- **Record Performance**: ROTCE 17.2%, up 0.4pts QoQ, driven by operating leverage and AI. Normalized ROTCE would hit upper end of 16%-20% guidance.
- **AI-Driven Efficiency**: AgentiQ AI reduces call center costs, with beta testing of autonomous task execution.
- **$200M MSR Fund Launch**: Pioneers asset-light growth strategy with institutional investors.
- **Home Equity Dominance**: 60% of originations in Q2, $900B total customer equity available for future growth.
- **Rock-Solid Balance Sheet**: 26.6% capital ratio, $3.8B liquidity, 1% delinquencies, and 50% cost-to-serve below industry average.
- **Rocket Integration**: Set to close merger, with post-close plan to launch integrated homeownership platform.

**【CEO Summary Section】**
- **Strong Q2 Performance**: Operating ROTCE of 17.2%, up from 16.8% Q1, within guidance range of 16%-20%. Normalized for stock buyback pause, ROTCE would be at upper end of range.
- **Resilience in Challenging Market**: Achieved double-digit returns for 2.5 years despite high mortgage rates, driven by operating leverage, fee income, and AI adoption.
- **AI and Innovation**: AgentiQ AI tool rolled out, improving customer service efficiency. Beta testing advanced AI features for call center automation.
- **MSR Fund Launch**: Launched $200M MSR fund with blue-chip investors, aiming to scale asset-light strategy.
- **Rocket Merger Excitement**: Preparing for post-close integration to build integrated homeownership platform.

**【President's Remarks】**
- **Servicing Momentum**: $332M pretax income, +15% YoY. Subservicing UPB flat at $1.5T, despite $62B client departure, offset by new $40B client win.
- **Operating Efficiency**: Cost-to-serve 50% below industry average, driven by scale and process improvements.
- **Originations Growth**: $64M pretax income, $9.4B fundings. Home equity loans up 40% sequentially, 60% of mix. Turn times 6 days faster YoY.
- **Correspondent Channel Strength**: Top 5 player, +20B Q3 MSR acquisitions, maintaining margin discipline.

**【CFO Financial Commentary】**
- **Net Income**: $198M, including $269M pretax operating income, offset by $30M mark adjustments and $7M intangible amortization.
- **Asset Quality**: Delinquencies at 1%, lowest in 5 years. MSR portfolio FICO 730+, LTV 65%, with 15% FHA limit and avoidance of 2023-24 vintages.
- **Liquidity and Capital**: $3.8B liquidity, capital ratio 26.6%, up from 24.4% YoY. MSR valuation 156bps UPB, 5.4x base strip.
- **Student Loan Impact**: 16% of customers have student loans, delinquencies peaked at 8.7% in April, now 7.9%. Minimal risk to portfolio.

**【Merger Update】**
- **Rocket Combination**: Post-close integration plan underway, aiming to deliver platform benefits to clients and investors. Stock buyback program paused during merger.


Mr. Cooper Group Inc. (COOP) Q2 2025 Pre Recorded Earnings Call Transcript

- **Strategic Combination with Rocket**: Creates end-to-end homeownership platform with $3.9B liquidity and 25.5% capital ratio
- **Record Financials**: 16.8% ROTCE, $332M Servicing pretax income (22% YoY growth), $53M Origination beat
- **AI-Driven Growth**: AgentiQ adoption across 1,400 agents, 46% cash-out refinance share
- **Home Equity Play**: $700B customer home equity pipeline, 21% 2nd lien volume share
- **Operational Excellence**: 1.1% delinquency rate, #1 Fannie Mae STAR Award recipient

**【CEO Opening Remarks】**
- Announced pending combination with Rocket to create a fully integrated homeownership platform, leveraging Mr. Cooper's servicing expertise and Rocket's brand & marketing capabilities.
- Highlighted 16.8% ROTCE (Return on Tangible Common Equity) for Q1 2025, up from 15.8% Q4 2024, driven by Flagstar acquisition integration.
- Emphasized balance sheet strength with 25.5% capital ratio and $3.9B liquidity, enabling resilience in uncertain rate environment.
- Servicing segment delivered $332M pretax income (high end of guidance), Originations beat with $53M pretax income.
- Won Fannie Mae STAR Award in all 3 categories, underscoring operational excellence.

