MT. LAUREL, N.J.--(BUSINESS WIRE)--Please replace the release dated Feb. 28, 2011 with the following corrected version. Under the Summary Consolidated Results table, revisions have been made to the second bullet under Fourth Quarter – 2010 and to the second bullet under Full Year – 2010.
The corrected release reads:
PHH CORPORATION ANNOUNCES RESULTS FOR FOURTH QUARTER AND FULL YEAR 2010
2010 Core Earnings (after-tax)* Exceed 2009 by 18%
- Fourth quarter 2010 consolidated GAAP net income attributable to PHH Corporation of $181 million and basic earnings per share attributable to PHH Corporation of $3.26, up from $97 million and $1.76 per share, respectively, in the fourth quarter of 2009, driven by a $287 million pre-tax, market-related fair value adjustment on mortgage servicing rights (MSRs)
- Full year 2010 consolidated GAAP net income attributable to PHH Corporation of $48 million and basic earnings per share attributable to PHH Corporation of $0.87, down from $153 million and $2.80 per share, respectively, in 2009
- Fourth quarter 2010 core earnings (after-tax)* of $17 million and core earnings per share* of $0.31, down from $55 million and $0.99, respectively, in the fourth quarter of 2009
- Full year 2010 core earnings (after-tax) of $167 million and core earnings per share of $3.01, up from $142 million and $2.60, respectively, in 2009
- Results reflect success in increasing mortgage market share, improving operating efficiencies, and earnings growth in Fleet Management segment
PHH Corporation (NYSE: PHH) (“PHH” or the “Company”) today announced results for the three months and year ended December 31, 2010.
Jerry Selitto, president and chief executive officer, commented, “Our strong 2010 full year core after-tax earnings reflect our success in increasing mortgage market share, strengthening operating efficiencies, and improving earnings in our Fleet Management Services segment. Despite a challenging year for the mortgage industry, our overall mortgage origination volume was up 30% in 2010 at $49 billion, versus $38 billion in 2009, as we increased market share from 2.1% in 2009 to 3.1% in 2010. The aggregate unpaid principal balance of loans included in our mortgage servicing portfolio increased almost $15 billion during the year, from $151 billion at year-end 2009 to $166 billion at year-end 2010, while the weighted average interest rate dropped nearly 40 basis points to 4.9% as of year-end. Fleet segment profit showed significant improvement versus 2009, up 67% for the quarter and 17% for the full year.
“Mortgage foreclosure related charges were $21 million during the fourth quarter 2010, up from $11 million in the comparable 2009 quarter, but were comparable on a full year basis at $72 million in 2010 versus $70 million in 2009. Total mortgage servicing portfolio delinquencies also showed improvement, standing at 4.24% at the end of 2010, compared to 4.92% at the end of 2009.
“2010 marked an important first step in the transformation of PHH, as we deepened market penetration, improved net margins, and through our transformation initiative, enhanced efficiencies and achieved approximately $88 million of annualized run-rate savings. In 2011, we expect to reinvest some of these savings in strengthening our capabilities in sales, marketing and enterprise risk management, while building scalability through technology. We remain committed to delivering sustainable, profitable growth within our risk guidelines by continuing to focus on improving productivity, expanding market share for mortgage originations and servicing, and increasing profitability in our Fleet Management Services segment.”
Summary Consolidated Results |
||||||||||||
(In millions, except per share data) |
||||||||||||
Three Months Ended | Year Ended | |||||||||||
December 31, | December 31, | |||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||
Net revenues | $ | 918 | $ | 744 | $ | 2,438 | $ | 2,606 | ||||
Income before income taxes | 313 | 169 | 115 | 280 | ||||||||
Net income attributable to PHH Corporation | 181 | 97 | 48 | 153 | ||||||||
Basic earnings per share attributable to PHH Corporation | $ | 3.26 | $ | 1.76 | $ | 0.87 | $ | 2.80 | ||||
Non-GAAP Results* | ||||||||||||
Core earnings (pre-tax) | $ | 31 | $ | 90 | $ | 289 | $ | 240 | ||||
Core earnings (after-tax) | 17 | 55 | 167 | 142 | ||||||||
Core earnings per share | $ | 0.31 | $ | 0.99 | $ | 3.01 | $ | 2.60 | ||||
Consolidated Results
Fourth Quarter – 2010
- Net revenues and Income before income taxes for the fourth quarters of 2010 and 2009 included market-related changes in fair value of the MSRs of $287 million and $96 million, respectively
- Both Income before income taxes and Core earnings (pre-tax) during the fourth quarter of 2010 were impacted by unfavorable changes in value of mortgage loans held for sale and related derivatives and higher prepayments in the mortgage loan servicing portfolio that were partially offset by improving Fleet leasing margins
Full Year – 2010
- Net revenues and income before income taxes for the years ended December 31, 2010 and 2009 included market-related changes in fair value of the MSRs of $(166) million and $111 million, respectively
- Both Income before income taxes and Core earnings (pre-tax) during the year ended December 31, 2010 were impacted by significantly higher interest rate lock commitments, lower prepayments in our mortgage servicing portfolio and improving Fleet leasing margins
SEGMENT RESULTS – FOURTH QUARTER | |||||||||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||
Fourth | |||||||||||||||||||||||||||
Quarter | |||||||||||||||||||||||||||
Fourth Quarter 2010 | 2009 | ||||||||||||||||||||||||||
