- Reported net income of $561 and $5.92 per diluted share,
including other mark-to-market of $373 million⁽¹⁾, equivalent to a
ROCE of 83%
- Generated record pretax operating income of $363 million,
equivalent to a ROTCE of 43.1%
- Book value per share increased to $33.71 and Tangible book
value per share increased to $31.97
- Originations generated pretax income of $362 million on record
funded volume of $25.1 billion
- Servicing portfolio grew 3% quarter-over-quarter to $646
billion
- Announced sale of Title365 for $500 million
- Repurchased 4.5 million shares of common stock for $148 million
in the quarter
- Quarter-end unrestricted cash was $674 million
⁽¹⁾ Other mark-to-market does not include fair value
amortization
Mr. Cooper Group Inc. (NASDAQ: COOP) (the “Company”), which
principally operates under the Mr. Cooper® and Xome® brands,
reported a first quarter net income of $561 million or $5.92 per
diluted share. Net income included $373 million in other
mark-to-market, which excludes fair value amortization of $19
million. Excluding mark-to-market and other items, the Company
reported pretax operating income of $363 million. Other items were
$1 million in severance charges related to corporate actions, $3
million in transaction costs related to Title365 sale, and $4
million of intangible amortization.
Chairman and CEO Jay Bray commented, “This quarter was a clear
demonstration of how innovative technology, world-class operational
discipline, and a culture of team members working together for
customers can produce exceptional results, including record
operating performance, record origination fundings, and strong
growth in our servicing portfolio.”
Chris Marshall, Vice Chairman and CFO added, “Even after
investing in MSRs and repurchasing shares, we ended the quarter
with a very robust cash position and strengthened capital ratios.
The company’s balance sheet and liquidity have never been
stronger.”
Servicing
The Servicing segment is focused on providing a best-in-class
home loan experience for our 3.5 million customers while
simultaneously strengthening asset performance for investors. In
the first quarter, Servicing recorded pretax income of $413
million, reflecting a total mark-to-market of $354 million, which
included $373 million in other mark-to-market offset by $19 million
in fair value amortization. The total servicing portfolio ended the
quarter at $646 billion UPB. Servicing generated pretax operating
income, excluding the full mark-to-market, of $59 million. At
quarter end, the carrying value of the MSR was $3,359 million, of
which $3,354 million was at fair value equivalent to 122 bps of MSR
UPB and original cost basis of 86 bps.
Quarter Ended
($ in millions)
Q4'20
Q1'21
$
BPS
$
BPS
Operational revenue
$
326
21.4
$
375
23.6
Amortization, net of accretion
(130
)
(8.5
)
(153
)
(9.6
)
Mark-to-market
(6
)
(0.4
)
354
22.3
Total revenues
190
12.5
576
36.3
Total expenses
(169
)
(11.1
)
(125
)
(7.9
)
Total other expenses, net
(50
)
(3.3
)
(38
)
(2.4
)
(Loss) income before taxes
(29
)
(1.9
)
413
26.0
Mark-to-market
6
0.4
(354
)
(22.3
)
Accounting items
2
0.1
—
—
Pretax operating (loss) income excluding
mark-to-market and accounting items
$
(21
)
(1.4
)
$
59
3.7
Quarter Ended
Q4'20
Q1'21
Ending UPB ($B)
$
626
$
646
Average UPB ($B)
$
608
$
634
60+ day delinquency rate at period end
5.8
%
5.3
%
Annualized CPR
33.1
%
30.8
%
Modifications and workouts
26,406
33,976
The Originations segment focuses on creating servicing assets at
attractive margins by acquiring loans through the correspondent
channel and refinancing existing loans in the direct-to-consumer
channel. Originations earned pretax income of $362 million.
Mr. Cooper funded 92,463 loans in the first quarter, totaling
approximately $25.1 billion UPB, which was comprised of $11.4
billion in direct-to-consumer and $13.7 billion in correspondent.
Funded volume increased 2% quarter-over-quarter.
Quarter Ended
($ in millions)
Q4'20
Q1'21
Income before taxes
$
435
$
362
Quarter Ended
($ in millions)
Q4'20
Q1'21
Total pull through adjusted volume
$
23,706
$
23,267
Funded volume
$
24,526
$
25,133
Refinance recapture percentage
35
%
37
%
Recapture percentage
29
%
31
%
Purchase volume as a percentage of funded
volume
18
%
12
%
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
$13 million in the first quarter, which excluded intangible
amortization and accounting items related to transaction costs
related to Title365 sale.
