Q1 2025 Onity Group Inc Earnings Call
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Speaker Change: Good day, everyone and welcome to the <unk> group's first quarter earnings and business update conference call.
At this time all participants are in a listen only mode.
Speaker Change: You will have the opportunity to ask questions. During the question and answer session.
Speaker Change: Register task questions by pushing to star and one on your telephone keypad.
Speaker Change: We draw your question by pressing star two.
Speaker Change: Please note. This call is being recorded and I will be standing by should you need any assistance.
Speaker Change: It is now my pleasure to turn the conference over to Valerie Haertel, Vice President of Investor Relations. Please go ahead.
Valerie Haertel: Thank you good morning, and welcome to honor the group's first quarter 2025 earnings call. Please note that our earnings release and presentation are available on our website at <unk> Dot Com speaking on the call will be chair, President and Chief Executive Officer, Glen Messina, and Chief Financial Officer, Shaun O'neil.
Valerie Haertel: As a reminder, our comments today may contain forward looking statements made pursuant to the safe Harbor provisions of the Federal Securities laws. These statements may be identified by reference to a future period or by use of forward looking terminology and address matters that are uncertain forward looking statements speak only as of the date they are made.
Valerie Haertel: And involve assumptions risks and uncertainties, including those described in our SEC filings in the past actual results have differed materially from those suggested by forward looking statements and this may happen again. In addition, the presentation and our comments contain references to non-GAAP financial measures such as adjusted pre tax.
Valerie Haertel: In sum we believe these non-GAAP measures provide a useful supplement to discussions and analysis of our financial condition. Because there are measures that management uses to assess the performance of our operations and allocate resources non-GAAP measures should be viewed in addition to and not as an alternative for the company's reported GAAP results.
Valerie Haertel: A reconciliation of these non-GAAP measures to the most directly comparable GAAP measures and management's reasons for including them may be found in the press release and the appendix to the Investor presentation now.
Glen Messina: Now I would like to turn the call over to Glen Messina.
Glen Messina: Thank you Valerie good morning, everyone and thanks for joining our call looking forward to sharing a few highlights for the first quarter as well as review our strategy and financial objectives to deliver long term value for our shareholders.
Glen Messina: Let's get started on slide three.
Glen Messina: I wanted to start with three key themes today first we're delivering on our 2025 operating priority to accelerate growth and origination volume and total servicing U P. B.
Glen Messina: Second our growth in book value and adjusted ROE performance demonstrates that our strategy is sound and execution is on track.
Glen Messina: And third we believe our balanced business positions us for success in high and low interest rate environment.
Glen Messina: Let's turn to slide four to review a few highlights for the quarter.
Glen Messina: Despite unpredictable market conditions, we delivered strong financial performance in the first quarter with adjusted pre tax income of $25 million and annualized adjusted ROE of 22%, which exceeds our guidance.
Glen Messina: GAAP net income attributable to common shareholders of $21 million or <unk> 50 per share fully diluted reflects an annualized return on equity of 19% and this is above consensus.
Glen Messina: Average servicing U P. B of 305 billion for the quarter is up 13 billion versus the first quarter of 2024.
Glen Messina: Total servicing editions of 17 billion is down from the first quarter of 'twenty four primarily due to lower some servicing additions related to the timing of bulk boardings. However, owned MSR additions more than doubled versus the first quarter 'twenty four.
Glen Messina: And finally book value per share was up approximately 4% versus Q1, 'twenty four and up approximately 2% versus year end 'twenty four.
We're pleased with our results for the quarter, which reflects the strength of our business and solid execution from our team.
Glen Messina: Let's turn to slide five to discuss how we're positioned for the balance of 2025.
Glen Messina: We believe 2025 will be a dynamic and unpredictable year.
Glen Messina: We're expecting continued interest rate and GSE price volatility, which is likely to generally impact hedge cost and drive unpredictable searches and refinancing activity and origination margin volatility.
Yeah.
Glen Messina: The mortgage bankers Association and Fannie Mae estimate for industry origination volume is expected to be up 17% year over year.
