Mr. Cooper Group Reports Fourth Quarter 2024 Results

Rhea-AI Summary

Mr. Cooper Group (NASDAQ: COOP) reported strong Q4 2024 results with net income of $204 million and operating ROTCE of 15.8%. The company's servicing portfolio grew significantly by 57% year-over-year to $1,556 billion. Key financial highlights include:

- Pretax operating income of $235 million
- Book value per share increased to $75.70
- Tangible book value per share rose to $71.61
- Completed acquisition of Flagstar's mortgage operations
- Repurchased 0.4 million shares for $38 million

The Servicing segment recorded pretax income of $393 million, while Originations earned pretax income of $46 million. The company funded 32,954 loans totaling $9.3 billion UPB, with $2.6 billion in direct-to-consumer and $6.7 billion in correspondent channels. The funded volume increased 36% quarter-over-quarter.

Positive

• Net income of $204 million with strong operating ROTCE of 15.8%
• Servicing portfolio grew 57% year-over-year to $1,556 billion
• 36% quarter-over-quarter increase in funded volume
• Book value per share increased to $75.70
• Successful completion of Flagstar's mortgage operations acquisition

Negative

• Refinance recapture percentage declined from 69% to 35% quarter-over-quarter
• 60+ day delinquency rate increased to 1.6% from 1.5%
• Originations pretax income decreased to $46 million from $69 million quarter-over-quarter

Insights

Financial Analyst

The Q4 2024 results reveal Mr. Cooper's exceptional execution in scaling its servicing platform while maintaining strong profitability metrics. The 57% year-over-year servicing portfolio growth to $1.556 trillion demonstrates the company's ability to capitalize on market opportunities, particularly through the strategic Flagstar acquisition.

The servicing segment's performance is particularly noteworthy, with operational revenue of $672 million at 19.1 basis points of UPB, indicating strong fee generation capabilities. The low delinquency rate of 1.6% and controlled CPR of 7.5% reflect robust portfolio quality and effective risk management. The completion of 24,899 modifications and workouts shows proactive portfolio management and potential for increased fee revenue.

In originations, the company's strategic shift towards purchase mortgages, now representing 65% of funded volume, positions it well for the current high-rate environment. The 21% recapture rate, while lower than previous quarters, remains solid given market conditions and demonstrates the platform's resilience.

The tangible book value per share increase to $71.61 and operating ROTCE of 15.8% underscore the company's ability to generate sustainable returns while maintaining strong capital levels. The continued share repurchases, totaling $38 million in Q4, reflect management's confidence in the company's financial position and commitment to shareholder returns.

• Reported net income of $204 million including other mark-to-market of $92 million, equivalent to ROCE of 17.3% and operating ROTCE of 15.8%

• Book value per share and tangible book value per share increased to $75.70 and $71.61

• Servicing portfolio grew 57% y/y to $1,556 billion

• Repurchased 0.4 million shares of common stock for $38 million

• Completed acquisition of Flagstar’s mortgage operations

• Recognized as the top mortgage servicer by Freddie Mac, receiving 2024 SHARP Gold Award

DALLAS--(BUSINESS WIRE)-- Mr. Cooper Group Inc. (NASDAQ: COOP) (the “Company”), reported fourth quarter income before income tax expense of $280 and net income of $204 million. Excluding other mark-to-market and other adjustments, the Company reported pretax operating income of $235 million. Adjustments included other mark-to-market net of hedges of $92 million and other items shown below in the reconciliation of GAAP and non-GAAP results.

Chairman and CEO Jay Bray commented, “The fourth quarter capped off an outstanding year for Mr. Cooper, with an operating ROTCE of 15.8% and substantial portfolio growth of 57% year-over-year. We enter 2025 with strong capital, liquidity, and an outstanding team, energized to serve our customers, clients, and stakeholders.”

Mike Weinbach, President, added, “I’m extremely proud of our team’s consistently strong servicing performance and agile execution in originations. Our robust operations and technology enabled us to successfully close the Flagstar acquisition and welcome new customers, clients, and team members. We continue to see exciting opportunities to grow our customer base, while our focus on cost leadership, fee revenues, and expanding our originations platform will help us generate strong returns.”

Servicing

The Servicing segment provides a best-in-class home loan experience for our 6.7 million customers while simultaneously strengthening asset performance for investors. In the fourth quarter, Servicing recorded pretax income of $393 million, including other mark-to-market of $92 million. The servicing portfolio ended the quarter at $1,556 billion. Servicing generated pretax operating income, excluding other mark-to-market, of $318 million. At quarter end, the carrying value of the MSR was $11,736 million equivalent to 159 bps of MSR UPB.

