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Press release from Business Wire

Newcastle Announces Third Quarter 2010 Results

<p> <b>Financial Results</b> </p> <p> <span class='bwuline'>Third Quarter 2010</span> </p>

Tuesday, November 09, 2010

Newcastle Announces Third Quarter 2010 Results08:00 EST Tuesday, November 09, 2010 NEW YORK (Business Wire) -- Newcastle Investment Corp. (NYSE: NCT) reported that for the quarter ended September 30, 2010, income applicable to common stockholders (“GAAP income”) was $162 million, or $2.61 per diluted share, compared to $50 million, or $0.94 per diluted share, for the quarter ended September 30, 2009. GAAP income of $162 million consisted of the following: $30 million of net interest income less expenses (net of preferred dividends), $37 million of other income, and $95 million from the reversal of prior valuation allowances on loans net of the impairment on securities. Other income was primarily related to a gain on the extinguishment of CDO debt partially offset by the decrease in value of the Company's derivatives. In the third quarter, Newcastle repurchased $48 million of CDO bonds for $1 million, recording a $47 million gain on the extinguishment of debt. During the quarter, the Company increased the over-collateralization excess in CDO's VIII, IX and X by $59 million despite $194 million of asset downgrades and received approximately $17 million of net interest cash flow and management fees from its CDO's. Nine-Months 2010 For the nine-months ended September 30, 2010, GAAP income was $460 million, or $7.77 per diluted share, compared to a loss applicable to common stockholders (“GAAP loss”) of $240 million, or $4.54 per diluted share, for the nine-months ended September 30, 2009. GAAP income of $460 million consisted of the following: $65 million of net interest income less expenses (net of preferred dividends), $146 million of other income, $43 million representing the excess of carrying amount of exchanged preferred stock over the fair value of consideration paid, and $206 million from the reversal of prior valuation allowances on loans net of the impairment on securities. Other income was primarily related to a gain on the extinguishment of CDO debt and net gain on sale of investments partially offset by the decrease in value of the Company's derivatives. In the nine months year-to-date, the Company repurchased $168 million of CDO bonds for $26 million, recording a $142 million gain on the extinguishment of debt. For a reconciliation of income (loss) applicable to common stockholders to net interest income less expenses (net of preferred dividends), please refer to the tables following the presentation of GAAP results. Recourse Debt Financing and Liquidity In the third quarter, the Company increased unrestricted cash by $21 million to $58 million and repaid the remaining $1 million of non-agency recourse debt. As a result, the Company currently does not have any recourse debt except for the Junior Subordinated Notes due in 2035. As of November 5, 2010, Newcastle had a total of $239 million of cash to invest, comprised of $63 million of unrestricted cash and $176 million of restricted cash for CDO reinvestment. This compares to $58 million of unrestricted cash and $147 million of restricted cash for CDO reinvestment at September 30, 2010. CDO Financings The following table summarizes the cash receipts in the third quarter of 2010 from the Company's consolidated CDO financings, their related coverage tests, and negative watch assets ($ in thousands):                                         InterestCoveragePrimary% Excess(Deficiency)Over Collateralization Excess (Deficiency)Assets onCollateralCashOctober 31,October 31, 2010 (2)September 30, 2010 (2)June 30, 2010 (2)NegativeTypeReceipts (1)2010 (2)%$%$%$Watch (3) CDO IV Securities $ 193 104.4% -15.3% (54,513) -15.3% (54,513) -7.8% (28,647) $ 34,478 CDO V Securities 1,656 162.1% 0.5% 1,991 0.5% 1,991 0.8% 3,173 45,053 CDO VI Securities 116 21.6% -38.7% (148,696) -42.1% (167,624) -39.6% (162,467) 51,140 CDO VIII Loans 4,506 