Release Date: April 30, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Can you explain how Redwood Trust managed its portfolio during the volatile market conditions in April, and how this affected the book value? A: Christopher Abate, CEO, explained that Redwood Trust navigated the volatility by actively managing its pipeline and turning capital quickly. The company engaged in numerous Sequoia transactions and bulk loan sales, which helped maintain the book value. Despite high volatility, Redwood's strategic positioning and experience from past market conditions, like COVID, contributed to effective management.
Q: How have Sequoia spreads fared, and what impact does this have on revenue margins? A: Christopher Abate noted that while April was volatile, spreads have since normalized. The company remains confident in achieving margins within or above the long-term range of 75 to 100 basis points, supported by strong business growth and first-quarter performance.
Q: How does Redwood Trust manage liquidity and execution risk with large volumes, such as the $4 billion locked in a quarter? A: Dashiell Robinson, President, emphasized the importance of speed and risk turnover. Half of the pipeline at quarter-end was sold or securitized shortly after, demonstrating efficient risk management. The company benefits from strong distribution and market knowledge, allowing it to clear risks effectively even in volatile conditions.
Q: What is the risk associated with the $1.9 billion bulk purchases of seasoned loans, and how are they managed? A: Christopher Abate explained that these closed pools from banks are now a significant market for Redwood. The company ensures that resources, hedging, and distribution are in place to manage these purchases effectively, often selling them to banks or through securitization.
Q: Can you elaborate on the bridge loans' risk and how Redwood Trust is addressing delinquencies? A: Dashiell Robinson stated that the $1.60 per share risk is specific to older multifamily bridge loans. The company focuses on the highest net present value resolutions, which may involve working with sponsors or selling notes. Delinquencies rose due to strategic decisions to pursue alternative resolutions, but the company remains proactive in managing these risks.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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