Glen Messina: Well not out of the realm of possibility. It is dependent on a 9% increase in home purchase volume and a 39% increase in refinancing volume.
Glen Messina: Economists have commented that the probability of a recession has increased since the beginning of the year, although we have not yet seen a deterioration in mortgage delinquencies.
Glen Messina: We believe the rocket acquisition of Mr. Cooper has the potential to accelerate M&A activity for two primary reasons.
Glen Messina: The desire to accelerate servicing scale and.
Glen Messina: Desire to own servicing capability.
Glen Messina: In addition, M&A activity over the past 12 months to 18 months amongst companies, who at large concentrations of sub servicing is giving rise to an increase in financial institutions exploring our options for sub servicing providers.
Glen Messina: We believe we're well positioned for this dynamic environment and we're maintaining our full year guidance.
Glen Messina: Our balanced business continues to demonstrate the resilience to successfully navigate high and low interest rates.
Glen Messina: We have a terrific servicing platform that is delivering top tier performance for the benefit of customers and investors.
Glen Messina: We believe our servicing portfolio mix and special servicing skills will help minimize advancing and delinquencies in the event of a recession and create delinquent servicing growth opportunities.
Glen Messina: We are accelerating growth consistent with our planned actions and we believe we're on track to achieve our portfolio growth objectives.
Glen Messina: Should interest rates declined we have an agile and high performing recapture platform that continues to close the gap to best practice.
Glen Messina: And as always in this dynamic environment, we are attaining and maintaining the flexibility to evaluate all options to create value for shareholders.
Glen Messina: Let's turn to slide six for more about our balanced business.
Glen Messina: We believe our balance business is positioned to perform well with higher low interest rates as you can see even with the sharp increase in interest rates from 2021, our total business is delivering improved performance driven by our servicing platform.
Glen Messina: Q1, 'twenty five adjusted pre tax income of $48 million for origination and servicing reflects both segments are operating profitably the servicing delivering most of our segment earnings.
As in 2021, if interest rates were to materially decline industry origination volume the margins typically expand while servicing runoff increases.
Glen Messina: In this scenario, we would expect originations to deliver most of our earnings.
Glen Messina: Given the current outlook for interest rates, we expect servicing will continue to be the predominant earnings contributor for 2025 with industry origination volume projected to increase modestly.
Glen Messina: Let's turn to slide seven for more about our servicing platform.
Glen Messina: We've built a strong servicing platform and our team is delivering industry, leading performance on multiple dimensions.
Glen Messina: We service or sub service $1 4 million loans with the total U P. B of over $300 billion on behalf of more than 4000 investors and over 120, some servicing clients.
Glen Messina: We serve as forward reverse and business purpose residential mortgages and our clients and loan investors include some of the largest financial institutions in the United States.
Glen Messina: We've been recognized by Fannie Mae Freddie Mac and HUD for industry, leading servicing performance in each of the past four years.
Glen Messina: Our commitment to technology as evidenced with our automation center of excellence, having been recognized in 2024 as best in class by the shared services outsourcing network, which is the world's largest community of business services and outsourcing professionals with more than 200000 global members.
Glen Messina: During the first quarter, our investment in technology was evident with roughly 89% of customer inquiries handled through digital interface channels and robotic process automation saving over 60000 manual work hours a month.
Glen Messina: Our investments in talent technology, and global proprietary infrastructure have created a scalable low cost high performing platform for investors and customers alike.
Glen Messina: Our continuous improvement in customer experience as evidenced with the four six and 4.1 out of five star satisfaction rating for our call center and loan boarding performance respectively.
Glen Messina: As well as a 61 net promoter score from sub servicing clients score consistent with companies such as Amazon Apple and Google.
Glen Messina: In addition, we were named by the National Association of mortgage brokers as one of their affiliate companies of the year for the past two years for our work in reverse mortgage.
Glen Messina: While we are not the largest servicer in the industry, we delivered top tier performance for customers and investors and are positioned to fiercely compete with anyone regardless of size.
