MILL VALLEY, Calif.,
Oct. 29, 2020 /PRNewswire/
-- Redwood Trust, Inc. (NYSE:RWT), a leading innovator in
housing credit investing, today reported its financial results for
the quarter ended September 30, 2020.
Key Financial Results and Metrics
- GAAP net income was $142 million,
or $1.02 per diluted common
share
- GAAP book value per common share was $9.41 at September 30, 2020
- Economic return on book value(1) of 17%
- Unrestricted cash balance of $451
million at September 30, 2020
- Total recourse leverage ratio(2) of 1.4x at
September 30, 2020
- Declared and paid a regular quarterly cash dividend of
$0.14 per common share for the third
quarter, an increase of 12% from the prior quarter
Operating Business Highlights
Residential
Lending
- Locked over $2.1
billion(3) of jumbo residential loans; loan
purchase commitments were $1.2
billion(4)
- Loan pipeline at September 30,
2020 included $1.8 billion of
loans identified for purchase
- Purchased $176 million of jumbo
loans and sold $89 million of whole
loans
- On October 29th, completed a
Sequoia securitization backed by $304
million of Select jumbo loans
Business Purpose Lending
- Record contribution of $52
million from business purpose lending segment through
increase in fair value of loans held in inventory at June 30, 2020, and third quarter
originations
- Originated $261 million in
business purpose loans, including $196
million of SFR loans and $66
million of bridge loans
- Completed one CoreVest securitization backed by single-family
rental loans totaling $293 million
(the platform's 13th overall)
_____________________
(1)
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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
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(2)
|
Recourse leverage
ratio is defined as recourse debt at Redwood divided by tangible
stockholders' equity. Recourse debt excludes $7.9 billion of
consolidated securitization debt (ABS issued and servicer advance
financing) and other debt that is non-recourse to Redwood, and
tangible stockholders' equity excludes $61 million of intangible
assets.
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(3)
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Does not account for
potential fallout from pipeline that typically occurs through the
lending process
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(4)
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Includes estimated
potential fallout from locked pipeline that typically occurs
through the lending process
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"We viewed the third quarter as a transition to the future for
Redwood, as record-breaking results for both Select residential
loan locks and business purpose lending earnings emphasized the
strength of our operating businesses. The secular trends supporting
our housing thesis are intact and accelerating with a nationwide
push toward single-family housing – whether rented or owned," said
Chris Abate, Chief Executive Officer
of Redwood Trust. "We continue to experience strong demand for
loans and believe we are well positioned to take market share in
the coming quarters – a prospect bolstered by new technological
initiatives. In spite of expected volatility through the remainder
of 2020, we are optimistic that we will end the year on a high
note."
Other Company Highlights
- During the quarter, the fair value of its securities investment
portfolio increased 10%
- Repurchased 3.0 million shares of common stock at a weighted
average price of $7.10 per share, for
a total of $22 million
Third Quarter 2020 Redwood Review Available Online
A further discussion of Redwood's business, financial results
and taxable income is included in the third quarter 2020 Redwood
Review, which is available within the "Financials-Redwood Review"
section on the Company's investor relations website at
ir.redwoodtrust.com.
REDWOOD TRUST,
INC.
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Financial
Performance
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Three Months
Ended
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($ in millions,
except per share data)
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9/30/2020
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6/30/2020
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9/30/2019
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GAAP net
income
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$
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142
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$
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167
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$
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34
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GAAP net income per
diluted common share
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$
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1.02
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$
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1.00
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$
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0.31
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REIT taxable income
(loss) (estimated)
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$
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7
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$
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(58)
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$
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39
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REIT taxable income
(loss) per share (estimated)
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$
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0.07
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$
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(0.50)
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$
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0.34
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GAAP book value per
share
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$
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9.41
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$
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8.15
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$
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15.92
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Dividends per common
share
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$
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0.14
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$
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0.125
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$
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0.30
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Conference Call and Webcast
Redwood will host an
earnings call today, October 29, 2020, at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time to discuss its third
quarter 2020 financial results. The number to dial in order to
listen to the conference call is 1-877-300-8521 in the U.S. and
Canada. International callers must
dial 1-412-317-6026. Callers should reference call ID #10149161. A
replay of the call will be available through midnight on
November 12, 2020, 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 #10149161.
