REDWOOD TRUST INCRWT
REDWOOD TRUST INC Segments Disclosure
Segment Information
Redwood operates in four segments: Sequoia Mortgage Banking, CoreVest Mortgage Banking, Redwood Investments and Legacy Investments. For a full description of our segments and factors used to determine each reportable segments, see Item 1—Business in this Annual Report on Form 10-K.
This segmentation aligns with the results of operations presented to our Chief Operating Decision Maker ("CODM") in reviewing the Company for performance assessment and resource allocation. We identify our CODM to be a group consisting of the Company's Chief Executive Officer, President and Chief Financial Officer.
Our CODM evaluates performance and allocates resources on each respective segment primarily based on segment net income (loss), also referred to as segment contribution, which is also used to assess the annual budget and forecasting process and to consider budget-to-actual variances when allocating capital and personnel to the segments throughout the year.
In the first quarter of 2025, we launched an additional mortgage loan conduit under our Aspire brand that acquires mortgage loans under expanded underwriting criteria, commonly referred to as "Expanded" loans. These loans, which primarily include bank statement and DSCR loans, are designed for prime-quality borrowers seeking alternative underwriting solutions, a segment that continues to grow within the U.S. housing market. The results of Aspire are currently included within our Sequoia Mortgage Banking segment.
In the second quarter of 2025, we identified and began reporting Legacy Investments as a new reportable segment, based on how the CODM evaluates performance and allocates resources. Previously included within Redwood Investments, this segment now consists of assets that are no longer strategically aligned with our core business strategies or with how we evaluate operational performance, allocate capital, and measure the success of our investment initiatives, and are primarily associated with our legacy unsecuritized bridge and term loan portfolios, residential re-performing loan securities and other non-core legacy assets. These assets are generally in runoff or other forms of disposition, and the CODM reviews financial results for this segment separately from other investments to inform strategic decisions regarding capital deployment and portfolio realignment. This change in segment presentation aligns with how management assesses performance under ASC 280, Segment Reporting, and has been applied retrospectively to all prior periods presented. This change had no impact on the consolidated financial statements. See Note 8 for further discussion on our legacy unsecuritized bridge and term loan portfolios.
In the third quarter of 2025, as part of our plans to accelerate the wind-down of the Legacy Investments portfolio, we sold a total $484 million in fair value of legacy unsecuritized bridge loans and REO assets to a newly formed partnership structure (the “Legacy Trust”). As part of the transaction, we retained a $182 million subordinate beneficial interest in the Legacy Trust, which is recorded as an available-for-sale ("AFS") real estate security on our consolidated balance sheet and is included in the Legacy Investments segment. See Notes 8 and 9 for further discussion on this transaction.
The accounting policies applied to the segments are the same as those described in the summary of significant accounting policies in Note 3 of the Notes to Consolidated Financial Statements, with the exception of allocations of certain corporate expenses not directly assigned or allocated to one of our four segments. These unallocated corporate expenses are included in the Corporate/Other column as reconciling items to our consolidated financial statements and primarily include interest expense related to our senior notes, convertible and exchangeable senior notes, and trust preferred securities, indirect general and administrative expenses and other expense. In the normal course of business, loans are originated and acquired at our mortgage banking segments and may subsequently be transferred to our Redwood Investments segment either as whole loans or through the retention of securities from securitizations we sponsor and consolidate under GAAP. All of our loans are accounted for under the fair value option and amounts transferred between segments are accounted for at fair value at the time of transfer.
The following tables present financial information by segment for the years ended December 31, 2025, 2024, and 2023.
