Rithm Capital Corp. · NYSE:RITM
Rithm Capital — Q4 2021 Earnings Presentation
43 slides from Rithm Capital's earnings presentation, Feb 8, 2022
Slide 1: Quarterly Supplement Fourth Quarter and Full Year 2021
New Residential Investment Corp. Quarterly Supplement F O U R T H Q UA R T E R A N D F U L L Y E A R 2 0 2 1
Slide 2: Disclaimers
Disclaimers IN GENERAL. This disclaimer applies to this document and the verbal or written comments of any person presenting it. This document, taken together with any such verbal or written comments, is referred to herein as the “Presentation.” FORWARD-LOOKING STATEMENTS. Certain statements regardi
Slide 3: New Residential Investment Corp. Overview
New Residential Investment Corp. Overview Our diversified investment management company leverages a unique portfolio of investments and operating businesses to generate attractive and sustainable risk-adjusted returns Over $3.9 Billion in Dividends Paid Since Inception(1)(2) $6.6 Billion Net Equ
Slide 4: Q4'21 Financial Highlights
Q4’21 Financial Highlights GAAP Net Income: Book Value: $160.4 Million / $0.33 per Diluted Share(1) $11.44 per Common Share as of December 31, 2021 +0.8% Book Value per Common Share from September 30, 2021 Core Earnings: $191.9 Million / $0.40 per Diluted Share(1)(2) Fourth Quarter 2021 Common Sto
Slide 5: 2021 Highlights
2021 Highlights NRZ grew strategically and strengthened the company in 2021, delivering strong results and generating attractive returns for our shareholders Acquisitions & Investments Securitization Platform 2021 FY Performance +17.3% Total Shareholder Return(1) Acquisition Acquisition 10 Securitiz
Slide 6: Strategic Evolution
Strategic Evolution We have built a strategy over time that combines our investment management expertise and complementary operating companies to create assets for our portfolio Investment Grow and Scale Entry into Grow and Scale Expand Goals for 2022 Portfolio Investment Complementary Operating Ope
Slide 7: Business Highlights
Business Highlights 1 Further positioned NRZ to be able to 4 Non-daily market to market financing perform in any rate environment(1) represents 99% of the NRZ portfolio* Continued prudent risk management strategy Portfolio of ~$629 billion UPB of MSRs to benefit from rising rate environment, while s
Slide 8: Business and Investment Summary
Business and Investment Summary Total Assets ($bn) Strategy Description $50 Top 5 non-bank mortgage originator with multi- Origination channel lending abilities(1) $41.6 $39.7 $40 $37.3 Leading non-bank mortgage servicer (performing and special servicing). Includes MSRs serviced in $35.2 Servici
Slide 9: Market Conditions
Market Conditions We believe the trends in the broader market are supportive of NRZ’s overall strategy(1) Rates are forecasted Total originations However, purchase Additionally, there is Continued trends to continue rising… are expected to originations pent-up demand of borrower strength decline in
Slide 10: NRZ's Ability to Organically Manufacture Assets
NRZ’s Ability to Organically Manufacture Assets Our ability to organically generate assets helps drive our earnings and book value growth(1) Product Agency Origination Non-Agency Origination Business Purpose Lending (Conventional and FHA MSRs) (MSRs, Loans, Bonds and Call Rights) (Loans) 2022E Indus
Slide 11: New Residential's 2022 Playbook
New Residential’s 2022 Playbook NRZ continues to originate and source high quality assets that deliver excess risk- adjusted returns(1) Largest Portfolio of MSRs Among Non-Banks(2) Industry-Leading Origination Franchise(3) Well-positioned to benefit from the expected rise in rates, Scalable orig
Slide 12: Q4'21 Performance
Q4’21 Performance NEW RESIDENTIAL Q4 2021 12
Slide 13: MSR Portfolio Summary
MSR Portfolio Summary NRZ owns a hard-to-replicate portfolio of MSRs with significant earnings power that benefits from a rising rate environment Q4’21 MSR Portfolio Activity and Outlook ◆ MSR portfolio totaled $629 billion UPB as of December 31, 2021(1) – 87% Full MSRs / 13% Excess MSRs ◆ Newrez /
Slide 14: MSR Speeds
MSR Speeds Slowing amortization and growing origination have supported our MSR portfolio ◆ The gap between MSR UPB run-off and origination UPB turned positive in Q4’21 with originations exceeding MSR run-off by ~$17bn ◆ During Q4’21, average portfolio speeds slowed for the fourth consecutive quarter
