ONITY GROUP INC. — Call Transcript 2026

All right. Welcome, everybody, and thank you for joining us today at the Sidoti June Small-Cap Conference. My name is Brendan McCarthy. I'm an analyst here with Sidoti, and I'm very pleased to welcome Onity Group. Ticker is O-N-I-T. Joining us from the firm will be Executive Vice President and CFO, Sean O'Neil. Before I hand it over, a quick reminder, the Q&A tab is located at the bottom of your screen. Feel free to type in any questions throughout the presentation, and we can save time for Q&A at the end. With that said, Sean, take it away. Thanks, Brendan. Morning, everyone. Apologies for the slow start. Some technical difficulties down here in Miami. Thanks very much for your interest, and let me walk you through the quick story of Onity and take you through a few numbers. So first of all, this is the overview we have and what we're focused on, as we grow our company. We're basically in two businesses, loan originations, mortgage loan originations, and mortgage servicing rights, which is an MSR ownership. We're driving our growth through more originations, focusing on MSR recapture, as well as subservicing, which is where we service for other people. That's a fee-only business. It wouldn't be a presentation in 2026 if you didn't see the letters AI. We'll have a slide where we show you how we use AI technologies to drive recapture, have some real live data for you. Yes, we're getting actual results from that. No, we're not firing half of our company because of AI. Generating capital, repositioning our reverse business. We just announced, approval for a successful sale of the bulk of our reverse business to Finance of America. That will allow us to redeploy that capital in the forward space and lock up a very profitable multi-year subservicing agreement. Another growth avenue is we're deploying that capital to grow the forward high-yielding MSRs, repurchase shares, and consider other investments. Finally, the last slide will show you how we have a more attractive price to book compared to our peers. This is a good placemat to give you a grounding of who we are. Over there on the left, you see the services offered. That's what I commented on earlier. In the middle, you see our servicing book. This book is about $328 billion of unpaid principal balance. That's UPB. Think of your mortgage at home. If your mortgage at home is $500,000, so that's the unpaid principal balance. Every mortgage we service, you add up all those numbers, that gives you the servicing book. The graph in the middle shows you that about half of that is owned, meaning we're the servicer, we take full risk, we hedge that asset, and you get paid more. Higher risk, higher reward. The 50% on the right, the dark blue, represents. Sorry, I've switched them around, but they're the same number, so it doesn't matter. The subservicing represents where we service for others. There, you get paid a thinner fee stream, so it's a lower margin business, but it's very low risk and it's basically infinite ROE. It's very interesting business in that way. You'll hear throughout this where I'll talk about capital-light growth. Capital light means we're trying to acquire MSRs. If we don't have all the capital we need, we'll partner with one of our capital partners. They'll own it. We'll subservice it on their behalf. If we have the cash or the capital to buy an MSR, that goes into the owned bucket. In terms of some industry ranks, you see there where we stack up against other non-bank mortgage companies in terms of servicing, subservicing, and correspondent lending. There's two different channels we participate in. One is called correspondent or third-party originations, and the other is called consumer direct, where we use our own loan officers. Adjusted ROE, 17%. Year-end servicing UPB. This is all the last 12 months trailing ratios. Book value per share, $74. Diluted book value per share, probably around $68. Compare that to our current price, which is in the high 30s. That's where you get the 50% discount to book, making us a pretty attractive value play. Debt-to-equity ratio is about 3:1. Here you see the strategy, balance, and diversification. The balance is between the origination business and the MSR business. Talk about that in a minute. Capital-light growth, I commented on. Industry-leading cost structure. We are somewhat smaller than some of our competitors, yet we compete very effectively because we've worked with process improvement and technology for years now to continue to drive a lower cost structure. We're not just saying that. There's data from the MBA, which is the Mortgage Bankers Association, where they blind pool dozens of people in this industry, and we have very competitive top quartile cost structures. Top-tier operating performance. We get a lot of awards from Fannie, Freddie, and HUD. Those are the agency servicers or agency GSEs that take care of the Fannie, Freddie, and Ginnie Mae assets. Dynamic asset management. That means, we look at our MSR book and other assets, any assets for sale at the right price, we sometimes rotate the assets out, when people are interested in paying what is significantly more than our book value. Our operating focus for the year is accelerate growth, differentiate performance, and elevate the customer experience. We have two kinds of customers, institutional customers when it comes to subservicing or originations, and then retail customers who are the actual borrowers that we service the MSRs for. Here's a quick overview of the U.S. mortgage market in case you're new to it. The small blue graph is the annual volume in trillions of dollars. It's a roughly $1.8 trillion-$2.2 trillion market the last couple of years. You assume that a mortgage has a weighted average life for a wall of, call it, seven years. That gets you to a servicing of $14.8 trillion. Just multiply the $2 trillion by seven. It's been higher in years past, lower in years past, and that means there's about $15 trillion of servicing volume out there. Of that, $4 trillion is sub-serviced, so the rest is owned. On the right you can see the growth projections for both the servicing market, the originations market. New single-family home sales is a pretty big driver. Some of you may be thinking, "Well, is the mortgage market going to grow if the Fed increases rates?" Mortgages tend to grow slower as rates are higher, and that's why we have a balanced business model, because the MSRs that we own get more valuable as rates go higher. They're offsetting businesses. As rates go up, our servicing business makes more money, and as rates go down, our origination business makes more money. We have a slide on that. Really important is that bottom comment on the right based on the Basel III endgame outcome. Some of you may have been reading about that. Fed Chairman, Michelle Bowman had some comments back in February. There may be regulation changes around Basel III that the OCC, the FDIC, and the Fed have all agreed on, and they have already put out for comments. There may be inactions or changes to that Basel III regulation that make it much easier for banks to hold MSRs. We see this as an opportunity. It means there's more folks that may come into the market that don't have scale and need sub-servicers. It's just something else to consider in terms of the market dynamics. Here's some of our performance trends over the last couple of years. Upper left, revenue, then you see adjusted pre-tax income and GAAP net income. The difference between the two is adjusted pre-tax income removes primarily MSR fair value net of hedge. Pretty much our entire sector reports some type of operating or adjusted income number like this, because some analysts and investors like to strip out the MSR and the hedge because that's a very interest rate-sensitive product. We focus on both, so we give you both data points. Obviously, GAAP net income's pretty important because it drives book value per share, which you see down there on the right. Fairly consistent trend of growing revenues, growing book value per share. The GAAP net income has become more dependable over the last couple of years, as has the adjusted pre-tax income. First quarter of 2026 was a strong quarter for adjusted revenue, but our first negative quarter for adjusted pre-tax income in about four years. You can see there that adjusted pre-tax income was a -6. GAAP net income was still a +7. I'll talk about that in a minute. The biggest driver there was something we call MSR runoff. Rates dropped significantly back in February. This was a long time ago, right? If you remember back in February, the 10-year treasury was coming down, and the 30-year fixed rate mortgage was coming down even faster. Right before the war in Iran started, the 30-year fixed rate mortgage went under 6%. In the month of February, there was massive refinancing. When that happens, you make money on the origination side, but your MSRs run off on your servicing side, and that caused a servicing loss. It usually isn't on a month-per-month cycle. The cycle lags a little bit. Your origination proceeds can come somewhat later than your MSR runoff, depending on the timing. Had strong volume for originations, $14 billion. That's again measured in UPB, and that was up 2x year-over-year. Within originations, there's a consumer direct channel that generated $1.2 billion of activity, up four times year-over-year, and the PTI was up pretty strongly as well. Servicing gets measured on ending servicing UPB, that's the number I quoted earlier, as well as how much we're adding to the servicing book, which we consistently are showing growth there. Can you see the- did I just lose the screen, or can you guys see it still? We can still see it. It looks good. Okay, good. I just clicked off of something. You've got originations and servicing complementing each other. This is what I talked about earlier in terms of a balanced business model. Here you have the last four years, and you can see in a year like 2021, originations, the dark blue, made a lot more money than servicing. Just a year later in 2023, servicing generated pretty much all the net income of the company. That's as this cycle swings in 2022, you might be asking what happened. Well, that's when rates went up, origination markets backtracked. The second half of 2022 was very difficult, and then by 2023, you were making all your money in servicing. That makes it tough for a pure-play originator to stay in business. Some of them didn't, some of them got acquired. In 2025, you saw the pendulum swing back and start to favor origination somewhat again. Off on the right, you can see how each of these businesses react to rates up or rates down. Did the slide advance or no, Brendan? It did not. Okay me. Hang on a second. Let me see if I can find it, bring it back. There we go. Okay. Does it say originations volume on the left? Yes. Okay. Originations volume up 2x. This is a measure of how much revenue and how much volume you can generate in originations, and as you can see, 2025 was a very strong year. We measure something called recapture, which is pretty important. Off to the right, you can see how we compare to the industry average. You see banks on the far left of that right-side graph. Banks aren't very good at recapture. Why? Banks do a lot of stuff, and mortgages are one of 30 things they focus on. All we do are mortgages. People that are large non-bank mortgage originators, think names like Rocket, Cooper back when it existed. Potentially Guild Mortgage, Better Mortgage, LoanDepot. All these companies do is mortgages. We're a little more focused than banks. We compare ourselves to the industry average, and we focus on the non-banks, and even amongst that crowd, we pick some of the best non-banks, which are the gray ones that publicly disclose the recapture. We either beat or we're competitive with that crowd. Recapture indicates how well you go in and get someone who has an MSR with you to refinance the mortgage with you. If that happens successfully, you make more money, you replace the MSR with a new MSR. If you fail at that, someone else gets your MSR, it disappears, and you don't generate revenue on it anymore. It's a pretty important thing to focus on. This is the servicing portfolio. This is our other business. Here you can see it's up 14% over the last two years. Industry growth, which is very easy to measure because it's all publicly available data, grew by 6%. We're growing faster than the industry. Off to the right, that pie chart tells you how our owned and subservicing book breaks up. The owned is the green, the subservicing is the blue. There you can see on the right of the green, we predominantly own Fannie and Freddie. We also call these GSEs. We own Ginnie Mae's down at the bottom, and you see a thin sliver called PLS. That stands for private label securitization. Maybe think non-QM. For those of you who've heard that term, it stands for non-qualified mortgage. That's a PLS. Think jumbo mortgages, closed-end seconds, debt service coverage ratio loans. That's all different examples of PLS. It's just a loan that doesn't meet Fannie, Freddie, and Ginnie guidelines. Quite a few people have non-agency mortgages. That's what that sliver represents. Here's an AI slide for you. It shows how we're focusing on the borrower journey to maximize recapture. That was that important thing I talked about earlier. Here we're focusing on leads and making sure machine learning is helping us get the leads that are more likely to result in a new loan. There's a lot of nuances there that computers are pretty good at figuring out when you give them a lot of data. That's driving