MILL VALLEY, Calif.--(BUSINESS WIRE)--Redwood Trust, Inc. (NYSE:RWT; "Redwood", the "Company"), a leader in expanding access to housing for homebuyers and renters, today reported its financial results for the quarter ended December 31, 2024.
Key Q4 2024 Financial Results and Metrics
- GAAP book value per common share was $8.46 at December 31, 2024, relative to $8.74 per share at September 30, 2024
- Economic return on book value of (1.1)% for the fourth quarter and 5.7% for the full year 2024(1)
- GAAP net loss related to common stockholders of $(8.4) million or $(0.07) per basic and diluted common share
- Non-GAAP Earnings Available for Distribution ("EAD") of $18.4 million or $0.13 per basic common share(2)
- Recourse leverage ratio of 2.4x at December 31, 2024, relative to 2.5x at September 30, 2024(3)
- Declared and paid a regular quarterly dividend of $0.18 per common share, a 5.9% increase from the third quarter 2024
Q4 2024 Operational Business Highlights
Sequoia (formerly Residential Consumer) Mortgage Banking
- Generated 23% annualized GAAP Return on Capital ("ROC")
- Locked $2.3 billion of loans(4), a 4% increase from $2.2 billion in the third quarter of 2024
- Achieved gross margins well in excess of our historical target range of 75bps to 100bps, driven by spread tightening on securitization execution during the quarter
- Lock volume split 23% / 77% between bulk and flow
- Quarterly flow volume increased 57% from Q3'24 and was the highest since the first quarter 2022
- Distributed $2.5 billion of loans through a combination of securitizations ($1.1 billion) and whole loan sales ($1.4 billion)
- Securitization activity consisted of a variety of loan products, including fixed-rate jumbo loans, hybrid adjustable-rate mortgages ("ARMs") and Agency-eligible investor loans
CoreVest (formerly Residential Investor) Mortgage Banking
- Generated 12% and 25% annualized GAAP ROC and non-GAAP EAD ROC(2)
- Funded $501 million of loans (55% bridge and 45% term), a 9% increase from $458 million in the third quarter of 2024
- Term loan volume increased by 43% to $227 million, the highest level since mid-2022
- Bridge loan production saw continued record quarterly volumes from single-asset bridge ("SAB") product, which represented over 50% of total quarterly bridge loan fundings
- Continued to deepen distribution channels, selling $547 million of loans through securitizations, whole loan sales and sales to joint ventures ("JVs")
- Closed our inaugural securitization of loans out of our JV (backed by $299 million of bridge loans)
Redwood Investments (formerly Investment Portfolio)
- Accretively deployed approximately $81 million of capital into internally sourced and third-party investments; deployed $525 million of Redwood Investments capital in 2024
- Trends in portfolio credit were generally stable
- Re-performing loan ("RPL") and jumbo securities saw steady trends in 90 day+ delinquency rates
- The CoreVest portfolio saw a modest increase in delinquencies for the securitized term portfolio, largely on a smaller pool balance, which was partially offset by successful bridge loan resolutions
- Payoffs in the CoreVest portfolio increased 20% in the fourth quarter to $418 million, including $320 million of bridge loans
- Redwood Investments recourse leverage ratio remained low at 0.8x at December 31, 2024
Financing / Corporate Highlights
- Unrestricted cash and cash equivalents of $245 million and unencumbered assets of approximately $325 million at December 31, 2024
- Total excess warehouse financing capacity of $4.7 billion at December 31, 2024
- Completed an opportunistic $40 million reopening of our 7.75% convertible notes due 2027; primary use of proceeds to repurchase convertible notes due 2025, effectively extending the overall maturity profile of our convertible debt outstanding
- We renewed or established four financing facilities representing $1.0 billion of total financing capacity
Q1 2025 Highlights to Date(5)
- Distributed approximately $1.4 billion of Sequoia loans through two securitizations and various whole loan sales(6)
- Distributed approximately $400 million of CoreVest loans through whole loan sales and sales to JVs(6)
- Formally launched new expanded loan programs through Aspire
- Issued $90 million of senior unsecured notes due 2030
"We are proud of the significant progress we made in 2024 in growing our operating businesses, establishing key capital partnerships, raising our dividend, and achieving solid profitability amidst a challenging market," said Christopher Abate, Chief Executive Officer of Redwood Trust. "Looking ahead to 2025, we expect further progress towards our core operating goals, with the added potential for housing policy and regulatory changes to transform our opportunity set. Our focus on strategic bank relationships and innovative new loan products positions Redwood to continuing growing market share and enhance earnings power. We remain committed to providing critical liquidity to the housing finance market and supporting our partners and shareholders in this evolving landscape."
