Trinity Merger : Second Quarter 2020 Earnings Presentation

Supplemental Earnings Presentation

Second Quarter 2020

AT A GLANCE: BROADMARK REALTY CAPITAL (NYSE - BRMK)

Key Facts

Rapid Growth of Active Loan Portfolio(3)

7.3%	$0
Dividend	Debt
Yield(1)	Outstanding(2)
59.9%	$2.4
billion
Weighted
Originations
Average LTV(2)
	Since
	Formation(2)
216	2010
Active Loans in	Broadmark
Eleven States
Founded
and D.C. (2)

Recent Developments

• Added to Russell 2000 and Russell 3000 indices in June 2020

Note: Historical information throughout this presentation includes combined predecessor companies unless other indicated or the context otherwise requires.

1.	Dividend yield based on closing price on August 7, 2020	2
2.	As of June 30, 2020

3. Reflects the total face amount as originated or amended while excluding principal paydowns as of June 30, 2020. Active loan portfolio excludes 1 REO.

BRMK HIGHLIGHTS

• Diversified loan portfolio with high equity buffer, industry leading balance sheet with zero debt, and strong liquidity supports expansion into new markets and pursuit of growth opportunities
• 100% fixed rate senior secured assets benefit from a declining interest rate environment(1)

High Quality		Attractive
Assets		Yields

59.9%	12%
Weighted		Weighted
	average fixed
average LTV(2)
	interest rate

11	4.7%
States & D.C.	Weighted
diversification	average fee rate

Strong Balance

Sheet

$0

Debt

Strong

Liquidity

$218M

Cash

84%

Cash to

construction

holdback

1.	Active loan portfolio excluding 1 REO	3
2.	Equal to weighted average LTV across active loan portfolio based on "as-complete" appraisals as of June 30, 2020

SECOND QUARTER 2020 KEY METRICS

Earnings

Originations

Portfolio

Composition

• GAAP Net Income of $0.15 per diluted common share
• Core Earnings of $0.18 per diluted common share (1)
• Paid $0.18 per diluted common share in total dividends
• Originated 16 loans from 8 states with a total commitment amount of $50.5 million with $45 million in June 2020
• Weighted average origination LTV of 59.6%
• Total active loan portfolio at $1.1 billion in total commitment including principal outstanding, interest reserve and construction holdback
• Weighted average LTV of 59.9% on active loan portfolio(2)
• Diversified across 11 states and the District of Columbia
• Diverse collateral weighted towards single family residential housing

1. Please refer to Appendix for Core Earnings Reconciliation	4

2. Equal to weighted average LTV across active loan portfolio based on "as-complete" appraisals as of June 30, 2020

QUARTERLY RESULTS

• Loan portfolio continues to grow despite the slowdown from COVID-19 with June originations totaling $45 million
• Future growth opportunities remain strong with current pipeline exceeding $200 million
• Post June 30, 2020 through August 7, 2020, originations and amendments total $103 million

New Loan Origination(1)

Change in Loan Portfolio(1)

Millions

250

200

150

100

				SPAC		COVID-19
				Merger		Impact
50										As of
									08/07/2020
-
Q1 19	Q2 19	Q3 19	Q4 19(2)	Q1 20	Q2 20(3)	Q3 20(4)

1.	Represents total commitment including principal outstanding, interest reserve and construction holdback as of June 30, 2020.	5
2.	Origination activity impacted by company SPAC merger, not reflecting normal business activities.

1. Origination activity reflects company's slower origination pace due to COVID-19 related uncertainty in April and May.
2. Reflects actual origination activity as of August 7, 2020, not including $15 million amendment activity.

PORTFOLIO COMPOSITION

Portfolio % by Property Type(1)

Portfolio % by Region(1)

Portfolio % by Loan Purpose(1)

Key Portfolio Metrics(2)

No. of Active Loans

Total Commitment

Average Loan Size

W.A. LTV %

W.A. Portfolio Yield

216

$1.1B

$5.2M

59.9%

16.7%

1.

Represents total commitment including principal outstanding, interest reserve and construction holdback as of June 30, 2020.

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2. As of June 30, 2020.

