Doug Harter: And any risk, obviously, you’re well above your own sort of target capital ratios, but if they were to apply more stringent capital rules to you, kind of how do you think capital liquidity rules? How do you think you fare if it went to kind of more of a bank like capital standards?
Chris Marshall: Well, the targets – the equity targets that we put out, range at 20 to 25, is so much – so far ahead of what is required of banks that I don’t think that’s any type of concern for us. I can’t even imagine it becoming anything of a conversation. Again, we’re talking about a range of 20 to 25 and we’re at 29 today. I’m not sure what the average bank is, but maybe it’s half that level. So I don’t think you – I think you should think of us as having a rock solid balance sheet.
Doug Harter: Great, I appreciate that, Chris. Thank you.
Operator: Thank you. [Operator Instructions] And our next question will come from the line of Michael Kaye – Sorry about that. Michael Kaye from Wells Fargo. Your line is open.
Michael Kaye: Hi. You’ve grown your servicing portfolio very fast and the outlook for further acquisition seems very favorable. But bringing on so much business, how do you think ahead and avoid a melting ice cube effect for the servicing portfolio, when the acquisition opportunity eventually slows down even now with a very low runoff of the portfolio, your originations are nowhere near able to offset that. Thanks.
Chris Marshall: Well, in actuality they are with an 80% recapture rate. The concept of a melting ice cube doesn’t really apply to us. We’re growing the portfolio, CPRs are very, very low at the same time and we’re growing it both through acquisitions and through subservicing growth. So I think if you look at the mortgage industry whole, historically, that melting ice cube description did apply. But when you have recapture as high as we do, as well as correspondent channel, co-issue channel replenishment has not been a problem for us at all. And I can’t imagine even if acquisitions were to slow down to half the levels they’ve been. And if you look back to say, 2019 through 2020, that was the situation and we were still growing at a very, very strong clip.
Jay Bray: Yes. Michael, to be specific, if you look at our co-issue correspondent DTC business, where we can maintain the portfolio and grow it slightly. So we have a sustainable model without any bulk acquisitions. But I mean, look at our track record over the last 25 years from a bulk acquisition standpoint, and I think it speaks for itself, there’s always going to be portfolios in the market and as you’ve seen us execute the last few years, when we will get our fair share of those. So I think from a growth standpoint, we feel very good about our existing kind of origination channels and the co-issue channel and the bulk opportunities are going to be there. And so I think we feel really good about it.
Michael Kaye: Okay. Thank you very much.
Operator: Thank you. [Operator Instructions] And I’m not showing any further questions in the queue. I’d like to turn the call back over – actually, I have a question from Derek Sommers from Jefferies. Your line is open.
Derek Sommers: Hi, good morning. On the $1.1 trillion guide for servicing book at the end of 1Q, what should we anticipate for the mix between forward MSR and subservicing? And then if you could talk about kind of your pipeline expectations for subservicing moving forward, that’d be great as well.
Chris Marshall: It’s a great question. I think in the first quarter, it’s about one-third subservicing. No, it’s about two-third subservicing. One-third owned. A lot of these deals were deals we closed in the fourth quarter and they’re just boarding now. Over the course of the year, we’d like to see a little bit more subservicing because traditionally, as we told you, we like to have a 50-50 mix and we’re a little bit higher. I think we ended the year more like 60-40 or roughly. So we’d like to board some large subservicing, but little too early to tell and that’ll play out depending on what market opportunity is presented.
Derek Sommers: Got it. Thank you. And then on your comments about originations EBT being double, if it weren’t for the cybersecurity incident. Is the assumption on that double that the incremental volume would have come majority from the DTC channel?
Chris Marshall: Yes. Yes, exactly. And just the timing of the event, it happened really as there was that mini rate rally. So we did lose some key days in the quarter.
Derek Sommers: Okay, got it. And then if we were to see any pickup in originations volume looking forward, would that assumption still hold that the mix would shift towards the DTC channel as well?
Chris Marshall: Yes, of course. I mean, correspondent and co-issue are pretty steady producers. DTC obviously is going to flex up and down depending on rates. We don’t expect rates to go much higher, but as they do come down, that should immediately generate more activity in DTC.
Derek Sommers: Got it. Thank you for answering my questions.
Operator: Thank you. And I’m not showing any further questions in the queue. I’d like to turn the call back over to Jay for any closing remarks.
Jay Bray: Thanks everybody for joining us and we look forward to further conversations. Thank you.
Operator: Thank you for your participation in today’s conference. This does conclude the program. You may now disconnect. Everyone, have a great day.
