Walter Investment Management Management Discusses Q2 2012 Results - Earnings Call Transcript

Aug. 9.12 | About: Walter Investment (WAC)

Walter Investment Management (NYSE:WAC)

Q2 2012 Earnings Call

August 09, 2012 10:00 am ET

Executives

Whitney K. Finch - Vice President of Investor Relations

Mark J. O'Brien - Chairman and Chief Executive Officer

Charles E. Cauthen - Chief Financial Officer and Chief Operating Officer

Denmar John Dixon - Vice Chairman, Executive Vice President and Director

Analysts

Paul J. Miller - FBR Capital Markets & Co., Research Division

Douglas Harter - Crédit Suisse AG, Research Division

Michael J. Grondahl - Piper Jaffray Companies, Research Division

Bradley G. Ball - Evercore Partners Inc., Research Division

Bose George - Keefe, Bruyette, & Woods, Inc., Research Division

James J. Fowler - Harvest Capital Strategies LLC

Operator

Good morning, and thank you for standing by. [Operator Instructions] I would now like to turn the call over to your conference host for today, Ms. Whitney Finch. Ms. Finch, you may begin.

Whitney K. Finch

Thank you, and good morning. Thank you for joining us for Walter Investment Management Corp. Earnings Conference Call for the quarter ended June 30, 2012. This call is being webcast live on the Internet, and will be archived on our website for 30 days.

This morning, management will discuss earnings for the quarter ended June 30, 2012, as well as our current business outlook. Let me remind you that comments on this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These statements are based on the Company's current expectations and involve risks and uncertainties that could cause actual results to differ materially from those in the statements. Please refer to our SEC filings for a full discussion of the risk factors that may affect any forward-looking statements. Except for any obligations to disclose material information under federal securities laws, we undertake no obligation to release publicly any revisions to forward-looking statements to reflect events or circumstances after this conference call.

We will discuss non-GAAP financial measures during this call. These non-GAAP measures are fully reconciled in the tables attached to the earnings press release we issued earlier today and the presentation accompanying this call. We believe that these measures provide investors useful information about our business trends. However, our non-GAAP measures do not replace and are not superior to GAAP measures.

Participating in today's call are Walter Investment's Chairman and CEO, Mark O'Brien; COO and CFO, Charles Cauthen; Vice Chairman and Executive Vice President, Denmar Dixon; and CAO, Kim Perez. Once we have completed our prepared remarks, we will open the call to questions from our dial-in participants. At this time, I will turn the call over to Mark.

Mark J. O'Brien

Thank you, Whitney, and good morning, everyone. The year has passed quickly since our July 1, 2011 acquisition of Green Tree. Much has been accomplished in this timeframe, including the integration of the businesses, the combining of the management teams, the boarding of over $50 billion in new business and the achievement of the financial targets we projected.

Our first half results have produced EBITDA in an annualized run rate of approximately $235 million and we have made great progress in our goal of reducing our outstanding debt. You will notice that we have reduced our corporate indebtedness by a total of $89.6 million, equal to over $3 per share in values to our shareholders.

We have a solid platform with distinct advantages that afford our shareholders a great vehicle for which to participate and a significant growth opportunity within the mortgage servicing sector. We continue to execute for our clients by delivering strong portfolio performance in a regulatory-compliant matter.

We believe we are well-positioned to continue to deliver solid financial and operational results for the remainder of 2012. Our business development opportunities, which currently exceed $300 billion in UPB, remain robust and continue to develop at a positive fashion. We have a number of very attractive strategic opportunities with both existing and new clients that are solidly within our wheel house of preferred product, and which we expect will be awarded during the second half of 2012.

We believe that these opportunities, in conjunction with further developments of our delinquency flow programs, opportunistic MSR purchases and the ramp-up of our origination business, will combine to drive strong performance and results in the second half of this year and position us very well for 2013.

I'd like to ask Charles to review some financial and operational highlights from the quarter, and then Denmar will provide you with an overview of the market and some additional color on our business development opportunities and activities. After that, I'll make a few brief remarks to conclude our presentation before we open the floor to questions. Charles?