DIVERSIFIED PORTFOLIO

• Active loan portfolio includes 216 loans across 11 states plus the District of Columbia
• Target states with favorable demographic trends and non-judicial foreclosure law
• Diverse collateral weighted towards single family residential housing

Geographic Diversification(1) (2)		Collateral Diversification(1) (2)

Commercial/other

Retail/offices 5%

Single Family

Housing

Senior

5%

15%

Housing

4%

Mixed Use

5%

Hotel

5%$1.1B

portfolio

Land

7%

Residential

Apartments

20%

Condos

Lots 13%

Townhomes

9%

12%

1.	Represents total commitment including principal outstanding, interest reserve and construction holdback as of June 30, 2020.	7
2.	Includes all outstanding loans as of June 30, 2020, excluding 1 REO.

MARKET OPPORTUNITY IN THE CURRENT ENVIRONMENT

• Significant residential housing demand outpacing current limited supply
• • Total housing starts for 2019 remain well below the 1.6 million annual housing starts needed to meet current demand(1)
  • ~2.5 million housing units cumulative shortage(1)
• Bank consolidation has narrowed the universe of lenders making construction loans post-financial crisis
• • COVID-19disruption has impaired leveraged banks and non-bank competitors, further reducing construction lender universe
• Construction activity has resumed and is accelerating to meet the demand partially driven by low interest rate environment for buyers
• • Privately-ownedhousing starts increased 17% in June from the previous month(3)

Private Housing Starts(1)(2)

(000s)	2,500									Housing Starts								Freddie Mac Minimum
2,000
Starts	1,500
Housing
1,000
US	500
	0
	1988	1989	1990	1991	1992	1993	1994	1995	1996	1997	1998	1999	2000	2001	2002	2003	2004	2005	2006	2007	2008	2009	2010	2011	2012	2013	2014	2015	2016	2017	2018	2019

Strong Pipeline in States with Population Growth(4)

1.	Source: Freddie Mac	8
2.	Source: Federal Reserve Bank of St. Louis

1. Source: U.S. Census Bureau
2. Green states represents the top 10 states with population growth from 2018 to 2019 according to data provided by the U.S. Census Bureau

HISTORY OF MAXIMIZING VALUE THROUGH STRATEGIC MANAGEMENT

• Minimal losses in nearly ten-year history, less than 0.1% on the $2.4 billion loans originated
• As of June 30, 2020, 11 loans are impaired with $6.8 million in allowance for loan losses recorded, less than 1% of the total commitment of active loan portfolio
• Resolved four loans in default in second quarter with minimal principal losses previously captured in allowance for loan losses
• Default loan resolutions provided $14 million in liquidity
• 77% of loans in technical default occurred in March and April as a result of construction halts, slowdown in housing market and the economy. Pace in May and June has gone down significantly
• 61% of the loans in technical default are in active forbearance process

	Current Loan Loss Reserve				Default Workouts (1)
					Forbearance in Progress
	($ in thousands)				Work with Borrower
	Balance at 3/31/2020	7,182
					Receiver in Place
	Provision for loan losses	309		Bankruptcy Trustee
	Charge offs	-696
	Recoveries	0		Foreclosure/Sale
	Balance at 6/30/2020	$6,795		Tendered Title Claim
					0%	10%	20%	30%	40%	50%	60%	70%
	1. Represents total commitment as of June 30, 2020.									9

CONFIDENTIAL - NOT FOR FURTHER DISTRIBUTION

ILLUSTRATIVE $5.0M LOAN COMMITMENT

• Significant upfront borrower equity requirement protects Broadmark against principal losses upon default

Senior

Lending

Position

Cumulative

$

• Senior secured lender position on 100% of its loans
• Borrower maintains "skin in the game" by contributing initial equity at loan origination(1)
• Strict adherence to 65% LTV threshold has resulted in less than 0.1% of principal losses since inception

As

Completed

LTV

BRMK Loan
Commitment	1st Deed of
$5.0	Trust Lien

$5.0M

59.7%(2)

Significant

Principal

Protection

• Requires $3.3mm or ~40% property value decline to incur a principal loss on investment
• Minimize risk by offering short initial loan term (<12 months) and by lending in strong markets

			Borrower
					Equity
			Equity
Completed			Buffer
$3.3
	Property
	Value
	Estimate		100%
	$8.3M

