Redwood Trust Reports Fourth Quarter 2023 Financial Results
- None.
- None.
Insights
The reported decrease in GAAP book value per common share from Redwood Trust, Inc. suggests a slight contraction in shareholder equity, which could be a concern for investors monitoring the company's intrinsic value. However, the economic return on book value, albeit modest at 0.3%, indicates the company was able to generate some shareholder value during the quarter. The non-GAAP Earnings Available for Distribution (EAD) figure, while not conforming to standard accounting practices, provides insight into the company's potential to distribute earnings, which is critical for dividend-focused investors. The reduction in the recourse leverage ratio may be viewed favorably, as it implies a lower risk profile due to decreased reliance on debt financing.
Operational highlights in the residential mortgage banking segments reveal a strategic shift in partnerships with depository institutions and an increase in capital allocation, which could signal confidence in this line of business. The reported increase in gross margins for jumbo loans surpasses historical targets, which is noteworthy for profitability analysis. The investment portfolio's activity, including the stability of delinquency rates and capital deployment into internally sourced investments, should be assessed for its impact on long-term earnings stability and risk management.
From a liquidity perspective, the levels of unrestricted cash and cash equivalents, unencumbered assets and excess warehouse financing capacity are indicators of financial health and operational flexibility. The repurchase of convertible debt at a discount and the issuance of common shares could be seen as efforts to optimize the capital structure and reduce future interest obligations, potentially enhancing shareholder value.
Redwood Trust's operational highlights suggest an evolving strategy in the housing finance sector, with an emphasis on expanding partnerships and distribution channels. The quarter-over-quarter decline in jumbo loan lock volume, attributed to seasonal factors and the increase in volume from depository institutions reflect changing market dynamics and customer behavior. The reported growth in depository institution partnerships and the strategic allocation of capital to the Residential Consumer Mortgage Banking segment indicate a targeted approach to capturing market share and fostering growth in a competitive industry.
The company's securitization activities, including the co-sponsored rated securitization and re-securitization of RPL securities, highlight innovative financing structures that could influence the company's risk profile and funding costs. These activities, coupled with the issuance of senior unsecured notes and the repurchase of convertible debt, demonstrate an active management of the company's financial instruments to support its operational strategies.
Looking forward, the CEO's statement about the transformation of the housing finance landscape and adaptability as a key to success underlines the importance of strategic agility in the face of potential market shifts. Investors may find interest in how these operational and financial strategies align with broader industry trends and whether Redwood's efforts will translate into sustainable earnings growth and stability.
The performance of Redwood Trust's Residential Consumer Mortgage Banking and Residential Investor Mortgage Banking segments provides insights into the current state of the real estate market, particularly in the jumbo loans and business purpose lending (BPL) spaces. The increase in jumbo loan purchases, despite a decrease in locked volume, could indicate a strategic pivot to capitalize on market opportunities or a response to housing market conditions. The distribution of jumbo loans through securitizations and whole loan sales is indicative of the company's approach to managing and diversifying risk while seeking to maximize returns from its loan origination activities.
The reported stability in delinquency rates for RPL and jumbo securities, as well as the slight uptick in delinquency rates for the combined CAFL securities and bridge loan portfolio, should be evaluated in the context of economic conditions and housing market trends. These rates can serve as a barometer for the health of the loan portfolios and the effectiveness of Redwood's underwriting and asset management practices.
Furthermore, the company's securitization activities, particularly in Home Equity Investments (HEI) and bridge loans, reflect a strategic use of financial instruments to unlock capital and manage leverage. The real estate investment community may interpret these activities as indicative of Redwood's ability to navigate complex financial arrangements and leverage market conditions to its advantage.
