MOUNT LAUREL, N.J.--(BUSINESS WIRE)--PHH Corporation (NYSE: PHH) (“PHH” or the “Company”) today announced financial results for the quarter ended December 31, 2015.
For the quarter ended December 31, 2015, the Company reported Net loss attributable to PHH Corporation of $54 million or $0.92 per basic share. Net loss from continuing operations attributable to PHH Corporation for the quarter ended December 31, 2014, was $32 million or $0.62 per basic share.
For the quarter ended December 31, 2015, core loss (after-tax)* and core loss per share* were $23 million and $0.38, respectively, which exclude a $52 million pre-tax unfavorable market-related mortgage servicing rights ("MSR") fair value adjustment, net of derivatives related to MSRs.
Glen A. Messina, president and CEO of PHH Corporation, said, "We made considerable progress to improve our financial performance over the past year, as the collective actions we executed in 2015 helped to significantly reduce our Core loss before notable items. Global economic and domestic regulatory conditions continue to be dynamic, and while we are expecting a smaller originations market and lower margins, the ultimate impact on the mortgage market in 2016 remains uncertain. Assuming we achieve our cost, volume and other business objectives, and the market unfolds as forecast, we expect Core earnings before notable items to be breakeven to modestly profitable for 2016."
Messina added, "Our priorities for 2016 are (i) returning to profitability on the basis of Core earnings before notable items, (ii) operationalizing the requirements of our revised private label contracts, (iii) preserving our balance sheet and liquidity position and (iv) resolving our legacy regulatory matters. We continue to believe that meaningfully increasing scale in both our production and servicing segments is necessary to achieve sustained profitability, and we will continue to seek inorganic growth opportunities to support our objectives."
| Summary Consolidated Results | ||||||||||||||||
| (In millions, except per share amounts) | ||||||||||||||||
|
Three Months Ended |
Year Ended |
|||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Net revenues | $ | 123 | $ | 180 | $ | 790 | $ | 639 | ||||||||
| Loss from continuing operations before income taxes | (83 | ) | (41 | ) | (213 | ) | (284 | ) | ||||||||
| Net loss from continuing operations attributable to PHH Corporation | (54 | ) | (32 | ) | (145 | ) | (191 | ) | ||||||||
| Net (loss) income attributable to PHH Corporation | (54 | ) | (33 | ) | (145 | ) | 81 | |||||||||
| Loss per share from continuing operations — basic & diluted | $ | (0.92 | ) | $ | (0.62 | ) | $ | (2.62 | ) | $ | (3.47 | ) | ||||
| Weighted-average common shares outstanding — basic & diluted | 58.536 | 51.126 | 55.202 | 55.001 | ||||||||||||
| Non-GAAP Results* | ||||||||||||||||
| Core loss (pre-tax) | $ | (34 | ) | $ | (30 | ) | $ | (238 | ) | $ | (207 | ) | ||||
| Core loss (after-tax) | (23 | ) | (24 | ) | (152 | ) | (140 | ) | ||||||||
| Core loss per share | $ | (0.38 | ) | $ | (0.47 | ) | $ | (2.74 | ) | $ | (2.55 | ) | ||||
| Adjusted cash flow | $ | 1 | $ | (182 | ) | $ | (33 | ) | $ | 758 | ||||||
| Notable items for the fourth quarters of 2015 and 2014 consisted of the following: | ||||||||||||||||
| Three Months Ended December 31, | ||||||||||||||||
| 2015 | 2014 | |||||||||||||||
| Pre-Tax | Post-Tax | Pre-Tax | Post-Tax | |||||||||||||
| $ | Per Share | $ | Per Share | |||||||||||||
| Legal and regulatory reserves | $ | — | $ | — | $ | (6 | ) | $ | (0.07 | ) | ||||||
| Re-engineering investments | (20 | ) | (0.21 | ) | — | — | ||||||||||
| Growth investments | (1 | ) | (0.01 | ) | — | — | ||||||||||
| Severance | — | — | 1 | 0.02 | ||||||||||||
| (Loss) gain on sales of existing MSRs | (4 | ) | (0.05 | ) | 2 | 0.03 | ||||||||||
| Market-related MSR fair value adjustment, net of related derivatives | (52 | ) | (0.54 | ) | (12 | ) | (0.15 | ) | ||||||||
In addition to the notable items presented above, our results include expenses associated with the sale and separation of our Fleet business, net of transition services revenue, of $5 million for the three months ended December 31, 2014. The amount was not significant for the three months ended December 31, 2015.
Tangible book value per share was $23.96 at December 31, 2015, down 21% from $30.21 at December 31, 2014.
* Non-GAAP Financial Measures
Non-GAAP financial measures for all periods presented reflect the continuing operations of the Company and exclude the results of the Fleet business and amounts related to the disposition of the business. Core earnings or loss (pre-tax), core earnings or loss (after-tax), core earnings or loss per share, and adjusted cash flow are financial measures that are not in accordance with U.S. generally accepted accounting principles (GAAP). See the “Note Regarding Non-GAAP Financial Measures” below for a detailed description of these and certain other Non-GAAP financial measures and reconciliations of such Non-GAAP financial measures to their most directly comparable GAAP financial measures as required by Regulation G.
Mortgage Production
Segment Results
Mortgage Production segment loss in the fourth quarter of 2015 was $21 million, compared to a segment loss of $10 million in the third quarter of 2015 and a segment loss of $26 million in the fourth quarter of 2014. The $11 million unfavorable change in segment results during the fourth quarter of 2015 compared to the third quarter of 2015 was due to a $23 million decrease in Net revenues that was partially offset by a $12 million decrease in Total expenses. The decline in Total revenues was due to an $11 million decrease in Origination and other loan fees driven by a 17% decline in the number of retail closing units, and an $8 million decrease in Gain on loans held for sale, net driven by a 32% decline in IRLCs expected to close and 14 bps of lower margins. These decreases in Net revenues were partially offset by a $9 million decrease in origination-related expenses primarily related to lower closing volume.
The $5 million improvement in segment results in the fourth quarter of 2015 compared to the fourth quarter of 2014 was primarily driven by $7 million of operating benefits from amendments to our private label agreements, $4 million of lower unsecured interest expense and reduced operating expenses that were partially offset by higher allocated corporate expenses.
Statistics
Total fourth quarter 2015 mortgage closings were $8.8 billion, down 14% from the third quarter of 2015 and 6% from the fourth quarter of 2014. The decrease in total closings compared to the third quarter of 2015 was primarily attributable to seasonal declines in purchase volume. The decrease in total closings compared to the fourth quarter of 2014 was primarily driven by re-engineering initiatives in our real estate channel and the impact of implementing the TILA RESPA integrated disclosure rules in the fourth quarter of 2015.
