WMIH: Mr. Cooper Group Reports Fourth Quarter 2020 Financial Results

The following excerpt is from the company's SEC filing.
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 mill ion shares of common stock for $34 million
Quarter-end unrestricted cash of $695 million
DALLAS--(BUSINESS WIRE)--February 23, 2021--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.”
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)
Operational revenue
18.5
21.4
Amortization, net of accretion
(112)
(7.6)
(130)
(8.5)
Mark-to-market
(29)
(2.0)
(0.4)
Total revenues
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)
(1.9)
Accounting items
Pretax operating loss excluding mark-to-market and accounting items
(0.1)
(21)
(1.4)
Ending UPB ($B)
Average UPB ($B)
60+ day delinquency rate at period end
Annualized CPR
30.1
33.1
Modifications and workouts
23,725
25,525
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.

Income before taxes
Total pull through adjusted volume
19,794
23,706
15,598
24,526
Refinance recapture percentage
Recapture percentage
Purchase volume as a percentage of funded volume
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.
Accounting items / other
Intangible amortization
Pretax operating income excluding accounting items and intangible amortization
Exchange property sold
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
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

December 31, 2020
Revenues:
Service related, net, excluding mark-to-market
Net gain on mortgage loans held for sale
Total expenses:
Other expense, net:
Interest income
Interest expense
(165)
(168)
Other expense, net
(51)
(85)
Total other expense, net
(160)
Income before income tax expense
Income tax expense
Net income attributable to non-controlling interest
Net income attributable to Mr. Cooper Group
Undistributed earnings attributable to participating stockholders
Net income attributable to common stockholders
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):
91.7
90.2
95.1
94.7
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(millions of dollars)
Assets
Cash and cash equivalents
Restricted cash
Mortgage servicing rights
2,669
2,708
Advances and other receivables, net
Reverse mortgage interests, net
5,460
5,253
Mortgage loans held for sale at fair value
3,817
5,720
Property and equipment, net
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
Mortgage servicing liabilities
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
UNAUDITED SEGMENT STATEMENT OF
OPERATIONS & EARNINGS RECONCILIATION
Three Months Ended September 30, 2020
Corporate/ Other
Consolidated
Service related, net
Other (expense) income, net:
(105
(165
Other income (expense), net
Total other (expense) income, net
(160
Pretax (loss) income
(140
Net income attributable to noncontrolling interests
Net income attributable to common stockholders of Mr. Cooper Group
Non-GAAP Reconciliation:
Pretax income (loss), net of notable items
Fair value amortization
Pretax operating (loss) income
Operating income
50.9
Amount represents additional amortization required under the fair value amortization method over the cost amortization method.
Three Months Ended December 31, 2020
(107
(168
(123
(169
Pretax (loss) income, net of notable items
44.1
Year Ended December 31, 2020
(115
2,088
2,310
2,193
2,733
1,831
(442
(182
(702
(139
(135
(205
(319
(503
(637
1,464
(476
3.31
3.20
1,465
(312
1,264
(110
1,154
(279
42.5
Contacts
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

The above information was disclosed in a filing to the SEC. To see the filing, click here.

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