278.6% 15.9% 102,843 16.2% 104,652 15.9% 102,714 113,602 CDO IX Loans 6,443 221.3% 17.3% 111,436 16.5% 106,526 9.4% 60,531 29,795 CDO X Securities 3,702 293.7% 3.6% 43,951 3.2% 39,543 2.4% 28,892 340,132 Total$ 16,616$ 614,200   (1) Represents net cash received from each CDO based on all of the interests in such CDO (including senior management fees). Cash receipts for the quarter ended September 30, 2010 may not be indicative of cash receipts for subsequent periods. See Forward-Looking Statements below for risks and uncertainties that could cause cash receipts for subsequent periods to differ materially from these amounts. (2) Represents excess or deficiency under the applicable interest coverage or over collateralization test to the first threshold at which cash flow would be redirected. The Company generally does not receive material cash flow from a CDO until a deficiency is corrected. The information regarding coverage tests is based on data from the most recent remittance date on or before October 31, 2010, September 30, 2010, or June 30, 2010, as applicable. The CDO IV and V tests are conducted only on a quarterly basis (December, March, June and September). (3) Represents the face amount of assets on negative watch for possible downgrade by at least one rating agency (Moody's, S&P or Fitch). Amounts are as of the determination date pertaining to September 2010 remittances for CDO IV and V (these tests are conducted only on a quarterly basis) and as of the determination date pertaining to October 2010 remittances for all other CDO's. The amounts include $55 million of bonds issued by Newcastle, which are eliminated in consolidation and not reflected in the investment portfolio disclosures. $2 million of the $17 million CDO cash receipts were senior collateral management fees, which were not subject to the related CDO coverage tests. The cash receipts above also include $4 million of non-recurring interest and extension fees received in the CDO's. Book Value GAAP book value increased by $246 million or $3.97 per share. As of September 30, 2010, GAAP book value was $(653) million or $(10.52) per share compared to $(899) million or $(14.49) per share at June 30, 2010. Dividends For the quarter ended September 30, 2010, Newcastle's Board of Directors elected not to pay a common stock or preferred stock dividend. The Company decided to retain capital for working capital purposes. Investment Portfolio Newcastle's $4.7 billion investment portfolio (with a basis of $3.1 billion) consists of commercial, residential and corporate debt. During the quarter, the weighted average carrying value of the portfolio changed from 60.2% to 64.0%, an increase of $178 million or 6%. The size of the portfolio decreased by $114 million, primarily as a result of principal repayments of $134 million, sales of $91 million and actual principal write-downs of $43 million, offset by purchases of $148 million at a weighted average price of 70% of par, a weighted average yield of 13.1% and a weighted average life of 6.3 years. The following table describes the investment portfolio as of September 30, 2010 ($ in millions):                                 % ofWeightedWeightedFaceBasisTotalNumber ofAverageAverageAmount $     Amount $ (1)     Basis     Investments     Credit (2)     Life (yrs) (3)     Carrying Value (4)Commercial Assets CMBS $ 2,070 $ 1,338 43.3 % 271 BB 3.1 62.9 % Mezzanine Loans 658 368 11.9 % 19 65% 2.0 56.0 % B-Notes 283 149 4.8 % 10 59% 2.2 52.7 % Whole Loans   102       56     1.8 % 4 80% 11.5     54.8 % Total Commercial Assets 3,113 1,911 61.8 % 3.0 60.2 %   Residential Assets MH and Residential Loans 442 377 12.2 % 11,606 704 6.7 85.3 % Subprime Securities 379 173 5.6 % 89 B- 4.4 50.4 % Real Estate ABS   79       56     1.8 % 22 BB 4.3     70.3 % 900 606 19.6 % 5.5 69.3 %   FNMA/FHLMC Securities   3       3     0.1 % 1 AAA 3.3     107.3 % Total Residential Assets 903 609 19.7 % 5.5 69.4 %   Corporate Assets REIT Debt 376 375 12.1 % 44 BB+ 3.4 38.0 % Corporate Bank Loans   301       196     6.4 % 9 C 3.6     102.4 % Total