Redwood Trust Reports Third Quarter 2025 Financial Results; Record Production Volumes Advance Transition to Core Operating Model

Redwood Trust, Inc. (NYSE:RWT, ", Redwood", , the ", Company", )), a leader in expanding access to housing for homebuyers and renters, today reported its financial results for the quarter ended September 30, 2025.

Mortgage Banking Platforms Continue to Profitably Scale

• Record $6.8 billion of cumulative loan production across operating platforms; capital allocated to mortgage banking up 84% since the second quarter 2024
• Delivered highest mortgage banking revenues since the third quarter of 2021

Executed on Capital Management Initiatives

• Transferred approximately $1 billion of Legacy Investments segment holdings⁽¹⁾, inclusive of activity through October 29, 2025, unlocking $150 million of capital for deployment towards mortgage banking platform growth
• Repurchased five million shares of common stock for approximately $29 million
• Subsequent to quarter-end, expanded partnership with CPP Investments to support ongoing platform growth, including extension of secured financing facility and joint venture commitment period (each to September 2028) and upsize of secured financing facility to $400 million

Key Financial Results and Metrics

• GAAP book value per common share was $7.35 at September 30, 2025, compared to $7.49 per share at June 30, 2025
  • Economic return on book value of 0.5% for the third quarter⁽²⁾
• GAAP net loss of $(9.5) million or $(0.08) per basic and diluted common share, primarily driven by one-time expenses associated with the transfer or resolution of certain Legacy Investments
• Non-GAAP Core Segments EAD of $27.1 million or $0.20 per basic common share (refer to non-GAAP reconciliation under the section titled "Non-GAAP Disclosures")⁽³⁾

"The third quarter was extremely productive at Redwood," said Christopher Abate, Chief Executive Officer. "We achieved record mortgage banking production of nearly $7 billion, underscoring the strength of our operating model and ability to significantly grow market share. We meaningfully reduced legacy portfolio holdings as we reposition our balance sheet for increased transaction activity as rates begin to fall. Together, these accomplishments demonstrate strong momentum and our continued focus on delivering returns for shareholders."

Q3 2025 Segment Highlights

Sequoia Mortgage Banking

• Segment GAAP net income of $34.3 million
• Generated 29% annualized Return on Equity ("ROE") and non-GAAP EAD ROE⁽⁴⁾
• Gain on sale margin of 93 basis points, within target range of 75 to 100 basis points
• Locked $6.3 billion of loans⁽⁵⁾, up 75% from $3.6 billion in the second quarter 2025 and up 183% from $2.2 billion in the third quarter 2024
  • Sequoia lock volume of $5.1 billion, driven by ongoing strength across bulk and flow channels
  • Aspire lock volume of $1.2 billion represented a 277% increase from the second quarter of 2025⁽⁶⁾
• Distributed $2.7 billion of loans through a combination of securitizations ($1.9 billion) and whole loan sales ($0.9 billion)

CoreVest Mortgage Banking

• Segment GAAP net income of $3.5 million
• Generated 21% and 30% annualized ROE and non-GAAP EAD ROE, respectively⁽⁴⁾
• Funded $521 million of loans (56% bridge and 44% term), a 2% increase from $509 million in the second quarter 2025 and a 14% increase from $458 million in the third quarter 2024
  • Achieved highest quarterly funding volume since mid-2022 with origination mix now emphasizing smaller-balance residential transition, DSCR and term loans
• Distributed $386 million of loans through whole loan sales, securitizations and sales to joint ventures ("JVs")

Redwood Investments⁽⁸⁾

• Segment GAAP net income of $10.3 million
• Redwood Investments recourse leverage ratio remained low at 1.1x at September 30, 2025⁽⁸⁾, unchanged from June 30, 2025

Legacy Investments⁽⁹⁾

• Segment GAAP net loss of $(22.2) million
  • Loss primarily attributable to one-time expenses and reduced net interest income related to third quarter transfer and resolution activity
• Segment capital allocation decreased to 25% of total invested capital at October 29, 2025, compared to 33% at June 30, 2025
• Legacy Investments recourse leverage ratio of 0.6x at September 30, 2025, down from 1.2x at June 30, 2025⁽¹⁰⁾

