations under the 2031 Senior Secured Notes are

secured by a perfected first-priority lien on certain capital stock and assets (collectively, the “2031 SSN Collateral”)

owned by certain subsidiaries of the Company.

The 2031 Senior Secured Notes are redeemable by ReadyCap Holdings II prior to September 30, 2030 through the

payment of the outstanding principal balance of the 2031 Senior Secured Notes plus a “make-whole” premium. On or

after September 30, 2030, the 2031 Senior Secured Notes are redeemable by ReadyCap Holdings II at a redemption price

equal to 100% of the outstanding principal amount of the 2031 Senior Secured Notes, plus accrued and unpaid interest

thereon. ReadyCap Holdings II is required to repurchase the 2031 Senior Secured Notes in the event of a change of

control, at a redemption price equal to 100% of the principal balance of the 2031 Senior Secured Notes plus a “make-

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whole premium” if such prepayment occurs on or prior to September 30, 2030, and at 102% of the principal balance of

the 2031 Senior Secured Notes if such prepayment occurs after September 30, 2030, as set forth more fully in the note

purchase agreement governing the 2031 Senior Secured Notes.

The 2031 Senior Secured Notes were issued pursuant to a note purchase agreement, which contains certain customary

negative covenants and requirements relating to the collateral and the Company, ReadyCap Holdings II, and the 2031

SSN Guarantors, including maintenance of minimum liquidity, minimum tangible net worth, minimum collateral

coverage, minimum unencumbered cash and assets, maximum debt to net worth ratio, minimum interest coverage ratio,

and limitations on transactions with affiliates.

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 “2026 Senior Secured Notes”). The 2026 Senior Secured Notes are fully and unconditionally guaranteed by the

Company, each direct parent entity of ReadyCap Holdings, and each other direct or indirect subsidiary 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

2026 Senior Secured Notes (collectively, the “2026 SSN Guarantors”).

ReadyCap Holdings’ and the 2026 SSN Guarantors’ respective obligations under the 2026 Senior Secured Notes are

secured by a perfected first-priority lien on certain capital stock and assets (collectively, the “2026 SSN Collateral”)

owned by certain subsidiaries of the Company.

The 2026 Senior Secured Notes are redeemable by ReadyCap Holdings following a non-call period, through the

payment of the outstanding principal balance of the 2026 Senior Secured Notes plus a “make-whole” or other premium

that decreases the closer the 2026 Senior Secured Notes are to maturity. ReadyCap Holdings is required to offer to

repurchase the 2026 Senior Secured Notes at 101% of the principal balance of the 2026 Senior Secured Notes in the

event of a change in control and a downgrade of the rating on the 2026 Senior Secured Notes in connection therewith, as

set forth more fully in the note purchase agreement governing the 2026 Senior Secured Notes.

The 2026 Senior Secured Notes were issued pursuant to a note purchase agreement, which contains certain customary

negative covenants and requirements relating to the collateral and the Company, ReadyCap Holdings, and the 2026 SSN

Guarantors, including maintenance of minimum liquidity, minimum tangible net worth, maximum debt to net worth

ratio, and limitations on transactions with affiliates.

On September 28, 2026, ReadyCap Holdings redeemed all of its outstanding 2026 Senior Secured Notes.

ReadyCap Holdings 9.375% senior secured notes due 2028. On February 21, 2025, ReadyCap Holdings completed the

offer and sale of $220.0 million of its 9.375% Senior Secured Notes due 2028 (the “2028 Senior Secured Notes” and,

with the 2031 Senior Secured Notes, collectively, the “Senior Secured Notes”) for net proceeds of $216.7 million before

expenses. The 2028 Senior Secured Notes are fully and unconditionally guaranteed by the Company and each other

direct or indirect subsidiary of the Company that, from time to time, pledges collateral to secure the 2028 Senior Secured

Notes (collectively, the “2028 SSN Guarantors”).

