Company: RWT-PA
Filing Date: 2025-08-08
Form Type: 10-Q
Source: 0000930236-25-000029
Chunk: 327

Company: REDWOOD TRUST INC
Filing Date: 2025-08-08
Form: 10-Q
Item: Part I, Item 8
Chunk 327
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 with our inventory of residential consumer loans held-for-sale within this segment. 

This segment’s main source of income is Mortgage banking income, which is comprised of net interest income from its inventory of loans held-for-sale, securities utilized for interest rate hedging purposes, as well as income from mortgage banking activities, which includes valuation increases (or gains) on loans we acquire and subsequently sell, securitize, or transfer into our Redwood investments portfolio, and the hedges used to manage risks associated with these activities. See Note 5 of our Notes to Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for further detail on the composition of mortgage banking activities, net. Direct operating expenses and tax expenses associated with these activities are also included in this segment. 

In the first quarter of 2025, we launched an additional mortgage loan conduit under our Aspire brand that acquires mortgage loans under expanded underwriting criteria, which we also refer to as "non-QM", as well as DSCR mortgage loans. While we may report this activity as a separate standalone segment in the future, we are including its results within our Sequoia Mortgage Banking segment until this additional conduit activity reaches sufficient scale. 

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The following table presents key earnings and operating metrics for our Sequoia Mortgage Banking segment during the three and six months ended June 30, 2025 to the immediate preceding quarter March 31, 2025 and year-to-date period through June 30, 2024.

Table 5 – Sequoia Mortgage Banking Earnings Summary and Operating MetricsThree Months EndedSix Months Ended(In Thousands)June 30, 2025March 31, 2025ChangeJune 30, 2025June 30, 2024ChangeMortgage banking income$39,915 $40,495 $(580)80,410 $31,293 $49,117 Operating expenses(8,472)(7,417)(1,055)(15,889)(11,297)(4,592)Provision for income taxes(9,289)(7,261)(2,028)(16,551)(3,054)(13,497)Segment Contribution$22,154 $25,817 $(3,663)$47,970 $16,942 $31,028 LPCs entered into (loan locks, adjusted for expected fallout)$3,047,445 $3,303,832 $(