INDIANAPOLIS, IN--(Marketwired - November 03, 2016) - Stonegate Mortgage Corporation (
Total revenues during the third quarter of 2016 were $66.3 million, up $39.8 million, or 150%, compared to the second quarter of 2016. Compared to the third quarter of 2015, revenues were up $40.7 million, or 159%. The increase in revenues during the third quarter of 2016 as compared to both the second quarter of 2016 and the third quarter of 2015 was predominantly the result of favorable changes in the fair value of our MSRs and increases in gains on mortgage loans held for sale, partially offset by lower servicing fee income from a decline in our average servicing portfolio.
Total expenses during the third quarter of 2016 were $50.4 million, up $6.8 million, or 16%, compared to the second quarter of 2016. Compared to the third quarter of 2015, expenses declined $4.4 million, or 8%.
Income tax expense during the third quarter of 2016 was $0.3 million, up $0.3 million compared to the second quarter of 2016 and up $9.4 million compared to the third quarter of 2015. The expense in the third quarter of 2016 was positively impacted by the reversal of $6.2 million of the valuation allowance established in prior periods.
Net income from continuing operations improved $32.7 million, or $1.26 per diluted share, in the third quarter of 2016 to $15.6 million, or $0.60 per diluted share, compared to a net loss from continuing operations of $17.2 million, or $0.66 per diluted share, in the second quarter of 2016. Net income from continuing operations was up $35.8 million, or $1.38 per diluted share, compared to the third quarter of 2015, during which we reported a net loss from continuing operations of $20.2 million, or $0.78 per diluted share.
Adjusted net income from continuing operations1 for the third quarter of 2016 was $11.0 million, or $0.42 per diluted share, after excluding pre-tax mortgage servicing rights valuation adjustments of $4.9 million compared to reported adjusted net income from continuing operations of $1.0 million, or $0.04 per diluted share, for the second quarter of 2016. Adjusted net income from continuing operations was up $8.2 million, or $0.31 per diluted share, compared to the third quarter of 2015, during which we reported adjusted net income from continuing operations of $2.8 million, or $0.11 per diluted share.
"We are extremely pleased to report strong GAAP and adjusted net income for the third quarter," said Jim Smith, Chief Executive Officer. "Our business platform was well prepared to benefit from increased production levels during the quarter and, as a result, we achieved GAAP earnings of $15.6 million and adjusted net income of $11.0 million. We continue to be highly focused on maintaining prudent liquidity and MSR debt levels, as well as fully leveraging our cost structure. Thanks to the dedication and commitment of our associates and the support of our many customers, Stonegate continues to deliver value to our shareholders."
1 Adjusted net income from continuing operations and adjusted diluted earnings per share from continuing operations are considered non-GAAP financial measures. These non-GAAP financial measures are performance measures and are presented to provide additional information about our core operations. See below for a discussion of the use of these non-GAAP measures and a reconciliation of each of these non-GAAP measures to the most comparable measure prepared in accordance with GAAP.
Third Quarter Highlights
- SGM consolidated highlights
- Reported third quarter GAAP net income of $15.6 million or $0.60 per diluted share -- increase of $32.7 million or 191% from the prior quarter
- Adjusted net income of $11.0 million or $0.42 per diluted share -- increase of $0.38 per diluted share from the prior quarter
- Maintained adequate liquidity position with $23.2 million in cash and cash equivalents as of 9/30/16
- Reduced MSR debt by $4.3 million, or 7%, to $57.6 million as of 9/30/16 compared to 6/30/16
- Originations segment highlights
- GAAP pre-tax income of $17.7 million -- up $12.0 million or 211% from the prior quarter
- Total originations of $2.62 billion -- up 12% from the prior quarter
- Total revenues of $51.8 million -- up $13.5 million or 35% from the prior quarter
- Total expenses down 9 basis points from the prior quarter
- Strong growth in retail channel -- originations up 27% from prior quarter results
- Financing segment highlights (NattyMac)
- Pre-tax income of $983 thousand -- up $57 thousand or 6% from the prior quarter
- Total funded loans of $1.37 billion -- up $146 million or 12% from the prior quarter
- Funding fee income of $488 thousand -- increase of 6% from the prior quarter
- Total expenses down 3% from the prior quarter
- Servicing segment highlights
- GAAP pre-tax income of $3.6 million -- an improvement of $22.3 million or 120% from the prior quarter
- Adjusted pre-tax loss of $1.3 million compared to a $0.7 million loss in the prior quarter
- Total expenses down 4% from the prior quarter
- End of quarter servicing UPB of $14.42 billion with a weighted average coupon of 3.75%
Audio Presentation
Stonegate Mortgage's Chief Executive Officer, Jim Smith, and Chief Financial Officer, Carrie Preston, will review the results for the third quarter ended September 30, 2016 in a recorded presentation. The audio recording and accompanying slide presentation will be available on the Company's Investor Relations Website at http://investors.stonegatemtg.com/.
