Onity Group (ONIT) Sidoti Small-Cap Virtual Investor Conference summary

Strategic Focus and Business Model

• Operates in loan originations and mortgage servicing rights (MSR), with growth driven by originations, MSR recapture, and subservicing relationships.

• Recently sold the bulk of the reverse mortgage business to redeploy capital into forward MSRs and secured new multi-year subservicing agreements.

• Maintains a balanced model: origination and servicing businesses offset each other depending on interest rate cycles, with a 50/50 mix of owned and subservicing MSRs.

• Capital-light growth strategy leverages partnerships for MSR acquisitions and focuses on maintaining a competitive cost structure.

• Prioritizes organic growth, product expansion, and optimizing liquidity for long-term shareholder returns.

Market Environment and Performance Trends

• US mortgage market remains large ($1.8–$2.2 trillion annual volume), with non-banks increasing market share and $15 trillion in servicing and $4 trillion subserviced.

• Servicing market projected to grow 3% YoY in 2026 and 4% in 2027; originations market expected to grow 13% in 2026.

• Originations volume doubled from 2023 to 2025, outpacing industry growth, with a refinance recapture rate 1.5x the industry average.

• Servicing portfolio grew 14% from 2023 to 2025, exceeding industry growth of 6%.

• Subservicing pipeline remains strong and is expected to surpass 2025 volume.

Financial Performance and Outlook

• Servicing book totals $328 billion in unpaid principal balance, split evenly between owned and subserviced assets.

• Book value per share is $74, with shares trading at a 50% discount to book, and a debt-to-equity ratio of 3:1.

• Adjusted revenue reached $993M in FY'24 and $896M in FY'25, with Q1'26 at $278M.

• Q1'26 saw originations volume of $14B (~2x YoY), servicing UPB of $338B (+11% YoY), and $28B in servicing additions (+69% YoY).

• Adjusted ROE guidance for 2026 was revised to 10–15% due to rate volatility; servicing UPB growth targeted at 5–15%.