Ready Capital Corporation · NYSE:RC
Ready Capital — Investor Presentation (April 2021)
32 slides from Ready Capital's investor presentation, April 2021
Slide 1: Investor Presentation April 2021
INVESTOR PRESENTATION April 2021
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: Company Overview
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Slide 4: Who is Ready Capital?
WHO IS READY CAPITAL? • Only nationwide specialty finance company focused on the SBC market • Compelling risk-adjusted returns due to fragmentation in the SBC market • Dual strategy of acquisitions and originations with extensive track record • Cost-effective financing through securitization and ban
Slide 5: SBC Market Opportunities
SBC MARKET OPPORTUNITIES ► SBC Loans ► SBC Originations (2) • First lien on commercial real estate • Investor • Owner-occupied • Appraised value generally $5M or less • 50,000 square ft or less • Highly fragmented origination market ► SBC Market Size ► SBA Originations (3) 30 Small Balance 15% 20 $4
Slide 6: Pursuing SBC Opportunities
PURSUING SBC OPPORTUNITIES Investor owned Investor multi- retail strip mall family Tempe, AZ Kenedy, TX Core loan Freddie Mac originated by loan originated RCC by RCC Type Loan Amount Rate Term LTV Type Loan Amount Rate Term LTV Retail $5,587,500 5.38% 10 years 75% Multifamily $5,135,000 5.28% 10 ye
Slide 7: A Multidimensional Platform to Drive Growth
A MULTIDIMENSIONAL PLATFORM TO DRIVE GROWTH SBA ORIGINATION, RESIDENTIAL LOAN SBC ORIGINATIONS ACQUISITIONS, AND MORTGAGE ACQUISITIONS SERVICING BANKING Products SBC Investor Property SBC Owner-Occupied; Acquisitions of non- Residential mortgage originator; stabilized 1 of 14 SBA non-bank and-re-per
Slide 8: Financial Overview
A FINANCIAL yy ; OVERVIEW
Slide 9: 2020 Results
2020 RESULTS Net income of $46.1 million(1), or $0.81 per common share EARNINGS / Distributable earnings of $101.4 million(1), or $1.82 per common share DIVIDENDS Declared dividend of $1.30 per share; 13.1% dividend yield over average RC share price Return on Equity(2) of 5.6% RETURNS Dist
Slide 10: Company Update
COMPANY UPDATE Successful re-launch of small balance commercial lending operation with $625.7 million in loans originated year-to-date 2021 BUSINESS Elevated activity in residential mortgage banking operations with $758.0 million in ACTIVITIES year-to-date originations The increase in SBA 7a g
Slide 11: Return on Equity
RETURN ON EQUITY Distributable Levered Equity Segment Levered Q4'20 Q3'20 FY 2020 Q4'20 Q3'20 FY 2020 Yield (1) (1) Allocation Yield Loan Acquisitions 15.6 % 15.6 % 27.0 % SBC Originations 14.5 % 14.5 % 60.3 % 24.9 % 24.0 % 19.7 % 26.6 % 26.0 % 23.6 % SBA Originations, Acquisitions, 63.0 % 63.0 % 6.
Slide 12: Capital Structure
CAPITAL STRUCTURE HISTORICAL CAPITAL STRUCTURE LIQUIDITY UPDATE Total Total Debt Debt + + Equity Equity $4,290 $4,608 $4,648 $4,502 $4,553 ($M) ► Current cash and available liquidity of $172 million ► Closed $201 million in senior unsecured notes in Q1 with 5-year maturity and 5 ¾ coupon Funding Mix
Slide 13: Loan Portfolio Composition as of December 31, 2020
LOAN PORTFOLIO COMPOSITION AS OF DECEMBER 31, 2020(1)(2) Geographic Location Lien Position Subordinated Mortgage 0.7% California 18% Other 45% Texas 14% First Mortgage Florida 99.3% 8% Illinois New York 5% 10% Collateral Type SBA Collateral Type Other Lodging 15% Multi-family 17% 24% Mixed Use 13% O
Slide 14: Financing and Leverage
FINANCING AND LEVERAGE $ in millions Total debt-to-equity ratio December 2020 Secured borrowings (warehouse credit facilities and borrowings under repo transactions) $ 1,371 Securitized debt obligations 1,906 Senior secured notes and corporate bonds 331 Convertible notes 112 Total debt $ 3,719 Total
Slide 15: Appendix 1: Additional Financial Information
APPENDIX 1 ADDITIONAL FINANCIAL INFORMATION 15
Slide 16: Diversified, Complementary, and Scalable Platforms
DIVERSIFIED, COMPLEMENTARY, AND SCALABLE PLATFORMS PORTFOLIO BREAKDOWN(1) REVENUE BREAKDOWN(2) $35,000 Residential Residential Mortgage Mortgage Banking $30,000 Banking, 7% $32,258 SBA Acquisitions Originations, 24% Acquisitions, & $25,000 SBA Servicing Originations, 15% Acquisitions, & SBC Originat
Slide 17: Financial Snapshot
FINANCIAL SNAPSHOT ($ in thousands, except per share data) Average Debt Investment Type Average Gross Yield(2) (3) (1) Balance Debt Cost Levered Yield Carrying Value Loan Acquisitions $ 1,041,590 6.8% $ 775,536 3.8% 15.6% SBC Originations $ 2,471,071 6.4% $ 1,876,240 3.8% 14.5% SBA Originations, Acq