our ability to grab the best leads that result in a new loan, and that grew pretty substantially over the last year as we started to implement technology. Lead to rate lock is also important. A lead means someone reaches out and talks to you. Locking your rate means you're pretty committed to that mortgage. The next step is, does the loan fund? The other thing we have to do is use AI to help the entire platform, both on the servicing and on the origination side. There you can see we're extracting documents and doing this automatically with very high accuracy, that allows us to do a lot more analysis as well as have the appropriate collateral documents for a mortgage, which comes in handy if you need to sell the mortgage at some point. Here's our capital allocation strategy. We prioritize organic growth. Think buying more of the assets that can produce mid-teen returns in terms of ROE. Expanding our products and services. Think new origination products. On the subservicing side, we're focusing deeply on, say, commercial subservicing, which is much higher margin. Another facet we try and consider is optimize liquidity and drive long-term returns. That's how we think about capital management. We're always focused on optimizing shareholder return. All of the executives at Onity are shareholders, some of them quite significant ones, so we're aligned with the shareholder. Here's our guidance for the full year. We updated our ROE range. Took it from 13% to 15% to 10% to 15% in the first quarter update. That was due to the rate volatility. If you think about where the rates were in February and where they were by April, was somewhat significant. We don't mind if rates go up or if rates go down. It's when rates go up and down, up and down, up and down, that makes it a little more difficult in this market because you have dynamic hedging, you have to hedge your MSRs and your origination pipeline. If rates are bouncing around a lot, that gets somewhat expensive. You're hedging with basic treasury derivatives or other mortgage derivatives. Other things we're focused on for the guidance are servicing UPB growth 5% to 15%. High hedge effectiveness. Here we like to protect the value of our MSR, we try and hedge away almost all of the interest rate risk. We've been quite successful the last nine quarters doing that. We also focus on efficiency ratio. Just means we grow revenue faster than we grow costs. Something pretty much all companies should focus on. Here's the price to book slide for you. We are lagging behind our peers. IMB stands for Independent Mortgage Bank. We're a non-bank mortgage company. Here you can see our price to book. This is all based on Q1 releases. At the end of Q1 when everyone released their earnings, we were at a 0.5 price to book. Some of our bigger competitors range from 0.8 up to 1.6. We're quite competitive in terms of generating very similar ROE to these competitors. You can see analyst consensus on the right. We're covered by about three different analysts, that's their consensus in terms of share price. In the middle, you see our book value per share. You see what the stock would look like at a 1.1 premium to book. That's it. I'll end on the slide I started with, where we're driving growth, both originations and MSR recapture, as well as deploying capital to grow the high-yielding MSRs, continuing to use technology as well as process improvements, generating excess capital for the forward business by repositioning our reverse, and then finally, the price-to-book comment I just made. I'll stop there and see what questions people have. Great. Thank you, Sean, for the overview here. We can open the floor for Q&A. Why don't we start just looking at the balance sheet? Can you talk about what the ideal mix is between your originations growth versus MSR growth and, maybe, picturing a longer-term scenario where that mix can optimize the highest ROE? Yeah. You can plan for all kinds of originations growth, but it is somewhat market-dependent, meaning it's easier to grow originations when rates are declining. The way we think about the balance sheet and the impact of the two businesses is we continuously support both businesses, but you have to have the ability to flex up and down your originations OPEX or operating expense based on what rates are doing. And so there, we continuously monitor our consumer direct. That's the most time-intensive people and labor-intensive business channel that we have. Also generates the highest margins. What you do is if that volume is declining, you have to cut costs in that channel, but you tend to still get very decent volume from the originations correspondent channel. That's the one where we're like a top 10 correspondent lender. That's where you're buying mortgages from very small originators who can't deliver to Fannie, Freddie, or Ginnie, or choose not to because there's much higher capital and liquidity requirements to be able to deliver to the agencies. That's a thinner margin business, but it's very scalable, far fewer people. While it generates net income, it can flex volume up or down very rapidly. The other thing we have to consider as we grow the origination business is liquidity, because originations is typically a liquidity consumer. Servicing is a liquidity provider. You either have to balance those two or if you want to grow originations faster, you have to sell some of your assets and replace it with better assets that you can generate organically. Got it. You mentioned you recently sold the reverse mortgage business. I think you mentioned $70 million to $80 million in proceeds. Can you walk us through the decision there and potential use of proceeds? Sure. We sold the bulk of the business, but we still have about 45% of the UPB. However, that only represents about 30% of the fair value. Most of the fair value is going to leave the balance sheet as measured by equity, or contribution to our total equity or tangible net worth. We'll still be a reverse servicer probably for the next four to five years. We think about 70% of that book will run off in the next four years. We also have the option to attempt to sell that book in the future. The component that we sold to Finance of America, that's the one we just reported two weeks ago, got regulatory approval to proceed. That will generate the numbers you quoted. When we see capital like that made available, we go back to our capital allocation sheet that I had up earlier, there we try and consider, what's the best use of this capital? Is it to buy more assets? That's organic growth. Is it to consider M&A prospects that'll get us into new channels more effectively and faster, what's the payback on that? Do we want to buy back stock or do we want to buy back debt? There's other options as well, that's kind of like the big four. Do you want to buy assets, another company, improve your leverage ratio, and/or buy back stock? We've done all of these things over the last couple of years. We de-leveraged heavily in 2023 and 2024, brought our high-yield debt down by about $140 million and tried to maintain a consistent debt-to-equity ratio. At this point in time, we're focused on de-leveraging by growing the equity, not by reducing our high-yield debt. We just announced our second share buyback of the year, we did that. Maybe put that announcement out probably two weeks ago that we got board approval. We had done another share buyback in the first quarter. That one completed, we replaced it with another one. We also are constantly looking at MSRs, because in addition to originating MSRs, you can buy them on the bulk market or in a flow market. Those are some of the areas that we look at to allocate capital. Understood. We have a question on the recapture rate. How can investors think about the recapture rate? What factors influence that rate? Are you satisfied with the current range that rate has trended at? Even though our recapture rate is good, that would be back on Page 10. I'll just flip back to that. Hopefully it went back to Page 10 or is going there. Even though our recapture rate's very strong, it's better than industry average, we're not happy with it. We're always trying to make it better. It's one of those metrics that doesn't matter whether you hit your internal objective in the first quarter, the third quarter, you're always looking to get it even better because every percent you can improve and recapture, protects your MSR book and generates gain on sale overnight. It's a win-win for both our businesses. The various factors that drive that range from how connected are you to a customer? You have to remember, we get our customers from a couple of ways, right? If we originate the loan directly through our own loan officers, that's got a very high recapture rate because loan officer XYZ knows the borrower, has connected with them in the past, and has a very good chance of refinancing their loan when it comes in the money, and we track that very carefully, of course. The more difficult one is loans you buy from someone else, like your correspondent market. That's where you have to take the time early on when they're not in the money, so to speak, and make connections with those borrowers. It's a combination of leveraging technology, old-fashioned modelling, and getting in front of the customer and ensuring you have good connectivity with the customer. Are there other products you can offer the customer? Like a customer who's not in the money still may want a closed-end second or a HELOC. A customer who doesn't like rates may want some different rate modification options available to them. The more you connect with the customer, as well as leveraging technology, that's what's going to help you drive recapture. Understood. That's helpful. Turning to the 2026 guidance, I think you mentioned you recently trimmed the adjusted ROE outlook by a couple percentage points. What macro assumptions are kind of baked into that guidance outlook, and what would cause variation there for the year? Yeah. What we had to look at there was it's not just a question of rates higher for longer, it's a question of are the rates volatile? Is the 10-year Treasury moving rapidly up and down? Think of the price of oil as a proxy for what the 10-year Treasury might have been doing over the last couple of months. The 10-year's been pretty consistent, hovering in a band, but when it has a lot of volatility intraday or intra-week, that still creates some hedging volatility, as well as origination volatility. Think about as the 10-year drops and the 30-year fixed rate mortgage drops, they're highly correlated, but not perfectly. There's a Treasury-to-mortgage spread that widens and tightens as well. As rates drop, you start to ramp up more of your origination production, and if they drop a lot, you start hiring people. If they turn around and pivot and go back up two weeks later because of some other geopolitical activity and people flock to Treasuries because it's still somewhat a haven for safe money, then you have to pull back on everything you were just doing. If you're actually out there hiring loan officers, then rates turn around and pivot back up, not only does your hedging get more expensive, but then you're like, "Okay, how long do I want to carry excess loan officers on my payroll?" Loan officers are like any salesperson in any industry. If you can't feed them, they will leave anyway, right? There's a lot of volatility that can be disruptive to the P&L. Rates are never static, don't get me wrong, but if they're moving in a general trend, it's somewhat easier to predict where they're going. Think periods of time like last April when we did Liberation Day with the tariffs. That was an incredibly difficult three-week period to hedge anything that was interest rate related. Basis hedges were widening inordinately, meaning even if you put on what would normally be an appropriate hedge, it didn't always effectively hedge your outcome. That makes sense. That's helpful. Last question here. I believe you mentioned the stock is currently trading at a pretty steep discount to book value. How's that discount trended over time compared to where it is now? Maybe you can tie in the buyback authorization, how investors can think about the company buying back shares. Yeah. The stock's traded, I don't have the data right in front of me, but it's basically been in a 45% to 60% discount to book for the last couple of years. We've been trying to erase issues that could create that proclivity for discount to book. Obviously, it's something we're focused on. We focused on removing any regulatory overhang or litigation concerns the market might have. That pretty much was accomplished by 2022 and 2023. We focused on kind of mainstreaming and upgrading the technology of the company during that same period. Focused on improving net income variability. That was a big focus on the hedge in 2023 and 2024. From end of 2023, early 2024 onwards, the hedge got far more effective at offsetting most of the interest rate risk. Delevered the company in 2023 and 2024 as well. Now we think the remaining issues are they continue to be the market wants consistent net income production and growth. We're also a small cap with a very small float. We're just not going to get the attention from some of the very large wire house names or asset managers that have to take a fairly large position to be meaningful. Which means it's an opportunity for investors who are willing to do a little bit of homework. That's great. Sean, we'll conclude there. We really appreciate the time and the overview today. Thank you very much, Brendan. Appreciate the time. Thanks, everybody. Thanks for joining.