Fee-based closings as a percentage of total closings continued to remain high in the fourth quarter of 2015, representing 72% of total closings. Our Mortgage production results reflect the progress we have made to realize operating benefits from amendments to our private label agreements; however, the high mix of fee-based closings has adversely impacted profitability since the revenue per loan on fee-based closings is generally lower than saleable closings.
IRLCs expected to close of $1.2 billion in the fourth quarter of 2015 decreased 32% from the third quarter of 2015 and 27% from the fourth quarter of 2014. Total loan margin on IRLCs expected to close for the fourth quarter of 2015 was 305 bps, a 14 bps decrease from the third quarter of 2015 and a 14 bps increase from the fourth quarter of 2014. The decrease in total loan margin from the third quarter of 2015 is consistent with the relatively higher interest rate environment as loan margins tend to narrow in periods of declining interest rates as industry participants attempt to balance origination volume with operational capacity.
Mortgage Servicing
Segment Results
Mortgage Servicing segment loss in the fourth quarter of 2015 was $65 million, compared to a segment loss of $77 million and $13 million in the third quarter of 2015 and fourth quarter of 2014, respectively. During the fourth quarter of 2015, provisions for legal and regulatory matters were not significant, however, segment results included provisions of $44 million and $6 million for the third quarter of 2015 and fourth quarter of 2014, respectively. In addition, during the fourth quarter of 2015, we recorded $52 million of unfavorable market-related fair value adjustment to our MSRs, net of related derivatives compared to $22 million in the third quarter of 2015. The $52 million unfavorable market-related fair value adjustment for the fourth quarter of 2015 consisted of a $27 million unfavorable market-related fair value adjustment on our MSRs and $25 million loss on MSR related derivatives. The unfavorable fair value adjustment on our MSRs was attributable to a $51 million decline primarily related to changes to our prepayment model and updates to default curves and losses in our government portfolio that were offset by a $24 million increase primarily due to a 22 bps increase in the modeled primary mortgage rate.
Statistics
At December 31, 2015, the unpaid principal balance (“UPB”) of our capitalized servicing portfolio was $99.0 billion, down 3% from September 30, 2015, and 12% from December 31, 2014. Our capitalized servicing portfolio continues to decline as payoffs, curtailments and sales have exceeded additions from new loan production. During the fourth quarter of 2015, we continued to execute sales of newly-created MSRs for which we retain the right to subservice the underlying loans.
At December 31, 2015, the UPB of our total loan servicing portfolio was $226.3 billion, which was nearly unchanged from both September 30, 2015 and December 31, 2014. Activity in our total loan servicing portfolio since the end of 2014 reflects the declines in our capitalized servicing portfolio and a sale of a delinquent GNMA portfolio which transferred in the first quarter of 2015, that was partially offset by an increase in our subservicing UPB driven by fee-based closings and sales of newly-created MSRs.
Mortgage Servicing Rights
At December 31, 2015, the book value of our MSR was $880 million, representing an 89 bps capitalized servicing rate. The MSR book value and capitalized servicing rate at September 30, 2015 was $927 million and 91 bps of the capitalized loan servicing portfolio. The MSR book value at December 31, 2014 was $1.0 billion, representing an 89 bps capitalized servicing rate. During the fourth quarter of 2015, there was a $27 million decrease from market-related fair value adjustments, a $37 million decrease related to prepayments and the receipt of recurring cash flows and a $4 million decrease from MSR sales that was partially offset by $21 million in MSR book value that was added from loans sold.
Liquidity Update
Liquidity at December 31, 2015 included $826 million in unrestricted Cash and cash equivalents, excluding cash held in variable interest entities. As of December 31, 2015, we had $615 million total principal of unsecured debt outstanding with our next maturity date in September 2019.
Open Market Share Repurchases
In the fourth quarter of 2015, we commenced the open market share repurchase program with $77 million in share repurchases to retire 4,841,267 shares under the program. In January 2016, we paid $23 million to retire 1,508,772 additional shares to complete $100 million of repurchases under the open market program.
We have authorizations from our Board of Directors to repurchase up to an additional $150 million through December 31, 2016 through an open market repurchase program. We intend to retain the necessary financial resources to maintain a liquidity cushion to weather the dynamic and uncertain environment and to support our remaining growth and re-engineering initiatives. As a result, we do not expect to engage in further share repurchase activity at the present time. The timing and amount of further repurchases, if any, will depend on several factors including market and business conditions, the trading price of our common stock, and our overall capital structure and liquidity position, including the nature of other potential uses of cash, including investments in growth. There can be no assurances that we will complete further repurchases.
Conference Call/Webcast
The Company will host a conference call at 10:00 a.m. (Eastern Time) on Thursday, February 25, 2016, to discuss its fourth quarter 2015 results. All interested parties are welcome to participate. You can access the conference call by dialing (877) 876-9176 or (785) 424-1667 and using the conference ID 1192416 approximately 10 minutes prior to the call. The conference call will also be webcast, which can be accessed from the Investor Relations page of PHH's website at www.phh.com under webcasts and presentations.
An investor presentation with an appendix of supplemental schedules will accompany the conference call and be available by visiting the Investor Relations page of PHH's website at www.phh.com on Thursday, February 25, 2016, prior to the start of the conference call.
A replay will be available beginning shortly after the end of the call through March 11, 2016, by dialing (888) 203-1112 or (719) 457-0820 and using conference ID 1192416, or by visiting the Investor Relations page of PHH's website at www.phh.com.
About PHH Corporation
Headquartered in Mount Laurel, New Jersey, PHH Corporation is a leading provider of end-to-end mortgage solutions through its subsidiary, PHH Mortgage. Its outsourcing model and proven expertise, combined with a strong commitment to operational excellence and customer service, has enabled PHH Mortgage to become one of the largest non-bank originators and servicers of residential mortgages in the United States. PHH Mortgage provides mortgage solutions for the real estate market and financial institutions, and offers home financing directly to consumers. For additional information, please visit www.phh.com.
Forward-Looking Statements
Certain statements in this press release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Generally, forward looking-statements are not based on historical facts but instead represent only our current beliefs regarding future events. All forward-looking statements are, by their nature, subject to risks, uncertainties and other factors that could cause actual results, performance or achievements to differ materially from those expressed or implied in such forward-looking statements. Investors are cautioned not to place undue reliance on these forward-looking statements. Such statements may be identified by words such as “expects,” “anticipates,” “intends,” “projects,” “estimates,” “plans,” “may increase,” “may fluctuate” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may” and “could.”