Key Q4 2023 Financial Results and Metrics
-
GAAP book value per common share was
$8.64 1.5% decrease from$8.77 -
Economic return on book value was
0.3% (1)
-
Economic return on book value was
-
GAAP net income available to common stockholders of
$19 million $0.15 -
Non-GAAP Earnings Available for Distribution ("EAD") of
$7 million $0.05 - Recourse leverage ratio of 2.2x at December 31, 2023, compared to 2.3x at September 30, 2023(3)
-
Declared and paid a regular quarterly dividend of
$0.16
Operational Business Highlights
Residential Consumer Mortgage Banking(4)
-
Locked
$1.2 billion $1.6 billion $1.0 billion $0.8 billion - Quarter-over-quarter decline in jumbo loan lock volume was driven primarily by seasonal factors
-
56% of lock volume in the fourth quarter 2023 was from depository institutions, up from38% in the third quarter 2023 - Achieved gross margins of 111bps, above our historical target range of 75bps to 100bps
-
Distributed
$743 million $708 million $35 million -
New or re-established depository institution partnerships increased
25% in the fourth quarter, resulting in a total of 68 new or re-established partnerships in 2023 -
Increased capital allocated to Residential Consumer Mortgage Banking segment to
$165 million
Residential Investor Mortgage Banking(4)
-
Funded
$343 million 66% bridge and34% term), down from$411 million -
Fourth quarter fundings included
$117 million 10% from the third quarter)
-
Fourth quarter fundings included
-
Distributed
$111 million
Investment Portfolio
-
Deployed approximately
$42 million -
RPL and jumbo securities saw stability in 90 day+ delinquency rates at
8.4% and0.2% , respectively; 90 day+ delinquency rates for our combined CAFL securities and bridge loan portfolio were4.7% , up from3.9% at September 30, 2023(6) -
Unlocked
$125 million $200 million -
Co-sponsored rated securitization backed by
$205 million -
Issued re-securitization backed by
$256 million -
Issued securitization backed by bridge loans with a 24-month revolving feature and up to
$250 million
-
Co-sponsored rated securitization backed by
- Secured recourse leverage ratio of 0.9x at December 31, 2023(8)
Financing Highlights
-
Unrestricted cash and cash equivalents of
$293 million $290 million -
Successfully renewed or established five loan warehouse financing facilities with key counterparties, representing capacity of
$850 million -
Maintained
$2.1 billion -
Repurchased
$15 million $193 million - Issued 12.6 million common shares through our At-the-Market (“ATM”) program, and began investing the proceeds accretively into, among other things, our Residential Consumer Mortgage Banking business and repurchases of our convertible debt
Q1 2024 Highlights to Date(10)
-
Unrestricted cash and cash equivalents was
$396 million -
Closed two SEMT jumbo securitizations in the first quarter of 2024, backed by approximately
$800 million -
Issued
$60 million -
Repurchased
$18 million
"As Redwood approaches our 30th anniversary, the landscape for housing finance is undergoing a profound transformation, where adaptability is the key to success," said Christopher Abate, Chief Executive Officer of Redwood. "With the work we completed across 2023 to bolster our capital base, we expect 2024 to be foundational to our long-term success as we expand our partnerships and distribution channels, and set Redwood on a course for earnings growth and stability in the quarters and years ahead."
_____________________
- Economic return on book value is based on the period change in GAAP book value per common share plus dividends declared per common share in the period.
- Earnings available for distribution is a non-GAAP measure. See Non-GAAP Disclosures section that follows for additional information on this measure.
-
Recourse leverage ratio is defined as recourse debt at Redwood divided by tangible stockholders' equity. Recourse debt excludes
$10.5 billion $52 million - We operate our business in three segments: Residential Consumer Mortgage Banking, Residential Investor Mortgage Banking, and Investment Portfolio. Prior to the fourth quarter of 2023, the Residential Consumer Mortgage Banking segment was named Residential Mortgage Banking and the Residential Investor Mortgage Banking segment was named Business Purpose Mortgage Banking. While the segment names changed, no changes were made to the underlying composition of the segments. All applicable references in this document have been conformed to reflect the new segment names.
- Lock volume represents loans identified for purchase from loan sellers. Lock volume does not account for potential fallout from pipeline that typically occurs through the lending process.
- RPL and jumbo securities delinquency rate calculations were updated in Q4'23 to be weighted by notional balances of loans collateralizing each of our securities investments (prior periods presented were conformed to updated calculation). Bridge loan and CAFL securities delinquency rates are calculated as BPL term loans in our consolidated CAFL securitizations, our portion of loans held at JVs, unsecuritized bridge loans held for investment, and bridge and term loans held-for-sale with a delinquent payment greater than 90 days, divided by the total notional balance of loans in consolidated CAFL securitizations, our portion of loans held at JVs, unsecuritized bridge loans held for investment, and bridge and term loans held for sale.
