Nationstar Mortgage Announces Fourth Quarter and Full Year 2012 Financial Results

  Nationstar Mortgage Announces Fourth Quarterand Full Year 2012 Financial
  Results

Business Wire

LEWISVILLE, Texas -- March 7, 2013

Nationstar Mortgage Holdings Inc. (NYSE:NSM):

HIGHLIGHTS FOR FOURTH QUARTER 2012

  *Record net income of $64 million, or $0.71 per share
  *Ending servicing portfolio UPB of $208 billion; Feb’13 UPB over $300
    billion
  *Increased servicing segment profitability
  *Third consecutive quarter of record originations volume and application
    pipeline
  *Solutionstar initiative to expand fee-based services offering

HIGHLIGHTS FOR FULL YEAR 2012

  *Record net income of $205 million, or $2.40 per share
  *Servicing portfolio growth of 94%, including Aurora acquisition
  *Originations of $7.9 billion, growth of 132%
  *Top 3 performing IPO with 121% increase in shareholder value
  *Return on equity of 40%

Nationstar Mortgage Holdings Inc. (NYSE:NSM) (“Nationstar”), a leading
residential mortgage services company, today reported that quarterly net
income grew 16% sequentially to $63.8 million, or $0.71 per share, for the
fourth quarter 2012 compared to $55.1 million, or $0.61 per share, in the
third quarter 2012 and 328% year-over-year versus $14.9 million in the fourth
quarter 2011, or $0.21 per share. Net income for the full year 2012 increased
882% to $205.3 million, or $2.40 per share, from $20.9 million in 2011, or
$0.30 per share.

On a Non-GAAP basis, adjusted EBITDA (“AEBITDA”) for operating segments grew
26% to $155.0 million, or $1.72 per share, for the current quarter versus
$123.0 million, or $1.37 per share, in the third quarter 2012. Full year 2012
AEBITDA increased 236% to $456.4 million, or $5.34 per share, from $136.0
million, or $1.94 per share, in 2011. In the current quarter AEBITDA margin
was 47%.

Nationstar’s revenue grew 17% to $332.6 million in the fourth quarter from
$284.9 million in the prior quarter and was up 180% from $118.6 million in the
fourth quarter of 2011. Full year 2012 revenue increased 161% to $984.3
million from $377.8 million in 2011. Pre-tax income from operating segments
for the fourth quarter increased 17% to a $96.6 million, or $1.07 per share,
up from $82.7 million, or $0.92 per share, in the third quarter of 2012 and
was up 324% from $22.8 million, or $0.33 per share, in the fourth quarter of
2011. Full year 2012 pre-tax income from operating segments was a $297.1
million, up 549% from $45.8 million in 2011. In the current quarter, pre-tax
income margin from operating segments was 30%.

Nationstar’s servicing portfolio, as measured by unpaid principal balance
(“UPB”), increased 5% to end the fourth quarter at $208 billion compared to
the prior quarter ending balance of $198 billion. 2012 ending UPB was up 94%
over 2011 ending balance of $107 billion.

“2012 was a very successful and important year for Nationstar, and we have
made great strides in building one of the leading residential mortgage
services companies in the United States,” said Jay Bray, Chief Executive
Officer of Nationstar. “Each quarter this year, we consistently achieved
meaningful sequential growth in revenue and earnings while delivering high
returns to our shareholders. We invested in infrastructure and built capacity
in preparation for our landmark servicing portfolio acquisitions, Aurora and
Bank of America. We continue to organically grow servicing with a continued
focus on portfolio recapture and expansion of our builder and other
origination channels. Our Solutionstar initiative is expanding our fee-based
services offering across the entire mortgage lifecycle. We look forward to
further growth in 2013 with a rigorous focus on delivering value to our
shareholders. We remain focused on providing homeownership solutions to our
customers and best-in-class servicing performance for investors.”

Chief Financial Officer David Hisey said, “Our strong financial results
reflect our continued focus on increasing profitably as we capitalize on the
many growth opportunities in front of us. Servicing profitability is a high
priority for us, as reflected in the increase in servicing profit and margins
in the fourth quarter. Origination margins remained near historical highs as
we continued to grow volumes in multiple channels. We raised additional
capital at lower costs to support our capital-light growth strategy and drive
shareholder returns. In 2013 we will continue to focus on profitable growth
across all of our business segments. Within servicing, we will look to drive
down cost per loan, delinquencies, and advance financing costs as we scale the
platform over time. We will also pursue fee-based services acquisitions that
meet our return thresholds.”

