Earnings call transcript Q4 2022

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Operator

Good day, and welcome to the AAMC Investor Call. Today's call is being recorded. At this time, I would like to turn the call over to Danya Sawyer. Please go ahead.

Danya Sawyer

Good morning, everyone, and welcome to AAMC’s Q4 and 2022 Annual Earnings Conference Call. new Officer the at Lending Sawyer, AAMC. Danya Chief of Operating Operations I'm

in include, that let that to the and include remind and we These the projections. Securities me Before These begin, of and Act you defined could our the from expectations made to XXXX. our Litigation Reform our as are the in by today's cause and executives uncertainties statements and may Exchange limited and subject release, actual forward-looking statements in but Private risks uncertainties presentations release, filings materially factors Securities not results identified to differ the are risks with Commission. press

conference and or revise Consequently, no otherwise. on predictions a forward-looking you update future as the obligation not new as to statements, forward-looking or statements these result rely future of today's are of company call information, made during undertakes date events. as whether should this any of Statements made events,

call Officer and me for mentioned, to Chief today. joining that, previously will a Jason With our call website our being XXXX quarter is and posted on review an webcast this Kopcak. today's Executive provide year for developments, of full present ahead. Jason additional corporate overview our update today's activity, our be an As and to later link outlook fourth is recorded year will the

questions. for line the open then will We

issued earlier stockholders Related website for be the investor www.altisource our morning. can found which call this Lastly, at was this can our found of materials also in information page on be amc.com. presentation,

turn Jason. I'll to over it now And

Jason Kopcak

our Alternative new the Thank of Lending Officer mentioned, you, Danya. is as Operating Danya Group. Chief

to experience She years Chief Also Steve across Officer. have career us this manage with and relationships me transactions origination her be joining We she Financial Countrywide, the asset and her is Krallman, are institutional execute started helping alternative our buyers. of all mortgage channels, brings in She at in instrumental will over industry. extremely meeting on our and to team. XX across happy

follows; I performance to $X.X QX highlight would fourth our financial improved million. Turning revenue to AAMC of quarter, by QX million One, as a of of XXX,XXX increasing at high generated or here. on $X.X relative revenue like to level for factors several the is XX%. a loss

QX million legal and Secondly, QX. loss million roughly items $X.X eliminating special be less branding, items considered of from and expenses non-recurring, realized we included to of other was that in charges, the $X these $X QX than adjusted million we three,

capital credit which as residential secured securitizations direct be endowments to then in relationships producing companies stable use known Buy a long properties invested channel. large criteria, funds exit experience our family DSCR strategy fixed residential permanent are channels, institutions our to to institutions. that unique We with not originate endowments. peers, a products. loans Box Our transitional known of originator direct of to have I income These these to capital sell we individual one other via is or as loans with go institutions such both loans. residential years in our properties that do going cash loan as wholesale, by Such loans. have well also establish we duration, XX insurance Unlike Instead, products. funds. three broker fixed multifamily short also improvements, or borrower we unique secured interest These are by market pension loans insurance for RTLs income backed these an and to needs or private value is as funds and as products income single only companies, that light are include pension duration or products four yielding the residential industry to as by distributed assets, through high

a must purchasers private with in insurance platform. permanent we are end capital, such I've weeks, at ramp recent as before be companies companies our firms to up seen the can with ourselves. unlike Therefore, that originate premium have place in and they products. origination companies Back the depend banks as credit partner on do firms securitization such market. look to infrastructure Insurance not

the as Insurance duration potentially investment such to funds invested an agency a banks a market. yields. the income risks, deal duration, typical mortgage weighted over gross and companies, average metrics XX.X% Alternative term. long that whack alternative do typically to in or two a XX% allocated assets one with same attractive endowments fixed have resetting coupon trillion pension of to range constantly portfolios, as there's very with rate opportunities, those include; a interest originations shorter have and dollars with be fixed assets. assets income are not The low such year These ours government

the a one residential collateralized multifamily value family or are As properties through reminder, four underlying single duration short improvements. notes collateral by to going that

our first $XX arbitration line. warehouse $X.X our million unpaid plus interest. owns second closed of Turning that warehouse company. takeout an insurance plus QX, manager won to in closed against We million CEO our with former judgment four In $XX a We money accomplishments. an our hearing a billion we with

