Core Viewpoint - Redwood Trust (RWT) has been upgraded to a Zacks Rank 1 (Strong Buy) due to an upward trend in earnings estimates, which significantly influences stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system is based on changes in a company's earnings picture, which is a strong indicator of near-term stock price movements [2][4]. - The correlation between earnings estimate revisions and stock price movements is well-established, with institutional investors using these estimates to determine fair value [4][6]. Company Performance Indicators - For the fiscal year ending December 2025, Redwood Trust is expected to earn $0.82 per share, reflecting a 57.7% increase from the previous year [8]. - Over the past three months, the Zacks Consensus Estimate for Redwood Trust has increased by 5.6%, indicating positive sentiment among analysts [8]. Zacks Rating System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [7]. - Only the top 5% of Zacks-covered stocks receive a 'Strong Buy' rating, indicating superior earnings estimate revisions and potential for market-beating returns [9][10].

Company Overview - Redwood Trust, Inc. issued its Shareholder Letter for Q1 2025 on April 21, 2025[6] - The company is listed on the New York Stock Exchange under the symbol RWT[4] - Redwood Trust is classified as an emerging growth company under the Securities Act[4] - Redwood Trust has multiple classes of securities registered, including common stock and various senior notes[4] Financial Performance - Redwood Trust reported significant financial results in the attached shareholder letter, which includes detailed performance metrics[6] - The financial statements and exhibits related to the Q1 2025 results are included in the report[8] - Redwood Trust's financial condition and operational results are subject to further detailed analysis in the shareholder letter[6] Compliance and Governance - The report was signed by Brooke E. Carillo, the Chief Financial Officer of Redwood Trust[12] - The company is committed to transparency and compliance with SEC regulations[7] Operational Insights - The shareholder letter provides insights into operational performance and future strategies[6]

Redwood Trust (RWT) shares soared 9.5% in the last trading session to close at $5.42. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 21.2% loss over the past four weeks.Redwood Trust’s surge in its stock price follows the broader market rally driven by the optimism surrounding Trump’s announcement on April 9, 2025, of a 90-day pause on reciprocal tariffs for most trading partners, excluding China. The tariff pause reduced immedi ...

Business Segments - The company operates in three segments: Sequoia Mortgage Banking, CoreVest Mortgage Banking, and Redwood Investments, with no changes to the composition of the segments[23]. - Sequoia Mortgage Banking primarily generates income from net interest income on loans held-for-sale and mortgage banking activities, including valuation changes and gains/losses from hedges[25]. - CoreVest Mortgage Banking focuses on originating residential investor loans, with term loans typically ranging from 3 to 30 years and bridge loans from 12 to 36 months, generating income from net interest and origination fees[26]. - Redwood Investments includes organic investments from mortgage banking operations and third-party investments, with income sources being net interest income, changes in fair value, and realized gains/losses[27]. Employee Management - As of December 31, 2024, the company employed 283 full-time employees, with 147 (52%) directly engaged in CoreVest operations[32]. - The company reported a voluntary employee turnover rate of 7.5% for 2024, indicating effective employee retention strategies[34]. - The company offers a competitive compensation structure, including financial incentives and health benefits, to attract and retain talent[36]. Corporate Responsibility and Governance - The company prioritizes corporate responsibility initiatives aligned with its mission to make quality housing accessible to all American households[37]. - The Chief Executive Officer and Chief Financial Officer have executed certifications as required by the Sarbanes-Oxley Act, ensuring compliance with corporate governance standards[43]. - The company will post any amendments to its Code of Ethics and waivers for executive officers on its website, ensuring transparency in governance practices[41]. Market Competition and Risks - The company faces intense competition from various financial institutions, including commercial banks and mortgage REITs, which may impact its ability to compete successfully[38]. - Regulatory developments in housing and real estate markets can adversely affect the company's business and the value of its assets[39]. - The company is committed to managing various market risks, including credit risk, interest rate risk, and liquidity risk, to enhance earnings and dividends while preserving capital[547]. - The company actively manages risks based on historical experience to maintain capital levels consistent with identified risks[547]. - The company is subject to various types of risks and uncertainties that may impact its operations and financial results, as detailed in the "Risk Factors" section of the Annual Report[548].

Q4 2024 Redwood Review February 13, 2025 R E D W O O D T R U S T . C O M Cautionary Statement; Forward-Looking Statements This presentation contains forward-looking statements, including statements regarding our 2025 forward outlook and strategic priorities, key drivers to increase earnings and book value, current target returns related to capital deployment opportunities and estimates of upside and potential earnings in our Redwood Investments segment from embedded discounts to par value on securities. For ...

