Redwood Trust Reports First Quarter 2012 Results

               Redwood Trust Reports First Quarter 2012 Results

PR Newswire

MILL VALLEY, Calif., May 3, 2012

MILL VALLEY, Calif., May 3, 2012 /PRNewswire/ --Redwood Trust, Inc. (NYSE:
RWT) today reported net income for the first quarter of 2012 of $30 million,
or $0.37 per fully diluted share. This compares to a net loss of $3 million,
or $0.03 per fully diluted share, for the fourth quarter of 2011, and net
income of $18 million, or $0.22 per fully diluted share, for the first quarter
of 2011.

Redwood also reported estimated taxable income of $8 million, or $0.11 per
share, for the first quarter of 2012. This compares to an estimated taxable
loss of $1 million, or $0.02 per share, for the fourth quarter of 2011, and
estimated taxable income of $5 million, or $0.06 per share, for the first
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 on Tuesday, May 8, 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              First    Fourth    Third    Second   First
Statements(1)
($ in millions, except share     Quarter  Quarter   Quarter  Quarter  Quarter
data)
                                 2012     2011      2011     2011     2011
Interest income                  $  59    $ 56      $  53    $  53    $ 54
Interest expense                    (31)    (29)       (24)     (24)    (22)
Net interest income                 28      27         29       29      32
Provision for loan losses           -       (8)        (4)      (2)     (3)
Other market valuation              (1)     (10)       (13)     (11)    (6)
adjustments, net
Net interest income after           27      10         12       17      24
provision and
other market valuation
adjustments
Mortgage banking activities,        4       -          -        -       -
net
Operating expenses                 (15)    (13)       (12)     (12)    (12)
Realized gains, net                 14      0          1        6       4
Provision for income taxes          -       -          -        -       -
Net income (loss)                   30      (3)        1        10      16
Less: Net income (loss)
attributable to noncontrolling      -       -          -        1       (2)
interest
Net Income (Loss) Attributable   $  30    $ (3)     $  1     $  9     $ 18
to Redwood Trust, Inc.
Average diluted shares           79,892   78,370    78,471   79,478     79,372
(thousands)
Diluted earnings (loss) per      $  0.37  $ (0.03)  $  0.01  $  0.11  $ 0.22
share
Regular dividends declared per   $  0.25  $ 0.25    $  0.25  $  0.25  $ 0.25
common share
(1) Certain totals may not foot
due to rounding.



REDWOOD TRUST, INC.
Consolidated Balance          31-Mar    31-Dec    30-Sep    30-Jun    31-Mar
Sheets(1)
($ in millions, except share  2012      2011      2011      2011      2011
data)
Residential loans,            $ 303     $ 395     $ 2       $ 2       $ 2
held-for-sale
Residential loans,              3,348     3,800     4,156     3,858     3,794
held-for-investment
Commercial loans                190       170       111       84        62
Real estate securities, at      1,262     982       1,033     1,038     1,104
fair value
Cash and cash equivalents       150       267       133       80        220
Other assets                    119       130       119       103       101
Total Assets                  $ 5,372   $ 5,743   $ 5,554   $ 5,165   $ 5,283
Short-term debt              $ 441     $ 428     $ -       $ 41      $ -
Other liabilities               126       144       163       119       104
Asset-backed securities         3,704     4,139     4,293     3,839     3,957
issued
Long-term debt                 140       140       140       140       140
Total liabilities             4,410     4,851     4,595     4,138     4,201
Stockholders' equity           962       893       959       1,025     1,075
Noncontrolling interest         -         -         -         2         7
Total equity                    962       893       959       1,027     1,082
Total Liabilities and Equity  $ 5,372   $ 5,743   $ 5,554   $ 5,165   $ 5,283
Shares outstanding at period    78,756    78,556    78,495    78,555    78,139
end (thousands)
GAAP book value per share     $ 12.22   $ 11.36   $ 12.22   $ 13.04   $ 13.76
(1) Certain totals may not foot due to rounding. See notes to
consolidating balance sheet on page 5.

