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))
|
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 26, 2018, issued by New Residential Investment Corp.
|
NEW RESIDENTIAL INVESTMENT CORP.
|
|
(Registrant)
|
|
/s/ Nicola Santoro, Jr.
|
|
Nicola Santoro, Jr.
|
|
Chief Financial Officer
|
§
|
GAAP Net Income of $175 million, or $0.51 per diluted share
|
§
|
Core Earnings of $198 million, or $0.58 per diluted share*
|
§
|
Common dividend of $170 million, or $0.50 per share
|
2Q 2018
|
1Q 2018
|
|
Summary Operating Results:
|
||
GAAP Net Income per Diluted Share**
|
$0.51
|
$1.81
|
GAAP Net Income
|
$175 million
|
$604 million
|
Non-GAAP Results:
|
||
Core Earnings per Diluted Share**
|
$0.58
|
$0.58
|
Core Earnings*
|
$198 million
|
$195 million
|
NRZ Common Dividend:
|
||
Common Dividend per Share**
|
$0.50
|
$0.50
|
Common Dividend
|
$170 million
|
$168 million
|
w
|
Mortgage Servicing Rights (“MSRs”) -
|
§
|
During the quarter, New Residential acquired MSRs totaling approximately $20 billion UPB for an aggregate purchase price of approximately $245 million. In addition, to further enhance liquidity, NRZ priced two fixed rate MSR notes in May and July 2018, totaling $1.2 billion, at a weighted average cost of funds of ~4.5%.
|
w
|
Non-Agency Securities & Call Rights -
|
§
|
During the second quarter 2018, New Residential continued its deal collapse strategy by executing clean-up calls on 32 seasoned, Non-Agency residential mortgage-backed securities (“RMBS”) deals with an aggregate UPB of approximately $1.1 billion. In addition, during the quarter, New Residential completed a $435 million Non-Agency loan securitization.
|
§
|
In the second quarter, New Residential continued to strategically invest in Non-Agency securities that are expected to be accretive to the Company’s call rights strategy. New Residential purchased $696 million face value of Non-Agency RMBS, bringing net equity to approximately $1.6 billion as of June 30, 2018.
|
w
|
Acquisition of Shellpoint Partners LLC (“Shellpoint”) -
|
§
|
On July 3, 2018, New Residential closed the previously announced acquisition of Shellpoint, a vertically integrated mortgage platform with established origination and servicing capabilities. The acquisition comprises all outstanding equity interests of Shellpoint and all companies within the Shellpoint family, including New Penn Financial, Shellpoint Mortgage Servicing, Avenue 365, and eStreet Appraisal Management Company.
|
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
||||||||||||||
|
2018
|
2017
|
2018
|
2017
|
||||||||||||
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
||||||||||||
|
||||||||||||||||
Interest income
|
$
|
403,805
|
$
|
471,952
|
$
|
787,378
|
$
|
764,490
|
||||||||
Interest expense
|
133,916
|
115,157
|
258,303
|
213,386
|
||||||||||||
Net Interest Income
|
269,889
|
356,795
|
529,075
|
551,104
|
||||||||||||
|
||||||||||||||||
Impairment
|
||||||||||||||||
Other-than-temporary impairment (OTTI) on securities
|
12,631
|
5,115
|
19,301
|
7,227
|
||||||||||||
Valuation and loss provision on loans and real estate owned
|
3,658
|
20,771
|
22,665
|
38,681
|
||||||||||||
|
16,289
|
25,886
|
41,966
|
45,908
|
||||||||||||
|
||||||||||||||||
Net interest income after impairment
|
253,600
|
330,909
|
487,109
|
505,196
|
||||||||||||
Servicing revenue, net
|
146,193
|
170,851
|
363,429
|
211,453
|
||||||||||||
Other Income
|
||||||||||||||||
Change in fair value of investments in excess mortgage servicing rights
|
(5,276
|
)
|
(19,180
|
)
|
(50,967
|
)
|
(18,359
|
)
|
||||||||
Change in fair value of investments in excess mortgage servicing rights, equity method investees
|
1,705
|
4,246
|
2,228
|
4,002
|
||||||||||||
