Rithm Capital Corp. · NYSE:RITM
Rithm Capital — New Residential Investment — Q1 2019 Earnings Presentation
38 slides from Rithm Capital's earnings presentation, May 1, 2019
Slide 1: Quarterly Supplement First Quarter 2019
New Residential Investment Corp. Quarterly Supplement First Quarter 2019
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. – Differentiated Strategy
New Residential Investment Corp. – Differentiated Strategy New Residential Investment Corp. (NYSE: NRZ) is a publicly traded mortgage real estate investment trust (mREIT) with a diversified portfolio and a strong track record of performance ~$7.0 Billion $33.4 Billion 11.8% Market Cap Total Assets(1
Slide 4: Q1 2019 Company and Financial Highlights
Q1 2019 Company and Financial Highlights Company and Financial Highlights GAAP Net Income of $145.6 Million, or $0.37 Per Diluted Share(1) Core Earnings of $204.3 Million, or $0.53 Per Diluted Share(1)(2) First Quarter Common Stock Dividend of $0.50 Per Common Share 11.8% dividend yield as o
Slide 5: Established Portfolio of Hard-to-Replicate Strategies
Established Portfolio of Hard-to-Replicate Strategies New Residential has a differentiated, hard-to-replicate portfolio with diversified and high-quality investment strategies Portfolio Overview MSRs & Residential Securities & Residential Loans Consumer Loans Servicer Advances Call Rights Net Equity
Slide 6: Market Backdrop is Supportive of NRZ Strategy
Market Backdrop is Supportive of NRZ Strategy… We believe that the economy remains stable and supportive of our overall strategy(1) New Residential’s Current View on Macro and Rate Environments The consumer is healthy The U.S. housing market is stable The Fed is on hold Consumer financial health r
Slide 7: Portfolio Composition Acts as a Natural Hedge for Various Rate Environments
…Portfolio Composition Acts as a Natural Hedge for Various Rate Environments…(1) The investment strategies within New Residential’s portfolio provide attractive risk-adjusted returns across various interest rate environments and act as a natural hedge for the overall portfolio NEUTRAL New Residentia
Slide 8: Portfolio Characteristics Supportive of Potential Headwinds
…and Portfolio Characteristics Supportive of Potential Headwinds(1) While potential headwinds exist, our portfolio has the appropriate characteristics to deliver strong returns and value as interest rates move in either direction While Mortgage rates have fallen…and CPRs are forecasted to pick up…
Slide 9: NRZ's Track Record of Outperformance & Returns Since Inception
NRZ’s Track Record of Outperformance & Returns Since Inception New Residential has demonstrated strong and consistent performance and returns since inception NRZ’s Total Shareholder Return Since Inception(1) 200.0% 147.0% Total Shareholder Return (%) 150.0% 100.0% 95.8% 50.0% 45.9% 0.0% May-13 Oct-1
Slide 10: Diversified Portfolio has Resulted in Book Value Growth Over Time
Diversified Portfolio has Resulted in Book Value Growth Over Time New Residential has a strong track record of executing on core investment strategies, making attractive opportunistic investments and delivering consistent growth $15.26 $16.25 $16.42 NRZ Book Value(1) $13.00 $11.28 $12.13 $10.00 +2%
Slide 11: NRZ is Focused on Maximizing Value of the Mortgage Asset
NRZ is Focused on Maximizing Value of the Mortgage Asset… New Residential is pursuing strategic partnerships and investments to maximize value of our servicing portfolio With a market leading position, New Residential owns $547 billion UPB of MSRs(1) which equates to approximately 3 million mortga
Slide 12: with Recent Acquisitions Starting to Drive Earnings
