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Segment Information
 3 Months Ended
Mar. 31, 2015
Segment Reporting [Abstract]  
Segment Information
Segment Information
Redwood operates in three segments: residential mortgage banking, residential investments, and commercial mortgage banking and investments. Our segments are based on our organizational and management structure, which aligns with how our results are monitored and performance is assessed. For a full description of our segments, see Item 1—Business in our Annual Report on Form 10-K.
Segment contribution represents the measure of profit that management uses to assess the performance of our business segments and make resource allocation and operating decisions. Certain expenses not directly assigned or allocated to one of the three primary segments, as well as activity from certain consolidated Sequoia entities consolidated for GAAP financial reporting purposes, are included in the Corporate/Other column as reconciling items to our consolidated financial statements. These unallocated expenses primarily include interest expense associated with certain long-term debt, indirect operating expenses, and other expense.
The following tables present financial information by segment for the three months ended March 31, 2015 and 2014.
Business Segment Financial Information
 
 
Three Months Ended March 31, 2015
(In Thousands)
 
 Residential Mortgage Banking
 
 Residential Investments
 
 Commercial Mortgage Banking and Investments
 
 Corporate/
Other
 
 Total
Interest income
 
$
15,795

 
$
30,012

 
$
10,914

 
$
7,025

 
$
63,746

Interest expense
 
(3,778
)
 
(2,810
)
 
(3,489
)
 
(13,884
)
 
(23,961
)
Net interest income (loss)
 
12,017

 
27,202

 
7,425

 
(6,859
)
 
39,785

Provision for loan losses
 
—

 
—

 
(206
)
 
—

 
(206
)
Non-interest income
 
 
 
 
 
 
 
 
 
 
Mortgage banking activities
 
2,215

 
—

 
(292
)
 
—

 
1,923

MSR income (loss)
 
—

 
(10,924
)
 
—

 
—

 
(10,924
)
Other market valuation adjustments
 
2

 
(19
)
 
—

 
(1,128
)
 
(1,145
)
Realized gains, net
 
—

 
4,306

 
—

 
—

 
4,306

Other income
 
—

 
809

 
—

 
—

 
809

Total non-interest income, net
 
2,217

 
(5,828
)
 
(292
)
 
(1,128
)
 
(5,031
)
Direct operating expenses
 
(10,903
)
 
(1,118
)
 
(3,482
)
 
(9,560
)
 
(25,063
)
Benefit from income taxes
 
8

 
3,510

 
853

 
945

 
5,316

Segment Contribution
 
$
3,339

 
$
23,766

 
$
4,298

 
$
(16,602
)
 
 
Net Income
 
 
 
 
 
 
 
 
 
$
14,801

 
 
 
 
 
 
 
 
 
 
 
Non-cash amortization expense
 
(46
)
 
9,838

 
(49
)
 
(981
)
 
8,762


 
 
Three Months Ended March 31, 2014
(In Thousands)
 
 Residential Mortgage Banking
 
 Residential Investments
 
 Commercial Mortgage Banking and Investments
 
 Corporate/
Other
 
 Total
Interest income
 
$
10,668

 
$
27,594

 
$
10,384

 
$
6,830

 
$
55,476

Interest expense
 
(1,321
)
 
(2,850
)
 
(3,303
)
 
(11,586
)
 
(19,060
)
Net interest income (loss)
 
9,347

 
24,744

 
7,081

 
(4,756
)
 
36,416

Provision for loan losses
 
—

 
—

 
(655
)
 
(629
)
 
(1,284
)
Non-interest income
 
 
 
 
 
 
 
 
 
 
Mortgage banking activities
 
(1,064
)
 
—

 
833

 
—

 
(231
)
MSR income (loss)
 
—

 
606

 
—

 
—

 
606

Other market valuation adjustments
 
(2
)
 
(5,957
)
 
—

 
(179
)
 
