FOR IMMEDIATE RELEASE
Redwood Trust, Inc.
Thursday, August 4, 2011
|
CONTACTS: Diane Merdian
(415) 380-2331
Mike McMahon
(415) 384-3805
|
Consolidated Income Statements(1)
|
Second
|
First
|
Fourth
|
Third
|
Second
|
|||||||||||||||
($ in millions, except share data)
|
Quarter
|
Quarter
|
Quarter
|
Quarter
|
Quarter
|
|||||||||||||||
|
2011
|
2011
|
2010
|
2010
|
2010
|
|||||||||||||||
Interest income
|
$ | 53 | $ | 54 | $ | 56 | $ | 59 | $ | 56 | ||||||||||
Interest expense
|
(24 | ) | (22 | ) | (22 | ) | (24 | ) | (21 | ) | ||||||||||
Net interest income
|
29 | 32 | 34 | 35 | 35 | |||||||||||||||
Provision for loan losses
|
(2 | ) | (3 | ) | (8 | ) | (2 | ) | (4 | ) | ||||||||||
Market valuation adjustments, net
|
(11 | ) | (6 | ) | - | (2 | ) | (7 | ) | |||||||||||
Net interest income after provision and
|
17 | 24 | 26 | 31 | 24 | |||||||||||||||
market valuation adjustments
|
||||||||||||||||||||
Operating expenses
|
(12 | ) | (12 | ) | (13 | ) | (12 | ) | (11 | ) | ||||||||||
Realized gains on sales and calls, net
|
6 | 4 | 2 | 2 | 16 | |||||||||||||||
Provision for income taxes
|
- | - | - | - | - | |||||||||||||||
Net income
|
10 | 16 | 15 | 21 | 29 | |||||||||||||||
Less: Net income (loss) attributable to noncontrolling interest
|
1 | (2 | ) | - | 1 | - | ||||||||||||||
Net Income Attributable to Redwood Trust, Inc.
|
$ | 9 | $ | 18 | $ | 15 | $ | 20 | $ | 29 | ||||||||||
Average diluted shares (thousands)
|
79,478 | 79,372 | 78,944 | 78,961 | 78,852 | |||||||||||||||
Diluted earnings per share
|
$ | 0.11 | $ | 0.22 | $ | 0.18 | $ | 0.25 | $ | 0.35 | ||||||||||
Regular dividends declared per common share
|
$ | 0.25 | $ | 0.25 | $ | 0.25 | $ | 0.25 | $ | 0.25 |
Consolidated Income Statements(1)
|
Six Months Ended
|
|||||||
($ in millions, except share data)
|
June 30,
|
|||||||
|
2011
|
2010
|
||||||
Interest income
|
$ | 107 | $ | 115 | ||||
Interest expense
|
(46 | ) | (39 | ) | ||||
Net interest income
|
62 | 76 | ||||||
Provision for loan losses
|
(4 | ) | (14 | ) | ||||
Market valuation adjustments, net
|
(17 | ) | (18 | ) | ||||
Net interest income after provision and
|
40 | 44 | ||||||
market valuation adjustments
|
||||||||
Operating expenses
|
(24 | ) | (29 | ) | ||||
Realized gains on sales and calls, net
|
10 | 60 | ||||||
Provision for income taxes
|
- | - | ||||||
Net income
|
27 | 76 | ||||||
Less: Net (loss) income attributable to noncontrolling interest
|
(1 | ) | - | |||||
Net Income Attributable to Redwood Trust, Inc.
