Ready Capital Corporation · NYSE:RC
Ready Capital — Q3 2020 Earnings Presentation
23 slides from Ready Capital's earnings presentation, Nov 4, 2020
Slide 1: Supplemental Financial Data Third Quarter 2020
Supplemental Financial Data Third 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 .. Elevated outperformances in government sponsored gain on sales business .. Record SBA 7(a) volumes of $82.9 million and higher residential originations of $1.2 billion .. Successful re-launch of SBC originations and acquisitions with growing CRE pipeline of $491.0 million .. Laun
Slide 4: Third Quarter 2020 Results
THIRD QUARTER 2020 RESULTS 4 .. Net income of $35.4 million(1), or $0.63 per common share .. Core earnings of $32.1 million(1), or $0.57 per common share .. Declared dividend of $0.30 per share EARNINGS / DIVIDENDS .. Return on Equity(2) of 17.3% .. Core Return on Equity(3) of 15.7% .. Dividend Yiel
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 $48.2 $70.2 $45.5 $20.8 $82.9 $165.6 $116.0 $60.7 $0.0 $0.0 $146.2 $104.7 $149.4 $157.9 $105.6 $153.5 $305.0 $259.6 $- $16.9 $77.9 $153.7 $51.5 $0.0 $15.8 $- $50 $100 $150 $200 $250 $300 $350 $400 $450 Q3
Slide 7: SBC Originations - Segment Snapshot
SBC ORIGINATIONS - SEGMENT SNAPSHOT 7 1) $ in millions, as of quarter end. 2) Represents fixed rate loans that have been securitized. 3) Represents fully committed amounts. 4) Calculated on unpaid principal balance 5) Includes interest income, accretion of discount, and servicing income net of inter
Slide 8: SBA Originations, Acquisitions, & Servicing - Segment Snapshot
SBA ORIGINATIONS, ACQUISITIONS, & SERVICING - SEGMENT SNAPSHOT 8 1) $ in millions, as of quarter end. 2) Reflects an increase in balances as a result of the Q4 2019 securitization and effects of the guaranteed loan financing gross up. 3) Calculated on unpaid principal balance and excludes assets off
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. 4) Calculated on unpaid principal balance • Continued acquisition flow from CMBS collapse arrangements • Increased opportuniti
Slide 10: Residential Mortgage Banking - Segment Snapshot
RESIDENTIAL MORTGAGE BANKING – SEGMENT SNAPSHOT 10 1) $ in millions. Represents activity during the quarter. • Elevated originations of $1.2 billion driven by rate environment • Recapture rates of 33% • Average margin in excess of 300bps for the quarter $8.0 $8.2 $8.3 $8.7 $9.1 $7.5 $7.8 $8.0 $8.3 $
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 September 30, 2020
LOAN PORTFOLIO COMPOSITION AS OF SEPTEMBER 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 19% Texas 15% Florida 8% New York 9% Illinois 5% Other 45% Fi
Slide 13: Current Expected Credit Losses
13 Total ending third quarter Q3 2020 allowance reserves of $52.6 million representing 1.3% of loan balances Net recovery of $4.4 million across our loan portfolios during the quarter: Acquired loans: Reduction in pooled reserves due to stabilized assumptions, and a lower weighted average matu
Slide 14: Loan Portfolio - Risk Ratings as of September 30, 2020
LOAN PORTFOLIO – RISK RATINGS AS OF SEPTEMBER 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 22% Bucket 4 10% Bucket 5 3% CRITERIA
Slide 15: Capital Structure
CAPITAL STRUCTURE ► Current cash and available liquidity of $221.7 million ► Completed first JV CMBS, contributing $31.7 million of fixed rate collateral and purchasing $12.6 million of subordinated bonds 15 Total Debt + Equity LIQUIDITY UPDATE HISTORICAL CAPITAL STRUCTURE Total Debt + Equity ($M) F
Slide 16: Financing and Leverage
FINANCING AND LEVERAGE 16 2.3x 1.9x 2.8x 2.1x 2.0x 4.3x 4.1x 4.9x 4.7x 4.5x - 1.0 2.0 3.0 4.0 5.0 6.0 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Historical Leverage Recourse Total HISTORICAL LEVERAGE • $328 million of secured debt financing agency production $ in millions Total debt-to-equity ratio Sec
Slide 17: Credit and Repurchase Facilities
CREDIT AND REPURCHASE FACILITIES 17 1) Commitment size is €200.0 million and has been converted for purposes of this disclosure. $ in thousands Lender Asset Class Maturity Pricing JPMorgan Acquired loans, SBA loans June 2021 1M L + 1.75 to 2.75% $ 250,000 $ 30,742 $ 219,258 Keybank Freddie Mac loans
Slide 18: Financial Snapshot
FINANCIAL SNAPSHOT ($ 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, accretion of discoun
Slide 19: Appendix
READY CAPITAL. APPENDIX
Slide 20: Balance Sheet by Quarter
BALANCE SHEET BY QUARTER 20 (In Thousands) Assets Cash and cash equivalents $ 52,727 $ 67,928 $ 122,265 $ 257,017 $ 149,847 Restricted cash 45,303 51,728 93,164 91,539 46,204 Loans, net 1,380,359 1,727,984 1,969,052 1,432,807 1,393,139 Loans, held for sale, at fair value 203,110 188,077 306,328 297,
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 $ 59,723 $ 64,406 $ 69,551 $ 63,211 $ 61,074 Interest expense (39,390) (40,962) (46,930) (43,408) (43,823) 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
i eteee, * READY SES . CAPITAL. RC LISTED NYSE