Company: RWT-PA
Filing Date: 2025-08-08
Form Type: 10-Q
Source: 0000930236-25-000029
Chunk: 339

Company: REDWOOD TRUST INC
Filing Date: 2025-08-08
Form: 10-Q
Item: Part I, Item 8
Chunk 339
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 federal and state income taxes. The benefit from income taxes was primarily due to GAAP losses generated by this segment’s operations at our TRS and our provision for income taxes at this segment is primarily driven by the amount of income earned from portfolio assets. 

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Three Months Ended June 30, 2025 Compared to Three Months Ended March 31, 2025 

The decrease in segment contribution during the three months ended June 30, 2025, as compared to the three months ended March 31, 2025, is due to the $13 million decline in Investment fair value changes, net. This decline was driven by muted asset valuation gains, driven by the lower impact of spread tightening in the second quarter of 2025 relative to the first quarter of 2025.

Fundamental performance of assets within this segment saw consistent trends in underlying credit and continue to be driven by relatively healthy employment data, embedded equity protection associated with loan seasoning and home price appreciation, and borrowers motivated to stay current on their low-coupon mortgages. Notably, 90 day+ delinquencies on our Sequoia Securities, CAFL Term Securities and retained bridge securities were stable-to-improving in the second quarter 2025 at 0.3%, 7.1% and 3.6% of our total unpaid principal balances, respectively, compared to 0.2% and 8.4% and 3.8% at March 31, 2025.

As we continue to expand our focus on our operating platforms, we intend to allocate capital accordingly. In line with this strategy, during the second quarter we deployed approximately $100 million into retained operating investments, targeting returns in the range of 15% to 20%.

Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024

The decrease in segment contribution in the six months ended June 30, 2025, as compared to the six months ended June 30, 2024 is due to the decline in Investment fair value changes, net of $46 million driven by similar trends as mentioned above.

The following table presents details of our Redwood Investments Portfolio at June 30, 2025 and March 31, 2025 organized by investments in retained securities from Sequoia and CoreVest securitizations and those acquired from third-parties. Amounts presented in the table represent our retained economic interests in consolidated Sequoia, CAFL Term, Freddie Mac