Basis of Presentation (Tables)

12 Months Ended

Dec. 31, 2021

Accounting Policies [Abstract]

Schedule of Assets Acquired and Liabilities Assumed

Through December 31, 2021, there were no changes to our purchase price allocations, which are summarized in the following table.

Table 2.1 – Purchase Price Allocations

(In Thousands)	5 Arches		CoreVest
Acquisition Date	March 1, 2019		October 15, 2019
Purchase price:
Cash	$	12,575	$	482,311
Contingent consideration, at fair value	24,621		—
Purchase option, at fair value	5,082		—
Equity method investment, at fair value	8,052		—
Total consideration	$	50,330	$	482,311
Allocated to:
Business purpose loans, at fair value	$	2,022	$	2,610,490
Cash and cash equivalents	2,128		30,685
Restricted cash	9,082		—
Other assets	5,473		67,420
Goodwill	28,747		59,928
Intangible assets	24,800		56,500
Deferred tax asset	—		2,577
Total assets acquired	72,252		2,827,600
Asset-backed securities issued, at fair value	—		1,656,023
Short-term debt, net	3,800		663,275
Accrued expenses and other liabilities	13,920		25,991
Deferred tax liability	4,202		—
Total liabilities assumed	21,922		2,345,289
Total net assets acquired	$	50,330	$	482,311

Because we owned a 20% non-controlling interest in 5 Arches immediately before obtaining full control, we remeasured our initial minority investment and purchase option at their acquisition-date fair values using the income approach, which resulted in a gain of $2 million that was recorded in Other income on our consolidated statements of income (loss) during the three months ended March 31, 2019.

We recognized $2 million of acquisition costs related our acquisitions of 5 Arches and CoreVest during the year ended December 31, 2019. These costs primarily related to accounting, consulting, and legal expenses and are included in our General and administrative expenses on our consolidated statements of income (loss).

Schedule of Finite-Lived Intangible Assets

The table below presents the amortization period and carrying value of our intangible assets, net of accumulated amortization at December 31, 2021 and 2020.

Table 2.2 – Intangible Assets – Activity

	Intangible Assets at Acquisition		Accumulated Amortization at December 31, 2021		Carrying Value at December 31, 2021		Weighted Average Amortization Period (in years)
(Dollars in Thousands)
Borrower network	$	45,300	$	(14,291)	$	31,009	7
Broker network	18,100		(10,257)		7,843		5
Non-compete agreements	9,500		(7,597)		1,903		3
Tradenames	4,000		(3,194)		806		3
Developed technology	1,800		(1,800)		—		2
Loan administration fees on existing loan assets	2,600		(2,600)		—		1
Total	$	81,300	$	(39,739)	$	41,561	6

	Intangible Assets at Acquisition		Accumulated Amortization at December 31, 2020		Carrying Value at December 31, 2020		Weighted Average Amortization Period (in years)
(Dollars in Thousands)
Borrower network	$	45,300	$	(7,819)	$	37,481	7
Broker network	18,100		(6,637)		11,463		5
Non-compete agreements	9,500		(4,431)		5,069		3
Tradenames	4,000		(1,860)		2,140		3
Developed technology	1,800		(1,088)		712		2
Loan administration fees on existing loan assets	2,600		(2,600)		—		1
Total	$	81,300	$	(24,435)	$	56,865	6

Finite-lived Intangible Assets Amortization Expense

Estimated future amortization expense is summarized in the table below.

Table 2.3 – Intangible Asset Amortization Expense by Year

(In Thousands)	December 31, 2021
2022	$	12,800
2023	10,091
2024	7,073
2025	6,471
2026	5,126
Total Future Intangible Asset Amortization	$	41,561

Pro Forma Information

The following unaudited pro forma financial information presents Net interest income, Non-interest income, and Net income of Redwood, 5 Arches, and CoreVest combined, for the year ended December 31, 2019, as if the acquisitions occurred as of January 1, 2018. These pro forma amounts have been adjusted to include the amortization of intangible assets and acquisition-related compensation expense for both periods, and to exclude the income statement impacts related to our equity method investment in 5 Arches. The unaudited pro forma financial information is not intended to represent or be indicative of the consolidated financial results of operations that would have been reported if the acquisitions had been completed as of January 1, 2018 and should not be taken as indicative of our future consolidated results of operations.

Table 2.4 – Unaudited Pro Forma Financial Information

	Year Ended
(In Thousands)	December 31, 2019
Supplementary pro forma information:
Net interest income	$	167,680
Non-interest income	193,519
Net income	185,896