Change in fair value of investments in mortgage servicing rights financing receivables
|
(119,103
|
)
|
5,596
|
151,973
|
5,596
|
|||||||||||
Change in fair value of servicer advance investments
|
(1,752
|
)
|
56,969
|
(81,228
|
)
|
59,528
|
||||||||||
Gain (loss) on settlement of investments, net
|
14,655
|
13,371
|
117,957
|
(303
|
)
|
|||||||||||
Earnings from investments in consumer loans, equity method investees
|
2,982
|
5,880
|
7,788
|
5,880
|
||||||||||||
Other income (loss), net
|
9,977
|
(9,035
|
)
|
19,961
|
(2,191
|
)
|
||||||||||
|
(96,812
|
)
|
57,847
|
167,712
|
54,153
|
|||||||||||
|
||||||||||||||||
Operating Expenses
|
||||||||||||||||
General and administrative expenses
|
20,575
|
16,042
|
40,582
|
27,869
|
||||||||||||
Management fee to affiliate
|
15,453
|
14,186
|
30,563
|
27,260
|
||||||||||||
Incentive compensation to affiliate
|
26,732
|
40,172
|
41,321
|
52,632
|
||||||||||||
Loan servicing expense
|
11,035
|
13,002
|
22,549
|
26,378
|
||||||||||||
Subservicing expense
|
45,958
|
55,958
|
92,555
|
73,662
|
||||||||||||
|
119,753
|
139,360
|
227,570
|
207,801
|
||||||||||||
|
||||||||||||||||
Income Before Income Taxes
|
183,228
|
420,247
|
790,680
|
563,001
|
||||||||||||
Income tax expense (benefit)
|
(2,608
|
)
|
82,844
|
(9,520
|
)
|
88,440
|
||||||||||
Net Income
|
$
|
185,836
|
$
|
337,403
|
$
|
800,200
|
$
|
474,561
|
||||||||
Noncontrolling Interests in Income of Consolidated Subsidiaries
|
$
|
11,078
|
$
|
15,671
|
$
|
21,189
|
$
|
31,451
|
||||||||
Net Income Attributable to Common Stockholders
|
$
|
174,758
|
$
|
321,732
|
$
|
779,011
|
$
|
443,110
|
||||||||
|
||||||||||||||||
Net Income Per Share of Common Stock
|
||||||||||||||||
Basic
|
$
|
0.52
|
$
|
1.05
|
$
|
2.34
|
$
|
1.49
|
||||||||
Diluted
|
$
|
0.51
|
$
|
1.04
|
$
|
2.32
|
$
|
1.48
|
||||||||
|
||||||||||||||||
Weighted Average Number of Shares of Common Stock Outstanding
|
||||||||||||||||
Basic
|
336,311,253
|
307,344,874
|
333,364,426
|
297,029,904
|
||||||||||||
Diluted
|
339,538,503
|
309,392,512
|
336,476,481
|
298,875,279
|
||||||||||||
|
||||||||||||||||
Dividends Declared per Share of Common Stock
|
$
|
0.50
|
$
|
0.50
|
$
|
1.00
|
$
|
0.98
|
|
June 30, 2018
|
December 31, 2017
|
||||||
Assets
|
(unaudited)
|
|||||||
Investments in:
|
||||||||
Excess mortgage servicing rights, at fair value
|
$
|
495,299
|
$
|
1,173,713
|
||||
Excess mortgage servicing rights, equity method investees, at fair value
|
159,034
|
171,765
|
||||||
Mortgage servicing rights, at fair value
|
2,232,126
|
1,735,504
|
||||||
Mortgage servicing rights financing receivables, at fair value
|
1,904,919
|
598,728
|
||||||
Servicer advance investments, at fair value
|
843,438
|
4,027,379
|
||||||
Real estate and other securities, available-for-sale
|
8,084,927
|
8,071,140
|
||||||
Residential mortgage loans, held-for-investment
|
690,771
|
691,155
|
||||||
Residential mortgage loans, held-for-sale
|
2,021,319
|
1,725,534
|
||||||
Real estate owned
|
125,701
|
128,295
|
||||||
Consumer loans, held-for-investment
|
1,212,917
|
1,374,263
|
||||||
Consumer loans, equity method investees
|
57,820
|
51,412
|
||||||
Cash and cash equivalents
|
193,236
|
295,798
|
||||||
Restricted cash
|
161,441
|
150,252
|
||||||
Servicer advances receivable
|
3,215,361
|
675,593
|
||||||
Trades receivable
|
1,076,626
|
1,030,850
|
||||||
Other assets
|
468,796
|
312,181
|
||||||
|
$
|
22,943,731
|
$
|
22,213,562
|
||||
|
||||||||
Liabilities and Equity
|
||||||||
|
||||||||
Liabilities
|
||||||||
Repurchase agreements
|
$
|
8,757,134
|
$
|
8,662,139
|
||||
Notes and bonds payable
|
6,707,776
|
7,084,391
|
||||||
Trades payable
|
1,168,865
|
1,169,896
|
||||||
Due to affiliates
|
48,648
|
88,961
|
||||||