Combined | Fleet | ||||||||||||||||||||||||||
Mortgage | Mortgage | Mortgage | Management | ||||||||||||||||||||||||
Production | Servicing | Services | Services | Total PHH | Total PHH | ||||||||||||||||||||||
Segment | Segment | Segments | Segment | Other | Corporation | Corporation | |||||||||||||||||||||
Net fee income | $ | 98 | $ | — | $ | 98 | $ | 41 | $ | — | $ | 139 | $ | 97 | |||||||||||||
Fleet lease income | — | — | — | 340 | — | 340 | 354 | ||||||||||||||||||||
Gain on mortgage loans | 126 | — | 126 | — | — | 126 | 160 | ||||||||||||||||||||
Mortgage net finance expense | (3 | ) |
(12 |
) |
(15 |
) |
— | (1 | ) |
(16 |
) |
(19 |
) |
||||||||||||||
Loan servicing revenues (1) |
— | 114 | 114 | — | — | 114 | 114 | ||||||||||||||||||||
Net reinsurance (loss) income | — | (2 | ) | (2 | ) | — | — | (2 | ) | 8 | |||||||||||||||||
MSRs prepayments and recurring cash flows(2) | — |
(77 |
) |
(77 |
) |
— | — |
(77 |
) |
(57 |
) |
||||||||||||||||
Other income | — | — | — | 18 | — | 18 | 16 | ||||||||||||||||||||
Core revenue* | 221 | 23 | 244 | 399 | (1 | ) |
642 |
673 |
|||||||||||||||||||
MSRs fair value adjustments: |
|
||||||||||||||||||||||||||
Market-related(3) | — | 287 | 287 | — | — | 287 | 96 | ||||||||||||||||||||
Credit-related(4) | — | (11 | ) | (11 | ) | — | — | (11 | ) | (25 | ) | ||||||||||||||||
Net revenues | 221 | 299 | 520 | 399 | (1 | ) | 918 | 744 | |||||||||||||||||||
Depreciation on operating leases | — | — | — | 303 | — | 303 | 305 | ||||||||||||||||||||
Fleet interest expense | — | — | — | 20 | (1 | ) | 19 | 17 | |||||||||||||||||||
Foreclosure-related charges | — | 21 | 21 | — | — | 21 | 11 | ||||||||||||||||||||
Other expenses | 182 | 27 | 209 | 51 | 2 | 262 | 242 | ||||||||||||||||||||
Total expenses | 182 | 48 | 230 | 374 | 1 | 605 | 575 | ||||||||||||||||||||
Income (loss) before income taxes |
39 |
251 |
290 |
25 |
(2 | ) |
$ |
313 |
$ |
169 |
|||||||||||||||||
Less: income attributable to noncontrolling interest | 6 | — | 6 | — | — |
|
|||||||||||||||||||||
Segment profit (loss) | $ | 33 | $ | 251 | $ | 284 | $ | 25 | $ | (2 | ) |
(1) | Loan servicing revenues do not include Net reinsurance (loss) income. | |
(2) | Represents the reduction in the fair value of MSRs due to actual prepayments and the receipt of recurring cash flows. | |
(3) | Represents the Change in fair value of mortgage servicing rights due to changes in market inputs and assumptions used in the valuation model. The fair value of our MSRs is estimated based upon projections of expected future cash flows from our MSRs considering prepayment estimates, our historical prepayment rates, portfolio characteristics, interest rates based on interest rate yield curves, implied volatility and other economic factors. | |
(4)
|
Represents the Change in fair value of mortgage servicing rights primarily due to the impact of changes in estimated portfolio delinquencies and foreclosures. |
SEGMENT RESULTS – FULL YEAR | |||||||||||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||||
2010 |
2009 |
||||||||||||||||||||||||||||
Combined | Fleet | ||||||||||||||||||||||||||||
Mortgage | Mortgage | Mortgage | Management | ||||||||||||||||||||||||||
Production | Servicing | Services | Services | Total PHH | Total PHH | ||||||||||||||||||||||||
Segment | Segment | Segments | Segment | Other | Corporation | Corporation | |||||||||||||||||||||||
Net fee income | $ | 291 | $ | — | $ | 291 | $ | 157 | $ | — |
$ |
448 |
$ | 425 | |||||||||||||||
Fleet lease income | — | — | — | 1,370 | — | 1,370 | 1,441 | ||||||||||||||||||||||
Gain on mortgage loans | 635 | — | 635 | — | — | 635 | 610 | ||||||||||||||||||||||
Mortgage net finance expense | (16 | ) |
(54 |
) |
(70 |
) |
— | (3 | ) |
(73 |
) |
(58 |
) |
||||||||||||||||
Loan servicing revenues (1) |
— | 434 | 434 | — | — | 434 | 436 | ||||||||||||||||||||||
Net reinsurance loss | — | (19 | ) | (19 | ) | — | — | (19 | ) | (5 | ) | ||||||||||||||||||
MSRs prepayments and recurring cash flows(2) | — |
(225 |
) |
(225 |
) |
— | — |
(225 |
) |
(300 |
) |
||||||||||||||||||
Other income | 1 | 3 | 4 | 66 | — | 70 | 37 | ||||||||||||||||||||||
Core revenue* | 911 | 139 | 1,050 | 1,593 | (3 | ) | 2,640 |
2,586 |
|||||||||||||||||||||
MSRs fair value adjustments: |
|
||||||||||||||||||||||||||||
Market-related(3) | — | (166 | ) | (166 | ) | — | — | (166 | ) | 111 | |||||||||||||||||||
Credit-related(4) | — | (36 | ) | (36 | ) | — | — | (36 | ) | (91 | ) | ||||||||||||||||||
Net revenues | 911 | (63 | ) | 848 | 1,593 | (3 | ) | 2,438 | 2,606 | ||||||||||||||||||||
Depreciation on operating leases | — | — | — | 1,224 | — | 1,224 | 1,267 | ||||||||||||||||||||||
Fleet interest expense | — | — | — | 94 | (3 | ) | 91 | 89 | |||||||||||||||||||||
Foreclosure-related charges | — | 72 | 72 | — | — | 72 | 70 | ||||||||||||||||||||||
Other expenses | 615 | 106 | 721 | 212 | 3 | 936 | 900 | ||||||||||||||||||||||
Total expenses | 615 | 178 | 793 | 1,530 | — | 2,323 | 2,326 | ||||||||||||||||||||||
Income (loss) before income taxes |
296 |
(241 |
) |
55 |
63 |
(3 | ) |
$ |
115 |
$ |
280 |
||||||||||||||||||
Less: income attributable to noncontrolling interest | 28 | — | 28 | — | — |
|
|||||||||||||||||||||||
Segment profit (loss) | $ | 268 | $ | (241 | ) | $ | 27 | $ | 63 | $ | (3 | ) |
(1) | Loan servicing revenues do not include Net reinsurance loss. | |
(2) | Represents the reduction in the fair value of MSRs due to actual prepayments and the receipt of recurring cash flows. | |