-
Represents intrinsic value of total HEI initially collateralizing securitization, of which Redwood contributed approximately
$75 million 40% of the total residual interests in the securitization. - Secured recourse leverage ratio for our Investment Portfolio is defined as secured recourse debt financing our investment portfolio assets divided by capital allocated to our investment portfolio.
-
Includes full retirement of August 2023 convertible maturity (
$113 million $81 million - Represents Q1'24 activity through February 16, 2024 unless otherwise noted.
Fourth Quarter 2023 Redwood Review and Supplemental Tables Available Online
A further discussion of Redwood's business and financial results is included in the fourth quarter 2023 Shareholder Letter and Redwood Review which are available under "Financial Info" within the Investor Relations section of the Company’s website at redwoodtrust.com/investor-relations. Additional supplemental financial tables can also be found within this section of the Company's website.
Conference Call and Webcast
Redwood will host an earnings call today, February 20, 2024, at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time to discuss its fourth quarter 2023 financial results. The number to dial in order to listen to the conference call is 1-877-423-9813 in the
The conference call will be webcast live in listen-only mode through the News & Events section of Redwood’s Investor Relations website at https://www.redwoodtrust.com/investor-relations/news-events/events. 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 Annual Report on Form 10-K with the Securities and Exchange Commission by Thursday February 29, 2024, and also make it available on Redwood’s website.
About Redwood
Redwood Trust, Inc. (NYSE: RWT) is a specialty finance company focused on several distinct areas of housing credit. Our operating platforms occupy a unique position in the housing finance value chain, providing liquidity to growing segments of the
Cautionary Statement; Forward-Looking Statements:
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 the amount of residential mortgage loans that we identified for purchase during the fourth quarter of 2023, expected fallout and the corresponding volume of residential mortgage loans expected to be available for purchase, and the expected timing for the filing of Redwood's Annual Report on Form 10-K. 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, opportunities, 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 for the year ended December 31, 2022 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.
($ in millions, except per share data) |
Three Months Ended |
||||||
|
12/31/2023 |
|
9/30/2023 |
||||
Financial Performance |
|
|
|
||||
Net income (loss) per diluted common share |
$ |
0.15 |
|
|
$ |
(0.29 |
) |
Net income (loss) per basic common share |
$ |
0.15 |
|
|
$ |
(0.29 |
) |
EAD per basic common share (non-GAAP) |
$ |
0.05 |
|
|
$ |
0.10 |
|
|
|
|
|
||||
Return on Common Equity ("ROE") (annualized) |
|
7.3 |
% |
|
|
(12.3 |
) % |
EAD Return on Common Equity ("EAD ROE") (annualized, non-GAAP) |
|
2.7 |
% |
|
|
4.7 |
% |
|
|
|
|
||||
Book Value per Common Share |
$ |
8.64 |
|
|
$ |
8.77 |
|
Dividend per Common Share |
$ |
0.16 |
|
|
$ |
0.16 |
|
Economic Return on Book Value (1) |
|
0.3 |
% |
|
|
(3.6 |
) % |
|
|
|
|
||||
Recourse Leverage Ratio (2) |
2.2x |
|
2.3x |
||||
Operating Metrics |
|||||||
Business Purpose Loans |
|
|
|
||||
Term fundings |
$ |
117 |
|
|
$ |
106 |
|
Bridge fundings |
|
226 |
|
|
|
305 |
|
Term securitized |
|
— |
|
|
|
278 |
|
Bridge securitized |
|
250 |
|
|
|
— |
|
Term sold |
|
48 |
|
|
|
27 |
|
Bridge sold |
|
63 |
|
|
|
34 |
|
Residential Jumbo Loans |
|
|
|
||||
Locks |
$ |
1,165 |
|
|
$ |
1,637 |
|
Purchases |
|
1,004 |
|
|
|
815 |
|
Securitized |
|
708 |
|
|
|
338 |
|
Sold |
|
35 |
|
|
|
54 |
|
|
|
|
|
||||
(1) Economic return on book value is based on the periodic change in GAAP book value per common share plus dividends declared per common share during the period.
(2) Recourse leverage ratio is defined as recourse debt at Redwood divided by tangible stockholders' equity. At December 31, 2023, and September 30, 2023, recourse debt excluded
REDWOOD TRUST, INC.
