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New Residential Investment Corp. Announces First Quarter 2020 Results

New Residential Investment Corp. (NYSE: NRZ; "New Residential" or the "Company") today reported the following information for the first quarter ended March 31, 2020:

FIRST QUARTER 2020 FINANCIAL HIGHLIGHTS:

  • GAAP Net Loss of ($1,602.3) million, or ($3.86) per diluted common share(1)
  • Core Earnings of $198.4 million, or $0.48 per diluted common share(1)(2)
  • Common Dividend of $20.8 million, or $0.05 per common share(1)
  • Book Value per common share of $10.71(1)
  • $360.5 million of cash as of March 31, 2020

 

 

1Q 2020

 

4Q 2019

 

Summary Operating Results:

 

 

GAAP Net (Loss) Income per Diluted Common Share(1)

($3.86)

$0.51

GAAP Net (Loss) Income

($1,602.3) million

$211.8 million

 

 

 

Non-GAAP Results:

 

 

Core Earnings per Diluted Common Share(1)

$0.48

$0.61

Core Earnings(2)

$198.4 million

$255.4 million

 

 

 

NRZ Common Dividend:

 

 

Common Dividend per Share(1)

$0.05

$0.50

Common Dividend

$20.8 million

$207.8 million

"Ahead of the unprecedented volatility in March 2020, our Company was positioned for a very strong first quarter," said Michael Nierenberg, Chairman, Chief Executive Officer and President of New Residential. "The world changed swiftly following our investor update on March 13, 2020. Subsequent to that update, asset values in the mortgage market went into free fall as liquidity left the system. In response, we sold down approximately $27.9 billion in assets and significantly de-leveraged our balance sheet. Our investment portfolio as of April 30, 2020 is 61% smaller than it was on December 31, 2019, which we believe puts us in a strong position to navigate the current and forward environment.(3) Importantly, we have continued to bolster our capital position and improve financing capacity; as of April 30, 2020, we have an estimated $517.3 million in cash and $397.4 million in unencumbered assets.(4) In particular, we have increased our advance financing capacity up to approximately $5.25 billion.(5) Looking ahead, our investment strategy will be to target assets that are term financed or low leverage. Our primary focus will be on our operating business, which includes our mortgage origination, servicing and ancillary service business lines. We believe that in today’s low interest rate environment, these businesses are particularly well-positioned to contribute to our profitability. We intend to support our investments, be opportunistic, and continue to do all we can to generate returns for our shareholders. We look forward to growing book value and returning our Company to normalcy."

FIRST QUARTER 2020 COMPANY HIGHLIGHTS:

  • Origination
    • Segment pre-tax net income of $60.2 million
    • Origination production grew to $11.4 billion in unpaid principal balance ("UPB"), up 8% QoQ and 418% YoY
  • Servicing
    • Segment pre-tax net income of $30.4 million
    • The servicing portfolio grew to $275.8 billion in UPB, up 26% QoQ and 95% YoY
  • Mortgage Servicing Rights ("MSRs")
    • MSR portfolio totaled approximately $648 billion UPB as of March 31, 2020, compared to $630 billion UPB as of December 31, 2019(6)
  • Residential Securities and Call Rights
    • Sold $24.9 billion of residential securities
    • Called 15 deals with collateral of $487.7 million UPB(7)
    • Completed one securitization of loans acquired through exercise of call rights with $545.4 million UPB of collateral
  • Residential Loans
    • Sold $2.0 billion of residential loans
    • Completed two securitizations with total collateral of $1.5 billion UPB (one reperforming loan and one Non-Qualified Mortgage loan)
  • Additional Updates Post Q1’20(8)
    • $517.3 million of cash as of April 30, 2020
    • Increased advance capacity by up to approximately $1.8 billion(5)
    • Priced and sold a seasoned performing loan securitization with $449.4 million UPB of collateral
    • Reduced overall leverage to 1.5x(9)
    • Sold $1.0 billion of residential loans
  1. Per common share calculations of GAAP Net Income (Loss) and Core Earnings are based on 415,589,155 weighted average diluted shares during the quarter ended March 31, 2020; and 415,673,185 weighted average diluted shares during the quarter ended December 31, 2019. Per share calculations of Common Dividend are based on 415,649,214 basic shares outstanding as of March 31, 2020; 415,520,780 basic shares outstanding as of December 31, 2019. Per common share calculations for Book Value are based on 415,589,155 basic common shares outstanding as of March 31, 2020.
  2. Core Earnings is a non-GAAP measure. For a reconciliation of Core Earnings to GAAP Net Income, as well as an explanation of this measure, please refer to Non-GAAP Measures and Reconciliation to GAAP Net Income below.
  3. "Investment portfolio" refers to total assets less cash, restricted cash, other assets, goodwill and mortgage loans originated and compares December 31, 2019 values of $32.6 billion to April 30, 2020 values of $12.7 billion.
  4. Unencumbered assets as of April 30, 2020 represent management’s estimates, and actual results may vary materially.
  5. Represents activity post March 31, 2020. $625 million of $1.8 billion additional capacity has been agreed upon in principle but is subject to definitive documentation. There can be no assurance that we will complete such definitive documentation or close such financing.
  6. Includes Excess and Full MSRs.
  7. Call rights UPB estimated as of March 31, 2020. The UPB of the loans relating to our call rights may be materially lower than the estimates in this press release, and there can be no assurance that we will be able to execute on this pipeline of callable deals in the near term, on the timeline presented above, or at all, or that callable deals will be economically favorable. The economic returns from this strategy could be adversely affected by a rise in interest rates and are contingent on the level of delinquencies and outstanding advances in each transaction, fair market value of the related collateral and other economic factors and market conditions. We may become subject to claims and legal proceedings, including purported class-actions, in the ordinary course of our business, challenging our right to exercise these call rights and, as a result, we may not be able to exercise such rights on favorable terms at all. Call rights are usually exercisable when current loan balances in a related portfolio are equal to, or lower than, 10% of their original balance.
  8. Represents activity from April 1, 2020 through April 30, 2020. Based on management’s current views and estimates, and actual results may vary materially.
  9. Represents recourse leverage. Excludes non-recourse leverage including outstanding consumer debt, servicer advance debt, $56.9 million of full MSR debt, SAFT 2013-1 and MDST Trusts mortgage backed securities issued, and Shellpoint non-agency RMBS.

ADDITIONAL INFORMATION

For additional information that management believes to be useful for investors, please refer to the latest presentation posted on the Investor Relations section of the Company’s website, www.newresi.com. For consolidated investment portfolio information, please refer to the Company’s most recent Quarterly Report on Form 10-Q or Annual Report on Form 10-K, which are available on the Company’s website, www.newresi.com.

EARNINGS CONFERENCE CALL

New Residential’s management will host a conference call on Tuesday, May 5, 2020 at 8:00 A.M. Eastern Time. A copy of the earnings release will be posted to the Investor Relations section of New Residential’s website, www.newresi.com.

All interested parties are welcome to participate on the live call. The conference call may be accessed by dialing 1-888-317-6016 (from within the U.S.) or 1-412-317-6016 (from outside of the U.S.) ten minutes prior to the scheduled start of the call; please reference "New Residential First Quarter 2020 Earnings Call."

A simultaneous webcast of the conference call will be available to the public on a listen-only basis at www.newresi.com. Please allow extra time prior to the call to visit the website and download any necessary software required to listen to the internet broadcast.

A telephonic replay of the conference call will also be available two hours following the call’s completion through 11:59 P.M. Eastern Time on Tuesday, May 19, 2020 by dialing 1-877-344-7529 (from within the U.S.) or 1-412-317-0088 (from outside of the U.S.); please reference access code "10143668."

Consolidated Statements of Income

($ in thousands, except share and per share data)

         
    Three Months Ended
    March 31, 2020   December 31, 2019
    (unaudited)   (unaudited)
         
Interest income  

 $

402,373

 

 

 $

463,089

 

Interest expense  

 

    216,855

 

 

 

 247,013

 

Net Interest Income  

 

  185,518

 

 

 

    216,076

 

         
Impairment        
Provision (reversal) for credit losses on securities  

 

      44,149

 

 

 

  3,232

 

Valuation and credit loss provision (reversal) on loans and real estate owned ("REO")  

 

  100,496

 

 

 

  2,361

 

   

 

   144,645

 

 

 

 5,593

 

