Redwood Trust - Earnings Call - Q1 2025

Executive Summary

• Q1 2025 delivered positive GAAP earnings ($0.10) and higher non-GAAP EAD ($0.14), driven by strong Sequoia mortgage banking margins and increased distribution, while legacy bridge loan marks remained a headwind.
• Revenue materially beat Wall Street consensus ($73.85M actual vs $30.25M estimate; +$43.6M), but normalized EPS under-ran consensus ($0.14 actual vs $0.17 estimate), reflecting mix and non-GAAP/GAAP differences; GAAP EPS was $0.10.
• Management reiterated a YE’25 run-rate target of 9%–12% EAD ROE and highlighted accelerating capital rotation toward operating platforms; dividend maintained at $0.18 in Q2 2025.
• Near-term catalysts: active buyback authorization (~$100M), robust bank flow and bulk purchases, and policy developments (GSE footprint reform) that could expand private-capital housing finance; Q2-to-date distributions ~$520M underscore momentum.

Values marked with * retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

• Sequoia gain-on-sale margins of 123 bps (above 75–100 bps target), with $4.0B locks (+73% QoQ; +125% YoY) and $2.0B distributed across securitizations and whole loan sales, supporting a 28% GAAP ROE for the segment.
• Third-Party Portfolio Investments net income rose as lower rates improved valuations; Redwood Investments segment net income increased to $22.9M (vs $2.8M in Q4).
• Management tone confident on strategic progress and market share gains: “Our Sequoia business produced its highest lock volumes in three years… CoreVest saw ongoing strength… we successfully launched our expanded Aspire loans…” (CEO Abate).

What Went Wrong

• Legacy multifamily bridge loans saw higher delinquencies, increasing negative fair value changes; segment net loss widened to $(33.9)M from $(26.6)M.
• GAAP book value per share slipped to $8.39 (vs $8.46), tempering total economic return to +1.3% for the quarter.
• CoreVest funded $482M, down 4% QoQ amid rate volatility (though +48% YoY), prompting tighter credit posture in certain geographies (e.g., Texas/Florida) and reduced leverage vs spread add-ons.

Transcript

Operator (participant)

Greetings and welcome to the Redwood Trust First Quarter 2025 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Kaitlyn Mauritz, Head of Investor Relations. Please go ahead.

Kaitlyn Mauritz (Head of Investor Relations)

Thank you, Operator. Hello, everyone, and thank you for joining us today for Redwood's First Quarter 2025 Earnings Conference Call. With me on today's call are Chris Abate, Chief Executive Officer; Dash Robinson, President; and Brooke Carillo, Chief Financial Officer. Before we begin, I want to remind you that certain statements made during management's presentation today with respect to future financial and business performance may constitute forward-looking statements. Forward-looking statements are based on current expectations, forecasts, and assumptions, and include risks and uncertainties that could cause actual results to differ materially. We encourage you to read the company's annual report on Form 10-K, which provides a description of some of the factors that could have a material impact on the company's performance and cause actual results to differ from those that may be expressed in forward-looking statements.

On this call, we may also refer to both GAAP and non-GAAP financial measures. The non-GAAP financial measures provided should not be utilized in isolation or considered as a substitute for measures of financial performance prepared in accordance with GAAP. A reconciliation between GAAP and non-GAAP financial measures is provided in our First Quarter Redwood Review, which is available on our website, redwoodtrust.com. Also note that the content of today's conference call contains time-sensitive information that is only accurate as of today. We do not intend and undertake no obligation to update this information to reflect subsequent events or circumstances. Finally, today's call is being recorded and will be available on our website later today. With that, I'll turn the call over to Chris for opening remarks.

Christopher J. Abate (CEO)

Thank you, Kate. Good afternoon, everyone, and thank you for joining Redwood's First Quarter Conference Call. A month into the second quarter, it's safe to say that the latest new normal is now sweeping the markets, rendering most macro projections for 2025 either obsolete or at best under review. Many have analogized this April with March of 2020 in terms of the extreme price and spread volatility we've seen across most financial markets. Fortunately, for the mortgage market, we have not seen any disproportionate effects this time around. Redwood continues to navigate this current bout of market volatility from a position of strength. As mentioned in the Q1 shareholder letter we published last week, our GAAP book value per share was estimated at April 21 to be up 1%-1.5% from quarter-end, and we believe that estimate still holds today.

