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Q3 Earnings Solidifies Nationstar’s Place in the Industry

Falling Money BHNationstar Mortgage Holdings [1] on Wednesday reported 52 cents per-share earnings for Q3. That’s 11 cents better than what analysts had expected for the company.

The company also posted a negative net margin of 3.92 percent and a positive return on equity of almost 9 percent in its Q3 earnings statement. Nationstar posted revenue of $542 million, well above anticipated revenue of about $370 million. A year ago, the firm posted $0.36 EPS.

Other significant numbers for Q3 included the company’s highest-ever unpaid principle balance of $453 billion, and an adjusted pretax income of $39 million. Nationstar also posted a GAAP pretax income of $83 million and adjusted pretax income of $85 million.

"Our third quarter achievements solidify us as the preferred industry partner," said Jay Bray, Nationstar’s chairman and CEO. "In the quarter we posted strong operational results, added almost 510,000 customers to our servicing platform, funded over 25,000 loans, and launched enhanced technologies that improve the home ownership experience for our 2.7 million and growing customer base. We ended the quarter with the largest servicing portfolio in our company's history, are actively engaged in a significant pipeline and remain focused on creating value for our shareholders."

Servicing saw a $14 million increase in amortization, which Bray said “reflects our focus on improving portfolio performance and cost containment initiatives.” The company funded $5.5 billion for its servicing platform, which was a 6 percent uptick over Q2.

The company has been authorized to repurchase up to $250 million of common stock and has so far repurchased $125 million.

Nationstar also boarded $100 billion in loans, including $91 billion worth of subserviced loans that Bray said contribute less revenue via basis points, but a higher margin and return on equity due to the limited capital deployed.

“We expect subservicing flow and originations volume to replace anticipated run-off in 2017,” Bray said. We remain actively engaged, along with our capital partners, in several large opportunities that could substantially add to our servicing portfolio.”