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Segment Information (Tables)
 3 Months Ended
Mar. 31, 2017
Segment Reporting [Abstract]  
Business Segment Financial Information
The following tables present financial information by segment for the three months ended March 31, 2017 and 2016.
Table 21.1 – Business Segment Financial Information
 
 
Three Months Ended March 31, 2017
(In Thousands)
 
Investment Portfolio
 
 Residential Mortgage Banking
 
 Corporate/
Other
 
 Total
Interest income
 
$
42,250

 
$
7,474

 
$
4,904

 
$
54,628

Interest expense
 
(5,264
)
 
(2,924
)
 
(12,843
)
 
(21,031
)
Net interest income (loss)
 
36,986


4,550


(7,939
)
 
33,597

Reversal of provision for loan losses
 
—

 
—

 
—

 
—

Non-interest income
 
 
 
 
 
 
 
 
Mortgage banking activities, net
 
—

 
17,604

 
—

 
17,604

MSR income, net
 
1,713

 
—

 
—

 
1,713

Investment fair value changes, net
 
3,359

 
—

 
(1,808
)
 
1,551

Other income
 
1,184

 
—

 
—

 
1,184

Realized gains, net
 
5,703

 
—

 
—

 
5,703

Total non-interest income, net
 
11,959


17,604


(1,808
)
 
27,755

Direct operating expenses
 
(1,593
)
 
(5,881
)
 
(10,752
)
 
(18,226
)
Provision for income taxes
 
(1,737
)
 
(4,420
)
 
—

 
(6,157
)
Segment Contribution
 
$
45,615


$
11,853


$
(20,499
)
 
 
Net Income
 
 
 
 
 
 
 
$
36,969

Non-cash amortization income (expense)
 
$
5,847

 
$
(27
)
 
$
(997
)
 
$
4,823

 
 
Three Months Ended March 31, 2016
(In Thousands)
 
Investment Portfolio
 
 Residential Mortgage Banking
 
 Corporate/
Other
 
 Total
Interest income
 
$
48,763

 
$
7,869

 
$
5,696

 
$
62,328

Interest expense
 
(7,507
)
 
(3,289
)
 
(13,154
)
 
(23,950
)
Net interest income (loss)
 
41,256


4,580

 
(7,458
)
 
38,378

Reversal of provision for loan losses
 
(289
)
 
—

 
—

 
(289
)
Non-interest income
 
 
 
 
 
 
 
 
Mortgage banking activities, net
 
—

 
9,280

 
(2,062
)
 
7,218

MSR income, net
 
6,281

 
—

 
—

 
6,281

Investment fair value changes, net
 
(17,902
)
 
—

 
(1,636
)
 
(19,538
)
Other income
 
955

 
—

 
—

 
955

Realized gains, net
 
9,246

 
—

 
292

 
9,538

Total non-interest income, net
 
(1,420
)

9,280

 
(3,406
)
 
4,454

Direct operating expenses (1)
 
(2,111
)
 
(5,321
)
 
(23,020
)
 
(30,452
)
Provision for income taxes
 
(28
)
 
—

 
—

 
(28
)
Segment Contribution
 
$
37,408


$
8,539


$
(33,884
)
 
 
Net Income
 
 
 
 
 
 
 
$
12,063

Non-cash amortization income (expense)
 
$
8,052

 
$
(43
)
 
$
(990
)
 
$
7,019

(1)
For the three months ended March 31, 2016, $11 million of costs associated with the restructuring of our conforming residential mortgage loan operations and commercial operations, included in the direct operating expense line item, are presented under the Corporate/Other column.
Components of Corporate and Other
The following tables present the components of Corporate/Other for the three months ended March 31, 2017 and 2016.
Table 21.2 – Components of Corporate/Other
 
 
Three Months Ended March 31,
 
 
2017
 
2016
(In Thousands)
 
Legacy Consolidated VIEs (1)
 
Other
 
Total
 
Legacy Consolidated VIEs (1)
 
Other
 
 Total
Interest income
 
$
4,838

 
$
66

 
$
4,904

 
$
4,777

 
$
919

 
$
5,696

Interest expense
 
(3,516
)
 
(9,327
)
 
(12,843
)
 
(3,297
)
 
(9,857
)
 
(13,154
)
Net interest income (loss)
 
1,322

 
(9,261
)
 
(7,939
)
 
1,480

 
(8,938
)
 
(7,458
)
Non-interest income
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage banking activities, net
 
—

 
—

 
—

 
—

 
(2,062
)
 
(2,062
)
Investment fair value changes, net
 
(1,810
)
 
2

 
(1,808
)
 
(1,580
)
 
(56
)
 
(1,636
)
Realized gains, net
 
—

 
—

 
—

 
—

 
292

 
292

Total non-interest income, net
 
(1,810
)
 
2

 
(1,808
)
 
(1,580
)
 
(1,826
)
 
(3,406
)
Direct operating expenses
 
—

 
(10,752
)
 
(10,752
)
 
—

 
(23,020
)
 
(23,020
)
Provision for income taxes
 
—

 
—

 
—

 
—

 
—

 
—

Total
 
$
(488
)
 
$
(20,011
)
 
$
(20,499
)
 
$
(100
)
 
$
(33,784
)
 
$
(33,884
)
(1)
Legacy consolidated VIEs represent legacy Sequoia entities that are consolidated for GAAP financial reporting purposes. See Note 4 for further discussion on VIEs.
Supplemental Information by Segment
The following table presents supplemental information by segment at March 31, 2017 and December 31, 2016.
Table 21.3 – Supplemental Segment Information
(In Thousands)
 
Investment Portfolio
 
Residential Mortgage Banking
 
Corporate/
Other
 
Total
March 31, 2017
 
 
 
 
 
 
 
 
Residential loans
 
$
2,350,013

 
$
376,607

 
$
745,621

 
$
3,472,241

Real estate securities
 
1,165,940

 
—

 
—

 
1,165,940

Mortgage servicing rights
 
111,013

 
—

 
—

 
111,013

Total assets
 
3,771,370

 
410,229

 
1,032,692

 
5,214,291

 
 
 
 
 
 
 
 
 
December 31, 2016
 
 
 
 
 
 
 
 
Residential loans
 
$
2,261,016

 
$
835,399

 
$
791,636

 
$
3,888,051

Real estate securities
 
1,018,439

 
—

 


 
1,018,439

Mortgage servicing rights
 
118,526

 
—

 
—

 
118,526

Total assets
 
3,615,535

 
866,356

 
1,001,586

 
5,483,477