Redwood Trust, Inc.

Greetings and welcome to the Redwood Trust, Inc. second quarter 2026 financial results conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Natasha Fodry, FP&A leader. Thank you. You may begin. Thank you, operator. Hello, everyone, and thank you for joining us today for Redwood's second quarter 2026 earnings conference call. With me on today's call are Chris Abate, Chief Executive Officer, Dash Robinson, President, Brooke Carillo, Chief Financial Officer, and Abhinav Asthana, our Chief Technology Officer. Before we begin today, I want to remind you that certain statements may 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, which 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 and quarterly report on Form 10-Q. 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 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 is being recorded. It will be available on our website later today. With that, I'll turn the call over to Chris for opening remarks.

Thank you. Good morning, everyone. Redwood exceeded $8 billion in mortgage banking volume for the second straight quarter. We did over 20 securitizations for the first half of the year. We ended the quarter pricing three securitizations in a single week, one for each of our operating platforms. The first for Redwood in our 32-year history. That makes us happy and a little nostalgic about how productive the company operates these days relative to the past, when two to four securitizations a year was deemed just fine by market standards. Proudly speaking, it's no secret the housing finance business has been a lot less forgiving for this current generation of mortgage practitioners. First in over 40 years not to benefit from a long-term bull market in interest rates. It serves as an invisible tailwind for both the lucky and the smart. Home affordability and supply headwinds, both closely linked to high interest rates and regulation, have impacted the addressable mortgage market and how mortgage businesses fundamentally operate. Today's environment requires higher operating efficiency and capital turnover in a deep strategic mode that can drive growth despite home sale activity still coming in at multi-decade lows. As investors seek to align with the long-term winners of this extended rate cycle, we're prioritizing a few key differentiators that are worth mentioning. Let's start with technology. We are rebuilding Redwood as an AI-native housing finance platform with proprietary systems developed by our own engineers and embedded directly into our workflows. Our multi-agent AI systems help teams retrieve answers quickly and apply the same intelligence to complex tasks, including stellar financial reviews, guideline comparisons, and contract analysis. The result has been faster expert reviews, greater consistency, and greater scale. There are people in the loop on every key decision. This is still early innings, but the capabilities we are deploying are proprietary, compounding, and changing how we operate. Early indications of the operating leverage from technology are already visible. Direct expenses for 64 basis points as a percentage of volume for the first half of 2026, already a 28% improvement from full year 2025. Annualized time savings from our 2026 AI-enabled automation initiatives increased to approximately 23,600 hours, about more than 50% with meaningful impacts on due diligence costs, rate sheet pricing, and guideline analysis. We also extended our unified technology platform supporting Sequoia and Aspire to enable Helox as a new Sequoia product. The bottom line is this. If you're wondering who the AI winners and losers are going to be in housing finance, we'll put 90% annual volume growth with consistent margins up against anyone operating in the housing market today. A market that has been operating at overall volumes down 50% from 2021 levels. As many of you know, our RwQ Horizons venture fund complemented, in certain ways significantly accelerated, our growth in mortgage banking in recent years. Representing less than 2% of our capital, Horizons gives us access to more than 25 early-stage companies across the mortgage and AI ecosystem. During the quarter, we invested in Prometheus, an artificial intelligence company developing an artificial general engineer, while another AI company in our portfolio priced the financing round that values our initial seed investment at approximately 27 times our cost. Our dual approach of adopting AI inside Redwood and investing directly at the frontier of technology makes a long-term strategic initiative. Product depth and distribution are another important part of the story. At Sequoia, newly launched products now represent more than 30% of our quarterly lock volume. Aspire also grew more than 30% sequentially in the 9QM space, while Corvus is building momentum in its small and balanced offerings for experienced housing investors. Taken together, Redwood today has been purely less dependent on any one product or on any mortgage rebuy cycle. It also differentiates our earnings model in comparison to monoline operators with revenues more tied to MSR values and associated customer retention. Our model, conversely, built around efficiently aggregating loans from across our broad network and distributing them to long-term investors through securitizations, full loan sales, and strategic partnerships. Our bank relationships further strengthen that position. Large repositories leaned into mortgage volume during the second quarter, even at the expense of margins, underscoring that bank behavior is already evolving as the Basel III endgame is finalized. Lower capital charges and high-quality mortgages may have been a necessary regulatory impediment for banks to re-engage, but they are certainly not the only constraint. The ultimate decision by banks to boost origination activity remains risk-based, and to repeat ourselves, the mortgage risk that banks see suites most consistently cite to us as top of mind is convexity, not credit. Redwood enables our bank partners to generate fee income and retain their clients while transferring their interest rate exposure to us while they retain and continue to grow the customer relationship. On June 30th, Redwood acted as a dedicated capital partner, 70% of the top 50 banks of the United States. Our ability to help banks manage ongoing mortgage exposures differentiates Redwood and reinforces our essential role throughout the banking system. In summary, business we operate today is fundamentally different than it was 20, 10, or even two years ago. Advanced technology and operating efficiency, more comprehensive products, diversified distribution, premier institutional capital partnerships, and a shrinking legacy portfolio position us to grow going forward for a wide range of market environments for a long-term value for shareholders. Not just when all boats are rising, as the human interest rates fall, but through challenging rate cycles where hard work and innovation make the difference. And with that, I'll turn the call over to Dash to discuss our operating results.

