- Reported $461 million net income or $4.95 per diluted share,
including $285 million recovery of valuation allowance and positive
$102 million mark-to-market
- Strong pretax operating income of $125 million, equivalent to a
21.1% after-tax ROTCE
- Generated Originations pretax income of $138 million on record
funded volume of $12.6 billion
- Servicing UPB portfolio remained stable, ending the quarter at
$643 billion
- Xome reported pretax income of $9 million and pretax operating
income of $14 million
- Tangible book value per diluted share increased from $16.88 to
$22.00
- Subsequent to quarter end, called $100 million of senior notes,
issued $600 million in senior notes maturing 2027 with coupon of
6.0%, and redeemed senior notes maturing 2021 and 2022
Mr. Cooper Group Inc. (NASDAQ: COOP) (the “Company”), which
principally operates under the Mr. Cooper® and Xome® brands,
reported a fourth quarter net income of $461 million or $4.95 per
diluted share. Net income included $285 million recovery of
deferred tax asset (“DTA”) reserve and positive $102 million in
mark-to-market. Excluding the mark-to-market and other items, the
Company reported pretax operating income of $125 million. Items
excluded from operating income were $102 million in mark-to-market,
net of the add back of $31 million in fair value amortization that
is included in the full mark-to-market, $6 million in severance
charges related to corporate actions, and $12 million of intangible
amortization.
Chairman and CEO Jay Bray commented, “This was a strong
operating quarter with solid results in Originations and Xome and a
stable quarter in servicing, capping a year of tremendous progress
for the organization. We successfully delivered on our commitments
to integrate recent acquisitions and improve profitability.”
Chris Marshall, vice chairman and CFO, added, “In addition to
delivering strong operating performance, we made progress in our
balance sheet strategy by deleveraging and building liquidity,
which is key to sustaining return on equity and growth over the
long term.”
Servicing
The Servicing segment is focused on providing a best-in-class
home loan experience for our 3.8 million customers while
simultaneously strengthening asset performance for investors. In
the fourth quarter, Servicing recorded pretax income of $189
million. The total servicing portfolio remained stable, ending the
quarter at $643 billion UPB. Servicing earned pretax operating
income excluding the full mark of $87 million, equivalent to a
servicing margin of 5.5 bps. At quarter end, the carrying value of
the MSR was $3,502 million, of which $3,496 million was at fair
value equivalent to 118 bps of MSR UPB and original cost basis of
86 bps.
Quarter Ended
($ in millions)
Q3'19
Q4'19
$
BPS
$
BPS
Operational revenue
$
319
20.0
$
316
20.1
Amortization, net of accretion
(73
)
(4.6
)
(84
)
(5.3
)
Mark-to-market
(83
)
(5.2
)
102
6.4
Total revenues
163
10.2
334
21.2
Total expenses
(171
)
(10.7
)
(135
)
(8.6
)
Total other income (expenses), net
17
1.1
(10
)
(0.6
)
Income before taxes
9
0.6
189
12.0
Mark-to-market
83
5.2
(102
)
(6.5
)
Pretax operating income excluding
mark-to-market
$
92
5.8
$
87
5.5
Quarter Ended
Q3'19
Q4'19
Ending UPB ($B)
$
641
$
643
Average UPB ($B)
$
637
$
630
60+ day delinquency rate at period end
2.2
%
2.0
%
Annualized CPR
17.5
%
19.1
%
Modifications and workouts
8,792
9,873
Originations
The Originations segment focuses on creating servicing assets at
attractive margins through existing customer relationships,
correspondent, and wholesale originations. Originations earned
pretax income of $138 million.
Mr. Cooper funded 51,508 loans in the fourth quarter, totaling
approximately $12.6 billion UPB comprised of $5.8 billion in
direct-to-consumer, $6.2 billion in correspondent, and $0.6 billion
in wholesale. Funded volume increased 5% quarter-over-quarter.