Speaker 1: All right. Welcome, everybody, and thank you for joining us today at the Sidoti June Small-Cap Conference. My name is Brendan McCarthy. I'm an analyst here with Sidoti, and I'm very pleased to welcome Onity Group. Ticker is O-N-I-T. Joining us from the firm will be Executive Vice President and CFO, Sean O'Neil. Before I hand it over, a quick reminder, the Q&A tab is located at the bottom of your screen. Feel free to type in any questions throughout the presentation, and we can save time for Q&A at the end. With that said, Sean, take it away. All right. all right Welcome, everybody, and thank you for joining us today at the Sidoti June Small-Cap Conference. welcome everybody and thank you for joining us today at the sidoti june small-cap conference My name is Brendan McCarthy. my name is brendan mccarthy I'm an analyst here with Sidoti, and I'm very pleased to welcome Onity Group. i'm an analyst here with sidoti and i'm very pleased to welcome onity group Ticker is O-N-I-T. ticker is o-n-i-t Joining us from the firm will be Executive Vice President and CFO, Sean O'Neil. joining us from the firm will be executive vice president and cfo sean o'neil Before I hand it over, a quick reminder, the Q&A tab is located at the bottom of your screen. before i hand it over a quick reminder the q&a tab is located at the bottom of your screen Feel free to type in any questions throughout the presentation, and we can save time for Q&A at the end. feel free to type in any questions throughout the presentation and we can save time for q&a at the end With that said, Sean, take it away. with that said sean take it away