Corporate Assets 677 571 18.5 % 3.5 73.8 %                       Total/Weighted Average (5) $ 4,693     $ 3,091     100.0 % 3.6     64.0 %   (1) Net of impairment. (2) Credit represents the weighted average of minimum ratings for rated assets, the Loan to Value ratio (based on the appraised value at the time of purchase or refinancing) for non-rated commercial assets, or the FICO score for non-rated residential assets and an implied AAA rating for FNMA/FHLMC securities. Ratings provided above were determined by third party rating agencies as of a particular date, may not be current and are subject to change (including a “negative watch” assignment) at any time. (3) Weighted average life is based on the timing of expected principal reduction on the asset. (4) As a percentage of face amount. (5) Excludes CDO securities with a face amount of $80 million, as they are valued at zero in the current period, operating real estate held for sale of $9 million and loans subject to call option with a face amount of $406 million. Commercial Assets The Company owns $3.1 billion of commercial assets (with a basis of $1.9 billion), which includes CMBS, mezzanine loans, B-Notes and whole loans. During the quarter, the Company purchased $137 million, sold $84 million, had principal repayments of $95 million and had $23 million of actual principal write-downs. The Company purchased 12 CMBS assets with a weighted average rating of “BBB-” and made an additional investment in a whole loan using $6 million of unrestricted cash. No commercial assets were upgraded, 12 securities or $72 million were affirmed and 31 securities or $191 million were downgraded (from a weighted average rating of BB+ to B-). The weighted average carrying value of these assets changed from 55.1% to 60.2%, an increase of $161 million or 9%, in the quarter. CMBS portfolio ($ in thousands):                                 AverageMinimumFaceBasis% of TotalDelinquencyPrincipalWeighted AverageVintage (1)     Rating (2)     Number     Amount $     Amount $     Basis     60+/FC/REO (3)     Subordination (4)     Life (yrs) (5)   Pre 2004 BBB- 84 417,718 379,932 28.4% 5.8% 10.5% 2.5 2004 BB 60 427,435 261,147 19.5% 3.9% 5.5% 2.7 2005 BB 38 375,044 168,926 12.6% 5.9% 8.2% 3.1 2006 BBB- 56 505,578 346,212 25.9% 4.3% 12.6% 3.8 2007 & Later     BB-     33     344,068     181,559     13.6%     6.3%     13.1%     3.2   TOTAL/WA     BB     271     2,069,843     1,337,776     100.0%     5.1%     10.0%     3.1   (1) The year in which the securities were issued. (2) Ratings provided above were determined by third party rating agencies as of a particular date, which may not be current and are subject to change (including a “negative watch” assignment) at any time. The Company had approximately $372 million of CMBS assets that were on negative watch for possible downgrade by at least one rating agency as of September 30, 2010. (3) The percentage of underlying loans that are 60+ days delinquent, in foreclosure or considered real estate owned (REO). (4) The percentage of the outstanding face amount of securities that is subordinate to the Company's investments. (5) Weighted average life is based on the timing of expected principal reduction on the asset. Mezzanine loans, B-Notes and whole loans portfolio ($ in thousands):                             FaceBasis% of TotalWA First $WA Last $Asset Type     Number     Amount ($)     Amount ($)     Basis     Loan to Value (1)     Loan to Value (1)     Delinquency (%) (2) Mezzanine Loans 19 658,103 368,267 64.2% 53.7% 64.5% 13.3% B-Notes 10 283,132 149,167 26.0% 46.7% 59.0% 33.6% Whole Loans     4     102,228     55,973     9.8%     0.0%     79.9%     69.6%   Total/WA     33     1,043,463     573,407     100.0%     46.5%     64.5%     24.3%   (1) Loan to Value is based on the appraised value at the time of purchase or refinancing. (2) The percentage of underlying loans that are non-performing, in foreclosure, under bankruptcy filing or considered real estate owned. Residential Assets The Company owns $903 million of residential assets (with a basis of $609 