Company: RWT-PA
Filing Date: 2025-08-08
Form Type: 10-Q
Source: 0000930236-25-000029
Chunk: 33

Company: REDWOOD TRUST INC
Filing Date: 2025-08-08
Form: 10-Q
Item: Part I, Item 2
Chunk 33
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,774 (2,759)Fee income, net412 142 270 554 733 (179)Other income, net394 370 24 764 1,208 (444)Realized gains, net640 567 73 1,207 314 893 Operating expenses(5,954)(5,116)(838)(11,070)(9,918)(1,152)Benefit from (provision for) income taxes1,567 304 1,263 1,871 (4,060)5,931 Segment Contribution$11,892 $25,011 $(13,119)$36,859 $84,457 $(47,598)

Investment fair value changes, net is primarily comprised of the change in fair value (both realized and unrealized) of our portfolio investments accounted for under the fair value option and interest rate hedges associated with these investments. 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, primarily our MSRs, 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. 

76

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+ del