Mr. Cooper Group(US:COOP)2025-02-12 19:20Financial Data and Key Metrics Changes - Pre-tax operating income was $235 million, with operating ROTCE at 15.8% [5][48] - Tangible book value increased by 12% year-over-year to $71.61 per share, and the capital ratio was 24.4% [5][56] - Liquidity decreased to $3.4 billion from $4.1 billion in the previous quarter [56] Business Line Data and Key Metrics Changes - The Servicing segment generated $318 million in pre-tax income, up 39% year-over-year [7][25] - Originations produced $47 million in EBT, with funded volumes growing 38% sequentially [7][37] - Fee income from subservicing and other services contributed over 20% of total revenue, totaling $500 million for 2024 [46] Market Data and Key Metrics Changes - The company became a top five correspondent lender, significantly improving market share from the previous year [38][105] - The acquisition of Flagstar added $275 billion in UPB in the fourth quarter [30] Company Strategy and Development Direction - The company aims to focus on unit costs, invest in origination platforms, grow fee revenues, and analyze acquisition opportunities [23][24] - The strategic direction includes leveraging technology to enhance customer experience and operational efficiency [20][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a ROTCE guidance range of 16% to 20% for 2025 and 2026, citing a balanced model resilient to interest rate volatility [18][19] - The company is optimistic about growth opportunities in 2025, particularly in correspondent and co-issue markets [28] Other Important Information - The company received the SHARP Gold Award from Freddie Mac, reflecting its commitment to quality and performance [9][10] - Moody's placed the corporate rating on a positive outlook, citing the growing strength and scale of the franchise [12] Q&A Session All Questions and Answers Question: Can you talk about the drivers that could get you to 20% ROTCE? - Management indicated that the services segment generates fee-based income, which can lead to higher ROTCE, and emphasized operational leverage as a key driver [60][64][66] Question: Can you sustain double-digit growth for services fee revenue? - Management expressed confidence in sustaining growth in the services revenue stream, highlighting opportunities with existing and new clients [69][71] Question: Can you discuss the pipeline for bulk MSR and returns? - Management noted that the bulk market is returning at attractive levels and expects continued consolidation in the industry [74][76][78] Question: Do you see room for correspondent market share to increase further? - Management confirmed expectations for continued growth in correspondent market share, focusing on scale and cost leadership [104][105] Question: Can you provide directional color on margins by channel? - Management stated that margins remained consistent across channels, with no significant changes from the fourth quarter to the first quarter [113][114] Question: Should we think about the growth rate of UPB in low double digits? - Management indicated that growth in UPB should be viewed in the context of low double digits, emphasizing a disciplined approach to acquisitions [142][143]