As we move forward, it's worth reiterating that the results of our strategic initiatives have begun to take hold. We believe the way mortgages are financed is undergoing a period of transformation. The risk-reward balance has shifted for many originators, with banks actively looking for balance sheet solutions for both new production and legacy collateral. To that end, we saw billions of dollars of seasoned jumbo loans change hands in the first quarter, and we positioned ourselves to be in the hunt for much of that production. We are also in the early stages of shifts in housing finance policy in Washington that have the potential to create a significant greenfield for our platform. We have witnessed a flurry of activity at the GSEs, including mass voluntary and involuntary workforce reductions and an almost complete board-level turnover that we believe reflects ideological shifts aimed at reassessing the GSE housing footprint.

This isn't a surprise to us. In recent years, taxpayers have found themselves backstopping GSE mortgages with balances over $1 million, mortgages on investment and vacation homes, second-line mortgages, and other products not squarely aligned with the federal government's housing mission. All of these are examples of products that we believe can and should be financed by the private sector without government support. We remain optimistic that over time, the GSEs can be reoriented back to their core housing missions, with much of this work able to precede any plan for a full release from conservatorship. We've also recently been spending time in Washington to advocate to members of the new administration, as well as lawmakers on both sides of the aisle, for a leveling of the playing field between private capital and the GSEs, particularly through streamlining regulatory burdens that drive up costs.

For example, there is room to rationalize outdated securitization rules that are holding back private capital formation and to sensibly update disclosure and execution burdens that would make the mortgage capital markets far more efficient, ultimately benefiting mortgage borrowers and supporting broader housing finance reform. As we look ahead, there remains strong demand for the assets we create, which trillions of dollars raised by private credit institutions were actively looking to crowd their capital into the residential mortgage space. The fact that they have not already done so in greater scale is a direct byproduct of the government's outsized role in housing. As the landscape in Washington evolves, our role as an intermediary between these large capital sources and our extensive network of loan originators and sponsors has the potential to become transformative.

As we pursue our 2025 volume objectives, strategic partnerships with entities on both the supply and demand side of this market will remain a key part of our growth initiatives. With that, I'll turn it over to Dash to cover our operating results for the first quarter.

Dashiell I. Robinson (President)

Thank you, Chris. I'll cover our operating results before handing the call over to Brooke to conclude with our financial highlights. Sequoia's first quarter performance underscores the significant runway for the business, even amidst a continued period of relatively tepid housing activity. While money center banks reported steep mortgage volume declines of between 20%-30%, Sequoia's $4 billion of first quarter locks represented 73% quarter-on-quarter growth. The source of the momentum is twofold: continued wallet share growth across our seller base for on-the-run production and the long-awaited emergence of seasoned bulk portfolios, primarily from banks, as a viable expansion of our funnel. Combined with an outlook for distribution that once again includes certain depositories seeking to bolster loan growth with third-party mortgage portfolios, this primes the business to grow market share even while prudently navigating the recent macro volatility.

With a network of over 200 sellers, we are actively engaged with originators that represent close to 75% of overall jumbo originations. This includes several top 20 banks and a deep group of independent mortgage bankers, or IMBs, who are benefiting from many depositories de-emphasizing mortgage lending. First quarter volume was split evenly between banks and IMBs and notably included a $1 billion portfolio of seasoned 30-year and hybrid production acquired from a large depository, our second large portfolio acquisition from a bank in the past three quarters. Even net of this important transaction, we estimate our market share of on-the-run jumbo production to be between 6%-7%, up from 4%-5% in 2024 and from the platform's long-term average of approximately 2%. As our product offerings deepen and more banks prioritize distribution over balance sheet retention, we expect this footprint to continue growing.

Efficient distribution drove another quarter of Sequoia gain-on-sale margins well above our historical targets. Sequoia distributed $2.5 billion of loans during the first quarter through three securitizations and several bulk whole-loan sales. Notably, the majority of our whole-loan distribution was to banks seeking to bolster overall loan growth, reflecting an emerging two-way flow between bank sellers and bank buyers that we are well-positioned to continue facilitating. Amidst April's unprecedented market fluctuations, we continue to defend margins, executing our fourth securitization of the year earlier this week while carefully managing pipeline and hedging risk to position us favorably into the second half of Q2 and beyond. A core complement to Sequoia's growth is the expansion of our Aspire platform, which now includes both directly originated home equity investments, or HEI, and expanded loan products acquired from third parties, many of them existing sellers.

While loan acquisition volume for the first quarter was just over $100 million, the platform has now locked loans with 25 discreet sellers and remains active in onboarding new origination partners. Inflows are being efficiently distributed, and we have sold Aspire pools to two different end investors, with several others actively engaged in acquiring loans from the platform. While Aspire loans serve consumers requiring an alternative approach to underwriting income or other key attributes, the focus remains on high-quality borrowers with strong equity positions in their homes. Life-to-date Aspire loan production has averaged 755 FICO and 68% LTV. Looking ahead, we expect to grow Aspire's volumes meaningfully in the second half of 2025, with a full-year share goal of 2%-3% of an addressable market that continues to expand.

