UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
x  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended June 30, 2016
 
or
 
¨  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from ________________to________________
 
Commission File Number: 001-35777
New Residential Investment Corp.
(Exact name of registrant as specified in its charter)
Delaware
 
45-3449660
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer Identification No.)
 
 
 
1345 Avenue of the Americas, New York, NY
 
10105
(Address of principal executive offices)
 
(Zip Code)
 
(212) 798-3150
(Registrant’s telephone number, including area code)
 
(Former name, former address and former fiscal year, if changed since last report) 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x    No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x    No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer x  Accelerated filer ¨ Non-accelerated filer ¨ (Do not check if a smaller reporting company) Smaller reporting company ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨    No x
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the last practicable date.
Common stock, $0.01 par value per share: 230,493,006 shares outstanding as of July 28, 2016.




CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
 
This report contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, which statements involve substantial risks and uncertainties. Such forward-looking statements relate to, among other things, the operating performance of our investments, the stability of our earnings, our financing needs and the size and attractiveness of market opportunities. Forward-looking statements are generally identifiable by use of forward-looking terminology such as “may,” “will,” “should,” “potential,” “intend,” “expect,” “endeavor,” “seek,” “anticipate,” “estimate,” “overestimate,” “underestimate,” “believe,” “could,” “project,” “predict,” “continue” or other similar words or expressions. Forward-looking statements are based on certain assumptions, discuss future expectations, describe future plans and strategies, contain projections of results of operations, cash flows or financial condition or state other forward-looking information. Our ability to predict results or the actual outcome of future plans or strategies is inherently uncertain. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, our actual results and performance could differ materially from those set forth in the forward-looking statements. These forward-looking statements involve risks, uncertainties and other factors that may cause our actual results in future periods to differ materially from forecasted results. Factors which could have a material adverse effect on our operations and future prospects include, but are not limited to:
 
reductions in cash flows received from our investments;
the quality and size of the investment pipeline and our ability to take advantage of investment opportunities at attractive risk-adjusted prices;
servicer advances may not be recoverable or may take longer to recover than we expect, which could cause us to fail to achieve our targeted return on our investment in servicer advances;
our ability to deploy capital accretively and the timing of such deployment;
our counterparty concentration and default risks in Nationstar, Ocwen, OneMain and other third parties;
a lack of liquidity surrounding our investments, which could impede our ability to vary our portfolio in an appropriate manner;
the impact that risks associated with subprime mortgage loans and consumer loans, as well as deficiencies in servicing and foreclosure practices, may have on the value of our Excess MSRs, servicer advances, RMBS and loan portfolios;
the risks that default and recovery rates on our Excess MSRs, servicer advances, real estate securities, residential mortgage loans and consumer loans deteriorate compared to our underwriting estimates;
changes in prepayment rates on the loans underlying certain of our assets, including, but not limited to, our Excess MSRs;
the risk that projected recapture rates on the loan pools underlying our Excess MSRs are not achieved;
the relationship between yields on assets which are paid off and yields on assets in which such monies can be reinvested;
the relative spreads between the yield on the assets in which we invest and the cost of financing;
changes in economic conditions generally and the real estate and bond markets specifically;
adverse changes in the financing markets we access affecting our ability to finance our investments on attractive terms, or at all;
changing risk assessments by lenders that potentially lead to increased margin calls, not extending our repurchase agreements or other financings in accordance with their current terms or not entering into new financings with us;
changes in interest rates and/or credit spreads, as well as the success of any hedging strategy we may undertake in relation to such changes;
impairments in the value of the collateral underlying our investments and the relation of any such impairments to our judgments as to whether changes in the market value of our securities or loans are temporary or not and whether circumstances bearing on the value of such assets warrant changes in carrying values;
the availability and terms of capital for future investments;
competition within the finance and real estate industries;
the legislative/regulatory environment, including, but not limited to, the impact of the Dodd-Frank Act, U.S. government programs intended to stabilize the economy, the federal conservatorship of Fannie Mae and Freddie Mac and legislation that permits modification of the terms of residential mortgage loans;




our ability to maintain our qualification as a real estate investment trust (“REIT”) for U.S. federal income tax purposes and the potentially onerous consequences that any failure to maintain such qualification would have on our business;
our ability to maintain our exclusion from registration under Investment Company Act of 1940 (the “1940 Act”) and the fact that maintaining such exclusion imposes limits on our operations;
the risks related to HLSS liabilities that we have assumed;
the impact of current or future legal proceedings and regulatory investigations and inquiries;
the impact of any material transactions with FIG LLC (the “Manager”) or one of its affiliates, including the impact of any actual, potential or perceived conflicts of interest; and
events, conditions or actions that might occur at Ocwen.

We also direct readers to other risks and uncertainties referenced in this report, including those set forth under “Risk Factors.” We caution that you should not place undue reliance on any of our forward-looking statements. Further, any forward-looking statement speaks only as of the date on which it is made. New risks and uncertainties arise from time to time, and it is impossible for us to predict those events or how they may affect us. Except as required by law, we are under no obligation (and expressly disclaim any obligation) to update or alter any forward-looking statement, whether written or oral, that we may make from time to time, whether as a result of new information, future events or otherwise.
 




SPECIAL NOTE REGARDING EXHIBITS
 
In reviewing the agreements included as exhibits to this Quarterly Report on Form 10-Q, please remember they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about New Residential Investment Corp. (the “Company,” “New Residential” or “we,” “our” and “us”) or the other parties to the agreements. The agreements contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and:
 
should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements proved to be inaccurate;
have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;
may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and
were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.

Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. Additional information about the Company may be found elsewhere in this Quarterly Report on Form 10-Q and the Company’s other public filings, which are available without charge through the SEC’s website at http://www.sec.gov.
 
The Company acknowledges that, notwithstanding the inclusion of the foregoing cautionary statements, it is responsible for considering whether additional specific disclosures of material information regarding material contractual provisions are required to make the statements in this report not misleading.
 




