Brooke Carillo: Yes, that is. If you think about our earnings available for distribution increasing from $0.05 to $0.08 this quarter, $0.08 really would have been $0.10 if on the pro forma cost structure that we’ll have in Q2 marching forward. So the incremental $0.06 towards the dividend is really somewhat driven by the capital deployment that Dash mentioned, but also the April trends that we’re seeing in the business. We mentioned a 25% increase in lock volumes for the residential business, a 15% to 20% increase in the investor pipeline as well. And so a couple of pennies of that walk was from increased but reasonable growth assumptions in the near-term for mortgage banking, really underscored by what we’re seeing in the pipeline today.
Don Fandetti: Got it. Thanks.
Operator: Thank you. Our next question comes from the line of Stephen Laws with Raymond James. Please proceed with your question.
Stephen Laws: Hi, good afternoon. Brooke, so you kind of hit on it. And from the Dash’s prepared remarks, the 25% kind of run rate April volume versus the monthly average in Q1 on jumbo. And I think, Dash, you mentioned some of the financing, so even as bank production was down, you’re getting a higher share of that. Can you talk about how you view the market share opportunity to continue gaining that? And as you look out 12 or 18 months in the future, what type of quarterly volumes do you think these relationships in the market and your platform can support if you get a little cooperation from rates moving lower say, in 2025?
Dash Robinson: Yes, it’s a great question, Stephen. And we wanted to — we really wanted to focus on our strong April, given the backup and the point is that even if the market remains constrained, there’s a lot of room to the ceiling from a wallet share perspective. We feel like we’re currently in that 4% to 5% market share range for jumbo. We talked about the doubling of IMB volumes quarter-on-quarter, which it’s a really big deal because as you know, that’s been a huge historical moat for the business. Those — that crowd is always going to be an originate-to-sell model with potentially a couple of exceptions. And so just being on the screws with that cohort is important. But the bank opportunity is really the big one. It’s the big ocean, so to speak, in terms of where volume could go, and we’re really just getting started there.
Bank volume was up quarter-on-quarter, like you said, even though depository volume was down. The big thing with banks, and we’ve talked about this before is from a wallet share perspective, once you’re in, you’re in, the vendor management and the setup processes of banks, they do take time. They — because a lot of these banks are coming back to the market for the first time in a while, it has been a process to get each other switch back on. And that’s a really deep moat, right? Because to the extent we’re in there locking loans with them now, it’s unlikely they’re going to run out and go through another several month vendor management process again, right? And so that’s a big piece that I think is really, really hard to replicate and something that we really want the market to understand is that these relationships take time to stand up, certainly, personally, but also operationally.
And we really think we’re in the early innings of the bank volume, and that could be a huge driver going forward.
Stephen Laws: But definitely agree there and appreciate the comments. Can you touch on the gain-on-sale margins was quite strong for Q1. Can you talk about the margin on the April securitization — I mean, that’s the comment there but curious if those strong margins continued into April?
Brooke Carillo: Yeah. Yeah, our pricing on our April securitization was actually even stronger than our March deal. So we continue to see really strong margins. I think part of, the commentary that we wanted to make sure came across today is just the durability of what we’ve, done in terms of some of the changes to how we’re efficiently financing the business that’s come through in net interest income and also to margin on the business this quarter and also some shifts in our hedges as well. So I think that’s definitely helping from a margin perspective.
Stephen Laws: Great. And then lastly, I noticed, Euticals release or the deck, but, you know, talked about the first directly originated AGI investment and launched a closed end, closed end second product through your, you know, resi consumer seller network. Can you talk about kind of uptake and outlook for these products and maybe the competitive landscape around those type, the new products you’re launching here?
Chris Abate: Sure, Stephen, I’ll weigh in. Clearly there’s a lot of excitement brewing around certainly the second lean products in the market. I think private capital is really crowding in there. I think it’s so lucrative that even the GSEs want to be involved, which is interesting. But I think our business is well-suited to source that product. We’re kind of in the midst of rolling all of this out to our seller base. It does take time, with the training and with the guides and the process, as Dash mentioned. But we’re quite excited about it. We think we’ve got great institutional capital partners that are interested in working with us, from a distribution standpoint. I think that, you know, AGI’s time is coming. You know, you saw a great Case-Shiller reprint today.
And as you, like, head out in the horizon and think about, the trajectory of HPA from here, I think AGI is going to continue to grow. And to the extent, we can help institutionalize the product, make it safe, make it transparent, that’s a huge TAM for this business. So I think we’re very focused on both. You know, I think the home equity product front is going to be a storyline for us, over the next few quarters.
Stephen Laws: Great. Appreciate the comments this evening and perhaps a nice start to the year.
Chris Abate: Thank you.
Operator: Thank you. Our next question comes from the line of Eric Hagen with BTIG. Please proceed with your question.
Eric Hagen: Hey. How you doing? Hey so looking at the capital utilized in the quarter in the jumbo segment it looks like it was $160 million, looks like you took it up, but you ended the quarter around $200 million. Would you say that’s a pretty steady level of capital at these mortgage rates? Do you see that maybe moving around much in the near-term? Then can you also share what the return on capital is for the retained tranches from the jumbo securitization right now and maybe how that compares to levels in the past?
Dash Robinson: Sure, Eric, this is Dash. I think you could certainly see capital allocated to that business going higher. We have talked about again utilizing the CPP facility to support that. But certainly as volumes hopefully continue to trend up, I think you could see it hanging out in the $200 million $250 million range or something like that. That level of capital would support I think our run rate at or in excess of our April run rate of that we talked about. So that’s the thinking there. In terms of return on the retained pieces, its low-to-mid double digits at this point, it’s largely on the subs and depending on some of the senior on the iOS piece that we typically keep. That’s the return profile right now.
