Mr. Cooper Group(COOP) - 2024 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a net income of $181 million, with pre-tax operating earnings of$199 million, reflecting strong performance in servicing and operational results [67] - Tangible book value per share increased by 15% year-on-year to $65.48, with a slight increase in share count due to employee stock incentives [23][56] - Operating ROTCE reached 14.5$273 million, up from $229 million in the previous quarter, driven by portfolio growth and low CPRs [47] - Originations generated$32 million in pre-tax income, slightly above guidance, with a focus on cash-out purchases and second liens [48][29] - The servicing portfolio reached $1.1 trillion, up 33$54 billion in MSR acquisitions [56][45] Market Data and Key Metrics Changes - The overall mortgage market remains robust, with $14 trillion in mortgages outstanding and over$30 trillion in homeowner equity [10][136] - Delinquencies in the MSR portfolio dropped to an all-time low of 1.1%, down from 2.3% a year ago, indicating strong asset quality [85] Company Strategy and Development Direction - The company is focusing on technology investments, particularly in AI and cloud-native platforms, to enhance operational efficiency and customer service [40][41] - The strategy includes asset-light growth through subservicing and launching a commingled MSR fund [4][46] - The company aims to maintain disciplined capital deployment while exploring attractive opportunities in the bulk market [90][64] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a challenging originations environment but expressed optimism about growth opportunities in servicing and subservicing [72][29] - The company is confident in its ability to navigate market fluctuations and maintain profitability through technology and operational efficiencies [87][88] - Future growth is expected to depend on market yields and disciplined capital deployment [64][69] Other Important Information - The company has a strong liquidity position, reaching a record high of $3.3 billion, supported by a recent$1 billion senior note issuance [51] - The company is actively engaging with sovereign wealth funds and pension plans for potential capital raising opportunities [52] Q&A Session Summary Question: Can you discuss competition in the origination segment? - Management noted solid improvement in margins and volumes, indicating a competitive market but expressed confidence in maintaining margins [53] Question: What is the outlook for the servicing portfolio? - Management highlighted the potential for continued growth, with expectations of onboarding another $100 billion in UPB in the second quarter [64][69] Question: How is the company financing the$50 billion of MSRs being onboarded? - The majority of the $50 billion was competitively bid, with a focus on maintaining a balanced business model [127] Question: What are the expectations for recapture rates? - Management indicated strong recapture rates, with a focus on maintaining best-in-class performance [108] Question: How does the company view the evolving MSR market? - Management expressed confidence in the stability of the market, emphasizing a disciplined approach to acquisitions [129][130]