(3) | Represents the Change in fair value of mortgage servicing rights due to changes in market inputs and assumptions used in the valuation model. The fair value of our MSRs is estimated based upon projections of expected future cash flows from our MSRs considering prepayment estimates, our historical prepayment rates, portfolio characteristics, interest rates based on interest rate yield curves, implied volatility and other economic factors. | |
(4) |
Represents the Change in fair value of mortgage servicing rights primarily due to the impact of changes in estimated portfolio delinquencies and foreclosures. |
|
Mortgage Production Segment
Fourth Quarter - 2010
- The mortgage production segment continued to generate strong volumes as interest rate lock commitments expected to close increased by $3.0 billion (48%) during the fourth quarter of 2010 compared to the same period in 2009
- Total mortgage closing volumes increased and were driven by the increase in the mix of wholesale/correspondent closings to 39% during the fourth quarter of 2010 from 20% during the same period in 2009, which represents the execution of our strategy to expand on this channel in 2010 and grow market share
- The trend of higher margins continued into the fourth quarter; however, margins came under pressure as the fourth quarter progressed and there was significant margin contraction late in the fourth quarter, which has continued into the early part of 2011
- The increase in mortgage interest rates and associated volatility late in the fourth quarter of 2010 caused a $5 million unfavorable change in fair value of mortgage loans held for sale and related derivatives during the fourth quarter of 2010, compared to a $35 million favorable change during the same period in 2009
Full Year – 2010
- The mortgage production segment generated strong volumes as interest rate lock commitments expected to close increased by $12.1 billion (46%) during the year ended December 31, 2010 compared to the same period in 2009
- Total mortgage closing volumes increased and were driven by the increase the mix of wholesale/correspondent closings to 32% during the year ended December 31, 2010 from 15% during the same period in 2009, which represents the execution of our strategy to expand on this channel in 2010 and grow market share
- Total loan margins during the year ended December 31, 2010 were lower than the same period in 2009 due to the lower value of initial capitalized MSRs resulting from continuing reductions in mortgage interest rates that occurred throughout most of 2010.
Mortgage Servicing Segment
Fourth Quarter – 2010
- The loan servicing portfolio continued to grow as additions to the portfolio exceeded actual prepayments and the average loan servicing portfolio increased by $12.1 billion (8%) during the fourth quarter of 2010 compared to the same period in 2009
- There was a significant amount of refinance activity, which led to increased prepayments in the mortgage loan servicing portfolio and a $67 million decrease in MSR value from actual prepayments of the underlying mortgage loans during the fourth quarter of 2010 compared to $44 million during the same period in 2009
- The fair value of MSRs increased by $287 million and $96 million in the fourth quarters of 2010 and 2009 respectively due to changes in market-related inputs and assumptions. The change in the fair value of MSRs was positively impacted in both periods by increases in mortgage interest rates
- Foreclosure costs increased to $21 million during the fourth quarter 2010, from $11 million during the same period in 2009 due to higher loss provisions from an increase in loan repurchases and indemnifications
Full Year – 2010
- The loan servicing portfolio grew as additions to the portfolio exceeded actual prepayments and the average loan servicing portfolio increased by $7.2 billion (5%) during the year ended December 31, 2010 compared to the same period in 2009
- The fair value of our MSRs declined by $166 million during the year ended December 31, 2010 compared to an increase of $111 million during the same period in 2009 due to changes in market-related inputs and assumptions and was primarily impacted in both periods by changes in mortgage interest rates
- Foreclosure costs were $72 million during the year ended December 31, 2010 compared to $70 million during the same period in 2009
Fleet Management Services Segment
Fourth Quarter – 2010
- The results during the fourth quarter of 2010 as compared to the same period in 2009 were positively impacted by growth in our principal fee-based products and our focus on cost reductions
- During the fourth quarter of 2010 all of our principal fee-based products experienced growth and were led by a 17% increase in average maintenance service cards outstanding during the fourth quarter of 2010 compared to the same period in 2009
- Average leased units decreased 6% as existing clients have reduced fleets due to the current economic conditions and we continue to realize the impact of non-renewals of lease arrangements in prior years
Full Year – 2010
- The results during the year ended December 31, 2010 as compared to the same period in 2009 were positively impacted by improvement in leasing margins and our focus on cost reductions
- Average leased units decreased 8% as existing clients have reduced fleets due to the current economic conditions and we continued to realize the impact of non-renewal of lease arrangements in previous years
* Note Regarding Non-GAAP Financial Measures
Core earnings (loss) (pre-tax and after-tax), core earnings (loss) per share, and core revenues, are financial measures that are not in accordance with GAAP. See Non-GAAP Reconciliations at the back of this release for a reconciliation of these measures to the most directly comparable GAAP financial measures.
