Mr. Cooper Group(US:COOP)2022-04-27 16:00Financial Performance - Mr. Cooper Group Inc. reported a fair value of mortgage servicing rights (MSRs) at $6,006 million as of March 31, 2022, up from $4,223 million on December 31, 2021, reflecting a significant increase of 42.3%[31] - The Company reported total revenues of $1,052 million for the three months ended March 31, 2022, with $716 million from Servicing and $324 million from Originations[106] - The Company reported net income from continuing operations of $658 million for the three months ended March 31, 2022, compared to $559 million for the same period in 2021, representing a 17.7% increase[72] - Earnings per share from continuing operations attributable to common stockholders were $8.91 (basic) and $8.59 (diluted) for Q1 2022, compared to $6.20 (basic) and $5.90 (diluted) for Q1 2021, reflecting a significant increase of 43.5% and 45.5% respectively[72] - The Company achieved income from continuing operations before income tax expense of $866 million for the three months ended March 31, 2022[106] - Total revenues for the three months ended March 31, 2022, were $1,052 million, a decrease of $207 million compared to $1,259 million in the same period in 2021[122] Mortgage Servicing Rights (MSRs) - The total UPB of MSRs was $411,840 million as of March 31, 2022, compared to $339,208 million on December 31, 2021, indicating a growth of 21.4%[33] - The fair value of MSRs at the end of the period was $6,006 million, up from $3,354 million, representing an increase of approximately 78.8%[1] - The company recorded a change in fair value included in earnings for MSR of $563 million during the three months ended March 31, 2022[80] - The average life of mortgage servicing rights was reported at 7.4 years, with a cost to service per loan averaging $74[83] - The total MSRs UPB reached $411,840 million, a significant increase from $276,028 million year-over-year, reflecting a growth of about 49.1%[1] Revenue and Expenses - The Company reported total revenues from the servicing segment of $716 million for the three months ended March 31, 2022, compared to $568 million for the same period in 2021, representing a 26.1% increase[40] - Total expenses for the Company were $338 million, with $123 million from Servicing and $174 million from Originations[106] - Total expenses rose to $123 million, an increase of 11.8% from $110 million in the prior year[139] - The total revenues for the Originations segment decreased to $324 million in Q1 2022 from $595 million in Q1 2021, a decline of $271 million[160] Legal and Compliance - The Company is involved in various legal proceedings that may lead to administrative, civil, or criminal proceedings, potentially resulting in fines or penalties[90] - The Company believes that the current legal accrued liability is appropriate and does not expect any incremental liability to materially affect its consolidated financial condition[97] - The company maintained compliance with its financial covenants as of March 31, 2022, which include requirements related to tangible net worth and liquidity reserves[64] Operational Metrics - The servicing portfolio expanded from $10 billion in 2009 to $796 billion as of March 31, 2022, reflecting strong operational capabilities[115] - The company aims to grow its servicing portfolio to $1 trillion in UPB by acquiring new customers and retaining existing ones[116] - As of March 31, 2022, approximately 1.2% of customers were on a forbearance plan, down from a peak of 7.2% in July 2020[117] - The total ending balance for the servicing portfolio was $795,799 million, compared to $628,509 million in the previous year, reflecting an increase of about 26.7%[1] Cash Flow and Liquidity - Operating activities generated cash of $926 million in Q1 2022 compared to cash used of $76 million in Q1 2021, a change of $1,002 million[181] - Cash and cash equivalents decreased to $579 million as of March 31, 2022, from $895 million as of December 31, 2021[172] - As of March 31, 2022, total borrowing capacity was $16.5 billion, with $11.7 billion remaining unused[172] Interest Rates and Financing - The weighted average interest rate for advance facilities was 2.4% for the three months ended March 31, 2022, compared to 3.0% for the same period in 2021[59] - The company incurred interest expenses of $86 million for the three months ended March 31, 2022, down from $93 million in the same period of 2021, indicating a decrease of approximately 7.5%[63] - The company reported a discount rate for excess spread financing ranging from 9.5% to 13.8%[83] Market Conditions and Future Outlook - The Originations segment experienced declining funding volumes due to increased interest rates, with expectations of margin compression in Q2 2022[120] - The company anticipates continued portfolio growth in 2022, primarily through MSR acquisitions and subservicing[118] - The company aims to achieve a refinance recapture rate of 60% as part of its strategic priorities[116]