         
Net interest income after impairment  

 

    40,873

 

 

 

    210,483

 

         
Servicing revenue, net of change in fair value of $(649,375) and $(93,036), respectively  

 

   (289,115

)

 

 

    251,793

 

Gain on originated mortgage loans, held-for-sale, net  

 

    179,698

 

 

 

   180,520

 

Other Income        
Change in fair value of investments in excess mortgage servicing rights  

 

(11,024

)

 

 

   (9,084

)

Change in fair value of investments in excess mortgage servicing rights, equity method investees  

 

   (457

)

 

 

   2,713

 

Change in fair value of investments in mortgage servicing rights financing receivables  

 

(104,111

)

 

 

 (55,823

)

Change in fair value of servicer advance investments  

 

(18,749

)

 

 

  (5,644

)

Change in fair value of investments in real estate and other securities  

 

  (86,792

)

 

 

(6,909

)

Change in fair value of investments in residential mortgage loans  

 

  (265,244

)

 

 

   (146,006

)

Change in fair value of derivative investments  

 

(39,982

)

 

 

 (31,107

)

Gain (loss) on settlement of investments, net  

 

(799,572

)

 

 

  131,073

 

Earnings from investments in consumer loans, equity method investees  

 

   -  

 

 

 

(548

)

Other income (loss), net  

 

   (76,730

)

 

 

  67,509

 

   

 

  (1,402,661

)

 

 

  (53,826

)

         
Operating Expenses        
General and administrative expenses  

 

      206,363

 

 

 

    186,676

 

Management fee to affiliate  

 

    21,721

 

 

 

  21,211

 

Incentive compensation to affiliate  

 

    -  

 

 

 

   42,627

 

Loan servicing expense  

 

   7,853

 

 

 

 5,570

 

Subservicing expense  

 

   66,981

 

 

 

   79,719

 

   

 

 302,918

 

 

 

    335,803

 

         
(Loss) Income Before Income Taxes  

 

(1,774,123

)

 

 

     253,167

 

Income tax (benefit) expense  

 

(166,868

)

 

 

    22,786

 

Net (Loss) Income  

 $

(1,607,255

)

 

 $

230,381

 

Noncontrolling Interests in Income of Consolidated Subsidiaries  

 $

  (16,162

)

 

 $

10,658

 

Dividends on Preferred Stock  

 $

  11,222

 

 

 $

7,943

 

Net (Loss) Income Attributable to Common Stockholders  

 $

  (1,602,315

)

 

 $

211,780

 

         
Net (Loss) Income Per Share of Common Stock        
Basic  

 $

  (3.86

)

 

 $

  0.51

 

Diluted  

 $

(3.86

)

 

 $

  0.51

 

         
Weighted Average Number of Shares of Common Stock Outstanding        
Basic  

 

415,589,155

 

 

 

415,520,780

 

Diluted  

 

   415,589,155

 

 

 

415,673,185

 

         
Dividends Declared per Share of Common Stock  

 $

    0.05

 

 

 $

0.50

 

Consolidated Balance Sheets

($ in thousands)

         
    March 31, 2020   December 31, 2019
Assets   (unaudited)    
Investments in:        
Excess mortgage servicing rights ("MSRs"), at fair value  

 $

363,932

 

 

 $

379,747

Excess mortgage servicing rights, equity method investees, at fair value  

 

119,609

 

 

 

125,596

Mortgage servicing rights, at fair value  

 

   3,934,384

 

 

 

3,967,960

Mortgage servicing rights financing receivables, at fair value  

 

  1,604,431

 

 

 

1,718,273

Servicer advance investments, at fair value  

 

515,574

 

 

 

 581,777

Real estate and other securities, available-for-sale (amortized cost $2,615,252 and $18,782,175 at March 31, 2020 and December 31, 2019, respectively; allowance for credit losses $44,149 at March 31, 2020)  

 

   2,479,603

 

 

 

19,477,728

Residential mortgage loans, held-for-investment (includes $824,183 and $484,443 at fair value at March 31, 2020 and December 31, 2019, respectively)  

 

824,183

 

 

 

  925,706

Residential mortgage loans, held-for-sale  

 

    1,264,533

 

 

 

  1,429,052

Residential mortgage loans, held-for-sale, at fair value  

 

