Ready Capital Corporation · NYSE:RC
Ready Capital — Sutherland Asset Management — Q4 2016 Earnings Presentation
23 slides from Ready Capital's earnings presentation, Mar 14, 2017
Slide 1: Supplemental Financial Data Fourth Quarter 2016
Supplemental Financial Data Fourth Quarter 2016
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 Small balance commercial investor property originations Freddie Mac approved seller and servicer; small balance multi-family originations SBA loan originations and servicing operations (owner-occupied) 2 Transitional commercial and multifamily real estate
Slide 4: Annual 2016 Highlights
Annual 2016 Highlights ► Completed merger with ZAIS Financial and began trading on NYSE on November 1, 2016 ► Stockholders’ equity increased to $552.1 million as of December 31, 2016, primarily due to the merger ► Securitized $162.1 million of originated SBC loans ► Sold $133.9 million of senior bon
Slide 5: Fourth Quarter 2016 Highlights
Fourth Quarter 2016 Highlights ► Net income of $26.1 million(1), or $0.83 per common share ► Includes bargain purchase gain from ZAIS Merger of $15.2 million, or $0.48 per common share ► Core earnings of $11.1 million(1), or $0.35 per common share ► Declared dividend of $0.35 per share for the fourt
Slide 6: Return on Equity – Fourth Quarter 2016
Return on Equity – Fourth Quarter 2016 Business Line Levered Yield(1) Equity Allocation Acquisitions 15.6% 21.4% SBC Conventional Originations 12.5% 48.9% SBA Originations, Acquisitions & Servicing 28.4% 18.1% Residential Mortgage Banking 47.4% 11.6% Cash and other non-earning assets, net Realized &
Slide 7: Acquired portfolio
Acquired portfolio ► At this stage of the credit cycle, ample inventory of opportunistic performing SBC loans ► Acquired $47.8 million of loans, including $38.1 million of jumbo residential loans from the ZAIS merger ►Increased capacity for acquisitions through the successful issuance of $75.0 milli
Slide 8: SBC Conventional Originations
SBC Conventional Originations ► Originations of $143.6 million, up 2.5% quarter over quarter ► Post-election rise in 10-year Treasury yields likely to benefit SBC conventional originations ► Extended $250 million repo facility for an additional year through February 2018 ► Origination pipeline of $1
Slide 9: SBA Originations, Acquisitions & Servicing
SBA Originations, Acquisitions & Servicing Number of loans 2,509 Unpaid principal balance(1) $615,764 Carrying value(1) $543,404 Weighted average LTV 80% Weighted average interest rate 5.2% Weighted average maturity 167 months Weighted average UPB $245,223 Percentage of loans fixed/floating 1% / 99%
Slide 10: Residential Mortgage Banking
Residential Mortgage Banking Unpaid principal balance $2.2 billion % of Originations Purchased 66.7% % of Originations Refinanced 33.3% Unpaid principal balance $2.2 billion % of UPB- Fannie/ Freddie securitizations 66.2 % % of UPB- Ginnie Mae securitizations 25.3 % % of UPB – Other investors 8.5 %
Slide 11: Quarterly Investment Allocation
Quarterly Investment Allocation Acquisitions(1) Originations(1) SBC Freddie MAC Transitional SBA Residential Total Gross investments $47,761 $33,635 $57,419 $52,547 $13,694 $363,609 $520,904 Number of loans 56 13 27 7 18 1,797 1,862 Average balance(2) $853 $2,737 $2,127 $7,789 $940 $199 $273 Gross Y
Slide 12: Net Interest Margin
Net Interest Margin(1) Contribution by SBC Operating Segment 11 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 amortization 0.0% 10.0% 20.0%
Slide 13: SBC Portfolio Composition as of Year End 2016
SBC Portfolio Composition as of Year End 2016 Collateral Diversification(1) SBA Segment Details(1) 12 As a percent of carrying value Retail 20% Office 20% Multi - Family 20% SBA 12% Industrial 9% Lodging 7% Mixed Use 6% Other 6% Acquired 30% Conventional SBC 39% Bridge 31% R ETAIL S EGMENT D ETAILS
Slide 14: SBC Portfolio Composition as of Year End 2016
SBC Portfolio Composition as of Year End 2016 Lien position(1) Loan Size(1) 13 As a percent of carrying value First Mortgage 93% Sub. Mortgage 5% Other 2% Top 10 Loans 7% Remaining 93% CA 17% TX 14% FL 10% NY 8% GA 6% AZ 5% IL 3% NC 3% PA 3% Other 31% G EOGRAPHIC D IVERSIFICATION (1)
Slide 15: Financing and Leverage
Financing and Leverage Deutsche Bank L + 250 - 325 1 – Year $275 $192 Master repurchase agreement used to finance newly originated SBC loans Citibank L + 300 1 – Year $200 $97 Master repurchase agreement used to finance legacy SBC loans J.P. Morgan L + 250 – 450 2 – Year $100 $48 Master repurchase a
Slide 16: 2017 Strategic Initiatives
2017 Strategic Initiatives 15
Slide 17: Sutherland Snapshot
Sutherland Snapshot ($ amounts in thousands, except per share data) Acquired portfolio $465,556 7.3% $373,954 5.3% 15.6% SBC conventional origination portfolio $742,240 6.6% $533,069 4.2% 12.5% SBA Originations, Acquisitions & Servicing $578,360 6.6% $501,065 3.3% 28.4% Residential Mortgage Banking
Slide 18: Investment Highlights
Investment Highlights 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 record Emb
Slide 19: Appendix
APPENDIX SUTHERLAND Asset Management
Slide 20: Historical Financial Performance
Historical Financial Performance(1) 18 Retroactively adjusted for the equivalent number of shares after reverse acquisition using an exchange rate of 0.8356 Refer to slide 21 for a reconciliation of GAAP earnings to Core earnings $0.32 $0.32 $0.31 $0.34 $0.83 $0.51 $0.37 $0.32 $0.36 $0.35 $0.60 $0.4
Slide 21: Balance Sheet by Quarter
Balance Sheet by Quarter 19 Retroactively adjusted for the equivalent number of shares after reverse acquisition using an exchange rate of 0.8356 (In millions, except per share values) 12/31/2015 3/31/2016 6/30/2016 9/30/2016 12/31/2016 Assets Cash and cash equivalents 41.6 $ 59.9 $ 55.0 $ 38.5 $ 59
Slide 22: Statement of Income by Quarter
Statement of Income by Quarter 20 Certain balances have been reclassified to match current period presentation Retroactively adjusted for the equivalent number of shares after reverse acquisition using an exchange rate of 0.8356 (In millions, except per share values) Q4 2015 Q1 2016 (1) Q2 2016 (1)
Slide 23: Core Earnings Reconciliation
Core Earnings Reconciliation 21 (In millions, except per share values) Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Net income $ 8.9 $ 9.1 $ 8.6 $ 9.6 $ 26.1 Reconciling items: Unrealized (gain) loss on mortgage-backed securities 3.8 (2.0) (1.6) (0.7) 0.6 Realized (gain) loss on mortgage-backed securitie
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