What caused RC's earnings surprise in Q1 2024?

Ready Capital Corporation (RC) experienced an earnings surprise in Q1 2024 due to several key factors: 1. **Net Interest Income (NII) Decline**: Net Interest Income fell by $900,000, primarily due to a 7% decrease in portfolio assets. This reduction in NII had a significant impact on the company's earnings, contributing to the earnings surprise. The company's strategic decision to set aside cash for souring loans also played a role in the NII decline. 2. **Non-Interest Income (NII) Reduction**: The company's Non-Interest Income decreased by $5.4 million to $20.9 million. This decline, along with the NII reduction, contributed to the overall earnings surprise. The decrease in NII can be attributed to various factors, including market conditions and the company's investment strategy. 3. **Provisions for Loan Losses and Valuation Allowances**: Ready Capital increased provisions for loan loss and valuation allowances totaling $253.8 million, which had a negative impact on the company's earnings. This increase reflects the company's proactive measures to address potential risks in its loan portfolio. 4. **Dividend Cut**: The company reduced its dividend to $0.125 per share, which could indicate underlying concerns about earnings stability. Dividend cuts can sometimes signal that a company is struggling to maintain earnings coverage, which may contribute to investor uncertainty and potential negative perceptions. In summary, Ready Capital's earnings surprise in Q1 2024 was primarily caused by a combination of NII and NII reductions, provisions for loan losses and valuation allowances, and a dividend cut. These factors, either directly or indirectly, affected the company's net income, leading to an earnings surprise.