Ready Capital Corporation · NYSE:RC
Ready Capital — Q2 2020 Earnings Presentation
23 slides from Ready Capital's earnings presentation, Aug 6, 2020
Slide 1: Supplemental Financial Data Second Quarter 2020
Supplemental Financial Data Second Quarter 2020
Slide 2: Disclaimer
DISCLAIMER 2 This presentation contains statements that constitute "forward-looking statements," as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and such statements are intended to be covered by the
Slide 3: Company Update
3 COMPANY UPDATE .. Government sponsored lending segments remain active with SBA, Residential Mortgage Banking and Freddie Mac Multifamily originations fully operational .. Core CRE lending activities to resume in Q3 after Q2 pause due to uncertain capital markets and stressed underwriting condition
Slide 4: Second Quarter 2020 Results
SECOND QUARTER 2020 RESULTS 4 .. Net income of $34.7 million(1), or $0.62 per common share .. Core earnings of $39.2 million(1), or $0.70 per common share .. Declared dividend of $0.25 per share EARNINGS / DIVIDENDS .. Return on Equity(2) of 17.4% .. Core Return on Equity(3) of 19.7% .. Dividend Yie
Slide 5: Return on Equity
RETURN ON EQUITY 5 1) Levered yield includes interest income, accretion of discount, MSR creation, income from unconsolidated joint ventures, realized gains (losses) on loans held for sale, unrealized gains (losses) on loans held for sale and servicing income net of interest expense and amortization
Slide 6: SBC Investment by Product Type
SBC INVESTMENT BY PRODUCT TYPE(1) 6 (1) Origination volumes are based on fully committed amounts $53.7 $48.2 $70.2 $45.5 $20.8 $177.5 $165.6 $116.0 $60.7 $0.0 $73.0 $146.2 $104.7 $149.4 $157.9 $169.1 $153.5 $305.0 $259.6 $- $362.2 $77.9 $153.7 $51.5 $0.0 $- $50 $100 $150 $200 $250 $300 $350 $400 $45
Slide 7: SBC Originations - Segment Snapshot
SBC ORIGINATIONS -SEGMENT SNAPSHOT 7 1) Represents fully committed amounts. 2) $ in millions, as of quarter end. 3) Represents fixed rate loans that have been securitized. 4) Includes interest income, accretion of discount, and servicing income net of interest expense and amortization of deferred fi
Slide 8: SBA Originations, Acquisitions, & Servicing - Segment Snapshot
SBA ORIGINATIONS, ACQUISITIONS, & SERVICING -SEGMENT SNAPSHOT 8 1) Represents fully committed amounts. 2) $ in millions, as of quarter end. 3) Includes interest income, accretion of discount, and servicing income net of interest expense and amortization of deferred financing costs. 4) Includes reali
Slide 9: Loan Acquisitions - Segment Snapshot
LOAN ACQUISITIONS -SEGMENT SNAPSHOT 9 1) Excludes joint venture investments. 2) $ in millions, as of quarter end. 3) Represents fixed rate loans that have been securitized. • 97% of portfolio is current as of 6/30/20 • Acquisition pipeline of $230.1 million SBC loans 11.3% 12.5% 12.1% 7.3% 13.7% 3.2
Slide 10: Residential Mortgage Banking - Segment Snapshot
RESIDENTIAL MORTGAGE BANKING –SEGMENT SNAPSHOT 10 1) $ in millions. Represents activity during the quarter. 2) Represents fully committed amounts • MSR portfolio of approximately $8.7 billion in UPB, up 5% compared to Q1 • Fair market value of $73.6 million • Originations of $1.2 billion(2) • Loan s
Slide 11: Diversified, Complementary, and Scalable Platforms
DIVERSIFIED, COMPLEMENTARY, AND SCALABLE PLATFORMS (1) Assets include loans, MBS, servicing assets, JV investments, real estate owned, and purchased future receivables. (2) Based on QTD Core Earnings. Core earnings includes interest income, accretion of discount, MSR creation, income from unconsolid