 3,283,973

 

 

 

  4,613,612

Consumer loans, held-for-investment ($780,821 and $0 held at fair value at March 31, 2020 and December 31, 2019, respectively)  

 

780,821

 

 

 

 827,545

Cash and cash equivalents  

 

   360,453

 

 

 

 528,737

Restricted cash  

 

  147,435

 

 

 

  162,197

Servicer advances receivable  

 

    3,072,863

 

 

 

 3,301,374

Trades receivable  

 

 3,293,976

 

 

 

  5,256,014

Deferred tax asset, net  

 

 176,238

 

 

 

   8,669

Other assets (includes $197,715 and $172,336 in residential mortgage loan subject to repurchase at March 31, 2020 and December 31,2019, respectively)  

 

  1,971,467

 

 

 

 1,559,467

   

 $

24,193,475

 

 

 $

44,863,454

         
Liabilities and Equity        
         
Liabilities        
Repurchase agreements  

 $

10,814,130

 

 

 $

27,916,225

Notes and bonds payable (includes $272,292 and $659,738 at fair value at March 31, 2020 and December 31, 2019, respectively)  

 

    7,014,579

 

 

 

   7,720,148

Trades payable  

 

20,913

 

 

 

 902,081

Due to affiliates  

 

17,216

 

 

 

103,882

Dividends payable  

 

   28,033

 

 

 

  211,732

Accrued expenses and other liabilities (includes $197,715 and $172,336 in residential mortgage loans repurchase liabilities at March 31, 2020 and December 31,2019, respectively)  

 

968,140

 

 

 

773,126

   

 

  18,863,011

 

 

 

 37,627,194

         
Commitments and Contingencies        
         
Equity        
Preferred Stock, par value of $0.01 per share, 100,000,000 shares authorized:        
7.50% Series A Preferred Stock, $0.01 par value, 11,500,000 shares authorized, 6,210,000 and 6,210,000 issued and outstanding at March 31, 2020 and December 31, 2019, respectively  

 

   150,026

 

 

 

 150,026

7.125% Series B Preferred Stock, $0.01 par value, 11,500,000 shares authorized, 11,300,000 and 11,300,000 issued and outstanding at March 31, 2020 and December 31, 2019, respectively  

 

  273,418

 

 

 

  273,418

6.375% Series C Preferred Stock, $0.01 par value, 16,100,000 shares authorized, 16,100,000 and 0 issued and outstanding at March 31, 2020 and December 31, 2019, respectively  

 

   389,548

 

 

 

  -  

Common Stock, $0.01 par value, 2,000,000,000 shares authorized, 415,649,214 and 415,520,780 issued and outstanding at March 31, 2020 and December 31, 2019, respectively  

 

   4,157

 

 

 

   4,156

Additional paid-in capital  

 

 5,500,308

 

 

 

 5,498,226

Retained earnings  

 

(1,059,706

)

 

 

   549,733

Accumulated other comprehensive income (loss)  

 

 6,135

 

 

 

682,151

Total New Residential stockholders’ equity  

 

  5,263,886

 

 

 

  7,157,710

Noncontrolling interests in equity of consolidated subsidiaries  

 

66,578

 

 

 

  78,550

Total Equity  

 

 5,330,464

 

 

 

    7,236,260

   

 $

24,193,475

 

 

 $

44,863,454

         

NON-GAAP MEASURES AND RECONCILIATION TO GAAP NET INCOME

New Residential has five primary variables that impact its operating performance: (i) the current yield earned on the Company’s investments, (ii) the interest expense under the debt incurred to finance the Company’s investments, (iii) the Company’s operating expenses and taxes, (iv) the Company’s realized and unrealized gains or losses, including any impairment, on the Company’s investments, and (v) income from its origination and servicing businesses. "Core earnings" is a non-GAAP measure of the Company’s operating performance, excluding the fourth variable above and adjusts the earnings from the consumer loan investment to a level yield basis. Core earnings is used by management to evaluate the Company’s performance without taking into account: (i) realized and unrealized gains and losses, which although they represent a part of the Company’s recurring operations, are subject to significant variability and are generally limited to a potential indicator of future economic performance; (ii) incentive compensation paid to the Company’s manager; (iii) non-capitalized transaction-related expenses; and (iv) deferred taxes, which are not representative of current operations.

