001-35777
|
45-3449660
|
|
(Commission File Number)
|
(IRS Employer Identification No.)
|
1345 Avenue of the Americas, 45th Floor
New York, New York
|
10105
|
|
(Address of principal executive offices)
|
(Zip Code)
|
☐ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
☐ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
☐ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
☐ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
Title of each class:
|
Trading Symbol:
|
Name of each exchange on which registered:
|
Common Stock, $0.01 par value per share
|
NRZ
|
New York Stock Exchange
|
7.50% Series A Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock
|
NRZ PR A
|
New York Stock Exchange
|
Item 2.02. |
Results of Operations and Financial Condition.
|
Item 9.01 |
Financial Statements and Exhibits.
|
(d) |
Exhibits
|
Exhibit
Number
|
Description
|
|
Press release, dated July 30, 2019, issued by New Residential Investment Corp.
|
NEW RESIDENTIAL INVESTMENT CORP.
|
|
(Registrant)
|
|
/s/ Nicola Santoro, Jr.
|
|
Nicola Santoro, Jr.
|
|
Chief Financial Officer
|
|
Date: July 30, 2019
|
NEW RESIDENTIAL ANNOUNCES SECOND QUARTER 2019 RESULTS
|
• |
GAAP Net Loss of $31.9 million, or ($0.08) per diluted share(1)
|
• |
Core Earnings of $219.8 million, or $0.53 per diluted share(1)(2)
|
• |
Common Dividend of $207.8 million, or $0.50 per share(1)
|
• |
Book Value per share of $16.17(1)
|
2Q 2019 | 1Q 2019 | |||||||
Summary Operating Results:
|
||||||||
GAAP Net (Loss) Income per Diluted Share(1)
|
$
|
(0.08
|
)
|
$
|
0.37
|
|||
GAAP Net (Loss) Income
|
|
($31.9) million
|
|
$145.6 million
|
||||
|
||||||||
Non-GAAP Results:
|
||||||||
Core Earnings per Diluted Share(1)(2)
|
$
|
0.53
|
$
|
0.53
|
||||
Core Earnings(2)
|
|
$219.8 million
|
|
$204.3 million
|
||||
|
||||||||
NRZ Common Dividend:
|
||||||||
Common Dividend per Share(1)
|
$
|
0.50
|
$
|
0.50
|
||||
Common Dividend
|
|
$207.8 million
|
|
$207.7 million
|
(1) |
Per share calculations of GAAP Net (Loss) Income and Core Earnings are based on 415,665,460 weighted average diluted shares during the quarter ended June 30, 2019 and 388,601,075 weighted average diluted
shares during the quarter ended March 31, 2019. Per share calculations of Common Dividend are based on 415,520,780 basic shares outstanding as of June 30, 2019 and 415,429,677 basic shares outstanding as of March 31, 2019. Per share
calculations for Book Value are based on 415,520,780 basic shares outstanding as of June 30, 2019.
|
(2) |
Core Earnings is a non-GAAP measure. For a reconciliation of Core Earnings to GAAP Net (Loss) Income, as well as an explanation of this measure, please refer to Non-GAAP Measures and Reconciliation to GAAP
Net (Loss) Income below.
|
⬥ |
Mortgage Servicing Rights (“MSRs”)
|
◾ |
Acquired MSRs totaling approximately $53 billion unpaid principal balance (“UPB”).
|
⬥ |
Non-Agency Securities and Call Rights
|
◾ |
New Residential controls call rights to approximately $106 billion of mortgage collateral, representing approximately 34% of the Non-Agency market.(3)(4) Approximately $42 billion of our call
rights population is currently callable.(3)
|
◾ |
During the second quarter, we executed clean-up calls on 40 seasoned, Non-Agency residential mortgage-backed securities (“RMBS”) deals with an aggregate UPB of approximately $1.1 billion.
|
◾ |
Purchased $723 million face value of Non-Agency RMBS.
|
◾ |
Completed one securitization of loans through exercise of call rights with approximately $596 million of UPB.
|
⬥ |
Residential Loans
|
◾ |
Acquired $1.6 billion UPB of RPLs.
|
◾ |
Completed one non-qualifying mortgage (Non-QM) loan securitization for UPB of approximately $305 million.
|
⬥ |
Servicer Advances
|
◾ |
Servicer advance balances were essentially flat in Q2’19, at $3.3 billion.
|
⬥ |
Additional Highlights
|
◾ |
Raised $155 million in gross proceeds of preferred equity that settled subsequent to June 30, 2019.
