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Published: 2025-11-07 16:44:16 ET

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rc-20250930

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, 2025

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
6.20% Senior Notes due 2026	RCB	New York Stock Exchange
5.75% Senior Notes due 2026	RCC	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 162,126,276 shares of common stock, par value $0.0001 per share, outstanding as of November 6, 2025.

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	12
Note 3. Summary of Significant Accounting Policies	12
Note 4. Recent Accounting Pronouncements	24
Note 5. Business Combinations	25
Note 6. Loans and Allowance for Credit Losses	28
Note 7. Fair Value Measurements	35
Note 8. Servicing Rights	40
Note 9. Discontinued Operations and Assets and Liabilities Held for Sale	42
Note 10. Secured Borrowings	44
Note 11. Senior Secured Notes and Corporate Debt, net	45
Note 12. Guaranteed Loan Financing	48
Note 13. Variable Interest Entities and Securitization Activities	48
Note 14. Interest Income and Interest Expense	50
Note 15. Derivative Instruments	51
Note 16. Real Estate Owned	52
Note 17. Agreements and Transactions with Related Parties	53
Note 18. Other Assets and Other Liabilities	55
Note 19. Other Income and Operating Expenses	56
Note 20. Redeemable Preferred Stock and Stockholders’ Equity	57
Note 21. Earnings per Share of Common Stock	61
Note 22. Offsetting Assets and Liabilities	62
Note 23. Financial Instruments with Off-Balance Sheet Risk, Credit Risk, and Certain Other Risks	63
Note 24. Commitments, Contingencies and Indemnifications	65
Note 25. Income Taxes	66
Note 26. Segment Reporting	66
Note 27. Subsequent Events	70


Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	71


Item 3. Quantitative and Qualitative Disclosures About Market Risk	93


Item 4. Controls and Procedures	97


PART II. OTHER INFORMATION	97


Item 1. Legal Proceedings	97


Item 1A. Risk Factors	100


Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	100


Item 3. Default Upon Senior Securities	101


Item 4. Mine Safety Disclosures	101


Item 5. Other Information	101


Item 6. Exhibits	101


SIGNATURES	104

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

READY CAPITAL CORPORATION

UNAUDITED CONSOLIDATED BALANCE SHEETS


(in thousands)	September 30, 2025	December 31, 2024
Assets
Cash and cash equivalents	$147,505	$143,803
Restricted cash	44,491	30,560
Loans, net (including $1,088 and $3,533 held at fair value)	4,360,501	3,378,149
Loans, held for sale (including $143,819 and $128,531 held at fair value and net of valuation allowance of $53,937 and $97,620)	163,792	241,626
Mortgage-backed securities	33,105	31,006
Investment in unconsolidated joint ventures (including $5,952 and $6,577 held at fair value)	178,840	161,561
Derivative instruments	5,295	7,963
Servicing rights	126,966	128,440
Real estate owned	632,985	193,437
Other assets	472,516	362,486
Assets of consolidated VIEs	2,166,105	5,175,295
Assets held for sale (refer to Note 9)	—	287,595
Total Assets	$8,332,101	$10,141,921
Liabilities
Secured borrowings	2,879,172	2,035,176
Securitized debt obligations of consolidated VIEs, net	1,293,778	3,580,513
Senior secured notes, net	721,151	437,847
Corporate debt, net	666,624	895,265
Guaranteed loan financing	565,883	691,118
Contingent consideration	18,385	573
Derivative instruments	1,627	352
Dividends payable	22,602	43,168
Loan participations sold	102,987	95,578
Due to third parties	9,927	1,442
Accounts payable and other accrued liabilities	166,406	188,051
Liabilities held for sale (refer to Note 9)	—	228,735
Total Liabilities	$6,448,542	$8,197,818
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, 161,834,837 and 162,792,372 shares issued and outstanding, respectively	17	17
Additional paid-in capital	2,257,078	2,250,291
Retained earnings (deficit)	(569,709)	(505,089)
Accumulated other comprehensive loss	(24,096)	(18,552)
Total Ready Capital Corporation equity	1,774,668	1,838,045
Non-controlling interests	100,530	97,697
Total Stockholders’ Equity	$1,875,198	$1,935,742
Total Liabilities, Redeemable Preferred Stock, and Stockholders’ Equity	$8,332,101	$10,141,921

See Notes To Unaudited Consolidated Financial Statements

READY CAPITAL CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS


	Three Months Ended September 30,		Nine Months Ended September 30,
(in thousands, except share data)	2025	2024	2025	2024
Interest income	$137,491	$226,537	$445,193	$693,010
Interest expense	(126,971)	(175,572)	(403,274)	(542,544)
Net interest income before (provision for) recovery of loan losses	$10,520	$50,965	$41,919	$150,466
(Provision for) recovery of loan losses	(37,977)	(53,166)	62,951	(7,751)
Net interest income after (provision for) recovery of loan losses	$(27,457)	$(2,201)	$104,870	$142,715
Non-interest income
Net realized gain (loss) on financial instruments and real estate owned	(160,396)	(69,184)	(131,513)	(43,066)
Net unrealized gain (loss) on financial instruments	2,914	(1,241)	(450)	2,034
Valuation recovery (allowance), loans held for sale	178,225	71,060	38,761	(156,107)
Servicing income, net of amortization and impairment of $4,514 and $22,682 for the three and nine months ended September 30, 2025, and $5,841 and $14,216 for the three and nine months ended September 30, 2024, respectively	7,509	5,415	13,661	12,444
Gain on bargain purchase	24,472	32,165	112,562	13,859
Income (loss) on unconsolidated joint ventures	7,417	3,214	3,291	4,821
Other income	14,773	14,823	37,667	37,246
Total non-interest income (expense)	$74,914	$56,252	$73,979	$(128,769)
Non-interest expense
Employee compensation and benefits	(21,151)	(22,989)	(65,564)	(59,202)
Allocated employee compensation and benefits from related party	(3,602)	(2,537)	(10,478)	(8,037)
Professional fees	(6,008)	(6,232)	(17,864)	(19,330)
Management fees – related party	(5,156)	(6,498)	(15,805)	(19,344)
Loan servicing expense	(9,771)	(10,101)	(36,653)	(33,907)
Transaction related expenses	(1,910)	(2,998)	(5,243)	(5,240)
Impairment on real estate	(1,862)	(525)	(8,476)	(26,627)
Other operating expenses	(24,879)	(18,048)	(57,135)	(43,935)
Total non-interest expense	$(74,339)	$(69,928)	$(217,218)	$(215,622)
Loss from continuing operations before benefit for income taxes	(26,882)	(15,877)	(38,369)	(201,676)
Income tax benefit	9,935	8,404	55,081	87,194
Net income (loss) from continuing operations	$(16,947)	$(7,473)	$16,712	$(114,482)
Discontinued operations (refer to Note 9)
Income (loss) from discontinued operations before benefit (provision) for income taxes	280	258	(6,881)	(1,554)
Income tax benefit (provision)	(70)	(64)	1,720	389
Net income (loss) from discontinued operations	$210	$194	$(5,161)	$(1,165)
Net income (loss)	$(16,737)	$(7,279)	$11,551	$(115,647)
Less: Dividends on preferred stock	1,999	1,999	5,997	5,997
Less: Net income attributable to non-controlling interest	2,008	2,031	6,282	3,968
Net loss attributable to Ready Capital Corporation	$(20,744)	$(11,309)	$(728)	$(125,612)

Earnings per common share from continuing operations - basic	$(0.13)	$(0.07)	$0.02	$(0.74)
Earnings per common share from discontinued operations - basic	$0.00	$0.00	$(0.03)	$(0.01)
Total earnings per common share - basic	$(0.13)	$(0.07)	$(0.01)	$(0.75)

Earnings per common share from continuing operations - diluted	$(0.13)	$(0.07)	$0.02	$(0.74)
Earnings per common share from discontinued operations - diluted	$0.00	$0.00	$(0.03)	$(0.01)
Total earnings per common share - diluted	$(0.13)	$(0.07)	$(0.01)	$(0.75)

Weighted-average shares outstanding
Basic	163,574,703	168,335,483	165,491,135	169,669,145
Diluted	165,873,807	169,509,208	167,790,240	170,815,080

Dividends declared per share of common stock	$0.125	$0.25	$0.375	$0.85

See Notes To Unaudited Consolidated Financial Statements

READY CAPITAL CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)


	Three Months Ended September 30,		Nine Months Ended September 30,
(in thousands)	2025	2024	2025	2024
Net income (loss)	$(16,737)	$(7,279)	$11,551	$(115,647)
Other comprehensive income (loss) - net change by component:
Derivative financial instruments (cash flow hedges)	(872)	(12,639)	(8,157)	(7,834)
Foreign currency translation	64	2,257	2,624	1,534
Other comprehensive income (loss)	$(808)	$(10,382)	$(5,533)	$(6,300)
Comprehensive income (loss)	$(17,545)	$(17,661)	$6,018	$(121,947)
Less: Comprehensive income attributable to non-controlling interests	2,011	1,945	6,257	3,909
Comprehensive income (loss) attributable to Ready Capital Corporation	$(19,556)	$(19,606)	$(239)	$(125,856)

See Notes To Unaudited Consolidated Financial Statements

READY CAPITAL CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY


	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	Additional Paid- In Capital	Retained Earnings (Deficit)	Accumulated Other Comprehensive Income (Loss)	Total Ready Capital Corporation Equity	Non-controlling Interests	Total Stockholders' Equity
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


	Three Months Ended September 30, 2024
	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	Additional Paid- In Capital	Retained Earnings (Deficit)	Accumulated Other Comprehensive Loss	Total Ready Capital Corporation Equity	Non-controlling Interests	Total Stockholders' Equity
Balance at June 30, 2024	4,600,000	$111,378	168,167,272	$17	$2,287,684	$(92,319)	$(13,880)	$2,292,880	$98,985	$2,391,865
Dividend declared:
Common stock ($0.25 per share)	—	—	—	—	—	(42,375)	—	(42,375)	—	(42,375)
OP units	—	—	—	—	—	—	—	—	(228)	(228)
$0.390625 per Series C preferred share	—	—	—	—	—	(131)	—	(131)	—	(131)
$0.406250 per Series E preferred share	—	—	—	—	—	(1,868)	—	(1,868)	—	(1,868)
Conversion of OP units into common stock	—	—	315,000	—	2,649	—	—	2,649	(2,649)	—
Stock-based compensation	—	—	48,980	—	450	—	—	450	—	450
Share repurchases	—	—	(548)	—	(5)	—	—	(5)	—	(5)
Reallocation of non-controlling interest	—	—	—	—	1,451	—	(56)	1,395	(1,395)	—
Net income (loss)	—	—	—	—	—	(9,310)	—	(9,310)	2,031	(7,279)
Other comprehensive loss	—	—	—	—	—	—	(10,296)	(10,296)	(86)	(10,382)
Balance at September 30, 2024	4,600,000	$111,378	168,530,704	$17	$2,292,229	$(146,003)	$(24,232)	$2,233,389	$96,658	$2,330,047

See Notes To Unaudited Consolidated Financial Statements

READY CAPITAL CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY


	Nine 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	Additional Paid- In Capital	Retained Earnings (Deficit)	Accumulated Other Comprehensive Income (Loss)	Total Ready Capital Corporation Equity	Non-controlling Interests	Total Stockholders' Equity
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 (loss)	—	—	—	—	—	5,269	—	5,269	6,282	11,551
Other comprehensive income (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



	Nine Months Ended September 30, 2024
	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	Additional Paid- In Capital	Retained Earnings (Deficit)	Accumulated Other Comprehensive Loss	Total Ready Capital Corporation Equity	Non-controlling Interests	Total Stockholders' Equity
Balance at December 31, 2023	4,600,000	$111,378	172,276,105	$17	$2,321,989	$124,413	$(17,860)	$2,539,937	$98,464	$2,638,401
Dividend declared:
Common stock ($0.85 per share)	—	—	—	—	—	(144,804)	—	(144,804)	—	(144,804)
OP units	—	—	—	—	—	—	—	—	(968)	(968)
$1.17188 per Series C preferred share	—	—	—	—	—	(393)	—	(393)	—	(393)
$1.21875 per Series E preferred share	—	—	—	—	—	(5,604)	—	(5,604)	—	(5,604)
Contributions, net	—	—	(1,981)	—	(18)	—	—	(18)	600	582
Stock-based compensation	—	—	435,052	—	5,056	—	—	5,056	—	5,056
Conversion of OP units into common stock	—	—	420,000	—	3,632	—	—	3,632	(3,632)	—
Share repurchases	—	—	(4,598,472)	—	(40,276)	—	—	(40,276)	—	(40,276)
Reallocation of non-controlling interest	—	—	—	—	1,846	—	(131)	1,715	(1,715)	—
Net income (loss)	—	—	—	—	—	(119,615)	—	(119,615)	3,968	(115,647)
Other comprehensive loss	—	—	—	—	—	—	(6,241)	(6,241)	(59)	(6,300)
Balance at September 30, 2024	4,600,000	$111,378	168,530,704	$17	$2,292,229	$(146,003)	$(24,232)	$2,233,389	$96,658	$2,330,047

See Notes To Unaudited Consolidated Financial Statements

READY CAPITAL CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS


	Nine Months Ended September 30,
(in thousands)	2025	2024
Cash Flows From Operating Activities:
Net income (loss)	$11,551	$(115,647)
Net income (loss) from discontinued operations, net of tax	(5,161)	(1,165)
Net income (loss) from continuing operations	16,712	(114,482)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Amortization of premiums, discounts, and debt issuance costs, net	33,208	38,484
Stock-based compensation	5,010	5,642
Provision for (recovery of) loan losses	(62,951)	7,751
Impairment loss on real estate owned, held for sale	8,476	26,627
Depreciation and amortization on real estate owned	1,100	—
Repair and denial reserve	1,627	282
Paid-in-kind accrued interest	(4,061)	(56,995)
Provision for loan losses on purchased future receivables	—	2,118
Valuation allowance (recovery), loans held for sale	(38,761)	156,107
Net (income) loss of unconsolidated joint ventures, net of distributions	(1,509)	(2,912)
Realized (gains) losses, net	132,945	46,863
Unrealized (gains) losses, net	(626)	(3,594)
Bargain purchase gain	(112,562)	(13,859)
Loans, held for sale, net	556,246	270,411
Changes in operating assets and liabilities:
Derivative instruments	(457)	(4,720)
Assets of consolidated VIEs (excluding loans, net), accrued interest and due from servicers	41,127	(70,315)
Receivable from third parties	(6,209)	1,587
Other assets	(111,574)	(59,795)
Accounts payable and other accrued liabilities	8,922	59,080
Net cash provided by operating activities from continuing operations	$466,663	$288,280
Net cash used for operating activities from discontinued operations	(23,784)	(42,625)
Net cash provided by operating activities	$442,879	$245,655
Cash Flows From Investing Activities:
Origination of loans	(420,697)	(674,770)
Proceeds from disposition and principal payment of loans	1,593,480	1,614,847
Funding of investments held to maturity	(2,385)	—
Funding of real estate, held for sale	(964)	(1,308)
Proceeds from sale of real estate, held for sale	57,743	56,766
Investment in unconsolidated joint ventures	(20,280)	(17,657)
Distributions in excess of cumulative earnings from unconsolidated joint ventures	9,800	8,384
Payment of liabilities under participation agreements	(1,335)	(4,009)
Net cash provided by (used for) disposal of discontinued operations	3,521	—
Net cash provided by (used for) asset acquisitions	4,249	—
Net cash provided by (used for) business acquisitions	16,020	(44,166)
Net cash provided by investing activities from continuing operations	$1,239,152	$938,087
Net cash provided by investing activities from discontinued operations	43,316	59,955
Net cash provided by investing activities	$1,282,468	$998,042
Cash Flows From Financing Activities:
Proceeds from secured borrowings	2,710,938	1,714,585
Repayment of secured borrowings	(1,870,521)	(1,633,621)
Repayment of the Paycheck Protection Program Liquidity Facility borrowings	(10,451)	(13,885)
Repayment of securitized debt obligations of consolidated VIEs	(2,295,827)	(1,136,024)
Proceeds from senior secured note	290,250	92,119
Repayment of corporate debt	(232,140)	—
Repayment of guaranteed loan financing	(147,002)	(101,909)
Payment of deferred financing costs	(25,940)	(10,851)
Common stock repurchased	(65,721)	(39,190)
Settlement of share-based awards in satisfaction of withholding tax requirements	(1,964)	(1,086)
Dividend payments	(90,716)	(161,456)
Distributions, net	—	(18)
Net cash used for financing activities from continuing operations	$(1,739,094)	$(1,291,336)
Net cash provided by (used for) financing activities from discontinued operations	(4,324)	19,474
Net cash used for financing activities	$(1,743,418)	$(1,271,862)
Net decrease in cash, cash equivalents, and restricted cash including cash classified within assets held for sale	(18,071)	(28,165)
Less: Net decrease in cash and cash equivalents within assets held for sale	(29,792)	(1,241)
Net increase (decrease) in cash, cash equivalents, and restricted cash	11,721	(26,924)
Cash, cash equivalents, and restricted cash beginning balance	182,774	262,506
Cash, cash equivalents, and restricted cash ending balance	$194,495	$235,582