Core earnings (loss) (pre-tax and after-tax), core earnings (loss) per share, and core revenues measure the Company’s financial performance excluding certain unrealized changes in value of mortgage servicing rights that are based upon projections of future voluntary and involuntary prepayments.
The unrealized changes in value of our mortgage servicing rights for voluntary and involuntary prepayments are reflected as market-related and credit related fair value adjustments, respectively. Core earnings (loss) (pre-tax and after-tax), core earnings (loss) per share, and core revenues may also include other adjustments, as applicable based upon facts and circumstances, consistent with the intent of providing investors a means of evaluating our core operating performance.
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 underlying operating performance which can be obscured by significant unrealized changes in value of our mortgage servicing rights in a given period that is included in Segment profit (loss), Income (loss) before income taxes, Net income (loss) attributable to PHH Corporation and Basic earnings (loss) per share attributable to PHH Corporation in accordance with GAAP.
Use of Core Earnings by Management
The unrealized changes in the value of mortgage servicing rights are based upon numerous assumptions, which include estimated changes in future prepayments that may or may not be actually realized in the future. The market-related fair value adjustments are based upon assumptions of future interest rates, the shape of the yield curve, volatility and other factors. The credit-related fair value adjustments are based upon projected levels of delinquencies and foreclosures that are assumed to remain at current period-end levels throughout the life of the asset for purposes of modeling the expected future cash flows of the mortgage servicing rights. Value lost from actual voluntary and involuntary prepayments are recorded when the underlying loans actually prepay or when foreclosure proceedings are complete, and are included in core earnings based on the current value of the mortgage servicing rights.
The Company manages the business and has designed certain management incentives based upon the achievement of core earnings targets. In addition, the Company believes that it will likely replenish most, if not all, realized value lost from changes in value from actual prepayments through new loan originations and actively manages and monitors economic replenishment rates to measure our ability to continue to do so. Therefore, management does not believe the unrealized change in value of the mortgage servicing rights is representative of the economic change in value of the business as a whole. 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 and Core Revenues
Since core earnings (loss) (pre-tax and after-tax), core earnings (loss) per share and core revenues measure the Company’s financial performance excluding certain unrealized changes in value of mortgage servicing rights, they may not reflect the rate of value lost on subsequent actual payments or prepayments over time. As such, core earnings (loss) (pre-tax and after-tax), core earnings (loss) per share and core revenues may tend to overstate operating results in a declining interest rate environment and understate operating results in a rising interest rate environment.
Core earnings (loss) (pre-tax and after-tax), core earnings (loss) per share and core revenues involves differences from Segment profit (loss), Income (loss) before income taxes, Net income (loss) attributable to PHH Corporation, Basic earnings (loss) per share attributable to PHH Corporation and Net revenues computed in accordance with GAAP. Core earnings (loss) (pre-tax and after-tax), core earnings (loss) per share and core revenues should be considered as supplementary to, and not as a substitute for, Segment profit (loss), Income (loss) before income taxes, Net income (loss) attributable to PHH Corporation, Basic earnings (loss) per share attributable to PHH Corporation or Net revenues computed in accordance with GAAP as a measure of the Company’s financial performance.
About PHH Corporation
Headquartered in Mount Laurel, New Jersey, PHH Corporation is a leading outsource provider of mortgage and vehicle fleet management services. Its subsidiary, PHH Mortgage, is one of the top five retail originators of residential mortgages in the United States1, and its subsidiary, PHH Arval, is a leading fleet management services provider in the United States and Canada. For additional information about the Company and its subsidiaries, please visit the Company’s website at 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. Investors are cautioned not to place undue reliance on these forward-looking statements. You should understand that these statements are not guarantees of performance or results and are preliminary in nature. Statements preceded by, followed by or that otherwise include the words “expects”, “anticipates”, “intends”, “projects”, “estimates”, “plans”, “may increase”, “may result”, “will result”, “may fluctuate” and similar expressions or future or conditional verbs such as “will”, “should”, “would”, “may” and “could” are generally forward-looking in nature and not historical facts.
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 Securities and Exchange Commission under the Exchange Act, 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 and our businesses generally. 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.