NEW RESIDENTIAL INVESTMENT CORP.
FORM 10-Q
 
INDEX
 
PAGE
Part I. Financial Information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    General
 
 
 
 
 
 
 
 
 
 




 
 
 
 
 
 
 
 
 
 
    Inflation
 
 
 
 
 
 
 
 
Part II. Other Information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




PART I. FINANCIAL INFORMATION
 
ITEM 1. FINANCIAL STATEMENTS
 
NEW RESIDENTIAL INVESTMENT CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except share data)
 
June 30, 2016
 
December 31, 2015
 
(Unaudited)
 
Assets
 
 
 
Investments in:
 
 
 
Excess mortgage servicing rights, at fair value
$
1,475,418

 
$
1,581,517

Excess mortgage servicing rights, equity method investees, at fair value
199,145

 
217,221

Servicer advances, at fair value(A)
6,513,274

 
7,426,794

Real estate securities, available-for-sale
4,554,657

 
2,501,881

Residential mortgage loans, held-for-investment

 
330,178

Residential mortgage loans, held-for-sale
824,002

 
776,681

Real estate owned
61,909

 
50,574

Consumer loans, held-for-investment(A)
1,830,436

 

Cash and cash equivalents(A)
233,845

 
249,936

Restricted cash
168,043

 
94,702

Trades receivable
1,549,795

 
1,538,481

Deferred tax asset, net
189,641

 
185,311

Other assets
304,983

 
239,446

 
$
17,905,148

 
$
15,192,722

 
 
 
 
Liabilities and Equity
 
 
 
 
 
 
 
Liabilities
 
 
 
Repurchase agreements
$
4,625,403

 
$
4,043,054

Notes and bonds payable(A)
8,295,331

 
7,249,568

Trades payable
1,624,130

 
725,672

Due to affiliates
11,983

 
23,785

Dividends payable
106,027

 
106,017

Accrued expenses and other liabilities
129,013

 
58,046

 
14,791,887

 
12,206,142

 
 
 
 
Commitments and Contingencies


 


 
 
 
 
Equity
 
 
 
Common Stock, $0.01 par value, 2,000,000,000 shares authorized, 230,493,006 and 230,471,202 issued and outstanding at June 30, 2016 and December 31, 2015, respectively
2,304

 
2,304

Additional paid-in capital
2,641,193

 
2,640,893

Retained earnings
117,144

 
148,800

Accumulated other comprehensive income (loss)
50,799

 
3,936

Total New Residential stockholders’ equity
2,811,440

 
2,795,933

Noncontrolling interests in equity of consolidated subsidiaries
301,821

 
190,647

Total Equity
3,113,261

 
2,986,580

 
$
17,905,148

 
$
15,192,722


(A)
New Residential’s Condensed Consolidated Balance Sheets include the assets and liabilities of certain consolidated VIEs, the Buyer (Note 6) and the Consumer Loan SPVs (Note 9), which primarily hold investments in servicer advances and consumer loans, respectively, financed with notes and bonds payable. The Buyer’s balance sheet is included in Note 6 and the Consumer Loan SPVs’ balance sheet is included in Note 9. The creditors of the Buyer and the Consumer Loan SPVs do not have recourse to the general credit of New Residential and the assets of the Buyer and the Consumer Loan SPVs are not directly available to satisfy New Residential’s obligations.

See notes to condensed consolidated financial statements.

1



NEW RESIDENTIAL INVESTMENT CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(dollars in thousands, except share data)
 
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2016
 
2015
 
2016
 
2015
Interest income
$
277,477

 
$
178,177

 
$
467,513

 
$
262,550

Interest expense
100,685

 
81,871

 
181,913

 
115,850

Net Interest Income
176,792

 
96,306

 
285,600

 
146,700

 
 
 
 
 
 
 
 
Impairment
 
 
 
 
 
 
 
Other-than-temporary impairment (OTTI) on securities
2,819

 
649

 
6,073

 
1,720

Valuation and loss provision on loans and real estate owned
16,825

 
4,772

 
23,570

 
5,749

 
19,644

 
5,421

 
29,643

 
7,469

 
 
 
 
 
 
 
 
Net interest income after impairment
157,148

 
90,885

 
255,957

 
139,231

 
 
 
 
 
 
 
 
Other Income
 
 
 
 
 
 
 
Change in fair value of investments in excess mortgage servicing rights
(15,263
)
 
356

 
(7,337
)
 
(1,405
)
Change in fair value of investments in excess mortgage servicing rights, equity method investees
(675
)
 
3,095

 
2,347

 
8,016

Change in fair value of investments in servicer advances
13,946

 
24,562

 
(17,278
)
 
16,893

Gain on consumer loans investment

 
8,510

 
9,943

 
18,957

Gain on remeasurement of consumer loans investment

 

 
71,250

 

Gain (loss) on settlement of investments, net
(12,711
)
 
1,201

 
(27,211
)
 
15,968

Other income (loss), net
(5,020
)
 
(74
)
 
(19,515
)
 
(8,484
)
 
(19,723
)
 
37,650

 
12,199

 
49,945

 
 
 
 
 
 
 
 
Operating Expenses
 
 
 
 
 
 
 
General and administrative expenses
7,224

 
21,239

 
19,305

 
29,799

Management fee to affiliate
10,008

 
8,371

 
20,016

 
13,497

Incentive compensation to affiliate
4,929

 
2,391

 
6,125

 
6,084

Loan servicing expense
14,119

 
2,951

 
15,850

 
7,842

 
36,280

 
34,952

 
61,296

 
57,222

 
 
 
 
 
 
 
 
Income Before Income Taxes
101,145

 
93,583

 
206,860

 
131,954

Income tax expense (benefit)
7,518

 
14,306

 
(2,705
)
 
10,879

Net Income
$
93,627

 
$
79,277

 
$
209,565

 
$
121,075

Noncontrolling Interests in Income of Consolidated Subsidiaries
$
24,975

 
$
4,158

 
$
29,177

 
$
9,981

Net Income Attributable to Common Stockholders
$
68,652

 
$
75,119

 
$
180,388

 
$
111,094

 
 
 
 
 
 
 
 
Net Income Per Share of Common Stock
 
 
 
 
 
 
 
Basic
$
0.30

 
$
0.37

 
$
0.78

 
$
0.65

Diluted
$
0.30

 
$
0.37

 
$
0.78

 
$
0.63

 
 
 
 
 
 
 
 
Weighted Average Number of Shares of Common Stock Outstanding
 
 
 
 
 
 
 
Basic
230,478,390

 
200,910,040

 
230,474,796

 
171,336,768

Diluted
230,839,753

 
205,169,099

 
230,689,233

 
175,206,662

 
 
 
 
 
 
 
 
Dividends Declared per Share of Common Stock
$
0.46

 
$
0.45

 
$
0.92

 
$
0.83

 
See notes to condensed consolidated financial statements.


