Ready Capital Corporation · NYSE:RC
Ready Capital — Sutherland Asset Management — Q2 2018 Earnings Presentation
23 slides from Ready Capital's earnings presentation, Aug 7, 2018
Slide 1: Supplemental Financial Data Second Quarter 2018
Supplemental Financial Data Second Quarter 2018
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 2018 Highlights
Net income of $15.9 million(1), or $0.48 per common share Core earnings of $15.8 million(1), or $0.47 per common share Declared dividend of $0.40 per share Earnings / Dividends Q2 Return on Equity(2) of 11.2% Q2 Core Return on Equity(3) of 11.1% Q2 Dividend Yield(4) of 9.5% Returns SBC loan originat
Slide 4: Return on Equity
RETURN ON EQUITY (1) Levered yields include interest income, accretion of discount, MSR creation, income from our unconsolidated joint venture, realized gains (losses) on loans held for sale, 3 unrealized gains (losses) on loans held for sale and servicing income net of interest expense and amortiza
Slide 5: SBC Origination Volume by Product Type
L SBC Origination Volume by Product Type 4 Q2 2017 – Q2 2018 YoY Growth Rate: 59%% Origination volumes are based on fully committed amounts Highlights Total SBC and SBA loan originations of $400.6 million for the quarter Freddie Mac loan originations up $49.7 million, or 45% QoQ; Transitional loan o
Slide 6: Q2 2018 Quarterly SBC and SBA Investment Allocation
Q2 2018 Quarterly SBC and SBA Investment Allocation Loans Acquisitions(2) Originations(2) Held for Investment Held for Sale Total SBC Transitional SBA(7) SBA(7) Freddie Mac Gross investments(2) $142.8 $63.6 $89.1 $11.4 $34.2 $160.3 $501.5 Number of loans 154 20 34 64 64 60 396 Average balance(3) $0.
Slide 7: SBC Originations - Segment Snapshot
SBC ORIGINATIONS - SEGMENT SNAPSHOT Portfolio Metrics (Balance Sheet) Number of loans 326 368 365 357 397 Unpaid Principal Balance (3) $ 971 $ 1,068 $ 1,094 $ 1,120 $ 1,202 Carrying Value (3) $ 989 $ 1,088 $ 1,108 $ 1,132 $ 1,213 Weighted Average LTV 63% 60% 61% 61% 60% Weighted Average Coupon 6.2%
Slide 8: SBA Originations, Acquisitions & Servicing – Segment Snapshot
SBA Originations, Acquisitions & Servicing – Segment snapshot Current Quarter Highlights Gross Levered Yield Represents fully committed amounts. As of July 31, 2018, including July 2018 fundings. $ in millions, as of quarter end. Includes interest income, accretion of discount, and servicing income
Slide 9: Loan Acquisitions – Segment Snapshot
LOAN ACQUISITIONS – SEGMENT SNAPSHOT Portfolio Metrics(1) (Balance Sheet) Number of loans 882 766 858 976 1,019 Unpaid Principal Balance (2) $ 411 $ 378 $ 417 $ 525 $ 602 Carrying Value (2) $ 368 $ 335 $ 376 $ 488 $ 569 Weighted Average LTV 53% 52% 49% 50% 51% Weighted Average Coupon 6.1% 6.3% 6.3%
Slide 10: Residential Mortgage Banking – Segment Snapshot
Residential Mortgage Banking – Segment snapshot Current Quarter Highlights MSR Servicing Portfolio (UPB in $billions) MSR portfolio of approximately $7.0 billion in UPB, up 3% compared to Q1 Fair market value of $85.6 million, up 5% compared to Q1 Originations of $498.6 million(2), up 14% compared t
Slide 11: SBC and SBA Loan Securitization Performance
P SBC and SBA Loan Securitization Performance Recent transactions: In June 2018, closed a CLO of $278.3 million of originated transitional loans, $217.1 million of bonds issued. 10 Represents remaining collateral in the securitization CumulativeLossFixed Rate $ 727,754 RCMT 2014-1September 2014 181,
Slide 12: Interest Rate Risk Sensitivity
53% of our held-for-investment loan portfolio is floating rate 55% of our fixed rate loan portfolio is match funded a 100 basis point increase in LIBOR would increase annual pre-tax net interest income by approximately $0.06 per share(3) As a percent of carrying value Excludes loans held-for-sale, a