Charles E. Cauthen

Thanks, Mark. As Mark mentioned, we continue to produce the same strong financial and operational performance in the second quarter of 2012 that we generated in the first quarter. Total revenue was $164.1 million for the second quarter, comparable to the $165.8 million earned in the first quarter. We continue to earn an attractive level of incentive and performance-based revenues, although the mix was more towards activity-based fees in the second quarter as compared to incentives in the first quarter.

Improved recovery income in our ARM business also contributed to this mix. And we feel confident about the opportunities for us to continue to produce positive results in incentive and performance-based revenues and in recovery income for the second half of the year.

Results for Q2 include a pro forma adjusted EBITDA of $58.2 million, in line with the $59.1 million earned in the first quarter. This brings annualized first half pro forma adjusted EBITDA to a run rate of approximately $235 million.

Core earnings for the quarter were $18 million after taxes or $0.62 per diluted share, compared to $20.6 million or $0.71 per diluted share in the first quarter of 2012. The $2.6 million decline in core earnings reflects certain increased servicing cost and lower insurance revenues, partially offset by improved results in our ARM and Loans and Residuals segment.

EBITDA remained even quarter-over-quarter despite declining core earnings, because pro forma adjusted EBITDA includes cash flows from our residuals trust, which improved by more this quarter than the improvement in core earnings for this segment.

Cash flows will vary from GAAP and core earnings for this segment because of the way cash is either trapped or released from the trust from period-to-period.

GAAP net income was $0.4 million or $0.01 per fully diluted share. This was down by $4.7 million from the first quarter with half of this decline in the core earnings decrease and the other half from lower fair value gains on our Non-Residual Trusts, which is not included in either EBITDA or core earnings.

The Servicing segment generated revenue of $98.7 million in the second quarter, which included $74.2 million of servicing fees, $14.4 million of incentive and performance-based fees and $9.1 million of ancillary and other fees. All of these amounts were essentially even with first quarter's results.

The Servicing segment's core earnings before taxes for the second quarter was $26.2 million, with a decrease from the first quarter due to an increase in expenses in Servicing segment of $3.9 million, all of which was in compensating interest and legal fees. The higher compensating interest was caused by the increase in HARP refinancing. We anticipate we will be able to more than mitigate this impact in the second half of the year as our originations capability ramps up through the remainder of 2012.

During the second quarter, the ARM segment generated revenue of $9.5 million and core earnings before taxes of $4.2 million as compared to $3.4 million in the first quarter. Gross collections for the second quarter increased 14% and margins improved as compared to the first quarter, driving these higher revenues in core earnings.

Our new agency model in the ARM segment was implemented ahead of schedule near the end of June. We expect this to contribute to our additional revenue growth in the second half of the year as this new product gains traction. The insurance segment generated revenue of $17 million in the quarter, roughly $3 million lower than the first quarter. The decrease reflected lower normalized revenues as compared to the higher revenues on new businesses set up in Q1 from the Walter legacy portfolio and from the Q4 2011 new boardings.

Insurance segment core earnings before taxes was $8.8 million for the quarter ended June 30, down from $11.7 million in the first quarter of the year on this lower revenue number.

The Loans and Residuals segment, which includes the legacy Walter Investment owned portfolio, generated net interest income of $17 million for the second quarter, $1.7 million than the $15.3 million generated in the first quarter. This improvement was attributable to a higher average yield on the loan portfolio. This, in turn, drove an improvement in segment pretax core earnings to $8.2 million for the second quarter of 2012, as compared to $6.7 million for the first quarter of 2012.

Performance of the Walter Investment legacy portfolio remained very good in the quarter as a 34 basis points increase in 30-plus delinquencies to 5.8% at June 30, was more than offset by lower levels of REO inventory, which declined to 756 units.