ReadyCap Holdings’ and the 2028 SSN Guarantors’ respective obligations under the 2028 Senior Secured Notes are

secured by a perfected first-priority lien on certain capital stock and assets (collectively, the “2028 SSN Collateral”)

owned by certain subsidiaries of the Company.

The 2028 Senior Secured Notes are redeemable by ReadyCap Holdings following a non-call period, through the

payment of the outstanding principal balance of the 2028 Senior Secured Notes plus a “make-whole” or other premium

that decreases the closer the 2028 Senior Secured Notes are to maturity. ReadyCap Holdings is required to offer to

repurchase the 2028 Senior Secured Notes at 101% of the principal balance of the 2028 Senior Secured Notes in the

event of a change in control and a downgrade of the rating on the 2028 Senior Secured Notes in connection therewith, as

set forth more fully in the note purchase agreement governing the 2028 Senior Secured Notes.

The 2028 Senior Secured Notes were issued pursuant to a note purchase agreement, which contains certain customary

negative covenants and requirements relating to the collateral and the Company, ReadyCap Holdings, and the 2028 SSN

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Guarantors, including maintenance of minimum tangible net worth, maximum debt to net worth ratio, unencumbered

cash and asset requirements, and limitations on transactions with affiliates.

On April 16, 2025, ReadyCap Holdings issued an additional $50.0 million in aggregate principal amount of its 2028

Senior Secured Notes for net proceeds of $49.3 million before expenses. The additional notes are fungible with and

treated as a single series of debt securities as the Company’s 2028 Senior Secured Notes issued on February 21, 2025.

The Company used the net proceeds from the issuance of the additional notes to repay its indebtedness and for general

corporate purposes.

Ready Term Holdings, LLC (“Ready Term Holdings”) term loan due 2029. On April 12, 2024, Ready Term Holdings,

an indirect subsidiary of the Company, entered into a credit agreement which provides for a delayed draw term loan to

the Company in an aggregate principal amount not to exceed $115.25 million (the “Term Loan”). The Term Loan is fully

and unconditionally guaranteed by the Company and each other direct or indirect subsidiary of the Company that, from

time to time, pledges collateral to secure the Term Loan (collectively, the “Term Loan Guarantors”).

Ready Term Holdings’ and the Term Loan Guarantors’ respective obligations under the Term Loan are secured by a

perfected first-priority lien on certain capital stock and assets (collectively, the “Term Loan Collateral”) owned by

certain subsidiaries of the Company.

The Term Loan matures on April 12, 2029, and may be drawn at any time on or prior to January 12, 2025, subject to the

satisfaction of customary conditions. The Company borrowed $75.0 million in connection with the initial closing of the

Term Loan. On August 19, 2024, the Company borrowed an additional $20.0 million. On January 10, 2025, the

Company borrowed an additional $20.25 million. The Term Loan bears interest on the outstanding principal amount

thereof at a rate equal to (a) SOFR plus 6.50% per annum or (b) base rate plus 5.50% per annum; provided that if at any

time the Term Loan is rated below investment grade, the interest rate shall increase to (x) SOFR plus 7.50% per annum

or (y) base rate plus 6.50% per annum until the rating is no longer below investment grade. In connection with the entry

into the credit agreement, the Company also agreed to pay certain upfront fees on the initial borrowing date. The

Company will also pay, with respect to any unused portion of the Term Loan, a commitment fee of 1.00% per annum.

The Term Loan was issued pursuant to a credit agreement, which contains certain customary representations and

warranties and affirmative and negative covenants and requirements relating to the collateral and the Company, Ready

Term Holdings, and the Term Loan Guarantors, including maintenance of a minimum asset coverage ratio and a

maximum debt to equity ratio.

