CEO sees ‘unprecedented’ mortgage servicing rights volume ahead

CEO sees ‘unprecedented’ mortgage servicing rights volume ahead

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‘Outstanding’ performance relative to peers, chairman says

Despite what he called “…a very challenging year for the industry due to one of the biggest rate increases on record,” Bray touted the company’s fourth quarter performance to end 2022 – a showing he largely attributed to a balanced strategy and technology investments. As evidence, he pointed to 23% growth of the company’s customer portfolio and 29% expansion of tangible book value per share. “Relative to our peers, this is outstanding performance,” he noted.

Bray expressed optimism for 2023: “And I will add that 2023 is shaping up to be a year of meaningful opportunity for Mr. Cooper. By executing on the strategy we’ve consistently shared with you in making the right tactical decisions, we stand to grow our customer base even further, plus put the company on the path to rising returns,” he said.

He showcased a key financial metric as further evidence of a solid fourth quarter performance: “I would point to a 200-basis-point lift in operating ROTCE [return on average tangible common shareholders equity] as servicing income nearly doubled in the quarter,” Bray said. “And bear in mind, our current return on equity is impacted by a very robust capital base, which you can see in the 31% ratio of tangible net worth to assets.”

Servicing portfolio expands, company shares repurchased

He then turned the focus to operations, pointing to a servicing portfolio that reached $870 billion, or 4.1 million customers – up 23% year-over-year. “And this growth, plus rising rates, helped push servicing income to a record high of $159 million in the fourth quarter,” he said, exceeding the November guidance of $140 million.

Given the current market climate, “rapid and decisive action” was taken last quarter to reduce capacity, he said. “And as a result, we were roughly break-even in the fourth quarter and are now on track for positive results, which will be in line with what we guided you to expect,” he said.

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