RWTQ · Redwood Trust, Inc. 9.75% Senior Notes Due 2031

Redwood Trust delivered a third consecutive quarter of record mortgage banking production at $8.5 billion, driven by Sequoia ($6.5 billion locked, up 22% QoQ with 96 bps gain on sale margin), Aspire ($1.6 billion locked with inaugural non-QM securitization), and CoreVest ($432 million funded). Despite late-quarter market volatility from interest rate changes and Middle East conflict, gross margins held within targets, supported by record securitization ($5.2 billion issuance) and whole loan sales. GAAP results showed a $7.3 million net loss or $(0.07) per share, primarily from $(23.2) million investment fair value changes and severance in CoreVest, contrasting with strong operating performance reflected in non-GAAP EAD of $0.21 per share (up from $0.20 prior quarter) covering the $0.18 dividend. Core segments EAD was $0.28 per share from $36.7 million mortgage platforms net income (38% ROC) and Redwood Investments loss. Book value declined to $7.12 per share due to non-cash valuations and charges. Management highlighted scalable platforms, new Castlelake JV for $8 billion jumbo loans, AI efficiencies via RWT Horizons (66% operational gains), and capital redeployment from legacy investments (down to 15% allocation). Liquidity remained strong at $202 million cash and $3.9 billion excess warehouse capacity, with recourse leverage at 5.1x tied to fast-turning mortgage assets (average 36 days on balance sheet). CEO Abate emphasized sustained demand from institutional investors and technology-driven risk management amid stagnant industry volumes.