You should understand that forward-looking statements are not guarantees of performance or results and are preliminary in nature. You should consider the areas of risk described under the heading “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” in our periodic reports filed with the U.S. Securities and Exchange Commission, including our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, in connection with any forward-looking statements that may be made by us or our businesses generally. Such periodic reports are available in the “Investors” section of our website at http://www.phh.com and are also available at http://www.sec.gov. Except for our ongoing obligations to disclose material information under the federal securities laws, applicable stock exchange listing standards and unless otherwise required by law, we undertake no obligation to release publicly any updates or revisions to any forward-looking statements or to report the occurrence or non-occurrence of anticipated or unanticipated events.
| PHH CORPORATION AND SUBSIDIARIES | ||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
| (In millions, except per share data) | ||||||||||||||||
|
Three Months Ended |
Year Ended |
|||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| REVENUES | ||||||||||||||||
| Origination and other loan fees | $ | 64 | $ | 61 | $ | 284 | $ | 231 | ||||||||
| Gain on loans held for sale, net | 61 | 64 | 298 | 264 | ||||||||||||
| Net loan servicing income: | ||||||||||||||||
| Loan servicing income | 96 | 113 | 394 | 448 | ||||||||||||
| Change in fair value of mortgage servicing rights | (64 | ) | (105 | ) | (187 | ) | (320 | ) | ||||||||
| Net derivative (loss) gain related to mortgage servicing rights | (25 | ) | 56 | 29 | 82 | |||||||||||
| Net loan servicing income | 7 | 64 | 236 | 210 | ||||||||||||
| Net interest expense: | ||||||||||||||||
| Interest income | 9 | 9 | 44 | 42 | ||||||||||||
| Secured interest expense | (8 | ) | (8 | ) | (35 | ) | (35 | ) | ||||||||
| Unsecured interest expense | (11 | ) | (18 | ) | (55 | ) | (95 | ) | ||||||||
| Net interest expense | (10 | ) | (17 | ) | (46 | ) | (88 | ) | ||||||||
| Other income | 1 | 8 | 18 | 22 | ||||||||||||
| Net revenues | 123 | 180 | 790 | 639 | ||||||||||||
| EXPENSES | ||||||||||||||||
| Salaries and related expenses | 72 | 80 | 323 | 358 | ||||||||||||
| Commissions | 14 | 20 | 79 | 78 | ||||||||||||
| Loan origination expenses | 19 | 21 | 91 | 85 | ||||||||||||
| Foreclosure and repossession expenses | 10 | 14 | 51 | 56 | ||||||||||||
| Professional and third-party service fees | 45 | 38 | 171 | 127 | ||||||||||||
| Technology equipment and software expenses | 9 | 10 | 37 | 37 | ||||||||||||
| Occupancy and other office expenses | 11 | 14 | 50 | 51 | ||||||||||||
| Depreciation and amortization | 5 | 5 | 18 | 23 | ||||||||||||
| Other operating expenses | 21 | 19 | 183 | 108 | ||||||||||||
| Total expenses | 206 | 221 | 1,003 | 923 | ||||||||||||
| Loss from continuing operations before income taxes | (83 | ) | (41 | ) | (213 | ) | (284 | ) | ||||||||
| Income tax benefit | (32 | ) | (10 | ) | (82 | ) | (99 | ) | ||||||||
| Loss from continuing operations, net of tax | (51 | ) | (31 | ) | (131 | ) | (185 | ) | ||||||||
| (Loss) income from discontinued operations, net of tax | — | (1 | ) | — | 272 | |||||||||||
| Net (loss) income | (51 | ) | (32 | ) | (131 | ) | 87 | |||||||||
| Less: net income attributable to noncontrolling interest | 3 | 1 | 14 | 6 | ||||||||||||
| Net (loss) income attributable to PHH Corporation | $ | (54 | ) | $ | (33 | ) | $ | (145 | ) | $ | 81 | |||||
| Basic (loss) earnings per share: | ||||||||||||||||
| From continuing operations | $ | (0.92 | ) | $ | (0.62 | ) | $ | (2.62 | ) | $ | (3.47 | ) | ||||
| From discontinued operations | — | (0.04 | ) | — | 4.94 | |||||||||||
| Total attributable to PHH Corporation | $ | (0.92 | ) | $ | (0.66 | ) | $ | (2.62 | ) | $ | 1.47 | |||||
| Diluted (loss) earnings per share: | ||||||||||||||||
| From continuing operations | $ | (0.92 | ) | $ | (0.62 | ) | $ | (2.62 | ) | $ | (3.47 | ) | ||||
| From discontinued operations | — | (0.04 | ) | — | 4.94 | |||||||||||
| Total attributable to PHH Corporation | $ | (0.92 | ) | $ | (0.66 | ) | $ | (2.62 | ) | $ | 1.47 | |||||
| PHH CORPORATION AND SUBSIDIARIES | |||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
| (In millions) | |||||||
| December 31, | |||||||
| 2015 | 2014 | ||||||
| ASSETS | |||||||
| Cash and cash equivalents | $ | 906 | $ | 1,259 | |||
| Restricted cash | 47 | 56 | |||||
| Mortgage loans held for sale | 743 | 915 | |||||
| Accounts receivable, net | 81 | 123 | |||||
| Servicing advances, net | 691 | 694 | |||||
| Mortgage servicing rights | 880 | 1,005 | |||||
| Property and equipment, net | 47 | 36 | |||||
| Other assets | 257 | 208 | |||||
| Total assets | $ | 3,652 | $ | 4,296 | |||
| LIABILITIES | |||||||
| Accounts payable and accrued expenses | $ | 251 | $ | 244 | |||
| Subservicing advance liabilities | 314 | 347 | |||||
| Debt | 1,358 | 1,739 | |||||
| Deferred taxes | 182 | 262 | |||||
| Loan repurchase and indemnification liability | 62 | 63 | |||||
| Other liabilities | 137 | 70 | |||||
| Total liabilities | 2,304 | 2,725 | |||||
| Commitments and contingencies | |||||||
| Total PHH Corporation stockholders’ equity | 1,318 | 1,545 | |||||
| Noncontrolling interest | 30 | 26 | |||||
| Total equity | 1,348 | 1,571 | |||||
| Total liabilities and equity | $ | 3,652 | $ | 4,296 | |||
