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Redwood Trust Reports Third Quarter 2012 Results



               Redwood Trust Reports Third Quarter 2012 Results

PR Newswire

MILL VALLEY, Calif., Nov. 1, 2012

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    Third    Second   First    Fourth    Third
^(1)
($ in millions, except share      Quarter  Quarter  Quarter  Quarter   Quarter
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          (1)      1        -       (8)        (4)
provision for loan losses
Other market valuation               (3)      (5)      (1)     (10)       (13)
adjustments, net
Net interest income after            27       27       27      10         12
provision and
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    $  40    $  20    $  30    $ (3)     $  1
to Redwood Trust, Inc.
Average diluted shares            80,764   78,815   79,892   78,370    78,471
(thousands)
Diluted earnings (loss) per       $  0.48  $  0.24  $  0.37  $ (0.03)  $  0.01
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 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        -                 (1)
interest
Net Income Attributable to Redwood Trust,      $     90           $    29
Inc.
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   30-Sep    30-Jun    31-Mar    31-Dec    30-Sep
^(1)
($ in millions, except        2012      2012      2012      2011      2011
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      1,313     1,311     1,262     982       1,033
fair value
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         3,429     3,564     3,704     4,139     4,293
issued
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         $ 5,297   $ 5,246   $ 5,372   $ 5,743   $ 5,554
Equity
Shares outstanding at period    81,526    79,263    78,756    78,556    78,495
end (thousands)
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)      Entities           Consolidated 
                         ^(2)
Interest income          $      29         $      25          $       54
Net discount (premium)          7                 (2)                 6
amortization
Total interest income           36                23                  60
Interest expense                (6)               (22)                (28)
Net interest income             30                1                   31
Provision for loan              (1)               (1)                 (1)
losses
Other market valuation          (6)               2                   (3)
adjustments, net
Net interest income             24                3                   27
after provision
and other market
valuation adjustments
Mortgage banking                17                -                   17
activities, net
Operating expenses              (17)              -                   (17)
Realized gains, net             14                -                   14
Provision for income            (1)               -                   (1)
taxes
Net Income               $      37         $      3           $       40
Consolidating Income
Statement ^(1)
Nine Months Ended
September 30, 2012
($ in millions)           Redwood           Consolidated       Redwood 
                              (Parent)      Entities           Consolidated 
                         ^(2)
Interest income          $      79         $      79          $       158
Net discount (premium)          24                (4)                 20
amortization
Total interest income           103               75                  178
Interest expense                (18)              (70)                (88)
Net interest income             85                5                   90
(Provision for)
reversal of provision           (1)               1                   -
for loan losses
Other market valuation          (13)              3                   (10)
adjustments, net
Net interest income             72                9                   80
after provision
and other market
valuation adjustments
Mortgage banking                23                -                   23
activities, net
Operating expenses              (47)              -                   (47)
Realized gains, net             27                7                   35
Provision for income            (1)               -                   (1)
taxes
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)      Entities           Consolidated 
                          ^(2)
Residential loans         $     418        $      3,077       $      3,495
Commercial loans                286               12                 298
Real estate securities,         1,069             243                1,313
at fair value
Cash and cash                   39                -                  39
equivalents
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         179               3,250              3,429
issued
Long-term debt                  140               -                  140
Total liabilities               940               3,308              4,247
Stockholders' equity            966               84                 1,050
Total Liabilities and     $     1,906      $      3,392       $      5,297
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. 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.

Website: http://www.redwoodtrust.com
Contact: Christopher Abate, Chief Financial Officer, +1-415-384-3584, or Mike
McMahon, Investor Relations, +1-415-384-3805
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