…with Recent Acquisitions Starting to Drive Earnings…. New Residential has made strategic acquisitions that enhance our ability to provide a suite of services to the consumer and drive earnings for our shareholders Shellpoint NRZ’s Acquisition of Shellpoint has Resulted in… $190 Million Acquisition;
Slide 13: and New Investments Moving the Strategy Forward
….and New Investments Moving the Strategy Forward* An investment in Covius Holdings (“Covius”) will align New Residential with a business well-positioned to expand its service offerings across the financial services landscape** Leading provider of technology-enabled services to the financial service
Slide 14: New Residential Portfolio Update
New Residential Portfolio Update
Slide 15: NRZ Portfolio – Q1 2019 & Subsequent Highlights
NRZ Portfolio – Q1 2019 & Subsequent Highlights MSRs & Acquired ~$22 billion UPB of MSRs for ~$276 million from 8 different counterparties during Q1’19 Servicer MSR portfolio totaled $547 billion UPB as of March 31, 2019, compared to $539 billion as of December 31, 2018(1) Advances Servicer ad
Slide 16: MSRs – Q1'19 Performance & Overview
MSRs – Q1'19 Performance & Overview During the first quarter 2019, New Residential’s MSR portfolio benefitted from enhanced economies of scale and improvement in counterparty risk, which offset lower interest rates during the quarter Q1’19 MSR Portfolio Activity Overall MSR Strategy(1)(2) New Resi
Slide 17: Call Rights – Q1'19 Performance & Overview
Call Rights – Q1'19 Performance & Overview As legacy mortgage performance continues to improve, we expect call volume and profit should continue to increase(1) Q1’19 Call Rights Portfolio Activity Overall Call Rights Strategy Successfully executed on our call rights strategy during Robust and st
Slide 18: Non-Agency Bond Portfolio - Q1'19 Performance & Overview
Non-Agency Bond Portfolio - Q1'19 Performance & Overview New Residential’s Non-Agency bond portfolio continued to add investments with attractive risk-adjusted returns Q1'19 Non-Agency Bond Portfolio Activity Non-Agency Bond Portfolio Characteristics Acquired $411 million face value of Non-Agency
Slide 19: Residential Loans – Q1'19 Performance & Overview
Residential Loans – Q1'19 Performance & Overview Active portfolio management continues to drive performance and New Residential further benefits from diversity of subservicers Q1'19 Residential Loan Portfolio Activity – Acquired $1.4 billion UPB of loans ($690 million UPB of RPLs) The performanc
Slide 20: Consumer Loans – SpringCastle & Prosper
Consumer Loans – SpringCastle & Prosper New Residential’s consumer loan portfolios have provided differentiated and compelling revenue streams over time SpringCastle Prosper In April 2013, New Residential invested $241 million to In February 2017, New Residential became part of a 4- purchase int
Slide 21: Servicer Advances - Q1'19 Performance & Overview
Servicer Advances - Q1'19 Performance & Overview(1) In Q1’19, servicer advances continued to decline and financing capacity continued to improve Q1'19 Servicer Advances Activity - Servicer advance balances continued their move lower in Q1'19, declining to $3.3 billion (~8% QoQ decline) Net equit
Slide 22: Financing – Diversified and Robust Platform
Financing – Diversified and Robust Platform New Residential has deep experience in accessing the capital markets through securitization transactions Q1’19 Securitization Activity Securitization Strategy and Outlook(1) New Residential continues to be a strong issuer in the Strong securitization p
Slide 23: What Differentiates and Uniquely Positions NRZ Going Forward?