Business Segments

Servicing

Servicing fee income before fair value adjustments increased 9% to $174.6
million in fourth quarter 2012 compared to $159.9 million in the prior
quarter. Servicing fee income before fair value adjustments was $535.8 million
in 2012, up 91% compared to 2011. Total servicing fee income of $145.4 million
in the fourth quarter was up 2% quarter-over-quarter. Full year total
servicing fee income was $462.0 million, up 94% compared to 2011.

Nationstar added over 550,000 new customers in 2012, resulting in over 1.1
million total customers at year-end. The average portfolio UPB for the fourth
quarter was $203 billion, a 4% increase over the prior quarter average of $195
billion. The average portfolio for the full year 2012 was $157 billion, up 84%
from 2011.

The fair value of mortgage servicing rights decreased in the current quarter
by $25.4 million, or $0.28 per share pre-tax, versus a decrease in value of
$22.4 million, or $0.25 per share, in the prior quarter. The current quarter
decrease was comprised of $24.3 million in portfolio runoff and $1.2 million
in fair-value mark to market adjustments.

Servicing pre-tax income increased 171% to $14.9 million from $5.5 million in
the prior quarter and 10% compared to $13.6 million in the year-ago quarter.
Servicing pre-tax margin was 9% in the current quarter, and servicing pre-tax
income as a percentage of UPB was 3 basis points, an increase from the 1 basis
point level in the prior quarter. Full year 2012 servicing pre-tax income was
a $35.4 million, up 60% from 2011.

Servicing pre-tax income in the current quarter includes other income of $15.6
million from the Rescap contract termination, mostly offset by $13.2 million
in other expense from the loss on an equity method investment (NREIS).
Nationstar wrote off its minority investment in NREIS and has made the
determination that Solutionstar will be the focus for the build out of
settlement, processing, and asset management services.

Servicing AEBITDA increased 59% in the current quarter to $66.9 million
compared to $42.1 million in the third quarter 2012 and was up 88% from $35.6
million in the fourth quarter of 2011. Servicing AEBITDA margin was 42% in the
current quarter, and servicing AEBITDA as a percentage of UPB was 13 basis
points, an increase from the 9 basis point level in the prior quarter. Full
year 2012 servicing AEBITDA was $181.2 million, up 69% from 2011.

In December 2012, Nationstar closed on a $13 billion GNMA forward portfolio.
Nationstar has executed on flow agreements that are expected to produce $15
billion in annual volume. Nationstar expects flow servicing of $25-50 billion
in annual potential as the program grows with additional clients.

Nationstar’s 60 plus day delinquency rate increased to 15.3% of UPB, up from
15.1% in the third quarter. This slight increase is related to fourth-quarter
boardings of higher delinquency portfolios.

The Solutionstar business’ REO unit managed the sale of over 2,600 homes in Q4
2012. Solutionstar plans to significantly expand the REO management business
in 2013, as REO properties under management are expected to significantly
increase with the closing of the private-label MSR portfolio acquisitions from
Bank of America.

Origination

Origination revenue increased 28% to $173.1 million in fourth quarter 2012 on
a 72% quarterly increase in origination volume to $3.1 billion in fundings.
Full year origination revenue was $486.9 million, up 294% from 2011. This was
primarily due to the significant increase in origination volume – up 132%
year-over-year – to $7.9 billion in 2012 total fundings. Wide spreads between
the primary and secondary markets also supported the increase in revenues over
prior periods.

Excluding the newly launched correspondent channel, origination revenue as a
percentage of funded volume was 682 basis points, with total origination
revenue including correspondent at 562 basis points. Of the $3.1 billion in
fundings, 82% were from the consumer direct/builder/wholesale channels, and
18% were from the new correspondent channel.

As a result of the favorable market environment, origination pre-tax income
grew 6% to $81.7 million, versus $77.1 million in the prior quarter and 788%
compared to $9.2 million in the year-ago quarter. Origination pre-tax income
margin was 47% in the current quarter. Full year 2012 origination pre-tax
income was a $261.7 million, up 1,004% from 2011.

Origination AEBITDA was up 9% over the previous quarter and nearly 653%
year-over-year to $88.1 million. Origination AEBITDA margin was 51% in the
current quarter. Full year 2012 origination AEBITDA was $275.2 million, up
866% from 2011. Expenses were higher in the quarter due to increased staffing
and volume-related costs. The total application pipeline grew 20% from the
prior quarter to $6.6 billion, and locked applications grew 14% to $5.0
billion.

