XML 24 R12.htm IDEA: XBRL DOCUMENT v3.24.2.u1
RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS
 3 Months Ended
Mar. 31, 2024
Accounting Changes and Error Corrections [Abstract]  
RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS
On July 22, 2024, the Audit Committee of the Company’s Board of Directors (the “Audit Committee”) concluded that the previously issued unaudited consolidated financial statements and notes thereto as of and for the three months ended March 31, 2024 (the “Affected Financial Statements”) need to be restated and should no longer be relied on. Amounts depicted as “As Restated” throughout the accompanying consolidated financial statements and notes thereto include the impact of the restatement.

The Company has restated its unaudited consolidated financial statements as of and for the quarterly period ended March 31, 2024 in the following tables (prior period financial information that is referenced in the following tables was restated in the Amended 2023 10-K/A).

The impact of the restatement on the Affected Financial Statements are presented within the tables below and relate to one of the following categories:

(a) an error in accounting treatment of certain private label mortgage securitization trusts (“Trusts”), classified as VIEs, that management concluded should be consolidated subject to ASC 810 - Consolidation, and its various interpretations. The conclusion is based on the determination that the Company should be treated as the primary beneficiary of these VIEs, a determination that involves complex and subjective analyses. As a result, the Company determined it necessary to consolidate the Trusts. To correct the error, adjustments were made to eliminate the Company’s retained interest in the Trusts from Real estate and other securities and to reflect the assets of the Trusts as Investments, at fair value and other assets of consolidated entities presented within Assets of consolidated CFEs and the liabilities of the Trusts as Notes payable, at fair value and other liabilities of consolidated entities presented within Liabilities of consolidated CFEs within the Consolidated Balance Sheets. The Company eliminated interest income on previously recognized retained interest, servicing fees related to the assets of the Trusts and any gain/loss on sale of the assets to the Trusts. The change in fair value of the consolidated assets and liabilities and the related interest are recognized in Realized and unrealized gains (losses), net on the Consolidated Statements of Operations. The related adjustments are reflected within the “Error Adjustments” column within the tables below. See Note 2 to the Company’s Consolidated Financial Statements contained in the Company’s Amended 2023 Form 10-K/A for policies of certain consolidated entities and Note 21 for further details on VIEs. These adjustments did not have any impact on the Company’s net income, equity or unrestricted cash position. In addition, there was no effect on retained earnings or other components of stockholders’ equity as of the beginning of the earliest period presented.

(b) an immaterial previously unrecorded adjustment related to incorrect netting of treasury securities payable and related financing. This adjustment requires a gross up of reverse repurchase agreement assets and treasury securities payable in the amount of $3.0 billion, a decrease of Other assets by $42.9 million for the difference in carrying value of reverse repurchase agreements and treasury securities payable, and an increase of Accrued expenses and other liabilities in the amount of $5.5 million for accrued interest payable on treasury securities payable as of December 31, 2023 within the Consolidated Balance Sheets. In addition, the Company corrected a second immaterial previously unrecorded adjustment to correct the classification of restricted cash in the amount of $10.9 million which impacted the Consolidated Balance Sheet as of March 31, 2024 and the Consolidated Statement of Cash Flows for the three months ended March 31, 2024. The related adjustments are reflected within the “Error Adjustments” column within the tables below. This adjustment did not have any impact on the Company’s net income, equity or unrestricted cash position.

(c) reclassifications of certain prior period amounts related to consolidated loan securitizations - mortgage loans receivable and consolidated funds to conform to the presentation of consolidated CFEs as described in (a) above. Reclassifications have no impact on the Company’s net income, equity or unrestricted cash position and are only included in order to conform the presentation across the periods presented.

Accordingly, the tables below present the effect of these adjustments, including the reclassifications, on the affected line items in the Company’s Consolidated Balance Sheets, Consolidated Statements of Operations and Consolidated Statements of Cash Flows as reported in the Company’s Quarterly Report on Form 10-Q as of and for the three months ended March 31, 2024.