|
$ | 28 | $ | 75 | ||||
Average diluted shares (thousands)
|
79,425 | 78,662 | ||||||
Diluted earnings per share
|
$ | 0.34 | $ | 0.94 | ||||
Regular dividends declared per common share
|
$ | 0.50 | $ | 0.50 |
Consolidated Balance Sheets(1)
|
30-Jun
|
31-Mar
|
31-Dec
|
30-Sep
|
30-Jun
|
|||||||||||||||
($ in millions, except share data)
|
2011
|
2011
|
2010
|
2010
|
2010
|
|||||||||||||||
Residential real estate loans
|
$ | 3,860 | $ | 3,796 | $ | 3,797 | $ | 3,733 | $ | 3,790 | ||||||||||
Commercial real estate loans
|
84 | 62 | 50 | 19 | 20 | |||||||||||||||
Real estate securities, at fair value:
|
||||||||||||||||||||
Trading securities
|
297 | 322 | 330 | 310 | 276 | |||||||||||||||
Available-for-sale securities
|
741 | 782 | 825 | 798 | 741 | |||||||||||||||
Other investments
|
- | - | - | - | 4 | |||||||||||||||
Cash and cash equivalents
|
80 | 220 | 47 | 189 | 288 | |||||||||||||||
Other assets
|
103 | 101 | 95 | 113 | 100 | |||||||||||||||
Total Assets
|
$ | 5,165 | $ | 5,283 | $ | 5,144 | $ | 5,162 | $ | 5,219 | ||||||||||
Short-term debt
|
$ | 41 | $ | - | $ | 44 | $ | - | $ | - | ||||||||||
Other liabilities
|
119 | 104 | 123 | 163 | 142 | |||||||||||||||
Asset-backed securities issued - Sequoia entities
|
3,566 | 3,646 | 3,458 | 3,568 | 3,681 | |||||||||||||||
Asset-backed securities issued - Acacia entities
|
273 | 311 | 303 | 264 | 253 | |||||||||||||||
Long-term debt
|
140 | 140 | 140 | 140 | 140 | |||||||||||||||
Total liabilities
|
4,138 | 4,201 | 4,068 | 4,135 | 4,216 | |||||||||||||||
Stockholders’ equity
|
1,025 | 1,075 | 1,065 | 1,016 | 991 | |||||||||||||||
Noncontrolling interest
|
2 | 7 | 11 | 11 | 12 | |||||||||||||||
Total equity
|
1,027 | 1,082 | 1,076 | 1,027 | 1,003 | |||||||||||||||
Total Liabilities and Equity
|
$ | 5,165 | $ | 5,283 | $ | 5,144 | $ | 5,162 | $ | 5,219 | ||||||||||
Shares outstanding at period end (thousands)
|
78,555 | 78,139 | 78,125 | 77,984 | 77,908 | |||||||||||||||
GAAP book value per share
|
$ | 13.04 | $ | 13.76 | $ | 13.63 | $ | 13.02 | $ | 12.71 |
Consolidating Income Statement(1)
|
||||||||||||||||||||
Three Months Ended June 30, 2011
|
Other
|
|||||||||||||||||||
($ in millions)
|
Redwood
|
New
|
Consolidated
|
Intercompany | Redwood | |||||||||||||||
|
(Parent)
|
Sequoia |
Entities
|
Adjustments
|
Consolidated
|
|||||||||||||||
Interest income
|
$ | 16 | $ | 5 | $ | 25 | $ | - | $ | 45 | ||||||||||
Net discount (premium) amortization
|
10 | - | (2 | ) | - | 8 | ||||||||||||||
Total interest income
|
26 | 5 | 23 | - | 53 | |||||||||||||||
Interest expense
|
(2 | ) | (4 | ) | (17 | ) | - | (24 | ) | |||||||||||
Net interest income
|
23 | 1 | 5 | - | 29 | |||||||||||||||
Provision for loan losses
|
- | - | (2 | ) | - | (2 | ) | |||||||||||||
Market valuation adjustments, net
|
(7 | ) | - | (4 | ) | - | (11 | ) | ||||||||||||
Net interest income (loss) after provision
|
16 | 1 | - | - | 17 | |||||||||||||||
and market valuation adjustments
|
||||||||||||||||||||
Operating expenses
|
(12 | ) | - | - | - | (12 | ) | |||||||||||||
Realized gains on sales and calls, net
|
4 | - | 2 | - | 6 | |||||||||||||||
Income from New Sequoia
|
1 | - | - | (1 | ) | - | ||||||||||||||
Income from Other Consolidated Entities
|
- | - | - | - | - | |||||||||||||||
Noncontrolling interest
|
- | - | (1 | ) | - | (1 | ) | |||||||||||||
Provision for income taxes
|
- | - | - | - | - | |||||||||||||||
Net Income
|
$ | 9 | $ | 1 | $ | - | $ | (1 | ) | $ | 9 |
Consolidating Income Statement(1)
|
||||||||||||||||||||
Six Months Ended June 30, 2011
|
Other
|
|||||||||||||||||||
($ in millions)
|
Redwood |
New
|
Consolidated
|
Intercompany |
Redwood
|
|||||||||||||||
|
(Parent)
|
Sequoia |
Entities
|
Adjustments
|
Consolidated
|
|||||||||||||||
Interest income
|
$ | 32 | $ | 7 | $ | 49 | $ | - | $ | 88 | ||||||||||
