ONIT Q2 2026 Earnings Call Summary

1Key Financial Results and Metrics

Revenue Growth: Revenue increased by 24% year-over-year, driven by strong servicing and origination volumes.

Origination Volume: Achieved record origination volume of $15.5 billion, marking a 64% increase from the prior year.

Adjusted Pretax Income:

Origination adjusted pretax income grew over 3x year-over-year.

Servicing adjusted pretax income decreased by over 60% due to increased mortgage servicing rights (MSR) runoff.

Net Loss: Reported a net loss including $33 million in pretax costs related to asset sales and unfavorable asset fair value adjustments.

Book Value per Share: Increased significantly, approximately $13 year-over-year.

Delinquency Trends: Noted a slight increase in GSE delinquencies, particularly in the 30-day bucket, but improvements were observed in Ginnie Mae delinquencies.

2Strategic Updates and Business Highlights

Asset Transactions: Completed a reverse asset sale to Finance of America and transferred legacy subservicing back to Rithm, aimed at simplifying operations and enhancing profitability.

Servicing Strategy: Focused on achieving a balanced mix of owned servicing and subservicing to optimize costs and improve returns.

Technology Investments: Continued investments in AI and automation to enhance customer engagement and operational efficiency, with a target to save about $3 million annually.

Market Position: Positioned as a top 10 nonbank mortgage originator and servicer, recognized for superior operating outcomes and customer service.

3Forward Guidance and Outlook

Adjusted ROE Guidance: Expecting full-year 2026 adjusted ROE to be at the lower end of the 10% to 15% range due to market conditions and first-half performance.

Servicing Growth: Anticipating continued growth in the servicing book, supported by strong origination performance and operational efficiencies.

4Bad News, Challenges, or Points of Concern

Market Volatility: Persistent geopolitical instability and inflation are expected to impact financial performance.

Declining Servicing Income: Significant decrease in servicing adjusted pretax income due to high MSR runoff, driven by lower interest rates.

Competitive Pressures: Increased competition from banks in the mortgage space, particularly in MSR acquisitions, which may affect market dynamics and pricing.

5Notable Q&A Insights

ROE Improvement: Management highlighted actions to improve ROE through servicing scale, portfolio optimization, and productivity enhancements, despite market volatility.

MSR Volatility: The company expects reduced volatility in MSR valuations following the sale of a significant portion of reverse assets, which had previously contributed to fluctuations.

Delinquency Trends: Seasonal trends were noted in GSE delinquencies, with expectations of recovery following typical patterns post-holidays.

Buyback Program: Ongoing share buyback program is expected to support ROE by reducing the denominator in the ROE calculation. This summary encapsulates the key financial metrics, strategic initiatives, forward guidance, and challenges faced by Onity in Q2 2026, providing a balanced view of the company's current standing and future outlook.