Quarter Ended
($ in millions)
Q4'20
Q1'21
Income before taxes
$
10
$
9
Accounting items / other
6
3
Intangible amortization
2
1
Pretax operating income excluding
accounting items and intangible amortization
$
18
$
13
Quarter Ended
Q4'20
Q1'21
Exchange properties sold
863
710
Average Exchange properties under
management
15,132
14,210
Title completed orders
205,718
188,356
Solution completed orders
709,121
546,552
Percentage of revenue earned from
third-party customers
47
%
48
%
Conference Call Webcast and Investor
Presentation
The Company will host a conference call on April 29, 2021 at
10:00 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 5199996 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 5199996 to access the
replay. The replay will be accessible through May 14, 2021 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. Return on tangible common equity
(ROTCE) is computed by dividing annualized earnings by average
tangible common equity (also known as tangible book value).
Tangible common equity equals total stockholders’ equity less
goodwill and intangible assets. Management believes that ROTCE is a
useful financial measure because it measures the performance of a
business consistently and enables investors and others to assess
the Company’s use of equity. Tangible book value is a non-GAAP
financial measure that is defined as stockholders’ equity less
goodwill and intangible assets. Tangible book value per share is
calculated by dividing tangible book value by the number of common
shares outstanding. Management believes tangible book value and
tangible book value per share are useful metrics to investors
because they provide a more accurate measure of the realizable
value of stockholder returns, excluding the impact of goodwill and
intangible assets.
Forward Looking
Statements
Any statements in this release that are not historical or
current facts are forward looking statements. 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, including the severity and duration of
the COVID-19 pandemic; the pandemic’s impact on the U.S. and global
economies; federal, state, and local governmental responses to the
pandemic; borrower forbearance rates and availability of financing.
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.
Financial Tables
MR. COOPER GROUP INC. AND
SUBSIDIARIES
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(millions of dollars, except for
earnings per share data)
Three Months Ended December 31,
2020
Three Months Ended March 31,
2021
Revenues:
Service related, net, excluding
mark-to-market
$
243
$
234
Mark-to-market
(6
)
354
Net gain on mortgage loans held for
sale
716
679
Total revenues
953
1,267
Total expenses:
537
469
Other expense, net:
Interest income
84
89
Interest expense
(168
)
(159
)
Other expense, net
(85
)
—
Total other expense, net
(169
)
(70
)
Income before income tax expense
247
728
Income tax expense
56
167
Net income
191
561
Net income attributable to non-controlling
interest
—
—
Net income attributable to Mr. Cooper
Group
191
561
Undistributed earnings attributable to
participating stockholders
2
5
Net income attributable to common
stockholders
$
189
$
556
Net income per share attributable to
common stockholders:
Basic
$
2.10
$
6.22
Diluted
$
2.00
$
5.92
Weighted average shares of common stock
outstanding (in millions):
Basic
90.2
89.5
Diluted
94.7
93.9
MR. COOPER GROUP INC. AND
SUBSIDIARIES
UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS
(millions of dollars)
December 31, 2020
March 31, 2021
Assets
Cash and cash equivalents
$
695
$
674
Restricted cash
218
261
Mortgage servicing rights
2,708
3,359
Advances and other receivables, net
940
838
Reverse mortgage interests, net
5,253
5,091
Mortgage loans held for sale at fair
value
5,720
6,351
Property and equipment, net
116
118
Deferred tax assets, net
1,340
1,228
Other assets
7,175
6,793
Total assets
$
24,165
$
24,713
Liabilities and
Stockholders' Equity
Unsecured senior notes, net
$
2,074
$
2,074
Advance and warehouse facilities, net
6,763
7,379
Payables and other liabilities
7,392
7,140
MSR related liabilities - nonrecourse at
fair value
967
957
Mortgage servicing liabilities
41
38
Other nonrecourse debt, net
4,424
4,221
Total liabilities
21,661
21,809
Total stockholders' equity
2,504
2,904