Aspire is leveraging Sequoia's playbook of speed and reliability of execution to capture production from a growing base of sellers. This will be coupled with an important technology overlay to more effectively transform the experience for our loan sellers and the prospective homeowners they serve. By providing these innovations to both new origination partners and the sellers we've served for decades, our loan acquisition funnel could emerge over time as a distinct competitive advantage in the sector. CoreVest maintained its recent momentum in the first quarter, funding $482 million of loans, a 4% decrease from the fourth quarter, but up 48% year over year. As the market landscape continues to evolve, our increased focus in recent quarters on smaller balance loans backed by single-family homes, namely residential transition loans, or RTL, and DSCR loans, continues to serve the platform well.

These two products comprised about 30% of CoreVest's first quarter volumes, a proportion we expect to grow throughout the remainder of the year. During the first quarter, 98% of our bridge volume was backed by single-family homes, and we continue to expand the sourcing funnels for these strategies and see ongoing runway to gain share in conjunction with existing bellwether products like term loans, for which volume dips slightly quarter over quarter given interest rate volatility, but where we maintain a strong pipeline for Q2. CoreVest continues to execute on its capital light strategy, prioritizing products in which the market sees value. The platform distributed over $400 million of loans during the first quarter, largely to whole-loan buyers and our joint ventures, and maintained an efficient working capital ratio while focusing on products prioritized by private credit investors.

In the past year alone, CoreVest has distributed over $1.8 billion of loans into dedicated sources of capital, specifically joint ventures, whole-loan sales, and existing securitizations with revolving features. Overall credit strategy across our platforms reflects a more nuanced national housing landscape than we've seen in some time. While the U.S. remains structurally undersupplied in turnkey homes, both new and secondary inventory has grown in several markets as buyers face higher borrowing and maintenance costs. Though recent softness is modest relative to the appreciation of recent years, we're adjusting our production priorities in response to emerging local trends that we believe will allow us to meet our growth goals at attractive risk-adjusted returns. Within Redwood Investments, credit performance for organically retained and third-party assets, particularly ones with consumer-related strategies, remains strong.

We've talked before about the ability to unlock the discount from these investments, which at quarter-end stood at $1.87 per share, through re-levering and other portfolio optimization, and see a path towards achieving that in the coming quarters. Underlying repayment velocity in the bridge loan portfolio remains solid, as we saw over 10% of the portfolio repaid in Q1. We continue to actively reduce exposure in the legacy bridge portfolio, specifically from the 2021 and 2022 vintage, prioritizing resolutions that optimize net present value, including traditional property liquidations and restructurings that better position a sponsor to refinance, as well as, more recently, pursuing partnership-based solutions with other capital providers in the space at both an asset-specific and portfolio level.

At times, this value-driven approach may result in short-term increases in delinquencies, as it did this quarter, largely tied to two sponsor relationships and still concentrated in the legacy multifamily bridge cohort we've previously discussed. Of note, during the first quarter, approximately 10% of loans that were 90-plus days delinquent at year-end were resolved, progress that has continued into the second quarter. We remain confident that this strategy is the most effective path to achieving successful outcomes and preserving value. Roughly half of this legacy multifamily portfolio has already been repaid, and our net capital exposure to this cohort, net of recent resolution activity, now sits at approximately $1.60 per share. Our post-2023 vintages, largely centered on single-family strategies, continue to perform well and reflect the strength of our more recent investment focus. With that, I will hand the call over to Brooke.

Brooke E. Carillo (CFO)

Thank you, Dash. We reported GAAP earnings of $14.4 million, or $0.10 per share, compared to a loss of $8.4 million, or negative $0.07 per share in the fourth quarter. The sequential improvement was driven by strong performance across our operating platforms, supported by improved fair value marks in the investment portfolio compared to the fourth quarter. Book value per share ended the quarter at $8.39, a modest decline from $8.46 in the fourth quarter, translating to a positive economic return of 1.3% for the first quarter. Our shareholder letter, published early last week, noted that our estimated book value per share for the second quarter is 1%-1.5% higher than at March 31st, supported by our dynamic hedging and strong mortgage banking activity to start the second quarter.

Earnings available for distribution, or EAD, for the first quarter was $19.8 million, or $0.14 per share, up from $18.4 million, or $0.13 per share, in the fourth quarter. These results reflect healthy contributions from mortgage banking and a continued focus on operational efficiency. Net income from Sequoia was $25.8 million, representing a 28% ROE for the quarter, up from 23% in the previous quarter. Loss volume increased 73% quarter over quarter, reaching $4 billion, the highest level since 2021, driven both by strong daily flow activity and bulk purchases from strategic partners. Capital efficiency drove ROE improvement as the segment utilized less capital, largely given heightened securitization activity on the quarter. Gain-on-sale margins remained above our historic 75-100 basis point range, and Aspire's early lock volumes, just over $100 million, tracked within the same gain-on-sale margin range.

