- Reported total net income of $1 million including other
mark-to-market of $58 million, equivalent to ROCE of 0.1%
- Book value per share increased to $58.57 and tangible book
value per share increased to $56.72, up 29% year-over-year
- Servicing UPB grew to $870 billion, up 23% y/y
- Repurchased 1.3 million shares of common stock for $54
million
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 $1 million or $0.01 per
diluted share. Net income included other mark-to-market of $58
million, which excludes fair value of excess spread accretion of $2
million. Excluding other mark-to-market and other items, the
Company reported pretax operating income of $82 million. Other
items included $23 million charge due to severance and property
consolidation and $10 million loss associated with equity
investments, and $1 million loss in intangible amortization.
Chairman and CEO Jay Bray commented, “The Company produced
exceptional results in 2022, growing the portfolio by 23%
year-over-year and tangible book value per share by 29%, despite a
very challenging year for the industry. This is a clear validation
of our balanced business model, the investments we’ve made in
technology, and the incredible talent and hard work of our
people.”
Chris Marshall, Vice Chairman and President added, “Over the
last year, we’ve continued to drive greater efficiencies throughout
the company and especially in our servicing platform, which is key
to the low-cost leadership strategy that’s driving customer growth
and positioning us to deliver higher return on equity.”
Servicing
The Servicing segment is focused on providing a best-in-class
home loan experience for our 4.1 million customers while
simultaneously strengthening asset performance for investors. In
the fourth quarter, Servicing recorded pretax income of $98
million, including other mark-to-market of $58 million. The
servicing portfolio ended the quarter at $870 billion in UPB.
Servicing generated pretax operating income, excluding other
mark-to-market, of $159 million. At quarter end, the carrying value
of the MSR was $6,654 million equivalent to 162 bps of MSR UPB.
Quarter Ended
($ in millions)
Q4'22
Q3'22
$
BPS
$
BPS
Operational revenue
$
394
18.2
$
377
18.3
Amortization, net of accretion
(123
)
(5.7
)
(169
)
(8.2
)
Mark-to-market
(56
)
(2.6
)
124
6.0
Total revenues
215
9.9
332
16.1
Total expenses
(147
)
(6.8
)
(147
)
(7.1
)
Total other expenses, net
30
1.4
18
0.9
Income before taxes
98
4.5
203
9.9
Other mark-to-market
58
2.7
(122
)
(5.9
)
Accounting items
3
0.1
—
—
Pretax operating income excluding other
mark-to-market and accounting items
$
159
7.3
$
81
4.0
Quarter Ended
Q4'22
Q3'22
MSR UPB($B)
$
411
$
396
Subservicing and Other UPB ($B)
459
458
Ending UPB ($B)
$
870
$
854
Average UPB ($B)
$
868
$
823
60+ day delinquency rate at period end
2.6
%
2.5
%
Annualized CPR
4.9
%
8.3
%
Modifications and workouts
14,966
16,505
Originations
The Originations segment focuses on creating servicing assets at
attractive margins by acquiring loans through the correspondent
channel and refinancing existing loans through the
direct-to-consumer channel. Originations reported pretax loss of
$14 and pretax operating loss of $2 million.
The Company funded 12,746 loans in the fourth quarter, totaling
approximately $3.2 billion UPB, which was comprised of $1.9 billion
in direct-to-consumer and $1.3 billion in correspondent. Funded
volume decreased 45% quarter-over-quarter, while pull through
adjusted volume decreased 47% quarter-over-quarter to $2.8
billion.
Quarter Ended
($ in millions)
Q4'22
Q3'22
(Loss) income before taxes
$
(14
)
$
46
Accounting items / other
12
—
Pretax operating (loss) income excluding
accounting items and other
$
(2
)
$
46
Quarter Ended
($ in millions)
Q4'22
Q3'22
Total pull through adjusted volume
$
2,797
$
5,276
Funded volume
$
3,169
$
5,741
Refinance recapture percentage
77
%
76
%
Recapture percentage
24
%
28
%
Purchase volume as a percentage of funded
volume
44
%
42
%
Conference Call Webcast and Investor
Presentation
The Company will host a conference call on February 10, 2023 at
10:00 A.M. Eastern Time. Preregistration for the call is now
available in the Investor section of www.mrcoopergroup.com.