| Segment Results | ||||||||||||||||||||
| (In millions) |
Fourth |
|||||||||||||||||||
| Fourth Quarter 2015 | ||||||||||||||||||||
|
Mortgage |
Mortgage |
Other |
Total PHH |
Total PHH |
||||||||||||||||
| Origination and other loan fees | $ | 64 | $ | — | $ | — | $ | 64 | $ | 61 | ||||||||||
| Gain on loans held for sale, net | 61 | — | — | 61 | 64 | |||||||||||||||
| Loan servicing income | — | 96 | — | 96 | 113 | |||||||||||||||
| MSR fair value adjustments: | ||||||||||||||||||||
| Prepayments and receipt of recurring cash flows | — | (37 | ) | — | (37 | ) | (37 | ) | ||||||||||||
| Market-related | — | (27 | ) | — | (27 | ) | (68 | ) | ||||||||||||
| Net derivative (loss) gain related to MSRs | — | (25 | ) | — | (25 | ) | 56 | |||||||||||||
| Net interest expense: | ||||||||||||||||||||
| Interest income | 8 | 1 | — | 9 | 9 | |||||||||||||||
| Secured interest expense | (5 | ) | (3 | ) | — | (8 | ) | (8 | ) | |||||||||||
| Unsecured interest expense | (3 | ) | (8 | ) | — | (11 | ) | (18 | ) | |||||||||||
| Other income | 1 | — | — | 1 | 8 | |||||||||||||||
| Net revenues | 126 | (3 | ) | — | 123 | 180 | ||||||||||||||
| Salaries and related expenses | 49 | 12 | 11 | 72 | 80 | |||||||||||||||
| Commissions | 14 | — | — | 14 | 20 | |||||||||||||||
| Loan origination expenses | 19 | — | — | 19 | 21 | |||||||||||||||
| Foreclosure and repossession expenses | — | 10 | — | 10 | 14 | |||||||||||||||
| Professional and third-party service fees | 9 | 9 | 27 | 45 | 38 | |||||||||||||||
| Technology equipment and software expenses | — | 4 | 5 | 9 | 10 | |||||||||||||||
| Occupancy and other office expenses | 7 | 3 | 1 | 11 | 14 | |||||||||||||||
| Depreciation and amortization | 2 | 1 | 2 | 5 | 5 | |||||||||||||||
| Other operating expenses: | ||||||||||||||||||||
| Repurchase and foreclosure-related charges | — | 1 | — | 1 | (4 | ) | ||||||||||||||
| Legal and regulatory reserves | — | — | — | — | 6 | |||||||||||||||
| Overhead Allocation - IT | 25 | 8 | (33 | ) | — | — | ||||||||||||||
| Overhead Allocation - Other | 11 | 4 | (15 | ) | — | — | ||||||||||||||
| Other | 8 | 10 | 2 | 20 | 17 | |||||||||||||||
| Total expenses | 144 | 62 | — | 206 | 221 | |||||||||||||||
| Loss from continuing operations before income taxes | (18 | ) | (65 | ) | — | $ | (83 | ) | $ | (41 | ) | |||||||||
| Less: net income attributable to noncontrolling interest | 3 | — | — | |||||||||||||||||
| Segment loss | $ | (21 | ) | $ | (65 | ) | $ | — | ||||||||||||
| Segment Results | ||||||||||||||||||||
| (In millions) |
Year Ended |
|||||||||||||||||||
| Year Ended December 31, 2015 | ||||||||||||||||||||
|
Mortgage |
Mortgage |
Other |
Total PHH |
Total PHH |
||||||||||||||||
| Origination and other loan fees | $ | 284 | $ | — | $ | — | $ | 284 | $ | 231 | ||||||||||
| Gain on loans held for sale, net | 298 | — | — | 298 | 264 | |||||||||||||||
| Loan servicing income | — | 394 | — | 394 | 448 | |||||||||||||||
| MSR fair value adjustments: | ||||||||||||||||||||
| Prepayments and receipt of recurring cash flows | — | (169 | ) | — | (169 | ) | (155 | ) | ||||||||||||
| Market-related | — | (18 | ) | — | (18 | ) | (165 | ) | ||||||||||||
| Net derivative gain related to MSRs | — | 29 | — | 29 | 82 | |||||||||||||||
| Net interest expense: | ||||||||||||||||||||
| Interest income | 40 | 4 | — | 44 | 42 | |||||||||||||||
| Secured interest expense | (24 | ) | (11 | ) | — | (35 | ) | (35 | ) | |||||||||||
| Unsecured interest expense | (21 | ) | (34 | ) | — | (55 | ) | (95 | ) | |||||||||||
| Other income | 9 | 3 | 6 | 18 | 22 | |||||||||||||||
| Net revenues | 586 | 198 | 6 | 790 | 639 | |||||||||||||||
| Salaries and related expenses | 213 | 56 | 54 | 323 | 358 | |||||||||||||||
| Commissions | 79 | — | — | 79 | 78 | |||||||||||||||
| Loan origination expenses | 91 | — | — | 91 | 85 | |||||||||||||||
| Foreclosure and repossession expenses | — | 51 | — | 51 | 56 | |||||||||||||||
| Professional and third-party service fees | 34 | 28 | 109 | 171 | 127 | |||||||||||||||
| Technology equipment and software expenses | 3 | 16 | 18 | 37 | 37 | |||||||||||||||
| Occupancy and other office expenses | 31 | 16 | 3 | 50 | 51 | |||||||||||||||
| Depreciation and amortization | 11 | 2 | 5 | 18 | 23 | |||||||||||||||
| Other operating expenses: | ||||||||||||||||||||
| Repurchase and foreclosure-related charges | — | 6 | — | 6 | (2 | ) | ||||||||||||||
| Loss on early debt retirement | — | — | 30 | 30 | 24 | |||||||||||||||
| Legal and regulatory reserves | — | 78 | — | 78 | 28 | |||||||||||||||
| Overhead Allocation - IT | 80 | 27 | (107 | ) | — | — | ||||||||||||||
| Overhead Allocation - Other | 51 | 17 | (68 | ) | — | — | ||||||||||||||
| Other | 26 | 32 | 11 | 69 | 58 | |||||||||||||||
| Total expenses | 619 | 329 | 55 | 1,003 | 923 | |||||||||||||||
| Loss from continuing operations before income taxes | (33 | ) | (131 | ) | (49 | ) | $ | (213 | ) | $ | (284 | ) | ||||||||
| Less: net income attributable to noncontrolling interest | 14 | — | — | |||||||||||||||||
| Segment loss | $ | (47 | ) | $ | (131 | ) | $ | (49 | ) | |||||||||||
| Mortgage Production Segment | ||||||||||||||||||
| ($ In millions) | ||||||||||||||||||
|
Three Months Ended |
Year Ended December 31, | |||||||||||||||||
| 2015 | 2014 | Change | 2015 | 2014 | Change | |||||||||||||
|
Closings: |
||||||||||||||||||
| Saleable to investors | $ | 2,518 | $ | 3,019 | (17 | )% | $ | 13,218 | $ | 12,389 | 7 | % | ||||||
