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New Residential Announces First Quarter 2016 Results

NEW YORK, May 04, 2016 (BUSINESS WIRE) -- New Residential Investment Corp. NRZ, -0.74% today reported the following information for the quarter ended March 31, 2016:

FIRST QUARTER FINANCIAL HIGHLIGHTS:

  • Core Earnings of $112.4 million, or $0.49 per diluted share*
  • GAAP Net Income of $111.7 million, or $0.48 per diluted share
  • Common dividend of $106.0 million, or $0.46 per share

Q1 2016

Q4 2015

Non-GAAP Results:
Core Earnings per Diluted Share* $0.49 $0.52
Core Earnings* $112.4 million $120.4 million
Summary Operating Results:
GAAP Net Income per Diluted Share $0.48 $0.45
GAAP Net Income $111.7 million $103.0 million
NRZ Common Dividend:
Common Dividend per Share $0.46 $0.46
Common Dividend $106.0 million $106.0 million

*Core Earnings is a non-GAAP measure. For a reconciliation of Core Earnings to GAAP Net Income, please refer to the Reconciliation of Core Earnings below.

First Quarter 2016 & Subsequent Highlights:

  • Consumer Loans - In April 2013, NRZ invested approximately $241 million to purchase a 30% interest in the SpringCastle Joint Venture’s (the “SpringCastle JV”) $3.9 billion UPB consumer loan portfolio. In March 2016, to further enhance future investment returns, NRZ invested an additional $56 million to increase its interest in the SpringCastle JV, from 30% to ~54%, by purchasing half of the interests owned by OneMain Holdings, Inc.

    As a result of the purchase, the fair value of SpringCastle JV’s assets and liabilities are reflected on the Company’s consolidated balance sheet as of March 31, 2016. Due to the consolidation, New Residential’s initial 30% interest was written up to fair value, resulting in the Company recognizing a GAAP gain of approximately $71 million during the quarter.
  • Non-Agency Securities & Call Rights - In the first quarter of 2016, New Residential continued to execute its deal collapse strategy by exercising clean-up call rights on 13 seasoned, Non-Agency deals totaling $171 million UPB. In addition, the Company completed its sixth Non-Agency called loan securitization, totaling $261 million, in March 2016.
  • Excess MSRs - During the quarter, New Residential continued to make notable progress in becoming a fully eligible MSR owner. Currently, the Company is eligible to own MSRs across 46 U.S. states, up from 38 states in fourth quarter 2015, with remaining state and agency approvals currently expected during second half of 2016. [(1)] In addition, as part of the Company’s overall effort to diversify funding, the Company obtained $225 million of financing secured by its Agency Excess MSRs in April 2016.
  • Servicer Advances - During the 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 increased its overall servicer advance LTV from 91% in fourth quarter 2015 to 94% and extended the maturity date on $1.1 billion of its servicer advance financing facility.

(1) As of May 3, 2016. Eligibility obtained as of the date of this press release relates to Non-Agency MSRs only.

ADDITIONAL INFORMATION

For additional information that management believes to be useful for investors, please refer to the latest presentation posted on the Investor Relations section of the Company’s website, www.newresi.com. For consolidated investment portfolio information, please refer to the Company’s most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, which are available on the Company’s website, www.newresi.com.

EARNINGS CONFERENCE CALL

New Residential’s management will host a conference call on Wednesday, May 4, 2016 at 8:00 A.M. Eastern Time. A copy of the earnings release will be posted to the Investor Relations section of New Residential’s website, www.newresi.com.

All interested parties are welcome to participate on the live call. The conference call may be accessed by dialing 1-866-393-1506 (from within the U.S.) or 1-706-634-0623 (from outside of the U.S.) ten minutes prior to the scheduled start of the call; please reference “New Residential First Quarter 2016 Earnings Call.”

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 website and download any necessary software required to listen to the internet broadcast.

A telephonic replay of the conference call will also be available two hours following the call’s completion through 11:59 P.M. Eastern Time on Wednesday, May 18, 2016 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 “97845833.”

Condensed Consolidated Statements of Income
($ in thousands, except share and per share data)

Three Months Ended
March 31,

2016

December 31,

2015

(unaudited) (unaudited)
Interest income $ 190,036 $ 200,181
Interest expense 81,228 80,605
Net Interest Income 108,808 119,576
Impairment
Other-than-temporary impairment (OTTI) on securities 3,254 2,494
Valuation and loss provision on loans and real estate owned 6,745 16,188
9,999 18,682
Net interest income after impairment 98,809 100,894
Other Income
Change in fair value of investments in excess mortgage servicing rights 7,926 38,917
Change in fair value of investments in excess mortgage servicing rights, equity method

investees

3,022 14,717
Change in fair value of investments in servicer advances (31,224 ) (55,646 )
Gain on consumer loans investment 9,943 10,612
Gain on remeasurement of consumer loans investment 71,250 -
Gain (loss) on settlement of investments, net (14,500 ) (16,766 )
Other income (loss), net (14,495 ) 18,075
31,922 9,909
Operating Expenses
General and administrative expenses 12,081 12,500
Management fee to affiliate 10,008 10,118
...

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