Ready Capital Corporation · NYSE:RC
Ready Capital — Investor Presentation (April 2022)
30 slides from Ready Capital's investor presentation, April 2022
Slide 1: Investor Presentation April 2022
INVESTOR PRESENTATION April 2022
Slide 2: Disclaimer
Disclaimer These materials and any presentation of which they form a part are neither an offer to sell, nor a solicitation of an offer to purchase, an interest in Ready Capital Corporation (“Ready Capital,” “RC,” or the “Company”). Neither the Company nor any of its representatives or affiliates mak
Slide 3: Differentiated Mortgage REIT
Differentiated Mortgage REIT Largest non-bank lender to both investors in and owners of small balance commercial (“SBC”) properties with current market capitalization over $1.8 billion1,2 All-weather investment strategy as a direct lender and acquiror of bulk portfolios, including distressed $7.6 bi
Slide 4: Waterfall – A Successful & Proven Asset Manager
Waterfall – A Successful & Proven Asset Manager Waterfall consists of a dedicated team of 75 investment professionals who have extensive experience in small balance commercial (SBC) distressed asset acquisition, loan origination, asset management and capital markets. TOTAL GAV $25.3B KEY MANAGEMENT
Slide 5: Experienced Management Team
Experienced Management Team Name & position Background Thomas Capasse Chairman of the Board, CEO Manager and Co-Founder of Waterfall Asset Management Principal Ready Capital Corporation 35+ years of structured credit experience globally Waterfall Asset Management Co-founded Merrill Lynch’s ABS
Slide 6: Company History and Evolution
Company History and Evolution 2011 October 2019 Ready Capital, then Sutherland Asset Management was founded Acquired Knight Capital, a technology-driven platform that provides working capital to small and medium businesses across the U.S., for $27.8mm July 2014 June 2020 Acquired SBA ownership
Slide 7: Recent Events – Capital Markets / M&A
Recent Events – Capital Markets / M&A COMMON STOCK OFFERING(1) CLO SECURITIZATION(2) MOSAIC MERGER(3) January 14, 2022 March 10, 2022 March 16, 2022 • Completed underwritten offer and sale of • Closed a $1.135 billion commercial • Completed the previously announced 7,000,000 shares of our common sto
Slide 8: Compelling and Attractive Combination
Compelling and Attractive Combination Pro-Forma Combined Company ($ in Millions) Invested $7,644 $572 ~$8,216 Assets(1) 1.9% 8.0%2.8% 8.6% 3.1% 12.4% SBC Loan Investment SBC Loan Originations Originations & Acq. & Acq. ($6,753) Construction Financing ($370) ($7,325) Portfolio Small Business Preferre
Slide 9: Strategic Combination Overview
Strategic Combination Overview Pro-Forma Equity Base ($ in billions) Pro-Forma Entity Highlights 1. Significant capital base to fund cycle-proven, diversified investment strategy 2. Strong balance sheet and abundant liquidity 3. Highly scalable business model $6.1 ~$606 million of equity $4.6 $2.6 $
Slide 10: Diversified Investment Strategy
Diversified Investment Strategy Capital allocated opportunistically to highest ROE OpCo across economic cycle Pro Forma SBC Loan Originations & Acquisitions Residential Mortgage Small Business Lending SBC Loan Originations & Banking Mosaic Acquisitions Middle-market lending Owner occupied SBC Invest
Slide 11: SBC Lending & Acquisition Overview
SBC Lending & Acquisition Overview All-weather origination platform with ability to allocate capital to the best opportunities across 7 products spanning heavy transitional to stabilized 1 of 12 Freddie Mac Small Balance Loan lenders; ranked #5 based on 2021 volume Over $11.7 billion in originations
Slide 12: Small Business Lending Overview
Small Business Lending Overview A leading provider of capital to small businesses through 7(a) loans, USDA loans and unsecured small business loans 1 of 14 non-bank Small Business Administration 7(a) license holders; acquired from CIT in 2014 #2 non-bank 7(a) lender and #16 overall lender1 Fully int
Slide 13: Residential Mortgage Banking Overview
Residential Mortgage Banking Overview GMFS, founded in 1999, has a leading Southeast market share and acquired via the ZFC merger in 2016 Licensed in 18 states, approved FNMA and FHLMC seller-servicer, GNMA issuer, HUD / FHA / USDA originator and VA lender GMFS provides a wide range of residential m
Slide 14: Fourth Quarter 2021 Results
Fourth Quarter 2021 Results Net income of $53.6 million1, or $0.69 per common share Earnings / Dividends Distributable earnings of $52.5 million1, or $0.67 per common share Declared dividend of $0.42 per common share Return on Equity2 of 18.1% Returns Distributable Return on Equity3 of 17.