million), which includes manufactured housing (“MH”) loans, residential loans, subprime securities and FNMA/FHLMC securities. During the quarter, the Company had principal repayments of $23 million, actual principal write-downs of $20 million and purchased $11 million of residential assets. The Company purchased two ABS assets with a weighted average rating of “CCC.” No ABS securities were upgraded, one security or $17 million was affirmed, and 11 securities or $52 million were downgraded (from a weighted average rating of B+ to CC+). The weighted average carrying value of these assets changed from 67.8% to 69.4%, an increase of $14 million or 2%, in the quarter. Manufactured housing and residential loan portfolios ($ in thousands):                                 % ofAverageAverageFaceBasisTotalLoan AgeOriginalDelinquencyCumulativeDeal     FICO Score     Amount $     Amount $     Basis     (months)     Balance $     90+/FC/REO (1)     Loss to Date   MH Loans Portfolio 1 704 156,273 126,107 33.5% 108 327,855 1.0% 6.5% MH Loans Portfolio 2 700 220,027 201,276 53.4% 138 434,743 1.4% 4.5% Residential Loans Portfolio 1 714 61,451 45,900 12.2% 88 646,357 7.1% 0.3% Residential Loans Portfolio 2     737     3,795     3,439     0.9%     68     83,950     0.0%     0.0%   TOTAL/WA     704     441,546     376,722     100.0%     120     1,492,905     2.0%     4.6%   (1) The percentage of loans that are 90+ days delinquent, in foreclosure or considered real estate owned (REO). Subprime Securities portfolio ($ in thousands): Security Characteristics:                             Average% ofMinimumFaceBasisTotalPrincipalExcessVintage (1)     Rating (2)     Number     Amount $     Amount $     Basis     Subordination (3)     Spread (4)   2003 B 15 19,957 11,641 6.7% 22.3% 4.1% 2004 B 28 85,651 31,163 18.0% 16.9% 4.0% 2005 CCC+ 26 96,682 30,728 17.7% 28.2% 4.7% 2006 CCC 10 90,837 48,184 27.8% 22.4% 4.9% 2007 & Later     B     10     85,692     51,406     29.8%     19.3%     3.3%   TOTAL/WA     B-     89     378,819     173,122     100.0%     21.9%     4.2% Collateral Characteristics:                     AverageLoan AgeCollateral3 MonthDelinquencyCumulativeVintage (1)     (months)     Factor (5)     CPR (6)     90+/FC/REO (7)     Loss to Date   2003 91 0.10 7.0% 18.2% 3.1% 2004 77 0.14 8.9% 19.9% 3.5% 2005 65 0.20 9.3% 32.4% 8.3% 2006 53 0.41 9.4% 32.8% 15.3% 2007 & Later     39     0.48     8.8%     20.8%     12.5%   TOTAL/WA     60     0.29     9.0%     26.3%     9.6% Real Estate ABS portfolios ($ in thousands): Security Characteristics:                             Average% ofMinimumFaceBasisTotalPrincipalExcessAsset Type     Rating (2)     Number     Amount $     Amount $     Basis     Subordination (3)     Spread (4)   Manufactured Housing BBB 9 48,275 46,935 84.0% 37.6% 1.6% Small Business Loans     CCC+     13     30,709     8,925     16.0%     15.4%     2.9%   TOTAL/WA     BB     22     78,984     55,860     100.0%     29.0%     2.1% Collateral Characteristics:                     AverageLoan AgeCollateral3 MonthDelinquencyCumulativeAsset Type     (months)     Factor (5)     CPR (6)     90+/FC/REO (7)     Loss to Date   Manufactured Housing 118 0.35 7.4% 3.2% 10.7% Small Business Loans     72     0.55     7.6%     29.4%     6.4%   TOTAL/WA     100     0.43     7.5%     13.4%     9.0%   (1) The year in which the securities were issued. (2) Ratings provided above were determined by third party rating agencies as of a particular date, may not be current and are subject to change (including a “negative watch” assignment) at any time. The Company had approximately $97 million of subprime and ABS securities that were on negative watch for possible downgrade by at least one rating agency as of September 30, 2010. (3) The percentage of the outstanding face amount of securities and residual interests that is subordinate to the Company's investments. (4) The annualized amount of interest received on the underlying loans in excess of the interest paid on the securities, as a percentage of the outstanding collateral balance. (5) The ratio of original