Table 4.1 – Business Segment Financial Information
| Year Ended December 31, 2025 | ||||||||||||||||||||||||||||||||||||||
| (In Thousands) | Sequoia Mortgage Banking | CoreVest Mortgage Banking | Redwood Investments | Legacy Investments | Corporate/ Other | Total | ||||||||||||||||||||||||||||||||
| Interest income | $ | 183,581 | $ | 18,468 | $ | 895,416 | $ | 83,734 | $ | 1,727 | $ | 1,182,926 | ||||||||||||||||||||||||||
| Interest expense | (101,174) | (10,070) | (814,035) | (108,762) | (66,188) | (1,100,229) | ||||||||||||||||||||||||||||||||
| Net interest income (expense) | 82,407 | 8,398 | 81,381 | (25,028) | (64,461) | 82,697 | ||||||||||||||||||||||||||||||||
| Non-interest income (loss) | ||||||||||||||||||||||||||||||||||||||
Mortgage banking activities, net, excluding risk management derivatives (1) | 49,429 | 53,196 | — | — | — | 102,625 | ||||||||||||||||||||||||||||||||
Risk management derivatives (losses) gains, net (2) | 66,220 | (1,739) | — | — | — | 64,481 | ||||||||||||||||||||||||||||||||
| Total Mortgage banking activities, net | 115,649 | 51,457 | — | — | — | 167,106 | ||||||||||||||||||||||||||||||||
| Investment fair value changes, net, excluding risk management derivatives | — | — | (49,124) | (90,708) | 879 | (138,953) | ||||||||||||||||||||||||||||||||
Risk management derivatives gains (losses), net (2) | — | — | 50,047 | (8,463) | — | 41,584 | ||||||||||||||||||||||||||||||||
| Total investment fair value changes, net | — | — | 923 | (99,171) | 879 | (97,369) | ||||||||||||||||||||||||||||||||
| HEI income (loss), net | — | — | 1,419 | (708) | — | 711 | ||||||||||||||||||||||||||||||||
| Servicing income, net | — | — | 9,993 | — | — | 9,993 | ||||||||||||||||||||||||||||||||
| Fee income (loss), net | — | 12,834 | 1,022 | (2,899) | — | 10,957 | ||||||||||||||||||||||||||||||||
| Other income (loss), net | — | 3,342 | 1,550 | (1,091) | 82 | 3,883 | ||||||||||||||||||||||||||||||||
| Realized gains, net | — | — | 1,207 | (1,767) | (48) | (608) | ||||||||||||||||||||||||||||||||
| Total non-interest income (loss), net | 115,649 | 67,633 | 16,114 | (105,636) | 913 | 94,673 | ||||||||||||||||||||||||||||||||
| General and administrative expenses | (34,019) | (40,242) | (5,549) | (111) | (74,025) | (153,946) | ||||||||||||||||||||||||||||||||
| Portfolio management costs | — | — | (10,930) | (17,279) | (49) | (28,258) | ||||||||||||||||||||||||||||||||
| Loan acquisition costs | (7,506) | (10,481) | — | (156) | — | (18,143) | ||||||||||||||||||||||||||||||||
| Other expenses | — | (8,426) | (12,938) | (500) | — | (21,864) | ||||||||||||||||||||||||||||||||
| (Provision for) benefit from income taxes | (30,418) | 3,235 | 7 | 1,769 | 222 | (25,185) | ||||||||||||||||||||||||||||||||
Net Income (Loss) (3) | $ | 126,113 | $ | 20,117 | $ | 68,085 | $ | (146,941) | $ | (137,400) | $ | (70,026) | ||||||||||||||||||||||||||
| Total Assets | $ | 3,321,116 | $ | 357,988 | $ | 18,744,747 | $ | 942,465 | $ | 334,798 | $ | 23,701,114 | ||||||||||||||||||||||||||
(1)Mortgage banking activities, net includes changes in the fair value of other derivative financial instruments such as loan purchase commitments and interest rate locks.
(2)Represents market valuation changes of derivatives that were used to manage risks associated with our mortgage banking operations, Redwood Investments and Legacy Investments.
(3)Net Income (Loss) by segment is also referred to as Segment Contribution (Loss).
