Ready Capital Corporation · NYSE:RC
Ready Capital — Sutherland Asset Management — Q3 2017 Earnings Presentation
22 slides from Ready Capital's earnings presentation, Nov 9, 2017
Slide 1: Supplemental Financial Data Third Quarter 2017
Supplemental Financial Data Third Quarter 2017
Slide 2: Disclaimer
Disclaimer 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 s
Slide 3: Third Quarter 2017 Highlights
Third Quarter 2017 Highlights ► Net income of $12.4 million(1), or $0.37 per common share ► Core earnings of $12.9 million(1), or $0.38 per common share ► Declared dividend of $0.37 per share for the third quarter ► Adjusted net book value of $16.68 per common share at September 30, 2017 ► Originati
Slide 4: Return on Equity by Business Line
Return on Equity Acquisitions 14.5% 14.5% 16.0% SBC Conventional Originations 17.1% 17.1% 46.9% SBA Originations & Servicing 30.5% 30.5% 22.1% Residential Mortgage Banking(3) 6.0% 9.6% 15.0% Corporate finance and non-earning assets, net Gross return on equity Realized & unrealized gains, net Operati
Slide 5: SBC Origination Volume by Product Type
L SBC Origination Volume by Product Type 4 Q3 2016 – Q3 2017 YoY Growth Rate: 88 % Origination volumes are based on fully committed amounts
Slide 6: SBC Conventional Originations
SBC Conventional Originations ► Originations of $278.8 million(1), up 24% quarter over quarter, 66% of which are floating rate ► Gains on sales of Freddie Mac loans of $1.8 million, up 46% quarter over quarter ► Origination pipeline of $160 million(2) Number of loans 368 Unpaid principal balance(3)
Slide 7: SBA Originations, Acquisitions & Servicing
SBA Originations, Acquisitions & Servicing Number of loans 2,194 Unpaid principal balance(3) $530 Carrying value(3) $471 Weighted average LTV 78% Weighted average interest rate 5.9% Weighted average remaining maturity 14 years Weighted average UPB(3) $0.2 Percentage of loans fixed/floating 1% / 99%
Slide 8: Acquired portfolio
Acquired portfolio ► At this stage of the credit cycle, ample inventory of opportunistic performing SBC loans ► Acquired $16.0 million of SBC loans with a weighted average coupon of 7.0% ► Acquisition pipeline of $307.0 million SBC loans(1) Number of loans 766 Unpaid principal balance(2) $378 Carryi
Slide 9: Residential Mortgage Banking
Residential Mortgage Banking Unpaid principal balance $490.9 million % of Originations Purchased 78.8% % of Originations Refinanced 21.2% Channel - % Correspondent 37.7% Channel - % Retail 37.6% Channel - % Wholesale 24.7% Unpaid principal balance $503.9 million % of UPB- Fannie/ Freddie securitizat
Slide 10: Quarterly SBC Investment Allocation
Quarterly SBC Investment Allocation Loans Acquisitions(1) Originations(1) SBC Freddie MAC Transitional SBA Total Gross investments(2) $16.0 $36.2 $126.9 $90.2 $41.3 $294.6 Number of loans 17 19 46 28 47 140 Average balance(3) $0.9 $2.7 $2.7 $6.5 $0.9 $2.8 Gross Yield(4) 7.0% 7.7% 4.2% 6.9% 6.4% 6.3%
Slide 11: SBC Portfolio Migration Towards Originated Product
SBC Portfolio Migration Towards Originated Product 10 Net of Guaranteed loan financing Net interest margin is based on interest income, which reflects contractual interest rates and accretion of discount net of interest expense, which reflects contractual interest rates and deferred financing amorti
Slide 12: SBC Portfolio Composition: Collateral Diversification
SBC Portfolio Composition as of September 30, 2017 Collateral Diversification(1) SBA Segment Details(1) 11 As a percent of carrying value Multi - Family 27% Retail 22% Office 18% SBA 10% Industrial 7% Mixed Use 8% Lodging/ Residential 3% Other 5% Acquired 26% Conventional SBC 53% Transitional 21% R
Slide 13: SBC Portfolio Composition: Lien Position and Loan Size
SBC Portfolio Composition as of September 30, 2017 Lien position(1) Loan Size(1) 12 As a percent of carrying value First Mortgage 96.5% Sub. Mortgage 3.2% Other 0.3% Top 10 Loans 8% Remaining 92% CA 16% TX 12% FL 11% NY 8% GA 7% AZ 4% IL 4% NC 4% OH 3% Other 31% G EOGRAPHIC D IVERSIFICATION (1)
Slide 14: Financing and Leverage
Financing and Leverage Deutsche Bank L + 250 - 325 1 – Year $275 $198 Master repurchase agreement used to finance newly originated SBC loans Citibank L + 225 - 300 1 – Year $200 $150 Master repurchase agreement used to finance acquired legacy SBC loans and newly originated SBC loans J.P. Morgan L +
Slide 15: Sutherland Snapshot
Sutherland Snapshot ($ amounts in thousands, except per share data) Acquired portfolio $364,724 7.7% $280,852 5.7% 14.5% SBC conventional origination portfolio $1,078,514 7.7% $831,906 4.9% 17.1% SBA Originations, Acquisitions & Servicing $499,970 10.1% $383,761 4.0% 30.5% Total $1,943,208 8.3% $1,4
Slide 16: Investment Highlights
Investment Highlights 15 Only nationwide specialty finance company focused on SBC market and structured as a tax-efficient REIT Compelling risk-adjusted returns due to competitive dynamics and fragmentation in the SBC market Dual strategy of acquisitions and originations with extensive track r
Slide 17: Appendix
APPENDIX SUTHERLAND Asset Management
Slide 18: Historical Financial Performance
Historical Financial Performance(1) 16 Retroactively adjusted for the equivalent number of shares after reverse acquisition using an exchange rate of 0.8356 Refer to slide 19 for a reconciliation of GAAP earnings to Core earnings $0.34 $0.83 $0.29 $0.34 $0.37 $0.36 $0.35 $0.33 $0.34 $0.38 $0.36 $0.3
Slide 19: Balance Sheet by Quarter
Balance Sheet by Quarter 17 Certain balances have been reclassified to match current period presentation Q3 2016 Adjusted Book Value per Share was retroactively adjusted for the equivalent number of shares after the reverse merger using an exchange rate of 0.8356 (In millions, except per share value
Slide 20: Statement of Income by Quarter
Statement of Income by Quarter 18 Certain balances have been reclassified to match current period presentation Q3 2016 share information has been retroactively adjusted for the equivalent number of shares after the reverse merger using an exchange rate of 0.8356 (In millions, except per share values
Slide 21: Core Earnings Reconciliation
Core Earnings Reconciliation 19 Represents RSU grant for services rendered to date Q3 2016 share information has been retroactively adjusted for the equivalent number of shares after the reverse merger using an exchange rate of 0.8356 (In millions, except per share values) Q3 2016 Q4 2016 Q1 2017 Q2
Slide 22: Small Cap CRE Price Relationships Through the Cycle
Small Cap CRE Price Relationships Through the Cycle 20
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