- Reported $191 million net income or $2.00 per diluted
share
- Generated strong pretax operating income of $329 million,
equivalent to a ROTCE of 44.1%
- Tangible book value per share increased to $26.27 from $23.95
in the prior quarter
- Originations segment generated pretax income of $435 million on
record funded volume of $24.5 billion, up 57%
quarter-over-quarter
- Servicing portfolio grew 7% quarter-over-quarter to $626
billion
- Redeemed $750 million of senior notes with $100 million cash
and issued $650 million in new notes at 5.125%, extending liquidity
runway to 6 years
- Repurchased 1.4 million shares of common stock for $34
million
- Quarter-end unrestricted cash of $695 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 $191 million or $2.00 per
diluted share. Net income included a negative $6 million in
mark-to-market, and $85 million expense on redemption of unsecured
senior notes (debt breakage costs). Excluding the mark-to-market,
fair value amortization of $26 million, debt breakage costs, and
other items, the Company reported pretax operating income of $329
million. Other items were $5 million in severance charges related
to corporate actions, $5 million in business shutdown costs, and $7
million of intangible amortization.
Chairman and CEO Jay Bray commented, “Strong results in the
fourth quarter capped an outstanding year for Mr. Cooper. Despite
all the challenges and uncertainties, we never wavered from our
focus on the customer, whether it was helping people enter and exit
forbearance or save money by refinancing. We enter 2021 with a
strong operating and financial momentum, extremely talented and
dedicated teammates, and unmatched technology and operational
capacity.”
Chris Marshall, Vice Chairman and CFO added, “Consistent cash
flow allowed us to continue down the path of deleveraging and
refinancing our senior notes, which has not only reduced our
funding costs, but also leaves us in the position of having no
maturities for six years. The company’s balance sheet has never
been in better shape.”
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 fourth quarter, Servicing recorded pretax loss of $29 million,
reflecting $6 million in mark-to-market. The total servicing
portfolio ended the quarter at $626 billion UPB. Servicing
generated pretax operating loss, excluding the full mark and
accounting items, of $21 million, equivalent to a servicing margin
of negative 1.4 bps. At quarter end, the carrying value of the MSR
was $2.7 billion, equivalent to 100 bps of MSR UPB and original
cost basis of 86 bps.
Quarter Ended
($ in millions)
Q3'20
Q4'20
$
BPS
$
BPS
Operational revenue
$
273
18.5
$
326
21.4
Amortization, net of accretion
(112)
(7.6)
(130)
(8.5)
Mark-to-market
(29)
(2.0)
(6)
(0.4)
Total revenues
132
8.9
190
12.5
Total expenses
(99)
(6.7)
(169)
(11.1)
Total other expenses, net
(65)
(4.4)
(50)
(3.3)
Loss before taxes
(32)
(2.2)
(29)
(1.9)
Mark-to-market
29
2.0
6
0.4
Accounting items
1
0.1
2
0.1
Pretax operating loss excluding
mark-to-market and accounting items
$
(2)
(0.1)
$
(21)
(1.4)
Quarter Ended
Q3'20
Q4'20
Ending UPB ($B)
$
588
$
626
Average UPB ($B)
$
591
$
608
60+ day delinquency rate at period end
5.9
%
5.8
%
Annualized CPR
30.1
%
33.1
%
Modifications and workouts
23,725
25,525
Originations
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 $435 million.
Mr. Cooper funded 85,452 loans in the fourth quarter, totaling
approximately $24.5 billion UPB, which was comprised of $10.9
billion in direct-to-consumer and $13.6 billion in correspondent.
Funded volume increased 57% quarter-over-quarter.
Quarter Ended
($ in millions)
Q3'20
Q4'20
Income before taxes
$
438
$
435
Quarter Ended
($ in millions)
Q3'20
Q4'20
Total pull through adjusted volume
$
19,794
$
23,706
Funded volume
$
15,598
$
24,526
Refinance recapture percentage
31
%
35
%
Recapture percentage
25
%
29
%
Purchase volume as a percentage of funded
volume
16
%
18
%
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 $10 million and pretax operating income
of $18 million in the fourth quarter, which excluded intangible
amortization and accounting items related to business shutdown
costs and severance.
Quarter Ended
($ in millions)
Q3'20
Q4'20
Income before taxes
$
15
$
10
Accounting items / other
—
6
Intangible amortization
3
2
Pretax operating income excluding
accounting items and intangible amortization
$
18
$
18
Quarter Ended
Q3'20
Q4'20
Exchange property sold
860
777
Average Exchange property listings
15,067
15,132
Title Completed Orders
223,497
205,718
Solution Completed Orders
635,059
709,121
Percentage of revenue earned from
third-party customers
50
%
47
%
Conference Call Webcast and Investor
Presentation
The Company will host a conference call on February 23, 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 4794750 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 4794750 to access the
replay. The replay will be accessible through March 10, 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.
