Q4 2019 Earnings Call
Good day, ladies and gentlemen, and welcome to the Impac mortgage holdings here in 2019 earnings Conference call.
At this time all participants are in a listen only mode.
So you will conduct a question and that's a session and instructions will follow at that time.
Anyone should require assistance during the conference. Please press star one zero on your tone telephone.
I would now what was on the conference over to your hosts and so just a mozilo you may begin.
Thank you good morning, everyone. Thank you for joining Impac mortgage holdings yearend 2019 earnings conference call. During this call, we will make projections or other forward looking statements in regards to but not limited to gap in taxable earnings cash flows interest rate risk in market risk exposure mortgage production in general market conditions.
We'd like to refer you to the business risk factors in are most recently filed form 10-K under the Securities Exchange Act at 934.
These documents contain and identify important factors that could cause actual results to differ materially from those contained in our projections or forward looking statements. This presentation, including any outlook for any guidance as effective as of today, given my expressly disclaim any duty to update the information herein.
I'd like to get started by introducing George Mendocino, Chairman and CEO, but going back four children. Thank you Justin good morning, and thank you for joining Impac mortgage holdings 2019 yearend earnings call with me. This morning, I'll, Brian counts as CFO, Justin Moisio, our chief administrative officer Anemic Dot General counsel.
We're cognizant of the extraordinary state of the markets over the last several weeks.
Heightened by the uncertainty of concerns related to covert 19, and so we appreciate your time of folks this morning.
In pack is both an operating company and an active asset management company.
Pack is not a week.
That is not a passive investor and assets.
As such we are the some of our human capital.
So before we discuss financial operating results for 2019, we know.
First and foremost our commitment to the health and wellbeing of our employees.
Families in our community.
In an attempt to proactively address the possible impact of cold at 19 over the last few months, we've developed a network of support for our employees, that's part of our broader continuity of operations plan.
Elements of this plan include access to 24 hour hotline from medical health related questions.
Access to like assistance program for behavioral and emotional health issues.
Access to local urgent care facilities.
On slide presentations directed by medical professionals discussed cobot, 19, and adoption of best practices to prevent the spread of communicable disease.
Work from home contingency options.
And frequent updates as circumstances evolve from our corporate Communications Department.
Fear is irrational fear can become self fulfilling prophecy.
As we tend to feel the most what we know leased about education and communication.
Local components to our continuity plan.
Now direct the focus of this earnings call to the potential impact that a sustained.
Pandemic outbreak could have on global in financial markets and how that outbreak.
Could adversely impact of course disruptions to the company's operations and financial results.
We have outlined our concerns related to these issues and the risk factor section of our 10-K, which will be released later today and if answer that filing I would like to turn the discussion over to our general counsel name of the Dot who will speak to these items nima.
Thank you George but I will now cover excerpts from risk factor language included in our 10-K.
Please refer to the risk factor in its entirety for all relevant email.
The outbreak of the novel Corona virus, undercover 19 could adversely impact or causing disruption to the company's operations.
Further the spread of the outbreak that causes severe disruptions in the U.S. economy. It further disrupt financial markets it could potentially create wide widespread business continuity issues.
The potential impact and duration of global events, such as a pandemic could have repercussions across regional and global economies in financial markets.
Outbreak of cover 19 in many countries continues to adversely impact global activity and its contributed significant volatility and negative pressure in financial markets.
The global impact to the outbreak has been rapidly evolving and has cases up the virus have continued to be identified in additional countries. Many countries have reacted by its an important chains and restrictions on travel.
Such auctions are creating disruption and global supply chains and adversely impacting a number of industries.
The outbreak could have a continued adverse impact on economic and market conditions and trigger a period of global economic slowdown.
The ultimate adverse impact to cover 19 on global in financial market markets any effect on our ability to successfully operate that'd be adversely impacted due to but not limited to one and availability of skilled personnel due to health reasons to inability to monetize the value of our locked at are funded loan portfolio three disruption in Uh huh.