Slide 18: Balance Sheet by Quarter
BALANCE SHEET BY QUARTER (In Thousands) 12/31/2019 3/31/2020 6/30/2020 9/30/2020 12/31/2020 Assets Cash and cash equivalents $ 67,928 $ 122,265 $ 257,017 $ 149,847 $ 138,975 Restricted cash 51,728 93,164 91,539 46,204 47,697 Loans, net 1,727,984 1,969,052 1,432,807 1,393,139 1,625,555 Loans, held fo
Slide 19: Statement of Income by Quarter
STATEMENT OF INCOME BY QUARTER (In thousands, except share data) Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Interest income $ 64,406 $ 69,551 $ 63,211 $ 61,074 $ 64,810 Interest expense (40,962) (46,930) (43,408) (43,823) (41,319) Net interest income before provision for loan losses $ 23,444 $ 22,621 $
Slide 20: Distributable Earnings Reconciliation by Quarter
DISTRIBUTABLE EARNINGS RECONCILIATION BY QUARTER (In thousands, except share data) Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Net Income $ 20,936 $ (51,516) $ 34,663 $ 35,363 $ 27,559 Reconciling items: Unrealized (gain) loss on mortgage servicing rights $ (2,482) $ 16,437 $ 12,044 $ 4,688 $ 4,087 Chan
Slide 21: Appendix 2: Business Segment Information
APPENDIX 2 BUSINESS SEGMENT INFORMATION 21
Slide 22: SBC Originations - Segment Snapshot
SBC ORIGINATIONS - SEGMENT SNAPSHOT Portfolio Metrics (Balance Sheet) Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Number of loans 537 593 568 552 561 Unpaid Principal Balance (1) $ 2,298 $ 2,581 $ 2,479 $ 2,338 $ 2,463 Carrying Value (1) $ 2,300 $ 2,580 $ 2,478 $ 2,308 $ 2,460 Weighted Average LTV 61% 6
Slide 23: SBA Originations, Acquisitions, & Servicing - Segment Snapshot
SBA ORIGINATIONS, ACQUISITIONS, & SERVICING - SEGMENT SNAPSHOT Portfolio Metrics (Balance Sheet) Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Number of loans 1,880 1,813 1,804 1,836 1,771 Unpaid Principal Balance (1) $ 804 $ 701 $ 678 $ 701 $ 659 (1) Carrying Value $ 770 $ 664 $ 641 $ 668 $ 624 Weighted
Slide 24: Loan Acquisitions - Segment Snapshot
LOAN ACQUISITIONS - SEGMENT SNAPSHOT (1) Portfolio Metrics (Balance Sheet) Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Number of loans 2,231 2,212 2,126 2,065 2,082 (2) Unpaid Principal Balance $ 1,048 $ 1,073 $ 1,010 $ 1,003 $ 1,054 (2) Carrying Value $ 1,039 $ 1,066 $ 1,002 $ 985 $ 1,047 Weighted Aver
Slide 25: Residential Mortgage Banking - Segment Snapshot
RESIDENTIAL MORTGAGE BANKING – SEGMENT SNAPSHOT Portfolio Metrics (quarterly activity) Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Unpaid principal balance(1) $ 586.3 $ 691.3 $ 1,192.9 $ 1,184.9 $ 1,179.4 Originations % of Originations - Purchased 54.7% 51.2% 37.4% 44.3% 41.3% % of Originations - Refina
Slide 26: Supported by Diversity in Asset Types
SUPPORTED BY DIVERSITY IN ASSET TYPES 26
Slide 27: Robust SBC Origination Platform
ROBUST SBC ORIGINATION PLATFORM Nationwide Presence Origination Volumes $2,500 $2,000 $1,500 $1,000 $500 States with Funded Loans Sales Offices $0 Headquarters Actively Recruiting 2014 2015 2016 2017 2018 2019 2020 Core Freddie Transitional SBA The ReadyCap origination platform is In mid-2014, Ready
Slide 28: Freddie Mac Offers Compelling Risk-Adjusted Returns
FREDDIE MAC OFFERS COMPELLING RISK-ADJUSTED RETURNS ► In 2014, Freddie Mac launched its Small Balance Loan (SBL) program for approved SBL Sellers/Servicers to originate and sell loans on smaller rental properties (under 50 units) ► Ready Capital is one of 11 approved Seller/Servicers under the progr
Slide 29: Meaningful Competitive Advantage in SBA 7(a) Loans
MEANINGFUL COMPETITIVE ADVANTAGE IN SBA 7(A) LOANS • The SBA (1953) is an independent federal agency which provides • The SBA Section 7(a) Program is the SBA’s primary program secured financing to small businesses • The SBA typically guarantees 75% of qualified loans up to $5M • Eligible participant
Slide 30: Enhanced Residential Mortgage Origination Platform
ENHANCED RESIDENTIAL MORTGAGE ORIGINATION PLATFORM BUSINESS DESCRIPTION ORIGINATION VOLUME BY PURPOSE ($MM) • GMFS, founded in 1999, has a leading Southeast $4,500 market share and acquired via the ZFC merger in $4,000 $2,434 2016 $3,500 $3,000 • GMFS provides a wide range of residential $2,500 mort
Slide 31: Waterfall – A Successful & Proven Asset Manager
WATERFALL – A SUCCESSFUL & PROVEN ASSET MANAGER ► Waterfall consists of a dedicated team of 64 investment professionals who have extensive experience in small balance commercial (SBC) distressed asset acquisition, loan origination, asset management and capital markets. Key Loan Management 27% Perman
Slide 32: “HEY READY
“HEY READY JESS. CAPITAL, RC LISTED NYSE