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Segment Information | 12 Months Ended
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Dec. 31, 2023
Segment Reporting [Abstract] |
Segment Information | Segment Information Redwood operates in three segments: Residential Consumer Mortgage Banking, Residential Investor Mortgage Banking and Investment Portfolio. In the fourth quarter of 2023, we updated the names of two of our segments: Residential Mortgage Banking was changed to Residential Consumer Mortgage Banking; and Business Purpose Mortgage Banking was changed to Residential Investor Mortgage Banking. No changes were made to the composition of the segments. The accounting policies of the reportable segments are the same as those described in Note 3 — Summary of Significant Accounting Policies. For a full description of our segments, see Item 1—Business in this Annual Report on Form 10-K. 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 at certain consolidated Legacy Sequoia Securitization entities, are included in the Corporate/Other column as reconciling items to our consolidated financial statements. These unallocated corporate expenses primarily include interest expense for our convertible notes and trust preferred securities (and in 2023 and 2022, realized gains from the repurchase of convertible notes), indirect general and administrative expenses and other expense. In the normal course of business, loans are originated and acquired at our mortgage banking segments and may subsequently be transferred to our investment portfolio segment either as whole loans or through the retention of securities from securitizations we sponsor and consolidate under GAAP. All of our loans are accounted for under the fair value option and amounts transferred between segments are accounted for at fair value at the time of transfer. The following tables present financial information by segment for the years ended December 31, 2023, 2022, and 2021. Table 24.1 – Business Segment Financial Information
|  | Year Ended December 31, 2023
(In Thousands) |  | Residential Consumer Mortgage Banking |  | Residential Investor Mortgage Banking |  | Investment Portfolio |  | Corporate/ Other |  | Total
Interest income |  | $ | 25,404 |  |  | $ | 15,896 |  |  | $ | 665,152 |  |  | $ | 18,010 |  |  | $ | 724,462 |
Interest expense |  | (24,114) |  |  | (13,078) |  |  | (526,547) |  |  | (67,780) |  |  | (631,519) |
Net interest income (expense) |  | 1,290 |  |  | 2,818 |  |  | 138,605 |  |  | (49,770) |  |  | 92,943 |
Non-interest income (loss) |  |  |  |  |  |  |  |  |  |
Mortgage banking activities, net |  | 27,782 |  |  | 39,604 |  |  | — |  |  | — |  |  | 67,386 |
Investment fair value changes, net |  | 1,076 |  |  | — |  |  | (42,322) |  |  | (3,154) |  |  | (44,400) |
HEI income, net |  | — |  |  | — |  |  | 35,117 |  |  | — |  |  | 35,117 |
Other income, net |  | — |  |  | 5,613 |  |  | 10,361 |  |  | (3,088) |  |  | 12,886 |
Realized gains, net |  | — |  |  | — |  |  | 858 |  |  | 841 |  |  | 1,699 |
Total non-interest income (loss), net |  | 28,858 |  |  | 45,217 |  |  | 4,014 |  |  | (5,401) |  |  | 72,688 |
General and administrative expenses |  | (17,171) |  |  | (44,547) |  |  | (5,638) |  |  | (60,939) |  |  | (128,295) |
Portfolio management costs |  | — |  |  | — |  |  | (14,516) |  |  | (55) |  |  | (14,571) |
Loan acquisition costs |  | (1,266) |  |  | (5,900) |  |  | — |  |  | — |  |  | (7,166) |
Other expenses (1) |  | — |  |  | (12,442) |  |  | (5,796) |  |  | 2,000 |  |  | (16,238) |
(Provision for) benefit from income taxes |  | (1,659) |  |  | 2,279 |  |  | (2,946) |  |  | 691 |  |  | (1,635) |
Segment Contribution |  | $ | 10,052 |  |  | $ | (12,575) |  |  | $ | 113,723 |  |  | $ | (113,474) |  |  |
Net (Loss) |  |  |  |  |  |  |  |  |  | $ | (2,274) |
Non-cash amortization (expense) income, net |  | $ | (1,097) |  |  | $ | (13,610) |  |  | $ | (8,657) |  |  | $ | (8,176) |  |  | $ | (31,540) |
(1)Corporate/other includes contra-expense from reversal of litigation reserve. See Note 17 for additional detail. Table 24.1 – Business Segment Financial Information (continued)
|  | Year Ended December 31, 2022