Slide 13: Loan Portfolio Composition as of June 30, 2018
Loan Portfolio Composition as of June 30, 2018 Geographic Location (1)(2) Collateral Type (1)(2) SBA Collateral Type (1)(2) As a percent of unpaid principal balance Excludes loans held-for-sale, at fair value Average carrying value of Retail exposure is $1.6 million as of June 30, 2018 Lien Position
Slide 14: Capital Structure
CAPITAL STRUCTURE HISTORICAL CAPITAL STRUCTURE Total Debt + Equity $1,932 $2,012 $2,038 $2,193 $2,382 21% 34% 29% 31% 33% 43% 26% 31% 30% 29% 7% 7% 7% 8% 10% 5% 5% 5% 5% Since going public in Q4 2016, we continue to optimize our capital structure: Issued $345 million of corporate debt through 6/30
Slide 15: Financing and Leverage
Financing and Leverage Historical Leverage 14 Check: Page #s 1.6x 1.2x 1.6x 1.7x 1.8x 1.9x 2.4x 2.7x 2.9x 3.2x 0 0.5 1 1.5 2 2.5 3 3.5 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Recourse Total Total debt-to-equity ratio Secured borrowings (warehouse credit facilities and borrowings under repo transacti
Slide 16: Loan Warehouse Facilities
Loan Warehouse Facilities 15 Check: Page #s $ in millions In July 2018, entered into a new warehouse facility with East West Bank to provide financing of up to $50.0 million for new originations of SBA 7(a) loans Bank Maturity Rate Description Borrowings under credi t faci l i ties JPMorgan May '19
Slide 17: Sutherland Snapshot
SUTHERLAND SNAPSHOT ($ AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA) INVESTMENT TYPE AVG. CARRYING VALUE(1) GROSS YIELD(2) AVG. DEBT BALANCE DEBT COST(3) LEVERED YIELD Loan Acquisitions $569,866 8.9% $483,591 6.4% 22.8% SBC origination portfolio $1,208,673 7.8% $1,051,885 5.3% 24.5% SBA Originations,
Slide 18: Appendix
APPENDIX SUTHERLAND Asset Management
Slide 19: Per Share Financial Performance
Per Share Financial Performance Per Share Trends Increased dividend by 8.1% compared to the previous quarter Adjusted net book value of $16.95 per common share as of June 30, 2018 17 Check: Page #s $0.34 $0.37 $0.38 $0.56 $0.48 $0.34 $0.38 $0.37 $0.47 $0.47 $0.37 $0.37 $0.37 $0.37 $0.40 0.60Q2 2017Q
Slide 20: Balance Sheet by Quarter
| BALANCE SHEET BY QUARTER Ga Thowands) eson017 ogon0i7 _aza1a017 312018 302018 Fase Cash and cash equivetents $ 63951 70300 «328.8 ——86,7 105,853 saiecise 7583 16057 hess 1968 1508 Shorea cena - aos = = = aaa 75.370 352.896 2017201957054 2,035,550 Tomo, hlé for sl, efi vaoe 206-708 200333 216022 16
Slide 21: Balance Sheet by Quarter
Balance Sheet by Quarter Certain balances have been reclassified to match current period presentation Excludes the equity component of our 2017 convertible note issuance. 18 Check: Page #s (In Thousands)AssetsCash and cash equivalents$63,931 $70,590 $63,425 $86,773 $105,833 Restricted cash 17,563 16
Slide 22: Statement of Income by Quarter
Statement of Income by Quarter Certain balances have been reclassified to match current period presentation 19 Check: Page #s (In Thousands, except share data)Interest income$33,248 $35,038 $36,135 $37,150 $41,858 Interest expense (17,230) (19,908) (21,067) (22,666) (26,407) Net interest income befo
Slide 23: Core Earnings Reconciliation
Core Earnings Reconciliation 20 Check: Page #s (In Thousands)Net Income$11,153 $12,374 $12,730 $18,518 $15,884 Reconciling items:Unrealized (gain) loss on mortgage-backed securities$(1,162) $(194) $24 $79 $86 Unrealized (gain) loss on mortgage servicing rights 1,671 1,728 47 (4,155) (253) Total reco
Sutherland Asset Management — Q2 2018 Earnings Presentation on 6ix