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Segment Information | 9 Months Ended
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Sep. 30, 2024
Segment Reporting [Abstract] |
Segment Information | Segment Information Redwood operates in three segments: Residential Consumer Mortgage Banking, Residential Investor Mortgage Banking and Investment Portfolio. 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 Part I, Item 1—Business in our Annual Report on Form 10-K for the year ended December 31, 2023. 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. 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 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, indirect general and administrative expenses and other expenses. The following tables present financial information by segment for the three and nine months ended September 30, 2024 and 2023. Table 4.1 – Business Segment Financial Information
|  | Three Months Ended September 30, 2024
(In Thousands) |  | Residential Consumer Mortgage Banking |  | Residential Investor Mortgage Banking |  | Investment Portfolio |  | Corporate/ Other |  | Total
Interest income |  | $ | 26,318 |  |  | $ | 4,868 |  |  | $ | 217,057 |  |  | $ | 400 |  |  | $ | 248,643 |
Interest expense |  | (16,770) |  |  | (3,099) |  |  | (184,319) |  |  | (18,957) |  |  | (223,145) |
Net interest income (expense) |  | 9,548 |  |  | 1,769 |  |  | 32,738 |  |  | (18,557) |  |  | 25,498 |
Non-interest income (loss) |  |  |  |  |  |  |  |  |  |
Mortgage banking activities, net |  | 26,715 |  |  | 12,854 |  |  | — |  |  | — |  |  | 39,569 |
Investment fair value changes, net |  | — |  |  | — |  |  | (11,966) |  |  | (236) |  |  | (12,202) |
HEI income, net |  | — |  |  | — |  |  | 10,651 |  |  | — |  |  | 10,651 |
Other income, net |  | — |  |  | 5,434 |  |  | 426 |  |  | 135 |  |  | 5,995 |
Realized gains, net |  | — |  |  | — |  |  | 211 |  |  | — |  |  | 211 |
Total non-interest income (loss), net |  | 26,715 |  |  | 18,288 |  |  | (678) |  |  | (101) |  |  | 44,224 |
General and administrative expenses |  | (5,240) |  |  | (9,306) |  |  | (701) |  |  | (20,761) |  |  | (36,008) |
Portfolio management costs |  | — |  |  | — |  |  | (6,324) |  |  | (32) |  |  | (6,356) |
Loan acquisition costs |  | (1,291) |  |  | (1,885) |  |  | — |  |  | — |  |  | (3,176) |
Other expenses |  | — |  |  | (2,202) |  |  | (26) |  |  | — |  |  | (2,228) |
(Provision for) benefit from income taxes |  | (6,977) |  |  | (981) |  |  | 606 |  |  | 224 |  |  | (7,128) |
Segment Contribution |  | $ | 22,755 |  |  | $ | 5,683 |  |  | $ | 25,615 |  |  | $ | (39,227) |  |  |
Net Income |  |  |  |  |  |  |  |  |  | $ | 14,826 |
Non-cash amortization (expense), net |  | $ | (271) |  |  | $ | (2,422) |  |  | $ | 1,016 |  |  | $ | (2,863) |  |  | $ | (4,540) |
Total Assets |  | $ | 1,543,380 |  |  | $ | 357,432 |  |  | $ | 16,151,156 |  |  | $ | 375,458 |  |  | $ | 18,427,426 |
|  | Nine Months Ended September 30, 2024
(In Thousands) |  | Residential Consumer Mortgage Banking |  | Residential Investor Mortgage Banking |  | Investment Portfolio |  | Corporate/ Other |  | Total
