Redwood Trust, Inc. · NYSE:RWT
Redwood Trust — Q1 2025 Earnings Presentation
27 slides from Redwood Trust's earnings presentation, Apr 30, 2025
Slide 1: Q1 2025 Redwood Review
Q1 2025 Redwood Review April 30, 2025 REDWOODTRUST.COM
Slide 2: Cautionary Statement; Forward-Looking Statements
Cautionary Statement; Forward-Looking Statements This presentation contains forward-looking statements, Other risks, uncertainties, and factors that could cause actual including statements regarding our 2025 forward outlook results to differ materially from those projected may be and strategic prior
Slide 3: Redwood's Network of Businesses
Redwood’s Network of Businesses Consumer Home Loan Homeownership and Business Purpose Portfolio Manager of Venture Fund Manager- Products for Originators Home Equity Access Loans to Housing Housing Related Fintech/Proptech Solutions Investors Investments Startups We serve areas of the housing market
Slide 4: First Quarter 2025 Financial Performance
First Quarter 2025 Financial Performance GAAP GAAP Book Value Per Share GAAP EPS GAAP ROE $8.46 $8.39 5.2% $0.10 Q4'24 Q1'25 ($0.07) -3.0% Q1’25 Total Economic Return: Q4'24 Q1'25 Q4'24 Q1'25 +1.3%(1) Non-GAAP EAD Common Dividend Per Share Non-GAAP EAD Per Non-GAAP EAD ROE* Share* $0.18 $0.18 $0.14
Slide 5: Additional First Quarter 2025 Metrics
Additional First Quarter 2025 Metrics Recourse Leverage Unrestricted Cash Illustrative Book Value Upside Ratio(2) ($mm) 2.4x 2.5x $260 ▪ Our 3/31/25 market capitalization sits ~$310 million $245 ($2.32/share) below book value ▪ 3/31/25 book value also reflects an additional ~$250 million ($1.87/shar
Slide 6: First Quarter 2025 & Recent Business Performance
First Quarter 2025 & Recent Business Performance ▪ GAAP segment net income of $25.8 million ▪ Segment GAAP ROE of 28% ▪ $4.0 billion of lock volume (+73% QoQ and +125% YoY)(1)(2) ▪ Launched new expanded loan products (e.g. Bank Statement and DSCR loans) in January 2025 ▪ $111 million of lock volume
Slide 7: Sequoia First Quarter 2025 Performance
Sequoia First Quarter 2025 Performance Correspondent jumbo platform, serving large network of mortgage originators (bank and non-bank) Q1’25 Overview Bulk vs Flow Quarterly Lock Volumes(1) $ billions • Q1’25 GAAP return on equity of 28%, compared to 23% in Q4’24 +125% YoY Increase • Gain on sale mar
Slide 8: Sequoia Volume Drivers
Sequoia Volume Drivers FY’25 Growth Drivers • Ongoing bank balance sheet management We believe growth in our volumes will continue to significantly outpace industry • Bulk transfers of seasoned loans activity(2) • Banks continue to hold over $1 trillion of legacy jumbo collateral on Sequoia vs. Indu
Slide 9: Aspire First Quarter 2025 Performance
Aspire First Quarter 2025 Performance Expanded non-QM consumer correspondent business – tailored to borrowers requiring an alternative underwriting approach Q1’25 Overview 2025 Platform Expansion Strategy • Launched our expanded loan strategy in January Scale existing products 2025 – Locked $111 mil
Slide 10: CoreVest First Quarter 2025 Performance
CoreVest First Quarter 2025 Performance Direct life-cycle lender to housing investors Q1’25 Overview • GAAP return on equity of 9% and non-GAAP EAD • Net cost to originate of 122bps(1) return on equity of 20%* • Distributed $421 million of loans • $482 million of fundings – Down 4% QoQ and up 48% Yo
Slide 11: CoreVest Volume Drivers
CoreVest Volume Drivers FY’25 Growth Drivers • Deeper footprint and greater market share in Growth in Market Volumes(1) small-balance loans (RTL and DSCR $ billions represent ~$250 billion TAM(1)) The small-balance loan market is estimated to grow 16% over the next 2 years • Homebuilder strategy shi
Slide 12: Redwood Investments First Quarter 2025 Performance
