Segment Information

6 Months Ended

Jun. 30, 2020

Note 19 — Segment Information

The summarized statements of operations and balance sheet data, as well as certain other data, by segment are included in the following tables ($ in thousands). Specifically identifiable costs are recorded directly to each business segment. For items not specifically identifiable, costs have been allocated between the business segments using the most meaningful allocation methodologies, which was predominately direct labor costs (i.e., time spent working on each business segment). Such costs include, but are not limited to, compensation and employee related costs, selling and administrative expenses and stock-based compensation.


	Three Months Ended June 30, 2020
	Structured		Agency		Other /
	Business		Business		Eliminations (1)		Consolidated
Interest income	$	74,295	$	8,785	$	—	$	83,080
Interest expense		36,739		4,563		—		41,302
Net interest income		37,556		4,222		—		41,778
Other revenue:
Gain on sales, including fee-based services, net		—		26,366		—		26,366
Mortgage servicing rights		—		32,417		—		32,417
Servicing revenue		—		25,397		—		25,397
Amortization of MSRs		—		(11,891)		—		(11,891)
Property operating income		751		—		—		751
Loss on derivative instruments, net		(294)		(7,074)		—		(7,368)
Other income, net		990		59		—		1,049
Total other revenue		1,447		65,274		—		66,721
Other expenses:
Employee compensation and benefits		9,161		25,277		—		34,438
Selling and administrative		3,533		5,073		—		8,606
Property operating expenses		1,035		—		—		1,035
Depreciation and amortization		629		1,332		—		1,961
Provision for loss sharing (net of recoveries)		—		2,395		—		2,395
Provision for credit losses (net of recoveries)		10,558		2,156		—		12,714
Total other expenses		24,916		36,233		—		61,149
Income before extinguishment of debt, income from equity affiliates and income taxes		14,087		33,263		—		47,350
Loss on extinguishment of debt		(1,592)		—		—		(1,592)
Income from equity affiliates		20,408		—		—		20,408
Provision for income taxes		(164)		(11,913)		—		(12,077)
Net income		32,739		21,350		—		54,089
Preferred stock dividends		1,888		—		—		1,888
Net income attributable to noncontrolling interest		—		—		8,110		8,110
Net income attributable to common stockholders	$	30,851	$	21,350	$	(8,110)	$	44,091


	Three Months Ended June 30, 2019
	Structured		Agency		Other /
	Business		Business		Eliminations (1)		Consolidated
Interest income	$	76,144	$	6,027	$	—	$	82,171
Interest expense		44,716		3,568		—		48,284
Net interest income		31,428		2,459		—		33,887
Other revenue:
Gain on sales, including fee-based services, net		—		14,211		—		14,211
Mortgage servicing rights		—		18,709		—		18,709
Servicing revenue		—		24,936		—		24,936
Amortization of MSRs		—		(12,324)		—		(12,324)
Property operating income		3,147		—		—		3,147
(Loss) gain on derivative instruments, net		(361)		1,103		—		742
Other income, net		651		—		—		651
Total other revenue		3,437		46,635		—		50,072
Other expenses:
Employee compensation and benefits		6,815		22,207		—		29,022
Selling and administrative		5,328		5,153		—		10,481
Property operating expenses		2,691		—		—		2,691
Depreciation and amortization		509		1,400		—		1,909
Impairment loss on real estate owned		1,000		—		—		1,000
Provision for loss sharing (net of recoveries)		—		368		—		368
Total other expenses		16,343		29,128		—		45,471
Income before extinguishment of debt, income from equity affiliates and income taxes		18,522		19,966		—		38,488
Income from equity affiliates		3,264		—		—		3,264
Provision for income taxes		—		(4,350)		—		(4,350)
Net income		21,786		15,616		—		37,402
Preferred stock dividends		1,888		—		—		1,888
Net income attributable to noncontrolling interest		—		—		6,598		6,598
Net income attributable to common stockholders	$	19,898	$	15,616	$	(6,598)	$	28,916


