Rithm Capital (US:RITM)2025-10-31 20:16Financial Performance - As of September 30, 2025, Rithm Capital had approximately $47.2 billion in total assets and $37.5 billion in assets under management (AUM) [422] - The book value per common share increased to $12.83 as of September 30, 2025, up from $12.71 as of June 30, 2025, reflecting a net income attributable to common stockholders of $36.5 million for the three months ended March 31, 2025 [423] - The company reported a net income of $228.798 million for the three months ended September 30, 2025, down from $318.006 million in the previous quarter [536] - Net income attributable to common stockholders for the three months ended September 30, 2025 was $193.662 million, a decrease of $90.237 million compared to the previous quarter [536] - Interest income for the nine months ended September 30, 2025 decreased by $90.7 million, primarily due to a reduced securities portfolio and elevated default rates related to certain consumer loans [540] - For the nine months ended September 30, 2025, servicing revenue, net increased by $0.5 million, driven by a $55.9 billion increase in servicing UPB compared to the same period in 2024 [538] Market Conditions - The unemployment rate increased to 4.3% in August 2025 from 4.1% in June 2025, indicating a slight loosening in the labor market [428] - The nominal 10-year Treasury yield declined slightly to 4.15% at the end of September 2025 from 4.23% at the end of June 2025 [427] - Core personal consumption expenditure inflation was 2.9% in August 2025, with the overall Consumer Price Index (CPI) rising to 3.0% in September 2025 from 2.7% in June 2025 [426] - Elevated interest rates during the reporting period may have impacted borrowers' willingness to enter into mortgage transactions [533] - The Federal Open Market Committee cut interest rates by a quarter percentage point in September 2025, with projections for two more rate cuts in the year [425] Loan Origination and Servicing - The origination business funded $16.4 billion of mortgages for the three months ended September 30, 2025, and $44.5 billion for the nine months ended September 30, 2025, compared to $41.3 billion for the same period in 2024 [436] - Funded loan origination volume for the three months ended September 30, 2025, was $16.4 billion, up from $16.3 billion for the previous quarter [445] - Purchase originations comprised 74.8% of funded loans for the three months ended September 30, 2025, an increase from 72.8% in the previous quarter [443] - Refinance originations comprised 26.4% of funded loans for the nine months ended September 30, 2025, higher than 16.4% for the same period in 2024 [444] - The total servicing portfolio reached $877.5 billion UPB as of September 30, 2025, an increase of $13.3 billion from June 30, 2025, primarily due to new client acquisition and loan production [437] Debt and Liquidity - The company reported total debt of $27.50 billion as of September 30, 2025, down from $28.28 billion at the end of 2024 [434] - Total outstanding debt obligations amounted to $32.5 billion as of September 30, 2025 [567] - The company has margin exposure on $16.5 billion of secured financing agreements, which could significantly impact liquidity if collateral value declines [568] - As of September 30, 2025, approximately $1.3 billion of available liquidity was held at NRM and Newrez, with $0.7 billion in excess of regulatory liquidity requirements [563] - The company expects to meet its long-term liquidity requirements through cash on hand and additional borrowings if needed [587] Strategic Initiatives - Rithm Capital is exploring growth opportunities in direct lending, insurance, private equity, and infrastructure spaces [421] - A strategic investment partnership was announced to fund the acquisition of up to $500 million of residential transition loans, with potential total acquisitions of up to $1.5 billion [520] - The company entered into a Purchase and Sale Agreement to acquire Crestline for $300 million, expected to close in Q4 2025 [569] - The acquisition of Paramount is valued at approximately $1.6 billion and is also expected to close in Q4 2025 [571] Asset Management - The company’s asset management platform had approximately $37.5 billion in assets under management (AUM) as of September 30, 2025 [519] - Asset management revenues for the nine months ended September 30, 2025, were $267.6 million, primarily driven by management fees and incentive income [527] - The company has unfunded capital commitments of $303.5 million to certain funds managed by Sculptor as of September 30, 2025 [611] Other Financial Metrics - Total gain on originated residential mortgage loans, held-for-sale, net increased by $3.3 million to $176.0 million for the three months ended September 30, 2025, compared to the previous quarter [443] - Total servicing fees for the three months ended September 30, 2025, were $515,409,000, a QoQ increase of $6,080,000 and a YoY increase of $235,009,000 [449] - The company reported a pull-through adjusted lock volume of $17.68 billion for the three months ended September 30, 2025, compared to $16.66 billion in the previous quarter [445] - The total outstanding face amount of Non-Agency securities was $8.6 billion, with an amortized cost basis of $669.1 million as of September 30, 2025 [480]