Speaker 2: Thanks, Brendan. Morning, everyone. Apologies for the slow start. Some technical difficulties down here in Miami. Thanks very much for your interest, and let me walk you through the quick story of Onity and take you through a few numbers. So first of all, this is the overview we have and what we're focused on, as we grow our company. We're basically in two businesses, loan originations, mortgage loan originations, and mortgage servicing rights, which is an MSR ownership. We're driving our growth through more originations, focusing on MSR recapture, as well as subservicing, which is where we service for other people. That's a fee-only business. It wouldn't be a presentation in 2026 if you didn't see the letters AI. We'll have a slide where we show you how we use AI technologies to drive recapture, have some real live data for you. Thanks, Brendan. thanks brendan Morning, everyone. morning everyone Apologies for the slow start. apologies for the slow start Some technical difficulties down here in Miami. some technical difficulties down here in miami Thanks very much for your interest, and let me walk you through the quick story of Onity and take you through a few numbers. So f irst of all, this is the overview we have and what we're focused on, as we grow our company. thanks very much for your interest and let me walk you through the quick story of onity and take you through a few numbers. so f irst of all this is the overview we have and what we're focused on as we grow our company We're basically in two businesses, loan originations, mortgage loan originations, and mortgage servicing rights, which is an MSR ownership. we're basically in two businesses loan originations mortgage loan originations and mortgage servicing rights which is an msr ownership We're driving our growth through more originations, focusing on MSR recapture, as well as subservicing, which is where we service for other people. we're driving our growth through more originations focusing on msr recapture as well as subservicing which is where we service for other people That's a fee-only business. that's a fee-only business It wouldn't be a presentation in 2026 if you didn't see the letters AI. it wouldn't be a presentation in 2026 if you didn't see the letters ai We'll have a slide where we show you how we use AI technologies to drive recapture, have some real live data for you. we'll have a slide where we show you how we use ai technologies to drive recapture have some real live data for you Yes, we're getting actual results from that. No, we're not firing half of our company because of AI. Generating capital, repositioning our reverse business. We just announced, approval for a successful sale of the bulk of our reverse business to Finance of America. That will allow us to redeploy that capital in the forward space and lock up a very profitable multi-year subservicing agreement. Another growth avenue is we're deploying that capital to grow the forward high-yielding MSRs, repurchase shares, and consider other investments. Finally, the last slide will show you how we have a more attractive price to book compared to our peers. This is a good placemat to give you a grounding of who we are. Over there on the left, you see the services offered. That's what I commented on earlier. In the middle, you see our servicing book. Yes, we're getting actual results from that. yes we're getting actual results from that No, we're not firing half of our company because of AI. no we're not firing half of our company because of ai Generating capital, repositioning our reverse business. generating capital repositioning our reverse business We just announced, approval for a successful sale of the bulk of our reverse business to Finance of America. we just announced approval for a successful sale of the bulk of our reverse business to finance of america That will allow us to redeploy that capital in the forward space and lock up a very profitable multi-year subservicing agreement. that will allow us to redeploy that capital in the forward space and lock up a very profitable multi-year subservicing agreement Another growth avenue is we're deploying that capital to grow the forward high-yielding MSRs, repurchase shares, and consider other investments. another growth avenue is we're deploying that capital to grow the forward high-yielding msrs repurchase shares and consider other investments Finally, the last slide will show you how we have a more attractive price to book compared to our peers. finally the last slide will show you how we have a more attractive price to book compared to our peers This is a good placemat to give you a grounding of who we are. this is a good placemat to give you a grounding of who we are Over there on the left, you see the services offered. over there on the left you see the services offered That's what I commented on earlier. that's what i commented on earlier In the middle, you see our servicing book. in the middle you see our servicing book This book is about $328 billion of unpaid principal balance. That's UPB. Think of your mortgage at home. If your mortgage at home is $500,000, so that's the unpaid principal balance. Every mortgage we service, you add up all those numbers, that gives you the servicing book. The graph in the middle shows you that about half of that is owned, meaning we're the servicer, we take full risk, we hedge that asset, and you get paid more. Higher risk, higher reward. The 50% on the right, the dark blue, represents. Sorry, I've switched them around, but they're the same number, so it doesn't matter. The subservicing represents where we service for others. There, you get paid a thinner fee stream, so it's a lower margin business, but it's very low risk and it's basically infinite ROE. It's very interesting business in that way. This book is about $328 billion of unpaid principal balance. this book is about $328 billion of unpaid principal balance That's UPB. that's upb Think of your mortgage at home. think of your mortgage at home If your mortgage at home is $500,000, so that's the unpaid principal balance. if your mortgage at home is $500,000 so that's the unpaid principal balance Every mortgage we service, you add up all those numbers, that gives you the servicing book. every mortgage we service you add up all those numbers that gives you the servicing book The graph in the middle shows you that about half of that is owned, meaning we're the servicer, we take full risk, we hedge that asset, and you get paid more. the graph in the middle shows you that about half of that is owned meaning we're the servicer we take full risk we hedge that asset and you get paid more Higher risk, higher reward. higher risk higher reward The 50% on the right, the dark blue, represents. the 50% on the right the dark blue represents Sorry, I've switched them around, but they're the same number, so it doesn't matter. sorry i've switched them around but they're the same number so it doesn't matter The subservicing represents where we service for others. the subservicing represents where we service for others There, you get paid a thinner fee stream, so it's a lower margin business, but it's very low risk and it's basically infinite ROE. there you get paid a thinner fee stream so it's a lower margin business but it's very low risk and it's basically infinite roe It's very interesting business in that way. it's very interesting business in that way You'll hear throughout this where I'll talk about capital-light growth. Capital light means we're trying to acquire MSRs. If we don't have all the capital we need, we'll partner with one of our capital partners. They'll own it. We'll subservice it on their behalf. If we have the cash or the capital to buy an MSR, that goes into the owned bucket. In terms of some industry ranks, you see there where we stack up against other non-bank mortgage companies in terms of servicing, subservicing, and correspondent lending. There's two different channels we participate in. One is called correspondent or third-party originations, and the other is called consumer direct, where we use our own loan officers. Adjusted ROE, 17%. Year-end servicing UPB. This is all the last 12 months trailing ratios. Book value per share, $74. Diluted book value per share, probably around $68. You'll hear throughout this where I'll talk about capital-light growth. you'll hear throughout this where i'll talk about capital-light growth Capital light means we're trying to acquire MSRs. capital light means we're trying to acquire msrs If we don't have all the capital we need, we'll partner with one of our capital partners. if we don't have all the capital we need we'll partner with one of our capital partners They'll own it. they'll own it We'll subservice it on their behalf. we'll subservice it on their behalf If we have the cash or the capital to buy an MSR, that goes into the owned bucket. if we have the cash or the capital to buy an msr that goes into the owned bucket In terms of some industry ranks, you see there where we stack up against other non-bank mortgage companies in terms of servicing, subservicing, and correspondent lending. in terms of some industry ranks you see there where we stack up against other non-bank mortgage companies in terms of servicing subservicing and correspondent lending There's two different channels we participate in. there's two different channels we participate in One is called correspondent or third-party originations, and the other is called consumer direct, where we use our own loan officers. one is called correspondent or third-party originations and the other is called consumer direct where we use our own loan officers Adjusted ROE, 17%. adjusted roe 17% Year-end servicing UPB. year-end servicing upb This is all the last 12 months trailing ratios. this is all the last 12 months trailing ratios Book value per share, $74. book value per share $74 Diluted book value per share, probably around $68. diluted book value per share probably around $68 Compare that to our current price, which is in the high 30s. That's where you get the 50% discount to book, making us a pretty attractive value play. Debt-to-equity ratio is about 3:1. Here you see the strategy, balance, and diversification. The balance is between the origination business and the MSR business. Talk about that in a minute. Capital-light growth, I commented on. Industry-leading cost structure. We are somewhat smaller than some of our competitors, yet we compete very effectively because we've worked with process improvement and technology for years now to continue to drive a lower cost structure. We're not just saying that. There's data from the MBA, which is the Mortgage Bankers Association, where they blind pool dozens of people in this industry, and we have very competitive top quartile cost structures. Top-tier operating performance. Compare that to our current price, which is in the high 30s. compare that to our current price which is in the high 30s That's where you get the 50% discount to book, making us a pretty attractive value play. that's where you get the 50% discount to book making us a pretty attractive value play Debt-to-equity ratio is about 3: 1. debt-to-equity ratio is about 3 1 Here you see the strategy, balance, and diversification. here you see the strategy balance and diversification The balance is between the origination business and the MSR business. the balance is between the origination business and the msr business Talk about that in a minute. talk about that in a minute Capital-light growth, I commented on. capital-light growth i commented on Industry-leading cost structure. industry-leading cost structure We are somewhat smaller than some of our competitors, yet we compete very effectively because we've worked with process improvement and technology for years now to continue to drive a lower cost structure. we are somewhat smaller than some of our competitors yet we compete very effectively because we've worked with process improvement and technology for years now to continue to drive a lower cost structure We're not just saying that. we're not just saying that There's data from the MBA, which is the Mortgage Bankers Association, where they blind pool dozens of people in this industry, and we have very competitive top quartile cost structures. there's data from the mba which is the mortgage bankers association where they blind pool dozens of people in this industry and we have very competitive top quartile cost structures Top-tier operating performance. top-tier operating performance We get a lot of awards from Fannie, Freddie, and HUD. Those are the agency servicers or agency GSEs that take care of the Fannie, Freddie, and Ginnie Mae assets. Dynamic asset management. That means, we look at our MSR book and other assets, any assets for sale at the right price, we sometimes rotate the assets out, when people are interested in paying what is significantly more than our book value. Our operating focus for the year is accelerate growth, differentiate performance, and elevate the customer experience. We have two kinds of customers, institutional customers when it comes to subservicing or originations, and then retail customers who are the actual borrowers that we service the MSRs for. Here's a quick overview of the U.S. mortgage market in case you're new to it. The small blue graph is the annual volume in trillions of dollars. We get a lot of awards from Fannie, Freddie, and HUD. we get a lot of awards from fannie freddie and hud Those are the agency servicers or agency GSEs that take care of the Fannie, Freddie, and Ginnie Mae assets. those are the agency servicers or agency gses that take care of the fannie freddie and ginnie mae assets Dynamic asset management. dynamic asset management That means, we look at our MSR book and other assets, any assets for sale at the right price, we sometimes rotate the assets out, when people are interested in paying what is significantly more than our book value. that means we look at our msr book and other assets any assets for sale at the right price we sometimes rotate the assets out when people are interested in paying what is significantly more than our book value Our operating focus for the year is accelerate growth, differentiate performance, and elevate the customer experience. our operating focus for the year is accelerate growth differentiate performance and elevate the customer experience We have two kinds of customers, institutional customers when it comes to subservicing or originations, and then retail customers who are the actual borrowers that we service the MSRs for. we have two kinds of customers institutional customers when it comes to subservicing or originations and then retail customers who are the actual borrowers that we service the msrs for Here's a quick overview of the U.S. mortgage market in case you're new to it. here's a quick overview of the u.s mortgage market in case you're new to it The small blue graph is the annual volume in trillions of dollars. the small blue graph is the annual volume in trillions of dollars It's a roughly $1.8 trillion-$2.2 trillion market the last couple of years. You assume that a mortgage has a weighted average life for a wall of, call it, seven years. That gets you to a servicing of $14.8 trillion. Just multiply the $2 trillion by seven. It's been higher in years past, lower in years past, and that means there's about $15 trillion of servicing volume out there. Of that, $4 trillion is sub-serviced, so the rest is owned. On the right you can see the growth projections for both the servicing market, the originations market. New single-family home sales is a pretty big driver. It's a roughly $1.8 trillion-$2.2 trillion market the last couple of years. it's a roughly $1.8 trillion-$2.2 trillion market the last couple of years You assume that a mortgage has a weighted average life for a wall of, call it, seven years. you assume that a mortgage has a weighted average life for a wall of call it seven years That gets you to a servicing of $14.8 trillion. that gets you to a servicing of $14.8 trillion Just multiply the $2 trillion by seven. just multiply the $2 trillion by seven It's been higher in years past, lower in years past, and that means there's about $15 trillion of servicing volume out there. it's been higher in years past lower in years past and that means there's about $15 trillion of servicing volume out there Of that, $4 trillion is sub-serviced, so the rest is owned. of that $4 trillion is sub-serviced so the rest is owned On the right you can see the growth projections for both the servicing market, the originations market. on the right you can see the growth projections for both the servicing market the originations market New single-family home sales is a pretty big driver. new single-family home sales is a pretty big driver Some of you may be thinking, "Well, is the mortgage market going to grow if the Fed increases rates?" Mortgages tend to grow slower as rates are higher, and that's why we have a balanced business model, because the MSRs that we own get more valuable as rates go higher. They're offsetting businesses. As rates go up, our servicing business makes more money, and as rates go down, our origination business makes more money. We have a slide on that. Really important is that bottom comment on the right based on the Basel III endgame outcome. Some of you may have been reading about that. Fed Chairman, Michelle Bowman had some comments back in February. There may be regulation changes around Basel III that the OCC, the FDIC, and the Fed have all agreed on, and they have already put out for comments. Some of you may be thinking, "Well, is the mortgage market going to grow if the Fed increases rates?" Mortgages tend to grow slower as rates are higher, and that's why we have a balanced business model, because the MSRs that we own get more valuable as rates go higher. some of you may be thinking "well is the mortgage market going to grow if the fed increases rates?" mortgages tend to grow slower as rates are higher and that's why we have a balanced business model because the msrs that we own get more valuable as rates go higher They're offsetting businesses. they're offsetting businesses As rates go up, our servicing business makes more money, and as rates go down, our origination business makes more money. as rates go up our servicing business makes more money and as rates go down our origination business makes more money We have a slide on that. we have a slide on that Really important is that bottom comment on the right based on the Basel III endgame outcome. really important is that bottom comment on the right based on the basel iii endgame outcome Some of you may have been reading about that. some of you may have been reading about that Fed Chairman, Michelle Bowman had some comments back in February. fed chairman michelle bowman had some comments back in february There may be regulation changes around Basel III that the OCC, the FDIC, and the Fed have all agreed on, and they have already put out for comments. there may be regulation changes around basel iii that the occ the fdic and the fed have all agreed on and they have already put out for comments There may be inactions or changes to that Basel III regulation that make it much easier for banks to hold MSRs. We see this as an opportunity. It means there's more folks that may come into the market that don't have scale and need sub-servicers. It's just something else to consider in terms of the market dynamics. Here's some of our performance trends over the last couple of years. Upper left, revenue, then you see adjusted pre-tax income and GAAP net income. The difference between the two is adjusted pre-tax income removes primarily MSR fair value net of hedge. Pretty much our entire sector reports some type of operating or adjusted income number like this, because some analysts and investors like to strip out the MSR and the hedge because that's a very interest rate-sensitive product. There may be inactions or changes to that Basel III regulation that make it much easier for banks to hold MSRs. there may be inactions or changes to that basel iii regulation that make it much easier for banks to hold msrs We see this as an opportunity. we see this as an opportunity It means there's more folks that may come into the market that don't have scale and need sub-servicers. it means there's more folks that may come into the market that don't have scale and need sub-servicers It's just something else to consider in terms of the market dynamics. it's just something else to consider in terms of the market dynamics Here's some of our performance trends over the last couple of years. here's some of our performance trends over the last couple of years Upper left, revenue, then you see adjusted pre-tax income and GAAP net income. upper left revenue then you see adjusted pre-tax income and gaap net income The difference between the two is adjusted pre-tax income removes primarily MSR fair value net of hedge. the difference between the two is adjusted pre-tax income removes primarily msr fair value net of hedge Pretty much our entire sector reports some type of operating or adjusted income number like this, because some analysts and investors like to strip out the MSR and the hedge because that's a very interest rate-sensitive product. pretty much our entire sector reports some type of operating or adjusted income number like this because some analysts and investors like to strip out the msr and the hedge because that's a very interest rate-sensitive product We focus on both, so we give you both data points. Obviously, GAAP net income's pretty important because it drives book value per share, which you see down there on the right. Fairly consistent trend of growing revenues, growing book value per share. The GAAP net income has become more dependable over the last couple of years, as has the adjusted pre-tax income. First quarter of 2026 was a strong quarter for adjusted revenue, but our first negative quarter for adjusted pre-tax income in about four years. You can see there that adjusted pre-tax income was a -6. GAAP net income was still a +7. I'll talk about that in a minute. The biggest driver there was something we call MSR runoff. Rates dropped significantly back in February. This was a long time ago, right? We focus on both, so we give you both data points. we focus on both so we give you both data points Obviously, GAAP net income's pretty important because it drives book value per share, which you see down there on the right. obviously gaap net income's pretty important because it drives book value per share which you see down there on the right Fairly consistent trend of growing revenues, growing book value per share. fairly consistent trend of growing revenues growing book value per share The GAAP net income has become more dependable over the last couple of years, as has the adjusted pre-tax income. the gaap net income has become more dependable over the last couple of years as has the adjusted pre-tax income First quarter of 2026 was a strong quarter for adjusted revenue, but our first negative quarter for adjusted pre-tax income in about four years. first quarter of 2026 was a strong quarter for adjusted revenue but our first negative quarter for adjusted pre-tax income in about four years You can see there that adjusted pre-tax income was a -6. you can see there that adjusted pre-tax income was a -6 GAAP net income was still a +7. gaap net income was still a +7 I'll talk about that in a minute. i'll talk about that in a minute The biggest driver there was something we call MSR runoff. the biggest driver there was something we call msr runoff Rates dropped significantly back in February. rates dropped significantly back in february This was a long time ago, right? this was a long time ago right If you remember back in February, the 10-year treasury was coming down, and the 30-year fixed rate mortgage was coming down even faster. Right before the war in Iran started, the 30-year fixed rate mortgage went under 6%. In the month of February, there was massive refinancing. When that happens, you make money on the origination side, but your MSRs run off on your servicing side, and that caused a servicing loss. It usually isn't on a month-per-month cycle. The cycle lags a little bit. Your origination proceeds can come somewhat later than your MSR runoff, depending on the timing. Had strong volume for originations, $14 billion. That's again measured in UPB, and that was up 2x year-over-year. If you remember back in February, the 10-year treasury was coming down, and the 30-year fixed rate mortgage was coming down even faster. if you remember back in february the 10-year treasury was coming down and the 30-year fixed rate mortgage was coming down even faster Right before the war in Iran started, the 30-year fixed rate mortgage went under 6%. right before the war in iran started the 30-year fixed rate mortgage went under 6% In the month of February, there was massive refinancing. in the month of february there was massive refinancing When that happens, you make money on the origination side, but your MSRs run off on your servicing side, and that caused a servicing loss. when that happens you make money on the origination side but your msrs run off on your servicing side and that caused a servicing loss It usually isn't on a month-per-month cycle. it usually isn't on a month-per-month cycle The cycle lags a little bit. the cycle lags a little bit Your origination proceeds can come somewhat later than your MSR runoff, depending on the timing. your origination proceeds can come somewhat later than your msr runoff depending on the timing Had strong volume for originations, $14 billion. had strong volume for originations $14 billion That's again measured in UPB, and that was up 2x year-over-year. that's again measured in upb and that was up 2x year-over-year Within originations, there's a consumer direct channel that generated $1.2 billion of activity, up four times year-over-year, and the PTI was up pretty strongly as well. Servicing gets measured on ending servicing UPB, that's the number I quoted earlier, as well as how much we're adding to the servicing book, which we consistently are showing growth there. Can you see the- did I just lose the screen, or can you guys see it still? Within originations, there's a consumer direct channel that generated $1.2 billion of activity, up four times year-over-year, and the PTI was up pretty strongly as well. within originations there's a consumer direct channel that generated $1.2 billion of activity up four times year-over-year and the pti was up pretty strongly as well Servicing gets measured on ending servicing UPB, that's the number I quoted earlier, as well as how much we're adding to the servicing book, which we consistently are showing growth there. servicing gets measured on ending servicing upb that's the number i quoted earlier as well as how much we're adding to the servicing book which we consistently are showing growth there Can you see the- did I just lose the screen, or can you guys see it still? can you see the- did i just lose the screen or can you guys see it still