Aspire's results remain consolidated under Sequoia at this stage, but through time, we expect to break out metrics as the platform scales. CoreVest generated net income of $1.3 million, or $2.9 million, excluding amortization of acquisition-related intangibles, resulting in a 20% ROE for the quarter. While volumes were down slightly from the fourth quarter, we saw margin expansion in term loan production and continued strength in our smaller balance bridge and DSCR strategies. Despite recent investments in expanding our production capacity, efficiency metrics remain strong and within our target range, underscoring the scalability of our operating infrastructure. Redwood Investments generated $22.9 million of net income in the first quarter, up from $2.8 million in Q4. This reflects solid returns from our retained operating investments and third-party portfolio, offset by the continued pressure in our legacy bridge book, which we have broken out separately.

Dash reviewed delinquency rates in the book rose due to credit migration on select vintage multifamily bridge loan exposures, though we are actively pursuing resolutions for this group. From a capital and liquidity standpoint, we ended the quarter with unrestricted cash of $260 million, up from $245 million at year-end. Recourse leverage stood at 2.5 times compared to 2.4 times in the fourth quarter. Following quarter-end, we accessed $50 million of additional capacity under our CPP Investments partnership, bolstering our near-term liquidity as we prepare for continued market volatility. As we noted in our shareholder letter, market conditions have shifted materially in recent weeks. The impact of escalating trade policy and rate volatility has led to a broad risk-off tone. With many economists now pricing in heightened recession risk, we've positioned our balance sheet to benefit modestly from declining rates and increased volatility.

At quarter-end, our debt profile remained predominantly linked to non-marginable loan warehouse lines or non-recourse securitizations. Only roughly a third of our $2.9 billion of recourse debt is marginable, mainly tied to our Prime Jumbo pipeline, where active hedging and fast capital turnover help mitigate exposure. In fact, we've reduced securities repo by 40% since March 31, following a creed of sales and non-recourse financing transactions. As it relates to our overall capital structure, we are evaluating alternatives, including the potential for share repurchases, particularly in light of the current discount to book value, which we believe meaningfully exceeds downside credit risk under stress scenarios.

As mentioned, we've made enhancements to our disclosures this quarter to clearly delineate the contributions from our strategies where we're actively directing new capital deployment, namely our operating businesses: Sequoia, CoreVest, and Aspire, and the retained investments we create there versus opportunistic third-party investments and legacy portfolios. These disclosures provide increased transparency around the strategic capital allocation decisions we've made and the resulting earnings contributions, which we believe will help investors better track our progress. With Q4 earnings, we've provided volume and return targets for each of our platforms and have expanded that with additional information in this quarter's Redwood Review. While the second quarter may see short-term volume fluctuations due to market conditions, we continue to expect to achieve our full-year target. For our year-end 2025 run rate, we are targeting annualized EAD returns on equity in the 9%-12% range, up from 7% in Q1.

We aim to accomplish this by reallocating nearly 20% of capital towards our operating platforms and retained operating investments as we reduce exposure to our legacy bridge investments and other non-strategic third-party securities. To date in Q2, we have sold approximately $50 million of such investments and anticipate continued activity throughout 2025. With that, Operator, we will now open the line for questions.

Operator (participant)

Thank you. We'll now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions. Our first question is from Doug Harter with UBS.

Doug Harter (Director and Senior Equity Research Analyst)

Thanks. Hoping you could walk through kind of the real-life case study of April, how you guys hedge your portfolio, and kind of how you made it through that period kind of with book value up?

Dashiell I. Robinson (President)

Sure, Doug. We aren't going to get into the specifics of how we hedged other than to say we consider the pipeline a moving business, and we're constantly trying to turn capital and move risk as quickly as we can. We've been in the markets with numerous Sequoia transactions at this point, and we're always looking to sell loans in bulk. I think it was kind of all of the above. Obviously, TBAs underperformed, and volatility was very high, but I think we've learned a lot over the past few years, particularly through the COVID experience, and our positioning with respect to our pipeline, our non-marginal facilities, things of that sort. All of it kind of contributed to being able to manage that period effectively across the book.

Doug Harter (Director and Senior Equity Research Analyst)

Great. Is there any way you could give us any sense as to kind of how Sequoia spreads have kind of fared and whether you think that has any impact on the ability to continue to generate kind of the target revenue margin on those loans?