Consolidated Balance Sheet:
March 31, 2024
As Reported
(Unaudited)		Error Adjustments*SubtotalReclassifications (c)*As Restated
(Unaudited)
Assets
Mortgage servicing rights and mortgage servicing rights financing receivables, at fair value$8,706,723 $— $8,706,723 $— $8,706,723 
Real estate and other securities (includes $14,832,401 at fair value)
15,314,199 (456,913)(a)14,857,286 — 14,857,286 
Residential mortgage loans, held-for-investment, at fair value365,398 — 365,398 — 365,398 
Residential mortgage loans, held-for-sale (includes $3,691,700 at fair value)(A)
3,766,115 — 3,766,115 — 3,766,115 
Consumer loans, held-for-investment, at fair value(A)
1,103,799 — 1,103,799 — 1,103,799 
Single-family rental properties1,007,172 — 1,007,172 — 1,007,172 
Mortgage loans receivable, at fair value2,384,744 — 2,384,744 (341,831)2,042,913 
Residential mortgage loans subject to repurchase1,845,889 — 1,845,889 — 1,845,889 
Cash and cash equivalents(A)
1,136,437 — 1,136,437 — 1,136,437 
Restricted cash(A)
394,546 10,856 (b)405,402 (22,463)382,939 
Servicer advances receivable2,586,409 — 2,586,409 — 2,586,409 
Reverse repurchase agreement— 3,040,756 (b)3,040,756 — 3,040,756 
Other assets (includes $1,124,961 at fair value)(A)
3,509,497 (53,737)(b)3,455,760 (344,074)3,111,686 
Assets of consolidated CFEs(A):
Investments, at fair value and other assets— 3,273,691 (a)3,273,691 708,368 3,982,059 
Total Assets$42,120,928 $5,814,653 $47,935,581 $— $47,935,581 
Liabilities and Equity
Liabilities
Secured financing agreements(A)
$18,271,046 $— $18,271,046 $— $18,271,046 
Secured notes and bonds payable (includes $221,922 at fair value)(A)
10,045,375 — 10,045,375 (324,062)9,721,313 
Residential mortgage loan repurchase liability1,845,889 — 1,845,889 — 1,845,889 
Unsecured notes, net of issuance costs1,205,411 — 1,205,411 — 1,205,411 
Treasury securities payable— 2,992,477 (b)2,992,477 — 2,992,477 
Payable for investments purchased1,271,542 — 1,271,542 — 1,271,542 
Dividends payable135,695 — 135,695 — 135,695 
Accrued expenses and other liabilities (includes $33,586 at fair value)(A)
2,102,598 5,488 (b)2,108,086 (223,559)1,884,527 
Liabilities of consolidated CFEs(A):
— 
Notes payable, at fair value and other liabilities— 2,816,688 (a)2,816,688 547,621 3,364,309 
Total Liabilities34,877,556 5,814,653 40,692,209 — 40,692,209 
Equity
Preferred stock, $0.01 par value, 100,000,000 shares authorized, 51,964,122 issued and outstanding, $1,299,104 aggregate liquidation preference
1,257,254 — 1,257,254 — 1,257,254 
Common stock, $0.01 par value, 2,000,000,000 shares authorized, 483,477,713 issued and outstanding
4,836 — 4,836 — 4,836 
Additional paid-in capital6,075,080 — 6,075,080 — 6,075,080 
Retained earnings (accumulated deficit)(232,119)— (232,119)— (232,119)
Accumulated other comprehensive income44,501 — 44,501 — 44,501 
Total Rithm Capital stockholders’ equity7,149,552 — 7,149,552 — 7,149,552 
Noncontrolling interests in equity of consolidated subsidiaries93,820 — 93,820 — 93,820 
Total Equity7,243,372 — 7,243,372 — 7,243,372 
Total Liabilities and Equity$42,120,928 $5,814,653 $47,935,581 $— $47,935,581 
(A)The Company's Consolidated Balance Sheets include assets and liabilities of consolidated VIEs and certain other consolidated VIEs classified as CFEs that are presented separately and measured under the CFE election. VIE assets can only be used to settle obligations and liabilities of the VIEs. VIE creditors do not have recourse to Rithm Capital Corp. As of March 31, 2024, total assets of such consolidated VIEs were $5.8 billion, and total liabilities of such consolidated VIEs were $4.9 billion. See Note 21 for further details.
* See the beginning of this Note 3, for explanations of the adjustments and reclassifications by type referenced in the above table as (a), (b), and (c).
