MILL VALLEY, Calif.--(BUSINESS WIRE)--May 4, 2006--Redwood Trust,
Inc. (NYSE:RWT) today reported GAAP earnings of $28 million, or $1.09
per share, for the first quarter of 2006. In the first quarter of
2005, GAAP earnings were $61 million, or $2.42 per share.
Doug Hansen, Redwood's President, said, "Our business continues to
develop and grow as planned, with no major surprises. Results for this
quarter, while not at last year's extraordinary levels, were still at
levels we consider to be attractive."
The reduction in our net income of $33 million from the first
quarter of 2005 to the first quarter of 2006 resulted from a decrease
in net interest income of $17 million, a decrease in net gains on
sales, calls, and market value adjustments of $17 million, an increase
in operating expenses of $1 million, and a decrease in GAAP provisions
for income taxes of $2 million. The reduction in net interest income
reflects higher levels of uninvested cash as well as the impact of
increased loan prepayment rates on earnings from our assets that we
have retained from the Sequoia residential loan securitizations we
have sponsored. We had little sales activity and significantly fewer
calls of securities during the first quarter of 2006 than in the first
quarter of 2005. Operating expenses increased due to continuing
investments we are making in systems, infrastructure, and new
employees to position our business for additional growth. Provisions
for income taxes decreased because we had less income in the 2006
period.
At the beginning of the year, our GAAP book value per share was
$37.20. After declaring a regular quarterly dividend of $0.70 per
share, GAAP book value increased during this quarter by 2% to $38.11
per share.
Additional Information
Additional information on our GAAP results is available in our
Quarterly Report on Form 10-Q for the three months ended March 31,
2006 which was filed today with the Securities and Exchange
Commission. Today we also released our second "Redwood Review",
covering the first quarter of 2006. The Review (formerly the
supplemental information package) contains a discussion of first
quarter activity, taxable income and other non-GAAP performance
measures, and a review of Redwood's business and outlook. Our 10-Q and
the Redwood Review are available on our web site
(www.redwoodtrust.com).
REDWOOD TRUST, INC.
(All dollars in millions,
except per share data)
First Fourth Third Second First
Quarter Quarter Quarter Quarter Quarter
CONSOLIDATED INCOME STATEMENT 2006 2005 2005 2005 2005
----------------------------- -------- ------- ------- ------- -------
Interest Income $225.4 $230.9 $243.5 $248.4 $237.2
Interest Expense (180.7) (189.7) (196.6) (195.2) (176.0)
----------------------------- -------- ------- ------- ------- -------
Net Interest Income 44.7 41.2 46.9 53.2 61.2
Operating Expenses (11.8) (12.1) (10.9) (11.1) (10.7)
Net Recognized (Losses) Gains
and Valuation Adjustments (1.9) 17.8 24.9 3.1 15.0
Variable Stock Option Income 0.0 0.0 0.0 0.0 0.1
Excise Tax Expense (0.3) (0.3) (0.3) (0.3) (0.3)
Provision For Income Taxes (2.7) (4.1) (4.7) (4.0) (4.7)
------- ------- ------- ------- -------
GAAP Earnings $28.0 $42.5 $55.9 $40.9 $60.6
Average Diluted Shares
(thousands) 25,703 25,311 25,314 25,196 25,021
GAAP Earnings per Share
(diluted) $1.09 $1.68 $2.21 $1.62 $2.42
Regular Dividends per Share $0.70 $0.70 $0.70 $0.70 $0.70
Special Dividends per Share 0.00 3.00 0.00 0.00 0.00
----------------------------- -------- ------- ------- ------- -------
Total Dividends per Share $0.70 $3.70 $0.70 $0.70 $0.70
REDWOOD TRUST, INC.
(All dollars in millions,
except per share data)
31-Mar 31-Dec 30-Sep 30-Jun 31-Mar
CONSOLIDATED BALANCE SHEET 2006 2005 2005 2005 2005
-------------------------- ------- -------- -------- -------- --------
Residential Real Estate
Loans $11,990 $13,875 $16,556 $19,630 $21,772
Residential Loan Credit-
Enhancement Securities 644 613 664 706 611
Commercial Real Estate
Loans 55 60 56 42 57
Commercial Loan Credit-
Enhancement Securities 67 58 44 29 29
Securities Portfolio 1,818 1,749 1,783 1,649 1,505
Cash and Cash Equivalents 85 176 163 72 65
Other Assets 320 246 239 218 246
-------------------------- ------- -------- -------- -------- --------
Total Consolidated Assets $14,979$16,777$19,505$22,346$24,285
Redwood Trust Debt $0 $170 $162 $453 $199
Consolidated Asset-Back
Securities Issued 13,930 15,585 18,237 20,815 23,057
Other Liabilities 82 87 90 86 81
Equity 967 935 1,016 992 948
-------------------------- ------- -------- -------- -------- --------
Total Liabilities and
Equity $14,979 $16,777 $19,505 $22,346 $24,285
Shares Outstanding at
Period End (thousands) 25,382 25,133 24,764 24,647 24,514
GAAP Equity (GAAP Book
Value) per Share $38.11 $37.20 $41.03 $40.24 $38.67
CONTACT: Redwood Trust, Inc.
Harold Zagunis, 415-389-7373
SOURCE: Redwood Trust, Inc.