Company: RWT-PA
Filing Date: 2025-11-07
Form Type: 10-Q
Source: 0000930236-25-000037
Chunk: 328

Company: REDWOOD TRUST INC
Filing Date: 2025-11-07
Form: 10-Q
Item: Part I, Item 8
Chunk 328
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,305)HEI (loss) income, net(291)(13,025)12,734 (3,205)35,664 (38,869)Fee (loss) income, net(938)(985)47 (2,793)(733)(2,060)Other (loss) income, net(532)— (532)(532)— (532)Operating expenses(4,105)(7,491)3,386 (16,041)(11,308)(4,733)(Provision for) benefit from income taxes(571)2,535 (3,106)1,964 — 1,964 Segment (Loss) Contribution$(22,230)$(103,989)$81,759 $(128,317)$13,495 $(141,812)

78

Investment fair value changes, net is primarily comprised of the change in fair value (both realized and unrealized) of our loans and portfolio investments accounted for under the fair value option and related interest rate hedges. See Table 3 in the Consolidated Results of Operations in Part I, Item 2 of this Quarterly Report on Form 10-Q for further detail on the composition of investment fair value changes (the difference in amounts in the table above and in Table 3 relates to fair value changes for investments held at corporate/other).

 We hold certain of our investments at our TRS. Activity of this segment that is performed within our TRS is subject to 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 at our TRS. 

Three Months Ended September 30, 2025 Compared to Three Months Ended June 30, 2025 

Legacy Investments reported a $22 million segment loss during the three months ended September 30, 2025, driven by Net interest loss of $9 million from continued net interest margin pressure and Investment fair value losses, net of $7 million. During the third quarter of 2025, we transferred a portfolio of unsecuritized bridge loans and REO totaling $484 million in fair value to newly formed partnership structure (the “Legacy Trust”). In connection with this transfer, we recognized a negative $6 million investment fair value change, reflecting adjustments associated with completing the transaction.

 Capital allocated to Legacy Investments declined