Ready Capital Corporation · NYSE:RC
Ready Capital — Investor Presentation (November 2022)
38 slides from Ready Capital's investor presentation, November 2022
Slide 1: Investor Presentation November 2022
INVESTOR PRESENTATION November 2022
Slide 2: Disclaimer
Disclaimer These materials and any presentation of which they form a part are neither an offer to sell, nor a solicitation of an offer to purchase, an interest in Ready Capital Corporation (“Ready Capital,” “RC,” or the “Company”). Neither the Company nor any of its representatives or affiliates mak
Slide 3: Differentiated Mortgage REIT
Differentiated Mortgage REIT Largest non-bank lender to both investors in and owners of small balance commercial (“SBC”) properties with current capitalization of approximately $2.0 billion1 All-weather investment strategy as a direct lender and acquiror of bulk portfolios, including distressed $10.
Slide 4: Diversified Investment Strategy
Diversified Investment Strategy Capital allocated opportunistically to highest ROE Operating Company across economic cycle SBC LENDING AND RESIDENTIAL SMALL BUSINESS LENDING ACQUISITIONS MORTGAGE BANKING Products: Investor SBC lending across 9 Owner occupied SBC lending Residential mortgage loan pro
Slide 5: Complementary Platforms
Complementary Platforms INVESTED EQUITY ALLOCATION TTM CORE EARNINGS CONTRIBUTION 2% 5% 11% 27% 4% 39% 11% 52% 4% 8% 15% 4% 6% 12% Bridge Construction Bridge Construction 2 Fixed rate/CMBS Freddie Mac Fixed rate/CMBS Freddie Mac 2 Other 1 Residential Mortgage Banking Other 1 Residential Mortgage Ban
Slide 6: Company History and Evolution
Company History and Evolution 2011 October 2019 ▪ Ready Capital, then Sutherland Asset Management was founded ▪ Acquired Knight Capital, a technology-driven platform that provides working capital to small and medium businesses across the U.S., for $27.8mm July 2014 June 2020 ▪ Acquired SBA ownership
Slide 7: SBC Lending & Acquisitions
a ~ READY CAPITAL. @ @ ® o ° @ ® e e @ e @ eo e ® e ® e ® e SBC Lending & Acquisitions _ _--* e e e e e e e e a e ee @ e @ ° e @
Slide 8: SBC Market
SBC Market SBC loans are 1st liens on either investor or owner occupied commercial real estate assets Typically, property appraised values of <$10M and <50,000 square feet TOTAL SMALL-CAP COMMERICAL MARKET VALUE SMALL-BALANCE LOAN ORIGINATION TREND SUB $5 Million 8
Slide 9: SBC Lending & Acquisition Overview
SBC Lending & Acquisition Overview All-weather origination platform with ability to allocate capital to the best opportunities across 9 products spanning ground-up to stabilized 1 of 12 Freddie Mac Small Balance Loan lenders; ranked #5 based on 2021 volume Over $15.7 billion1 in originations since t
Slide 10: SBC Investment by Platform
SBC Investment by Platform 39.0% 10-year CAGR Current 0.8% SBC market share with 1.5% 3-year target HISTORICAL INVESTMENT ACTIVITY1 $5,272 $5,000 $3,921 $4,000 $3,000 $2,000 $1,738 $1,537 $1,188 $1,142 $1,000 $862 $868 $863 $588 $660 $372 $140 $208 $197 $98 $0 Pre-2016(2) 2016 2017 2018 2019 2020 20
Slide 11: SBC Product Offerings
READY CAPITAL. SBC Product Offerings GROUND-UP HEAVY TRANSITIONAL LIGHT TRANSITIONAL STABILIZING STABILIZED AFFORDABLE HOUSING Proouct CONSTRUCTION BRIDGE BRIDGE-TO-PEEM BRIDGE-10- STRUCTURED FIXED CMBSDIRECT CORRESPONDENT FREDDIE MAC — AFFORDABLE AGENCY RATE AGENCY SBL HOUSING LOAN PURPOSE LOAN SIZ
Slide 12: Case Studies – CRE Bridge Transaction
Case Studies – CRE Bridge Transaction Transaction Overview Multifamily Phoenix, AZ ▪ 1 multifamily property ▪ 274 units ▪ Acquisition / Renovation / Stabilization ▪ $54M loan Metrics / Loan Details Opportunity Overview ▪ $54M loan commitment for the acquisition ▪ Renovation and stabilization of a 27
Slide 13: SBC Lending and Acquisitions