Quarter Ended
($ in millions)
Q3'19
Q4'19
Income before taxes
$
178
$
138
Quarter Ended
($ in millions)
Q3'19
Q4'19
Total pull through adjusted volume
$
12,699
$
12,537
Funded volume
$
11,911
$
12,559
Refinance recapture percentage
38
%
39
%
Recapture percentage
25
%
29
%
Purchase volume as a percentage of funded
volume
39
%
32
%
Xome
Xome provides real estate solutions including property
disposition, asset management, title, close, valuation, and field
services for Mr. Cooper and third-party clients. The Xome segment
recorded pretax income of $9 million and pretax operating income of
$14 million in the fourth quarter, which excluded severance
charges, and intangible amortization.
Quarter Ended
($ in millions)
Q3'19
Q4'19
Income before taxes
$
14
$
9
Accounting items / other
(4
)
3
Intangible amortization
3
2
Pretax operating income excluding
intangible amortization and accounting items
$
13
$
14
Quarter Ended
Q3'19
Q4'19
Exchange properties sold
2,453
2,332
Average Exchange properties under
management
6,688
11,917
Services completed orders
429,128
403,779
Percentage of revenue earned from
third-party customers
53
%
51
%
Conference Call Webcast and Investor
Presentation
The Company will host a conference call on February 25, 2020 at
9:00 A.M. Eastern Time. The conference call may be accessed by
dialing 855-874-2685, or 720-634-2923 internationally. Please use
the participant passcode 2299433 to access the conference call. A
simultaneous audio webcast of the conference call will be available
in the Investor section of www.mrcoopergroup.com. A replay will
also be available approximately two hours after the conclusion of
the conference call by dialing 855-859-2056, or 404-537-3406
internationally. Please use the passcode 2299433 to access the
replay. The replay will be accessible through March 11, 2020 at
1:00 P.M. Eastern Time.
Non-GAAP Financial
Measures
The Company utilizes non-GAAP financial measures as the measures
provide additional information to assist investors in understanding
and assessing the Company’s and our business segments’ ongoing
performance and financial results, as well as assessing our
prospects for future performance. The adjusted operating financial
measures facilitate a meaningful analysis and allow more accurate
comparisons of our ongoing business operations because they exclude
items that may not be indicative of or are unrelated to the
Company’s and our business segments’ core operating performance,
and are better measures for assessing trends in our underlying
businesses. These notable items are consistent with how management
views our businesses. Management uses these non-GAAP financial
measures in making financial, operational and planning decisions
and evaluating the Company’s and our business segment’s ongoing
performance. Pretax operating income (loss) in the servicing
segment eliminates the effects of mark-to-market adjustments which
primarily reflects unrealized gains or losses based on the changes
in fair value measurements of MSRs and their related financing
liabilities for which a fair value accounting election was made.
These adjustments, which can be highly volatile and material due to
changes in credit markets, are not necessarily reflective of the
gains and losses that will ultimately be realized by the Company.
Pretax operating income (loss) in each segment also eliminates, as
applicable, transition and integration costs, gains (losses) on
sales of fixed assets, certain settlement costs that are not
considered normal operational matters, intangible amortization, and
other adjustments based on the facts and circumstances that would
provide investors a supplemental means for evaluating the Company’s
core operating performance.
Forward-Looking
Statements
Any statements in this release that are not historical or
current facts are forward-looking statements, including statements
regarding the results of deleveraging. Forward looking statements
involve known and unknown risks, uncertainties and other factors
that may cause our actual results, performance, or achievements to
be materially different from any future results, performance or
achievements expressed or implied by the forward-looking
statements. Results for any specified quarter are not necessarily
indicative of the results that may be expected for the full year or
any future period. Certain of these risks and uncertainties are
described in the “Risk Factors” section of Mr. Cooper Group’s most
recent annual reports and other required documents as filed with
the SEC which are available at the SEC’s website at
http://www.sec.gov. Mr. Cooper undertakes no obligation to publicly
update or revise any forward-looking statement or any other
financial information contained herein, and the statements made in
this press release are current as of the date of this release
only.