Consolidated Statement of Operations:
Three Months Ended March 31, 2024
As Reported
(Unaudited)		Error Adjustments*SubtotalReclassifications (c)*As Restated
(Unaudited)
Revenues
Origination and Servicing, Investment Portfolio, Mortgage Loans Receivable and Corporate
Servicing fee revenue, net and interest income from MSRs and MSR financing receivables$470,203 $(312)(a)$469,891 $— $469,891 
Change in fair value of MSRs and MSR financing receivables (includes realization of cash flows of $(116,839))
84,175 — 84,175 — 84,175 
Servicing revenue, net554,378 (312)554,066 — 554,066 
Interest income448,179 (9,348)(a)438,831 (8,945)429,886 
Gain on originated residential mortgage loans, held-for-sale, net
149,545 (7,087)(a)142,458 — 142,458 
Other revenues58,348 — 58,348 — 58,348 
1,210,450 (16,747)1,193,703 (8,945)1,184,758 
Asset Management
Asset management revenues75,860 — 75,860 — 75,860 
1,286,310 (16,747)1,269,563 (8,945)1,260,618 
Expenses
Interest expense and warehouse line fees414,365 — 414,365 (4,538)409,827 
General and administrative195,118 2,076 (a)197,194 — 197,194 
Compensation and benefits235,778 — 235,778 — 235,778 
845,261 2,076 847,337 (4,538)842,799 
Other Income (Loss)
Realized and unrealized gains (losses), net(68,134)18,881 (a)(49,253)4,407 (44,846)
Other income (loss), net7,984 (58)(a)7,926 — 7,926 
(60,150)18,823 (41,327)4,407 (36,920)
Income (loss) before income taxes380,899 — 380,899 — 380,899 
Income tax expense (benefit)93,412 — 93,412 — 93,412 
Net Income (loss)$287,487 $— $287,487 $— $287,487 
Noncontrolling interests in income (loss) of consolidated subsidiaries3,452 — 3,452 — 3,452 
Dividends on preferred stock22,395 — 22,395 — 22,395 
Net income (loss) attributable to common stockholders$261,640 $— $261,640 $— $261,640 
Net Income (loss) per share of common stock
  Basic$0.54 $— $0.54 $— $0.54 
  Diluted$0.54 $— $0.54 $— $0.54 
Weighted average number of shares of common stock outstanding
  Basic483,336,777 — 483,336,777 — 483,336,777 
  Diluted485,931,501 — 485,931,501 — 485,931,501 
Dividends declared per share of common stock$0.25 $— $0.25 $— $0.25 
* See the beginning of this Note 3, for explanations of the adjustments and reclassifications by type referenced in the above table as (a), (b), and (c).
Consolidated Statement of Cash Flows:
Three Months Ended March 31, 2024
As Reported
(Unaudited)		Error Adjustments*SubtotalReclassifications (c)*As Restated
(Unaudited)
Net income (loss)$287,487 $— $287,487 $— $287,487 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Change in fair value of investments, net341,744 (525)(a)341,219 — 341,219 
Change in fair value of equity investments(6,012)— (6,012)— (6,012)
Change in fair value of secured notes and bonds payable4,605 — 4,605 — 4,605 
(Gain) loss on settlement of investments, net(274,709)— (274,709)— (274,709)
(Gain) loss on sale of originated residential mortgage loans, held-for-sale, net(149,545)7,088 (a)(142,457)— (142,457)
(Gain) loss on transfer of loans to real estate owned ("REO")(2,166)— (2,166)— (2,166)
Accretion and other amortization(21,091)(133)(a)(21,224)— (21,224)
Provision (reversal) for credit losses on securities, loans and REO462 — 462 — 462 
Non-cash portions of servicing revenue, net(76,376)— (76,376)— (76,376)
Deferred tax provision90,628 — 90,628 — 90,628 
Mortgage loans originated and purchased for sale, net of fees(11,439,065)— (11,439,065)— (11,439,065)
Sales proceeds and loan repayment proceeds for residential mortgage loans, held-for-sale10,114,343 (257,597)(a)9,856,746 — 9,856,746 
Residential mortgage loan repayment proceeds of consolidated CFEs— 80,822 (a)80,822 — 80,822 
Interest received from servicer advance investments, loans and other13,488 — 13,488 — 13,488 
Purchase of investments of consolidated CFEs— — — (9,811)(9,811)
Proceeds from sale and repayments of investments of consolidated CFEs— — — 2,090 2,090 
Changes in:
Servicer advances receivable, net165,425 — 165,425 — 165,425 
Other assets29,916 — 29,916 7,721 37,637 
Accrued expenses and other liabilities(223,335)— (223,335)— (223,335)