About Stonegate Mortgage Corporation
Founded in 2005, Stonegate Mortgage Corporation (
For more information on Stonegate Mortgage Corporation, please visit www.stonegatemtg.com.
| Stonegate Mortgage Corporation | |||||||||||||||
| Key Operating Statistics | |||||||||||||||
| (Unaudited) | |||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||
| (In millions) | September 30, 2016 | June 30, 2016 |
September 30, 2015 | September 30, 2016 | September 30, 2015 | ||||||||||
| Origination volume by channel: | |||||||||||||||
| Retail | $ | 364.2 | $ | 287.3 | $ | 402.6 | $ | 866.9 | $ | 1,240.3 | |||||
| Wholesale | 596.8 | 561.8 | 574.6 | 1,586.7 | 2,004.7 | ||||||||||
| Correspondent | 1,660.3 | 1,494.3 | 2,222.5 | 4,452.7 | 5,721.0 | ||||||||||
| Total origination volume | $ | 2,621.4 | $ | 2,343.4 | $ | 3,199.7 | $ | 6,906.3 | $ | 8,966.0 | |||||
| Average origination volume per business day | $ | 41.0 | $ | 36.6 | $ | 50.0 | $ | 36.3 | $ | 47.4 | |||||
| Mortgage loan locks volume: | |||||||||||||||
| Mortgage loans locked | $ | 3,625.0 | $ | 3,280.3 | $ | 3,929.3 | $ | 9,971.3 | $ | 12,555.7 | |||||
| Average mortgage loans locked per business day | $ | 56.6 | $ | 51.3 | $ | 61.4 | $ | 52.5 | $ | 66.5 | |||||
| As of | |||||||||||||||
| September 30, 2016 | December 31, 2015 | September 30, 2015 | |||||||||||||
| Servicing portfolio | $ | 14,416.9 | $ | 17,520.7 | 18,165.0 | ||||||||||
| Stonegate Mortgage Corporation | ||||||||||||||||||||||
| Consolidated Statements of Operations | ||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||
| (In thousands, except per share data) | September 30, 2016 | June 30, 2016 |
September 30, 2015 | September 30, 2016 | September 30, 2015 | |||||||||||||||||
| Revenues | ||||||||||||||||||||||
| Gains on mortgage loans held for sale, net | $ | 41,239 | $ | 28,314 | $ | 32,874 | $ | 92,674 | $ | 119,095 | ||||||||||||
| Changes in mortgage servicing rights valuation | 4,918 | (17,927 | ) | (28,088 | ) | (48,729 | ) | (34,525 | ) | |||||||||||||
| Payoffs and principal amortization of mortgage servicing rights | (8,592 | ) | (10,148 | ) | (9,215 | ) | (25,988 | ) | (34,303 | ) | ||||||||||||
| Loan origination and other loan fees | 6,013 | 5,473 | 6,718 | 15,948 | 18,530 | |||||||||||||||||
| Loan servicing fees | 11,184 | 13,712 | 14,051 | 38,342 | 41,001 | |||||||||||||||||
| Interest and other income | 11,515 | 7,070 | 9,217 | 25,500 | 26,125 | |||||||||||||||||
| Total revenues | 66,277 | 26,494 | 25,557 | 97,747 | 135,923 | |||||||||||||||||
| Expenses | ||||||||||||||||||||||
| Salaries, commissions and benefits | 25,880 | 23,551 | 31,851 | 72,657 | 93,836 | |||||||||||||||||
| General and administrative expense | 11,576 | 6,467 | 8,921 | 25,057 | 24,939 | |||||||||||||||||
| Interest expense | 6,488 | 6,824 | 7,508 | 20,561 | 23,358 | |||||||||||||||||
| Occupancy, equipment and communication | 4,230 | 4,050 | 4,175 | 12,528 | 12,441 | |||||||||||||||||
| Depreciation and amortization expense | 2,247 | 2,725 | 2,397 | 7,518 | 5,779 | |||||||||||||||||
| Total expenses | 50,421 | 43,617 | 54,852 | 138,321 | 160,353 | |||||||||||||||||
| Income (loss) before income taxes | 15,856 | (17,123 | ) | (29,295 | ) | (40,574 | ) | (24,430 | ) | |||||||||||||
| Income tax expense (benefit) | 282 | 29 | (9,105 | ) | (1,473 | ) | (7,265 | ) | ||||||||||||||
| Income (loss) from continuing operations, net of tax | 15,574 | (17,152 | ) | (20,190 | ) | (39,101 | ) | (17,165 | ) | |||||||||||||
| (Loss) from discontinued operations, net of tax | - | - | (2,614 | ) | - | (5,624 | ) | |||||||||||||||