Capital and Financing

• Unrestricted cash and cash equivalents of $226 million at September 30, 2025
• Recourse debt of $3.8 billion at September 30, 2025 compared to $3.3 billion at June 30, 2025⁽¹¹⁾
  • Increase in recourse debt driven by higher utilization of Sequoia mortgage banking warehouse facilities where loans are typically held an average of approximately one month before borrowings are repaid
  • Reduced portfolio recourse debt by 30% during the quarter, linked to reduction in Legacy Investments exposure
• Completed an opportunistic $50 million reopening of our 7.75% convertible notes due 2027
• Subsequent to quarter end, retired outstanding convertible debt maturing October 2025; next unsecured corporate debt maturity in June 2027⁽¹²⁾

Third Quarter 2025 Redwood Review and Supplemental Tables Available Online

A further discussion of Redwood's business and financial results is included in the third quarter 2025 Shareholder Letter and Redwood Review which are available under "Financial Info" within the Investor Relations section of the Company's website at redwoodtrust.com/investor-relations. Additional supplemental financial tables can also be found within this section of the Company's website.

Conference Call and Webcast

Redwood will host an earnings call today, October 29, 2025, at 5:00 p.m. Eastern Time / 2:00 p.m. Pacific Time to discuss its third quarter 2025 financial results. The number to dial in order to listen to the conference call is 1-877-423-9813 in the U.S. and Canada. International callers must dial 1-201-689-8573. A replay of the call will be available through midnight on Wednesday, November 12, 2025, and can be accessed by dialing 1-844-512-2921 in the U.S. and Canada or 1-412-317-6671 internationally and entering access code #13755968.

The conference call will be webcast live in listen-only mode through the News & Events section of Redwood's Investor Relations website at https://www.redwoodtrust.com/investor-relations/news-events/events. To listen to the webcast, please go to Redwood's website at least 15 minutes before the call to register and to download and install any audio software needed. An audio replay of the call will also be available on Redwood's website following the call. Redwood plans to file its Quarterly Report on Form 10-Q with the Securities and Exchange Commission by Monday, November 10, 2025, and also make it available on Redwood's website.

Non-GAAP Disclosures

To supplement consolidated and segment financial information prepared and presented in accordance with U.S. generally accepted accounting principles ("GAAP"), the Company also provides the following non-GAAP measures:

• Core Segments Earnings Available for Distribution ("Core Segments EAD")
• Earnings Available for Distribution ("EAD")

Management believes these non-GAAP measures provide supplemental information to assist management and investors in analyzing the Company's results of operations and help facilitate comparisons to industry peers. Management also believes that these non-GAAP measures are metrics that can supplement its analysis of the Company's ability to pay dividends, by providing an indication of the current income generating capacity of the Company's operating platforms as of the quarter being presented. In addition, management believes its non-GAAP Core Segments EAD measure provides supplemental information to assist management and investors in analyzing the Company's in progress transition to a more scalable and simplified business model, which includes a wind-down of legacy portfolio holdings within its recently-established Legacy Investments segment.

These non-GAAP measures should not be utilized in isolation, nor should they be considered as an alternative to GAAP net income (loss) available (related) to common stockholders, GAAP ROE or other measurements of results of operations computed in accordance with GAAP or for federal income tax purposes.

Core Segments EAD. Core Segments EAD and Core Segments EAD ROE are non-GAAP measures established in the second quarter 2025 and are used to present management's non-GAAP analysis (based on its non-GAAP Earnings Available for Distribution ("EAD") measure further described below) of the combined performance the Company's mortgage banking platforms and related investments (which consist of the Company's Sequoia Mortgage Banking, CoreVest Mortgage Banking and Redwood Investments segments and are defined as the Company's "Core Segments", inclusive of an allocated portion of the Company's Corporate segment relating to those segments).

• Core Segments EAD excludes the Company's Legacy Investments segment and excludes an allocated portion of the Company's Corporate segment relating to the Legacy Investments segment.
• Core Segments EAD per basic common share and Core Segments EAD ROE are also non-GAAP measures established in the second quarter 2025 and are calculated using Core Segments EAD.
• Core Segments EAD ROE is defined as Core Segments EAD divided by average capital attributable to Core Segments.