The Company’s definition of core earnings includes accretion on held-for-sale loans as if they continued to be held-for-investment. Although the Company intends to sell such loans, there is no guarantee that such loans will be sold or that they will be sold within any expected timeframe. During the period prior to sale, the Company continues to receive cash flows from such loans and believes that it is appropriate to record a yield thereon. In addition, the Company’s definition of core earnings excludes all deferred taxes, rather than just deferred taxes related to unrealized gains or losses, because the Company believes deferred taxes are not representative of current operations. The Company’s definition of core earnings also limits accreted interest income on RMBS where the Company receives par upon the exercise of associated call rights based on the estimated value of the underlying collateral, net of related costs including advances. The Company created this limit in order to be able to accrete to the lower of par or the net value of the underlying collateral, in instances where the net value of the underlying collateral is lower than par. The Company believes this amount represents the amount of accretion the Company would have expected to earn on such bonds had the call rights not been exercised.

The Company’s investments in consumer loans are accounted for under Accounting Standards Codification ("ASC") No. 310-20 and ASC No. 310-30, including certain non-performing consumer loans with revolving privileges that are explicitly excluded from being accounted for under ASC No. 310-30. Under ASC No. 310-20, the recognition of expected losses on these non-performing consumer loans is delayed in comparison to the level yield methodology under ASC No. 310-30, which recognizes income based on an expected cash flow model reflecting an investment’s lifetime expected losses. The purpose of the core earnings adjustment to adjust consumer loans to a level yield is to present income recognition across the consumer loan portfolio in the manner in which it is economically earned, avoid potential delays in loss recognition, and align it with the Company’s overall portfolio of mortgage-related assets which generally record income on a level yield basis. With respect to consumer loans classified as held-for-sale, the level yield is computed through the expected sale date. With respect to the gains recorded under GAAP in 2014 and 2016 as a result of a refinancing of the debt related to the Company’s investments in consumer loans, and the consolidation of entities that own the Company’s investments in consumer loans, respectively, the Company continues to record a level yield on those assets based on their original purchase price.

While incentive compensation paid to the Company’s manager may be a material operating expense, the Company excludes it from core earnings because (i) from time to time, a component of the computation of this expense will relate to items (such as gains or losses) that are excluded from core earnings, and (ii) it is impractical to determine the portion of the expense related to core earnings and non-core earnings, and the type of earnings (loss) that created an excess (deficit) above or below, as applicable, the incentive compensation threshold. To illustrate why it is impractical to determine the portion of incentive compensation expense that should be allocated to core earnings, the Company notes that, as an example, in a given period, it may have core earnings in excess of the incentive compensation threshold but incur losses (which are excluded from core earnings) that reduce total earnings below the incentive compensation threshold. In such case, the Company would either need to (a) allocate zero incentive compensation expense to core earnings, even though core earnings exceeded the incentive compensation threshold, or (b) assign a "pro forma" amount of incentive compensation expense to core earnings, even though no incentive compensation was actually incurred. The Company believes that neither of these allocation methodologies achieves a logical result. Accordingly, the exclusion of incentive compensation facilitates comparability between periods and avoids the distortion to the Company’s non-GAAP operating measure that would result from the inclusion of incentive compensation that relates to non-core earnings.

With regard to non-capitalized transaction-related expenses, management does not view these costs as part of the Company’s core operations, as they are considered by management to be similar to realized losses incurred at acquisition. Non-capitalized transaction-related expenses are generally legal and valuation service costs, as well as other professional service fees, incurred when the Company acquires certain investments, as well as costs associated with the acquisition and integration of acquired businesses.

Since the third quarter of 2018, as a result of its acquisition of Shellpoint Partners LLC ("Shellpoint"), the Company, through its wholly owned subsidiary, NewRez (formerly New Penn Financial), originates conventional, government-insured and nonconforming residential mortgage loans for sale and securitization. In connection with the transfer of loans to the GSEs or mortgage investors, the Company reports realized gains or losses on the sale of originated residential mortgage loans and retention of mortgage servicing rights, which the Company believes is an indicator of performance for the Servicing and Origination segments and therefore included in core earnings. Realized gains or losses on the sale of originated residential mortgage loans had no impact on core earnings in any prior period, but may impact core earnings in future periods.

