Nationstar Mortgage Holdings (NSM) posted fourth-quarter net income of $19 million, or $0.21 per share, down from $111 million or $1.22 per share in the third quarter.
Core EPS for the quarter was $0.58, down from $0.80 in the third quarter. Core EPS was down principally related to increased amortization and higher servicing expenses in the quarter.
For the full year, net income surged to $221 million, or $2.45 per share, up from $217 million, or $2.40 per share for full-year 2013.
Nationstar generated core EPS of $2.86 per share, up 61% from 2013, due to greater earnings contribution from core operations versus increases in the fair value of mortgage servicing rights. Core EPS was up year-over-year as a function of increased servicing earnings, significant growth in the Solutionstar business from increasedproperty sales, valuation and title orders, and more stable originations earnings.
Operating cash flow increased over 900% to $363 million for 2014.
“Heading into 2015, growth prospects for Nationstar are significant, and we are well positioned from a capital, technology and operational perspective,” said Jay Bray, CEO.
“Looking forward we believe customer satisfaction is a source of competitive advantage and a single customer provides extreme value to our portfolio over time. We are relentlessly focused on retaining our ‘Customers for Life’ through a robust suite of products and solutions, offered at a competitive price, with a customer- centric focus.”
Servicing
The servicing segment generated $327 million of core pretax earnings in 2014, up from $316 million in 2013. Servicing core margin increased year-over-year from 26% to 30% thanks to new profitability initiatives that reduced cost per loan and improved the performance of acquired portfolios. The initiatives reduced operating costs by 17%.
By the end of the year, Nationstar’s servicing portfolio reached $381 billion, nearly in line with the 2013 ending balance despite a challenging transfer market. Nationstar completed over 80,000 workouts during 2014 that contributed to an overall decline in the 60+ day delinquency rate from 11.8% to 9.9%.
On Monday, the Nationstar announced it purchased the residential mortgage servicing rights on a $9.8 billion portfolio from Ocwen Loan Servicing (OCN)
Solutionstar
The Solutionstar segment generated $133 million of pretax earnings in 2014, soaring 295% from $34 million in 2013. Solutionstar margin increased year-over-year from 23% to 41% due to an increase in property sales and an increase in unit volume orders in our valuation, title and closing services as a result of the expansion in our existing client relationships. The segment sold nearly 21,000 properties over the course of 2014, a 68% increase from 2013.
At the end of the January, Solutionstar closed on its acquisition of Experience 1, the holding company for Title365 and technology subsidiaries X1 Labs and X1 Xpress, which is expected to speed operations through added efficiency.
This acquisition is another strategic move to leverage technological expertise to deliver comprehensive, end-to-end online services for homebuyers, home sellers and real estate professionals.
Originations
Originations generated $209 million of core pretax earnings in 2014, up 25% from $168 million in 2013. Originations core margin increased year-over-year from 24% to 36% as a result of the strategic decision to exit lower margin channels in late 2013, increased margins on consumer direct originated loans and maximizing capacity utilization on a single integrated platform.
Nationstar funded $16.9 billion of volume in 2015, with approximately 67% of the volume from the consumer direct channel.
