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Investments

Walter Investment posts $235.5M income on $402M revenue for FY2013

Servicing, MSRs drive revenues

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Walter Investment Management Corp. (WAC) reported net income for 2013 totaling $253.5 million, or $6.63 per diluted share, compared to a net loss of $22.1 million, or 73 cents per diluted share for 2012. 

The company saw revenues of $402.8 million for 2013, as compared to $171 million in the same quarter last year.

For the fourth quarter of 2013, the company reported net income of $9.8 million, or 26 cents per diluted share, compared to a net loss of $34.1 million, or 98 cents per diluted share, in the fourth quarter of 2012. 

“During 2013 Walter Investment executed against its strategic plan, profitably growing its servicing business, launching its originations platform to opportunistically harvest the HARP opportunity and extending its core competencies to the reverse mortgage market," said Mark J. O'Brien, Walter Investment's Chairman and CEO.  

“We more than doubled the serviced book of business to over $200 billion of UPB, funded $16 billion of originations volume and were the #1 HECM issuer in the reverse mortgage space while growing our serviced book of business by 23%,” O’Brien said.

Walter Investment said that the results reflected strong earnings growth in the servicing segment, predominantly driven by the higher volume of units serviced as compared to the prior year periods. 

Servicing results also reflected increases in the value of the company's mortgage servicing rights.  

Originations performance moderated toward a more normalized operating level in the quarter, delivering solid results and strong margins from the consumer direct channel.

Completed financings including issuance of $1.5 billion first lien term loan and $575 million of senior unsecured notes resulting in a reduced rate, covenant light term loan facility and diversification of the company's capital structure. The company funded over 63,000 HARP loans.

Servicing generated revenue of $162.9 million in the fourth quarter, which included $142.3 million of gross servicing fees, $25.6 million of incentive and performance-based fees, and $20.1 million of ancillary and other fees. 

Servicing revenues for the fourth quarter of 2013 are net of $8.5 million in amortization on MSRs accounted for at amortized cost and include $23.4 million of gains related to MSRs accounted for at fair value.

Servicing segment revenues were up 80% over the fourth quarter of 2012, principally reflecting the significant increase in UPB serviced over the past year, as well as the positive fair value adjustment recognized in the fourth quarter of this year. 

Originations generated revenue of $135.8 million in the fourth quarter, driven primarily by the consumer lending channel, which targets refinancing and recapture of accounts from the serviced portfolio. 

These results compare to revenue of $167.4 million, expenses of $115.6 million, core earnings before income taxes of $54.5 million and AEBITDA of $58.6 million in the third quarter of 2013.

The reverse mortgage segment generated revenue of $39.1 million for the quarter, which included a $26.4 million gain from the net impact of HECM loan and related HMBS obligation fair value adjustments, $6.9 million in servicing fees and $5.8 million of other revenue. 

The ARM segment generated revenue of $9.7 million and incurred expense of $7.2 million in the quarter ended December 31, 2013.

The loans and residuals segment, which includes the legacy Walter Investment owned portfolio, generated interest income of $35.3 million for the fourth quarter of 2013.

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