Glen Messina: Please turn to slide eight to discuss how we're positioned for a recession.
Glen Messina: On a <unk> legacy DNA in special servicing.
Glen Messina: In the event of a recession, we believe our portfolio mix and special servicing skills positioning the company to minimize our exposure to advances and potentially take advantage of delinquent sub servicing opportunities.
Glen Messina: Looking at our portfolio mix to 51% of our portfolio and sub servicing has no or limited exposure to advances and generally includes additional revenue to service delinquent loans.
Glen Messina: The 35% of our portfolio in GSE owned MSR.
Glen Messina: Is generally.
Glen Messina: With higher credit quality consumers and we have no obligation to advance principal and interest payments after 120 days of delinquency.
Glen Messina: Only the remaining 14% of our portfolio and Pls and Ginnie Mae forward and reverse on servicing has exposure to all advances through resolution.
Glen Messina: Here's where our special servicing skills make a difference.
Glen Messina: In the middle of the page you can see how we perform on resolving delinquent loans.
Glen Messina: For all delinquent loans bought it in 2021 through 2023 12 months after boarding we brought 61% of the loans to current or paid in full status and reduce the delinquent population by 60 percentage points.
Glen Messina: As you can see on the right side of the page our ability to resolve delinquent loans is the primary reason why we're able to reduce outstanding advances on our legacy servicing book by 20% year over year with only a 10% reduction in loan count.
Glen Messina: We believe our special servicing skills or an asset that can be converted to revenue through delinquent sub servicing in a recessionary cycle.
Glen Messina: Now, let's turn to slide nine to discuss the results of our growth actions.
Glen Messina: In the first quarter originations and capital markets teams to live at over two times growth in total MSR additions versus Q1, 24, with a 53% increase in originations volume.
Glen Messina: First is an 8% increase for the overall industry during the same period.
Glen Messina: Our performance in MSR additions is consistent with our objective to retain more msr's to grow earnings and book value as well as reload our portfolio for recapture opportunity.
Glen Messina: Average total servicing in the first quarter is up 13 billion or approximately 5% year over year.
Glen Messina: Sub servicing is roughly flat versus Q1, 'twenty four with additions offsetting runoff and over 16 billion unscheduled transfers from the rhythm and mob portfolios over the same period.
Speaker Change: The runoff in the rhythm sub servicing portfolio has really masked our growth performance over the past several years.
Speaker Change: Since the beginning of 2020, the rhythm sub servicing U P. B has declined by $84 billion, while we increase all other servicing by $176 billion, a roughly two nine times over the same period.
Speaker Change: I believe this highlights the power of our origination capability and success of our growth strategy.
Speaker Change: Switching to our product development activities. We're excited to report that our new product launches are on track.
Speaker Change: The first quarter rollout of our enhanced closed end second lien product was very well received by customers.
Speaker Change: With lock volume three six times the same period last year.
Speaker Change: In April we launched a proprietary equity IQ reverse mortgage product on schedule and for the balance of the year. We are targeting to launch several non agency expanded credit products to further expand the market opportunity we can access.
Speaker Change: We believe our product development actions expand our addressable market opportunity provides access to higher margin market segments and creates alternatives for our consumer direct platform to maintain operating capacity for searches and refinancing activity.
Speaker Change: Now please turn to slide 10 to discuss the progress we made in our recapture platform.
Speaker Change: Our consumer direct team is continuing to improve our recapture capability to near benchmark performance levels, while maintaining the flexibility to address mortgage rate volatility.
Speaker Change: As you can see on the left funding in lock volume in our consumer direct platform was up two seven and two five times, respectively. In Q1 25 versus Q1 24 as compared to one four times for the industry over the same period.
Speaker Change: Based on our refinancing recapture benchmarking for the quarter in the last 12 months, excluding home equity products. We believe our platform is performing better than average and several of our public nonbank third party origination focus peers and the ice reported averages.
Speaker Change: For the first quarter are refinanced recapture rate is on par with our benchmark peer.
Speaker Change: While we're pleased with our recapture performance so far we want to be the benchmark by which all others measure.