Turning to and our operating QX goals XXXX standards.

points basis revenue for range expected per to RTLs Our points. as gross is XXX between loan high basis a XXX as

to reflect have and sales on revenue above consisting loans ranges a and interest loans XXX the DSCR fees, annualized from received XXX range points or between basis gain points. originating basis trips. expected be of all-in The the origination term Our

originating focus purchasing loans. as to is Our closed opposed

per we around time can is cost historical cost improve have to the the that experiences clients costs XXXX we're multiple borrower XXXX certain expecting inquiry, from respecting capture hours sorry, of to I'm on over loans. client I XXX. over spread are We and a channel acquiring direct client to of be the

significant in our process $XXX file. principally to competitive to production cost expected a Our India. advantage a is due per having This loan Bangalore, represents loan

loan approximately average XXXK. expected RTLs Our for size is

XXXK. expected the DSCR term size While average for loan is loans

in an additional a to pipeline on top XX And million direct have that of borrower active channel XX, we with of origination March As we XX million. negotiations of XX of are million.

We our volume over committed of for weeks. on next wholesale XX had we roll the a three channel XX, have soft a March million. plan direct As out channel, to broker which rollout Friday

I'll call the turn back for the to questions. operator that, With

Operator

you. Thank to turn the As call I'll we pre queue, the Krallman [Operator questions. over assemble for Stephen Instructions] submitted

Stephen Krallman

Thank you, Katie.

First question we or light sector? any U.S. in we have of recent the crisis confidence in impact felt could have what be banking if to regional exposed of we the

Jason Kopcak

Steve. And this experienced That's so which we've question filled many a haven't environment question, great issues. we times, that in any

capital capital short the affected We not providers are have, term our takeoff our by that permanent in partners, the fluctuations markets.

or the beauty are partners market. dependent model. That's our business unstable deposits the partners, securitization upon not capital of Our

that it's product hedge. Furthermore, more a clear our than is ever

over product agency are and been banks the of Our to The long mortgages is natural stress collateral has not be causing is perfectly the duration if underlying yield, rising duration, improving the loan. under they're that yield, rate severe duration environment, a short high low unlike hedged.

Second…

Stephen Krallman

credit Have to negotiated we lines we had one of access lost we that have for? previously Yes, question. any additional

Jason Kopcak

us Flagstar, Bank by actually, it No, increasing to who's Community owned about New reached line. our York out

loan Signature Flagstar Community the News, well, news acquired of portfolio. seen the as deposits Bank, owns which York Bank, the you've in the some from New If

of news York of acquisition New deposits. materially signatures since stock Community up the Bank the has ran

very good our we both bank So feel with lenders.

all We’re time providers.

Stephen Krallman

for questions Thank via the further phone to request. operator you, Jason. Back the

Operator

Capital. first from Instructions] question We'll Moore Jeff Burr take [Operator with our you. Thank Oak

Jeffrey Moore

really whatnot. My repurchase presentation was is, Jason, plan curious. Hey and how's coming? how good helpful the question I first stock

Jason Kopcak

So in Monday. out filing we purchased million in on will X.X about be that information repurchases stock our XXK

Jeffrey Moore

fantastic. Okay,

clarity that business with progress then Okay, XX about the pipeline sounds you like, want given means? can the what kind do those had XX little clarity When as to give the that that on kind close. XX? and a pot deals out. it But what, bit are a of of and to like was million you're Because little million even had you more number what's laid ask whatnot, going bit committed, to that about you talking I that more

Jason Kopcak

absolutely. No,

So Jeff. great that's a question,

is million, headed we've look have forward closing. didn't towards you when have appraisals borrowers sheets, that process what at we're who saying moved a ordered signed we term So XX

turned just our on marketing. we So

We directed have borrower. XX million committed

behind are We that.

We’re from getting loans, interested another who with millions XX in prospects doing and loans or XX talks acquiring of between us. rehab are in

originations So around in sitting XX on our direct recently and we million originations. XX was million to turned just

at. just So a that's, stage where different we're that's of It's the process.