2



NEW RESIDENTIAL INVESTMENT CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
(dollars in thousands)
 
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2016
 
2015
 
2016
 
2015
Comprehensive income (loss), net of tax
 
 
 
 
 
 
 
Net income
$
93,627

 
$
79,277

 
$
209,565

 
$
121,075

Other comprehensive income (loss)
 
 
 
 
 
 
 
Net unrealized gain (loss) on securities
60,510

 
(21,164
)
 
56,541

 
(6,032
)
Reclassification of net realized (gain) loss on securities into earnings
3,201

 
18,570

 
(9,678
)
 
(5,056
)
 
63,711

 
(2,594
)
 
46,863

 
(11,088
)
Total comprehensive income
$
157,338

 
$
76,683

 
$
256,428

 
$
109,987

Comprehensive income attributable to noncontrolling interests
$
24,975

 
$
4,158

 
$
29,177

 
$
9,981

Comprehensive income attributable to common stockholders
$
132,363

 
$
72,525

 
$
227,251

 
$
100,006

 
See notes to condensed consolidated financial statements.


3



NEW RESIDENTIAL INVESTMENT CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED) 
FOR THE SIX MONTHS ENDED JUNE 30, 2016
(dollars in thousands, except share data)
 
 
Common Stock
 
 
 
 
 
 
 
 
 
 
 
 
 
Shares
 
Amount
 
Additional Paid-in Capital
 
Retained Earnings
 
Accumulated Other Comprehensive Income (Loss)
 
Total New Residential Stockholders’ Equity
 
Noncontrolling
Interests in Equity of Consolidated Subsidiaries
 
Total Equity
Equity - December 31, 2015
230,471,202

 
$
2,304

 
$
2,640,893

 
$
148,800

 
$
3,936

 
$
2,795,933

 
$
190,647

 
$
2,986,580

Dividends declared

 

 

 
(212,044
)
 

 
(212,044
)
 

 
(212,044
)
SpringCastle Transaction (Note 1)

 

 

 

 

 

 
110,438

 
110,438

Capital contributions

 

 

 

 

 

 

 

Capital distributions

 

 

 

 

 

 
(28,441
)
 
(28,441
)
Director share grant
21,804

 

 
300

 

 

 
300

 

 
300

Comprehensive income (loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income

 

 

 
180,388

 

 
180,388

 
29,177

 
209,565

Net unrealized gain (loss) on securities

 

 

 

 
56,541

 
56,541

 

 
56,541

Reclassification of net realized (gain) loss on securities into earnings

 

 

 

 
(9,678
)
 
(9,678
)
 

 
(9,678
)
Total comprehensive income
 
 
 
 
 
 
 
 
 
 
227,251

 
29,177

 
256,428

Equity - June 30, 2016
230,493,006

 
$
2,304

 
$
2,641,193

 
$
117,144

 
$
50,799

 
$
2,811,440

 
$
301,821


$
3,113,261

 
See notes to condensed consolidated financial statements.


4


NEW RESIDENTIAL INVESTMENT CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(dollars in thousands)
 
Six Months Ended June 30,
 
2016
 
2015
Cash Flows From Operating Activities
 
 
 
Net income
$
209,565

 
$
121,075

Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 
 
 
Change in fair value of investments in excess mortgage servicing rights
7,337

 
1,405

Change in fair value of investments in excess mortgage servicing rights, equity method investees
(2,347
)
 
(8,016
)
Change in fair value of investments in servicer advances
17,278

 
(16,893
)
(Gain) / loss on remeasurement of consumer loans investment
(71,250
)
 

(Gain) / loss on settlement of investments (net)
27,211

 
(16,425
)
Unrealized (gain) / loss on derivative instruments
35,466

 
8,259

Unrealized (gain) / loss on other ABS
950

 
368

(Gain) / loss on transfer of loans to REO
(10,287
)
 
197

(Gain) / loss on transfer of loans to other assets
(277
)
 
457

(Gain) / loss on Excess MSR recapture agreements
(1,420
)
 
(1,577
)
Accretion and other amortization
(331,915
)
 
(209,137
)
Other-than-temporary impairment
6,073

 
1,720

Valuation and loss provision on loans and real estate owned
23,570

 
5,749

Non-cash directors’ compensation
300

 
300

Deferred tax provision
(4,131
)
 
11,341

 
 
 
 
Changes in:
 
 
 
Restricted cash
1,263

 
(32,737
)
Other assets
39,080

 
145,461

Due to affiliates
(11,802
)
 
(47,754
)
Accrued expenses and other liabilities
29,271

 
31,288

Other operating cash flows:
 
 
 
Interest received from excess mortgage servicing rights
82,163

 
43,367

Interest received from servicer advance investments
94,870

 
73,480

Interest received from Non-Agency RMBS
50,074

 
16,657

Interest payments from residential mortgage loans, held-for-investment
2,815

 

Interest payments from PCD consumer loans, held-for-investment
18,567

 

Distributions of earnings from excess mortgage servicing rights, equity method investees
15,532

 
19,920

Purchases of residential mortgage loans, held-for-sale
(469,665
)
 
(388,805
)
Proceeds from sales of purchased residential mortgage loans, held-for-sale
519,615

 
722,961

Principal repayments from purchased residential mortgage loans, held-for-sale
64,963

 
34,614

Net cash provided by (used in) operating activities
342,869

 
517,275


Continued on next page.

