Mr. Cooper Group Inc. COOP reported third-quarter 2024 adjusted earnings per share of $2.84, which beat the Zacks Consensus Estimate by 11.8%. The bottom line rose 1.8% year over year.

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Solid growth in the Servicing and Originations segments were major tailwinds for the company in the third quarter. The servicing portfolio increased year over year, surpassing the $1.2-trillion mark. However, a decline in revenues and an increase in expenses were spoilsports.

Net income of $80 million in the third quarter declined significantly from $275 million a year ago.

COOP’s Revenues & Expenses

Mr. Cooper's total revenues declined 26.1% year over year to $424 million. The top line missed the consensus mark by 20.3%.

Total expenses of $335 million rose 11.3% year over year.

Interest income of $227 million jumped 35.9% year over year. Interest expenses increased 36.3% year over year to $199 million in the quarter under review.

Mr. Cooper's Segmental Performance

The Servicing segment reported a pretax operating income of $305 million, which rose 1.3% year over year in the third quarter due to portfolio growth and strong operating leverage. Total revenues of $256 million declined from $464 million a year ago. The servicing portfolio increased 32% year over year, surpassing the $1.23-trillion mark.

The Originations segment’s pretax operating income of $69 million increased significantly from $29 million a year ago. Total revenues of $150 million in the third quarter rose from $88 million a year ago. The recapture percentage was 22%, down from 24% a year ago. Funded volume of $6.8 billion rose from the year-ago figure of $3.4 billion.

COOP's Financial Position (As of Sept. 30, 2024)

Mr. Cooper exited the third quarter with total assets of $16.2 billion, higher than $15.8 billion at the end of the second quarter of 2024. Cash and cash equivalents amounted to $733 million, higher than $642 million at the end of the previous quarter.

Net unsecured senior notes were at $4.9 billion, up from the previous quarter’s $4.1 billion. Total liabilities of $11.5 billion at the third-quarter end were higher than $11.2 billion at the end of second-quarter 2024. Total shareholders’ equity rose from $15.8 billion in the previous quarter to $16.2 billion in the third quarter.

Mr. Cooper’s Capital Deployment Update

The company bought back 0.5 million shares for $46 million in the quarter under review.

Our View on COOP

Mr. Cooper ended the third quarter on a decent note, with a strong performance in the Originations segment. A solid balance sheet position is an added advantage. The company’s strong operations, rising profits and shareholder-value-boosting efforts are likely to support its financials in the upcoming period.