New Residential Investment Corp. Announces Fourth Quarter and Full Year 2019 Results

NEW YORK--(BUSINESS WIRE)-- New Residential Investment Corp. (NYSE: NRZ; “New Residential” or the “Company”) today reported the following information for the fourth quarter and full year ended December 31, 2019:

FOURTH QUARTER 2019 FINANCIAL HIGHLIGHTS:

  • GAAP Net Income of $211.8 million, or $0.51 per diluted common share(1)
  • Core Earnings of $255.4 million, or $0.61 per diluted common share(1)(2)
  • Common Dividend of $207.8 million, or $0.50 per common share(1)
  • Book Value per common share of $16.21(1)

FULL YEAR 2019 FINANCIAL HIGHLIGHTS

  • GAAP Net Income of $550.0 million, or $1.34 per diluted common share(1)
  • Core Earnings of $886.8 million, or $2.17 per diluted common share(1)(2)
  • Common Dividend of $807.8 million, or $2.00 per common share(1)

 

4Q 2019

3Q 2019

Year Ended

Year Ended

 

 

 

 

December 31, 2019

December 31, 2018

 

Summary Operating Results:

 

 

 

 

 

GAAP Net Income per Diluted Common Share(1)

$0.51

$0.54

$1.34

$2.81

 

GAAP Net Income

$211.8 million

$224.6 million

$550.0 million

$964.0 million

 

 

 

 

 

 

 

Non-GAAP Results:

 

 

 

 

 

Core Earnings per Diluted Common Share(1)

$0.61

$0.50

$2.17

$2.38

 

Core Earnings(2)

$255.4 million

$207.3 million

$886.8 million

$815.2 million

 

 

 

 

 

 

 

NRZ Common Dividend:

 

 

 

 

 

Common Dividend per Share(1)

$0.50

$0.50

$2.00

$2.00

 

Common Dividend

$207.8 million

$207.8 million

$807.8 million

$692.7 million

 

“New Residential’s full mortgage platform delivered strong results in 2019,” said Michael Nierenberg, Chairman, Chief Executive Officer and President of New Residential. “Throughout the year, as we faced a volatile rate environment, we were focused on strategically growing our mortgage platform and delivering stable returns for shareholders. Our performance during the year, including delivering total economic return of 12% and total shareholder return of 27%, reflects our success at executing around our strategy.(3) Specifically, our performance demonstrated the benefits of a diversified and balanced portfolio with differentiated revenue streams. As we progress through 2020, we are excited about our positioning and continue to be focused on executing on our key business initiatives.”

FOURTH QUARTER INVESTMENT PORTFOLIO HIGHLIGHTS:

  • Origination
    • Segment pre-tax net income of $86.2 million, up 138% QoQ
    • Origination production grew to $10.6 billion in unpaid principal balance (“UPB”), up 85% QoQ and 412% YoY
  • Servicing
    • Segment pre-tax net income of $27.3 million, up 26% QoQ
    • The servicing portfolio grew to $219.4 billion in UPB, up 19% QoQ and 101% YoY
  • Mortgage Servicing Rights (“MSRs”)
    • MSR portfolio totaled approximately $630 billion UPB as of December 31, 2019, compared to $593 billion UPB as of September 30, 2019(4)
    • Settled on $73 billion UPB of MSRs for $668 million of equity from nine different counterparties
  • Non-Agency Securities and Call Rights
    • Sold $286 million of Non-Agency securities that were not accretive to our call strategy and acquired $894 million of Non-Agency securities
    • Successfully executed on our call rights strategy, calling 43 deals with collateral of $1.2 billion UPB(5)
    • Completed two securitizations of loans acquired through exercise of call rights with $1.3 billion UPB of collateral
  • Residential Loans
    • Acquired $2.7 billion UPB of loans (including $979 million UPB reperforming loans (“RPLs”), $495 million UPB Non-Qualified Mortgage (“QM”) and $1.2 billion UPB collapse)
    • Completed one Non-QM securitization with $305 million UPB of collateral and one RPL securitization with $1.7 billion UPB of collateral
  • Post Q4’19 Activity(6)
    • Priced a RPL securitization with $1.2 billion UPB of collateral(7)
    • Completed two securitizations with total collateral of $823 million UPB (one Non-QM and one securitization of loans acquired through exercise of call rights)
    • Preliminarily agreed to acquire ~$40 billion UPB of MSRs that are expected to settle in Q1’20
  1. Per common share calculations of GAAP Net Income and Core Earnings are based on 408,990,107 average diluted shares during the full year ended December 31, 2019; 343,137,361 average diluted shares during the full year ended December 31, 2018; 415,673,185 weighted average diluted shares during the quarter ended December 31, 2019; and 415,588,238 weighted average diluted shares during the quarter ended September 30, 2019. Per share calculations of Common Dividend are based on 415,520,780 basic shares outstanding as of December 31, 2019 and September 30, 2019; 415,429,677 basic shares outstanding as of June 30, 2019; 369,104,429 basic shares outstanding as of March 31, 2019; 369,104,429 basic shares outstanding as of December 31, 2018; 340,354,429 basic shares outstanding as of September 30, 2018; 339,862,769 basic shares outstanding as of June 30, 2018; and 336,135,391 basic shares outstanding as of March 31, 2018. Per common share calculations for Book Value are based on 415,520,780 basic common shares outstanding as of December 31, 2019.
  2. Core Earnings is a non-GAAP measure. For a reconciliation of Core Earnings to GAAP Net Income, as well as an explanation of this measure, please refer to Non-GAAP Measures and Reconciliation to GAAP Net Income below.
  3. FY ‘19 Economic Return represents NRZ book value change from December 31, 2018 through December 31, 2019 plus common dividends declared during that time ($2.00) divided by NRZ book value per common share as of December 31, 2018. FY’19 Total Shareholder Return represents NRZ common share price appreciation from December 31, 2018 through December 31, 2019 plus common dividends declared during that time ($2.00) divided by NRZ common share price as of December 31, 2018.
  4. Includes Excess and Full MSRs.
  5. Call rights UPB estimated as of December 31, 2019. The UPB of the loans relating to our call rights may be materially lower than the estimates in this press release, and there can be no assurance that we will be able to execute on this pipeline of callable deals in the near term, on the timeline presented above, or at all, or that callable deals will be economically favorable. The economic returns from this strategy could be adversely affected by a rise in interest rates and are contingent on the level of delinquencies and outstanding advances in each transaction, fair market value of the related collateral and other economic factors and market conditions. We may become subject to claims and legal proceedings, including purported class-actions, in the ordinary course of our business, challenging our right to exercise these call rights and, as a result, we may not be able to exercise such rights on favorable terms at all. Call rights are usually exercisable when current loan balances in a related portfolio are equal to, or lower than, 10% of their original balance.
  6. Represents activity from January 1, 2020 through February 5, 2020. Based on management’s current views and estimates, and actual results may vary materially.
  7. New Residential Mortgage Loan Trust 2020-RPL1 is expected to settle on February 7, 2020.

ADDITIONAL INFORMATION

For additional information that management believes to be useful for investors, please refer to the latest presentation posted on the Investor Relations section of the Company’s website, www.newresi.com. For consolidated investment portfolio information, please refer to the Company’s most recent Quarterly Report on Form 10-Q or Annual Report on Form 10-K, which are available on the Company’s website, www.newresi.com.

EARNINGS CONFERENCE CALL

New Residential’s management will host a conference call on Thursday, February 6, 2020 at 8:00 A.M. Eastern Time. A copy of the earnings release will be posted to the Investor Relations section of New Residential’s website, www.newresi.com.

All interested parties are welcome to participate on the live call. The conference call may be accessed by dialing 1-866-393-1506 (from within the U.S.) or 1-281-456-4044 (from outside of the U.S.) ten minutes prior to the scheduled start of the call; please reference “New Residential Fourth Quarter & Full Year 2019 Earnings Call.”

A simultaneous webcast of the conference call will be available to the public on a listen-only basis at www.newresi.com. Please allow extra time prior to the call to visit the website and download any necessary software required to listen to the internet broadcast.

A telephonic replay of the conference call will also be available two hours following the call’s completion through 11:59 P.M. Eastern Time on Thursday, February 20, 2020 by dialing 1-855-859-2056 (from within the U.S.) or 1-404-537-3406 (from outside of the U.S.); please reference access code “3679502.