(In Thousands) |  | Residential Consumer Mortgage Banking |  | Residential Investor Mortgage Banking |  | Investment Portfolio |  | Corporate/ Other |  | Total
Interest income |  | $ | 45,202 |  |  | $ | 28,674 |  |  | $ | 627,134 |  |  | $ | 6,844 |  |  | $ | 707,854 |
Interest expense |  | (32,735) |  |  | (18,041) |  |  | (445,154) |  |  | (56,470) |  |  | (552,400) |
Net interest income (expense) |  | 12,467 |  |  | 10,633 |  |  | 181,980 |  |  | (49,626) |  |  | 155,454 |
Non-interest (loss) income |  |  |  |  |  |  |  |  |  |
Mortgage banking activities, net |  | (21,282) |  |  | 7,623 |  |  | — |  |  | — |  |  | (13,659) |
Investment fair value changes, net |  | — |  |  | — |  |  | (193,862) |  |  | 15,590 |  |  | (178,272) |
HEI income, net |  | — |  |  | — |  |  | 2,714 |  |  | — |  |  | 2,714 |
Other income, net |  | — |  |  | 3,509 |  |  | 18,596 |  |  | (901) |  |  | 21,204 |
Realized gains, net |  | — |  |  | — |  |  | 3,174 |  |  | 2,160 |  |  | 5,334 |
Total non-interest (loss) income, net |  | (21,282) |  |  | 11,132 |  |  | (169,378) |  |  | 16,849 |  |  | (162,679) |
General and administrative expenses |  | (22,566) |  |  | (56,557) |  |  | (6,036) |  |  | (55,749) |  |  | (140,908) |
Portfolio management costs |  | — |  |  | — |  |  | (7,951) |  |  | — |  |  | (7,951) |
Loan acquisition costs |  | (3,085) |  |  | (8,681) |  |  | — |  |  | — |  |  | (11,766) |
Other expenses |  | 74 |  |  | (13,969) |  |  | (1,695) |  |  | — |  |  | (15,590) |
Benefit from (provision for) income taxes |  | 12,814 |  |  | 13,157 |  |  | (6,051) |  |  | — |  |  | 19,920 |
Segment Contribution |  | $ | (21,578) |  |  | $ | (44,285) |  |  | $ | (9,131) |  |  | $ | (88,526) |  |  |
Net (Loss) |  |  |  |  |  |  |  |  |  | $ | (163,520) |
Non-cash amortization (expense) income, net |  | $ | (1,075) |  |  | $ | (15,071) |  |  | $ | 2,507 |  |  | $ | (8,289) |  |  | $ | (21,928) |
Table 24.1 – Business Segment Financial Information (continued)
|  | Year Ended December 31, 2021
(In Thousands) |  | Residential Consumer Mortgage Banking |  | Residential Investor Mortgage Banking |  | Investment Portfolio |  | Corporate/ Other |  | Total
Interest income |  | $ | 48,953 |  |  | $ | 14,054 |  |  | $ | 507,173 |  |  | $ | 4,746 |  |  | $ | 574,926 |
Interest expense |  | (26,963) |  |  | (7,230) |  |  | (351,635) |  |  | (40,921) |  |  | (426,749) |
Net interest income (expense) |  | 21,990 |  |  | 6,824 |  |  | 155,538 |  |  | (36,175) |  |  | 148,177 |
Non-interest income (loss) |  |  |  |  |  |  |  |  |  |
Mortgage banking activities, net |  | 127,151 |  |  | 108,593 |  |  | — |  |  | — |  |  | 235,744 |
Investment fair value changes, net |  | — |  |  | — |  |  | 116,189 |  |  | (1,565) |  |  | 114,624 |
HEI income, net |  | — |  |  | — |  |  | 13,425 |  |  | — |  |  | 13,425 |
Other income, net |  | — |  |  | 1,046 |  |  | 10,021 |  |  | 951 |  |  | 12,018 |
Realized gains, net |  | — |  |  | — |  |  | 17,993 |  |  | — |  |  | 17,993 |
Total non-interest income (loss), net |  | 127,151 |  |  | 109,639 |  |  | 157,628 |  |  | (614) |  |  | 393,804 |
General and administrative expenses |  | (33,574) |  |  | (46,586) |  |  | (7,992) |  |  | (77,066) |  |  | (165,218) |
Portfolio management costs |  | — |  |  | — |  |  | (5,758) |  |  | — |  |  | (5,758) |
Loan acquisition costs |  | (7,480) |  |  | (8,100) |  |  | (635) |  |  | (4) |  |  | (16,219) |
Other expense |  | 104 |  |  | (15,127) |  |  | (1,689) |  |  | 17 |  |  | (16,695) |
(Provision for) benefit from income taxes |  | (25,777) |  |  | (8,122) |  |  | (3,862) |  |  | 19,283 |  |  | (18,478) |
Segment Contribution |  | $ | 82,414 |  |  | $ | 38,528 |  |  | $ | 293,230 |  |  | $ | (94,559) |  |  |
Net Income |  |  |  |  |  |  |  |  |  | $ | 319,613 |
Non-cash amortization income (expense), net |  | $ | (82) |  |  | $ | (16,452) |  |  | $ | (20,781) |  |  | $ | (7,878) |  |  | $ | (45,193) |
The following table presents the components of Corporate/Other for the years ended December 31, 2023, 2022, and 2021. Table 24.2 – Components of Corporate/Other
|  | Years Ended December 31,
|  | 2023 |  | 2022 |  | 2021