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 merger among the Company, Broadmark Realty Capital Inc. (“Broadmark”), and

Ready Capital Investments, LLC (formerly known as “RCC Merger Sub, LLC”), a wholly owned subsidiary of the

operating partnership (“Ready Capital Investments”), in which Broadmark merged with and into Ready Capital

Investments, with Ready Capital Investments remaining as a wholly owned subsidiary of the operating partnership (the

“Broadmark Merger”), Ready Capital Investments assumed Broadmark’s obligations on certain senior unsecured notes.

The note purchase agreement governing these notes contains financial covenants that require compliance with leverage

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and coverage ratios and maintenance of minimum tangible net worth, as well as other customary affirmative and

negative covenants.

Securitization transactions

Our Manager’s extensive experience in loan acquisition, origination, servicing and securitization strategies has enabled

us to complete several securitizations of LMM and SBA loan assets since January 2011. These securitizations allow us

to match fund the LMM 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 LMM 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)	Collateral Asset Class	Issuance	Active / Collapsed / Sold	Bonds Issued
Trusts (Firm sponsored)
Waterfall Victoria Mortgage Trust 2011-1 (SBC1)	LMM Acquired loans	February 2011	Collapsed	$40.5
Waterfall Victoria Mortgage Trust 2011-3 (SBC3)	LMM Acquired loans	October 2011	Collapsed	143.4
Sutherland Commercial Mortgage Trust 2015-4 (SBC4)	LMM Acquired loans	August 2015	Collapsed	125.4
Sutherland Commercial Mortgage Trust 2018 (SBC7)	LMM 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
ReadyCap Lending Small Business Loan Trust 2026-4 (RCLT 2026-4)	Originated SBA 7(a) loans	June 2026	Active	145.2
Real Estate Mortgage Investment Conduits (REMICs)
ReadyCap Commercial Mortgage Trust 2014-1 (RCMT 2014-1)	LMM Originated conventional	September 2014	Collapsed	181.7
ReadyCap Commercial Mortgage Trust 2015-2 (RCMT 2015-2)	LMM Originated conventional	November 2015	Collapsed	218.8
ReadyCap Commercial Mortgage Trust 2016-3 (RCMT 2016-3)	LMM Originated conventional	November 2016	Sold	162.1
ReadyCap Commercial Mortgage Trust 2018-4 (RCMT 2018-4)	LMM Originated conventional	March 2018	Active	165.0
Ready Capital Mortgage Trust 2019-5 (RCMT 2019-5)	LMM Originated conventional	January 2019	Active	355.8
Ready Capital Mortgage Trust 2019-6 (RCMT 2019-6)	LMM Originated conventional	November 2019	Active	430.7
Ready Capital Mortgage Trust 2022-7 (RCMT 2022-7)	LMM Originated conventional	April 2022	Active	276.8
Waterfall Victoria Mortgage Trust 2011-2 (SBC2)	LMM Acquired loans	March 2011	Collapsed	97.6
Sutherland Commercial Mortgage Trust 2018 (SBC6)	LMM Acquired loans	August 2017	Collapsed	154.9
Sutherland Commercial Mortgage Trust 2019 (SBC8)	LMM Acquired loans	June 2019	Active	306.5
Sutherland Commercial Mortgage Trust 2020 (SBC9)	LMM Acquired loans	June 2020	Collapsed	203.6
Sutherland Commercial Mortgage Trust 2021 (SBC10)	LMM Acquired loans	May 2021	Active	232.6
Collateralized Loan Obligations (CLOs)
Ready Capital Mortgage Financing 2017– FL1	LMM Originated bridge	August 2017	Collapsed	198.8
Ready Capital Mortgage Financing 2018 – FL2	LMM Originated bridge	June 2018	Collapsed	217.1
Ready Capital Mortgage Financing 2019 – FL3	LMM Originated bridge	April 2019	Collapsed	320.2
Ready Capital Mortgage Financing 2020 – FL4	LMM Originated bridge	June 2020	Collapsed	405.3
Ready Capital Mortgage Financing 2021 – FL5	LMM Originated bridge	March 2021	Collapsed	628.9
Ready Capital Mortgage Financing 2021 – FL6	LMM Originated bridge	August 2021	Collapsed	652.5
Ready Capital Mortgage Financing 2021 – FL7	LMM Originated bridge	November 2021	Collapsed	927.2
Ready Capital Mortgage Financing 2022 – FL8	LMM Originated bridge	March 2022	Collapsed	1,135.0
Ready Capital Mortgage Financing 2022 – FL9	LMM Originated bridge	June 2022	Collapsed	754.2
Ready Capital Mortgage Financing 2022 – FL10	LMM Originated bridge	October 2022	Collapsed	860.1
Ready Capital Mortgage Financing 2023 – FL11	LMM Originated bridge	February 2023	Collapsed	586.0
Ready Capital Mortgage Financing 2023 – FL12	LMM Originated bridge	June 2023	Collapsed	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)	LMM Originated conventional	September 2020	Active	263.2

