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Mr. Cooper Group Reports Fourth Quarter 2024 Results

1. Mr. Cooper reported Q4 earnings of $204 million with strong year-end performance. 2. Servicing segment income reached $393 million, indicating strong asset management. 3. Portfolio growth was robust, increasing 57% year-over-year, showing operational strength. 4. Flagstar acquisition closed successfully, enhancing customer base and operational efficiency. 5. Return on tangible common equity was 15.8%, indicating strong returns for shareholders.

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$107.3202/12 07:28 AM EDTEvent Start
$108.1202/13 02:11 PM EDTLatest Updated
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FLAG
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.

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