XML 58 R32.htm IDEA: XBRL DOCUMENT v3.20.4
Segment Information
 12 Months Ended
Dec. 31, 2020
Segment Reporting [Abstract]  
Segment Information Segment Information
Redwood operates in three segments: Residential Lending, Business Purpose Lending, and Third-Party Investments. During 2020, we reorganized our segments and combined what was previously our Multifamily Investments segment and Third-Party Residential Investments into a new segment called Third-Party Investments, and began including convertible debt and trust-preferred interest expense in our Corporate/Other segment. We conformed the presentation of prior periods. The accounting policies of the reportable segments are the same as those described in Note 3 — Summary of Significant Accounting Policies. For a full description of our segments, see Item 1—Business in this Annual Report on Form 10-K.
Segment contribution represents the measure of profit that management uses to assess the performance of our business segments and make resource allocation and operating decisions. Certain corporate expenses not directly assigned or allocated to one of our three segments, as well as activity from certain consolidated Sequoia entities, are included in the Corporate/Other column as reconciling items to our consolidated financial statements. These unallocated corporate expenses primarily include interest expense and realized gains from the repurchase of our convertible notes and trust preferred securities, indirect general and administrative expenses and other expense.
The following tables present financial information by segment for the years ended December 31, 2020, 2019, and 2018.
Table 23.1 – Business Segment Financial Information
Year Ended December 31, 2020
(In Thousands)Residential LendingBusiness Purpose LendingThird-Party Investments Corporate/
Other 		 Total
Interest income$150,906 $218,890 $192,984 $9,136 $571,916 
Interest expense(107,371)(157,292)(135,722)(47,620)(448,005)
Net interest income43,535 61,598 57,262 (38,484)123,911 
Non-interest income
Mortgage banking activities, net3,721 74,751 — — 78,472 
Investment fair value changes, net(153,388)(81,042)(352,004)(2,004)(588,438)
Other income, net(4,642)4,651 1,494 2,685 4,188 
Realized gains, net2,001 — 3,241 25,182 30,424 
Total non-interest income, net(152,308)(1,640)(347,269)25,863 (475,354)
General and administrative expenses (17,939)(39,319)(5,046)(52,900)(115,204)
Loan acquisition costs(2,785)(7,544)(684)(10)(11,023)
Other expenses(4,114)(104,147)194 (718)(108,785)
Provision for income taxes4,567 (4,063)4,104 — 4,608 
Segment Contribution$(129,044)$(95,115)$(291,439)$(66,249)
Net Loss$(581,847)
Non-cash amortization (expense) income, net$2,401 $(24,638)$1,867 $(4,954)$(25,324)
Other significant non-cash expense: goodwill impairment$— $(88,675)$— $— $(88,675)
Year Ended December 31, 2019
(In Thousands)Residential LendingBusiness Purpose LendingThird-Party Investments Corporate/
Other 		 Total
Interest income$268,559 $54,372 $281,701 $17,649 $622,281 
Interest expense(171,119)(32,232)(213,312)(63,145)(479,808)
Net interest income 97,440 22,140 68,389 (45,496)142,473 
Non-interest income
Mortgage banking activities, net47,743 39,523 — — 87,266 
Investment fair value changes, net(27,920)(6,722)71,759 (1,617)35,500 
Other income9,210 5,852 1,484 2,711 19,257 
Realized gains, net8,292 — 15,529 — 23,821 
Total non-interest income (loss), net37,325 38,653 88,772 1,094 165,844 
General and administrative expenses (26,717)(25,591)(3,561)(52,868)(108,737)
Loan acquisition costs(3,954)(5,064)(780)(137)(9,935)
