Financial Data and Key Metrics Changes - The company generated total revenue of over $1.9 million in Q3 2022, more than triple the net revenue earned in Q2 2022 [5] - The private credit commitments increased to over $123 million by the end of Q3 2022, representing a 175% increase from Q2 2022 [4] Business Line Data and Key Metrics Changes - The company has dynamically raised loan rates and is currently originating loans with a total yield of 12.5% or greater [5] - The advance rates on bridge originations have been lowered by 10 points to accommodate market headwinds [5][9] Market Data and Key Metrics Changes - Despite rising interest rates, strong demand for housing persists due to a housing shortage and modernization of existing housing stock in the U.S. [8] - The market conditions vary significantly across different U.S. metropolitan statistical areas (MSAs), with some experiencing declines while others show different trajectories [11] Company Strategy and Development Direction - The company is focused on creating alternative credit through direct-to-borrower and wholesale originations, primarily in the private credit space [12] - The strategy includes utilizing technology, data, and analytics to enhance market reach and customer experience [14] - The company aims to originate and sell loans on a forward flow basis to minimize interest rate and principal risk [18][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving over $600 million in loan production for 2023, despite current market volatility [25] - The company anticipates that a more normalized market environment will occur over the next six to nine months, which should expand margins [90] Other Important Information - The company entered into a warehouse line with Flagstar Bank, receiving approximately $53 million in funding by the end of Q3 2022 [6] - An arbitration case against the former CEO was dismissed, with the arbitrator sanctioning him for misconduct [7] Q&A Session Summary Question: What does the loan book look like and what institutions are being talked to for selling loans? - The company is in discussions with insurance companies, REITs, and money managers for selling DSCR and bridge loans, expecting to finalize takeouts in the next two to three weeks [17][20] Question: Do you still expect to achieve $600 million in originations? - Management remains confident in achieving or exceeding $600 million in total production for 2023, contingent on securing takeouts [25] Question: What are the borrower requirements? - The average borrower for the DSCR rental product typically has a credit score of 700 or higher, with LTVs at 80% or less [30] Question: How does the company monitor the health of its loan book? - The company conducts weekly reviews of its portfolio and has proactive measures in place to ensure timely payments from borrowers [80] Question: What is the expected timeline for margin normalization in the sector? - Management anticipates a stabilization in the market over the next six to nine months, which should lead to expanded margins [90]
Altisource Asset Management(AAMC) - 2022 Q3 - Earnings Call Transcript