Redwood Trust(RWT) - 2024 Q3 - Quarterly Report

Financial Performance - Total interest income for the three months ended September 30, 2024, was $248,643,000, an increase of 40.4% compared to $177,074,000 for the same period in 2023[8]. - Net income for the three months ended September 30, 2024, was $14,826,000, compared to a net loss of $30,810,000 for the same period in 2023[10]. - Basic earnings per common share for the nine months ended September 30, 2024, was $0.40, compared to a loss of $0.27 for the same period in 2023[8]. - Other comprehensive income for the three months ended September 30, 2024, was $7,941,000, compared to a loss of $(2,647,000) for the same period in 2023[10]. - Net income for the nine months ended September 30, 2024, was $60,622,000, compared to a net loss of $23,317,000 for the same period in 2023[16]. - Total non-interest income for Q3 2024 was $44,224,000, significantly improving from a loss of $9,594,000 in Q3 2023[8]. - Comprehensive income for Q3 2024 was $22,767,000, compared to a comprehensive loss of $33,457,000 in Q3 2023[10]. Assets and Liabilities - Total liabilities and equity as of September 30, 2024, amounted to $18,427,426,000, up from $14,504,327,000 as of December 31, 2023[5]. - Total assets of consolidated variable interest entities (VIEs) were $14,312,672,000 as of September 30, 2024, compared to $10,988,885,000 as of December 31, 2023[5]. - Total assets as of September 30, 2024, amounted to $18,427,426,000, showcasing the company's strong asset base[32]. - Total liabilities as of September 30, 2024, were $12,652,870,000, up from $9,244,843,000 at the end of 2023, indicating a growth in leverage[39]. - The company reported total liabilities of $12,648,727,000 as of September 30, 2024, compared to $10,096,308,000 at the end of 2023[126]. Shareholder Returns - Cumulative distributions to stockholders reached $(2,507,684,000) as of September 30, 2024, compared to $(2,439,873,000) at the end of 2023[5]. - Common dividends declared for the nine months ended September 30, 2024, totaled $67,811,000, compared to $66,447,000 for the same period in 2023[13][15]. - The company declared common dividends of $0.17 per share for Q3 2024, totaling $23,565,000[12]. Mortgage Banking Activities - The company’s mortgage banking activities generated net income of $39,569,000 for the three months ended September 30, 2024, compared to $19,440,000 for the same period in 2023[8]. - Mortgage banking activities generated net income of $73,049,000 for the nine months ended September 30, 2024, compared to $52,663,000 for the same period in 2023, reflecting a year-over-year increase of 38.7%[36]. - The Residential Consumer Mortgage Banking segment contributed $22,755,000 to net income, while the Residential Investor Mortgage Banking segment contributed $5,683,000[30]. Cash Flow and Financing - Cash flows used in operating activities totaled $(5,008,540,000) for the nine months ended September 30, 2024, compared to $(867,461,000) in 2023, indicating a significant increase in cash outflow[16]. - Net cash provided by financing activities was $3,428,316,000 for the nine months ended September 30, 2024, compared to $158,586,000 in 2023, indicating a strong financing position[16]. - Proceeds from borrowings on debt obligations reached $7,207,997,000 in 2024, significantly higher than $2,398,412,000 in 2023[16]. Segment Reporting - The company operates in three segments: Residential Consumer Mortgage Banking, Residential Investor Mortgage Banking, and Investment Portfolio[29]. - The company expects to adopt new accounting guidance related to segment reporting and income tax disclosures by the required dates[28]. Investment and Fair Value - The fair value of residential consumer loans was reported at $11,157,159,000 as of September 30, 2024, while residential investor loans were valued at $4,746,174,000[39]. - The fair value of derivative assets was reported at $78,933,000, with total derivative liabilities at $7,977,000 as of September 30, 2024[39]. - The company recorded investment fair value changes of $(2,837,000) for the three months ended September 30, 2024, compared to $(14,430,000) for the same period in 2023[68]. General and Administrative Expenses - The company incurred general and administrative expenses totaling $36,008,000 for the three months ended September 30, 2024[30]. - Total General and Administrative Expenses for Q3 2024 were $36,008,000, an increase of 21.1% from $29,697,000 in Q3 2023[155]. Tax and Valuation - The effective income tax rate for Q3 2024 was 17.2%, compared to (2.8)% in Q3 2023, indicating a significant change in tax position[157]. - As of September 30, 2024, the company has a valuation allowance of $117 million for certain state deferred tax assets, indicating potential realizability issues[157].