Interest income |  | $ | 61,728 |  |  | $ | 15,647 |  |  | $ | 598,696 |  |  | $ | 2,729 |  |  | $ | 678,800 |
Interest expense |  | (34,958) |  |  | (11,480) |  |  | (506,429) |  |  | (50,932) |  |  | (603,799) |
Net interest income (expense) |  | 26,770 |  |  | 4,167 |  |  | 92,267 |  |  | (48,203) |  |  | 75,001 |
Non-interest income (loss) |  |  |  |  |  |  |  |  |  |
Mortgage banking activities, net |  | 40,787 |  |  | 32,262 |  |  | — |  |  | — |  |  | 73,049 |
Investment fair value changes, net |  | — |  |  | — |  |  | 11,770 |  |  | (1,037) |  |  | 10,733 |
HEI income, net |  | — |  |  | — |  |  | 35,521 |  |  | — |  |  | 35,521 |
Other income, net |  | — |  |  | 7,233 |  |  | 10,371 |  |  | (810) |  |  | 16,794 |
Realized gains, net |  | — |  |  | — |  |  | 525 |  |  | 95 |  |  | 620 |
Total non-interest income (loss), net |  | 40,787 |  |  | 39,495 |  |  | 58,187 |  |  | (1,752) |  |  | 136,717 |
General and administrative expenses |  | (14,986) |  |  | (30,407) |  |  | (3,517) |  |  | (54,951) |  |  | (103,861) |
Portfolio management costs |  | — |  |  | — |  |  | (14,746) |  |  | (71) |  |  | (14,817) |
Loan acquisition costs |  | (2,843) |  |  | (5,982) |  |  | (244) |  |  | (8) |  |  | (9,077) |
Other expenses |  | — |  |  | (7,210) |  |  | (3,556) |  |  | — |  |  | (10,766) |
(Provision for) benefit from income taxes |  | (10,031) |  |  | 706 |  |  | (3,454) |  |  | 204 |  |  | (12,575) |
Segment Contribution |  | $ | 39,697 |  |  | $ | 769 |  |  | $ | 124,937 |  |  | $ | (104,781) |  |  |
Net Income |  |  |  |  |  |  |  |  |  | $ | 60,622 |
Non-cash amortization (expense), net |  | $ | (868) |  |  | $ | (7,921) |  |  | $ | (2,204) |  |  | $ | (7,684) |  |  | $ | (18,677) |
Total Assets |  | $ | 1,543,380 |  |  | $ | 357,432 |  |  | $ | 16,151,156 |  |  | $ | 375,458 |  |  | $ | 18,427,426 |
|  | Three Months Ended September 30, 2023
(In Thousands) |  | Residential Consumer Mortgage Banking |  | Residential Investor Mortgage Banking |  | Investment Portfolio |  | Corporate/ Other |  | Total
Interest income |  | $ | 6,063 |  |  | $ | 4,618 |  |  | $ | 164,847 |  |  | $ | 1,546 |  |  | $ | 177,074 |
Interest expense |  | (4,826) |  |  | (3,888) |  |  | (133,790) |  |  | (14,219) |  |  | (156,723) |
Net interest income (expense) |  | 1,237 |  |  | 730 |  |  | 31,057 |  |  | (12,673) |  |  | 20,351 |
Non-interest income (loss) |  |  |  |  |  |  |  |  |  |
Mortgage banking activities, net |  | 8,964 |  |  | 10,476 |  |  | — |  |  | — |  |  | 19,440 |
Investment fair value changes, net |  | — |  |  | — |  |  | (41,789) |  |  | 100 |  |  | (41,689) |
HEI income, net |  | — |  |  | — |  |  | 10,259 |  |  | — |  |  | 10,259 |
Other income, net |  | — |  |  | 1,278 |  |  | 2,622 |  |  | (1,554) |  |  | 2,346 |
Realized gains, net |  | — |  |  | — |  |  | 26 |  |  | 24 |  |  | 50 |
Total non-interest income (loss), net |  | 8,964 |  |  | 11,754 |  |  | (28,882) |  |  | (1,430) |  |  | (9,594) |
General and administrative expenses |  | (4,521) |  |  | (9,402) |  |  | (1,340) |  |  | (14,434) |  |  | (29,697) |
Portfolio management costs |  | — |  |  | — |  |  | (3,636) |  |  | (25) |  |  | (3,661) |
