• |
GAAP Net Income of $77.9 million, or $0.19 per diluted common share(1)
|
• |
Core Earnings of $131.6 million, or $0.31 per diluted common share(1)(2)
|
• |
Common Dividend of $62.4 million, or $0.15 per common share(1)
|
• |
Book Value per common share of $10.86(1)
|
• |
$841.0 million of cash as of September 30, 2020
|
Q3 2020
|
Q2 2020
|
|
Summary of Operating Results:
|
||
GAAP Net Income (Loss) per Diluted Common Share(1)
|
$0.19
|
($0.02)
|
GAAP Net Income (Loss)
|
$77.9 million
|
($8.9 million)
|
Non-GAAP Results:
|
||
Core Earnings per Diluted Common Share(1)
|
$0.31
|
$0.34
|
Core Earnings(2)
|
$131.6 million
|
$140.2 million
|
NRZ Common Dividend:
|
||
Common Dividend per Share(1)
|
$0.15
|
$0.10
|
Common Dividend
|
$62.4 million
|
$41.6 million
|
• |
Origination
|
o |
Segment pre-tax income of $312.3 million (+72% QoQ)
|
o |
Origination production of $18.1 billion in unpaid principal balance (“UPB”) (+118% QoQ)
|
o |
Direct to Consumer production of $3.4 billion UPB (+12% QoQ)
|
• |
Servicing
|
o |
Segment pre-tax net income of $30.3 million (+24% QoQ)
|
o |
The servicing portfolio grew to $287.2 billion in UPB (+3% QoQ)
|
• |
Mortgage Servicing Rights (“MSRs”) and Servicer Advances
|
o |
MSR portfolio totaled approximately $571 billion UPB as of September 30, 2020 compared to $610 billion UPB as of June 30, 2020(3)
|
o |
Issued two MSR debt securitizations for $426 million
|
o |
Closed a new $500 million Ginnie Mae MSR and advance financing facility(4)
|
o |
Issued two servicer advance securitizations for $1.2 billion
|
o |
Servicer advance balances declined slightly to $3.4 billion from $3.5 billion as of June 30, 2020
|
• |
Residential Securities
|
o |
Purchased $5.1 billion (net face value) of agency securities
|
o |
Sold $616 million (face value) of non-agency securities
|
• |
Residential Loans
|
o |
Sold $279 million (face value) of residential loans
|
o |
Completed three securitizations with total collateral of $1.3 billion UPB (two non-performing loans and one reperforming loan)
|
• |
Financing and Leverage
|
o |
Fully refinanced 11.00% senior secured term loan with 6.25% senior unsecured corporate debt, resulting in approximately $32 million of annual savings(5)
|
o |
Refinanced SpringCastle securitization, representing $663 million of collateral
|
o |
Annualized savings of approximately $50 million from all Q3’20 refinancing activity(5)
|
o |
Overall leverage of 3.5x compared to 2.1x as of June 30, 2020(6)
|
• |
Additional Updates Post Q3’20(7)
|
o |
Issued one servicer advance securitization for $500 million
|
o |
Sold $194 million (face value) of residential loans
|
(1) |
Per common share calculations for both GAAP Net Income (Loss) and Core Earnings are based on 420,968,626 weighted average diluted shares during the quarter ended September 30, 2020; and 415,661,782 weighted average diluted shares during
the quarter ended June 30, 2020. Per share calculations of Common Dividend are based on 415,744,518 basic shares outstanding as of September 30, 2020 and June 30, 2020. Per common share calculations for Book Value are based on 415,744,518
basic common shares outstanding as of September 30, 2020.
|
(2) |
Core Earnings is a non-GAAP financial 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) |
Includes excess and full MSRs.
|
(4) |
Closed August 31, 2020. Upon approval from Ginnie Mae and the related lender, may be upsized to $750 million.
|
(5) |
Based on management’s current views and estimates, and actual results may vary.
|
(6) |
Represents recourse leverage. Excludes non-recourse leverage, including outstanding consumer debt, servicer advance debt, $37.4 million and $59.5 million of full MSR debt for September 30, 2020 and December 31, 2019 respectively, SAFT
2013-1 and MDST Trusts mortgage backed securities issued, and Shellpoint non-agency RMBS.
|
(7) |
Represents activity from October 1, 2020 through October 23, 2020. Based on management’s current views and estimates, and actual results may vary.