We ended the quarter with liquidity of $83 million, including cash of $38.3 million and availability on our revolver of $44.7 million. Subsequent to the end of the quarter, the company strengthened its liquidity position by adding $45 million to its available revolving capacity, bringing the total revolver to $90 million.

The company made payments of $21.5 million to reduce outstanding corporate indebtedness during the quarter, bringing the total reduction in corporate debt since the acquisition of Green Tree to $89.6 million. Over that 1-year period, the company has reduced its leverage ratio from 3.9x to 3.2x. And I'm pleased to report that in conjunction with our annual reviews of the company, both Moody's and S&P have recently affirmed our corporate debt ratings.

In summary, we continue to produce strong and consistent financial results from our business, a direct result of the operational excellence and strong performance of our people. Cash flows produced by the business have gone to quickly pay down our debt, which have positioned us well when the time comes to refinance that debt. We believe the core business will continue to produce strong results and as new business comes on board as we expect it will, we will continue to grow revenues while maintaining our strong, attractive margins.

I'd now like to turn the discussion over to Denmar to provide some color in the current market conditions, as well as our opportunities and outlook.

Denmar John Dixon

Thank you, Charles. As we view the broader market, it continues to be our opinion that the opportunity is tremendous, with something over $1 trillion of servicing expected to transfer over the next few years.

During the first half of 2012, we saw fewer transfers take place than expected, and those that did transact were predominantly platform at MSR sales that had been better awarded in late 2011 and early 2012. Various industry-wide regulatory actions, including the DOJ settlement, clearly caused key market participants to take pause to analyze the impact on their portfolios and to adjust their plans to implement solutions. Several of those participants noted this on their analyst calls. We do not believe that the settlement for these slowdowns in any way caused the market opportunity to decline. It only delayed transfer activity, and in fact, has added to existing servicing burdens. The market opportunity remains robust.

Now, I'd like to make some key observations relating to our pipeline and business development efforts.

As previously noted, we were below our expectations for the first half for both awards and boardings. However, the pipeline of approximately $300 billion has not been reduced, only extended. We did not miss any of our high priority opportunities, and in fact, several of those opportunities have matured toward the award phase, which we expect will transact in the second half of the year.

In addition to the flow programs that we've discussed, for example, we are currently in exclusive negotiations for both subservicing and MSR opportunities, representing an excess of $22 billion of UPB, which we expect will be awarded by year end. We've consistently stated that the lead times, especially for sub-service business, are extended and the timing of awards and boardings can be lumpy in nature. That continues to be the case. We believe our unique value proposition to owners of credit and the scale and breadth of our platform will allow us to garner more than our fair share of this business going forward.

As previously disclosed, we expect our second larger delinquency flow program will be awarded soon and should contribute approximately 15,000 units to 2012. Combined with our first delinquency flow program initiated in June, we expect these programs to generate average monthly flows sufficient to offset our normalized rate of unit run-off by the end of the year.

As a key component of our business development efforts, we focused on to make consistent progress regarding access to alternative capital sources, and we are actively bidding on MSR opportunities that meet our parameters in conjunction with these sources. We closely review all opportunities presented in the market and participate in those where we believe we can achieve returns that are solidly accretive to our goals.

Finally, on the originations front, we continue our two-pronged approach of ramping up our bank direct origination efforts, while continuing to transfer warm leads to a fulfillment partner on a broker basis in order to meet demand. We continue to build out our capacity and we'll begin to deliver loans directly through the Fannie Mae window next month. In either case, the servicing will be retained by us. The contribution from this segment is building as we reach our targeted volumes and increase the mix towards directly originated loans.

I'll now hand the discussion back to Mark.

Mark J. O'Brien

Thank you, Denmar. We've had a very successful first half of 2012 and remain focused on delivering strong operational and financial performance, as well as winning new business that we believe best fits our fee-based, high-margin capital-light business model. We continue to be patient in our pursuit of product that is the right fit for us despite the extension to market timing that has occurred in the first half of the year.

