DALLAS, April 24, 2024 (BUSINESS WIRE) --
Mr. Cooper Group Inc. (NASDAQ: COOP) (the "Company"), reported first quarter income before income tax expense of $232 and net income of $181 million. Excluding other mark-to-market and other adjustments, the Company reported pretax operating income of $199 million. Adjustments included other mark-to-market net of hedges of $42 million and other items shown below in the reconciliation of GAAP and non-GAAP results.
Chairman and CEO Jay Bray commented, "The company has started the year with excellent momentum, including return on tangible common equity rising to 14.5%. Thanks to our strategic emphasis on technology, including years of investment in AI and the cloud, Mr. Cooper is well positioned to provide our customers with world-class service, operate as a trusted counterparty for our industry stakeholders, and grow and sustain investor returns."
Mike Weinbach, President added, "This environment is playing to the strengths of our balanced business model, as we are enjoying strong momentum with subservicing clients and seeing attractive opportunities to acquire MSRs, while our originations team has been very nimble in helping customers save money and access the equity they've built up in their homes."
Servicing
The Servicing segment provides a best-in-class home loan experience for our 5.1 million customers while simultaneously strengthening asset performance for investors. In the first quarter, Servicing recorded pretax income of $313 million, including other mark-to-market of $42 million. The servicing portfolio ended the quarter at $1,136 billion. Servicing generated pretax operating income, excluding other mark-to-market, of $273 million. At quarter end, the carrying value of the MSR was $9,796 million equivalent to 155 bps of MSR UPB.
Quarter Ended
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
($ in millions) Q1'24 Q4'23
-------------------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------------------------
$ BPS $ BPS
------------------------------------------------------------ ------------------------------------------------------------ ------------------------------------------------------------ ------------------------------------------------------------
Operational revenue $ 577 21.6 $ 507 21.1
Amortization, net of accretion (170 ) (6.4 ) (151 ) (6.3 )
Mark-to-market 43 1.6 (40 ) (1.7 )
-------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Total revenues 450 16.8 316 13.1
Total expenses (185 ) (6.9 ) (180 ) (7.4 )
Total other income, net 48 1.8 48 1.9
-------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Income before taxes 313 11.7 184 7.6
Other mark-to-market (42 ) (1.6 ) 41 1.7
Accounting items -- -- 2 0.1
Intangible amortization 2 0.1 2 0.1
-------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
Pretax operating income excluding other mark-to-market and accounting items $ 273 10.2 $ 229 9.5
==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ====================
Quarter Ended Quarter Ended
--------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Q1'24 Q1'24 Q4'23 Q4'23
--------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------------------------- -------------------- --------------------------------------------------------------------------------------------------------------------------------------------
MSRs UPB ($B) $ 631 $ $ $ 588
Subservicing and Other UPB ($B) 505 505 404 404 404 404
-------------------- ---------------------------------------------------------------------------------------------------- -------------------- -------------------- -------------------- ----------------------------------------------------------------------------------------------------
Ending UPB ($B) $ 1,136 $ $ $ 992
Average UPB ($B) $ 1,068 $ $ $ 963
60+ day delinquency rate at period end 1.6 1.6 % 1.9 1.9 1.9 %
Annualized CPR 4.7 4.7 % 4.0 4.0 4.0 %
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 and pretax operating income of $32 million.
The Company funded 11,599 loans in the first quarter, totaling approximately $2.9 billion UPB, which was comprised of $1.4 billion in direct-to-consumer and $1.5 billion in correspondent. Funded volume increased 8% quarter-over-quarter, while pull through adjusted volume increased 16% quarter-over-quarter to $3.0 billion.
Quarter Ended
------------------------------------------------------------------------------------------------
($ in millions) Q1'24 Q4'23
---------------------------------- ----------------------
Income before taxes $ 32 $ 9
Accounting items -- 1
-------------------- -------------- -------------------- --
Quarter Ended
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($ in millions) Q1'24 Q4'23
--------------------------------------------- ---------------------------------------------
Total pull through adjusted volume $ 3,013 $ 2,592
Funded volume $ 2,878 $ 2,661
Refinance recapture percentage 70 % 76 %
Recapture percentage 24 % 22 %
Conference Call Webcast and Investor Presentation
The Company will host a conference call on April 24, 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 Three Months Ended
March 31, 2024 December 31, 2023
----------------------------------------------- -----------------------------------------------
Revenues:
$ 478 $ 345
Service related, net
86 59
Net gain on mortgage loans held for sale
-------------------- ------- -------------------- -------------------- ------- --------------------
Total revenues 564 404
-------------------- ------- -------------------- -------------------- ------- --------------------
Total expenses: 317 332
Other (expense) income, net:
158 159
Interest income
(170 ) (159 )
Interest expense
(3 ) (3 )
Other (expense) income, net
-------------------- ------- -------------------- -------------------- ------- --------------------
Total other (expense) income, net (15 ) (3 )
-------------------- ------- -------------------- -------------------- ------- --------------------
Income before income tax expense 232 69
Income tax expense 51 23
-------------------- ------- -------------------- -------------------- ------- --------------------
Net income $ 181 $ 46
==================== ======= ==================== ==================== ======= ====================
Earnings per share:
$ 2.80 $ 0.71
Basic
==================== ======= ==================== ==================== ======= ====================
$ 2.73 $ 0.69
Diluted