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
|||||||||||||
Revenues
|
||||||||||||||||
Interest income
|
$
|
233,848
|
$
|
448,127
|
$
|
868,419
|
$
|
1,303,041
|
||||||||
Servicing revenue, net of change in fair value of $(395,064), $(228,405), $(1,485,472), and $(619,914), respectively
|
(43,929
|
)
|
53,050
|
(459,313
|
)
|
133,366
|
||||||||||
Gain on originated mortgage loans, held-for-sale, net
|
495,098
|
126,747
|
984,818
|
294,935
|
||||||||||||
685,017
|
627,924
|
1,393,924
|
1,731,342
|
|||||||||||||
Expenses
|
||||||||||||||||
Interest expense
|
130,528
|
245,902
|
463,786
|
686,738
|
||||||||||||
General and administrative expenses
|
316,560
|
193,580
|
859,601
|
525,289
|
||||||||||||
Management fee to affiliate
|
22,482
|
20,678
|
66,682
|
58,261
|
||||||||||||
Incentive compensation to affiliate
|
— |
36,307
|
— |
49,265
|
||||||||||||
469,570
|
496,467
|
1,390,069
|
1,319,553
|
|||||||||||||
Other Income (Loss)
|
||||||||||||||||
Change in fair value of investments
|
89,092
|
2,212
|
(374,408
|
)
|
(55,534
|
)
|
||||||||||
Gain (loss) on settlement of investments, net
|
(94,457
|
)
|
133,670
|
(968,995
|
)
|
96,385
|
||||||||||
Earnings from investments in consumer loans, equity method investees
|
— |
(2,547
|
)
|
— |
(890
|
)
|
||||||||||
Other income (loss), net
|
5,385
|
(30,695
|
)
|
(34,635
|
)
|
(27,234
|
)
|
|||||||||
20
|
102,640
|
(1,378,038
|
)
|
12,727
|
||||||||||||
Impairment
|
||||||||||||||||
Provision (reversal) for credit losses on securities
|
(3,849
|
)
|
5,567
|
15,166
|
21,942
|
|||||||||||
Valuation and credit loss provision (reversal) on loans and real estate owned (“REO”)
|
14,584
|
(10,690
|
)
|
118,504
|
8,042
|
|||||||||||
10,735
|
(5,123
|
)
|
133,670
|
29,984
|
||||||||||||
Income (Loss) Before Income Taxes
|
204,732
|
239,220
|
(1,507,853
|
)
|
394,532
|
|||||||||||
Income tax expense (benefit)
|
100,812
|
(5,440
|
)
|
(48,647
|
)
|
18,980
|
||||||||||
Net Income (Loss)
|
$
|
103,920
|
$
|
244,660
|
$
|
(1,459,206
|
)
|
$
|
375,552
|
|||||||
Noncontrolling Interests in Income of Consolidated Subsidiaries
|
$
|
11,640
|
$
|
14,738
|
$
|
34,118
|
$
|
31,979
|
||||||||
Dividends on Preferred Stock
|
$
|
14,359
|
$
|
5,338
|
$
|
39,938
|
$
|
5,338
|
||||||||
Net Income (Loss) Attributable to Common Stockholders
|
$
|
77,921
|
$
|
224,584
|
$
|
(1,533,262
|
)
|
$
|
338,235
|
|||||||
Net Income (Loss) Per Share of Common Stock
|
||||||||||||||||
Basic
|
$
|
0.19
|
$
|
0.54
|
$
|
(3.69
|
)
|
$
|
0.83
|
|||||||
Diluted
|
$
|
0.19
|
$
|
0.54
|
$
|
(3.69
|
)
|
$
|
0.83
|
|||||||
Weighted Average Number of Shares of Common Stock Outstanding
|
||||||||||||||||
Basic
|
415,744,518
|
415,520,780
|
415,665,441
|
406,521,273
|
||||||||||||
Diluted
|
420,968,626
|
415,588,238
|