(1)Contributed portion of assets into trust

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We used the proceeds from the sale of the tranches issued to purchase and originate LMM and SBL 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, 2026. Refer to 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.

We utilize loan loss forecasting models for estimating expected life-time credit losses, at the individual loan level, for its

loan portfolio. The Current Expected Credit Loss (“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

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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.

Valuation of financial assets and liabilities carried at fair value

We measure our MBS, derivative assets and liabilities, 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.

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– Recent 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.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

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

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economic disruptions caused by inflationary pressures, rising energy costs, heightened geopolitical tensions, and the

impact of pandemics and epidemics which remain uncertain and difficult to predict. We continue to monitor the impact

and 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 LMM loans and LMM 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.

Interest rate risk. Interest rates are 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 LMM 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 LMM 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, 2026, assuming an immediate increase or decrease of 25, 50, 75, and 100 basis points in interest rates.

	12-month pretax net interest income sensitivity profiles
	Instantaneous change in rates
(in thousands)	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
Assets:
Loans	$3,489		$7,059		$10,662		$14,398		$(3,366)		$(6,696)		$(9,903)		$(12,985)
Interest rate swap hedges	350		700		1,050		1,400		(350)		(700)		(1,050)		(1,400)
Total	$3,839		$7,759		$11,712		$15,798		$(3,716)		$(7,396)		$(10,953)		$(14,385)
Liabilities:
Secured borrowings	(3,633)		(7,265)		(10,898)		(14,531)		3,633		7,265		10,898		14,531
Securitized debt obligations	(480)		(961)		(1,441)		(1,922)		480		961		1,441		1,922
Senior secured notes and corporate debt	(379)		(758)		(1,136)		(1,515)		379		758		1,136		1,515
Total	$(4,492)		$(8,984)		$(13,475)		$(17,968)		$4,492		$8,984		$13,475		$17,968
Total Net Impact to Net Interest Income (Expense)	$(653)		$(1,225)		$(1,763)		$(2,170)		$776		$1,588		$2,522		$3,583

97

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. It also includes risk stemming from PIK interest loans and loan modifications we may grant

to borrowers which are intended to minimize our economic loss and to avoid foreclosure or repossession of collateral.

Such modifications may include interest rate reductions, principal forgiveness, term extensions, and other-than-

insignificant payment delay, which may impact our ability to meet potential cash requirements and make us more reliant

on financing strategies. Additionally, 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 LMM 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.

LMM 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 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 mortgage loans, MBS and other

assets with our repurchase agreements, credit facilities, and other financing agreements. In connection with these

98

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.

	September 30, 2026
(in thousands)	Counterparty Rating		Amount of Risk		Weighted Average Months to Maturity for Agreement		Percentage of Stockholders’ Equity
JPMorgan Chase Bank, N.A.	AA-/Aa2		$432,586		35.3		33.8%
Nomura Corporate Funding Americas, LLC	BBB+/Baa1		$138,695		16.0		10.8%
Churchill MRA Funding I LLC	Not rated		$67,666		5.3		5.3%

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.

