Redwood Trust, Inc. · NYSE:RWT
Redwood Trust — Wedbush Virtual Housing & Housing Finance Conference 2022
25 slides from Redwood Trust's conference presentation, Dec 13, 2022
Slide 1: Wedbush Virtual Housing & Housing Finance Conference
Redwood Trust Wedbush Virtual Housing & Housing Finance Conference December 13, 2022 1
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains forward-looking statements, including statements regarding our 2022 forward outlook, estimates of upside and potential earnings in our investment portfolio from embedded discounts to par value on securities, and indicative yields and return on eq
Slide 3: Select Q4 2022 Corporate Highlights
Select Q4 2022 Corporate Highlights 3
Slide 4: Select Q4'22 Corporate Highlights
Select Q4’22 Corporate Highlights Convertible Debt Repurchase Secured Financing Repurchased $32 Million Closed $150 Million Borrowing Facility to of Convertible Debt Finance Home Equity Investments (“HEI”) ✓ Year to date, we have repurchased ~$90 ✓ Represents new borrowing line for HEI million of co
Slide 5: Select Q3 2022 Redwood Review Slides
Select Q3 2022 Redwood Review Slides The following section includes slides that were included in the Q3 2022 Redwood Review, published on October 27, 2022. These slides are included as originally published and have not been updated or revised from October 27, 2022. Slides 15 and 16, with information
Slide 6: Redwood's mission is to help make quality housing accessible
Redwood’s mission is to help make quality housing, whether rented or owned, accessible to all American households OUR DIFFERENTIATORS 28-Year Track Record of Control Credit through Strong Performance Disciplined Underwriting and Earnings Generation Diversified Product Set Ability to Organically with
Slide 7: Redwood Operates Across Three Complementary Business Lines
Redwood Operates Across Three Complementary Business Lines Redwood’s business model is geared toward providing strategic capital for sustainable innovation in housing finance Residential Business Purpose Investment Mortgage Banking Mortgage Banking Portfolio Market leading non-Agency Leading direct
Slide 8: Funding by Business
Funding by Business Across our business lines and investment portfolio, we have significant excess financing capacity and low exposure to marginable debt(1) Investment Residential Business Purpose Portfolio Mortgage Banking Mortgage Banking $2.2 billion of debt $0.6 billion of debt $0.3 billion of d
Slide 9: Investment Portfolio
Investment Portfolio Credit performance remains strong across our portfolio of investments Investment Portfolio by Quarterly Performance Economic Investments(2) ▪ Q3’22 market value changes in the portfolio were $3.6 billion Housing Credit Investments primarily driven by macro market conditions that
Slide 10: Additional Drivers of Potential Long-Term Book Value Upside
We See Additional Drivers of Potential Long-Term Book Value Upside in our Securities Portfolio Potential Upside to Book Value $458mm of Net Portfolio Discount to Par(1) $16.00 $4.05 Third-Party Our ability to realize Book Value Per Share CAFL Securities $12.00 this potential book Securities 9% $10.1
Slide 11: Outlook for Investment Portfolio
Outlook for Investment Portfolio Our portfolio is positioned for a potential slowdown in HPA ▪ During the third quarter, our investment portfolio continued to demonstrate strong performance ▪ Our investment portfolio strategy is based on our outlook for housing credit and we primarily target investm
Slide 12: Investment Portfolio - SLST 2018-2
Investment Portfolio - SLST 2018-2 Our SLST 2018-2 investment serves as an example of the strong and stable underlying credit performance of our RPL investments SLST 2018-2 Summary Stable Delinquency Levels (% 90+ DQ) ▪ Our SLST 2018-2 investment, which represents ~50% Overall delinquencies in the i
Slide 13: Investment Portfolio - Home Equity Investments (HEI)
