Ready Capital Corporation · NYSE:RC
Ready Capital — Q1 2019 Earnings Presentation
24 slides from Ready Capital's earnings presentation, May 8, 2019
Slide 1: Supplemental Financial Data First Quarter 2019
Supplemental Financial Data First Quarter 2019
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: First Quarter 2019 Highlights
FIRST QUARTER 2019 HIGHLIGHTS 3 ▪ Net income of $30.5 million(1), or $0.90 per common share ▪ Core earnings of $11.3 million(1), or $0.34 per common share ▪ Declared dividend of $0.40 per share EARNINGS / DIVIDENDS ▪ Return on Equity(2) of 21.6% ▪ Core Return on Equity(3) of 8.0% ▪ Dividend Yield(4)
Slide 4: Merger with Owens Realty Mortgage, Inc.
MERGER WITH OWENS REALTY MORTGAGE, INC. TRANSACTION HIGHLIGHTS • Completed previously announced merger on March 29, 2019 • Increases total equity by 38% to approximately $760 million • Larger market capitalization may benefit the company as smaller commercial mortgage REITs trade at a price/book dis
Slide 5: Return on Equity
RETURN ON EQUITY 5 1) Levered yields include interest income, accretion of discount, MSR creation, income from our unconsolidated joint venture, realized gains (losses) on loans held for sale, unrealized gains (losses) on loans held for sale and servicing income net of interest expense and amortizat
Slide 6: SBC Investment by Product Type
SBC INVESTMENT BY PRODUCT TYPE(1) 6 (1) Origination volumes are based on fully committed amounts $48.3 $48.3 $51.1 $65.4 $44.1 $23.0 $69.4 $125.4 $95.7 $86.3 $110.6 $160.3 $70.3 $70.3 $62.9 $78.0 $122.6 $95.5 $166.9 $142.8 $142.4 $142.8 $86.4 $8.8 $128.7 0 20 40 60 80 100 120 140 160 Q1'18 Q2'18 Q3'
Slide 7: Q1 2019 Quarterly SBC Loan Investment Allocation
Q1 2019 QUARTERLY SBC LOAN INVESTMENT ALLOCATION 7 • Total funded investments of $450.5 million added during the quarter. • Funded $321.8 million(1) of SBC and SBA loan originations. • Acquired $128.7 million of SBC loans • Excludes acquired loans from ORM (1) Represents actual disbursements during
Slide 8: SBC Originations - Segment Snapshot
SBC ORIGINATIONS -SEGMENT SNAPSHOT 8 1) Represents fully committed amounts. 2) As of April 30, 2019 including April 2019 fundings. 3) $ in millions, as of quarter end. 4) Represents fixed rate loans that have been securitized. 5) Includes interest income, accretion of discount, and servicing income
Slide 9: SBA Originations, Acquisitions, & Servicing - Segment Snapshot
SBA ORIGINATIONS, ACQUISITIONS, & SERVICING-SEGMENT SNAPSHOT 9 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 4) Includes realized and unrealized
Slide 10: Loan Acquisitions - Segment Snapshot
LOAN ACQUISITIONS-SEGMENT SNAPSHOT 10 1) Excludes joint venture investment. 2) $ in millions, as of quarter end. 3) Represents fixed rate loans that have been securitized. • At this stage of the credit cycle, ample inventory of opportunistic performing SBC loans • Acquired $128.7 million of SBC loan
Slide 11: Residential Mortgage Banking - Segment Snapshot
RESIDENTIAL MORTGAGE BANKING –SEGMENT SNAPSHOT 111) $ in millions. Represents activity during the quarter. 2) Represents fully committed amounts • MSR portfolio of approximately $7.6 billion in UPB, up 2% compared to Q4 • Fair market value of $88.2 million • Originations of $344.4 million(2) • Loan
Slide 12: Active SBC and SBA Loan Securitization Performance