| Net income (loss) attributable to common stockholders | $ | 15,574 | $ | (17,152 | ) | $ | (22,804 | ) | $ | (39,101 | ) | $ | (22,789 | ) | ||||||||
| Basic earnings (loss) per share: | ||||||||||||||||||||||
| From continuing operations | $ | 0.60 | $ | (0.66 | ) | $ | (0.78 | ) | $ | (1.51 | ) | $ | (0.66 | ) | ||||||||
| From discontinued operations | - | - | (0.10 | ) | - | (0.22 | ) | |||||||||||||||
| Total basic earnings (loss) per share | $ | 0.60 | $ | (0.66 | ) | $ | (0.88 | ) | $ | (1.51 | ) | $ | (0.88 | ) | ||||||||
| Diluted earnings (loss) per share: | ||||||||||||||||||||||
| From continuing operations | $ | 0.60 | $ | (0.66 | ) | $ | (0.78 | ) | $ | (1.51 | ) | $ | (0.66 | ) | ||||||||
| From discontinued operations | - | - | (0.10 | ) | - | (0.22 | ) | |||||||||||||||
| Total diluted earnings (loss) per share | $ | 0.60 | $ | (0.66 | ) | $ | (0.88 | ) | $ | (1.51 | ) | $ | (0.88 | ) | ||||||||
| Stonegate Mortgage Corporation | ||||||||
| Consolidated Balance Sheets | ||||||||
| (Unaudited) | ||||||||
| (In thousands, except share and per share data) | September 30, 2016 | December 31, 2015 | ||||||
| Assets | ||||||||
| Cash and cash equivalents | $ | 23,221 | $ | 32,463 | ||||
| Restricted cash | 5,660 | 4,045 | ||||||
| Mortgage loans held for sale, at fair value | 828,713 | 645,696 | ||||||
| Servicing advances, net | 21,703 | 19,374 | ||||||
| Derivative assets | 18,958 | 12,160 | ||||||
| Mortgage servicing rights, at fair value | 148,164 | 199,637 | ||||||
| Property and equipment (net of accumulated depreciation and amortization of $19,400 and $12,558 at September 30, 2016 and December 31, 2015, respectively) | 16,664 | 22,923 | ||||||
| Loans eligible for repurchase from GNMA | 99,342 | 80,794 | ||||||
| Warehouse lending receivables | 167,885 | 199,215 | ||||||
| Goodwill and other intangible assets (net of accumulated amortization of $1,817 and $1,453 at September 30, 2016 and December 31, 2015, respectively) | 6,538 | 6,902 | ||||||
| Subordinated loan receivable | 30,000 | 30,000 | ||||||
| Other assets | 24,973 | 27,417 | ||||||
| Total assets | $ | 1,391,821 | $ | 1,280,626 | ||||
| Liabilities and stockholders' equity | ||||||||
| Liabilities | ||||||||
| Secured borrowings - mortgage loans | $ | 326,462 | $ | 492,799 | ||||
| Secured borrowings - mortgage servicing rights | 57,649 | 77,069 | ||||||
| Secured borrowings - eligible GNMA loan repurchases | 27,832 | 37,615 | ||||||
| Mortgage repurchase borrowings | 589,164 | 279,421 | ||||||
| Warehouse lines of credit | 975 | 1,306 | ||||||
| Operating lines of credit | 9,969 | 5,000 | ||||||
| Accounts payable and accrued expenses | 26,160 | 23,544 | ||||||
| Derivative liabilities | 7,061 | 2,517 | ||||||
| Reserve for mortgage repurchases and indemnifications | 6,680 | 5,536 | ||||||
| Liability for loans eligible for repurchase from GNMA | 99,342 | 80,794 | ||||||
| Deferred income tax liabilities, net | 795 | 2,364 | ||||||
| Other liabilities | 16,145 | 11,033 | ||||||
| Total liabilities | 1,168,234 | 1,018,998 | ||||||
| Stockholders' equity | ||||||||
| Common stock, par value $0.01, shares authorized - 100,000,000; shares issued: 25,973,455 and outstanding: 25,839,020 at September 30, 2016; shares issued: 25,845,566 and outstanding: 25,796,193 at December 31, 2015 | 265 | 264 | ||||||
| Additional paid-in capital | 271,965 | 270,906 | ||||||
| Accumulated deficit | (48,643 | ) | (9,542 | ) | ||||
| Total stockholders' equity | 223,587 | 261,628 | ||||||