Illustrative Loan Investment ($M)

1.	In some cases, borrower might use equity from another source	10
2.	Equal to weighted average LTV across active loan portfolio based on "as-complete" appraisals as of June 30, 2020

APPENDIX: BALANCE SHEET

Unaudited Condensed Consolidated Balance Sheets

(Dollar amounts in thousands except earnings per share)

		June 30, 2020			December 31, 2019
Assets
Cash and cash equivalents	$	217,969	$	238,214
Mortgage notes receivable, net		817,319			821,589
Interest and fees receivable		8,986			4,108
Investment in real property, net		3,690			5,837
Intangible assets, net		791			4,970
Goodwill		136,965			131,965
Other assets		4,606			2,046
Total Assets	$	1,190,326	$	1,208,729
Liabilities and Equity
Accounts payable and accrued liabilities		4,494			8,415
Dividends payable		7,934			15,842
Total Liabilities		12,428			24,257
Commitments and Contingencies
Common stock, $0.001 par value, 500,000,000 shares authorized, 132,231,184 and
132,015,635 shares issued and outstanding at June 30, 2020 and December 31,
2019		132			132
Preferred Stock, $0.001 par value, 100,000,000 shares authorized, 0 shares issued
and outstanding at June 30, 2020 and December 31, 2019		-			-
Additional Paid in Capital		1,211,001			1,209,120
(Accumulated deficit)		(33,235)			(24,780)
Total Equity		1,177,898			1,184,472
Total Liabilities and Equity	$	1,190,326		$	1,208,729

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APPENDIX: INCOME STATEMENT

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except for per share amounts)

		Successor		Predecessor			Successor			Predecessor
		Three Months Ended		Three Months Ended			Six Months Ended			Six Months Ended
		June 30,		June 30,			June 30,			June 30,
Revenues		2020			2019(2)			2020			2019(2)
Interest income	$	22,180		$	23,456	$	46,733	$	44,079
Fee income		6,890			13,117			14,105			22,277
Total Revenue		29,070			36,573			60,838			66,356
Other Income (Expense):
Change in fair value of optional
subscription liabilities		(1,458)		-			3,146			-
Expenses
Impairment:
Loan loss provision		309			297			3,931			73
Operating expenses:
Compensation and employee
benefits		3,044			1,925			6,237			3,853
General and administrative		4,500			3,151			6,778			6,241
Total Expenses		7,853			5,373			16,946			10,167
Income before income taxes		19,759			31,200			47,038			56,189
Income tax provision		-			-			-			-
Net income	$	19,759		$	31,200		$	47,038		$	56,189
Earnings per common share: (1)
Basic	$	0.15		$	-	$	0.36	$	-
Diluted	$	0.15		$	-	$	0.36	$	-
Weighted-average shares of
common stock outstanding, basic
and diluted
Basic		132,165,005			-			132,120,290			-
Diluted		132,165,005			-			132,120,290			-

1.	The Company determined that earnings per unit in the Predecessor periods would not be meaningful to the users of this filing, given the different unit holders and	12
members' equity structures of each individual entity in the Predecessor Company Group.
2.	Predecessor periods are combined as disclosed in Note 1 to the unaudited condensed consolidated financial statements of Form 10-Q filed on August 10, 2020 with the SEC.

APPENDIX: CORE EARNINGS RECONCILIATION

Definition of Core Earnings

Core earnings is a non-GAAP financial measure used by management as a supplemental measure to evaluate our performance. We define core earnings as net income attributable to common stockholders adjusted for: (i) impairment recorded on our investments in mortgage notes receivable;

1. realized and unrealized gains or losses on both our investments and optional subscription liabilities; (iii) non-capitalizedtransaction-related expenses and first year public company transition expenses; (iv) non-cashstock-based compensation; (v) amortization of our intangible assets; and (vi) deferred taxes, which are subject to variability and generally not indicative of future economic performance or representative of current operations.
   Management believes that the adjustments to compute "core earnings" specified above allow investors and analysts to readily identify and track the operating performance of the assets that form the core of our activity, assist in comparing the core operating results between periods, and enable investors to evaluate our current core performance using the same measure that management uses to operate the business. Core earnings excludes certain recurring items, such as gains and losses (including provision for loan losses) and non-capitalizedtransaction-related expenses, because they are not considered by management to be part of our core operations for the reasons described herein. As such, core earnings is not intended to reflect all of our activity and should be considered as only one of the factors used by management in assessing our performance, along with GAAP net income which is inclusive of all of our activities.
   Core earnings does not represent and should not be considered as a substitute for, or superior to, net income or as a substitute for, or superior to, cash flows from operating activities, each as determined in accordance with GAAP, and our calculation of this measure may not be comparable to similarly entitled measures reported by other companies. Set forth below is a reconciliation of core earnings to the most directly comparable GAAP financial measure:

		Three Months Ended		Six Months Ended
			June 30,			June 30,
(dollars in thousands, except share and per share data)			2020			2020
Net income attributable to common stockholders		$	19,759		$	47,038
Adjustments for non-core earnings:
Stock-based compensation expense			967			1,881
First year public company transition expenses (1)			834			2,066
Change in fair value of optional subscription liabilities			1,458			(3,146)
Amortization of intangible assets			119			(785)
Loan loss provision			309			3,931
Core earnings		$	23,446		$	50,985
Earnings per share, basic	$	0.15	$	0.36
Earnings per share, diluted	$	0.15	$	0.36
Core earnings per share, basic	$	0.18	$	0.39
Core earnings per share, diluted	$	0.18	$	0.39
Weighted-average number of shares of common stock outstanding, basic and
diluted
Basic			132,165,005			132,120,290
Diluted			132,165,005			132,120,290

1. Expenses directly related to first year of public company reporting and compliance, primarily professional fees in connection with the design	13
and implementation of internal controls and procedures under Section 404 of the Sarbanes-Oxley Act.

FORWARD LOOKING STATEMENTS

This presentation contains certain "forward-looking statements" within the meaning of the federal securities laws, including, without limitation, statements concerning our operations, economic performance, portfolio performance and financial condition. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. Forward-looking statements reflect the Company's current views with respect to, among other things, capital resources, portfolio performance and results of operations. In some cases, you can identify these forward-looking statements by the use of terminology such as "outlook," "believes," "expects," "potential," "continues," "may," "will," "should," "could," "seeks," "approximately," "predicts," "intends," "plans," "estimates," "anticipates" or the negative version of these words or other comparable words or phrases. Forward- looking statements do not guarantee future performance, which may be materially different from that expressed in, or implied by, any such statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their respective dates.

These forward-looking statements are based largely on our current beliefs, assumptions and expectations of our future performance taking into account all information currently available to us. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to us or within our control, and which could materially affect actual results, performance or achievements. Factors that may cause actual results to vary from our forward-looking statements include, but are not limited to:

• factors described under the headings "Risk Factors" and "Business" in our Annual Report on Form 10-K for the year ended December 31, 2019, and under the heading "Risk Factors" in our Quarterly Reports on Form 10-Q;
• disruptions in our business operations, including construction lending activity, relating to COVID-19;
• adverse impact of COVID-19 on the value of our goodwill established in the Business Combination;
• the magnitude, duration and severity of the COVID-19 pandemic;
• the impact of actions taken by governments, businesses, and individuals in response to the COVID-19 pandemic;
• the current and future health and stability of the economy and residential housing market, including any extended slowdown in the real estate markets as a result of COVID-19;
• changes in laws or regulations applicable to our business, employees, lending activities, including current and future laws, regulations and orders that limit our ability to operate in light of COVID-19;
• defaults by borrowers in paying debt service on outstanding indebtedness;
• impairment in the value of real estate property securing our loans;
• availability of origination and acquisition opportunities acceptable to us;
• potential mismatches in the timing of asset repayments and the maturity of the associated financing agreements;
• general economic uncertainty and the effect of general economic conditions on the real estate and real estate capital markets in particular;
• general and local commercial and residential real estate property conditions;
• changes in federal government policies;
• changes in federal, state and local governmental laws and regulations that impact our business, assets or classification as a real estate investment trust;
• increased competition from entities engaged in construction lending activities;
• changes in interest rates;
• the availability of, and costs associated with, sources of liquidity;
• the ability to manage future growth; and
• changes in personnel and availability of qualified personnel.

We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

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