See Notes To Unaudited Consolidated Financial Statements

READY CAPITAL CORPORATION

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS


	Nine Months Ended September 30,
(in thousands)	2025	2024
Supplemental disclosures:
Cash paid for interest	$385,608	$520,795
Cash received for income taxes	$(228)	$(11,942)
Non-cash investing activities
Loans transferred from loans, held for sale to loans, net	$130,126	$—
Loans transferred from loans, net to loans, held for sale	$722,797	$719,623
Loans transferred to real estate owned, held for sale	$519,824	$18,711
Contingent consideration in connection with acquisitions	$15,242	$2,007
Non-cash financing activities
Shares and OP units issued in connection with merger transactions	$64,600	$—
Conversion of OP units to common stock	$1,197	$3,632
Cash, cash equivalents, and restricted cash reconciliation
Cash and cash equivalents	$147,505	$181,315
Restricted cash	44,491	31,331
Cash, cash equivalents, and restricted cash in assets of consolidated VIEs	2,499	22,936
Cash, cash equivalents, and restricted cash ending balance	$194,495	$235,582

See Notes To Unaudited Consolidated Financial Statements

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, United States Department of Agriculture (“USDA”) 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 Advisors 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 September 30, 2025 and December 31, 2024, the Company owned

approximately 99.6% and 99.5% of the operating partnership, respectively. 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.

Funding Circle. On July 1, 2024, the Company acquired Funding Circle USA, Inc. (“Funding Circle”) through its

subsidiary, iBusiness Funding LLC, for approximately $41.2 million in cash plus the assumption of certain liabilities

(the “Funding Circle Acquisition”). Funding Circle is an online lending platform that originates and services small

business loans. The Funding Circle Acquisition integrates Funding Circle’s loan origination servicing platform with the

Company’s Lending as a Service and LenderAI product offerings. Refer to Note 5 for assets acquired and liabilities

assumed in the Funding Circle Acquisition.

Madison One. On June 5, 2024, the Company acquired Madison One Capital, M1 CUSO and Madison One Lender

Services (together, “Madison One”), a leading originator and servicer of USDA and SBA guaranteed loan products, for

an initial purchase price of approximately $32.9 million paid in cash (the “Madison One Acquisition”). Approximately

$3.6 million of the initial purchase price was paid as bonuses to certain key Madison One personnel in cash. Additional

purchase price payments, including cash payments and the issuance of shares of common stock of the Company, may be

made over the four years following the acquisition date contingent upon the Madison One business achieving certain

performance metrics. Part of the Company’s strategy in acquiring Madison One included the value of the anticipated

synergies arising from the acquisition and the value of the acquired assembled workforce, neither of which qualify for

recognition as an intangible asset. Refer to Note 5 for assets acquired and liabilities assumed in the Madison One

Acquisition.

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, 2025 and December 31, 2024 and for the three and nine months ended September 30, 2025 and 2024,

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.

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, 2024, 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

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 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, 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, occupancy, 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.

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, including PCD loans. 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. 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 30 days past

due to be in payment default.

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 predominantly 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).

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

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, 2025 and December 31,

2024, the Company had offset $16.5 million and $25.4 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.

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. For servicing rights, 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

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 Company assesses fair value based on estimated cash flow projections, as well as

other available market information. 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.

Gains or losses from operating lease income are recorded as other income (loss) in the consolidated statement 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.

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.

Investments held to maturity

The Company accounts for held to maturity investments under ASC 320. Such securities are accounted for at amortized

cost and reviewed on a quarterly basis to determine if an allowance for credit losses should be recorded in the

consolidated statements of operations.

Purchased future receivables

The Company provides working capital advances to small businesses through the purchase of their future revenues. The

Company enters into a contract with the business whereby the Company pays the business an upfront amount in return

for a specific amount of the business’s future revenue receivables, known as payback amounts. The payback amounts are

primarily received through daily payments initiated by automated clearing house transactions.

Revenues from purchased future receivables are realized when funds are received under each contract. The allocation of

the amount received is determined by apportioning the amount received based upon the factor (discount) rate of the

business’s contract. Management believes that this methodology best reflects the effective interest method.

The CECL method the Company utilizes is an aging schedule where estimating expected life-time credit losses is

determined on the basis of how long a receivable has been outstanding. Where there is doubt regarding the ultimate

collectability, the allowance for credit losses increases through provisions recorded in the consolidated statements of

operations and reduced by charge-offs, net of recoveries. Purchased future receivables that have been delinquent for 90

days or more are considered uncollectible and subsequently charged off. While the Company has a formal methodology

to determine the adequate and appropriate level of the allowance for credit losses, estimates involve judgment and

assumptions as to various factors, including current economic conditions and inherent risk in the portfolio. 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.

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 third 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.

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. 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. 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 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.

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”),

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

with a focus on construction lending (collectively, the “Mosaic Funds”), managed by MREC Management, LLC. 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 and warrants under the treasury stock method. Potential dilutive shares are

excluded from the calculation if they have an anti-dilutive effect in the period.

All of the Company’s unvested RSAs, unvested RSUs granted to non-employee directors, 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.

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.

Employee retention credit consulting income. In connection with the Coronavirus Aid, Relief and Economic Security

Act, which provided numerous stimulus measures including the employee retention credit (“ERC”), the Company

provided consulting services whereby ERC requests received were processed on the client’s behalf. Income related to

ERC consulting are recorded in accordance with ASC 606 and recognized when the performance obligation has been

satisfied. In addition, the Company estimates an allowance for doubtful accounts using historical data and other relevant

factors, such as collection rate, to determine the uncollectible reserve rate. While the Company has a formal

methodology to determine the adequate and appropriate level of the allowance for doubtful accounts, estimates of losses

involve judgment and assumptions as to various factors, including current economic conditions. Accordingly, the

provision for losses will vary from period to period based on management's ongoing assessment of the adequacy of the

allowance for doubtful accounts. Employee retention credit consulting income is reported as other income and the

provision for losses is reported as other expense in the consolidated statements of operations.

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, 2025, 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).

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

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 2025-06, 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 Company is currently assessing the impact upon adoption of this standard on the

consolidated financial statements.

ASU 2025-03, Compensation – 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

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 Company is currently assessing the impact upon

adoption of this standard on the 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 Company is currently

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

ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures Issued November

2023

This ASU improves reportable segment disclosure requirements, primarily through enhanced disclosures about

significant segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”). This ASU

is effective in reporting periods beginning after December 15, 2023, and interim periods within fiscal years beginning

after December 15, 2024, on a retrospective basis. The adoption of this standard did not have an impact on the

Company's consolidated financial statements.

ASU 2023-05, Business Combinations- Joint Venture Formations (Topic 805): Recognition and Initial

Measurement Issued August 2023

This ASU applies to the formation of a “joint venture” or a “corporate joint venture” and requires a joint venture to

initially measure all contributions received upon its formation at fair value and is applicable to joint venture entities with

a formation date on or after January 1, 2025 on a prospective basis. The adoption of this standard did not have an 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	13,848	172,317
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	$13,848	$197,542
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	$9,924	$192,404

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

date. Because the measurement period for the UDF IV Merger remains open, certain fair value estimates may change

once all information necessary to make a final fair value assessment is received. The amounts presented in the table

above pertain 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 is subject to change as the Company completes its analysis of the fair value of the

assets acquired and liabilities assumed, which could have an impact on 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 $10.1 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	$9,924	$192,404

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	$10,091	$112,562

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. As

of September 30, 2025, 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.

Funding Circle Acquisition

On July 1, 2024 the Company acquired Funding Circle, an online lending platform that originates and services small

business loans. Refer to Note 1 for more information about the Funding Circle Acquisition. 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 Funding Circle

Acquisition.


(in thousands)	Preliminary Purchase Price Allocation	Measurement Period Adjustments	Updated Purchase Price Allocation
Assets
Cash and cash equivalents	$29,209	$—	$29,209
Loans, net	8,167	—	8,167
Investment in unconsolidated joint ventures	891	—	891
Servicing rights	5,388	—	5,388
Other assets:
Deferred tax asset	32,186	—	32,186
Intangible assets	10,052	—	10,052
Other	4,558	—	4,558
Total assets acquired	$90,451	$—	$90,451
Liabilities
Secured borrowings	2,022	—	2,022
Accounts payable and other accrued liabilities	14,952	—	14,952
Total liabilities assumed	$16,974	$—	$16,974
Net assets acquired	$73,477	$—	$73,477

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 occurred within one year of the merger date.

Because the measurement period for the Funding Circle Acquisition remained open until July 1, 2025, 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 Funding

Circle Acquisition 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 impacted the consolidated financial statements. While

the measurement period remained open, there have been no adjustments related to this transaction.

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

gain.


(in thousands)	Preliminary Purchase Price Allocation	Measurement Period Adjustments	Updated Purchase Price Allocation
Fair value of net assets acquired	$73,477	$—	$73,477
Consideration transferred	41,312	—	41,312
Bargain purchase gain	$32,165	$—	$32,165

Madison One Acquisition

On June 5, 2024 the Company acquired Madison One, a lending originator and servicer in the government guaranteed

loan industry focusing on USDA and SBA guaranteed loan products. Refer to Note 1 for more information about the

Madison One Acquisition. 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 Madison One Acquisition.


(in thousands)	Preliminary Purchase Price Allocation	Measurement Period Adjustments	Updated Purchase Price Allocation
Assets
Cash and cash equivalents	$83	$—	$83
Restricted cash	721	(200)	521
Servicing rights	16,304	612	16,916
Other assets:
Intangible assets	10,400	900	11,300
Other	303	—	303
Total assets acquired	$27,811	$1,312	$29,123
Liabilities
Accounts payable and other accrued liabilities	978	1,722	2,700
Total liabilities assumed	$978	$1,722	$2,700
Non-controlling interests	(600)	—	(600)
Net assets acquired, net of non-controlling interests	$26,233	$(410)	$25,823

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 occurred within one year of the merger date.

Because the measurement period for the Madison One Acquisition remained open until June 5, 2025, 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 Madison

One Acquisition 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 decreasing net assets acquired and increasing goodwill

related to this transaction by $0.4 million.

The table below illustrates the aggregate consideration transferred, net assets acquired, and the related goodwill.


(in thousands)	Preliminary Purchase Price Allocation	Measurement Period Adjustments	Updated Purchase Price Allocation
Fair value of net assets acquired	$26,233	$(410)	$25,823

Cash paid	32,868	—	32,868
Contingent consideration	3,926	—	3,926
Total consideration transferred	$36,794	$—	$36,794

Goodwill	$10,561	$410	$10,971

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.

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, 2025		December 31, 2024
(in thousands)	Carrying Value	UPB	Carrying Value	UPB
Loans
Bridge	$2,605,140	$2,645,511	$1,246,725	$1,309,683
Fixed rate	151,561	152,141	197,162	197,272
Construction	476,279	604,346	733,276	874,558
Freddie Mac	1,377	1,337	—	—
SBA - 7(a)	1,039,365	1,091,047	1,043,120	1,075,845
Other	86,779	105,894	157,866	177,155
Total Loans, net	$4,360,501	$4,600,276	$3,378,149	$3,634,513
Loans in consolidated VIEs
Bridge	1,057,164	1,059,878	3,854,982	3,970,084
Fixed rate	577,404	579,726	685,505	688,347
SBA - 7(a)	145,445	154,425	178,498	189,737
Other	176,470	176,907	211,076	212,020
Total Loans, net, in consolidated VIEs	$1,956,483	$1,970,936	$4,930,061	$5,060,188
Loans, held for sale
Bridge	1,696	44,400	58,703	134,065
Fixed rate	—	—	2,750	6,056
Construction	18,277	29,427	54,392	77,487
Freddie Mac	18,947	18,752	36,248	35,931
SBA - 7(a)	115,903	108,574	87,825	81,524
Other	8,969	8,440	1,708	1,817
Total Loans, held for sale	$163,792	$209,593	$241,626	$336,880
Total	$6,480,776	$6,780,805	$8,549,836	$9,031,581

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.

