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Segment Information | 3 Months Ended
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Mar. 31, 2020
Segment Reporting [Abstract] |
Segment Information | Segment Information Redwood operates in four segments: Residential Lending, Business Purpose Lending, Multifamily Investments, and Third-Party Residential Investments. For a full description of our segments, see Part I, Item 1—Business in our Annual Report on Form 10-K for the year ended December 31, 2019. 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 corporate expenses not directly assigned or allocated to one of our four segments, as well as activity from certain consolidated Sequoia entities, are included in the Corporate/Other column as reconciling items to our consolidated financial statements. These unallocated corporate expenses primarily include indirect general and administrative expenses and other expense. The following tables present financial information by segment for the three months ended March 31, 2020 and 2019. Table 24.1 – Business Segment Financial Information
|  | Three Months Ended March 31, 2020
(In Thousands) |  | Residential Lending |  | Business Purpose Lending |  | Multifamily Investments |  | Third-Party Residential Investments |  | Corporate/ Other |  | Total
Interest income |  | $ | 60,631 |  |  | $ | 53,060 |  |  | $ | 46,883 |  |  | $ | 34,313 |  |  | $ | 3,194 |  |  | $ | 198,081 |
Interest expense |  | (41,402 | ) |  | (34,990 | ) |  | (43,286 | ) |  | (24,471 | ) |  | (2,522 | ) |  | (146,671 | )
Net interest income |  | 19,229 |  |  | 18,070 |  |  | 3,597 |  |  | 9,842 |  |  | 672 |  |  | 51,410 |
Non-interest income |  |  |  |  |  |  |  |  |  |  |  |
Mortgage banking activities, net |  | (23,081 | ) |  | (5,330 | ) |  | — |  |  | — |  |  | — |  |  | (28,411 | )
Investment fair value changes, net |  | (196,635 | ) |  | (142,130 | ) |  | (227,122 | ) |  | (304,436 | ) |  | (509 | ) |  | (870,832 | )
Other income |  | (497 | ) |  | 1,693 |  |  | 1,240 |  |  | 1 |  |  | — |  |  | 2,437 |
Realized gains, net |  | 1,796 |  |  | — |  |  | (1,604 | ) |  | 3,660 |  |  | — |  |  | 3,852 |
Total non-interest income, net |  | (218,417 | ) |  | (145,767 | ) |  | (227,486 | ) |  | (300,775 | ) |  | (509 | ) |  | (892,954 | )
General and administrative expenses |  | (5,632 | ) |  | (14,333 | ) |  | (610 | ) |  | (1,178 | ) |  | (10,915 | ) |  | (32,668 | )
Other expenses |  | — |  |  | (92,985 | ) |  | — |  |  | 1,882 |  |  | (312 | ) |  | (91,415 | )
Benefit from (provision for) income taxes |  | 5,330 |  |  | 6,582 |  |  | (106 | ) |  | 10,423 |  |  | — |  |  | 22,229 |
Segment Contribution |  | $ | (199,490 | ) |  | $ | (228,433 | ) |  | $ | (224,605 | ) |  | $ | (279,806 | ) |  | $ | (11,064 | ) |  |
Net Loss |  |  |  |  |  |  |  |  |  |  |  | $ | (943,398 | )
Non-cash amortization income (expense), net |  | $ | 367 |  |  | $ | (5,363 | ) |  | $ | 54 |  |  | $ | 812 |  |  | $ | (367 | ) |  | $ | (4,497 | )
Other significant non-cash expense: goodwill impairment |  | $ | — |  |  | $ | (88,675 | ) |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | (88,675 | )
|  | Three Months Ended March 31, 2019
(In Thousands) |  | Residential Lending |  | Business Purpose Lending |  | Multifamily Investments |  | Third-Party Residential Investments |  | Corporate/ Other |  | Total
Interest income |  | $ | 66,839 |  |  | $ | 2,937 |  |  | $ | 28,208 |  |  | $ | 28,204 |  |  | $ | 4,853 |  |  | $ | 131,041 |
Interest expense |  | (47,676 | ) |  | (1,539 | ) |  | (25,870 | ) |  | (20,076 | ) |  | (4,115 | ) |  | (99,276 | )
Net interest income |  | 19,163 |  |  | 1,398 |  |  | 2,338 |  |  | 8,128 |  |  | 738 |  |  | 31,765 |
Non-interest income |  |  |  |  |  |  |  |  |  |  |  |
Mortgage banking activities, net |  | 10,827 |  |  | 1,482 |  |  | — |  |  | — |  |  | — |  |  | 12,309 |
Investment fair value changes, net |  | (1,720 | ) |  | (303 | ) |  | 8,524 |  |  | 14,055 |  |  | (397 | ) |  | 20,159 |
Other income |  | 1,449 |  |  | 466 |  |  | — |  |  | — |  |  | 2,710 |  |  | 4,625 |
Realized gains, net |  | 4,937 |  |  | — |  |  | — |  |  | 5,749 |  |  | — |  |  | 10,686 |
Total non-interest income, net |  | 15,493 |  |  | 1,645 |  |  | 8,524 |  |  | 19,804 |  |  | 2,313 |  |  | 47,779 |