Speaker Change: To that end, we continue to invest in talent technology predictive analytics products and marketing to further improve our capability.
Speaker Change: Now I'll turn it over to Sean to cover our financial and segment performance in more detail.
Sean: Thanks, Glenn let's turn to slide 11 for our financial performance.
Sean: Slide 25 is off to a strong start for us and the financial metrics reflect that here, we compare three key metrics year over year.
Sean: Topline revenue grew 5%, while keeping operating efficiencies stable that combination flowed through to drive adjusted pre tax income up to $25 million versus $15 million.
Sean: Prior year quarter.
Sean: The result was an adjusted ROE of 22%, which was well ahead of our guidance of 16% to 18% for full year 'twenty five.
Sean: This continued the upward trajectory of book value per share was $2.15 book value being added from the first quarter.
Sean: Overall, we had a robust quarter added scale to the servicing platform growing U P D by $13 billion a year <unk>.
Sean: Including growth in our owned MSR book by 12 billion in originations was again profitable despite the elevated rate environment.
Sean: Please turn to slide 12 for our servicing performance and both before and reverse space.
Sean: The servicing segment again remains a strong contributor to adjusted pretax same time.
Sean: Forward servicing grew adjusted Pgi through increased fee generation, which was up 6% year over year and 5% from last quarter driven by the growth in servicing which was up 9% from the prior quarter.
Sean: Lower MSR runoff also helped to more than offset the seasonally lower first quarter float income.
Sean: Reverse servicing was up from the prior quarter, but lower versus prior year.
Sean: The year over year change was due primarily to strong asset gains in the first quarter of 'twenty four as well as valuation adjustments on buyout loans in the first quarter of 'twenty five.
Sean: Overall, our reverse assets, our recapture capabilities and our derivatives delivered an effective hedge to the Ford MSR in the first quarter.
Sean: The right graph shows an illustrative example of the impact of growing sub servicing UTP and the subsequent lift in adjusted Pgi. This shows the leverage that our operating platform provides as we build scale.
Sean: And as Glenn mentioned, we believe shifts in the competitive landscape that have occurred over the last 12 plus months create opportunities to acquire new clients for sub servicing.
Sean: Let's turn to slide 13 for the results of our origination segment.
Sean: Originations grew adjusted <unk> significantly year over year. This was driven primarily by total volume growing 50% from the first quarter of 'twenty four and the high margin consumer direct channel growing by about 165%.
Sean: This improvement in consumer direct is driven by the strong recapture capabilities previously mentioned.
Sean: Generally the first quarter is a seasonally weaker originations quarter industry volume was down 21% quarter over quarter. Despite our lower volume originations posted a consistent level of adjusted <unk>.
Sean: This was driven by stronger net interest income and improved operating expense.
Sean: Overall, we continue to operate a profitable origination business with a wide range of products and we believe we are able to adapt to any interest rate environment.
Sean: Regarding new high margin products or additional home equity loan product showing strong loss and the reverse proprietary product was successfully rolled out last week.
Sean: Let's go to slide 14 will confirm our guidance for 2025.
Sean: Our financial objectives remain unchanged sustained adjusted Pgi growth and earnings stability. These are enabled by the increased scale and the agility to capture market opportunities.
Sean: For 2025, we are confirming the guidance we provided last quarter.
Sean: Continued expectation of a strong adjusted ROE in the range of 16% to 18%.
Sean: Growth in our servicing book to exceed 10% year over year.
Sean: Our consistent hedge ratio targeting 90% to 110% and a stable efficiency ratio as we prudently add costs commensurate with the revenue.
Sean: Okay.
Sean: Then we've also included information that we provided in our March 8-K release regarding the reasonable possibility that we will release, some or all of our valuation allowance on our U S deferred tax assets or <unk> by year end 2025.
Sean: For a frame of reference the total valuation allowance or VA for the U S. DTA was about $180 million at the end of 'twenty four and using the 24 year end share count would create an increase of roughly $22 per share.