Dashiell I. Robinson (President)

Yeah. The market was obviously extremely volatile in April. I'd say we had somewhat of a risk-off mindset in the first half of the month, which was extremely appropriate. Things have calmed down, and spreads have come back in. The last deal that we were in the market with, spreads a point back of TBAs, just kind of right back to more normalized levels. I think where Brooke was going in her prepared remarks, we still feel that it's early in the year. Just given the growth in the business and the trajectory, we obviously had a fantastic first quarter. We still feel confident we can generate margins that are at or in excess of our long-term range of 75-100 basis points.

Doug Harter (Director and Senior Equity Research Analyst)

Great. Appreciate those answers. Thank you.

Operator (participant)

Our next question is from Rick Shane with JPMorgan.

Rick Shane (Managing Director and Senior Equity Research Analyst)

Hey, guys. Thanks for taking my question. It's actually kind of the other side of the coin of Doug's question. I'm looking at the tremendous growth that you guys are experiencing and the volatility of the markets that we're also all experiencing. Dash, I think you alluded to this a little bit, but I'm curious, as you do things like lock $4 billion worth of volume in a quarter, how you manage the liquidity and execution risk associated with that. It's kind of interesting, actually. The average capital allocation, it looks to me like ticked down for the quarter. You alluded to the fact that there was a lot of velocity in terms of Sequoia execution, and it sounds like post-quarter there's been additional.

I would love to understand, in the context of things, what is the risk that you guys take on when you, for example, put a lock $4 billion in an environment where maybe the markets go away the next day?

Dashiell I. Robinson (President)

Sure, Rick. I can take that. Thank you for the question. As Chris referenced, speed is, in this industry, the hardest thing to teach. Our ability to turn over the risk efficiently and have risk pre-sold or know where partners are lined up to execute, I think, is a really big deal. Just to put some math around that, the pipeline we were carrying into the end of the quarter, half of that has already been sold or securitized since March 31. That is both whole-owned sales, largely to banks, as I talked about, as well as securitization. Just understanding the shock absorbers in the market and where risk can be cleared day in, day out. In April, it was intraday. As you know, at 10:00 A.M., that was a different answer than 3:00 P.M. on a number of days.

Just always knowing where that risk can clear is the best mitigant. I think Q1 was a good example of that. We've probably never felt better about our depth and distribution. As Chris articulated, private label securitization, and this has not always been the case amidst macro volatility, has really hung in there. It's been really orderly, even amidst huge swings in rates and obviously equities that, as Chris articulated, we haven't seen in five years. I think that's a testament to a number of things, including our platform and being able to get Sequoia deals up and down and being the only phone call that a lot of loan buyers will take amidst bouts of volatility. They're taking our call. They're not taking others. I think that's a big part of it.

As Brooke said in her remarks, we've been positioned for a while to benefit from lower rates and increase in volatility. We obviously saw a fair amount of that, certainly on the vol side in April. I think that continues to serve us well. A lot of it, Rick, is the same as we've always done, which is just speed and knowing where the market is at all times.

Rick Shane (Managing Director and Senior Equity Research Analyst)

Got it. If I could ask one follow-up, and this kind of reflects the limits of an equity analyst's understanding of your business, or at least my understanding of your business and the nomenclature. You guys had $1.9 billion of bulk purchases. I think you said that those were seasoned loans from a depository. That is, it's categorized as part of the forward purchases, but I'm assuming those are closed loans. Is that something where, when you take on that $1.9 billion, you are basically within 24 hours that's being funded in a permanent structure as opposed to flow loans on a lock basis?

Dashiell I. Robinson (President)

I'll take that, Rick. You've been around the hoop for decades, so I know.

Rick Shane (Managing Director and Senior Equity Research Analyst)

Forever.

Dashiell I. Robinson (President)

You know more than you're letting on. The closed-end pools or the closed pools, seasoned pools, things that we're seeing from banks, we include that because that's really become a bona fide addressable market for us at this point. We're seeing pools regularly now. Obviously, there was a big TD Bank pool that traded and got a lot of headlines in January. We were very focused on that. Certainly, following that, we've seen some additional pools and have been in touch with our regional bank partners. What we're seeing causes us to position to view that as an addressable market and make sure that we've got the resources and the hedging parameters in place and the distribution. We're selling to banks again. We've been very focused on buying from banks, but there's certain regional banks that still need collateral.

That has been the two-way exchanges with banks has been very good for us. I think it is really something we have built some competencies around. If we know that there is a pool that we intend on purchasing the same day, the same moment, we are focused on how we are going to distribute it. That has been working pretty well for us this year.

Rick Shane (Managing Director and Senior Equity Research Analyst)

Terrific. Thank you very much.