Eric Hagen: Got it. Okay. That’s helpful. Can you share how big the unfunded commitment is in the bridge book at this point? In the CPP funding, be used to support unfunded commitments or is it only for really new loans. You guys don’t have a CECL reserve for the portfolio, because you’re marking everything to market. But if there was a loss assumption that you could share for the portfolio just for benchmarking purposes that would be kind of helpful.
Brooke Carillo: Sure. We had about $513 million of unfunded commitments at the end of March. And just remember we only had $80 million roughly of draws on the quarter. This number has come down and as you’re tracking overtime and so our payoffs have significantly exceeded our draws. And so that will probably be more of a source of self financing in a bridge that use no capital on the quarter between and the capacity we had in our RPL and facilities as well as our Joint Ventures and our payoffs. And so we will we will likely not all capital is fungible, but that’s not the intention of utilizing the CPP facility. And just in terms of your commentary on our marks. We have about 150 basis points across the bridge portfolio are essentially reserves, given where it’s marked at 331 and that varied between certain cohorts. We have about 300 basis points across the entire multifamily portfolio. And our non-performing loan cohort was about 10 points of them of reserves.
Eric Hagen: Okay. That’s helpful. Thank you, guys.
Operator: Thank you. Our next question comes from the line of Steve Delaney with Citizens JMP. Please proceed with your question.
Steve Delaney: Hi. Good afternoon everyone and congratulations on the nice start to 2024. I’d like to go back and talk a little bit about IMBs, the mortgage bankers, curious, if you could just give us some general automation of approximately how many or how has that grown over the past year? Are you focusing at the very the largest players in the space, just from a standpoint of efficiency and risk return, just curious about how that has emerged here. Not something that I recall talking a lot about in the past, and your thoughts about, how big this might become? Thank you.
Dash Robinson: Sure, I can start there Steve. So our total seller base from banks and nonbanks about 190 discrete institutions of that about 115, 1-1-5 are nonbanks. And as you obviously know, we’ve grown the bank piece of that to about 75 particularly over the past few quarters. But like we talked about, IMB’s have always been you know a core foundation of our volumes. We lock loans because you can tell with a wide variety. There’s a lot of the biggest household names in that list on. We talked a little bit about this last quarter, but it’s worth underscoring which is just the diversity of our overall volumes across the seller base. We had a $1.8 billion loss quarter. We had a big April, generally no one sellers more than 5% or so of production.
And you can sort of see that when our Sequoia deals are in the market just the distribution there. And that’s really important because we have really broad reach, which we’re really proud of. As you know Steve that’s years of building this network particularly on the IMB side. So, it’s interesting in terms of volumes that we had a minute ago we talked about the banks and obviously that’s there’s a huge runway there for us to do more. But you know over the past couple of quarters, really the last several years, I suppose you’ve as you well know you’ve seen IMB’s become a more a meaningful part of overall production. They were there when a lot of the banks step back last year with some of the volatility in the banking sector. So things will move around a bit, but we remain very bullish on the IMB opportunity and we’re thrilled we have that we have those relationships because we’ve been at a point the past year where frankly they have continued to take share.
And we’ve been there now to provide liquidity to.
Steve Delaney: But I think they’ve invested in the technology. They’re way ahead of the banks. The banks have the consumer relationships, but they just don’t have the infrastructure if you will the AMD’s have for sure. Just one quick one to follow up on both. You know, there’s an old saying who’s got all the money will it’s the bank. So who’s got all the mortgages would be the bank to. When we hear about bank, both is, it working directly with banks or possibly with Wall Street treat both brokers and might be representing smaller banks that you don’t have a relationship. Just curious, where the flow is coming from on the bulk packages. Thank you. That’s my last question.
Dash Robinson: It’s definitely all of the above. There are some IMB’S that on that execute in both fashion and that was a part of the story in Q1. Certainly, partnering with larger Wall Street banks that have platforms that can ours is something we’ve done a lot of over the years and have continued to do. I think we are really just scratching the surface probably in the batting practice zone in terms of getting bulk packages off of bank balance sheets. I think Chris said, it well as rates hang out here you know, even if some of those sale prices are a little bit out of the money, it is going to compel banks to come to the table, finding more quickly and so that that remains just a huge opportunity that we’re excited to hopefully partner with flow relationships going forward with them.
Chris Abate: Yes I’d say Steve a few things, we are — as we partner up with some of these very large institutions like CPP Investments, Oaktree, others, I think we’ve continued to become more formidable as far as our ability to be aggressive and both in terms and size. So I think over time, we should continue to see more of bulk transactions. I do think, it’s worth noting that on things like CRT even bulk, one of the challenges with portfolio lenders, who haven’t been attuned to distributing to the capital markets, is you still have the same challenges, you’ve got the loan files, it’s got to be in order on a lot of these for CRT, any ratings. And so for bulk, whether it’s whole loans or securities, there’s still a lot of work that goes into those transactions.
I think the efforts that we put into to work with these banks on the flow side. I think we’ll pay dividends over time on the bulk side. And we’re now just starting to see that. Bulk was a pretty meaningful part of our Q1 volume. And so we’re very open for business to do more on that front.
Steve Delaney: Great. I appreciate all the comments. Thank you.
Chris Abate: Thank you, Steve.
Operator: Thank you. Our next question comes from the line of Kyle Joseph with Jefferies. Please proceed with your question.
