XML 44 R32.htm IDEA: XBRL DOCUMENT v3.21.2
Segment Information
 9 Months Ended
Sep. 30, 2021
Segment Reporting [Abstract]  
Segment Information Segment Information
Redwood operates in three segments: Residential Lending, Business Purpose Lending, and Third-Party 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, 2020.
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 three 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 interest expense from our convertible notes and trust preferred securities, indirect general and administrative expenses and other expense.
The following tables present financial information by segment for the three and nine months ended September 30, 2021 and 2020.
Table 23.1 – Business Segment Financial Information
Three Months Ended September 30, 2021
(In Thousands)Residential LendingBusiness Purpose LendingThird-Party Investments Corporate/
Other 		 Total
Interest income$44,220 $67,235 $33,218 $1,049 $145,722 
Interest expense(25,395)(46,834)(21,370)(10,155)(103,754)
Net interest income18,825 20,401 11,848 (9,106)41,968 
Non-interest income
Mortgage banking activities, net32,946 30,217 — — 63,163 
Investment fair value changes, net2,285 3,470 20,569 (247)26,077 
Other income, net874 1,184 — 330 2,388 
Realized gains, net6,389 314 — — 6,703 
Total non-interest income (loss), net42,494 35,185 20,569 83 98,331 
General and administrative expenses(8,989)(13,987)(1,415)(23,301)(47,692)
Loan acquisition costs(2,395)(2,175)(51)— (4,621)
Other expenses— (3,873)(150)— (4,023)
(Provision for) benefit from income taxes(11,139)(3,485)(335)19,282 4,323 
Segment Contribution$38,796 $32,066 $30,466 $(13,042)
Net Income$88,286 
Non-cash amortization (expense) income, net$5,862 $(4,713)$276 $(1,995)$(570)
Nine Months Ended September 30, 2021
(In Thousands)Residential LendingBusiness Purpose LendingThird-Party Investments Corporate/
Other 		 Total
Interest income$104,801 $202,155 $102,180 $3,586 $412,722 
Interest expense(65,488)(151,351)(66,883)(30,649)(314,371)
Net interest income39,313 50,804 35,297 (27,063)98,351 
Non-interest income
Mortgage banking activities, net115,646 84,543 — — 200,189 
Investment fair value changes, net8,958 10,551 102,303 (1,168)120,644 
Other income, net4,566 3,044 5 742 8,357 
Realized gains, net15,484 812 1,507 — 17,803 
Total non-interest income, net144,654 98,950 103,815 (426)346,993 
General and administrative expenses(30,539)(38,834)(3,476)(58,988)(131,837)
Loan acquisition costs(5,698)(6,088)(138)(4)(11,928)
Other expenses(6)(11,523)(592)17 (12,104)
(Provision for) benefit from income taxes(25,289)(6,988)(912)19,282 (13,907)
Segment Contribution$122,435 $86,321 $133,994 $(67,182)
Net Income$275,568 
Non-cash amortization (expense) income, net$8,867 $(16,154)$317 $(5,845)$(12,815)
Three Months Ended September 30, 2020
(In Thousands)Residential LendingBusiness Purpose LendingThird-Party Investments Corporate/
Other 		 Total
Interest income$26,672 $55,930 $37,576 $1,804 $121,982 
Interest expense(21,401)(44,159)(24,238)(10,613)(100,411)
Net interest income5,271 11,771 13,338 (8,809)21,571 
Non-interest income
Mortgage banking activities, net11,864 47,531 — — 59,395 
Investment fair value changes, net2,443 16,892 87,890 (178)107,047 
Other income, net(2,011)623 340 934 (114)
Realized gains, net— — 602 — 602 
Total non-interest income, net12,296 65,046 88,832 756 166,930 
General and administrative expenses(4,602)(9,321)(709)(12,998)(27,630)
Loan acquisition costs(304)(1,660)(194)— (2,158)
Other expenses(3,309)(3,874)(470)(135)(7,788)
(Provision for) benefit from income taxes(826)(8,544)257 — (9,113)
Segment Contribution$8,526 $53,418 $101,054 $(21,186)
Net Income$141,812 
Non-cash amortization income (expense), net$1,785 $(6,719)$117 $(1,516)$(6,333)
Nine Months Ended September 30, 2020
(In Thousands)Residential LendingBusiness Purpose LendingThird-Party Investments Corporate/
Other 		 Total
Interest income$123,956 $162,732 $155,583 $7,738 $450,009 
Interest expense(87,725)(113,143)(111,666)(37,214)(349,748)
Net interest income36,231 49,589 43,917 (29,476)100,261 
Non-interest income
Mortgage banking activities, net(19,222)43,733 — — 24,511 
Investment fair value changes, net(159,107)(84,837)(366,696)(917)(611,557)
Other income, net(2,278)3,493 1,072 1,692 3,979 
Realized gains, net2,001 — 3,236 25,182 30,419 
Total non-interest income, net(178,606)(37,611)(362,388)25,957 (552,648)
General and administrative expenses(12,901)(29,977)(4,230)(37,724)(84,832)
Loan acquisition costs(1,512)(5,630)(567)(7)(7,716)
Other expenses(3,309)(100,743)347 (581)(104,286)
Benefit from income taxes7,827 477 4,775 — 13,079 
Segment Contribution$(152,270)$(123,895)$(318,146)$(41,831)
Net Loss$(636,142)
Non-cash amortization income (expense), net$732 $(18,035)$1,170 $(3,244)$(19,377)
Other significant non-cash expense: goodwill impairment$— $(88,675)$— $— $(88,675)
The following table presents the components of Corporate/Other for the three and nine months ended September 30, 2021 and 2020.