So the and and by that's, XX, committed in we're borrowers, XX. talks with. difference XX XX that's the between then

Jeffrey Moore

And then you've got another XX in wholesales.

the So be. math yes, would quick it

Jason Kopcak

question. great Go Jeff. a It's ahead,

Jeffrey Moore

that We'll million. XX million process of call see you the XX% let's get, you that's just that XX get in

where to you're the in what's now originations marketing in going $XX without getting more channel from kind likelihood your in really million all broker be getting So basically, of pipeline out. going, say

probably is XX closing of or for one loans timeframe days. the So what, XX these

Jason Kopcak

smooth market soft underwriting. out, who XX to turned borrower just working counterparties, to we million increase saying a out is, So to and million we are with us I what of pipeline exactly, direct Obviously, call Wholesale, We what think things we you're originations, we and just with want can a between rolled day found turning we rollout. on we're from as there. we calls penetration us getting want is what every our literally XX originations. on face do

So we it right one counterparty. now, turn literally with on

XX in committed some loans. have million We

next We out have to we're counterparties. the weeks probably roll another that two X in X to going

properly. the roll volume, is very out confident the trying So of side, to we obviously, organized what wholesale a will received which to we're between an the to, received, request on side, us manage we're trying there's we're to face fashion calls it amount do tremendous demand in the frankly, wholesale the

turn Like problems. for and could us it cause to go we go production just hard on, and out some

we million So With into we're one XX submissions. it. with being Counterparty, trying to said, that log have

two We weeks. we're on to to have turn live that going five in eight another next

So or we is wholesale our production months, that wholesale to the feel over quickly. ramp good, next going very three

Okay.

marketing channel. are the to finally, done we haven't them, focus work four that's And see on we've a turned doing weeks. channel our marketing haven't volume then we And the brokers. yet. material But we incidentally And with And frankly, of three origination. And that expect coming lot started to work in our broker in a to Brokers which third of haven't started very on plan to business. towards space. we we the we've brokers from directly around part that important a over next

a from borrower million million to turned say weeks, So, if on week, being we're that at week three sitting any days. directed like, that's one from million XX XX I'd XX

should XX extrapolate or with next months I next be think over pretty you three our business. strong the can the ramp

Jeffrey Moore

like Yes, a absolutely mean, goal that. able destroy just run hit year sounds and rate it I you'll million $XXX your this to since your be like probably on

profitability the should for when that given company? we So expect

Jason Kopcak

as I'm Yes, look, infrastructure is we're it. some and the framework to a eager the day, revenue to anybody metrics, I mean provided as cost I of profit. turn at at the side the how end looking of

think for is us most I our as to important focus first around our production question on it's your you production.

statement. all as it. focused think don't basis three I I with So give as I'm forward on shareholders far. very it's to looking soon to get profit want going a to monthly my interest getting But in is live. getting be why on align a channels don't We're possible. terribly

Jeffrey Moore

Okay, channel. to so, seem to but loans are you How of all huge lot. and to that like underwrite turn you whatnot, way, of only able the loans be seems amount and bit that like going the given not channel more the, a broker a those kind be the so little wholesale once are on coming your

Jason Kopcak

a we're staffed over fair October, staff, were well. pretty So added amount of Bangalore. pretty September, November staffing We if in in we

team have a there. great We

that and So the here to XXX or and now. couple more right million team processors, easily between can add pretty month, lot a current one we there's probably can that could talent but we good handle slack standard, a But lot triple our million have of processors feel there's frankly, up we towards have what absorb we'll there of out hire we a adding processor. easily. XXX and in a maybe Bangalore We,

we there, So people and That's there very we what's a needed process we have that the on late concern of we've out supply labor, loans. feel been good the already at out can if looking to the the of challenge ours. not we've demand if

Jeffrey Moore

and kind Like, Okay. play having the how what then that? what, you how does of for that are some origination the guys you, with what, what operating are workforce? just the going differences And about and and And processes really operating are remote a of into loan with stuff like whatnot?

