- Reported net income of $46 million including other
mark-to-market loss of $41 million, equivalent to ROCE of 4.3% and
operating ROTCE of 11.1%
- Book value per share and tangible book value per share
increased to $66.29 and $63.67
- Servicing portfolio grew 14% y/y to $992 billion
- Repurchased 1.3 million shares of common stock for $72
million
- Subsequent to quarter end, issued $1 billion senior notes
maturing 2032 with coupon of 7.125%
Mr. Cooper Group Inc. (NASDAQ: COOP) (the “Company”), reported
fourth quarter income before income tax expense of $69 and net
income of $46 million. Excluding other mark-to-market and other
adjustments, the Company reported pretax operating income of $151
million. Adjustments included other mark-to-market net of hedges of
$41 million, $27 million related to the previously disclosed cyber
event, and other items shown below in the reconciliation of GAAP
and non-GAAP results.
Chairman and CEO Jay Bray commented, “The fourth quarter closed
out an exceptionally productive year for Mr. Cooper, with steadily
rising return on equity throughout the year and very substantial
growth which puts us on the cusp of achieving our $1 trillion
portfolio strategic target. We enter 2024 with robust capital and
liquidity, an extremely talented and dedicated team, and enormous
energy to serve customers, clients and all our other
stakeholders.”
Chris Marshall, Vice Chairman added, “Operational performance
this year has benefited from strong focus and vigorous execution.
Accomplishments include record servicing profits and very agile
performance by our originations unit despite headwinds from rising
interest rates. Over the last fifteen years, we have grown in a
steady, consistent, and prudent fashion, to the point that today we
have earned the title of market leader. I believe we are in strong
shape to excel in 2024 and beyond.”
Servicing
The Servicing segment provides a best-in-class home loan
experience for our 4.6 million customers while simultaneously
strengthening asset performance for investors. In the fourth
quarter, Servicing recorded pretax income of $184 million,
including other mark-to-market of $41 million. The servicing
portfolio ended the quarter at $992 billion. Servicing generated
pretax operating income, excluding other mark-to-market, of $229
million. At quarter end, the carrying value of the MSR was $9,090
million equivalent to 155 bps of MSR UPB.
Quarter Ended
($ in millions)
Q4'23
Q3'23
$
BPS
$
BPS
Operational revenue
$
507
21.1
$
561
25.0
Amortization, net of accretion
(151
)
(6.3
)
(160
)
(7.1
)
Mark-to-market
(40
)
(1.7
)
63
2.8
Total revenues
316
13.1
464
20.7
Total expenses
(180
)
(7.4
)
(172
)
(7.6
)
Total other expenses, net
48
1.9
69
3.0
Income before taxes
184
7.6
361
16.1
Other mark-to-market
41
1.7
(61
)
(2.7
)
Accounting items
2
0.1
—
—
Intangible amortization
2
0.1
1
—
Pretax operating income excluding other
mark-to-market and accounting items
$
229
9.5
$
301
13.4
Quarter Ended
Q4'23
Q3'23
MSRs UPB ($B)
$
588
$
528
Subservicing and Other UPB ($B)
404
409
Ending UPB ($B)
$
992
$
937
Average UPB ($B)
$
963
$
897
60+ day delinquency rate at period end
1.9
%
1.9
%
Annualized CPR
4.0
%
5.3
%
Modifications and workouts
16,953
21,459
Originations
The Originations segment creates 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 $9 million and pretax
operating income of $10 million.
The Company funded 10,699 loans in the fourth quarter, totaling
approximately $2.7 billion UPB, which was comprised of $1.2 billion
in direct-to-consumer and $1.5 billion in correspondent. Funded
volume decreased 22% quarter-over-quarter, while pull through
adjusted volume decreased 22% quarter-over-quarter to $2.6
billion.
Quarter Ended
($ in millions)
Q4'23
Q3'23
Income before taxes
$
9
$
29
Accounting items
1
—
Pretax operating income excluding
accounting items and other
$
10
$
29
Quarter Ended
($ in millions)
Q4'23
Q3'23
Total pull through adjusted volume
$
2,592
$
3,308
Funded volume
$
2,661
$
3,412
Refinance recapture percentage
76
%
83
%
Recapture percentage
22
%
24
%
Purchase volume as a percentage of funded
volume
59
%
54
%
Conference Call Webcast and Investor
Presentation
The Company will host a conference call on February 9, 2024 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, 2023
Three Months Ended
September 30, 2023
Revenues:
Service related, net
$
345
$
432
Net gain on mortgage loans held for
sale
59
142
Total revenues
404
574
Total expenses:
332
301
Other (expense) income, net:
Interest income
159
167
Interest expense
(159
)
(146
)
Other (expense) income, net
(3
)
58
Total other (expense) income, net
(3
)
79
Income before income tax expense
69
352
Income tax expense
23
77
Net income
$
46
$
275
Earnings per share:
Basic
$
0.71
$
4.14
Diluted
$
0.69
$
4.06
Weighted average shares of common stock
outstanding (in millions):
Basic
65.1
66.4
Diluted
66.7
67.7
MR. COOPER GROUP INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(millions of dollars)
Unaudited
December 31, 2023
September 30, 2023
Assets
Cash and cash equivalents
$
571
$
553
Restricted cash
169
151
Mortgage servicing rights at fair
value
9,090
8,504
Advances and other receivables, net
996
758
Mortgage loans held for sale at fair
value
927
893
Property and equipment, net
53
59
Deferred tax assets, net
472
499
Other assets
1,918
2,010
Total assets
$
14,196
$
13,427
Liabilities and
Stockholders' Equity
Unsecured senior notes, net
$
3,151
$
3,147
Advance and warehouse facilities, net
4,302
3,545
Payables and other liabilities
1,995
1,964
MSR related liabilities - nonrecourse at
fair value
466
467
Total liabilities
9,914
9,123
Total stockholders' equity
4,282
4,304
Total liabilities and stockholders'
equity
$
14,196
$
13,427
UNAUDITED SEGMENT STATEMENT
OF
OPERATIONS & EARNINGS
RECONCILIATION
(millions of dollars, except for
earnings per share data)
Three Months Ended December 31,
2023
Servicing
Originations
Corporate/
Other
Consolidated
Service related, net
$
307
$
16
$
22
$
345
Net gain on mortgage loans held for
sale
9
51
(1
)
59
Total revenues
316
67
21
404
Total expenses
180
59
93
332
Other income (expense), net:
Interest income
148
10
1
159
Interest expense
(100
)
(9
)
(50
)
(159
)
Other income, net
—
—
(3
)
(3
)
Total other income (expense), net
48
1
(52
)
(3
)
Pretax income (loss)
$
184
$
9
$
(124
)
$
69
Income tax expense
23
Net income
$
46
Earnings per share
Basic
$
0.71
Diluted
$
0.69
Non-GAAP Reconciliation:
Pretax income (loss)
$
184
$
9
$
(124
)
$
69
Other mark-to-market
41
—
—
41
Accounting items / other
2
1
36
39
Intangible amortization
2
—
—
2
Pretax operating income (loss)
$
229
$
10
$
(88
)
$
151
Income tax expense(1)
(37
)
Operating income
$
114
Operating ROTCE(2)
11.1
%
Average tangible book value (TBV)(3)
$
4,123
(1)
Assumes tax-rate of 24.2%.