(In Thousands) |  | Legacy Consolidated VIEs (1) |  | Other |  | Total |  | Legacy Consolidated VIEs (1) |  | Other |  | Total |  | Legacy Consolidated VIEs (1) |  | Other |  | Total
Interest income |  | $ | 10,326 |  |  | $ | 7,684 |  |  | $ | 18,010 |  |  | $ | 5,672 |  |  | $ | 1,172 |  |  | $ | 6,844 |  |  | $ | 4,709 |  |  | $ | 37 |  |  | $ | 4,746 |
Interest expense |  | (9,980) |  |  | (57,800) |  |  | (67,780) |  |  | (5,206) |  |  | (51,264) |  |  | (56,470) |  |  | (3,040) |  |  | (37,881) |  |  | (40,921) |
Net interest income (expense) |  | 346 |  |  | (50,116) |  |  | (49,770) |  |  | 466 |  |  | (50,092) |  |  | (49,626) |  |  | 1,669 |  |  | (37,844) |  |  | (36,175) |
Non-interest income (loss) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Investment fair value changes, net |  | (160) |  |  | (2,994) |  |  | (3,154) |  |  | (1,302) |  |  | 16,892 |  |  | 15,590 |  |  | (1,558) |  |  | (7) |  |  | (1,565) |
Other income, net |  | — |  |  | (3,088) |  |  | (3,088) |  |  | — |  |  | (901) |  |  | (901) |  |  | — |  |  | 951 |  |  | 951 |
Realized gains, net |  | — |  |  | 841 |  |  | 841 |  |  | — |  |  | 2,160 |  |  | 2,160 |  |  | — |  |  | — |  |  | — |
Total non-interest (loss) income, net |  | (160) |  |  | (5,241) |  |  | (5,401) |  |  | (1,302) |  |  | 18,151 |  |  | 16,849 |  |  | (1,558) |  |  | 944 |  |  | (614) |
General and administrative expenses |  | — |  |  | (60,939) |  |  | (60,939) |  |  | — |  |  | (55,749) |  |  | (55,749) |  |  | — |  |  | (77,066) |  |  | (77,066) |
Portfolio management costs |  | — |  |  | (55) |  |  | (55) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Loan acquisition costs |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (4) |  |  | (4) |
Other expenses |  | — |  |  | 2,000 |  |  | 2,000 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 17 |  |  | 17 |
Benefit from income taxes |  | — |  |  | 691 |  |  | 691 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 19,283 |  |  | 19,283 |
Total |  | $ | 186 |  |  | $ | (113,660) |  |  | $ | (113,474) |  |  | $ | (836) |  |  | $ | (87,690) |  |  | $ | (88,526) |  |  | $ | 111 |  |  | $ | (94,670) |  |  | $ | (94,559) |
(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 December 31, 2023 and 2022. Table 24.3 – Supplemental Segment Information
(In Thousands) |  | Residential Consumer Mortgage Banking |  | Residential Investor Mortgage Banking |  | Investment Portfolio |  | Corporate/ Other |  | Total
December 31, 2023 |  |  |  |  |  |  |  |  |  |
Residential loans |  | $ | 911,192 |  |  | $ | — |  |  | $ | 5,999,706 |  |  | $ | 139,739 |  |  | $ | 7,050,637 |
Business purpose loans |  | — |  |  | 180,250 |  |  | 5,040,048 |  |  | — |  |  | 5,220,298 |
Consolidated Agency multifamily loans |  | — |  |  | — |  |  | 425,285 |  |  | — |  |  | 425,285 |
Real estate securities |  | 4,995 |  |  | — |  |  | 122,802 |  |  | — |  |  | 127,797 |
Home equity investments |  | — |  |  | — |  |  | 550,323 |  |  | 113 |  |  | 550,436 |
Other investments |  | — |  |  | — |  |  | 287,822 |  |  | 56,108 |  |  | 343,930 |
Goodwill |  | — |  |  | 23,373 |  |  | — |  |  | — |  |  | 23,373 |
Intangible assets |  | — |  |  | 28,462 |  |  | — |  |  | — |  |  | 28,462 |
Total assets |  | 971,535 |  |  | 293,225 |  |  | 12,718,201 |  |  | 521,366 |  |  | 14,504,327 |
December 31, 2022 |  |  |  |  |  |  |  |  |  |
Residential loans |  | $ | 628,160 |  |  | $ | — |  |  | $ | 4,800,096 |  |  | $ | 184,932 |  |  | $ | 5,613,188 |
Business purpose loans |  | — |  |  | 364,073 |  |  | 4,968,513 |  |  | — |  |  | 5,332,586 |
Consolidated Agency multifamily loans |  | — |  |  | — |  |  | 424,551 |  |  | — |  |  | 424,551 |
Real estate securities |  | — |  |  | — |  |  | 240,475 |  |  | — |  |  | 240,475 |
Home equity investments |  | — |  |  | — |  |  | 403,462 |  |  |  |  | 403,462 |
Other investments |  | — |  |  | — |  |  | 334,420 |  |  | 56,518 |  |  | 390,938 |
Goodwill |  | — |  |  | 23,373 |  |  | — |  |  | — |  |  | 23,373 |
Intangible assets |  | — |  |  | 40,892 |  |  | — |  |  | — |  |  | 40,892 |
Total assets |  | 660,916 |  |  | 487,159 |  |  | 11,303,991 |  |  | 578,833 |  |  | 13,030,899 |

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