Consolidated Statements of Income

($ in thousands, except share and per share data)

 
Quarter Ended Year Ended December 31,
December 31, 2019 September 30, 2019

 

2019

 

 

2018

 

(unaudited) (unaudited) (unaudited)
 

Interest income

$

463,089

$

448,127

$

1,766,130

$

1,664,223

Interest expense

 

247,013

 

 

245,902

 

 

933,751

 

 

606,433

 

Net Interest Income

 

216,076

 

 

202,225

 

 

832,379

 

 

1,057,790

 

 
Impairment
Other-than-temporary impairment (OTTI) on securities

 

3,232

 

 

5,567

 

 

25,174

 

 

30,017

 

Valuation and loss provision (reversal) on loans and real estate owned (REO)

 

2,361

 

 

(10,690

)

 

10,403

 

 

60,624

 

 

5,593

 

 

(5,123

)

 

35,577

 

 

90,641

 

 
Net interest income after impairment

 

210,483

 

 

207,348

 

 

796,802

 

 

967,149

 

 
Servicing revenue, net of change in fair value of $(93,036), $(228,405), $(712,950) and $(191,245), respectively

 

251,793

 

 

53,050

 

 

385,159

 

 

528,595

 

Gain on originated mortgage loans, held-for-sale, net

 

180,520

 

 

126,747

 

 

475,455

 

 

96,145

 

Other Income
Change in fair value of investments in excess mortgage servicing rights

 

(9,084

)

 

2,407

 

 

(10,505

)

 

(58,656

)

Change in fair value of investments in excess mortgage servicing rights, equity method investees

 

2,713

 

 

4,751

 

 

6,800

 

 

8,357

 

Change in fair value of investments in mortgage servicing rights financing receivables

 

(55,823

)

 

(41,410

)

 

(189,023

)

 

31,550

 

Change in fair value of servicer advance investments

 

(5,644

)

 

6,641

 

 

10,288

 

 

(89,332

)

Change in fair value of investments in residential mortgage loans

 

(146,006

)

 

(6,513

)

 

(70,914

)

 

69,820

 

Change in fair value of derivative investments

 

(31,107

)

 

41,389

 

 

(56,143

)

 

(108,234

)

Gain (loss) on settlement of investments, net

 

131,073

 

 

133,141

 

 

225,687

 

 

95,085

 

Earnings from investments in consumer loans, equity method investees

 

(548

)

 

(2,547

)

 

(1,438

)

 

10,803

 

Other income (loss), net

 

60,600

 

 

(35,219

)

 

44,149

 

 

(10,778

)

 

(53,826

)

 

102,640

 

 

(41,099

)

 

(51,385

)

 
Operating Expenses
General and administrative expenses

 

186,676

 

 

133,513

 

 

538,035

 

 

231,579

 

Management fee to affiliate

 

21,211

 

 

20,678

 

 

79,472

 

 

62,594

 

Incentive compensation to affiliate

 

42,627

 

 

36,307

 

 

91,892

 

 

94,900

 

Loan servicing expense

 

5,570

 

 

7,192

 

 

31,737

 

 

43,547

 

Subservicing expense

 

79,719

 

 

52,875

 

 

227,482

 

 

176,784

 

 

335,803

 

 

250,565

 

 

968,618

 

 

609,404

 

 
Income Before Income Taxes

 

253,167

 

 

239,220

 

 

647,699

 

 

931,100

 

Income tax (benefit) expense

 

22,786

 

 

(5,440

)

 

41,766

 

 

(73,431

)

Net Income

$

230,381

 

$

244,660

 

$

605,933

 

$

1,004,531

 

Noncontrolling Interests in Income of Consolidated Subsidiaries

$

10,658

 

$

14,738

 

$

42,637

 

$

40,564

 

Dividends on Preferred Stock

$

7,943

 

$

5,338

 

$

13,281

 

$

-

 

Net Income Attributable to Common Stockholders

$

211,780

 

$

224,584

 

$

550,015

 

$

963,967

 

 
Net Income Per Share of Common Stock
Basic

$

0.51

 

$

0.54

 

$

1.35

 

$

2.82

 

Diluted

$

0.51

 

$

0.54

 

$

1.34

 

$

2.81

 

 
Weighted Average Number of Shares of Common Stock Outstanding
Basic

 

415,520,780

 

 

415,520,780

 

 

408,789,642

 

 

341,268,923

 

Diluted

 

