Rithm Capital Corp. · NYSE:RITM
Rithm Capital — Q1 2021 Earnings Presentation
42 slides from Rithm Capital's earnings presentation, May 5, 2021
Slide 1: New Residential Investment Corp. Quarterly Supplement First Quarter 2021
New Residential Investment Corp. Quarterly Supplement First Quarter 2021
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 vertically integrated investment management and mortgage platform generates attractive and sustainable risk-adjusted returns ✓ Over $3.6 Billion in Dividends Paid Since Inception(2)(3) ✓ $5.5 Billion Net Equity(4) ✓ 101% Total Shareholder Return Since In
Slide 4: Q1'21 Company and Financial Highlights
Q1’21 Company and Financial Highlights ▪ GAAP Net Income of $277.6 Million, or $0.65 per Diluted Share(1) ▪ $222.8 Million Pre-Tax Income (“PTI”) from Origination and Servicing(2) ▪ Core Earnings of $144.8 Million, or $0.34 per Diluted Share(1)(3) ▪ First Quarter 2021 Common Stock Dividend of $0.20
Slide 5: Book Value per Share Summary
Book Value per Share Summary Book value increased +4.4% in Q1’21 relative to Q4’20 Q4’20 to Q1’21 Book Value Per Share Walk QoQ% (1) Per Share Change Ending Q4'20 BV $10.87 Origination & Servicing Segment Net Income (2) 0.53 Investment Portfolio and Corporate Segment Net Income (3) 0.94 MSR Realizat
Slide 6: Delivering Results
Delivering Results Q1’21 and Beyond Highlights Announced agreement to acquire Caliber, building 1 Further positioned NRZ to scale across recapture, purchase originations, perform across rate environments technology and people(1) 2 Operated from a position Maintained elevated levels of cash and unenc
Slide 7: Bullish on Investment Opportunities
Bullish on Investment Opportunities(1) We see robust investment opportunities for our portfolio driven by the macro environment Private Label Securities ▪ The evolving GSE landscape is anticipated to create excess production, (“PLS”) expanding the capital needs for the PLS market ▪ We believe call a
Slide 8: Investment Portfolio
Investment Portfolio @ New RESIDENTIAL wy /eSTMENT CORP.
Slide 9: Investment Portfolio
Investment Portfolio The opportunity set within NRZ’s investment portfolio continued to expand in Q1’21 and beyond Q1’21 and Beyond Activity ✓ Called non-agency collateral of $636 million UPB, the highest quarterly call population since Q4’19(1) ✓ Purchased $1.6 billion (net face value) of agency se
Slide 10: MSRs
MSRs MSRs are one of the few fixed income assets that increase in value when interest rates rise Q1’21 MSR Portfolio Activity and Outlook ▪ MSR portfolio totaled $515 billion UPB as of March 31, 2021(1) (4% QoQ decline in MSR UPB) ▪ 100% of MSR financings are non-daily mark to market facilities* ▪ $
Slide 11: NRZ's MSR Portfolio Benefitted from Higher Rates in Q1'21
NRZ’s MSR Portfolio Benefitted from Higher Rates in Q1’21 We believe our MSR portfolio will continue to benefit as rates trend higher(1) NRZ’s MSR portfolio saw considerable upside in Q1’21… Q4’20A Q1’21A QoQ Δ 10-Year Treasury 0.90% 1.74% +84bps NRZ Owned MSR Market Value $4.6bn $5.0bn +$0.5bn Weig
Slide 12: Call Rights
Call Rights Call volumes picked up to their highest level since Q4’19 Q1’21 Call Rights Portfolio Activity and Outlook ▪ We expect call activity to pick up as advance balances decline and delinquencies improve(1) ▪ Called 18 deals with collateral of $636 million UPB in Q1’21(2) ▪ Post Q1’21, called
Slide 13: Residential Loans & Non-Agency Residential Securities
Residential Loans & Non-Agency Residential Securities Strategically retained residential loans and non-agency securities that fit within our long-term strategy Residential Loans Non-Agency Residential Securities Other NPL 16% RPL 25% 31% Other NRZ Risk Portfolio Retention Retained Composition Bonds
Slide 14: Servicer Advances
Servicer Advances We continue to have significant excess servicer advance capacity(1) Advance Balances as of March 31, 2021 ▪ Servicer advance balances as of March 31, 2021 decreased to $3.4 billion from $3.6 billion as of December 31, 2020 ▪ Outstanding advance balances are financed with:(2) ▪ $2.9
Slide 15: NewRez Performance
NewRez Performance @ New RESIDENTIAL Ww Inv /ESTMENT CORP.