Financial Data and Key Metrics Changes - The company reported GAAP earnings of negative $8.4 million for Q4 2024, compared to positive $13.1 million in Q3 2024, reflecting a GAAP return on equity of negative 3% [40] - For the full year 2024, GAAP earnings were positive $47 million, equating to a GAAP return on equity of 4.1% [41] - The book value per share decreased to $8.46 in Q4 2024 [41] - The total economic return for the full year 2024 was 5.7%, inclusive of common dividends, which were increased twice during the year [42] Business Line Data and Key Metrics Changes - The Sequoia platform achieved $9 billion in total lock volume for 2024, with 40% sourced in bulk form [26] - CoreVest fundings totaled $501 million in Q4 2024, up nearly 10% from Q3 2024, marking the highest volume since Q3 2022 [31] - The Aspire platform was launched in early 2024 to provide innovative solutions for homeowners, expanding its loan product offerings [14] Market Data and Key Metrics Changes - The company noted that banks represented 40% of its lock volume in 2024, doubling from 2023 [12] - The market for alternative loan products is growing, with the Aspire platform targeting a $100 billion addressable market [15][52] - The company expects a 30% plus year-over-year volume increase in its mortgage banking businesses in 2025 [50] Company Strategy and Development Direction - The company's top strategic priority is to capitalize on the downsizing of mortgage activity within the banking sector, which has accelerated recently [11] - The company aims to expand its bank seller network and expects to benefit from increased M&A activity in the banking sector [13] - The focus on GSE reform and addressing housing affordability is seen as a potential opportunity for the company [16][19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the potential for significant market share gains despite elevated mortgage rates and flat housing activity in 2025 [10] - The company anticipates strong profitability and growth in its core business and new initiatives aimed at expanding access to credit [21] - Management highlighted the importance of maintaining a strong liquidity position and the ability to capitalize on market opportunities [74] Other Important Information - The company reported a significant increase in unrestricted cash to $245 million as of December 31, 2024 [47] - The company has reduced its convertible debt as a percentage of equity from 65% two years ago to 31% at the end of 2024 [47] - The company is focused on optimizing its capital allocation and leveraging its strong liquidity to support growth [114] Q&A Session Summary Question: Current run rate EAD relative to the dividend - Management discussed the quality of EAD and the impact of nonrecurring income on the dividend, expressing confidence in future EAD growth [54][55][60] Question: Competitive environment in BPL - Management noted that the competitive environment is evolving positively, with a strong product mix and distribution capabilities [67][70] Question: Trends in leverage and liquidity - Management indicated that leverage could trend between 2% to 3% depending on the timing of portfolio activities, expressing confidence in their liquidity position [71][74] Question: Expansion of the credit box - Management highlighted the potential for expanding the Aspire platform and accessing a large addressable market for alternative loan products [76][78] Question: Capital allocation philosophy - Management discussed the flexibility gained from reduced unsecured debt and the focus on optimizing capital allocation for growth [82][86] Question: Mortgage banking results and delinquencies - Management explained the shift in income sources and addressed concerns regarding delinquencies, attributing increases to borrower issues rather than seasonal factors [120][128]

Redwood Trust (RWT) reported $27.6 million in revenue for the quarter ended December 2024, representing a year-over-year increase of 38%. EPS of $0.13 for the same period compares to $0.05 a year ago.The reported revenue represents a surprise of +6.15% over the Zacks Consensus Estimate of $26 million. With the consensus EPS estimate being $0.16, the EPS surprise was -18.75%.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Street ...

Core Viewpoint - Redwood Trust reported quarterly earnings of $0.13 per share, missing the Zacks Consensus Estimate of $0.16 per share, but showing an improvement from $0.05 per share a year ago, indicating a mixed performance in earnings expectations [1][2]. Earnings Performance - The company experienced an earnings surprise of -18.75% for the recent quarter, while it had a positive surprise of 28.57% in the previous quarter [1][2]. - Over the last four quarters, Redwood Trust has surpassed consensus EPS estimates two times [2]. Revenue Insights - Redwood Trust posted revenues of $27.6 million for the quarter ended December 2024, exceeding the Zacks Consensus Estimate by 6.15%, compared to $20 million in the same quarter last year [2]. - The company has also topped consensus revenue estimates two times over the last four quarters [2]. Stock Performance - Since the beginning of the year, Redwood Trust shares have declined by approximately 1.4%, contrasting with the S&P 500's gain of 2.9% [3]. Future Outlook - The company's earnings outlook will be crucial for determining the stock's immediate price movement, with current consensus EPS estimates at $0.18 for the coming quarter and $0.78 for the current fiscal year [4][7]. - The estimate revisions trend for Redwood Trust is currently mixed, resulting in a Zacks Rank 3 (Hold), suggesting the shares are expected to perform in line with the market in the near future [6]. Industry Context - The REIT and Equity Trust industry, to which Redwood Trust belongs, is currently positioned in the bottom 46% of over 250 Zacks industries, indicating potential challenges ahead [8].