1 Inside Mortgage Finance, Copyright 2010
PHH CORPORATION AND SUBSIDIARIES | ||||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
(In millions, except per share data) | ||||||||||||||||
Three Months |
Full Year |
|||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Revenues | ||||||||||||||||
Mortgage fees | $ | 98 | $ | 59 | $ | 291 | $ | 275 | ||||||||
Fleet management fees | 41 | 38 | 157 | 150 | ||||||||||||
Net fee income | 139 | 97 | 448 | 425 | ||||||||||||
Fleet lease income | 340 | 354 | 1,370 | 1,441 | ||||||||||||
Gain on mortgage loans, net | 126 | 160 | 635 | 610 | ||||||||||||
Mortgage interest income | 41 | 19 | 110 | 89 | ||||||||||||
Mortgage interest expense | (57 | ) | (38 | ) | (183 | ) | (147 | ) | ||||||||
Mortgage net finance expense | (16 | ) | (19 | ) | (73 | ) | (58 | ) | ||||||||
Loan servicing income | 112 | 122 | 415 | 431 | ||||||||||||
Change in fair value of mortgage servicing rights | 199 | 14 | (427 | ) | (280 | ) | ||||||||||
Net loan servicing income (loss) | 311 | 136 | (12 | ) | 151 | |||||||||||
Other income | 18 | 16 | 70 | 37 | ||||||||||||
Net revenues | 918 | 744 | 2,438 | 2,606 | ||||||||||||
Expenses | ||||||||||||||||
Salaries and related expenses | 137 | 125 | 497 | 482 | ||||||||||||
Occupancy and other office expenses | 15 | 16 | 60 | 59 | ||||||||||||
Depreciation on operating leases | 303 | 305 | 1,224 | 1,267 | ||||||||||||
Fleet interest expense | 19 | 17 | 91 | 89 | ||||||||||||
Other depreciation and amortization | 5 | 6 | 22 | 26 | ||||||||||||
Other operating expenses | 126 | 106 | 429 | 403 | ||||||||||||
Total expenses | 605 | 575 | 2,323 | 2,326 | ||||||||||||
Income before income taxes | 313 | 169 | 115 | 280 | ||||||||||||
Income tax expense | 126 | 64 | 39 | 107 | ||||||||||||
Net income | 187 | 105 | 76 | 173 | ||||||||||||
Less: net income attributable to noncontrolling interest | 6 | 8 | 28 | 20 | ||||||||||||
Net income attributable to PHH Corporation | $ | 181 | $ | 97 | $ | 48 | $ | 153 | ||||||||
Basic earnings per share attributable to PHH Corporation | $ | 3.26 | $ | 1.76 | $ | 0.87 | $ | 2.80 | ||||||||
Diluted earnings per share attributable to PHH Corporation | $ | 3.25 | $ | 1.74 | $ | 0.86 | $ | 2.77 |
PHH CORPORATION AND SUBSIDIARIES | ||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
(In millions) | ||||||
December 31, | December 31, | |||||
2010 | 2009 | |||||
ASSETS | ||||||
Cash and cash equivalents | $ | 195 | $ | 150 | ||
Restricted cash, cash equivalents and investments | 531 | 596 | ||||
Mortgage loans held for sale | 4,329 | 1,218 | ||||
Accounts receivable, net | 573 | 469 | ||||
Net investment in fleet leases | 3,492 | 3,610 | ||||
Mortgage servicing rights | 1,442 | 1,413 | ||||
Property, plant and equipment, net | 46 | 49 | ||||
Goodwill | 25 | 25 | ||||
Other assets(1) | 637 | 593 | ||||
Total assets | $ | 11,270 | $ | 8,123 | ||
LIABILITIES AND EQUITY | ||||||
Accounts payable and accrued expenses | $ | 521 | $ | 495 | ||
Debt | 8,085 | 5,160 | ||||
Deferred income taxes | 728 | 702 | ||||
Other liabilities | 358 | 262 | ||||
Total liabilities | 9,692 | 6,619 | ||||
Commitments and contingencies | — | — | ||||
Total PHH Corporation stockholders’ equity | 1,564 | 1,492 | ||||
Noncontrolling interest | 14 | 12 | ||||
Total equity | 1,578 | 1,504 | ||||
Total liabilities and equity | $ | 11,270 | $ | 8,123 |
(1) | Other assets include intangible assets of $36 million and $38 million as of December 31, 2010 and December 31, 2009, respectively. |
PHH CORPORATION AND SUBSIDIARIES | ||||||||||||||||||||||
COMBINED MORTGAGE SERVICES SEGMENTS RESULTS | ||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||
Three Months Ended | Full Year Ended | |||||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||||
% | % | |||||||||||||||||||||
2010 | 2009 | Change | 2010 | 2009 | Change | |||||||||||||||||
Mortgage fees | $ | 98 | $ | 59 | 66 | % | $ | 291 | $ | 275 | 6 | % | ||||||||||