415,673,185

 

 

415,588,238

 

 

408,990,107

 

 

343,137,361

 

 
Dividends Declared per Share of Common Stock

$

0.50

 

$

0.50

 

$

2.00

 

$

2.00

 

Consolidated Balance Sheets

($ in thousands)

 
December 31, 2019 December 31, 2018
Assets (unaudited)
Investments in:
Excess mortgage servicing rights (“MSRs”), at fair value

$

379,747

$

447,860

Excess mortgage servicing rights, equity method investees, at fair value

 

125,596

 

147,964

Mortgage servicing rights, at fair value

 

3,967,960

 

2,884,100

Mortgage servicing rights financing receivables, at fair value

 

1,718,273

 

1,644,504

Servicer advance investments, at fair value

 

581,777

 

735,846

Real estate and other securities, available-for-sale

 

19,477,728

 

11,636,581

Residential mortgage loans, held-for-investment (includes $108,630 and $121,088 at fair value at
December 31, 2019 and December 31, 2018, respectively)

 

549,893

 

735,329

Residential mortgage loans, held-for-sale

 

1,429,052

 

932,480

Residential mortgage loans, held-for-sale, at fair value

 

4,989,425

 

2,808,529

Consumer loans, held-for-investment

 

827,545

 

1,072,202

Cash and cash equivalents

 

528,737

 

251,058

Restricted cash

 

162,197

 

164,020

Servicer advances receivable

 

3,301,374

 

3,277,796

Trades receivable

 

5,256,014

 

3,925,198

Deferred tax asset, net

 

8,669

 

65,832

Other assets (includes $172,336 and $121,602 in residential mortgage loans subject to repurchase at
December 31, 2019 and December 31, 2018, respectively)

 

1,573,056

 

961,714

$

44,877,043

$

31,691,013

 
Liabilities and Equity
 
Liabilities
Repurchase agreements

$

27,916,225

$

15,553,969

Notes and bonds payable (includes $659,715 and $117,048 at fair value at December 31, 2019 and
December 31, 2018, respectively)

 

7,720,148

 

7,102,266

Trades payable

 

902,081

 

2,048,348

Due to affiliates

 

103,882

 

101,471

Dividends payable

 

211,732

 

184,552

Accrued expenses and other liabilities (includes $172,336 and $121,602 in residential mortgage loans
repurchase liabilities at December 31, 2019 and December 31, 2018, respectively)

 

786,715

 

612,112

 

37,640,783

 

25,602,718

 
Commitments and Contingencies
 
Equity
Preferred Stock, par value of $0.01 per share, 23,000,000 shares authorized:
7.50% Series A Preferred Stock, $0.01 par value, 11,500,000 shares authorized, 6,210,000 and 0 issued and
outstanding at December 31, 2019 and December 31, 2018, respectively

 

150,026

 

-

7.125% Series B Preferred Stock, $0.01 par value, 11,500,000 shares authorized, 11,300,000 and 0 issued
and outstanding at December 31, 2019 and December 31, 2018, respectively

 

273,418

 

-

Common Stock, $0.01 par value, 2,000,000,000 shares authorized, 415,520,780 and 369,104,429 issued and
outstanding at December 31, 2019 and December 31, 2018, respectively

 

4,156

 

3,692

Additional paid-in capital

 

5,498,226

 

4,746,242

Retained earnings

 

549,733

 

830,713

Accumulated other comprehensive income (loss)

 

682,151

 

417,023

Total New Residential stockholders’ equity

 

7,157,710

 

5,997,670

Noncontrolling interests in equity of consolidated subsidiaries

 

78,550

 

90,625

Total Equity

 

7,236,260

 

6,088,295

$

44,877,043

$

31,691,013

 

NON-GAAP MEASURES AND RECONCILIATION TO GAAP NET INCOME

New Residential has five primary variables that impact its operating performance: (i) the current yield earned on the Company’s investments, (ii) the interest expense under the debt incurred to finance the Company’s investments, (iii) the Company’s operating expenses and taxes, (iv) the Company’s realized and unrealized gains or losses, including any impairment, on the Company’s investments, and (v) income from its origination and servicing businesses. “Core earnings” is a non-GAAP measure of the Company’s operating performance, excluding the fourth variable above and adjusts the earnings from the consumer loan investment to a level yield basis. Core earnings is used by management to evaluate the Company’s performance without taking into account: (i) realized and unrealized gains and losses, which although they represent a part of the Company’s recurring operations, are subject to significant variability and are generally limited to a potential indicator of future economic performance; (ii) incentive compensation paid to the Company’s manager; (iii) non-capitalized transaction-related expenses; and (iv) deferred taxes, which are not representative of current operations.