| Fee-based | 6,324 | 6,379 | (1 | )% | 27,386 | 23,572 | 16 | % | ||||||||||
| Total | $ | 8,842 | $ | 9,398 | (6 | )% | $ | 40,604 | $ | 35,961 | 13 | % | ||||||
| Purchase | $ | 4,326 | $ | 4,808 | (10 | )% | $ | 20,169 | $ | 20,105 | — | % | ||||||
| Refinance | 4,516 | 4,590 | (2 | )% | 20,435 | 15,856 | 29 | % | ||||||||||
| Total | $ | 8,842 | $ | 9,398 | (6 | )% | $ | 40,604 | $ | 35,961 | 13 | % | ||||||
| Retail - PLS | $ | 6,900 | $ | 6,998 | (1 | )% | $ | 30,436 | $ | 26,015 | 17 | % | ||||||
| Retail - Real Estate | 1,634 | 2,069 | (21 | )% | 8,752 | 8,593 | 2 | % | ||||||||||
| Total retail | 8,534 | 9,067 | (6 | )% | 39,188 | 34,608 | 13 | % | ||||||||||
| Wholesale/correspondent | 308 | 331 | (7 | )% | 1,416 | 1,353 | 5 | % | ||||||||||
| Total | $ | 8,842 | $ | 9,398 | (6 | )% | $ | 40,604 | $ | 35,961 | 13 | % | ||||||
| Retail - PLS (units) | 13,348 | 14,156 | (6 | )% | 58,587 | 54,105 | 8 | % | ||||||||||
| Retail - Real Estate (units) | 6,159 | 7,926 | (22 | )% | 32,428 | 34,131 | (5 | )% | ||||||||||
| Total retail (units) | 19,507 | 22,082 | (12 | )% | 91,015 | 88,236 | 3 | % | ||||||||||
| Wholesale/correspondent (units) | 1,318 | 1,451 | (9 | )% | 6,199 | 5,940 | 4 | % | ||||||||||
| Total (units) | 20,825 | 23,533 | (12 | )% | 97,214 | 94,176 | 3 | % | ||||||||||
|
Applications: |
||||||||||||||||||
| Saleable to investors | $ | 3,065 | $ | 3,811 | (20 | )% | $ | 18,047 | $ | 16,895 | 7 | % | ||||||
| Fee-based | 7,153 | 7,120 | — | % | 33,593 | 28,696 | 17 | % | ||||||||||
| Total | $ | 10,218 | $ | 10,931 | (7 | )% | $ | 51,640 | $ | 45,591 | 13 | % | ||||||
| Retail - PLS | $ | 7,982 | $ | 8,087 | (1 | )% | $ | 38,672 | $ | 32,810 | 18 | % | ||||||
| Retail - Real Estate | 1,846 | 2,333 | (21 | )% | 10,845 | 10,727 | 1 | % | ||||||||||
| Total retail | 9,828 | 10,420 | (6 | )% | 49,517 | 43,537 | 14 | % | ||||||||||
| Wholesale/correspondent | 390 | 511 | (24 | )% | 2,123 | 2,054 | 3 | % | ||||||||||
| Total | $ | 10,218 | $ | 10,931 | (7 | )% | $ | 51,640 | $ | 45,591 | 13 | % | ||||||
| Retail - PLS (units) | 15,250 | 15,805 | (4 | )% | 76,106 | 68,258 | 11 | % | ||||||||||
| Retail - Real Estate (units) | 6,894 | 8,825 | (22 | )% | 40,165 | 42,123 | (5 | )% | ||||||||||
| Total retail (units) | 22,144 | 24,630 | (10 | )% | 116,271 | 110,381 | 5 | % | ||||||||||
| Wholesale/correspondent (units) | 1,634 | 2,151 | (24 | )% | 9,181 | 9,015 | 2 | % | ||||||||||
| Total (units) | 23,778 | 26,781 | (11 | )% | 125,452 | 119,396 | 5 | % | ||||||||||
|
Other: |
||||||||||||||||||
| IRLCs expected to close | $ | 1,174 | $ | 1,603 | (27 | )% | $ | 7,199 | $ | 7,262 | (1 | )% | ||||||
| Total loan margin on IRLCs (in basis points) | 305 | 291 | 5 | % | 310 | 282 | 10 | % | ||||||||||
| Loans sold | $ | 2,628 | $ | 2,887 | (9 | )% | $ | 13,630 | $ | 12,555 | 9 | % | ||||||
| Mortgage Production Segment (continued) | |||||||||||||||||||||||
|
(in millions) |
|||||||||||||||||||||||
|
Three Months Ended |
Year Ended December 31, | ||||||||||||||||||||||
| 2015 | 2014 | Change | 2015 | 2014 | Change | ||||||||||||||||||
|
Segment Results: |
|||||||||||||||||||||||
| Origination and other loan fees | $ | 64 | $ | 61 | 5 | % | $ | 284 | $ | 231 | 23 | % | |||||||||||
| Gain on loans held for sale, net | 61 | 64 | (5 | )% | 298 | 264 | 13 | % | |||||||||||||||
| Net interest expense: | |||||||||||||||||||||||
| Interest income | 8 | 8 | — | % | 40 | 38 | 5 | % | |||||||||||||||
| Secured interest expense | (5 | ) | (6 | ) | (17 | )% | (24 | ) | (26 | ) | (8 | )% | |||||||||||
| Unsecured interest expense | (3 | ) | (7 | ) | (57 | )% | (21 | ) | (51 | ) | (59 | )% | |||||||||||
| Net interest expense | — | (5 | ) | (100 | )% | (5 | ) | (39 | ) | (87 | )% | ||||||||||||
| Other income | 1 | 2 | (50 | )% | 9 | 9 | — | % | |||||||||||||||
| Net revenues | 126 | 122 | 3 | % | 586 | 465 | 26 | % | |||||||||||||||
| Salaries and related expenses | 49 | 53 | (8 | )% | 213 | 231 | (8 | )% | |||||||||||||||
| Commissions | 14 | 20 | (30 | )% | 79 | 78 | 1 | % | |||||||||||||||
| Loan origination expenses | 19 | 21 | (10 | )% | 91 | 85 | 7 | % | |||||||||||||||
| Professional and third-party service fees | 9 | 10 | (10 | )% | 34 | 34 | — | % | |||||||||||||||
| Technology equipment and software expenses | — | 1 | (100 | )% | 3 | 3 | — | % | |||||||||||||||
| Occupancy and other office expenses | 7 | 8 | (13 | )% | 31 | 31 | — | % | |||||||||||||||
| Depreciation and amortization | 2 | 2 | — | % | 11 | 12 | (8 | )% | |||||||||||||||
| Other operating expenses | 44 | 32 | 38 | % | 157 | 126 | 25 | % | |||||||||||||||
| Total expenses | 144 | 147 | (2 | )% | 619 | 600 | 3 | % | |||||||||||||||
| Loss before income taxes | (18 | ) | (25 | ) | (28 | )% | (33 | ) | (135 | ) | (76 | )% | |||||||||||
| Less: net income attributable to noncontrolling interest | 3 | 1 | 200 | % | 14 | 6 | 133 | % | |||||||||||||||
| Segment loss | $ | (21 | ) | $ | (26 | ) | (19 | )% | $ | (47 | ) | $ | (141 | ) | (67 | )% | |||||||
| Mortgage Servicing Segment | ||||||||||||||||||||||
| ($ in millions) | ||||||||||||||||||||||
| December 31, | ||||||||||||||||||||||
| 2015 | 2014 | Change | ||||||||||||||||||||
|
Total Loan Servicing Portfolio: |
||||||||||||||||||||||
| Unpaid principal balance | $ | 226,259 | $ | 227,272 | — | % | ||||||||||||||||
| Number of loans in owned portfolio (units) | 642,379 | 712,643 | (10 | )% | ||||||||||||||||||