Capital and our global financial markets and for concerns around business continuity.
First to the extent, our management or personnel are impacted and significant numbers by the outbreak a pandemic or epidemic disease and are not available conduct work for health related reasons. Our business an operating results may be negatively impacted as George highlighted about it is for that reason that the company places such an emphasis on health and wellbeing of its workforce.
Second it is critical that are personnel remain productive in order to effectively monetize the value of our portfolio from the time alone as luck told the ultimate disposition of alone.
They extend our management or personnel are adversely impacted operating at peak capacity, our business and operating results maybe negatively impacted.
Third given a severe disruption and instability in the global financial markets or deterioration as a credit and financing conditions. It could emerge difficulty accessing debt and equity capital on attractive terms for at all which may cause us to reduce the volume of loans, we originate and or fund.
Personally affect the valuation of financial assets and liabilities any of which did have a material adverse effect on our business financial condition results of operation and cash flows.
Finally, the company's ability to ensure business continuity in the face of an outbreak would be credible critical so its continued productivity.
Any event or continuity of operations plant is not effective or improperly implemented are deployed during a disruption the company's ability to operate could be adversely impacted which may cause our business and operating results decline or impact the company's ability to comply with regulatory obligations lean its reputation will harm regulatory issues are fine.
To proactively address these potential risks the company's executive management has implemented a rapid response team tasked with managing and preparing for a possible outbreak.
The work streams that this group is managing address areas such as the health and wellbeing of the company's workforce reduction of pipeline management business continuity risk mitigation and internal and external communications.
Among the most immediate needs is expanding the ability of the company's workforce to work remotely.
To that end companies looking to increase its remote workforce capacity to 50% in the immediate near term covering essential personnel responsible for treasury capital markets and loan fulfillment functions.
This will require obtaining additional remote access licenses disturbing aged equipment, such as computers, telephones et cetera, and assessing those employees with a need to work remotely depending on a 30 60 or 90 day time horizon.
The company feels confident that its rapid response team an effort on expanding remote access to particular and allow the company to continue to effectively originate fund and sell them even in a situation where the company has prevented from working out of its home office.
All that said the rapid development and fluidity of this situation preclude any prediction as to the ultimate adverse impact of Cobot 19.
No reason to Corona virus and cover 19% material uncertainty and risk with respect to our womens financial condition results of operations and cash flows.
I'll turn the discussion back over to George to go over the company's operating results.
Thank you mean.
The 2019, the company reported a GAAP loss of approximately 8 million in core earnings of approximately 15.8 million.
Nine 2019, GAAP loss of 8 million contrast, the 2019.
2018, GAAP losses of 145 million.
Sure and 37 million dollar favorable delta or approximately 6050 cents chair.
2019 core earnings of 15.8 million contrasted 2018 core losses of 35 million.
51 million dollar favorable delta.
Or approximately $2.40 per share.
Core earnings or an alternative measure results that senior management utilizes to gauge the company's performance.
Corning's isolates results from recurring business activities by adjusting for certain nonrecurring items, such as changes in fair value long term debt and trust assets impairment intangible assets, including goodwill changes in contingent consideration being a loss on mortgage servicing rights and other nonrecurring lycos like.
She matters.
We introduced this concept beginning in 2019 and provide a table without our earnings release to enable variation analysis between quiet periods.
And our view the 51 million favorable dealt in core earnings.
He is a more accurate measure than traditional GAAP metrics and reflect the effectiveness of the initiatives were executed over the last year to reposition the company.
During the second quarter.
2019 earnings calls, we noted that the story of 2019 was without question shaping up to be interest rates more specifically what appear to be an inexorable March two zero negative rate environment in the United States.
In August of 2019 tenure stood at the level of wanting to have said earlier. This week. The 10 year briefly hit 31 basis points.
