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))
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Item 2.02. | Results of Operation and Financial Condition. |
Item 9.01 | Financial Statements and Exhibits. |
(d) | Exhibits |
Exhibit
Number
|
Description
|
|
99.1
|
Press release, dated August 2, 2016, issued by New Residential Investment Corp.
|
NEW RESIDENTIAL INVESTMENT CORP.
|
|
(Registrant)
|
|
/s/ Nicola Santoro, Jr.
|
|
Nicola Santoro, Jr.
|
|
Chief Financial Officer
|
Exhibit
Number
|
Description
|
|
99.1
|
Press release, dated August 2, 2016, issued by New Residential Investment Corp.
|
§
|
GAAP Net Income of $68.7 million, or $0.30 per diluted share
|
§
|
Core Earnings of $119.6 million, or $0.52 per diluted share*
|
§
|
Common dividend of $106.0 million, or $0.46 per share
|
Q2 2016
|
Q1 2016
|
||
Summary Operating Results:
|
|||
GAAP Net Income per Diluted Share
|
$0.30
|
$0.48
|
|
GAAP Net Income
|
$68.7 million
|
$111.7 million
|
|
Non-GAAP Results:
|
|||
Core Earnings per Diluted Share*
|
$0.52
|
$0.49
|
|
Core Earnings*
|
$119.6 million
|
$112.4 million
|
|
NRZ Common Dividend:
|
|||
Common Dividend per Share
|
$0.46
|
$0.46
|
|
Common Dividend
|
$106.0 million
|
$106.0 million
|
w
|
Non-Agency Securities & Call Rights -
|
§
|
In the second quarter of 2016, New Residential continued to execute its deal collapse strategy by exercising clean-up call rights on 12 seasoned, Non-Agency deals totaling $291 million UPB. In addition, the Company completed its seventh Non-Agency called loan securitization, totaling $306 million, in May 2016.
|
§
|
During the year, the Company made significant progress in growing its Non-Agency securities portfolio as part of an effort to accelerate its call rights strategy. Year to date, New Residential increased its Non-Agency RMBS net equity from $374 million at the end of fourth quarter 2015 to $715 million at the end of second quarter 2016.
|
§
|
Valuation of the Company’s Non-Agency holdings increased by $68 million during the quarter from mark-to-market gains, resulting in a $0.30 per share increase to book value.
|
w
|
Excess MSRs -
|
§
|
During the quarter, New Residential made notable progress towards obtaining the necessary state and agency approvals to become fully eligible to own MSRs. As a result of these efforts, the Company, through its subsidiary New Residential Mortgage LLC, is eligible to own Non-Agency MSRs across 49 U.S. states, up from 46 states in first quarter 2016. In addition, during the quarter, New Residential obtained approvals to be a Fannie Mae Servicer and a Federal Housing Administration (“FHA”) Lender. As a result, New Residential Mortgage LLC is now eligible to own MSRs relating to loans owned by Fannie Mae or loans insured by FHA. The Company expects to obtain California state approval and remaining agency approvals during the second half of 2016.(1)
|
§
|
New Residential experienced a below-industry average increase in prepayments during the quarter as a result of the Company’s existing recapture provisions and differentiated collateral characteristics. In the second quarter, New Residential’s average Gross CPR increased 2.0% (average Net CPR, including recapture, increased by 1.8%), compared to an average industry Gross CPR increase of 4.8%.(2)
|
§
|
As part of the Company’s continued efforts to diversify funding, the Company obtained two new financing facilities, which include a secured $300 million financing collateralized by Non-Agency Excess MSRs and a secured $225 million financing collateralized by Agency Excess MSRs.
|
w
|
Servicer Advances -
|
§
|
During the quarter, New Residential continued to work with its servicing partners to reduce its servicer advance balance. Year-to-date, the Company successfully reduced its servicer advance balance by 13%, from $7.6 billion as of fourth quarter 2015 to $6.6 billion as of second quarter 2016.
|
§
|
In the second quarter, New Residential continued to improve advance financing by reallocating financing capacity, increasing advance rates, extending maturities and lowering cost of funds. In particular, the Company issued $400 million of 3-year maturity servicer advance term notes in June 2016, and closed a new $185 million 2-year servicer advance facility in May 2016. Furthermore, the Company increased the capacity and extended the maturity on a $950 million advance financing facility.
|
(1)
|
As of August 1, 2016. Eligibility obtained as of the date of this press release relates to Non-Agency MSRs only, other than express references to MSRs relating to Fannie Mae loans or FHA-insured loans. New Residential may not be able to receive remaining approvals during 2H 2016 or at all.
|
(2)
|
Gross Constant Prepayment Rate (“CPR”) does not include recapture. Industry Gross CPR calculation has been prepared by New Residential and includes only prepayment data for MSRs with a coupon and seasoning that management believes are comparable to the weighted average of New Residential’s existing MSR portfolio. The inclusion of industry prepayment data with different characteristics, including dissimilar weighted average coupon and seasoning would likely change the average Industry Gross CPR. Determinations of comparability have been made by management based on New Residential’s current MSR portfolio and the portfolio’s collateral characteristics. Other industry participants may calculate Industry Gross CPR in a different manner. A change in, or the diversification of, New Residential’s MSR portfolio could change the appropriate calculation of Industry Gross CPR. Industry data is initially taken from eMBS and CoreLogic’s Loan Performance database as of June 30, 2016.