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Consolidated Income Statements (1) |
|
Three Months Ended |
||||||||||||||||||
($ in millions, except share and per share data) |
|
12/31/23 |
|
9/30/23 |
|
6/30/23 |
|
3/31/23 |
|
12/31/22 |
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest income |
|
$ |
190 |
|
|
$ |
177 |
|
|
$ |
179 |
|
|
$ |
179 |
|
|
$ |
173 |
|
Interest expense |
|
|
(170 |
) |
|
|
(157 |
) |
|
|
(153 |
) |
|
|
(152 |
) |
|
|
(146 |
) |
Net interest income |
|
|
20 |
|
|
|
20 |
|
|
|
26 |
|
|
|
26 |
|
|
|
27 |
|
Non-interest income (loss) |
|
|
|
|
|
|
|
|
|
|
||||||||||
Residential consumer mortgage banking activities, net |
|
|
8 |
|
|
|
9 |
|
|
|
7 |
|
|
|
3 |
|
|
|
(14 |
) |
Residential investor mortgage banking activities, net |
|
|
6 |
|
|
|
10 |
|
|
|
9 |
|
|
|
13 |
|
|
|
(3 |
) |
Investment fair value changes, net |
|
|
15 |
|
|
|
(42 |
) |
|
|
(14 |
) |
|
|
(4 |
) |
|
|
(24 |
) |
HEI income, net |
|
|
12 |
|
|
|
10 |
|
|
|
9 |
|
|
|
4 |
|
|
|
1 |
|
Other income, net |
|
|
2 |
|
|
|
2 |
|
|
|
4 |
|
|
|
5 |
|
|
|
4 |
|
Realized gains, net |
|
|
1 |
|
|
|
— |
|
|
|
1 |
|
|
|
— |
|
|
|
3 |
|
Total non-interest income (loss), net |
|
|
44 |
|
|
|
(10 |
) |
|
|
17 |
|
|
|
21 |
|
|
|
(33 |
) |
General and administrative expenses |
|
|
(32 |
) |
|
|
(30 |
) |
|
|
(31 |
) |
|
|
(36 |
) |
|
|
(39 |
) |
Portfolio management costs |
|
|
(4 |
) |
|
|
(4 |
) |
|
|
(3 |
) |
|
|
(4 |
) |
|
|
(3 |
) |
Loan acquisition costs |
|
|
(3 |
) |
|
|
(2 |
) |
|
|
(1 |
) |
|
|
(1 |
) |
|
|
(1 |
) |
Other expenses |
|
|
(3 |
) |
|
|
(5 |
) |
|
|
(5 |
) |
|
|
(4 |
) |
|
|
(4 |
) |
(Provision for) benefit from income taxes |
|
|
(1 |
) |
|
|
(2 |
) |
|
|
— |
|
|
|
1 |
|
|
|
9 |
|
Net income (loss) |
|
$ |
21 |
|
|
$ |
(31 |
) |
|
$ |
3 |
|
|
$ |
5 |
|
|
$ |
(44 |
) |
Dividends on preferred stock |
|
|
(2 |
) |
|
|
(2 |
) |
|
|
(2 |
) |
|
|
(1 |
) |
|
|
— |
|
Net income (loss) available (related) to common stockholders |
|
$ |
19 |
|
|
$ |
(33 |
) |
|
$ |
1 |
|
|
$ |
3 |
|
|
$ |
(44 |
) |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Weighted average basic common shares (thousands) |
|
|
121,927 |
|
|
|
115,466 |
|
|
|
114,051 |
|
|
|
113,679 |
|
|
|
113,363 |
|
Weighted average diluted common shares (thousands) (2) |
|
|
122,474 |
|
|
|
115,466 |
|
|
|
114,445 |
|
|
|
114,135 |
|
|
|
113,363 |
|
Earnings (loss) per basic common share |
|
$ |
0.15 |
|
|
$ |
(0.29 |
) |
|
$ |
— |
|
|
$ |
0.02 |
|
|
$ |
(0.40 |
) |
Earnings (loss) per diluted common share |
|
$ |
0.15 |
|
|
$ |
(0.29 |
) |
|
$ |
— |
|
|
$ |
0.02 |
|
|
$ |
(0.40 |
) |
Regular dividends declared per common share |
|
$ |
0.16 |
|
|
$ |
0.16 |
|
|
$ |
0.16 |
|
|
$ |
0.23 |
|
|
$ |
0.23 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
- Certain totals may not foot due to rounding.