We anticipate that our patient and thoughtful approach to new business will be rewarded in the second half of 2012, especially with respect to our preferred subservicing opportunities. Based on our continued strong operating results and the expectations for the company's other initiatives and business development opportunities, we continue to anticipate that our 2012 pro forma adjusted EBITDA will be at or above the midpoint of the previously provided range of guidance of $225 million to $240 million. We have accomplished a great deal in our first year since the Green Tree acquisition, and we remain convinced that the opportunity is still in its early stages and the coming results will be impressive.

That concludes our prepared remarks. And we will now open the call for questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question does come from Paul Miller.

Paul J. Miller - FBR Capital Markets & Co., Research Division

Some that a lot of people are concerned about out there in the industry is force placed insurance. Denmar, can you explain a little bit where you guys stand with force place insurance and have you got any -- I believe you did get caught up in some subpoenas here and there. I know you're policies are much different than other policies, but can you just say where you stand on that force placed investigations?

Charles E. Cauthen

Paul, this is Charles Cauthen. Where we stand on it simply is we were subject to a couple of request for information or subpoenas, or whatever they were called, the New York Department of Banking and Financial Regulation, whichever group that is, was the most notable one. We've provided all that information and have had no further discussions or contact or questions. Any other regulatory authorities that request information, we are cooperative and we provide it, because we're very comfortable and confident that our business practices meet all the requirements out there. You can go through the CFPB's examination manual or any of the other information you might read publicly about what best practices are in this business and we follow those very, very stridently. If on Slide 4 of our presentation today, just to give you some indication of how much this business means to us, we had, in the second quarter, lender place business on residential real estate loans, commissions were less than $2.5 million for the quarter. The revenue side was less than $2.5 million for us in the quarter. So it's not a major item or impact to our financials.

Paul J. Miller - FBR Capital Markets & Co., Research Division

Okay. And then can you talk a little about the flow arrangements? I know you got the one up and kicking and that's doing very well. You mentioned now that you have another one that could take place in the fourth quarter. How many of these relationships do you think you can enter in over the next couple of years?

Denmar John Dixon

Paul, it's Denmar, let me take that one. I think that it should be several at a minimum. The product, once you get the program, the kinks worked out of it, the detail work is a very efficient program for the clients. And there's a joint effort, if you will, with the GSE's and others to roll this out wider. So our expectation is if you look at the flow programs, there's really 2 paths, there's the settlement path that you saw from BofA. We don't expect the BofA settlement to be the only settlement out there, there will be others. And given our position in the marketplace, we would expect to be able to participate in more than our fair share and then there's the regular way of flow programs, as we've described in the past, where key clients are looking to offload delinquents as they come in so they can right size their servicing expense on their platforms and there are multiple clients that would benefit from those programs. So we're very excited about getting the first 2 done. We are in discussions on others and we would look to add to that flow as quickly as we possibly can.

Operator

Our next question does come from Douglas Harter of Credit Suisse.

Douglas Harter - Crédit Suisse AG, Research Division

I also just want to touch base on the flow programs. First, just a point of clarification. That 10,000 units per month on average, is that the combination of the 2?

Mark J. O'Brien

Yes, it is, Doug. We have one program in place already as we've talked about, started in June, that's the smaller of the programs. We expect the second program to get kicked off in the latter part of this year, so we don't anticipate it contributing but about 15,000 units in this year. But when you add the ongoing expectation of flow under that program to the first program, the 2 combined are expected to average about 10,000 units a month.

Denmar John Dixon

I think that what's important, we've said before about those programs, if you think about that 10,000 roughly approximating our normalized disappearance, we're actually picking up UPB because the average dollars are greater. And then keep in mind on a margin basis, on average, the margin for those programs are going to be higher than the legacy book.

Douglas Harter - Crédit Suisse AG, Research Division

Got it. So when you say the margin is higher, it's both, I would imagine, both revenues and expenses, but the margin shakes out to be higher?

Mark J. O'Brien

Yes.

Douglas Harter - Crédit Suisse AG, Research Division

And then on the origination side, could you just talk about what the extra sort of revenue or profitability potential is there on a loan that you originate and sell to the GSE's versus just selling a lead to a broker?

