Redwood Trust, Inc. · NYSE:RWT
Redwood Trust — Q4 2024 Earnings Presentation
35 slides from Redwood Trust's earnings presentation, Feb 27, 2025
Slide 1: Q4 2024 Redwood Review
Q4 2024 Redwood Review February 13, 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 2025 Strategic Priorities
Redwood’s 2025 Strategic Priorities Capture market share across operating platforms, including through new Aspire loan programs Grow volumes with ongoing distribution efficiency and portfolio optimization Deepen partnerships with banks given anticipated industry consolidation and balance sheet manag
Slide 4: Redwood Provides Liquidity Across the Entire Single-Family Residential Market
Redwood Provides Liquidity Across the Entire Single-Family Residential Market Housing Target Returns(1): Investors 15-20% Bridge & Term Loans, DSCR Detailed Endnotes and Summary of Terms are included at the end of this presentation. 4
Slide 5: Full Year 2024 Financial & Operational Highlights
Full Year 2024 Financial & Operational Highlights Our full year results demonstrate improved financial and operating metrics in 2024 FINANCIAL HIGHLIGHTS OPERATIONAL HIGHLIGHTS Grew Earnings GAAP Earnings Non-GAAP EAD* Sequoia Loans Locked Per Share Per Share $9.0bn +158% YoY $0.32 $0.52 CoreVest Lo
Slide 6: Fourth Quarter 2024 Financial Performance
Fourth Quarter 2024 Financial Performance Earnings Per Share GAAP Book Value Per Share GAAP EPS Non-GAAP EAD Per Share* $8.74 $0.09 $8.46 $0.18 $0.13 ($0.07) Q3'24 Q4'24 Q3'24 Q4'24 Q3'24 Q4'24 Q4’24 Total Economic Return: (1.1%)%(1) Common Dividend Per Share Return on Equity GAAP ROE Non-GAAP EAD R
Slide 7: Fourth Quarter 2024 Financial Performance (Continued)
Fourth Quarter 2024 Financial Performance (Continued) Capital Allocation & Revenue Mix(1) Financing & Capital $1.6 billion of allocated capital(1) Recourse Leverage Ratio(2) 29% Mortgage CoreVest Banking 7% 2.5x 2.4x Sequoia 22% Single- Family 58% Multifamily Q3'24 Q4'24 13% 71% Redwood Investments
Slide 8: Fourth Quarter 2024 & Recent Business Performance
Fourth Quarter 2024 & Recent Business Performance ▪ At December 31, 2024: ▪ Unrestricted cash and cash equivalents of $245 million Financing & Capital ▪ Unencumbered assets of approximately $325 million ▪ Completed an opportunistic $40 million reopening of our 7.75% convertible notes due 2027, effec
Slide 9: Aspire Expanded Programs Address Growing Market Demand
Aspire Expanded Programs Address Growing Market Demand In January 2025, we announced the formal launch of new Aspire loan programs to meet the growing borrower demand Broadened mandate designed to meet growing consumer need for flexible financing solutions ▪ Represents large and growing addressable
Slide 10: Redwood's Deepening Opportunities with Banks
Redwood’s Deepening Opportunities with Banks Redwood is a preferred partner to our bank loan sellers as they evaluate their evolving approach to residential lending Banks are pulling back from residential …providing a unique opportunity for lending… Redwood as a non-bank partner: ▪ “Higher for longe
Slide 11: Housing Policy and Regulatory Reform
Housing Policy and Regulatory Reform Redwood’s business model is well-positioned to respond to potential changes to housing policy and regulations Key areas of potential housing policy and Redwood’s GSE-Style Offerings regulatory reform: Our operating model is primed to benefit from potential ▪ Rati
Slide 12: Operating Businesses & Investments
Operating Businesses & Investments 12
Slide 13: Operating Businesses: Market Leading Distribution Platforms
Operating Businesses: Market Leading Distribution Platforms Through securitizations, whole loan sales and sales to JVs, Redwood continues to demonstrate leading distribution capabilities across our operating businesses FY’24 Distribution Achievements Total Distribution ($bn) ▪ Completed 13 securitiz
Slide 14: Operating Businesses: Increased Efficiency & Profitability
Operating Businesses: Increased Efficiency & Profitability We have strengthened our operations, improving our efficiency metrics and supporting higher returns for shareholders Increased Efficiency(1) Optimized Use of Capital(2) Return on Capital(3) Our operating platforms demonstrated We were succes
Slide 15: Sequoia Mortgage Banking Fourth Quarter 2024 Performance
Sequoia Mortgage Banking Fourth Quarter 2024 Performance In addition to ongoing market share growth, we see additional opportunities to support banks with balance sheet solutions Q4’24 Quarterly Overview • Q4’24 GAAP return on capital of 23%, compared to 30% • Achieved gross margins of 181 bps durin
Slide 16: CoreVest Mortgage Banking Fourth Quarter 2024 Performance
