RWT · Redwood Trust, Inc.

The business behind the income

Redwood buys or originates residential loans, sells or securitizes many of them, and holds selected mortgages and related investments.

The two income engines give Redwood more than one way to earn. We like that flexibility. Our main test is still straightforward: does the whole business earn enough per share to support the dividend?

Redwood Trust, Inc.: financial report supporting reported earnings

What the balance sheet tells us

Redwood's preliminary update says it distributed more than $8 billion of mortgage loans during the September 2026 quarter and ended September with about $190 million in cash and equivalents.

A large mortgage book can earn substantial income, but it needs financing. We watch whether the cost of that financing leaves enough earnings for shareholders. Total liabilities include obligations beyond borrowings, so this is not a simple measure of debt.

Exhibit 99.1 Press Release issued October 13, 2026

Do earnings cover the dividend?

As of 2026-10-24, annual earnings are $0.82 per share against $0.72 in included annual dividends. That gives 113.89% coverage.

We like that earnings currently cover the dividend. That gives the income case something solid to rest on, although the cushion still deserves attention.

Fly High weekend update 2026-10-24

The June quarter’s dividend support

For the June 2026 quarter, Redwood reported ﹩0.15 per share of earnings available for distribution against a ﹩0.18 regular dividend.

Earnings fell 3 cents short of the dividend that quarter. Profits retained from earlier periods may help cover a shortfall, but we would like the next report to show stronger earnings support.

Redwood Trust, Inc.: financial report supporting reported earnings

What could weigh on earnings?

Redwood is working more quickly through modified and legacy loans using sales, negotiated exits and, where necessary, foreclosure. Management cautions that final recoveries may differ materially from the values used in its accounts.

More loan business would be welcome if it lifts earnings per share. Missed loan payments or weaker demand from buyers of those loans could work the other way. The next report should help us see which effect is winning.

Redwood Trust, Inc.: financial report supporting reported earnings

How borrowing affects the payment

Redwood needs cash to fund its loan pipeline as well as debt payments, potential margin calls and existing lending commitments. Loan sales and securitizations help provide that cash, while related borrowing is repaid as loans leave the pipeline.

Borrowing is part of Redwood’s business. We care about the bill it leaves behind: higher interest costs can eat into the earnings that pay the dividend. A lasting improvement here would make the income case more comfortable.

Redwood Trust, Inc.: financial report supporting reported earnings

Asset quality

At June 30, 2026, residential-investor loans with $268 million of principal were on non-accrual, including $222 million in Legacy Investments. The total had declined from $291 million at December 31, 2025.

The decline is encouraging, but loans that are not accruing all their interest still weaken dependable income. The important next step is recovery of principal, not merely a smaller reported problem-loan balance.

Redwood Trust, Inc.: financial report supporting reported earnings

Capital per share

Redwood finished June 2026 with GAAP book value of $6.90 per share, down from $7.12 in March. Losses on legacy loans, changes in their valuations and the cost of carrying them accounted for most of that decline.

Profitable mortgage-banking platforms have not yet stopped the erosion in capital behind each share. Stable book value alongside stronger earnings would make the dividend outlook more convincing.

Redwood Trust, Inc.: financial report supporting reported earnings

Funding and liquidity

Redwood held $192 million of unrestricted cash at June 30, 2026, while $2.68 billion of secured recourse borrowing was marginable. Loans supporting the main consumer-mortgage platforms stayed on the balance sheet for about 26 days during the first half.

Quick loan sales and securitizations help recycle capital, but marginable borrowing can require extra cash when collateral values fall. That deserves monitoring without treating the borrowing structure itself as proof of a funding shortfall.

Redwood Trust, Inc.: financial report supporting reported earnings

What would change the earnings picture?

We would feel more comfortable with a wider earnings cushion. In the next update, look for earnings to keep pace with the dividend. Then check whether borrowing costs and mortgage performance explain the change.