Financial Data and Key Metrics Changes - For Q4 2025, the company reported GAAP net income of $18.3 million, or $0.13 per share, compared to a GAAP loss of $9.5 million, or $0.08 per share in Q3 2025 [22] - Book value per common share was $7.36 at December 31, 2025, slightly up from $7.35 at September 30, 2025 [22] - Economic return on book value was 2.6% for the quarter, including $0.04 from share repurchases and $0.18 per share common dividend [22] - Non-GAAP earnings available for distribution (EAD) increased from $0.01 in Q3 to $0.20 in Q4, exceeding the common dividend [22][23] Business Line Data and Key Metrics Changes - The Sequoia platform locked $5.3 billion of loans in Q4 2025, a 5% increase from Q3 and up 130% from Q4 2024 [12] - Aspire locked a record $1.5 billion of loans during Q4 2025, a 20% sequential increase, with total 2025 lock volume exceeding $3 billion [16] - CoreVest closed out 2025 with full-year volumes up 13% versus 2024, with nearly 40% of Q4 production coming from residential transition loans [17] Market Data and Key Metrics Changes - The company estimates that between $200 billion and $300 billion of jumbo mortgages could become refinanceable as mortgage rates hover just above 6% [8] - The company’s full-year 2025 jumbo market share was approximately 7%, significantly up from prior years [13] - Institutional participation in housing has drawn renewed focus, with proposals to limit ownership of single-family homes by large institutional investors [9] Company Strategy and Development Direction - The company is shifting towards increasing capital to mortgage banking platforms, with over 80% of capital now invested in core operating activities, up from 57% in 2024 [6] - The company plans to leverage AI to enhance risk management, accelerate capital deployment, and improve operating leverage [10] - The focus is on maintaining a capital-efficient, originate-to-distribute model, where earnings power is driven by margin and capital velocity rather than balance sheet size [25] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the potential for a broader refinance wave, which could significantly expand volume expectations for the Sequoia business [8] - The company expects core operating performance to drive consolidated earnings above the common dividend in 2026, enabling earnings retention and reinvestment for organic growth [11] - Management highlighted the importance of affordability initiatives in Washington and their potential impact on housing activity [7] Other Important Information - The company reduced its legacy bridge portfolio's principal balance by nearly 40% during Q4 2025, leading to a significant decline in 90-day plus delinquencies [18] - The company is focused on technology enablement through RWT Horizons, which has resulted in a reduction of operating costs per loan by 44% year-over-year [20] Q&A Session Summary Question: Impact of recent mortgage rate movements on business volume - Management reported January volume at $3.6 billion, indicating continued acceleration from Q4 [30] Question: Opportunities in the Aspire non-QM platform and potential GSE reform impacts - Management noted strong momentum in Aspire, with expectations for continued growth and limited impact from GSE reforms [32][36] Question: Thoughts on third-party capital providers - Management indicated strong demand for production and ongoing discussions with capital partners to support growth [40][41] Question: Current margins in the non-QM channel compared to jumbo - Management targets gain on sale margins in non-QM similar to Sequoia, with expectations for improved execution through securitization [44][46] Question: Competitive landscape in the non-QM market - Management acknowledged increased competition but expressed confidence in their ability to grow market share [48][49] Question: CoreVest originations and first-quarter volume expectations - Management projected higher volumes in Q1 with consistent margins, focusing on smaller balance products [75][76]

