Redwood Trust Reports Third Quarter 2012 Results
MILL VALLEY, Calif., Nov. 1, 2012 /PRNewswire/ -- Redwood Trust, Inc. (NYSE:RWT) today reported net income for the third quarter of 2012 of $40 million, or $0.48 per fully diluted share. This compares to net income of $20 million, or $0.24 per fully diluted share, for the second quarter of 2012, and net income of $1 million, or $0.01 per fully diluted share, for the third quarter of 2011.
Redwood also reported estimated total taxable income of $17 million, or $0.21 per share, for the third quarter of 2012. This compares to estimated taxable income of $17 million, or $0.22 per share, for the second quarter of 2012, and taxable income of $6 million, or $0.07 per share, for the third quarter of 2011.
Additional information on Redwood's business, financial results, and non-GAAP metrics can be found in The Redwood Review, a quarterly publication available on Redwood's website at www.redwoodtrust.com. In order to complete the formatting of its Quarterly Report on Form 10-Q with eXtensible Business Reporting Language (XBRL) tags, Redwood plans to file the Quarterly Report with the Securities and Exchange Commission by Monday, November 5, 2012, and also make it available on the website.
Cautionary Statement: This press release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve numerous risks and uncertainties. Our actual results may differ from our 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 most recent Annual Report on Form 10-K 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 (SEC), 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 Quarter |
Second Quarter |
First Quarter |
Fourth Quarter |
Third Quarter |
||||||||||
| ($ in millions, except share data) |
|||||||||||||||
| 2012 |
2012 |
2012 |
2011 |
2011 |
|||||||||||
| Interest income |
$ |
60 |
$ |
60 |
$ |
59 |
$ |
56 |
$ |
53 |
|||||
| Interest expense |
(28) |
(29) |
(31) |
(29) |
(24) |
||||||||||
| Net interest income |
31 |
31 |
28 |
27 |
29 |
||||||||||
| (Provision for) reversal of provision for loan losses |
(1) |
1 |
- |
(8) |
(4) |
||||||||||
| Other market valuation adjustments, net |
(3) |
(5) |
(1) |
(10) |
(13) |
||||||||||
| Net interest income after provision and |
27 |
27 |
27 |
10 |
12 |
||||||||||
| other market valuation adjustments |
|||||||||||||||
| Mortgage banking activities, net |
17 |
2 |
4 |
- |
- |
||||||||||
| Operating expenses |
(17) |
(15) |
(15) |
(13) |
(12) |
||||||||||
| Realized gains, net |
14 |
7 |
14 |
- |
1 |
||||||||||
| Provision for income taxes |
(1) |
(1) |
- |
- |
- |
||||||||||
| Net Income (Loss) Attributable to Redwood Trust, Inc. |
$ |
40 |
$ |
20 |
$ |
30 |
$ |
(3) |
$ |
1 |
|||||
| Average diluted shares (thousands) |
80,764 |
78,815 |
79,892 |
78,370 |
78,471 |
||||||||||
| Diluted earnings (loss) per share |
$ |
0.48 |
$ |
0.24 |
$ |
0.37 |
$ |
(0.03) |
$ |
0.01 |
|||||
| Regular dividends declared per common share |
$ |
0.25 |
$ |
0.25 |
$ |
0.25 |
$ |
0.25 |
$ |
0.25 |
|||||
| (1) Certain totals may not foot due to rounding. |
| REDWOOD TRUST, INC. |
||||||
| Consolidated Income Statements (1) |
||||||
| ($ in millions, except share data) |
Nine Months Ended September 30, |
|||||
| 2012 |
2011 |
|||||
| Interest income |
$ |
178 |
$ |
161 |
||
| Interest expense |
(88) |
(70) |
||||
| Net interest income |
90 |
91 |
||||
| Provision for loan losses |
- |
(8) |
||||
| Other market valuation adjustments, net |
(10) |
(30) |
||||
| Net interest income after provision and |
80 |
52 |
||||
| other market valuation adjustments |
||||||
| Mortgage banking activities, net |
23 |
- |
||||
| Operating expenses |
(47) |
(35) |
||||
| Realized gains, net |
35 |
11 |
||||
| Provision for income taxes |
(1) |
- |
||||
| Net income |
90 |
28 |
||||
| Less: Net loss attributable to noncontrolling interest |
- |
(1) |
||||
| Net Income Attributable to Redwood Trust, Inc. |
$ |
90 |
$ |
29 |
||
| Average diluted shares (thousands) |
80,176 |
78,276 |
||||
| Diluted earnings per share |
$ |
1.09 |
$ |
0.35 |
||
| Regular dividends declared per common share |
$ |
0.75 |
$ |
0.75 |
||
| (1) Certain totals may not foot due to rounding. |