Gain on mortgage loans, net | 126 | 160 | (21 | )% | 635 | 610 | 4 | % | ||||||||||||||
Mortgage interest income | 42 | 20 | 110 | % | 112 | 91 | 23 | % | ||||||||||||||
Mortgage interest expense | (57 | ) | (39 | ) | (46 | )% | (182 | ) | (151 | ) | (21 | )% | ||||||||||
Mortgage net finance expense | (15 | ) | (19 | ) | 21 | % | (70 | ) | (60 | ) | (17 | )% | ||||||||||
Loan servicing income | 112 | 122 | (8 | )% | 415 | 431 | (4 | )% | ||||||||||||||
Change in fair value of mortgage servicing rights | 199 | 14 |
n/m |
(1) |
(427 | ) | (280 | ) | (53 | )% | ||||||||||||
Net loan servicing income (loss) | 311 | 136 | 129 | % | (12 | ) | 151 |
n/m |
(1) |
|||||||||||||
Other income | — | 1 | (100 | )% | 4 | (14 | ) |
n/m |
(1) |
|||||||||||||
Net revenues | 520 | 337 | 54 | % | 848 | 962 | (12 | )% | ||||||||||||||
Salaries and related expenses | 121 | 96 | 26 | % | 406 | 375 | 8 | % | ||||||||||||||
Occupancy and other office expenses | 11 | 11 | — | 43 | 41 | 5 | % | |||||||||||||||
Other depreciation and amortization | 3 | 4 | (25 | )% | 11 | 15 | (27 | )% | ||||||||||||||
Other operating expenses | 95 | 67 | 42 | % | 333 | 290 | 15 | % | ||||||||||||||
Total expenses | 230 | 178 | 29 | % | 793 | 721 | 10 | % | ||||||||||||||
Income before income taxes | 290 | 159 | 82 | % | 55 | 241 | (77 | )% | ||||||||||||||
Less: net income attributable to noncontrolling interest |
6 | 8 | (25 | )% | 28 | 20 | 40 | % | ||||||||||||||
Combined Mortgage Services segments profit | $ | 284 | $ | 151 | 88 | % | $ | 27 | $ | 221 | (88 | )% |
(1) | n/m — Not meaningful. |
PHH CORPORATION AND SUBSIDIARIES | ||||||||||||||||||||||
MORTGAGE PRODUCTION SEGMENT RESULTS | ||||||||||||||||||||||
(In millions, except average loan amount) | ||||||||||||||||||||||
Three Months Ended | Full Year Ended | |||||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||||
2010 | 2009 | % Change | 2010 | 2009 | % Change | |||||||||||||||||
Loans closed to be sold | $ | 14,438 | $ | 6,453 | 124 | % | $ | 37,747 | $ | 29,370 | 29 | % | ||||||||||
Fee-based closings | 3,996 | 2,239 | 78 | % | 11,247 | 8,194 | 37 | % | ||||||||||||||
Total closings | $ | 18,434 | $ | 8,692 | 112 | % | $ | 48,994 | $ | 37,564 | 30 | % | ||||||||||
Purchase closings | $ | 5,316 | $ | 4,464 | 19 | % | $ | 20,270 | $ | 15,401 | 32 | % | ||||||||||
Refinance closings | 13,118 | 4,228 | 210 | % | 28,724 | 22,163 | 30 | % | ||||||||||||||
Total closings | $ | 18,434 | $ | 8,692 | 112 | % | $ | 48,994 | $ | 37,564 | 30 | % | ||||||||||
Fixed rate | $ | 14,641 | $ | 6,703 | 118 | % | $ | 38,657 | $ | 30,512 | 27 | % | ||||||||||
Adjustable rate | 3,793 | 1,989 | 91 | % | 10,337 | 7,052 | 47 | % | ||||||||||||||
Total closings | $ | 18,434 | $ | 8,692 | 112 | % | $ | 48,994 | $ | 37,564 | 30 | % | ||||||||||
Retail closings | $ | 11,333 | $ | 6,990 | 62 | % | $ | 33,429 | $ | 31,834 | 5 | % | ||||||||||
Wholesale/correspondent closings | 7,101 | 1,702 | 317 | % | 15,565 | 5,730 | 172 | % | ||||||||||||||
Total closings | $ | 18,434 | $ | 8,692 | 112 | % | $ | 48,994 | $ | 37,564 | 30 | % | ||||||||||
First mortgage closings (units) | 74,247 | 35,243 | 111 | % | 197,010 | 153,694 | 28 | % | ||||||||||||||
Second-lien closings (units) | 1,971 | 2,414 | (18 | )% | 8,687 | 10,692 | (19 | )% | ||||||||||||||
Number of loans closed (units) | 76,218 | 37,657 | 102 | % | 205,697 | 164,386 | 25 | % | ||||||||||||||
Average loan amount | $ | 241,857 | $ | 230,810 | 5 | % | $ | 238,187 | $ | 228,510 | 4 | % | ||||||||||
Loans sold | $ | 12,583 | $ | 6,444 | 95 | % | $ | 34,535 | $ | 29,002 | 19 | % | ||||||||||
Applications | $ | 19,305 | $ | 12,476 | 55 | % | $ | 74,628 | $ | 54,283 | 37 | % | ||||||||||
IRLCs expected to close | $ | 9,170 | $ | 6,211 | 48 | % | $ | 38,330 | $ | 26,210 | 46 | % | ||||||||||
Three Months Ended | Full Year Ended | |||||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||||
2010 | 2009 | % Change | 2010 | 2009 | % Change | |||||||||||||||||
