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Segment Information (Tables)
 9 Months Ended
Sep. 30, 2018
Segment Reporting [Abstract]  
Business Segment Financial Information
The following tables present financial information by segment for the three and nine months ended September 30, 2018 and 2017.
Table 22.1 – Business Segment Financial Information
 
 
Three Months Ended September 30, 2018
(In Thousands)
 
Investment Portfolio
 
Mortgage Banking
 
 Corporate/
Other
 
 Total
Interest income
 
$
79,556

 
$
14,427

 
$
5,414

 
$
99,397

Interest expense
 
(40,852
)
 
(7,537
)
 
(15,962
)
 
(64,351
)
Net interest income (loss)
 
38,704


6,890


(10,548
)
 
35,046

Non-interest income
 
 
 
 
 
 
 
 
Mortgage banking activities, net
 
—

 
11,224

 
—

 
11,224

Investment fair value changes, net
 
10,566

 
—

 
(234
)
 
10,332

Other income, net
 
3,334

 
—

 
119

 
3,453

Realized gains, net
 
7,275

 
—

 
—

 
7,275

Total non-interest income, net
 
21,175


11,224


(115
)
 
32,284

Direct operating expenses
 
(2,659
)
 
(6,570
)
 
(12,261
)
 
(21,490
)
Provision for income taxes
 
(2,840
)
 
(2,079
)
 
—

 
(4,919
)
Segment Contribution
 
$
54,380


$
9,465


$
(22,924
)
 
 
Net Income
 
 
 
 
 
 
 
$
40,921

Non-cash amortization income (expense), net
 
$
4,019

 
$
(54
)
 
$
(1,176
)
 
$
2,789

 
 
Three Months Ended September 30, 2017
(In Thousands)
 
Investment Portfolio
 
Mortgage Banking
 
 Corporate/
Other
 
 Total
Interest income
 
$
47,023

 
$
10,626

 
$
5,088

 
$
62,737

Interest expense
 
(9,445
)
 
(4,135
)
 
(13,863
)
 
(27,443
)
Net interest income (loss)
 
37,578

 
6,491

 
(8,775
)
 
35,294

Non-interest income
 
 
 
 
 
 
 
 
Mortgage banking activities, net
 
—

 
21,200

 
—

 
21,200

Investment fair value changes, net
 
1,372

 
—

 
(1,048
)
 
324

Other income, net
 
2,812

 
—

 
—

 
2,812

Realized gains, net
 
1,734

 
—

 
—

 
1,734

Total non-interest income, net
 
5,918

 
21,200

 
(1,048
)
 
26,070

Direct operating expenses
 
(1,324
)
 
(6,107
)
 
(12,491
)
 
(19,922
)
Provision for income taxes
 
(433
)
 
(4,829
)
 
—

 
(5,262
)
Segment Contribution
 
$
41,739

 
$
16,755

 
$
(22,314
)
 
 
Net Income
 
 
 
 
 
 
 
$
36,180

Non-cash amortization income (expense)
 
$
5,222

 
$
(25
)
 
$
(787
)
 
$
4,410

 
 
Nine Months Ended September 30, 2018
(In Thousands)
 
Investment Portfolio
 
Mortgage Banking
 
 Corporate/
Other
 
 Total
Interest income
 
$
202,882

 
$
40,408

 
$
15,702

 
$
258,992

Interest expense
 
(87,719
)
 
(21,303
)
 
(45,056
)
 
(154,078
)
Net interest income (loss)
 
115,163

 
19,105

 
(29,354
)
 
104,914

Non-interest income
 
 
 
 
 
 
 
 
Mortgage banking activities, net
 
—

 
48,396

 
—

 
48,396

Investment fair value changes, net
 
13,756

 
—

 
(926
)
 
12,830

Other income, net
 
8,774

 
—

 
119

 
8,893

Realized gains, net
 
21,352

 
—

 
—

 
21,352

Total non-interest income, net
 
43,882

 
48,396

 
(807
)
 
91,471

Direct operating expenses
 
(6,524
)
 
(20,941
)
 
(36,064
)
 
(63,529
)
Provision for income taxes
 
(4,858
)
 
(7,485
)
 
—

 
(12,343
)
Segment Contribution
 
$
147,663

 
$
39,075

 
$
(66,225
)
 
 
Net Income
 
 
 
 
 
 
 
$
120,513

Non-cash amortization income (expense)
 
$
13,290

 
$
(99
)
 
$
(3,021
)
 
$
10,170


 
 
Nine Months Ended September 30, 2017
(In Thousands)
 
Investment Portfolio
 
Mortgage Banking
 
 Corporate/
Other
 
 Total
Interest income
 
$
135,106

 
$
26,515

 
$
14,968

 
$
176,589

Interest expense
 
(21,940
)
 
(11,462
)
 
(39,306
)
 