Table 23.2 – Components of Corporate/Other
Three Months Ended September 30,
20212020
(In Thousands)
Legacy Consolidated VIEs (1)
OtherTotal
Legacy Consolidated VIEs (1)
Other Total
Interest income$1,042 $7 $1,049 $1,795 $9 $1,804 
Interest expense(641)(9,514)(10,155)(1,059)(9,554)(10,613)
Net interest income401 (9,507)(9,106)736 (9,545)(8,809)
Non-interest income
Investment fair value changes, net(247)— (247)(81)(97)(178)
Other income— 330 330 — 934 934 
Total non-interest income, net(247)330 83 (81)837 756 
General and administrative expenses— (23,301)(23,301)— (12,998)(12,998)
Other expenses— — — — (135)(135)
Provision for income taxes— 19,282 19,282 — — — 
Total$154 $(13,196)$(13,042)$655 $(21,841)$(21,186)
Nine Months Ended September 30,
20212020
(In Thousands)
Legacy Consolidated VIEs (1)
OtherTotal
Legacy Consolidated VIEs (1)
Other Total
Interest income$3,559 $27 $3,586 $7,674 $64 $7,738 
Interest expense(2,271)(28,378)(30,649)(5,099)(32,115)(37,214)
Net interest income1,288 (28,351)(27,063)2,575 (32,051)(29,476)
Non-interest income
Investment fair value changes, net(1,162)(6)(1,168)(702)(215)(917)
Other income— 742 742 — 1,692 1,692 
Realized gains, net— — — — 25,182 25,182 
Total non-interest income, net(1,162)736 (426)(702)26,659 25,957 
General and administrative expenses— (58,988)(58,988)— (37,724)(37,724)
Loan acquisition costs— (4)(4)— (7)(7)
Other expenses— 17 17 — (581)(581)
Provision for income taxes— 19,282 19,282 — — — 
Total$126 $(67,308)$(67,182)$1,873 $(43,704)$(41,831)
(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 September 30, 2021 and December 31, 2020.
Table 23.3 – Supplemental Segment Information
(In Thousands)Residential LendingBusiness Purpose LendingThird-Party Investments Corporate/
Other		Total
September 30, 2021
Residential loans$3,974,829 $— $1,999,405 $242,234 $6,216,468 
Business purpose loans— 4,693,555 — — 4,693,555 
Multifamily loans— — 482,791 — 482,791 
Real estate securities150,368 — 202,918 — 353,286 
Other investments12,389 6,767 379,102 24,108 422,366 
Intangible assets— 45,246 — — 45,246 
Total assets4,219,950 4,860,226 3,088,815 903,723 13,072,714 
December 31, 2020
Residential loans$1,741,963 $— $2,221,153 $285,935 $4,249,051 
Business purpose loans— 4,136,353 — — 4,136,353 
Multifamily loans— — 492,221 — 492,221 
Real estate securities160,780 — 183,345 — 344,125 
Other investments8,815 21,627 317,282 451 348,175 
Intangible assets— 56,865 — — 56,865 
Total assets1,989,802 4,323,040 3,232,415 809,809 10,355,066