Net discount (premium) amortization
|
22 | - | (3 | ) | - | 19 | ||||||||||||||
Total interest income
|
54 | 7 | 46 | - | 107 | |||||||||||||||
Interest expense
|
(5 | ) | (6 | ) | (34 | ) | - | (46 | ) | |||||||||||
Net interest income
|
49 | 1 | 12 | - | 62 | |||||||||||||||
Provision for loan losses
|
- | - | (4 | ) | - | (4 | ) | |||||||||||||
Market valuation adjustments, net
|
(6 | ) | - | (11 | ) | - | (17 | ) | ||||||||||||
Net interest income (loss) after provision
|
43 | 1 | (3 | ) | - | 40 | ||||||||||||||
and market valuation adjustments
|
||||||||||||||||||||
Operating expenses
|
(23 | ) | - | - | - | (24 | ) | |||||||||||||
Realized gains (losses) on sales and calls, net
|
11 | - | (1 | ) | - | 10 | ||||||||||||||
Income from New Sequoia
|
1 | - | - | (1 | ) | - | ||||||||||||||
Loss from Other Consolidated Entities
|
(4 | ) | - | - | 4 | - | ||||||||||||||
Noncontrolling interest
|
- | - | 1 | - | 1 | |||||||||||||||
Provision for income taxes
|
- | - | - | - | - | |||||||||||||||
Net Income (Loss)
|
$ | 28 | $ | 1 | $ | (4 | ) | $ | 3 | $ | 28 |
Consolidating Balance Sheet(1)
|
||||||||||||||||||||
June 30, 2011
|
Other
|
|||||||||||||||||||
($ in millions)
|
Redwood
|
New
|
Consolidated
|
Intercompany
|
Redwood
|
|||||||||||||||
|
(Parent)
|
Sequoia (2)
|
Entities
|
Adjustments
|
Consolidated
|
|||||||||||||||
Residential real estate loans
|
$ | 205 | $ | 392 | $ | 3,263 | $ | - | $ | 3,860 | ||||||||||
Commercial real estate loans
|
71 | - | 13 | - | 84 | |||||||||||||||
Real estate securities, at fair value:
|
||||||||||||||||||||
Trading securities
|
20 | - | 277 | - | 297 | |||||||||||||||
Available-for-sale securities
|
741 | - | - | - | 741 | |||||||||||||||
Cash and cash equivalents
|
80 | - | - | - | 80 | |||||||||||||||
Investment in New Sequoia
|
37 | - | - | (37 | ) | - | ||||||||||||||
Investment in Other Consolidated Entities
|
57 | - | - | (57 | ) | - | ||||||||||||||
Total earning assets
|
1,211 | 392 | 3,552 | (93 | ) | 5,062 | ||||||||||||||
Other assets
|
39 | 4 | 60 | - | 103 | |||||||||||||||
Total Assets
|
$ | 1,250 | $ | 396 | $ | 3,613 | $ | (93 | ) | $ | 5,165 | |||||||||
Short-term debt
|
$ | 41 | $ | - | $ | - | $ | - | $ | 41 | ||||||||||
Other liabilities
|
44 | 1 | 72 | - | 119 | |||||||||||||||
Asset-backed securities issued
|
- | 358 | 3,481 | - | 3,839 | |||||||||||||||
Long-term debt
|
140 | - | - | - | 140 | |||||||||||||||
Total liabilities
|
225 | 359 | 3,554 | - | 4,138 | |||||||||||||||
Stockholders’ equity
|
1,025 | 37 | 57 | (93 | ) | 1,025 | ||||||||||||||
Noncontrolling interest
|
- | - | 2 | - | 2 | |||||||||||||||
Total equity
|
1,025 | 37 | 59 | (93 | ) | 1,027 | ||||||||||||||
Total Liabilities and Equity
|
$ | 1,250 | $ | 396 | $ | 3,613 | $ | (93 | ) | $ | 5,165 |
Tax / GAAP Differences(1)
|
||||||||||||
Three Months Ended June 30, 2011
|
||||||||||||
($ in millions, except per share data)
|
||||||||||||
Tax est.
|
GAAP
|
Differences
|
||||||||||
Interest income
|
$ | 30 | $ | 53 | $ | (23 | ) | |||||
Interest expense
|
(3 | ) | (24 | ) | 21 | |||||||
Net Interest Income
|
27 | 29 | (2 | ) | ||||||||
Provision for loan losses
|
- | (2 | ) | 2 | ||||||||
Realized credit losses
|
(16 | ) | - | (16 | ) | |||||||
Market valuation adjustments, net
|
- | (11 | ) | 11 | ||||||||
Operating expenses
|
(11 | ) | (12 | ) | 1 | |||||||
Realized gains on sales and calls, net
|
- | 6 | (6 | ) | ||||||||
Provision for income taxes
|
- | - | - | |||||||||
Less: Net income attributable to noncontrolling interest
|
- | 1 | (1 | ) | ||||||||
Net (Loss) Income
|
$ | - | $ | 9 | $ | (10 | ) | |||||
(Loss) income per share
|
$ | - | $ | 0.11 | $ | (0.11 | ) |
Tax / GAAP Differences(1)
|
||||||||||||
Six Months Ended June 30, 2011
|
||||||||||||
($ in millions, except per share data)
|
||||||||||||
Tax est.