Jason Kopcak

because Nomura. Yes, And worked a street. And seamlessly. working clear, brought where so to things and great I Stanley, as going in just move around turn a that countries pretty over Danya world, the And reason people question. well building the the and on I'm platforms. platforms, we had that's these a Morgan, at the world, on through have to board, these second. Danya out I that's, worked we all the all at across looking to as But history had we around tremendous in be she's offices reviewing

with answer you So Danya let that. that, love Danya, I'd love here? to are

Danya Sawyer

I am. Yes. question. for Jeff thanks And the

Jason we is various do at as that job the that stages the sure in call, of is earlier in infrastructure operational to facilitate heavily have So pipeline a the to more make this kind it's highlighted earlier stages. that. And required my point weighted that we in have

the sure we to of possible. on guidelines, that of we've making focusing lot documented extent using been forms, that weeks we're making been work a the that automated recent have really So in processes sure development has standardized

Jeff Some these of loans. easier process and make to we're it hit is specifically the trying on underwrite things to to

So the outs can't nature, outlets deal. we've negotiated, lot still Jason capabilities toward tools. that at are a that every our scalable look like need and take And to we deal a has of end, investor tremendous that a created have proprietary while process. we We customer to and create given

also think point more future, officers the kind form partners. at broker a internally, used of not system web automated in this loan or they to a that deals, about rudimentary not be by based some to whether Excel identify facing qualified at underwriting model have based So can quickly that's only point externally but in

creating like internal so things, make and just is, are we're basic fashion, we things consistent shaping being seconds, scale to that that can processed minutes, and orders, for things in We're appraisal these forms orders, standardized title a processes whatever more. up doing it sure that

extent in have broker to lot Additionally, to local the requests duplicate of we those so considerations, and a making get our of want on coordinate make don't to loan I external Obviously, with. vendors XXth borrowers issues. run specific state construction endorsements into there's sure We the have we're process, with to in processes points manufacturing eliminate things special think we're we products or we the process to that for earlier hour ahead trying that partners. touch that of that titles

not possible standards, a fashion in a in but So can protocols, create the coordination we those procedures, our sure make with only deals standardized can lot with in short, to to of process do that workflows. communication is extent alignment operating risk automated we in an that tools, and credit that so efficient manner scalable

Jeffrey Moore

like the you're Wow, ahead of sounds loans lot I well, a on my property. it banks definitely local of for use

good hear. So to Thanks that's Danya. stuff really

Danya Sawyer

No problem Jeff.

Jeffrey Moore

back the more in I've queue. questions, if and I'll there's once hop got I'll circle off anyone else but some

Operator

you. Riley. Thank from take Matthew our B. We'll Howlett next with question

Matthew Howlett

that guess to big my capital that's capital, Thank you. strong The selling I -- you I asset everybody. were insurance the Thanks, What you side? pretty life on a company? up? really managers. with morning, What's the said, signed the hearing? directly for big other that are good enter? the outlook, a appreciation you typing ads owns have like what conversations on. the tip manager are you're the insurance asset your or What’s that do What additional model you companies the life question You

Jason Kopcak

our our, late we focus we pretty year, a ramp great we That's That's Matt. that That's a QX tested last proprietary easily. ours. When of and QX in generation could question. been great, lead realized

paramount forward these So to it became flows. add

I say, four another of life addition, are We're that would to takeout currently to of partners being life up probably of we're quarters another pockets money have life, we're said, six for Three three three signed those the three passes companies, eight, with talking managers. in and So five insurance. with money four partners.

a enough On just, the we we million insurance month, get couldn't side, could products. -- the sell and It it can't buckets. originate it XXX

above their market massive market. they're from amounts there's capital agency So away figure pressure liquid into to to capital, deploy ways different of out rates, the getting under

like, get sheet, amount balance raised enough capital so tremendous a there's We of, they can't insurance have they companies. matter being do And it's see in product. of that not it,

it a anybody, you quality but they with long because, those up Counterparty, they don't sign somebody insurance when they the with they companies, deliver handful work need has who products. same pick process, a with to So has infrastructure, of don't they resources partners, need people sign just have to it's and up have credible a the they the infrastructure

team for, in with light team codes long solid having history, our pretty to management And our with here, a these model are partner with we for India a with. us

the said, that of voice we course life at money and the are ton a that some managers a sidelines, beginning with so their capital, being with have the so some the on that money are the found [Ph] and And sitting year, managers. of