| REDWOOD TRUST, INC. |
|||||||||||||||
| Consolidated Balance Sheets (1) |
30-Sep 2012 |
30-Jun 2012 |
31-Mar 2012 |
31-Dec 2011 |
30-Sep 2011 |
||||||||||
| ($ in millions, except share data) |
|||||||||||||||
| Residential loans |
$ |
3,495 |
$ |
3,472 |
$ |
3,651 |
$ |
4,195 |
$ |
4,158 |
|||||
| Commercial loans |
298 |
259 |
190 |
170 |
111 |
||||||||||
| Real estate securities, at fair value |
1,313 |
1,311 |
1,262 |
982 |
1,033 |
||||||||||
| Cash and cash equivalents |
39 |
70 |
150 |
267 |
133 |
||||||||||
| Other assets |
152 |
134 |
119 |
130 |
119 |
||||||||||
| Total Assets |
$ |
5,297 |
$ |
5,246 |
$ |
5,372 |
$ |
5,743 |
$ |
5,554 |
|||||
| Short-term debt |
$ |
522 |
$ |
455 |
$ |
441 |
$ |
428 |
$ |
- |
|||||
| Other liabilities |
156 |
136 |
126 |
144 |
163 |
||||||||||
| Asset-backed securities issued |
3,429 |
3,564 |
3,704 |
4,139 |
4,293 |
||||||||||
| Long-term debt |
140 |
140 |
140 |
140 |
140 |
||||||||||
| Total liabilities |
4,247 |
4,295 |
4,410 |
4,851 |
4,595 |
||||||||||
| Stockholders' equity |
1,050 |
951 |
962 |
893 |
959 |
||||||||||
| Total Liabilities and Equity |
$ |
5,297 |
$ |
5,246 |
$ |
5,372 |
$ |
5,743 |
$ |
5,554 |
|||||
| Shares outstanding at period end (thousands) |
81,526 |
79,263 |
78,756 |
78,556 |
78,495 |
||||||||||
| GAAP book value per share |
$ |
12.88 |
$ |
12.00 |
$ |
12.22 |
$ |
11.36 |
$ |
12.22 |
|||||
| (1) Certain totals may not foot due to rounding. See notes to consolidating balance sheet on page 6. |
| REDWOOD TRUST, INC. |
|||||||||
| The following tables show the estimated effect that Redwood (Parent) and our Consolidated Entities had on GAAP income for the three and nine months ended September 30, 2012. |
|||||||||
| Consolidating Income Statement (1) |
|||||||||
| Three Months Ended September 30, 2012 |
|||||||||
| ($ in millions) |
Redwood |
Consolidated |
Redwood |
||||||
| (Parent) (2) |
Entities |
Consolidated |
|||||||
| Interest income |
$ |
29 |
$ |
25 |
$ |
54 |
|||
| Net discount (premium) amortization |
7 |
(2) |
6 |
||||||
| Total interest income |
36 |
23 |
60 |
||||||
| Interest expense |
(6) |
(22) |
(28) |
||||||
| Net interest income |
30 |
1 |
31 |
||||||
| Provision for loan losses |
(1) |
(1) |
(1) |
||||||
| Other market valuation adjustments, net |
(6) |
2 |
(3) |
||||||
| Net interest income after provision |
24 |
3 |
27 |
||||||
| and other market valuation adjustments |
|||||||||
| Mortgage banking activities, net |
17 |
- |
17 |
||||||
| Operating expenses |
(17) |
- |
(17) |
||||||
| Realized gains, net |
14 |
- |
14 |
||||||
| Provision for income taxes |
(1) |
- |
(1) |
||||||
| Net Income |
$ |
37 |
$ |
3 |
$ |
40 |
|||
| Consolidating Income Statement (1) |
|||||||||
| Nine Months Ended September 30, 2012 |
|||||||||
| ($ in millions) |
Redwood |
Consolidated |
Redwood |
||||||
| (Parent) (2) |
Entities |
Consolidated |
|||||||
| Interest income |
$ |
79 |
$ |
79 |
$ |
158 |
|||
| Net discount (premium) amortization |
24 |
(4) |
20 |
||||||
| Total interest income |
103 |
75 |
178 |
||||||
| Interest expense |
(18) |
(70) |
(88) |
||||||
| Net interest income |
85 |
5 |
90 |
||||||
| (Provision for) reversal of provision for loan losses |
(1) |
1 |
- |
||||||
| Other market valuation adjustments, net |
(13) |
3 |
(10) |
||||||
| Net interest income after provision |
72 |
9 |
80 |
||||||
| and other market valuation adjustments |
|||||||||
| Mortgage banking activities, net |
23 |
- |
23 |
||||||
| Operating expenses |
(47) |
- |
(47) |
||||||
| Realized gains, net |
27 |
7 |
35 |
||||||
| Provision for income taxes |
(1) |
- |
(1) |
||||||
| Net Income |
$ |
74 |
$ |
16 |
$ |
90 |
|||
| (1) Certain totals may not foot due to rounding. |
|||||||||
| (2) The interest income and interest expense related to the resecuritization we engaged in during the third quarter of 2011 are included in Redwood (Parent). |
|||||||||
| REDWOOD TRUST, INC. |
|||||||||
| We present this table to highlight the effect that Redwood (Parent) and our Consolidated Entities had on our GAAP balance sheet at September 30, 2012. |
|||||||||
| Consolidating Balance Sheet (1) |