415,665,441
|
406,671,972
|
||||||||||||
Dividends Declared per Share of Common Stock
|
$
|
0.15
|
$
|
0.50
|
$
|
0.30
|
$
|
1.50
|
September 30, 2020
|
December 31, 2019
|
|||||||
Assets
|
(unaudited)
|
|||||||
Excess mortgage servicing rights assets, at fair value
|
$
|
435,982
|
$
|
505,343
|
||||
Mortgage servicing rights, at fair value
|
3,651,805
|
3,967,960
|
||||||
Mortgage servicing rights financing receivables, at fair value
|
1,129,819
|
1,718,273
|
||||||
Servicer advance investments, at fair value
|
535,760
|
581,777
|
||||||
Real estate and other securities
|
10,830,067
|
19,477,728
|
||||||
Residential loans and variable interest entity consumer loans held-for-investment, at fair value
|
1,440,910
|
1,753,251
|
||||||
Residential mortgage loans, held-for-sale ($4,358,473 and $4,613,612 at fair value at September 30, 2020 and December 31, 2019, respectively)
|
4,936,826
|
6,042,664
|
||||||
Residential mortgage loans subject to repurchase
|
1,458,325
|
172,336
|
||||||
Cash and cash equivalents
|
841,022
|
528,737
|
||||||
Restricted cash
|
180,554
|
162,197
|
||||||
Servicer advances receivable
|
2,857,040
|
3,301,374
|
||||||
Trades receivable
|
946,321
|
5,256,014
|
||||||
Other assets
|
1,161,933
|
1,395,800
|
||||||
$
|
30,406,364
|
$
|
44,863,454
|
|||||
Liabilities and Equity
|
||||||||
Liabilities
|
||||||||
Secured financing agreements
|
$
|
14,666,868
|
$
|
27,916,225
|
||||
Secured notes and bonds payable (includes $1,756,632 and $659,738 at fair value at September 30, 2020 and December 31, 2019, respectively)
|
7,733,648
|
7,720,148
|
||||||
Residential mortgage loan repurchase liability
|
1,458,325
|
172,336
|
||||||
Unsecured senior notes, net of issuance costs
|
541,758
|
-
|
||||||
Trades payable
|
210
|
902,081
|
||||||
Due to affiliates
|
9,545
|
103,882
|
||||||
Dividends payable
|
69,541
|
211,732
|
||||||
Accrued expenses and other liabilities
|
497,838
|
600,790
|
||||||
24,977,733
|
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 September 30, 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 September 30, 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 September 30, 2020 and December 31, 2019,
respectively
|
389,548
|
-
|
||||||
Common Stock, $0.01 par value, 2,000,000,000 shares authorized, 415,744,518 and 415,520,780 issued and outstanding at September 30, 2020 and December 31, 2019,
respectively
|
4,158
|
4,156
|
||||||
Additional paid-in capital
|
5,554,559
|
5,498,226
|
||||||
Retained earnings (accumulated deficit)
|
(1,094,589
|
)
|
549,733
|
|||||
Accumulated other comprehensive income (loss)
|
52,074
|
682,151
|
||||||
Total New Residential stockholders’ equity
|
5,329,194
|
7,157,710
|
||||||
Noncontrolling interests in equity of consolidated subsidiaries
|
