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Ready Capital (RC) Rolls Out $100M Share Repurchase Program

Shares of Ready Capital Corporation RC have rallied 7.6% following the announcement of a share repurchase program. Under the program, the board of directors of the company has authorized the buyback of up to an aggregate of $100 million of its outstanding shares. The plan has no expiry date.

The company has made efforts to enhance shareholder value on the back of share buybacks in the past as well. Particularly, on Mar 6, 2018, the company authorized a share repurchase plan, which was subsequently enhanced by $25 million on Sep 29, 2022, to $50 million.

In addition to the share repurchases, the company pays regular quarterly dividends. In May, RC announced a quarterly dividend aggregating 40 cents per share. The company’s dividend yield stands at 17.79%, considering RC’s last day’s closing price of $10.68. The yield is not only attractive for investors but also represents a steady income stream.

Markedly, last week, Ready Capital completed the previously announced acquisition of Broadmark Realty Capital Inc., following shareholders’ approval of both companies.

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The merger is a strategic fit as it leads to the creation of a preeminent non-bank lender to the lower and middle commercial real estate (CRE) market and the fourth-largest commercial mortgage REIT with a total equity capitalization of $2.8 billion.

The combined franchise will enjoy expanded geographic reach, and a higher focus on construction and bridge loans in top markets. Complementary product offerings will enable the company to capture the full lifestyle of credit assets.

By adding Broadmark’s largely unleveraged portfolio, RC will likely see an immediate de-leveraging impact, while deploying Broadmark’s excess capital and liquidity into existing businesses will generate marginal returns in the mid-teens range.

The combined entity will enjoy operating efficiency via expense synergies and fixed costs being spread over a larger equity base. At the deal announcement, the merger was expected to be accretive to earnings in the low-to-mid teens range in 2024.

Such inorganic growth moves will strengthen its operations and balance sheet position, indicating that its capital deployments seem sustainable. However, the deteriorating operating backdrop is a major near-term headwind.

Over the past six months, shares of RC have lost 16.7% compared with the industry fall of 12.5%.

 

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

 

Currently, RC carries a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Enhanced Capital Deployment Activities by Other Companies

Stock Yards Bancorp, Inc. SYBT announced the extension of its stock-repurchase plan. The company’s board of directors approved the extension by two years to May 22, 2025. The plan was previously extended in May 2021.

Implemented on May 22, 2019, the plan was authorized to repurchase one million shares. To date, SYBT has repurchased around 259,000 shares at an average cost of $35.41 per share. It has approximately 741,000 shares remaining under the authorized share-repurchase plan.

Civista Bancshares, Inc. CIVB announced a share repurchase program. Based in Sandusky, OH, CIVB was authorized to buy back up to an aggregate of $13.5 million of its outstanding shares. The plan will expire on May 2, 2024.

This new repurchase plan of CIVB replaced the previous authorization (announced in August 2022) to buy back $13.5 million shares. It repurchased $7.4 million worth of shares under that plan, which expired on May 9.

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Ready Capital Corp (RC) : Free Stock Analysis Report

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