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	2025	2024	2023	2022	2021	Pre 2021	Total
September 30, 2025
Bridge	$3,705,389	$—	$296,572	$196,360	$1,417,367	$1,619,122	$132,883	$3,662,304
Fixed rate	731,867	—	—	—	93,743	176,541	458,681	728,965
Construction	604,346	20,016	48,984	26,940	196,638	36,413	147,288	476,279
Freddie Mac	1,337	—	—	—	1,377	—	—	1,377
SBA - 7(a)	1,245,472	172,987	214,214	127,817	273,002	169,978	226,812	1,184,810
Other	282,801	17,629	14,374	2,777	4,214	451	223,804	263,249
Total Loans, net	$6,571,212	$210,632	$574,144	$353,894	$1,986,341	$2,002,505	$1,189,468	$6,316,984
Gross write-offs		$—	$507	$1,216	$989	$707	$159,830	$163,249
	UPB	2024	2023	2022	2021	2020	Pre 2020	Total
December 31, 2024
Bridge	$5,279,767	$321,439	$244,283	$2,083,723	$2,270,504	$105,279	$76,479	$5,101,707
Fixed rate	885,619	—	—	109,733	180,209	86,013	506,712	882,667
Construction	874,558	9,233	26,925	162,309	83,287	144	451,378	733,276
SBA - 7(a)	1,265,582	235,374	138,670	322,007	237,105	94,730	193,732	1,221,618
Other	389,175	14,769	2,881	4,225	685	9,205	337,177	368,942
Total Loans, net	$8,694,701	$580,815	$412,759	$2,681,997	$2,771,790	$295,371	$1,565,478	$8,308,210
Gross write-offs		$28	$1,440	$1,710	$3,022	$617	$7,776	$14,593

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


		Carrying Value by Year of Origination
(in thousands)	UPB	2025	2024	2023	2022	2021	Pre 2021	Total
September 30, 2025
Current	$5,900,289	$209,686	$567,582	$322,153	$1,636,525	$1,818,311	$1,143,691	$5,697,948
30 - 59 days past due	165,989	—	357	—	119,696	36,888	8,605	165,546
60+ days past due	504,934	946	6,205	31,741	230,120	147,306	37,172	453,490
Total Loans, net	$6,571,212	$210,632	$574,144	$353,894	$1,986,341	$2,002,505	$1,189,468	$6,316,984
	UPB	2024	2023	2022	2021	2020	Pre 2020	Total
December 31, 2024
Current	$8,094,859	$575,781	$392,201	$2,488,252	$2,566,736	$289,352	$1,475,325	$7,787,647
30 - 59 days past due	148,612	3,666	1,676	92,516	26,385	734	6,311	131,288
60+ days past due	451,230	1,368	18,882	101,229	178,669	5,285	83,842	389,275
Total Loans, net	$8,694,701	$580,815	$412,759	$2,681,997	$2,771,790	$295,371	$1,565,478	$8,308,210

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, 2025
Bridge	$3,158,486	$156,066	$347,752	$3,662,304	$293,846	$102,949
Fixed rate	704,442	3,301	21,222	728,965	21,222	—
Construction	453,171	—	23,108	476,279	37,998	15,378
Freddie Mac	—	—	1,377	1,377	1,377	—
SBA - 7(a)	1,139,206	1,073	44,531	1,184,810	84,660	12
Other	242,643	5,106	15,500	263,249	12,680	578
Total Loans, net	$5,697,948	$165,546	$453,490	$6,316,984	$451,783	$118,917
Percentage of loans outstanding	90.2%	2.6%	7.2%	100%	7.2%	1.9%
December 31, 2024
Bridge	$4,732,393	$93,078	$276,236	$5,101,707	$366,890	$88,396
Fixed rate	840,951	8,421	33,295	882,667	33,295	—
Construction	691,655	—	41,621	733,276	60,018	—
SBA - 7(a)	1,160,844	27,124	33,650	1,221,618	64,687	—
Other	361,804	2,665	4,473	368,942	1,871	973
Total Loans, net	$7,787,647	$131,288	$389,275	$8,308,210	$526,761	$89,369
Percentage of loans outstanding	93.7%	1.6%	4.7%	100%	6.3%	1.1%

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, 2025
Bridge	$1,463	$17,193	$373,850	$2,307,306	$608,918	$353,574	$3,662,304
Fixed rate	92	23,942	301,584	386,001	17,346	—	728,965
Construction	4,164	17,194	100,224	221,121	77,181	56,395	476,279
Freddie Mac	—	—	—	1,377	—	—	1,377
SBA - 7(a)	13,920	62,366	155,999	319,904	183,128	449,493	1,184,810
Other	68,902	79,224	66,537	36,038	9,314	3,234	263,249
Total Loans, net	$88,541	$199,919	$998,194	$3,271,747	$895,887	$862,696	$6,316,984
Percentage of loans outstanding	1.4%	3.2%	15.8%	51.7%	14.2%	13.7%	100.0%
December 31, 2024
Bridge	$—	$103,364	$553,768	$3,230,535	$471,137	$742,903	$5,101,707
Fixed rate	1,348	29,799	379,043	446,246	26,231	—	882,667
Construction	27,973	4,725	90,615	160,507	17,892	431,564	733,276
SBA - 7(a)	14,222	65,279	184,965	354,891	219,371	382,890	1,221,618
Other	105,417	116,848	61,974	62,662	16,661	5,380	368,942
Total Loans, net	$148,960	$320,015	$1,270,365	$4,254,841	$751,292	$1,562,737	$8,308,210
Percentage of loans outstanding	1.8%	3.9%	15.3%	51.2%	9.0%	18.8%	100.0%

(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, 2025	December 31, 2024
Texas	25.2%	19.3%
California	11.8	10.8
Florida	9.1	7.9
Arizona	7.9	7.7
Georgia	7.3	6.7
New York	3.4	4.8
Washington	3.2	3.1
Ohio	2.5	2.5
Illinois	2.1	3.1
North Carolina	1.9	4.0
Other	25.6	30.1
Total	100.0%	100.0%

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


Collateral Concentration (% of UPB)	September 30, 2025	December 31, 2024
Multi-family	57.5%	60.1%
SBA	19.0	14.6
Industrial	5.5	4.8
Land	4.7	1.0
Retail	4.0	4.1
Office	3.5	3.2
Mixed Use	2.6	9.5
Other	3.2	2.7
Total	100.0%	100.0%

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


Collateral Concentration (% of UPB)	September 30, 2025	December 31, 2024
Lodging	19.1%	20.9%
Gasoline Service Stations	9.9	12.0
Eating Places	6.0	6.5
Child Day Care Services	5.7	5.7
Offices of Physicians	3.1	3.7
General Freight Trucking, Local	2.7	3.0
Grocery Stores	2.4	2.3
Car Washes	1.5	1.1
Assisted Living Facilities for the Elderly	1.0	1.0
Coin-Operated Laundries and Drycleaners	0.9	1.4
Other	47.7	42.4
Total	100.0%	100.0%

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, 2025
General	$17,025	$2,517	$807	$29,275	$1,474	$51,098
Specific	23,759	1,586	14,958	8,601	262	49,166
PCD	—	—	68,786	—	—	68,786
Ending balance	$40,784	$4,103	$84,551	$37,876	$1,736	$169,050
December 31, 2024
General	$126,471	$3,156	$493	$18,825	$1,523	$150,468
Specific	43,974	1,958	137,812	3,262	631	187,637
PCD	—	—	1,834	—	—	1,834
Ending balance	$170,445	$5,114	$140,139	$22,087	$2,154	$339,939

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, 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
Three Months Ended September 30, 2024
Beginning balance	$14,398	$6,480	$7,910	$13,566	$2,478	$44,832
Provision for (recoveries of) loan losses	8,438	(186)	41,253	3,680	(575)	52,610
Charge-offs and sales	—	—	—	(724)	—	(724)
Recoveries	—	—	—	524	—	524
Ending balance	$22,836	$6,294	$49,163	$17,046	$1,903	$97,242
Nine Months Ended September 30, 2025
Beginning balance	$170,445	$5,114	$140,139	$22,087	$2,154	$339,939
Provision 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
Nine Months Ended September 30, 2024
Beginning balance	$36,241	$13,598	$30,870	$17,867	$3,029	$101,605
Provisions for (recoveries of) loan losses	(13,405)	(4,675)	23,038	3,434	(1,060)	7,332
Charge-offs and sales	—	(2,629)	(4,745)	(4,983)	(66)	(12,423)
Recoveries	—	—	—	728	—	728
Ending balance	$22,836	$6,294	$49,163	$17,046	$1,903	$97,242

(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 Merger.

The table above excludes $1.8 million and $1.1 million of allowance for loan losses on unfunded lending commitments

as of September 30, 2025 and September 30, 2024, 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, 2025	December 31, 2024
Non-accrual loans
With an allowance	$433,980	$509,752
Without an allowance	17,803	17,009
Total carrying value of non-accrual loans	$451,783	$526,761
Allowance for loan losses related to non-accrual loans	$(47,841)	$(125,218)
UPB of non-accrual loans	$503,808	$654,526

	September 30, 2025	September 30, 2024
Interest income on non-accrual loans for the three months ended	$2,510	$1,066
Interest income on non-accrual loans for the nine months ended	$13,009	$6,245

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, 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 which range between 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

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 an 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.

Three months ended September 30, 2024. During the three months ended September 30, 2024, the Company entered into

9 loan modifications with an aggregate carrying value of $224.4 million, or 2.5% of total loans, net. These modified

loans include a combination of changes to the contractual terms which were in the form of term extensions, other-than-

insignificant payment delays, and interest reductions.

There was 1 loan with a carrying value of $93.3 million, or 1.0% of loans, net that was modified to include an interest

payment deferral of 7 months and includes payments for periods before the modification date. There were 7 loans with

an aggregate carrying value of $68.8 million, or 0.8% of loans, net, that were modified to include both term extensions

and interest payment deferrals. The term extension ranged between 2 and 125 months with a weighted average of 11

months added to the original loan term. Included within these modifications was 1 SBA loan with a carrying value of

less than $0.1 million with a 125 month term extension, which is included in the range mentioned above. Interest

payment deferrals ranged between 6 and 28 months with a weighted average of 15 months and include payments for

periods before the modification date. 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, cash management accounts are set up for the loans and default interest is waived. There was 1 loan with a carrying

value of $62.3 million, or 0.7% of loans, net that was modified to include an 18 month term extension, a 22 month

interest payment deferral and an interest rate reduction from SOFR + 3.30% to SOFR + 0.50% from October 2024 to

August 2025 and to SOFR + 1.00% from September 2025 to August 2026.

During the three months ended September 30, 2024, $2.5 million of total capital was invested by the borrowers,

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

Nine months ended September 30, 2024. During the nine months ended September 30, 2024, the Company entered into

32 loan modifications with an aggregate carrying value of $772.3 million, or 8.5% of total loans, net. These modified

loans include a combination of changes to the contractual terms which were in the form of term extensions, other-than-

insignificant payment delays, and interest reductions.

There were 20 loans with an aggregate carrying value of $425.6 million, or 4.7% of loans, net that were modified to

include both term extensions and interest payment deferrals. The term extensions ranged between 2 and 125 months with

a weighted average of 12 months added to the original loan term. Included within these modifications was 1 SBA loan

with a carrying value of less than $0.1 million with a 125 month term extension, which is included in the range

mentioned above. Interest payment deferrals ranged between 6 and 32 months with a weighted average of 14 months and

include payments for periods before the modification date. 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, cash management accounts are set up for the loans and default interest is waived. There

were 4 loans with an aggregate carrying value of $151.8 million, or 1.7% of loans, net that were modified to include

interest payment deferrals which ranged between 7 and 28 months with a weighted average of 11 months and include

payments for periods before the modification date. 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, cash management accounts are set up for the loans and default interest is waived. There was 1 loan with a

carrying value of $74.3 million, or 0.8% of loans, net that was modified to include both an 18 month term extension

added to the original loan term and an interest rate reduction from SOFR + 3.25% to a fixed rate of 6.0% from June 2024

to December 2024 and 6.5% from January 2025 to July 2025. There was 1 loan with a carrying value of $62.3 million, or

0.7% of loans, net that was modified to include an 18 month term extension added to the original loan term, a 22 month

interest payment deferral, and an interest rate reduction from SOFR + 3.30% to SOFR + 0.50% from October 2024 to

August 2025 and to SOFR + 1.00% from September 2025 to August 2026. There were 6 loans with an aggregate

carrying value of $58.3 million, or 0.6% of loans, net that were modified to include term extensions which ranged

between 10 and 24 months with a weighted average of 17 months added to the original loan term.

During the nine months ended September 30, 2024, $9.7 million of total capital was invested by the borrowers,

substantially all in the form of payment towards past due interest, principal or 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. Majority of the modified loans during the three and nine months ended September 30, 2025 and September 30,

2024, respectively, 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, 2025, except for 30 loans with a carrying value of $32.4 million which did not make payments

in accordance with their modified terms during the three months ended September 30, 2025.

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, 2025 and December 31, 2024, the Company’s total carrying amount of loans in

the foreclosure process was $31.3 million and $8.4 million, respectively.

Lending commitments. 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. For the three and nine months ended September 30, 2024, lending commitments to borrowers

experiencing financial difficulty for which the Company has modified the loan terms were not material and $22.7

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)	51,469	(35,672)
Purchase price of loans classified as PCD	$96,962	$(22,027)	$74,935

The Company did not acquire any PCD loans during the three months ended September 30, 2025 or September 30, 2024.

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

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.

As of September 30, 2025, the CVRs associated with the closing of the UDF IV Merger were valued at approximately

$17.9 million or $1.40 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, 2025
Assets:
Money market funds (1)	$143,601	$—	$—	$143,601
Loans, net	—	—	1,088	1,088
Loans, held for sale	—	143,819	—	143,819
PPP loans (2)	—	326	—	326
MBS	—	33,105	—	33,105
Derivative instruments	—	5,295	—	5,295
Investment in unconsolidated joint ventures	—	—	5,952	5,952
Preferred equity investment (3)	—	—	90,532	90,532
Total assets	$143,601	$182,545	$97,572	$423,718

Liabilities:
Derivative instruments	—	1,627	—	1,627
Contingent consideration	—	—	18,385	18,385
Total liabilities	$—	$1,627	$18,385	$20,012
December 31, 2024
Assets:
Money market funds (1)	$86,637	$—	$—	$86,637
Loans, net	—	—	3,533	3,533
Loans, held for sale	—	125,781	2,750	128,531
PPP loans (2)	—	1,340	—	1,340
MBS	—	31,006	—	31,006
Derivative instruments	—	7,963	—	7,963
Investment in unconsolidated joint ventures	—	—	6,577	6,577
Preferred equity investment (3)	—	—	92,810	92,810
Total assets	$86,637	$166,090	$105,670	$358,397

Liabilities:
Derivative instruments	—	352	—	352
Contingent consideration	—	—	573	573
Total liabilities	$—	$352	$573	$925

(1) Money market funds are included in cash and cash equivalents on the consolidated balance sheets

(2) PPP loans are 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.


(in thousands)	Fair Value	Predominant Valuation Technique (1)	Type	Range	Weighted Average
September 30, 2025
Assets:
Investment in unconsolidated joint ventures	$5,952	Income Approach	Discount rate	9.0%	9.0%
Preferred equity investment	90,532	Income Approach	Discount rate	12.0%	12.0%
Total assets	$96,484
Liabilities:
Contingent consideration- Madison One	$491	Monte Carlo Simulation Model	Net income volatility \| Risk- adjusted discount rate	64.0% \| 51.0%	64.0% \| 51.0%
Contingent consideration - UDF	17,894	Distributable Cash Flow Approach	Discount factor	17.5%	17.5%
Total liabilities	$18,385
December 31, 2024
Assets:
Investment in unconsolidated joint ventures	$6,577	Income Approach	Discount rate	9.0%	9.0%
Preferred equity investment	92,810	Income Approach	Discount rate	12.0%	12.0%
Total assets	$99,387
Liabilities:
Contingent consideration- Madison One	$573	Monte Carlo Simulation Model	Net income volatility \| Risk- adjusted discount rate	66.0% \| 44.3%	66.0% \| 44.3%
Total liabilities	$573

(1) Prices are weighted based on the UPB of the loans and securities included in the range for each class.

Included within Level 3 assets of $97.6 million as of September 30, 2025 and $105.7 million as of December 31, 2024,

is $1.1 million and $6.3 million, respectively, of transaction prices in which quantitative unobservable inputs are not

developed by the Company when measuring fair value.