99,437
|
78,550
|
||||||
Total Equity
|
5,428,631
|
7,236,260
|
||||||
$
|
30,406,364
|
$
|
44,863,454
|
Three Months Ended
|
||||||||
September 30, 2020
|
June 30, 2020
|
|||||||
Net income (loss) attributable to common stockholders
|
$
|
77,921
|
$
|
(8,868
|
)
|
|||
Adjustments for Non-Core Earnings:
|
||||||||
Impairment
|
10,735
|
(21,710
|
)
|
|||||
Change in fair value of investments
|
(203,652
|
)
|
(27,516
|
)
|
||||
(Gain) loss on settlement of investments, net
|
94,068
|
81,382
|
||||||
Other (income) loss
|
20,646
|
47,366
|
||||||
Other Income and Impairment attributable to non-controlling interests
|
(4,360
|
)
|
19,332
|
|||||
Non-capitalized transaction-related expenses
|
17,795
|
14,195
|
||||||
Preferred stock management fee to affiliate
|
3,048
|
3,048
|
||||||
Deferred taxes
|
99,374
|
25,277
|
||||||
Interest income on residential mortgage loans, held-for-sale
|
9,579
|
8,424
|
||||||
Adjust consumer loans to level yield
|
363
|
(995
|
)
|
|||||
Core earnings of equity method investees:
|
||||||||
Excess mortgage servicing rights
|
6,120
|
265
|
||||||
Core Earnings
|
$
|
131,637
|
$
|
140,200
|
||||
Net Income (Loss) Per Diluted Share
|
$
|
0.19
|
$
|
(0.02
|
)
|
|||
Core Earnings Per Diluted Share
|
$
|
0.31
|
$
|
0.34
|
||||
Weighted Average Number of Shares of Common Stock Outstanding, Diluted
|
420,968,626
|
415,661,782
|
Servicing and Origination
|
Residential Securities and Loans
|
|||||||||||||||||||||||||||
Origination
|
Servicing
|
MSRs & Servicer Advances
|
Residential Securities & Call Rights
|
Residential Loans
|
Corporate & Other
|
Total
|
||||||||||||||||||||||
Quarter Ended September 30, 2020
|
||||||||||||||||||||||||||||
Interest income
|
$
|
17,407
|
$
|
373
|
$
|
91,576
|
$
|
61,034
|
$
|
33,913
|
$
|
29,545
|
$
|
233,848
|
||||||||||||||
Servicing revenue, net
|
(3,767
|
)
|
111,420
|
(151,582
|
)
|
— | — | — |
(43,929
|
)
|
||||||||||||||||||
Gain on originated mortgage loans, held-for-sale, net
|
445,578
|
346
|
49,174
|
— | — | — |
495,098
|
|||||||||||||||||||||
Total revenues
|
459,218
|
112,139
|
(10,832
|
)
|
61,034
|
33,913
|
29,545
|
685,017
|
||||||||||||||||||||
Interest expense
|
10,977
|
90
|
59,650
|
15,652
|
19,326
|
24,833
|
130,528
|
|||||||||||||||||||||
G&A and other
|
136,086
|
81,767
|
78,831
|
930
|
10,361
|
31,067
|
339,042
|
|||||||||||||||||||||
Total operating expenses
|
147,063
|
81,857
|
138,481
|
16,582
|
29,687
|
55,900
|
469,570
|
|||||||||||||||||||||
Other income (loss)
|
123
|
— |
(19,753
|
)
|
36,941
|
44,699
|
(61,990
|
)
|
20
|
|||||||||||||||||||
Impairment
|
— | — |
218
|
(3,849
|
)
|
14,366
|
— |
10,735
|
||||||||||||||||||||
Income (loss) before income taxes
|
312,278
|
30,282
|
(169,284
|
)
|
85,242
|
34,559
|
(88,345
|
)
|
204,732
|
