- GAAP Net Income of $98.9 million, or $0.41 per diluted share
- Core Earnings of $123.9 million, or $0.51 per diluted share*
- Common dividend of $115.4 million, or $0.46 per share
|Q3 2016||Q2 2016|
|Summary Operating Results:|
|GAAP Net Income per Diluted Share**||$0.41||$0.30|
|GAAP Net Income||$98.9 million||$68.7 million|
|Core Earnings per Diluted Share||$0.51||$0.52|
|Core Earnings*||$123.9 million||$119.6 million|
|NRZ Common Dividend:|
|Common Dividend per Share**||$0.46||$0.46|
|Common Dividend||$115.4 million||$106.0 million|
- Mortgage Servicing Rights ("MSRs") -
- During the third quarter, New Residential, through its subsidiary New Residential Mortgage LLC ("NRM"), obtained all remaining state licenses and agency approvals required to own Non-Agency MSRs and MSRs relating to Fannie Mae loans, Freddie Mac Loans and Federal Housing Administration ("FHA")-insured loans in all 50 U.S. states. NRM's state licenses and agency approvals not only give the Company the ability to independently acquire MSRs, but also enable the Company to diversify servicing partners and to continue and expand its role as a leading capital provider to the mortgage servicing industry.
- In August 2016, the Company announced a series of transactions for the purchase of up to $66 billion UPB of MSRs from Walter Investment Management Corp. ("Walter") and Walter Capital Opportunity, LP and its subsidiaries ("WCO"), marking NRZ's inaugural whole MSR transactions. In these transactions, NRZ agreed to purchase up to approximately $32 billion UPB of MSRs from Walter and agreed in principle (1) to acquire an additional MSR portfolio of up to $34 billion UPB from WCO, in each case to be subserviced by Ditech Financial LLC, a wholly-owned subsidiary of Walter. In early October, New Residential closed the $32 billion UPB MSR purchase from Walter for a total purchase price of approximately $212 million. (2)
- In October 2016, as part of its continued efforts to enhance liquidity, New Residential secured $345 million of MSR financing collateralized by Non-Agency Excess MSRs.
- Servicer Advances -
- New Residential continues to focus on improving advance financing by extending maturities, locking in fixed-rate funding and lowering cost of funds. In particular, the Company issued $900 million of 3-year ($500 million) and 5-year ($400 million) fixed-rate term notes in October 2016. Furthermore, the Company extended the maturity on a $2 billion advance financing facility by three years and lowered cost of funds to 3.0% from 3.45%.
- During the quarter, New Residential continued to work with its servicing partners to reduce its servicer advance balance. Year-to-date, the Company has successfully reduced its servicer advance balance by 17%, from $7.6 billion as of fourth quarter 2015 to $6.3 billion as of third quarter 2016.
- Non-Agency Securities & Call Rights -
- In the third quarter of 2016, New Residential continued to execute its deal collapse strategy by exercising clean-up call rights on 11 seasoned, Non-Agency deals, totaling $314 million UPB. In addition, the Company completed its eighth Non-Agency called loan securitization, totaling $308 million, in September 2016.
- During the year, the Company continued growing its Non-Agency securities portfolio as part of its previously announced effort to accelerate its call rights strategy. Year-to-date, New Residential increased its Non-Agency RMBS net equity from $374 million at the end of fourth quarter 2015 to $934 million at the end of third quarter 2016.
- Other Notable Events -
- Consumer Loan Refinancing: In October 2016, New Residential completed a $1.7 billion refinancing of the SpringCastle securitization, reducing blended cost of funds from 4.5% to 3.6% and providing approximately $23 million of liquidity.
- Equity Offering: The Company raised $284 million in gross proceeds in August 2016 to help fund the Walter MSR purchases and other investments.
|1)||The transaction involving the purchase by New Residential of $34 billion UPB of MSRs from WCO was agreed to in principle by the parties in August 2016 and is expected to close in the fourth quarter of 2016, subject to (i) GSE and other regulatory approvals, (ii) the negotiation and execution of definitive documentation and (iii) certain customary closing conditions. There can be no assurance if or when NRZ will be able to complete the MSR purchase from WCO.|
|2)||Walter and WCO UPB calculations are as of September 30, 2016. UPB of the Walter and WCO portfolios decreased since the August 9, 2016 announcement date due to amortization. Actual UPB for WCO is expected to decline due to further paydown.|