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)	2025	2024	2025	2024
Assets:
Loans, net
Beginning balance	$1,263	$—	$3,533	$9,348
Sales / Principal payments	(81)	—	(1,070)	—
Unrealized gains (losses), net	(94)	—	(1,375)	680
Mergers and acquisitions (2)	—	4,851	—	4,851
Transfer to (from) Level 3	—	—	—	(10,028)
Ending balance	$1,088	$4,851	$1,088	$4,851
Loans, held for sale
Beginning balance	—	9,145	2,750	—
Sales / Principal payments	—	(4,009)	—	(4,009)
Unrealized gains (losses), net	—	(75)	10	(75)
Transfer to (from) Level 3	—	—	(2,760)	9,145
Ending balance	$—	$5,061	$—	$5,061
Investment in unconsolidated joint ventures
Beginning balance	6,163	6,974	6,577	7,360
Unrealized gains (losses), net	(211)	(197)	(625)	(583)
Ending balance	$5,952	$6,777	$5,952	$6,777
Preferred equity investment (1)
Beginning balance	88,583	108,423	92,810	108,423
Unrealized gains (losses), net	1,949	—	(2,278)	—
Ending balance	$90,532	$108,423	$90,532	$108,423
Total assets
Beginning balance	96,009	124,542	105,670	125,131
Sales / Principal payments	(81)	(4,009)	(1,070)	(4,009)
Unrealized gains (losses), net	1,644	(272)	(4,268)	22
Mergers and acquisitions (2)	—	4,851	—	4,851
Transfer to (from) Level 3	—	—	(2,760)	(883)
Ending balance	$97,572	$125,112	$97,572	$125,112
Liabilities:
Contingent consideration
Beginning balance	17,189	3,926	573	7,628
Realized (gains) losses, net	—	—	—	(7,628)
Unrealized (gains) losses, net	1,196	(1,919)	2,403	(1,919)
Mergers and acquisitions (2)	—	—	15,409	3,926
Ending balance	$18,385	$2,007	$18,385	$2,007

(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 and the Madison One Acquisition in 2024. Refer to Note 5 for further details on

assets acquired and liabilities assumed in connection with the UDF IV Merger and Madison One Acquisition.

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.


	September 30, 2025		December 31, 2024
(in thousands)	Carrying Value	Estimated Fair Value	Carrying Value	Estimated Fair Value
Assets:
Loans, net	$6,315,896	$6,143,561	$8,304,677	$8,426,700
Loans, held for sale	19,973	19,973	113,095	113,095
Servicing rights	126,966	144,449	128,440	141,513
Total assets	$6,462,835	$6,307,983	$8,546,212	$8,681,308
Liabilities:
Secured borrowings	2,879,172	2,879,172	2,035,176	2,035,176
Securitized debt obligations of consolidated VIEs, net	1,293,778	1,265,857	3,580,513	3,532,765
Senior secured notes, net	721,151	704,561	437,847	421,427
Guaranteed loan financing	565,883	594,326	691,118	724,747
Corporate debt, net	666,624	637,781	895,265	865,380
Total liabilities	$6,126,608	$6,081,697	$7,639,919	$7,579,495

As of both September 30, 2025 and December 31, 2024, 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)	2025	2024	2025	2024
SBA
Beginning net carrying amount	$39,193	$35,327	$39,227	$29,536
Additions	2,534	4,892	9,626	13,165
Amortization	(1,623)	(1,522)	(5,203)	(3,482)
Recovery (impairment)	339	20	(3,207)	(502)
Ending net carrying amount	$40,443	$38,717	$40,443	$38,717
Multi-family
Beginning net carrying amount	64,627	70,222	67,996	73,301
Additions	681	2,003	3,367	4,623
Amortization	(3,046)	(2,927)	(9,101)	(8,626)
Ending net carrying amount	$62,262	$69,298	$62,262	$69,298
USDA
Beginning net carrying amount	16,404	14,219	16,465	—
Additions	3,506	1,336	6,615	15,749
Amortization	(732)	(572)	(2,064)	(766)
Recovery (impairment)	1,371	—	(467)	—
Ending net carrying amount	$20,549	$14,983	$20,549	$14,983
Small business loans
Beginning net carrying amount	4,059	—	4,752	—
Additions	476	5,831	1,600	5,831
Amortization	(728)	(840)	(2,279)	(840)
Impairment	(95)	—	(361)	—
Ending net carrying amount	$3,712	$4,991	$3,712	$4,991
Total servicing rights	$126,966	$127,989	$126,966	$127,989

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.

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, 2025		As of December 31, 2024
(in thousands)	UPB	Carrying Value	UPB	Carrying Value
SBA	$1,900,425	$40,443	$1,779,233	$39,227
Multi-family	6,347,352	62,262	6,160,486	67,996
USDA	685,496	20,549	599,362	16,465
Small business loans	438,532	3,712	494,609	4,752
Total	$9,371,805	$126,966	$9,033,690	$128,440

The table below presents significant assumptions used in the estimated valuation of servicing rights at amortized cost.


	September 30, 2025				December 31, 2024
	Range of input values			Weighted Average	Range of input values			Weighted Average
SBA
Forward prepayment rate	4.4%	-	21.7%	10.1%	9.9%	-	21.6%	10.6%
Forward default rate	0.0%	-	4.0%	1.3%	0.0%	-	6.8%	6.6%
Discount rate	10.0%	-	19.0%	11.8%	11.9%	-	21.8%	12.2%
Servicing expense	0.4%	-	0.4%	0.4%	0.4%	-	0.4%	0.4%

Multi-family
Forward prepayment rate	0.0%	-	7.3%	7.0%	0.0%	-	7.3%	6.7%
Forward default rate	0.0%	-	1.0%	0.1%	0.0%	-	1.0%	0.6%
Discount rate	5.2%	-	5.2%	5.2%	5.5%	-	6.0%	5.8%
Servicing expense	0.0%	-	0.8%	0.1%	0.0%	-	0.8%	0.1%

USDA
Forward prepayment rate	5.2%	-	16.3%	11.7%	12.2%	-	12.2%	12.2%
Discount rate	4.5%	-	6.0%	5.6%	4.9%	-	5.2%	5.1%
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.

The table below presents the possible impact of 10% and 20% adverse changes to key assumptions on servicing rights.


(in thousands)	September 30, 2025	December 31, 2024
SBA
Forward prepayment rate
Impact of 10% adverse change	$(1,248)	$(1,273)
Impact of 20% adverse change	$(2,426)	$(2,473)
Forward default rate
Impact of 10% adverse change	$(204)	$(192)
Impact of 20% adverse change	$(407)	$(382)
Discount rate
Impact of 10% adverse change	$(1,329)	$(1,349)
Impact of 20% adverse change	$(2,571)	$(2,605)
Servicing expense
Impact of 10% adverse change	$(2,668)	$(2,545)
Impact of 20% adverse change	$(5,336)	$(5,091)
Multi-family
Forward prepayment rate
Impact of 10% adverse change	$(483)	$(530)
Impact of 20% adverse change	$(950)	$(1,041)
Forward default rate
Impact of 10% adverse change	$(13)	$(14)
Impact of 20% adverse change	$(25)	$(28)
Discount rate
Impact of 10% adverse change	$(1,878)	$(2,132)
Impact of 20% adverse change	$(3,677)	$(4,161)
Servicing expense
Impact of 10% adverse change	$(2,483)	$(2,519)
Impact of 20% adverse change	$(4,972)	$(5,037)
USDA
Forward prepayment rate
Impact of 10% adverse change	$(1,090)	$(958)
Impact of 20% adverse change	$(2,085)	$(1,829)
Discount rate
Impact of 10% adverse change	$(526)	$(399)
Impact of 20% adverse change	$(1,028)	$(782)
Servicing expense
Impact of 10% adverse change	$(804)	$(681)
Impact of 20% adverse change	$(1,609)	$(1,362)
Small business loans
Discount rate
Impact of 10% adverse change	$(19)	$(28)
Impact of 20% adverse change	$(37)	$(58)
Servicing expense
Impact of 10% adverse change	$(290)	$(300)
Impact of 20% adverse change	$(579)	$(600)

The table below presents estimated future amortization expense for servicing rights.


(in thousands)	September 30, 2025
2025	$6,194
2026	22,245
2027	18,768
2028	15,727
2029	13,759
Thereafter	50,273
Total	$126,966

Note 9. Discontinued Operations and Assets and Liabilities Held for Sale

In the fourth quarter of 2023, 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 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 assets and liabilities of the Residential Mortgage Banking segment classified as held for

sale.


(in thousands)	September 30, 2025	December 31, 2024
Assets
Cash and cash equivalents	$—	$24,328
Restricted cash	—	5,464
Loans, net	—	222
Loans, held for sale	—	158,152
Loans eligible for repurchase from Ginnie Mae	—	14,107
Servicing rights(1)	—	55,582
Other assets	—	29,740
Total Assets	$—	$287,595
Liabilities
Secured borrowings	$—	$190,333
Liabilities for loans eligible for repurchase from Ginnie Mae	—	14,107
Derivative instruments	—	1,443
Accounts payable and other accrued liabilities	—	22,852
Total Liabilities	$—	$228,735

(1)Servicing rights are Level 3 assets that had been measured at fair value using the income approach valuation technique. Refer to Note 7- Fair value measurements for

further details.

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)	2025	2024	2025	2024
Interest income	$—	$2,716	$4,693	$6,678
Interest expense	—	(3,010)	(4,515)	(8,295)
Net interest income (expense)	$—	$(294)	$178	$(1,617)
Non-interest income
Residential mortgage banking activities	(556)	14,897	20,399	35,492
Net realized gain (loss) on financial instruments	—	—	9,832	2,938
Net unrealized gain (loss) on financial instruments	—	—	(8,952)	(7,219)
Servicing income, net of amortization and impairment	—	6,274	1,776	24,162
Other income	—	4	8	12
Total non-interest income	$(556)	$21,175	$23,063	$55,385
Non-interest expense
Employee compensation and benefits	(38)	(5,122)	(6,391)	(16,624)
Variable expenses on residential mortgage banking activities	—	(11,318)	(13,599)	(25,526)
Professional fees	(3)	(748)	(827)	(1,160)
Loan servicing expense	—	(1,541)	(3,702)	(6,282)
Other operating expenses	(13)	(1,894)	(3,483)	(5,730)
Total non-interest expense	$(54)	$(20,623)	$(28,002)	$(55,322)
Income (loss) from discontinued operations before income tax benefit (provision)	(610)	258	(4,761)	(1,554)
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	$258	$(6,881)	$(1,554)
Income tax benefit (provision)	(70)	(64)	1,720	389
Net income (loss) from discontinued operations	$210	$194	$(5,161)	$(1,165)

Note 10. Secured Borrowings

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, 2025	December 31, 2024
3	SBA loans	November 2025 - June 2027	SOFR + 2.84% Prime - 0.82%	$335,000	$417,510	$334,045	$250,601
1	LMM loans - USD	February 2026	SOFR + 1.35%	80,000	18,947	18,752	35,931
1	LMM loans - Non-USD (4)	January 2027	EURIBOR + 3.00%	58,742	40,194	30,040	30,513
2	USDA loans	June 2027 - August 2028	SOFR + 2.78%	148,500	25,712	35,382	—
Total borrowings under credit facilities and other financing agreements				$622,242	$502,363	$418,219	$317,045
9	LMM loans	October 2025 - September 2028	SOFR + 2.79%	4,735,000	3,490,291	2,325,766	1,482,085
5	MBS	October 2025 - January 2026	5.92%	135,187	253,610	135,187	236,046
Total borrowings under repurchase agreements				$4,870,187	$3,743,901	$2,460,953	$1,718,131
Total secured borrowings				$5,492,429	$4,246,264	$2,879,172	$2,035,176

(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 both September 30, 2025 and December 31, 2024, certain financing counterparties covenants

calculations were amended to exclude the PPPLF from certain covenant calculations. As of both September 30, 2025 and

December 31, 2024 the Company was in compliance with all debt and financial covenants.

The table below presents the carrying value of collateral pledged with respect to secured borrowings outstanding.


	Pledged Assets Carrying Value
(in thousands)	September 30, 2025	December 31, 2024
Collateral pledged - borrowings under credit facilities and other financing agreements
Loans, held for sale	$30,473	$36,249
Loans, net	471,890	351,443
Total	$502,363	$387,692
Collateral pledged - borrowings under repurchase agreements
Loans, net	2,919,334	2,036,311
MBS	33,105	21,729
Retained interest in assets of consolidated VIEs	220,505	436,617
Loans, held for sale	—	81,708
Real estate acquired in settlement of loans	570,957	127,828
Total	$3,743,901	$2,704,193
Total collateral pledged on secured borrowings	$4,246,264	$3,091,885

Note 11. Senior Secured Notes and Corporate Debt, net

Senior secured notes, net

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 other direct or indirect

subsidiaries of the Company from time to time that is a direct parent entity of Sutherland Asset III, LLC or otherwise

pledges collateral to secure the 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.

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.

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 2026 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 other direct or

indirect subsidiaries of the Company from time to time that pledge 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.

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 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 other direct or indirect subsidiaries of the Company from time to

time that pledge 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. The Term Loan bears interest on

the outstanding principal amount thereof at a rate equal to (a) SOFR plus 5.50% per annum or (b) base rate plus 4.50%

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 6.50% per annum or (y) base rate plus 5.50% 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.

As of September 30, 2025, 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

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

RCC Merger Sub, LLC, a wholly owned subsidiary of the operating partnership (“RCC Merger Sub”), in which

Broadmark merged with and into RCC Merger Sub, with RCC Merger Sub remaining as a wholly owned subsidiary of

the operating partnership (the “Broadmark Merger”), RCC Merger Sub 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, 2025, the Company was in compliance with all covenants with respect to its Corporate debt.

The Debt ATM Agreement

On May 20, 2021, the Company entered into an At Market Issuance Sales Agreement (the “Sales Agreement”) with B.

Riley Securities, Inc. (the “Agent”), pursuant to which it may offer and sell, from time to time, up to $100.0 million of

the Company’s 6.20% Senior Notes due 2026 and 5.75% Senior Notes due 2026. Sales of such notes pursuant to the

Sales Agreement, if any, may be made in transactions that are deemed to be “at the market offerings” as defined in Rule

415 under the Securities Act (the “Debt ATM Program”). The Agent is not required to sell any specific number of the

notes, but the Agent will make all sales using commercially reasonable efforts consistent with its normal trading and

sales practices on mutually agreed terms between the Agent and the Company. No such sales through the Debt ATM

Program were made during the three and nine months ended September 30, 2025 or September 30, 2024, respectively.

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, 2025
Senior secured notes principal amount(1)	4.50%	10/20/2026	$350,000
Senior secured notes principal amount(2)	9.375%	3/1/2028	270,000
Term loan principal amount(3)	SOFR + 5.50%	4/12/2029	115,250
Unamortized discount			(2,031)
Unamortized deferred financing costs			(12,068)
Total senior secured notes, net			$721,151
Corporate debt principal amount(4)	5.50%	12/30/2028	110,000
Corporate debt principal amount(5)	6.20%	7/30/2026	67,437
Corporate debt principal amount(5)	5.75%	2/15/2026	131,852
Corporate debt principal amount(6)	7.375%	7/31/2027	100,000
Corporate debt principal amount(7)	5.00%	11/15/2026	100,000
Corporate debt principal amount(8)	9.00%	12/15/2029	129,371
Unamortized discount - corporate debt			(5,896)
Unamortized deferred financing costs - corporate debt			(2,390)
Junior subordinated notes principal amount(9)	SOFR + 3.10%	3/30/2035	15,000
Junior subordinated notes principal amount(10)	SOFR + 3.10%	4/30/2035	21,250
Total corporate debt, net			$666,624
Total carrying amount of debt			$1,387,775

(1)Interest on the senior secured notes is payable semiannually on April 20 and October 20 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 quarterly on January 30, April 30, July 30, and October 30 of each year.

(6)Interest on the corporate debt is payable semiannually on January 31 and July 31 of each year.

(7)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).

(8)Interest on the corporate debt is payable quarterly on March 15, June 15, September 15, and December 15 of each year.

(9) Interest on the Junior subordinated notes I-A is payable quarterly on March 30, June 30, September 30, and December 30 of each year.

(10) 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, 2025
2025	$—
2026	649,289
2027	100,000
2028	380,000
2029	244,621
Thereafter	36,250
Total contractual amounts	$1,410,160
Unamortized deferred financing costs, discounts, and premiums, net	(22,385)
Total carrying amount of debt	$1,387,775

Note 12. Guaranteed Loan Financing

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 $566.1 million and $691.0 million as of September 30, 2025 and December 31, 2024, 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, 2025	8.36%	1.45-9.50%	2025-2048	$565,883
December 31, 2024	8.69%	1.45-10.00%	2025-2048	$691,118

The table below presents the contractual maturities of guaranteed loan financing.