Thank you, Chris. Our second quarter operating performance reflected the combined benefits of product diversification, capital efficient distribution channels, and an operating framework that's fully integrated with core AI initiatives at the center of our strategic blueprint. The result was an eighth consecutive quarter of mortgage banking returns north of 20%, increasingly fertile ground for continued capital redeployment away from our non-core portfolio holdings. At Sequoia, second quarter lock volume totaled $5.6 billion alongside several no-worthy product and distribution benchmarks. Dealing on sale margins were 92 basis points overall, in line with the first quarter's 96 basis points despite substantial macro headwinds in April and May and broader indications of pronounced margin compression across the industry. Distribution remained well aligned with production, most notably with a Castle Lake joint venture coming online in late June, nine Sequoia secure donations, and $1.2 billion of whole loan sales, almost all to banks. Sequoia's production mix included over 65% purchase money loans. The strategic positioning Chris referenced has emerged as an important buffer against profitability headwinds for non-bank operators that are often coupled with reduced housing activity and renewed vigor for bank portfolios. This is in large part attributable to how our platform as a non-bank has positioned itself within the depository ecosystem. When business drivers, including those influenced by capital rules, either bank to buy or sell mortgage loans, we are most often the first call. The deep bank relationship proved the launch of our medical professional loan program, now offered broadly to our seller network with great early success, including a second MedPro securitization earlier in July and a price well inside of our inaugural issuance. The recent launch of our HELOC program builds on our optimism that deeper product offerings will continue to drive resilience during periods of upward pressure on rates and volatility through stable margins, increased relevance to our deep seller network, and our ability to support two-way flow between bank portfolios. Also key to this positioning is Aspire, whose establishment 18 short months ago was designed to leverage existing strengths by offering a well-underwritten, flexible suite of expanded products to a broader network of originators. Aspire delivered over $2 billion of block volume during the second quarter, down the record for the platform, up 31% from Q1. Market observers expect non-QM originations to reach $150 billion in 2026, up 20% from last year and reflective of a growing cohort of high-quality borrowers that access credit differently than the traditional W-2 employee. This implies a run rate market share for Aspire of approximately 5% to 6% that we see to go to 10% by year-end 2026 through relentless commitment to product innovation, accretive distribution, and technology. including recently announced progress with AI-powered pricing and guideline analysis tools. Institutional investor demand continues to support the non-QM sector's growth in general, but Aspire isn't specific. The business completed its second and third securitizations issued under the Aspire shelf during the second quarter, with the risk retention and support in the tranches once again syndicated profitably to third-party investors. At June 30th, 60-plus data link with use within Aspire's securitized population were less than 10 basis points Subsequent to quarter end, we executed definitive documentation for an Aspire-dedicated joint venture with Crayhill Capital Management, a leading structured credit investor. Through time, the vehicle has the potential purchasing power of up to $8 billion of loans, underscoring demand for Aspire's products and an important early validation for the business. Similar to our other joint ventures, it provides a source of recurring revenues with added performance fees while reaching stated return thresholds. Each of our platforms now operates with a dedicated joint venture with key benefits to our operating leverage and revenue durability going forward. For VEST, our direct originator focused on lending to housing investors, funded $410 million of loans during the second quarter, down approximately 5% from Q1, with higher rates weighed on portions of the pipeline and legislative uncertainty now largely settled, impacted certain key pockets of market activity. We remain disciplined while borrowers and developers assess the evolving regulatory and legislative landscape. With the landmark housing bill now passed and bill for rent carved out from institutional ownership limitations, activity is beginning to reopen an area that has largely paused. Corvass remains well positioned, supported by its longstanding focus on experienced sponsors below the largest institutional segment. A key milestone for Corvass during the quarter was its first term line securitization since 2023. and Twitch Time, our term loan production has largely been sold in all loan form. The $268 million transaction priced accretively to Lonesale Economics and was placed with close to two dozen discreet investors. A market response that underscores the deep demand for the platform's origination activities. The team also entered into a new servicing arrangement later in the second quarter designed to reduce administrative demands and lower servicing costs over time and launched a targeted business development initiative to expand the e-generations. As immediately realizable returns and mortgage banking continues to sit well above 20%, the value of continued reallocation away from our legacy investment segment remains significant. At quarter end, allocation to this portfolio totaled 12% of overall capital, down from 15% on March 31st at 63% lower than one year ago, when we announced the accelerated wind-down of this position. Early in the third quarter, we commenced formal marketing of a substantial portion of our remaining legacy-grade loans, and continue to progress individual line items through to resolutions, unlocking capital and reducing associated secured debt. Thus far in the third quarter, we also priced a new financing arrangement for the remainder of our home equity investment portfolio. That proforma we expect to reduce segment capital to below 10%. 90-day-plus delinquencies in the unsecuritized legacy bridge portfolio were roughly flat versus March 31st, and the priority remains fully moving on from this position as quickly and efficiently as possible to support further growth of our core activities. I will now turn the call over to Brooke to discuss our financial results.