(72,708
)
Net interest income (loss)
 
113,166

 
15,053

 
(24,338
)
 
103,881

Non-interest income
 
 
 
 
 
 
 
 
Mortgage banking activities, net
 
—

 
50,850

 
—

 
50,850

Investment fair value changes, net
 
13,846

 
—

 
(3,856
)
 
9,990

Other income, net
 
9,473

 
—

 
—

 
9,473

Realized gains, net
 
9,561

 
—

 
(752
)
 
8,809

Total non-interest income, net
 
32,880

 
50,850

 
(4,608
)
 
79,122

Direct operating expenses
 
(4,371
)
 
(18,009
)
 
(34,409
)
 
(56,789
)
Provision for income taxes
 
(4,490
)
 
(12,251
)
 
—

 
(16,741
)
Segment Contribution
 
$
137,185

 
$
35,643

 
$
(63,355
)
 
 
Net Income
 
 
 
 
 
 
 
$
109,473

Non-cash amortization income (expense)
 
$
16,263

 
$
(79
)
 
$
(2,528
)
 
$
13,656
Components of Corporate and Other
The following table presents the components of Corporate/Other for the three and nine months ended September 30, 2018 and 2017.
Table 22.2 – Components of Corporate/Other
 
 
Three Months Ended September 30,
 
 
2018
 
2017
(In Thousands)
 
Legacy Consolidated VIEs (1)
 
Other
 
Total
 
Legacy Consolidated VIEs (1)
 
Other
 
 Total
Interest income
 
$
5,174

 
$
240

 
$
5,414

 
$
4,875

 
$
213

 
$
5,088

Interest expense
 
(4,257
)
 
(11,705
)
 
(15,962
)
 
(3,838
)
 
(10,025
)
 
(13,863
)
Net interest income (loss)
 
917

 
(11,465
)
 
(10,548
)
 
1,037

 
(9,812
)
 
(8,775
)
Non-interest income
 
 
 
 
 
 
 
 
 
 
 
 
Investment fair value changes, net
 
(248
)
 
14

 
(234
)
 
(1,045
)
 
(3
)
 
(1,048
)
Other income
 
—

 
119

 
119

 
—

 
—

 
—

Total non-interest income, net
 
(248
)
 
133

 
(115
)
 
(1,045
)
 
(3
)
 
(1,048
)
Direct operating expenses
 
—

 
(12,261
)
 
(12,261
)
 
—

 
(12,491
)
 
(12,491
)
Total
 
$
669

 
$
(23,593
)
 
$
(22,924
)
 
$
(8
)
 
$
(22,306
)
 
$
(22,314
)
 
 
Nine Months Ended September 30,
 
 
2018
 
2017
(In Thousands)
 
Legacy Consolidated
VIEs (1)
 
Other
 
Total
 
Legacy Consolidated
VIEs (1)
 
Other
 
 Total
Interest income
 
$
15,003

 
$
699

 
$
15,702

 
$
14,576

 
$
392

 
$
14,968

Interest expense
 
(12,324
)
 
(32,732
)
 
(45,056
)
 
(11,046
)
 
(28,260
)
 
(39,306
)
Net interest income (loss)
 
2,679

 
(32,033
)
 
(29,354
)
 
3,530

 
(27,868
)
 
(24,338
)
Non-interest income
 
 
 
 
 
 
 
 
 
 
 
 
Investment fair value changes, net
 
(976
)
 
50

 
(926
)
 
(3,842
)
 
(14
)
 
(3,856
)
Other income
 
—

 
119

 
119

 
—

 
—

 
—

Realized gains, net
 
—

 
—

 
—

 
—

 
(752
)
 
(752
)
Total non-interest income, net
 
(976
)
 
169

 
(807
)
 
(3,842
)
 
(766
)
 
(4,608
)
Direct operating expenses
 
—

 
(36,064
)
 
(36,064
)
 
—

 
(34,409
)
 
(34,409
)
Total
 
$
1,703

 
$
(67,928
)
 
$
(66,225
)
 
$
(312
)
 
$
(63,043
)
 
$
(63,355
)
(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 September 30, 2018 and December 31, 2017.
Table 22.3 – Supplemental Segment Information
(In Thousands)
 
Investment Portfolio
 
Mortgage Banking
 
Corporate/
Other
 
Total
September 30, 2018
 
 
 
 
 
 
 
 
Residential loans
 
$
4,501,857

 
$
866,444

 
$
553,958

 
$
5,922,259

Business purpose loans
 
95,515

 
20,105

 
—

 
115,620

Multifamily loans
 
942,165

 
—

 
—

 
942,165

Real estate securities
 
1,470,084

 
—

 
—

 
1,470,084

Total assets
 
7,436,674

 
909,926

 
793,035

 
9,139,635

 
 
 
 
 
 
 
 
 
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