	Quarter Ended
($ in millions)	Q4'24								Q3'24
	$				BPS				$				BPS
Operational revenue	$	672				19.1			$	616				20.1
Amortization, net of accretion		(264	)			(7.5	)			(235	)			(7.6	)
Mark-to-market		94				2.7				(125	)			(4.1	)
Total revenues		502				14.3				256				8.4
Total expenses		(185	)			(5.3	)			(180	)			(5.9	)
Total other income, net		76				2.2				101				3.3
Income before taxes		393				11.2				177				5.8
Other mark-to-market		(92	)			(2.6	)			126				4.1
Accounting items		9				0.3				—				—
Intangible amortization		8				0.2				2				0.1
Pretax operating income	$	318				9.1			$	305				10.0
	Quarter Ended
	Q4'24								Q3'24
MSRs UPB ($B)	$					736			$					678
Subservicing and Other UPB ($B)						820								561
Ending UPB ($B)	$					1,556			$					1,239
Average UPB ($B)	$					1,407			$					1,225
60+ day delinquency rate at period end						1.6	%							1.5	%
Annualized CPR						7.5	%							7.1	%
Modifications and workouts						24,899								21,817

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 $46 million and pretax operating income of $47 million.

The Company funded 32,954 loans in the third quarter, totaling approximately $9.3 billion UPB, which was comprised of $2.6 billion in direct-to-consumer and $6.7 billion in correspondent. Funded volume increased 36% quarter-over-quarter, while pull through adjusted volume increased 21% quarter-over-quarter to $9.1 billion.

	Quarter Ended
($ in millions)	Q4'24			Q3'24
Income before taxes	$	46		$	69
Accounting items		1			—
Pretax operating income	$	47		$	69

	Quarter Ended
($ in millions)	Q4'24				Q3'24
Total pull through adjusted volume	$	9,063			$	7,491
Funded volume	$	9,290			$	6,825
Refinance recapture percentage		35	%			69	%
Recapture percentage		21	%			22	%
Purchase volume as a percentage of funded volume		65	%			69	%

Conference Call Webcast and Investor Presentation

The Company will host a conference call on February 12, 2025 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, 2024				Three Months Ended September 30, 2024
Revenues:
Service related, net	$	537			$	288
Net gain on mortgage loans held for sale		117				136
Total revenues		654				424
Total expenses:		367				335
Other (expense) income, net:
Interest income		216				227
Interest expense		(220	)			(199	)
Other expense, net		(3	)			(5	)
Total other expense, net		(7	)			23
Income before income tax expense		280				112
Income tax expense		76				32
Net income	$	204			$	80
Earnings per share:
Basic	$	3.20			$	1.24
Diluted	$	3.13			$	1.22
Weighted average shares of common stock outstanding (in millions):
Basic		63.8				64.3
Diluted		65.1				65.5

MR. COOPER GROUP INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(millions of dollars)
	December 31, 2024			September 30, 2024
Assets
Cash and cash equivalents	$	753		$	733
Restricted cash		220			186
Mortgage servicing rights at fair value		11,736			10,035
Advances and other receivables, net		1,345			940
Mortgage loans held for sale at fair value		2,211			1,962
Property and equipment, net		58			58
Deferred tax assets, net		230			315
Other assets		2,386			1,957
Total assets	$	18,939		$	16,186
Liabilities and Stockholders' Equity
Unsecured senior notes, net	$	4,891		$	4,885
Advance, warehouse and MSR facilities, net		6,495			4,379
Payables and other liabilities		2,322			1,841
MSR related liabilities - nonrecourse at fair value		418			443
Total liabilities		14,126			11,548
Total stockholders' equity		4,813			4,638
Total liabilities and stockholders' equity	$	18,939		$	16,186

UNAUDITED SEGMENT STATEMENT OF
OPERATIONS & EARNINGS RECONCILIATION
(millions of dollars, except for earnings per share data)
	Three Months Ended December 31, 2024
	Servicing				Originations				Corporate/ Other				Consolidated
Service related, net	$	493			$	27			$	17			$	537
Net gain on mortgage loans held for sale		9				108				—				117
Total revenues		502				135				17				654
Total expenses		185				90				92				367
Other income (expense), net:
Interest income		184				32				—				216
Interest expense		(108	)			(31	)			(81	)			(220	)
Other expense, net		—				—				(3	)			(3	)
Total other income (expense), net		76				1				(84	)			(7	)
Pretax income (loss)	$	393			$	46			$	(159	)		$	280
Income tax expense														76
Net income													$	204
Earnings per share
Basic													$	3.20
Diluted													$	3.13
Non-GAAP Reconciliation:
Pretax income (loss)	$	393			$	46			$	(159	)		$	280
Other mark-to-market		(92	)			—				—				(92	)
Accounting items / other		9				1				29				39
Intangible amortization		8				—				—				8
Pretax operating income (loss)	$	318			$	47			$	(130	)		$	235
Income tax expense(1)														(57	)
Operating income													$	178
Operating ROTCE(2)														15.8	%
Average tangible book value (TBV)(3)													$	4,514

(1)		Assumes tax-rate of 24.2%.
(2)		Computed by dividing annualized earnings by average TBV.
(3)		Average of beginning TBV of $4,474 and ending TBV of $4,553.