| Number of subserviced loans (units) | 450,295 | 446,381 | 1 | % | ||||||||||||||||||
| Total number of loans serviced (units) | 1,092,674 | 1,159,024 | (6 | )% | ||||||||||||||||||
|
Capitalized Servicing Portfolio: |
||||||||||||||||||||||
| Unpaid principal balance | $ | 98,990 | $ | 112,686 | (12 | )% | ||||||||||||||||
| Capitalized servicing rate | 0.89 | % | 0.89 | % | — | % | ||||||||||||||||
| Capitalized servicing multiple | 3.1 | 3.1 | — | % | ||||||||||||||||||
| Weighted-average servicing fee (in basis points) | 29 | 29 | — | % | ||||||||||||||||||
|
Three Months Ended |
Year Ended |
||||||||||||||||||||||
| 2015 | 2014 | Change | 2015 | 2014 | Change | ||||||||||||||||||
|
Total Loan Servicing Portfolio: |
|||||||||||||||||||||||
| Average Portfolio UPB | $ | 226,791 | $ | 226,803 | — | % | $ | 225,787 | $ | 226,438 | — | % | |||||||||||
|
Capitalized Servicing Portfolio: |
|||||||||||||||||||||||
| Average Portfolio UPB | $ | 100,442 | $ | 117,163 | (14 | )% | $ | 105,343 | $ | 123,090 | (14 | )% | |||||||||||
| Payoffs and principal curtailments | 4,238 | 4,604 | (8 | )% | 19,092 | 18,463 | 3 | % | |||||||||||||||
| Sales | 365 | 4,458 | (92 | )% | 3,445 | 6,929 | (50 | )% | |||||||||||||||
| December 31, | ||||||||||||||||||
| 2015 | 2014 | |||||||||||||||||
|
Number of |
Unpaid |
Number of |
Unpaid |
|||||||||||||||
|
Delinquency - Total Servicing Portfolio(1) |
||||||||||||||||||
| 30 days | 2.22 | % | 1.55 | % | 2.43 | % | 1.75 | % | ||||||||||
| 60 days | 0.44 | 0.30 | 0.58 | 0.41 | ||||||||||||||
| 90 or more days | 0.82 | 0.62 | 1.13 | 0.85 | ||||||||||||||
| Total | 3.48 | % | 2.47 | % | 4.14 | % | 3.01 | % | ||||||||||
| Foreclosure/real estate owned(2) | 1.74 | % | 1.51 | % | 2.22 | % | 2.04 | % | ||||||||||
| _______________ | ||
| (1) | Represents portfolio delinquencies as a percentage of the total number of loans and the total unpaid balance of the portfolio. | |
| (2) | As of December 31, 2015 and 2014, the total servicing portfolio included 15,487 and 21,456 of loans in foreclosure with an unpaid principal balance of $3.0 billion and $4.1 billion, respectively. | |
| Mortgage Servicing Segment (continued) | |||||||||||||||||||||||
| ($ in millions) | |||||||||||||||||||||||
|
Three Months Ended |
Year Ended December 31, |
||||||||||||||||||||||
| 2015 | 2014 | Change | 2015 | 2014 | Change | ||||||||||||||||||
|
Segment Results: |
|||||||||||||||||||||||
| Net loan servicing income | $ | 7 | $ | 64 | (89 | )% | $ | 236 | $ | 210 | 12 | % | |||||||||||
| Net interest expense | (10 | ) | (12 | ) | (17 | )% | (41 | ) | (49 | ) | (16 | )% | |||||||||||
| Other income | — | 1 | (100 | )% | 3 | 2 | 50 | % | |||||||||||||||
| Net revenues | (3 | ) | 53 | n/m | 198 | 163 | 21 | % | |||||||||||||||
| Salaries and related expenses | 12 | 15 | (20 | )% | 56 | 60 | (7 | )% | |||||||||||||||
| Foreclosure and repossession expenses | 10 | 14 | (29 | )% | 51 | 56 | (9 | )% | |||||||||||||||
| Professional and third-party service fees | 9 | 8 | 13 | % | 28 | 31 | (10 | )% | |||||||||||||||
| Technology equipment and software expenses | 4 | 4 | — | % | 16 | 16 | — | % | |||||||||||||||
| Occupancy and other office expenses | 3 | 5 | (40 | )% | 16 | 17 | (6 | )% | |||||||||||||||
| Depreciation and amortization | 1 | 1 | — | % | 2 | 2 | — | % | |||||||||||||||
| Other operating expenses | 23 | 19 | 21 | % | 160 | 84 | 90 | % | |||||||||||||||
| Total expenses | 62 | 66 | (6 | )% | 329 | 266 | 24 | % | |||||||||||||||
| Segment loss | $ | (65 | ) | $ | (13 | ) | n/m | $ | (131 | ) | $ | (103 | ) | 27 | % | ||||||||
| ______________ | |||||||||||||||||||||||
| n/m - Not Meaningful | |||||||||||||||||||||||
| Debt and Borrowing Arrangements | |||||||||||||
| (in millions) | |||||||||||||
|
December 31, 2015 |
December 31, |
||||||||||||
|
Balance |
Interest |
Available |
Balance | ||||||||||
| Committed warehouse facilities | $ | 632 | 2.5 | % | $ | 968 | $ | 800 | |||||
| Uncommitted warehouse facilities | — | — | 2,825 | — | |||||||||
| Servicing advance facility | 111 | 2.3 | % | 44 | 108 | ||||||||
| Convertible notes due in 2017(3) | — | 6.0 | % | n/a | 216 | ||||||||
| Term notes due in 2019 | 275 | 7.375 | % | n/a | 275 | ||||||||
| Term notes due in 2021 | 340 | 6.375 | % | n/a | 340 | ||||||||
| Unsecured credit facilities | — | — | 5 | — | |||||||||
| Unsecured debt | 615 | 831 | |||||||||||
| Total | $ | 1,358 | $ | 1,739 | |||||||||
| ______________ | |||
|
(1) |
Interest rate shown represents the stated interest rate of outstanding borrowings, which may differ from the effective rate due to the amortization of premiums, discounts and issuance costs. Warehouse facilities and the servicing advance facility are variable-rate. Rate shown for warehouse facilities represents the weighted-average rate of current outstanding borrowings. | ||
| (2) | Capacity is dependent upon maintaining compliance with, or obtaining waivers of, the terms, conditions and covenants of the respective agreements, including asset-eligibility requirements. | ||
| (3) | As of December 31, 2015, after the completion of the exchange offers, an insignificant amount of notes remain. As of December 31, 2014, balance is net of unamortized discount of $29 million. | ||
* NOTE REGARDING NON-GAAP FINANCIAL MEASURES
Non-GAAP financial measures for all periods presented reflect the continuing operations of the Company and exclude the results of the Fleet business and amounts related to the disposition of the business.