Dashiell I. Robinson (President)

Thanks, Rick.

Operator (participant)

Our next question is from Don Fandetti with Wells Fargo.

Don Fandetti (Managing Director and Senior Equity Research Analyst)

Hi, good evening. Can you talk a little bit? I just want to clarify the, on the bridge loans, I guess the net capital, net of resolutions of $1.60. Is that all of your bridge loans, both securitized and unsecuritized?

Dashiell I. Robinson (President)

Thanks, Don. It's Dash. I can take that. That $1.60 share is specific to the 2022 and earlier vintage multifamily bridge, which, as we've said, has been the area where we've seen the most density of issues. Just trying to convey as we've continued to optimize financing against that part of the book, continue resolutions, continue to see paydowns. We thought it was useful to frame on a per-share basis the unsecuritized portion that's sort of older vintage multifamily.

Don Fandetti (Managing Director and Senior Equity Research Analyst)

Got it. I mean, how should we think about kind of the manifestation of that risk? Obviously, delinquencies, as you highlighted, were up a good bit this quarter, but you're resolving them, and your resolutions are probably coming in pretty close to your carrying value, I think. How are you thinking about that risk to the book? Is there enough liquidity in multifamily where you can resolve these, and it's pretty clean?

Dashiell I. Robinson (President)

Yeah, good question. As I mentioned, we are always focused on the highest net present value of resolution. To be candid, that evolves quarter by quarter, loan by loan, depending on the market, depending on how the sponsor is progressing with a project. We've talked in recent quarters about our willingness for an engaged sponsor who's working on their project to maybe offer some short-term rate relief. We've done that in certain cases. I think the uptick in delinquency we saw this quarter was a function, frankly, of decisions we made where we felt it was best to pursue alternative resolutions, potentially selling the note or getting into the real estate to get out of the risk more efficiently. That's what's important. This is a short-duration book. There's a lot of maturities that have already occurred or are coming up in the next 6-12 months.

We have the ability to control our outcomes if we want to continue to work with a sponsor or not. We do expect these to continue to resolve throughout the year. Some are certainly taking, from a timeline perspective, longer than we expect. It will be a combination of working with a borrower through time to get them to some sort of refinance away from us or potentially getting out of the risk ourselves without the borrower involved. I would say, in general, liquidity in multifamily has been fine. It is certainly market-specific as you go across the country. In general, obviously, multifamily starts are down a lot. We expect that supply-demand ultimately to sort of reassess or realign here in the coming quarters as starts are down and demand stays where it is or improves. It is loan-specific.

The important thing is that we're determining our outcome as it relates to continuing to work with these borrowers or not. The move in delinquency up this quarter reflected situations where we felt moving on and dealing with the real estate ourselves or in partnership with another capital partner was the best answer.

Don Fandetti (Managing Director and Senior Equity Research Analyst)

Got it. Thanks.

Kaitlyn Mauritz (Head of Investor Relations)

Operator, we can take our next question.

Operator (participant)

Our next question is from Crispin Love with Piper Sandler.

Crispin Love (Senior Research Analyst)

Hi, Dash. Good afternoon. Appreciate you taking my question. First, can you talk a little bit about your EAD ROE guide for 2025? Brooke, I believe you called out 9%-12% for the full year. Still early, but that assumes a decent ramp from the first quarter. Can you just speak a little bit to the cadence you might expect throughout the year and what that might mean for dividend coverage throughout 2025 from EAD?

Brooke E. Carillo (CFO)

Sure. I'm happy to. Yeah. As I laid out in some of my prepared remarks, and we did include a slide on this in the Redwood Review page 13 this quarter. This has been an ongoing trend. You've seen us continue to de-emphasize some of our non-strategic investments in the investment portfolio in favor of redeploying capital into our operating businesses where we've seen this quarter we had a 20% and 28% ROE for our operating businesses. I think from several of the already made comments, we see really strong opportunities for both increasing our flow activity with new banking partners through our Sequoia business and large bulk opportunities. Those will obviously be more episodic.

In CoreVest, some of the smaller balance products where we are under-penetrated in the market, those all serve as kind of key areas for growth and will require incremental working capital to fund growth of our pipelines there. I think we had guided at the beginning of the year that we locked about $9 billion of loans last year, and we thought we could see a 30% increase in some of our consumer volumes. Just if you draw a line through the first quarter, which obviously was very heavily weighted towards a couple of bulk transactions, we think that we could exceed our initial projections there. This is really a $200-$225 million rotation out of some of the third-party investments that are really under-levered today.