|||||||||||||||||||
Income tax expense (benefit)*
|
71,304
|
6,044 |
15,682
|
|
— |
7,783
|
(1
|
)
|
100,812
|
|||||||||||||||||||
Net income (loss)
|
$
|
240,974
|
$
|
24,238
|
$
|
(184,966
|
)
|
$
|
85,242
|
$
|
26,776 |
|
$
|
(88,344
|
)
|
$
|
103,920
|
|||||||||||
Noncontrolling interests in income (loss) of consolidated subsidiaries
|
4,840
|
— |
2,612
|
— | — |
4,188
|
11,640
|
|||||||||||||||||||||
Dividends on preferred stock
|
$
|
— |
$
|
— |
$
|
— |
$
|
— |
$
|
—
|
$
|
14,359
|
$
|
14,359
|
||||||||||||||
Net income (loss) attributable to common stockholders
|
$
|
236,134
|
$
|
24,238
|
$
|
(187,578
|
)
|
$
|
85,242
|
$
|
26,776
|
|
$
|
(106,891
|
)
|
$
|
77,921
|
|||||||||||
Servicing and Origination
|
Residential Securities and Loans
|
|||||||||||||||||||||||||||
Origination
|
Servicing
|
MSRs & Servicer Advances
|
Residential Securities & Call Rights
|
Residential Loans
|
Corporate & Other
|
Total
|
||||||||||||||||||||||
Quarter Ended June 30, 2020
|
||||||||||||||||||||||||||||
Interest income
|
$
|
8,963
|
$
|
1,115
|
$
|
108,386
|
$
|
33,663
|
$
|
47,284
|
$
|
32,787
|
$
|
232,198
|
||||||||||||||
Servicing revenue, net
|
(1,998
|
)
|
96,885
|
(185,346
|
)
|
— | — | — |
(90,459
|
)
|
||||||||||||||||||
Gain on originated mortgage loans, held-for-sale, net
|
281,937
|
343
|
29,591
|
— |
(1,849
|
)
|
— |
310,022
|
||||||||||||||||||||
Total revenues
|
288,902
|
98,343
|
(47,369
|
)
|
33,663
|
45,435
|
32,787
|
451,761
|
||||||||||||||||||||
Interest expense
|
5,667
|
111
|
60,594
|
17,679
|
17,471
|
14,881
|
116,403
|
|||||||||||||||||||||
G&A and other
|
102,462
|
73,907
|
91,454
|
344
|
19,278
|
32,688
|
320,133
|
|||||||||||||||||||||
Total operating expenses
|
108,129
|
74,018
|
152,048
|
18,023
|
36,749
|
47,569
|
436,536
|
|||||||||||||||||||||
Other income (loss)
|
390
|
— |
(90,665
|
)
|
47,837
|
36,676
|
30,365
|
24,603
|
||||||||||||||||||||
Impairment
|
— | — |
(91
|
)
|
(25,134
|
)
|
3,515
|
— |
(21,710
|
)
|
||||||||||||||||||
Income (loss) before income taxes
|
181,163
|
24,325
|
(289,991
|
)
|
88,611
|
41,847
|
15,583
|
61,538
|
||||||||||||||||||||
Income tax expense (benefit)*
|
50,285
|
6,752
|
(42,562
|
)
|
— |
2,918
|
16
|
17,409
|
||||||||||||||||||||
Net income (loss)
|
$
|
130,878
|
$
|
17,573
|
$
|
(247,429
|
)
|
$
|
88,611
|
$
|
38,929
|
$
|
15,567
|
$
|
44,129
|
|||||||||||||
Noncontrolling interests in income (loss) of consolidated subsidiaries
|
4,419
|
— |
8,591
|
— | — |
25,630
|
38,640
|
|||||||||||||||||||||
Dividends on preferred stock
|
$
|
— |
$
|
— |
$
|
— |
$
|
— |
$
|
— |
$
|
14,357
|
$
|
14,357
|
||||||||||||||
Net income (loss) attributable to common stockholders
|
$
|
126,459
|
$
|
17,573
|
$
|
(256,020
|
)
|
$
|
88,611
|
$
|
38,929
|
$
|
(24,420
|
)
|
$
|
(8,868
|
)
|