The fed remains accommodative.
Traditionally honor reflexive recurring basis, and more recently on an emergency basis as well.
Recall January of 2001.
And the fed embark on a series of rate cuts that initiated a multiyear refinance wave rejection volume, which is 1.1 trillion in 2000 doubled in 2001 or 2003 at almost quadrupled 3.8 trillion volume remained at two three times 2000 baseline until 2008.
The mortgage bankers Association recently revised.
Origination forecasted 2020 to exceed two and a half trillium the highest volume since 2.3 trillion in 2007.
Conventional wisdom would indicate that there should be a good science mortgage originators increased demand supporting wider margins and scale chief to cover fixed cost in the short term. However, the industry will be challenged from a capacity and liquidity perspective, we monetize this opportunity.
The unprecedented interest rate shocks continue to drive excess consumer demand with current stresses on hedge activities Labor force and distribution exits he's the supply side challenges to the industry's fulfillment and distribution capabilities, which you would could create liquidity challenges the industrys locked to fund the.
Settle timelines extend significantly.
Previous earnings calls, we just discussed the company's ability over market cycles to contract.
Or scale, our consumer direct call center at the calibrated to changing market conditions.
We continue to increase our focus attention and resources Troy Nonqm franchise.
Creating approximately 4 billion if not when loans since we let the industry's reemergence of that segment. In 2015 2019 was the second consecutive year of the company posting an excess of 1 billion in non QM originations.
Also remain committed to our mandate to maintain Optionality and call center quickly capitalize on GRC origination during low rate environments. The company nearly double volume in the call Center from 2018, 2019, and 1.8 billion to 3.5 billion.
Serves to validate our investment in the call center, and our continued commitment to maintaining a diversified product and channel offering.
The company's GRC, driven call center, and Nonqm, driven third party business is a complementary call center scalable, providing high volume at reasonable margins and a refinance environment a third party channels through our nonqm offerings provide interest rate inelastic volume at superior margins.
Justin mostly I will now discuss some forms of the investment we are making in production detailing our growth initiatives around the build out of TPL correspondent.
Geographic expansion in product evolution, Justin Thanks, George.
As mentioned a favorable rate environment combined with the flexibility of our retail call center platform allowed us to quickly adjust models to add capacity department level infrastructure to provide support for the large influx of volume.
We've completed the build out of the additional physical space, we have leased in our existing building and remain focused on hiring experienced staff, while also recognizing town inside the organization.
Along with adding new loan agents through our internal training program. We've also added a number of seasoned originators and specialty originators to help strengthen our specialty teams such as VA non QM to create a singular focus around each product to enhance production.
During the fourth quarter, we saw the impact of creating a nonqm specialty team within the call Center, that's not income production. It within the call Center rose $57 million, a 50% increase compared to third quarter.
We've seen this trend continue into the first quarter 2020, with our current monkey run rate increasing to approximately 25 million per month, which in the call Center.
The prepayment speeds of our borrowers in California and to be higher than the national average, but are consistent with California prepayment speeds because of our typical loan attributes of high FICO low LTV borrowers to better manage these prepayments speeds, we maintained our new management teams revise business model within the core.
All center to further ensured that our prepay speeds are responsibly manage through a salary retention team that to here's to restrict retention policy.
Our third party origination channel comprised of wholesale correspondent production have been focused exclusively on non QM production. During 2019, we've invested significant resources in operational improvements and technology and get increasing volume and counterparty experience as well as recent non California account executive hires that will continue.
Boost business previously underserved regions.
During the fourth quarter non QM production within our third party origination channel increased more than 20% as compared to the third quarter to date in the first quarter. Our submissions have increased approximately 15% and the Tipo channel with March on track for being our strongest nonqm submission month ever.
Within the correspondent channel, we continue to see diversity in our competitors nonqm offerings around product and pricing well. Some originators are embracing lower credit tiers is important that we maintain a competitive offering without compromising our credit philosophy.