The Company’s definition of core earnings includes accretion on held-for-sale loans as if they continued to be held-for-investment. Although the Company intends to sell such loans, there is no guarantee that such loans will be sold or that they will be sold within any expected timeframe. During the period prior to sale, the Company continues to receive cash flows from such loans and believes that it is appropriate to record a yield thereon. In addition, the Company’s definition of core earnings excludes all deferred taxes, rather than just deferred taxes related to unrealized gains or losses, because the Company believes deferred taxes are not representative of current operations. The Company’s definition of core earnings also limits accreted interest income on RMBS where the Company receives par upon the exercise of associated call rights based on the estimated value of the underlying collateral, net of related costs including advances. The Company created this limit in order to be able to accrete to the lower of par or the net value of the underlying collateral, in instances where the net value of the underlying collateral is lower than par. The Company believes this amount represents the amount of accretion the Company would have expected to earn on such bonds had the call rights not been exercised.

The Company’s investments in consumer loans are accounted for under Accounting Standards Codification (“ASC”) No. 310-20 and ASC No. 310-30, including certain non-performing consumer loans with revolving privileges that are explicitly excluded from being accounted for under ASC No. 310-30. Under ASC No. 310-20, the recognition of expected losses on these non-performing consumer loans is delayed in comparison to the level yield methodology under ASC No. 310-30, which recognizes income based on an expected cash flow model reflecting an investment’s lifetime expected losses. The purpose of the core earnings adjustment to adjust consumer loans to a level yield is to present income recognition across the consumer loan portfolio in the manner in which it is economically earned, avoid potential delays in loss recognition, and align it with the Company’s overall portfolio of mortgage-related assets which generally record income on a level yield basis. With respect to consumer loans classified as held-for-sale, the level yield is computed through the expected sale date. With respect to the gains recorded under GAAP in 2014 and 2016 as a result of a refinancing of the debt related to the Company’s investments in consumer loans, and the consolidation of entities that own the Company’s investments in consumer loans, respectively, the Company continues to record a level yield on those assets based on their original purchase price.

While incentive compensation paid to the Company’s manager may be a material operating expense, the Company excludes it from core earnings because (i) from time to time, a component of the computation of this expense will relate to items (such as gains or losses) that are excluded from core earnings, and (ii) it is impractical to determine the portion of the expense related to core earnings and non-core earnings, and the type of earnings (loss) that created an excess (deficit) above or below, as applicable, the incentive compensation threshold. To illustrate why it is impractical to determine the portion of incentive compensation expense that should be allocated to core earnings, the Company notes that, as an example, in a given period, it may have core earnings in excess of the incentive compensation threshold but incur losses (which are excluded from core earnings) that reduce total earnings below the incentive compensation threshold. In such case, the Company would either need to (a) allocate zero incentive compensation expense to core earnings, even though core earnings exceeded the incentive compensation threshold, or (b) assign a “pro forma” amount of incentive compensation expense to core earnings, even though no incentive compensation was actually incurred. The Company believes that neither of these allocation methodologies achieves a logical result. Accordingly, the exclusion of incentive compensation facilitates comparability between periods and avoids the distortion to the Company’s non-GAAP operating measure that would result from the inclusion of incentive compensation that relates to non-core earnings.

With regard to non-capitalized transaction-related expenses, management does not view these costs as part of the Company’s core operations, as they are considered by management to be similar to realized losses incurred at acquisition. Non-capitalized transaction-related expenses are generally legal and valuation service costs, as well as other professional service fees, incurred when the Company acquires certain investments, as well as costs associated with the acquisition and integration of acquired businesses.