5


NEW RESIDENTIAL INVESTMENT CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED), CONTINUED
(dollars in thousands)
 
Six Months Ended June 30,
 
2016
 
2015
Cash Flows From Investing Activities
 
 
 
Acquisition of investments in excess mortgage servicing rights
(2,022
)
 
(129,098
)
Acquisition of HLSS, net of cash acquired

 
(959,616
)
SpringCastle Transaction (Note 1), net of cash acquired
(49,943
)
 

Purchase of servicer advance investments
(7,814,541
)
 
(6,306,745
)
Purchase of Agency RMBS
(3,227,130
)
 
(1,026,586
)
Purchase of Non-Agency RMBS
(1,273,231
)
 
(468,197
)
Purchase of residential mortgage loans
(319
)
 

Purchase of derivatives
(4,457
)
 
(2,877
)
Purchase of real estate owned and other assets
(9,602
)
 
(1,289
)
Draws on revolving consumer loans
(16,483
)
 

Payments for settlement of derivatives
(52,612
)
 
(36,212
)
Return of investments in excess mortgage servicing rights
94,250

 
66,400

Return of investments in excess mortgage servicing rights, equity method investees
4,891

 
4,602

Principal repayments from servicer advance investments
8,772,662

 
6,587,781

Principal repayments from Agency RMBS
42,442

 
85,369

Principal repayments from Non-Agency RMBS
143,837

 
34,687

Principal repayments from residential mortgage loans
17,825

 
11,085

Proceeds from sale of residential mortgage loans

 
646,436

Principal repayments from consumer loans
100,751

 

Proceeds from sale of Agency RMBS
3,236,165

 
1,455,221

Proceeds from sale of Non-Agency RMBS
95,683

 
389,719

Proceeds from settlement of derivatives
5,445

 
22,406

Proceeds from sale of real estate owned
30,484

 
46,341

Net cash provided by (used in) investing activities
94,095

 
419,427


Continued on next page.

6


NEW RESIDENTIAL INVESTMENT CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED), CONTINUED
(dollars in thousands)
 
 
Six Months Ended June 30,
 
2016
 
2015
Cash Flows From Financing Activities
 
 
 
Repayments of repurchase agreements
(12,026,068
)
 
(3,480,781
)
Margin deposits under repurchase agreements and derivatives
(182,666
)
 
(284,389
)
Repayments of notes and bonds payable
(4,474,167
)
 
(3,073,963
)
Payment of deferred financing fees
(37,144
)
 
(34,096
)
Common stock dividends paid
(212,034
)
 
(107,490
)
Borrowings under repurchase agreements
12,605,745

 
2,651,587

Return of margin deposits under repurchase agreements and derivatives
160,055

 
288,880

Borrowings under notes and bonds payable
3,741,665

 
2,481,379

Issuance of common stock

 
882,099

Costs related to issuance of common stock

 
(3,580
)
Noncontrolling interest in equity of consolidated subsidiaries - contributions

 

Noncontrolling interest in equity of consolidated subsidiaries - distributions
(28,441
)
 
(37,326
)
Net cash provided by (used in) financing activities
(453,055
)
 
(717,680
)
 
 
 
 
Net Increase (Decrease) in Cash and Cash Equivalents
(16,091
)
 
219,022

 
 
 
 
Cash and Cash Equivalents, Beginning of Period
249,936

 
212,985

 
 
 
 
Cash and Cash Equivalents, End of Period
$
233,845

 
$
432,007

 
 
 
 
Supplemental Disclosure of Cash Flow Information
 
 
 
Cash paid during the period for interest
$
169,343

 
$
103,548

Cash paid during the period for income taxes
769

 
535

 
 
 
 
Supplemental Schedule of Non-Cash Investing and Financing Activities
 
 
 
Dividends declared but not paid
$
106,027

 
$
89,521

Reclassification resulting from the application of ASU No. 2014-11

 
85,955

Purchase of Agency and Non-Agency RMBS, settled after quarter end
1,624,130

 
778,528

Sale of investments, primarily Agency RMBS, settled after quarter end
1,549,795

 
986,532

Transfer from residential mortgage loans to real estate owned and other assets
90,263

 
19,875

Non-cash distributions from Consumer Loan Companies
25

 
585

Portion of HLSS Acquisition paid in common stock

 
434,092

Non-cash contingent consideration
5,581

 
50,000

Real estate securities retained from loan securitizations
76,864

 
14,990

Remeasurement of Consumer Loan Companies noncontrolling interest
110,438

 

Transfer of loans from held-for-investment to held-for sale
316,199

 

 
See notes to condensed consolidated financial statements.

7



NEW RESIDENTIAL INVESTMENT CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2016
(dollars in tables in thousands, except share data) 
 

1. ORGANIZATION AND BASIS OF PRESENTATION
 
New Residential Investment Corp. (together with its subsidiaries, “New Residential”) is a Delaware corporation that was formed as a limited liability company in September 2011 for the purpose of making real estate related investments and commenced operations on December 8, 2011. On December 20, 2012, New Residential was converted to a corporation. Newcastle Investment Corp. (“Newcastle”) was the sole stockholder of New Residential until the spin-off (Note 13), which was completed on May 15, 2013. Following the spin-off, New Residential is an independent publicly traded real estate investment trust (“REIT”) primarily focused on investing in residential mortgage related assets. New Residential is listed on the New York Stock Exchange (“NYSE”) under the symbol “NRZ.”
 
New Residential has elected and intends to qualify to be taxed as a REIT for U.S. federal income tax purposes. As such, New Residential will generally not be subject to U.S. federal corporate income tax on that portion of its net income that is distributed to stockholders if it distributes at least 90% of its REIT taxable income to its stockholders by prescribed dates and complies with various other requirements. See Note 17 regarding New Residential’s taxable REIT subsidiaries.
 
New Residential has entered into a management agreement (the “Management Agreement”) with FIG LLC (the “Manager”), an affiliate of Fortress Investment Group LLC (“Fortress”), pursuant to which the Manager provides a management team and other professionals who are responsible for implementing New Residential’s business strategy, subject to the supervision of New Residential’s Board of Directors. For its services, the Manager is entitled to management fees and incentive compensation, both defined in, and in accordance with the terms of, the Management Agreement. The Manager also manages Newcastle, investment funds that indirectly own a majority of the outstanding interests in Nationstar Mortgage LLC (“Nationstar”), a leading residential mortgage servicer, and investment funds that own a majority of the outstanding common stock of OneMain Holdings, Inc. (formerly known as Springleaf Holdings, Inc.) (together with its subsidiaries, “OneMain”), former managing member of the Consumer Loan Companies (Note 9).
 
