Market Overview

Nationstar Reports Second Quarter 2018 Financial Results

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  • Quarterly GAAP income of $58 million, $0.59 per diluted share and $52
    million adjusted income, $0.53 per diluted share
  • Adjusted servicing profitability of 5.8 basis points (bps)
  • Servicing GAAP pretax income of $88 million, adjusted pretax income of
    $72 million
  • Originations GAAP pretax income of $32 million, adjusted pretax income
    of $33 million
  • Xome GAAP pretax income of $10 million, adjusted pretax income of $13
    million

Nationstar Mortgage Holdings Inc. (NYSE:NSM), which principally operates
under the Mr. Cooper® and Xome® brands, reported second quarter GAAP net
income of $58 million, or $0.59 per diluted share. On an adjusted basis,
the Company reported earnings for the second quarter of $52 million, or
$0.53 per diluted share.

"Nationstar continues to deliver solid operating results with all
segments experiencing growth. Servicing profitability is improving ahead
of expectations, and significant opportunities exist for further growth.
Originations grew in profitability and volume, and it is focused on
providing solutions for our 3.2 million customers. Xome sales and order
volumes increased with the continued addition of new third-party
clients," said Jay Bray, Chairman and Chief Executive Officer. "We have
received all required approvals for our merger transaction with WMIH and
we expect to close the merger on July 31. We appreciate the support of
our shareholders, the WMIH shareholders and our partners who have
provided these approvals. We look forward to growing our differentiated
platform and building value for our shareholders and customers."

Servicing

Servicing supports home ownership for our 3.2 million customers and
earns recurring revenues from mortgage servicing rights and
subservicing. The Servicing segment earned $88 million GAAP pretax
income or $72 million adjusted pretax income (5.8 basis points).
Adjusted pretax profitability improved 5% from the prior quarter
primarily due to lower expenses. Expenses improved by $16 million or 9%
quarter-over-quarter as a result of improved efficiencies in the segment.

Nationstar boarded $20 billion UPB, ending the second quarter at $498
billion. An estimated $65 billion UPB, consisting of both mortgage
servicing rights and subservicing, is scheduled to board in the second
half of the year. Nationstar continues to evaluate significant servicing
growth opportunities and expects to end the year with over $530 billion.

Nationstar is targeting adjusted servicing profitability in excess of
6.0 basis points on average for the full year 2018 which will be
propelled by lower prepayment environment, portfolio additions, and
continued cost savings initiatives.

                           
Quarter Ended
($ in millions) Q1'18   Q2'18
$   BPS $   BPS
Operational revenue $ 291 23.0 $ 277 22.3
Amortization (48 ) (3.8 ) (48 ) (3.9 )
Mark-to-market   152   12.1     19   1.5  
Total revenues 395 31.3 248 20.0
Expenses (182 ) (14.4 ) (166 ) (13.4 )
Total other income (expenses), net   7   0.6     6   0.5  
Income before taxes (GAAP) 220 17.6 88 7.1
Mark-to-market (152 ) (12.1 ) (19 ) (1.5 )
Adjustments         3   0.2  
Adjusted pretax income $ 69   5.5   $ 72   5.8  
 
               
Quarter Ended
Q1'18   Q2'18
Ending UPB (NYSE:B) $ 500 $ 498
Average UPB (NYSE:B) $ 504 $ 497
60+ day delinquency rate 3.2 % 2.8 %
Annualized CPR 10.7 % 12.1 %
Annualized CPR, net of recapture 8.9 % 10.5 %
Modifications and workouts 19,950 14,715
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