Beginning with the third quarter of 2019, as a result of the continued evaluation of how Shellpoint operates its business and its impact on the Company’s operating performance, core earnings includes Shellpoint’s GAAP net income with the exception of the unrealized gains or losses due to changes in valuation inputs and assumptions on MSRs owned by NewRez, and non-capitalized transaction-related expenses. This change was not material to core earnings for the quarter ended September 30, 2019.

Management believes that the adjustments to compute "core earnings" specified above allow investors and analysts to readily identify and track the operating performance of the assets that form the core of the Company’s activity, assist in comparing the core operating results between periods, and enable investors to evaluate the Company’s current core performance using the same measure that management uses to operate the business. Management also utilizes core earnings as a measure in its decision-making process relating to improvements to the underlying fundamental operations of the Company’s investments, as well as the allocation of resources between those investments, and management also relies on core earnings as an indicator of the results of such decisions. Core earnings excludes certain recurring items, such as gains and losses (including impairment as well as derivative activities) and non-capitalized transaction-related expenses, because they are not considered by management to be part of the Company’s core operations for the reasons described herein. As such, core earnings is not intended to reflect all of the Company’s activity and should be considered as only one of the factors used by management in assessing the Company’s performance, along with GAAP net income which is inclusive of all of the Company’s activities.

The primary differences between core earnings and the measure the Company uses to calculate incentive compensation relate to (i) realized gains and losses (including impairments), (ii) non-capitalized transaction-related expenses and (iii) deferred taxes (other than those related to unrealized gains and losses). Each are excluded from core earnings and included in the Company’s incentive compensation measure (either immediately or through amortization). In addition, the Company’s incentive compensation measure does not include accretion on held-for-sale loans and the timing of recognition of income from consumer loans is different. Unlike core earnings, the Company’s incentive compensation measure is intended to reflect all realized results of operations. The Gain on Remeasurement of Consumer Loans Investment was treated as an unrealized gain for the purposes of calculating incentive compensation and was therefore excluded from such calculation.

Core earnings does not represent and should not be considered as a substitute for, or superior to, net income or as a substitute for, or superior to, cash flows from operating activities, each as determined in accordance with U.S. GAAP, and the Company’s calculation of this measure may not be comparable to similarly entitled measures reported by other companies. Set forth below is a reconciliation of core earnings to the most directly comparable GAAP financial measure (in thousands):

         
    Three Months Ended
    March 31,   December 31,
   

 

2020

 

 

 

2019

 

Net (loss) income attributable to common stockholders  

 $

(1,602,315

)

 

 $

211,780

 

Adjustments for Non-Core Earnings:        
Impairment  

 

  144,645

 

 

 

   5,360

 

Change in fair value of investments in mortgage servicing rights  

 

   504,848

 

 

 

(100,344

)

Change in fair value of servicer advance investments  

 

   18,749

 

 

 

   5,644

 

Change in fair value of investments in real estate and other securities  

 

  86,792

 

 

 

6,909

 

Change in fair value of investments in residential mortgage loans  

 

  265,244

 

 

 

 145,308

 

Change in fair value of derivative instruments  

 

   39,982

 

 

 

 31,113

 

(Gain) loss on settlement of investments, net  

 

  811,471

 

 

 

(112,584

)

Other (income) loss  

 

 83,501

 

 

 

  (51,396

)

Other Income and Impairment attributable to non-controlling interests  

 

  (22,279

)

 

 

 (4,495

)

Non-capitalized transaction-related expenses  

 

  16,902

 

 

 

  31,984

 

Incentive compensation to affiliate  

 

    -  

 

 

 

 42,627

 

Preferred stock management fee to affiliate  

 

 2,295

 

 

 

 1,588

 

Deferred taxes  

 

(166,917

)

 

 

20,127

 

Interest income on residential mortgage loans, held-for sale  

 

  12,143

 

 

 

  15,648

 

Adjust consumer loans to level yield  

 

    (515

)

 

 

 355

 

Core earnings of equity method investees:        
Excess mortgage servicing rights  

 

  3,825

 

 

 

   5,803

 

Core Earnings  

 $

198,371

 

 

 $

255,427

 