Financial Data and Key Metrics Changes - For Q4 2025, the company reported GAAP net income of $18.3 million, or $0.13 per share, compared to a GAAP loss of $9.5 million, or $0.08 per share in Q3 2025 [22] - Book value per common share was $7.36 at December 31, 2025, slightly up from $7.35 at September 30, 2025 [22] - Economic return on book value was 2.6% for the quarter, including $0.04 from share repurchases and $0.18 per share common dividend [22] - Non-GAAP earnings available for distribution (EAD) increased from $0.01 in Q3 to $0.20 in Q4, exceeding the common dividend [22][23] Business Line Data and Key Metrics Changes - The Sequoia platform locked $5.3 billion of loans in Q4 2025, a 5% increase from Q3 and up 130% from Q4 2024 [12] - Aspire locked a record $1.5 billion of loans during Q4 2025, a 20% sequential increase, with total 2025 lock volume exceeding $3 billion [16] - CoreVest closed out 2025 with full-year volumes up 13% versus 2024, with RTL representing nearly 40% of Q4 production [17] Market Data and Key Metrics Changes - The company estimates that between $200 billion and $300 billion of jumbo mortgages could become refinanceable as mortgage rates hover just above 6% [8] - The company’s full-year 2025 jumbo market share was approximately 7%, significantly up from prior years [13] Company Strategy and Development Direction - The company is shifting focus towards increasing capital to mortgage banking platforms, with over 80% of capital now invested in core operating activities, up from 57% in 2024 [6] - The company plans to leverage AI to enhance risk management, accelerate capital deployment, and improve operating leverage [10] - The company is winding down its legacy investment portfolio to free up capital for core activities [18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the potential for increased volume in 2026, driven by a favorable economic environment and housing affordability initiatives [10] - The company expects core operating performance to drive consolidated earnings above the common dividend in 2026, enabling earnings retention and reinvestment [11] Other Important Information - The company reported a 44% year-over-year reduction in operating costs per loan, attributed to technology enablement and operational efficiencies [20] - The company is focused on maintaining a flexible balance sheet and strong liquidity, with $256 million of unrestricted cash at quarter end [28] Q&A Session Summary Question: Impact of recent mortgage rate changes on business volume - Management reported January volume at $3.6 billion, indicating continued acceleration from Q4 [30][31] Question: Opportunities in the Aspire non-QM platform - Management highlighted strong momentum in non-QM products and expected growth in the non-QM market, estimating it to be $130 billion for 2025 [32][34] Question: Future of third-party capital providers - Management noted strong demand for production and ongoing discussions with capital partners to support growth [40][41] Question: Current margins in non-QM and jumbo channels - Management indicated targeting margins in non-QM similar to Sequoia, with expectations for improved execution through securitization [44][46] Question: Competitive landscape in non-QM - Management acknowledged increased competition but expressed confidence in their ability to grow market share [48][49] Question: CoreVest originations and margins - Management projected higher volumes in Q1 with consistent margins, focusing on smaller balance products [73][75]