	Six Months Ended June 30, 2020
		Structured		Agency		Other /
		Business		Business		Eliminations (1)		Consolidated
Interest income	$	152,772	$	18,834	$	—	$	171,606
Interest expense		80,138		11,146		—		91,284
Net interest income		72,634		7,688		—		80,322
Other revenue:
Gain on sales, including fee-based services, net		—		40,671		—		40,671
Mortgage servicing rights		—		54,351		—		54,351
Servicing revenue		—		50,522		—		50,522
Amortization of MSRs		—		(23,713)		—		(23,713)
Property operating income		2,943		—		—		2,943
Loss on derivative instruments, net		(3,294)		(54,805)		—		(58,099)
Other income, net		2,293		58		—		2,351
Total other revenue		1,942		67,084		—		69,026
Other expenses:
Employee compensation and benefits		20,007		48,683		—		68,690
Selling and administrative		7,983		11,675		—		19,658
Property operating expenses		3,478		—		—		3,478
Depreciation and amortization		1,248		2,660		—		3,908
Provision for loss sharing (net of recoveries)		—		23,932		—		23,932
Provision for credit losses (net of recoveries)		64,448		2,648		—		67,096
Total other expenses		97,164		89,598		—		186,762
Loss before extinguishment of debt, income from equity affiliates and income taxes		(22,588)		(14,826)		—		(37,414)
Loss on extinguishment of debt		(3,546)		—		—		(3,546)
Income from equity affiliates		24,401		—		—		24,401
(Provision for) benefit from income taxes		(248)		2,541		—		2,293
Net loss		(1,981)		(12,285)		—		(14,266)
Preferred stock dividends		3,777		—		—		3,777
Net loss attributable to noncontrolling interest		—		—		(2,824)		(2,824)
Net loss attributable to common stockholders	$	(5,758)	$	(12,285)	$	2,824	$	(15,219)


	Six Months Ended June 30, 2019
	Structured		Agency		Other /
	Business		Business		Eliminations (1)		Consolidated
Interest income	$	141,953	$	11,495	$	—	$	153,448
Interest expense		82,973		7,176		—		90,149
Net interest income		58,980		4,319		—		63,299
Other revenue:
Gain on sales, including fee-based services, net		—		30,600		—		30,600
Mortgage servicing rights		—		32,941		—		32,941
Servicing revenue		—		50,770		—		50,770
Amortization of MSRs		—		(24,606)		—		(24,606)
Property operating income		5,950		—		—		5,950
Loss on derivative instruments, net		(362)		(1,361)		—		(1,723)
Other income, net		989		—		—		989
Total other revenue		6,577		88,344		—		94,921
Other expenses:
Employee compensation and benefits		15,279		45,507		—		60,786
Selling and administrative		9,749		10,493		—		20,242
Property operating expenses		5,086		—		—		5,086
Depreciation and amortization		1,020		2,801		—		3,821
Impairment loss on real estate owned		1,000		—		—		1,000
Provision for loss sharing (net of recoveries)		—		822		—		822
Total other expenses		32,134		59,623		—		91,757
Income before extinguishment of debt, income from equity affiliates and income taxes		33,423		33,040		—		66,463
Loss on extinguishment of debt		(128)		—		—		(128)
Income from equity affiliates		5,415		—		—		5,415
Provision for income taxes		—		(4,341)		—		(4,341)
Net income		38,710		28,699		—		67,409
Preferred stock dividends		3,777		—		—		3,777
Net income attributable to noncontrolling interest		—		—		12,066		12,066
Net income attributable to common stockholders	$	34,933	$	28,699	$	(12,066)	$	51,566

(1)	Includes income allocated to the noncontrolling interest holders not allocated to the two reportable segments.