We carry very low leverage in our investment portfolio, which serves as a nice area to funnel that redeployment. We obviously made commentary on just book value accretion possible through share buybacks today, which is not reflected in that guidance that we gave in the 9%-12% but could hit the accelerator button there. I think a lot of this will just depend on when we see those opportunities manifest in the operating businesses and comparing that to opportunities within our capital structure today. You will see it really throughout the year as we continue this reallocation driven by payoffs, resolution activities, and financing optimization.

Don Fandetti (Managing Director and Senior Equity Research Analyst)

Great. I'm looking at that slide now, and I see target year-end 2025 run rate of 9-12. Does that mean for the full year you're expecting 9-12, or once you get to the fourth quarter?

Brooke E. Carillo (CFO)

It seems like a second. We'll call that a second half of the year run rate.

Don Fandetti (Managing Director and Senior Equity Research Analyst)

Okay. Sounds good. Can you just expand on your comments on share repurchases? Do you have an authorization in place today, and what would you need to see to become more active there?

Brooke E. Carillo (CFO)

Yeah. We do have a current authorization. It's just over $100 million. We have bought back stock before, and we are actively evaluating it, as I said in my commentary. I think some of it is just freeing up the capital that we've laid out on this through this plan today to make sure that we feel like, given the volatile markets that we've faced today, that we feel like we have sufficient capital to manage our business and excess capital to deploy it back into our own stock. We feel like the levels today are certainly attractive.

Dashiell I. Robinson (President)

Yeah. I'd also add, when we look at our debt maturity ladder, we have a convert maturing later this year. I think it's around $109 million or so, which, if you look in the past three, four, or five years, that's about the lowest amount of maturities we've had to manage in quite some time by a wide margin. When we look at organically internally sourced capital and our uses, the stock is definitely something that we're going to pay close attention to in the coming weeks and months, particularly because we have the authorization in place.

Don Fandetti (Managing Director and Senior Equity Research Analyst)

Fantastic. I appreciate you taking my questions. Thank you.

Operator (participant)

Our next question is from Eric Hagen with BTIG.

Eric Hagen (Managing Director)

Hey, thanks. Good afternoon. Okay. A bone of contention to some degree in the securitization market, as you guys know, has been the high level of credit enhancement, especially in the prime jumbo and the non-QM securitization deals relative to that risk that's embedded in those loans. Do you guys see any catalysts which could maybe alleviate that constraint where the rating agencies get more constructive? How do you think that conversation potentially evolves as the GSEs potentially exit conservatorship and there's more demand for funding that sort of needs to go into the private label securitization market?

Christopher J. Abate (CEO)

Eric, it's hard to say other than when we engage with the rating agencies, their models and the timing of when they change their models is kind of all over the map. They use a lot of empirical and historical data. So it's not just, "What have we seen over the past year?" but, "What have we seen over the past cycle or a few cycles?" As far as what really opens up securitization, as you know, we were just in Washington, and we've been re-advocating for some of the basic changes, such as changes to Reg AB2 and some other things that would make public securitization, in particular, viable. There's one thing I can tell you is there's a lot of capital out there. One of the boogeyman arguments within the Beltway is there's not enough private capital.

I mean, go look at how many trillions of dollars have been raised in private credit over the past few years. There's tons of capital, but it's not a level playing field. There was a great article, Abate, that just dropped today in the Journal about the GSEs. I would encourage everyone to read it. There's definitely a growing need for private sector capital, private sector securitizations, public securitizations. All of these things we will continue to pursue. Hopefully, with change in Washington, we can get a few of these low-hanging fruit changes implemented that we think could have a big impact.

Eric Hagen (Managing Director)

Yeah, that's helpful. Thanks, Chris. Okay. For the CoreVest loans that were originated in the quarter, maybe a couple of questions there. Any color on how the expected returns have maybe changed from the perspective of the investors themselves? In this environment where the macro is maybe a little bit more challenging or sensitive, do you think it's more effective to tighten the credit box or your underwriting standards, or is it more effective to just raise the cost of credit, like the loan coupon?

Dashiell I. Robinson (President)

Hey, Eric, Dashiell. Those are great questions. I'll take them. In terms of return expectations, I don't know that those have changed a ton. I think the ways in which these loans are financed continues to evolve. As you're well aware, there's now a fairly robust market for rated securitizations for residential transition loans. We're exploring doing one of those this quarter, which I think has helped bring efficiency to the market, particularly for some of those smaller balance single-family bridge products. I would say, however, that a competitive tailwind for us for sure is the market in terms of lenders leaning in or stepping back feels about as fragmented as it has in a while. Maybe some of that is a function of your point around geography, which I'll get to in a second.

