Ready Capital (RC) 8-K/A Financial Statements and Exhibits

Unaudited Pro Forma Condensed Combined Financial Information

The following unaudited pro forma condensed combined financial information is based on the historical financial information of ZAIS Financial Corp. (“ZFC” or the “Company”) and GMFS, LLC (“GMFS”) and has been prepared to reflect the acquisition of GMFS on October 31, 2014 by a wholly-owned subsidiary of ZAIS Financial Corp., the Transaction. The pro forma data in the unaudited pro forma condensed combined balance sheet as of September 30, 2014 assumes that the Transaction had occurred on September 30, 2014. The data in the unaudited pro forma condensed combined statements of operations for the year ended December 31, 2013 and the nine months ended September 30, 2014 assumes that the Transaction had occurred on January 1, 2013. The historical consolidated financial information has been adjusted in the unaudited pro forma condensed combined financial information to give effect to pro forma events that are (i) directly attributable to the acquisition of GMFS, (ii) factually supportable, and (iii) with respect to the statements of operations, expected to have a continuing impact on the combined results. The unaudited pro forma condensed combined financial information should be read in conjunction with the accompanying notes to the unaudited pro forma condensed combined financial statements. In addition, the unaudited pro forma condensed combined financial information was based on and should be read in conjunction with the following historical consolidated financial statements and accompanying notes:

● audited historical consolidated financial statements of ZFC as of and for the year ended December 31, 2013 and the related notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2013;

● audited historical consolidated financial statements of GMFS for the years ended December 31, 2013, and December 31, 2012 and the related notes included within this report as exhibit 99.1.;

● unaudited historical interim consolidated financial statements of ZFC as of and for the nine months ended September 30, 2014 and the related notes included in the Company's Quarterly Report on Form 10-Q for the nine months ended September 30, 2014; and

● unaudited historical interim consolidated financial statements of GMFS as of and for the nine months ended September 30, 2014 and the related notes included within this report as exhibit 99.2

The unaudited pro forma condensed combined financial information is presented for informational purposes only and is not intended to reflect the results of operations or the financial position of the combined company that would have resulted had the Transaction been effective during the periods presented or the results that may be obtained by the combined company in the future. The unaudited pro forma condensed combined financial information as of and for the periods presented does not reflect future events that may occur after the Transaction, including, but not limited to, synergies or revenue enhancements arising from the Transaction. Future results may vary significantly from the results reflected in the unaudited pro forma condensed combined financial information.

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEETAS OF SEPTEMBER 30, 2014
(in thousands)

								Pro Forma
								Adjustments				Pro Forma
								Relating to				Adjustments
								Sale of Securities				Relating to
								to Fund GMFS				the GMFS				Pro Forma
	ZFC		GMFS		Reclassifications			Acquisition				Acquisition				Combined
Assets						K
Cash and cash equivalents	$	25,777	$	17,283	$	-		$	24,534		A	$	(62,847	)	B	$	4,747
Restricted cash		7,037		-		-			-				-				7,037
Mortgage loans, at fair value		430,097		-		(430,097	)		-				-				-
Mortgage loans held for investment, at fair value		-		-		431,272			-				-				431,272
Mortgage loans held for sale, at fair value		-		94,342		-			-				-				94,342
Mortgage loans held for investment, net		-		1,175		(1,175	)		-				-				-
Real estate securities, at fair value		243,904		-		-			(85,566	)	A		-				158,338
Other investment securities, at fair value		13,441		-		-			(11,232	)	A		-				2,209
Real estate owned, at fair value		166		-		-			-				-				166
Derivative assets, at fair value		70		1,903		-			-				194		C		2,167
Other assets		1,129		21		2,745			-				-				3,895
Accounts receivable		-		1,340		(1,340	)		-				-				-
Mortgage servicing rights, at fair value		-		23,709		-			-				10,038		C		33,747
Servicing advances		-		808		(808	)		-				-				-
Prepaid expenses		-		197		(197	)		-				-				-
Fixed assets		-		400		(400	)		-				-				-
Goodwill		-		-		-			-				13,441		C		13,441
Other identifiable intangibles		-		-		-			-				5,800		C		5,800
Loans eligible for repurchase from GNMA		-		15,705		-			-				-				15,705
Total assets	$	721,621	$	156,883	$	-		$	(72,264	)		$	(33,374	)		$	772,866
Liabilities
Loan repurchase facilities	$	293,178	$	-	$	-		$				$	-			$	293,178
Securities repurchase agreements		165,604		-		-			(75,675	)	A		-				89,929
Warehouse line of credit		-		88,999		-			-				-				88,999
Exchangeable senior notes		55,232		-		-			-				-				55,232
Contingent consideration		-		-		-			-				11,429		B		11,429
Derivative liabilities, at fair value		1,621		-		-			-				-				1,621
Dividends and distributions payable		3,559		-		-			-				-				3,559
Accounts payable and other liabilities		3,731		883		6,493			-				-				11,107
Accrued interest payable		1,970		-		-			-				-				1,970
Accrued compensation and benefits		-		3,198		(3,198	)		-				-				-
Loan indemnification reserve		-		3,295		(3,295	)		-				-				-
Liability for loans eligible for repurchase from GNMA		-		15,705		-			-				-				15,705
Total liabilities		524,895		112,080		-			(75,675	)			11,429				572,729
Stockholders’ Equity
Common stock		1		-		-			-				-				1
Additional paid-in capital		164,207		-		-			-				-				164,207
Retained earnings		12,024		-		-			3,411		A		-				15,435
Non-controlling interest		20,494		25		-			-				(25	)	D		20,494
Member's Equity		-		44,778		-			-				(44,778	)	D		-
Total stockholders’ equity		196,726		44,803		-			3,411				(44,803	)			200,137
Total liabilities and stockholders’ equity	$	721,621	$	156,883	$	-		$	(72,264	)		$	(33,374	)		$	772,866