REDWOOD TRUST,
INC.
The following tables show the estimated effect that Redwood (Parent), New Sequoia
Entities, and our Other Consolidated Entities had on GAAP income for the three
months ended March 31, 2012.
Consolidating
Income
Statement(1)
Three Months
Ended March                           Other
31, 2012                   New
($ in           Redwood  Sequoia    Consolidated  Intercompany  Redwood
millions)                  Entities
                (Parent)              Entities      Adjustments   Consolidated
                (2)
Interest        $   24     $   7      $     21        $      -        $      52
income
Net discount
(premium)           8          (0)          (1)              -               7
amortization
Total interest      32         7            20               -               59
income
Interest            (6)        (6)          (19)             -               (31)
expense
Net interest        26         1            1                -               28
income
Provision for       -          -            -                -               -
loan losses
Other market
valuation           -          -            -                -               (1)
adjustments,
net
Net interest
income after        26         1            1                -               27
provision
and other
market
valuation
adjustments
Mortgage
banking             4          -            -                                4
activities,
net
Operating           (15)       -            -                -               (15)
expenses
Realized            6          -            7                -               14
gains, net
Income from
New Sequoia         1          -            -                (1)             -
Entities
Income from
Other               8          -            -                (8)             -
Consolidated
Entities
Noncontrolling      -          -            -                -               -
interest
Provision for       -          -            -                -               -
income taxes
Net Income      $   30     $   1      $     8         $      (9)      $      30
(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 impact that Redwood (Parent), New Sequoia Entities,
and our Other Consolidated Entities had on our GAAP balance sheet at March 31, 2012.
Consolidating
Balance Sheet(1)
March 31, 2012                  New Sequoia  Other
($ in millions)      Redwood             Consolidated  Intercompany  Redwood
                     (Parent)   Entities(3)  Entities      Adjustments   Consolidated
                     (2)
Residential loans,   $  303     $    -       $     -         $     -         $     303
held-for-sale
Residential loans,      -            591           2,757           -               3,348
held-for-investment
Commercial loans        178          -             12              -               190
Real estate
securities, at fair     1,009        -             254             -               1,262
value
Cash and cash           150          -             -               -               150
equivalents
Total earning           1,640        591           3,023           -               5,253
assets
Investment in New       47           -             -               (47)            -
Sequoia Entities
Investment in Other
Consolidated            40           -             -               (40)            -
Entities
Other assets            81           5             32              -               119
Total Assets         $  1,808   $    596     $     3,055     $     (87)      $     5,372
Short-term debt      $  441     $    -       $     -         $     -         $     441
Other liabilities       58           2             66              -               126
Asset-backed            207          547           2,950           -               3,704
securities issued
Long-term debt         140          -             -               -               140
Total liabilities       846          549           3,015           -               4,410
Stockholders'           962          47            40              (87)            962
equity
Noncontrolling          -            -             -               -               -
interest
Total equity            962          47            40              (87)            962
Total Liabilities    $  1,808   $    596     $     3,055     $     (87)      $     5,372
and Equity
(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. However, the
securitized assets of these entities are not available to Redwood. Similarly, the
liabilities of these entities are obligations payable only from the cash flow generated by
their securitized assets and are not legal obligations of Redwood.
(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 March 31, 2012, the resecuritization accounted for $332 million
of available-for-sale securities and $207 million of asset-backed securities issued and our
investment in this resecuritization is reflected in the difference between these assets and
liabilities.
(3) The consolidating balance sheet presents the New Sequoia securitization entities
separately from Other Consolidated Entities (Sequoia entities issued prior to 2010 and
Acacia entities) to highlight our renewed focus on growing our core business of creating
residential credit investments. As we complete additional securitizations, we expect New
Sequoia Entities to represent a larger portion of our consolidated balance sheet as prior
Sequoia securitization entities continue to pay down.

REDWOOD TRUST, INC.
Tax / GAAP Differences(1)
Three Months Ended March 31, 2012
($ in millions, except per share
data)
                                       Tax (Est.)     GAAP       Differences
Interest income                        $    38        $  59      $    (21)
Interest expense                            (6)          (31)         25
Net Interest Income                         32           28           4
Provision for loan losses                   -            -            -
Realized credit losses                      (10)         -            (10)
Other market valuation adjustments,         -            (1)          1
net
Mortgage banking activities, net            0            4            (4)
Operating expenses                          (13)         (15)         2
Realized gains, net                         -            14           (14)
Provision for income taxes                  (0)          -            (0)
Net Income                             $    8         $  30      $    (22)
Income per share                       $    0.11      $  0.37    $    (0.26)
(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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