- Reported fourth quarter net income of $155 million and $2.01
per diluted share, equivalent to ROCE of 19%
- Book value per share increased to $45.64 and tangible book
value per share increased to $43.82
- Servicing UPB grew to $710 billion, up 6% quarter-over-quarter
and 17% year-over-year
- Repurchased 1.3 million common shares in the fourth quarter for
$56 million at an average price of $41.22
- Board authorized additional $200 million stock repurchase in
the fourth quarter, bringing total authorization to $252
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 $155 million or $2.01 per
diluted share. The Company reported pretax income of $231 million
and pretax operating income of $156 million, which excluded
mark-to-market and other items. The mark-to-market adjustment was
$46 million in the quarter and other items included $34 million
gain from the sale of Xome Field Services, $3 million in charges
related to severance and $2 million of intangible amortization.
Chairman and CEO Jay Bray commented, “Solid results in the
fourth quarter closed out a fantastic year for Mr. Cooper, where we
delivered very strong returns and portfolio growth. We enter 2022
with an extremely talented and dedicated team and a balanced
business model that positions us to benefit from higher interest
rates.”
Chris Marshall, Vice Chairman, President, and CFO added, “The
fourth quarter capped a year of terrific improvement in the balance
sheet, with record levels of capital and liquidity, exceptional
growth in tangible book value per share, and significant
advancements in many of our technology initiatives. Our team is
perfectly positioned to capitalize on the strong momentum we have
across our business.”
Servicing
The Servicing segment is focused on providing a best-in-class
home loan experience for our 3.6 million customers while
simultaneously strengthening asset performance for investors. In
the fourth quarter, Servicing recorded pretax income of $87
million, including other mark-to-market of $46 million. The forward
servicing portfolio ended the quarter at $710 billion in UPB.
Servicing generated pretax operating income, excluding other
mark-to-market, of $41 million. At quarter end, the carrying value
of the MSR was $4,223 million equivalent to 124 bps of MSR UPB
Quarter Ended
($ in millions)
Q3'21
Q4'21
$
BPS
$
BPS
Operational revenue
$
402
24.6
$
390
22.9
Amortization, net of accretion
(202
)
(12.4
)
(186
)
(10.9
)
Mark-to-market
151
9.3
45
2.6
Total revenues
351
21.5
249
14.6
Total expenses
(128
)
(7.8
)
(143
)
(8.4
)
Total other expenses, net
(26
)
(1.6
)
(19
)
(1.1
)
Income before taxes
197
12.1
87
5.1
Other mark-to-market
(153
)
(9.4
)
(46
)
(2.7
)
Accounting items
—
—
—
—
Pretax operating income excluding other
mark-to-market and accounting items
$
44
2.7
$
41
2.4
Quarter Ended
Q3'21
Q4'21
Ending UPB ($B)
$
668
$
710
Average UPB ($B)
$
653
$
682
60+ day delinquency rate at period end
4.0
%
3.1
%
Annualized CPR
24.6
%
21.2
%
Modifications and workouts
28,581
39,554
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 earned pretax income of
$181 million and pretax operating income of $182 million.
The Company funded 65,971 loans in the fourth quarter, totaling
approximately $17.2 billion UPB, which was comprised of $9.0
billion in direct-to-consumer and $8.2 billion in correspondent.
Funded volume decreased 14% quarter-over-quarter, while pull
through adjusted volume decreased 27% quarter-over-quarter to $14.7
billion.
Quarter Ended
($ in millions)
Q3'21
Q4'21
Income before taxes
$
271
$
181
Accounting items / other
2
1
Pretax operating income excluding
accounting items and other
$
273
$
182
Quarter Ended
($ in millions)
Q3'21
Q4'21
Total pull through adjusted volume
$
20,073
$
14,736
Funded volume
$
19,938
$
17,165
Refinance recapture percentage
40
%
43
%
Recapture percentage
30
%
32
%
Purchase volume as a percentage of funded
volume
31
%
30
%
Conference Call Webcast and Investor
Presentation
The Company will host a conference call on February 11, 2022 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. A telephonic replay
will also be available approximately two hours after the conclusion
of the conference call by dialing 855-859-2056 (toll-free), or
404-537-3406 (international). Please use the passcode 7271516 to
access the replay.