See notes to unaudited pro forma condensed combined financial statements

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONSFOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014
(in thousands, except shares and per share data)

									Pro Forma
									Adjustments				Pro Forma
									Relating to				Adjustments
									Sale of Securities				Relating to the
									to Fund GMFS				GMFS				Pro Forma
	ZFC			GMFS		Reclassification			Acquisition				Acquisition				Combined
Interest income							K
Mortgage loans	$	19,307		$	2,329	$	-		$	-			$	-			$	21,636
Real estate securities		11,550			-		-			(3,976	)	E		-				7,574
Other investment securities		469			-		-			(461	)	E		-				8
Total interest income		31,326			2,329		-			(4,437	)			-				29,218
Interest expense
Loan repurchase facilities		6,481			-		-			-				-				6,481
Securities repurchase agreements		2,075			-		-			(864	)	E		-				1,211
Warehouse facilities		-			1,394		-			-				-				1,394
Exchangeable senior notes		4,256			-		-			-				-				4,256
Total interest expenses		12,812			1,394		-			(864	)			-				13,342
Net interest income		18,514			935		-			(3,573	)			-				15,876
Other gains / (losses)
Change in unrealized gain or loss on mortgage loans		23,566			-		-			-				-				23,566
Change in unrealized gain or loss on real estate securities		1,965			-		-			-				-				1,965
Change in unrealized gain or loss on other investment securities		384			-		-			-				-				384
Change in unrealized gain or loss on real estate owned		(3	)		-		-			-				-				(3	)
Realized gain on mortgage loans		972			-		-			-				-				972
Realized gain on real estate securities		520			-		-			-				-				520
Loss on derivative instruments		(5,529	)		-		-			-				-				(5,529	)
Total other gains / (losses)		21,875			-		-			-				-				21,875
Mortgage banking activities
Gain on sale of mortgage loans, net of direct costs		-			26,568		-			-				-				26,568
Provision for loan indemnification		-			-		(560	)		-				-				(560	)
Loan servicing fees, net of direct costs		-			3,773		-			-				-				3,773
Loan origination fees		-			1,337		-			-				-				1,337
Other income		-			573		-			-				-				573
Total mortgage banking activities		-			32,251		(560	)		-				-				31,691
Expenses
Advisory fee – related party		2,132			-		-			-				-				2,132
Professional fees		3,783			-		-			-				-				3,783
Transaction costs		1,684			-		-			-				(1,684	)	G		-
Loan servicing fees		1,577			-		-			-				-				1,577
General and administrative expenses		1,578			1,749		1,922			-				-				5,249
Salaries, commissions and benefits		-			16,229		-			-				-				16,229
Occupancy, equipment and communication		-			1,422	(1,422		)		-				-				-
Advertising and marketing		-			500		(500	)		-				-				-
Provision for loan losses		-			560		(560	)		-				-				-
Depreciation and amortization		-			88		-			-				591		F		679
Amortization of mortgage servicing rights		-			2,017		-			-				(2,017	)	H		-
Total expenses		10,754			22,565		(560	)		-				(3,110	)			29,649
Net income / (loss) before income tax expense		29,635			10,621		-			(3,573	)			3,110				39,793
Income tax expense		-			-		-			-				4,818		I		4,818
Net income / (loss) after income tax expense		29,635			10,621		-			(3,573	)			(1,708	)			34,975
Net income allocated to non-controlling interests		3,087			-		-			-				556		J		3,643
Net income / (loss) attributable to ZFC common
stockholders	$	26,548		$	10,621	$	-		$	(3,573	)		$	(2,264	)		$	31,332
Weighted Average Shares Outstanding - Basic		7,970,886																7,970,886
Weighted Average Shares Outstanding - Diluted		10,677,360																10,677,360
EPS - Basic	$	3.33															$	3.93
EPS - Diluted	$	2.99															$	3.49

