MILL VALLEY, Calif., Nov. 6, 2017 /PRNewswire/ -- Redwood Trust, Inc. (NYSE:RWT)
today reported net income for the third quarter of 2017 of $36 million, or $0.41 per fully diluted share. This compares with net income of $36 million, or
$0.43 per fully diluted share, for the second quarter of 2017 and net income of $53 million, or $0.58 per fully diluted share, for the third quarter of 2016.
Redwood also reported non-GAAP core earnings for the third quarter of 2017 of $30 million, or
$0.35 per fully diluted share. This compares with non-GAAP core earnings of $29 million, or $0.35 per fully diluted share, for the second quarter of
2017.
A reconciliation of GAAP net income to non-GAAP core earnings, along with additional information about Redwood's core earnings
measure, is included in the tables that follow. A further discussion of Redwood's business, financial results, core earnings and
taxable income, as well as a discussion of management's 2017 outlook, is included in the third quarter Redwood Review, which is
available on the company's website at www.redwoodtrust.com .
Redwood also reported estimated REIT taxable income of $20 million, or $0.26 per share, for the third quarter of 2017. This compares to estimated REIT taxable income of $19 million, or $0.25 per share, for the second quarter of 2017 and estimated
REIT taxable income of $26 million, or $0.34 per share, for the third
quarter of 2016.
At September 30, 2017, Redwood reported GAAP book value per share of $15.67, as compared
with $15.29 at June 30, 2017, and $14.74 at
September 30, 2016.
Redwood will host an earnings call today, November 6, 2017, at 2:00 p.m. Pacific Time /
5:00 p.m. Eastern Time to discuss its third quarter 2017 financial results. The number to dial in
order to listen to the conference call is 1-888-417-8516 in the U.S. and Canada. International
callers must dial 1-719-325-4783. Callers should reference call ID #1824889. A replay of the call will be available through
midnight on November 20, 2017, and can be accessed by dialing 1-844-512-2921 in the U.S. and Canada or 1-412-317-6671 internationally and entering access code #1824889.
The live conference call will also be webcast in listen-only mode in the Newsroom section of Redwood's website under "Events
& Presentations." To listen to the webcast, please go to Redwood's website at least 15 minutes before the call to
register and to download and install any needed audio software. An audio replay of the call will also be available on Redwood's
website following the call.
Redwood plans to file its Quarterly Report on Form 10-Q with the Securities and Exchange Commission by Thursday,
November 9, 2017, and also make it available on Redwood's website.
Cautionary Statement: This press release and the related conference call contain forward-looking statements within
the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements related
to estimates of 2017 REIT taxable income and the expected timing for the filing of Redwood's Quarterly Report on Form 10-Q.
Forward-looking statements involve numerous risks and uncertainties. Redwood's actual results may differ from Redwood's beliefs,
expectations, estimates, and projections and, consequently, you should not rely on these forward-looking statements as
predictions of future events. Forward-looking statements are not historical in nature and can be identified by words such as
"anticipate," "estimate," "will," "should," "expect," "believe," "intend," "seek," "plan" and similar expressions or their
negative forms, or by references to strategy, plans, or intentions. These forward-looking statements are subject to risks and
uncertainties, including, among other things, those described in our Annual Report on Form 10-K and subsequent Quarterly Reports
on Form 10-Q under the caption "Risk Factors." Other risks, uncertainties, and factors that could cause actual results to differ
materially from those projected may be described from time to time in reports we file with the Securities and Exchange
Commission, including reports on Forms 10-Q and 8-K. We undertake no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events, or otherwise.
|
REDWOOD TRUST, INC.
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Income Statements
(1)
|
|
Third
|
|
Second
|
|
First
|
|
Fourth
|
|
Third
|
|
($ in millions, except share and per share data)
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
|
2017
|
|
2017
|
|
2017
|
|
2016
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
$
|
63
|
|
|
$
|
59
|
|
|
$
|
55
|
|
|
$
|
56
|
|
|
$
|
61
|
|
|
Interest expense
|
|
(27)
|
|
|
(24)
|
|
|
(21)
|
|
|
(21)
|
|
|
(22)
|
|
|
Net interest income
|
|
35
|
|
|
35
|
|
|
34
|
|
|
36
|
|
|
39
|
|
|
Reversal of provision for loan losses
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
Net interest income after provision
|
|
35
|
|
|
35
|
|
|
34
|
|
|
36
|
|
|
40
|
|
|
Non-interest income
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage banking activities, net
|
|
21
|
|
|
12
|
|
|
18
|
|
|
14
|
|
|
10
|
|
|
MSR income, net
|
|
2
|
|
|
3
|
|
|
2
|
|
|
2
|
|
|
4
|
|
|
Investment fair value changes, net
|
|
—
|
|
|
8
|
|
|
2
|
|
|
(10)
|
|
|
12
|
|
|
Other income
|
|
1
|
|
|
1
|
|
|
1
|
|
|
2
|
|
|
2
|
|
|
Realized gains, net
|
|
2
|
|
|
1
|
|
|
6
|
|
|
2
|
|
|
7
|
|
|
Total non-interest income, net
|
|
26
|
|
|
25
|
|
|
28
|
|
|
10
|
|
|
34
|
|
|
Operating expenses
|
|
(20)
|
|
|
(19)
|
|
|
(18)
|
|
|
(18)
|
|
|
(20)
|
|
|
Provision for income taxes
|
|
(5)
|
|
|
(5)
|
|
|
(6)
|
|
|
(2)
|
|
|
(1)
|
|
|
Net income
|
|
$
|
36
|
|
|
$
|
36
|
|
|
$
|
37
|
|
|
$
|
25
|
|
|
$
|
53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average diluted shares (thousands)
(2)
|
|
102,703
|
|
|
97,494
|
|
|
97,946
|
|
|
85,838
|
|
|
97,832
|
|
|
Diluted earnings per share
|
|
$
|
0.41
|
|
|
$
|
0.43
|
|
|
$
|
0.43
|
|
|
$
|
0.31
|
|
|
$
|
0.58
|
|
|
Regular dividends declared per common share
|
|
$
|
0.28
|
|
|
$
|
0.28
|
|
|
$
|
0.28
|
|
|
$
|
0.28
|
|
|
$
|
0.28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Certain totals may not foot due to rounding.