Investment Portfolio - Home Equity Investments (“HEI”) Over the last few years, we have steadily established our investment in HEI based on our long-term thesis on housing ▪ HEIs are an effective and attractive option for Redwood’s Investments in HEI homeowners seeking to access the equity in their
Slide 14: Investment Portfolio – BPL Bridge Loans
Investment Portfolio – BPL Bridge Loans Our bridge loan portfolio is predominantly comprised of loans that we originate ourselves, in compliance with strict underwriting guidelines Summary of our Bridge Portfolio(2) ▪ We continue to deploy capital into Strategies Loan Geography (Top 10) organically
Slide 15: Investment Portfolio – Bridge Commitments & Maturities
Investment Portfolio – Bridge Commitments & Maturities Summary of Bridge Loans Summary of Bridge Unfunded Commitments As of 09/30/22, We expect average draws of we had $1.9 billion of bridge loan investments ~$100 to $125mm per quarter (gross) over the next 8-12 quarters ▪ Unique bridge lending stra
Slide 16: Investment Portfolio – Bridge Underwriting & Credit Strength
Investment Portfolio – Bridge Underwriting & Credit Strength Our bridge loan portfolio is predominantly comprised of loans that we originate ourselves, in compliance with strict underwriting guidelines ▪ We control underwriting guidelines and standards for bridge loans we originate in our portfolio
Slide 17: Business Purpose Mortgage Banking
Business Purpose Mortgage Banking We have seen continued steady demand for our bridge products, while SFR demand has waned amidst higher rates Quarterly Highlights ▪ CoreVest funded $570 million of loans in Q3’22 (83% bridge / 17% SFR) ▪ Bridge demand remains elevated (driven by multi-family product
Slide 18: Business Purpose Lending Market Opportunity
Business Purpose Lending Market Opportunity Current dynamics in the housing market provide continued tailwinds to support growth in Business Purpose Lending and demand for CoreVest’s diverse product suite Durability of BPL Demand Amidst Higher Rates & Recessionary Markets P BPL is an attractive and
Slide 19: Residential Mortgage Banking
Residential Mortgage Banking As volatility persists, Redwood has maintained leadership as a partner of choice to both our loan sellers and buyers / investors Quarterly Highlights Quarterly Volume ($bn) ▪ Positioned conservatively given market backdrop $4.7 ▪ $461 million of quarterly locks, down 54%
Slide 20: Industry-Leading Distribution Platform is a Clear Differentiator
Industry-Leading Distribution Platform is a Clear Differentiator We were able to successfully distribute our inventory through securitizations and whole loan sales in Q3’22 despite challenged market conditions Redwood Distribution Overview Residential Mortgage Banking (Sequoia) ▪ Industry leader for
Slide 21: RWT Horizons
RWT Invests primarily in early-stage companies that drive innovation in financial and HORIZONS real estate technology Horizons Opportunity Thesis P Enhance efficiency and P Early-stage companies with P Partnerships drive growth and P Alignment with Redwood’s scale in Redwood opportunity for technolo
Slide 22: Endnotes
Endnotes 22
Slide 23: Endnotes
Endnotes Slide 4 (Select Q4’22 Corporate Highlights) Source: Company financial data as of December 12, 2022. Slide 8 (Funding by Business) Source: Company financial data as of September 30, 2022 unless otherwise 1. Represents management expectations of 2023 annual run-rate expenses noted. relative
Slide 24: Endnotes
Endnotes Slide 10 (We See Additional Drivers of Potential Long-Term Book Value Upside in our Securities Portfolio) Slide 14 (Investment Portfolio - BPL Bridge Loans) Source: Company financial data as of September 30, 2022 unless otherwise Source: Company financial data as of September 30, 2022 unl
Slide 25: Endnotes
Endnotes Slide 19 (Residential Mortgage Banking) Source: Company financial data as of September 30, 2022 unless otherwise noted. 1. Lock volume does not account for potential fallout from pipeline that typically occurs through the lending process. 2. Total net loan exposure represents the sum of $0.
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