MR. COOPER GROUP INC. AND
SUBSIDIARIES
UNAUDITED CONSOLIDATED
STATEMENTS OF OPERATIONS
(millions of dollars, except for
earnings per share data)
Three Months Ended September 30,
2019
Three Months Ended December 31,
2019
Revenues:
Service related, net, excluding
mark-to-market
$
341
$
328
Mark-to-market
(83
)
102
Net gain on mortgage loans held for
sale
360
310
Total revenues
618
740
Total expenses
478
438
Other income (expense):
Interest income
163
146
Interest expense
(196
)
(207
)
Other expense, net
—
(1
)
Total other income (expenses), net
(33
)
(62
)
Income before income tax expense
(benefit)
107
240
Income tax expense (benefit)
24
(221
)
Net income
83
461
Net loss attributable to non-controlling
interest
(1
)
(2
)
Net income attributable to Mr. Cooper
Group
84
463
Undistributed earnings attributable to
participating stockholders
1
4
Net income attributable to common
stockholders
$
83
$
459
Net income per share attributable to
common stockholders:
Basic
$
0.91
$
5.03
Diluted
$
0.90
$
4.95
Weighted average shares of common stock
outstanding (in thousands):
Basic
91,080
91,105
Diluted
92,036
92,599
MR. COOPER GROUP INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE
SHEETS
(millions of dollars)
September 30, 2019
December 31, 2019
Assets
Cash and cash equivalents
$
371
$
329
Restricted cash
271
283
Mortgage servicing rights
3,346
3,502
Advances and other receivables, net
967
988
Reverse mortgage interests, net
6,662
6,279
Mortgage loans held for sale at fair
value
4,267
4,077
Property and equipment, net
113
112
Deferred tax asset, net
1,032
1,345
Other assets
1,449
1,390
Total assets
$
18,478
$
18,305
Liabilities and
Stockholders’ Equity
Unsecured senior notes, net
$
2,464
$
2,366
Advance facilities, net
513
422
Warehouse facilities, net
4,802
4,575
Payables and other liabilities
2,002
2,016
MSR related liabilities - nonrecourse at
fair value
1,328
1,348
Mortgage servicing liabilities
69
61
Other nonrecourse debt, net
5,533
5,286
Total liabilities
16,711
16,074
Total stockholders’ equity
1,767
2,231
Total liabilities and stockholders’
equity
$
18,478
$
18,305
UNAUDITED SEGMENT STATEMENT OF
OPERATIONS & EARNINGS
RECONCILIATION
(millions of dollars, except for
earnings per share data)
Three Months Ended September 30,
2019
Servicing
Originations
Xome
Corporate/ Other
Elimination
Consolidated
Service related, net
$
126
$
22
$
112
$
—
$
(2
)
$
258
Net gain on mortgage loans held for
sale
37
312
—
11
—
360
Total revenues
163
334
112
11
(2
)
618
Total expenses
171
155
101
53
(2
)
478
Other income (expense):
Interest income
137
24
—
2
—
163
Interest expense
(120
)
(24
)
—
(52
)
—
(196
)
Other income (expense), net
—
(1
)
3
(2
)
—
—
Total other income (expense), net
17
(1
)
3
(52
)
—
(33
)
Pretax income (loss)
$
9
$
178
$
14
$
(94
)
$
—
$
107
Income tax expense
24
Net income
$
83
Net loss attributable to noncontrolling
interests
(1
)
Net income attributable to Mr. Cooper
Group
$
84
Undistributed earnings attributable to
participating stockholders
1
Net income attributable to common
stockholders
$
83
Net income per share
Basic
$
0.91
Diluted
$
0.90
Non-GAAP
Reconciliation:
Pretax income (loss)
$
9
$
178
$
14
$
(94
)
$
—
$
107
Mark-to-market
83
—
—
—
—
83
Accounting items / other
—
—
(4
)
5
—
1
Intangible amortization
—
—
3
9
—
12
Pretax income (loss), net of notable
items
$
92
$
178
$
13
$
(80
)
$
—
$
203
Fair value amortization(1)
(32
)
—
—
—
—
(32
)
Pretax operating income (loss)
$
60
$
178
$
13
$
(80
)
$
—
$
171
Income tax expense
(41
)
Operating income
$
130
ROTCE
34.5
%
(1) Amount represents additional
amortization required under the fair value amortization method over
the cost amortization method.