|
|
|
|
(2)
|
In the periods presented above, weighted average diluted shares included
shares from the assumed conversion of our convertible and/or exchangeable debt in accordance with GAAP diluted EPS
provisions. Actual shares outstanding at September 30, 2017, June 30, 2017, March 31, 2017, December 31, 2016, and
September 30, 2016 were 77,123, 77,117, 77,039, 76,835, and 76,682, respectively.
|
|
REDWOOD TRUST, INC.
|
|
|
|
|
|
|
Consolidated Income Statements
(1)
|
|
Nine Months Ended September 30,
|
|
($ in millions, except share and per share data)
|
|
2017
|
|
2016
|
|
|
|
|
|
|
Interest income
|
|
$
|
177
|
|
|
$
|
190
|
|
|
Interest expense
|
|
(73)
|
|
|
(68)
|
|
|
Net interest income
|
|
104
|
|
|
122
|
|
|
Reversal of provision for loan losses
|
|
—
|
|
|
7
|
|
|
Net interest income after provision
|
|
104
|
|
|
129
|
|
|
Non-interest income
|
|
|
|
|
|
Mortgage banking activities, net
|
|
51
|
|
|
25
|
|
|
MSR income, net
|
|
6
|
|
|
13
|
|
|
Investment fair value changes, net
|
|
10
|
|
|
(19)
|
|
|
Other income
|
|
3
|
|
|
4
|
|
|
Realized gains, net
|
|
9
|
|
|
26
|
|
|
Total non-interest income
|
|
79
|
|
|
49
|
|
|
Operating expenses
|
|
(57)
|
|
|
(71)
|
|
|
Provision for income taxes
|
|
(17)
|
|
|
(1)
|
|
|
Net income
|
|
$
|
109
|
|
|
$
|
106
|
|
|
|
|
|
|
|
Weighted average diluted shares (thousands)
|
|
99,398
|
|
|
97,992
|
|
|
Diluted earnings per share
|
|
$
|
1.26
|
|
|
$
|
1.23
|
|
|
Regular dividends declared per common share
|
|
$
|
0.84
|
|
|
$
|
0.84
|
|
|
|
|
|
|
|
|
|
(1)
|
Certain totals may not foot due to rounding.
|
|
REDWOOD TRUST, INC.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP Net Income to Non-GAAP Core
Earnings (1) (2)
|
|
Three Months Ended
|
|
($ in millions, except per share data)
|
|
September 30, 2017
|
|
June 30, 2017
|
|
|
|
|
|
|
GAAP net income
|
|
$
|
36
|
|
|
$
|
36
|
|
|
Adjustments:
|
|
|
|
|
|
Eliminate mark-to-market changes on long-term investments and associated
derivatives (3)
|
|
(6)
|
|
|
(14)
|
|
|
Include cumulative gain (loss) on long-term investments sold, net
(4)
|
|
1
|
|
|
4
|
|
|
Income taxes associated with core earnings adjustments
(5)
|
|
(1)
|
|
|
2
|
|
|
Total adjustments
|
|
(6)
|
|
|
(8)
|
|
|
Non-GAAP core earnings
|
|
$
|
30
|
|
|
$
|
29
|
|
|
|
|
|
|
|
GAAP net income per diluted common share
|
|
$
|
0.41
|
|
|
$
|
0.43
|
|
|
Non-GAAP core earnings per diluted common share
(6)
|
|
$
|
0.35
|
|
|
$
|
0.35
|
|
|
|
|
|
|
|
|
|
(1)
|
Certain totals may not foot due to rounding.