Dividends payable
|
169,931
|
153,681
|
||||||
Deferred tax liability, net
|
8,403
|
19,218
|
||||||
Accrued expenses and other liabilities
|
284,050
|
239,114
|
||||||
|
17,144,807
|
17,417,400
|
||||||
|
||||||||
Commitments and Contingencies
|
||||||||
|
||||||||
Equity
|
||||||||
Common Stock, $0.01 par value, 2,000,000,000 shares authorized, 339,862,769 and 307,361,309 issued and outstanding at June 30, 2018 and December 31, 2017, respectively
|
3,399
|
3,074
|
||||||
Additional paid-in capital
|
4,246,135
|
3,763,188
|
||||||
Retained earnings
|
1,000,488
|
559,476
|
||||||
Accumulated other comprehensive income (loss)
|
458,771
|
364,467
|
||||||
Total New Residential stockholders’ equity
|
5,708,793
|
4,690,205
|
||||||
Noncontrolling interests in equity of consolidated subsidiaries
|
90,131
|
105,957
|
||||||
Total Equity
|
5,798,924
|
4,796,162
|
||||||
|
$
|
22,943,731
|
$
|
22,213,562
|
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
||||||||||||||
|
2018
|
2017
|
2018
|
2017
|
||||||||||||
Net income attributable to common stockholders
|
$
|
174,758
|
$
|
321,732
|
$
|
779,011
|
$
|
443,110
|
||||||||
Impairment
|
16,289
|
25,886
|
41,966
|
45,908
|
||||||||||||
Other Income adjustments:
|
||||||||||||||||
Other Income
|
||||||||||||||||
Change in fair value of investments in excess mortgage servicing rights
|
5,276
|
19,180
|
50,967
|
18,359
|
||||||||||||
Change in fair value of investments in excess mortgage servicing rights, equity method investees
|
(1,705
|
)
|
(4,246
|
)
|
(2,228
|
)
|
(4,002
|
)
|
||||||||
Change in fair value of investments in mortgage servicing rights financing receivables
|
62,263
|
(6,723
|
)
|
(257,516
|
)
|
(6,723
|
)
|
|||||||||
Change in fair value of servicer advance investments
|
1,752
|
(56,969
|
)
|
81,228
|
(59,528
|
)
|
||||||||||
(Gain) loss on settlement of investments, net
|
(14,655
|
)
|
(13,371
|
)
|
(117,957
|
)
|
303
|
|||||||||
Unrealized (gain) loss on derivative instruments
|
(1,240
|
)
|
8,010
|
(3,686
|
)
|
3,684
|
||||||||||
Unrealized (gain) loss on other ABS
|
(5,117
|
)
|
607
|
(4,804
|
)
|
(151
|
)
|
|||||||||
(Gain) loss on transfer of loans to REO
|
(6,320
|
)
|
(4,978
|
)
|
(10,490
|
)
|
(11,612
|
)
|
||||||||
(Gain) loss on transfer of loans to other assets
|
175
|
(81
|
)
|
120
|
(293
|
)
|
||||||||||
(Gain) loss on Excess MSRs
|
(1,365
|
)
|
(715
|
)
|
(4,270
|
)
|
(1,342
|
)
|
||||||||
(Gain) loss on Ocwen common stock
|
972
|
-
|
(4,800
|
)
|
-
|
|||||||||||
Other (income) loss
|
2,918
|
6,192
|
7,969
|
11,905
|
||||||||||||
Total Other Income Adjustments
|
42,954
|
(53,094
|
)
|
(265,467
|
)
|
(49,400
|
)
|
|||||||||
|
||||||||||||||||
Other Income and Impairment attributable to non-controlling interests
|
(5,869
|
)
|
(7,848
|
)
|
(12,455
|
)
|
(18,101
|
)
|
||||||||
Change in fair value of investments in mortgage servicing rights
|
(52,632
|
)
|
(89,742
|
)
|
(182,425
|
)
|
(88,983
|
)
|
||||||||
Non-capitalized transaction-related expenses
|
6,373
|
5,278
|
13,510
|
7,930
|
||||||||||||
Incentive compensation to affiliate
|
26,732
|
40,172
|
41,321
|
52,632
|
||||||||||||
Deferred taxes
|
(1,759
|
)
|
82,188
|
(10,815
|
)
|
85,606
|
||||||||||
Interest income on residential mortgage loans, held-for sale
|
2,562
|
3,789
|
6,868
|
7,466
|
||||||||||||
Limit on RMBS discount accretion related to called deals
|
(5,920
|
)
|
(6,516
|
)
|
(10,194
|
)
|
(6,516
|
)
|
||||||||
Adjust consumer loans to level yield
|
(9,213
|
)
|
(8,566
|
)
|
(15,155
|
)
|
(13,586
|
)
|
||||||||
Core earnings of equity method investees:
|
||||||||||||||||
Excess mortgage servicing rights
|
3,432
|
4,456
|
6,046
|
6,534
|
||||||||||||
Core Earnings
|
$
|
197,707
|
$
|
317,735
|
$
|
392,211
|
$
|
472,600
|