Yahoo Finance Mr. Cooper Group Inc (COOP) Q1 2024 Earnings Call Transcript Highlights: Strategic Growth and ...
Operating ROTCE: 14.5%
Tangible Book Value: Up 15% year-over-year to $65.48
Servicing Portfolio: Increased to $1.1 trillion, up 33% year-over-year
Servicing Income: $273 million
Pretax Income from Originations: $32 million
Net Income: $181 million
High-Yield Notes Issued: $1 billion at 7.25% yield
Corporate Credit Rating: Upgraded by Moody's by two notches; S&P outlook to positive
Liquidity: Record high at $3.3 billion
Capital Ratio: 29%
Release Date: April 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Can you discuss what you're seeing competition-wise in the originations segment? Have you seen a solid improvement in margins and also a pickup in volumes in the quarter? A: Michael Weinbach, President of Mr. Cooper Group Inc, noted that despite the challenging market due to higher rates, the growing servicing portfolio presents more opportunities to assist customers. He emphasized the company's focus on serving customers irrespective of the rate environment, without providing specific guidance on margins.
Q: Can you talk about the potential longer-term growth in the servicing portfolio? Could we see $2 trillion at some point? A: Michael Weinbach discussed that future growth would depend on market offerings and maintaining pricing discipline. He highlighted the large market potential with $14 trillion in mortgages and over $30 trillion in home equity, suggesting room for growth as the market consolidates and other players focus on their core competencies.
Q: What is driving the dynamic of decreasing delinquencies, particularly on the Ginnie side? A: Kurt Johnson, CFO and EVP, explained that FHA's effective modification programs are allowing customers to maintain low-rate mortgages and manage arrears, leading to performance improvements and reduced delinquencies. He also mentioned new VA programs that might enhance future performance.
Q: Regarding the $50 billion of MSRs being onboarded this quarter, how are you financing this, and what are the recapture expectations? A: Kurt Johnson stated that the $50 billion was largely competitively bid, with financing details not specified. He mentioned that amortization expenses would align proportionally with the overall portfolio, depending on interest rate movements.
Q: Can you provide insight into the MSR bulk purchase market, specifically regarding the types of portfolios you are most interested in? A: Jay Bray, CEO, emphasized a disciplined approach to evaluating opportunities regardless of portfolio type, focusing on targeted returns. He expressed a bullish outlook on the market, noting the company's ability to quickly and accurately respond to sellers.
Q: How do you view the evolution of the investor base for MSRs and its impact on market volatility? A: Jay Bray and Kurt Johnson both noted that the presence of strong, well-capitalized nonbank and financial buyers in the MSR market does not necessarily introduce more volatility. They highlighted the continued participation of banks and the strategic positioning of Mr. Cooper to maintain stable, consistent earnings.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