Core earnings or loss (pre-tax and after-tax), core earnings or loss per share, and adjusted cash flow are financial measures that are not in accordance with GAAP. See Non-GAAP Reconciliations below for a reconciliation of these measures to the most directly comparable GAAP financial measures as required by Regulation G.
Core earnings or loss (pre-tax and after-tax) and core earnings or loss per share involves differences from Segment profit or loss, Income or loss from continuing operations before income taxes, Net income or loss attributable to PHH Corporation and Basic earnings or loss per share attributable to PHH Corporation computed in accordance with GAAP. Core earnings or loss (pre-tax and after-tax) and core earnings or loss per share should be considered as supplementary to, and not as a substitute for, Segment profit or loss, Income or loss from continuing operations before income taxes, Net income or loss attributable to PHH Corporation or Basic earnings or loss per share from continuing operations computed in accordance with GAAP as a measure of the Company’s financial performance.
Adjusted cash flow excludes the change in the Cash balance of discontinued operations and involves differences from Net increase or decrease in cash and cash equivalents computed in accordance with GAAP. Adjusted cash flow should be considered as supplementary to, and not as a substitute for, Net increase or decrease in cash and cash equivalents computed in accordance with GAAP as a measure of the Company’s net increase or decrease in cash and cash equivalents.
Non-GAAP metrics are used in managing certain aspects of the Company’s business. For example, management’s reviews of results incorporate Non-GAAP metrics and certain of the Company’s debt agreements contain covenants calculated using a measure similar to the calculations of the Non-GAAP metrics. The Company has also designed certain management incentives based upon the achievement of targets related to Non-GAAP metrics. The Company believes that these Non-GAAP Financial Measures can be useful to investors because they provide a means by which investors can evaluate the Company’s underlying key drivers and operating performance of the business, exclusive of certain adjustments and activities that investors may consider to be unrelated to the underlying economic performance of the business for a given period.
The Company also believes that any meaningful analysis of the Company’s financial performance by investors requires an understanding of the factors that drive the Company’s underlying operating performance which can be obscured by significant unrealized changes in value of the Company’s mortgage servicing rights, as well as any gain or loss on derivatives that are intended to offset market-related fair value adjustments on the Company’s mortgage servicing rights, in a given period that are included in Segment profit or loss, Income or loss from continuing operations before income taxes, Net income or loss attributable to PHH Corporation and Basic earnings or loss per share from continuing operations attributable to PHH Corporation in accordance with GAAP.
Core earnings or loss (pre-tax and after-tax) and core earnings or loss per share
Core earnings or loss (pre-tax and after-tax) and core earnings or loss per share measure the Company’s financial performance from continuing operations excluding unrealized changes in fair value of the Company’s mortgage servicing rights that are based upon projections of expected future cash flows and prepayments as well as realized and unrealized changes in the fair value of derivatives that are intended to offset changes in the fair value of mortgage servicing rights. The changes in fair value of mortgage servicing rights and related derivatives are highly sensitive to changes in interest rates and are dependent upon the level of current and projected interest rates at the end of each reporting period.
Value lost from actual prepayments and recurring cash flows are recorded when actual cash payments or prepayments of the underlying loans are received, and are included in core earnings based on the current fair value of the mortgage servicing rights at the time the payments are received.
The presentation of core earnings is designed to more closely align the timing of recognizing the actual value lost from prepayments in the mortgage servicing segment with the associated value created through new originations in the mortgage production segment.
Limitations on the use of Core Earnings: Since core earnings or loss (pre-tax and after-tax) and core earnings or loss per share measure the Company’s financial performance from continuing operations excluding unrealized changes in value of mortgage servicing rights, such measures may not appropriately reflect the rate of value lost on subsequent actual payments or prepayments over time. As such, core earnings or loss (pre-tax and after-tax) and core earnings or loss per share may tend to overstate operating results in a declining interest rate environment and understate operating results in a rising interest rate environment, absent the effect of any offsetting gains or losses on derivatives that are intended to offset changes in fair value on the Company’s mortgage servicing rights.
Adjusted cash flow
Adjusted cash flow excludes the change in the Cash balance of discontinued operations and measures the Company’s Net increase or decrease in cash and cash equivalents from continuing operations for a given period excluding changes resulting from the issuance or repurchase of equity, the purchase of derivative securities related to the Company’s stock or the issuance or repayment of unsecured or other debt by PHH Corporation. The Company believes that Adjusted cash flow is a useful measure for investors because the Company’s ability to repay future unsecured debt maturities or return capital to equity holders is highly dependent on a demonstrated ability to generate cash. Accordingly, the Company believes that Adjusted cash flow may assist investors in determining the amount of cash and cash equivalents generated from business activities during a period that is available to repay unsecured debt or distribute to holders of the Company’s equity.
Adjusted cash flow can be generated through a combination of earnings, more efficient utilization of asset-backed funding facilities, or an improved working capital position. Adjusted cash flow can vary significantly between periods based upon a variety of potential factors including, but not limited to, timing related to cash collateral postings, mortgage origination volumes and loan margins.