	June 30, 2020
	Structured Business		Agency Business		Consolidated
Assets:
Cash and cash equivalents	$	268,467	$	115,715	$	384,182
Restricted cash		90,457		4,390		94,847
Loans and investments, net		4,800,176		—		4,800,176
Loans held-for-sale, net		—		360,372		360,372
Capitalized mortgage servicing rights, net		—		313,288		313,288
Securities held-to-maturity, net		20,000		99,019		119,019
Investments in equity affiliates		64,991		—		64,991
Goodwill and other intangible assets		12,500		95,540		108,040
Other assets		107,134		38,075		145,209
Total assets	$	5,363,725	$	1,026,399	$	6,390,124

Liabilities:
Debt obligations	$	4,484,961	$	333,472	$	4,818,433
Allowance for loss-sharing obligations		—		73,220		73,220
Other liabilities		185,378		55,317		240,695
Total liabilities	$	4,670,339	$	462,009	$	5,132,348


	December 31, 2019
Assets:
Cash and cash equivalents	$	264,468	$	35,219	$	299,687
Restricted cash		208,926		1,949		210,875
Loans and investments, net		4,189,960		—		4,189,960
Loans held-for-sale, net		—		861,360		861,360
Capitalized mortgage servicing rights, net		—		286,420		286,420
Securities held-to-maturity, net		20,000		68,699		88,699
Investments in equity affiliates		41,800		—		41,800
Goodwill and other intangible assets		12,500		98,200		110,700
Other assets		118,175		31,484		149,659
Total assets	$	4,855,829	$	1,383,331	$	6,239,160

Liabilities:
Debt obligations	$	3,878,343	$	743,595	$	4,621,938
Allowance for loss-sharing obligations		—		34,648		34,648
Other liabilities		171,004		55,543		226,547
Total liabilities	$	4,049,347	$	833,786	$	4,883,133


	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Origination Data:
Structured Business
New loan originations	$	300,481		$	1,014,103		$	1,156,710		$	1,430,398
Loan payoffs / paydowns		159,174			503,130			434,466			782,601

Agency Business
Origination Volumes by Investor:
Fannie Mae	$	1,140,181		$	937,977		$	1,722,154		$	1,484,863
Freddie Mac		135,720			234,851			335,431			427,343
FHA		75,533			43,558			93,476			44,668
Private Label		49,122			—			331,467			—
CMBS/Conduit		—			71,900			—			177,325
Total	$	1,400,556		$	1,288,286		$	2,482,528		$	2,134,199
Total loan commitment volume	$	1,206,723		$	1,302,128		$	2,473,941		$	2,149,091

Loan Sales Data:
Agency Business
Fannie Mae	$	1,063,923		$	668,063		$	1,817,967		$	1,415,001
Private Label		727,154			—			727,154			—
Freddie Mac		171,688			176,544			351,391			400,317
FHA		30,124			6,539			53,437			32,170
CMBS/Conduit		—			71,900			—			177,325
Total	$	1,992,889		$	923,046		$	2,949,949		$	2,024,813
Sales margin (fee-based services as a % of loan sales)		1.32	%		1.54	%		1.38	%		1.51	%
MSR rate (MSR income as a % of loan commitments)		2.69	%		1.44	%		2.20	%		1.53	%


	June 30, 2020
			Wtd. Avg. Servicing	Wtd. Avg. Life of
	UPB of Servicing		Fee Rate	Servicing Portfolio
Key Servicing Metrics for Agency Business:	Portfolio		(basis points)	(in years)
Fannie Mae	$	15,672,931	50.5	8.2
Freddie Mac		4,560,382	29.5	10.6
Private Label		727,132	20.0	9.5
FHA		621,487	15.4	19.6
Total	$	21,581,932	44.1	9.1


	December 31, 2019
Fannie Mae	$	14,832,844	49.3	7.8
Freddie Mac		4,534,714	30.0	10.6
FHA		691,519	15.4	18.7
Total	$	20,059,077	43.8	8.8

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

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-Publisher FASB
-Name Accounting Standards Codification
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+ Details