_____________________
(1) |
Economic return on book value is based on the period change in GAAP book value per common share plus dividends declared per common share in the period. |
|
(2) |
Earnings available for distribution and EAD ROC are non-GAAP measures. See Non-GAAP Disclosures section that follows for additional information on this measure. |
|
(3) |
Recourse leverage ratio is defined as recourse debt at Redwood divided by tangible stockholders' equity. Recourse debt excludes $14.3 billion of consolidated securitization debt (ABS issued and servicer advance financing), other liabilities and other debt that is non-recourse to Redwood, and tangible stockholders' equity excludes $42.4 million of goodwill and intangible assets. |
|
(4) |
Lock volume represents loans identified for purchase from loan sellers. Lock volume does not account for potential fallout from pipeline that typically occurs through the lending process. |
|
(5) |
Represents Q1'25 activity through February 12, 2025 unless otherwise noted. |
|
(6) |
Includes securitizations and sales that have priced but not yet closed as of February 12, 2025. |
Fourth Quarter 2024 Redwood Review and Supplemental Tables Available Online
A further discussion of Redwood's business and financial results is included in the fourth quarter 2024 Shareholder Letter and Redwood Review which are available under "Financial Info" within the Investor Relations section of the Company’s website at redwoodtrust.com/investor-relations. Additional supplemental financial tables can also be found within this section of the Company's website.
Conference Call and Webcast
Redwood will host an earnings call today, February 13, 2025, at 5:00 p.m. Eastern Time / 2:00 p.m. Pacific Time to discuss its fourth quarter 2024 financial results. The number to dial in order to listen to the conference call is 1-877-423-9813 in the U.S. and Canada. International callers must dial 1-201-689-8573. A replay of the call will be available through midnight on Thursday, February 27, 2025, and can be accessed by dialing 1-844-512-2921 in the U.S. and Canada or 1-412-317-6671 internationally and entering access code #13750895.
The conference call will be webcast live in listen-only mode through the News & Events section of Redwood’s Investor Relations website at https://www.redwoodtrust.com/investor-relations/news-events/events. To listen to the webcast, please go to Redwood's website at least 15 minutes before the call to register and to download and install any needed audio software. An audio replay of the call will also be available on Redwood's website following the call. Redwood plans to file its Annual Report on Form 10-K with the Securities and Exchange Commission by Monday, March 3, 2025, and also make it available on Redwood’s website.
About Redwood
Redwood Trust, Inc. (NYSE: RWT) is a specialty finance company focused on several distinct areas of housing credit where we provide liquidity to growing segments of the U.S. housing market not well served by government programs. We deliver customized housing credit investments to a diverse mix of investors through our best-in-class securitization platforms, whole-loan distribution activities, and our publicly traded shares. We operate our business in three segments: Sequoia Mortgage Banking, CoreVest Mortgage Banking and Redwood Investments. Through RWT Horizons®, our venture investing initiative, we invest in early-stage companies that have a direct nexus to our operating platforms. Additionally, through Aspire, we directly originate home equity investment options to homeowners and purchase expanded home loan products from mortgage originators. Our goal is to provide attractive returns to shareholders through a stable and growing stream of earnings and dividends, capital appreciation, and a commitment to technological innovation that facilitates risk-minded scale. Redwood Trust is internally managed and structured as a real estate investment trust ("REIT") for tax purposes. For more information about Redwood, please visit our website at www.redwoodtrust.com or connect with us on LinkedIn.
Cautionary Statement; Forward-Looking Statements:
This press release and the related conference call contain forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including the expected timing for the filing of Redwood's Annual Report on Form 10-K. Forward-looking statements involve numerous risks and uncertainties. Redwood's actual results may differ from Redwood's beliefs, expectations, estimates, and projections and, consequently, you should not rely on these forward-looking statements as predictions of future events. Forward-looking statements are not historical in nature and can be identified by words such as “anticipate,” “estimate,” “will,” “should,” “expect,” “believe,” “intend,” “seek,” “plan” and similar expressions or their negative forms, or by references to strategy, plans, opportunities, or intentions. These forward-looking statements are subject to risks and uncertainties, including, among other things, those described in our Annual Report on Form 10-K for the year ended December 31, 2023 under the caption “Risk Factors”. Other risks, uncertainties, and factors that could cause actual results to differ materially from those projected may be described from time to time in reports we file with the Securities and Exchange Commission, including reports on Forms 10-K, 10-Q and 8-K. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
REDWOOD TRUST, INC. |
|
|
|
Consolidated Income Statements (1) |
|
($ in millions, except share and per share data) |
|
(1) |
Certain totals may not foot due to rounding. |
|
(2) |
EAD and EAD ROC are non-GAAP measures derived from GAAP Net income (loss) available (related) to common stockholders and GAAP Return on common equity ("GAAP ROE" or "ROE"), respectively. |