ACTIVE SBC AND SBA LOAN SECURITIZATION PERFORMANCE 121) Represents remaining collateral in the securitization Issuance Date Delinquency 30+ Delinquency 60+ Delinquency 90+ Cumulative Loss Fixed Rate $ 1,126,954 RCMT 2014-1 September 2014 181,922 0.25 0.0% 0.0% 0.0% 0.0% RCMT 2015-2 November 2015 218
Slide 13: Interest Rate Risk Sensitivity
INTEREST RATE RISK SENSITIVITY 13 1) As a percent of carrying value 2) Excludes loans held-for-sale, at fair value 3) Based on portfolio as of March 31, 2019 and assumes no future changes in the composition of the portfolio. PORTFOLIO -FIXED VS FLOATING INTEREST RATESENSITIVITY ► 69% of our fixed ra
Slide 14: Loan Portfolio Composition as of March 31, 2019
LOAN PORTFOLIO COMPOSITION AS OF MARCH 31, 2019(1)(2) Geographic Location Lien Position (1) As a percent of unpaid principal balance (2) Excludes loans held-for-sale, at fair value (3) 14 Collateral Type SBA Collateral Type California, 18.4% Texas, 13.7% Florida, 8.9% New York, 5.2%Georgia, 5.2% Oth
Slide 15: Capital Structure - Reduction in Liquidity Risk
CAPITAL STRUCTURE –REDUCTION IN LIQUIDITY RISK ► Since going public in Q4 2016, we continue to optimize our capital structure: • Issued $345 million of corporate debt: • Convertible notes: 6 year notes, 7.0% coupon, $115 million • Senior secured notes: 5 year notes, 7.5% coupon • $75 million in 2/20
Slide 16: Financing and Leverage
FINANCING AND LEVERAGE 16 1.7x 1.8x 2.0x 2.1x 1.6x 2.9x 3.2x 3.4x 3.7x 3.1x 0 0.5 1 1.5 2 2.5 3 3.5 4 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Historical Leverage Recourse Total HISTORICAL LEVERAGE Total Debt-to-Equity Ratio Secured borrowings (warehouse credit facilities and borrowings under repo tr
Slide 17: Loan Warehouse Facilities
LOAN WAREHOUSE FACILITIES 17(1) $ in millions Bank Maturity Rate Description and Uses of Funds JPMorgan May '19 1M L + 2.50% $ 225 $ 158 Borrowings are used to finance SBC and SBA loan acquisitions, and SBA loan originations. KeyBank Feb '20 1M L + 1.50% 125 120 Borrowings are used to finance Freddi
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: Per Share Financial Performance
PER SHARE FINANCIAL PERFORMANCE 20 ► Adjusted net book value of $16.65 per common share as of March 31, 2019 Per Share Trends $0.56 $0.48 $0.53 $0.30 $0.90 $0.47 $0.47 $0.48 $0.34 $0.34 $0.37 $0.40 $0.40 $0.40 $0.40 $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 $0.70 $0.80 $0.90 $1.00 Q1 2018 Q2 2018 Q3 2018
Slide 21: Balance Sheet by Quarter
BALANCE SHEET BY QUARTER 21 (In Thousands) Assets Cash and cash equivalents $ 86,773 $ 105,833 $ 47,845 $ 54,406 $ 47,597 Restricted cash 13,964 15,108 18,864 28,921 29,979 Loans, net 1,057,034 1,035,330 1,256,177 1,193,392 1,057,023 Loans, held for sale, at fair value 160,999 188,752 124,988 115,25
Slide 22: Statement of Income by Quarter
STATEMENT OF INCOME BY QUARTER 22(1) Certain balances have been reclassified to match current period presentation (In Thousands, except share data) Interest income $ 37,150 $ 41,858 $ 44,287 $ 46,204 $ 48,753 Interest expense (22,666) (26,407) (28,925) (31,240) (35,775) Net interest income before pr
Slide 23: Core Earnings Reconciliation
CORE EARNINGS RECONCILIATION 23 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-making. Howev
Slide 24: Ready Capital
' READY ES _ CAPITAL. RC LISTED NYSE