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Segment Information (Tables)
 6 Months Ended
Jun. 30, 2018
Segment Reporting [Abstract]  
Business Segment Financial Information
The following tables present financial information by segment for the three and six months ended June 30, 2018 and 2017.
Table 20.1 – Business Segment Financial Information
 
 
Three Months Ended June 30, 2018
(In Thousands)
 
Investment Portfolio
 
 Residential Mortgage Banking
 
 Corporate/
Other
 
 Total
Interest income
 
$
64,569

 
$
13,084

 
$
5,323

 
$
82,976

Interest expense
 
(27,004
)
 
(7,629
)
 
(13,580
)
 
(48,213
)
Net interest income (loss)
 
37,565


5,455


(8,257
)
 
34,763

Non-interest income
 
 
 
 
 
 
 
 
Mortgage banking activities, net
 
—

 
10,596

 
—

 
10,596

Investment fair value changes, net
 
1,600

 
—

 
(711
)
 
889

Other income, net
 
3,322

 
—

 
—

 
3,322

Realized gains, net
 
4,714

 
—

 
—

 
4,714

Total non-interest income, net
 
9,636


10,596


(711
)
 
19,521

Direct operating expenses
 
(1,858
)
 
(5,611
)
 
(11,540
)
 
(19,009
)
Provision for income taxes
 
(1,130
)
 
(1,398
)
 
—

 
(2,528
)
Segment Contribution
 
$
44,213


$
9,042


$
(20,508
)
 
 
Net Income
 
 
 
 
 
 
 
$
32,747

Non-cash amortization income (expense), net
 
$
4,654

 
$
(23
)
 
$
(814
)
 
$
3,817

 
 
Three Months Ended June 30, 2017
(In Thousands)
 
Investment Portfolio
 
 Residential Mortgage Banking
 
 Corporate/
Other
 
 Total
Interest income
 
$
45,833

 
$
8,415

 
$
4,976

 
$
59,224

Interest expense
 
(7,231
)
 
(4,403
)
 
(12,600
)
 
(24,234
)
Net interest income (loss)
 
38,602

 
4,012

 
(7,624
)
 
34,990

Non-interest income
 
 
 
 
 
 
 
 
Mortgage banking activities, net
 
—

 
12,046

 
—

 
12,046

Investment fair value changes, net
 
9,115

 
—

 
(1,000
)
 
8,115

Other income, net
 
3,764

 
—

 
—

 
3,764

Realized gains, net
 
2,124

 
—

 
(752
)
 
1,372

Total non-interest income, net
 
15,003

 
12,046

 
(1,752
)
 
25,297

Direct operating expenses
 
(1,454
)
 
(6,021
)
 
(11,166
)
 
(18,641
)
Provision for income taxes
 
(2,320
)
 
(3,002
)
 
—

 
(5,322
)
Segment Contribution
 
$
49,831

 
$
7,035

 
$
(20,542
)
 
 
Net Income
 
 
 
 
 
 
 
$
36,324

Non-cash amortization income (expense)
 
$
5,194

 
$
(27
)
 
$
(744
)
 
$
4,423

 
 
Six Months Ended June 30, 2018
(In Thousands)
 
Investment Portfolio
 
 Residential Mortgage Banking
 
 Corporate/
Other
 
 Total
Interest income
 
$
123,326

 
$
25,981

 
$
10,288

 
$
159,595

Interest expense
 
(46,867
)
 
(13,766
)
 
(29,094
)
 
(89,727
)
Net interest income (loss)
 
76,459

 
12,215

 
(18,806
)
 
69,868

Non-interest income
 
 
 
 
 
 
 
 
Mortgage banking activities, net
 
—

 
37,172

 
—

 
37,172

Investment fair value changes, net
 
3,190

 
—

 
(692
)
 
2,498

Other income, net
 
5,440

 
—

 
—

 
5,440

Realized gains, net
 
14,077

 
—

 
—

 
14,077

Total non-interest income, net
 
22,707

 
37,172

 
(692
)
 
59,187

Direct operating expenses
 
(3,865
)
 
(14,243
)
 
(23,931
)
 
(42,039
)
Provision for income taxes
 
(2,018
)
 
(5,406
)
 
—

 
(7,424
)
Segment Contribution
 
$
93,283

 
$
29,738

 
$
(43,429
)
 
 
Net Income
 
 
 
 
 
 
 
$
79,592

Non-cash amortization income (expense)
 
$
9,271

 
$
(45
)
 
$
(1,672
)
 
$
7,554


 
 
Six Months Ended June 30, 2017
(In Thousands)
 
Investment Portfolio
 
 Residential Mortgage Banking
 
 Corporate/
Other
 
 Total
Interest income
 
$
88,083

 
$
15,889

 
$
9,880

 
$
113,852

Interest expense
 
(12,495
)
 
(7,327
)
 
(25,443
)
 
(45,265
)
Net interest income (loss)
 