(in thousands)	September 30, 2025
2025	$21
2026	515
2027	3,475
2028	5,371
2029	9,248
Thereafter	547,253
Total	$565,883

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, most notably Freddie Mac. 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. As of September 30, 2025 and

December 31, 2024, income and expenses on joint venture investments identified as consolidated VIEs were not

material.

The table below presents assets and liabilities of consolidated VIEs.


(in thousands)	September 30, 2025	December 31, 2024
Assets:
Cash and cash equivalents	$9	$—
Restricted cash	2,490	8,411
Loans, net	1,956,483	4,930,061
Loans, held for sale	—	—
Preferred equity investment (1)	90,532	92,810
Receivable from third parties (1)	15,721	—
Accrued interest (1)	85,582	140,607
Real estate owned	15,288	1,583
Other assets	—	1,823
Total assets	$2,166,105	$5,175,295
Liabilities:
Securitized debt obligations of consolidated VIEs, net	1,293,778	3,580,513
Due to third parties (2)	2,521	4,116
Accounts payable and other accrued liabilities	—	93
Total liabilities	$1,296,299	$3,584,722

(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.

The table below presents additional information on the Company’s securitized debt obligations.


	September 30, 2025			December 31, 2024
(in thousands)	Current Principal Balance	Carrying Value	Weighted Average Interest Rate	Current Principal Balance	Carrying Value	Weighted Average Interest Rate
ReadyCap Lending Small Business Trust 2019-2	$8,402	$8,402	7.0%	$18,189	$18,189	7.9%
ReadyCap Lending Small Business Trust 2023-3	75,091	73,960	7.6	101,004	99,390	8.4
Sutherland Commercial Mortgage Trust 2019-SBC8	77,691	76,623	2.9	89,496	88,231	2.9
Sutherland Commercial Mortgage Trust 2021-SBC10	50,366	49,684	1.7	60,816	59,907	1.6
ReadyCap Commercial Mortgage Trust 2016-3	2,501	2,485	5.4	6,401	6,289	5.3
ReadyCap Commercial Mortgage Trust 2018-4	43,393	42,476	4.8	46,980	45,707	4.6
ReadyCap Commercial Mortgage Trust 2019-5	42,805	39,671	5.1	68,125	64,209	5.0
ReadyCap Commercial Mortgage Trust 2019-6	136,770	134,329	3.6	168,946	165,943	3.5
ReadyCap Commercial Mortgage Trust 2022-7	174,223	169,767	4.1	190,426	184,852	4.1
Ready Capital Mortgage Financing 2021-FL5	—	—	—	75,970	75,970	7.3
Ready Capital Mortgage Financing 2021-FL6	—	—	—	206,377	206,377	6.7
Ready Capital Mortgage Financing 2021-FL7	314,622	314,622	6.3	423,529	423,529	7.0
Ready Capital Mortgage Financing 2022-FL8	—	—	—	587,693	587,625	7.5
Ready Capital Mortgage Financing 2022-FL9	—	—	—	328,522	328,090	8.5
Ready Capital Mortgage Financing 2022-FL10	—	—	—	576,655	573,924	8.2
Ready Capital Mortgage Financing 2023-FL11	168,636	168,636	7.7	322,630	321,742	8.2
Ready Capital Mortgage Financing 2023-FL12	213,230	213,123	8.0	331,692	330,437	8.2
Total	$1,307,730	$1,293,778	5.8%	$3,603,451	$3,580,411	7.1%

The table above excludes non-Company sponsored securitized debt obligations of $0.1 million that are included in the

consolidated balance sheets as of December 31, 2024.

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, 2025	December 31, 2024	September 30, 2025	December 31, 2024
MBS (2)	$30,242	$28,233	$30,242	$28,233
Investment in unconsolidated joint ventures	178,840	161,561	178,840	161,561
Total assets in unconsolidated VIEs	$209,082	$189,794	$209,082	$189,794

(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.


	Three Months Ended September 30,		Nine Months Ended September 30,
(in thousands)	2025	2024	2025	2024
Interest income
Loans, net
Bridge	$74,076	$138,835	$253,398	$433,526
Fixed rate	9,260	11,643	29,444	35,602
Construction	12,349	27,135	35,353	83,266
SBA - 7(a)	27,595	30,948	82,271	94,183
PPP (1)	146	88	934	516
Other	6,376	7,728	18,748	23,731
Total loans, net (2)	$129,802	$216,377	$420,148	$670,824
Loans, held for sale
Bridge	(73)	85	3,457	209
Fixed rate	—	107	26	371
Construction	(1)	2,840	326	7,240
SBA - 7(a)	2,461	2,066	6,764	2,066
Other	622	379	1,112	1,135
Total loans, held for sale (2)	$3,009	$5,477	$11,685	$11,021
Loans, held at fair value
Other	31	182	107	182
Total loans, held at fair value	$31	$182	$107	$182
Investments held to maturity (1)	—	93	—	120
Preferred equity investment (2)	3,325	3,325	9,916	7,848
MBS	1,324	1,083	3,337	3,015
Total interest income	$137,491	$226,537	$445,193	$693,010
Interest expense
Secured borrowings	(64,005)	(51,712)	(159,416)	(150,850)
PPPLF borrowings (3)	(10)	(21)	(35)	(73)
Securitized debt obligations of consolidated VIEs	(23,450)	(86,979)	(126,284)	(281,707)
Guaranteed loan financing	(11,659)	(16,959)	(37,078)	(53,249)
Senior secured notes	(15,504)	(6,859)	(39,183)	(17,608)
Corporate debt	(12,343)	(13,042)	(41,278)	(39,057)
Total interest expense	$(126,971)	$(175,572)	$(403,274)	$(542,544)
Net interest income before provision for loan losses	$10,520	$50,965	$41,919	$150,466

(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.

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, 2025			December 31, 2024
(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	$2,580	$—	$26,300	$3,506	$—
Interest Rate Swaps - designated as hedges	Interest rate risk	396,943	18,839	(361)	396,943	29,030	—
FX forwards	Foreign exchange rate risk	20,731	340	(1,266)	34,133	851	(352)
Total		$443,974	$21,759	$(1,627)	$457,376	$33,387	$(352)

The table below presents gains and losses on derivatives.


(in thousands)	Net Realized Gain (Loss)	Net Unrealized Gain (Loss)
Three Months Ended September 30, 2025
Interest rate swaps	$2,030	$(199)
FX forwards	(223)	428
Total	$1,807	$229
Three Months Ended September 30, 2024
Interest rate swaps	$4,460	$(992)
Total	$4,460	$(992)
Nine Months Ended September 30, 2025
Interest rate swaps	$5,995	$(1,111)
FX forwards	(223)	428
Total	$5,772	$(683)
Nine Months Ended September 30, 2024
Interest rate swaps	$12,418	$(1,405)
FX forwards	912	—
Total	$13,330	$(1,405)

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, 2025	$(233)	$(1,105)	$(872)
Three Months Ended September 30, 2024	$(274)	$(12,913)	$(12,639)
Nine Months Ended September 30, 2025	$(729)	$(8,886)	$(8,157)
Nine Months Ended September 30, 2024	$(835)	$(8,669)	$(7,834)

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

The table below presents details on the real estate owned portfolio.


(in thousands)	September 30, 2025	December 31, 2024
Acquired REO, held for sale:
Mixed use	$7,501	$13,159
Multi-family	54,371	18,000
Lodging	12,808	16,461
Residential	168,659	250
Office	3,750	3,750
Retail	4,190	—
Land	71,096	91,111
Total Acquired REO, held for sale	$322,375	$142,731
Other REO, held for sale:
Office	7,125	4,365
Mixed use	12,210	15,210
Multi-family	23,747	30,000
Retail	5,349	1,126
Other	455	5
Total Other REO, held for sale	$48,886	$50,706
REO, held for use:
Land	21,469	—
Building and improvements, net	226,559	—
Furniture, fixtures and equipment, net	13,696	—
Total REO, held for use	$261,724	$—
Total real estate owned	$632,985	$193,437

In the table above:

•Depreciation expense related to REO, held for use was $1.1 million for both the three and nine months ended

September 30, 2025. There was no such depreciation expense for the three and nine months ended

September 30, 2024.

•Other REO excludes $15.3 million and $1.6 million as of September 30, 2025 and December 31, 2024,

respectively, 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,
	2025	2024	2025	2024
Management fee - total	$5.2million	$6.5million	$15.8million	$19.3million
Management fee - amount unpaid	$5.2million	$6.3million	$5.2million	$6.3million

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,

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,
	2025	2024	2025	2024
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, 2025 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,
	2025	2024	2025	2024
Reimbursable expenses payable to Manager - total	$4.0million	$2.5million	$12.9million	$8.6million
Reimbursable expenses payable to Manager - amount unpaid	$7.7million	$4.2million	$7.7million	$4.2million

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%

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, 2025, the

Company has contributed $95.8 million of cash into the Fund for a remaining commitment of $29.2 million.

Note 18. Other Assets and Other Liabilities

The table below presents the composition of other assets and other liabilities.


(in thousands)	September 30, 2025	December 31, 2024
Other assets:
Goodwill	$49,501	$49,501
Deferred loan exit fees	22,467	27,811
Accrued interest	95,133	45,416
Due from servicers	8,124	7,039
Intangible assets	38,868	37,006
Receivable from third party	47,204	34,540
Deferred financing costs	12,294	8,053
Deferred tax asset	111,325	111,325
Tax receivable	60,236	1,654
Right-of-use lease asset	3,537	7,362
PPP receivables	10,641	18,363
Investments held to maturity	—	3,000
Other	13,186	11,416
Other assets	$472,516	$362,486
Accounts payable and other accrued liabilities:
Accrued salaries, wages and commissions	37,735	39,565
Accrued interest payable	40,036	39,723
Servicing principal and interest payable	20,892	13,609
Repair and denial reserve	8,986	7,359
Payable to related parties	5,175	5,566
PPP liabilities	10,441	20,892
Accrued professional fees	2,458	5,538
Lease payable	8,509	17,806
Liabilities of consolidated VIEs	2,521	4,209
Other	29,653	33,784
Total accounts payable and other accrued liabilities	$166,406	$188,051

In the table above, investments held to maturity was $3.0 million as of December 31, 2024 and consisted of multi-family

preferred equities with maturities of less than one year and a weighted average interest rate of 10.0%. The provision for

credit losses on held to maturity securities was not material for the three and nine months ended September 30, 2024.

Goodwill

The table below presents the carrying value of goodwill by reportable segment.


(in thousands)	September 30, 2025	December 31, 2024
LMM Commercial Real Estate	$27,324	$27,324
Small Business Lending	22,177	22,177
Total	$49,501	$49,501

Intangible assets

The table below presents information on intangible assets.


(in thousands)	Gross Carrying Amount	Accumulated Amortization	Net Carrying Value
September 30, 2025
Amortized intangible assets:
Internally developed software	$25,166	$10,426	$14,740
Customer relationships	10,299	2,037	8,262
Broker network	10,200	2,450	7,750
Above market leases	1,958	39	1,919
Other	3,535	1,100	2,435
Unamortized intangible assets:
Trade name	2,500	—	2,500
Trademark	262	—	262
SBA license	1,000	—	1,000
Total intangible assets	$54,920	$16,052	$38,868
Amortized intangible liabilities:
Below market leases	$(417)	$(6)	$(411)
Total intangible liabilities	$(417)	$(6)	$(411)
December 31, 2024
Amortized intangible assets:
Internally developed software	$20,518	$7,051	$13,467
Customer relationships	10,332	1,474	8,858
Broker network	10,200	1,700	8,500
Other	3,499	818	2,681
Unamortized intangible assets:
Trade name	2,500	—	2,500
SBA license	1,000	—	1,000
Total intangible assets	$48,049	$11,043	$37,006

The amortization expense related to intangible assets was $1.8 million and $5.1 million for the three and nine months

ended September 30, 2025 and $1.4 million and $3.1 million for the three and nine months ended September 30, 2024,

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, 2025
2025	$1,959
2026	6,276
2027	6,143
2028	5,116
2029	3,554
Thereafter	11,647
Total	$34,695

Note 19. Other Income and Operating Expenses

The table below presents the composition of other income and operating expenses.


	Three Months Ended September 30,		Nine Months Ended September 30,
(in thousands)	2025	2024	2025	2024
Other income:
Origination income	$6,944	$9,121	$23,486	$14,251
Hotel income	5,885	—	5,885	—
Change in repair and denial reserve	(488)	325	(1,822)	(1,841)
ERC consulting income	—	615	149	3,201
Other	2,432	4,762	9,969	21,635
Total other income	$14,773	$14,823	$37,667	$37,246
Other operating expenses:
Origination costs	4,438	6,801	16,465	10,030
Hotel expense	5,735	—	5,735	—
Technology expense	3,405	3,457	9,197	8,282
Rent and property tax expense	2,827	2,042	6,518	5,732
Depreciation and amortization expense	2,973	1,435	6,339	3,303
Recruiting, training and travel expense	462	839	1,907	2,071
Marketing expense	357	750	1,060	1,499
Bad debt expense - ERC	—	49	109	3,670
Other	4,682	2,675	9,805	9,348
Total other operating expenses	$24,879	$18,048	$57,135	$43,935

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
September 13, 2024	September 30, 2024	October 31, 2024	$0.250
December 13, 2024	December 31, 2024	January 31, 2025	$0.250
March 3, 2025	March 31, 2025	April 30, 2025	$0.125
June 13, 2025	June 30, 2025	July 31, 2025	$0.125
September 15, 2025	September 30, 2025	October 31, 2025	$0.125

Stock incentive plans

The Company currently maintains the 2013 Equity Incentive Plan and the 2023 Equity Incentive Plan which authorize

the Compensation Committee of the Board to approve grants of equity-based awards to the Company’s officers and

directors, and employees of the Manager and its affiliates. The 2013 Equity Incentive Plan provided for grants of equity-

based awards up to an aggregate of 5% of the shares of the Company’s common stock issued and outstanding from time

to time on a fully diluted basis. On August 22, 2023, the Company’s stockholders approved the 2023 Equity Incentive

Plan which replaces the 2013 Equity Incentive Plan and provides for grants of equity-based awards up to 5.5 million

shares of the Company’s common stock. As of August 22, 2023, no further awards will be granted under the 2013

Equity Incentive Plan, and the 2013 Equity Incentive Plan remains in effect only for so long as awards granted

thereunder remain outstanding. 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 2025, 2024, and 2023, the Company granted 1,184,196, 774,097, and 413,852, respectively, of time-based RSAs

under the 2013 Equity Incentive Plan and 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. The Company further granted in these years 89,285, 126,930, and 75,639, respectively, of 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 are currently paid on all time-based RSAs and dividend equivalents are paid on deferred RSU

awards during their deferral period.

Additionally, as part of the Broadmark Merger, the Company assumed each award of restricted stock units that was not

an award of performance restricted stock units granted by Broadmark pursuant to the Broadmark Equity Plan (each, a

“Broadmark RSU Award”) outstanding immediately prior to the effective time of the Broadmark Merger (“Broadmark

Merger Effective Time”) and converted them into 736,666 Company RSUs after applying the exchange ratio of 0.47233

shares of Company common stock for each share of common stock, par value $0.001 per share, of Broadmark (the

“Broadmark Common Stock”) issued and outstanding immediately prior to the Broadmark Merger Effective Time, of

which 535 Company RSUs remain outstanding. The Broadmark RSU Awards have the same terms and conditions as

were applicable to them immediately prior to the Broadmark Merger Effective Time and, accordingly, are not dividend

eligible.

