Redwood Trust, Inc.

Welcome to the Redwood Trust Second Quarter 2025 Financial Results Conference Call and Webcast. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. You may be placed into question queue at any time by pressing star 1 on your telephone keypad. If anyone should require operator assistance, please press star 0. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Caitlin Moritz, Head of Investor Relations. Caitlin, please go ahead.

Thank you, Operator. Hello, everyone, and thank you for joining us today for Redwood's second quarter 2025 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 today, 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 include risks and uncertainties that could cause actual results to differ materially. We encourage you to read the company's annual report on 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 call, 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. Reconciliation between GAAP and non-GAAP financial measures are provided in our second 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. We do 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. With that, I'll turn the call over to Chris for opening remarks.

Thanks, Kate, and good morning, everyone. Our second quarter results reflected our decision to accelerate Redwood's strategic transition toward a more scalable and simplified operating model, an evolution we first articulated at our 2024 Investor Day. The avenues for growth we see today across our operating platforms are unequivocally transformative, particularly amid evolving market dynamics in single-family housing, shifts in bank lending practices, and potential outcomes related to the GSEs. In light of this, we took decisive steps to begin reducing exposure to holdings that now reside outside of our core operating footprint. These include our legacy multifamily bridge loan portfolio, third-party securities portfolio, and other non-core legacy assets, the vast majority of which we have held for years. While these investments were initially aligned with our strategy and return thresholds, some are now fully valued, while others have underperformed as interest rates rose and have become a significant drag on our forward earnings. In assessing the shifts now occurring in housing finance and the growth potential of our mortgage banking platforms, where capital allocation has grown by over $200 million in the past year, and we have generated combined gap returns north of 20% in each of the past four quarters, the opportunity cost of simply allowing legacy investments to naturally run off has become too great. prompting us to more proactively reposition our capital. The decision to accelerate the wind down of our legacy portfolio resulted in approximately 79 cents per share of fair value and repositioning charges in the second quarter as we move forward with liquidations, term financings, or other resolutions for these assets. This was the primary contributing factor to a reduction in our gap book value per share to $7.49 at June 30, 2025 as compared to $8.39 at March 31, 2025. However, our consistent use of fair value accounting standards as compared to cost accounting methods used by banks and other financial institutions positions us to reflect asset values at levels aligned with current market conditions, facilitating more expeditious outcomes. We estimate the total capital ultimately harvested from these legacy investments will total up to $200 to $250 million by year-end 2025, and our ability to quickly redeploy that capital into our operating platforms will result in higher quality, more predictable earnings in a simplified revenue mix. In support of this transition, which is well underway, we recently began repurchasing our common shares buying back 2.4 million shares since June 2025. Following today's second quarter earnings release, we plan to become more aggressive buyers of our common shares, having recently received an increased stock repurchase authorization to $150 million from our board of directors. As we continue to free up capital through our strategic portfolio transition, we expect utilization under this authorization to increase until our share price begins to more fairly value the go-forward earnings power of our platform, driven by the potential for continued strong mortgage banking returns at increased scale fueled in part by under-earning capital freed up from our legacy activities. Over the past year, we've allocated an additional $200 million of capital to our operating platforms, a trend we anticipate continuing as these operating platforms swiftly increase in scale. The well-documented retrenchment by banks in mortgage lending has enabled Redwood to meaningfully expand loan acquisition volumes and market share, even as overall housing activity remains subdued. Through our network, we have seen increased demand from our bank partners for capital-efficient solutions that address a broader segment of their loan production. To offer context, we have sourced and are currently reviewing over $55 billion of seasoned bulk jumbo pool opportunities from regional banks. While some sales may require a modest improvement in benchmark interest rates, many are actionable now, reflecting conviction among many bank executives in the value of our partnership. Additionally, the recent reemergence of bank M&A activity is expected to result in further portfolio dispositions as acquirers utilizing purchase accounting are motivated to sell these portfolios. More broadly, the prospect of transformative housing market reform, or GSE privatization, has the potential to create generational opportunities for us, particularly given that our core operating objectives closely resemble that of a private sector GSE. As some may recall, Fannie Mae and Freddie Mac's previous market share as privatized companies was substantially below where it sits today, with the GSE still enjoying the benefit of full backing by the federal government under conservatorship. We expect and are prepared for the role of the private sector to expand dramatically under any form of GSE privatization or as a result of any federal housing policy shifts aimed at reducing taxpayer exposure to housing finance. Given rapidly advancing narratives on the future of the GSEs in Washington, we remain deeply engaged with prominent regulatory and market stakeholders who are shaping housing policy and expect Redwood to be positioned advantageously irrespective of policy outcomes. I'll now turn the call over to Dash who will cover our operating results.