Mortgage fees | $ | 98 | $ | 59 | 66 | % | $ | 291 | $ | 275 | 6 | % | ||||||||||
Gain on mortgage loans, net | 126 | 160 | (21 | )% | 635 | 610 | 4 | % | ||||||||||||||
Mortgage interest income | 37 | 18 | 106 | % | 97 | 79 | 23 | % | ||||||||||||||
Mortgage interest expense | (40 | ) | (23 | ) | (74 | ) % | (113 | ) | (90 | ) | (26 | )% | ||||||||||
Mortgage net finance expense | (3 | ) | (5 | ) | 40 | % | (16 | ) | (11 | ) | (45 | )% | ||||||||||
Other income | — | 1 | (100 | )% | 1 | 6 | (83 | )% | ||||||||||||||
Net revenues | 221 | 215 | 3 | % | 911 | 880 | 4 | % | ||||||||||||||
Salaries and related expenses | 113 | 85 | 33 | % | 369 | 336 | 10 | % | ||||||||||||||
Occupancy and other office expenses | 9 | 9 | — | 34 | 32 | 6 | % | |||||||||||||||
Other depreciation and amortization | 2 | 4 | (50 | )% | 10 | 14 | (29 | )% | ||||||||||||||
Other operating expenses | 58 | 44 | 32 | % | 202 | 172 | 17 | % | ||||||||||||||
Total expenses | 182 | 142 | 28 | % | 615 | 554 | 11 | % | ||||||||||||||
Income before income taxes | 39 | 73 | (47 | )% | 296 | 326 | (9 | )% | ||||||||||||||
Less: net income attributable to noncontrolling interest | 6 | 8 | (25 | )% | 28 | 20 | 40 | % | ||||||||||||||
Segment profit | $ | 33 | $ | 65 | (49 | )% | $ | 268 | $ | 306 | (12 | )% |
PHH CORPORATION AND SUBSIDIARIES |
||||||||||||||||||||||
MORTGAGE SERVICING SEGMENT RESULTS |
||||||||||||||||||||||
(In millions) |
||||||||||||||||||||||
Average for the Three Months |
Average for the Year |
|||||||||||||||||||||
2010 | 2009 | % Change | 2010 | 2009 | % Change | |||||||||||||||||
Loan servicing portfolio | $ | 162,628 | $ | 150,540 | 8 | % | $ | 156,825 | $ | 149,628 | 5 | % | ||||||||||
|
Three Months Ended |
Full Year Ended |
||||||||||||||||||||
2010 | 2009 | % Change | 2010 | 2009 | % Change | |||||||||||||||||
Mortgage interest income | $ | 5 | $ | 2 | 150 | % | $ | 15 | $ | 12 | 25 | % | ||||||||||
Mortgage interest expense | (17 | ) | (16 | ) | (6 | )% | (69 | ) | (61 | ) | (13 | )% | ||||||||||
Mortgage net finance expense | (12 | ) | (14 | ) | 14 | % | (54 | ) | (49 | ) | (10 | )% | ||||||||||
Loan servicing income | 112 | 122 | (8 | )% | 415 | 431 | (4 | )% | ||||||||||||||
Change in fair value of mortgage servicing rights | 199 | 14 | n/m(1) | (427 | ) | (280 | ) | (53 | )% | |||||||||||||
Net loan servicing income (loss) | 311 | 136 | 129 | % | (12 | ) | 151 | n/m(1) | ||||||||||||||
Other income (expense) | — | — | — | 3 | (20 | ) | n/m(1) | |||||||||||||||
Net revenues | 299 | 122 | 145 | % | (63 | ) | 82 | n/m(1) | ||||||||||||||
Salaries and related expenses | 8 | 11 | (27 | )% | 37 | 39 | (5 | )% | ||||||||||||||
Occupancy and other office expenses | 2 | 2 | — | 9 | 9 | — | ||||||||||||||||
Other depreciation and amortization | 1 | — | 100 | % | 1 | 1 | — | |||||||||||||||
Other operating expenses | 37 | 23 | 61 | % | 131 | 118 | 11 | % | ||||||||||||||
Total expenses | 48 | 36 | 33 | % | 178 | 167 | 7 | % | ||||||||||||||
Segment profit (loss) | $ | 251 | $ | 86 | 192 | % | $ | (241 | ) | $ | (85 | ) | (184 | ) % | ||||||||
|
||||||||||||||||||||||
(1) n/m — Not meaningful. |
||||||||||||||||||||||
PHH CORPORATION AND SUBSIDIARIES |
||||||||||||||||||||
FLEET MANAGEMENT SERVICES SEGMENT RESULTS |
||||||||||||||||||||
(In millions, except lease units) |
||||||||||||||||||||
Average for the Three Months |
Average for the Year |
|||||||||||||||||||
2010 | 2009 | % Change | 2010 | 2009 | % Change | |||||||||||||||
(In thousands of units) | ||||||||||||||||||||
Leased vehicles | 284 | 303 | (6 | )% | 290 | 314 | (8 | )% | ||||||||||||
Maintenance service cards | 315 | 269 | 17 | % | 287 | 275 | 4 | % | ||||||||||||
Fuel cards | 283 | 277 | 2 | % | 276 | 282 | (2 | )% | ||||||||||||
Accident management vehicles | 293 | 289 | 1 | % | 290 | 305 | (5 | )% | ||||||||||||
|
Three Months Ended |
Full Year Ended |
||||||||||||||||||
2010 | 2009 | % Change | 2010 | 2009 | % Change | |||||||||||||||