Financial Data and Key Metrics Changes - For Q4 2025, the company reported GAAP net income of $18.3 million, or $0.13 per share, compared to a GAAP loss of $9.5 million, or $0.08 per share in Q3 2025 [21] - Book value per common share was $7.36 at December 31, 2025, slightly up from $7.35 at September 30, 2025 [22] - Economic return on book value was 2.6% for the quarter, including $0.04 of accretion from share repurchases and a $0.18 per share common dividend [22] - Non-GAAP consolidated earnings available for distribution (EAD) increased from $0.01 in Q3 to $0.20 in Q4, exceeding the common dividend [22] Business Line Data and Key Metrics Changes - The Sequoia platform locked $5.3 billion of loans in Q4 2025, a 5% increase from Q3 and up 130% from Q4 2024 [11] - Aspire locked a record $1.5 billion of loans during Q4 2025, a 20% sequential increase, contributing to a total of over $3 billion for the year [16] - CoreVest closed out 2025 with full-year volumes up 13% versus 2024, with nearly 40% of Q4 production coming from residential transition loans [17] Market Data and Key Metrics Changes - The company estimates that between $200 billion and $300 billion of jumbo mortgages could become refinanceable as mortgage rates hover just above 6% [7] - The company’s full-year 2025 jumbo market share was approximately 7%, significantly up from prior years [12] - Institutional participation in housing has drawn renewed focus, with proposals intended to limit ownership of single-family homes by large institutional investors [8] Company Strategy and Development Direction - The company is shifting towards increasing capital to mortgage banking platforms, with over 80% now invested in core operating activities at year-end 2025, up from 57% in 2024 [5] - The company plans to leverage AI to enhance risk management, accelerate capital deployment, and extract further gains in operating leverage [9] - The company is winding down its legacy investment portfolio to free up capital for redeployment into higher return mortgage banking platforms [6] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the potential for volume growth in 2026, supported by a broader base of third-party capital partners and a simpler balance sheet [9] - The company expects core operating performance to drive consolidated earnings above the common dividend in 2026, enabling earnings retention and reinvestment [10] - Management noted that the refinance market could significantly expand volume expectations, particularly for the Sequoia business [15] Other Important Information - The company reported a 44% year-over-year reduction in operating costs per loan, attributed to technology enablement and operational efficiencies [19] - The legacy bridge portfolio's principal balance was reduced by nearly 40% in Q4, with 90-day plus delinquencies declining to $82 million, down over 65% from earlier in the year [18] Q&A Session Summary Question: Impact of recent mortgage rate movements on business volume - Management reported January volume at $3.6 billion, indicating continued acceleration from Q4 [29] Question: Opportunities in the Aspire non-QM platform and potential GSE reform impacts - Management highlighted strong momentum in non-QM products and expected continued growth, with GSE reform unlikely to impact the non-QM market significantly [31][34] Question: Future of third-party capital providers - Management noted strong demand for production and ongoing discussions with capital partners to support growth in Aspire and Sequoia [39] Question: Current margins in the non-QM channel compared to jumbo - Management indicated targeting margins in the non-QM channel similar to Sequoia, with the potential for increased efficiency through securitization [45] Question: Competitive landscape in the non-QM market - Management acknowledged increased competition but expressed confidence in their ability to grow market share due to operational advantages [48] Question: CoreVest originations and first-quarter volume expectations - Management projected higher volumes in Q1, with consistent margins expected [72]

Financial Performance - Fourth quarter 2025 Mortgage Banking production reached a record $7.3 billion, contributing to earnings growth [6] - Full year 2025 combined Mortgage Banking volume was $23 billion, a 111% year-over-year increase [6] - GAAP net income for Q4 2025 was $18.3 million, or $0.13 per basic and diluted common share, compared to a loss of $(9.5) million in Q3 2025 [8] - Non-GAAP Core Segments Earnings Available for Distribution (EAD) for Q4 2025 was $43.2 million, or $0.33 per basic common share [6] - Sequoia Mortgage Banking segment generated GAAP net income of $43.8 million with a 29% annualized Return on Capital (ROC) [9] - CoreVest Mortgage Banking segment reported GAAP net income of $7.5 million, with a 30% annualized ROC [13] - Economic return on book value for Q4 2025 was 2.6%, compared to 0.5% in Q3 2025 [7] - Net income available to common stockholders was $18.3 million, a significant recovery from a loss of $9.5 million in the previous quarter [18] Revenue and Income - Net interest income increased to $25.9 million for the three months ended December 31, 2025, compared to $15.0 million for the previous quarter, representing a 72.7% increase [18] - Total non-interest income rose to $61.3 million, up from $39.4 million in the prior quarter, marking a 55.6% increase [18] - Sequoia mortgage banking generated net interest income of $27.3 million, up from $21.2 million in the previous quarter, an increase of 28.8% [22] - CoreVest mortgage banking's net interest income also improved to $3.1 million from $1.5 million, a 106.7% increase [18] - Redwood investments contributed $20.1 million to net interest income, up from $17.6 million, indicating an increase of 14.2% [18] Operational Efficiency - Total operating cost per loan improved by 44% year-over-year, affirming operational efficiency [6] - The average capital utilized by Core Segments was $726 million for Q4 2025 and $643 million for Q3 2025 [39] Shareholder Returns - The company repurchased 9.2 million shares of common stock for $53 million, resulting in $0.13 of accretion to book value per share [6] - The company declared regular dividends of $0.18 per common share, consistent with the previous quarter [18] Assets and Liabilities - Total assets increased to $23.701 billion as of December 31, 2025, compared to $22.601 billion at the end of the previous quarter, reflecting a growth of 4.9% [20] - The total liabilities increased to $22.718 billion from $21.602 billion, a rise of 5.2% [20] Legacy Investments - Legacy Investments capital allocation decreased to 19% of total invested capital, down from 28% at the end of Q3 2025 [13] Return on Equity - Return on Equity (ROE) for Core Segments EAD was 23.8% (annualized) in Q4 2025 [34] - Return on Equity (ROE) for Core Segments EAD was 16.8% (annualized) in Q3 2025 [35] Corporate Segments Performance - GAAP Net Income for Q4 2025 was $18.3 million, with a loss of $35.0 million from Corporate/Other segments [34] - GAAP Net Income for Q3 2025 was a loss of $9.5 million, with a total loss from Corporate/Other segments of $36.4 million [35] - Non-GAAP EAD for Q4 2025 was $26.4 million, while Core Segments EAD was $43.2 million [34] - Non-GAAP EAD for Q3 2025 was $0.2 million, with Core Segments EAD at $27.1 million [35] - Non-GAAP EAD per Basic Common Share for Q4 2025 was $0.20, and Core Segments EAD per Basic Common Share was $0.33 [34] - Non-GAAP EAD per Basic Common Share for Q3 2025 was $0.01, while Core Segments EAD per Basic Common Share was $0.20 [35] Business Focus - Redwood Trust focuses on providing liquidity to underserved segments of the U.S. housing market through its three core platforms: Sequoia, Aspire, and CoreVest [40]