Other expenses— (8,521)(1,106)(3,395)(13,022)
Provision for income taxes(4,074)(947)(2,419)— (7,440)
Segment Contribution$100,020 $20,670 $149,295 $(100,802)
Net Income$169,183 
Non-cash amortization income (expense), net$3,669 $(9,173)$6,956 $(4,813)$(3,361)
Year Ended December 31, 2018
(In Thousands)Residential LendingBusiness Purpose LendingThird-Party Investments Corporate/
Other		 Total
Interest income$245,124 $4,588 $108,969 $20,036 $378,717 
Interest expense(134,590)(1,598)(41,887)(60,964)(239,039)
Net interest income 110,534 2,990 67,082 (40,928)139,678 
Non-interest income
Mortgage banking activities, net59,623 (57)— — 59,566 
Investment fair value changes, net(21,686)(29)(2,978)(996)(25,689)
Other income12,452 — — 618 13,070 
Realized gains, net7,709 — 19,332 — 27,041 
Total non-interest income (loss), net58,098 (86)16,354 (378)73,988 
General and administrative expenses(26,897)(1,948)(2,140)(44,313)(75,298)
Loan acquisition costs(5,242)(649)(1,584)(9)(7,484)
Other expense— — (18)(178)(196)
Provision for income taxes(8,033)— (3,055)— (11,088)
Segment Contribution$128,460 $307 $76,639 $(85,806)
Net Income$119,600 
Non-cash amortization income (expense), net$4,486 $(290)$12,294 $(4,111)$12,379 
The following table presents the components of Corporate/Other for the years ended December 31, 2020, 2019, and 2018.
Table 23.2 – Components of Corporate/Other
Years Ended December 31,
202020192018
(In Thousands)
Legacy Consolidated VIEs (1)
OtherTotal
Legacy Consolidated VIEs (1)
Other Total
Legacy Consolidated VIEs (1)
Other Total
Interest income$9,061 $75 $9,136 $17,649 $— $17,649 $20,036 $— $20,036 
Interest expense(5,945)(41,675)(47,620)(14,418)(48,727)(63,145)(16,519)(44,445)(60,964)
Net interest income (loss)3,116 (41,600)(38,484)3,231 (48,727)(45,496)3,517 (44,445)(40,928)
Non-interest income
Investment fair value changes, net(1,512)(492)(2,004)(1,545)(72)(1,617)(1,016)20 (996)
Other income— 2,685 2,685 — 2,711 2,711 — 618 618 
Realized gains, net— 25,182 25,182 — — — — — — 
Total non-interest (loss) income, net(1,512)27,375 25,863 (1,545)2,639 1,094 (1,016)638 (378)
General and administrative expenses— (52,900)(52,900)— (52,868)(52,868)— (44,313)(44,313)
Loan acquisition costs— (10)(10)— (137)(137)— (9)(9)
Other expenses— (718)(718)— (3,395)(3,395)— (178)(178)
Total$1,604 $(67,853)$(66,249)$1,686 $(102,488)$(100,802)$2,501 $(88,307)$(85,806)
(1)     Legacy consolidated VIEs represent Legacy Sequoia entities that are consolidated for GAAP financial reporting purposes. See Note 4 for further discussion on VIEs.
The following table presents supplemental information by segment at December 31, 2020 and December 31, 2019.
Table 23.3 – Supplemental Segment Information
(In Thousands)Residential LendingBusiness Purpose LendingThird-Party Investments Corporate/
Other		Total
December 31, 2020
Residential loans$1,741,963 $— $2,221,153 $285,935 $4,249,051 
Business purpose loans— 4,136,353 — — 4,136,353 
Multifamily loans— — 492,221 — 492,221 
Real estate securities160,780 — 183,345 — 344,125 
Other investments8,815 21,627 317,282 451 348,175 
Goodwill and intangible assets— 56,865 — — 56,865 
Total assets1,989,802 4,323,040 3,232,415 809,809 10,355,066 
December 31, 2019
Residential loans$4,939,745 $— $2,367,215 $407,890 $7,714,850 
Business purpose loans— 3,506,743 — — 3,506,743 
Multifamily loans— — 4,408,524 — 4,408,524 
Real estate securities229,074 — 870,800 — 1,099,874 
Other investments42,224 21,002 294,904 — 358,130 
Goodwill and intangible assets— 161,464 — — 161,464 
Total assets5,410,540 3,786,641 8,028,946 769,313 17,995,440