See notes to unaudited pro forma condensed combined financial statements

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONSFOR THE YEAR ENDED DECEMBER 31, 2013
(in thousands, except shares and per share data)

									Pro Forma
									Adjustments				Pro Forma
									Relating to				Adjustments
									Sale of Securities				Relating to the
									to Fund GMFS				GMFS				Pro Forma
	ZFC			GMFS		Reclassification			Acquisition				Acquisition				Combined
Interest income							K
Mortgage loans	$	10,470		$	2,738	$	-		$	-			$	-			$	13,208
Real estate securities		15,948			-		-			(4,598	)	E		-				11,350
Total interest income		26,418			2,738		-			(4,598	)			-				24,558
Interest expense
Loan repurchase facility		3,612			-		-			-				-				3,612
Securities repurchase agreements		2,919			-		-			(939	)	E		-				1,980
Warehouse facilities		-			2,666		-			-				-				2,666
Exchangeable senior notes		563			-		-			-				-				563
Total interest expenses		7,094			2,666		-			(939	)			-				8,821
Net interest income		19,324			72		-			(3,659	)			-				15,737
Other gains / (losses)
Change in unrealized gain or loss on mortgage loans		7,136			-		-			-				-				7,136
Change in unrealized gain or loss on real estate securities		(7,171	)		-		-			-				-				(7,171	)
Realized gain mortgage loans		1,299			-		-			-				-				1,299
Realized loss on real estate securities		(9,046	)		-		-			-				-				(9,046	)
Gain on derivative instruments		5,615			-		-			-				-				5,615
Total other gains / (losses)		(2,167	)		-		-			-				-				(2,167	)
Mortgage banking activities
Gain on sale of mortgage loans, net of direct costs		-			44,232		-			-				-				44,232
Provision for loan indemnification		-			-		(803	)		-				-				(803	)
Loan servicing fees, net of direct costs		-			3,022		-			-				-				3,022
Loan origination fees		-			2,927		-			-				-				2,927
Other income		-			709		-			-				-				709
Total mortgage banking activities		-			50,890		(803	)		-				-				50,087
Expenses														-
Advisory fee – related party		2,630			-		-			-				-				2,630
Professional fees		3,490			-		-			-				-				3,490
Loan servicing fees		904			-		-			-				-				904
General and administrative expenses		2,580			2,503	1,647				-				(50	)	G		6,680
Salaries, commissions and benefits		-			27,171		-			-				-				27,171
Occupancy, equipment and communication		-			1,647	(1,647		)		-				-				-
Advertising and marketing		-			2,028					-				-				2,028
Provision for loan losses		-			803		(803	)		-				-				-
Depreciation and amortization		-			160		-			-				788		F		948
Amortization of mortgage servicing rights		-			1,523		-			-				(1,523	)	H		-
Total expenses		9,604			35,835		(803	)		-				(785	)			43,851
Net income / (loss) before income tax expense		7,553			15,127		-			(3,659	)			785				19,806
Income tax expense		-			-		-			-				6,345		I		6,345
Net income / (loss) after income tax expense		7,553			15,127		-			(3,659	)			(5,560	)			13,461
Net income allocated to non-controlling interests		880			503		-			-				598		J		1,981
Preferred dividends		15			-		-			-				-				15
Net income / (loss) attributable to ZFC common
Stockholders	$	6,658		$	14,624	$	-		$	(3,659	)		$	(6,158	)		$	11,465
Weighted Average Shares Outstanding - Basic		7,273,366																7,273,366
Weighted Average Shares Outstanding - Diluted		8,200,280																8,200,280
EPS – Basic	$	0.92															$	1.58
EPS – Diluted	$	0.92															$	1.58