|
GAAP
|
Differences
|
||||||||||
Interest income
|
$ | 64 | $ | 107 | $ | (44 | ) | |||||
Interest expense
|
(6 | ) | (46 | ) | 40 | |||||||
Net Interest Income
|
58 | 62 | (4 | ) | ||||||||
Provision for loan losses
|
- | (4 | ) | 4 | ||||||||
Realized credit losses
|
(31 | ) | - | (31 | ) | |||||||
Market valuation adjustments, net
|
- | (17 | ) | 17 | ||||||||
Operating expenses
|
(23 | ) | (24 | ) | 1 | |||||||
Realized gains on sales and calls, net
|
- | 10 | (10 | ) | ||||||||
Provision for income taxes
|
- | - | - | |||||||||
Less: Net loss attributable to noncontrolling interest
|
- | (1 | ) | 1 | ||||||||
Net Income
|
$ | 4 | $ | 28 | $ | (23 | ) | |||||
Income per share
|
$ | 0.06 | $ | 0.34 | $ | (0.28 | ) |
Book Value Per Share (1)
|
||||||||
($ in millions, except per share data)
|
||||||||
June 30, 2011
|
March 31, 2011
|
|||||||
Cash and cash equivalents
|
$ | 80 | $ | 220 | ||||
Real estate loans at Redwood
|
||||||||
Residential
|
205 | 55 | ||||||
Commercial
|
71 | 42 | ||||||
Subtotal real estate loans
|
276 | 97 | ||||||
Real estate securities at Redwood
|
||||||||
Residential
|
754 | 780 | ||||||
Commercial
|
6 | 7 | ||||||
CDO
|
1 | 1 | ||||||
Subtotal real estate securities
|
761 | 788 | ||||||
Investments in Sequoia entities
|
90 | 97 | ||||||
Investments in Acacia entities
|
1 | 2 | ||||||
Investments in the Fund
|
3 | 11 | ||||||
Other assets (2)
|
39 | 34 | ||||||
Total assets
|
1,250 | 1,249 | ||||||
Short-term debt
|
(41 | ) | - | |||||
Long-term debt
|
(140 | ) | (140 | ) | ||||
Other liabilities (3)
|
(44 | ) | (34 | ) | ||||
Stockholders' Equity
|
$ | 1,025 | $ | 1,075 | ||||
Book Value Per Share
|
$ | 13.04 | $ | 13.76 |
Sources and Uses of Cash (1)
|
||||||||
($ in millions)
|
|
|||||||
Three Months Ended
|
||||||||
June 30, 2011
|
March 31, 2011
|
|||||||
Beginning cash balance
|
$ | 220 | $ | 47 | ||||
Sources of cash(2)
|
||||||||
Loans at Redwood
|
5 | 6 | ||||||
Proceeds from securitization
|
- | 296 | ||||||
Securities at Redwood - principal and interest
|
||||||||
Residential senior
|
30 | 33 | ||||||
Residential Re-REMIC
|
1 | 2 | ||||||
Residential subordinate
|
8 | 9 | ||||||
Commercial and CDO
|
1 | - | ||||||
Sales of securities (3)
|
14 | 30 | ||||||
Investments in Consolidated Entities (1)
|
16 | 15 | ||||||
Short-term debt financing
|
41 | - | ||||||
Derivative margin returned, net
|
- | 3 | ||||||
Changes in working capital
|
- | 3 | ||||||
Total sources of cash
|
116 | 397 | ||||||
Uses of cash
|
||||||||
Acquisitions of residential loans
|
(152 | ) | (101 | ) | ||||
Origination of commercial loans
|
(29 | ) | (12 | ) | ||||
Acquisitions of securities(4)
|
(29 | ) | (13 | ) | ||||
Investment in New Sequoia
|
- | (15 | ) | |||||
Short-term debt repayment
|
- | (44 | ) | |||||
Cash operating expenses
|
(12 | ) | (17 | ) | ||||
Derivative margin posted, net
|
(11 | ) | - | |||||
Interest expense on long-term debt
|
(2 | ) | (2 | ) | ||||
Dividends
|
(20 | ) | (20 | ) | ||||
Changes in working capital
|
(1 | ) | - | |||||
Total uses of cash
|
(256 | ) | (224 | ) | ||||
Net (uses) sources of cash
|
(140 | ) | 173 | |||||
Ending Cash Balance
|
$ | 80 | $ | 220 |