- Actual shares outstanding (in thousands) at December 31, 2023, September 30, 2023, June 30, 2023, March 31, 2023, and December 31, 2022, were 131,486, 118,504, 114,178, 113,864, and 113,485, respectively.
Analysis of Income Statement - Changes from Third Quarter 2023 to Fourth Quarter 2023
- Net interest income remained stable from the third quarter as an increase in interest income on bridge loans and a reduction in interest expense on corporate debt were offset by a decline in interest income from non-strategic third-party assets sold during the third quarter.
- Income from Residential Consumer Mortgage Banking activities decreased from the third quarter, as loan purchase commitments declined due to fourth quarter seasonality, partially offset by margins exceeding our historical target range of 75 to 100 basis points.
- Income from Residential Investor Mortgage Banking activities decreased from the third quarter, as spreads on term loans normalized, compared to the third quarter where spread tightening benefited loan inventory. Overall volume declined as a decrease in bridge fundings was partially offset by growth in term production.
- Net positive fair value changes on our Investment Portfolio in the fourth quarter primarily reflected the impact of declining rates on valuations on our re-performing loan (“RPL”) securities, and spread tightening improved valuations on CAFL securities. The positive fair value changes were partially offset by fair value decreases on our bridge loan portfolio related to delinquent loans along with residential servicing assets which declined in step with falling mortgage rates.
- In the fourth quarter of 2023, we changed the presentation of our Income Statement to break out income from HEI investments on a separate line item – "HEI income, net". Amounts in this new line item were previously presented within the Investment fair value changes, net line item. All prior periods presented were conformed to this new presentation. HEI income, net is primarily comprised of recurring accretion of the underlying option value of the investments, along with periodic fluctuations in value influenced by housing and other market conditions. HEI income, net increased in the fourth quarter, as actual and projected trends in home prices continued to improve.
- Realized gains in the fourth quarter reflect gains on extinguishment of corporate convertible debt that we repurchased during the quarter.
- General and administrative expenses increased from the third quarter primarily as variable and long-term incentive compensation increased commensurate with the improvement in quarterly GAAP earnings.
- Portfolio management and loan acquisition costs increased slightly from the third quarter, primarily due to higher loan special servicing costs.
- Other expenses were primarily comprised of acquisition-related intangible amortization expenses.
- Our provision for income taxes in the fourth quarter reflected net income earned at our taxable REIT subsidiary, driven by mortgage banking income and certain servicing investments.
REDWOOD TRUST, INC. |
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Consolidated Income Statements (1) |
|
Year ended December 31, |
||||||
($ in millions, except share and per share data) |
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
||||
Interest income |
|
$ |
724 |
|
|
$ |
708 |
|
Interest expense |
|
|
(632 |
) |
|
|
(552 |
) |
Net interest income |
|
|
93 |
|
|
|
155 |
|
Non-interest income (loss) |
|
|
|
|
||||
Residential consumer mortgage banking activities, net |
|
|
28 |
|
|
|
(21 |
) |
Residential investor mortgage banking activities, net |
|
|
40 |
|
|
|
8 |
|
Investment fair value changes, net |
|
|
(44 |
) |
|
|
(178 |
) |
HEI income, net |
|
|
35 |
|
|
|
3 |
|
Other income, net |
|
|
13 |
|
|
|
21 |
|
Realized gains, net |
|
|
2 |
|
|
|
5 |
|
Total non-interest income (loss), net |
|
|
73 |
|
|
|
(163 |
) |
General and administrative expenses |
|
|
(128 |
) |
|
|
(141 |
) |
Portfolio management costs |
|
|
(15 |
) |
|
|
(8 |
) |
Loan acquisition costs |
|
|
(7 |
) |
|
|
(12 |
) |
Other expenses |
|
|
(16 |
) |
|
|
(16 |
) |
(Provision for) benefit from income taxes |
|
|
(2 |
) |
|
|
20 |
|
Net loss |
|
$ |
(2 |
) |
|
$ |
(164 |
) |
Dividends on preferred stock |
|
|
(7 |
) |
|
|
— |
|
Net loss related to common stockholders |
|
$ |
(9 |
) |
|
$ |
(164 |
) |
|
|
|
|
|
||||
Weighted average basic common shares (thousands) |
|
|
116,283 |
|
|
|
117,228 |
|
Weighted average diluted common shares (thousands) |
|
|
116,283 |
|
|
|
117,228 |
|
Earnings (loss) per basic common share |
|
$ |
(0.11 |
) |
|
$ |
(1.43 |
) |
Earnings (loss) per diluted common share |
|
$ |
(0.11 |
) |
|
$ |
(1.43 |
) |
Regular dividends declared per common share |
|
$ |
0.71 |
|
|
$ |
0.92 |
|
|
|
|
|
|
||||
- Certain totals may not foot due to rounding.