Total liabilities and stockholders'
equity
$
24,165
$
24,713
UNAUDITED SEGMENT STATEMENT
OF
OPERATIONS & EARNINGS
RECONCILIATION
(millions of dollars, except for
earnings per share data)
Three Months Ended December 31,
2020
Servicing
Originations
Xome
Corporate/ Other
Consolidated
Service related, net
$
87
$
37
$
113
$
—
$
237
Net gain on mortgage loans held for
sale
103
613
—
—
716
Total revenues
190
650
113
—
953
Total expenses
169
218
104
46
537
Other (expense) income, net:
Interest income
57
26
—
1
84
Interest expense
(107
)
(23
)
—
(38
)
(168
)
Other income (expense), net
—
—
1
(86
)
(85
)
Total other (expense) income, net
(50
)
3
1
(123
)
(169
)
Pretax (loss) income
$
(29
)
$
435
$
10
$
(169
)
$
247
Income tax expense
56
Net income
191
Net income attributable to noncontrolling
interests
—
Net income attributable to common
stockholders of Mr. Cooper Group
191
Undistributed earnings attributable to
participating stockholders
2
Net income attributable to common
stockholders
$
189
Net income per share
Basic
$
2.10
Diluted
$
2.00
Non-GAAP Reconciliation:
Pretax (loss) income
$
(29
)
$
435
$
10
$
(169
)
$
247
Mark-to-market
6
—
—
—
6
Accounting items / other
2
—
6
87
95
Intangible amortization
—
—
2
5
7
Pretax income (loss), net of notable
items
(21
)
435
18
(77
)
355
Fair value amortization (1)
(26
)
—
—
—
(26
)
Pretax operating (loss) income
$
(47
)
$
435
$
18
$
(77
)
$
329
Income tax expense(2)
(80
)
Operating income
$
249
ROTCE(3)
44.1
%
Average tangible book value (TBV)(4)
$
2,263
(1)
Amount represents additional amortization
required under the fair value amortization method over the cost
amortization method.
(2)
Assumes tax-rate of 24.2%.
(3)
Computed by dividing annualized earnings
by average TBV.
(4)
Average of beginning TBV of $2,176 and
ending TBV of $2,350.
UNAUDITED SEGMENT STATEMENT
OF
OPERATIONS & EARNINGS
RECONCILIATION
(millions of dollars, except for
earnings per share data)
Three Months Ended March 31,
2021
Servicing
Originations
Xome
Corporate/ Other
Consolidated
Service related, net
$
449
$
43
$
96
$
—
$
588
Net gain on mortgage loans held for
sale
127
552
—
—
679
Total revenues
576
595
96
—
1,267
Total expenses
125
231
87
26
469
Other (expense) income, net:
Interest income
66
23
—
—
89
Interest expense
(104
)
(25
)
—
(30
)
(159
)
Other income (expense), net
—
—
—
—
—
Total other (expense) income, net
(38
)
(2
)
—
(30
)
(70
)
Pretax income (loss)
$
413
$
362
$
9
$
(56
)
$
728
Income tax expense
167
Net income
561
Net income attributable to noncontrolling
interests
—
Net income attributable to common
stockholders of Mr. Cooper Group
561
Undistributed earnings attributable to
participating stockholders
5
Net income attributable to common
stockholders
$
556
Net income per share
Basic
$
6.22
Diluted
$
5.92
Non-GAAP Reconciliation:
Pretax income (loss)
$
413
$
362
$
9
$
(56
)
$
728
Mark-to-market
(354
)
—
—
—
(354
)
Accounting items / other
—
—
3
1
4
Intangible amortization
—
—
1
3
4
Pretax income (loss), net of notable
items
59
362
13
(52
)
382
Fair value amortization (1)
(19
)
—
—
—
(19
)
Pretax operating income (loss)
$
40
$
362
$
13
$
(52
)
$
363
Income tax expense
(88
)
Operating income(2)
$
275
ROTCE(3)
43.1
%
Average tangible book value (TBV)(4)
$
2,552
(1)
Amount represents additional amortization
required under the fair value amortization method over the cost
amortization method.
(2)
Assumes tax-rate of 24.2%.
(3)
Computed by dividing annualized earnings
by average TBV.
(4)
Average of beginning TBV of $2,350 and
ending TBV of $2,754.
Non-GAAP Reconciliation:
Quarter Ended
($ in millions except value per share
data)
Q4'20
Q1'21
Stockholders' equity (BV)
$
2,504
$
2,904
Goodwill
(120
)
(120
)
Intangible assets
(34
)
(30
)
Tangible book value (TBV)
$
2,350
$
2,754
Ending shares of common stock outstanding
(in millions)
89.5
86.1
BV/share
$
27.99
$
33.71
TBV/share
$
26.27
$
31.97
Net income
$
191
$
561
ROCE(1)
31.5
%
83.0
%
Beginning stockholders’ equity
$
2,341
$
2,504
Ending stockholders’ equity
$
2,504
$
2,904
Average stockholders’ equity (BV)
$
2,423
$
2,704
(1)
Computed by dividing annualized earnings
by average BV.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210429005396/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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