| Year Ended December 31, 2024 | ||||||||||||||||||||||||||||||||||||||
| (In Thousands) | Sequoia Mortgage Banking | CoreVest Mortgage Banking | Redwood Investments | Legacy Investments | Corporate/ Other | Total | ||||||||||||||||||||||||||||||||
| Interest income | $ | 97,860 | $ | 20,280 | $ | 661,489 | $ | 162,450 | $ | 3,085 | $ | 945,164 | ||||||||||||||||||||||||||
| Interest expense | (54,065) | (14,970) | (562,148) | (140,357) | (71,016) | (842,556) | ||||||||||||||||||||||||||||||||
| Net interest income (expense) | 43,795 | 5,310 | 99,341 | 22,093 | (67,931) | 102,608 | ||||||||||||||||||||||||||||||||
| Non-interest income (loss) | ||||||||||||||||||||||||||||||||||||||
Mortgage banking activities, net, excluding risk management derivatives (1) | 82,202 | 36,701 | — | — | — | 118,903 | ||||||||||||||||||||||||||||||||
Risk management derivatives gains, net (2) | (24,623) | 5,118 | — | — | — | (19,505) | ||||||||||||||||||||||||||||||||
| Total Mortgage banking activities, net | 57,579 | 41,819 | — | — | — | 99,398 | ||||||||||||||||||||||||||||||||
| Investment fair value changes, net, excluding risk management derivatives | — | — | 60,068 | (62,959) | (1,679) | (4,570) | ||||||||||||||||||||||||||||||||
Risk management derivatives (losses) gains, net (2) | — | — | (21,571) | 11,382 | — | (10,189) | ||||||||||||||||||||||||||||||||
| Total Investment fair value changes, net | — | — | 38,497 | (51,577) | (1,679) | (14,759) | ||||||||||||||||||||||||||||||||
| HEI income, net | — | — | 61 | 42,024 | — | 42,085 | ||||||||||||||||||||||||||||||||
| Servicing income, net | — | — | 14,414 | — | — | 14,414 | ||||||||||||||||||||||||||||||||
| Fee income, net | — | 10,930 | 965 | (1,020) | 155 | 11,030 | ||||||||||||||||||||||||||||||||
| Other income (loss), net | — | — | 3,122 | — | (1,292) | 1,830 | ||||||||||||||||||||||||||||||||
| Realized gains, net | — | — | 565 | — | (259) | 306 | ||||||||||||||||||||||||||||||||
| Total non-interest income (loss), net | 57,579 | 52,749 | 57,624 | (10,573) | (3,075) | 154,304 | ||||||||||||||||||||||||||||||||
| General and administrative expenses | (20,008) | (40,008) | (7,654) | (68) | (68,655) | (136,393) | ||||||||||||||||||||||||||||||||
| Portfolio management costs | — | — | (5,836) | (15,021) | (58) | (20,915) | ||||||||||||||||||||||||||||||||
| Loan acquisition costs | (3,860) | (8,563) | (14) | (238) | — | (12,675) | ||||||||||||||||||||||||||||||||
| Other expenses | — | (9,413) | (4,675) | — | — | (14,088) | ||||||||||||||||||||||||||||||||
| (Provision for) Benefit from income taxes | (16,009) | 2,219 | (5,586) | — | 539 | (18,837) | ||||||||||||||||||||||||||||||||
Net Income (Loss) (3) | $ | 61,497 | $ | 2,294 | $ | 133,200 | $ | (3,807) | $ | (139,180) | $ | 54,004 | ||||||||||||||||||||||||||
| Total Assets | $ | 1,231,723 | $ | 317,612 | $ | 13,277,770 | $ | 3,101,377 | $ | 329,862 | $ | 18,258,344 | ||||||||||||||||||||||||||
(1)Mortgage banking activities, net includes changes in the fair value of other derivative financial instruments such as loan purchase commitments and interest rate locks.
(2)Represents market valuation changes of derivatives that were used to manage risks associated with our mortgage banking operations, Redwood Investments and Legacy Investments.
(3)Net Income (Loss) by segment is also referred to as Segment Contribution (Loss).