(6,138
)
Realized gains, net
 
—

 
987

 
—

 
105

 
1,092

Total non-interest income, net
 
(1,066
)
 
(4,364
)
 
833

 
(74
)
 
(4,671
)
Direct operating expenses
 
(7,094
)
 
(1,095
)
 
(2,626
)
 
(9,156
)
 
(19,971
)
(Provision for) benefit from income taxes
 
(165
)
 
1,527

 
355

 
126

 
1,843

Segment Contribution
 
$
1,022


$
20,812


$
4,988


$
(14,489
)
 
 
Net Income
 
 
 
 
 
 
 
 
 
$
12,333

 
 
 
 
 
 
 
 
 
 
 
Non-cash amortization expense
 
(52
)
 
11,247

 
(173
)
 
(1,946
)
 
9,076

The following tables present the components of Corporate/Other for the three months ended March 31, 2015 and 2014.
 
 
Three Months Ended March 31,
 
 
2015
 
2014
(In Thousands)
 
Legacy Consolidated VIEs
 
Other
 
Total
 
Legacy Consolidated VIEs
 
Other
 
 Total
Interest income
 
$
7,018

 
$
7

 
$
7,025

 
$
6,828

 
$
2

 
$
6,830

Interest expense
 
(4,482
)
 
(9,402
)
 
$
(13,884
)
 
(5,460
)
 
(6,126
)
 
(11,586
)
Net interest income (loss)
 
2,536

 
(9,395
)
 
(6,859
)
 
1,368

 
(6,124
)
 
(4,756
)
Provision for loan losses
 
—

 
—

 
—

 
(629
)
 
—

 
(629
)
Non-interest income
 
 
 
 
 
 
 
 
 
 
 
 
Other market valuation adjustments
 
(1,093
)
 
(35
)
 
(1,128
)
 
(142
)
 
(37
)
 
(179
)
Realized gains, net
 
—

 
—

 
—

 
105

 
—

 
105

Total non-interest income, net
 
(1,093
)
 
(35
)
 
(1,128
)
 
(37
)
 
(37
)
 
(74
)
Direct operating expenses
 
—

 
(9,560
)
 
(9,560
)
 
(52
)
 
(9,104
)
 
(9,156
)
Benefit from income taxes
 
—

 
945

 
945

 
—

 
126

 
126

Total
 
$
1,443

 
$
(18,045
)
 
$
(16,602
)
 
$
650

 
$
(15,139
)
 
$
(14,489
)

The following table presents supplemental information by segment at March 31, 2015 and December 31, 2014.
Supplemental Disclosures
(In Thousands)
 
Residential Mortgage Banking
 
Residential Investments
 
Commercial Mortgage Banking and Investments
 
Corporate/
Other
 
Total
March 31, 2015
 
 
 
 
 
 
 
 
 
 
Residential loans
 
$
1,094,885

 
$
1,000,444

 
$
—

 
$
1,304,426

 
$
3,399,755

Commercial loans
 
—

 
—

 
460,342

 
—

 
460,342

Real estate securities
 
65,809

 
1,219,434

 
—

 
—

 
1,285,243

Mortgage servicing rights
 
—

 
120,324

 
—

 
—

 
120,324

Total assets
 
1,204,055

 
2,446,100

 
467,200

 
1,698,664

 
5,816,019

 
 
 
 
 
 
 
 
 
 


December 31, 2014
 
 
 
 
 
 
 
 
 


Residential loans
 
$
1,342,519

 
$
581,668

 
$
—

 
$
1,474,386

 
$
3,398,573

Commercial loans
 
—

 
—

 
566,927

 
—

 
566,927

Real estate securities
 
93,802

 
1,285,428

 
—

 
—

 
1,379,230

Mortgage servicing rights
 
—

 
139,293

 
—

 
—

 
139,293

Total assets
 
1,468,856

 
2,057,256

 
575,943

 
1,816,911

 
5,918,966