During the fourth quarter or non QM originations across all channels at an average FICO 736, and a weighted average LTV of 70% supporting the company's commitment to encourage responsible lending.
There has been significant credit expansion in the market surrounding non trim products driving competition in volume.
Impact remain focused on non QM as a core product throughout 2019, we did not surpass EUR 2 billion dollar cool, we remain competitive in space and maintain strong investor relationships as a result of our high credit quality loan performance.
Loosening credit standards and paid significant bonuses and guarantees to attract unproven talent certainly drive volume. However, we're committed to originating responsibly and deviating to compete in the non prime market sacrificing profitability would not yield stable long term broke through the company.
During 2019, we decreased our marketing spend to $9.3 million as compared to 26.9 million for 2018, a $17.6 million decreased year over year.
The primary driver for the decrease in marketing spend in 2019 was a result of the shift in consumer direct marketing strategy. We made at the end of 28, you moving away from traditional broad based television and radio advertising to more of a digital campaign. The shift in strategy allows for a more cost effective approach increasingly ability.
To be more price of product competitive to more specific targeted geographies, we'd like to now turn the call back over to George.
Thanks, Justin.
Why would do not provide forward guidance on financial results, we will note and increasing year over year January and February originations most.
Notably we produced 600 million on the call Center in February 2020, as compared to less than 90 million in February 2019.
Within eight weeks, we'll be back presenting the financial results for the first quarter of 2020 that earnings calls, we'll provide results that reflect the company's performance. Following these extraordinarily volatile times.
Expanding further on current market volatility will now discuss some overarching themes slated to the companys positioning to manage interest rate risk.
And liquidity risk.
Mortgage servicing rights for MSR us.
[noise] MSR as for under significant downward pressure from mark to market valuation and paid unfolds from portfolio run off.
And our prior yearend call for 2018, we'd indicated that we just finished the year long repositioning of the company with specific emphasis on liquidity management.
Reducing our MSR portfolio from 18 billion to 6 billion, which we believed was critical level set to rightsize that interest only exposure to our tangible book value.
Prior to the repositioning at the end of the third quarter of 2018.
MSR us.
Stood at 16.8 billion you PBM were valued at 181 million or 2.8 times common tangible book value.
Fourth quarter of 2018, we sold tenant half billion, you PBF mortgage servicing rights and by the end of 2018 the MSR.
Of 6.2 billion, you PB revalued at 65 million or 1.1 times tangible.
Book value.
We believed at that time that the appropriate balance for the company going forward was to carry an MSR portfolio of no more than 50% of common tangible book value.
2019, we executed our whole loan sales on a servicing released basis and did not acquire any servicing for bulk bids.
For the foreseeable future, we believe strategy to monetize newly originated MSR is to be prudent and we've continued to execute on a service we lease basis through the first quarter of 2020.
As of the end of 2019, RMS or portfolio stood at 4.9 billion you PB.
Valued at 41 million or 80% of common tangible book value.
We have a financing facility a range borrowed against the value of the remaining MSR.
As of the end of 2019, the company had no outstanding borrowings against this facility.
It had 24 million of available capacity to be drawn down against the facility.
As the Mark to market on the MSR decline the capacity available to be drawn down will also be reduced proportionally.
The company does not hedged our remaining MSR us we believe the most effective hedge to be a combination of selling the MSR us and focusing on recapturing portfolio run off through our salary only retention team historically, we've been successful and recapturing approximately two thirds of loans that would refinance elsewhere.
Interest rate risk.
The company hedges, its GRC locked and funded loan pipeline with TV A's and other forward sale agreements.
In a declining rate environment, the mark to market gain on our loan pipeline.
Reflected as gain on sale on our financial statements is partially offset by hedge losses associated with our TV a short position.
A mismatch in the timing of cash flows is created as margin calls on the short TBA position needs to be satisfied immediately.
