Redwood Trust, Inc.

Good afternoon and welcome to the Redwood Trust, Inc. First Quarter 2024 Financial Results Conference Call. Today's conference is being recorded. I'll now turn the call over to Caitlin Mertz, Redwood's Senior Vice President of Investor Reactions. Please go ahead, ma'am.

Thank you, Operator. Hello, everyone, and thank you for joining us today for our First Quarter 2024 Earnings Conference Call. With me on today's call are Chris Abate, Chief Executive Officer, Dash Robinson, President, and Brooke Carrillo, 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 involve risks and uncertainties that could cause actual results to differ materially. We encourage you to read the company's annual report in 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 column, 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. Our reconciliation between GAAP and non-GAAP financial measures are 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 contain time-sensitive information that are only accurate as of today. and we 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. I'll now turn the call over to Chris for opening remarks.

Thanks, Kate. In February, we delivered our fourth quarter commentary, where our focus was on actions we took in 2023 to lay the groundwork for our long-term positioning. These actions occurred in the midst of one of the worst housing finance markets in decades. More recently, at our March Investor Day, we updated the market on our progress at that point in the first quarter, including the announcement of a transformational new capital partnership. With the first quarter now behind us, we're pleased to be building on the foundation we established, generating significant increases in net interest income, GAAP earnings, EAD earnings, and GAAP book value. As we'll discuss in today's call, first quarter is emblematic of our long-term strategic vision, demonstrates the potential of our platform, to deliver value regardless of the interest rate environment. Our business has been fueled by the strong capital position we've amassed in recent quarters, allowing us to form generational partnerships with banks and other institutions who now lack portfolio capacity for residential mortgages. With April now behind us, we've continued to gain market share, making our trajectory worthy of a second look by macro traders who've been otherwise consumed with the gyrations of the 10-year Treasury. Our residential consumer lock volume was up 50% quarter over quarter, eclipsing our highest level since the beginning of this Fed tightening cycle. Our residential investor business has also found momentum on the heels of the $750 million strategic partnership that we announced with the Canada Pension Plan Investment Board last month. As a reminder, this partnership includes a $500 million joint venture sized to purchase up to $4 billion of residential investor loans in the quarters ahead. But the partnership with the Canada Pension Plan Investment Board is much more than a traditional joint venture. It also provides us with significant corporate liquidity through a $250 million secured revolving facility. Through today, we've already drawn $100 million on this facility as it's well-suited to address the anticipated growth trajectory for our residential consumer business. Leveraging this partnership has reduced our need for additional equity capital thus far in 2024. An extended period of higher rates has also driven the expansion of our home equity product offerings. Closed our first directly originated home equity investment option through our Aspire platform in the first quarter, began the process of rolling out traditional secondly mortgage products through our seller base. As we have for some of our other products, we expect to pursue dedicated capital partners for this asset class in the quarters ahead and scale these offerings over time. Turning to our investment portfolio, Fundamentals remain strong, the vast majority of our investments backed by single-family housing credit, where homeowners continue to build equity. In particular, we've made meaningful progress within our residential investor portfolio, where we saw a sharp reduction in credit-related charges for multifamily bridge loans relative to recent quarters. This eventual flattening was intuitive to us as we made important shifts in our product focus as rates began to rise in late 2022. and we've steered clear of commercial asset classes now experiencing significant stress. Collectively, our progress in the first quarter reflects the unique value that our franchise brings to home buyers, housing investors, banks, independent mortgage companies, and private credit institutions who have come to rely upon Redwood. Our focus will now be on scaling our platforms and growing wallet share at a time when few are capable of doing so. While our business stands to significantly benefit from an eventual Fed easing, the first quarter was evidence that we are well-positioned for growth in an extended, hire-for-longer environment as well. As more banks begin to publicly message their early compliance with the anticipated Basel endgame rules, it serves as an important reminder of the growing need for Redwood's products and services. And with that, I will turn the call over to Dash.