SBC Lending and Acquisitions LOAN 60+ DAYS PRODUCT TYPE UPB BOOK VALUE WA LTV WA COUPON FIXED/FLOAT(2) COUNT(1) PAST DUE 2,325 $9.55B $9.44B 65.2% 6.4% 15.6 / 84.4% 3.2% FIXED RATE(3) 255 $976M $972M 60.9% 5.0% 99.4 / 0.6% 3.0% BRIDGE 577 $7.41B $7.34B 68.5% 6.3% 1.1 / 98.9% 1.7% CONSTRUCTION 22 $51
Slide 14: Small Business Lending
"READY CAPITAL. Small Business Lending
Slide 15: Small Business Lending Overview
Small Business Lending Overview A leading provider of capital to small businesses through 7(a) loans, USDA loans and unsecured small business loans 1 of 14 non-bank Small Business Administration 7(a) license holders; acquired from CIT in 2014 #2 non-bank 7(a) lender and #6 overall lender1 Fully inte
Slide 16: Small Business Market – 7(a)
Small Business Market – 7(a) • The SBA (1953) is an independent federal agency • The SBA’s lead program is the 7(a) which that guarantees loans to small businesses guarantees 75% of eligible loans up to $5M @ Prime + 275bps maximum rate • Eligible participants are banks except for 14 non- bank licen
Slide 17: SBA Investments
SBA Investments 70.3% CAGR Current 1.6% non-bank market share with 2.0% 3-year target or ~$600 million in volume Approximately $5.0 billion of PPP loans originated ORIGINATIONS1 600 $480.8 500 $402.0 400 300 $213.0 $216.3 $216.6 200 $129.8 100 $45.4 $11.6 0 2015 2016 2017 2018 2019 2020 2021 2022 YT
Slide 18: SBA 7(a) Case Study
SBA 7(a) Case Study LOAN AMOUNT: $3,350,000 PRICING BASIS: Variable RATE: Prime + 125 bps GUARANTEE: 75% SALE PREMIUM: 12% SECURITIZATION ADVANCE RATE: 84% SERVICING STRIP: 1% DEBT COST: 3.45% LIEN: 1st Name: Creative JDEA, Inc. ORIGINATION DATE: February 2022 Location: Los Angeles, CA 90020 TERM (M
Slide 19: Small Business Lending
Small Business Lending 60+ DAYS LOAN COUNT UPB BOOK VALUE WA LTV WA COUPON FIXED/FLOAT PAST DUE 2,320 $585M $546M 89.5% 6.7% 0.3 / 99.7% 1.5% GEOGRAPHY PROPERTY TYPE 22% 39% 15% 10% 14% Lodging Retail Doctors Eating Place Other 19
Slide 20: Residential Mortgage Banking
Residential Mortgage Banking
Slide 21: Residential Mortgage Banking Overview
Residential Mortgage Banking Overview GMFS, founded in 1999, has a leading Southeast market share and acquired via the ZFC merger in 2016 Licensed in 18 states, approved FNMA and FHLMC seller-servicer, GNMA issuer, HUD / FHA / USDA originator and VA lender GMFS provides a wide range of residential m
Slide 22: Production Metrics
Production Metrics PURCHASE VOLUME HAS ACCOUNTED FOR ~60% OF HISTORICAL PRODUCTION (in millions) $4,500 $2,435 $2,110 $3,000 $728 $463 $775 $2,095 $567 $1,500 $636 $398 $1,812 $1,460 $1,508 $1,380 $1,439 $1,189 $1,484 $0 2015 2016 2017 2018 2019 2020 2021 2022 Purchase Refi DIVERSIFIED PRODUCTION CH
Slide 23: Servicing Asset
Servicing Asset HISTORICAL RETENTION RATES EXCEEDING 15% $12,000 5.00% $11,972 4.1% 4.1% $10,996 $10,000 3.9% 3.8% 3.9% 3.7% 4.00% $9,529 3.4% 3.5% $8,000 $8,165 3.00% $7,467 $6,000 $6,558 $5,483 2.00% $4,000 $4,175 1.00% $2,000 $0 0.00% 2015 2016 2017 2018 2019 2020 2021 2022 UPB WAC 23
Slide 24: Financial Overview & Performance
Financial Overview & Performance
Slide 25: Historical Performance
Historical Performance 4Q 2021 1Q 2022 2Q 2022 3Q 2022 4Q 2021 1Q 2022 2Q 2022 3Q 2022 Dividends per Net Income2: $53.6 $64.3 $59.0 $66.3 Share: $0.42 $0.42 $0.42 $0.42 Dividend Yield Distributable on Market Earnings2: $52.5 $48.9 $60.1 $58.2 Price1: 10.75% 11.16% 14.09% 16.57% Distributable Earning
Slide 26: Third Quarter Strategic Highlights
Third Quarter Strategic Highlights Issued $100.0 million in aggregate principal amount of 7.375% Senior Unsecured Notes due 2027. Increased the size of the Company's existing stock repurchase program by an additional $25 million, bringing the total amount authorized under the program to $50 million.
