Company: RWT-PA
Filing Date: 2025-08-08
Form Type: 10-Q
Source: 0000930236-25-000029
Chunk: 319

Company: REDWOOD TRUST INC
Filing Date: 2025-08-08
Form: 10-Q
Item: Part I, Item 8
Chunk 319
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 resolutions on our legacy unsecuritized bridge and term loan portfolios and other non-core legacy assets, as well as changes in the underlying performance of certain Legacy bridge loans. These losses were partially offset by fair value gains, net of associated interest rate hedges, on our securities portfolio, which benefited from tighter credit spreads during the period.

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A more detailed analysis of the changes in this line item is included in the “Redwood Investments Segment” and "Legacy Investments Segment" section that follows. 

HEI Income, net 

HEI income, net decreased by $28 million, from a $25 million gain in the six months ended June 30, 2024 to a $3 million loss in the same period in 2025. This was primarily driven by driven by similar trends as described above for the three-month periods in the section above, including the anticipated sale of a substantial portion of this portfolio in the third quarter of 2025.

Additional detail on our HEI income is presented in Table 10.3 of our Notes to Consolidated Financial Statements in Part 1, Item 1 of this Quarterly Report on Form 10-Q.

Operating Expenses 

Operating expenses increased by $17 million in the six months ended June 30, 2025 compared to the same period ended in 2024, primarily driven by an increase in fixed compensation associated with hiring directly at our operating platforms to support higher volumes and profitability, as well as higher variable and equity compensation expense and higher portfolio management costs related to specially serviced residential investor bridge loans.

Additional detail on our General and administrative expenses is presented in Table 22.1 of our Notes to Consolidated Financial Statements in Part 1, Item 1 of this Quarterly Report on Form 10-Q.

Provision for Income Taxes

Our provision for income taxes is almost entirely related to activity at our taxable REIT subsidiaries ("TRS"), which primarily includes our mortgage banking activities and MSR investments, as well as certain other investment and hedging activities. The increase of $5 million for the tax provision in the six months ended June 30, 2025 was primarily the result of a higher effective rate and higher income from mortgage banking activities at our TRS compared to the same period ended June 30, 2024.

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Consolidated Net Interest Income 

The following tables present the components of net interest income recorded in each line item of our consolidated statements of income for the three and six months ended June 30, 2025 to the immediate preceding