CoreVest Mortgage Banking Fourth Quarter 2024 Performance Q4’24 capped off a strong year in funding activity for CoreVest, which delivered 9% YoY growth in volumes Q4’24 Quarterly Overview Composition of Q4’24 Quarterly Fundings(2) Multifamily • GAAP return on capital of 12% and non-GAAP EAD Term (4
Slide 17: Redwood Investments Fourth Quarter 2024 Performance
Redwood Investments Fourth Quarter 2024 Performance Our Redwood Investments portfolio is supported by our organically-created and third-party investments that align with our long-term view on housing credit Q4’24 Quarterly Performance • Continue to focus on accretive capital deployment, particularly
Slide 18: Redwood Investments: Summary of Credit Characteristics
Redwood Investments: Summary of Credit Characteristics Strong underlying fundamentals could contribute to further upside in book value and recovery of portfolio discount over time Summary of Portfolio Characteristics 18.0 Underlying Loan Seasoning (Years)(1) 3.5 3.9 1.8 Lower sensitivity to changes
Slide 19: Redwood Investments: CoreVest Bridge Loans
Redwood Investments: CoreVest Bridge Loans We maintain a diversified portfolio of organically created bridge loans CoreVest Bridge Portfolio Characteristics at 12/31/24 Evolution of CoreVest Bridge Portfolio Coupon Range Maturity by Quarter ($mm) • Since the end of 2022, we have strategically increa
Slide 20: RWT Horizons
RWT Horizons® We added three new RWT Horizons investments in Q4’24, including a follow-on to an existing RWT Horizons portfolio company RWT Horizons Opportunity Thesis Enhance efficiency Early-stage companies Partnerships drive Alignment with and scale in Redwood with opportunity for growth and tech
Slide 21: Financial Results
REDWOOD TRUST Financial Results
Slide 22: Detailed Endnotes are included at the end of this presentation. Note: Numbers may not
Detailed Endnotes are included at the end of this presentation. Note: Numbers may not foot due to rounding. 22
Slide 23: Detailed Endnotes are included at the end of this presentation. Note: Numbers may not
Detailed Endnotes are included at the end of this presentation. Note: Numbers may not foot due to rounding. 23
Slide 24: Capital Allocation Summary
Detailed Endnotes are included at the end of this presentation Note: Numbers may not foot due to rounding. 24 .
Slide 25: Detailed Endnotes are included at the end of this presentation. Note: Numbers may not
Detailed Endnotes are included at the end of this presentation. 25 Note: Numbers may not foot due to rounding.
Slide 26: Detailed Endnotes are included at the end of this presentation. Note: Numbers may not
Detailed Endnotes are included at the end of this presentation. 26 Note: Numbers may not foot due to rounding.
Slide 27: Recourse Debt Scheduled Maturities
Recourse Debt Scheduled Maturities ($ in millions) Detailed Endnotes are included at the end of this presentation. 27 Note: Numbers may not foot due to rounding.
Slide 28: Endnotes
REDWOOD TRUST Endnotes
Slide 29: Non-GAAP Measures
Non-GAAP Measures Earnings Available for Distribution (“EAD”) and EAD Return on Common 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 common equity (“GAAP ROE”), respectively. EAD is defined a
Slide 30: Non-GAAP Measures
Non-GAAP Measures EAD Net Contribution and EAD Net Contribution Return on Capital (“ROC”) EAD Net Contribution and EAD Net Contribution Return on Capital are non-GAAP measures derived from GAAP Net Contribution and GAAP Return on Capital, respectively. EAD Net Contribution presents a measure of the
Slide 31: Non-GAAP Measures
Non-GAAP Measures EAD Net Contribution and EAD Net Contribution Return on Capital (“ROC”) (continued from prior slide) (1) See footnotes to table on prior page for a full description of these adjustments. 31 Note: Numbers may not foot due to rounding.
Slide 32: Endnotes
Endnotes Slide 4 (Redwood Provides Liquidity Across the Entire Single-Family Residential Slide 7 (Fourth Quarter 2024 Financial Performance (Continued)) Market) Source: Company financial data as of December 31, 2024 unless otherwise noted. Market Source: Company financial data as of December 31, 20
Slide 33: Endnotes
Endnotes Slide 11 (Housing Policy and Regulatory Reform) Source: Company financial data as of December 31, 2024 unless otherwise noted. Slide 17 (Redwood Investments Fourth Quarter 2024 Performance) 1. Source: US Median Household Income per Federal Reserve Economic Data, Source: Company financial d
Slide 34: Endnotes
Endnotes Slide 25 (Appendix: Mortgage Banking Key Results) Slide 22 (Appendix: Income Statement) 1. EAD Net Contribution and EAD Net Contribution Return on Capital are non-GAAP 1. Net interest expense from “Corporate (unsecured debt)” consists primarily of interest measures. Please refer to Non-GAAP
Slide 35: 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