Slide 1: Supplemental Financial Data 3Q16
Supplemental Financial Data 3Q16 SutherLand Asset Management
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: Business overview
Business overview ORIGINATIONS ACQUISITIONS WATERFALL Asset management Manager and SEC Registered Advisor to Sutherland Asset Management Corporation Sutherland Asset Management Servicing KeyBank TRIMONT MIDLAND LOAN SERVICES PNC REAL ESTATE READY CAP COMMERCIAL, LLC READY CAPITAL STRUCTURED FINANCE
Slide 4: Completed merger with ZAIS Financial Corp
► Completed merger with ZAIS Financial Corp on 10/31/2016 with trading on NYSE on 11/1/2016 increasing the pro-forma stockholders’ equity to $561 million and delivering liquidity to shareholders ► Pro-forma(1) combined company balance sheet as of 09/30/2016: COMBINED ► Planned 4Q16 securitizations:
Slide 5: Third Quarter 2016 Highlights
Third Quarter 2016 Highlights ► Core earnings of $10.1 million(1), or $0.30 per common share ► Net income of $9.6 million(1), or $0.28 per common share ► Declared dividend of $0.30 per share ► Net book value of $14.38 per common share, pro-forma net book value of $17.07 per common share ► Originated
Slide 6: Return on Equity
Return on Equity Business Line Levered Yield(1) Equity Allocation Acquisitions 15.7% 31.0% SBC Conventional Originations 13.0% 49.2% SBA Originations, Acquisitions & Servicing 28.6% 19.8% Cash and Other Non-earning Assets, Net Non-earning Equity Realized & Unrealized Gain, net Operating Expenses Inv
Slide 7: Acquired portfolio
Acquired portfolio ► At this stage of the credit cycle, ample inventory of “scratch-and-dent” performing SBC ► Decline in Gross Levered Yield consistent with Acquired Portfolio migration from NPLs to performing loans ► Acquired $26 million of SBC loans with a levered yield of 15% ► Potential additio
Slide 8: SBC Conventional Originations
SBC Conventional Originations ► Originations of $140 million, a 31% increase quarter over quarter ► Origination pipeline of $154 million ► Post-election rise in 10-year Treasury yields likely to benefit SBC conventional originations ► Completed repo facility with KeyBank to fund Freddie Mac originat
Slide 9: SBA Originations, Acquisitions & Servicing
SBA Originations, Acquisitions & Servicing Number of loans 2,735 Unpaid principal balance $653,727 Carrying value $574,761 Weighted average LTV 73% Weighted average interest rate 5.2% Weighted average maturity 168 months Weighted average UPB $239,023 Percentage of loans fixed/floating 1% / 99% Perce
Slide 10: Quarterly Investment Allocation
Quarterly Investment Allocation (Dollars in thousands) Acquisitions Originations SBC Freddie MAC Transitional SBA Total Gross investments $25,832 $51,597 $48,759 $39,681 $13,521 $153,558 Number of loans 102 23 23 8 15 69 Average balance(1) $279 $3,623 $2,120 $9,915 $901 $4,500 Gross Yield(2) 7.2% 6.
Slide 11: Net Interest Margin Contribution by Operating Segment
Net Interest Margin(1) Contribution by Operating Segment 10 Net interest margin is based on interest income and net servicing income, which reflects contractual interest rates, accretion of discount and servicing income net of interest expense, which reflects contractual interest rates, and deferred
Slide 12: Portfolio Composition as of 09/30/2016
Other 7% Lodging 5% Retail 20% Mixed Use 7% Industrial 10% COLLATERAL DIVERSIFICATION Office 19% SBA 12% Bridge 10% Day Care 14% Multi-Family 20% Other 38% Dentists 11% SBA SEGMENT DETAILS RETAIL SEGMENT DETAILS Conventional SBC 37% Acquired 53% Hotels Auto 3% Restu rants Physicians 6% Vets 7% Groce
Slide 13: Portfolio Composition: Geographic Diversification, Loan Size, Lien Position
Top 10 Loans 5.5% Sub. Mt . 5% Oth r 2% CA 16% Other 31% TX 14% GEOGRAPHIC DIVERSIFICATION LOAN SIZE LIEN POSITION IL 3% PA 3% FL 11% NC 3% AZ 5% NY 9% GA 5% First Mtg. 93% Remaining 94.5% 12 PORTFOLIO COMPOSITION AS OF 09/30/2016
Slide 14: Financing facilities and leverage
loans 7(a) loans and newly originated SBA loans loans, CRE bridge loans and acquired CRE 2.5 2 1.5 1 0.5 0 2.0x 2.0x 2.0x 2.0x 1.9 x 1.9x 1.8x 1.3x Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Recourse Total (1) Excludes reverse repurchase agreement secured by U.S. Treasuries and guarante
Slide 15: Pro forma illustrative Core ROE
The Company is actively pursuing various strategies to optimize financial results. Except as noted, no assurance can be given that such strategies will be successfully implemented. LOW END HIGH END Q316 Core ROE Subsidiaries directly to the REIT. The pro forma information above is presented for illu
Slide 16: Investment yields and pro forma book value and earnings