Loan acquisition costs |  | (395) |  |  | (1,485) |  |  | — |  |  | — |  |  | (1,880) |
Other expenses |  | — |  |  | (3,108) |  |  | (1,525) |  |  | — |  |  | (4,633) |
(Provision for) Benefit from income taxes |  | (813) |  |  | 318 |  |  | (1,457) |  |  | 256 |  |  | (1,696) |
Segment Contribution |  | $ | 4,472 |  |  | $ | (1,193) |  |  | $ | (5,783) |  |  | $ | (28,306) |  |  |
Net (Loss) |  |  |  |  |  |  |  |  |  | $ | (30,810) |
Non-cash amortization (expense), net |  | $ | (266) |  |  | $ | (3,294) |  |  | $ | (1,687) |  |  | $ | (2,099) |  |  | $ | (7,346) |
Total Assets |  | $ | 659,520 |  |  | $ | 197,974 |  |  | $ | 11,701,939 |  |  | $ | 461,705 |  |  | $ | 13,021,138 |
|  | Nine Months Ended September 30, 2023
(In Thousands) |  | Residential Consumer Mortgage Banking |  | Residential Investor Mortgage Banking |  | Investment Portfolio |  | Corporate/ Other |  | Total
Interest income |  | $ | 14,007 |  |  | $ | 13,509 |  |  | $ | 500,393 |  |  | $ | 6,662 |  |  | $ | 534,571 |
Interest expense |  | (13,392) |  |  | (11,599) |  |  | (392,260) |  |  | (44,436) |  |  | (461,687) |
Net interest income (expense) |  | 615 |  |  | 1,910 |  |  | 108,133 |  |  | (37,774) |  |  | 72,884 |
Non-interest income (loss) |  |  |  |  |  |  |  |  |  |
Mortgage banking activities, net |  | 19,390 |  |  | 33,273 |  |  | — |  |  | — |  |  | 52,663 |
Investment fair value changes, net |  | 1,076 |  |  | — |  |  | (57,930) |  |  | (2,744) |  |  | (59,598) |
HEI income, net |  | — |  |  | — |  |  | 23,445 |  |  | — |  |  | 23,445 |
Other income, net |  | — |  |  | 4,762 |  |  | 8,803 |  |  | (2,505) |  |  | 11,060 |
Realized gains, net |  | — |  |  | — |  |  | 858 |  |  | 246 |  |  | 1,104 |
Total non-interest income (loss), net |  | 20,466 |  |  | 38,035 |  |  | (24,824) |  |  | (5,003) |  |  | 28,674 |
General and administrative expenses |  | (13,065) |  |  | (34,718) |  |  | (3,990) |  |  | (44,284) |  |  | (96,057) |
Portfolio management costs |  | — |  |  | — |  |  | (10,233) |  |  | (38) |  |  | (10,271) |
Loan acquisition costs |  | (719) |  |  | (3,894) |  |  | — |  |  | — |  |  | (4,613) |
Other expenses |  | — |  |  | (9,323) |  |  | (3,969) |  |  | — |  |  | (13,292) |
(Provision for) Benefit from income taxes |  | (887) |  |  | 2,427 |  |  | (3,135) |  |  | 953 |  |  | (642) |
Segment Contribution |  | $ | 6,410 |  |  | $ | (5,563) |  |  | $ | 61,982 |  |  | $ | (86,146) |  |  |
Net (Loss) |  |  |  |  |  |  |  |  |  | $ | (23,317) |
Non-cash amortization (expense), net |  | $ | (813) |  |  | $ | (10,291) |  |  | $ | (6,167) |  |  | $ | (6,292) |  |  | $ | (23,563) |
Total Assets |  | $ | 659,520 |  |  | $ | 197,974 |  |  | $ | 11,701,939 |  |  | $ | 461,705 |  |  | $ | 13,021,138 |

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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://www.xbrl.org/2003/role/exampleRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 48 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482785/280-10-55-48 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards 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