As of June 30, 2016, New Residential conducted its business through the following segments: (i) investments in excess mortgage servicing rights (“Excess MSRs”), (ii) investments in servicer advances (including the basic fee component of the related mortgage servicing rights (“MSRs”)), (iii) investments in real estate securities, (iv) investments in real estate loans, (v) investments in consumer loans and (vi) corporate.
 
Approximately 2.4 million shares of New Residential’s common stock were held by Fortress, through its affiliates, and its principals as of June 30, 2016. In addition, Fortress, through its affiliates, held options relating to approximately 9.2 million shares of New Residential’s common stock as of June 30, 2016.
 
Interim Financial Statements

The accompanying condensed consolidated financial statements and related notes of New Residential have been prepared in accordance with accounting principles generally accepted in the United States for interim financial reporting and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, certain information and note disclosures normally included in financial statements prepared under U.S. generally accepted accounting principles have been condensed or omitted. In the opinion of management, all adjustments considered necessary for a fair presentation of New Residential’s financial position, results of operations and cash flows have been included and are of a normal and recurring nature. The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. These condensed consolidated financial statements should be read in conjunction with New Residential’s consolidated financial statements for the year ended December 31, 2015 and notes thereto included in New Residential’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”). Capitalized terms used herein, and not otherwise defined, are defined in New Residential’s consolidated financial statements for the year ended December 31, 2015.
 
Certain prior period amounts have been reclassified to conform to the current period’s presentation.


8

NEW RESIDENTIAL INVESTMENT CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2016
(dollars in tables in thousands, except share data) 
 

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenues from Contracts with Customers (Topic 606). The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In effect, companies will be required to exercise further judgment and make more estimates prospectively. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. ASU No. 2014-09 is effective for New Residential in the first quarter of 2018. Early adoption is not permitted. Entities have the option of using either a full retrospective or a modified approach to adopt the guidance in ASU No. 2014-09. New Residential is currently evaluating the new guidance to determine the impact it may have on its condensed consolidated financial statements.

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The standard provides guidance on management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern by requiring management to assess an entity’s ability to continue as a going concern by incorporating and expanding on certain principles that are currently in U.S. auditing standards. ASU No. 2014-15 is effective for New Residential for the annual period ending on December 31, 2016. Early adoption was permitted. New Residential is currently evaluating the new guidance to determine the impact that it may have on its condensed consolidated financial statements.

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10) - Recognition and Measurement of Financial Assets and Financial Liabilities. The standard: (i) requires that certain equity investments be measured at fair value, and modifies the assessment of impairment for certain other equity investments, (ii) changes certain disclosure requirements related to the fair value of financial instruments measured at amortized cost, (iii) changes certain disclosure requirements related to liabilities measured at fair value, (iv) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset, and (v) clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. ASU No. 2016-01 is effective for New Residential in the first quarter of 2018. Early adoption is generally not permitted. An entity should apply ASU No. 2016-01 by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. New Residential is currently evaluating the new guidance to determine the impact it may have on its condensed consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments. The standard requires that a financial asset measured at amortized cost basis be presented at the net amount expected to be collected, net of an allowance for all expected (rather than incurred) credit losses. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectibility of the reported amount. The standard also changes the accounting for purchased credit deteriorated (“PCD”) assets and available-for-sale securities to align with this treatment. ASU No. 2016-13 is effective for New Residential in the first quarter of 2020. Early adoption is permitted beginning in 2019. An entity should apply ASU No. 2016-13 by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. New Residential is currently evaluating the new guidance to determine the impact it may have on its condensed consolidated financial statements.

The FASB has recently issued or discussed a number of proposed standards on such topics as financial statement presentation, financial instruments, restricted cash and hedging. Some of the proposed changes are significant and could have a material impact on New Residential’s reporting. New Residential has not yet fully evaluated the potential impact of these proposals, but will make such an evaluation as the standards are finalized. 

SpringCastle Transaction

On March 31, 2016, certain of New Residential’s indirect wholly owned subsidiaries (collectively, the “NRZ SpringCastle Buyers”) entered into a Purchase Agreement (the “SpringCastle Purchase Agreement”) primarily with (i) certain direct or indirect wholly owned subsidiaries of OneMain (the “SpringCastle Sellers”), (ii) BTO Willow Holdings II, L.P. and Blackstone Family Tactical Opportunities Investment Partnership - NQ - ESC L.P. (together, the “Blackstone SpringCastle Buyers,” and the Blackstone SpringCastle Buyers together with the NRZ SpringCastle Buyers, collectively, the “SpringCastle Buyers”). Pursuant to the

9

NEW RESIDENTIAL INVESTMENT CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2016
(dollars in tables in thousands, except share data) 
 

SpringCastle Purchase Agreement, the SpringCastle Sellers sold their collective 47% limited liability company interests in the Consumer Loan Companies (Note 9) to the SpringCastle Buyers for an aggregate purchase price of $111,625,000 (the “SpringCastle Transaction”).

Pursuant to the SpringCastle Purchase Agreement, the NRZ SpringCastle Buyers collectively acquired an additional 23.5% limited liability company interest in the Consumer Loan Companies (representing 50% of the limited liability company interests being sold by the SpringCastle Sellers in the SpringCastle Transaction) and the Blackstone SpringCastle Buyers acquired the other 50% of the limited liability company interests being sold in the SpringCastle Transaction. The SpringCastle Buyers collectively paid $100,462,500 of the aggregate purchase price to the SpringCastle Sellers on March 31, 2016, with the remaining $11,162,500 to be paid into an escrow account within 120 days following March 31, 2016. The NRZ SpringCastle Buyers’ obligation with respect to purchase price was, and the escrow obligation will be, 50% of the total paid, or to be paid, by the SpringCastle Buyers. The escrowed funds are expected to be held in escrow for a period of up to five years following March 31, 2016 and, subject to the terms of the SpringCastle Purchase Agreement and depending on the achievement of certain portfolio performance requirements, paid (in whole or in part) to the SpringCastle Sellers at the end of such five year period. Any portion of the escrowed funds that the SpringCastle Sellers are not entitled to receive at the end of such five year period, based on the failure to achieve certain portfolio performance requirements, will be returned to the SpringCastle Buyers. The SpringCastle Buyers are also entitled (but not required) to use the escrowed funds as a source of recovery for any indemnification payments to which they become entitled pursuant to the SpringCastle Purchase Agreement. The SpringCastle Purchase Agreement includes customary representations, warranties, covenants and indemnities.