REDWOOD TRUST, INC.
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|
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|
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Consolidated Balance Sheets (1) |
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|||||
($ in millions, except share and per share data) |
|
12/31/23 |
|
9/30/23 |
|
6/30/23 |
|
3/31/23 |
|
12/31/22 |
|||||
|
|
|
|
|
|
|
|
|
|
|
|||||
Residential loans |
|
$ |
7,051 |
|
$ |
5,847 |
|
$ |
5,456 |
|
$ |
5,493 |
|
$ |
5,613 |
Business purpose loans |
|
|
5,220 |
|
|
5,249 |
|
|
5,227 |
|
|
5,365 |
|
|
5,333 |
Consolidated Agency multifamily loans |
|
|
425 |
|
|
421 |
|
|
420 |
|
|
427 |
|
|
425 |
Real estate securities |
|
|
128 |
|
|
129 |
|
|
167 |
|
|
243 |
|
|
240 |
Home equity investments (HEI) |
|
|
550 |
|
|
431 |
|
|
427 |
|
|
417 |
|
|
403 |
Other investments |
|
|
344 |
|
|
340 |
|
|
356 |
|
|
382 |
|
|
391 |
Cash and cash equivalents |
|
|
293 |
|
|
204 |
|
|
357 |
|
|
404 |
|
|
259 |
Other assets |
|
|
493 |
|
|
399 |
|
|
387 |
|
|
391 |
|
|
367 |
Total assets |
|
$ |
14,504 |
|
$ |
13,021 |
|
$ |
12,797 |
|
$ |
13,121 |
|
$ |
13,031 |
|
|
|
|
|
|
|
|
|
|
|
|||||
Short-term debt, net |
|
$ |
1,558 |
|
$ |
1,477 |
|
$ |
1,457 |
|
$ |
1,616 |
|
$ |
2,030 |
Other liabilities |
|
|
251 |
|
|
217 |
|
|
230 |
|
|
187 |
|
|
197 |
Asset-backed securities issued, net |
|
|
9,812 |
|
|
8,392 |
|
|
8,183 |
|
|
8,447 |
|
|
7,987 |
Long-term debt, net |
|
|
1,681 |
|
|
1,830 |
|
|
1,802 |
|
|
1,733 |
|
|
1,733 |
Total liabilities |
|
|
13,302 |
|
|
11,915 |
|
|
11,673 |
|
|
11,984 |
|
|
11,947 |
|
|
|
|
|
|
|
|
|
|
|
|||||
Stockholders' equity |
|
|
1,203 |
|
|
1,106 |
|
|
1,124 |
|
|
1,138 |
|
|
1,084 |
|
|
|
|
|
|
|
|
|
|
|
|||||
Total liabilities and equity |
|
$ |
14,504 |
|
$ |
13,021 |
|
$ |
12,797 |
|
$ |
13,121 |
|
$ |
13,031 |
|
|
|
|
|
|
|
|
|
|
|
|||||
Common shares outstanding at period end (thousands) |
|
|
131,486 |
|
|
118,504 |
|
|
114,178 |
|
|
113,864 |
|
|
113,485 |
GAAP book value per common share |
|
$ |
8.64 |
|
$ |
8.77 |
|
$ |
9.26 |
|
$ |
9.40 |
|
$ |
9.55 |
|
|
|
|
|
|
|
|
|
|
|
|||||
- Certain totals may not foot due to rounding.
