Redwood Trust Stock Earnings Reports

Redwood reported a third consecutive record operating quarter with mortgage banking volume surpassing $8.5 billion and non-GAAP earnings available for distribution (EAD) of $0.21 per share, covering the dividend. Sequoia drove results with a record $6.5 billion of locks and very efficient execution (cost per loan down to ~18 bps), aided by AI-driven automation and high capital turnover (volume was ~10x GAAP book value). Management announced a major Sequoia capital partnership with Castlelake (~$8 billion of purchasing power) and expects an additional Aspire JV announcement soon; these JV structures are intended to scale volume in a capital-efficient, additive manner. Gain-on-sale margins remained resilient (96 bps) despite March TBA volatility that has largely reversed in April. CoreVest is being repositioned (one-time restructuring charges) and legacy investments continue to be wound down (legacy capital down to 15% of total, target <10% by year-end and <5% by end of year stated as a goal), which should reduce the drag on consolidated EAD over time. Liquidity and financing improved: $202M unrestricted cash, ~$3.9B excess warehouse capacity, increased warehouse capacity to $7.1B, and no unsecured corporate maturities over the next five quarters. Key risks cited include Middle East conflict-driven rate volatility and the still-evolving securitization/spread environment; potential regulatory tailwind noted from the reproposed Basel III Endgame easing bank capital costs for high-quality mortgages. Management expects the Castlelake JV to be additive and to ramp roughly linearly over the next four quarters and estimates potential incremental company earnings of ~$0.12–$0.15 annually from that structure as it scales.