Slide 15: Earnings from MSR Portfolio Expected to Offset Lower Origination Earnings
Earnings from MSR Portfolio Expected to Offset Impact of Lower Origination Earnings As interest rates rise, MSR amortization is expected to slow down and outweigh the potential reduction in origination earnings(1) The number of borrowers who elect to refinance their mortgages will decrease as intere
Slide 16: Call Rights
Call Rights Call volumes in Q4’21 were high, driven by positive fundamentals Q4’21 Call Rights Portfolio Activity and Outlook(1) ◆ Call rights are an important part of NRZ’s investment strategy, acting as an organic pipeline to the whole loan balance sheet and the servicing business – NRZ controls c
Slide 17: Single Family Rental (SFR)
Single Family Rental (SFR) NRZ intends to prudently grow its SFR portfolio through various sourcing channels and high-quality property management(1) NRZ’s SFR Portfolio NRZ Competitive Advantage(1) ◆ Lower cost of financing and proven securitization capabilities Portfolio Including ◆ ~2,700 units (2
Slide 18: Loans
Loans NRZ has organic access to a steady pipeline of income generating assets within our loan portfolio Targeted NRZ Q4’21 Projected FY 2021 Lifetime Net Portfolio 2022E Market Trends(2) NRZ Advantage(2) Volume Yield(1)(2) Size ($bn) Volume(2) Performing & 12-15% $1.2bn $4.0bn $2.5bn ◆ High demand d
Slide 19: Servicer Advances
Servicer Advances Balances remain low and we continue to have significant excess servicer advance capacity(1) Advance Balances as of December 31, 2021 ◆ Servicer advance balances as of December 31, 2021 were $3.3 billion, effectively unchanged from September 30, 2021 ◆ Outstanding advance balances a
Slide 20: Mortgage Company Highlights
Mortgage Company Highlights The integration of Newrez and Caliber is yielding significant synergies(1) Integration Update Initial Integration Synergies Targets(1) ($mm) ◆ Correspondent and Wholesale channel integrations Origination completed $150-$200 Channels $200 ◆ DTC integration began in Q4 2021
Slide 21: Origination: Q4'21 Activity and Business Highlights
Origination: Q4’21 Activity and Business Highlights The Caliber acquisition added incremental origination volume; Q4’21 is the first quarter with fully combined reporting $101.5 million $33.5 billion $25 - $30 billion $38.1 billion 51% Origination PT Adj. Lock Q1’22E Funded Volume Purchase Mix Pre-T
Slide 22: Origination: Leading Purchase Franchise
Origination: Leading Purchase Franchise Supported by Local Footprint and Broad Product Set We believe our extensive local presence will continue to drive purchase performance(1) Footprint and Differentiators Purchase Channel Diversification is Outpacing the Industry(2) ◆ Scalable Retail platform and
Slide 23: Servicing: Q4'21 Activity and Business Highlights
Servicing: Q4’21 Activity and Business Highlights NRZ is the nation’s largest non-bank servicer, benefiting from significant operational expertise(1) $629 billion UPB ~3.2 million $390 billion UPB Total Loan Count Largest Q4’21 Total NRZ Servicing Q4’21 In-House Servicing (incl. ~2.3 million at Mort
Slide 24: Servicing: Recapture
Servicing: Recapture Our large servicing book combined with strong recapture capabilities is a competitive advantage Recapture Highlights Overall Refinance Recapture Performance(1) ◆ Overall recapture performance remained strong in Q4’21 62% 64% 62% ◆ Retail/JV purchase recapture is up ~13% since Q1
Slide 25: Complementary Operating Companies
Complementary Operating Companies NRZ boasts a portfolio of multiple wholly-owned businesses that provide a boost to our earnings profile SUBSERVICING Subservicing on Leading provider National title Manages network Nationwide behalf of third- of fix & flip, new insurance and of certified and provide
Slide 26: How We Set Ourselves Apart
New Residential – How We Set Ourselves Apart(1) Leading Investment Asset Manufacturer with Manager with Ability to Organically Complementary Create New Quality Operating Businesses Investments MSR Portfolio Diversified Portfolio of with Significant Income Generating Upside Opportunity in Rising Rate
Slide 27: Appendix
Appendix NEW RESIDENTIAL Q4 2021 27
Slide 28: Condensed Consolidated Balance Sheets
Condensed Consolidated Balance Sheets NEW RESIDENTIAL Q4 2021 28