Non-GAAP Disclosures
|
|
|
|
|
|
||||
Reconciliation of GAAP Net Income (Loss) Available (Related) to Common Stockholders to non-GAAP Earnings Available for Distribution(1)(2)(3) |
|
Three Months Ended |
|||||||
($ in millions, except share and per share data) |
|
12/31/23 |
|
9/30/23 |
|
||||
|
|
|
|
|
|
||||
GAAP Net income (loss) available (related) to common stockholders |
|
$ |
19 |
|
|
$ |
(33 |
) |
|
|
|
|
|
|
|
||||
Adjustments: |
|
|
|
|
|
||||
Investment fair value changes, net(4) |
|
|
(15 |
) |
|
|
42 |
|
|
Realized (gains)/losses, net(5) |
|
|
(1 |
) |
|
|
— |
|
|
Acquisition related expenses(6) |
|
|
3 |
|
|
|
3 |
|
|
Tax effect of adjustments(7) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
||||
Earnings Available for Distribution (non-GAAP) |
|
$ |
7 |
|
|
$ |
13 |
|
|
|
|
|
|
|
|
||||
Earnings (loss) per basic common share |
|
$ |
0.15 |
|
|
$ |
(0.29 |
) |
|
EAD per basic common share (non-GAAP) |
|
$ |
0.05 |
|
|
$ |
0.10 |
|
|
|
|
|
|
|
|
||||
GAAP Return on Common Equity (annualized) |
|
|
7.3 |
% |
|
|
(12.3 |
)% |
|
EAD Return on Common Equity (non-GAAP, annualized)(8) |
|
|
2.7 |
% |
|
|
4.7 |
% |
|
|
|
|
|
|
|
||||
- Certain totals may not foot due to rounding.
- In the fourth quarter of 2023, we changed our calculation of EAD and conformed all prior period amounts presented in the table above and throughout this earnings release. This change consisted of removing the previously presented line item titled "Change in economic basis of investments". Additionally, during the fourth quarter of 2023, we changed our consolidated income statements to include a new line item titled "HEI income, net". This line item includes all amounts related to our HEI investments that were previously presented within the "Investment fair value changes, net" line item. As such, our adjustment for "Investment fair value changes, net" in our current calculation of EAD does not include fair value changes related to our HEI investments.
- EAD and EAD ROE are non-GAAP measures derived from GAAP Net income (loss) available (related) to common stockholders and GAAP ROE, respectively. EAD is defined as: GAAP net income (loss) available (related) to common stockholders adjusted to (i) exclude investment fair value changes, net; (ii) exclude realized gains and losses; (iii) exclude acquisition related expenses; (iv) exclude organizational restructuring charges (as applicable); and (v) adjust for the hypothetical income taxes associated with these adjustments. EAD ROE is defined as EAD divided by average common equity. We believe EAD and EAD ROE provide supplemental information to assist management and investors in analyzing the Company’s results of operations and help facilitate comparisons to industry peers. Management also believes that EAD and EAD ROE are metrics that can supplement its analysis of the Company’s ability to pay dividends, by providing an indication of the current income generating capacity of the Company's business operations as of the quarter being presented. EAD and EAD ROE should not be utilized in isolation, nor should they be considered as an alternative to GAAP net income (loss) available (related) to common stockholders, GAAP ROE or other measurements of results of operations computed in accordance with GAAP or for federal income tax purposes.
- Investment fair value changes, net includes all amounts within that same line item on our consolidated statements of income, which primarily represents both realized and unrealized gains and losses on our investments (excluding HEI) and associated hedges. As noted above, realized and unrealized gains and losses on our HEI investments are reflected in a new line item on our consolidated income statements titled "HEI income, net".
- Realized (gains)/losses, net includes all amounts within that line item on our consolidated statements of income.
- Acquisition related expenses include transaction costs paid to third parties, as applicable, and the ongoing amortization of intangible assets related to the Riverbend, CoreVest and 5Arches acquisitions.
- Tax effect of adjustments represents the hypothetical income taxes associated with all adjustments used to calculate EAD.
- EAD ROE is calculated by dividing EAD by average common equity for each respective period.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240220757584/en/
Investor Relations
Kaitlyn Mauritz
MD, Head of Investor Relations
Phone: 866-269-4976
Email: investorrelations@redwoodtrust.com
Source: Redwood Trust, Inc.
FAQ
What was Redwood Trust's GAAP book value per common share at December 31, 2023?
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How much capital was allocated to the Residential Consumer Mortgage Banking segment at December 31, 2023?
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