Bose George: Yes. Okay. Great. Thanks. And then actually one on the MSR hedge, you guys are right at 80% this quarter. Any thoughts about increasing that? Or do you just feel like the remainder is kind of covered by your macro hedge and sort of keep it at that level?
Jay Bray: Yes. I think that we’re planning on keeping it at that level. I think we have probably what I’d say is outperformed in both directions over the last quarter, when the portfolio was going up, we had a little bit less than 75% coverage, which was great, which means that we didn’t lose as much on the hedge. And when the mark was going down, we did better. So we gained a little bit more on the hedge. So I think our hedge effectiveness over the last couple of quarters has been really good, but we’re still targeting that 75%. And I think as we continue to acquire new current coupon portfolio,, we’ve got a little bit of kind of loans that are going to be in the money if we see a rate rally. And we think that can really give us sort of the upside potential against the remaining 25%.
Bose George: Yes. Okay. Great. Thanks.
Operator: Thank you. [Operator Instructions] And our next question will come from the line of Terry Ma from Barclays. Your line is open.
Terry Ma: Hi, thanks. Good morning. I just had a follow-up on the ROE range of 14% to 18%. If I look at Slide 8 on a 2024 outlook, is it possible to maybe dimensionalize some of those drivers of portfolio growth, operating leverage and DTC, how much they contribute toward that ROE range?
Chris Marshall: Terry, we wouldn’t break it down into those pieces. We – I think we’re giving you guidance that we expect a certain amount of operating leverage. We’ve been generating it for the last three years consistently. So if you’re asking for a specific percentage for each. No, I’d say, on balance, we’re very comfortable at the range and I think we just leave it at that point. I would say on originations, it won’t take much in terms of rates to move to see originations produce more meaningful levels. Obviously, in the quarter, we had that rate rally right at the end of the quarter, and our team turned on a dime and started producing much higher volume of fundings. And that was really maybe 10 or 15 days of activity. So if rates do start to move down, as many people expect them to this year, I would expect originations to play a bigger role.
Terry Ma: Got it. That’s helpful. So if I look at the fourth quarter ROE of 11%, is it possible to, I guess, quantify what the ROE – have the adjusted ROE for the disruption, like what it would have been?
Chris Marshall: Yes. If not for the disruption of the fourth quarter, we would have doubled that operating income.
Kurt Johnson: For originations.
Chris Marshall: Yes, originations.
Kurt Johnson: From a pro forma perspective.
Chris Marshall: Yes. I’m sorry, I was just talking about originations.
Kurt Johnson: From a pro forma perspective, it would have been about 12.5% ROTCE for the fourth quarter.
Terry Ma: Got it. Okay.
Chris Marshall: Servicing business was back up, just to remind everyone, our servicing business, although the event was disruptive, our servicing business was back up and running in four days. So there was an interruption, but it was not very significant.
Kurt Johnson: Right. Although, we did have call it $7 million to $8 million because we waived late fees for the month. And again, doing the right thing for the customer is something we’re always going to do. And it did have a slight impact. So if you add kind of Chris’ doubling of originations plus the servicing waving of late fees, I think you’ll get kind of to that. You come back into that same 12.5% number.
Terry Ma: Got it. Okay. That’s helpful. Thank you.
Operator: Thank you. [Operator Instructions] Our next question will come from the line of Doug Harter from UBS. Your line is open.
Doug Harter: Thanks. Can you talk about the outlook for regulation for yourself in light of some of Treasury, Secretary, Yellen’s comments yesterday?
Chris Marshall: I think if you’re talking about regulation in terms of size growth, I’m not – I think you really have to look at our portfolio as in two pieces. While the overall portfolio has grown considerably and we expect it to grow by another 25% this year, only half of it is owned MSR. The other half is subserviced for a number of clients. So I don’t think if there are any limitations on concentration, I think it would be focused more on people on owned MSR. So I think we have quite a bit of room for us to grow before that becomes a concern to anybody.
Jay Bray: Yes. And if you look in total, we’re still in kind of a single-digit market share. And so I think there’s plenty of room to grow from there. And if you look at other sectors in financial services, payments, processing – other processing businesses, you certainly see consolidation to a few players. And so I think that makes sense for the servicing business as well. I mean it’s a scale business. You have to be able to invest in the technology, et cetera. And so we don’t have any concerns about continuing to grow the platform. And the key for us is sustainability, right? We’ve invested heavily in technology and compliance and risk. And so those are real key strengths of the company and we’ll continue to focus on those. We feel good about future growth prospects.
