Redwood Trust(RWT) - 2024 Q4 - Annual Results

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].