What Differentiates and Uniquely Positions NRZ Going Forward?(1) New Residential has created a differentiated and hard-to- Hard-to-Replicate Portfolio replicate portfolio of value-creating strategies Our investment strategies and ancillary service offerings act as Balanced Investment Strategies natu
Slide 24: Appendices
Appendices 1) Financial Statements 2) GAAP Reconciliation & Endnotes
Slide 25: 1) Financial Statements
1) Financial Statements kes New RESIDENTIAL SN Sy INVESTMENT Corp. WY
Slide 26: Condensed Consolidated Balance Sheets
Condensed Consolidated Balance Sheets As of 3/31/19 ($000s, except per share data) As of 12/31/18 (Unaudited) ASSETS Investments in: Excess mortgage servicing rights, at fair value $ 436,137 $ 447,860 Excess mortgage servicing rights, equity method investees, at fair value 143,200 147,964 Mortgage s
Slide 27: Condensed Consolidated Income Statements
Condensed Consolidated Income Statements 3 Months Ended 3 Months Ended March 31, 2019 December 31, 2018 ($ 000s) (Unaudited) (Unaudited) Interest Income $ 438,867 $ 451,321 Interest Expense 212,832 185,324 Net Interest Income 226,035 265,997 Impairment 7,516 6,827 Other-than-temporary impairment (OT
Slide 28: 2) GAAP Reconciliation & Endnotes
2) GAAP Reconciliation & Endnotes
Slide 29: 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. ($000s, except per share data) 1Q 2019 4Q 2018 Reconciliation of Core Earnings Net income
Slide 30: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Core Earnings We have four primary variables that impact our operating performance: (i) the current yield earned on our investments, (ii) the interest expense under the debt incurred to finance our investments, (iii) our operating expenses and taxes and (iv) our
Slide 31: Endnotes to Slide 2
Endnotes to Slide 2 Endnotes to Slide 2: Source: Company filings and data, and Bloomberg. Financial data as of March 31, 2019 unless otherwise noted. Market data as of March 29, 2019. (1) Refer to the condensed consolidated balance sheet on slide 25 of this presentation for additional information. (
Slide 32: Endnotes to Slide 3
Endnotes to Slide 3 Endnotes to Slide 3: Source: Company filings and data, and Bloomberg. Financial data as of March 31, 2019 unless otherwise noted. Market data as of March 29, 2019. (1) Per share calculations of GAAP Net Income and Core Earnings are based on 388,601,075 weighted average diluted sh
Slide 33: Endnotes to Slides 4 & 5
Endnotes to Slides 4 & 5 Endnotes to Slide 4: Source: Company filings and data. Data as of March 31, 2019. (1) MSRs and Servicer Advances: Excess MSRs - Net Investment of $389 million includes (A) $579 million investment in 3/31/19 Legacy NRZ Excess MSRs, and (B) $8 million of restricted cash and ot
Slide 34: Endnotes to Slides 6 through 11
Endnotes to Slides 6 through 11 Endnotes to Slide 6: (1) All statements made on this slide are based on current management beliefs, and actual results may vary materially. See “Disclaimers” at the beginning of this Presentation for more information on forward-looking statements. (2) As of March 31,
Slide 35: Endnotes to Slides 14 through 16
Endnotes to Slides 14 through 16 Endnotes to Slide 14: Source: Company filings and data. Financial data as of March 31, 2019 unless otherwise noted. (1) MSR UPB as of March 31, 2019 and December 31, 2018 respectively. Includes Excess MSRs and Full MSRs. (2) Call rights UPB estimated as of March 31,
Slide 36: Endnotes to Slides 17 through 19
Endnotes to Slides 17 through 19 Endnotes to Slide 17: Source: Company filings and data. Financial data as of March 31, 2019 unless otherwise noted. (1) Based on management’s current views and estimates. See “Disclaimers” at the beginning of this Presentation for more information on forward-looking
Slide 37: Endnotes to Slides 20 through 22
Endnotes to Slides 20 through 22 Endnotes to Slide 20: Source: Company filings and data. Financial data as of March 31, 2019 unless otherwise noted. (1) In January 2018, as part of the Company’s previously announced MSR transfer agreement with Ocwen, NRZ paid Ocwen an approximately $280 million rest
Slide 38: Abbreviations
Abbreviations Abbreviations: This Presentation may include abbreviations, which have the following meanings: 60+ DQ – Percentage of loans that are delinquent by 60 days or more WA – Weighted Average Age (mths) or Loan Age (mths) – Weighted average number of months loans are outstanding WAC –
New Residential Investment — Q1 2019 Earnings Presentation on 6ix