Slide 15: Fourth Quarter 2021 Results (continued)
Fourth Quarter 2021 Results (continued) Total liquidity of $246 million1 including cash, anticipated warehouse advances, Current Liquidity principal and interest receivable from servicers, and anticipated proceeds from available-for-sale assets Closed $927.2 million commercial mortgage collatera
Slide 16: 2021 Highlights
2021 Highlights EARNINGS ($ in millions) INVESTMENT ACTIVITY ($ in millions) $200 $10,000 $8,000 $4,208.6 $150 $6,000 $480.8 $100 $160.0$168.0 $4,000 $2,105.6 $4,246.4 $50 $101.4 $1,778.8 $216.3 $5,468.9 $75.1 $67.3 $2,000 $61.5 $58.7 $213.0 $216.6 $46.1 $2,425.2 $1,568.7 $1,372.9 $0 $0 2018 2019 20
Slide 17: Return on Equity
Return on Equity 1. Levered yield includes interest income, accretion of discount, MSR creation, income 2. GAAP ROE is based on GAAP Net Income, while Distributable ROE is based on from unconsolidated joint ventures, realized gains (losses) on loans held for sale, Distributable Earnings, which adjus
Slide 18: Diversified, Complementary, & Scalable Platforms
Diversified, Complementary, & Scalable Platforms PORTFOLIO BREAKDOWN1 REVENUE BREAKDOWN2 ($ in thousands) $45,000 $40,763 $40,000 5% 13% $35,000 17% $29,481 $30,000 13% $26,673 2% $25,000 $20,000 $15,000 $11,032 50% $10,000 $5,752 $4,519 $5,000 Acquisitions $0 Acquisitions SBC SBC SBC Small Resident
Slide 19: SBC and SBA Investment by Product Type
SBC and SBA Investment by Product Type QUARTERLY GROWTH1 $2,405.2 $2,400 $443.8 $2,000 $29.0 $1,600 $1,419.3 $1,250.0 $136.2 $1,200 $168.0 $1,529.2 $875.2 $807.2 $800 $730.4 $615.9 $140.2 $652.8 $400 $243.2 $240.5 $135.5 $169.3 $132.1 $53.6 $104.9 $98.2 $164.4 $34.8 $6.0 $148.7 $144.3 $135.7 $65.6 $
Slide 20: SBC Lending and Acquisitions
SBC Lending and Acquisitions LOAN COUNT(1) UPB BOOK VALUE WA LTV WA COUPON FIXED/FLOAT(2) 60%+(3) 2,608 $6.76B $6.71B 65.5% 4.6% 26.4 / 73.6% 1.8% ACQUIRED 1,868 $1.20B $1.19B 44.4% 5.1% 52.1 / 47.9% 3.0% TRANSITIONAL 433 $4.43B $4.39B 72.0% 4.2% 0.5 / 99.5% 1.0% FIXED/CMBS(6) 291 $1.09B $1.09B 62.7
Slide 21: Small Business Lending
Small Business Lending LOAN COUNT UPB BOOK VALUE WA LTV WA COUPON FIXED/FLOAT 60%+(1) 1,886 $657M $623M 88.4% 5.5% 0.6 / 99.4% 1.2% CURRENT QUARTER HIGHLIGHTS GROSS LEVERED YIELD • SBA net sales premiums peaking at 14.9% and averaging 100% 11.5% net, with 19.6% of SBA sales sold for a higher future
Slide 22: Loan Portfolio Composition
Loan Portfolio Composition PROPERTY TYPE GEOGRAPHY 14% 20% 8% 58% 44% SBC Lending SBC Lending 9% and Acquisitions and Acquisitions 14% 11% 8% 7% 7% Multi-family Retail Office Mixed-use Other Investments Texas California Arizona New York Georgia Other 17% 21% 41% Small Small 12% Business Business 53%
Slide 23: Residential Mortgage Banking
Residential Mortgage Banking QUARTERLY ORIGINATIONS UPB $875.8M 18% 46% Production Production 45% by Purpose 54% by Platform 37% Purchased Refinanced Retail Correspondent Wholesale QUARTERLY SALES UPB $921.7M MSR PORTFOLIO UPDATE ($ in billions) $12 4.0% 3.7% 3.6% 3% $10 3.5% 3.4% 3.4% 3.5% 21% $8 $
Slide 24: Loan Portfolio – Risk Rating
Loan Portfolio – Risk Rating RISK RATING DISTRIBUTION(1) CRITERIA 100% 90% 85% 80% BUCKET 1: Very Low Risk of Loss: New origination or current with strong 60% credit metrics (LTV/DSCR/DY). No expected losses. 40% 20% BUCKET 2: 5% 8% 3% 5% 2% 2% Low Risk of Loss: Current with maturity > 6 months. Low
Slide 25: Financial Snapshot
Financial Snapshot Investment Type Average Carrying Value(1) Gross Yield(2) Average Debt Balance Debt Cost (3) Levered Yield SBC Lending and Acquisitions $ 6,304,317 5.4% $ 4,694,787 3.0% 12.6% Small Business Lending $ 304,962 22.6% $ 181,848 4.2% 49.7% Total $ 6,609,279 6.2% $ 4,876,635 3.0% 18.0%
Slide 26: Additional Financial Information
APPENDIX Additional Financial Information
Slide 27: Balance Sheet by Quarter
READY CAPITAL. Balance Sheet by Quarter Cash and cash equivalents S$ 138975 $ 308428 $ 200,723 $ 209,769 $ 229,531 Restricted cash 47,697 62,961 57,118 52,692 51,569 Loans, net 1,550,624 1,611,826 2,222,284 2,384,497 2,915,446 Loans, held for sale, at fair value 340,268 473,078 470,184 549,917 552,9
Slide 28: Statement of Income by Quarter
Statement of Income by Quarter (In thousands, except share data) Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Interest income $ 64,810 $ 73,371 $ 103,047 $ 105,136 $ 121,942 Interest expense (41,319) (50,761) (55,415) (50,136) (57,249) Net interest incom e before provision for loan losses $ 23,491 $ 22,6
Slide 29: Distributable Earnings Reconciliation by Quarter
Distributable Earnings Reconciliation by Quarter The Company believes that this non-U.S. GAAP financial information, in addition to the related U.S. GAAP measures, provides investors greater transparency into the information used by management in its financial and operational decision-making, includ
Slide 30: THEE’ READY
THEE’ READY 2H. CAPITAL. RC LISTED NYSE