Prior to the cash being released on our locked and funded loans for homeowners settlements.
In a normalized market with normalized fulfillment and distribution timelines. This process can take 30 to 60 days from locked settlement.
We use various derivative financial instruments to provide a low protection against interest rate risk in our mortgage lending operations, but no hedging strategy can protect us completely.
Unprecedented volatility in today's markets might lead to a reduction in our hedge effectiveness, which could affect our margins in a positive or negative fashion.
Brian Kells now discuss operating results in more detailed 2019 financial condition of the company at the end of the year.
With a focus on hedging and liquidity, Brian. Thank you George I'll now provide a brief review of the results for year end, starting with revenue total revenue for 2019 was 91 million compared to 105 million for 2018. The decline was primarily due to the change in fair value.
The 5 million for the MSR asset, resulting from changes in market interest rates as well as voluntary and scheduled prepayments.
We do not explicitly hedge the MSR portfolio.
And as of December 31st 2019, the value. The MSR was 41 million the MSR declined approximately 31%.
100 basis point decline in market interest rates and the value increases approximately 25% for 100 basis points increase in market rates the recapture rates for the servicing portfolio from August through December 2019, or 55% in units, 67% in new PB.
And 53% in net gain on sale value.
There's a time differential between the point in time MSR portfolio declines in value and loan originations are recaptured as of December 31st 2019 average days from application to funding for conventional loans 30 days, which approximates the timing differential between MSR decline in value and.
Recapture of the servicing.
For the year end.
December 31st 29 team.
On sale won't total 99 million compared to 67 million in the comparable 2018 period overall increase and gain on sale loans, a student an increase in margins as well as mortgage loans originated and sold during 2019.
For the year ended 2019 origination volumes increased 18%.
4.5 billion as compared to 3.8 billion in 2018.
Of the 4.5 billion in total originations approximately three point.
5 billion or 77% was originated through the retail channel in contrast, during 2018 or retail originations contributed 40%.
Total origination volume.
For the year end December 31st want to 19 margins increased approximately 217 basis points as compared to 174 basis points for the same period in 2018. The primary driver margin expansion was due to an increase in our consumer direct originations.
I'll turn to liquidity now.
At the end.
2019, we increased by the end of 2019, we increased our total borrowing capacity to $1.7 billion as compared to 900 million at the end of 2018 to support our growth in loan origination volume.
Mailable MSR financing capacity as of December 31st Plenty 19 was 24 million and with the additional 800 million in warehouse financing substantial liquidity for the company has been provided for we continue to evaluate competitive warehouse in MSR financing proposals to improve our liquidity.
And cost of funds.
I'll just briefly touch on expenses, excluding goodwill and intangible asset impairment total expenses decreased 30 million or 23%.
The year.
2019.
Key cost savings conclude business promotion decrease of 18 million to 9 million.
For year end 2019 mortgage rates declining facilitated a reduction in more expensive TV media spend while still keeping capacity full with high quality leads are.
Administrative and other expenses decreased $13 million 22 million.
For 2019, the decrease was partially related to an $8 million reduction legal and professional fees.
This concludes the financial results.
Prepared remarks, we'll now open the call for questions actually before do that I, just want and closing.
To note that.
Historically near term challenges presents long term opportunity.
The company believes its positions itself manage the challenges of today's markets.
And the benefit from opportunities that present themselves.
Markets normalize momentum we've created in 2019 should accelerate in the future as we continue to invest in our origination channels.
These are extraordinary times with unprecedented interest rate shocks and global market dislocation, so any enthusiasm for future prasek prospects.
Should be properly balanced and tempered by potential supply in distribution constraints and attendant liquidity risk associated with.
Car macroeconomic conditions.
That concludes our prepared remarks, and closing will open up for call for.
Questions if they're arnie.