Also, I think a lot of it is just overall corporate posture for some of these shops where that's a huge advantage for us, frankly, where good borrowers we haven't served before are coming to us because of a failure to execute by certain of our competitors. I say that because not so much that that in and of itself is going to cause us to move spreads higher, but it certainly is a competitive tailwind and something that we are hoping to take advantage of, particularly in some of these smaller balance products where, as Brooke articulated, we're still not as penetrated as we could be given the depth of our platform and, frankly, most importantly, the strength of our distribution.

I think there's a long runway there, but we are pleased, as we talked about earlier in the call, about how these markets have hung in there from a securitization perspective. The emergence of these rated bridge deals is certainly one we're following and hope to be a participant in more directly soon. As it relates to geography, I think what we found over the years is that there's not many instances where extra spread can compensate for where lower leverage should have been employed. I think when you look at areas, parts of Texas, Florida, obviously parts of the Southwest, we have probably erred more on the side of reducing leverage. We haven't really gotten a lot of pushback, frankly, when we've tried to do that.

I think when markets where you're worried about supply-demand challenges, etc., I think our general view is that it's better to adjust for that through credit policy rather than an expectation of return.

Eric Hagen (Managing Director)

Yep. Really helpful. I appreciate you guys. Thank you.

Operator (participant)

Our next question is from Steve Delaney with Citizens JMP.

Steve Delaney (Managing Director and Senior Equity Analyst)

Thanks. I would like to thank Chris for getting to the details on the existing buyback. With all this volatility, it seems like it's essential you guys have that tool in your pocket just to take advantage of for the benefit of the shareholders. Talking about volatility, we had a 10-year at 480 in January. It's under 420 now. Just curious as far as how that primary bond market indicator has impacted your prime jumbo 30-year, kind of your vanilla jumbo loan product, fixed rate, of course. What the range has been this year that you find yourself quoting and kind of where is it today versus what was likely, I guess, a high back in January or February? Just any color you can give on that would be helpful.

Dashiell I. Robinson (President)

Sure. Brooke can supplement here too. We've probably moved within a 100 basis point range on rate for 30-year prime jumbo since January 1. As you articulated, Steve, the real story there is the relationship of that rate to where benchmark rates are. As Chris pointed out earlier in the Q&A, I think mortgage spreads are wide right now. We're probably very high 6s, 7 handle 30-year fixed. To your point, that's versus a sub 4.20 10-year. That's as wide as we've seen in some time. In these markets, that can be a headwind, obviously, because rates are higher and that rates at this level continue at a macro level to continue to put a lid on overall housing supply. The other side of that coin is that spreads are wide, mortgages versus benchmarks. I think that's been a part of some of the execution efficiency.

You often see this when mortgage spreads are wide, notwithstanding the volatility. That allows us to price at a tighter spread back of TBAs, which, as Chris said, we've consistently done here, even through April where we saw a ton of volatility. Mortgages locally here continue to be very, very wide, but that has translated on a sort of a total return basis versus TBAs and versus benchmarks, I think, of continuously attractive levels where we've continued to be able to lock loans and do so profitably.

Steve Delaney (Managing Director and Senior Equity Analyst)

I've had some portfolio managers in CMBS and RMBS mention that they're finding just really attractive opportunities. Has this resulted kind of from dislocation post the big tariff blow-up a couple of weeks ago? Obviously, the 10-year is going to get the safety bid, but credit bonds, obviously, it sounds like they're widening out. Is that sort of what you're seeing in the last several weeks?

Dashiell I. Robinson (President)

Steve, we've seen some widening in sympathy to the broader markets. Certainly, it's been tough across the board. Mortgage was disproportionately impacted in the early days of COVID a few years back, and we didn't observe that this time around. It was more in tune with the broader markets. One thing that has consistently shown up for our sector more recently is private credit. There's so much money that's been raised, and that gets to my early comment about private capital and being able to do more in housing finance. As spreads widen, it just seems like that bid shows back up consistently. I think that really kept things from gapping too far in the midst of some of the April volatility.

We have been in the market with a deal as recently as this week, and things have felt quite orderly relative to all the chaos in the broader markets.

Steve Delaney (Managing Director and Senior Equity Analyst)

Nice. Nice. Appreciate everyone's comments. Thank you.

Dashiell I. Robinson (President)

Thank you.

Christopher J. Abate (CEO)

Thanks, Steve.

Operator (participant)

Thank you. There are no further questions at this time. I'd like to hand the floor back over to Kaitlyn Mauritz for any closing comments.

Kaitlyn Mauritz (Head of Investor Relations)

Thank you, operator, and thank you, everyone, for joining today. We appreciate the questions and engagement. If you have not already done so, we also encourage you to check out our shareholder letter and Redwood Review on our website for additional commentary. Thanks, and have a good afternoon.

Operator (participant)

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.