unpaid principal balance of loans still outstanding. (6) Three month average constant prepayment rate. (7) The percentage of underlying loans that are 90+ days delinquent, in foreclosure or considered real estate owned (REO). Corporate Assets The Company owns $677 million of corporate assets (with a basis of $571 million), including REIT debt and corporate bank loans. During the quarter, the Company had principal repayments of $16 million and sold an $8 million REIT asset. One corporate asset was upgraded (from a rating of CCC to B) and no assets were affirmed or downgraded. The weighted average carrying value of these assets changed from 73.3% to 73.8%, an increase of $3 million or 1%, in the quarter. REIT debt portfolio ($ in thousands):                     AverageMinimumFaceBasis% of TotalIndustry     Rating (1)     Number     Amount $     Amount $     Basis   Retail BBB+ 10 75,665 71,877 19.2% Diversified CCC+ 10 94,336 95,088 25.3% Office BBB 11 115,469 117,041 31.2% Multifamily BBB 3 12,765 12,824 3.4% Hotel BBB 3 29,220 29,641 7.9% Healthcare BBB- 5 41,600 41,689 11.1% Storage A- 1 5,000 5,057 1.3% Industrial     BB-     1     2,000     2,069     0.6%   TOTAL/WA     BB+     44     376,055     375,286     100.0% Corporate bank loan portfolio ($ in thousands):                     Average% ofMinimumFaceBasisTotalIndustry     Rating (1)     Number     Amount $     Amount $     Basis   Real Estate CC 3 31,996 30,102 15.3% Media CC 2 111,764 42,051 21.5% Resorts NR 1 112,191 82,191 42.0% Restaurant B 2 18,159 15,813 8.1% Transportation     NR     1     26,992     25,643     13.1%   TOTAL/WA     C     9     301,102     195,800     100.0% (1)   Ratings provided above were determined by third party rating agencies as of a particular date, may not be current and are subject to change (including a “negative watch” assignment) at any time. The Company had approximately $2 million of REIT assets that were on negative watch for possible downgrade by at least one rating agency as of September 30, 2010. Conference Call Newcastle's management will conduct a live conference call today, November 9, 2010, at 11:00 A.M. Eastern Time to review the financial results for the quarter ended September 30, 2010. All interested parties are welcome to participate on the live call. You can access the conference call by dialing (888) 243-2046 (from within the U.S.) or (706) 679-1533 (from outside of the U.S.) ten minutes prior to the scheduled start of the call; please reference "Newcastle Third Quarter Earnings Call." A simultaneous webcast of the conference call will be available to the public on a listen-only basis at www.newcastleinv.com. Please allow extra time prior to the call to visit the site and download the necessary software required to listen to the internet broadcast. A telephonic replay of the conference call will also be available until 11:59 P.M. Eastern Time on Tuesday, November 23, 2010 by dialing (800) 642-1687 (from within the U.S.) or (706) 645-9291 (from outside of the U.S.); please reference access code “19732150.” About Newcastle Newcastle Investment Corp. owns and manages a portfolio of diversified, credit sensitive real estate debt that is primarily financed with match funded debt. Newcastle is organized and conducts its operations to qualify as a real estate investment trust (REIT) for federal income tax purposes. Newcastle is managed by an affiliate of Fortress Investment Group LLC, a global investment management firm. For more information regarding Newcastle Investment Corp. or to be added to our e-mail distribution list, please visit www.newcastleinv.com. Forward-Looking Statements Certain items in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements relating to our liquidity, future losses and impairment charges, our ability to acquire assets with attractive returns and the delinquent and loss rates on our subprime portfolios. These statements are based on management's current expectations and beliefs and are subject to a number of trends and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements, many of