The SpringCastle Transaction was unanimously approved by a special committee composed entirely of independent directors to which New Residential’s board of directors had delegated full authority to consider, negotiate and determine whether to engage in the SpringCastle Transaction.

Following the SpringCastle Transaction, New Residential, through the NRZ SpringCastle Buyers, owns 53.5% of the limited liability company interests in the Consumer Loan Companies and the Blackstone SpringCastle Buyers, collectively with their affiliates, own the remaining 46.5% interests in the Consumer Loan Companies. OneMain will remain as servicer of the loans held by the Consumer Loan Companies and their subsidiaries immediately following the SpringCastle Transaction.

In connection with the closing of the SpringCastle Transaction, each NRZ SpringCastle Buyer entered into a Second Amended & Restated Limited Liability Company Agreement (each, a “Second A&R LLC Agreement”) for each of the Consumer Loan Companies in which it acquired limited liability company interests. All of the Second A&R LLC Agreements contain substantially identical terms and conditions and designate the respective NRZ SpringCastle Buyer that is a party thereto as managing member of the applicable Consumer Loan Company. Pursuant to each Second A&R LLC Agreement, the managing member has the exclusive power and authority to manage the business and affairs of the applicable Consumer Loan Company, subject to the rights of the members to approve specified significant actions outside of the ordinary course of business and certain affiliate transactions, and subject to the other terms, conditions and limitations set forth in the Second A&R LLC Agreements. Each Second A&R LLC Agreement contains certain customary restrictions on the members’ ability to transfer their interests in the applicable Consumer Loan Companies.

As a result of the SpringCastle Transaction, New Residential obtained a controlling financial interest in the Consumer Loan Companies, which triggered the application of the acquisition model in ASC No. 805, including the fair value recognition of all net assets over which control has been obtained and the remeasurement of any previously held noncontrolling interest. Based on the guidance in ASC No. 805, New Residential has consolidated all of the assets and the related liabilities of the Consumer Loan Companies assuming a gross purchase price of $237.5 million. This gross purchase price is representative of the fair value, measured in accordance with ASC No. 820, of 100% of the net assets of the Consumer Loan Companies, which was used to derive the $111.6 million purchase price for an aggregate 47.0% of the equity ownership acquired by the SpringCastle Buyers. New Residential previously held a 30% equity method investment in the Consumer Loan Companies, which had a basis of zero, and a fair value of $71.3 million based on 30% of the gross purchase price of $237.5 million, immediately prior to the SpringCastle Transaction. Therefore, the remeasurement of New Residential’s previously held equity method investment resulted in a gain of $71.3 million, which was recorded to Gain on Remeasurement of Consumer Loans Investment.


10

NEW RESIDENTIAL INVESTMENT CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2016
(dollars in tables in thousands, except share data) 
 

New Residential has performed a preliminary allocation of the purchase price to the Consumer Loans Companies’ assets and liabilities, as set forth below. The final allocation of purchase price may differ from the amounts included herein. The preliminary allocation of the total consideration, following reclassifications to conform to New Residential’s presentation, is as follows:
Total Consideration ($ in millions)
$
237.5

Assets
 
Consumer loans, held-for-investment
$
1,934.7

Cash and cash equivalents
0.3

Restricted cash
74.6

Other assets
35.9

Total Assets Acquired
$
2,045.5

 
 
Liabilities
 
Notes and bonds payable
1,803.2

Accrued expenses and other liabilities
4.8

Total Liabilities Assumed
$
1,808.0

 
 
Net Assets
$
237.5


The acquisition of the Consumer Loans Companies resulted in no goodwill because the total consideration transferred was equal to the fair value of the net assets acquired.

Unaudited Supplemental Pro Forma Financial Information - The following table presents New Residential’s unaudited pro forma combined Interest Income and Income Before Income Taxes for the three and six months ended June 30, 2016 and 2015 prepared as if the SpringCastle Transaction had been consummated on January 1, 2015.
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
(unaudited)
Pro Forma
 
 
 
 
 
 
 
Interest Income
$
277,477

 
$
276,022

 
$
554,426

 
$
462,770

Income Before Income Taxes
101,145

 
128,213

 
167,158

 
288,498

Noncontrolling Interests in Income of Consolidated Subsidiaries
24,975

 
24,218

 
47,766

 
50,347


The 2016 unaudited supplemental pro forma financial information has been adjusted to exclude, and the 2015 unaudited supplemental pro forma financial information has been adjusted to include, (i) the gain on remeasurement of New Residential’s Consumer Loans investment of $71.3 million and (ii) approximately $1.5 million of acquisition related costs incurred by New Residential in 2016. The unaudited supplemental pro forma financial information does not include any other anticipated benefits of the SpringCastle Transaction and, accordingly, the unaudited supplemental pro forma financial information is not necessarily indicative of either future results of operations or results that might have been achieved had the SpringCastle Transaction occurred on January 1, 2015.

New Residential’s Condensed Consolidated Statements of Income include Interest income and Income Before Income Taxes of the Consumer Loan Companies (Note 9) since the March 31, 2016 acquisition of $78.3 million and $30.9 million, respectively.

See Note 9 for further information on the Consumer Loan Companies and Note 11 for further information on related financing.


