REDWOOD TRUST INC
For the period ended Mar 31, 2024. Filed May 8, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2024 · Filed May 8, 2024
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Consolidated Results of Operations
Net Interest Income
The following table presents the components of net interest income for the three months ended March 31, 2024 and 2023.
Table 3 – Net Interest Income
| Three Months Ended March 31, | |||||||
|---|---|---|---|---|---|---|---|
| 2024 · 2023 | |||||||
| (Dollars in Thousands) · Interest Income/ (Expense) · Average Balance (1) · Yield · Interest Income/ (Expense) · Average Balance (1) · Yield | |||||||
| Interest Income | |||||||
| Residential consumer loans, held-for-sale | $9,343 | $574,683 | 6.5% | $5,197 | $370,827 | 5.6% | |
| Residential consumer loans - HFI at Legacy Sequoia (2) | 2,296 | 133,654 | 6.9% | 2,540 | 174,679 | 5.8% | |
| Residential consumer loans - HFI at Sequoia (2) | 60,680 | 5,138,079 | 4.7% | 34,644 | 3,445,200 | 4.0% | |
| Residential consumer loans - HFI at Freddie Mac SLST (2) | 14,616 | 1,341,498 | 4.4% | 15,493 | 1,443,737 | 4.3% | |
| Residential investor loans - HFS | 3,573 | 219,297 | 6.5% | 4,214 | 260,483 | 6.5% | |
| Residential investor loans - HFI | 30,468 | 1,301,042 | 9.4% | 38,645 | 1,821,246 | 8.5% | |
| Residential investor term loans - HFI at CAFL (2) | 40,753 | 2,905,126 | 5.6% | 41,809 | 2,902,736 | 5.8% | |
| Residential investor bridge loans - HFI at CAFL (2) | 20,241 | 771,294 | 10.5% | 12,628 | 507,550 | 10.0% | |
| Multifamily loans - HFI at Freddie Mac K-Series (2) | 4,581 | 424,049 | 4.3% | 4,618 | 423,124 | 4.4% | |
| Trading securities(3) | 4,651 | 72,482 | 25.7% | 3,546 | 107,650 | 13.2% | |
| AFS securities | 1,629 | 81,561 | 8.0% | 2,882 | 130,043 | 8.9% | |
| Other interest income | 11,909 | 901,100 | 5.3% | 12,300 | 1,084,192 | 4.5% | |
| Total interest income | 204,740 | 13,863,865 | 5.9% | 178,516 | 12,671,467 | 5.6% | |
| Interest Expense | |||||||
| Short-term debt facilities | (18,499) | 950,726 | (7.8)% | (25,506) | 1,293,081 | (7.9)% | |
| Short-term debt - servicer advance financing | (3,219) | 151,578 | (8.5)% | (3,848) | 206,533 | (7.5)% | |
| Promissory notes | (272) | 15,509 | (7.0)% | (398) | 23,993 | (6.6)% | |
| Short-term debt - convertible notes, net | (2,015) | 129,863 | (6.2)% | (2,076) | 156,702 | (5.3)% | |
| ABS issued - Legacy Sequoia (2) | (2,193) | 132,531 | (6.6)% | (2,504) | 173,996 | (5.8)% | |
| ABS issued - Sequoia (2) | (56,628) | 4,925,630 | (4.6)% | (30,055) | 3,217,441 | (3.7)% | |
| ABS issued - Freddie Mac SLST (2) | (13,979) | 1,250,286 | (4.5)% | (11,218) | 1,150,945 | (3.9)% | |
| ABS issued - Freddie Mac K-Series (2) | (4,199) | 390,618 | (4.3)% | (4,241) | 391,227 | (4.3)% | |
| ABS issued - CAFL Term (2) | (33,458) | 2,559,795 | (5.2)% | (34,159) | 2,575,855 | (5.3)% | |
| ABS issued - CAFL Bridge (2) | (9,802) | 714,295 | (5.5)% | (5,288) | 478,531 | (4.4)% | |
| Long-term debt facilities | (24,517) | 1,130,399 | (8.7)% | (20,056) | 1,076,650 | (7.5)% | |
| Long-term debt - corporate | (11,749) | 542,156 | (8.7)% | (12,730) | 656,693 | (7.8)% | |
| Total interest expense | (180,530) | 12,893,386 | (5.6)% | (152,079) | 11,401,647 | (5.3)% | |
| Net Interest Income | $24,210 | $26,437 | |||||
(1)Average balances for residential consumer loans held-for-sale and held-for-investment, residential investor loans held-for-sale and held-for-investment, multifamily loans held-for-investment, and trading securities are calculated based upon carrying values, which represent estimated fair values. Average balances for AFS securities, short-term debt, long-term debt and certain ABS issued are calculated based upon amortized historical cost. Average balances for ABS carried at fair value are calculated based upon fair value.
(2)Interest income and interest expense at "Legacy Sequoia", "Sequoia", "Freddie Mac SLST", "Freddie Mac K-Series", "CAFL Term", and "CAFL Bridge" reflect activity from consolidated variable interest entities. While we consolidate these entities for GAAP reporting purposes, economically, we earn interest income from the securities we own in these entities, which is represented by the net interest income (interest income less interest expense) from these consolidated entities presented in the table above.
(3)At March 31, 2024, our trading securities consisted primarily of interest-only securities, which generate a higher cash interest yield. This interest income is generally offset by a decline in fair value (recognized through investment fair value changes, net on our consolidated statements of income) related to the receipt of cash flows each period, resulting in a lower overall economic yield for these investments.
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