The table below summarizes RSU and RSA activity, excluding performance-based equity awards. See below for further

details on performance-based equity awards.


	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, 2024	996,549	$10,248	$10.28
Granted	1,545,723	10,313	6.67
Vested	(682,080)	(6,238)	9.15
Forfeited	(27,223)	(215)	7.90
Outstanding, March 31, 2025	1,832,969	$14,108	$7.70
Granted	22,506	113	5.02
Vested	(55,010)	(454)	8.25
Forfeited	(63,955)	(479)	7.49
Outstanding, June 30, 2025	1,736,510	$13,288	$7.65
Vested	(23,704)	(168)	7.09
Forfeited	(25,111)	(181)	7.21
Outstanding, September 30, 2025	1,687,695	$12,939	$7.67

The Company recognized $1.6 million and $5.0 million for the three and nine months ended September 30, 2025,

respectively and $1.8 million and $5.6 million for the three and nine months ended September 30, 2024, respectively, of

non-cash compensation expense related to its stock-based incentive plan in the consolidated statements of operations. As

of September 30, 2025 and December 31, 2024, approximately $12.9 million and $10.2 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

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 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.

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

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.

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 may be earned based on the

achievement of performance goals by the end of 2024 in relation to the Broadmark Merger. The awards are 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 may be earned based on the volume of Broadmark product originated from the time of the

merger through the end of 2024, 30% to awards that may be 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 may be earned based on distributable return on equity (“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 receive may range from

0% to 200% of the target award. The fair value of the performance-based RSUs granted is recorded as compensation

expense over the performance period and will vest 2/3rds on December 31, 2024, and 1/3rd on December 31, 2025, with

an offsetting increase in stockholders’ equity. Any awards earned on December 31, 2024 based on achievement of the

applicable performance metrics but vesting on December 31, 2025 will convert into RSAs that are eligible to vest on

December 31, 2025 based on the key employee’s continued employment or service through that date. Dividend

equivalents are accrued by the Company during the performance period and paid to the holder if and when the

performance-based RSUs vest. 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 are allocated 50% to awards that may be

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 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.

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 are allocated 50% to awards that may be 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 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 vesting 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 a 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. 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.

2021 performance-based RSUs. In February 2021, the Company granted, to certain key employees, 61,895

performance-based RSUs at a grant date fair value of $12.82 per performance-based RSU. During October 2021, 18,568

performance-based RSUs were forfeited. The performance-based RSUs are allocated 50% to awards that may be earned

based on achievement of performance goals related to absolute TSR for the three-year forward-looking period ending

December 31, 2023 and 50% to awards that may be earned based on achievement of performance goals related to TSR

for such three-year forward-looking performance period relative to the performance of a designated peer group. Subject

to the absolute 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 300% of the target award. Dividend

equivalents are accrued by the Company during the performance period and paid to the holder if and when the

performance-based RSUs vest. Following the conclusion of the performance period on December 31, 2023, the Board

determined that the relative TSR target goal was achieved and the absolute TSR goal was not achieved. As such, on

January 9, 2024, the Board approved the settlement of 29,215 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, 2025, the conversion rate was 1.8391 shares of common stock per $25 principal amount of

the Series C Preferred Stock, 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, 2025
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, 2025. The dividends were paid on

October 15, 2025 for Series C Preferred Stock and on October 31, 2025 for Series E Preferred Stock to the

holders of record as of the close of business on September 30, 2025.

•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. Series E Preferred Stock is not redeemable

prior to June 10, 2026, except under certain conditions.

Public and Private Warrants

As part of the Broadmark Merger, the Company assumed public and private placement warrants that represented the

right to purchase shares of Broadmark Common Stock. As of September 30, 2025, there were 5.2 million private

placement warrants outstanding, each representing the right to purchase 0.47233 shares of common stock. The Company

has outstanding warrants to purchase approximately 2.5 million shares of common stock at a price of $24.34 per whole

share. Settlement of outstanding warrants will be in shares of common stock, unless the Company elects (solely in the

Company’s discretion) to settle warrants the Company has called for redemption in cash, and subject to customary

adjustment in the event of business combinations and certain tender offers. On November 19, 2024, 41.7 million public

warrants, each representing the right to purchase 0.1180825 shares of common stock, expired.

The liability for the private placement warrants was less than $0.1 million as of September 30, 2025 and is included in

accounts payable and other accrued liabilities in the consolidated balance sheets.

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

three and nine months ended September 30, 2025 or September 30, 2024. As of September 30, 2025, 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)	2025	2024	2025	2024
Basic Earnings
Net income (loss) from continuing operations	$(16,947)	$(7,473)	$16,712	$(114,482)
Less: Income attributable to non-controlling interest	2,008	2,031	6,282	3,968
Less: Income attributable to participating shares	2,210	2,241	6,652	6,877
Basic earnings - continuing operations	$(21,165)	$(11,745)	$3,778	$(125,327)
Basic earnings - discontinued operations	$210	$194	$(5,161)	$(1,165)

Diluted Earnings
Net income (loss) from continuing operations	(16,947)	(7,473)	16,712	(114,482)
Less: Income attributable to non-controlling interest	2,008	2,031	6,282	3,968
Less: Income attributable to participating shares	2,210	2,241	6,652	6,877
Add: Expenses attributable to dilutive instruments	131	131	393	393
Diluted earnings - continuing operations	$(21,034)	$(11,614)	$4,171	$(124,934)
Diluted earnings - discontinued operations	$210	$194	$(5,161)	$(1,165)

Number of Shares
Basic — Average shares outstanding	163,574,703	168,335,483	165,491,135	169,669,145
Effect of dilutive securities — Unvested participating shares	2,299,104	1,173,725	2,299,105	1,145,935
Diluted — Average shares outstanding	165,873,807	169,509,208	167,790,240	170,815,080

EPS Attributable to RC Common Stockholders:
Basic - continuing operations	$(0.13)	$(0.07)	$0.02	$(0.74)
Basic - discontinued operations	$0.00	$0.00	$(0.03)	$(0.01)
Basic - total	$(0.13)	$(0.07)	$(0.01)	$(0.75)

Diluted - continuing operations	$(0.13)	$(0.07)	$0.02	$(0.74)
Diluted - discontinued operations	$0.00	$0.00	$(0.03)	$(0.01)
Diluted - total	$(0.13)	$(0.07)	$(0.01)	$(0.75)

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 September 30, 2025 and

December 31, 2024, the non-controlling interest OP unit holders owned 602,968 and 885,582 OP units, respectively.

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

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, 2025 and December 31, 2024, 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, 2025

and December 31, 2024, the Company has elected to offset assets and liabilities associated with its OTC derivative

contracts in the consolidated balances sheets.

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, 2025
Assets
FX forwards	$340	$—	$340	$—	$—	$340
Interest rate swaps	21,419	16,464	4,955	—	—	4,955
Total	$21,759	$16,464	$5,295	$—	$—	$5,295
Liabilities
Interest rate swaps	361	—	361	—	—	361
FX forwards	1,266	—	1,266	—	—	1,266
Secured borrowings	2,879,172	—	2,879,172	2,879,172	—	—
PPPLF	10,441	—	10,441	10,441	—	—
Total	$2,891,240	$—	$2,891,240	$2,889,613	$—	$1,627
December 31, 2024
Assets
FX forwards	851	—	851	—	—	851
Interest rate swaps	32,536	25,424	7,112	—	—	7,112
Total	$33,387	$25,424	$7,963	$—	$—	$7,963
Liabilities
FX forwards	352	—	352	—	—	352
Secured borrowings	2,035,176	—	2,035,176	2,035,176	—	—
PPPLF	20,892	—	20,892	18,362	—	2,530
Total	$2,056,420	$—	$2,056,420	$2,053,538	$—	$2,882

(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.

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

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

The Company may be subject to litigation and administrative proceedings arising in the ordinary course of business and

as such, has entered into agreements which provide for indemnifications against losses, costs, claims, and liabilities

arising from the performance of individual obligations under such agreements. Such indemnification obligations may not

be subject to maximum loss clauses.

While the outcome of any particular litigation, administrative proceeding or indemnification claim cannot be predicted

with certainty, management believes that the aggregate amount of such liabilities, if any, in excess of amounts covered

by insurance, will not have a material adverse effect on the Company’s financial condition or results of operations.

Management is not aware of any other contingencies that would require accrual or disclosure in the consolidated

financial statements.

Unfunded Loan Commitments

The table below presents unfunded loan commitments.


(in thousands)	September 30, 2025	December 31, 2024
Loans, net	$512,209	$444,838
Loans, held for sale	$55,437	$28,566

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

and it would not be able to qualify as a REIT for the subsequent four taxable years. As of September 30, 2025 and

December 31, 2024, 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 our 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 originates and services multi-family loan products

under the Freddie Mac SBL program. 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 and

government guaranteed loans focused on the USDA as well as originate and service small business loans. 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, along

with remaining unallocated amounts primarily including interest expense relating to senior secured notes, allocated

employee compensation from the Manager, management and incentive fees paid to the Manager and other general

corporate overhead expenses. Unallocated assets were $402.8 million and $342.4 million as of September 30, 2025 and

September 30, 2024, respectively.


	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


	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 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 (allowance) recovery, loans held for sale	38,761	—	38,761
Servicing income, net	4,501	9,160	13,661
Income (loss) 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


	Three Months Ended September 30, 2024
(in thousands)	LMM Commercial Real Estate	Small Business Lending	Total
Interest income	$193,252	$33,285	$226,537
Interest expense	(150,489)	(25,083)	(175,572)
Net interest income before provision for loan losses	$42,763	$8,202	$50,965
Provision for loan losses	(49,240)	(3,926)	(53,166)
Net interest income after provision for loan losses	$(6,477)	$4,276	$(2,201)
Non-interest income
Net realized gain (loss) on financial instruments and real estate owned	(95,206)	26,022	(69,184)
Net unrealized gain (loss) on financial instruments	(2,447)	1,206	(1,241)
Valuation allowance, loans held for sale	71,060	—	71,060
Servicing income, net	1,445	3,970	5,415
Income on unconsolidated joint ventures	3,204	10	3,214
Other income	2,803	10,792	13,595
Total non-interest income (loss)	$(19,141)	$42,000	$22,859
Non-interest expense
Employee compensation and benefits	(6,462)	(13,852)	(20,314)
Allocated employee compensation and benefits from related party	(254)	—	(254)
Professional fees	(809)	(3,326)	(4,135)
Loan servicing expense	(9,632)	(469)	(10,101)
Impairment on real estate	(525)	—	(525)
Other operating expenses	(3,394)	(12,697)	(16,091)
Total non-interest expense	$(21,076)	$(30,344)	$(51,420)
Income (loss) before unallocated expenses and provision for income taxes	$(46,694)	$15,932	$(30,762)
Unallocated corporate income (expenses)
Gain on bargain purchase			32,165
Employee compensation and benefits			(4,958)
Professional fees			(2,097)
Management fees – related party			(6,498)
Transaction related expenses			(2,998)
Other operating expenses - net			(729)
Total unallocated corporate income			$14,885
Loss before provision for income taxes			$(15,877)
Total assets	$8,950,073	$1,486,085	$10,436,158


	Nine Months Ended September 30, 2024
(in thousands)	LMM Commercial Real Estate	Small Business Lending	Total
Interest income	$596,062	$96,948	$693,010
Interest expense	(467,718)	(74,826)	(542,544)
Net interest income before provision for loan losses	$128,344	$22,122	$150,466
Provision for loan losses	(4,071)	(3,680)	(7,751)
Net interest income after provision for loan losses	$124,273	$18,442	$142,715
Non-interest income
Net realized gain (loss) on financial instruments and real estate owned	(99,540)	56,474	(43,066)
Net unrealized gain (loss) on financial instruments	(958)	2,992	2,034
Valuation allowance, loans held for sale	(156,107)	—	(156,107)
Servicing income, net	3,998	8,446	12,444
Income on unconsolidated joint ventures	4,811	10	4,821
Other income	20,326	14,267	34,593
Total non-interest income (loss)	$(227,470)	$82,189	$(145,281)
Non-interest expense
Employee compensation and benefits	(21,080)	(31,472)	(52,552)
Allocated employee compensation and benefits from related party	(804)	—	(804)
Professional fees	(3,324)	(9,471)	(12,795)
Loan servicing expense	(33,075)	(832)	(33,907)
Impairment on real estate	(26,627)	—	(26,627)
Other operating expenses	(10,880)	(23,968)	(34,848)
Total non-interest expense	$(95,790)	$(65,743)	$(161,533)
Income (loss) before unallocated expenses and provision for income taxes	$(198,987)	$34,888	$(164,099)
Unallocated corporate income (expenses)
Gain on bargain purchase			13,859
Employee compensation and benefits			(13,883)
Professional fees			(6,535)
Management fees – related party			(19,344)
Transaction related expenses			(5,240)
Other operating expenses - net			(6,434)
Total unallocated corporate expenses			$(37,577)
Loss before provision for income taxes			$(201,676)
Total assets	$8,950,073	$1,486,085	$10,436,158

Note 27. Subsequent Events

The Company has evaluated subsequent events through the issuance date of the consolidated financial statements and

determined that no additional disclosure is necessary.

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;

•the impact of inflation on our business;

•tariffs imposed or threatened to be imposed by the current presidential administration;

•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 acquisitions of United Development Funding IV (“UDF IV”), Madison One Capital, M1 CUSO

and Madison One Lender Services (together, “Madison One”), and Funding Circle USA, Inc. (“Funding

Circle”), and our increased scale;

•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”), government-guaranteed loans focused on the

United States Department of Agriculture (“USDA”), 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”);

•applicable regulatory changes;

•changes in our assets, interest rates or the general economy;

•mortgage loan modification programs and future legislative actions;

•our ability to maintain our qualification as a real estate investment trust (“REIT”) and limitations on our

business as a result of our qualifications as a REIT;

•our ability to maintain our exemption from qualification under the Investment Company Act of 1940, as

amended (the “1940 Act”);

•factors described in our Annual Report on Form 10-K, including those set forth under the captions “Risk

Factors” and “Business”;

•our dependence on our external advisor, Waterfall Asset Management, LLC (“Waterfall” or the “Manager”),

and our ability to find a suitable replacement if we or Waterfall were to terminate the management agreement

we have entered into with Waterfall (the “management agreement”);

•the degree and nature of our competition, including competition for 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, 2024 (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, USDA 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

primarily through dividends, as well as through capital appreciation. In order to achieve this objective, we continue to

grow our investment portfolio and believe that the breadth of our full-service real estate finance platform will allow us to

adapt to market conditions and deploy capital in our asset classes and segments with the most attractive risk-adjusted

returns.

We 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:

•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 originate and service multi-family loan products under

the Freddie Mac SBL program. These originated loans are held for sale, and subsequently sold to Freddie

Mac. We provide construction and permanent financing for the preservation and construction of affordable

housing, primarily utilizing tax-exempt bonds through Red Stone, a 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 acquire, originate and service USDA loans through our subsidiary,

Madison One, as well as originate and service small business loans through our subsidiary iBusiness

Funding LLC.

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, LP (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.

Funding Circle. On July 1, 2024, the Company acquired Funding Circle through its subsidiary, iBusiness Funding LLC,

for approximately $41.2 million in cash plus the assumption of certain liabilities (the “Funding Circle Acquisition”).