Speaker 1: We can still see it. It looks good. We can still see it. we can still see it It looks good. it looks good

Speaker 2: Okay, good. I just clicked off of something. You've got originations and servicing complementing each other. This is what I talked about earlier in terms of a balanced business model. Here you have the last four years, and you can see in a year like 2021, originations, the dark blue, made a lot more money than servicing. Just a year later in 2023, servicing generated pretty much all the net income of the company. That's as this cycle swings in 2022, you might be asking what happened. Well, that's when rates went up, origination markets backtracked. The second half of 2022 was very difficult, and then by 2023, you were making all your money in servicing. That makes it tough for a pure-play originator to stay in business. Some of them didn't, some of them got acquired. Okay, good. okay good I just clicked off of something. i just clicked off of something You've got originations and servicing complementing each other. you've got originations and servicing complementing each other This is what I talked about earlier in terms of a balanced business model. this is what i talked about earlier in terms of a balanced business model Here you have the last four years, and you can see in a year like 2021, originations, the dark blue, made a lot more money than servicing. here you have the last four years and you can see in a year like 2021 originations the dark blue made a lot more money than servicing Just a year later in 2023, servicing generated pretty much all the net income of the company. just a year later in 2023 servicing generated pretty much all the net income of the company That's as this cycle swings in 2022, you might be asking what happened. that's as this cycle swings in 2022 you might be asking what happened Well, that's when rates went up, origination markets backtracked. well that's when rates went up origination markets backtracked The second half of 2022 was very difficult, and then by 2023, you were making all your money in servicing. the second half of 2022 was very difficult and then by 2023 you were making all your money in servicing That makes it tough for a pure-play originator to stay in business. that makes it tough for a pure-play originator to stay in business Some of them didn't, some of them got acquired. some of them didn't some of them got acquired In 2025, you saw the pendulum swing back and start to favor origination somewhat again. Off on the right, you can see how each of these businesses react to rates up or rates down. Did the slide advance or no, Brendan? In 2025, you saw the pendulum swing back and start to favor origination somewhat again. in 2025 you saw the pendulum swing back and start to favor origination somewhat again Off on the right, you can see how each of these businesses react to rates up or rates down. off on the right you can see how each of these businesses react to rates up or rates down Did the slide advance or no, Brendan? did the slide advance or no brendan

Speaker 1: It did not. It did not. it did not

Speaker 2: Okay Okay okay

Speaker 1: me. me. me

Speaker 2: Hang on a second. Let me see if I can find it, bring it back. Hang on a second. hang on a second Let me see if I can find it, bring it back. let me see if i can find it bring it back

Speaker 1: There we go. There we go. there we go

Speaker 2: Okay. Does it say originations volume on the left? Okay. okay Does it say originations volume on the left? does it say originations volume on the left