Subsequent Events

Servicing: In January 2013, Nationstar announced that it had signed a
definitive agreement to acquire approximately $215 billion in servicing UPB
and certain other assets from Bank of America, resulting in a pro-forma
portfolio UPB of $423 billion with over 2.5 million customers when completed.
In February 2013, Nationstar announced it had closed the purchase of
approximately $97 billion in servicing UPB as a part of the Bank of America
transaction, resulting in a servicing portfolio over $300 billion in UPB.
Nationstar expects to close on the remaining Bank of America private label
securitization UPB and other asset purchases as necessary third-party
approvals are received in Q1-Q2 2013. Excluding the remaining Bank of America
servicing, Nationstar’s current servicing pipeline is approximately $300
billion.

Solutionstar: In February 2013, Nationstar also announced the acquisition of
Equifax Settlement Services (“ESS”), a leading provider of appraisal, title
and closing services that serves a broad array of blue chip clients, including
the largest financial institutions in the United States. Nationstar is
rebranding the acquired entity as “Solutionstar Settlement Services.” ESS had
over $65 million in revenue in 2012. In March 2013, Solutionstar is launching
the HomeSearch.com platform, providing an online real estate marketplace for
home buyers, sellers and investors to connect and conveniently complete sale
transactions.

Financing: In January 2013, Nationstar announced the pricing of $300 million
in asset-backed term notes with a weighted average fixed interest rate of
1.46% and a weighted average term of 3.0 years. The notes replaced $300
million in existing Agency servicing advance facilities that carried a
weighted average floating rate of Libor plus 2.86%, or 3.10% in total,
resulting in a reduction in rate of 1.65% as of January 24, 2013.
Additionally, the effective advance rate of the new facility is approximately
94%, an increase over the effective advance rate on the facilities being
replaced. Nationstar is developing a programmatic Term Asset-Backed Security
issuance program which will allow it to efficiently finance current and future
acquisitions of Agency and non-Agency servicing advance assets.

In February 2013 Nationstar announced the pricing of $400 million aggregate
principal amount of 6.500% Senior Notes due 2021. The 6.500% note rate on the
February 2013 issuance is lower than the financing cost of previous senior
note pricings of 7.875% in September 2012 and 9.625% in April 2012.

Adjusted EBITDA (“AEBITDA”)

This disclaimer applies to every usage of “Adjusted EBITDA” or “AEBITDA” in
this presentation. Adjusted EBITDA is a key performance metric used by
management in evaluating the performance of our segments. Adjusted EBITDA
represents our Operating Segments' income (loss), and excludes income and
expenses that relate to the financing of our senior notes, depreciable (or
amortizable) asset base of the business, income taxes, and exit costs from our
restructuring and certain non-cash items. Adjusted EBITDA also excludes
results from our legacy asset portfolio and certain securitization trusts that
were consolidated upon adoption of the accounting guidance eliminating the
concept of a qualifying special purpose entity ("QSPE“).

Conference Call Webcast and Investor Presentation

Chief Executive Officer, Jay Bray, and Chief Financial Officer, David Hisey,
will host a conference call for investors and analysts to discuss Nationstar’s
fourth quarter and full year 2012 results and other general business matters
at 10:00 a.m. (ET) on Thursday, March 7, 2013. To listen to the event live or
in an archive which will be available for 14 days, visit Nationstar's website
at http://investors.nationstarholdings.com. The conference call will also be
accessible by dialing 800-320-2978, or 617-614-4923 internationally. Please
use the participant passcode 61330875 to access the live conference call. An
investor presentation will also be available at
http://investors.nationstarholdings.com.

NATIONSTAR MORTGAGE HOLDINGS INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(dollars and shares in thousands, except per share data)
                                                           
            Three months ended                                Year ended December, 31
            December      September
            31,           30,                   December
            2012         2012                 31,            2012       2011    
                                                2011
                         
Revenues
Servicing
fee         $ 145,496     $ 142,482             $ 67,775      $ 462,495     $ 233,411
income
Other fee    12,070      3,129               15,205      34,656      35,294  
income
Total fee     157,566       145,611               82,980        497,151       268,705
income
Gain on
mortgage
loans        175,048     139,259             35,576      487,164     109,136 
held for
sale
Total         332,614       284,870               118,556       984,315       377,841
revenues
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