MILL VALLEY, Calif., Aug. 4 /PRNewswire-FirstCall/ -- Redwood Trust, Inc. (NYSE: RWT) today reported net income for the second quarter of 2010 of $29 million, or $0.35 per fully diluted share. This compares to net income of $47 million, or $0.58 per fully diluted share, for the first quarter of 2010, and net income of $7 million, or $0.10 per fully diluted share, for the second quarter of 2009.
Redwood also reported an estimated taxable loss of $3 million, or $0.03 per share, during the second quarter of 2010. This compares to estimated taxable income of $1 million, or $0.01 per share, for the first quarter of 2010, and a taxable loss of $12 million, or $0.16 per share, for the second quarter of 2009.
At June 30, 2010, GAAP book value was $12.71 per share, a decrease of $0.13 per share from March 31, 2010, and management's estimate of non-GAAP economic value was $13.37 per share, an increase of $0.05 per share from March 31, 2010.
During the second quarter of 2010, Redwood acquired $23 million of residential securities and sold $116 million of securities. Redwood ended the quarter with a total securities portfolio of $734 million, down from $840 million at the beginning of the quarter, and with $288 million of cash and cash equivalents.
Please see the tables that follow for reconciliations between GAAP and non-GAAP metrics. Additional information on Redwood's business, financial results, and on non-GAAP metrics is available in Redwood's Quarterly Report on Form 10-Q for the three months ended June 30, 2010, which was filed today with the Securities and Exchange Commission, and is also available on Redwood's website at www.redwoodtrust.com.
The accounting concepts and disclosures relating to Redwood's financial statements are complex. The Redwood Review is an additional publication that provides information about Redwood. Today, The Redwood Review was released covering the second quarter of 2010 and is available on our 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 Annual Report on Form 10-K for the year ended December 31, 2009, 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 |
Second |
First |
Fourth |
Third |
Second |
|||||||||||
($ in millions, except share data) |
Quarter |
Quarter |
Quarter |
Quarter |
Quarter |
|||||||||||
2010 |
2010 |
2009 |
2009 |
2009 |
||||||||||||
Interest income |
$ |
56 |
$ |
58 |
$ |
62 |
$ |
70 |
$ |
74 |
||||||
Interest expense |
(21) |
(18) |
(21) |
(25) |
(39) |
|||||||||||
Net interest income |
35 |
40 |
41 |
45 |
35 |
|||||||||||
Provision for loan losses |
(4) |
(9) |
(9) |
(10) |
(15) |
|||||||||||
Market valuation adjustments, net |
(7) |
(11) |
(4) |
(11) |
(29) |
|||||||||||
Net interest income (loss) after provision and |
24 |
20 |
28 |
24 |
(9) |
|||||||||||
market valuation adjustments |
||||||||||||||||
Operating expenses |
(11) |
(17) |
(11) |
(15) |
(10) |
|||||||||||
Realized gains, net |
16 |
44 |
20 |
18 |
25 |
|||||||||||
Benefit from income taxes |
- |
- |
3 |
- |
1 |
|||||||||||
Net income |
29 |
47 |
40 |