Speaker 1: Yes. Yes. yes

Speaker 2: Okay. Originations volume up 2x. This is a measure of how much revenue and how much volume you can generate in originations, and as you can see, 2025 was a very strong year. We measure something called recapture, which is pretty important. Off to the right, you can see how we compare to the industry average. You see banks on the far left of that right-side graph. Banks aren't very good at recapture. Why? Banks do a lot of stuff, and mortgages are one of 30 things they focus on. All we do are mortgages. People that are large non-bank mortgage originators, think names like Rocket, Cooper back when it existed. Potentially Guild Mortgage, Better Mortgage, LoanDepot. All these companies do is mortgages. We're a little more focused than banks. Okay. okay Originations volume up 2x. originations volume up 2x This is a measure of how much revenue and how much volume you can generate in originations, and as you can see, 2025 was a very strong year. this is a measure of how much revenue and how much volume you can generate in originations and as you can see 2025 was a very strong year We measure something called recapture, which is pretty important. we measure something called recapture which is pretty important Off to the right, you can see how we compare to the industry average. off to the right you can see how we compare to the industry average You see banks on the far left of that right-side graph. you see banks on the far left of that right-side graph Banks aren't very good at recapture. banks aren't very good at recapture Why? why Banks do a lot of stuff, and mortgages are one of 30 things they focus on. banks do a lot of stuff and mortgages are one of 30 things they focus on All we do are mortgages. all we do are mortgages People that are large non-bank mortgage originators, think names like Rocket, Cooper back when it existed. people that are large non-bank mortgage originators think names like rocket cooper back when it existed Potentially Guild Mortgage, Better Mortgage, LoanDepot. potentially guild mortgage, better mortgage loandepot All these companies do is mortgages. all these companies do is mortgages We're a little more focused than banks. we're a little more focused than banks We compare ourselves to the industry average, and we focus on the non-banks, and even amongst that crowd, we pick some of the best non-banks, which are the gray ones that publicly disclose the recapture. We either beat or we're competitive with that crowd. Recapture indicates how well you go in and get someone who has an MSR with you to refinance the mortgage with you. If that happens successfully, you make more money, you replace the MSR with a new MSR. If you fail at that, someone else gets your MSR, it disappears, and you don't generate revenue on it anymore. It's a pretty important thing to focus on. This is the servicing portfolio. This is our other business. Here you can see it's up 14% over the last two years. We compare ourselves to the industry average, and we focus on the non-banks, and even amongst that crowd, we pick some of the best non-banks, which are the gray ones that publicly disclose the recapture. we compare ourselves to the industry average and we focus on the non-banks and even amongst that crowd we pick some of the best non-banks which are the gray ones that publicly disclose the recapture We either beat or we're competitive with that crowd. we either beat or we're competitive with that crowd Recapture indicates how well you go in and get someone who has an MSR with you to refinance the mortgage with you. recapture indicates how well you go in and get someone who has an msr with you to refinance the mortgage with you If that happens successfully, you make more money, you replace the MSR with a new MSR. if that happens successfully you make more money you replace the msr with a new msr If you fail at that, someone else gets your MSR, it disappears, and you don't generate revenue on it anymore. if you fail at that someone else gets your msr it disappears and you don't generate revenue on it anymore It's a pretty important thing to focus on. it's a pretty important thing to focus on This is the servicing portfolio. this is the servicing portfolio This is our other business. this is our other business Here you can see it's up 14% over the last two years. here you can see it's up 14% over the last two years Industry growth, which is very easy to measure because it's all publicly available data, grew by 6%. We're growing faster than the industry. Off to the right, that pie chart tells you how our owned and subservicing book breaks up. The owned is the green, the subservicing is the blue. There you can see on the right of the green, we predominantly own Fannie and Freddie. We also call these GSEs. We own Ginnie Mae's down at the bottom, and you see a thin sliver called PLS. That stands for private label securitization. Maybe think non-QM. For those of you who've heard that term, it stands for non-qualified mortgage. That's a PLS. Think jumbo mortgages, closed-end seconds, debt service coverage ratio loans. That's all different examples of PLS. It's just a loan that doesn't meet Fannie, Freddie, and Ginnie guidelines. Industry growth, which is very easy to measure because it's all publicly available data, grew by 6%. industry growth which is very easy to measure because it's all publicly available data grew by 6% We're growing faster than the industry. we're growing faster than the industry Off to the right, that pie chart tells you how our owned and subservicing book breaks up. off to the right that pie chart tells you how our owned and subservicing book breaks up The owned is the green, the subservicing is the blue. the owned is the green the subservicing is the blue There you can see on the right of the green, we predominantly own Fannie and Freddie. there you can see on the right of the green we predominantly own fannie and freddie We also call these GSEs. we also call these gses We own Ginnie Mae's down at the bottom, and you see a thin sliver called PLS. we own ginnie mae's down at the bottom and you see a thin sliver called pls That stands for private label securitization. that stands for private label securitization Maybe think non-QM. maybe think non-qm For those of you who've heard that term, it stands for non-qualified mortgage. for those of you who've heard that term it stands for non-qualified mortgage That's a PLS. that's a pls Think jumbo mortgages, closed-end seconds, debt service coverage ratio loans. think jumbo mortgages closed-end seconds debt service coverage ratio loans That's all different examples of PLS. that's all different examples of pls It's just a loan that doesn't meet Fannie , Freddie, and Ginnie guidelines. it's just a loan that doesn't meet fannie , freddie and ginnie guidelines Quite a few people have non-agency mortgages. That's what that sliver represents. Here's an AI slide for you. It shows how we're focusing on the borrower journey to maximize recapture. That was that important thing I talked about earlier. Here we're focusing on leads and making sure machine learning is helping us get the leads that are more likely to result in a new loan. There's a lot of nuances there that computers are pretty good at figuring out when you give them a lot of data. That's driving our ability to grab the best leads that result in a new loan, and that grew pretty substantially over the last year as we started to implement technology. Lead to rate lock is also important. A lead means someone reaches out and talks to you. Quite a few people have non-agency mortgages. quite a few people have non-agency mortgages That's what that sliver represents. that's what that sliver represents Here's an AI slide for you. here's an ai slide for you It shows how we're focusing on the borrower journey to maximize recapture. it shows how we're focusing on the borrower journey to maximize recapture That was that important thing I talked about earlier. that was that important thing i talked about earlier Here we're focusing on leads and making sure machine learning is helping us get the leads that are more likely to result in a new loan. here we're focusing on leads and making sure machine learning is helping us get the leads that are more likely to result in a new loan There's a lot of nuances there that computers are pretty good at figuring out when you give them a lot of data. there's a lot of nuances there that computers are pretty good at figuring out when you give them a lot of data That's driving our ability to grab the best leads that result in a new loan, and that grew pretty substantially over the last year as we started to implement technology. that's driving our ability to grab the best leads that result in a new loan and that grew pretty substantially over the last year as we started to implement technology Lead to rate lock is also important. lead to rate lock is also important A lead means someone reaches out and talks to you. a lead means someone reaches out and talks to you Locking your rate means you're pretty committed to that mortgage. The next step is, does the loan fund? The other thing we have to do is use AI to help the entire platform, both on the servicing and on the origination side. There you can see we're extracting documents and doing this automatically with very high accuracy, that allows us to do a lot more analysis as well as have the appropriate collateral documents for a mortgage, which comes in handy if you need to sell the mortgage at some point. Here's our capital allocation strategy. We prioritize organic growth. Think buying more of the assets that can produce mid-teen returns in terms of ROE. Expanding our products and services. Think new origination products. On the subservicing side, we're focusing deeply on, say, commercial subservicing, which is much higher margin. Locking your rate means you're pretty committed to that mortgage. locking your rate means you're pretty committed to that mortgage The next step is, does the loan fund? the next step is does the loan fund The other thing we have to do is use AI to help the entire platform, both on the servicing and on the origination side. the other thing we have to do is use ai to help the entire platform both on the servicing and on the origination side There you can see we're extracting documents and doing this automatically with very high accuracy, that allows us to do a lot more analysis as well as have the appropriate collateral documents for a mortgage, which comes in handy if you need to sell the mortgage at some point. there you can see we're extracting documents and doing this automatically with very high accuracy that allows us to do a lot more analysis as well as have the appropriate collateral documents for a mortgage which comes in handy if you need to sell the mortgage at some point Here's our capital allocation strategy. here's our capital allocation strategy We prioritize organic growth. we prioritize organic growth Think buying more of the assets that can produce mid-teen returns in terms of ROE. think buying more of the assets that can produce mid-teen returns in terms of roe Expanding our products and services. expanding our products and services Think new origination products. think new origination products On the subservicing side, we're focusing deeply on, say, commercial subservicing, which is much higher margin. on the subservicing side we're focusing deeply on say commercial subservicing which is much higher margin Another facet we try and consider is optimize liquidity and drive long-term returns. That's how we think about capital management. We're always focused on optimizing shareholder return. All of the executives at Onity are shareholders, some of them quite significant ones, so we're aligned with the shareholder. Here's our guidance for the full year. We updated our ROE range. Took it from 13% to 15% to 10% to 15% in the first quarter update. That was due to the rate volatility. If you think about where the rates were in February and where they were by April, was somewhat significant. We don't mind if rates go up or if rates go down. Another facet we try and consider is optimize liquidity and drive long-term returns. another facet we try and consider is optimize liquidity and drive long-term returns That's how we think about capital management. that's how we think about capital management We're always focused on optimizing shareholder return. we're always focused on optimizing shareholder return All of the executives at Onity are shareholders, some of them quite significant ones, so we're aligned with the shareholder. all of the executives at onity are shareholders some of them quite significant ones so we're aligned with the shareholder Here's our guidance for the full year. here's our guidance for the full year We updated our ROE range. we updated our roe range Took it from 13% to 15% to 10% to 15% in the first quarter update. took it from 13% to 15% to 10% to 15% in the first quarter update That was due to the rate volatility. that was due to the rate volatility If you think about where the rates were in February and where they were by April, was somewhat significant. if you think about where the rates were in february and where they were by april was somewhat significant We don't mind if rates go up or if rates go down. we don't mind if rates go up or if rates go down It's when rates go up and down, up and down, up and down, that makes it a little more difficult in this market because you have dynamic hedging, you have to hedge your MSRs and your origination pipeline. If rates are bouncing around a lot, that gets somewhat expensive. You're hedging with basic treasury derivatives or other mortgage derivatives. Other things we're focused on for the guidance are servicing UPB growth 5% to 15%. High hedge effectiveness. Here we like to protect the value of our MSR, we try and hedge away almost all of the interest rate risk. We've been quite successful the last nine quarters doing that. We also focus on efficiency ratio. Just means we grow revenue faster than we grow costs. Something pretty much all companies should focus on. It's when rates go up and down, up and down, up and down, that makes it a little more difficult in this market because you have dynamic hedging, you have to hedge your MSRs and your origination pipeline. it's when rates go up and down up and down up and down that makes it a little more difficult in this market because you have dynamic hedging you have to hedge your msrs and your origination pipeline If rates are bouncing around a lot, that gets somewhat expensive. if rates are bouncing around a lot that gets somewhat expensive You're hedging with basic treasury derivatives or other mortgage derivatives. you're hedging with basic treasury derivatives or other mortgage derivatives Other things we're focused on for the guidance are servicing UPB growth 5% to 15%. other things we're focused on for the guidance are servicing upb growth 5% to 15% High hedge effectiveness. high hedge effectiveness Here we like to protect the value of our MSR, we try and hedge away almost all of the interest rate risk. here we like to protect the value of our msr we try and hedge away almost all of the interest rate risk We've been quite successful the last nine quarters doing that. we've been quite successful the last nine quarters doing that We also focus on efficiency ratio. we also focus on efficiency ratio Just means we grow revenue faster than we grow costs. just means we grow revenue faster than we grow costs Something pretty much all companies should focus on. something pretty much all companies should focus on Here's the price to book slide for you. We are lagging behind our peers. IMB stands for Independent Mortgage Bank. We're a non-bank mortgage company. Here you can see our price to book. This is all based on Q1 releases. At the end of Q1 when everyone released their earnings, we were at a 0.5 price to book. Some of our bigger competitors range from 0.8 up to 1.6. We're quite competitive in terms of generating very similar ROE to these competitors. You can see analyst consensus on the right. We're covered by about three different analysts, that's their consensus in terms of share price. In the middle, you see our book value per share. You see what the stock would look like at a 1.1 premium to book. That's it. Here's the price to book slide for you. here's the price to book slide for you We are lagging behind our peers. we are lagging behind our peers IMB stands for Independent Mortgage Bank. imb stands for independent mortgage bank We're a non-bank mortgage company. we're a non-bank mortgage company Here you can see our price to book. here you can see our price to book This is all based on Q1 releases. this is all based on q1 releases At the end of Q1 when everyone released their earnings, we were at a 0.5 price to book. at the end of q1 when everyone released their earnings we were at a 0.5 price to book Some of our bigger competitors range from 0.8 up to 1.6. some of our bigger competitors range from 0.8 up to 1.6 We're quite competitive in terms of generating very similar ROE to these competitors. we're quite competitive in terms of generating very similar roe to these competitors You can see analyst consensus on the right. you can see analyst consensus on the right We're covered by about three different analysts, that's their consensus in terms of share price. we're covered by about three different analysts that's their consensus in terms of share price In the middle, you see our book value per share. in the middle you see our book value per share You see what the stock would look like at a 1.1 premium to book. you see what the stock would look like at a 1.1 premium to book That's it. that's it I'll end on the slide I started with, where we're driving growth, both originations and MSR recapture, as well as deploying capital to grow the high-yielding MSRs, continuing to use technology as well as process improvements, generating excess capital for the forward business by repositioning our reverse, and then finally, the price-to-book comment I just made. I'll stop there and see what questions people have. I'll end on the slide I started with, where we're driving growth, both originations and MSR recapture, as well as deploying capital to grow the high-yielding MSRs, continuing to use technology as well as process improvements, generating excess capital for the forward business by repositioning our reverse, and then finally, the price-to-book comment I just made. i'll end on the slide i started with where we're driving growth both originations and msr recapture as well as deploying capital to grow the high-yielding msrs continuing to use technology as well as process improvements generating excess capital for the forward business by repositioning our reverse and then finally the price-to-book comment i just made I'll stop there and see what questions people have. i'll stop there and see what questions people have

Speaker 1: Great. Thank you, Sean, for the overview here. We can open the floor for Q&A. Why don't we start just looking at the balance sheet? Can you talk about what the ideal mix is between your originations growth versus MSR growth and, maybe, picturing a longer-term scenario where that mix can optimize the highest ROE? Great. great Thank you, Sean, for the overview here. thank you sean for the overview here We can open the floor for Q&A. we can open the floor for q&a Why don't we start just looking at the balance sheet? why don't we start just looking at the balance sheet Can you talk about what the ideal mix is between your originations growth versus MSR growth and, maybe, picturing a longer-term scenario where that mix can optimize the highest ROE? can you talk about what the ideal mix is between your originations growth versus msr growth and maybe picturing a longer-term scenario where that mix can optimize the highest roe

