Redwood Trust, Inc. (NYSE:RWT) Q1 2024 Earnings Call Transcript

Kyle Joseph: Hey. Good afternoon. Thanks for taking my questions. Kind of to follow-up on fees. Obviously, we don’t know what that will end-game is going to look like in the end. But nevertheless, it sounds like banks are already preparing in terms of reducing mortgage exposure. And obviously, that’s a huge opportunity. But on the other side, have you anything any sort of incremental capital formulation to take advantage of the banks exiting? Or have you seen basically any changes in the competitive environment on the other side besides banks leaving?

Chris Abate: Nothing overly formidable to this point. One thing I will say that I think is meaningful, as you did starting with this earnings call cycle, you did start to hear. Certainly the large banks, voice that they expect to be compliant with the end-game rules. So, as they do that, other banks will follow. And then over time, banks who aren’t messaging early compliance, will sort of be in a different category with concerns that they can’t comply currently. So I do think that was a really positive sign and validation that large banks expect the rules to change. So, we’ve been — obviously, we out in front of that. We’ve talked about how regulatory changes really drive the cycles in our business. And I think we’re just going to keep on building these partnerships.

Certainly over time, I think there’s great interest in things like CRG. There’s a lot of some private credit funds out there that would love to be involved. There are challenges to getting CRG off the ground, certainly regulatory challenges but also just operational challenges as I laid out a few minutes ago. We are quite differentiated there, because we do have the capacity to help walk banks through that process. And so hopefully, there’s certainly going to be capital that is demanding these types of transactions outside of the walls of Redwood. But I do think we’re arguably better positioned than anyone at this point to take advantage of it.

Kyle Joseph: Very helpful, great. Thanks for answering my question.

Chris Abate: Thanks.

Operator: Thank you. And we have reached the end of the question-and-answer session. And this also concludes today’s conference, and you may disconnect your line at this time. Thank you for your participation.