Mr. Cooper reports lower earnings due to MSR marking violations

Mr. Cooper reported fourth-quarter net income of $46 million due to the impact of interest rate fluctuations on mortgage servicing rights valuations and charges. cyber attack Earnings fell, but the company remained profitable thanks to strength in other businesses.

A previously reported mark-to-market loss of $41 million from MSR and a $27 million charge related to the system vulnerability weighed on the bottom line number, which was down from $275 million last season But above $1 million a year ago. The company said the breach disrupted some operations for four days, but the impact was not serious.

The final results for the quarter essentially confirmed preliminary pre-tax results related to A well-received financing deal. Senior management said unsecured debt The financing contributes to financial robustness and will help position it as a leading service provider to cope with Regulatory scrutiny of large non-bank institutions is increasing.

“We don’t have any concerns about continuing to grow the platform,” Jay Bray, Mr. Cooper’s chairman and chief executive, said on the company’s earnings call. He noted that services is a business of scale, and with scale With expansion, operational efficiency will be higher.

Kurt Johnson, the company’s executive vice president and chief financial officer, said the financing provides the company with high-yield debt due in 2032, “providing us with a very strong liquidity runway.”

A BTIG analyst note released shortly after the call suggested that the resource should help the company “maintain its bulk MSR acquisitions.”

The company’s results included pre-tax income of $69 million. Other figures it confirmed included pretax operating income of $151 million, a figure that excludes negative $27 million in items reflecting cyberattacks and other one-time adjustment costs.

Services revenue was also in line with previous figures, at $184 million before tax. Operating income before service taxes was $229 million, in line with expectations. The company also previously reported a $41 million loss on its mortgage servicing rights portfolio, net of hedging gains.

Additionally, Mr. Cooper reported that the company’s total services portfolio rose to $992 million in the fourth quarter and could ultimately still exceed Its long-term goal is $1 trillion In the first season.

Mr. Cooper also confirmed fourth-quarter pre-tax raw revenue of $9.0 billion and raw operating income of $10.0 million, with funding for the period in the preliminary results report at $2.7 billion.

Profits in both the origination and services segments were higher than analysts at Keefe, Bruyette and Woods expected, but they said in a preliminary report on the latest data that margins in the production segment appeared to have narrowed in the quarter.

“We calculated a sales margin of 197 basis points, below our expectation of 212 basis points,” they said.

Mr. Cooper’s sales gains, based on fourth-quarter earnings, were down 266 basis points from the previous quarter, according to KBW analysts.

Executives said the company is keeping a close eye on margins, noting that margins are affected by interest rate fluctuations and will continue to take technology-driven efficiency measures with that in mind.

“If interest rates make an unexpected change in either direction, both volume and margins could change,” Chris Marshall said. The company’s outgoing president. But profit margins remain strong for now, he said.

Mike Weinbach is an industry veteran who served as a senior executive at a bank. Mr. Cooper’s new president.

As of midday, Mr. Cooper’s shares were trading at more than $70 a share on the East Coast, up from the opening price of $66.48.

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