UNAUDITED SEGMENT STATEMENT OF
OPERATIONS & EARNINGS
RECONCILIATION
(millions of dollars, except for
earnings per share data)
Three Months Ended December 31,
2019
Servicing
Originations
Xome
Corporate/ Other
Elimination
Consolidated
Service related, net
$
300
$
23
$
106
$
2
(1
)
$
430
Net gain on mortgage loans held for
sale
34
276
—
—
—
310
Total revenues
334
299
106
2
(1
)
740
Total expenses
135
164
97
43
(1
)
438
Other income (expense):
Interest income
112
34
—
—
—
146
Interest expense
(126
)
(31
)
—
(50
)
—
(207
)
Other income (expense), net
4
—
—
(5
)
—
(1
)
Total other income (expense), net
(10
)
3
—
(55
)
—
(62
)
Pretax income (loss)
$
189
$
138
$
9
$
(96
)
$
—
$
240
Income tax benefit
(221
)
Net income
$
461
Net loss attributable to noncontrolling
interests
(2
)
Net income attributable to Mr. Cooper
Group
$
463
Undistributed earnings attributable to
participating stockholders
4
Net income attributable to common
stockholders
$
459
Net income per share
Basic
$
5.03
Diluted
$
4.95
Non-GAAP
Reconciliation:
Pretax income (loss)
189
138
9
(96
)
—
$
240
Mark-to-market
(102
)
—
—
—
—
(102
)
Accounting items / other
—
—
3
3
—
6
Intangible amortization
—
—
2
10
—
12
Pretax income (loss), net of notable
items
$
87
$
138
$
14
$
(83
)
$
—
$
156
Fair value amortization(1)
(31
)
—
—
—
—
(31
)
Pretax operating income (loss)
$
56
$
138
$
14
$
(83
)
$
—
$
125
Income tax expense
(30
)
Operating income
$
95
ROTCE
21.1
%
(1) Amount represents additional
amortization required under the fair value amortization method over
the cost amortization method.
UNAUDITED SEGMENT STATEMENT OF
OPERATIONS & EARNINGS
RECONCILIATION
(millions of dollars, except for
earnings per share data)
Year Ended December 31, 2019
Servicing
Originations
Xome
Corporate/ Other
Elimination
Consolidated
Service related, net
$
408
$
80
$
422
$
2
$
(3
)
$
909
Net gain on mortgage loans held for
sale
124
963
—
11
—
1,098
Total revenues
532
1,043
422
13
(3
)
2,007
Total expenses
690
568
398
198
(3
)
1,851
Other income (expense):
Interest income
500
98
—
7
—
605
Interest expense
(469
)
(98
)
—
(212
)
—
(779
)
Other income (expense), net
4
4
14
(7
)
—
15
Total other income (expense), net
35
4
14
(212
)
—
(159
)
Pretax (loss) income
$
(123
)
$
479
$
38
$
(397
)
$
—
$
(3
)
Income tax benefit
(273
)
Net income
$
270
Net loss attributable to noncontrolling
interests
(4
)
Net income attributable to Mr. Cooper
Group
$
274
Undistributed earnings attributable to
participating stockholders
2
Net income attributable to common
stockholders
$
272
Net income per share
Basic
$
2.99
Diluted
$
2.95
Non-GAAP
Reconciliation:
Pretax (loss) income
(123
)
479
38
(397
)
—
$
(3
)
Mark-to-market
505
—
—
—
—
505
Accounting items / other
(9
)
—
(12
)
8
—
(13
)
Merger related costs
—
—
—
37
—
37
Intangible amortization
—
—
11
39
—
50
Pretax income (loss), net of notable
items
$
373
$
479
$
37
$
(313
)
$
—
$
576
Fair value amortization(1)
(114
)
—
—
—
—
(114
)
Pretax operating income (loss)
$
259
$
479
$
37
$
(313
)
$
—
$
462
Income tax expense
(112
)
Operating income
$
350
ROTCE
21.7
%
(1) Amount represents additional
amortization required under the fair value amortization method over
the cost amortization method.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200225005286/en/
Investor Contact: Kenneth Posner, SVP Strategic Planning and
Investor Relations (469) 426-3633 Shareholders@mrcooper.com
Media Contact: Christen Reyenga, VP Corporate Communications
MediaRelations@mrcooper.com
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