Slide 27: Return on Equity
Return on Equity 1. Levered yield includes interest income, accretion of discount, MSR creation, income 3. ROE based on net income before tax of the Residential Mortgage Banking business from unconsolidated joint ventures, realized gains (losses) on loans held for sale, line divided by the business
Slide 28: Financial Flexibility
Financial Flexibility UNENCUMBERED ASSET POOL HIGHLIGHTS 19% 20% • Diversified unencumbered asset pool of $1.0 billion, including $200 million of unrestricted cash 7% $1.0B Total 8% Unencumbered Assets • 1.4x unencumbered assets to unsecured debt 14% 32% • $2.4 billion in available warehouse borrowi
Slide 29: Debt - Leverage
Debt - Leverage Leverage Debt Balance Ratio $306 0.1x PPPLF • Total leverage of 4.9x • Recourse leverage ratio of 1.6x • Majority of secured borrowings subject to non-recourse or Securitized limited recourse terms Debt $4,430 2.4x Obligations Recourse Leverage by Reporting Segment(1) ($ in millions)
Slide 30: Revenue Trends
Revenue Trends Diverse & re-occurring revenue from stabilized net interest and servicing revenue with alpha from gain on sale operations 140,000 120,000 Current WA Servicing Fee: 100,000 32bps 80,000 60,000 Current WAC: 6.3% 40,000 20,000 - Q118 Q218 Q318 Q418 Q119 Q219 Q319 Q419 Q120 Q220 Q320 Q420
Slide 31: Loan Portfolio – Risk Rating
Loan Portfolio – Risk Rating RISK RATING DISTRIBUTION CRITERIA 100% 89% 88% 80% BUCKET 1: Very Low Risk of Loss: New origination or current with strong 60% credit metrics (LTV/DSCR/DY). No expected losses. 40% 20% BUCKET 2: 5% 6% 3% 4% 3% 2% Low Risk of Loss: Current with maturity > 6 months. Lower
Slide 32: Waterfall Asset Management
"READY CAPITAL. Waterfall Asset Management
Slide 33: A Successful & Proven Asset Manager
A Successful & Proven Asset Manager RE PE 4% 2% RC 18% 17 yr ABS Investment record $11.2B AUM 50% $11.2B Loans 26% AUM 170+ Employees • SEC-registered credit investment advisor founded in 2005 • Top 10 global manager with focus on real estate loans & ABS 70+ • Principals were early pioneers of the A
Slide 34: Additional Financial Information
APPENDIX Additional Financial Information
Slide 35: Balance Sheet by Quarter
READY CAPITAL. Balance Sheet by Quarter Cash and cash equivalents $s 209,769 $s 229,531 $s 211,369 $ 127,939 $ (208,037 Restricted cash 52,692 51,569 56,963 64,746 S7,675 Loans, net 2,384,497 2,915,446 4,062,335 3,907,321 4,158,807 Loans, held for sale, at fair value $49,917 $52,935 $23,214 469,442
Slide 36: Statement of Income by Quarter
Statement of Income by Quarter 36
Slide 37: Distributable Earnings Reconciliation by Quarter
Distributable Earnings Reconciliation by Quarter The Company believes that this non-U.S. GAAP financial information, in addition to the related U.S. GAAP measures, provides investors greater transparency into the information used by management in its financial and operational decision-making, includ
Slide 38: READY
READY RC LISTED NYSE EES CAPITAL.
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