Matthew Howlett

they you're mean, flow did do think almost said, demand they, could up mean, would hear counterparties? I almost just you you sensational. XX been they you – you how the Did like? were have I would have big to would -- they And would say is you arrangements what look I XXX could, been

can a So just each you how of be? give could us them sense big

Jason Kopcak

step second. So let me back a

Three, another okay. a our seven, with in counterparties. for double in talks, four, eight, we're So check sure. if like We're not standard

XXX could term a the we insurance the are various just this product, fill could term able and million products, to wouldn't side be On companies million, month, originate to. originate I under DSCR talking XXX we still

have to paper, billion XXs mandate it's X each each to going be deploy mandate a it's can't companies insurance assume DSCR to like, them, the we're at to these one X I they in talking be in least I have to, -- you, of more. not they So of going billion if a and tell haven't, even to would

about an that's we million and that that scratch before, month, million billion, reaching with a company, per X the a in bucket. three so being insurance it's different groups, a said distribute that XXX And XXX and

have million typically, would how to an to each insurance irrelevant, selling you on XX But an them. insurance company. basis a can you're become if don't so caps world become sell to company, ideal Okay, much you you irrelevant monthly

won't each us, to Like, them. want X So that month XX dealing a at because don't is a for clip be become XX counterparty to million or doesn't, to with. to million we're not sell we're selling we we relevant target the million it insurance

So we on become to to a insurance fit because a million we have to partner quickly these get month, very, we then XX companies.

on So term we that you side. then look similar, they're so get to you XX become it's if you in transitional at to to that's to to that's the you're going going Typically, And typically to got on side. at insurance sell slugs not the XX million unless the size. look sell irrelevant, order companies

of So to of with of that's get to that We're level. that, our strategies that in to volume capable get kind numbers. kind getting that kind of is

up and signed up person kind why we him with I they think that's to directly. can no, the talking get of we're or there us with sign

hopefully So yes, that that's Matt. helps,

Matthew Howlett

clarifying And look Yes, just up to you next And just on time it this went, that's an It’s them for you incredible other guess what the can like you they us. product. this RTL that last the It's question went about I my you great the margins they're model. on gave to hear that. seeing it certainly It's thanks does. side. on what know deliver

then long-term driving look as you what what's sustainable And curious, you? margin. XXX do you'll get at for to Just And that? it

Jason Kopcak

long rise I've around Look, side, And I’ve been the seen I've side, loan XXX, transitional points. on on the XXX RTL margins time. space seen a

more the in when So players more actually involvement, is typically more now. so the market spread has and there's as wide securitizations,

going and this don't the in a in don't to it the a current a lot players, partners have have on markets weak of infrastructure sector current market, tough last that and bank there's market, run, short good this shakes when handle out what the capital just on the year’s people who score the shake on securitization good a lot of year So don't takeout environment. have in

deliver XX million being to shop into we wise. the for borrowers there's of when out. I to said, the any insurance medium a your guys these and With can't month, to, are smaller And liquidity. able close lack when we've XX start players that's to just go again, companies. while originate million That's ability So shook say that of wholesale size us, to loans, that to fund shook lot why are getting us now and a to noticed coming

our So we're spreads We with that because that we valuable. have a have liquidity being said, our know spreads provider. what widened widened is have

liquidity we've and so to control, And have able exercise have permanent have, that capital. we a capital are takeout provider. we because pricing been good strong we And partners

this have spreads because price widened, point market. at our we're a taker the not So in

loans, So transitional that's have why on the spreads our widened.

much can how the production do, that fact about know in on more that side. we're because have focused matter the advantage get it's so on a we to production trying is, we we're And of competitive up, positive, a really a we very

for side, demand competition, On there's is we're insurance same there's by as aren't DSCR a properly. an that, the there's structured originators, lot a of companies but whole, DSCR who thing a what seeing product insatiable

so And out. getting they're washed

out bit we the people it's RTL is shaken on little do But term right on the market the just a than a power. more and pricing give bit now So more competition feel a we fact side. side; us

lately I us think markets strength. positioned be to position is turbulence that, The we're causing in a of So right.