|
|
|
|
(2)
|
Core earnings is a non-GAAP measure of Redwood's earnings and results of
operations. Specifically, management has defined core earnings as: GAAP net income adjusted to (i) eliminate the impact
of quarterly mark-to-market changes on the fair value of long-term investments (and associated derivatives) related to
changes in benchmark interest rates and credit spreads, (ii) include the cumulative net gains or losses on long-term
investments accounted for as trading securities under GAAP that were sold during the period presented, net of any gains
or losses from derivatives associated with the investments sold, and (iii) include the hypothetical income taxes
associated with core earnings adjustments.
|
|
|
|
Management utilizes this core earnings measure internally as one way of
analyzing Redwood's performance over multiple periods, as it believes it provides useful comparative results absent the
impact of certain quarterly mark-to-market changes and other items that management believes are not reflective of core
results. Core earnings should not be utilized in isolation, nor should it be considered as an alternative to GAAP net
income or other measurements of results of operations computed in accordance with GAAP. A further discussion of core
earnings is included in the third quarter Redwood Review.
|
|
|
|
(3)
|
Adjustments eliminate the mark-to-market changes on the fair value of loans
held-for-investment, trading securities, other investments, and associated derivatives that are primarily related to
changes in benchmark interest rates and credit spreads. Details on the components of investment fair value changes, net,
are included in the Financial Insights section of the third quarter Redwood Review.
|
|
|
|
(4)
|
Adjustment includes the cumulative net gains or losses on long-term
investments accounted for as trading securities under GAAP that were sold during the period presented, net of any
realized gains or losses from derivatives associated with the investments sold. Cumulative gains and losses are
calculated by multiplying the difference between the sales price and original purchase price by the face value of the
securities sold.
|
|
|
|
(5)
|
We apply estimated effective tax rates to core earnings adjustments
occurring within Redwood's taxable REIT subsidiaries to estimate the hypothetical income tax expense or benefit
associated with those adjustments.
|
|
|
|
(6)
|
Consistent with the calculation of net income per diluted common share for
GAAP purposes, non-GAAP core earnings per diluted common share is calculated following the "two-class" method. Additional
information on the calculation of core earnings using the "two-class" method can be found in Table 2 in the Financial
Tables section of the Appendix to the third quarter Redwood Review.
|
|
REDWOOD TRUST, INC.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Balance Sheets
(1)
|
|
30-Sep
|
|
30-Jun
|
|
31-Mar
|
|
31-Dec
|
|
30-Sep
|
|
|
($ in millions, except share and per share data)
|
|
2017
|
|
2017
|
|
2017
|
|
2016
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential loans
|
|
$
|
4,185
|
|
|
$
|
3,905
|
|
|
$
|
3,472
|
|
|
$
|
3,888
|
|
|
$
|
4,311
|
|
|
|
Real estate securities
|
|
1,356
|
|
|
1,219
|
|
|
1,166
|
|
|
1,018
|
|
|
937
|
|
|
|
Commercial loans
|
|
—
|
|
|
—
|
|
|
3
|
|
|
3
|
|
|
30
|
|
|
|
Mortgage servicing rights
|
|
63
|
|
|
64
|
|
|
111
|
|
|
119
|
|
|
106
|
|
|
|
Cash and cash equivalents
|
|
258
|
|
|
217
|
|
|
222
|
|
|
213
|
|
|
221
|
|
|
|
Other assets
|
|
269
|
|
|
251
|
|
|
241
|
|
|
243
|
|
|
267
|
|
|
|
Total assets
|
|
$
|
6,131
|
|
|
$
|
5,655
|
|
|
$
|
5,214
|
|
|
$
|
5,483
|
|
|
$
|
5,873
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term debt
|
|
$
|
1,238
|
|
|
$
|
1,295
|
|
|
$
|
564
|
|
|
$
|
792
|
|
|
$
|
1,117
|
|
|
|
Other liabilities
|
|
166
|
|
|
152
|
|
|
135
|
|
|
148
|
|
|
185
|
|
|
|
Asset-backed securities issued
|
|
944
|
|
|
693
|
|
|
728
|
|
|
773
|
|
|
820
|
|
|
|
Long-term debt, net
|
|
2,574
|
|
|
2,336
|
|
|
2,621
|
|
|
2,621
|
|
|
2,620
|
|
|
|
Total liabilities
|
|
4,922
|
|
|
4,476
|
|
|
4,049
|
|
|
4,334
|
|
|
4,742
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity
|
|
1,209
|
|
|
1,179
|
|
|
1,166
|
|
|
1,149
|
|
|
1,130
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
$
|
6,131
|
|
|
$
|
5,655
|
|
|
$
|
5,214
|
|
|
$
|
5,483
|
|
|
$
|
5,873
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares outstanding at period end (thousands)
|
|
77,123
|
|
|
77,117
|
|
|
77,039
|
|
|
76,835
|
|
|
76,682
|
|
|
|
GAAP book value per share
|
|
$
|
15.67
|
|
|
$
|
15.29
|
|
|
$
|
15.13
|
|
|
$
|
14.96
|
|
|
$
|
14.74
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Certain totals may not foot due to rounding.
|
View original content:http://www.prnewswire.com/news-releases/redwood-trust-reports-third-quarter-2017-results-300549990.html
SOURCE Redwood Trust, Inc.