Company: RWT-PA
Filing Date: 2025-08-08
Form Type: 10-Q
Source: 0000930236-25-000029
Chunk: 157

Company: REDWOOD TRUST INC
Filing Date: 2025-08-08
Form: 10-Q
Item: Part I, Item 1
Chunk 157
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Net interest income decreased by $8 million for the six months ended June 30, 2025 compared to the same period in 2024. The decline was largely due to an increase in the balance of our legacy unsecuritized bridge and term loan portfolios on non-accrual during the second quarter of 2025, which in certain cases caused a reversal of prior period's net interest income. In addition, corporate interest expense rose by $6 million due to higher unsecured debt balances and fully utilizing the maximum capacity under the secured revolving financing facility established in 2024.

These decreases were partially offset by net interest income from Sequoia and CoreVest mortgage banking, including a $17 million increase from Sequoia, driven by higher loan purchase volumes, capital deployment into certain interest rate hedging instruments, and lower base floating rates on our financing facilities as SOFR declined over 90 basis points between June 30, 2024 and June 30, 2025. CoreVest mortgage banking also contributed $1 million increase in net interest income. 

Additional detail on net interest income is provided in the “Net Interest Income” section that follows.

Mortgage Banking Activities, Net 

Mortgage Banking activities, net increased by $40 million in the six months ended June 30, 2025 compared to the same period in 2024, due to both higher Sequoia Mortgage Banking and CoreVest Mortgage Banking revenues. 

The increase in Sequoia Mortgage Banking activities, net of $32 million was primarily attributable to a 71% year-over-year increase in lock volumes during the six-month period. Lock volume for the six-month period ended June 30, 2025 totaled $7.6 billion, compared to $4.4 billion for the period ended June 30, 2024 as 2025 volumes were supported by continued strength across both flow and bulk executions, including the bulk purchase of a $1.0 billion seasoned loan portfolio in the first quarter of 2025. This also included $441 million of loans locked by Aspire, a mortgage banking business initiative that was newly established in 2025. Sequoia achieved gain-on-sale margins of over 100 basis points, exceeding typical historical levels, and distributed $4.9 billion of loans in the six months ended June 30, 2025. 

The increase in CoreVest Mortgage Banking activities, net of $8