Funding Circle is an online lending platform that originates and services small business loans. The Funding Circle

Acquisition integrates Funding Circle’s loan origination servicing platform with the Company’s Lending as a Service

and LenderAI product offerings. Refer to Notes 1 and 5, included in Part I, Item 1, “Financial Statements,” of this Form

10-Q, for more information about the Funding Circle Acquisition and the assets acquired and liabilities assumed as a

result of the Funding Circle Acquisition.

Madison One. On June 5, 2024, the Company acquired Madison One, a leading originator and servicer of USDA and

SBA guaranteed loan products, for an initial purchase price of approximately $32.9 million paid in cash (the “Madison

One Acquisition”). Approximately $3.6 million of the initial purchase price was paid as bonuses to certain key Madison

One personnel in cash. Additional purchase price payments, including cash payments and the issuance of shares of

common stock of the Company, may be made over the four years following the acquisition date contingent upon the

Madison One business achieving certain performance metrics. Part of the Company’s strategy in acquiring Madison One

included the value of the anticipated synergies arising from the acquisition and the value of the acquired assembled

workforce, neither of which qualify for recognition as an intangible asset. Refer to Notes 1 and 5, included in Part I, Item

1, “Financial Statements,” of this Form 10-Q, for more information about the Madison One Acquisition and the assets

acquired and liabilities assumed as a result of the Madison One Acquisition.

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, USDA 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 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, 2025, all fixed rate loans are 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, 2025, 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 delivered its first interest rate cut since November 2024, but there is uncertainty regarding if and when

further 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 is a measure that is not prepared in accordance with GAAP. We use distributable

earnings to evaluate our performance and determine dividends, excluding the effects of certain transactions and GAAP

adjustments that we believe are not necessarily indicative of our current loan activity and operations. Refer to “—Non-

GAAP Financial Measures” below for a reconciliation of net income to distributable earnings.

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


	Three Months Ended September 30,		Nine Months Ended September 30,
($ in thousands, except share data)	2025	2024	2025	2024
Net Income (loss) from continuing operations	$(16,947)	$(7,473)	$16,712	$(114,482)
Earnings per common share from continuing operations - basic	$(0.13)	$(0.07)	$0.02	$(0.74)
Earnings per common share from continuing operations - diluted	$(0.13)	$(0.07)	$0.02	$(0.74)
Distributable earnings before realized losses	$(2,170)	$46,558	$(10,734)	$137,418
Distributable earnings before realized losses per common share - basic	$(0.04)	$0.25	$(0.14)	$0.74
Distributable earnings before realized losses per common share - diluted	$(0.04)	$0.25	$(0.14)	$0.74
Distributable earnings	$(149,592)	$(42,514)	$(180,768)	$28,093
Distributable earnings per common share - basic	$(0.94)	$(0.28)	$(1.17)	$0.10
Distributable earnings per common share - diluted	$(0.94)	$(0.28)	$(1.17)	$0.10
Dividends declared per common share	$0.125	$0.25	$0.38	$0.85
Dividend yield (1)	12.9%	13.1%	12.9%	13.1%
Return on equity from continuing operations	(4.5)%	(1.8)%	1.2%	(7.2)%
Distributable return on equity before realized losses	(1.0)%	8.4%	(2.1)%	7.6%
Distributable return on equity	(35.7)%	(8.2)%	(21.6)%	1.3%
Book value per common share	$10.28	$12.59	$10.28	$12.59

(1)Dividend yield is based on the respective period end closing share price.

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)	2025	2024	2025	2024
Loan originations:
LMM loans	$139,200	$246,175	$391,213	$762,242
SBL loans	282,607	439,704	1,028,746	854,121
Total loan investment activity	$421,807	$685,879	$1,419,959	$1,616,363

Balance Sheet Analysis and Metrics


(in thousands)	September 30, 2025	December 31, 2024	$ Change	% Change
Assets
Cash and cash equivalents	$147,505	$143,803	$3,702	2.6%
Restricted cash	44,491	30,560	13,931	45.6
Loans, net (including $1,088 and $3,533 held at fair value)	4,360,501	3,378,149	982,352	29.1
Loans, held for sale (including $143,819 and $128,531 held at fair value and net of valuation allowance of $53,937 and $97,620)	163,792	241,626	(77,834)	(32.2)
Mortgage-backed securities	33,105	31,006	2,099	6.8
Investment in unconsolidated joint ventures (including $5,952 and $6,577 held at fair value)	178,840	161,561	17,279	10.7
Derivative instruments	5,295	7,963	(2,668)	(33.5)
Servicing rights	126,966	128,440	(1,474)	(1.1)
Real estate owned	632,985	193,437	439,548	227.2
Other assets	472,516	362,486	110,030	30.4
Assets of consolidated VIEs	2,166,105	5,175,295	(3,009,190)	(58.1)
Assets held for sale	—	287,595	(287,595)	(100.0)
Total Assets	$8,332,101	$10,141,921	$(1,809,820)	(17.8)%
Liabilities
Secured borrowings	2,879,172	2,035,176	843,996	41.5
Securitized debt obligations of consolidated VIEs, net	1,293,778	3,580,513	(2,286,735)	(63.9)
Senior secured notes, net	721,151	437,847	283,304	64.7
Corporate debt, net	666,624	895,265	(228,641)	(25.5)
Guaranteed loan financing	565,883	691,118	(125,235)	(18.1)
Contingent consideration	18,385	573	17,812	3,108.6
Derivative instruments	1,627	352	1,275	362.2
Dividends payable	22,602	43,168	(20,566)	(47.6)
Loan participations sold	102,987	95,578	7,409	7.8
Due to third parties	9,927	1,442	8,485	588.4
Accounts payable and other accrued liabilities	166,406	188,051	(21,645)	(11.5)
Liabilities held for sale	—	228,735	(228,735)	(100.0)
Total Liabilities	$6,448,542	$8,197,818	$(1,749,276)	(21.3)%
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, 161,834,837 and 162,792,372 shares issued and outstanding, respectively	17	17	—	—
Additional paid-in capital	2,257,078	2,250,291	6,787	0.3
Retained earnings (deficit)	(569,709)	(505,089)	(64,620)	12.8
Accumulated other comprehensive loss	(24,096)	(18,552)	(5,544)	(29.9)
Total Ready Capital Corporation equity	1,774,668	1,838,045	(63,377)	(3.4)
Non-controlling interests	100,530	97,697	2,833	2.9
Total Stockholders’ Equity	$1,875,198	$1,935,742	$(60,544)	(3.1)%
Total Liabilities, Redeemable Preferred Stock, and Stockholders’ Equity	$8,332,101	$10,141,921	$(1,809,820)	(17.8)%

As of September 30, 2025, total assets in our consolidated balance sheet were $8.3 billion, a decrease of $1.8 billion

from December 31, 2024, primarily reflecting a decrease in Assets of consolidated VIEs, partially offset by an increase

in Loans, net and Real estate owned. Assets of consolidated VIEs decreased $3.0 billion, primarily due to the collapse of

RCMF 2021-FL5, RCMF 2021-FL6, RCMF 2022-FL8, RCMF 2022-FL9 and RCMF 2022-FL10 and paydowns on

securitized loans. Loans, net increased $1.0 billion, primarily due to the collapse of RCMF 2021-FL5, RCMF 2021-FL6,

RCMF 2022-FL8, RCMF 2022-FL9 and RCMF 2022-FL10, partially offset by sales, paydowns and the transfer of

Loans, net to both Loans, held for sale and Real estate owned. Real estate owned increased $0.4 billion, due to the

settlement of the Portland, mixed-use asset loan obligation via a consensual deed-in-lieu arrangement, partially offset by

sales.

As of September 30, 2025, total liabilities in our consolidated balance sheet were $6.4 billion, a decrease of $1.7 billion

from December 31, 2024, primarily reflecting a decrease in Securitized debt obligations of consolidated VIEs, net,

partially offset by an increase in Secured borrowings. Securitized debt obligations of consolidated VIEs, net decreased

$2.3 billion due to paydowns on securitized loans including the collapse of RCMF 2021-FL5, RCMF 2021-FL6, RCMF

2022-FL8, RCMF 2022-FL9 and RCMF 2022-FL10. Secured borrowings increased $0.8 billion due to the collapse of

RCMF 2021-FL5, RCMF 2021-FL6, RCMF 2022-FL8, RCMF 2022-FL9 and RCMF 2022-FL10, partially offset by

payoffs.

As of September 30, 2025, total stockholders’ equity was $1.9 billion, a decrease of $60.5 million from December 31,

2024, primarily due to dividends paid and common stock repurchased through the Company’s share repurchase program,

partially offset by shares issued in connection with the acquisition of UDF IV.

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, 2025
Assets
Loans, net	$5,111,811	$1,205,173	$6,316,984
Loans, held for sale	38,920	124,872	163,792
MBS	33,105	—	33,105
Investment in unconsolidated joint ventures	178,439	401	178,840
Servicing rights	62,262	64,704	126,966
Real estate owned	648,268	5	648,273

Liabilities
Secured borrowings	2,509,745	369,427	2,879,172
Securitized debt obligations of consolidated VIEs	1,211,416	82,362	1,293,778
Senior secured notes, net	713,525	7,626	721,151
Corporate debt, net	666,624	—	666,624
Guaranteed loan financing	—	565,883	565,883
Loan participations sold	102,987	—	102,987

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.

Refer to Exhibit 99.1 to this Form 10-Q for additional financial information related to a selection of our loan portfolio as

of June 30, 2025.

Statement of Operations Analysis and Metrics


	Three Months Ended September 30,			Nine Months Ended September 30,
(in thousands)	2025	2024	$ Change	2025	2024	$ Change
Interest income
LMM commercial real estate	$105,856	$193,252	$(87,396)	$353,097	$596,062	$(242,965)
Small business lending	31,635	33,285	(1,650)	92,096	96,948	(4,852)
Total interest income	$137,491	$226,537	$(89,046)	$445,193	$693,010	$(247,817)
Interest expense
LMM commercial real estate	(106,556)	(150,489)	43,933	(342,998)	(467,718)	124,720
Small business lending	(20,415)	(25,083)	4,668	(60,276)	(74,826)	14,550
Total interest expense	$(126,971)	$(175,572)	$48,601	$(403,274)	$(542,544)	$139,270
Net interest income before recovery of (provision for) loan losses	$10,520	$50,965	$(40,445)	$41,919	$150,466	$(108,547)
Recovery of (provision for) loan losses
LMM commercial real estate	(30,980)	(49,240)	18,260	81,815	(4,071)	85,886
Small business lending	(6,997)	(3,926)	(3,071)	(18,864)	(3,680)	(15,184)
Total recovery of (provision for) loan losses	$(37,977)	$(53,166)	$15,189	$62,951	$(7,751)	$70,702
Net interest income after recovery of (provision for) loan losses	$(27,457)	$(2,201)	$(25,256)	$104,870	$142,715	$(37,845)
Non-interest income (loss)
LMM commercial real estate	17,028	(19,141)	36,169	(134,004)	(227,470)	93,466
Small business lending	32,564	42,000	(9,436)	93,139	82,189	10,950
Unallocated corporate income	25,322	33,393	(8,071)	114,844	16,512	98,332
Total non-interest income (loss)	$74,914	$56,252	$18,662	$73,979	$(128,769)	$202,748
Non-interest expense
LMM commercial real estate	(29,138)	(21,076)	(8,062)	(84,422)	(95,790)	11,368
Small business lending	(28,363)	(30,344)	1,981	(86,146)	(65,743)	(20,403)
Unallocated corporate expenses	(16,838)	(18,508)	1,670	(46,650)	(54,089)	7,439
Total non-interest expense	$(74,339)	$(69,928)	$(4,411)	$(217,218)	$(215,622)	$(1,596)
Net income (loss) before provision for income taxes
LMM commercial real estate	(43,790)	(46,694)	2,904	(126,512)	(198,987)	72,475
Small business lending	8,424	15,932	(7,508)	19,949	34,888	(14,939)
Unallocated corporate expenses	8,484	14,885	(6,401)	68,194	(37,577)	105,771
Total net income (loss) before provision for income taxes	$(26,882)	$(15,877)	$(11,005)	$(38,369)	$(201,676)	$163,307

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)	2025	2024	$ Change	2025	2024	$ Change
Realized gain (loss) on financial instruments
Creation of mortgage servicing rights
SBA - 7(a)	$2,534	$4,850	$(2,316)	$9,623	$10,764	$(1,141)
Multi-family	1,102	1,836	(734)	3,730	4,452	(722)
USDA	3,085	1,544	1,541	6,255	2,016	4,239
Small business loans	476	444	32	1,600	444	1,156
Total Creation of mortgage servicing rights	$7,197	$8,674	$(1,477)	$21,208	$17,676	$3,532
Loans
SBA - 7(a)	8,608	19,227	(10,619)	36,085	43,765	(7,680)
Multi-family	374	137	237	897	775	122
USDA	4,340	476	3,864	6,197	476	5,721
Total loans	$13,322	$19,840	$(6,518)	$43,179	$45,016	$(1,837)
Gain on sale business
SBA - 7(a)	11,142	24,077	(12,935)	45,708	54,529	(8,821)
Multi-family	1,476	1,973	(497)	4,627	5,227	(600)
USDA	7,425	2,020	5,405	12,452	2,492	9,960
Small business loans	476	444	32	1,600	444	1,156
Total gain on sale business	$20,519	$28,514	$(7,995)	$64,387	$62,692	$1,695
Loans, held for sale
Bridge	(178,022)	(43,885)	(134,137)	(194,907)	(43,885)	(151,022)
Construction	(1,001)	(49,287)	48,286	(1,020)	(54,209)	53,189
Other	—	(8,689)	8,689	—	(8,689)	8,689
Total loans, held for sale	$(179,023)	$(101,861)	$(77,162)	$(195,927)	$(106,783)	$(89,144)
Loans, net
Bridge	(753)	(312)	(441)	(1,751)	14	(1,765)
Fixed rate	(1,701)	(14)	(1,687)	(1,717)	(14)	(1,703)
Construction	218	—	218	144	(6,938)	7,082
Other	(778)	(40)	(738)	(879)	(425)	(454)
Total loans, net	$(3,014)	$(366)	$(2,648)	$(4,203)	$(7,363)	$3,160
Net realized gain (loss) on derivatives, at fair value	$1,807	$4,460	$(2,653)	$5,772	$13,330	$(7,558)
Net realized gain (loss) - all other	$(685)	$69	$(754)	$(1,542)	$(4,942)	$3,400
Net realized gain (loss) on financial instruments	$(160,396)	$(69,184)	$(91,212)	$(131,513)	$(43,066)	$(88,447)
Unrealized gain (loss) on financial instruments
Loans, held for sale
Fixed rate	—	(75)	75	10	(959)	969
Freddie Mac	32	192	(160)	(123)	(27)	(96)
SBA - 7(a)	(597)	(251)	(346)	1,027	1,535	(508)
Other	384	(320)	704	622	(27)	649
Total Loans, held for sale	$(181)	$(454)	$273	$1,536	$522	$1,014
Net unrealized gain (loss) on preferred equity, at fair value	$1,949	$—	$1,949	$(2,278)	$—	$(2,278)
Net unrealized gain (loss) on derivatives, at fair value	$229	$(992)	$1,221	$(683)	$(1,405)	$722
Net unrealized gain (loss) - all other	$917	$205	$712	$975	$2,917	$(1,942)
Net unrealized gain (loss) on financial instruments	$2,914	$(1,241)	$4,155	$(450)	$2,034	$(2,484)

LMM Commercial Real Estate Segment Results.

