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Nationstar 4Q earnings boosted by servicing, originations growth

Adjusted earnings rise to $34M

Nationstar Mortgage Holdings’ fourth quarter adjusted earnings were $34 million, or 32 cents per share, compared to $32 million, or $0.30 per share, for the third quarter.

The increase was driven primarily by sequential improvement in servicing profitability and strong originations earnings.

The company reported GAAP net income in the fourth quarter of $79 million, or 73 cents per share.

The servicing segment achieved $51 million of adjusted pretax income, or 5.1 bps based upon average UPB, for the quarter, while adjusted pretax income improved for the fourth straight quarter due to a reduction in delinquency rates and implemented technology and process initiatives to drive improved profitability.

On the other side, the originations segment generated adjusted pretax income of $43 million in the fourth quarter in line with expectations, marking eight consecutive quarters of pretax income above $40 million.

The report noted that adjusted pretax income decreased sequentially principally due to the industry-wide implementation of TRID and general seasonality in the fourth quarter, which was expected.

Xome, which boasted that it was “the world’s first integrated, end-to-end digital platform for real estate, with the promise of connecting every major touch point in the transaction process, from finding a home to closing the deal,” struggled for the quarter.

The platform delivered $6 million in pretax income in the fourth quarter, with earnings down sequentially due to an increase in technology and marketing investments, higher title expenses due to TRID delays and increased title orders, and a reduction in property sales attributable to seasonality and pipeline delays that are in the process of being addressed.

Xome's total revenues increased 43% year-over-year principally due to higher sales price execution on property sales and growth in our title and close business.

During the year, Xome invested over $140 million to acquire three companies, and develop and launch new products and technologies, including Xome.com and mobile apps, establishing an offshore captive and building out corporate infrastructure.

Looking ahead, the company expects similar investments for Xome to be between $25 to $30 million in 2016.

“Our servicing segment continued to generate solid cash flows with sequential improvement in profitability to exit the year above our target of five basis points. In addition, our originations segment had a strong fourth quarter, posting its best annual performance since 2012 and continues to provide a cost effective source of new servicing assets,” said Jay Bray, CEO.

 “Looking forward, we remain focused on taking steps that improve customer experience and drive customer retention while delivering greater value for our shareholders. We enter 2016 well positioned from a strategic, operational and capital perspective,” Bray added.

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