27 |
7 |
|||||||||||
Less: Net income attributable to |
- |
- |
- |
- |
- |
|||||||||||
GAAP net income |
$ |
29 |
$ |
47 |
$ |
40 |
$ |
27 |
$ |
7 |
||||||
Average diluted shares (thousands) |
78,852 |
78,542 |
78,101 |
78,223 |
66,446 |
|||||||||||
Diluted earnings per share |
$ |
$0.35 |
$ |
0.58 |
$ |
0.51 |
$ |
0.34 |
$ |
0.10 |
||||||
Regular dividends declared per common share |
$ |
0.25 |
$ |
0.25 |
$ |
0.25 |
$ |
0.25 |
$ |
0.25 |
||||||
REDWOOD TRUST, INC. |
|||||||
Consolidated Income Statement |
Six Months Ended |
||||||
($ in millions, except share data) |
June 30, |
||||||
2010 |
2009 |
||||||
Interest income |
$ |
115 |
$ |
156 |
|||
Interest expense |
(39) |
(87) |
|||||
Net interest income |
76 |
69 |
|||||
Provision for loan losses |
(14) |
(31) |
|||||
Market valuation adjustments, net |
(18) |
(72) |
|||||
Net interest loss after provision and |
44 |
(34) |
|||||
market valuation adjustments |
|||||||
Operating expenses |
(29) |
(22) |
|||||
Realized gains, net |
60 |
26 |
|||||
Benefit from income taxes |
- |
1 |
|||||
Net income (loss) |
75 |
(29) |
|||||
Less: Net (loss) income attributable to noncontrolling interest |
- |
(1) |
|||||
GAAP net income (loss) |
$ |
75 |
$ |
(28) |
|||
Average diluted shares (thousands) |
78,662 |
59,138 |
|||||
Diluted earnings (loss) per share |
$ |
0.94 |
$ |
(0.48) |
|||
Regular dividends declared per common share |
$ |
0.50 |
$ |
0.50 |
|||
REDWOOD TRUST, INC. |
|||||||||||||||
Consolidated Balance Sheets |
30-Jun |
31-Mar |
31-Dec |
30-Sep |
30-Jun |
||||||||||
($ in millions, except share data) |
2010 |
2010 |
2009 |
2009 |
2009 |
||||||||||
Real estate loans |
$ |
3,810 |
$ |
3,662 |
$ |
3,740 |
$ |
3,831 |
$ |
3,966 |
|||||
Real estate securities, at fair value: |
|||||||||||||||
Trading securities |
276 |
289 |
278 |
275 |
253 |
||||||||||
Available-for-sale securities |
741 |
847 |
810 |
787 |
551 |
||||||||||
Other investments |
4 |
11 |
20 |
29 |
47 |
||||||||||
Cash and cash equivalents |
288 |
242 |
243 |
217 |
337 |
||||||||||
Other assets |
100 |
144 |
162 |
146 |
131 |
||||||||||
Total Assets |
$ |
5,219 |
$ |
5,195 |
$ |
5,253 |
$ |
5,285 |
$ |
5,285 |
|||||
Short-term debt |
$ |
- |
$ |
- |
$ |
- |
$ |
- |
$ |
- |
|||||
Other liabilities |
142 |
207 |
181 |
203 |
185 |
||||||||||
Asset-backed securities issued - Sequoia entities |
3,681 |
3,557 |
3,645 |
3,728 |
3,843 |
||||||||||
Asset-backed securities issued - Acacia entities |
253 |
280 |
298 |
288 |
287 |
||||||||||
Long-term debt |
140 |
140 |
140 |
140 |
150 |
||||||||||
Total liabilities |
4,216 |
4,184 |
4,264 |
4,359 |
4,465 |
||||||||||
Stockholders’ equity |
991 |
998 |
972 |
907 |
802 |
||||||||||
Noncontrolling interest |
12 |
13 |
17 |
19 |
18 |
||||||||||
Total equity |
1,003 |
1,011 |
989 |
926 |
820 |
||||||||||
Total Liabilities and Equity |
$ |
5,219 |
$ |
5,195 |
$ |
5,253 |
$ |
5,285 |
$ |
5,285 |
|||||
Shares outstanding at period end (thousands) |
77,908 |
77,751 |
77,737 |
77,669 |
77,503 |
||||||||||
GAAP book value per share |