The live conference call will also be webcast in listen-only
mode in the Newsroom section of Redwood's website under "Events."
To listen to the webcast, please go to Redwood's website at least
15 minutes prior to the call to register and 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 Monday, November 9, 2020, and also make
it available on Redwood's website.
About Redwood Trust
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 U.S. housing market not served by government
programs. We deliver customized housing credit investments to a
diverse mix of investors, through our best-in-class securitization
platforms; whole-loan distribution activities; and our
publicly-traded shares. Our consolidated investment portfolio has
evolved to incorporate a diverse mix of residential, business
purpose and multifamily investments. Our goal is to provide
attractive returns to shareholders through a stable and growing
stream of earnings and dividends, capital appreciation, and a
commitment to technological innovation that facilitates risk-minded
scale. Since going public in 1994, we have managed our business
through several cycles, built a track record of innovation, and a
best-in-class reputation for service and a common-sense approach to
credit investing. Redwood Trust is internally managed, and
structured as a real estate investment trust ("REIT") for tax
purposes. For more information about Redwood, please visit our
website at www.redwoodtrust.com.
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 our
financial outlook and expectations for 2020 and future years,
including our optimism that we will end 2020 on a high note, that
secular trends supporting our housing thesis are intact and
accelerating, and our positioning to take market share in coming
quarters, our estimates of 2020 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 Quarterly Report on Form 10-Q
for the quarter ended March 31, 2020
under the caption "Risk Factors," and in our Current Report on Form
8-K filed on April 2, 2020. 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.
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Consolidated
Income Statements (1)
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Three Months
Ended
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($ in millions,
except share and per share data)
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9/30/20
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6/30/20
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3/31/20
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12/31/19
|
|
9/30/19
|
|
|
|
|
|
|
|
|
|
|
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Interest
income
|
|
$
|
122
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|
|
$
|
130
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|
|
$
|
198
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$
|
193
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$
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150
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Interest
expense
|
|
(100)
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|
|
(103)
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|
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(147)
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(148)
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(117)
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Net interest
income
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22
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|
|
27
|
|
|
51
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|
|
45
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|
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34
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Non-interest income
(loss)
|
|
|
|
|
|
|
|
|
|
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Mortgage banking
activities, net
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59
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|
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(6)
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|
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(29)
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46
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|
|
10
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Investment fair value
changes, net
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107
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152
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(871)
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1
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|
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11
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Other
income
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—
|
|
|
1
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|
|
3
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|
|
5
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|
|
4
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Realized gains,
net
|
|
1
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|
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26
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|
4
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6
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5
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Total non-interest
income (loss), net
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167
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173
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(893)
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58
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30
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General and
administrative expenses
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(28)
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(29)
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(29)
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(38)
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(25)
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Loan acquisition
costs
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(2)
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(2)
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(4)
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(5)
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(2)
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Other
expenses
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(8)
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(5)
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(91)
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(7)
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(3)
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(Provision for)
benefit from income taxes
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(9)
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—
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22
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(4)
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—
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Net income
(loss)
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$
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142
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$
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165
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$
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(943)
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$
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49
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$
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34
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Weighted average
diluted shares (thousands) (2)
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141,970
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147,099
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114,077
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152,983
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136,523
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Diluted earnings
(loss) per common share
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$
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1.02
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$
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1.00
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$
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(8.28)
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$
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0.38
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$
|
0.31
|
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Regular dividends
declared per common share
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|
$
|
0.14
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$
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0.125
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$
|
0.32
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|
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$
|
0.30
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|
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$
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0.30
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|
|
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(1)
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Certain totals may
not foot due to rounding.
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(2)
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In the periods
presented above, excluding the first quarter of 2020, 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,
2020, June 30, 2020, March 31, 2020, December 31, 2019, and
September 30, 2019 were 111,904, 114,940, 114,838, 114,353, and
112,102, respectively.
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REDWOOD TRUST,
INC.