AVG. CARRYING VALUE AVG. DEBT BALANCE LEVERED INVESTMENT TYPE GROSS YIELD(1) DEBT COST(2) (3) YIELD Book Equity Value per Common Share Pro-forma Earnings per Common Share 15 accretion of discount and servicing income expense is calculated based on interest expense and deferred financing amortization
Slide 17: Appendix
Appendix Sutherland Asset Management
Slide 18: Historical Financial Performance
Historical Financial Performance 17 Refer to slide 20 for a reconciliation of GAAP earnings to Core earnings $0.40 $0.27 $0.27 $0.26 $0.28 $0.40 $0.43 $0.31 $0.27 $0.30 $0.35 $0.50 $0.38 $0.38 $0.30 $- $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 $ Per share Earnings C
Slide 19: Balance Sheet by Quarter
Balance Sheet by Quarter 18 (In millions, except per share values) 9/30/2015 12/31/2015 3/31/2016 6/30/2016 9/30/2016 Assets Cash and cash equivalents $ 80.3 $ 41.6 $ 59.9 $ 55.0 $ 38.5 Restricted cash 27.7 14.8 16.7 14.7 15.9 Short term investments 250.0 250.0 250.0 250.0 250.0 Loans, held at fair
Slide 20: Statement of Income by Quarter
Statement of Income by Quarter 19 (In millions, except per share values) Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Interest income Loans, held-for-investment $ 31.6 $ 32.0 $ 32.3 $ 30.8 $ 27.0 Loans, held at fair value 5.0 3.8 3.4 2.7 3.9 Loans, held for sale, at fair value - - - - 0.2 Mortgage backed
Slide 21: Core Earnings Reconciliation
Core Earnings Reconciliation 20 (In millions, except per share values) Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Net income $ 13.4 $ 8.9 $ 9.1 $ 8.6 $ 9.6 Reconciling items: Unrealized (gain) loss on mortgage-backed securities 1.3 3.8 (2.0) (1.6) (0.7) Realized (gain) loss on mortgage-backed securitie
Slide 22: Corporate Overview
Corporate Overview Sutherland Asset Management
Slide 23: SLD Overview
SLD Overview ► Sutherland Asset Management Corporation (“SLD” or the “Company”), formed on November 4, 2013, is a Maryland-based externally-managed commercial mortgage REIT that is advised by Waterfall Asset Management (“WAM”) ► SLD acquires, originates, services and finances (i) small balance comme
Slide 24: SLD Overview: Acquired Loans
SLD Overview Acquired Loans Top 5 acquirer of SBC loans since crisis WAM has reviewed approximately 334,000 performing, sub-performing and non-performing SBC and SBA loans, priced approximately 162,000 of these loans and acquired more than 9,200 SBC and SBA loans with aggregate UPB of approximately
Slide 25: SLD History
SLD History 2007 2008 2009 2010 2011 2012 2013 2005 2014 2015 2016 July 2007 Launch of loan strategies August 2008 Acquired performing SBC Loan pool from Lehman Brothers June 2009 Purchased SBC ABS equity tranches from Washington Mutual February 2011 First non performing SBC loan securitization ($41
Slide 26: SLD Business Overview
SLD Business Overview Loan Acquisition Business Conventional Loans Bridge Loans Freddie Mac SBL Program SBA 7(a) Origination Business(es) Booking Entity: SLD ReadyCap Commercial ReadyCap Lending Principal Business Activity / Secured by: Acquires pools of performing, sub-performing, and non-performin
Slide 27: Attractive Markets: SBC Offers Compelling Risk-adjusted Returns
Attractive Markets: SBC Offers Compelling Risk-adjusted Returns SBC property market has lagged the larger CRE/housing markets over the last ~2 years due to limited institutional investment Provides strong relative value versus other real estate classes Historical Price Performance Typical Asset Char
Slide 28: Attractive Markets: SBA 7(a) Program
• The SBA was created in 1953 as an independent agency of the federal government to aid, counsel, assist and protect the intere sts of small business concerns – – – The SBA does not make direct loans to small businesses The SBA sets guidelines for loans, which are then made by its partners The SBA g
Slide 29: Attractive Markets: Freddie Mac Offers Compelling Risk-adjusted Returns
Attractive Markets: Freddie Mac Offers Compelling Risk-adjusted Returns 28 SBL Seller/Servicer Requirements SBL Options & Qualifications Freddie Mac’s SBL program created a platform for approved SBL Sellers/Servicers to originate and sell loans on smaller rental properties. ReadyCap is an approved S
Slide 30: ReadyCap origination platform
States with Funded Loans Headquarters Sales Offices The ReadyCap origination platform generates an attractive risk spread premium by lending to borrowers that fall just outside of credit guidelines of many banks. The Company uses an extensive network of existing relationships to source origination
Slide 31: GMFS Business Description
Business Description Origination Volume by Purpose ($MM) GMFS was founded in 1999 and headquartered in Baton Rouge, Louisiana GMFS provides a wide range of residential mortgage services, including home purchase financing, mortgage refinancing, reverse mortgages, new construction loans and condo fi