Participants will receive a toll-free dial-in number and a unique
registrant ID to be used for immediate call access. A simultaneous
audio webcast of the conference call will be available under the
investors section on www.mrcoopergroup.com.
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,
change in equity method investments, fair value change in equity
investments 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 net income
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 defined
as stockholders’ equity less goodwill and intangible assets. Our
management believes tangible book value is useful to investors
because it provides a more accurate measure of the realizable value
of shareholder 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. 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,
2022
Three Months Ended September 30,
2022
Revenues:
Service related, net
$
255
$
395
Net gain on mortgage loans held for
sale
48
115
Total revenues
303
510
Total expenses:
292
316
Other income (expense), net:
Interest income
92
83
Interest expense
(103
)
(104
)
Other (expense), net
(10
)
(20
)
Total other (expense), net
(21
)
(41
)
(Loss) income before income tax (benefit)
expense
(10
)
153
Income tax (benefit) expense
(11
)
40
Net income
1
113
Net income attributable to non-controlling
interest
—
—
Net income attributable to common
stockholders
$
1
$
113
Earnings per common share attributable to
Mr. Cooper:
Basic
$
0.01
$
1.59
Diluted
$
0.01
$
1.55
Weighted average shares of common stock
outstanding (in millions):
Basic
69.9
71.2
Diluted
71.6
72.9
MR. COOPER GROUP INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(millions of dollars)
Unaudited
December 31, 2022
September 30, 2022
Assets
Cash and cash equivalents
$
527
$
530
Restricted cash
175
148
Mortgage servicing rights at fair
value
6,654
6,408
Advances and other receivables, net
1,019
831
Mortgage loans held for sale at fair
value
893
1,581
Property and equipment, net
65
69
Deferred tax assets, net
703
711
Other assets
2,740
2,537
Total assets
$
12,776
$
12,815
Liabilities and
Stockholders' Equity
Unsecured senior notes, net
$
2,673
$
2,673
Advance and warehouse facilities, net
2,885
3,070
Payables and other liabilities
2,633
2,428
MSR related liabilities - nonrecourse at
fair value
528
539
Total liabilities
8,719
8,710
Total stockholders' equity
4,057
4,105
Total liabilities and stockholders'
equity
$
12,776
$
12,815
UNAUDITED SEGMENT STATEMENT
OF
OPERATIONS & EARNINGS
RECONCILIATION
(millions of dollars, except for
earnings per share data)
Three Months Ended December 31,
2022
Servicing
Originations
Corporate/ Other
Consolidated
Service related, net
$
223
$
12
$
20
$
255
Net gain on mortgage loans held for
sale
(8
)
56
—
48
Total revenues
215
68
20
303
Total expenses
147
81
64
292
Other (expense) income, net:
Interest income
83
9
—
92
Interest expense
(53
)
(10
)
(40
)
(103
)
Other expense, net
—
—
(10
)
(10
)
Total other (expense) income, net
30
(1
)
(50
)
(21
)
Pretax income (loss)
$
98
$
(14
)
$
(94
)
$
(10
)
Income tax benefit
(11
)
Net income
1
Net income attributable to noncontrolling
interests
—
Net income attributable to common
stockholders
$
1
Net income per share
Basic
$
0.01
Diluted
$
0.01
Non-GAAP Reconciliation:
Pretax income (loss)
$
98
$
(14
)
$
(94
)
$
(10
)
Other mark-to-market
58
—
—
58
Accounting items / other
3
12
18
33
Intangible amortization
—
—
1
1
Pretax operating income (loss)
$
159
$
(2
)
$
(75
)
$
82
Income tax expense(1)
(20
)
Operating income
$
62
ROTCE(2)
6.3
%
Average tangible book value (TBV)(3)
$
3,953
(1)
Assumes tax-rate of 24.2%.
(2)
Computed by dividing annualized earnings
by average TBV.
(3)
Average of beginning TBV of $3,976 and
ending TBV of $3,929.