Sean: This increase results from the valuation allowance lifting which then allows the existing net deferred tax asset to be an accretive impact on net income as an income tax benefit.
Sean: This in turn increases our stockholder equity by the same amount.
Sean: This will also have a beneficial impact on our leverage ratio as measured by debt to equity.
Brian: In closing I'd like to say this was a strong quarter. We are pleased with our results that exceeded guidance and the trajectory of our business back to you Brian.
Brian: Thanks, Sean.
Speaker Change: Now please turn to slide 15 for a few comments before we open up the call for questions.
Speaker Change: I believe we're well positioned to navigate the market environment ahead, and deliver long term value for our shareholders.
Speaker Change: We've delivered a robust increase in profitability and returns in 2024, and we're off to a great start in 2025.
Speaker Change: Our performance is the result of our balanced business capital light growth top tier operating performance disciplined cost management and dynamic asset management.
Speaker Change: Our operating priorities for 2025 are aligned with our strategy and focused on three areas.
Speaker Change: Are there any growth.
Speaker Change: Differentiating operating performance and elevating the customer experience.
Speaker Change: Our execution is driven by our experienced team.
Speaker Change: We're relentlessly focused on delivering on our commitments and providing excellent service to our customers.
Speaker Change: All of this comes together to suggest a share price that we believe has excellent upside.
Speaker Change: And we intend to continue to take.
Speaker Change: The actions necessary and maintain the agility in a dynamic marketplace to harvest that value for the benefit of all shareholders. Overall, we could not be more optimistic about the potential for our business.
Speaker Change: With that Nikki, let's open up the call for questions.
Speaker Change: And at this time, if you would like to ask a question. Please press the star and one on your telephone keypad you.
Speaker Change: You may withdraw your question at any time by pressing Star Q.
Speaker Change: Once again to ask a question. Please press star one on your telephone keypad.
Speaker Change: We'll take our first question from Randy Binner with B Riley. Please go ahead. Your line is open.
Speaker Change: Okay. Thank you good morning hard in order to start, but it's obviously, a really solid quarter and good.
Speaker Change: Informative call I guess.
Speaker Change: The valuation allowance news in the kind of detail you provided here is pretty pretty interesting and so I hear that you are saying, it's worth $22 a share and I guess generally my.
Speaker Change: Her experience with these is that there can be ownership testing rules with the IRS and timing things that does that affect how these days.
Speaker Change: Kind of the value of that DTA comes out and so I just wanted to maybe dig into that a little bit some of the details there or are there really not limitations.
Speaker Change: All kind of accrete to the equity value like on a single date.
Randy Binner: So Randy thanks for the question.
Randy Binner: Yeah, Youre right valuation allowances are interesting and RK.
Randy Binner: Really the key question that.
Randy Binner: You know future performance and our continued analysis will show US is that do we left all or some of the VA.
Randy Binner: Whether it's some or all of the valuation allowance or VA.
Randy Binner: That then flows through dollar for dollar it hits net income it raises book value.
Randy Binner: So the question is how much of the V a.
Randy Binner: <unk>.
Randy Binner: And we look at this by every quarter, we analyze positive and negative data.
Randy Binner: Accumulative loss in recent periods is negative evidence.
Randy Binner: And we've had the valuation allowance in place since 2015.
Randy Binner: So we think given our recent strong performance over multiple quarters that we will transition from accumulative loss in recent years to accumulative income.
Randy Binner: Yes, so that's kind of one of the key parameters. There is several others, but once you make the VA decision than the math becomes relatively simple.
Randy Binner: Okay. So theres no theres no ownership or other kind of course that would hold the hold that timing.
Randy Binner: No I think you're referring to ownership changes, which can affect the overall deferred tax asset, which apply whether or not you have a valuation allowance and that stood out.
Randy Binner: Changes in shareholders over 5%, but that's <unk> hundred 82, that's kind of a separate concept around dth.
Randy Binner: Okay. So that they are <unk>.
Randy Binner: <unk> been pretty consistent the valuation allowance has been in that neighborhood of 175 to 183 for the last several years, we only we only printed in the K. So it shows up once a year.
Randy Binner: Alright.
Speaker Change: I have a bunch of others, but I'll jump back in the queue I appreciate that thank you.
Randy Binner: Thanks Randy.
Randy Binner: Thank you. Our next question comes from Bose, George with K B W. Please go ahead. Your line is open.
Speaker Change: Hey, guys. Good morning. Thank you just wanted to follow up on the DTA is there any timing in terms of when it has to be utilized by.
The vast majority of our DTA is not limited by a timeframe mix post 2017 tax Reform Act.
Speaker Change: When the the DCA has only cover 80% of your taxable income, but they're indefinite.
Speaker Change: And that's the large majority of.
Speaker Change: Almost all of our federal and a good chunk of our state.
Speaker Change: Okay, great. Thanks.
Speaker Change: Then actually it looked like there was a legal expense. This quarter can you just talk about that and then just can you remind us where things stand in terms of anything else on the regulatory legal side.
Glen Messina: Yeah Bose, it's it's Glenn so look on the <unk>.
Glen Messina: On the legal side, yes, we did reach an agreement in principle this quarter to resolve one of our oldest.
Glen Messina: Legacy class action litigation matters believe it or not this thing is nearly two decades old.
Glen Messina: Dealing with pre acquisition PHH practices again that was discontinued almost two decades ago.
Glen Messina: So look we had the opportunity to reach.
Glen Messina: Reach a settlement here again for this thing Paragon for almost 20 years, just let's get it behind us and move on.
Speaker Change: Okay, Great and then just as a reminder is there anything else that's like sort of on the litigation front or a regulatory front row. Thanks.
Glen Messina: Thanks, Kevin fully resolved now.
Glen Messina: Yeah Bose as you know we are our 10-K or 10-Q includes what we believe are yes, yes.
Glen Messina: Generally it's a major litigation matters affecting the company I think as you know yeah look the mortgage industry is yes it.
Glen Messina: It is subject to litigation from a number of different directions in the ordinary course of business.
Glen Messina: We and other market participants.
Glen Messina: Can become involved in all sorts of threatened and pending legal matters.
Glen Messina: And.
Glen Messina: That's no different than anybody else in this industry the biggest.
Glen Messina: Yes, the thing out there from the prior administration as the just generally an adverse reaction to consumer fees charged to consumers of any type.
Glen Messina: We and others have been defending ourselves in a number of different Ah.
Glen Messina: Pending actions or inquiries regarding convenience fees.
Glen Messina: And we believe we've comply with the law and every one of those examples.
Speaker Change: Yes more recently.
Glen Messina: Yeah resolved one of those matters with hot sell.
Speaker Change: So my first name Okay.
Glen Messina: Okay, great. Thank you.
Speaker Change: Thank you and as a reminder, it is star one if you would like to join the queue. We will move next with Eric Hagen with BTG. Please go ahead. Your line is open.
Glen Messina: Okay, Hey, thanks, good morning, guys.
Glen Messina: I wanted to ask about the rocket Coupe merger and what you think is the impact on the sub servicing market specifically, how much you see that maybe driving lower cost for the industry. At large are you guys doing anything differently to source new business as a result of the merger and do you feel like you'll even maybe change behavior from any of the other sub servicers in the market.
Eric Hagen: Hey, Eric.
Glen Messina: Yeah look I mean.
Speaker Change: Anytime you see a big transaction like that with rockets announced acquisition of Mr. Cooper, It's big it's disruptive it shakes things up a bit.
Speaker Change: I think theres been a couple of folks who have been very vocal about how they think about the transaction and you know people generally fall sub servicing clients, particularly will generally fall into one or two camps.
Speaker Change: Yes people feel.
Speaker Change: We are threatened by rocket.
Speaker Change: They're going to want to think about other opportunities and where else could they go where they're partnering with a player who potentially is not going to be a threat to their business.
Speaker Change: And in other cases people look at rocket and say, who wrong love rocket and.