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
|||||||||||||
Interest income
|
$
|
277,477
|
$
|
178,177
|
$
|
467,513
|
$
|
262,550
|
||||||||
Interest expense
|
100,685
|
81,871
|
181,913
|
115,850
|
||||||||||||
Net Interest Income
|
176,792
|
96,306
|
285,600
|
146,700
|
||||||||||||
Impairment
|
||||||||||||||||
Other-than-temporary impairment (OTTI) on securities
|
2,819
|
649
|
6,073
|
1,720
|
||||||||||||
Valuation and loss provision on loans and real estate owned
|
16,825
|
4,772
|
23,570
|
5,749
|
||||||||||||
19,644
|
5,421
|
29,643
|
7,469
|
|||||||||||||
Net interest income after impairment
|
157,148
|
90,885
|
255,957
|
139,231
|
||||||||||||
Other Income
|
||||||||||||||||
Change in fair value of investments in excess mortgage servicing rights
|
(15,263
|
)
|
356
|
(7,337
|
)
|
(1,405
|
)
|
|||||||||
Change in fair value of investments in excess mortgage servicing rights, equity method investees
|
(675
|
)
|
3,095
|
2,347
|
8,016
|
|||||||||||
Change in fair value of investments in servicer advances
|
13,946
|
24,562
|
(17,278
|
)
|
16,893
|
|||||||||||
Gain on consumer loans investment
|
-
|
8,510
|
9,943
|
18,957
|
||||||||||||
Gain on remeasurement of consumer loans investment
|
-
|
-
|
71,250
|
- | ||||||||||||
Gain (loss) on settlement of investments, net
|
(12,711
|
)
|
1,201
|
(27,211
|
)
|
15,968
|
||||||||||
Other income (loss), net
|
(5,020
|
)
|
(74
|
)
|
(19,515
|
)
|
(8,484
|
)
|
||||||||
(19,723
|
)
|
37,650
|
12,199
|
49,945
|
||||||||||||
Operating Expenses
|
||||||||||||||||
General and administrative expenses
|
7,224
|
21,239
|
19,305
|
29,799
|
||||||||||||
Management fee to affiliate
|
10,008
|
8,371
|
20,016
|
13,497
|
||||||||||||
Incentive compensation to affiliate
|
4,929
|
2,391
|
6,125
|
6,084
|
||||||||||||
Loan servicing expense
|
14,119
|
2,951
|
15,850
|
7,842
|
||||||||||||
36,280
|
34,952
|
61,296
|
57,222
|
|||||||||||||
Income Before Income Taxes
|
101,145
|
93,583
|
206,860
|
131,954
|
||||||||||||
Income tax expense (benefit)
|
7,518
|
14,306
|
(2,705
|
)
|
10,879
|
|||||||||||
Net Income
|
$
|
93,627
|
$
|
79,277
|
$
|
209,565
|
$
|
121,075
|
||||||||
Noncontrolling Interests in Income of Consolidated Subsidiaries
|
$
|
24,975
|
$
|
4,158
|
$
|
29,177
|
$
|
9,981
|
||||||||
Net Income Attributable to Common Stockholders
|
$
|
68,652
|
$
|
75,119
|
$
|
180,388
|
$
|
111,094
|
||||||||
Net Income Per Share of Common Stock
|
||||||||||||||||
Basic
|
$
|
0.30
|
$
|
0.37
|
$
|
0.78
|
$
|
0.65
|
||||||||
Diluted
|
$
|
0.30
|
$
|
0.37
|
$
|
0.78
|
$
|
0.63
|
||||||||
Weighted Average Number of Shares of Common Stock Outstanding
|
||||||||||||||||
Basic
|
230,478,390
|
200,910,040
|
230,474,796
|
171,336,768
|
||||||||||||
Diluted
|
230,839,753
|
205,169,099
|
230,689,233
|
175,206,662
|
||||||||||||
Dividends Declared per Share of Common Stock
|
$
|
0.46
|
$
|
0.45
|
$
|
0.92
|
$
|
0.83
|
June 30, 2016
|
December 31, 2015
|
|||||||
(unaudited)
|
||||||||
Assets
|
||||||||
Investments in:
|
||||||||
Excess mortgage servicing rights, at fair value
|
$
|
1,475,418
|
$
|
1,581,517
|
||||
Excess mortgage servicing rights, equity method investees, at fair value
|
199,145
|
217,221
|
||||||
Servicer advances, at fair value
|
6,513,274
|
7,426,794
|
||||||
Real estate securities, available-for-sale
|
4,554,657
|
2,501,881
|
||||||
Residential mortgage loans, held-for-investment
|
-
|
330,178
|
||||||
Residential mortgage loans, held-for-sale
|
824,002
|
776,681
|
||||||
Real estate owned
|
61,909
|
50,574
|
||||||
Consumer loans, held-for-investment
|
1,830,436
|
-
|
||||||
Cash and cash equivalents
|
233,845
|
249,936
|
||||||
Restricted cash
|
168,043
|
94,702