Speaker 2: Yeah. You can plan for all kinds of originations growth, but it is somewhat market-dependent, meaning it's easier to grow originations when rates are declining. The way we think about the balance sheet and the impact of the two businesses is we continuously support both businesses, but you have to have the ability to flex up and down your originations OPEX or operating expense based on what rates are doing. And so there, we continuously monitor our consumer direct. That's the most time-intensive people and labor-intensive business channel that we have. Also generates the highest margins. What you do is if that volume is declining, you have to cut costs in that channel, but you tend to still get very decent volume from the originations correspondent channel. That's the one where we're like a top 10 correspondent lender. Yeah. yeah You can plan for all kinds of originations growth, but it is somewhat market-dependent, meaning it's easier to grow originations when rates are declining. you can plan for all kinds of originations growth but it is somewhat market-dependent meaning it's easier to grow originations when rates are declining The way we think about the balance sheet and the impact of the two businesses is we continuously support both businesses, but you have to have the ability to flex up and down your originations OPEX or operating expense based on what rates are doing. And so there, we continuously monitor our consumer direct. the way we think about the balance sheet and the impact of the two businesses is we continuously support both businesses but you have to have the ability to flex up and down your originations opex or operating expense based on what rates are doing. and so there we continuously monitor our consumer direct That's the most time-intensive people and labor-intensive business channel that we have. that's the most time-intensive people and labor-intensive business channel that we have Also generates the highest margins. also generates the highest margins What you do is if that volume is declining, you have to cut costs in that channel, but you tend to still get very decent volume from the originations correspondent channel. what you do is if that volume is declining you have to cut costs in that channel but you tend to still get very decent volume from the originations correspondent channel That's the one where we're like a top 10 correspondent lender. that's the one where we're like a top 10 correspondent lender That's where you're buying mortgages from very small originators who can't deliver to Fannie, Freddie, or Ginnie, or choose not to because there's much higher capital and liquidity requirements to be able to deliver to the agencies. That's a thinner margin business, but it's very scalable, far fewer people. While it generates net income, it can flex volume up or down very rapidly. The other thing we have to consider as we grow the origination business is liquidity, because originations is typically a liquidity consumer. Servicing is a liquidity provider. You either have to balance those two or if you want to grow originations faster, you have to sell some of your assets and replace it with better assets that you can generate organically. That's where you're buying mortgages from very small originators who can't deliver to Fannie, Freddie, or Ginnie, or choose not to because there's much higher capital and liquidity requirements to be able to deliver to the agencies. that's where you're buying mortgages from very small originators who can't deliver to fannie freddie or ginnie or choose not to because there's much higher capital and liquidity requirements to be able to deliver to the agencies That's a thinner margin business, but it's very scalable, far fewer people. that's a thinner margin business but it's very scalable far fewer people While it generates net income, it can flex volume up or down very rapidly. while it generates net income it can flex volume up or down very rapidly The other thing we have to consider as we grow the origination business is liquidity, because originations is typically a liquidity consumer. the other thing we have to consider as we grow the origination business is liquidity because originations is typically a liquidity consumer Servicing is a liquidity provider. servicing is a liquidity provider You either have to balance those two or if you want to grow originations faster, you have to sell some of your assets and replace it with better assets that you can generate organically. you either have to balance those two or if you want to grow originations faster you have to sell some of your assets and replace it with better assets that you can generate organically

Speaker 1: Got it. You mentioned you recently sold the reverse mortgage business. I think you mentioned $70 million to $80 million in proceeds. Can you walk us through the decision there and potential use of proceeds? Got it. got it You mentioned you recently sold the reverse mortgage business. you mentioned you recently sold the reverse mortgage business I think you mentioned $70 million to $80 million in proceeds. i think you mentioned $70 million to $80 million in proceeds Can you walk us through the decision there and potential use of proceeds? can you walk us through the decision there and potential use of proceeds

Speaker 2: Sure. We sold the bulk of the business, but we still have about 45% of the UPB. However, that only represents about 30% of the fair value. Most of the fair value is going to leave the balance sheet as measured by equity, or contribution to our total equity or tangible net worth. We'll still be a reverse servicer probably for the next four to five years. We think about 70% of that book will run off in the next four years. We also have the option to attempt to sell that book in the future. The component that we sold to Finance of America, that's the one we just reported two weeks ago, got regulatory approval to proceed. That will generate the numbers you quoted. Sure. sure We sold the bulk of the business, but we still have about 45% of the UPB. we sold the bulk of the business but we still have about 45% of the upb However, that only represents about 30% of the fair value. however that only represents about 30% of the fair value Most of the fair value is going to leave the balance sheet as measured by equity, or contribution to our total equity or tangible net worth. most of the fair value is going to leave the balance sheet as measured by equity or contribution to our total equity or tangible net worth We'll still be a reverse servicer probably for the next four to five years. we'll still be a reverse servicer probably for the next four to five years We think about 70% of that book will run off in the next four years. we think about 70% of that book will run off in the next four years We also have the option to attempt to sell that book in the future. we also have the option to attempt to sell that book in the future The component that we sold to Finance of America, that's the one we just reported two weeks ago, got regulatory approval to proceed. the component that we sold to finance of america that's the one we just reported two weeks ago got regulatory approval to proceed That will generate the numbers you quoted. that will generate the numbers you quoted When we see capital like that made available, we go back to our capital allocation sheet that I had up earlier, there we try and consider, what's the best use of this capital? Is it to buy more assets? That's organic growth. Is it to consider M&A prospects that'll get us into new channels more effectively and faster, what's the payback on that? Do we want to buy back stock or do we want to buy back debt? There's other options as well, that's kind of like the big four. Do you want to buy assets, another company, improve your leverage ratio, and/or buy back stock? We've done all of these things over the last couple of years. We de-leveraged heavily in 2023 and 2024, brought our high-yield debt down by about $140 million and tried to maintain a consistent debt-to-equity ratio. When we see capital like that made available, we go back to our capital allocation sheet that I had up earlier, there we try and consider, what's the best use of this capital? when we see capital like that made available we go back to our capital allocation sheet that i had up earlier there we try and consider what's the best use of this capital Is it to buy more assets? is it to buy more assets That's organic growth. that's organic growth Is it to consider M&A prospects that'll get us into new channels more effectively and faster, what's the payback on that? is it to consider m&a prospects that'll get us into new channels more effectively and faster what's the payback on that Do we want to buy back stock or do we want to buy back debt? do we want to buy back stock or do we want to buy back debt There's other options as well, that's kind of like the big four. there's other options as well that's kind of like the big four Do you want to buy assets, another company, improve your leverage ratio, and/or buy back stock? do you want to buy assets another company improve your leverage ratio and/or buy back stock We've done all of these things over the last couple of years. we've done all of these things over the last couple of years We de-leveraged heavily in 2023 and 2024, brought our high-yield debt down by about $140 million and tried to maintain a consistent debt-to-equity ratio. we de-leveraged heavily in 2023 and 2024 brought our high-yield debt down by about $140 million and tried to maintain a consistent debt-to-equity ratio At this point in time, we're focused on de-leveraging by growing the equity, not by reducing our high-yield debt. We just announced our second share buyback of the year, we did that. Maybe put that announcement out probably two weeks ago that we got board approval. We had done another share buyback in the first quarter. That one completed, we replaced it with another one. We also are constantly looking at MSRs, because in addition to originating MSRs, you can buy them on the bulk market or in a flow market. Those are some of the areas that we look at to allocate capital. At this point in time, we're focused on de-leveraging by growing the equity, not by reducing our high-yield debt. at this point in time we're focused on de-leveraging by growing the equity not by reducing our high-yield debt We just announced our second share buyback of the year, we did that. we just announced our second share buyback of the year we did that Maybe put that announcement out probably two weeks ago that we got board approval. maybe put that announcement out probably two weeks ago that we got board approval We had done another share buyback in the first quarter. we had done another share buyback in the first quarter That one completed, we replaced it with another one. that one completed we replaced it with another one We also are constantly looking at MSRs, because in addition to originating MSRs, you can buy them on the bulk market or in a flow market. we also are constantly looking at msrs because in addition to originating msrs you can buy them on the bulk market or in a flow market Those are some of the areas that we look at to allocate capital. those are some of the areas that we look at to allocate capital

Speaker 1: Understood. We have a question on the recapture rate. How can investors think about the recapture rate? What factors influence that rate? Are you satisfied with the current range that rate has trended at? Understood. understood We have a question on the recapture rate. we have a question on the recapture rate How can investors think about the recapture rate? how can investors think about the recapture rate What factors influence that rate? what factors influence that rate Are you satisfied with the current range that rate has trended at? are you satisfied with the current range that rate has trended at

Speaker 2: Even though our recapture rate is good, that would be back on Page 10. I'll just flip back to that. Hopefully it went back to Page 10 or is going there. Even though our recapture rate's very strong, it's better than industry average, we're not happy with it. We're always trying to make it better. It's one of those metrics that doesn't matter whether you hit your internal objective in the first quarter, the third quarter, you're always looking to get it even better because every percent you can improve and recapture, protects your MSR book and generates gain on sale overnight. It's a win-win for both our businesses. The various factors that drive that range from how connected are you to a customer? You have to remember, we get our customers from a couple of ways, right? Even though our recapture rate is good, that would be back on Page 10. even though our recapture rate is good that would be back on page 10 I'll just flip back to that. i'll just flip back to that Hopefully it went back to Page 10 or is going there. hopefully it went back to page 10 or is going there Even though our recapture rate's very strong, it's better than industry average, we're not happy with it. even though our recapture rate's very strong it's better than industry average we're not happy with it We're always trying to make it better. we're always trying to make it better It's one of those metrics that doesn't matter whether you hit your internal objective in the first quarter, the third quarter, you're always looking to get it even better because every percent you can improve and recapture, protects your MSR book and generates gain on sale overnight. it's one of those metrics that doesn't matter whether you hit your internal objective in the first quarter the third quarter you're always looking to get it even better because every percent you can improve and recapture protects your msr book and generates gain on sale overnight It's a win-win for both our businesses. it's a win-win for both our businesses The various factors that drive that range from how connected are you to a customer? the various factors that drive that range from how connected are you to a customer You have to remember, we get our customers from a couple of ways, right? you have to remember we get our customers from a couple of ways right If we originate the loan directly through our own loan officers, that's got a very high recapture rate because loan officer XYZ knows the borrower, has connected with them in the past, and has a very good chance of refinancing their loan when it comes in the money, and we track that very carefully, of course. The more difficult one is loans you buy from someone else, like your correspondent market. That's where you have to take the time early on when they're not in the money, so to speak, and make connections with those borrowers. It's a combination of leveraging technology, old-fashioned modelling, and getting in front of the customer and ensuring you have good connectivity with the customer. Are there other products you can offer the customer? Like a customer who's not in the money still may want a closed-end second or a HELOC. If we originate the loan directly through our own loan officers, that's got a very high recapture rate because loan officer XYZ knows the borrower, has connected with them in the past, and has a very good chance of refinancing their loan when it comes in the money, and we track that very carefully, of course. if we originate the loan directly through our own loan officers that's got a very high recapture rate because loan officer xyz knows the borrower has connected with them in the past and has a very good chance of refinancing their loan when it comes in the money and we track that very carefully of course The more difficult one is loans you buy from someone else, like your correspondent market. the more difficult one is loans you buy from someone else like your correspondent market That's where you have to take the time early on when they're not in the money, so to speak, and make connections with those borrowers. that's where you have to take the time early on when they're not in the money so to speak and make connections with those borrowers It's a combination of leveraging technology, old-fashioned modelling, and getting in front of the customer and ensuring you have good connectivity with the customer. it's a combination of leveraging technology old-fashioned modelling and getting in front of the customer and ensuring you have good connectivity with the customer Are there other products you can offer the customer? are there other products you can offer the customer Like a customer who's not in the money still may want a closed-end second or a HELOC. like a customer who's not in the money still may want a closed-end second or a heloc A customer who doesn't like rates may want some different rate modification options available to them. The more you connect with the customer, as well as leveraging technology, that's what's going to help you drive recapture. A customer who doesn't like rates may want some different rate modification options available to them. a customer who doesn't like rates may want some different rate modification options available to them The more you connect with the customer, as well as leveraging technology, that's what's going to help you drive recapture. the more you connect with the customer as well as leveraging technology that's what's going to help you drive recapture