Core Viewpoint - Redwood Trust, Inc. announced tax information regarding its dividend distributions for 2025, detailing the expected federal income tax treatment for both common and preferred stock dividends [1][3][4]. Dividend Distribution Summary - All common stock dividend distributions paid during 2025 will be reportable on shareholders' federal income tax returns, characterized as 39% ordinary income, 2% qualified dividends, and 59% return of capital [3][5]. - Preferred stock dividend distributions for 2025 are expected to be characterized as 96% ordinary income and 4% qualified dividends [4][5]. Tax Implications - Individual taxpayers may take a 20% deduction from taxable income of their ordinary income REIT dividends under section 199A, subject to certain holding period requirements [6]. - Corporate shareholders are generally not eligible for the corporate dividends-received deduction or the 20% ordinary REIT dividend deduction [7]. Detailed Dividend Information - Common Stock (CUSIP 758075 40 2) distributions for 2025 are detailed as follows: - Total distribution per share: $0.7200, with $0.2940 as ordinary dividends and $0.4260 as return of capital [8]. - Preferred Stock (CUSIP 758075 80 8) distributions for 2025 total $2.5000 per share, with $2.5000 as ordinary dividends and $2.4012 as return of capital [9]. Company Overview - Redwood Trust, Inc. is a specialty finance company focused on providing liquidity to segments of the U.S. housing market not well served by government programs, operating through three core residential housing-focused platforms and a venture investing initiative [11].

Core Insights - Redwood Trust, Inc. (NYSE:RWT) has been recognized among 13 dividend stocks with over 8% yield [1] - JPMorgan upgraded Redwood Trust's rating to Overweight from Neutral, setting a price target of $6, citing easing loss pressures and a clearer path to a normalized return on equity around 20% [2] - The company reported its strongest quarter on record, locking or originating nearly $7 billion in loans, with significant contributions from its Sequoia, Aspire, and CoreVest segments [3] Financial Performance - Redwood Trust's CEO noted a rapid transition to a simpler, scalable operating model, which is expected to capitalize on meaningful changes in the business landscape [3] - Legacy exposure has been reduced to approximately 25% of total capital, with a target to decrease it to 20% by year-end [4] - The secured borrowing facility with CPP Investments has been expanded to $400 million from $250 million, indicating increased financial flexibility [4] Market Position - Sequoia's loan locks increased by 53% from the previous quarter, with jumbo market share rising to about 7%, up from 1-2% earlier in 2023 [5] - Aspire achieved $1.2 billion in loan locks, nearly quadrupling its second-quarter volume, alongside a 50% increase in loan originator partners [5] - Redwood Trust operates across various segments of the housing credit market, including mortgage banking and investment activities [6]