         
Net (Loss) Income Per Diluted Share   

 

 (3.86

)

 

 

  0.51

 

Core Earnings Per Diluted Share   

 

 0.48

 

 

 

  0.61

 

         
Weighted Average Number of Shares of Common Stock Outstanding, Diluted  

 

 415,589,155

 

 

 

 415,673,185

 

         

NET INCOME BY SEGMENT

 
 Servicing and OriginationsResidential Securities and Loans
 Originations  Servicing  MSRs &
Servicer
Advances 
 Residential
Securities &
Call Rights 
 Residential
Loans 
 Corporate
& Other 
 Total 
Quarter Ended March 31, 2020
Interest income

 $

16,735

 

 $

7,487

 $

99,353

 

 $

184,005

 

 $

59,921

 

 $

34,872

 

 $

402,373

 

Interest expense

 

  13,427

 

 

   196

 

 57,783

 

 

108,009

 

 

 30,773

 

 

   6,667

 

 

  216,855

 

      Net interest income

 

  3,308

 

 

   7,291

 

  41,570

 

 

  75,996

 

 

 29,148

 

 

  28,205

 

 

   185,518

 

Impairment

 

  -  

 

 

   -  

 

   -  

 

 

44,149

 

 

 100,496

 

 

   -  

 

 

   144,645

 

Servicing revenue, net

 

  (1,078

)

 

  86,742

 

(374,779

)

 

  -  

 

 

    -  

 

 

   -  

 

 

  (289,115

)

Gain on originated mortgage loans, held-for-sale, net

 

  158,215

 

 

   259

 

  12,713

 

 

    -  

 

 

  8,511

 

 

    -  

 

 

  179,698

 

Other income (loss)

 

  (16

)

 

   499

 

(156,933

)

 

  (966,039

)

 

  (192,271

)

 

  (87,901

)

 

  (1,402,661

)

Operating expenses

 

 100,212

 

 

  64,352

 

   83,880

 

 

   6,854

 

 

   16,756

 

 

   30,864

 

 

  302,918

 

Income (Loss) Before Income Taxes

 

   60,217

 

 

  30,439

 

(561,309

)

 

   (941,046

)

 

 (271,864

)

 

  (90,560

)

 

 (1,774,123

)

Income tax expense (benefit)

 

  11,958

 

 

  6,045

 

   (109,785

)

 

  -  

 

 

   (75,201

)

 

    115

 

 

 (166,868

)

Net Income (Loss)

 $

  48,259

 

 $

  24,394

 $

(451,524

)

 $

(941,046

)

 $

(196,663

)

 $

(90,675

)

 $

(1,607,255

)

Noncontrolling interests in income (loss) of consolidated subsidiaries

 

  1,283

 

 

-  

 

 (11,247

)

 

   -  

 

 

    -  

 

 

  (6,198

)

 

(16,162

)

Dividends on Preferred Stock

 $

-  

 

 $

-  

 $

-  

 

 $

-  

 

 $

-  

 

 $

11,222

 

 $

11,222

 

Net income (loss) attributable to common stockholders

 $

46,976

 

 $

24,394

 $

(440,277

)

 $

(941,046

)

 $

(196,663

)

 $

(95,699

)

 $

(1,602,315

)

 
 
 Servicing and OriginationsResidential Securities and Loans
 Originations  Servicing  MSRs &
Servicer
Advances 
 Residential
Securities &
Call Rights 

 Residential
Loans 

 Corporate
& Other 
 Total 
Quarter Ended December 31, 2019 
Interest income

 $

 17,321

 

 $

 8,665

 $

 151,755

 

 $

186,250

 

 $

61,765

 

 $

37,333

 

 $

463,089

Interest expense

 

   16,895

 

 

  306

 

   61,694

 

 

 122,617

 

 

38,461

 

 

  7,040

 

247,013

 

      Net interest income

 

    426

 

 

8,359

 

   90,061

 

 

    63,633

 

 

  23,304

 

 

  30,293

 

 

 216,076

 

Impairment

 

   -  

 

 

  -  

 

    -  

 

 

   3,232

 

 

   (4,050

)

 

   6,411

 

 

   5,593

 

Servicing revenue, net

 

  (390

)

 

  56,020

 

 196,163

 