$ |
12.71 |
$ |
12.84 |
$ |
12.50 |
$ |
11.68 |
$ |
10.35 |
|||||
REDWOOD TRUST, INC. |
||||||||||||||||
Consolidating Income Statement |
||||||||||||||||
Three Months Ended June 30, 2010 |
Other |
|||||||||||||||
($ in millions) |
Redwood |
2010 |
Consolidated |
Intercompany |
Redwood |
|||||||||||
Parent |
Sequoia |
Entities |
Adjustments |
Consolidated |
||||||||||||
Interest income |
$ |
16 |
$ |
1 |
$ |
30 |
$ |
- |
$ |
47 |
||||||
Net discount (premium) amortization |
10 |
- |
(1) |
- |
9 |
|||||||||||
Total interest income |
26 |
1 |
29 |
- |
56 |
|||||||||||
Management fees |
- |
- |
- |
- |
- |
|||||||||||
Interest expense |
(2) |
(1) |
(18) |
- |
(21) |
|||||||||||
Net interest income |
24 |
- |
11 |
- |
35 |
|||||||||||
Provision for loan losses |
- |
- |
(4) |
- |
(4) |
|||||||||||
Market valuation adjustments, net |
(4) |
- |
(3) |
- |
(7) |
|||||||||||
Net interest income after provision |
20 |
- |
4 |
- |
24 |
|||||||||||
and market valuation adjustments |
||||||||||||||||
Operating expenses |
(11) |
- |
- |
- |
(11) |
|||||||||||
Realized gains, net |
16 |
- |
- |
- |
16 |
|||||||||||
Income from Other Consolidated Entities |
4 |
- |
- |
(4) |
- |
|||||||||||
Noncontrolling interest |
- |
- |
- |
- |
- |
|||||||||||
Benefit from income taxes |
- |
- |
- |
- |
- |
|||||||||||
Net income |
$ |
29 |
$ |
- |
$ |
4 |
$ |
(4) |
$ |
29 |
||||||
Consolidating Income Statement |
||||||||||||||||
Six Months Ended June 30, 2010 |
Other |
|||||||||||||||
($ in millions) |
Redwood |
2010 |
Consolidated |
Intercompany |
Redwood |
|||||||||||
Parent |
Sequoia |
Entities |
Adjustments |
Consolidated |
||||||||||||
Interest income |
$ |
33 |
$ |
1 |
$ |
63 |
$ |
1 |
$ |
98 |
||||||
Net discount (premium) amortization |
19 |
- |
(2) |
- |
17 |
|||||||||||
Total interest income |
52 |
1 |
61 |
1 |
115 |
|||||||||||
Management fees |
1 |
- |
- |
(1) |
- |
|||||||||||
Interest expense |
(3) |
(1) |
(35) |
- |
(39) |
|||||||||||
Net interest income |
50 |
- |
26 |
- |
76 |
|||||||||||
Provision for loan losses |
- |
- |
(14) |
- |
(14) |
|||||||||||
Market valuation adjustments, net |
(7) |
- |
(12) |
- |
(19) |
|||||||||||
Net interest income after provision |
43 |
- |
- |
- |
43 |
|||||||||||
and market valuation adjustments |
||||||||||||||||
Operating expenses |
(28) |
- |
- |
- |
(28) |
|||||||||||
Realized gains, net |
54 |
- |
6 |
- |
60 |
|||||||||||
Income from Other Consolidated Entities |
6 |
- |
- |
(6) |
- |
|||||||||||
Noncontrolling interest |
- |
- |
- |
- |
- |
|||||||||||
Benefit from income taxes |
- |
- |
- |
- |
- |
|||||||||||
Net income |
$ |
75 |
$ |
- |
$ |
6 |
$ |
(6) |
$ |
75 |
||||||
REDWOOD TRUST, INC. |
||||||||||||||||
Consolidating Balance Sheet |
||||||||||||||||
June 30, 2010 |
Other |
|||||||||||||||
($ in millions) |
Redwood |
2010 |
Consolidated |
Intercompany |
Redwood |
|||||||||||
Parent |
Sequoia |
Entities |
Adjustments |
Consolidated |
||||||||||||
Real estate loans |
$ |
3 |
$ |
226 |
$ |
3,581 |
$ |
- |
$ |
3,810 |
||||||