General and administrative expenses |  | (7,203 | ) |  | (2,565 | ) |  | (323 | ) |  | (663 | ) |  | (12,405 | ) |  | (23,159 | )
Other expenses |  | — |  |  | (633 | ) |  | — |  |  | (227 | ) |  | (178 | ) |  | (1,038 | )
Provision for income taxes |  | (501 | ) |  | (5 | ) |  | — |  |  | (377 | ) |  | — |  |  | (883 | )
Segment Contribution |  | $ | 26,952 |  |  | $ | (160 | ) |  | $ | 10,539 |  |  | $ | 26,665 |  |  | $ | (9,532 | ) |  |
Net Income |  |  |  |  |  |  |  |  |  |  |  | $ | 54,464 |
Non-cash amortization income (expense), net |  | $ | 1,975 |  |  | $ | (732 | ) |  | $ | (136 | ) |  | $ | (271 | ) |  | $ | (491 | ) |  | $ | 345 |
The following table presents the components of Corporate/Other for the three months ended March 31, 2020 and 2019. Table 24.2 – Components of Corporate/Other
|  | Three Months Ended March 31,
|  | 2020 |  | 2019
(In Thousands) |  | Legacy Consolidated VIEs (1) |  | Other |  | Total |  | Legacy Consolidated VIEs (1) |  | Other |  | Total
Interest income |  | $ | 3,194 |  |  | $ | — |  |  | $ | 3,194 |  |  | $ | 4,853 |  |  | $ | — |  |  | $ | 4,853 |
Interest expense |  | (2,522 | ) |  | — |  |  | (2,522 | ) |  | (4,115 | ) |  | — |  |  | (4,115 | )
Net interest income |  | 672 |  |  | — |  |  | 672 |  |  | 738 |  |  | — |  |  | 738 |
Non-interest income |  |  |  |  |  |  |  |  |  |  |  |
Investment fair value changes, net |  | (391 | ) |  | (118 | ) |  | (509 | ) |  | (374 | ) |  | (23 | ) |  | (397 | )
Other income |  | — |  |  | — |  |  | — |  |  | — |  |  | 2,710 |  |  | 2,710 |
Total non-interest income, net |  | (391 | ) |  | (118 | ) |  | (509 | ) |  | (374 | ) |  | 2,687 |  |  | 2,313 |
General and administrative expenses |  | — |  |  | (10,915 | ) |  | (10,915 | ) |  | — |  |  | (12,405 | ) |  | (12,405 | )
Other expenses |  | — |  |  | (312 | ) |  | (312 | ) |  | — |  |  | (178 | ) |  | (178 | )
Total |  | $ | 281 |  |  | $ | (11,345 | ) |  | $ | (11,064 | ) |  | $ | 364 |  |  | $ | (9,896 | ) |  | $ | (9,532 | )
(1) | Legacy consolidated VIEs represent Legacy Sequoia entities that are consolidated for GAAP financial reporting purposes. See Note 4 for further discussion on VIEs.
The following table presents supplemental information by segment at March 31, 2020 and December 31, 2019. Table 24.3 – Supplemental Segment Information
(In Thousands) |  | Residential Lending |  | Business Purpose Lending |  | Multifamily Investments |  | Third-Party Residential Investments |  | Corporate/ Other |  | Total
March 31, 2020 |  |  |  |  |  |  |  |  |  |  |  |
Residential loans |  | $ | 4,263,327 |  |  | $ | — |  |  | $ | — |  |  | $ | 2,131,125 |  |  | $ | 316,677 |  |  | $ | 6,711,129 |
Business purpose residential loans |  | — |  |  | 3,463,742 |  |  | — |  |  | — |  |  | — |  |  | 3,463,742 |
Multifamily loans |  | — |  |  | — |  |  | 470,484 |  |  | — |  |  | — |  |  | 470,484 |
Real estate securities |  | 132,326 |  |  | — |  |  | 26,487 |  |  | 134,649 |  |  | — |  |  | 293,462 |
Other investments |  | 23,616 |  |  | 26,877 |  |  | 36,691 |  |  | 359,036 |  |  | — |  |  | 446,220 |
Goodwill and intangible assets |  | — |  |  | 68,483 |  |  | — |  |  | — |  |  | — |  |  | 68,483 |
Total assets |  | 4,639,181 |  |  | 3,675,336 |  |  | 557,964 |  |  | 2,735,677 |  |  | 692,632 |  |  | 12,300,790 |
December 31, 2019 |  |  |  |  |  |  |  |  |  |  |  |
Residential loans |  | $ | 4,939,745 |  |  | $ | — |  |  | $ | — |  |  | $ | 2,367,215 |  |  | $ | 407,890 |  |  | $ | 7,714,850 |
Business purpose residential loans |  | — |  |  | 3,506,743 |  |  | — |  |  | — |  |  | — |  |  | 3,506,743 |
Multifamily loans |  | — |  |  |  |  |  | 4,408,524 |  |  | — |  |  | — |  |  | 4,408,524 |
Real estate securities |  | 229,074 |  |  |  |  |  | 404,128 |  |  | 466,672 |  |  | — |  |  | 1,099,874 |
Other investments |  | 42,224 |  |  | 21,002 |  |  | 61,018 |  |  | 233,886 |  |  | — |  |  | 358,130 |
Goodwill and intangible assets |  | — |  |  | 161,464 |  |  | — |  |  | — |  |  | — |  |  | 161,464 |
Total assets |  | 5,410,540 |  |  | 3,786,641 |  |  | 4,889,330 |  |  | 3,139,616 |  |  | 769,313 |  |  | 17,995,440 |

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- 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 Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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