Financial Performance - GAAP net loss attributable to common stockholders was $(8.4) million, equating to $(0.07) per basic and diluted common share[5]. - Net loss attributable to common stockholders was $8.4 million in Q4 2024, compared to net income of $13.1 million in Q3 2024[27]. - Non-GAAP Earnings Available for Distribution (EAD) was $18.4 million, or $0.13 per basic common share, down from $0.18 in the previous quarter[5]. - Earnings available for distribution (non-GAAP) was $18.4 million in Q4 2024, down from $25.2 million in Q3 2024[27]. - EAD return on common equity (non-GAAP, annualized) was 6.6% in Q4 2024, compared to 8.7% in Q3 2024[27]. - Total non-interest income for Q4 2024 was $17.6 million, significantly lower than $44.2 million in Q3 2024, primarily due to fair value changes[24]. Asset and Equity Changes - Total assets decreased to $18.258 billion in Q4 2024 from $18.427 billion in Q3 2024, reflecting a reduction in residential consumer loans[25]. - Stockholders' equity at the end of Q4 2024 was $1.188 billion, down from $1.223 billion in Q3 2024[25]. - GAAP book value per common share decreased to $8.46 at December 31, 2024, from $8.74 at September 30, 2024, reflecting an economic return on book value of (1.1)% for Q4 2024[5]. Revenue and Income Sources - Net interest income for Q4 2024 was $27.6 million, an increase from $25.5 million in Q3 2024, driven by accretive capital deployment[24]. - Sequoia mortgage banking activities generated net income of $16.8 million in Q4 2024, down from $26.7 million in Q3 2024, despite maintaining gain on sale margins above the target range[24]. - CoreVest mortgage banking activities net income decreased to $1.1 million in Q4 2024 from $1.8 million in Q3 2024 due to non-recurring fee revenue in the previous quarter[24]. Loan and Financing Activities - Locked loans totaled $2.3 billion, a 4% increase from $2.2 billion in Q3 2024, with quarterly flow volume increasing by 57%[5]. - Distributed $2.5 billion of loans through securitizations ($1.1 billion) and whole loan sales ($1.4 billion)[5]. - Funded loans amounted to $501 million, a 9% increase from $458 million in Q3 2024, with term loan volume rising 43% to $227 million[5]. - The recourse leverage ratio was 2.4x at December 31, 2024, down from 2.5x at September 30, 2024[5]. - The company maintained unrestricted cash and cash equivalents of $245 million and total excess warehouse financing capacity of $4.7 billion[9]. Strategic Outlook - The CEO highlighted expectations for further progress in 2025, focusing on strategic bank relationships and innovative loan products to enhance market share[8]. Non-GAAP Measures - EAD Net contribution and EAD Net contribution ROC are non-GAAP measures used to analyze the profitability of each business segment[10]. - GAAP ROC is defined as GAAP Net contribution adjusted for investment fair value changes, realized gains and losses, acquisition-related expenses, and organizational restructuring charges[10]. - Acquisition-related expenses include transaction costs and ongoing amortization of intangible assets from Riverbend and CoreVest acquisitions[10]. - EAD ROC is calculated by dividing EAD by average capital utilized for each respective period[10].

Core Viewpoint - Analysts forecast that Redwood Trust (RWT) will report quarterly earnings of $0.16 per share, indicating a year-over-year increase of 220% and revenues of $26 million, reflecting a 30% increase compared to the previous year [1]. Earnings Projections - Over the last 30 days, there has been a downward revision of 1.4% in the consensus EPS estimate for the quarter, indicating a collective reconsideration by analysts [2]. - Changes in earnings projections are crucial for predicting investor reactions, with empirical studies showing a strong correlation between earnings estimate trends and short-term stock price movements [3]. Revenue and Income Estimates - Analysts predict that 'Net interest income' will reach $25.90 million, up from $20 million in the same quarter last year [5]. - The estimate for 'Total non-interest income (loss), net' is projected to be $37.06 million, down from $44 million reported in the same quarter of the previous year [5]. - 'Non-interest income (loss) - Investment fair value changes, net' is expected to be -$5.75 million, a decrease from $15 million in the prior year [6]. Stock Performance - Shares of Redwood Trust have increased by 8.1% over the past month, outperforming the Zacks S&P 500 composite, which moved up by 4.2% [6]. - With a Zacks Rank 4 (Sell), RWT is anticipated to underperform the overall market in the near future [6].