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

Company: REDWOOD TRUST INC
Filing Date: 2025-08-08
Form: 10-Q
Item: Part I, Item 2
Chunk 25
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 quarter, primarily due to an increase in loan acquisition costs related to the increase in loan purchases, as well as higher general and administrative expenses from variable and equity compensation due to improved segment performance for the three-months ended June 30, 2025.

Capital allocation to this segment was $475 million at June 30, 2025, compared to $425 million at March 31, 2025 due to higher loan purchases during the second quarter of 2025. We continue to competitively bid on bulk jumbo loan acquisition opportunities, including newer vintage and seasoned collateral and both fixed and adjustable-rate mortgages while also focusing on forward flow agreements. Looking ahead, we are focused on continuing to gain market share with our seller network, including as it relates to supporting our bank partners with balance sheet solutions for their legacy collateral.

We utilize a combination of capital and our residential consumer loan warehouse facilities to finance our inventory of residential consumer loans held-for-sale. At June 30, 2025, we had residential consumer warehouse facilities outstanding with $2.96 billion of total capacity and $1.69 billion of available capacity. These facilities included non-marginable facilities (i.e., not subject to margin calls based solely on the lender's determination, in its discretion, of the market value of the underlying collateral that is non-delinquent) with $400 million of total capacity and marginable facilities with $2.56 billion of total capacity.

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

Segment contribution from Sequoia Mortgage Banking increased significantly to $48 million for the six months ended June 30, 2025, up from $17 million in the prior-year period, an improvement of $31 million. This increase was driven by a substantial rise in income from mortgage banking activities from higher loan lock volumes and distribution activities, and ongoing operational efficiency.

Mortgage banking income (which includes net interest income and non-interest income from mortgage banking activities, net) totaled $80 million through June 30, 2025, representing an increase of $49 million or 157% compared to $31 million for the six months ended June 30, 2024. This growth was supported by strong performance across both flow and bulk acquisition channels, particularly from bank sellers, which saw enhanced engagement throughout the first half of 2025.

Total loan locks during the period reached $7.6 billion, up from $4.4 billion in the first half of 202