Mr. Cooper Group Reports First Quarter 2021 Financial Results

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Mr. Cooper Group reported a strong first quarter with a net income of $561 million or $5.92 per diluted share. This includes $373 million in other mark-to-market adjustments. Excluding these items, the pretax operating income stood at $363 million. The Servicing segment achieved $413 million in pretax income while the Originations segment generated $362 million. The company ended the quarter with significant cash reserves and robust capital ratios, reinforcing its financial stability.

Positive

Net income of $561 million or $5.92 per diluted share.
Servicing segment recorded pretax income of $413 million.
Originations segment generated $362 million in pretax income.
Company ended the quarter with a strong cash position and robust capital ratios.

Negative

60+ day delinquency rate increased to 5.3% from 5.8%.

04/29/2021 - 07:00 AM

Mr. Cooper Group Inc. (NASDAQ: COOP) (the “Company”), which principally operates under the Mr. Cooper® and Xome® brands, reported a first quarter net income of $561 million or $5.92 per diluted share. Net income included $373 million in other mark-to-market, which excludes fair value amortization of $19 million. Excluding mark-to-market and other items, the Company reported pretax operating income of $363 million. Other items were $1 million in severance charges related to corporate actions, $3 million in transaction costs related to Title365 sale, and $4 million of intangible amortization.

Chairman and CEO Jay Bray commented, “This quarter was a clear demonstration of how innovative technology, world-class operational discipline, and a culture of team members working together for customers can produce exceptional results, including record operating performance, record origination fundings, and strong growth in our servicing portfolio.”

Chris Marshall, Vice Chairman and CFO added, “Even after investing in MSRs and repurchasing shares, we ended the quarter with a very robust cash position and strengthened capital ratios. The company’s balance sheet and liquidity have never been stronger.”

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 first quarter, Servicing recorded pretax income of $413 million, reflecting a total mark-to-market of $354 million, which included $373 million in other mark-to-market offset by $19 million in fair value amortization. The total servicing portfolio ended the quarter at $646 billion UPB. Servicing generated pretax operating income, excluding the full mark-to-market, of $59 million. At quarter end, the carrying value of the MSR was $3,359 million, of which $3,354 million was at fair value equivalent to 122 bps of MSR UPB and original cost basis of 86 bps.

	Quarter Ended
($ in millions)	Q4'20					Q1'21
	$			BPS		$			BPS
Operational revenue	$	326		21.4		$	375		23.6
Amortization, net of accretion		(130	)	(8.5	)		(153	)	(9.6	)
Mark-to-market		(6	)	(0.4	)		354		22.3
Total revenues		190		12.5			576		36.3
Total expenses		(169	)	(11.1	)		(125	)	(7.9	)
Total other expenses, net		(50	)	(3.3	)		(38	)	(2.4	)
(Loss) income before taxes		(29	)	(1.9	)		413		26.0
Mark-to-market		6		0.4			(354	)	(22.3	)
Accounting items		2		0.1			—		—
Pretax operating (loss) income excluding mark-to-market and accounting items	$	(21	)	(1.4	)	$	59		3.7

	Quarter Ended
	Q4'20			Q1'21
Ending UPB ($B)	$	626		$	646
Average UPB ($B)	$	608		$	634
60+ day delinquency rate at period end		5.8	%		5.3	%
Annualized CPR		33.1	%		30.8	%
Modifications and workouts		26,406			33,976

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 $362 million.

Mr. Cooper funded 92,463 loans in the first quarter, totaling approximately $25.1 billion UPB, which was comprised of $11.4 billion in direct-to-consumer and $13.7 billion in correspondent. Funded volume increased 2% quarter-over-quarter.

	Quarter Ended
($ in millions)	Q4'20		Q1'21
Income before taxes	$	435	$	362

Quarter Ended

($ in millions)

Q4'20

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