Wrapping up Q1 earnings, we look at the numbers and key takeaways for the thrifts & mortgage finance stocks, including Starwood Property Trust (NYSE: STWD) and its peers.

Thrifts & Mortgage Finance institutions operate by accepting deposits and extending loans primarily for residential mortgages, earning revenue through interest rate spreads (difference between lending rates and borrowing costs) and origination fees. The industry benefits from demographic tailwinds as millennials enter prime homebuying age, technological advancements streamlining the loan approval process, and potential interest rate stabilization improving affordability. However, significant headwinds include net interest margin compression during rate volatility, increased competition from fintech disruptors offering digital-first experiences, mounting regulatory compliance costs, and potential housing market corrections that could impact loan portfolios and default rates.

The 22 thrifts & mortgage finance stocks we track reported a slower Q1. As a group, revenues missed analysts’ consensus estimates by 18.5%.

In light of this news, share prices of the companies have held steady as they are up 4.1% on average since the latest earnings results.

Starwood Property Trust (NYSE: STWD)

With a diverse portfolio spanning commercial properties, residential mortgages, infrastructure loans, and real estate servicing, Starwood Property Trust (NYSE: STWD) is a real estate investment trust that originates, acquires, and manages commercial mortgages, residential loans, and other real estate investments.

Starwood Property Trust reported revenues of $170.3 million, down 16.9% year on year. This print exceeded analysts’ expectations by 26.4%. Overall, it was a strong quarter for the company.

"We entered 2025 with significant financial flexibility, diversified business lines, and a solid investment portfolio that we expect to grow significantly this year, with commercial lending originations to date already surpassing all of last year. Our pipeline across businesses continues to be very active. Dislocation in securitized markets, as we are seeing today, always creates outsized opportunities for us," commented Barry Sternlicht, Chairman and CEO of Starwood Property Trust.

Starwood Property Trust achieved the biggest analyst estimates beat of the whole group. Unsurprisingly, the stock is up 8.8% since reporting and currently trades at $20.72.

Is now the time to buy Starwood Property Trust? Access our full analysis of the earnings results here, it’s free.

Best Q1: Northwest Bancshares (NASDAQ: NWBI)

Founded in 1896 and operating across Pennsylvania, New York, Ohio, and Indiana, Northwest Bancshares (NASDAQ: NWBI) is a bank holding company that operates Northwest Bank, providing personal and business banking, investment management, and trust services.

Northwest Bancshares reported revenues of $156.2 million, up 19% year on year, outperforming analysts’ expectations by 9.9%. The business had a stunning quarter with an impressive beat of analysts’ EPS and net interest income estimates.

The market seems happy with the results as the stock is up 14.1% since reporting. It currently trades at $13.48.

Is now the time to buy Northwest Bancshares? Access our full analysis of the earnings results here, it’s free.

Weakest Q1: Ladder Capital (NYSE: LADR)

Founded during the 2008 financial crisis when traditional lenders retreated from commercial real estate, Ladder Capital (NYSE: LADR) is a real estate investment trust that originates commercial real estate loans, owns commercial properties, and invests in real estate securities.

Ladder Capital reported revenues of $51.28 million, down 18.9% year on year, falling short of analysts’ expectations by 7.1%. It was a disappointing quarter as it posted a significant miss of analysts’ tangible book value per share and EPS estimates.

Interestingly, the stock is up 4.6% since the results and currently trades at $11.15.

Read our full analysis of Ladder Capital’s results here.

Rithm Capital (NYSE: RITM)

Evolving from a mortgage-focused REIT to a diversified asset manager with its 2023 acquisition of Sculptor Capital, Rithm Capital (NYSE: RITM) is a global asset manager focused on real estate, credit, and financial services that invests in mortgage servicing rights, residential properties, and loan portfolios.

Rithm Capital reported revenues of $565.8 million, down 31.9% year on year. This number came in 35.1% below analysts' expectations. Overall, it was a slower quarter as it also logged a miss of analysts’ tangible book value per share estimates.

The stock is flat since reporting and currently trades at $11.56.

Read our full, actionable report on Rithm Capital here, it’s free.

AGNC Investment (NASDAQ: AGNC)

Born during the 2008 financial crisis when mortgage markets were in turmoil, AGNC Investment (NASDAQ: AGNC) is a real estate investment trust that primarily invests in mortgage-backed securities guaranteed by U.S. government agencies or enterprises.

AGNC Investment reported revenues of $78 million, down 83.3% year on year. This print lagged analysts' expectations by 73.6%. It was a slower quarter as it also recorded a slight miss of analysts’ tangible book value per share estimates.

The stock is up 16.2% since reporting and currently trades at $9.50.

Read our full, actionable report on AGNC Investment here, it’s free.

Market Update

As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.

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