**【President Mike Weinbach - Operations Update】**
- Servicing pretax income +22% YoY to $332M, benefiting from:
  - 136bps operating expense ratio improvement
  - AgentiQ AI tool adoption across 1,400 call center agents
  - Flagstar integration completed ahead of schedule
- Origination momentum:
  - Cash-out refinances grew to 46% of volume (vs 39% Q4)
  - 2nd lien loans expanded to 21% of volume (vs 12% Q4)
  - $700B customer home equity available for capture
- Correspondent channel market share ranked #4 in March

**【CFO Kurt Johnson - Financial Highlights】**
- Q1 net income: $88M (GAAP) / $105M (Non-GAAP)
- Key financial metrics:
  - ROTCE: 16.8% (vs 15.8% prior quarter)
  - MSR valuation: 155bps UPB (5.4x servicing strip)
  - Liquidity: $3.9B (up $500M QoQ)
  - Capital ratio: 25.5% (vs 24.4% prior quarter)
- Asset quality:
  - Delinquencies: 1.1% (down 9bps QoQ)
  - Ginnie Mae delinquencies down 50bps
- MSR hedge coverage: 72% (target 75%), generated $209M gains
- 2026 senior notes callable at par, evaluating early redemption

Mr. Cooper Group Inc. (COOP) Q1 2025 Earnings Call Transcript

- **Record Q4 Performance**: $235M pre-tax income, 15.8% ROTCE, $71.61/share TBV. Flagstar acquisition solidified leadership with 1.1M new customers.
- **Double-Digit Growth Drivers**: Servicing EBIT +39% YoY, Originations volumes +38% QoQ, fee income now 20% of revenue.
- **AI & Efficiency Leap**: AgentiQ AI tool processing 400K/month calls, driving 47% YoY increase in loan modifications.
- **2025 ROTCE Ambition**: 16%-20% target enabled by fee income (60% contribution), disciplined MSR growth (40%).
- **Home Equity Goldmine**: $675B unlocked value, 94% of customers with >20% equity, 20%+ refi recapture potential.

**【CEO Opening Remarks】**
- Q4 2024 pre-tax operating income: $235M, ROTCE: 15.8%, TBV: $71.61/share (+12% YoY). Flagstar acquisition added 1.1M customers, making Mr. Cooper the largest servicer in the U.S. by scale.
- Servicing EBIT: $318M (+39% YoY), Originations EBT: $47M, funded volumes +38% QoQ, climbing to top 5 correspondent lender.
- Key achievements: Freddie Mac SHARP Gold Award, Fitch master servicing upgrade, Moody's positive credit outlook.
- 2025 ROTCE guidance: 16%-20% (up from 14%-18%), driven by cost leverage, AI adoption, and fee income growth.

**【President Operational Update】**
- Servicing scale: $1.5T UPB (6M+ customers), Flagstar added $275B UPB. Subservicing fee income: $500M (20% of total 2024 revenue), growing double-digit annually.
- AgentiQ AI tool rolled out to 400K/month calls, improving customer service efficiency and compliance.
- Originations: 48% QoQ growth in correspondent channel, DTC volumes +16% QoQ. Home equity utilization potential: $675B unlocked value for customers.
- Fee income diversification: subservicing, master servicing, and technology solutions driving recurring revenue.

**【CFO Financial Highlights】**
- Net income: $204M, including $92M mark-to-market gain. Liquidity: $3.4B, capital ratio: 24.4%.
- Credit performance: delinquency rate 1.2%, lowest in industry. MSR valuation: 159bps of UPB, 5.5x multiple.
- Hedges: $581M losses (85% coverage), outperforming 75% target. ROTCE guidance not reliant on leverage expansion.

**【Q&A Key Takeaways】**
- ROTCE target achievability: 60%+ from fee-based services, 40% from MSR. Execution, not rates, will drive results.
- MSR pipeline: bulk deals returning to normal levels, attractive risk-adjusted returns. Subservicing share expected to grow organically.
- Xome monetization: strategic option for future value capture, currently focused on market share growth.
- Home equity opportunity: 94% of customers with >20% equity, steady refi demand despite high rates.
- AI investment: 2025-2026 budget focused on process automation, customer experience, and operational efficiency.

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