| Year Ended December 31, 2023 | ||||||||||||||||||||||||||||||||||||||
| (In Thousands) | Sequoia Mortgage Banking | CoreVest Mortgage Banking | Redwood Investments | Legacy Investments | Corporate/ Other | Total | ||||||||||||||||||||||||||||||||
| Interest income | $ | 25,404 | $ | 15,896 | $ | 465,134 | $ | 210,344 | $ | 7,684 | $ | 724,462 | ||||||||||||||||||||||||||
| Interest expense | (24,114) | (13,078) | (379,710) | (156,817) | (57,800) | (631,519) | ||||||||||||||||||||||||||||||||
| Net interest income (expense) | 1,290 | 2,818 | 85,424 | 53,527 | (50,116) | 92,943 | ||||||||||||||||||||||||||||||||
| Non-interest income (loss) | ||||||||||||||||||||||||||||||||||||||
Mortgage banking activities, net, excluding risk management derivatives (1) | 45,690 | 40,518 | — | — | — | 86,208 | ||||||||||||||||||||||||||||||||
Risk management derivatives (losses) gains, net (2) | (17,908) | (914) | — | — | — | (18,822) | ||||||||||||||||||||||||||||||||
| Total Mortgage banking activities, net | 27,782 | 39,604 | — | — | — | 67,386 | ||||||||||||||||||||||||||||||||
| Investment fair value changes, net, excluding risk management derivatives | 1,076 | — | 24,579 | (65,582) | (2,994) | (42,921) | ||||||||||||||||||||||||||||||||
Risk management derivatives (losses) gains, net (1) | — | — | (884) | (595) | — | (1,479) | ||||||||||||||||||||||||||||||||
| Total Investment fair value changes, net | 1,076 | — | 23,695 | (66,177) | (2,994) | (44,400) | ||||||||||||||||||||||||||||||||
| HEI income, net | — | — | 23,569 | 11,672 | — | 35,241 | ||||||||||||||||||||||||||||||||
| Servicing income, net | — | — | 7,033 | — | — | 7,033 | ||||||||||||||||||||||||||||||||
| Fee income, net | — | 5,593 | 1,041 | 1,447 | 132 | 8,213 | ||||||||||||||||||||||||||||||||
| Other income (loss), net | — | 20 | 716 | — | (3,220) | (2,484) | ||||||||||||||||||||||||||||||||
| Realized gains, net | — | — | 1,502 | (644) | 841 | 1,699 | ||||||||||||||||||||||||||||||||
| Total non-interest income (loss), net | 28,858 | 45,217 | 57,556 | (53,702) | (5,241) | 72,688 | ||||||||||||||||||||||||||||||||
| General and administrative expenses | (17,171) | (44,547) | (7,283) | (525) | (58,769) | (128,295) | ||||||||||||||||||||||||||||||||
| Portfolio management costs | — | — | (6,039) | (8,492) | (40) | (14,571) | ||||||||||||||||||||||||||||||||
| Loan acquisition costs | (1,266) | (5,900) | — | — | — | (7,166) | ||||||||||||||||||||||||||||||||
| Other expense | — | (12,442) | (5,796) | — | 2,000 | (16,238) | ||||||||||||||||||||||||||||||||
| (Provision for) benefit from income taxes | (1,659) | 2,279 | (2,946) | — | 691 | (1,635) | ||||||||||||||||||||||||||||||||
Net Income (Loss) (3) | $ | 10,052 | $ | (12,575) | $ | 120,916 | $ | (9,192) | $ | (111,475) | $ | (2,274) | ||||||||||||||||||||||||||
| Total Assets | $ | 971,535 | $ | 293,225 | $ | 9,450,031 | $ | 3,408,949 | $ | 380,587 | $ | 14,504,327 | ||||||||||||||||||||||||||
(1)Mortgage banking activities, net includes changes in the fair value of other derivative financial instruments such as loan purchase commitments and interest rate locks.
(2)Represents market valuation changes of derivatives that were used to manage risks associated with our mortgage banking operations, Redwood Investments and Legacy Investments.
(3)Net Income (Loss) by segment is also referred to as Segment Contribution (Loss).
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Mar 3, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2021 | Feb 25, 2022 | |
| 2020 | Feb 26, 2021 | |
| 2019 | Mar 2, 2020 | |
| 2018 | Mar 1, 2019 | |
| 2017 | Feb 28, 2018 | |
| 2016 | Feb 24, 2017 | |
| 2015 | Feb 26, 2016 | |
About Segments Disclosures
Segment disclosures break a company into its reportable operating units, revealing revenue, profit, and asset allocation that consolidated financial statements obscure. Under ASC 280, segments must match how the chief operating decision maker views the business, providing a window into internal management structure and resource allocation priorities.
Key signals: compare segment margins to identify which units drive profitability and which destroy value. Watch for changes in the number of reportable segments — segment aggregation or disaggregation often coincides with strategic shifts or attempts to obscure declining performance. Intersegment elimination patterns reveal internal pricing practices. The reconciliation between segment totals and consolidated figures exposes corporate overhead allocation and unallocated items. Geographic revenue concentration highlights regulatory and currency exposure. Compare segment-level capital expenditure against segment revenue to assess where management is investing for future growth versus harvesting existing assets.