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 September 30,
2020
Three Months Ended December 31,
2020
Revenues:
Service related, net, excluding
mark-to-market
$
256
$
243
Mark-to-market
(29)
(6)
Net gain on mortgage loans held for
sale
645
716
Total revenues
872
953
Total expenses:
431
537
Other expense, net:
Interest income
56
84
Interest expense
(165)
(168)
Other expense, net
(51)
(85)
Total other expense, net
(160)
(169)
Income before income tax expense
281
247
Income tax expense
67
56
Net income
214
191
Net income attributable to non-controlling
interest
5
—
Net income attributable to Mr. Cooper
Group
209
191
Undistributed earnings attributable to
participating stockholders
2
2
Net income attributable to common
stockholders
$
207
$
189
Net income per share attributable to
common stockholders:
Basic
$
2.26
$
2.10
Diluted
$
2.18
$
2.00
Weighted average shares of common stock
outstanding (in millions):
Basic
91.7
90.2
Diluted
95.1
94.7
MR. COOPER GROUP INC. AND
SUBSIDIARIES
UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS
(millions of dollars)
September 30, 2020
December 31, 2020
Assets
Cash and cash equivalents
$
946
$
695
Restricted cash
229
218
Mortgage servicing rights
2,669
2,708
Advances and other receivables, net
745
940
Reverse mortgage interests, net
5,460
5,253
Mortgage loans held for sale at fair
value
3,817
5,720
Property and equipment, net
114
116
Deferred tax assets, net
1,344
1,340
Other assets
6,431
7,175
Total assets
$
21,755
$
24,165
Liabilities and
Stockholders' Equity
Unsecured senior notes, net
$
2,167
$
2,074
Advance and warehouse facilities, net
4,851
6,763
Payables and other liabilities
6,590
7,392
MSR related liabilities - nonrecourse at
fair value
1,091
967
Mortgage servicing liabilities
44
41
Other nonrecourse debt, net
4,671
4,424
Total liabilities
19,414
21,661
Total stockholders' equity
2,341
2,504
Total liabilities and stockholders'
equity
$
21,755
$
24,165
UNAUDITED SEGMENT STATEMENT
OF
OPERATIONS & EARNINGS
RECONCILIATION
(millions of dollars, except for
earnings per share data)
Three Months Ended September 30,
2020
Servicing
Originations
Xome
Corporate/ Other
Consolidated
Service related, net
$
92
$
27
$
108
$
—
$
227
Net gain on mortgage loans held for
sale
40
605
—
—
645
Total revenues
132
632
108
—
872
Total expenses
99
195
94
43
431
Other (expense) income, net:
Interest income
40
16
—
—
56
Interest expense
(105
)
(15
)
—
(45
)
(165
)
Other income (expense), net
—
—
1
(52
)
(51
)
Total other (expense) income, net
(65
)
1
1
(97
)
(160
)
Pretax (loss) income
$
(32
)
$
438
$
15
$
(140
)
$
281
Income tax expense
67
Net income
214
Net income attributable to noncontrolling
interests
5
Net income attributable to common
stockholders of Mr. Cooper Group
209
Undistributed earnings attributable to
participating stockholders
2
Net income attributable to common
stockholders
$
207
Net income per share
Basic
$
2.26
Diluted
$
2.18
Non-GAAP Reconciliation:
Pretax (loss) income
$
(32
)
$
438
$
15
$
(140
)
$
281
Mark-to-market
29
—
—
—
29
Accounting items / other
1
—
—
53
54
Intangible amortization
—
—
3
6
9
Pretax income (loss), net of notable
items
(2
)
438
18
(81
)
373
Fair value amortization (1)
(25
)
—
—
—
(25
)
Pretax operating (loss) income
$
(27
)
$
438
$
18
$
(81
)
$
348
Income tax expense
(84
)
Operating income
$
264
ROTCE
50.9
%
(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,
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 (loss) income, 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
(80
)
Operating income
$
249
ROTCE
44.1
%
(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,
2020
Servicing
Originations
Xome
Corporate/ Other
Consolidated
Service related, net
$
(115
)
$
105
$
433
$
—
$
423
Net gain on mortgage loans held for
sale
222
2,088
—
—
2,310
Total revenues
107
2,193
433
—
2,733
Total expenses
539
746
389
157
1,831
Other (expense) income, net:
Interest income
237
95
—
2
334
Interest expense
(442
)
(78
)
—
(182
)
(702
)
Other income (expense), net
—
—
4
(139
)
(135
)
Total other (expense) income, net
(205
)
17
4
(319
)
(503
)
Pretax (loss) income
$
(637
)
$
1,464
$
48
$
(476
)
$
399
Income tax expense
92
Net income
307
Net income attributable to noncontrolling
interests
2
Net income attributable to common
stockholders of Mr. Cooper Group
305
Undistributed earnings attributable to
participating stockholders
3
Net income attributable to common
stockholders
$
302
Net income per share
Basic
$
3.31
Diluted
$
3.20
Non-GAAP Reconciliation:
Pretax (loss) income
$
(637
)
$
1,464
$
48
$
(476
)
$
399
Mark-to-market
679
—
—
—
679
Accounting items / other
7
1
6
140
154
Intangible amortization
—
—
8
24
32
Pretax income (loss), net of notable
items
49
1,465
62
(312
)
1,264
Fair value amortization (1)
(110
)
—
—
—
(110
)
Pretax operating (loss) income
$
(61
)
$
1,465
$
62
$
(312
)
$
1,154
Income tax expense
(279
)
Operating income
$
875
ROTCE
42.5
%
(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/20210223005272/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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