REDWOOD TRUST, INC. Redwood Trust Investor Day
March 19, 2024
Forward Looking Statements
This presentation contains forward-looking statements, including statements related to potential book value upside related to embedded discount within our securities portfolio, potential transactional volume achievable for Redwood's Residential Consumer and Residential Investor Mortgage Banking platforms through private capital partnerships; 2024 run-rate targets for Redwood's revenue mix, capital allocation, capital structure, capital deployment (including illustrative returns for capital deployment opportunities), operating metrics, general and administrative expense and non-GAAP earnings. Forward-looking statements involve numerous risks and uncertainties. Our actual results may differ from our 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, or intentions. These forward- looking statements are subject to risks and uncertainties, including, among other things, those described in the Company's Annual Report on Form 10-K for the year ended December 31, 2023 and any subsequent Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K 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 the Company files with the Securities and Exchange Commission, including reports on Form 8-K.
Additionally, this presentation contains estimates and information concerning our industry, including market size and growth rates of the markets in which we participate, that are based on industry publications and reports. This information involves many assumptions and limitations, and you are cautioned not to give undue weight to these estimates. We have not independently verified the accuracy or completeness of the data contained in these industry publications and reports. The industry in which we operate is subject to a high degree of uncertainty and risk due to a variety of factors, including those referred to above, that could cause results to differ materially from those expressed in these publications and reports.
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Agenda
01 | To Own RWT | Page 4 |
03 | The Power of Partnerships: | Page 23 |
Private Credit Partnerships |
Underscore Our Opportunity
05 | Election Year Politics: | Page 37 |
Insights on Regulation and |
Housing Policy
07 | Q&A | Page 40 |
02 | Shifting Roles in Housing | Page 22 |
Finance: How Private Capital |
Can Support Bank Capital Needs
04 | Operating Blueprint: Partnership | Page 25 |
Based Investing | ||
06 | The Opportunity to Build a More | Page 38 |
Accessible Housing Market |
2
Today's Redwood Speakers
Chris Abate | Dash Robinson | Brooke Carillo |
Chief Executive Officer | President | Chief Financial Officer |
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To Own RWT
Chris Abate
Chief Executive Officer
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Our Thesis
We are on the cusp of a secular shift in the way mortgages are financed
Private institutional capital has exhibited great demand for our products
The next bull market for interest rates and credit spreads is upon us
We are positioned in the largest untapped addressable markets in residential housing
To own RWT is to hold the keys to tremendous option value on the future of housing finance
A Few Things Happened Since Our Last Investor Day
6.0% | |
5.0% | |
(%) | 4.0% |
Rate | |
Funds Target | 3.0% |
Fed | 2.0% |
1.0% |
2021 Investor Day
0.0%
September 2021
2024 Investor Day
525 bps
Increase in Fed Funds since our 2021 Investor Day
March 2024
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We've Focused on Strengthening Our Market Positioning
Redwood Business or Segment
Poised to Grow Market Share
New Platform Seeded
Total Addressable Market(1) Clients Served
Housing Investors
~$130 Billion
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As Rates Began to Rise, Housing Transaction Activity Was
Among the First to Go…
Quarterly Mortgage Origination Volumes vs. Mortgage Rates
Quarterly Mortgage Origination Volume ($bn)
$1,261 | 8.0% | |||||||
$1,076 | $1,094 | $1,050 | ||||||
$928 | $954 | 6.0% | ||||||
$893 | ||||||||
(%) | ||||||||
$689 | $678 | Rate | ||||||
$398 | $399 | 4.0% | Mortgage | |||||
$480 | $463 | $444 | ||||||
$333 | Yr | |||||||
2.0% | 30 | |||||||
Q2'20 | Q3'20 | Q4'20 | Q1'21 | Q2'21 | Q3'21 | Q4'21 | Q1'22 | Q2'22 | Q3'22 | Q4'22 | Q1'23 | Q2'23 | Q3'23 | Q4'23 | 0.0% |
Quarterly Mortgage Origination Volume ($bn) | 30 Yr Mortgage Rate (%) | ||||||||||||||
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…. And Fed Tightening Pushed Risk Capital to the Sidelines
A record $6 trillion in money market funds should provide a major tailwind for credit spreads once the Fed eases and managers allocate capital back into risk assets
Money Market Fund Assets vs. Fed Funds Target Rate
Money Market Funds ($bn)
$6,500
$6,000
$5,500
$5,000
$4,500
$4,000
2021 | 2022 | 2023 | 2024 | ||
Money Market Funds ($bn) | Fed Funds Target Rate (%) | ||||
6.00%
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%
Fed Funds Rate Rate (%)
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Disclaimer
Redwood Trust Inc. published this content on 19 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 19 March 2024 18:23:08 UTC.