99

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. Refer to “Quantitative and Qualitative

Disclosures About Market Risk – Interest Rate Risk” in this Form 10-Q for a discussion on interest rate sensitivity.

Item 4. Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be

disclosed in its 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, 2026. 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, 2026, that have materially affected, or are reasonably likely to

materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

For information regarding certain legal proceedings involving the Company, see Note 24 of the Notes to Consolidated

Financial Statements, which is incorporated herein by reference.

Item 1A. Risk Factors

There have been no material changes from risk factors previously disclosed in the Company’s Form 10-K under Part I,

Item 1A. 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.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Share Repurchase Program

On January 16, 2025, our Board approved a new share repurchase program, replacing the previous program, authorizing,

but not obligating the repurchase of up to $150.0 million of our common stock. Repurchases under the stock repurchase

programs may be made at management’s discretion from time to time on the open market, in privately negotiated

transactions or otherwise, in each case subject to compliance with all Securities and Exchange Commission rules and

other legal requirements and may be made in part under one or more Rule 10b5-1 and Rule 10b-18 plans, which permit

stock repurchases at times when we might otherwise be precluded from doing so. The timing and amount of repurchase

transactions will be determined by our management based on its evaluation of market conditions, share price, legal

requirements and other factors.

100

The table below presents purchases of our common stock during the quarter.

	Total Number of Shares Purchased			Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Programs		Maximum Shares (or Approximate Dollar Value) That May Yet Be Purchased Under the Program
July	—			$—		—		$82,770,332
August	—			—		—		82,770,332
September	1,489			1.60		—		82,770,332
Total	1,489	(1)		$1.60	(2)	—		$82,770,332

(1)Total shares purchased includes shares of common stock owned by certain of our employees which have been surrendered by them to satisfy their tax and other

compensation related withholdings associated with the vesting of restricted stock units and other equity awards.

(2)The price paid per share is based on the price of our common stock as of the date of the withholding.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None of our officers and directors entered into, modified or terminated any “Rule 10b5-1 trading arrangements” or “non-

Rule 10b5-1 trading arrangements” (each as defined in Item 408(c) of Regulation S-K) during the quarter ended

September 30, 2026.

Item 6. Exhibits

101

Exhibit number		Exhibit description
4.1		First Supplement to Eighth Supplemental Indenture, dated as of September 18, 2026, by and between Ready Capital Corporation and U.S. Bank Trust Company, National Association, as trustee (incorporated by reference to Exhibit 4.4 to the Registrant's Current Report on Form 8-K filed with the SEC on September 23, 2026).
10.1		Ready Capital Corporation Amended & Restated 2023 Equity Incentive Plan (incorporated by reference to Annex A to the Registrant’s Definitive Proxy Statement on Schedule 14A filed with the SEC on June 1, 2026).
31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	*	Certification of the Chief Executive Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	*	Certification of the Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH		Inline XBRL Taxonomy Extension Scheme Document
101.CAL		Inline XBRL Taxonomy Calculation Linkbase Document
101.DEF		Inline XBRL Extension Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Linkbase Document
101.PRE		Inline XBRL Taxonomy Presentation Linkbase Document
104		Cover Page Interactive Data File (embedded with the Inline XBRL document)

* This exhibit is being furnished rather than filed, and shall not be deemed incorporated by reference into any filing, in accordance with Item 601 of Regulation S-K.

102

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be

signed on its behalf by the undersigned thereunto duly authorized.

READY CAPITAL CORPORATION

Date:  November 6, 2026	By:	/s/ Thomas E. Capasse
		Thomas E. Capasse
		Chairman of the Board, Chief Executive Officer and Chief Investment Officer
		(Principal Executive Officer)
Date:  November 6, 2026	By:	/s/ Andrew Ahlborn
		Andrew Ahlborn
		Chief Financial Officer
		(Principal Accounting and Financial Officer)