New Residential Investment Corp. (NYSE:NRZ) Q2 2020 Earnings Conference Call - Final Transcript

Jul 22, 2020 • 08:00 am ET

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New Residential Investment Corp. (NYSE:NRZ) Q2 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good morning, and welcome to the New Residential Second Quarter 2020 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Kaitlyn Mauritz with Investor Relations. Please go ahead.

Executive
Kaitlyn Mauritz

Great. Thank you, Jason and good morning everyone. I would like to welcome you today to New Residential's second quarter 2020 earnings call, and thank you all for joining us. Joining me here today are Michael Nierenberg, our Chairman, CEO and President; Nick Santoro, our Chief Financial Officer; and Jack Navarro, President and CEO of the Servicing division of NewRez; and Andrew Miller who runs our MSR portfolio.

Throughout the call this morning, we are going to reference the earnings supplement that was posted to the New Residential website this morning. If you have not already done so, I would encourage you to download the presentation now.

Before I turn the call over to Michael, I would like to point out that certain statements today will be forward-looking statements. These statements, by their nature, are uncertain and may differ materially from actual results. I'd encourage you to review the disclaimers in our press release and earnings supplement regarding forward-looking statements and to review the risk factors contained in our annual and quarterly reports filed with the SEC.

In addition, we will be discussing some non-GAAP financial measures during today's call. A reconciliation of these measures to most directly comparable GAAP measures can be found in our earnings supplement.

And with that, I will turn the call over to Michael.

Executive
Michael Nierenberg

Thanks, Kate. Good morning, everyone and thanks for joining us. As we continue our recovery from the early days of COVID-19, I'm happy to report that we have made great progress on many fronts. We have more cash in our balance sheet today than ever before. We closed the quarter with over $1 billion of cash and liquidity and the company has never been better capitalized. We termed out and reduced our daily mark-to-market exposure of our investment portfolio. 95% of our investment portfolio away from agency mortgage-backed securities are non-daily mark-to-market or has a mark-to-market holiday. We made sure we have a surplus of capital to handle any additional amounts of advanced financing if needed.

So far to date, our advanced needs have not increased at all. In fact, due to prepays and better performance, we have actually had a net positive result in advances, which have required less cash and actually positive cash for our company. We grew book, and we will continue to focus on earnings and book value growth in both our investment portfolios and our operating business. The earnings power of our mortgage company is one that has plenty of room to grow, and I feel that we have only scratched its surface. When we acquired NewRez in 2018, the company made $38 million in pre-tax income. Along the way, we acquired the assets of Ditech, which are now fully integrated and expect the company to make upwards of $800 million in 2020.