Slide 16: Acquisition of Caliber Home Loans Inc.
Acquisition of Caliber Home Loans Inc. New Residential to combine NewRez and Caliber platforms into a premier financial services company Transaction Summary Strategic Rationale(3) ✓ Attractive Purchase Price of 1.0x P/B(1) ✓ Adds ~$141bn UPB of MSRs Agrees to Acquire ✓ Recapture Rates Over 50% ✓ Ext
Slide 17: Caliber Corporate Overview
Caliber Corporate Overview Caliber is a leading customer-centric, purchase-focused mortgage originator and servicer Caliber Overview Origination Mix Servicing Mix(3) PLS/Other 9% DTC 11% $891mm 5th Largest CLD 12% GNMA FHLMC 39% 2020 Pre-Tax Income Non-Bank Originator by $80bn Retail $153bn 29% Purc
Slide 18: NewRez + Caliber: Combination of Complementary Platforms
NewRez + Caliber: Combination of Complementary Platforms(1) Pro forma company has strong alignment in business models and long-term strategies Combination of Platforms Direct to Consumer Direct to Consumer ✓ Recapture rates over 50% ✓ Extensive local footprint that Origination Joint Venture Distribu
Slide 19: NewRez Origination: Q1'21 Activity and Business Highlights
NewRez Origination: Q1’21 Activity and Business Highlights Record fundings in Q1’21 in DTC, Wholesale and Correspondent channels P P Record Funded PRecord PT Adj. Lock P Origination PTI of Estimate Q2’21 Funded Volume of Volume of $191.2 million(1) $27.2 billion $26.9 billion Volume of (down 23% QoQ
Slide 20: NewRez Origination Market Share and Recapture Growth
NewRez Origination Market Share and Recapture Growth NewRez continues to grow market share and improve recapture rates Market Share Growth Continues Improvement in Recapture(2) We have made significant progress growing our market Through various initiatives, we have improved our share recapture perf
Slide 21: NewRez Direct to Consumer Channel Summary
NewRez Direct to Consumer Channel Summary DTC volumes continue to steadily increase DTC Funded and Pull Through Adjusted Lock Volume DTC GOS Margin Performance(1) $7.5 $6.4 5.00% $5.9 4.52% $5.7 4.13% $4.9 $5.0 3.43% UPB ($bn) $4.3 3.24% $3.6 2.98% $3.4 $3.0 $3.0 2.01% 2.50% $2.5 $1.9 $2.1 $1.6 $0.0
Slide 22: NewRez / SMS Servicing: Activity and Business Highlights
NewRez / SMS Servicing: Activity and Business Highlights Industry-leading servicer with financial and operational strength P P $304.6 billion P P Q1’21 Servicing PTI of UPB Over 1.7 million $305 billion UPB $31.6 million Q1’21 Servicing customers Q2’21 Estimated (down 34% QoQ) Portfolio (flat QoQ) S
Slide 23: NewRez / SMS Servicing: Special Servicing Summary
NewRez / SMS Servicing: Special Servicing Summary Well-recognized and distinguished track record of helping homeowners with complex servicing solutions P Upgraded P P P Over 60 20 year servicer ratings world class Over 500k track record by Moody’s and Fitch institutional special loans serviced of sp
Slide 24: Leading Special Servicer Helps Create Positive Outcomes for Homeowners
Leading Special Servicer Helps Create Positive Outcomes for Homeowners Committed to helping homeowners and clients navigate COVID-19 landscape Migration of COVID-19 Impacted Homeowners(1) ▪ Our servicing team at NewRez and SMS 250,000 234,742 has supported homeowners and provided Active forbearances
Slide 25: New Residential – Our Value Proposition
New Residential – Our Value Proposition(1) ABILITY TO DRIVE GREAT INVESTMENT ATTRACTIVE RISK PORTFOLIO WITH ADJUSTED RETURNS COMPELLING ACROSS RATE OPPORTUNITIES ENVIRONMENTS PORTFOLIO OF LARGE MSR PORTFOLIO UNDERVALUED HIGH- WITH SIGNIFICANT PERFORMING UPSIDE OPPORTUNITY OPERATING COMPANIES EXPERIE
Slide 26: Appendix
Appendix @ New RESIDENTIAL Ww Investment Core.
