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New Residential Announces Third Quarter 2013 Results

A simultaneous webcast of the conference call will be available to the public on a listen-only basis at www.newresi.com. Please allow extra time prior to the call to visit the site and download any necessary software required to listen to the webcast.

A telephonic replay of the conference call will also be available two hours following the completion of the call through 11:59 P.M. Eastern Time on Thursday, November 14, 2013 by dialing 1-855-859-2056 (from within the U.S.) or 1-404-537-3406 (from outside of the U.S.); please reference access code “75759888.”

 
 

Unaudited Consolidated Statements of Income ($ in thousands, except share data)
 
     

Three Months Ended September 30,
   

Nine Months Ended September 30,
2013     2012 2013     2012
 
Interest income $ 21,885 $ 12,295 $ 61,075 $ 18,811
Interest expense   3,443   298   6,993   298
Net Interest Income   18,442   11,997   54,082   18,513
 
Impairment
Other-than-temporary impairment ("OTTI")
on securities   -   -   3,756   -
Net interest income after impairment 18,442 11,997 50,326 18,513
 
Other Income
Change in fair value of investments in excess mortgage
servicing rights 208 1,774 43,899 6,513
Change in fair value of investments in excess mortgage
servicing rights, equity method investees 20,645 - 41,741 -
Earnings from investments in consumer loans, equity
method investees 24,129 - 60,293 -
Gain on settlement of securities   11,213   -   11,271   -
  56,195   1,774   157,204   6,513
 
Operating Expenses
General and administrative expenses 2,538 686 5,859 2,363
Management fee allocated by Newcastle - 1,317 4,134 1,733
Management fee to affiliate 4,484 - 6,747 -
Incentive compensation to affiliate   4,470   -   5,348   -
  11,492   2,003   22,088   4,096
 
Net Income $ 63,145 $ 11,768 $ 185,442 $ 20,930
 
 
Income Per Share of Common Stock
Basic $ 0.25 $ 0.05 $ 0.73 $ 0.08
Diluted $ 0.24 $ 0.05 $ 0.72 $ 0.08
 
 
Weighted Average Number of Shares of Common
Stock Outstanding
Basic   253,072,788   253,025,645   253,041,532   253,025,645
Diluted   259,889,285   253,025,645   256,549,947   253,025,645
 
 
Dividends Declared per Share of Common Stock $ 0.175 $ - $ 0.245 $ -
 
         
 

Consolidated Balance Sheets ($ in thousands)
 

September 30, 2013 (Unaudited)

December 31, 2012
Assets
Real estate securities, available-for-sale $ 1,861,200 $ 289,756
Investments in excess mortgage servicing rights, at fair value 307,568 245,036
Investments in excess mortgage servicing rights, equity method
investees, at fair value 358,032 -
Investments in consumer loans, equity method investees 192,498 -
Residential mortgage loans, held-for-investment 33,060 -
Cash and cash equivalents 172,203 -
Other assets   7,283   84
$ 2,931,844 $ 534,876
 
Liabilities and Equity
 
Liabilities
Repurchase agreements $ 1,467,934 $ 150,922
Trades payable 149,181
Due to affiliates 7,109 5,136
Dividends payable 44,308 -
Accrued expenses and other liabilities   2,276   462
  1,670,808   156,520
 
Commitments and Contingencies
 
Stockholders' Equity
Common Stock, $0.01 par value, 2,000,000,000 shares authorized,
253,186,279 issued and outstanding at September 30, 2013 2,532 -
Additional paid-in capital 1,157,040 362,830
Retained earnings 85,776 -
Accumulated other comprehensive income   15,688   15,526
  1,261,036   378,356
$ 2,931,844 $ 534,876
 
 
 

Reconciliation of Core Earnings ($ in thousands)
 
     

Three Months Ended

September 30,
   

Nine Months Ended

September 30,
2013     2012 2013     2012
 
Income available for common shareholders $ 63,145 $ 11,768 $ 185,442 $ 20,930
Impairment - - 3,756 -
Other Income (56,195 ) (1,774 ) (157,204 ) (6,513 )
Incentive compensation to affiliate 4,470 - 5,348 -
Non-capitalized deal costs 107 19 4,329 1,398
Core earnings of equity method investees
Excess mortgage servicing rights 8,091 - 13,500 -
Consumer loans   18,260     -     38,053     -  
Core Earnings $ 37,878   $ 10,013   $ 93,224   $ 15,815  
 

CORE EARNINGS

New Residential has four primary variables that impact its operating performance: (i) the current yield earned on its investments, (ii) the interest expense incurred under its debt, (iii) its operating expenses and (iv) its realized and unrealized gain or losses, including any impairment, on its investments. Core Earnings is a non-GAAP measure of the operating performance of New Residential excluding the fourth variable above and adjusting the earnings from the consumer loan investment to a level yield basis.

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