See notes to unaudited pro forma condensed combined financial statements

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

1. Description of Acquisition

On August 5, 2014, ZAIS Financial Corp. (“ZFC” or the “Company”) entered into a definitive merger agreement to acquire GMFS, LLC, (“GMFS”). While subject to a final reconciliation of October 31, 2014 values, the preliminary purchase price was approximately $62.8 million at closing. This closing payment included the fair market value of GMFS's mortgage servicing rights portfolio at October 31, 2014, estimated at $34.8 million, and the actual value of GMFS's net tangible assets at closing. In addition to cash paid at closing, two contingent $1 million deferred premium payments payable in cash over two years, plus potential additional consideration based on future loan production and profits will be payable over a four year period if certain conditions are met. The $2 million of deferred premium payments is contingent on GMFS remaining profitable and retaining certain key employees. The additional contingent consideration is dependent on GMFS achieving certain profitability and loan production goals and is capped at $20 million. Up to 50% of the additional contingent consideration may be paid in common stock of the Company, at the Company's option. ZFC funded the closing cash payment through a combination of available cash and the liquidation of a portion of its non-agency RMBS portfolio.

2. Basis of Presentation

The unaudited pro forma condensed combined financial information was prepared using the acquisition method of accounting and was based on the historical financial statements of ZFC and GMFS. The acquisition method of accounting is based on the accounting guidance on business combinations and uses the fair value concepts defined in the accounting guidance on fair value measurements. The acquisition method of accounting requires, among other things, that the assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date. In addition, the acquisition method of accounting requires that the consideration transferred be measured at the date the acquisition is completed at its then-current market price. Accordingly, the assets acquired and liabilities assumed are recorded as of the acquisition date at their respective fair values and added to those of ZFC. The financial statements and reported results of operations of ZFC issued after completion of the Transaction will reflect these values. Prior periods will not be retroactively restated to reflect the historical financial position or results of operations of GMFS.

Pro forma adjustments reflected in the unaudited pro forma condensed combined balance sheet are based on items that are directly attributable to the Transaction and are factually supportable. Pro forma adjustments reflected in the unaudited pro forma condensed combined statements of operations are based on items directly attributable to the Transaction, factually supportable and expected to have a continuing impact on the combined results. As a result, the unaudited pro forma condensed combined statements of operations exclude acquisition costs and other costs that will not have a continuing impact on the combined results, although these items are reflected in the unaudited pro forma condensed combined balance sheet.

The pro forma adjustments reflecting the Transaction under the acquisition method of accounting are based on estimates and assumptions. The Company’s management believes that its assumptions provide a reasonable basis for presenting all of the significant effects of the Transaction and that the pro forma adjustments give appropriate effect to those assumptions that are applied in the unaudited pro forma condensed combined financial statements.

Certain amounts in GMFS's historical balance sheet and statements of operations have been conformed to ZFC's presentation.

3. Accounting Policies

GMFS is in the process of being integrated with the Company. This integration includes a review by ZFC of GMFS's accounting policies. As a result of that review, ZFC may identify differences between the accounting policies of the two companies that, when conformed, could have a material impact on the combined financial statements. At this time, ZFC is not aware of any differences that would have a material impact on the combined financial statements that have not been adjusted for in the pro forma financial information. Accounting policy differences may be identified after completion of the integration.

4. Purchase Price

The purchase price of the Transaction is as follows:

Consideration	(in thousands)
Cash to owners of GMFS	$	62,847
Contingent consideration		11,429
Total consideration	$	74,276

Contingent consideration represents the estimated present value of future earn-out payments as defined in the definitive merger agreement. Contingent consideration was estimated based on future earnings projections of GMFS over the four year earn-out period. The valuation considers assumptions that a market participant would consider in valuing a company similar to GMFS.