Since the third quarter of 2018, as a result of its acquisition of Shellpoint Partners LLC (“Shellpoint”), the Company, through its wholly owned subsidiary, NewRez (formerly New Penn Financial), originates conventional, government-insured and nonconforming residential mortgage loans for sale and securitization. In connection with the transfer of loans to the GSEs or mortgage investors, the Company reports realized gains or losses on the sale of originated residential mortgage loans and retention of mortgage servicing rights, which the Company believes is an indicator of performance for the Servicing and Origination segments and therefore included in core earnings. Realized gains or losses on the sale of originated residential mortgage loans had no impact on core earnings in any prior period, but may impact core earnings in future periods.

Beginning with the third quarter of 2019, as a result of the continued evaluation of how Shellpoint operates its business and its impact on the Company’s operating performance, core earnings includes Shellpoint’s GAAP net income with the exception of the unrealized gains or losses due to changes in valuation inputs and assumptions on MSRs owned by NewRez, and non-capitalized transaction-related expenses. This change was not material to core earnings for the quarter ended September 30, 2019.

Management believes that the adjustments to compute “core earnings” specified above allow investors and analysts to readily identify and track the operating performance of the assets that form the core of the Company’s activity, assist in comparing the core operating results between periods, and enable investors to evaluate the Company’s current core performance using the same measure that management uses to operate the business. Management also utilizes core earnings as a measure in its decision-making process relating to improvements to the underlying fundamental operations of the Company’s investments, as well as the allocation of resources between those investments, and management also relies on core earnings as an indicator of the results of such decisions. Core earnings excludes certain recurring items, such as gains and losses (including impairment as well as derivative activities) and non-capitalized transaction-related expenses, because they are not considered by management to be part of the Company’s core operations for the reasons described herein. As such, core earnings is not intended to reflect all of the Company’s activity and should be considered as only one of the factors used by management in assessing the Company’s performance, along with GAAP net income which is inclusive of all of the Company’s activities.

The primary differences between core earnings and the measure the Company uses to calculate incentive compensation relate to (i) realized gains and losses (including impairments), (ii) non-capitalized transaction-related expenses and (iii) deferred taxes (other than those related to unrealized gains and losses). Each are excluded from core earnings and included in the Company’s incentive compensation measure (either immediately or through amortization). In addition, the Company’s incentive compensation measure does not include accretion on held-for-sale loans and the timing of recognition of income from consumer loans is different. Unlike core earnings, the Company’s incentive compensation measure is intended to reflect all realized results of operations. The Gain on Remeasurement of Consumer Loans Investment was treated as an unrealized gain for the purposes of calculating incentive compensation and was therefore excluded from such calculation.

Core earnings does not represent and should not be considered as a substitute for, or superior to, net income or as a substitute for, or superior to, cash flows from operating activities, each as determined in accordance with U.S. GAAP, and the Company’s calculation of this measure may not be comparable to similarly entitled measures reported by other companies. Set forth below is a reconciliation of core earnings to the most directly comparable GAAP financial measure (in thousands):

 
Three Months Ended Year Ended December 31,
December 31, September 30,

 

2019

 

 

2019

 

 

2019

 

 

2018

 

Net income attributable to common stockholders

$

211,780

 

$

224,584

 

$

550,015

 

$

963,967

 

Adjustments for Non-Core Earnings:
Impairment

 

5,360

 

 

(5,123

)

 

35,344

 

 

90,641

 

Change in fair value of investments in mortgage servicing rights

 

(100,344

)

 

45,541

 

 

171,915

 

 

(244,624

)

Change in fair value of servicer advance investments

 

5,644

 

 

(6,641

)

 

(10,288

)

 

89,332

 

Change in fair value of investments in residential mortgage loans

 

145,308

 

 

7,290

 

 

43,009

 

 

(74,162

)

Change in fair value of derivative instruments

 

31,113

 

 

(41,910

)

 

49,699

 

 

113,558

 

(Gain) loss on settlement of investments, net

 

(112,584

)

 

(114,325

)

 

(158,640

)

 

(96,319

)

Other (income) loss

 

(44,487

)

 

35,271

 

 

(27,985

)

 

11,425

 

Other Income and Impairment attributable to non-controlling interests

 

(4,495

)

 

(994

)

 

(13,548

)

 

(22,247

)

Non-capitalized transaction-related expenses

 

31,984

 

 

8,155

 

 

56,289

 

 

21,946

 

Incentive compensation to affiliate

 

42,627

 

 

36,307

 

 

91,892

 

 

94,900

 

Preferred stock management fee to affiliate

 

1,588

 

 

1,055

 