75,588

 
8,562

 
(15,563
)
 
68,587

Non-interest income
 
 
 
 
 
 
 
 
Mortgage banking activities, net
 
—

 
29,650

 
—

 
29,650

Investment fair value changes, net
 
12,474

 
—

 
(2,808
)
 
9,666

Other income, net
 
6,661

 
—

 
—

 
6,661

Realized gains, net
 
7,827

 
—

 
(752
)
 
7,075

Total non-interest income, net
 
26,962

 
29,650

 
(3,560
)
 
53,052

Direct operating expenses
 
(3,047
)
 
(11,902
)
 
(21,918
)
 
(36,867
)
Provision for income taxes
 
(4,057
)
 
(7,422
)
 
—

 
(11,479
)
Segment Contribution
 
$
95,446

 
$
18,888

 
$
(41,041
)
 
 
Net Income
 
 
 
 
 
 
 
$
73,293

Non-cash amortization income (expense)
 
$
11,041

 
$
(54
)
 
$
(1,741
)
 
$
9,246
Components of Corporate and Other
The following table presents the components of Corporate/Other for the three and six months ended June 30, 2018 and 2017.
Table 20.2 – Components of Corporate/Other
 
 
Three Months Ended June 30,
 
 
2018
 
2017
(In Thousands)
 
Legacy Consolidated VIEs (1)
 
Other
 
Total
 
Legacy Consolidated VIEs (1)
 
Other
 
 Total
Interest income
 
$
5,017

 
$
306

 
$
5,323

 
$
4,863

 
$
113

 
$
4,976

Interest expense
 
(4,215
)
 
(9,365
)
 
(13,580
)
 
(3,692
)
 
(8,908
)
 
(12,600
)
Net interest income (loss)
 
802

 
(9,059
)
 
(8,257
)
 
1,171

 
(8,795
)
 
(7,624
)
Non-interest income
 
 
 
 
 
 
 
 
 
 
 
 
Investment fair value changes, net
 
(720
)
 
9

 
(711
)
 
(987
)
 
(13
)
 
(1,000
)
Realized gains, net
 
—

 
—

 
—

 
—

 
(752
)
 
(752
)
Total non-interest income, net
 
(720
)
 
9

 
(711
)
 
(987
)
 
(765
)
 
(1,752
)
Direct operating expenses
 
—

 
(11,540
)
 
(11,540
)
 
—

 
(11,166
)
 
(11,166
)
Total
 
$
82

 
$
(20,590
)
 
$
(20,508
)
 
$
184

 
$
(20,726
)
 
$
(20,542
)
 
 
Six Months Ended June 30,
 
 
2018
 
2017
(In Thousands)
 
Legacy Consolidated
VIEs (1)
 
Other
 
Total
 
Legacy Consolidated
VIEs (1)
 
Other
 
 Total
Interest income
 
$
9,829

 
$
459

 
$
10,288

 
$
9,701

 
$
179

 
$
9,880

Interest expense
 
(8,067
)
 
(21,027
)
 
(29,094
)
 
(7,208
)
 
(18,235
)
 
(25,443
)
Net interest income (loss)
 
1,762

 
(20,568
)
 
(18,806
)
 
2,493

 
(18,056
)
 
(15,563
)
Non-interest income
 
 
 
 
 
 
 
 
 
 
 
 
Investment fair value changes, net
 
(728
)
 
36

 
(692
)
 
(2,797
)
 
(11
)
 
(2,808
)
Realized gains, net
 
—

 
—

 
—

 
—

 
(752
)
 
(752
)
Total non-interest income, net
 
(728
)
 
36

 
(692
)
 
(2,797
)
 
(763
)
 
(3,560
)
Direct operating expenses
 
—

 
(23,931
)
 
(23,931
)
 
—

 
(21,918
)
 
(21,918
)
Total
 
$
1,034

 
$
(44,463
)
 
$
(43,429
)
 
$
(304
)
 
$
(40,737
)
 
$
(41,041
)
(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 June 30, 2018 and December 31, 2017.
Table 20.3 – Supplemental Segment Information
(In Thousands)
 
Investment Portfolio
 
Residential Mortgage Banking
 
Corporate/
Other
 
Total
June 30, 2018
 
 
 
 
 
 
 
 
Residential loans
 
$
3,794,481

 
$
1,104,660

 
$
592,029

 
$
5,491,170

Real estate securities
 
1,453,936

 
—

 
—

 
1,453,936

Total assets
 
5,591,778

 
1,124,300

 
796,473

 
7,512,551

 
 
 
 
 
 
 
 
 
December 31, 2017
 
 
 
 
 
 
 
 
Residential loans
 
$
3,054,448

 
$
1,427,945

 
$
632,817

 
$
5,115,210

Real estate securities
 
1,476,510

 
—

 
—

 
1,476,510

Total assets
 
4,743,873

 
1,453,069

 
842,880

 
7,039,822