goes very saying So much we're to that our that on production. focused

those channels. place, we're to be other our three talking broker we now, It's, going channel. in put wholesale, get borrower, surely you're this right channels, we how right in our The to add. effort and counterparties have do simply to have then much counterparties it's to production goal be? where director, to we And the point, needs it to have Our value

help So does Matt. it

Matthew Howlett

really nonetheless, margins, appreciate switches. incredible all Look I the Absolutely. context and

Jason Kopcak

you. Thank

Operator

you. question Oak Moore, Jeff we'll And Capital. our next Burr take Thank from

Jeffrey Moore

Is And happening, with are you rising freezes affect Do a able origination then with -- be sales. banks? lot a How for and What on that? this do it if thoughts does up of Kind do general failures rates, how, a to what that you, bank model? lending is how you? your the that environment environment? with your better are and worse you'll think of

Jason Kopcak

great environment look, going lend to right for they now we're the a one mentioned banks, When similar less. A I into have Yes, tendency question. Matt. banks to like tough a

see pulls back. their So lending you'll

with a in And that's firms that more us. the space being because Street they quite this banks positive the for understand so don't said, peripheral The love with are it. that just pullback,

the less driver's that So it companies I've companies in can't it. the insurance natural gives conversations us competition, know of seat get matters there's it. insurance They pricing more had And product; right fact The product. is now. the companies the power. This they're is insurance a frankly, enough love know the plenty

And to and out your allows beneficial to question power, some us market for it's us pricing of share, It puts your answer very more This process. environment us -- the weaker in us. this it gives is it us long-term players. out build weeds more to it so to take our allows

us. win a win it's it's So for

a is it's, volatility for capitalize the are is On you over opportunity. the thing years XX people day, working the us. very street us there one being the important my But, experienced and opportunity the street, that on it's are learned a again, sidelines. opportunity. It's At market for who thing the I've volatility creates of heading creates and the end on learn, this very one great for to

and that is the enhancement It's underlying a over [Indiscernible] short a The it high often. is it. a improving always resets yield has it's hedge. life natural of to product of lot product again; the Our duration loan,

a rather points, that bonnet would It's basis you hedge that -- XXX So that equity XX has or book has would more, you points you're it, a what of XX% it a when at equity. it's you a XX have? brainer. no with natural or have what XX have at rather of You done rather points loan

Jeffrey Moore

of that you availability pencil even a or can probably you're to we have that originations Okay. line or kind doing numbers some How $XXX the going million $XXX kind point? much of month need would at to say of be to do, credit in in million

Jason Kopcak

have being we four be right able three look, lines without to pressured. now. those Well, $XXX Frankly, month, a turn like to you million should times

warehouse million current enough $XXX million our could production. than So in handle lines or more $XXX capacity

earlier, asking our yield. more lenders us us sheet, we more I like like to to product come warehouse line, if As they balance mentioned have the they want

right the the on So is asset, we to those you're goal facilities well. warehouse but to And so the focus as the office, our get increasing have and we have the now a indicating. profile, they're numbers in numbers they people primarily production, like back enough that line enough hit

Jeffrey Moore

-- how guess are on there Okay. my the I last question is, the lawsuits? how are Redleaf Luxor any or updates the

Jason Kopcak

is will be to in that information just Yes, on going filed XX-K, which Monday. our be

They there. be So there's they'll no out material -- Monday. information there's There's real real, in on XX-K. the will that be no update, but will be

Jeffrey Moore

much the Jason. to and looking next call. Great very Thank cool. forward you stuff Okay,

Jason Kopcak

Thanks That guys. good. sounds

Operator

question, closing questions the no over or like any additional additional call Thank back remarks. Mr. to additional I'd for in Kopeak you. no turn queue, With with to

Jason Kopcak

Again, thanks Katie for the intro.

excited team's last great do joined We're I'm Since in position a a July say we've our think things done. to by sorry, lot to to want gotten I this teams just I I I'm going be accomplishments year. great Finally, forward. the

up So I look performance Thank forward to our throughout ramping the you. year.

Operator

That will We your participation. conclude appreciate today's call.

Altisource Asset Management (AAMCF) 23 Mar 232022 Q4 Earnings call transcript