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Consolidated
Income Statements (1)
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Nine Months Ended
September 30,
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($ in millions,
except share and per share data)
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2020
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2019
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Interest
income
|
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$
|
450
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$
|
430
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Interest
expense
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(350)
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(332)
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Net interest
income
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100
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98
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Non-interest (loss)
income
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Mortgage banking
activities, net
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25
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41
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Investment fair value
changes, net
|
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(612)
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35
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Other
income
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4
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14
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Realized gains,
net
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30
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|
|
18
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Total non-interest
(loss) income
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(553)
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108
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General and
administrative expenses
|
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(85)
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(71)
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Loan acquisition
costs
|
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(8)
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(6)
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Other
expenses
|
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(104)
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(6)
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Benefit from
(provision for) income taxes
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13
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(3)
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Net (loss)
income
|
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$
|
(636)
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$
|
120
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Weighted average
diluted shares (thousands)
|
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113,952
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|
|
131,203
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Diluted (loss)
earnings per common share
|
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$
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(5.60)
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$
|
1.09
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Regular dividends
declared per common share
|
|
$
|
0.585
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$
|
0.90
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REDWOOD TRUST,
INC.
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Consolidated
Balance Sheets (1)
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($ in millions,
except share and per share data)
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|
9/30/20
|
|
6/30/20
|
|
3/31/20
|
|
12/31/19
|
|
9/30/19
|
|
|
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Residential
loans
|
|
$
|
4,495
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|
|
$
|
4,534
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|
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$
|
6,711
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|
|
$
|
7,715
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|
|
$
|
8,682
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|
|
Business purpose
residential loans
|
|
3,956
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|
|
3,782
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|
|
3,464
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|
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3,507
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|
|
336
|
|
|
Multifamily
loans
|
|
491
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|
|
489
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|
|
470
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|
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4,409
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|
|
3,792
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|
|
Real estate
securities
|
|
351
|
|
|
316
|
|
|
293
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|
|
1,100
|
|
|
1,285
|
|
|
Other
investments
|
|
385
|
|
|
430
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|
|
446
|
|
|
358
|
|
|
348
|
|
|
Cash and cash
equivalents
|
|
451
|
|
|
529
|
|
|
378
|
|
|
197
|
|
|
395
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|
|
Other
assets
|
|
273
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|
|
281
|
|
|
538
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|
|
710
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|
|
639
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|
|
Total
assets
|
|
$
|
10,402
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|
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$
|
10,362
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|
|
$
|
12,301
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|
|
$
|
17,995
|
|
|
$
|
15,476
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|
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|
|
|
|
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|
|
|
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Short-term
debt
|
|
$
|
483
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|
|
$
|
663
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|
|
$
|
2,342
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|
|
$
|
2,329
|
|
|
$
|
1,981
|
|
|
Other
liabilities
|
|
158
|
|
|
168
|
|
|
318
|
|
|
370
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|
|
411
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|
|
Asset-backed
securities issued
|
|
7,172
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|
|
6,856
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|
|
6,462
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|
|
10,515
|
|
|
8,346
|
|
|
Long-term debt,
net
|
|
1,536
|
|
|
1,738
|
|
|
2,454
|
|
|
2,953
|
|
|
2,954
|
|
|
Total
liabilities
|
|
9,349
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|
|
9,425
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|
|
11,576
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|
|
16,168
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|
|
13,691
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity
|
|
1,053
|
|
|
937
|
|
|
725
|
|
|
1,827
|
|
|
1,785
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and
equity
|
|
$
|
10,402
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|
|
$
|
10,362
|
|
|
$
|
12,301
|
|
|
$
|
17,995
|
|
|
$
|
15,476
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares outstanding at
period end (thousands)
|
|
111,904
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|
|
114,940
|
|
|
114,838
|
|
|
114,353
|
|
|
112,102
|
|
|
GAAP book value per
share
|
|
$
|
9.41
|
|
|
$
|
8.15
|
|
|
$
|
6.32
|
|
|
$
|
15.98
|
|
|
$
|
15.92
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Certain
totals may not foot due to rounding.
|
CONTACTS
|
Lisa M.
Hartman
|
SVP, Head of Investor
Relations
|
Phone:
866-269-4976
|
Email:
investorrelations@redwoodtrust.com
|
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SOURCE Redwood Trust, Inc.