Redwood Investments First Quarter 2025 Performance Portfolio of residential housing investments sourced from our operating platforms or third parties Q1’25 Overview Q1’25 Average Capital Allocation(2) ▪ Deployed approximately $100 million of capital primarily into accretive Retained Operating Invest
Slide 13: Return Potential from Our Operating Platforms & Investments
Return Potential from Our Operating Platforms & Investments (1) Q1’25 & Target Returns & Capital Allocation Q1’25 Target YE’25 Run- Capital Allocation Evolution Towards Summary Rate(1) Retained Strategies Avg. Capital Allocated(2) Annualized Avg Annualized $mm % of Total Non-GAAP Capital Non-GAAP EA
Slide 14: Redwood Investments: Summary of Credit Characteristics
Redwood Investments: Summary of Credit Characteristics Summary of Portfolio Credit Characteristics 18.3 Underlying Loan Seasoning (Years)(1) 3.3 4.1 1.9 Lower sensitivity to changes in interest rates SLST (RPL) SEMT (Jumbo) CAFL (Term) Bridge Loans - - - Represents LTV at Origination 90% HPA Adjuste
Slide 15: Financial Results
REDWOOD TRUST Financial Results
Slide 16: Detailed Endnotes are included at the end of this presentation. Note: Numbers may not
Detailed Endnotes are included at the end of this presentation. Note: Numbers may not foot due to rounding. 16
Slide 17: Detailed Endnotes are included at the end of this presentation. Note: Numbers may not
Detailed Endnotes are included at the end of this presentation. Note: Numbers may not foot due to rounding. 17
Slide 18: Detailed Endnotes are included at the end of this presentation Note: Numbers may not
Detailed Endnotes are included at the end of this presentation Note: Numbers may not foot due to rounding. 18 .
Slide 19: Appendix: Mortgage Banking Key Results
Detailed Endnotes are included at the end of this presentation. 19 Note: Numbers may not foot due to rounding.
Slide 20: Detailed Endnotes are included at the end of this presentation. Note: Numbers may not
Detailed Endnotes are included at the end of this presentation. 20 Note: Numbers may not foot due to rounding.
Slide 21: Recourse Debt Scheduled Maturities
Recourse Debt Scheduled Maturities ($ in millions) Detailed Endnotes are included at the end of this presentation. 21 Note: Numbers may not foot due to rounding.
Slide 22: Endnotes
REDWOOD TRUST Endnotes
Slide 23: Non-GAAP Measures
Non-GAAP Measures Earnings Available for Distribution (“EAD”) and EAD Return on Equity (“EAD ROE”) EAD and EAD ROE are non-GAAP measures derived from GAAP Net income (loss) available (related) to common stockholders and GAAP return on equity (“GAAP ROE”), respectively. EAD is defined as: GAAP net in
Slide 24: Non-GAAP Measures
Non-GAAP Measures EAD and EAD Return on Equity (“ROE”) EAD and EAD Return on Equity are non-GAAP measures derived from GAAP Net Income and GAAP Return on Equity, respectively. EAD presents a measure of the profitability of our business operations and is defined as: GAAP Net Income adjusted to (i) ex
Slide 25: Endnotes
Endnotes Slide 3 (Redwood’s Network of Businesses) Slide 7 (Sequoia First Quarter 2025 Performance) Source: Company financial data as of March 31, 2025 unless otherwise noted. Market data per Source: Company financial data as of March 31, 2025 unless otherwise noted. References to “QoQ” Bloomberg
Slide 26: Endnotes
Endnotes Slide 13 (Return Potential from Our Operating Platforms & Investments) Slide 19 (Appendix: Mortgage Banking Key Results) Source: Company financial data as of March 31, 2025 unless otherwise noted. 1. EAD Net Contribution and EAD Net Contribution Return on Equity are non-GAAP measures. 1. R
Slide 27: Glossary of Terms
Glossary of Terms Term Definition Term Definition ARM Adjustable-Rate Mortgage MB Mortgage banking BFR Build for rent MSR Mortgage servicing rights bps Basis points Non-QM Non-qualified mortgage CAFL® CoreVest securitization program QM Qualified mortgage CES Closed end second liens QoQ Quarter over