Yahoo Finance Redwood Trust Inc (RWT) (Q1 2024) Earnings Call Transcript Highlights: Strong Performance and ...
GAAP Earnings: $29 million in Q1, up from $19 million in the previous quarter.
Earnings Per Share (EPS): $0.21 in Q1, compared to $0.15 in the previous quarter.
Book Value Per Share: Increased to $8.78 from $8.64 at the end of the previous quarter.
Net Interest Income: Increased by 20% or $4 million in Q1.
Return on Equity (ROE): GAAP ROE of 10% for the quarter.
Total Economic Return: 3.5% for the quarter.
Residential Consumer Mortgage Banking: Loan volume up 50% quarter over quarter.
Residential Investor Mortgage Banking: Funded $326 million of loans, stable from previous quarter.
Securitizations: Three accretive securitizations totaling $1.2 billion.
Investment Portfolio: Deployed approximately $115 million into new investments.
Release Date: April 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: When we compare the bridge loan maturity schedule from the fourth quarter to the first quarter, it looks like about $165 million or $170 million of the pending first quarter maturities have been rolled in or extended into the second and third quarter. Is that about right? A: Brooke Carillo, CFO of Redwood Trust Inc, confirmed that approximately $155 million of extensions occurred in the quarter, averaging around 8 months each. These extensions were strategically managed to ensure sufficient equity positions and involved reevaluating the borrower's circumstances and property appraisals.
Q: Last year, you provided a pie chart showing the outcomes of 2023 maturities. Can you break out what percentage were extended with additional equity commitments? A: Dashiell Robinson, President of Redwood Trust Inc, explained that while some extensions required additional equity from borrowers, many did not if the existing equity position was deemed sufficient. The decision was based on updated appraisals and the borrower's situation, particularly if the property was on the market.
Q: Can you discuss the accretion from the joint venture mentioned during Investor Day, and how it relates to the figures mentioned today? A: Brooke Carillo clarified that the accretion figures remain consistent with those discussed at Investor Day, projecting an annual increase of $0.15 for the joint venture. This figure is expected to materialize as financing facilities for the joint venture are established and deployed later in Q2.
Q: With banks pulling back on jumbo loans, can you speak to the competition in this space? Are there new entrants, and how is the landscape evolving? A: Christopher Abate, CEO of Redwood Trust Inc, noted that the competitive landscape has not significantly changed. The company's differentiated strategy focuses on deepening relationships with banks and expanding their network, which positions them well to capture market share as transaction activity in the housing market remains low.
Q: How should we think about deployable capital now, especially with the new JV and other sources of capital? A: Christopher Abate explained that Redwood Trust Inc has about $175 million of deployable capital, excluding potential further optimizations. This figure could increase significantly with additional draws from the CPP line and leveraging unencumbered assets, providing substantial flexibility for growth and investment.
Q: Can you update us on the mix of delinquencies in the bridge loan portfolio and the trends in resolutions and recoveries? A: Dashiell Robinson highlighted that the bridge loan portfolio's delinquency rates have improved, with significant resolutions occurring post-quarter-end. The recoveries on resolved loans have been favorable, reflecting strong asset management and underwriting practices.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