A further discussion of Core Segments EAD and a reconciliation of our non-GAAP Core Segments EAD measures to comparable GAAP measures is set forth below under the heading "Reconciliation of GAAP to non-GAAP Core Segments EAD".

EAD. Earnings Available for Distribution ("EAD") and EAD ROE are non-GAAP measures that the Company has historically reported and continue to be used to present management's non-GAAP analysis of the performance of the Company's different business segments, and that continue to be calculated exclusive of any allocation of the Company's Corporate segment.

• Consistent with prior quarter disclosures, EAD and EAD ROE are non-GAAP measures derived from GAAP Net income (loss) available (related) to common stockholders and GAAP Return on common equity ("GAAP ROE" or "ROE"), respectively.
• Consistent with prior quarter disclosures, EAD is defined as: GAAP net income (loss) available (related) to common stockholders adjusted to (i) exclude investment fair value changes, net; (ii) exclude realized gains and losses; (iii) exclude acquisition related expenses; (iv) exclude certain organizational restructuring charges (as applicable); and (v) adjust for the hypothetical income taxes associated with these adjustments.
• Consistent with prior quarter disclosures, EAD ROE is defined as EAD divided by average capital utilized for each respective period.

A further discussion of EAD and a reconciliation of our non-GAAP EAD measures to comparable GAAP measures is set forth below under the heading "Reconciliation of GAAP to non-GAAP EAD".

Supplemental Non-GAAP Table - Illustrating EAD With Allocated Corporate Segment.

Management is also presenting a supplemental non-GAAP table in this section under the heading "Supplemental Table - EAD With Allocated Corporate Segment" to clearly illustrate a key distinction between the methodology for calculating the two non-GAAP measures described above – namely, Core Segments EAD and EAD. That key distinction relates to whether or not the non-GAAP measure allocates the Company's Corporate segment across its other reporting segments for purposes of calculating the non-GAAP measure of performance. Management believes this supplemental table assists management and investors in comparing the Company's two distinct non-GAAP measures described above.

Non-GAAP Disclosures (continued)

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About Redwood

Redwood Trust, Inc. (NYSE:RWT) is a specialty finance company focused on several distinct areas of housing credit where we provide liquidity to growing segments of the U.S. housing market not well served by government programs. We deliver customized housing credit investments to a diverse mix of investors, through our best-in-class securitization platforms, whole-loan distribution activities, joint ventures and our publicly traded shares. We operate through three core residential housing-focused operating platforms — Sequoia, Aspire, and CoreVest — alongside our complementary Redwood Investments portfolio which is primarily composed of assets we source through these platforms. In addition, through RWT Horizons®, our venture investing initiative, we invest in early-stage companies that have a direct nexus to our operating platforms. Our goal is to provide attractive returns to shareholders through a stable and growing stream of earnings and dividends, capital appreciation, and a commitment to technological innovation that facilitates risk-minded scale. Redwood Trust is internally managed and structured as a real estate investment trust ("REIT") for tax purposes. For more information about Redwood, please visit our website at www.redwoodtrust.com or connect with us on LinkedIn.

Cautionary Statement; Forward-Looking Statements:

This press release and the related conference call contain forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements regarding the expected timing for the filing of Redwood's Quarterly Report on Form 10-Q. Forward-looking statements involve numerous risks and uncertainties. Redwood's actual results may differ from Redwood's beliefs, expectations, estimates, and projections and, consequently, you should not rely on these forward-looking statements as predictions of future events. Forward-looking statements are not historical in nature and can be identified by words such as "anticipate," "estimate," "will," "should," "expect," "believe," "intend," "seek," "plan" and similar expressions or their negative forms, or by references to strategy, plans, opportunities, or intentions. These forward-looking statements are subject to risks and uncertainties, including, among other things, those described in our Annual Report on Form 10-K for the year ended December 31, 2024 under the caption "Risk Factors". Other risks, uncertainties, and factors that could cause actual results to differ materially from those projected may be described from time to time in reports we file with the Securities and Exchange Commission, including reports on Forms 10-K, 10-Q and 8-K. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

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Investor Relations

Kaitlyn Mauritz

Head of Investor Relations

Phone: 866-269-4976

Email: [email protected]