|
◾ |
Announced strategic investment in Covius Holdings, a leading provider of technology-enabled services to the financial services industry.(5)
|
◾ |
Announced the execution of an asset purchase agreement with Ditech Holding Corp. and Ditech Financial LLC (collectively “Ditech”) relating to substantially all of the forward assets of Ditech.(6)
|
(3) |
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, 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. Call rights are usually exercisable when current loan balances in a related portfolio are equal to, or lower than, 10% of their original balance.
|
(4) |
All data as of June 30, 2019, unless otherwise stated.
|
(5) |
Announced May 2019 and closed July 2019.
|
(6) |
The potential transaction with Ditech is subject to several closing conditions including, among other things, (a) the entry of a confirmation order by the United States Bankruptcy Court for the Southern
District of New York that is acceptable to New Residential, (b) receipt of approvals from certain governmental and quasi-governmental agencies, (c) resolution of various objections currently pending before the United States Bankruptcy
Court for the Southern District of New York and (d) certain other customary closing conditions. The sale of certain assets contemplated as part of this potential transaction are also subject to receipt of third party consents. There can
be no assurance that this potential transaction will be consummated in the near term, on the timeline presented in other statements made by New Residential, or at all.
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
2019
|
2018
|
2019
|
2018
|
|||||||||||||
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
|||||||||||||
Interest income
|
$
|
416,047
|
$
|
403,805
|
$
|
854,914
|
$
|
787,378
|
||||||||
Interest expense
|
228,004
|
133,916
|
440,836
|
258,303
|
||||||||||||
Net Interest Income
|
188,043
|
269,889
|
414,078
|
529,075
|
||||||||||||
Impairment
|
||||||||||||||||
Other-than-temporary impairment (OTTI) on securities
|
8,859
|
12,631
|
16,375
|
19,301
|
||||||||||||
Valuation and loss provision (reversal) on loans and real estate owned (REO)
|
13,452
|
3,658
|
18,732
|
22,665
|
||||||||||||
22,311
|
16,289
|
35,107
|
41,966
|
|||||||||||||
Net interest income after impairment
|
165,732
|
253,600
|
378,971
|
487,109
|
||||||||||||
Servicing revenue, net of change in fair value of $(334,599), $(12,807), $(391,509), and $61,859, respectively
|
(85,537
|
)
|
146,193
|
80,316
|
363,429
|
|||||||||||
Gain on sale of originated mortgage loans, net
|
49,504
|
-
|
93,488
|
-
|
||||||||||||
Other Income
|
||||||||||||||||
Change in fair value of investments in excess mortgage servicing rights
|
(8,455
|
)
|
(5,276
|
)
|
(3,828
|
)
|
(50,967
|
)
|
||||||||
Change in fair value of investments in excess mortgage servicing rights, equity method investees
|
(3,276
|
)
|
1,705
|
(664
|
)
|
2,228
|
||||||||||
Change in fair value of investments in mortgage servicing rights financing receivables
|
(55,411
|
)
|
(119,103
|
)
|
(91,790
|
)
|
151,973
|
|||||||||
Change in fair value of servicer advance investments
|
1,388
|
(1,752
|
)
|
9,291
|
(81,228
|
)
|
||||||||||
Change in fair value of investments in residential mortgage loans
|
95,025
|
-
|
109,588
|
-
|
||||||||||||
Change in fair value of derivative instruments
|
(36,729
|
)
|
1,240
|
(60,496
|
)
|
3,686
|
||||||||||
Gain (loss) on settlement of investments, net
|
29,584
|
14,655
|
2,261
|
117,957
|
||||||||||||
Earnings from investments in consumer loans, equity method investees
|
(2,654
|
)
|
2,982
|
1,657
|
7,788
|
|||||||||||
Other income (loss), net
|
6,095
|
8,737
|
18,768
|
16,275
|
||||||||||||
25,567
|
(96,812
|
)
|
(15,213
|
)
|
167,712
|
|||||||||||