And ladies and gentlemen, if you have a question at this time. Please press the star under the number one kill you touched on telephone.
Question has been answered all your wish will move yourself from Q.
Please press the pound key.
And you have a question on the line from Trevor Cranston JMP global.
Hi, Thanks, good morning.
Morning.
I guess the first question you guys talked about the capacity constraints within the industry.
And some of the near term issues.
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And also you know Theres, obviously, a lot of demand from you know borrowers to refi loans can you can you provide a little more detail around sort of how much capacity you guys are looking to.
Add within within Impac.
Hello, how quickly that will be able to come online and how are you guys are thinking about.
The volume you'll be able to potentially process. So you know heading into the spring versus where you guys have been running up in 2019, Thanks, Hey driver Ics Justin So as we noted.
The build out at this building that took place last year was very timely because pipeline continues to grow so from a capacity standpoint.
We're currently comfortable kind of an all in number across all channels around kind of 1.3 1.4 billion a month in terms of capacity right now.
We continue to add talent throughout the organization and.
If theres any silver lining around.
The scaring the industry right now with the virus is the ability of potentially allowing employees work remotely. So it gives us significant flexibility there.
Okay. That's helpful.
And then in terms of.
You know, how we should think about margins primary mortgage rates of obviously not come down nearly as much as.
Treasury rates.
But you guys. We're also talking about sort of the the difficulty with hedge effectiveness and things like that given all the market volatility.
Can you can you give us any sense in terms of how gain on sale margins are looking as you see things.
Today versus say, where there were a in the fourth quarter.
Yes. This is Brian kelps, we're seeing margin improvements across our product set on a unit.
Basis.
Through this fall.
Time in the market due to price adjustments, we've made proactively.
Sometimes on a daily basis.
Then multiple times per day, however, those those pricing adjustments are partially offset by our investors that are also.
Widening.
Their pricing for the assets that they're acquiring from investors.
Sellers I should say like like impact so.
Net of the Investor moves were still seeing margin improvement, but and somewhat muted.
By what's going on in the Investor community and the involved with this is George and volatility in in the markets.
You had down on the pillow and the the 10 years at 100 basis points, you get up but one of the morning, its 30 basis points since back at 70, some volatility creates.
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Lock and fallout.
Activity around the pipeline.
Many times overnight and we had to come in.
Hedge that first thing in the morning, so its but when we locked loans certainly where we're building in.
Comfortable margin, but to Bryan's point.
Hedge effectiveness is challenged by volatility in and up and our investors adjusting pricing as well.
Okay got it.
I guess to follow up on that on the on the non QM business no. It sounds like you guys are making continuing to make nice progress there.
I'm curious over the last couple of weeks, especially as the markets have become extremely volatile or you are.
Are you seeing anything from investors on the non QM side in terms of like is there any decreased willingness to you know acquire loans or the you know just just sort of adjusting their their their pricing to count for the volatility or.
Any color you could provide around that would be useful.
I'd say, it's fluid we've had ever deals I believe last week in this week new issue.
That would delayed.
Don't know flows will get done.
This week or early next week. So there's some supply that's building in the market.
We had that we experienced some time and I think at the end of 2018.
When when new issue shut down for a period of time and we saw that product come through in the first quarter of 2019.
This was with respect to our pipeline, we we we take down committed forward trades around rate locks and so we have.
We have 75 to 90 day forwards for our production. So I think where we're fairly properly hedged on non QM without basis risk actually delivering non QM asset into the instrument forward instrument we created.
But I would say in general.
Around the non QM space that probably investors and we are thinking about.
The underlying consumer and.
Many of.
The bank statement borrowers are are part of the gig economy.
They're tied into industries. Their income is tied into industries that had been affected by the global shutdown or slow down.
Brown transport hospitality.
Restaurants, food services industry and so.
Just overarching theme.
Maybe baby delinquencies, which kind of thinking forward here right, maybe delinquencies pick up.