==================== ======= ==================== ==================== ======= ====================
Weighted average shares of common stock outstanding (in millions):
64.6 65.1
Basic
-------------------- ------- -------------------- -------------------- ------- --------------------
MR. COOPER GROUP INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(millions of dollars)
Unaudited
------------------------------ ------------------------------
March 31, 2024 December 31, 2023
------------------------------ ------------------------------
Assets
---------------------------------------------------
Cash and cash equivalents $ 578 $ 571
Restricted cash 157 169
Mortgage servicing rights at fair value 9,796 9,090
Advances and other receivables, net 914 996
Mortgage loans held for sale at fair value 1,070 927
Property and equipment, net 55 53
Deferred tax assets, net 426 472
Other assets 1,779 1,918
-------------------- ---------- -------------------- ----------
$ 14,775 $ 14,196
Total assets
==================== ========== ==================== ==========
Liabilities and Stockholders' Equity
---------------------------------------------------
Unsecured senior notes, net $ 4,137 $ 3,151
Advance, warehouse and MSR facilities, net 4,087 4,302
Payables and other liabilities 1,691 1,995
MSR related liabilities - nonrecourse at fair value 455 466
-------------------- ---------- -------------------- ----------
10,370 9,914
Total liabilities
Total stockholders' equity 4,405 4,282
-------------------- ---------- -------------------- ----------
UNAUDITED SEGMENT STATEMENT OF
OPERATIONS & EARNINGS RECONCILIATION
(millions of dollars, except for earnings per share data)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Three Months Ended March 31, 2024
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Servicing Originations Corporate/ Consolidated
Other
------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------ ----------------------------------------------
Service related, net $ 440 $ 16 $ 22 $ 478
Net gain on mortgage loans held for sale 10 76 -- 86
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- ------ --------------------
Total revenues 450 92 22 564
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- ------ --------------------
Total expenses 185 62 70 317
Other income (expense), net:
146 12 -- 158
Interest income
(98 ) (10 ) (62 ) (170 )
Interest expense
-- -- (3 ) (3 )
Other expense, net
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- ------ --------------------
Total other income (expense), net 48 2 (65 ) (15 )
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- ------ --------------------
Pretax income (loss) $ 313 $ 32 $ (113 ) $ 232
==================== ============== ==================== ==================== ============== ==================== ==================== ============== ====================
Income tax expense 51
-------------------- ------ --------------------
Net income $ 181
==================== ====== ====================
Earnings per share
$ 2.80
Basic
==================== ====== ====================
$ 2.73
Diluted
==================== ====== ====================
Non-GAAP Reconciliation:
----------------------------------------
Pretax income (loss) $ 313 $ 32 $ (113 ) $ 232
Other mark-to-market (42 ) -- -- (42 )
Accounting items / other -- -- 7 7
Intangible amortization 2 -- -- 2
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- ------ --------------------
Pretax operating income (loss) $ 273 $ 32 $ (106 ) $ 199
==================== ============== ==================== ==================== ============== ==================== ==================== ============== ====================
Income tax expense(1) (48 )
-------------------- ------ --------------------
Operating income $ 151
==================== ====== ====================
Operating ROTCE(2) 14.5 %
==================== ====== ====================
(1) Assumes tax-rate of 24.2%.
(2) Computed by dividing annualized earnings by average TBV.
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/ Consolidated
Other
------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------ ----------------------------------------------
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:
148 10 1 159
Interest income
(100 ) (9 ) (50 ) (159 )
Interest expense
-- -- (3 ) (3 )
Other expense, net
-------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- ------ --------------------
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
$ 0.71
Basic
==================== ====== ====================
$ 0.69
Diluted
==================== ====== ====================
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 (37 )
-------------------- ------ --------------------
Operating income(1) $ 114
==================== ====== ====================
Operating ROTCE(2) 11.1 %
==================== ====== ====================
(1) Assumes tax-rate of 24.2%.
(2) Computed by dividing annualized earnings by average TBV.
Non-GAAP Reconciliation: Quarter Ended
--------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------
($ in millions except value per share data) Q1'24 Q4'23
---------------------------------------------- ----------------------------------------------
Stockholders' equity (BV) $ 4,405 $ 4,282
(141 ) (141 )
Goodwill
(26 ) (28 )
Intangible assets
-------------------- ------ -------------------- -------------------- ------ --------------------
Tangible book value (TBV) $ 4,238 $ 4,113
==================== ====== ==================== ==================== ====== ====================
Ending shares of common stock outstanding (in millions) 64.7 64.6
BV/share $ 68.06 $ 66.29
TBV/share $ 65.48 $ 63.67
---------------------------------------------- ----------------------------------------------
Net income $ 181 $ 46
-------------------- ------ -------------------- -------------------- ------ --------------------
ROCE(1) 16.7 % 4.3 %
Beginning stockholders' equity $ 4,282 $ 4,304
Ending stockholders' equity $ 4,405 $ 4,282
-------------------- ------ -------------------- -------------------- ------ --------------------
(1) Return on Common Equity (ROCE) is computed by dividing annualized earnings by average BV.
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SOURCE: Mr. Cooper Group Inc.
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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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