 

-  

 

 

   -  

 

 

-  

 

 

 251,793

 

Gain on originated mortgage loans, held-for-sale, net

 

  160,280

 

 

  348

 

   6,748

 

 

  -  

 

 

  13,144

 

 

     -  

 

 

   180,520

 

Other income (loss)

 

 8,886

 

 

  5,343

 

 (11,876

)

 

 (10,748

)

 

  (42,859

)

 

  (2,572

)

 

  (53,826

)

Operating expenses

 

 82,953

 

 

 42,790

 

  117,374

 

 

  (964

)

 

  21,456

 

 

72,194

 

 

335,803

 

Income (Loss) Before Income Taxes

 

86,249

 

 

 27,280

 

  163,722

 

 

   50,617

 

 

    (23,817

)

 

  (50,884

)

 

  253,167

 

Income tax expense (benefit)

 

  24,286

 

 

  8,150

 

29,819

 

 

  -  

 

 

   (39,509

)

 

   40

 

 

  22,786

 

Net Income (Loss)

 $

61,963

 

 $

19,130

 $

133,903

 

 $

 50,617

 

 $

15,692

 

 $

(50,924

)

 $

230,381

 

Noncontrolling interests in income (loss) of consolidated subsidiaries

 

  1,824

 

 

-  

 

      (211

)

 

-  

 

 

  -  

 

 

9,045

 

 

 10,658

 

Dividends on Preferred Stock

 $

   -  

 

 $

  -  

 $

-  

 

 $

-  

 

 $

-  

 

 $

7,943

 

 $

7,943

 

Net income (loss) attributable to common stockholders

 $

60,139

 

 $

19,130

 $

134,114

 

 $

50,617

 

 $

15,692

 

 $

(67,912

)

 $

211,780

 

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain information in this press release constitutes as "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding our strategy, growth opportunities, ability to execute on key business initiatives and generate returns, and the ability to close any deals for which we have entered into any preliminary agreements. These statements are not historical facts. They represent management’s current expectations regarding future events and are subject to a number of trends and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from those described in the forward-looking statements. Accordingly, you should not place undue reliance on any forward-looking statements contained herein. For a discussion of some of the risks and important factors that could affect such forward-looking statements, see the sections entitled "Cautionary Statements Regarding Forward Looking Statements," "Risk Factors" and "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in the Company’s most recent annual and quarterly reports and other filings filed with the U.S. Securities and Exchange Commission, which are available on the Company’s website (www.newresi.com). New risks and uncertainties emerge from time to time, and it is not possible for New Residential to predict or assess the impact of every factor that may cause its actual results to differ from those contained in any forward-looking statements. Forward-looking statements contained herein speak only as of the date of this press release, and New Residential expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in New Residential's expectations with regard thereto or change in events, conditions or circumstances on which any statement is based.

ABOUT NEW RESIDENTIAL

New Residential is a leading provider of capital and services to the mortgage and financial services industry. The Company’s mission is to generate attractive risk-adjusted returns in all interest rate environments through a portfolio of investments and operating businesses. New Residential has built a diversified, hard-to-replicate portfolio with high-quality investment strategies that have generated returns across different interest rate environments over time. New Residential’s portfolio is composed of mortgage servicing related assets (including investments in operating entities consisting of servicing, origination, and affiliated businesses), residential securities (and associated called rights) and loans, and consumer loans. New Residential’s investments in operating entities include its mortgage origination and servicing subsidiary, NewRez, and its special servicing division, Shellpoint Mortgage Servicing, as well as investments in affiliated businesses that provide services that are complementary to the origination and servicing businesses and other portfolios of mortgage related assets. Since inception in 2013, New Residential has a proven track record of performance, growing and protecting the value of its assets while generating attractive risk-adjusted returns and delivering approximately $3.3 billion in dividends to shareholders. New Residential is organized and conducts its operations to qualify as a real estate investment trust ("REIT") for federal income tax purposes. New Residential is managed by an affiliate of Fortress Investment Group LLC, a global investment management firm, and headquartered in New York City.

View source version on businesswire.com: https://www.businesswire.com/news/home/20200505005503/en/

Contacts

Investor Relations
Kaitlyn Mauritz
212-479-3150
IR@NewResi.com