5. Pro Forma Adjustments

A.	Reflects the pro forma adjustments to record the net proceeds received from the sale of real estate securities and other investment securities and the termination of the related securities repurchase agreements to fund the Transaction assuming the Transaction occurred on September 30, 2014. The pro forma adjustments consist of: (1) the proceeds received from the sale of securities of approximately $100.2 million and (2) the repayment of the related repurchase agreements of approximately $75.7 million.
B.	Reflects the pro forma adjustments to record the funding of the Transaction with (i) cash of approximately $62.8 and (ii) contingent consideration of approximately $11.4 million. See Note 4 – Purchase Price for a discussion of the contingent consideration.
C.	Reflects allocation of purchase price to record amounts at their estimated fair value assuming the Transaction occurred on September 30, 2014. Management has performed a preliminary allocation of the purchase price to major assets and liabilities in the accompanying unaudited pro forma condensed combined balance sheet based on estimates. The final allocation of purchase price may differ significantly from the pro forma amounts included herein. The fair value of mortgage servicing rights, identified intangible assets and goodwill was estimated based on cash flow analyses and related analytical procedures. The valuation considers assumptions that a market participant would consider in valuing the assets or liabilities, including but not limited to, assumptions for prepayments, credit and discount rates. The fair value of mortgage loans was estimated based on quoted secondary-market prices. The detailed estimated preliminary purchase price allocation assuming the Transaction occurred on September 30, 2014 is approximately as follows:

	(in thousands)
Assets:
Cash and cash equivalents	$	17,283
Mortgage loans held for sale, at fair value		94,342
Mortgage loans held for investment, at fair value		1,175
Derivative assets, at fair value		2,097
Other assets		2,766
Mortgage servicing rights, at fair value		33,747
Goodwill		13,441
Other identifiable intangibles		5,800
Loans eligible for repurchase from GNMA		15,705
Total assets acquired		186,356
Liabilities:
Warehouse lines of credit		88,999
Accounts payable and other liabilities		7,376
Liability for loans eligible for repurchase from GNMA		15,705
Total liabilities assumed		112,080
Fair value of net assets acquired	$	74,276

D.	Reflects the pro forma adjustment to eliminate GMFS member’s equity and non-controlling interest.
E.	Reflects the pro forma adjustments to reduce (i) interest income from real estate securities and other investment securities due to the sale of these securitiesto fund the Transaction and (ii) interest expense on securities repurchase agreements resulting from the repayment of the related repurchaseagreements assuming the Transaction occurred on January 1, 2013.
F.	Reflects the pro forma adjustment to record amortization expense on the other intangible assets recognized by the Company assuming the Transaction occurred on January 1, 2013. The amortization expense was computed using an estimated useful life range of 3 to 12 years.Management has based this adjustment on preliminary estimates of the fair value assigned to the other intangible assets, andtherefore, the actual fair value assigned may differ materially and the impact on therelated amortization expense may also be materially different than the estimates provided herein.
G.	Reflects the pro forma adjustment to reduce total expenses by the transaction costs incurred by ZFC in connection with the acquisition of GMFS since these costs are non-recurring in nature and are not expected to have a continuing impact on the combined results.

H.	Reflects the pro forma adjustment to reduce amortization of mortgage servicing rights. Upon acquisitionof GMFS, ZFC elected to measure mortgage servicing rights at fair value under the fair value option. Accordingly, amortization expense will no longer be recorded.
I.	Reflects the pro forma adjustment to record income tax provision assuming GMFS was acquired by ZFC in a Taxable REIT Subsidiary ("TRS") on January 1, 2013. Income tax is calculated at an effective tax rate of 40% onnet income of GMFS and pro forma adjustments that would be taxable under the TRS. The effective tax rate of GMFS post-acquisition could be significantly different depending upon post-acquisition activities of GMFS operating under a TRS of ZFC.
J.	Reflects the effect of the pro forma adjustments on the net income allocated to the non-controlling interests of ZFC.
K.	Reflects the reclassifications to conform to the presentation of the combined companies.