11

NEW RESIDENTIAL INVESTMENT CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2016
(dollars in tables in thousands, except share data) 
 

2. OTHER INCOME, ASSETS AND LIABILITIES
 
Other income (loss), net, is comprised of the following:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
Unrealized gain (loss) on derivative instruments
$
(13,163
)
 
$
(1,229
)
 
$
(35,466
)
 
$
(8,259
)
Unrealized gain (loss) on other ABS
(1,218
)
 
(77
)
 
(950
)
 
(368
)
Gain (loss) on transfer of loans to REO
7,804

 
347

 
10,287

 
(197
)
Gain on Excess MSR recapture agreements
688

 
848

 
1,420

 
1,577

Other income (loss)
869

 
37

 
5,194

 
(1,237
)
 
$
(5,020
)
 
$
(74
)
 
$
(19,515
)
 
$
(8,484
)
 
Gain (loss) on settlement of investments, net is comprised of the following:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
Gain (loss) on sale of real estate securities, net
$
(382
)
 
$
(17,921
)
 
$
15,751

 
$
6,776

Gain (loss) on sale of residential mortgage loans, net
1,866

 
11,795

 
1,975

 
32,625

Gain (loss) on settlement of derivatives
(12,835
)
 
13,769

 
(45,468
)
 
(8,821
)
Gain (loss) on liquidated residential mortgage loans

 
(277
)
 

 
123

Gain (loss) on sale of REO
2,835

 
(2,201
)
 
2,986

 
(7,837
)
Other gains (losses)
(4,195
)
 
(3,964
)
 
(2,455
)
 
(6,898
)
 
$
(12,711
)
 
$
1,201

 
$
(27,211
)
 
$
15,968


Other assets and liabilities are comprised of the following:
 
Other Assets
 
 
 
Accrued Expenses
and Other Liabilities
 
June 30, 2016
 
December 31, 2015
 
 
 
June 30, 2016
 
December 31, 2015
Margin receivable, net
$
77,070

 
$
54,459

 
Interest payable
 
$
21,965

 
$
18,268

Other receivables
29,711

 
10,893

 
Accounts payable
 
38,208

 
18,650

Principal paydown receivable
1,552

 
795

 
Derivative liabilities (Note 10)
 
42,506

 
13,443

Receivable from government agency
74,956

 
68,833

 
Current taxes payable
 
2,496

 
1,573

Call rights
414

 
414

 
Other liabilities
 
23,838

 
6,112

Derivative assets (Note 10)
1,626

 
2,689

 
 
 
$
129,013

 
$
58,046

Interest receivable
67,885

 
36,963

 
 
 
 
 
 
Ginnie Mae EBO servicer advance receivable, net
32,428

 
49,725

 
 
 
 
 
 
Other assets
19,341

 
14,675

 
 
 
 
 
 
 
$
304,983

 
$
239,446

 
 
 
 
 
 


12

NEW RESIDENTIAL INVESTMENT CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2016
(dollars in tables in thousands, except share data) 
 

As reflected on the Condensed Consolidated Statements of Cash Flows, accretion and other amortization is comprised of the following:
 
 
Six Months Ended June 30,
 
 
2016
 
2015
Accretion of servicer advance interest income
 
$
156,749

 
$
150,937

Accretion of excess mortgage servicing rights income
 
76,231

 
49,397

Accretion of net discount on securities and loans(A)
 
109,228

 
19,703

Amortization of deferred financing costs
 
(9,320
)
 
(10,900
)
Amortization of discount on notes and bonds payable
 
(973
)
 

 
 
$
331,915

 
$
209,137


(A)
Includes accretion of the accretable yield on PCD loans.

3. SEGMENT REPORTING
 
New Residential conducts its business through the following segments: (i) investments in Excess MSRs, (ii) investments in Servicer Advances, (iii) investments in real estate securities, (iv) investments in real estate loans, (v) investments in consumer loans, and (vi) corporate. The corporate segment consists primarily of (i) general and administrative expenses, (ii) the management fees and incentive compensation related to the Management Agreement and (iii) corporate cash and related interest income. Securities owned by New Residential (Note 7) that are collateralized by servicer advances are included in the Servicer Advances segment. Secured corporate loans effectively collateralized by Excess MSRs are included in the Excess MSRs segment.
 
Summary financial data on New Residential’s segments is given below, together with a reconciliation to the same data for New Residential as a whole:
 
Servicing Related Assets
 
Residential Securities and Loans
 
 
 
 
 
 
 
Excess MSRs
 
Servicer Advances
 
Real Estate Securities
 
Real Estate Loans
 
Consumer Loans
 
Corporate
 
Total
Three Months Ended June 30, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income
$
33,263

 
$
82,793

 
$
68,214

 
$
14,272

 
$
78,309

 
$
626

 
$
277,477

Interest expense
5,181

 
58,795

 
10,933

 
6,904

 
18,872

 

 
100,685

Net interest income (expense)
28,082

 
23,998

 
57,281

 
7,368

 
59,437

 
626

 
176,792

Impairment

 

 
2,819

 
855

 
15,970

 

 
19,644

Other income
(15,875
)
 
15,064

 
(24,403
)
 
5,491

 

 

 
(19,723
)
Operating expenses
298

 
944

 
477

 
2,718

 
12,614

 
19,229

 
36,280

Income (Loss) Before Income Taxes
11,909

 
38,118

 
29,582

 
9,286

 
30,853

 
(18,603
)
 
101,145

Income tax expense (benefit)

 
7,397

 

 
42

 
75

 
4

 
7,518

Net Income (Loss)
$
11,909

 
$
30,721

 
$
29,582

 
$
9,244

 
$
30,778

 
$
(18,607
)
 
$
93,627

Noncontrolling interests in income (loss) of consolidated subsidiaries
$

 
$
10,345

 
$

 
$

 
$
14,630

 
$

 
$
24,975

Net income (loss) attributable to common stockholders
$
11,909

 
$
20,376

 
$
29,582

 
$
9,244

 
$
16,148

 
$
(18,607
)
 
$
68,652



13

NEW RESIDENTIAL INVESTMENT CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2016
(dollars in tables in thousands, except share data) 
 

 
Servicing Related Assets
 
Residential Securities and Loans
 
 
 
 
 
 
 
Excess MSRs
 
Servicer Advances
 
Real Estate Securities
 
Real Estate Loans
 
Consumer Loans
 
Corporate
 
Total
Six Months Ended June 30, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income
$
76,231

 
$
163,760

 
$
114,127

 
$
33,765

 
$
78,310

 
$
1,320

 
$
467,513

Interest expense
8,115

 
121,870

 
18,417

 
14,294

 
19,217

 

 
181,913

Net interest income (expense)
68,116

 
41,890

 
95,710

 
19,471

 
59,093

 
1,320

 
285,600

Impairment

 

 
6,073

 
7,600

 
15,970

 

 
29,643

Other income
(4,182
)
 
