Redwood Trust, Inc.

Good afternoon and welcome to the Redwood Trust Inc. Fourth Quarter 2025 Financial Results Conference Call. Today's conference is being recorded. I will now turn the call over to Caitlin Moritz, Redwood's Head of Investor Relations. Please go ahead, ma'am.

Thank you, Operator. Hello, everyone, and thank you for joining us today for Redwood's Fourth Quarter 2025 and Full Year 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, 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 fourth quarter Redwood review, which is available on our website, redwoodtrust.com. Also note that the contents of today's conference call contain time-sensitive information that are accurate only 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 has been recorded. It'll be available on our website later today. With that, I'll turn the call over to Chris for opening remarks.

Thank you, Kate, and thanks to everyone for joining our fourth quarter earnings call today. Before I turn the call over to Dash and Brooke, I'll share some thoughts on our recent performance and our outlook for 2026. Fourth quarter of 2025 kept a year of meaningful progress for Redwood, marked by record mortgage banking activity, improved capital efficiency, and a more durable earnings profile. We closed out the final quarter of the year delivering positive GAAP consolidated earnings and very strong earnings available for distribution across our core segments. For the full year, our three operating platforms, Sequoia, Corvest, and Aspire, generated $23 billion of volume, the highest in our company's history. In hitting a new gear with production, we've also ensured that earnings have kept pace. Brooke will cover a few operating metrics that demonstrate how more revenue is making it to the bottom line than we have seen in a very long time. Tracking the operations-focused metrics, as opposed to more traditional REIT investment portfolio metrics, is something we'll be emphasizing in the quarters ahead. This also coincides with our strategic shift towards increasing capital to our mortgage banking platforms, with over 80% now invested in core operating and related activities at year-end 2025. up from 57% in 2024. On the back of recent new product rollouts, the runway to continue profitably growing volume supports additional capital deployment to these platforms, capital both sourced internally and in tandem with a growing cohort of external partners. This shift also reflects our decision in the second quarter to accelerate the wind down of our legacy investment portfolio. We saw further progress on this front in the fourth quarter with resolutions and dispositions, and more thus far in the first quarter. As we work to fully wind down this portfolio, we'll continue freeing up investment capital to redeploy while also simplifying the balance sheet. Turning to the broader economy, housing affordability has been a key focus in Washington, with a $200 billion agency MBS buying initiative recently announced in tandem with other efforts to lower borrowing costs. The announcement tightened spreads and pushed mortgage rates lower initially, but rates have since stabilized, leaving markets still looking for a broader revival of the refinanced mortgage market, which in more accommodative times has represented 50% or more of total originations. The case for lower jumbo mortgage rates was recently bolstered by the long-awaited nomination of a new Fed chair, who, as anticipated, favors additional rate cuts in 2026. Mortgage rates currently sit meaningfully off their highs, with 30-year fixed rate prime jumbo mortgages hovering just above 6% in coupons. At levels modestly below 6%, we estimate between 200 and 300 billion of jumbo mortgages could become refinanceable. An important distinction here for Redwood, unlike many mortgage businesses, is that we don't maintain large holdings of mortgage servicing rights whose values are reliant upon significant levels of customer recapture volume. In other words, the prospect of a new refinance wave is entirely good news for us, particularly for a Sequoia business where high refinance volume could significantly expand our volume expectations and further scale our operations. Complementing our Sequoia business in the consumer mortgage space is our Aspire non-QM business. In leveraging Redwood's best-in-class originator network, Aspire has already become a top non-QM correspondent platform. On the back of strong non-QM growth, we are pleased to launch our third branded securitization issuance platform under the moniker Aspire, which will speak for a large amount of our non-QM production going forward. We expect our inaugural Aspire securitization to launch in the coming weeks. Turning back to affordability initiatives in Washington, institutional participation in housing has also drawn a renewed focus with proposals intended to limit the ownership of single-family homes by large institutional investors. We remind listeners that large investors continue to only own a small share of the country's single-family housing stock, and that with respect to Corvest, our business-purpose lending platform, the vast majority of our lending footprint remains focused on smaller and mid-sized housing investors. In serving this segment of the market, Corvest continues to thrive, having recently been named IMN's Lender of the Year for 2025. Our team is positioned to deliver additional growth in 2026, especially as our small-balance products are scaled to complement Corvus' flagship term and bridge offerings. I'll close with some context for the year ahead. Redwood's market and structural positioning is now meaningfully stronger across all channels in which we operate. We're supported by a broader base of third-party capital partners, a more flexible, simpler balance sheet, and an infrastructure built to profitably scale volume as housing activity expands under a renewed focus in Washington in an evolving rate regime under a new Fed chair. As we look to grow earnings and market share in 2026, we are leveraging AI to enhance risk management, accelerate capital deployment, and extract further gains in operating leverage. Based on the progress we have made to date, we expect core operating performance to drive consolidated earnings above our common dividend in 2026, enabling earnings retention and reinvestment to help fund organic growth. And with that, I will turn the call over to Dash to discuss our operating businesses and investments. Thank you, Chris.