UNAUDITED SEGMENT STATEMENT OF
OPERATIONS & EARNINGS RECONCILIATION
(millions of dollars, except for earnings per share data)
	Three Months Ended September 30, 2024
	Servicing				Originations				Corporate/ Other				Consolidated
Service related, net	$	246			$	24			$	18			$	288
Net gain on mortgage loans held for sale		10				126				—				136
Total revenues		256				150				18				424
Total expenses		180				83				72				335
Other income (expense), net:
Interest income		201				25				1				227
Interest expense		(100	)			(23	)			(76	)			(199	)
Other expense, net		—				—				(5	)			(5	)
Total other income (expense), net		101				2				(80	)			23
Pretax income (loss)	$	177			$	69			$	(134	)		$	112
Income tax expense														32
Net income													$	80
Earnings per share
Basic													$	1.24
Diluted													$	1.22
Non-GAAP Reconciliation:
Pretax income (loss)	$	177			$	69			$	(134	)		$	112
Other mark-to-market		126				—				—				126
Accounting items / other		—				—				6				6
Intangible amortization		2				—				—				2
Pretax operating income (loss)	$	305			$	69			$	(128	)		$	246
Income tax expense														(60	)
Operating income(1)													$	186
Operating ROTCE(2)														16.8	%
Average tangible book value (TBV)(3)													$	4,451

(1)		Assumes tax-rate of 24.2%.
(2)		Computed by dividing annualized earnings by average TBV.
(3)		Average of beginning TBV of $4,428 and ending TBV of $4,474.

UNAUDITED SEGMENT STATEMENT OF
OPERATIONS & EARNINGS RECONCILIATION
(millions of dollars, except for earnings per share data)
	Year Ended December 31, 2024
	Servicing				Originations				Corporate/ Other				Consolidated
Service related, net	$	1,625			$	86			$	77			$	1,788
Net gain on mortgage loans held for sale		39				398				—				437
Total revenues		1,664				484				77				2,225
Total expenses		721				304				294				1319
Other income (expense), net:
Interest income		705				84				1				790
Interest expense		(411	)			(79	)			(286	)			(776	)
Other expense, net		—				—				(19	)			(19	)
Total other income (expense), net		294				5				(304	)			(5	)
Pretax income (loss)	$	1237			$	185			$	(521	)		$	901
Income tax expense														232
Net income													$	669
Earnings per share
Basic													$	10.40
Diluted													$	10.19
Non-GAAP Reconciliation:
Pretax income (loss)	$	1,237			$	185			$	(521	)		$	901
Other mark-to-market		(76	)			—				—				(76	)
Accounting items / other		9				1				50				60
Intangible amortization		12				—				2				14
Pretax operating income (loss)	$	1,182			$	186			$	(469	)		$	899
Income tax expense														(218	)
Operating income(1)													$	681
Operating ROTCE(2)														15.6	%
Average tangible book value (TBV)(3)													$	4,368

(1)		Assumes tax-rate of 24.2%.
(2)		Computed by dividing annualized earnings by average TBV.
(3)		Average of quarterly TBV averages of $4,176 for 1Q’24, $4,333 for 2Q’24, $4,451 for 3Q’24, and $4,514 for 4Q’24.

Non-GAAP Reconciliation:	Quarter Ended
($ in millions except value per share data)	Q4'24				Q3'24
Stockholders' equity (BV)	$	4,813			$	4,638
Goodwill		(141	)			(141	)
Intangible assets		(119	)			(23	)
Tangible book value (TBV)	$	4,553			$	4,474
Ending shares of common stock outstanding (in millions)		63.6				64.0
BV/share	$	75.70			$	72.49
TBV/share	$	71.61			$	69.93
Net income	$	204			$	80
ROCE(1)		17.3	%			6.9	%
Beginning stockholders’ equity	$	4,638			$	4,594
Ending stockholders’ equity	$	4,813			$	4,638
Average stockholders’ equity (BV)	$	4,726			$	4,616

(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/20250212301682/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

Source: Mr. Cooper Group Inc.

FAQ

What was Mr. Cooper Group's (COOP) net income in Q4 2024?

Mr. Cooper Group reported a net income of $204 million in Q4 2024.

How much did COOP's servicing portfolio grow in 2024?

Mr. Cooper's servicing portfolio grew 57% year-over-year to $1,556 billion.

What was COOP's share repurchase activity in Q4 2024?

The company repurchased 0.4 million shares of common stock for $38 million.

What was Mr. Cooper Group's (COOP) operating ROTCE in Q4 2024?

The company achieved an operating ROTCE of 15.8% in Q4 2024.

How much was COOP's funded loan volume in Q4 2024?

The company funded 32,954 loans totaling approximately $9.3 billion UPB.