(12,327
)
 
(60,864
)
 
8,364

 
81,193

 
15

 
12,199

Operating expenses
530

 
2,047

 
938

 
6,943

 
14,218

 
36,620

 
61,296

Income (Loss) Before Income Taxes
63,404

 
27,516

 
27,835

 
13,292

 
110,098

 
(35,285
)
 
206,860

Income tax expense (benefit)

 
(2,605
)
 

 
(179
)
 
75

 
4

 
(2,705
)
Net Income (Loss)
$
63,404

 
$
30,121

 
$
27,835

 
$
13,471

 
$
110,023

 
$
(35,289
)
 
$
209,565

Noncontrolling interests in income (loss) of consolidated subsidiaries
$

 
$
14,547

 
$

 
$

 
$
14,630

 
$

 
$
29,177

Net income (loss) attributable to common stockholders
$
63,404

 
$
15,574

 
$
27,835

 
$
13,471

 
$
95,393

 
$
(35,289
)
 
$
180,388


 
Servicing Related Assets
 
Residential Securities and Loans
 
 
 
 
 
 
 
Excess MSRs
 
Servicer Advances
 
Real Estate Securities
 
Real Estate Loans
 
Consumer Loans
 
Corporate
 
Total
June 30, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
Investments
$
1,674,563

 
$
6,919,791

 
$
4,148,140

 
$
885,911

 
$
1,830,436

 
$

 
$
15,458,841

Cash and cash equivalents
4,037

 
111,041

 
8,659

 
24,765

 
20,281

 
65,062

 
233,845

Restricted cash
6,830

 
95,984

 

 

 
65,229

 

 
168,043

Other assets
2,418

 
202,268

 
1,627,328

 
141,177

 
35,682

 
35,546

 
2,044,419

Total assets
$
1,687,848

 
$
7,329,084

 
$
5,784,127

 
$
1,051,853

 
$
1,951,628

 
$
100,608

 
$
17,905,148

Debt
$
323,645

 
$
6,790,257

 
$
3,310,512

 
$
772,550

 
$
1,723,770

 
$

 
$
12,920,734

Other liabilities
1,784

 
33,069

 
1,673,603

 
22,126

 
15,996

 
124,575

 
1,871,153

Total liabilities
325,429

 
6,823,326

 
4,984,115

 
794,676

 
1,739,766

 
124,575

 
14,791,887

Total equity
1,362,419

 
505,758

 
800,012

 
257,177

 
211,862

 
(23,967
)
 
3,113,261

Noncontrolling interests in equity of consolidated subsidiaries

 
187,719

 

 

 
114,102

 

 
301,821

Total New Residential stockholders’ equity
$
1,362,419

 
$
318,039

 
$
800,012

 
$
257,177

 
$
97,760

 
$
(23,967
)
 
$
2,811,440

Investments in equity method investees
$
199,145

 
$

 
$

 
$

 
$

 
$

 
$
199,145

 

14

NEW RESIDENTIAL INVESTMENT CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2016
(dollars in tables in thousands, except share data) 
 


Servicing Related Assets

Residential Securities and Loans







Excess MSRs

Servicer Advances

Real Estate Securities

Real Estate Loans

Consumer Loans

Corporate

Total
Three Months Ended June 30, 2015













Interest income
$
34,359


$
108,588


$
23,454


$
10,795


$


$
981


$
178,177

Interest expense
9,172


63,450


3,540


5,185


524




81,871

Net interest income (expense)
25,187


45,138


19,914


5,610


(524
)

981


96,306

Impairment




650


4,771






5,421

Other income
4,298


24,115


(4,211
)

7,817


8,510


(2,879
)

37,650

Operating expenses
260


1,688


105


5,610


54


27,235


34,952

Income (Loss) Before Income Taxes
29,225

 
67,565

 
14,948

 
3,046

 
7,932

 
(29,133
)

93,583

Income tax expense (benefit)

 
15,657

 

 
(1,351
)
 

 


14,306

Net Income (Loss)
$
29,225

 
$
51,908

 
$
14,948

 
$
4,397

 
$
7,932

 
$
(29,133
)

$
79,277

Noncontrolling interests in income (loss) of consolidated subsidiaries
$

 
$
9,279

 
$

 
$

 
$

 
$
(5,121
)

$
4,158

Net income (loss) attributable to common stockholders
$
29,225

 
$
42,629

 
$
14,948

 
$
4,397

 
$
7,932

 
$
(24,012
)

$
75,119


 
Servicing Related Assets
 
Residential Securities and Loans
 
 
 
 
 
 
 
Excess MSRs
 
Servicer Advances
 
Real Estate Securities
 
Real Estate Loans
 
Consumer Loans
 
Corporate
 
Total
Six Months Ended June 30, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income
$
49,397

 
$
150,937

 
$
37,715

 
$
23,520

 
$

 
$
981

 
$
262,550

Interest expense
9,941

 
87,086

 
7,021

 
11,278

 
524

 

 
115,850

Net interest income (expense)
39,456

 
63,851

 
30,694

 
12,242

 
(524
)
 
981

 
146,700

Impairment

 

 
1,720

 
5,749

 

 

 
7,469

Other income
8,188

 
13,389

 
(9,302
)
 
21,592

 
18,957

 
(2,879
)
 
49,945

Operating expenses
349

 
2,263

 
3

 
11,712

 
111

 
42,784

 
57,222

Income (Loss) Before Income Taxes
47,295

 
74,977

 
19,669

 
16,373

 
18,322

 
(44,682
)
 
131,954

Income tax expense (benefit)

 
12,417

 

 
(1,538
)
 

 

 
10,879

Net Income (Loss)
$
47,295

 
$
62,560

 
$
19,669

 
$
17,911

 
$
18,322

 
$
(44,682
)
 
$
121,075

Noncontrolling interests in income (loss) of consolidated subsidiaries
$

 
$
15,102

 
$

 
$

 
$

 
$
(5,121
)
 
$
9,981

Net income (loss) attributable to common stockholders
$
47,295

 
$
47,458

 
$
19,669

 
$
17,911

 
$
18,322

 
$
(39,561
)
 
$
111,094




15

NEW RESIDENTIAL INVESTMENT CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 2016