Redwood Trust (RWT) Q2 2024 earnings summary

Executive summary

• Achieved strong growth in residential consumer lock volumes (~50% sequentially) and residential investor loan volumes (up 40–41%), with record volumes and increased market share to 6% in Q2 2024.

• Distributed nearly $3.5 billion of collateral year-to-date, supported by robust demand from institutional and private credit investors.

• Operating efficiency improved with a 20% reduction in fixed costs and cost per loan in residential consumer down to 22bps.

• Earnings available for distribution (EAD) rose 70% sequentially to $0.13 per share; GAAP EPS was $0.10; book value per share was stable at $8.73.

• Investment portfolio capital deployment reached $133 million, the highest since Q3 2022, with stable credit performance and embedded discounts to par.

Financial highlights

• GAAP net income available to common stockholders was $13.8–$15.5 million, with EPS of $0.10 and EAD per share of $0.13, up from $0.08 sequentially.

• Book value per share was $8.73–$8.78 at June 30, 2024, stable quarter-over-quarter.

• Net interest income was $25–$25.3 million for Q2 2024.

• Total economic return for Q2 2024 was 1.3%, with a $0.16 per share dividend declared.

• Maintained a robust cash position of $275–$276 million at quarter end.

Outlook and guidance

• Management expects continued growth in market share, accretive capital deployment, and further earnings growth as interest rates stabilize or decline.

• Preparing for potential challenges from regulatory changes, the U.S. election cycle, and macroeconomic volatility.

• Investment portfolio is positioned for upside with embedded discounts and strong credit performance.