 

2,642

 

 

-

 

Deferred taxes

 

20,127

 

 

(6,652

)

 

38,207

 

 

(80,054

)

Interest income on residential mortgage loans, held-for sale

 

15,648

 

 

18,852

 

 

60,689

 

 

13,374

 

Limit on RMBS discount accretion related to called deals

 

-

 

 

(34

)

 

(19,590

)

 

(58,581

)

Adjust consumer loans to level yield

 

355

 

 

1,922

 

 

5,239

 

 

(21,181

)

Core earnings of equity method investees:
Excess mortgage servicing rights

 

5,803

 

 

3,987

 

 

11,905

 

 

13,183

 

Core Earnings

$

255,427

 

$

207,286

 

$

886,794

 

$

815,158

 

 
Net Income Per Diluted Share

0.51

 

0.54

 

$

1.34

 

$

2.81

 

Core Earnings Per Diluted Share

0.61

 

0.50

 

$

2.17

 

$

2.38

 

 
Weighted Average Number of Shares of Common Stock Outstanding, Diluted

 

415,673,185

 

 

415,588,238

 

 

408,990,107

 

 

343,137,361

 

 

NET INCOME BY SEGMENT

 
Servicing and Originations Residential Securities and Loans


Originations


Servicing
MSRs &
Servicer
Advances
Residential
Securities &
Call Rights

Residential
Loans

Corporate
& Other


Total
Quarter Ended December 31, 2019
Interest income

$

17,321

 

$

8,665

$

151,755

 

$

186,250

 

$

61,765

 

$

37,333

 

$

463,089

 

Interest expense

 

16,895

 

 

306

 

61,694

 

 

122,617

 

 

38,461

 

 

7,040

 

 

247,013

 

Net interest income

 

426

 

 

8,359

 

90,061

 

 

63,633

 

 

23,304

 

 

30,293

 

 

216,076

 

Impairment

 

-

 

 

-

 

-

 

 

3,232

 

 

(4,050

)

 

6,411

 

 

5,593

 

Servicing revenue, net

 

(390

)

 

56,020

 

196,163

 

 

-

 

 

-

 

 

-

 

 

251,793

 

Gain on originated mortgage loans, held-for-sale, net

 

160,280

 

 

348

 

6,748

 

 

-

 

 

13,144

 

 

-

 

 

180,520

 

Other income (loss)

 

8,886

 

 

5,343

 

(11,876

)

 

(10,748

)

 

(42,859

)

 

(2,572

)

 

(53,826

)

Operating expenses

 

82,953

 

 

42,790

 

117,374

 

 

(964

)

 

21,456

 

 

72,194

 

 

335,803

 

Income (Loss) Before Income Taxes

 

86,249

 

 

27,280

 

163,722

 

 

50,617

 

 

(23,817

)

 

(50,884

)

 

253,167

 

Income tax expense (benefit)

 

24,286

 

 

8,150

 

29,819

 

 

-

 

 

(39,509

)

 

40

 

 

22,786

 

Net Income (Loss)

$

61,963

 

$

19,130

$

133,903

 

$

50,617

 

$

15,692

 

$

(50,924

)

$

230,381

 

Noncontrolling interests in income (loss) of consolidated
subsidiaries

 

1,824

 

 

-

 

(211

)

 

-

 

 

-

 

 

9,045

 

 

10,658

 

Dividends on Preferred Stock

$

-

 

$

-

$

-

 

$

-

 

$

-

 

$

7,943

 

$

7,943

 

Net income (loss) attributable to common stockholders

$

60,139

 

$

19,130

$

134,114

 

$

50,617

 

$

15,692

 

$

(67,912

)

$

211,780

 

 
 
Servicing and Originations Residential Securities and Loans


Originations


Servicing
MSRs &
Servicer
Advances
Residential
Securities &
Call Rights

Residential
Loans

Corporate
& Other


Total
Quarter Ended September 30, 2019
Interest income

$

10,873

 

$

8,847

$

129,727

 

$

184,933

 

$

73,416

 

$

40,331

 

$

448,127

 

Interest expense

 

10,359

 

 

264

 

61,399

 

 

123,023

 

 

43,364

 

 

7,493

 

 

245,902

 

Net interest income

 

514

 

 

8,583

 

68,328

 

 

61,910

 

 