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 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, 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,
2021
Three Months Ended December 31,
2021
Revenues:
Service related, net
$
288
$
207
Net gain on mortgage loans held for
sale
572
418
Total revenues
860
625
Total expenses:
402
381
Other income (expense), net:
Interest income
66
68
Interest expense
(118
)
(115
)
Other income, net
8
34
Total other expense, net
(44
)
(13
)
Income before income tax expense
414
231
Income tax expense
104
61
Net income from continuing operations
310
170
Net loss from discontinued operations
(11
)
(15
)
Net income
299
155
Net income attributable to non-controlling
interest
—
—
Net income attributable to Mr. Cooper
Group
299
155
Undistributed earnings attributable to
participating stockholders
1
—
Premium on retirement of preferred
stock
28
—
Net income attributable to common
stockholders
$
270
$
155
Earnings from continuing operations per
common share attributable to Mr. Cooper:
Basic
$
3.56
$
2.28
Diluted
$
3.42
$
2.20
Earnings from discontinued operations per
common share attributable to Mr. Cooper:
Basic
$
(0.14
)
$
(0.20
)
Diluted
$
(0.13
)
$
(0.19
)
Earnings per common share attributable to
Mr. Cooper:
Basic
$
3.42
$
2.08
Diluted
$
3.29
$
2.01
Weighted average shares of common stock
outstanding (in millions):
Basic
78.9
74.6
Diluted
82.1
77.4
MR. COOPER GROUP INC. AND
SUBSIDIARIES
UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS
(millions of dollars)
September 30, 2021
December 31, 2021
Assets
Cash and cash equivalents
$
731
$
895
Restricted cash
118
146
Mortgage servicing rights at fair
value
3,666
4,223
Advances and other receivables, net
909
1,228
Mortgage loans held for sale at fair
value
7,939
4,381
Property and equipment, net
103
98
Deferred tax assets, net
1,011
991
Other assets
3,462
2,242
Assets of discontinued operations
3,722
—
Total assets
$
21,661
$
14,204
Liabilities and
Stockholders' Equity
Unsecured senior notes, net
$
2,076
$
2,670
Advance and warehouse facilities, net
8,206
4,997
Payables and other liabilities
3,537
2,392
MSR related liabilities - nonrecourse at
fair value
842
778
Liabilities of discontinued operations
3,740
—
Total liabilities
18,401
10,837
Total stockholders' equity
3,260
3,367
Total liabilities and stockholders'
equity
$
21,661
$
14,204
UNAUDITED SEGMENT STATEMENT
OF
OPERATIONS & EARNINGS
RECONCILIATION
(millions of dollars, except for
earnings per share data)
Three Months Ended September 30,
2021
Servicing
Originations
Corporate/ Other
Consolidated
Service related, net
$
209
$
44
$
35
$
288
Net gain on mortgage loans held for
sale
142
430
—
572
Total revenues
351
474
35
860
Total expenses
128
208
66
402
Other (expense) income, net:
Interest income
39
27
—
66
Interest expense
(65
)
(22
)
(31
)
(118
)
Other income, net
—
—
8
8
Total other (expense) income, net
(26
)
5
(23
)
(44
)
Pretax income (loss)
$
197
$
271
$
(54
)
$
414
Income tax expense
104
Net income from continuing operations
310
Net loss from discontinued operations
(11
)
Net income
299
Net income attributable to noncontrolling
interests
—
Net income attributable to common
stockholders of Mr. Cooper Group
299
Undistributed earnings attributable to
participating stockholders
1
Premium on retirement of preferred
stock
28
Net income attributable to common
stockholders
$
270
Net income per share
Basic
$
3.42
Diluted
$
3.29
Non-GAAP Reconciliation:
Pretax income (loss)
$
197
$
271
$
(54
)
$
414
Other mark-to-market
(153
)
—
—
(153
)
Accounting items / other
—
2
(3
)
(1
)
Intangible amortization
—
—
3
3
Pretax operating income (loss)
$
44
$
273
$
(54
)
$
263
Income tax expense
(64
)
Operating income(1)
$
199
ROTCE(2)
25.2
%
Average tangible book value (TBV)(3)
$
3,165
(1)
Assumes tax-rate of 24.2%.
(2)
Computed by dividing annualized earnings
by average TBV.
(3)
Average of beginning TBV of $3,208 and
ending TBV of $3,122.