Speaker 1: Understood. That's helpful. Turning to the 2026 guidance, I think you mentioned you recently trimmed the adjusted ROE outlook by a couple percentage points. What macro assumptions are kind of baked into that guidance outlook, and what would cause variation there for the year? Understood. understood That's helpful. that's helpful Turning to the 2026 guidance, I think you mentioned you recently trimmed the adjusted ROE outlook by a couple percentage points. turning to the 2026 guidance i think you mentioned you recently trimmed the adjusted roe outlook by a couple percentage points What macro assumptions are kind of baked into that guidance outlook, and what would cause variation there for the year? what macro assumptions are kind of baked into that guidance outlook and what would cause variation there for the year

Speaker 2: Yeah. What we had to look at there was it's not just a question of rates higher for longer, it's a question of are the rates volatile? Is the 10-year Treasury moving rapidly up and down? Think of the price of oil as a proxy for what the 10-year Treasury might have been doing over the last couple of months. The 10-year's been pretty consistent, hovering in a band, but when it has a lot of volatility intraday or intra-week, that still creates some hedging volatility, as well as origination volatility. Think about as the 10-year drops and the 30-year fixed rate mortgage drops, they're highly correlated, but not perfectly. There's a Treasury-to-mortgage spread that widens and tightens as well. Yeah. yeah What we had to look at there was it's not just a question of rates higher for longer, it's a question of are the rates volatile? what we had to look at there was it's not just a question of rates higher for longer it's a question of are the rates volatile Is the 10-year Treasury moving rapidly up and down? is the 10-year treasury moving rapidly up and down Think of the price of oil as a proxy for what the 10-year Treasury might have been doing over the last couple of months. think of the price of oil as a proxy for what the 10-year treasury might have been doing over the last couple of months The 10-year's been pretty consistent, hovering in a band, but when it has a lot of volatility intraday or intra-week, that still creates some hedging volatility, as well as origination volatility. the 10-year's been pretty consistent hovering in a band but when it has a lot of volatility intraday or intra-week that still creates some hedging volatility as well as origination volatility Think about as the 10-year drops and the 30-year fixed rate mortgage drops, they're highly correlated, but not perfectly. think about as the 10-year drops and the 30-year fixed rate mortgage drops they're highly correlated but not perfectly There's a Treasury-to-mortgage spread that widens and tightens as well. there's a treasury-to-mortgage spread that widens and tightens as well As rates drop, you start to ramp up more of your origination production, and if they drop a lot, you start hiring people. If they turn around and pivot and go back up two weeks later because of some other geopolitical activity and people flock to Treasuries because it's still somewhat a haven for safe money, then you have to pull back on everything you were just doing. If you're actually out there hiring loan officers, then rates turn around and pivot back up, not only does your hedging get more expensive, but then you're like, "Okay, how long do I want to carry excess loan officers on my payroll?" Loan officers are like any salesperson in any industry. If you can't feed them, they will leave anyway, right? As rates drop, you start to ramp up more of your origination production, and if they drop a lot, you start hiring people. as rates drop you start to ramp up more of your origination production and if they drop a lot you start hiring people If they turn around and pivot and go back up two weeks later because of some other geopolitical activity and people flock to Treasuries because it's still somewhat a haven for safe money, then you have to pull back on everything you were just doing. if they turn around and pivot and go back up two weeks later because of some other geopolitical activity and people flock to treasuries because it's still somewhat a haven for safe money then you have to pull back on everything you were just doing If you're actually out there hiring loan officers, then rates turn around and pivot back up, not only does your hedging get more expensive, but then you're like, "Okay, how long do I want to carry excess loan officers on my payroll?" Loan officers are like any salesperson in any industry. if you're actually out there hiring loan officers then rates turn around and pivot back up not only does your hedging get more expensive but then you're like "okay how long do i want to carry excess loan officers on my payroll?" loan officers are like any salesperson in any industry If you can't feed them, they will leave anyway, right? if you can't feed them they will leave anyway right There's a lot of volatility that can be disruptive to the P&L. Rates are never static, don't get me wrong, but if they're moving in a general trend, it's somewhat easier to predict where they're going. Think periods of time like last April when we did Liberation Day with the tariffs. That was an incredibly difficult three-week period to hedge anything that was interest rate related. Basis hedges were widening inordinately, meaning even if you put on what would normally be an appropriate hedge, it didn't always effectively hedge your outcome. There's a lot of volatility that can be disruptive to the P&L. there's a lot of volatility that can be disruptive to the p&l Rates are never static, don't get me wrong, but if they're moving in a general trend, it's somewhat easier to predict where they're going. rates are never static don't get me wrong but if they're moving in a general trend it's somewhat easier to predict where they're going Think periods of time like last April when we did Liberation Day with the tariffs. think periods of time like last april when we did liberation day with the tariffs That was an incredibly difficult three-week period to hedge anything that was interest rate related. that was an incredibly difficult three-week period to hedge anything that was interest rate related Basis hedges were widening inordinately, meaning even if you put on what would normally be an appropriate hedge, it didn't always effectively hedge your outcome. basis hedges were widening inordinately meaning even if you put on what would normally be an appropriate hedge it didn't always effectively hedge your outcome

Speaker 1: That makes sense. That's helpful. Last question here. I believe you mentioned the stock is currently trading at a pretty steep discount to book value. How's that discount trended over time compared to where it is now? Maybe you can tie in the buyback authorization, how investors can think about the company buying back shares. That makes sense. that makes sense That's helpful. that's helpful Last question here. last question here I believe you mentioned the stock is currently trading at a pretty steep discount to book value. i believe you mentioned the stock is currently trading at a pretty steep discount to book value How's that discount trended over time compared to where it is now? how's that discount trended over time compared to where it is now Maybe you can tie in the buyback authorization, how investors can think about the company buying back shares. maybe you can tie in the buyback authorization how investors can think about the company buying back shares

Speaker 2: Yeah. The stock's traded, I don't have the data right in front of me, but it's basically been in a 45% to 60% discount to book for the last couple of years. We've been trying to erase issues that could create that proclivity for discount to book. Obviously, it's something we're focused on. We focused on removing any regulatory overhang or litigation concerns the market might have. That pretty much was accomplished by 2022 and 2023. We focused on kind of mainstreaming and upgrading the technology of the company during that same period. Focused on improving net income variability. That was a big focus on the hedge in 2023 and 2024. From end of 2023, early 2024 onwards, the hedge got far more effective at offsetting most of the interest rate risk. Delevered the company in 2023 and 2024 as well. Yeah. yeah The stock's traded, I don't have the data right in front of me, but it's basically been in a 45% to 60% discount to book for the last couple of years. the stock's traded i don't have the data right in front of me but it's basically been in a 45% to 60% discount to book for the last couple of years We've been trying to erase issues that could create that proclivity for discount to book. we've been trying to erase issues that could create that proclivity for discount to book Obviously, it's something we're focused on. obviously it's something we're focused on We focused on removing any regulatory overhang or litigation concerns the market might have. we focused on removing any regulatory overhang or litigation concerns the market might have That pretty much was accomplished by 2022 and 2023. that pretty much was accomplished by 2022 and 2023 We focused on kind of mainstreaming and upgrading the technology of the company during that same period. we focused on kind of mainstreaming and upgrading the technology of the company during that same period Focused on improving net income variability. focused on improving net income variability That was a big focus on the hedge in 2023 and 2024. that was a big focus on the hedge in 2023 and 2024 From end of 2023, early 2024 onwards, the hedge got far more effective at offsetting most of the interest rate risk. from end of 2023 early 2024 onwards the hedge got far more effective at offsetting most of the interest rate risk Delevered the company in 2023 and 2024 as well. delevered the company in 2023 and 2024 as well Now we think the remaining issues are they continue to be the market wants consistent net income production and growth. We're also a small cap with a very small float. We're just not going to get the attention from some of the very large wire house names or asset managers that have to take a fairly large position to be meaningful. Which means it's an opportunity for investors who are willing to do a little bit of homework. Now we think the remaining issues are they continue to be the market wants consistent net income production and growth. now we think the remaining issues are they continue to be the market wants consistent net income production and growth We're also a small cap with a very small float. we're also a small cap with a very small float We're just not going to get the attention from some of the very large wire house names or asset managers that have to take a fairly large position to be meaningful. we're just not going to get the attention from some of the very large wire house names or asset managers that have to take a fairly large position to be meaningful Which means it's an opportunity for investors who are willing to do a little bit of homework. which means it's an opportunity for investors who are willing to do a little bit of homework

Speaker 1: That's great. Sean, we'll conclude there. We really appreciate the time and the overview today. That's great. that's great Sean, we'll conclude there. sean we'll conclude there We really appreciate the time and the overview today. we really appreciate the time and the overview today

Speaker 2: Thank you very much, Brendan. Appreciate the time. Thank you very much, Brendan. thank you very much brendan Appreciate the time. appreciate the time

Speaker 1: Thanks, everybody. Thanks for joining. Thanks, everybody. thanks everybody Thanks for joining. thanks for joining