30,052

 

 

32,838

 

 

202,225

 

Impairment

 

-

 

 

-

 

-

 

 

5,567

 

 

(16,553

)

 

5,863

 

 

(5,123

)

Servicing revenue, net

 

(548

)

 

48,612

 

4,986

 

 

-

 

 

-

 

 

-

 

 

53,050

 

Gain on originated mortgage loans, held-for-sale, net

 

106,216

 

 

348

 

(1,428

)

 

-

 

 

21,611

 

 

-

 

 

126,747

 

Other income (loss)

 

1

 

 

-

 

(43,143

)

 

116,081

 

 

33,541

 

 

(3,840

)

 

102,640

 

Operating expenses

 

69,941

 

 

35,815

 

62,344

 

 

1,839

 

 

14,006

 

 

66,620

 

 

250,565

 

Income (Loss) Before Income Taxes

 

36,242

 

 

21,728

 

(33,601

)

 

170,585

 

 

87,751

 

 

(43,485

)

 

239,220

 

Income tax expense (benefit)

 

9,081

 

 

5,292

 

(3,624

)

 

-

 

 

(15,546

)

 

(643

)

 

(5,440

)

Net Income (Loss)

$

27,161

 

$

16,436

$

(29,977

)

$

170,585

 

$

103,297

 

$

(42,842

)

$

244,660

 

Noncontrolling interests in income (loss) of consolidated
subsidiaries

 

2,457

 

 

-

 

1,684

 

 

-

 

 

-

 

 

10,597

 

 

14,738

 

Dividends on Preferred Stock

$

-

 

$

-

$

-

 

$

-

 

$

-

 

$

5,338

 

$

5,338

 

Net income (loss) attributable to common stockholders

$

24,704

 

$

16,436

$

(31,661

)

$

170,585

 

$

103,297

 

$

(58,777

)

$

224,584

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain information in this press release constitutes as “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to our strategy, growth opportunities, ability to execute on key business initiatives, and the ability to close any deals that we have priced or for which we have entered into any preliminary agreements. These statements are not historical facts. They represent management’s current expectations regarding future events and are subject to a number of trends and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from those described in the forward-looking statements. Accordingly, you should not place undue reliance on any forward-looking statements contained herein. For a discussion of some of the risks and important factors that could affect such forward-looking statements, see the sections entitled “Cautionary Statements Regarding Forward Looking Statements,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s annual and quarterly reports and other filings filed with the U.S. Securities and Exchange Commission, which are available on the Company’s website (www.newresi.com). New risks and uncertainties emerge from time to time, and it is not possible for New Residential to predict or assess the impact of every factor that may cause its actual results to differ from those contained in any forward-looking statements. Forward-looking statements contained herein speak only as of the date of this press release, and New Residential expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in New Residential's expectations with regard thereto or change in events, conditions or circumstances on which any statement is based.

ABOUT NEW RESIDENTIAL

New Residential is a leading provider of capital and services to the mortgage and financial services industry with a proven track record of returns and performance. The Company’s mission is to generate attractive risk-adjusted returns in all interest rate environments through a portfolio of investments and operating businesses. With approximately $45 billion in assets as of December 31, 2019, New Residential has built a diversified, hard-to-replicate portfolio with high-quality investment strategies that have generated returns across different interest rate environments over time. New Residential’s portfolio is composed of mortgage servicing related assets (including investments in operating entities consisting of servicing, origination, and affiliated businesses), residential securities (and associated called rights) and loans, and consumer loans. New Residential’s investments in operating entities include its mortgage origination and servicing subsidiary, NewRez, and its special servicing division, Shellpoint Mortgage Servicing, as well as investments in affiliated businesses that provide services that are complementary to the origination and servicing businesses and other portfolios of mortgage related assets. Since inception in 2013, New Residential has a proven track record of performance, growing and protecting the value of its assets while generating attractive risk-adjusted returns and delivering approximately $3.3 billion in dividends to shareholders. New Residential is organized and conducts its operations to qualify as a real estate investment trust (“REIT”) for federal income tax purposes. New Residential is managed by an affiliate of Fortress Investment Group LLC, a global investment management firm, and headquartered in New York City.

Investor Relations
Kaitlyn Mauritz
212-479-3150
IR@NewResi.com

Source: New Residential Investment Corp.