Mr. Cooper Group(COOP) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a return on tangible common equity (ROTCE) of 16.8%, an increase from 15.8% in the previous quarter, reflecting the benefits from the Flagstar acquisition [8] - Net income for the quarter was $88 million, which included$255 million in pretax operating earnings offset by an $82 million negative mark on mortgage servicing rights (MSR) [28][30] - The capital ratio stood at 25.5$3.9 billion [10][35] Business Line Data and Key Metrics Changes - The servicing segment generated pretax income of $332 million, up 22$53 million in earnings before tax (EBT), slightly above guidance, with strong volumes in the correspondent channel [20] - Home equity loans and cash-out refinances showed significant growth, with cash-outs making up 46% of volume, up from 39% in the previous quarter [22] Market Data and Key Metrics Changes - The total portfolio decreased slightly to $1.5 trillion, with over 6.4 million customers, while the subservicing portfolio grew organically by 2$7 billion in bulk acquisitions, indicating strong activity in the correspondent channel [20] Company Strategy and Development Direction - The pending combination with Rocket aims to create a scaled homeownership experience, leveraging technology and AI to enhance customer experience [4][5] - The integration of Flagstar is on schedule, with onboarding of new customers and team members completed [11][16] - The focus on operational excellence and customer trust is emphasized as a key driver for long-term growth [14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, highlighting the potential for growth in home equity loans and cash-out refinances regardless of interest rate fluctuations [13][22] - The company is well-positioned to manage potential adverse market conditions, with strong asset quality and low delinquency rates [32][34] Other Important Information - The company incurred $26 million in transaction and transition charges related to the Flagstar integration and an additional$33 million charge for legal fees [29] - The hedge gains amounted to $209 million, contributing to stable and predictable results [31] - The company does not expect to repurchase stock prior to the closing of the Rocket transaction, anticipated in the fourth quarter of 2025 [37] Summary of Q&A Session - No questions were taken during the call due to the pending combination with Rocket, as stated by management [3]