UNAUDITED SEGMENT STATEMENT
OF
OPERATIONS & EARNINGS
RECONCILIATION
(millions of dollars, except for
earnings per share data)
Three Months Ended December 31,
2021
Servicing
Originations
Corporate/ Other
Consolidated
Service related, net
$
147
$
44
$
16
$
207
Net gain on mortgage loans held for
sale
102
316
—
418
Total revenues
249
360
16
625
Total expenses
143
187
51
381
Other (expense) income, net:
Interest income
42
26
—
68
Interest expense
(61
)
(18
)
(36
)
(115
)
Other income, net
—
—
34
34
Total other (expense) income, net
(19
)
8
(2
)
(13
)
Pretax income (loss)
$
87
$
181
$
(37
)
$
231
Income tax expense
61
Net income from continuing operations
170
Net loss from discontinued operations
(15
)
Net income
155
Net income attributable to noncontrolling
interests
—
Net income attributable to common
stockholders of Mr. Cooper Group
155
Undistributed earnings attributable to
participating stockholders
—
Net income attributable to common
stockholders
$
155
Net income per share
Basic
$
2.08
Diluted
$
2.01
Non-GAAP Reconciliation:
Pretax income (loss)
$
87
$
181
$
(37
)
$
231
Other mark-to-market
(46
)
—
—
(46
)
Accounting items / other
—
1
(32
)
(31
)
Intangible amortization
—
—
2
2
Pretax operating income (loss)
$
41
$
182
$
(67
)
$
156
Income tax expense(1)
(38
)
Operating income
$
118
ROTCE(2)
14.9
%
Average tangible book value (TBV)(3)
$
3,178
(1)
Assumes tax-rate of 24.2%.
(2)
Computed by dividing annualized earnings
by average TBV.
(3)
Average of beginning TBV of $3,122 and
ending TBV of $3,233.
UNAUDITED SEGMENT STATEMENT
OF
OPERATIONS & EARNINGS
RECONCILIATION
(millions of dollars, except for
earnings per share data)
Year Ended December 31, 2021
Servicing
Originations
Corporate/ Other
Consolidated
Service related, net
$
705
$
176
$
186
$
1,067
Net gain on mortgage loans held for
sale
568
1,683
—
2,251
Total revenues
1,273
1,859
186
3,318
Total expenses
502
852
308
1,662
Other (expense) income, net:
Interest income
129
102
—
231
Interest expense
(262
)
(88
)
(128
)
(478
)
Other income, net
—
—
528
528
Total other (expense) income, net
(133
)
14
400
281
Pretax income
$
638
$
1,021
$
278
$
1,937
Income tax expense
471
Net income from continuing operations
1,466
Net loss from discontinued operations
(12
)
Net income
1,454
Net income attributable to noncontrolling
interests
—
Net income attributable to common
stockholders of Mr. Cooper Group
1,454
Undistributed earnings attributable to
participating stockholders
8
Premium on retirement of preferred
stock
28
Net income attributable to common
stockholders
$
1,418
Net income per share
Basic
$
17.24
Diluted
$
16.53
Non-GAAP Reconciliation:
Pretax income
$
638
$
1,021
$
278
$
1,937
Other mark-to-market
(437
)
—
—
(437
)
Accounting items / other
1
9
(516
)
(506
)
Intangible amortization
—
—
12
12
Pretax operating income (loss)
$
202
$
1,030
$
(226
)
$
1,006
Income tax expense(1)
(243
)
Operating income
$
763
ROTCE(2)
25.7
%
Average tangible book value (TBV)(3)
$
2,970
(1)
Assumes tax-rate of 24.2%.
(2)
Computed by dividing annualized earnings
by average TBV.
(3)
Average of quarterly TBV averages of
$2,555 for 1Q’21, $2,983 for 2Q’21, $3,165 for 3Q’21, and $3,178
for 4Q’21.
Non-GAAP Reconciliation:
Quarter Ended
($ in millions except value per share
data)
Q3'21
Q4'21
Stockholders' equity (BV)
$
3,260
$
3,367
Goodwill
(120
)
(120
)
Intangible assets
(18
)
(14
)
Tangible book value (TBV)
$
3,122
$
3,233
Ending shares of common stock outstanding
(in millions)
75.1
73.8
BV/share
$
43.40
$
45.64
TBV/share
$
41.56
$
43.82
Net income
$
299
$
155
ROCE(1)
36.2
%
18.7
%
Beginning stockholders’ equity
$
3,350
$
3,260
Ending stockholders’ equity
$
3,260
$
3,367
Average stockholders’ equity (BV)
$
3,305
$
3,314
(1)
Computed by dividing annualized earnings
by average BV.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220211005095/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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