Slide 29: Book Value per Share Summary
Book Value per Share Summary QoQ% (1) Per Share Change Ending Q3'21 BV 11.35 Net Income (Excluding change in fair value) 0.65 MSR Realization of Cash Flows (0.57) Change in valuation inputs and assumptions 0.24 Change in fair value of investments 0.02 GAAP Net Income 0.34 Other Comprehensive Income
Slide 30: Condensed Consolidated Income Statements
Condensed Consolidated Income Statements NEW RESIDENTIAL Q4 2021 30
Slide 31: Segment Information (Q4'21)
Segment Information (Q4’21) (1) (1) Mortgage Loans Receivable includes Genesis Capital LLC that was acquired in December 2021. NEW RESIDENTIAL Q4 2021 31
Slide 32: Segment Information (Q3'21)
Segment Information (Q3’21) Residential Securities, Properties and Origination and Servicing Loans Residential Properties & MSRs & Servicer Securities & Call Residential Mortgage Loans Corporate & Quarter Ended September 30, 2021 Origination Servicing Advances Rights Loans Receivable (1) Other Total
Slide 33: Mortgage Servicing Rights
Mortgage Servicing Rights (in thousands) MSRs Balance as of September, 2021 $ 6,565,267 Purchases, net 2,983 Originations 453,436 Proceeds from sales (21,376) Change in fair value due to: Realization of cash flows (267,880) Change in valuation inputs and assumptions 106,875 (Gain)/loss realized 19,4
Slide 34: Servicing and Origination
Servicing and Origination The acquisition of Caliber closed in August 2021. As a result, only a stub period of Caliber’s Q3’21 performance is included in “Q3’21 Reported Results.” “Q3’21 Full Quarter” represents results as if Caliber had been owned for a full quarter. (1) Includes impact from ancill
Slide 35: Unaudited GAAP Reconciliation of Core Earnings
Unaudited GAAP Reconciliation of Core Earnings Management uses Core Earnings, which is a Non-GAAP measure, as one measure of operating performance. Please see next slide for the definition of Core Earnings. NEW RESIDENTIAL Q4 2021 35
Slide 36: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Core Earnings New Residential has five primary variables that impact its operating performance: (i) the current yield earned on the Company’s investments, (ii) the interest expense under the debt incurred to finance the Company’s investments, (iii) the Company’s
Slide 37: Endnotes
Endnotes NEW RESIDENTIAL Q4 2021 37
Slide 38: Endnotes to Slide 3
Endnotes to Slide 3 Endnotes to Slide 3: Source: Company filings and data, and Bloomberg. Financial and market data as of December 31, 2021 unless otherwise noted. (1) “Inception” date refers to May 2, 2013. (2) “Dividends Paid” represents both common and preferred dividends. Inclusive of common and
Slide 39: Endnotes to Slides 4 through 6
Endnotes to Slide 4 through 6 Endnotes to Slide 4: Source: Company filings and data, and Bloomberg. Financial and market data as of December 31, 2021 unless otherwise noted. (1) Per common share calculations for both GAAP Net Income and Core Earnings are based on 485,381,890 weighted average diluted
Slide 40: Endnotes to Slides 7 through 13
Endnotes to Slides 7 through 13 Endnotes to Slide 7: Source: Company filings and data, and Bloomberg. Financial and market data as of December 31, 2021 unless otherwise noted. (1) Based on management’s current views and estimates, and actual results may vary materially. See “Disclaimers” at the begi
Slide 41: Endnotes to Slides 14 through 18
Endnotes to Slides 14 through 18 Endnotes to Slide 14: Source: Company filings and data. Financial data as of December 31, 2021 unless otherwise noted. (1) Based on management’s current views and estimates, and actual results may vary materially. See “Disclaimers” at the beginning of this Presentati
Slide 42: Endnotes to Slides 19 through 26
Endnotes to Slides 19 through 26 Endnotes to Slide 19: Source: Company filings and data. Financial data as of December 31, 2021 unless otherwise noted. (1) Based on management’s current views and estimates, and actual results may vary materially. See “Disclaimers” at the beginning of this Presentati
Slide 43: Abbreviations
Abbreviations Abbreviations: This Presentation may include abbreviations, which have the following Original UPB – UPB at Time of Securitization meanings: PLS – Private Label Securities 60+ DQ – Percentage of loans that are delinquent by 60 days or more PT Adj. Lock Volume – Pull Through Adju