This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Redwood's Revenue Plummets

Once these most recent quarterly results are finalized, they will be run through TheStreet.com Ratings' model and our ratings will be adjusted accordingly. To keep up to date on all of our ratings, visit TheStreet.com Ratings Screener.

Redwood Trust's (RWT) third-quarter fiscal 2008 revenue plunged 40.4% to $132.50 million from $222.22 million in the prior year's quarter. Interest income dipped 40.5% to $131.19 million from $220.33 million, due to lower interest from real estate loans and securities.

Total interest expense declined 44.3% to $93.07 million from $167.12 million due to lower expense related to the issuing of asset-backed securities. As a result, net interest income decreased 28.4% to $39.43 million from $55.10 million, primarily due to a $11.00 million decrease in interest income from securities held at Redwood as a result of higher credit losses, slower prepayments and lower interest rates.

Net interest income at Sequoia declined 38.8% to $5.45 million from $8.89 million, due to lower interest rates. Net interest income at Acacia dipped 38.3% to $7.92 million from $12.84 million. Conversely, net interest income at The Fund stood at $3.54 million.

During the quarter, net loss widened to $111.30 million or $3.34 per share from $60.92 million or $2.18 per share, hurt by a $24.00 million increase in negative market valuation adjustments (MVA) and a $16.00 million increase in the provision for loan losses.

Redwood's cash and cash equivalents dwindled 46.3% to $239.69 million from $446.61 million. Return on assets swung to a negative 19.07% from a positive 0.04%. Similarly, return on equity worsened to a negative 341.41% from a positive 3.02%. Total debt for the quarter diminished 38.5% to $6.76 billion from $10.99 billion. Stockholders' equity climbed 176.8% to $411.89 million from $148.79 million. Therefore, the debt-to-equity ratio stood at 16.41 compared to 73.88 in the same quarter last year.

Provisions for credit losses during the quarter increased several times to $18.33 million from $1.51 million, due to higher expected credit losses on residential real estate loans at Sequoia. Net charge-offs increased 48.4% to $4.05 million from $2.73 million a year ago. Redwood repurchased 341,656 shares at an average price of $18.05 per share for a total of approximately $6.17 million.

Recently, the company appointed Marty Hughes president. In addition, it declared a regular dividend of 75 cents per share for fourth-quarter 2008, payable on Jan. 21, 2009.

Looking forward, Redwood expects that its GAAP earnings will remain volatile in the near term owing to mark-to-market (MTM) adjustments. Redwood also expects its cash flow from investments to decrease by about one-third in fourth-quarter 2008 and its taxable income to be negative in 2009, pressured by the realization of credit losses.

In addition, RWT intends to reduce its regular dividend to a rate of 25 cents per share per quarter in 2009. However, the company believes that hedge fund redemptions, forced margin calls and planned asset liquidations from troubled or seized financial institutions will provide investment opportunities in the upcoming quarters.

A detailed report covering this quarterly release is now available. To purchase the report, click here .

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,215.84 -63.90 -0.37%
S&P 500 1,997.42 -12.98 -0.65%
NASDAQ 4,531.5380 -48.2510 -1.05%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs