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New Residential Investment (NRZ)

Participants
Kaitlyn Mauritz Investor Relations
Michael Nierenberg Chairman, Chief Executive Officer& President
Nick Santoro Chief Financial Officer
Bose George KBW
Tim Hayes B. Riley FBR
Doug Harter Credit Suisse
Matthew Howlett Nomura
Kevin Barker Piper Jaffray
Call transcript
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Operator

Good morning. My name is Lausanne and I will be your conference operator today. At this time, I would like to welcome everyone to the New Residential First Quarter and 2019 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. And after the speakers' remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator like the now Ms. over to would conference turn to I Mauritz Investor Kaitlyn Relations. of

begin. may You

Kaitlyn Mauritz

Thank good XXXX Lausanne, to you, and New you like Residential’s today welcome first quarter earnings morning call. everyone. I’d

and not this New today supplement are are that the if done Financial our Executive our Joining me Residential are I’d morning, encourage President; the going you Michael Santoro, call here Nick Throughout earnings the website we so, Chairman, this posted Nierenberg, to now. already Chief to Officer morning this download Officer. reference Chief to you presentation

Before the Michael, by actual that be point I may factors nature contained with call our turn reports you today our regarding the statements. I forward-looking the and in SEC. supplement earnings quarterly over to press from their I’d like in risks will materially statements and made statements to are to results. to the statements filed forward-looking review disclaimers annual and These uncertain certain review differ release encourage

financial like over most our be A to these In addition, measures of reconciliation the turn now, some the call. today’s measures comparable And I’d supplement. be discussing found during earnings can to GAAP in Michael. to call directly we’ll non-GAAP

Michael Nierenberg

everyone Kate. joining Thanks, morning, and our Good for thanks call.

to Before company. joined us I up Kate Kate. efforts want begin, the for and our I recently welcome will IR be heading

here. have to thrilled We’re

could online, see So Kate we posted you some those. when thank are the the to that for changes supplements

scenarios rate truly the perform of in business of work For how portfolios to company. interest continues tried is all nature talking scenarios. rate We've show in quarter, really about the the I’d our diversified and earnings showed power like well what our start quarter to our to how this different always

performed our this extremely XX we loan lines basis slight the and What portfolios, consumer all to During decline treasury portfolios the Fixed fall our rallies assets tightened. we saw year points. does origination Our XX spreads business. bond mean? income saw in by well, yields business offsetting MSR XX quarter portfolios,

against also asset only do with we hedges mind, agreements added have partners. we've business our the should our lead MSR servicing and recaptured appropriate. sourcing Keep which of in our which a more earnings our where lead the MSR all MSRs will have of production - hedges, at On originator, an not We've increase in to balance assets our future seen in greater sheet. for

now which Fidelity. On agreements sub We is we've taken to counterparty by the with care, steps a side, is have owned minimize servicing us to servicing counterparty our loan which sub risk. new

renegotiated have revenue. and our agreements, servicing of fees sub We some lowering increasing ancillary our

During investments the quarter, the close deals $X.XX of we on estimate and drag we earnings take Unfortunately debt. paid share we time per add, down based capital investments. on to which pipeline our at some to minimize something raised

terrific position anytime based today see deals I our current reason on will Our and is that soon of liquidity no we investments. and need capital pipelines

the On side, tilted the are risk to downside. investing rewards

desire On While approximately look two, on is stream cap Aquiline page market to with I'll investments with been dividend energy quarter going To posted page future. that our and hold, which each to as our in the our mortgage a $X the ancillary our supplement provide I'll begin two now continue to of assets. partner income the bullets Covius capture and we well. earnings Fed online. into This an to perform take you on and refer currently a today we just for saying should shareholders with downside through an we has I'm to services couple our a fixed billion. that whole I sustainable agreement to page. pointed the believe continue terrific past summarize, assets the business. and regarding out announced pie the on morning will had

have We total billion in assets. $XX

it $X.XX million per balance Our Since result since on $X.XX earnings. of to this by shareholder out liquidity grown $XXX.X value million of the approximately diluted while our it $XXX.X capital of inception XX%. company. results our south Core We're XXX%. $X.X GAAP XXXX, earnings deployed core Page paying or would of share. we've is raise inception dividend is proud to as book total we the bit of and and time diluted net $X.XX XX%, capital add a the have share. Again, return would our at or our per in very yield plenty billion earnings. little a - income in add sheet, dividends two,

First our again, XX% $X.XX a quarter at is yield bit And dividend common dividend percent. per little common south share.

value from our grew to the quarter, XX.XX XX.XX. book During

is Our value an of at And we book pointed $X.XX, that X.X% out return equity increase out total economic $X.XX quarter. our dividend a during million per we the I common about XXX in and talk our earlier, comprised as top page, in portfolio out tried paid investment. and raised our participate raise. than equity the the Page capital different to Across our is net rest. four, did I of lay the And the we we company part share. why

my million thoughts. you of MSR are far pointed to outpaced our these and the is loan our are business our defined the get consumer in net And assets. business, the net million One will fall some into saw equity, loans, couple opening on loans net on out equity, the of we have net the advance like to Clearly in after and again, and $X.X we numbers of $XXX as a offset on our securities business. that fall give of business equity. typically and servicer rates I'll when - to rights as of in well. The $X.X $XXX securities, I on the consumer numbers and call On value MSR billion MSR equity remarks in values billion MSR that I our refer

consumers are they and what be the mean What to I lower seeing, throughout in how data that we at see least, the on lower bond based on clearly year, saw delinquencies basically in us? about healthy housing the defaults, segment we to leads business market portfolios the lower does call way delinquencies the think A are month today, to signaled going and business very market when March through hold to and of about the continue the that they're defaults. the you'll it, the their and go consumer as that our healthy, As we now see statements stable. of of each our think course the for that Fed our

is lines the offsets We each assuming you to business, business. there MSR than company origination about MSR depending be better going more to Fed six. let there'll seven, deck again, our whether our about Today How our housing rights, that illustrates business about This the and XXX fallen. Res. headwinds. down is XXX, origination refinanceable. XX% and we to credit volatility a call. in this others mortgage that rates portfolio with there'll business mortgage fall. in mortgage we or rise Therefore anticipate the tighter Page rates - a do loans, the the Page at with we talk non-agency the give that really the will think will have our side have rate at On that's at again, about certain New I think earnings And opportunities be upon of - hold, security we more of spreads. from and created loan take year. always at lower is consumer do company. then believe assets Approximately be page And the for classes, of XXX be The or each for put sheet rates lead to this of on business, you'll diversity our our our move rate? XX% balance call power in end end is of our asset different our

that to are more lot legacy is Why the little MSRs nature. XX% of impaired market. Now a We in approximately that a compares credit for bit have that? broader

small. up above loan. an for to than outstanding quite the we'll borrowers in these time. a to been period currently they that The mortgage a universe have loans - business could When look think portfolios, less And position flip have loans have given to likely we rates XX points rates These now. they origination recapture and population many are be of refinance that lack refinance that is to you do actually refinance increase when the quite at [ph] loans another overall portfolio MSR borrower. XX%. bond decline the the basis about we the mortgage good season that we for would loan so extent the of of seen is our seeing to lower pin side refinanceable to Mortgage So to to incentive offer are have

business origination through side in increase Financial. mortgage ancillary mortgage origination. our New was capacity of refinancing more our Res which of recapture our Again, ownership The our the Penn formerly benefit New the lengthens business mortgage equals debt. from On residential

is it's total business. XXXX. on our XXX highlight the our energy overall policy cash return up gains our insurance flow real. sale increases of really - inception think to MSR and XXX% May an Our way since is Since about the Page for eight,

out One return on that's value extremely – of and as our and to book in continues how change continue and we're nine thing in in we we was go what on past, pride - that economic our to the about things obviously a something hold take our economic overall the diversified total Our book and language value want of do that to mindful with continues the try to Fed and had in book portfolio lot I forward. talks change Page seen very, investments. very grow of a that opportunistic well. grow protect point and values one we this a to - the to to we

since see a that cap some $XX.XX. the We of quarter $X did - first hiccup $XX share, can recaptured we when market melted down, XXXX fourth at markets quarter a have the ‘XX kicked the billion. value today of is of in approximately in You book ’XX,

servicing bottom on the billion right mortgage reiterate If these Page going some full I'm see look mortgage the on the some mortgage asset. $XXX that to customers. acquisitions. not one to have points. portfolio, different of of of maximizing to the focus equates about X we each highlights value things of Couple of note, our XX million you a and of

How of things offer more we're go mortgage focused helpful is counter we business, forward loans, and our we customer, that think the customer. more the think our can the around. overall products As go more business, on mortgage there's the and originate then revenue to about one more you when we how to be about mortgage can we truly if to ancillary

we Shellpoint. said to Page to capture this I So when announced we morning firm be the with a call, want spoke the equity I pie. on little along talks And bit investment last about earnings our private the Aquiline. whole able Covius, in XX equity

I between billion year they X and in couple billion now. This things a the this state highlight think production billion right to we X%, first expect based a Bottom up quarter last in year of volume do right, are was for for on them overall to something them production. close page. XX on and where we steady did X to

expect quarter-over-quarter. our say in So a we you capture of that production. a forward. million less - that huge Big first we little when Again, volume non-QM in you another in origination chunk bit. to the to about focus is for and due we quarter, $XXX We if recapture. million, the you'll December you see XX% $XXX space loans down have think increase policy to a in that of was $XXX A Again, numbers, have nice a grow we of for talk going and than it insurance is minute. big on I'll that up to then our volume if Non-QM was business. meltdown million little securitization - the originated MSR that, securitizations

to tech is and and and here picture us - provider and ancillary XX% run grow. bigger The services $XXX when business. into The know, of leading quick not a quarter-over-quarter. on small servicing gentlemen ton up that a I'll to the of of that just investment a Rob mortgage the you do third you one of many, loans get a and Wonderful Aquiline. with - continue XX, we we kind for people, think partner great Shellpoint I'm a Page of to till ran thing total we're assets And as for ton Surface. with EverBank. about time wait know Q&A Clements side spend Shellpoint that John billion, to job is and These I them thrilled that. other many, the well folks service going them, many business years. many, as Covius that expect on our a slide, parties the for On

Now our portfolios. on quarter you highlights I'm going just give and to And then first page - forward. I'm talk about going going then to XX begin, I'll to

During for of MSRs the quarter total we $XX dollar of gross that acquired is $XXX billion million, amount pre-financing. a amount

there before March XXX that investments north this as spend at think are something the in consumer because advance at heels and going little continue and billion. $X totaled less of mortgager the to time the Our was need I servicer $XXX begin in advances Servicer advances, first and making compared as to end mentioned $X.X not billion. I see less of of to of we MSR as the class, book, of a equity to was end asset December. Today going am a lot you're I When servicer close billion [ph] business. to

non-agency $XXX non-agency On of season acquired we legacy mortgage the million that’s our strategy. firm call for securities

XX UPB. one completed We in During with two we RPLs. non-agency a performing the deals also quarter, - loans on one $XXX dollar worth season of and amount in securitizations, called

loans, On The those were and our XXX we the loan re-performing of market acquired are residential business. side, loans. the in those purchased rest billion were $X.X secondary call of to

as flow One performance things loan by current to increased more of existing is focused of current having The loans XX%. our the our portfolios we’re continue on have cash improve of portfolios. out

two completed million. performance things. I $XXX terrific. just we has That want loans. for quick prosper During a front. to Consumer securitizations been the spend quick the non-QM Two quarter, on there second

point At about prosper. will X% Our own warrants interesting. that that goes with and May. that of be they of the be earned will company go by end where we’ll Where

existing and point in on. or very at there future Away the on pipeline a liquidity, Res in business. we on a are investments look there any we very hopeful proceeds. the based deals that soon, Currently raised that's on there is working capital that, from lot of raise of I the need forward, if bunch we're - that investments. our The based do anytime our of on deals be on go customers see we synergies we the quickly our to front, could New that difficult. is no is deploy cross-selling if done As able capital plenty getting focused at point sitting deal would any we’ll are to with make do million deals $XXX Shellpoint Again, near we're to of We some the sitting balance sheet. of

our did We then $XXX What with quarter did servicing liquidity relationship closed we On bought that's LoanCare by that's remarks, of first side, excess up financing opening plus is my our drag and low counterparty pretty pay vehicles. the XX which side, a our opened the liquidity for again, we share. to MSRs the per the mentioned of to in leverage And QX, back as $X.XX we are cash risk. Fidelity. less cash, reduced sub we reduce servicing again again I MSR of and about with down quarter some come owned billion end our ratios sub business. about to the we've just debt, Post we million so

you we'll and through quickly take then just me let up for open Q&A. So the portfolios

down mortgage in book MSRs give or go something away the our take MSR sub again in side, $XXX when fees typically million. MSR our change the from servicing around On for rates business value down rally was

well did assumptions We with up decline as two and on is down for it One hedging means our again, going huge XXX million. during with day that sub different XX% quarter. decline deals, XX some the be out right they're bring I earlier. in going more of call up partners recapture Two here overall our fees work the Call do securitizations. called year-over-year. again we bonds. to help we’re XX% change is, our its point our to we existing Why is of quarter-over-quarter to as million pointed on us I performance the sped continue actually declined $XX servicing quarter XX.X, the we'll Big as prepayment business, With servicing our as up? strategy. delinquencies out out pointed We I XX different get to and portfolios,

do On page, than we less the velocity you there. $XX billion call the callable, we'll little a and billion of right to can again, our are to continue bit side see can strategy currently all $XXX increase

acquired bond call was portfolio face our the business. again million for non-agency On that's in quarter, a $XXX

the cheap strategy. we will collapse is legacy XX number XX% some AAA over point callable discount portfolio, that We be- bond believe in portfolio continue years. couple non-agency also we the our invested our in next drive a triple on of that and Overall, have to our of which earlier will bonds quarter. And decrease helps currently that

dropped at delinquency right, and XX% rates default year-over-year rates the by has X%. improvement in about Looking bottom

to about. the On a loan not talk side, time

You know, of Shellpoint We sold very, bought we capital course on couple perspective. very, with the price from on in been that past not very the Market's grown RPO that about business loan We that, the different We returns couple and did over had week have very others, a and of just worked good. guys well invested on sub book $X where loans, the services competitive auction, participate the billion. years. last in loans. of has deals different a

capital million of loan year. On [ph] percent legacy is the the of the consumer loan page, end X% on SpringCastle $XXX page prosper there, by XX, deal. total our

able - deal. give to then deal. hopefully we'll to each. little overall lower of advances, any $X one that refinancing up have In returns to be cost spend not going another be billion a about on just of XXX equity, have sense, next our of off deal know roughly I'm doesn't and million at you $XX will take those XX is will But And both SpringCastle add I the very a to the time. funds prosper is that Service the market tense. We to that in been it week, and

see into XX, was in unless there's look balances. a be investment servicer emphasis page less great a us, but for need take the could to there's going a you less you go advance That you If of at as a recession. decline

So little securitization platforms. talks loans. first Page four on the did our We the deals in a bit delinquent We're advance XX, market about quarter. servicers just now. to different in the

the proud deal more as the financing we're very turn I've focused marketplace. of will in the able One and saw we’ll MSRs, put crazy to for of what MSRs those After on doing a came like on as our replicate team. less and out mean, and quarter how market term when more company, are our portfolios of term differentiates we the doing and and us I end MSR very markets of a we’ll results that not in XX. the forward? work up X%. this been I'm continue and $X it are hard is really of business in market of out quarter. we our the since We're Fed rallied think on and currently and to billion much proud hard our on Freddie Mac things financing to think done possibly be I going good can. we're we vocal I continue deal we about hard acquire we we're as portfolio. earnings this bond year with a things Page Again, think the total a pretty what our in is the population because business likely our with What the in was I'm amount May, financed to than our very of still do last

about in are flushed the Covius. on investments, an markets We focused we When pie. now. not The we So with opportunistic think capturing announced that right investment easy cash. whole

to really the we're of you go on certain know into in details we near execute which things the hope are future, there. don’t in We middle working that

over record shareholder bring as And Our and earnings maintain two, then our I and the I'm protect, questions. in out that, I'm to and turn for up pointed participated one to I make open capital we’ll for operator With speak continues that the I in when raise continue track going dividends. to itself we’ll sure you. it up raise focus, capital. with to to to it

Operator

of Your Bose [Operator first KBW. George Instructions] question comes the line with from

Bose George

morning. Good Yeah.

So well? of ancillary can Covius of in-house first bring sort opportunity just through acquisition, the potentially third-party could you kind bit is you talk back little there this? here revenue And a much just about how with as also a

Michael Nierenberg

and Over business in third-party go time. Keep it's value gives ownership equity our time The in - do. grow that of earnings when couple big Good grow we Covius we Bose. share of we have and in them we give equity an they investment the we to of about that - the than Rob just over going this where little know, at of And up us a a the team in to the We it ownership The investment a to as grow and John. business the Aquiline equity company. continue company, - the million can mind, $XX an and Yeah. the But million believers hope investment is the bigger forward. you the our of earnings it's about invested in grow in the their there could leadership - with of look at in that debt credit that and Covius things. hope going we debt you a equity and Again, for at to is in the will is a XX% first as we question, our we forward in investment opportunity of grow. all management have Two, projections will Thanks. our bit in company. quick XX an ownership. no earnings a we're way and earnings presence Covius we we This our think our owns to look the industry. look provider third-party

Bose George

But know the just gradual increase more revenue? the ancillary the to revenue sort of your so timing stuff in benefits of in and of in terms over, or its coming from somewhat of sizing terms earnings you

Michael Nierenberg

This points overall you think kind about to to a there's equity in couple a I can We of products will you valuation business. origination obviously company, business. an our Res, already up. of that those services already there. adds is But business. have have within New the that earnings is, One in will Yeah, the stay revenue Two We Shellpoint capture suite and think the the equity we already our title of that if we or business. company. our appraisal go have know, growth an numbers the ancillary extent

on of we of contracts our already the come you know, So to you understand, it's products have getting and sure I excited. servicing today. sub more But we some partners, that get servicing think renegotiation in are revenue of And back do business. seeing know, some we're our to going our We want ancillary when of some going sub sooner than fruits later. make from existing you that these rather on our

Bose George

against tightened thoughts about are on credit on wanted obviously thinking you about, quarter did helpful. Thanks. just just the helped, That's just ask potentially, generally protecting this you I mean, falling but well, rents? Okay. which to mean, updated hedging spreads how you know, I MSR then And guys

Michael Nierenberg

MSR know, for MSRs. So environment, see great with back years on and rates thought higher course we'd the I much past the of Fed the keep you obviously Fed over if raising you everybody the of hold, a that's the couple rate go mean, in business, would

During books the versus book. you use our MSR end we know, that even from out so our loan standpoint, hedge as of a a year quarter, coming longer were duration

with Our of spreads MSR. We so kind bond was And is have our agreements MSR recapture our against there, hedge that we the actually book also used a as help long. and credit book.

Powell One as that said want up, mortgage and and the the we a because put hedges thing the I came your buying MSR. We've core hedge Now Fed earnings in go basically will on of hold. out, against the they're against our [ph] put you're point on space. MSR out on out MSR, bunch assets against to mortgage more mortgage actually

think now, this this earnings. of low – for that core hedges I and down So believe to we remain we will kind and we the extent doing at low vol the in least to are be add lead and higher extent which environment road that we'll vol more to environment, remain the mortgage will in we

Bose George

are And or color just Okay. hedges agencies the mortgage the any just there?

Michael Nierenberg

You would know, I assume they're agencies.

I of You longer as could the the nature, MSR product. some but some for But derivatives, offsetting would of book is of that it going a the be which in it to that. our - part take our the some swaps, most in be offset be duration know, would businesses in agencies, in could in general it hedges against could in be mortgage

Bose George

great. Okay, Thanks.

Michael Nierenberg

Thanks, Bose.

Operator

Riley with next Tim of B. line Your from FBR. Hayes question comes

Tim Hayes

Hey. Good morning, Mike.

Michael Nierenberg

Good morning.

Tim Hayes

talking that been rates. But been past there? your vol you several expect You you’ve banking about raising tailwind for on lower the largely you capital. how universe invest highlighted the for industry from why is ahead for expectations you lower volatility which see outlook Hey. Can you quarters the touch in could opportunities the to could general opportunities your in and and for present you’ve mortgage

wondering if ahead? So opportunities you overcapacity expect present to just opportunities or you fewer issues still if expect

Michael Nierenberg

opportunities. more be there'll think I

really mortgage – business this all look industry that. is know mean, you at hard. standing I the We think listen at I there the the original is point. men few

assets that. we're we our only see origination business. increase balance we us also not business, the with for providing Jack capital have Navarro the to it that way the pretty would more think income extent been we it, The will I’ve I provide know, of to more sheet, That and can around help that but servicing on with vocal that us you part side, our this. going do hopefully

over think likely They're has business take that about know, billion. and That I $XXX will tremendously. billion. something, time at You $XXX grow grown give or to

sub business our partners one. earnings, of there'll acquisition from to our lower side that in so roster origination rates, will be in evaluating know, other all that. the the its I are increase Obviously, think servicing opportunities. also of We're of Shellpoint. to But more on sub as result the benefit We captive the to partners, seeing try servicing we're and overall you income a seeing not

we're net-net, think see more I you'll consolidation optimistic. So do though.

Tim Hayes

for Are And then around will is this, tailored going Covius and following or business you this like what does to the space check to helpful. ancillary touched but or you of the deal? That's ways here appetite still M&A for recapture? additional kind Covius actively looking any Okay. your and more investment box in on strategic be acquisition investments play additional

Michael Nierenberg

Yeah.

I things. would think if going accretive biggest I shareholders, to it's say the acquire think for we're is, that we thing

big sit we You where is of good, reasonably know, now, a thing a - asset big liquidity prices full. part are

done. we're capital do try we deals know the hard [ph]. to to middle that execute still We're we that we're the head a I the get little team deploying actually a capital lot we perspective, do of that and things better have think look It's mean, their you at to it's intention I a bit we run because spread But the but probably to confident certain will. going are though of a to a raised of with extent four price things, M&A. focused rear on they'll M&A, from opportunities a hard perspective so, and of sooner in

Tim Hayes

Understood.

maybe and you've of touch anticipated savings of Ditech much on calls on recognize sub And conference has your moved that can you or negotiated how And been Okay. contracts? cost to of some this last kind renegotiate the servicing, you've if amount mentioned on that of point. been as able then you the just these

Michael Nierenberg

Sure. loans On XXX,XXX at May there'll Ditech XXX,XXX be handful loans as loans By July transferred. X, alone of XXX,XXX loans remaining. is remaining a small a there. have There been of

Ditech, disruptive about about we servicing, big sure this want around not anything that really or is for make the do frankly a and to foremost You know, transfers is and homeowner. NRZ to us We is first not thing it's the homeowner. quite

to Ditech Shellpoint. from as MSR LoanCare, We as well have transferred

Tim Hayes

be moved that counter-parties So those MSRs the just to are to speak you've only clear to? the two

Michael Nierenberg

yes. point, this At

Tim Hayes

Understood. Okay.

outsourcing Can And moving just they you know I talk they equity the an necessarily any - Okay. just it's from functions about as counter you working do the that that currently some add be value them? that more you're - any are looking expect, - maybe then Covius paid and to also agreement? there your But expect one, stake, to for or there just know grow. earnings not know, know, dividends - from with one is you're are then partnering your Covius. parties from maybe on day as you you some already And you getting I'm that with you

Michael Nierenberg

currently the second that counter is point. The this answer parties some to of have we at with the question work Covius

Rob but guys These again is real it's think you and way the You know, The a it, a in investment, to which know very and job. we - some about that real a some a debt. on people equity company. then again are know, – will John great debt, have do to there's it's coupon and earn To $XX little after couple to the the is not debt then $XX you drop going years. million XX% million and

of So can't number only and they're regs from capture Res in have want that our you relationships to we we we or Shellpoint New do servicer. not the people and is people. know, homeowner with servicing because way about mortgage really as as buy possibly we other can. the MSRs thought this only We of much a the it We

true is much So we can of let's It's capture as business. the the a idea stuff of revenue. as third-party ancillary this

not company. are that running We

have you they know, that is services you the multiple going but hopefully think company. them say, businesses, financial And when to a board what help to about We're their traded thing. services going We do higher seats, would way of company, PE. trade know, they know, grow they're I you you will versus a

debt and the and is earn business. have that $XX time we over ownership, it. could continue Hopefully the do we grow to if put We we as then because they capital equity then two could is, you great don't in. So the substantially increase one equity grows one, our and on the grow day million that a our some John idea some valuation job Rob coupon growing

Tim Hayes

sense. Got it. It makes

that. Mike. I'll in the back Appreciate Okay, queue. jump

Michael Nierenberg

All Tim. right. Thanks,

Operator

Doug line with the of Harter comes Your next Suisse. question from Credit

Michael Nierenberg

Doug. Morning,

Doug Harter

help you some you of morning. Hey, could on that specifics, if just kind large go are I Michael. deals the exact good the at understand they looking characterize - deals. into the you us but you're side of can't MSR know the deals, larger smaller

of us capital the kind deployment? help Just think about

Michael Nierenberg

on. we're one I working Well thing is can Doug, you what the tell

anything investment for our working You is consistent would prior think think I most that I with - the we're would about on part strategy. know,

buy on you not focused That's know, have assets with and/or assets past it's of six that's years the go at joke we consistent doing not was the since nothing, everything look been - the sell companies what it's when Ice not we're that the here, financial company of course doing they like and we're that over what are value services sometimes So founded. a you Breyers Cream.

Doug Harter

All Michael. right. Thanks, appreciate it. I

Michael Nierenberg

Sorry, Doug.

Operator

with line of Your Nomura. next Matthew question comes Howlett the from

Matthew Howlett

How Michael. Hey, are you doing?

Michael Nierenberg

Hey, Matt, back. welcome

Matthew Howlett

past vocal lot. really a it summer spreads always and you ways this Michael it. inflated like tough, market credit have now sounds cut you've and the was around of been Thanks the in

want just [ph] First I'll - with credit hear this up follow your overall get other rich. then when view And get question. spread to

Michael Nierenberg

based in our we're issue credit what the markets on spread market regular we I side, on at room the I of stuff actually think a go think tighter. of have that you debt, get types in will mean, securitize. seen, I to we've tighter. we the term the not know assets Yeah, we're

agency side longer vol are continue particularly credit to - of low market. if with a around lot mortgages, a more cash, you in mortgages the up, you're There's pick know, prepayments are typically produced. you'll duration. think But the I markets those see flushed

will there's for So enough high. to duration I be And short just the think extremely don't out need assets there. continue them of

So go spreads likely I will think tighter.

if X% obviously to invest currently dividend lot XX%. For think our just today. is and shareholders you buy we assets about want buy in yield yield it a don't more we between assets. dividend XX% you buy be to to than If unfortunately or dilutive want X% we'd a and was us to our know, But we don't

I going stuff's downside, in risk pointed - to is in opinion not So when reward tilted earlier out to But going that our our better. early going I to but better. do do think the to again comments, doesn't stuff's the mean - do

Matthew Howlett

little If bit Right. cheapened the MSRs with rates. a active post Is that quarter? why you're

Michael Nierenberg

$XX That's a you that cheapened why we bit. have bought little week. billion last MSR know

relationships on that. like know, have You and things agreements there's certain we originators we prepayment mortgage and certain have protections with

levered in you frankly the buy more to the buck I MSR bang stream. money attractive to if a And more space mortgages, are You we as comment, hedge a them would fairly where in going the for in I know, basis earlier - yield put quite going likely on think say here. right actually is over my you're to we you're we our see with and MSRs time earnings what bigger - –

Matthew Howlett

about SoftBank people bit is, know, ability. or more then And your I'm just you it of evolution. energy to what an putting, just awards, Is risk about the a [ph] Great. second that it business. these as fortress as little operating of businesses the just What's using evolves to one looks like an talk run good hiring

are rewards bit the evolve little Just or for operating into you doing these as companies what talk a challenges the about that?

Michael Nierenberg

Sure.

I made of you servicing good insurance was again is for out One partners an July acquisition it's that our Doug. an company in itself there. know, a The Shellpoint think, couple of reasons. - for all is question, insurance policy

have won't the want MSRs the mortgage a you're proved now a do - thought we know, run idea very move Ditech situation a that’s We So process. and that a you extent seeing them to good to this and to acquiring in don't company be to levered about that.

level. been typically from look at our financing terrific. around of the You asset company they've that earnings know, you When is most

We yet, returns they time. job a a least where know for are from experience, person segment will at haven't I ton down and wonderful in know long earnings great management but hard do they operating I XXXX. a think you have Williams were of companies a though. double The they know I broken there, year-over-year He's and team Bruce

very You are there, who they're it. very, know, not, we know, plenty I'm not people say going on of to focused you have

have - You a very know, we compliance group. you have robust

a know there. people functions We there's different have bunch of - you doing

On in the an And operating business I Covius thing, not really that we're it's again running others, company. only think. our that's so investment is really

still we're investment company. So an overall

as core and around now us contributing know, still business. going The Shellpoint you returns to to We’re try acquisition to up gave our well put as scale protection, earnings.

are. got about all you've stuff thrilled be you as operating we're this standpoint from we know So and an to that, but over

Matthew Howlett

Michael. Thanks, Great.

Michael Nierenberg

Thanks, Matt.

Operator

with the Piper [Operator Barker Instructions] comes Jaffray. line from Your question Kevin of next

Kevin Barker

Good morning, Hi. Michael.

Michael Nierenberg

Hi.

Kevin Barker

comfortable utilize to some in around and cash investments. do you regards that ability your the balance leverage point? much I is, comments have what quantify is you X.X know, where that you times sheet where you Can just some dry at this to How and continue you view continue the have and the powder some of your with In to you're equity. dry of think sheet powder the today. balance it how putting quantify to debt

Michael Nierenberg

south little We paid of million. bit a reported debts. of $XXX down We cash

the up MSRs. our at out leverage we the business hedge agency of our are ratios end ratios of X the mortgages leverage our as end Those quarter. at below to go add So more to - will

MSR you'll the and you our securitizations agency actually do until So are a that's almost loan we'll as business. entire where you which some one That's book areas where side. see those seeing out including in capital think I financing more of around book The our three there, work up mortgages, ton bond more do know, we leverage on how non-agency many as of leverage - there's the Again, assets can, loans. term leverage. of and we possibly end to our continue

we and - runway know, don't dry sheet, On you we down pay being the look capital and as that about I on our that we something think just have not seeing need balance right our we're we're powder plenty. for at front different debt on, we - we deals I nor we're that the now have have working anticipating, no equity that and up comes

on all facilities powder, even funded deals have. they that currently with with the be we liquidity on the So our will we're dry working

should that all would earnings, be continued of strong say. net the know, you I - So

powder and of our leverage agency know as mortgages on moderate up leverage, run increase result the in So play our against will a leverage you go MSRs. a will

Kevin Barker

there what change this but last was fair mortgage rights value up actually it I'm rates happened quarter And mortgage well, in the then if sorry the versus [indiscernible] going move pretty a I had missed in the around? and earlier, of servicing time

Michael Nierenberg

at think as Yeah. went The a - escrow component to has part it when as rights, about rates. they servicing you you the forward down then look and you valuation of there's do actually at large look

lower So value. in the was itself asset

You sub and did great the fees. job team know, his of servicing some a renegotiating Andrew

the on book value and business the helped increase. actually helped in to book bond value book was book book contribute MSR to our that helped contribute increase, to the and our our quarter up net-net contribute the increase our loan value So to

Kevin Barker

add a up and the a quantify you negotiation the maybe servicing fees more on could entails Just of there, that little color and follow that? what

Michael Nierenberg

our sub at in certain acquired think fees actually extended we've really a is. you servicing you acquiring one fee also business of revenue in we a it, and and past. I one weren’t with mortgage the what ancillary that part parties, doing what agree the the key we've loans. of seeing, Sure. about [ph] to working contracts that's portfolios of and and what counter if business the that as contract our for our the mean, evolution happened captured counterparties And our we're The of on some set service us lowered or of it and

Kevin Barker

Okay. Michael. Thank you,

Michael Nierenberg

Kevin. Thanks,

Operator

time. There closing to remarks. this are no turn questions it at over additional I back would you Michael, for

Michael Nierenberg

Super.

for thanks, So participating. everybody

earnings your continuing We all day. wonderful as in to be our and thank you do support for Thanks. which is providing business forward do look shareholders. we a for what a business, Investor's know, You have stable to the and we

Operator

Ladies conference. this conclude and today's gentlemen, does

all now disconnect. may You