(2)
Computed by dividing annualized earnings by average TBV.
(3)
Average of beginning TBV of $4,133 and ending TBV of $4,113.
UNAUDITED SEGMENT STATEMENT
OF
OPERATIONS & EARNINGS
RECONCILIATION
(millions of dollars, except for
earnings per share data)
Three Months Ended September 30,
2023
Servicing
Originations
Corporate/
Other
Consolidated
Service related, net
$
392
$
18
$
22
$
432
Net gain on mortgage loans held for
sale
72
70
—
142
Total revenues
464
88
22
574
Total expenses
172
58
71
301
Other income (expense), net:
Interest income
157
10
—
167
Interest expense
(88
)
(11
)
(47
)
(146
)
Other expense, net
—
—
58
58
Total other income (expense), net
69
(1
)
11
79
Pretax income (loss)
$
361
$
29
$
(38
)
$
352
Income tax expense
77
Net income
$
275
Earnings per share
Basic
$
4.14
Diluted
$
4.06
Non-GAAP Reconciliation:
Pretax income (loss)
$
361
$
29
$
(38
)
$
352
Other mark-to-market
(61
)
—
—
(61
)
Accounting items / other
—
—
(44
)
(44
)
Intangible amortization
1
—
1
2
Pretax operating income (loss)
$
301
$
29
$
(81
)
$
249
Income tax expense
(60
)
Operating income(1)
$
189
Operating ROTCE(2)
18.7
%
Average tangible book value (TBV)(3)
$
4,032
(1)
Assumes tax-rate of 24.2%.
(2)
Computed by dividing annualized earnings by average TBV.
(3)
Average of beginning TBV of $3,931 and ending TBV of $4,133.
UNAUDITED SEGMENT STATEMENT
OF
OPERATIONS & EARNINGS
RECONCILIATION
(millions of dollars, except for
earnings per share data)
Year Ended December 31, 2023
Servicing
Originations
Corporate/
Other
Consolidated
Service related, net
$
1,295
$
61
$
84
$
1,440
Net gain on mortgage loans held for
sale
84
271
(1
)
354
Total revenues
1,379
332
83
1,794
Total expenses
664
232
276
1172
Other income (expense), net:
Interest income
491
36
1
528
Interest expense
(324
)
(37
)
(176
)
(537
)
Other expense, net
—
—
41
41
Total other income (expense), net
167
(1
)
(134
)
32
Pretax income (loss)
$
882
$
99
$
(327
)
$
654
Income tax expense
154
Net income
$
500
Earnings per share
Basic
$
7.46
Diluted
$
7.30
Non-GAAP Reconciliation:
Pretax income (loss)
$
882
$
99
$
(327
)
$
654
Other mark-to-market
(18
)
—
—
(18
)
Accounting items / other
2
1
14
17
Intangible amortization
3
—
4
7
Pretax operating income (loss)
$
869
$
100
$
(309
)
$
660
Income tax expense
(160
)
Operating income(1)
$
500
Operating ROTCE(2)
12.5
%
Average tangible book value (TBV)(3)
$
3,987
(1)
Assumes tax-rate of 24.2%.
(2)
Computed by dividing annualized earnings
by average TBV.
(3)
Average of quarterly TBV averages of
$3,895 for 1Q’23, $3,896 for 2Q’23, $4,032 for 3Q’23, and $4,123
for 4Q’23.
Non-GAAP Reconciliation:
Quarter Ended
($ in millions except value per share
data)
Q4'23
Q3'23
Stockholders' equity (BV)
$
4,282
$
4,304
Goodwill
(141
)
(141
)
Intangible assets
(28
)
(30
)
Tangible book value (TBV)
$
4,113
$
4,133
Ending shares of common stock outstanding
(in millions)
64.6
65.8
BV/share
$
66.29
$
65.38
TBV/share
$
63.67
$
62.78
Net income
$
46
$
275
ROCE(1)
4.3
%
26.2
%
Beginning stockholders’ equity
$
4,304
$
4,079
Ending stockholders’ equity
$
4,282
$
4,304
Average stockholders’ equity (BV)
$
4,293
$
4,192
(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/20240209042862/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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