Mark J. O'Brien

Well, yes. I mean, don't want to give any specific guidance as to what we have embedded in our projections or expectations, but in general terms, I'd say, I will just say we have some targets based on recapture opportunity within our own portfolio that we think are achievable. We expect to ramp up to those targets over the next few months. The profitability that we expect to generate, I think, that when you look at the profitability of other originators out in the market, that's what we expect to do. Something very equivalent and comparable to that.

Operator

Our next question does come from Mike Grondahl of Piper Jaffray.

Michael J. Grondahl - Piper Jaffray Companies, Research Division

In terms of the $22 billion that you're in exclusive negotiations with. One, I just want to verify that that is in addition to the forward flow programs that you described. And secondly, just can you give us a feel for how many sellers that represents? Is it a couple, is it many? That would be helpful.

Denmar John Dixon

Mike, it's Denmar. Yes, that is in addition to the flow programs that we've been discussing. And I don't want to get too specific about the numbers of sellers, but there are several.

Michael J. Grondahl - Piper Jaffray Companies, Research Division

Okay. And then secondly, Denmar, maybe could you describe your efforts, maybe your tenacity in kind of going after MSR purchase deals? I mean, how much effort are you guys dedicating to that channel?

Denmar John Dixon

I'd say, Mike, that it's fair to say we're dedicating a lot of effort to that channel, and that comes in 2 forms. We obviously on the business development side, are spending a lot of our people's time in sourcing those opportunities. And then on a parallel path, as you would imagine, we're working with capital sources and partners for the capital necessary to put those transactions together on a basis that meets our model and our hurdle. So it clearly is an important part of what we're doing, no less or more important than the subservicing business that we are consistently after. And if you just think about the nature of the business development effort, it's in a lot of cases, the same client base, the overlap is very deep. So we're having multiple discussions with the same clients on different products.

Mark J. O'Brien

Mike, I'd just kind of say -- reiterate that. To be a little more specific, I would say that we're engaged in just about every MSR transaction that we hear about that comes to market we get engaged in. We usually put -- we will usually put $1 billion on most of those, not necessary all, but many of them. But I will say that our bidding is more focused on certain MSRs that are fit for us and that we can be the most competitive with and the most attractive to us.

Charles E. Cauthen

Mike, let me reiterate that point, because I think it's an important one and we all have a finite amount of energy and capacity, and we take a quick look at everything. But as everything in the servicing business, all portfolios are not created equal. Some we think set us very nicely. Others, I think, we would prefer that unless we could get them at a bargain basement price, we'd be better off passing. It's an interesting time in the MSR business, and we think there will be opportunities for us in the right places.

Michael J. Grondahl - Piper Jaffray Companies, Research Division

Got you, that's helpful. And then maybe, could you help us understand your investment in the origination channel? I don't know if you can help with number of people or dollars you think you've made as an investment there, and then maybe what you think the payback is on that investment?

Charles E. Cauthen

Yes, the hard dollar investment is not great. I mean, we have most of what we need on hand in terms of that type of thing. So the investment we're really making is in the ramp-up of it and the hiring of people. We've made a pretty dramatic increase in our staffing compared to where we were. We still have some more to go. And I would say we're incurring some very slight investment from an operating perspective in that ramp-up. But once we get it ramped up, which will be soon, we think it's going to be very fine for us. Soon as we can start delivering the whole loan products to the windows and so forth, that'll turn positive quickly for us.

Mark J. O'Brien

Just think about this, Mike. One, 2 big expenses in the origination business have always been the people and the leads, right? In this case, we've got the people as anyone else would, the leads are coming to us relatively cheaply, very cheaply through mostly the HARP program and the economics that we see in the market today around that program are relatively positive. So to Charles' point, the combination of those factors make it a positive program very quickly as again.