which are beyond our control. Newcastle can give no assurance that its expectations will be attained. Factors that could cause actual results to differ materially from Newcastle's expectations include, but are not limited to, the risk that the ongoing challenging credit and liquidity conditions continue to cause downgrades of a significant number of our securities and recording of additional impairment charges or reductions in shareholders' equity; the risk that we can find additional suitably priced investments; the risk that investments made or committed to be made cannot be financed on the basis and for the term at which we expect; the relationship between yields on assets which are paid off and yields on assets in which such monies can be reinvested; and the relative spreads between the yield on the assets we invest in and the cost and availability of debt and equity financing. Accordingly, you should not place undue reliance on any forward-looking statements contained in this press release. For a discussion of some of the risks and important factors that could affect such forward-looking statements, see the sections entitled “Risk Factors” and “Management's Discussion and Analysis of Financial Condition and Results of Operation” in the Company's Quarterly Report on Form 10-Q, which is available on the Company's website (www.newcastleinv.com). In addition, new risks and uncertainties emerge from time to time, and it is not possible for the Company to predict or assess the impact of every factor that may cause its actual results to differ from those contained in any forward-looking statements. Such forward-looking statements speak only as of the date of this press release. Newcastle expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or change in events, conditions or circumstances on which any statement is based.   Newcastle Investment Corp.Consolidated Statements of Operations (Unaudited)(dollars in thousands, except per share data)           Three Months Ended September 30,     Nine Months Ended September 30,2010     20092010     2009 Interest income $ 81,040 $ 75,222 $ 225,315 $ 287,033 Interest expense   42,547     52,438     131,277     167,154   Net interest income   38,493     22,784     94,038     119,879     Impairment Valuation allowance (reversal) on loans (105,360 ) (6,926 ) (292,668 ) 83,093 Other-than-temporary impairment on securities 3,616 130,555 102,397 526,691 Portion of other-than-temporary impairment on  securities recognized in other comprehensive income (loss),  net of reversal of other comprehensive loss into net income (loss)   6,425     (32,827 )   (15,575 )   (88,105 )   (95,319 )   90,802     (205,846 )   521,679     Net interest income (loss) after impairment 133,812 (68,018 ) 299,884 (401,800 )   Other Income (Loss) Gain (loss) on settlement of investments, net (1,134 ) (1,709 ) 17,497 7,788 Gain on extinguishment of debt 46,624 132,534 141,698 186,209 Other income (loss), net   (8,828 )   (1,956 )   (12,606 )     2,474     36,662     128,869     146,589       196,471   Expenses Loan and security servicing expense 1,116 1,097 3,473 3,869 General and administrative expense 1,775 2,230 6,751 6,821 Management fee to affiliate 4,258 4,492 12,993 13,475 Depreciation and amortization   36     73     161     218     7,185     7,892     23,378     24,383     Income (loss) from continuing operations 163,289 52,959 423,095 (229,712 ) Income (loss) from discontinued operations   213     79     186     (96 ) Net Income (Loss) 163,502 53,038 423,281 (229,808 ) Preferred dividends (1,395 ) (3,375 ) (6,058 ) (10,126 ) Excess of carrying amount of exchanged preferred stock  over fair value of consideration paid - Note 9   -     -     43,043     -   Income (Loss) Applicable to Common Stockholders $ 162,107   $ 49,663   $ 460,266   $ (239,934 ) Income (loss) Per Share of Common Stock Basic $ 2.61   $ 0.94   $ 7.77   $ (4.54 ) Diluted $ 2.61   $ 0.94   $ 7.77   $ (4.54 ) Income (loss) from continuing operations per share of common stock,after preferred dividends and excess of carrying amount ofexchanged