Real estate securities, at fair value: |
||||||||||||||||
Trading securities |
18 |
- |
258 |
- |
276 |
|||||||||||
Available-for-sale securities |
716 |
- |
52 |
(27) |
741 |
|||||||||||
Other investments |
- |
- |
4 |
- |
4 |
|||||||||||
Cash and cash equivalents |
288 |
- |
- |
- |
288 |
|||||||||||
Investment in 2010 Sequoia |
28 |
- |
- |
(28) |
- |
|||||||||||
Investment in Other Consolidated Entities |
91 |
- |
- |
(91) |
- |
|||||||||||
Total earning assets |
1,144 |
226 |
3,895 |
(146) |
5,119 |
|||||||||||
Other assets |
41 |
3 |
56 |
- |
100 |
|||||||||||
Total Assets |
$ |
1,185 |
$ |
229 |
$ |
3,951 |
$ |
(146) |
$ |
5,219 |
||||||
Short-term debt |
$ |
- |
$ |
- |
$ |
- |
$ |
- |
$ |
- |
||||||
Other liabilities |
54 |
1 |
87 |
- |
142 |
|||||||||||
Asset-backed securities issued |
- |
200 |
3,761 |
(27) |
3,934 |
|||||||||||
Long-term debt |
140 |
- |
- |
- |
140 |
|||||||||||
Total liabilities |
194 |
201 |
3,848 |
(27) |
4,216 |
|||||||||||
Stockholders’ equity |
991 |
28 |
91 |
(119) |
991 |
|||||||||||
Noncontrolling interest |
- |
- |
12 |
- |
12 |
|||||||||||
Total equity |
991 |
28 |
103 |
(119) |
1,003 |
|||||||||||
Total Liabilities and Equity |
$ |
1,185 |
$ |
229 |
$ |
3,951 |
$ |
(146) |
$ |
5,219 |
||||||
REDWOOD TRUST, INC. |
||||||||||||
Tax / GAAP Differences |
||||||||||||
Three Months Ended June 30, 2010* |
||||||||||||
(In Millions, Except per Share Data) |
||||||||||||
Tax |
GAAP |
Differences |
||||||||||
Interest income |
$ |
34 |
$ |
56 |
$ |
(22) |
||||||
Interest expense |
(3) |
(21) |
18 |
|||||||||
Net Interest Income |
31 |
35 |
(4) |
|||||||||
Provision for loan losses |
- |
(4) |
4 |
|||||||||
Realized credit losses |
(24) |
- |
(24) |
|||||||||
Market valuation adjustments, net |
- |
(7) |
7 |
|||||||||
Operating expenses |
(10) |
(11) |
1 |
|||||||||
Realized gains, net |
- |
16 |
(16) |
|||||||||
Benefit from income taxes |
- |
- |
- |
|||||||||
Less: Net loss attributable to noncontrolling interest |
- |
- |
- |
|||||||||
Net (Loss) Income |
$ |
(3) |
$ |
29 |
$ |
(32) |
||||||
Estimated (loss) income per share |
$ |
(0.03) |
$ |
0.35 |
$ |
(0.38) |
||||||
* Reconciliation of GAAP income for prior quarters is provided in filings for those quarters. |
||||||||||||
REDWOOD TRUST, INC. |
||||||||||||
Tax / GAAP Differences |
||||||||||||
Six Months Ended June 30, 2010* |
||||||||||||
(In Millions, Except per Share Data) |
||||||||||||
Tax |
GAAP |
Differences |
||||||||||
Interest income |
$ |
72 |
$ |
115 |
$ |
(43) |
||||||
Interest expense |
(3) |
(39) |
36 |
|||||||||
Net Interest Income |
69 |
76 |
(7) |
|||||||||
Provision for loan losses |
- |
(14) |
14 |
|||||||||
Realized credit losses |
(49) |
- |
(49) |
|||||||||
Market valuation adjustments, net |
- |
(18) |
18 |
|||||||||
Operating expenses |
(21) |
(29) |
8 |
|||||||||
Realized gains, net |
- |
60 |
(60) |
|||||||||
Benefit from income taxes |
- |
- |
- |
|||||||||
Less: Net loss attributable to noncontrolling interest |
- |
- |
- |
|||||||||
Net (Loss) Income |
$ |