Limitations on the use of Adjusted Cash Flow: Adjusted cash flow is not a substitute for the Net increase or decrease in cash and cash equivalents for a period and is not intended to provide the Company’s total sources and uses of cash or measure its change in liquidity. As such, it is important that investors review the Company’s consolidated statement of cash flows for a more detailed understanding of the drivers of net cash provided by (used in) operating activities, investing activities, and financing activities.
|
NON-GAAP RECONCILIATIONS - CORE EARNINGS |
|
(In millions, except per share data) |
| See “Note Regarding Non-GAAP Financial Measures” above in this press release for a description of the uses and limitations of the Non-GAAP Financial Measures. |
| Regulation G Reconciliation | ||||||||||||||||
|
Three Months Ended |
Year Ended |
|||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Loss from continuing operations before income taxes - as reported | $ | (83 | ) | $ | (41 | ) | $ | (213 | ) | $ | (284 | ) | ||||
| Less: net income attributable to noncontrolling interest | 3 | 1 | 14 | 6 | ||||||||||||
| Segment loss | (86 | ) | (42 | ) | (227 | ) | (290 | ) | ||||||||
| Market-related fair value adjustments (1) | 27 | 68 | 18 | 165 | ||||||||||||
| Net derivative loss (gain) related to MSRs | 25 | (56 | ) | (29 | ) | (82 | ) | |||||||||
| Core loss (pre-tax) | $ | (34 | ) | $ | (30 | ) | $ | (238 | ) | $ | (207 | ) | ||||
| Net (loss) income attributable to PHH Corporation - as reported | $ | (54 | ) | $ | (33 | ) | $ | (145 | ) | $ | 81 | |||||
| Less: (Loss) income from discontinued operations, net of tax | — | (1 | ) | — | 272 | |||||||||||
| Net loss from continuing operations attributable to PHH Corporation | (54 | ) | (32 | ) | (145 | ) | (191 | ) | ||||||||
| Market-related fair value adjustments (1)(2) | 16 | 42 | 11 | 101 | ||||||||||||
| Net derivative loss (gain) related to MSRs, net of taxes(2) | 15 | (34 | ) | (18 | ) | (50 | ) | |||||||||
| Core loss (after-tax) | $ | (23 | ) | $ | (24 | ) | $ | (152 | ) | $ | (140 | ) | ||||
| Basic loss per share from continuing operations attributable to PHH Corporation - as reported | $ | (0.92 | ) | $ | (0.62 | ) | $ | (2.62 | ) | $ | (3.47 | ) | ||||
| Market-related fair value adjustments, net of taxes (1)(3) | 0.27 | 0.82 | 0.20 | 1.83 | ||||||||||||
| Net derivative loss (gain) related to MSRs, net of taxes(3) | 0.27 | (0.67 | ) | (0.32 | ) | (0.91 | ) | |||||||||
| Core loss per share | $ | (0.38 | ) | $ | (0.47 | ) | $ | (2.74 | ) | $ | (2.55 | ) | ||||
| _______________ | ||
| (1) | Represents the Change in fair value of MSRs due to changes in market inputs and assumptions used in the valuation model. | |
| (2) | An incremental effective tax rate of 39% was applied to arrive at the net of taxes amounts. | |
| (3) | Basic weighted-average shares outstanding of 58.536 million and 51.126 million for the three months ended December 31, 2015 and 2014, respectively, and 55.202 million and 55.001 million for the year ended December 31, 2015 and 2014, respectively, were used to calculate per share amounts. | |
|
NON-GAAP RECONCILIATIONS - CORE EARNINGS BY SEGMENT |
|
(In millions) |
| See “Note Regarding Non-GAAP Financial Measures” above in this press release for a description of the uses and limitations of the Non-GAAP Financial Measures. |
| Regulation G Reconciliation | ||||||||||||
| Three Months Ended December 31, 2015 | ||||||||||||
|
Mortgage |
Mortgage |
Other | ||||||||||
| Segment (loss) | $ | (21 | ) | $ | (65 | ) | $ | — | ||||
| Market-related fair value adjustments(1) | — | 27 | — | |||||||||
| Net derivative loss related to MSRs | — | 25 | — | |||||||||
| Core (loss) | $ | (21 | ) | $ | (13 | ) | $ | — | ||||
| Three Months Ended December 31, 2014 | ||||||||||||
|
Mortgage |
Mortgage |
Other | ||||||||||
| Segment (loss) | $ | (26 | ) | $ | (13 | ) | $ | (3 | ) | |||
| Market-related fair value adjustments(1) | — | 68 | — | |||||||||
| Net derivative gain related to MSRs | — | (56 | ) | — | ||||||||
| Core (loss) | $ | (26 | ) | $ | (1 | ) | $ | (3 | ) | |||
| Year Ended December 31, 2015 | ||||||||||||
|
Mortgage |
Mortgage |
Other | ||||||||||
| Segment (loss) | $ | (47 | ) | $ | (131 | ) | $ | (49 | ) | |||
| Market-related fair value adjustments(1) | — | 18 | — | |||||||||
| Net derivative gain related to MSRs | — | (29 | ) | — | ||||||||
| Core (loss) | $ | (47 | ) | $ | (142 | ) | $ | (49 | ) | |||
| Year Ended December 31, 2014 | ||||||||||||
|
Mortgage |
Mortgage |
Other | ||||||||||
| Segment (loss) | $ | (141 | ) | $ | (103 | ) | $ | (46 | ) | |||
| Market-related fair value adjustments(1) | — | 165 | — | |||||||||
| Net derivative gain related to MSRs | — | (82 | ) | — | ||||||||
| Core (loss) | $ | (141 | ) | $ | (20 | ) | $ | (46 | ) | |||
| _____________ | ||
|
(1) |
Represents the Change in fair value of MSRs due to changes in market inputs and assumptions used in the valuation model. | |
|
NON-GAAP RECONCILIATIONS - ADJUSTED CASH FLOW |
|
(In millions) |
| See “Note Regarding Non-GAAP Financial Measures” above in this press release for a description of the uses and limitations of the Non-GAAP Financial Measures. |
| Regulation G Reconciliation | ||||||||||||||||
|
Three Months Ended |
Year Ended |
|||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Net (decrease) increase in Cash and cash equivalents - as reported | $ | (76 | ) | $ | (192 | ) | $ | (353 | ) | $ | 14 | |||||
| Less: Decrease in cash balance of discontinued operations | — | — | — | 119 | ||||||||||||
| Net (decrease) increase in Cash attributable to continuing operations | (76 | ) | (192 | ) | (353 | ) | 133 | |||||||||
| Adjustments: | ||||||||||||||||
| Principal payments on unsecured borrowings | — | 10 | 245 | 435 | ||||||||||||
| Repurchase of Common stock | 77 | — | 77 | 200 | ||||||||||||
| Issuances of Common stock | — | — | (2 | ) | (10 | ) | ||||||||||
| Adjusted Cash Flow | $ | 1 | $ | (182 | ) | $ | (33 | ) | $ | 758 | ||||||