Mark J. O'Brien

I think it's important to remind you though that this isn't a new business for us. We have been doing it in the Green Tree side for a good while. And on the Walter side, we've been refinancing our REOs and we've been doing 100, 150 at least a month on a pretty regular basis. So this is a question of expanding our capacity, not literally creating it, A. And, B, to reiterate what Denmar said, given that most of these, most of the big opportunity currently is coming out of our portfolio, our cost to acquire leads is virtually nothing. We can do an awful lot of that with technology. And as importantly, to the extent you're doing HARP and HAMP, the risk associated with originations is dramatically reduced from the risk that other originators have incurred over the past few years. So all in, we think it's going to be quite profitable for us. It is not a de novo startup, and I think we have picked the time to grow the business on a moderate-risk platform.

Michael J. Grondahl - Piper Jaffray Companies, Research Division

Got you. And then lastly, maybe for Charles. Charles, help me understand just the difference between an incentive fee and kind of an activity-based fee? You kind of used both of those terms.

Charles E. Cauthen

Sure. The difference, incentive fees are really generally based off of broader portfolio based, portfolio performance-based characteristics and they're kind of earned, I would say, periodically. So on a quarterly basis, you'll get measured as your portfolio performance and how it does, and those get paid out in that form of fashion. The activity-based fees are typically -- I mean, that would include HAMP mod fees, for example, short sales incentives, those type of fees. So that's what we mean by activity-based fees.

Operator

Our next question does come from Brad Ball of Evercore.

Bradley G. Ball - Evercore Partners Inc., Research Division

How much UPB was added through the flow agreement announced in June?

Charles E. Cauthen

It was a small amount, probably about $0.5 billion. Yes. The initial transfer was lower than we expected as potential modifications were pulled out of that pool initially, but we expect those to come back into the pool relatively quickly over the next few months or so.

Denmar John Dixon

Yes, the mods we're talking about were from the DOJ settlement. That was impacted along with many other things by that project.

Bradley G. Ball - Evercore Partners Inc., Research Division

Yes. And you've mentioned that the dollar amounts of those that are coming on are higher than what's running off. What's the average loan size of what's coming in through the flow agreements?

Charles E. Cauthen

Our average coming on board is the $175,000 to $200,000 average, our average run off is in the $120-ish range, $120,000 range.

Bradley G. Ball - Evercore Partners Inc., Research Division

Great. And what was the average UPB overall for the quarter?

Charles E. Cauthen

The average through the quarter per loan or for...

Bradley G. Ball - Evercore Partners Inc., Research Division

No. Total average UPB.

Charles E. Cauthen

It was probably $84 million.

Bradley G. Ball - Evercore Partners Inc., Research Division

Okay. So you ended the quarter 84, 7, sorry $82 million. Excuse me, $82 million.

Charles E. Cauthen

We ended the quarter at about $82 million, I believe, and started the quarter at $86 million.

Bradley G. Ball - Evercore Partners Inc., Research Division

Got it. And then you mentioned in the press release that one of the reasons for lower core earnings and servicing was lower contractual servicing fees.

Charles E. Cauthen

Very slight. It's of that and that was on the UPB decline.

Bradley G. Ball - Evercore Partners Inc., Research Division

Okay. That's out, not for fee for UPB?

Charles E. Cauthen

Not rate, that's right.

Operator

Our next question does come from Bose George of KBW.

Bose George - Keefe, Bruyette, & Woods, Inc., Research Division

Can you discuss what drove the increase in the G&A to $34 million from $29 million? Was that related to some of that origination buildout?

Charles E. Cauthen

It included some amount for that. But also if you recall the compensating interest that I mentioned and legal fees and the servicing business, it will be in that line item, too.

Bose George - Keefe, Bruyette, & Woods, Inc., Research Division

Okay, great. And then if I did, I have missed this on the early responses, but did you mention a potential way to kind of scale this origination opportunity?

Mark J. O'Brien

We are organically growing our capacity now, Bose. We didn't mention any other methods of doing that.

