Mr. Cooper Group reported third-quarter net income of $275 million Wednesday. After adjusting for mark-to-market and specific other factors, the company reported a pretax operating income of $249 million. This figure includes a gain of $67 million resulting from the dissolution of a securitization trust. When excluding this gain, the operating return on equity for the quarter stood at 13.8%.
“Our impressive performance, highlighted by rising return on equity, strong book value per share growth, robust capital, and record liquidity, reflects the strength of our balanced business model,” Chairman and CEO Jay Bray said. “With our servicing portfolio now at $937 billion, Mr. Cooper’s consistent track record of growth has propelled us to the nation’s leading servicer, one step closer to achieving our $1 trillion target.”
In the third quarter, servicing recorded pretax income of $361 million, including other mark-to-market of $61 million.
During an earnings call Bray said that means Mr. Cooper Group is now the "industry's largest servicer. We are also the most efficient."
He said the Basel III capital regime means they have been able to win business from big banks and it will present further attractive growth opportunities for Mr. Cooper Group.
"There's really no one in the industry who can compete with us in servicing," Bray added.
Originations earned pretax income and pretax operating income of $29 million. The company funded 12,468 loans in the third quarter, totaling approximately $3.4 billion unpaid principal balance. This was comprised of $1.7 billion in direct-to-consumer and $1.7 billion in correspondent. Funded volume decreased 11% quarter-over-quarter, while pull through adjusted volume decreased 13% quarter-over-quarter to $3.3 billion.
The company also announced the retirement of Vice Chairman and President Chris Marshall. It said he plans to retire by the end of 2024 and a search process has been initiated to identify his successor. Marshall joined the company in January 2019 and implemented bank-like processes, as well as pushing for efficiency gains and leveraging.
"This served us extremely well when the pandemic hit a year later," Bray said. "And being well-prepared for adverse scenarios we were able to substantially expand our liquidity."
In 2021, Marshall was promoted to president. He will continue to lead operations until the end of next year when a replacement is found.
In May, Mr. Cooper Group signed an agreement to acquire all outstanding shares of Home Point Capital Inc. for approximately $324 million in cash. And in April it entered an agreement to buy Rushmore Loan Management Services LLC’s residential mortgage servicing platform, which includes 250,000 customers with a total of $37 billion in unpaid principal balance.