(1) |
$ |
75 |
$ |
(76) |
||||||
Estimated (loss) income per share |
$ |
(0.02) |
$ |
0.94 |
$ |
(0.96) |
||||||
* Reconciliation of GAAP income for prior quarters is provided in filings for those quarters. |
||||||||||||
REDWOOD TRUST, INC |
|||||||||||
Book Value Per Share and Management's Estimate of Non-GAAP Economic Value Per Share* |
|||||||||||
(In Millions, Except per Share Data) |
|||||||||||
June 30, 2010 |
|||||||||||
Management's |
|||||||||||
GAAP |
Estimate of |
||||||||||
As Reported |
Adjustments |
Economic |
|||||||||
Cash and cash equivalents |
$ |
288 |
$ |
$ |
288 |
||||||
Real estate securities at Redwood |
|||||||||||
Residential |
725 |
725 |
|||||||||
Commercial |
8 |
8 |
|||||||||
CDO |
1 |
1 |
|||||||||
Subtotal real estate securities |
734 |
734 |
|||||||||
Investments in the Fund |
15 |
15 |
|||||||||
Investments in Sequoia entities |
101 |
(25) |
(a) |
76 |
|||||||
Investments in Acacia entities (b) |
3 |
(2) |
1 |
||||||||
Total cash, securities and investments |
1,141 |
1,114 |
|||||||||
Long-term debt |
(140) |
78 |
(c) |
(62) |
|||||||
Other assets/liabilities, net (d) |
(10) |
(10) |
|||||||||
Stockholders' Equity |
$ |
991 |
$ |
1,042 |
|||||||
Book Value Per Share |
$ |
12.71 |
$ |
13.37 |
|||||||
(a) Our investments in Sequoia entities consist of interest-only securities and senior and |
|||||||||||
(b) The GAAP carrying value of our investments in Acacia entities was $3 million and |
|||||||||||
(c) At June 30, 2010, we had $140 million of long-term debt outstanding with a stated interest |
|||||||||||
(d) Other assets/liabilities, net are comprised of $3 million of real estate loans, $4 million of |
|||||||||||
* This table presents supplemental components of book value at June 30, 2010, as reported |
|||||||||||
REDWOOD TRUST, INC. |
|||||||
Sources and Uses of Cash* |
|||||||
(In Millions) |
|||||||
Three Months Ended |
|||||||
June 30, 2010 |
March 31, 2010 |
||||||
Beginning cash balance |
$ |
242 |
$ |
243 |
|||
Business cash flow: |
|||||||
Cash flow from investments (including sales proceeds) |
177 |
193 |
|||||
Asset management fees |
- |
- |
|||||
Operating expenses |
(10) |
(15) |
|||||
Interest expense on long-term debt |
(1) |
(1) |
|||||
Total business cash flow |
166 |
177 |
|||||
Other sources and uses: |
|||||||
Investment in 2010 Sequoia |
(28) |
0 |
|||||
Changes in working capital |
3 |
(2) |
|||||
Acquisitions** |
(55) |
(156) |
|||||
Derivative margins posted, net |
(20) |
0 |
|||||
Dividends |
(20) |
(20) |
|||||
Net other uses |
(120) |
(178) |
|||||
Net sources (uses) of cash |
46 |
(1) |
|||||
Ending cash balance |
$ |
288 |
$ |
242 |
|||
* The sources and uses of cash in the table above are derived from our GAAP Consolidated Statements of Cash Flow by aggregating and |
|||||||
** Total acquisitions in the second quarter of 2010 were $23 million, $1 million which are not reflected in this table because they did not settle |
|||||||
SOURCE Redwood Trust, Inc.
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