| Total liabilities and stockholders' equity | $ | 1,391,821 | $ | 1,280,626 | ||||
| Stonegate Mortgage Corporation |
| GAAP Reconciliation |
| (Unaudited) |
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||
| (In thousands, except per share data) | September 30, 2016 | June 30, 2016 |
September 30, 2015 | September 30, 2016 | September 30, 2015 | ||||||||||||||||
| Income (loss) from continuing operations, net of tax | $ | 15,574 | $ | (17,152 | ) | $ | (20,190 | ) | $ | (39,101 | ) | $ | (17,165 | ) | |||||||
| Adjustments: | |||||||||||||||||||||
| Changes in mortgage servicing rights valuation | (4,918 | ) | 17,927 | 28,088 | 48,729 | 34,525 | |||||||||||||||
| Stock-based compensation expense | 399 | 354 | 1,900 | 1,059 | 3,545 | ||||||||||||||||
| Severance expense | - | - | 1,533 | - | 1,533 | ||||||||||||||||
| Results from discontinued retail branches | - | 55 | - | 119 | - | ||||||||||||||||
| Other non-routine expenses1 | - | - | 221 | - | 221 | ||||||||||||||||
| Tax effect of adjustments | (49 | ) | (139 | ) | (8,733 | ) | (1,823 | ) | (11,843 | ) | |||||||||||
| Adjusted income from continuing operations, net of tax | $ | 11,006 | $ | 1,045 | $ | 2,819 | $ | 8,983 | $ | 10,816 | |||||||||||
| Diluted earnings (loss) per share | $ | 0.60 | $ | (0.66 | ) | $ | (0.78 | ) | $ | (1.51 | ) | $ | (0.66 | ) | |||||||
| Adjustments: | |||||||||||||||||||||
| Changes in mortgage servicing rights valuation | (0.19 | ) | 0.70 | 1.09 | 1.88 | 1.33 | |||||||||||||||
| Stock-based compensation expense | 0.01 | 0.01 | 0.07 | 0.04 | 0.14 | ||||||||||||||||
| Severance expense | - | - | 0.06 | - | 0.06 | ||||||||||||||||
| Results from discontinued retail branches | - | - | - | - | - | ||||||||||||||||
| Other non-routine expenses | - | - | 0.01 | - | 0.01 | ||||||||||||||||
| Tax effect of adjustments | - | (0.01 | ) | (0.34 | ) | (0.07 | ) | (0.46 | ) | ||||||||||||
| Adjusted diluted earnings per share | $ | 0.42 | $ | 0.04 | $ | 0.11 | $ | 0.34 | $ | 0.42 | |||||||||||
| 1 For the three and nine months ended September 30, 2015, amount consists primarily of expenses associated with the write down of certain assets. |
Forward Looking Statements
Various statements contained in this earnings release, including those that express a belief, expectation or intention, as well as those that are not statements of historical fact, are forward-looking statements. These forward-looking statements may include projections and estimates concerning the timing and success of specific projects and our future production, revenues, income and capital spending. Our forward- looking statements are generally accompanied by words such as "estimate," "project," "predict," "believe," "expect," "intend," "anticipate," "potential," "plan," "goal" or other words that convey the uncertainty of future events or outcomes. The forward-looking statements in this earnings release speak only as of the date of this earnings release; we disclaim any obligation to update these statements unless required by law, and we caution you not to rely on them unduly. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These and other important factors, including those discussed in the "Risk Factors" section within our 2015 Annual Report on Form 10-K filed on March 15, 2016 and any revisions to those Risk Factors in subsequent filings, may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements.
Contact Information:
Media:
Sloane & Company (on behalf of Stonegate Mortgage Corporation)
Whit Clay
212-446-1864