Operating Expenses
|
||||||||||||||||
General and administrative expenses
|
118,906
|
20,575
|
217,846
|
40,582
|
||||||||||||
Management fee to affiliate
|
19,623
|
15,453
|
37,583
|
30,563
|
||||||||||||
Incentive compensation to affiliate
|
—
|
26,732
|
12,958
|
41,321
|
||||||||||||
Loan servicing expense
|
9,372
|
11,035
|
18,975
|
22,549
|
||||||||||||
Subservicing expense
|
53,962
|
45,958
|
94,888
|
92,555
|
||||||||||||
201,863
|
119,753
|
382,250
|
227,570
|
|||||||||||||
(Loss) Income Before Income Taxes
|
(46,597
|
)
|
183,228
|
155,312
|
790,680
|
|||||||||||
Income tax expense (benefit)
|
(21,577
|
)
|
(2,608
|
)
|
24,420
|
(9,520
|
)
|
|||||||||
Net (Loss) Income
|
$
|
(25,020
|
)
|
$
|
185,836
|
$
|
130,892
|
$
|
800,200
|
|||||||
Noncontrolling Interests in Income of Consolidated Subsidiaries
|
$
|
6,923
|
$
|
11,078
|
$
|
17,241
|
$
|
21,189
|
||||||||
Net (Loss) Income Attributable to Common Stockholders
|
$
|
(31,943
|
)
|
$
|
174,758
|
$
|
113,651
|
$
|
779,011
|
|||||||
Net (Loss) Income Per Share of Common Stock
|
||||||||||||||||
Basic
|
$
|
(0.08
|
)
|
$
|
0.52
|
$
|
0.28
|
$
|
2.34
|
|||||||
Diluted
|
$
|
(0.08
|
)
|
$
|
0.51
|
$
|
0.28
|
$
|
2.32
|
|||||||
Weighted Average Number of Shares of Common Stock Outstanding
|
||||||||||||||||
Basic
|
415,463,757
|
336,311,253
|
401,946,938
|
333,364,426
|
||||||||||||
Diluted
|
415,665,460
|
339,538,503
|
402,239,438
|
336,476,481
|
||||||||||||
Dividends Declared per Share of Common Stock
|
$
|
0.50
|
$
|
0.50
|
$
|
1.00
|
$
|
1.00
|
June 30, 2019
|
December 31, 2018
|
|||||||
Assets
|
(unaudited)
|
|||||||
Investments in:
|
||||||||
Excess mortgage servicing rights, at fair value
|
$
|
411,537
|
$
|
447,860
|
||||
Excess mortgage servicing rights, equity method investees, at fair value
|
133,468
|
147,964
|
||||||
Mortgage servicing rights, at fair value
|
2,976,008
|
2,884,100
|
||||||
Mortgage servicing rights financing receivables, at fair value
|
1,941,139
|
1,644,504
|
||||||
Servicer advance investments, at fair value
|
637,914
|
735,846
|
||||||
Real estate and other securities, available-for-sale
|
12,125,826
|
11,636,581
|
||||||
Residential mortgage loans, held-for-investment (includes $117,155 and $121,088 at fair value
at June 30, 2019 and December 31, 2018, respectively)
|
641,389
|
735,329
|
||||||
Residential mortgage loans, held-for-sale
|
1,154,256
|
932,480
|
||||||
Residential mortgage loans, held-for-sale, at fair value
|
5,588,540
|
2,808,529
|
||||||
Real estate owned
|
91,038
|
113,410
|
||||||
Residential mortgage loans subject to repurchase
|
141,581
|
121,602
|
||||||
Consumer loans, held-for-investment
|
938,956
|
1,072,202
|
||||||
Consumer loans, equity method investees
|
25,486
|
38,294
|
||||||
Cash and cash equivalents
|
406,038
|
251,058
|
||||||
Restricted cash
|
159,151
|
164,020
|
||||||
Servicer advances receivable
|
3,047,201
|
3,277,796
|
||||||
Trades receivable
|
5,307,642
|
3,925,198
|
||||||
Deferred tax assets, net
|
39,333
|
65,832
|
||||||
Other assets
|
1,025,872
|
688,408
|
||||||
$
|
36,792,375
|
$
|
31,691,013
|
|||||
Liabilities and Equity
|
||||||||
Liabilities
|
||||||||
Repurchase agreements
|
$
|
21,480,245
|
$
|
15,553,969
|
||||
Notes and bonds payable (includes $113,880 and $117,048 at fair value at June 30, 2019 and
December 31, 2018, respectively)
|
7,297,765
|
7,102,266
|
||||||
Trades payable
|
265,125
|
2,048,348
|
||||||
Residential mortgage loans repurchase liability
|
141,581
|
121,602
|
||||||
Due to affiliates
|
27,777
|
101,471
|
||||||
Dividends payable
|
207,760
|
184,552
|
||||||
Accrued expenses and other liabilities
|
571,292
|
490,510
|
||||||
29,991,545
|
25,602,718
|
|||||||
Commitments and Contingencies
|
||||||||
Equity
|
||||||||