Slide 27: Financial Statements
Financial Statements @ New RESIDENTIAL ww Inv P. /eSTMENT CORP.
Slide 28: Condensed Consolidated Balance Sheets
Condensed Consolidated Balance Sheets As of 3/31/2021 As of 12/31/2020 (dollars in thousands, except per share data) (Unaudited) ASSETS Excess mortgage servicing rights assets, at fair value $ 402,454 $ 410,855 Mortgage servicing rights, at fair value 4,023,559 3,489,675 Mortgage servicing rights fi
Slide 29: Condensed Consolidated Income Statements
Condensed Consolidated Income Statements Three Months Ended March 31, 2021 December 31, 2020 (dollars in thousands) (Unaudited) Revenues Interest income $ 253,735 $ 234,118 Servicing revenue, net of change in fair value of $217,911 and $(404,269), respectively 513,548 (95,728) Gain on originated mor
Slide 30: Net Income by Segment (Q1'21 and Q4'20)
Net Income by Segment (Q1’21 and Q4’20) Servicing and Origination Residential Securities and Loans MSRs & Residential Servicer Securities & Call Residential Corporate & Quarter Ended March 31, 2021 Origination Servicing Advances Rights Loans Other Total Interest income $ 22,852 $ 474 $ 78,771 $ 89,8
Slide 31: Servicing and Origination
Servicing and Origination Q1'20 Q2'20 Q3'20 Q4'20 FY'20 Q1'21 Servicing Servicing Portfolio (UPB $bn) NewRez / NRZ $180.6 $174.8 $188.2 $204.4 $204.4 $211.8 Third Party / SMS $95.2 $102.8 $99.0 $93.3 $93.3 $92.8 Total UPB ($bn) $275.8 $277.6 $287.2 $297.8 $297.8 $304.6 Annualized Direct Cost To Serv
Slide 32: Mortgage Servicing Rights
Mortgage Servicing Rights MSR Financing (in thousands) MSRs Receivables Total Balance as of December 31, 2020 $ 3,489,675 $ 1,096,166 $ 4,585,841 Purchases, net 4,044 - 4,044 Transfers 47,831 (47,831) - Originations 255,473 - 255,473 Proceeds from sales (1,016) (777) (1,793) Change in fair value due
Slide 33: 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) Q1 2021 Q4 2020 Reconciliation of Core Earnings Net income
Slide 34: 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 35: Endnotes
Endnotes @ New RESIDENTIAL Ww Investment Core.
Slide 36: Endnotes to Slide 2
Endnotes to Slide 2 Endnotes to Slide 2: Source: Company filings and data, and Bloomberg. Financial and market data as of March 31, 2021 unless otherwise noted. (1) “Investment portfolio” assets refers to total assets less cash, restricted cash, other assets, trades receivable, goodwill and mortgage
Slide 37: Endnotes to Slides 3 and 4
Endnotes to Slides 3 and 4 Endnotes to Slide 3: Source: Company filings and data. Financial data as of March 31, 2021 unless otherwise noted. (1) Per common share calculations of GAAP Net Income and Core Earnings are based on 429,491,379 weighted average diluted common shares during the quarter ende
Slide 38: Endnotes to Slides 5 to 9
Endnotes to Slides 5 to 9 Endnotes to Slide 5: Source: Company filings and data. Financial data as of March 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 Presentation for more
Slide 39: Endnotes to Slides 10 to 12
Endnotes to Slides 10 to 12 Endnotes to Slide 10: Source: Company filings and data. Financial data as of March 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 Presentation for m
Slide 40: Endnotes to Slides 13 to 19
Endnotes to Slides 13 to 19 Endnotes to Slide 13: Source: Company filings and data. Financial data as of March 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 Presentation for m
Slide 41: Endnotes to Slides 20 to 24
Endnotes to Slides 20 to 24 Endnotes to Slide 20: Source: Company filings and data. Financial data as of March 31, 2021 unless otherwise noted. (1) Excludes recapture MSR which is reported in the MSR & Servicer Advance segments. Includes impact from ancillary services. (2) Based on management’s curr
Slide 42: Abbreviations
Abbreviations Abbreviations: This Presentation may include abbreviations, which have the following meanings: ▪ Original UPB – UPB at Time of Securitization ▪ 60+ DQ – Percentage of loans that are delinquent by 60 days or more ▪ Proj. Future Cash Flows – Future cash flow projected with the Company’s