|
||||||
Trades receivable
|
1,549,795
|
1,538,481
|
||||||
Deferred tax asset, net
|
189,641
|
185,311
|
||||||
Other assets
|
304,983
|
239,446
|
||||||
$
|
17,905,148
|
$
|
15,192,722
|
|||||
Liabilities and Equity
|
||||||||
Liabilities
|
||||||||
Repurchase agreements
|
$
|
4,625,403
|
$
|
4,043,054
|
||||
Notes and bonds payable
|
8,295,331
|
7,249,568
|
||||||
Trades payable
|
1,624,130
|
725,672
|
||||||
Due to affiliates
|
11,983
|
23,785
|
||||||
Dividends payable
|
106,027
|
106,017
|
||||||
Accrued expenses and other liabilities
|
129,013
|
58,046
|
||||||
14,791,887
|
12,206,142
|
|||||||
Commitments and Contingencies
|
||||||||
Equity
|
||||||||
Common Stock, $0.01 par value, 2,000,000,000 shares authorized, 230,493,006 and 230,471,202 issued and outstanding at June 30, 2016 and December 31, 2015, respectively
|
||||||||
Additional paid-in capital
|
2,641,193
|
2,640,893
|
||||||
Retained earnings
|
117,144
|
148,800
|
||||||
Accumulated other comprehensive income
|
50,799
|
3,936
|
||||||
Total New Residential stockholders' equity
|
2,811,440
|
2,795,933
|
||||||
Noncontrolling interests in equity of consolidated subsidiaries
|
301,821
|
190,647
|
||||||
Total Equity
|
3,113,261
|
2,986,580
|
||||||
$
|
17,905,148
|
$
|
15,192,722
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
Net income (loss) attributable to common stockholders
|
$
|
68,652
|
$
|
75,119
|
$
|
180,388
|
$
|
111,094
|
||||||||
Impairment
|
19,644
|
5,421
|
29,643
|
7,469
|
||||||||||||
Other Income Adjustments:
|
||||||||||||||||
Other Income
|
||||||||||||||||
Change in fair value of investments in excess mortgage servicing rights
|
15,263
|
(356
|
)
|
7,337
|
1,405
|
|||||||||||
Change in fair value of investments in excess mortgage servicing rights, equity method investees
|
675
|
(3,095
|
)
|
(2,347
|
)
|
(8,016
|
)
|
|||||||||
Change in fair value of investments in servicer advances
|
(13,946
|
)
|
(24,562
|
)
|
17,278
|
(16,893
|
)
|
|||||||||
Gain on consumer loans investment
|
-
|
(8,510
|
)
|
(9,943
|
)
|
(18,957
|
)
|
|||||||||
Gain on remeasurement of consumer loans investment
|
-
|
-
|
(71,250
|
)
|
- | |||||||||||
(Gain) loss on settlement of investments, net
|
12,711
|
(1,201
|
)
|
27,211
|
(15,968
|
)
|
||||||||||
Unrealized (gain) loss on derivative instruments
|
13,163
|
1,229
|
35,466
|
8,259
|
||||||||||||
Unrealized (gain) loss on other ABS
|
1,218
|
77
|
950
|
367
|
||||||||||||
(Gain) loss on transfer of loans to REO
|
(7,804
|
)
|
(347
|
)
|
(10,287
|
)
|
197
|
|||||||||
Gain on Excess MSR recapture agreements
|
(688
|
)
|
(848
|
)
|
(1,420
|
)
|
(1,578
|
)
|
||||||||
Other loss
|
3,651
|
763
|
5,179
|
2,039
|
||||||||||||
Total Other Income Adjustments
|
24,243
|
(36,850
|
)
|
(1,826
|
)
|
(49,145
|
)
|
|||||||||
Other Income and impairment attributable to non-controlling interests
|
(4,195
|
)
|
(3,294
|
)
|
(5,187
|
)
|
(7,823
|
)
|
||||||||
Non-capitalized transaction related expenses
|
(557
|
)
|
9,341
|
5,413
|
14,890
|
|||||||||||
Incentive compensation to affiliate
|
4,929
|
2,391
|
6,125
|
6,084
|
||||||||||||
Deferred taxes
|
6,547
|
14,348
|
(4,134
|
)
|
11,341
|
|||||||||||
Interest income on residential mortgage loans, held for sale
|
4,561
|
3,648
|
6,473
|
17,083
|
||||||||||||
Limit on RMBS discount accretion related to called deals
|
(3,594
|
)
|
-
|
(6,243
|
)
|
- | ||||||||||
Adjust consumer loans to level yield
|
(2,744
|
)
|
17,458
|
15,162
|
34,216
|
|||||||||||
Core earnings of equity method investees:
|
||||||||||||||||
Excess mortgage servicing rights
|
2,110
|
4,597
|
6,139
|
10,435
|
||||||||||||
Core Earnings
|
$
|
119,596
|
$
|
92,179
|
$
|
231,953
|
$
|
155,644
|