Speaker Change: Wanted to be more closely aligned with them. So I think I think it's a mixed bag, but generally speaking we're seeing I would say two key themes emerge.
Speaker Change: On the sub servicing side.
Speaker Change: People either wanting to explore their options, but that's I would say not just solely related to rocket coop over the last 12 to 18 months Theres been a number of.
Speaker Change: Sub servicing centric platforms that have changed ownership.
Speaker Change: And that creates an opportunity for people to consider alternatives.
Speaker Change: Yes, we've been very aggressive in growing our sub servicing business last year, we added $46 billion of new sub servicing APB and a record 13 new clients.
Speaker Change: And we are attacking the marketplace with passion and energy and trying to continue to grow that side of our business.
Speaker Change: Alright, good stuff I always appreciate your complete answers.
Speaker Change: A lot of your of your MSR is our flow and co issue Msr's is there an advantage that you can point to in this environment being as volatile as it is for being a flow buyer versus a bulk buyer like us.
Speaker Change: Is there a distinct sources of value that you.
Speaker Change: You can identify for being in the flow market.
Speaker Change: And being a formidable competitor there versus.
Speaker Change: Sourcing MSR is in a different channel.
Speaker Change: Yeah.
Speaker Change: Eric with our originations platform, we have basically haven't or in three different water. So to speak we do the floor, which is our correspondent business. We also are what I'll call delivery agnostic so to the extent one of our clients wants to deliver to us through the commercial channels.
Speaker Change: Cash channels.
Speaker Change: CRX S&P or pit.
Speaker Change: We'll do that as well and we opportunistically tap into the bulk market. So.
Speaker Change: For us we yes, we targeted yields.
Speaker Change: Proprietary number we don't disclose it publicly.
Speaker Change: And we like.
Speaker Change: Like to demonstrate some level of agility and flexibility too.
Speaker Change: Emphasize or deemphasize those channels, where we see the best economics.
Speaker Change: And.
Speaker Change: Having that ability.
Speaker Change: To lean into the flow market when the flow market is much.
Speaker Change: Much more attractive or lean into the S&P CRX Pip market when that appears to be more attractive or bulk market. If that appears to be more attractive I think it is a great advantage for the company and gives us flexibility to maximize returns.
Speaker Change: Got it okay.
Speaker Change: We're looking on slide 22, we're looking at the operating efficiency.
Speaker Change: You have there I mean is there an objective that you have with respect to the operating efficiency on the servicing side.
Speaker Change: Or is there should we kind of like.
Speaker Change: I expect that.
Speaker Change: Level.
Speaker Change: Kind of be stable.
Speaker Change: Yes.
Eric Hagen: I'd say, our overall objective Eric has just continued to increase pre tax income in each segment.
Eric Hagen: We think our current levels are adequate it can shift as we can.
Eric Hagen: We brought in more special servicing.
Eric Hagen: Yes.
Eric Hagen: Possibly.
Eric Hagen: Slightly increase until revenue catches up same thing with big chunks of reverse but overall.
Eric Hagen: We like the level, we're at always continue.
Eric Hagen: Try and drive it slightly better through technology operations talent scale.
Eric Hagen: But we did not stay.
Eric Hagen: Stated target, we're trying to attain in a certain period of time.
Eric Hagen: Alright appreciate it guys. Thank you.
Speaker Change: Thanks, Eric Thanks, Eric.
Speaker Change: Thank you and as a reminder, it is star one on your telephone keypad, if you would like to join the queue star and one with <unk>.
Speaker Change: Just a moment to allow any further questions to queue.
Speaker Change: And there appear to be no further questions. At this time I will turn the call back to Glen Messina for closing remarks.
Glen Messina: Thanks, Nikki and I'd like to thank our shareholders and key business partners for supporting our business I'd also like to thank and recognize our board of directors and the other the global business team for the hard work and commitment to our success I look forward to updating everyone on our progress at the next quarterly earnings call. Thank you.
Speaker Change: And this does conclude today's program. Thank.
Glen Messina: Thank you for your participation you may disconnect at any time.
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