If those consumers and borrowers have a challenge around income.
And then maybe prepay slowdown on non QM that's been created.
But it's early to tell the lasting effects of.
Current conditions on on that market.
Okay, that's very helpful.
And on the MSR side.
Is there any way you can give us a sense in terms of the magnitude and.
For the likely market value change of the MSR.
The bulk of movement, we've seen in rates.
First quarter.
Yes, I guess related related to that I was just curious.
You know how quickly you expect the remaining MSR too.
To pay off if we just sort of assume.
It's a relatively stable at this level.
Yes, we can we can provide you some of the numbers around the MSR is as of the close yesterday may be we had a sense that but just in terms of terms of where we were I mean, we when we when we liquidated.
The 10 billion that the GRC servicing that we settled on in December of 2018, we traded added about 100 written.
Close to 120 basis points, Trevor and we I think we have our GST portfolio and remaining GFC portfolio today, Mark the closer to 50 basis points.
And so there's a mark.
Hi to assumptions and current rates and then there is also the.
The paid unfolds and so.
Brian We again, we don't provide forward guidance, but we can provide.
Two quick info on the remaining servicing book in its approaching 50% of tangible book.
Which is our goal so wed so where are we as of the most recent mark.
24.
Well.
And we'll be at.
At about $24 million currently.
In terms of fair market value given all the market activity, that's taking place.
So and we had it and at the end of the year was Mark that we headed to 41 41 41 million right. So that'll give you a sensor.
The downward shock in.
In evaluation on that in some of that some of that as pass some of that as some of that number includes paid in falls right, yes that where the entire servicing runs off.
And some of that move in Mark.
And paid in full somewhat some of the action around the.
MSR valuation from the ended the year to the Mark We just gave you.
His and captured in our gain on sale right.
To the extent, we recaptured two thirds of the you PB.
That's run off in the first quarter it'll flow through back that flows in to gain on sale.
Yep Gotcha, Okay, that's very helpful.
When I get the last question for me the funding side can you give us.
Just discuss anything you guys have seen in terms of.
Funding for your your loan warehouse has there been any change in in the sense of.
Haircuts or or the level of rates that your lenders who are looking for.
Any color that would be critical.
This is Brian.
We're in daily contact with our lenders.
Sure.
Yes, more capacity available if we needed.
We were pretty good position currently but to be proactive where.
We're talking to our.
Third parties in the event that we need increases.
Going forward certainly these market conditions persist as they are that's a pretty likely.
Results for us.
And.
Haircuts have remained constant.
Across our lender portfolio group.
One or two.
Have indicated that given the demand for additional funding they make charge a higher cost of funds for increases in capacity, but there at the reasonable amount.
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Yeah.
Material I think in this to the scheme of things financially.
Well I think.
For now but.
Additional capacity looks readily available in the marketplace without a material change and in price or terms.
Yeah, where our warehouse our existing warehouse lenders have been steadfast in support of the company they've been accommodative.
And in many cases proactive Trevor in reaching out and asking us to provide them guidance as to how much more liquidity, we might need in the near term.
I would say.
That it's more difficult to add a new warehouse provider in at this moment right.
It appears that the banks more willing to.
Extend for credits they know and that they've had history and comfort with then to add new counterparty credit risk.
And so on that.
We we believe when planning on expanding our AR balance sheets expanded in our origination capabilities expand they were going to.
Look to add.
Several other warehouse providers.
But some of those some of those.
Initiatives have been put on hold for the time being.
Okay. That's very helpful. Appreciate all the comments thank you guys.
Thank you.
And I'm showing no further questions at this time, so I'd now like to turn the conference back over to the speaker.
Thank you everyone for joining us this morning, we'll be back in.
Artists May for the first quarter earnings call. Thank you.
Okay.
Ladies and gentlemen. This concludes today's conference. Thank you for your participation have a wonderful day you may all disconnect.
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