preferred stock over fair value of consideration paid Basic $ 2.61   $ 0.94   $ 7.77   $ (4.54 ) Diluted $ 2.61   $ 0.94   $ 7.77   $ (4.54 ) Income (loss) from discontinued operations per shareof common stock Basic $ -   $ -   $ -   $ -   Diluted $ -   $ -   $ -   $ -     Weighted Average Number of Shares of Common Stock Outstanding Basic   62,024,945     52,905,335     59,249,175     52,850,034   Diluted   62,024,945     52,905,335     59,249,175     52,850,034     Dividends Declared per Share of Common Stock $ -   $ -   $ -   $ -     Newcastle Investment Corp.Consolidated Balance Sheets(dollars in thousands, except share data)           September 30, 2010     (Unaudited)December 31, 2009AssetsNon-Recourse VIE Financing Structures Real estate securities, available for sale $ 1,941,162 $ 1,784,487 Real estate related loans, held for sale, net 736,386 554,367 Residential mortgage loans, held for investment, net 127,830 - Residential mortgage loans, held for sale, net 255,452 380,123 Subprime mortgage loans subject to call option 403,584 403,006 Restricted cash 156,825 200,251 Derivative assets 4,403 - Receivables and other assets   32,571     36,643     3,658,213     3,358,877   Recourse Financing Structures and Unlevered Assets Real estate securities, available for sale 1,117 46,308 Real estate related loans, held for sale, net 32,821 19,495 Residential mortgage loans, held for sale, net 343 3,524 Operating real estate, held for sale 9,066 9,966 Cash and cash equivalents 58,336 68,300 Receivables and other assets   170     8,158     101,853     155,751   $ 3,760,066   $ 3,514,628     Liabilities and Stockholders' Equity (Deficit)LiabilitiesNon-Recourse VIE Financing Structures CDO bonds payable $ 3,393,139 $ 4,058,928 Other bonds payable 266,243 303,697 Notes payable 4,516 - Financing of subprime mortgage loans subject to call option 403,584 403,006 Derivative liabilities 220,447 203,054 Accrued expenses and other liabilities   7,076     2,992     4,295,005     4,971,677   Recourse Financing Structures and Other Liabilities Repurchase agreements - 71,309 Junior subordinated notes payable 51,255 103,264 Derivative liabilities - 4,100 Due to affiliates 1,419 1,497 Accrued expenses and other liabilities   3,571     3,433     56,245     183,603     4,351,250     5,155,280     Stockholders' Equity (Deficit) Preferred stock, $0.01 par value, 100,000,000 shares authorized, 1,347,321 and 2,500,000 shares of 9.75% Series B Cumulative Redeemable Preferred Stock 496,000 and 1,600,000 shares of 8.05% Series C Cumulative Redeemable Preferred Stock, and 620,000 and 2,000,000 shares of 8.375% Series D Cumulative Redeemable Preferred Stock liquidation preference $25.00 per share, issued and outstanding as of September 30, 2010 and December 31, 2009, respectively 61,583 152,500 Common stock, $0.01 par value, 500,000,000 shares authorized, 62,024,945 and 52,912,513 shares issued and outstanding at September 30, 2010 and December 31, 2009, respectively 620 529 Additional paid-in capital 1,065,362 1,033,520 Accumulated deficit (1,527,368 ) (2,193,383 ) Accumulated other comprehensive income (loss)   (191,381 )   (633,818 )   (591,184 )   (1,640,652 ) $ 3,760,066   $ 3,514,628     Newcastle Investment Corp.Reconciliation of Net Interest Income Less Expenses (Net of Preferred Dividends)(dollars in thousands)(Unaudited)           Three Months Ended September 30,Nine Months Ended September 30,2010     20092010     2009 Income (Loss) Applicable to Common Stockholders $ 162,107 $ 49,663 $ 460,266 $ (239,934 ) Add (Deduct): Impairment (including the reversal of prior valuation allowance on loans) (95,319 ) 90,802 (205,846 ) 521,679 Other (Income) Loss (36,662 ) (128,869 ) (146,589 ) (196,471 ) Excess of carrying amount of exchanged preferred stock over fair value of consideration paid - - (43,043 ) - Loss from discontinued operations   (213 )   (79 )   (186 )   96   Net Interest Income less Expenses (Net of Preferred Dividends) $ 29,913   $ 11,517   $ 64,602   $ 85,370   Newcastle Investment Corp.Nadean Finke Novogratz, 212-479-5295Investor Relations