Common Stock, $0.01 par value, 2,000,000,000 shares authorized, 415,520,780 and 369,104,429
issued and outstanding at June 30, 2019 and December 31, 2018, respectively
|
4,156
|
3,692
|
||||||
Additional paid-in capital
|
5,498,226
|
4,746,242
|
||||||
Retained earnings
|
528,889
|
830,713
|
||||||
Accumulated other comprehensive income (loss)
|
686,694
|
417,023
|
||||||
Total New Residential stockholders’ equity
|
6,717,965
|
5,997,670
|
||||||
Noncontrolling interests in equity of consolidated subsidiaries
|
82,865
|
90,625
|
||||||
Total Equity
|
6,800,830
|
6,088,295
|
||||||
$
|
36,792,375
|
$
|
31,691,013
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
2019
|
2018
|
2019
|
2018
|
|||||||||||||
Net (loss) income attributable to common stockholders
|
$
|
(31,943
|
)
|
$
|
174,758
|
$
|
113,651
|
$
|
779,011
|
|||||||
Impairment
|
22,311
|
16,289
|
35,107
|
41,966
|
||||||||||||
Other Income adjustments:
|
||||||||||||||||
Other Income
|
||||||||||||||||
Change in fair value of investments in excess mortgage servicing rights
|
8,455
|
5,276
|
3,828
|
50,967
|
||||||||||||
Change in fair value of investments in excess mortgage servicing rights, equity method
investees
|
3,276
|
(1,705
|
)
|
664
|
(2,228
|
)
|
||||||||||
Change in fair value of investments in mortgage servicing rights financing receivables
|
15,210
|
62,263
|
8,713
|
(257,516
|
)
|
|||||||||||
Change in fair value of servicer advance investments
|
(1,388
|
)
|
1,752
|
(9,291
|
)
|
81,228
|
||||||||||
Change in fair value of investments in residential mortgage loans
|
(95,025
|
)
|
—
|
(109,588
|
)
|
—
|
||||||||||
(Gain) loss on settlement of investments, net
|
(29,584
|
)
|
(14,655
|
)
|
(2,261
|
)
|
(117,957
|
)
|
||||||||
Unrealized (gain) loss on derivative instruments
|
36,729
|
(1,240
|
)
|
60,496
|
(3,686
|
)
|
||||||||||
Unrealized (gain) loss on other ABS
|
(7,385
|
)
|
(5,117
|
)
|
(14,064
|
)
|
(4,804
|
)
|
||||||||
(Gain) loss on transfer of loans to REO
|
(1,600
|
)
|
(6,320
|
)
|
(6,584
|
)
|
(10,490
|
)
|
||||||||
(Gain) loss on transfer of loans to other assets
|
(244
|
)
|
175
|
277
|
120
|
|||||||||||
(Gain) loss on Excess MSR recapture agreements
|
(935
|
)
|
(1,365
|
)
|
(1,242
|
)
|
(4,270
|
)
|
||||||||
(Gain) loss on Ocwen common stock
|
(1,451
|
)
|
972
|
(4,237
|
)
|
(4,800
|
)
|
|||||||||
Other (income) loss
|
5,520
|
2,918
|
7,082
|
7,969
|
||||||||||||
Total Other Income Adjustments
|
(68,422
|
)
|
42,954
|
(66,207
|
)
|
(265,467
|
)
|
|||||||||
Other Income and Impairment attributable to non-controlling interests
|
(5,626
|
)
|
(5,869
|
)
|
(8,058
|
)
|
(12,455
|
)
|
||||||||
Change in fair value of investments in mortgage servicing rights
|
229,278
|
(52,632
|
)
|
213,513
|
(182,425
|
)
|
||||||||||
Non-capitalized transaction-related expenses
|
9,284
|
6,373
|
16,150
|
13,510
|
||||||||||||
(Gain) loss on securitization of originated mortgage loans
|
24,944
|
—
|
40,788
|
—
|
||||||||||||
Incentive compensation to affiliate
|
—
|
26,732
|
12,958
|
41,321
|
||||||||||||
(Gain) loss on settlement of mortgage loan origination derivative instruments
|
29,741
|
—
|
29,741
|
—
|
||||||||||||
Deferred taxes
|
(21,599
|
)
|
(1,759
|
)
|
24,732
|
(10,815
|
)
|
|||||||||
Interest income on residential mortgage loans, held-for sale
|
23,888
|
2,562
|
26,189
|
6,868
|
||||||||||||
Limit on RMBS discount accretion related to called deals
|
—
|
(5,920
|
)
|
(19,556
|
)
|
(10,194
|
)
|
|||||||||
Adjust consumer loans to level yield
|
7,815
|
(9,213
|
)
|
2,962
|
(15,155
|
)
|
||||||||||
Core earnings of equity method investees:
|
||||||||||||||||
Excess mortgage servicing rights
|
87
|
3,432
|
2,115
|
6,046
|
||||||||||||
Core Earnings
|
$
|
219,758
|
$
|
197,707
|
$
|
424,085
|
$
|
392,211
|
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