UNAUDITED SEGMENT STATEMENT
OF
OPERATIONS & EARNINGS
RECONCILIATION
(millions of dollars, except for
earnings per share data)
Three Months Ended September 30,
2022
Servicing
Originations
Corporate/ Other
Consolidated
Service related, net
$
353
$
20
$
22
$
395
Net gain on mortgage loans held for
sale
(21
)
136
—
115
Total revenues
332
156
22
510
Total expenses
147
111
58
316
Other (expense) income, net:
Interest income
71
12
—
83
Interest expense
(53
)
(11
)
(40
)
(104
)
Other income, net
—
—
(20
)
(20
)
Total other (expense) income, net
18
1
(60
)
(41
)
Pretax income (loss)
$
203
$
46
$
(96
)
$
153
Income tax expense
40
Net income
113
Net income attributable to noncontrolling
interests
—
Net income attributable to common
stockholders
$
113
Net income per share
Basic
$
1.59
Diluted
$
1.55
Non-GAAP Reconciliation:
Pretax income (loss)
$
203
$
46
$
(96
)
$
153
Other mark-to-market
(122
)
—
—
(122
)
Accounting items / other
—
—
23
23
Intangible amortization
—
—
2
2
Pretax operating income (loss)
$
81
$
46
$
(71
)
$
56
Income tax expense
(14
)
Operating income(1)
$
42
ROTCE(2)
4.3
%
Average tangible book value (TBV)(3)
$
3,941
(1)
Assumes tax-rate of 24.2%.
(2)
Computed by dividing annualized earnings
by average TBV.
(3)
Average of beginning TBV of $3,906 and
ending TBV of $3,976.
UNAUDITED SEGMENT STATEMENT
OF
OPERATIONS & EARNINGS
RECONCILIATION
(millions of dollars, except for
earnings per share data)
Year Ended December 31, 2022
Servicing
Originations
Corporate/ Other
Consolidated
Service related, net
$
1,691
$
98
$
76
$
1,865
Net gain on mortgage loans held for
sale
(33
)
632
—
599
Total revenues
1,658
730
76
2,464
Total expenses
559
491
224
1,274
Other income (expense), net:
Interest income
208
53
—
261
Interest expense
(221
)
(43
)
(160
)
(424
)
Other income, net
—
—
187
187
Total other income (expense), net
(13
)
10
27
24
Pretax income (loss)
$
1,086
$
249
$
(121
)
$
1,214
Income tax expense
291
Net income
923
Net income attributable to noncontrolling
interests
—
Net income attributable to common
stockholders
$
923
Net income per share
Basic
$
12.84
Diluted
$
12.50
Non-GAAP Reconciliation:
Pretax income (loss)
$
1,086
$
249
$
(121
)
$
1,214
Other mark-to-market
(812
)
—
—
(812
)
Accounting items / other
4
16
(177
)
(157
)
Intangible amortization
—
—
6
6
Pretax operating income (loss)
$
278
$
265
$
(292
)
$
251
Income tax expense
(61
)
Operating income(1)
$
190
ROTCE(2)
4.9
%
Average tangible book value (TBV)(3)
$
3,914
(1)
Assumes tax-rate of 24.2%.
(2)
Computed by dividing annualized earnings
by average TBV.
(3)
Average of quarterly TBV averages of
$3,844 for 1Q’22, $3,906 for 2Q’22, $3,976 for 3Q’22, and $3,929
for 4Q’22.
Non-GAAP Reconciliation:
Quarter Ended
($ in millions except value per share
data)
Q4'22
Q3'22
Q2'22
Q1'22
Stockholders' equity (BV)
$
4,057
$
4,105
$
4,037
$
3,977
Goodwill
(120
)
(120
)
(120
)
(120
)
Intangible assets
(8
)
(9
)
(11
)
(13
)
Tangible book value (TBV)
$
3,929
$
3,976
$
3,906
$
3,844
Ending shares of common stock outstanding
(in millions)
69.3
70.6
BV/share
$
58.57
$
58.18
TBV/share
$
56.72
$
56.35
Net income
$
1
$
113
ROCE(1)
0.1
%
11.1
%
Beginning stockholders’ equity
$
4,105
$
4,037
Ending stockholders’ equity
$
4,057
$
4,105
Average stockholders’ equity (BV)
$
4,081
$
4,071
(1)
Return on Common Equity (ROCE) is computed
by dividing annualized earnings by average BV.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230210005050/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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