Core Viewpoint - Momentum investing focuses on "buying high and selling higher" rather than the traditional "buying low and selling high" approach, aiming for quicker profits [1] Group 1: Momentum Investing Characteristics - Fast-moving trending stocks can be difficult to enter at the right time, as they may lose momentum if future growth does not justify their high valuations [2] - Investing in bargain stocks that have recently shown price momentum can be a safer strategy [3] Group 2: Redwood Trust (RWT) Analysis - Redwood Trust (RWT) has shown a price increase of 5.1% over the past four weeks, indicating growing investor interest [4] - RWT has gained 12.7% over the past 12 weeks, with a beta of 1.58, suggesting it moves 58% more than the market [5] - RWT has a Momentum Score of B, indicating a favorable time to invest based on momentum [6] Group 3: Earnings Estimates and Valuation - RWT has a Zacks Rank 1 (Strong Buy) due to upward revisions in earnings estimates, which attract more investors [7] - The stock is trading at a Price-to-Sales ratio of 0.65, indicating it is relatively cheap at 65 cents for each dollar of sales [7] Group 4: Additional Investment Opportunities - Besides RWT, there are other stocks that meet the criteria of the 'Fast-Paced Momentum at a Bargain' screen, suggesting further investment opportunities [8]

Core Insights - Redwood Trust, Inc. is set to release its fourth quarter and full year 2025 financial results on February 11, 2026, after the close of the New York Stock Exchange [1] - A conference call will be held the same afternoon at 5:00 p.m. Eastern Time to discuss these results [1] Conference Call Details - The conference call will be available via live webcast on Redwood's Investor Relations website [2] - Participants can join the call by phone, with domestic and international dial-in numbers provided [3] - An audio replay of the conference call will be accessible after the event, with specific access numbers and a passcode for listeners [4] Company Overview - Redwood Trust, Inc. operates as a specialty finance company focused on providing liquidity to underserved segments of the U.S. housing market [5] - The company utilizes various platforms, including Sequoia, Aspire, and CoreVest, to deliver customized housing credit investments [5] - Redwood Trust is structured as a real estate investment trust (REIT) and aims to provide attractive returns through earnings, dividends, and capital appreciation [5]

Group 1 - The article focuses on monitoring newly listed fixed-income securities on the exchange, specifically highlighting Redwood Trust's (RWT) latest Arbitrage Trader [1] - Denislav Iliev, with over 15 years of day trading experience, leads a team of 40 analysts who identify mispriced investments in fixed-income and closed-end funds [1] - The investing group Trade With Beta offers features such as frequent picks for mispriced preferred stocks and baby bonds, weekly reviews of over 1200 equities, IPO previews, hedging strategies, and an actively managed portfolio [1]

Core Viewpoint - Redwood Trust, Inc. has declared dividends for both common and preferred stock for the fourth quarter of 2025, reflecting its commitment to providing returns to shareholders [1]. Common Stock Dividend - The Board has authorized a fourth quarter 2025 regular common stock dividend of $0.18 per share, which remains unchanged from the third quarter of 2025. This marks the 106th consecutive quarterly common dividend [2]. - The dividend is payable on December 30, 2025, to stockholders of record on December 23, 2025 [2]. Preferred Stock Dividend - The Board has declared a Series A dividend for the fourth quarter of 2025 of $0.625 per share, in accordance with the terms of Redwood's 10.00% Series A Fixed-Rate Reset Cumulative Redeemable Preferred Stock [3]. - Dividends for the Series A are payable on January 15, 2026, to stockholders of record on January 1, 2026 [3]. Company Overview - Redwood Trust, Inc. is a specialty finance company focused on providing liquidity to segments of the U.S. housing market that are not well served by government programs [4]. - The company operates through three core residential housing-focused platforms: Sequoia, Aspire, and CoreVest, along with a complementary portfolio known as Redwood Investments [4]. - Redwood Trust aims to deliver attractive returns to shareholders through stable earnings, dividends, capital appreciation, and a commitment to technological innovation [4].