|||||||||
| September 30, 2012 |
|||||||||
| ($ in millions) |
Redwood |
Consolidated |
Redwood |
||||||
| (Parent) (2) |
Entities |
Consolidated |
|||||||
| Residential loans |
$ |
418 |
$ |
3,077 |
$ |
3,495 |
|||
| Commercial loans |
286 |
12 |
298 |
||||||
| Real estate securities, at fair value |
1,069 |
243 |
1,313 |
||||||
| Cash and cash equivalents |
39 |
- |
39 |
||||||
| Total earning assets |
1,813 |
3,332 |
5,145 |
||||||
| Other assets |
93 |
60 |
152 |
||||||
| Total Assets |
$ |
1,906 |
$ |
3,392 |
$ |
5,297 |
|||
| Short-term debt |
$ |
522 |
$ |
- |
$ |
522 |
|||
| Other liabilities |
99 |
58 |
156 |
||||||
| Asset-backed securities issued |
179 |
3,250 |
3,429 |
||||||
| Long-term debt |
140 |
- |
140 |
||||||
| Total liabilities |
940 |
3,308 |
4,247 |
||||||
| Stockholders' equity |
966 |
84 |
1,050 |
||||||
| Total Liabilities and Equity |
$ |
1,906 |
$ |
3,392 |
$ |
5,297 |
|||
| (1) Certain totals may not foot due to rounding. Certain Sequoia and Acacia securitization entities and the resecuritization we engaged in during the third quarter of 2011 are treated as secured borrowing transactions for GAAP and we are required under GAAP to consolidate the assets and liabilities of these securitization entities. The securitized assets and liabilities are legally not ours, and we own only the securities and interests that we acquired from these entities. The liabilities of these entities are obligations payable only from the cash flow generated by their securitized assets. |
|||||||||
| (2) The consolidating balance sheet presents the assets and liabilities of the resecuritization we engaged in during the third quarter of 2011 under Redwood (Parent), although these assets and liabilities are owned by the resecuritization entity and are legally not ours and we own only the securities and interests that we acquired from the resecuritization entity. At September 30, 2012, the resecuritization accounted for $325 million of available-for-sale securities and $179 million of asset-backed securities issued and our investment in this resecuritization is reflected in the difference between these assets and liabilities. |
|||||||||
| REDWOOD TRUST, INC. |
|||||||||
| Tax / GAAP Differences (1) |
|||||||||
| Three Months Ended September 30, 2012 |
|||||||||
| ($ in millions, except per share data) |
|||||||||
| Tax (Est.) |
GAAP |
Differences |
|||||||
| Interest income |
$ |
43 |
$ |
60 |
$ |
(17) |
|||
| Interest expense |
(6) |
(28) |
22 |
||||||
| Net Interest Income |
37 |
31 |
5 |
||||||
| Provision for loan losses |
- |
(1) |
1 |
||||||
| Realized credit losses |
(6) |
- |
(6) |
||||||
| Other market valuation adjustments, net |
- |
(3) |
3 |
||||||
| Mortgage banking activities, net |
- |
17 |
(17) |
||||||
| Operating expenses |
(14) |
(17) |
3 |
||||||
| Realized gains, net |
- |
14 |
(14) |
||||||
| Provision for income taxes |
- |
(1) |
1 |
||||||
| Net Income |
$ |
17 |
$ |
40 |
$ |
(23) |
|||
| Income per share |
$ |
0.21 |
$ |
0.48 |
$ |
(0.27) |
|||
| Tax / GAAP Differences (1) |
|||||||||
| Nine Months Ended September 30, 2012 |
|||||||||
| ($ in millions, except per share data) |
|||||||||
| Tax (Est.) |
GAAP |
Differences |
|||||||
| Interest income |
$ |
123 |
$ |
178 |
$ |
(55) |
|||
| Interest expense |
(18) |
(88) |
70 |
||||||
| Net Interest Income |
105 |
90 |
15 |
||||||
| Provision for loan losses |
- |
- |
- |
||||||
| Realized credit losses |
(21) |
- |
(21) |
||||||
| Other market valuation adjustments, net |
- |
(10) |
10 |
||||||
| Mortgage banking activities, net |
- |
23 |
(23) |
||||||
| Operating expenses |
(41) |
(47) |
6 |
||||||
| Realized gains, net |
- |
35 |
(35) |
||||||
| Provision for income taxes |
- |
(1) |
1 |
||||||
| Net Income |
$ |
43 |
$ |
90 |
$ |
(47) |
|||
| Income per share |
$ |
0.53 |
$ |
1.09 |
$ |
(0.56) |
|||
| (1) Certain totals may not foot due to rounding. Taxable income for 2012 is an estimate until we file our 2012 tax return. Taxable income per share is based on the number of shares outstanding at the end of each quarter. |
SOURCE Redwood Trust, Inc.
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