Q3 2025 versus Q3 2024. Interest income of $105.9 million represented a decrease of $87.4 million, primarily due to an

increase in non-accrual loans, decreased loan balances and interest rates. Interest expense of $106.6 million represented a

decrease of $43.9 million, driven by decreased loan balances and interest rates. Provision for loan losses of $31.0 million

represented a decrease of $18.3 million, primarily due to loan sales. Non-interest income of $17.0 million represented an

increase of $36.2 million, primarily due to an increase in the valuation recovery and income from the Portland mixed-use

asset, partially offset by an increase in realized losses on financial instruments related to loan sales. Non-interest expense

of $29.1 million represented an increase of $8.1 million, due to an increase in other operating expenses primarily driven

by operating costs and depreciation related to the Portland mixed-use asset.

YTD 2025 versus YTD 2024. Interest income of $353.1 million represented a decrease of $243.0 million, primarily due

to an increase in non-accrual loans, decreased loan balances and interest rates. Interest expense of $343.0 million

represented a decrease of $124.7 million, driven by decreased loan balances and interest rates. Recovery of loan losses of

$81.8 million represented an increase of $85.9 million, primarily due to loans transferred from Loans, net to Loans, held

for sale, partially offset by loan sales. Non-interest loss of $134.0 million represented a decrease of $93.5 million,

primarily due to a decrease in the valuation allowance and income from the Portland mixed-use asset, partially offset by

an increase in realized losses on financial instruments related to loan sales. Non-interest expense of $84.4 million

represented a decrease of $11.4 million, due to a decrease in charge-offs of real estate acquired in settlement of loans,

partially offset by an increase in other operating expenses primarily driven by operating costs and depreciation related to

the Portland mixed-use asset.

Small Business Lending Segment Results.

Q3 2025 versus Q3 2024. Interest income of $31.6 million represented a decrease of $1.7 million, primarily due to

decreases in interest rates, partially offset by increases in loan balances. Interest expense of $20.4 million represented a

decrease of $4.7 million, driven by decreased debt balances and interest rates. Provision for loan losses of $7.0 million

represented an increase of $3.1 million, due to changes in the forecasted macroeconomic inputs for reserve modeling and

an increase in asset specific reserves. Non-interest income of $32.6 million represented a decrease of $9.4 million,

primarily due to a decrease in realized gains on financial instruments and loan origination income, partially offset by

servicing income. Non-interest expense of $28.4 million represented a decrease of $2.0 million, due to decreases in loan

origination expenses, partially offset by increases in loan servicing expenses.

YTD 2025 versus YTD 2024. Interest income of $92.1 million represented a decrease of $4.9 million, primarily due to

decreases in interest rates, partially offset by increases in loan balances. Interest expense of $60.3 million represented a

decrease of $14.6 million, driven by decreased debt balances and interest rates. Provision for loan losses of $18.9 million

represented an increase of $15.2 million, due to changes in the forecasted macroeconomic inputs for reserve modeling

and an increase in asset specific reserves. Non-interest income of $93.1 million represented an increase of $11.0 million,

primarily due to loan origination income, net realized gains on financial instruments and servicing income. Non-interest

expense of $86.1 million represented an increase of $20.4 million, due to increases in employee compensation and

benefits, loan origination expenses and loan servicing expenses.

Unallocated – Corporate.

Q3 2025 versus Q3 2024. Non-interest income of $25.3 million represented a decrease of $8.1 million, primarily due to

a lower gain on bargain purchase recognized from the UDF IV Merger. 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, when compared

to the respective prior year period gain on bargain purchase recognized from the Funding Circle Acquisition. Non-

interest expense of $16.8 million represented a decrease of $1.7 million, primarily due to decreased management fees

and transaction related expenses, partially offset by an increase in employee compensation and benefits.

YTD 2025 versus YTD 2024. Non-interest income of $114.8 million represented an increase of $98.3 million, primarily

due to a gain on bargain purchase recognized from the UDF IV Merger, 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 $46.7 million represented

a decrease of $7.4 million, primarily due to decreased management fees and other operating expenses.

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.

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)	2025	2024	$ Change	2025	2024	$ Change
Net Income (loss)	$(16,737)	$(7,279)	$(9,458)	$11,551	$(115,647)	$127,198
Reconciling items:
Unrealized (gain) loss on MSR - discontinued operations	—	—	—	8,952	7,219	1,733
Unrealized (gain) loss on joint ventures	(4,336)	2,173	(6,509)	2,322	1,512	810
Increase (decrease) in CECL reserve	32,844	52,442	(19,598)	(78,796)	(4,313)	(74,483)
Increase (decrease) in valuation allowance	(178,225)	(71,060)	(107,165)	(38,761)	156,107	(194,868)
Non-recurring REO impairment	1,862	525	1,337	8,626	24,511	(15,885)
Depreciation and amortization on real estate owned	1,100	—	1,100	1,100	—	1,100
Non-cash compensation	1,591	1,916	(325)	5,010	5,684	(674)
Unrealized (gain) loss on preferred equity, at fair value	(1,949)	—	(1,949)	2,278	—	2,278
Merger transaction costs and other non-recurring expenses	2,220	4,070	(1,850)	8,874	10,853	(1,979)
Bargain purchase (gain) loss	(24,472)	(32,165)	7,693	(112,562)	(13,859)	(98,703)
Realized losses on sale of investments	188,512	109,675	78,837	217,492	132,030	85,462
Total reconciling items	$19,147	$67,576	$(48,429)	$24,535	$319,744	$(295,209)
Income tax adjustments	(4,580)	(13,739)	9,159	(46,820)	(66,679)	19,859
Distributable earnings (loss) before realized losses	$(2,170)	$46,558	$(48,728)	$(10,734)	$137,418	$(148,152)
Realized losses on sale of investments, net of tax	(147,422)	(89,072)	(58,350)	(170,034)	(109,325)	(60,709)
Distributable earnings (loss)	$(149,592)	$(42,514)	$(107,078)	$(180,768)	$28,093	$(208,861)
Less: Distributable earnings attributable to non-controlling interests	1,473	1,766	(293)	5,419	5,097	322
Less: Income attributable to participating shares	2,210	2,241	(31)	6,652	6,877	(225)
Distributable earnings (loss) attributable to common stockholders	$(153,275)	$(46,521)	$(106,754)	$(192,839)	$16,119	$(208,958)
Distributable earnings (loss) before realized losses on investments, net of tax per common share - basic	$(0.04)	$0.25	$(0.29)	$(0.14)	$0.74	$(0.88)
Distributable earnings (loss) before realized losses on investments, net of tax per common share - diluted	$(0.04)	$0.25	$(0.29)	$(0.14)	$0.74	$(0.88)
Distributable earnings (loss) per common share - basic	$(0.94)	$(0.28)	$(0.66)	$(1.17)	$0.10	$(1.27)
Distributable earnings (loss) per common share - diluted	$(0.94)	$(0.28)	$(0.66)	$(1.17)	$0.10	$(1.27)

Q3 2025 versus Q3 2024. Consolidated net loss of $16.7 million for the third quarter of 2025 represented an increase of

$9.5 million from the third quarter of 2024, primarily due to net realized losses on financial instruments and real estate

owned and a decrease in net interest income, partially offset by an increase in the valuation recovery. Consolidated

distributable loss before realized losses of $2.2 million for the third quarter of 2025 represented a decrease of $48.7

million from the third quarter of 2024. The decrease in the distributable earnings reconciling items is primarily due to an

increase to the valuation recovery, partially offset by realized losses on sale of investments. Consolidated distributable

losses of $149.6 million for the third quarter of 2025 represented a decrease of $107.1 million from the third quarter of

2024 due to certain charge-offs and losses realized on sales of real estate owned assets and LMM loans.

YTD 2025 versus YTD 2024. Consolidated net income of $11.6 million for the nine months ended September 30, 2025

represented an increase of $127.2 million from the nine months ended September 30, 2024, primarily due to a decrease

in the valuation allowance, a gain on bargain purchase recognized from the UDF IV Merger, 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 recovery

for loan losses, partially offset by a decrease in net interest income. Consolidated distributable losses before realized

losses of $10.7 million for the nine months ended September 30, 2025 represented a decrease of $148.2 million from the

nine months ended September 30, 2024. The decrease in the distributable earnings reconciling items is primarily due to a

decrease in the valuation allowance, a gain on bargain purchase recognized from the UDF IV Merger, 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

recovery for loan losses, partially offset by realized losses on sale of investments. Consolidated distributable losses of

$180.8 million for the nine months ended September 30, 2025 represented a decrease of $208.9 million from the nine

months ended September 30, 2024 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 forecloses 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

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 sources of liquidity will provide sufficient liquidity to fund ongoing obligations and address

upcoming debt maturities, including the approximately $650.0 million of debt maturing in 2026. We had approximately

$150.0 million of unrestricted cash and approximately $830.0 million of unencumbered assets as of September 30, 2025.

We expect approximately $425.0 million in net liquidity from portfolio maturities and pending asset resolutions over the

next 12 months. Additionally, we intend to further accelerate asset sales as we move out of non-performing loan and

REO positions. We expect the combination of these items to de-lever the balance sheet, which may impact book value

depending on the size, timing and pricing of such actions. We expect to utilize these 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.

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, 2025. Cash and cash equivalents 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.

Nine Months Ended September 30, 2024. Cash and cash equivalents as of September 30, 2024, decreased by $26.9

million to $235.6 million from December 31, 2023, 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

repayments of securitized debt obligations of consolidated VIEs and repayments of secured borrowings. The net cash

provided by investing activities primarily reflected proceeds on disposition and principal payments of loans, partially

offset by net cash used for loan originations. The net cash provided by operating activities reflected sales on loans, held

for sale and a valuation allowance related to the transfer of loans, net to loans, held for sale, partially offset by an

increase in operating assets and net loss from continuing operations.

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.

As of September 30, 2025, we had a total leverage ratio of 3.1x and recourse leverage ratio of 1.4x. 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, 2025	December 31, 2024
3	SBA loans	November 2025 - June 2027	SOFR + 2.84% Prime - 0.82%	$335,000	$417,510	$334,045	$250,601
1	LMM loans - USD	February 2026	SOFR + 1.35%	80,000	18,947	18,752	35,931
1	LMM loans - Non-USD (4)	January 2027	EURIBOR + 3.00%	58,742	40,194	30,040	30,513
2	USDA loans	June 2027 - August 2028	SOFR + 2.78%	148,500	25,712	35,382	—
Total borrowings under credit facilities and other financing agreements				$622,242	$502,363	$418,219	$317,045

(1)Represents the total number of facility lenders.

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

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

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

Repurchase Agreements. Under the loan repurchase facilities and securities repurchase agreements, we may be required

to pledge additional assets to our counterparties in the event that the estimated fair value of the existing pledged

collateral under such agreements declines and such lenders demand additional collateral, which may take the form of

additional assets or cash. Generally, the loan repurchase facilities and securities repurchase agreements contain a SOFR-

based financing rate, term and haircuts depending on the types of collateral and the counterparties involved. The loan

repurchase facilities also include financial maintenance covenants.

If the estimated fair values of the assets increase due to changes in market interest rates or other market factors, lenders

may release collateral back to us. Margin calls may result from a decline in the value of the investments securing the

loan repurchase facilities and securities repurchase agreements, prepayments on the loans securing such investments and

from changes in the estimated fair value of such investments generally due to principal reduction of such investments

from scheduled amortization and resulting from changes in market interest rates and other market factors. Counterparties

also may choose to increase haircuts based on credit evaluations of our Company and/or the performance of the assets in

question. Historically, disruptions in the financial and credit markets have resulted in increased volatility in these levels,

and this volatility could persist as market conditions continue to change. Should prepayment speeds on the mortgages

underlying our investments or market interest rates suddenly increase, margin calls on the loan repurchase facilities and

securities repurchase agreements could result, causing an adverse change in our liquidity position. To date, we have

satisfied all of our margin calls and have never sold assets in response to any margin call under these borrowings.

Our borrowings under repurchase agreements are renewable at the discretion of our lenders and, as such, our ability to

roll-over such borrowings are not guaranteed. The terms of the repurchase transaction borrowings under our repurchase

agreements generally conform to the terms in the standard master repurchase agreement as published by the Securities

Industry and Financial Markets Association, as to repayment, margin requirements and the segregation of all assets we

have initially sold under the repurchase transaction. In addition, each lender typically requires that we include

supplemental terms and conditions to the standard master repurchase agreement. Typical supplemental terms and

conditions, which differ by lender, may include changes to the margin maintenance requirements, required haircuts and

purchase price maintenance requirements, requirements that all controversies related to the repurchase agreement be

litigated in a particular jurisdiction, and cross default and setoff provisions.

We maintain certain assets, which, from time to time, may include cash, unpledged 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, 2025	December 31, 2024
9	LMM loans	October 2025 - September 2028	SOFR + 2.79%	$4,735,000	$3,490,291	$2,325,766	$1,482,085
5	MBS	October 2025 - January 2026	5.92%	135,187	253,610	135,187	236,046
Total borrowings under repurchase agreements				$4,870,187	$3,743,901	$2,460,953	$1,718,131

(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 repurchase agreements have been converted into USD for purposes of this disclosure.

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 2023	1,952,152	1,889,494	1,952,152
Q1 2024	1,998,132	1,956,153	1,998,132
Q2 2024	2,087,661	2,058,766	2,087,661
Q3 2024	1,882,327	1,971,347	2,049,273
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

The net decrease in the outstanding balances during the third quarter of 2025 was primarily due to the sales and

paydowns 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, 2025, we had approximately

$10.4 million outstanding under this credit facility.

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, 2025
Senior secured notes principal amount(1)	4.50%	10/20/2026	$350,000
Senior secured notes principal amount(2)	9.375%	3/1/2028	270,000
Term loan principal amount(3)	SOFR + 5.50%	4/12/2029	115,250
Unamortized discount			(2,031)
Unamortized deferred financing costs			(12,068)
Total senior secured notes, net			$721,151
Corporate debt principal amount(4)	5.50%	12/30/2028	110,000
Corporate debt principal amount(5)	6.20%	7/30/2026	67,437
Corporate debt principal amount(5)	5.75%	2/15/2026	131,852
Corporate debt principal amount(6)	7.375%	7/31/2027	100,000
Corporate debt principal amount(7)	5.00%	11/15/2026	100,000
Corporate debt principal amount(8)	9.00%	12/15/2029	129,371
Unamortized discount - corporate debt			(5,896)
Unamortized deferred financing costs - corporate debt			(2,390)
Junior subordinated notes principal amount(9)	SOFR + 3.10%	3/30/2035	15,000
Junior subordinated notes principal amount(10)	SOFR + 3.10%	4/30/2035	21,250
Total corporate debt, net			$666,624
Total carrying amount of debt			$1,387,775

(1)Interest on the senior secured notes is payable semiannually on April 20 and October 20 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 quarterly on January 30, April 30, July 30, and October 30 of each year.

(6)Interest on the corporate debt is payable semiannually on January 31 and July 31 of each year.

(7)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).

(8) Interest on the corporate debt is payable quarterly on March 15, June 15, September 15, and December 15 of each year.

(9) Interest on the Junior subordinated notes I-A is payable quarterly on March 30, June 30, September 30, and December 30 of each year.

(10) 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, 2025
2025	$—
2026	649,289
2027	100,000
2028	380,000
2029	244,621
Thereafter	36,250
Total contractual amounts	$1,410,160
Unamortized deferred financing costs, discounts, and premiums, net	(22,385)
Total carrying amount of debt	$1,387,775

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 other direct or indirect subsidiaries of the Company from

time to time that is a direct parent entity of Sutherland Asset III, LLC or otherwise pledges collateral to secure the 2026

Senior Secured Notes (collectively, the “2026 SSN Guarantors”).