Bose George - Keefe, Bruyette, & Woods, Inc., Research Division

I mean, just kind of thinking about you have an existing portfolio and when we think about how much could run off from that for youtube potentially have HARP resized? Is there some way for us to think about how much could flow to you as originations?

Charles E. Cauthen

I mean, it's very hard to know the pull through rates, and I think it varies a lot across different portfolios.

Denmar John Dixon

I think what we said the last quarter and I have to think about the latest update I've seen that roughly half that pool would be HARP eligible, you then grade it by how much pickup would be available to that 50%. And I think overall, the market, there's a scattering of numbers around there and what the eventual pull through is, but you make 90% contact with the bar that are eligible, you get 60 that respond and you pull through like 20% or 25%.

Bose George - Keefe, Bruyette, & Woods, Inc., Research Division

Okay, that's great. So it's effectively whatever part of that 50% that you can capture, you can refi.

Denmar John Dixon

Yes. And again there's a very deep grading that we're doing as we think about how we attack that pool, depending on where borrowers interest rates are, some would get big pickups, some would get less. And you can imagine the take-up of the product, if you will, in response back matters based on what it's worth for the client.

Bose George - Keefe, Bruyette, & Woods, Inc., Research Division

Okay, great. And next switching to the $300 billion pipeline, I was just wondering, does that fall primarily into 1 of those 3 buckets, or is that pretty spread out between those 3?

Denmar John Dixon

No. It's Denmar. I'd say it's still pretty spread out. So I'd still probably, in the camp of it, it's roughly 1/3 subservicing, roughly 1/3 maybe a bigger piece could go either way, and then 1/3 would be kind of a pure MSR opportunity.

Bose George - Keefe, Bruyette, & Woods, Inc., Research Division

Okay, great. And then just finally on the flow programs that you're set up. Are they mainly non-agency loans, portfolio loans, agency, just curious what the loan types are.

Charles E. Cauthen

The first one was a private label securitization, the second one we anticipate will be an agency product, and ongoing programs could be any, either or both, or will be both.

Mark J. O'Brien

Yes. So the other discussions we're having has both private label and agency content.

Operator

[Operator Instructions] The next question does come from Jim Fowler of Harvest Capital.

James J. Fowler - Harvest Capital Strategies LLC

You might have mentioned this, I apologize if you did. What was the -- in June, for example, when your mortgage brokering picked up in earnest. I mean, what was the dollar volume of loans you might have brokered to your partner?

Charles E. Cauthen

We haven't disclosed that, so we have not provided that information.

James J. Fowler - Harvest Capital Strategies LLC

Did the volume pick up sequentially in the months in the second quarter?

Charles E. Cauthen

Yes. I mean, it started out really being pure mostly a recap -- the things Mark talked about that we've always done historically that, that would be where the volume probably started out in June. And we have ramped as we've added people and ramped up our efforts there. We've ramped up the amount of refinancing we've done through the quarter, yes.

Mark J. O'Brien

When the program was first announced, there was a pretty big rush to it. That has leveled off a bit. It's still pretty dramatic, but if the peak, the peak, I think, was reached early on and unless it gets an awful lot more publicity, I think we can all expect a more even flow. One of the reasons we are a bit sensitive to talking about how much of this we brokered is there's a counterparty, and I'm not sure we should be talking about that without their authorities.

James J. Fowler - Harvest Capital Strategies LLC

Okay, that's fine. And did I note it correctly that you expect to be delivering to the cash window in September when you said -- is next month September or is that later this month or...

Charles E. Cauthen

Yes.

James J. Fowler - Harvest Capital Strategies LLC

Okay, September's right now. Okay, great. So you will, in the third quarter, be reporting some level of revenue and activity. And at that point we'll get some view on what the volume ramp is?

Denmar John Dixon

Sure. I would think so, yes.

Operator

At this time, I show no further questions.

Mark J. O'Brien

Operator, if you don't have any more questions, we would like to thank everybody for their continued support and participation and we will then conclude the call.

Operator

Thank you. Today's conference has ended. All participants may disconnect at this time.

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