Net cash provided by (used in) operating activities(1,144,201)(170,345)(1,314,546)— (1,314,546)
Cash Flows From Investing Activities
Purchase of US Treasuries(4,733,368)— (4,733,368)— (4,733,368)
Purchase of servicer advance investments(212,656)— (212,656)— (212,656)
Purchase of RMBS(16,928)15,037 (a)(1,891)(1,891)
US Treasury short sales1,425,370 — 1,425,370 — 1,425,370 
Reverse repurchase agreements entered(1,256,872)— (1,256,872)— (1,256,872)
Purchase of Single-family rental (“SFR”) properties, MSRs and other assets(63,877)— (63,877)— (63,877)
Draws on revolving consumer loans(4,113)— (4,113)— (4,113)
Origination of mortgage loans receivable(649,698)— (649,698)— (649,698)
Net settlement of derivatives371,827 — 371,827 — 371,827 
Return of investments in Excess MSRs10,423 — 10,423 — 10,423 
Principal repayments from servicer advance investments224,039 — 224,039 — 224,039 
Principal repayments from RMBS177,333 (12,009)(a)165,324 — 165,324 
Principal repayments from residential mortgage loans12,187 — 12,187 — 12,187 
Principal repayments from consumer loans153,479 — 153,479 — 153,479 
Principal repayments from mortgage loans receivable505,091 — 505,091 (81,822)423,269 
Three Months Ended March 31, 2024
As Reported
(Unaudited)		Error Adjustments*SubtotalReclassifications (c)*As Restated
(Unaudited)
Mortgage loans receivable repayment proceeds of consolidated entities— — — 81,822 81,822 
Proceeds from sale of MSRs and MSR financing receivables(671)— (671)— (671)
Proceeds from sale of REO5,216 — 5,216 — 5,216 
Net cash provided by (used in) investing activities(4,053,218)3,028 (4,050,190)— (4,050,190)
Cash Flows From Financing Activities
Repayments of secured financing agreements(18,055,590)— (18,055,590)— (18,055,590)
Repayments of warehouse credit facilities(10,778,294)— (10,778,294)— (10,778,294)
Repayment of unsecured senior notes(275,000)— (275,000)— (275,000)
Net settlement of margin deposits under repurchase agreements and derivatives(346,569)— (346,569)— (346,569)
Repayments of secured notes and bonds payable(1,405,197)— (1,405,197)— (1,405,197)
Deferred financing fees(8,298)— (8,298)— (8,298)
Dividends paid on common and preferred stock(143,298)— (143,298)— (143,298)
Borrowings under secured financing agreements22,495,882 — 22,495,882 — 22,495,882 
Borrowings under warehouse credit facilities12,047,306 — 12,047,306 — 12,047,306 
Borrowings under notes receivable financing— — — — — 
Borrowings under secured notes and bonds payable761,266 — 761,266 — 761,266 
Proceeds from issuance of unsecured senior notes767,103 — 767,103 — 767,103 
Noncontrolling interest in equity of consolidated subsidiaries - distributions(3,728)— (3,728)— (3,728)
Proceeds from issuance of debt obligations of consolidated CFEs— 257,597 (a)257,597 — 257,597 
Repayments of debt obligations of consolidated CFEs— (87,545)(a) (b)(87,545)— (87,545)
Net cash provided by (used in) financing activities5,055,583 170,052 5,225,635 — 5,225,635 
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash(141,836)2,735 (139,101)— (139,101)
Cash, Cash Equivalents and Restricted Cash, Beginning of Period1,672,819 24,276 (a) (b)1,697,095 — 1,697,095 
Cash, Cash Equivalents and Restricted Cash, End of Period$1,530,983 $27,011 $1,557,994 $— $1,557,994 
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for interest419,701 46,263 (a)465,964 — 465,964 
Cash paid during the period for income taxes1,259 — 1,259 — 1,259 
Supplemental Schedule of Non-Cash Investing and Financing Activities
Dividends declared but not paid on common and preferred stock143,199 — 143,199 — 143,199 
Transfer from residential mortgage loans to REO and other assets5,917 — 5,917 — 5,917 
Real estate securities retained from loan securitizations34,203 (34,203)(a)— — — 
Residential mortgage loans subject to repurchase1,845,889 — 1,845,889 — 1,845,889 
Purchase of Agency RMBS, settled after quarter-end1,271,542 — 1,271,542 — 1,271,542 
* See the beginning of this Note 3, for explanations of the adjustments and reclassifications by type referenced in the above table as (a), (b), and (c).