Ready Capital Corporation · NYSE:RC
Ready Capital — Sutherland Asset Management — Q2 2017 Earnings Presentation
24 slides from Ready Capital's earnings presentation, Aug 3, 2017
Slide 1: Supplemental Financial Data Second Quarter 2017
Supplemental Financial Data Second Quarter 2017
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: Second Quarter 2017 Highlights
Second Quarter 2017 Highlights ► Net income of $11.2 million(1), or $0.34 per common share ► Core earnings of $11.2 million(1), or $0.34 per common share ► Declared dividend of $0.37 per share for the second quarter ► Net book value of $16.67 per common share at June 30, 2017 ► Originations(5) for t
Slide 4: Recent Securitizations
Recent Securitizations 3 RCMF 2017-FL1 SCMT 2017-SBC6 FRESB 2017-SB33 Collateral Transitional loans Seasoned, first lien, small business loans secured by commercial real estate Freddie Mac Small Balance Multi-Family Type Newly Originated Acquired Legacy Loans Newly Originated Bonds Sold $198,800,000
Slide 5: Return on Equity
Return on Equity Acquisitions 14.2% 14.2% 16.5% SBC Conventional Originations 10.1% 10.1% 53.4% SBA Originations & Servicing 19.8% 19.8% 17.5% Residential Mortgage Banking(3) 5.6% 14.8% 12.6% Corporate finance and non-earning assets, net Gross return on equity Realized & unrealized gains, net Operat
Slide 6: SBC Origination Volume by Product Type
L SBC Origination Volume by Product Type 5 Q2 2016 – Q2 2017 YoY Growth Rate: 121 % Origination volumes are based on fully committed amounts
Slide 7: SBC Conventional Originations
SBC Conventional Originations ► Originations of $225.6 million(1), up 52% quarter over quarter, 68% of which are floating rate ► Late in quarter originations will produce additional earnings impact in subsequent quarters ► Origination pipeline of $197.4 million(2) Number of loans 326 Unpaid principa
Slide 8: SBA Originations, Acquisitions & Servicing
SBA Originations, Acquisitions & Servicing Number of loans 2,280 Unpaid principal balance(3) $548,503 Carrying value(3) $485,864 Weighted average LTV 78% Weighted average interest rate 5.7% Weighted average remaining maturity 166 months Weighted average UPB $240,572 Percentage of loans fixed/floatin
Slide 9: Acquired portfolio
Acquired portfolio ► At this stage of the credit cycle, ample inventory of opportunistic performing SBC loans ► Acquired $14.4 million of asset-backed securities and repurchased $57.3 million of transitional loans ► Acquisition pipeline of $89.0 million SBC loans(1) Number of loans 882 Unpaid princi
Slide 10: Residential Mortgage Banking
Residential Mortgage Banking Unpaid principal balance $560.0 million % of Originations Purchased 80.1% % of Originations Refinanced 19.9% Channel - % Correspondent 40.1% Channel - % Retail 35.9% Channel - % Wholesale 24.0% Unpaid principal balance $547.0 million % of UPB- Fannie/ Freddie securitizat
Slide 11: Quarterly Investment Allocation
Quarterly Investment Allocation Loans Acquisitions(1) Originations(1) SBC Freddie MAC Transitional SBA Residential Total Gross investments(2) $57,326 $47,931 $87,241 $81,702 $25,081 $559,970 $801,925 Number of loans 4 19 39 22 38 2,744 2,862 Average balance(3) $14,332 $2,873 $2,237 $6,433 $1,177 $20
Slide 12: Portfolio Migration Towards Originated Product
Portfolio Migration Towards Originated Product 11 Net of Guaranteed loan financing 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 amortizati
Slide 13: SBC Portfolio Composition as of June 30, 2017
SBC Portfolio Composition as of June 30, 2017 Collateral Diversification(1) SBA Segment Details(1) 12 As a percent of carrying value Multi - Family 24% Retail 22% Office 18% SBA 10% Industrial 8% Mixed Use 7% Lodging/ Residential 6% Other 5% Acquired 25% Conventional SBC 56% Transitional 19% R ETAIL
Slide 14: SBC Portfolio Composition as of June 30, 2017
SBC Portfolio Composition as of June 30, 2017 Lien position(1) Loan Size(1) 13 As a percent of carrying value First Mortgage 96.4% Sub. Mortgage 3.2% Other 0.3% Top 10 Loans 9% Remaining 91% CA 18% TX 12% FL 11% NY 8% GA 6% AZ 5% IL 4% NC 3% OH 3% Other 30% G EOGRAPHIC D IVERSIFICATION (1)
Slide 15: Financing and Leverage
Financing and Leverage Deutsche Bank L + 250 - 325 1 – Year $275 $185 Master repurchase agreement used to finance newly originated SBC loans Citibank L + 300 1 – Year $200 $104 Master repurchase agreement used to finance acquired legacy SBC loans and newly originated SBC loans J.P. Morgan L + 250 –
Slide 16: 2017 Strategic Initiatives
2017 Strategic Initiatives 15 Initiative Target Update Access Corporate Debt Markets Raise up to $250M of corporate debt to support $1B of loan originations and/or acquisitions Completed Secured Note, $75M, 7.5%, due 2022 Completed Secured Note, $65M, 7.5%, due 2022 with yield to maturity of 6.75% S
Slide 17: Sutherland Snapshot
Sutherland Snapshot ($ amounts in thousands, except per share data) Acquired portfolio $371,297 7.8% $276,967 5.7% 14.2% SBC conventional origination portfolio $914,407 6.2% $608,508 4.2% 10.1% SBA Originations, Acquisitions & Servicing $522,743 7.1% $422,533 4.0% 19.8% Total $1,808,447 6.8% $1,308,
Slide 18: Investment Highlights
Investment Highlights 17 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 r
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 $0.31 $0.34 $0.83 $0.29 $0.34 $0.32 $0.36 $0.35 $0.33 $0.34 $0.45 $0.3
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) 6/30/2016 9/30/2016 12/31/2016 3/31/2017 6/30/2017 Assets Cash and cash equivalents 55.0 $ 38.5 $ 59.6 $ 40.0 $ 63.
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) Q2 2016 (1) Q3 2016 (1) Q4 2016
Slide 23: Core Earnings Reconciliation
Core Earnings Reconciliation 21 Represents RSU grant for services rendered to date 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 p
Slide 24: Small cap CRE price relationships through the cycle
Small cap cre price relationships through the cycle 36-month running correlations case-shiller index moody’s core commercial index 0.6 0.5 0.4 0.3 0.2 0.1 0 -0.1 -0.2 -0.3 -0.4 08 11 12 03 06 08 11 12 03 06 08 11 12 03 06 08 11 12 03 06 08 11 12 03 06 08 11 12 03 06 08 11 12 2010 2011 2012 2013 2014
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