Slide 12: Loan Portfolio Composition as of June 30, 2020
LOAN PORTFOLIO COMPOSITION AS OF JUNE 30, 2020(1)(2) Geographic Location Lien Position (1) As a percent of unpaid principal balance (2) Excludes loans held-for-sale, at fair value (3) Collateral Type SBA Collateral Type 12 California 18% Texas 15% Florida 8% New York 9% Illinois 5% Other 45% First M
Slide 13: Allowance Reserves and Net Recovery
13 Total ending Q2 2020 allowance reserves of $57.1 million representing 1.4% of loan balances Net recovery of $0.9 million across our loan portfolios during the quarter: Acquired loans: Incremental net reserves of $2.0 million, consisting of certain specific impairment reserves due to collate
Slide 14: Loan Portfolio - Risk Ratings as of June 30, 2020
LOAN PORTFOLIO –RISK RATINGS AS OF JUNE 30, 2020(1)(2)(3) CREDIT QUALITY INDICATORS (1) Commercial real estate portfolio only (2) As a percent of unpaid principal balance (3) Excludes loans held-for-sale, at fair value 14 Bucket 1 17% Bucket 2 48% Bucket 3 27% Bucket 4 6% Bucket 5 2% CRITERIA • Buck
Slide 15: Capital Structure
CAPITAL STRUCTURE ► Approximate unencumbered cash of over $250 million ► Completed $405 million securitization of originated transitional loans in June 2020, with senior bonds pricing at LIBOR + 215 basis points ► Completed $204 million securitization of acquired SBC loans in June 2020, with senior
Slide 16: Financing and Leverage
FINANCING AND LEVERAGE 16 1.8x 2.3x 1.9x 2.8x 2.1x 3.9x 4.3x 4.1x 4.9x 4.7x - 1.0 2.0 3.0 4.0 5.0 6.0 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Historical Leverage Recourse Total HISTORICAL LEVERAGE Total Debt-to-Equity Ratio Secured borrowings (warehouse credit facilities and borrowings under repo tr
Slide 17: Credit and Repurchase Facilities
CREDIT AND REPURCHASE FACILITIES 17 (1) $ in thousands (2) Commitment size is €200.0 million, but has been converted for purposes of this disclosure. Lender Asset Class Maturity Pricing JPMorgan Acquired loans, SBA loans Jun-2021 1M L + 2.00 to 2.75% $ 250,000 $ 34,525 $ 215,475 Keybank Freddie Mac
Slide 18: Ready Capital Snapshot
READY CAPITAL SNAPSHOT ($ amounts in thousands, except per share data) 18 (5) Excludes the equity component of our 2017 convertible note issuance 1) Average carrying value includes average quarterly carrying value of loan and servicing asset balances 2) Gross yields include interest income, accretio
Slide 19: Appendix
~ READY CAPITAL. APPENDIX
Slide 20: Balance Sheet by Quarter
BALANCE SHEET BY QUARTER 20 (In Thousands) Assets Cash and cash equivalents $ 41,925 $ 52,727 $ 67,928 $ 122,265 $ 257,017 Restricted cash 38,019 45,303 51,728 93,164 91,539 Loans, net 1,002,676 1,380,359 1,727,984 1,969,052 1,432,807 Loans, held for sale, at fair value 177,507 203,110 188,077 306,3
Slide 21: Statement of Income by Quarter
STATEMENT OF INCOME BY QUARTER 21 (1) Certain balances have been reclassified to match current period presentation (In thousands, except share data) Interest income $ 57,034 $ 59,723 $ 64,406 $ 69,551 $ 63,211 Interest expense (35,753) (39,390) (40,962) (46,930) (43,408) Net interest income before p
Slide 22: Core Earnings Reconciliation by Quarter
CORE EARNINGS RECONCILIATION BY QUARTER 22 We believe that providing investors with Core Earnings, a non-U.S. GAAP financial measure, in addition to the related U.S. GAAP measures, gives investors greater transparency into the information used by management in our financial and operational decision-
Slide 23: Ready Capital
* READY _ CAPITAL. RC LISTED NYSE