Fleet management fees | $ | 41 | $ | 38 | 8 | % | $ | 157 | $ | 150 | 5 | % | ||||||||
Fleet lease income | 340 | 354 | (4 | )% | 1,370 | 1,441 | (5 | )% | ||||||||||||
Other income | 18 | 16 | 13 | % | 66 | 58 | 14 | % | ||||||||||||
Net revenues | 399 | 408 | (2 | )% | 1,593 | 1,649 | (3 | )% | ||||||||||||
Salaries and related expenses | 15 | 23 | (35 | )% | 75 | 86 | (13 | )% | ||||||||||||
Occupancy and other office expenses | 4 | 5 | (20 | )% | 17 | 18 | (6 | )% | ||||||||||||
Depreciation on operating leases | 303 | 305 | (1 | )% | 1,224 | 1,267 | (3 | )% | ||||||||||||
Fleet interest expense | 20 | 19 | 5 | % | 94 | 95 | (1 | )% | ||||||||||||
Other depreciation and amortization | 3 | 3 | — | 11 | 11 | — | ||||||||||||||
Other operating expenses | 29 | 38 | (24 | )% | 109 | 118 | (8 | )% | ||||||||||||
Total expenses | 374 | 393 | (5 | )% | 1,530 | 1,595 | (4 | )% | ||||||||||||
Segment profit | $ | 25 | $ | 15 | 67 | % | $ | 63 | $ | 54 | 17 | % | ||||||||
PHH CORPORATION AND SUBSIDIARIES |
||||||
COMPONENTS OF MORTGAGE LOANS HELD FOR SALE |
||||||
(In millions) |
||||||
December 31, | ||||||
2010 | 2009 | |||||
First mortgages: | (In millions) | |||||
Conforming(1) | $ | 4,123 | $ | 1,106 | ||
Non-conforming | 138 | 27 | ||||
Construction loans | 11 | 16 | ||||
Total first mortgages | 4,272 | 1,149 | ||||
Second lien | 11 | 24 | ||||
Scratch and Dent(2) | 40 | 43 | ||||
Other | 6 | 2 | ||||
Total | $ | 4,329 | $ | 1,218 | ||
|
||||||
(1) Represents mortgage loans that conform to the standards of the government-sponsored entities. |
||||||
(2) Represents mortgage loans with origination flaws or performance issues. |
COMPONENTS OF GAIN ON MORTGAGE LOANS, NET |
||||||||||||||||||||||||
(In millions) |
||||||||||||||||||||||||
Three Months Ended |
Full Year Ended |
|||||||||||||||||||||||
2010 | 2009 | % Change | 2010 | 2009 | % Change | |||||||||||||||||||
Gain on loans | $ | 131 | $ | 125 | 5 | % | $ | 624 | $ | 552 | 13 | % | ||||||||||||
Change in fair value of Scratch and Dent and certain non-conforming mortgage loans
|
(13 | ) | (3 | ) | (333 | )% | (19 | ) | (20 | ) | 5 | % | ||||||||||||
Economic hedge results | 8 | 38 | (79 | )% | 30 | 78 | (62 | )% | ||||||||||||||||
Total change in fair value of MLHS and related derivatives | (5 | ) | 35 | n/m(1) | 11 | 58 | (81 | )% | ||||||||||||||||
Gain on mortgage loans, net | $ | 126 | $ | 160 | (21 | )% | $ | 635 | $ | 610 | 4 | % | ||||||||||||
|
||||||||||||||||||||||||
(1) n/m — Not meaningful. |
PHH CORPORATION AND SUBSIDIARIES |
||||||||||
MORTGAGE LOAN SERVICING PORTFOLIO COMPOSITION |
||||||||||
(In millions) | ||||||||||
December 31, | ||||||||||
|
2010 | 2009 | ||||||||
Owned servicing portfolio | $ | 140,160 | $ | 129,663 | ||||||
Subserviced portfolio | 25,915 | 21,818 | ||||||||
Total servicing portfolio | $ | 166,075 | $ | 151,481 | ||||||
Conventional loans | $ | 136,261 | $ | 129,840 | ||||||
Government loans | 23,100 | 14,872 | ||||||||
Home equity lines of credit | 6,714 | 6,769 | ||||||||
Total servicing portfolio | $ | 166,075 | $ | 151,481 | ||||||
Weighted-average interest rate | 4.9 | % | 5.3 | % | ||||||
MORTGAGE LOAN SERVICING PORTFOLIO DELINQUENCY (1) |
|||||||||||||
December 31, | |||||||||||||
2010 | 2009 | ||||||||||||
Number | Unpaid | Number | Unpaid | ||||||||||
of Loans | Balance | of Loans | Balance | ||||||||||
30 days | 2.36 | % | 2.01 | % | 2.57 | % | 2.26 | % | |||||
60 days | 0.67 | % | 0.60 | % | 0.73 | % | 0.69 | % | |||||
90 or more days | 1.21 | % | 1.27 | % | 1.62 | % | 1.73 | % | |||||
Total delinquency | 4.24 | % | 3.88 | % | 4.92 | % | 4.68 | % | |||||
Foreclosure/real estate owned(2) | 2.30 | % | 2.37 | % | 2.18 | % | 2.32 | % |
(1) |
Represents the loan servicing portfolio delinquencies as a percentage of the total number of loans and the total unpaid balance of the portfolio. | |
(2) |
As of December 31, 2010 and 2009, there were 18,554 and 16,553 of loans in foreclosure with unpaid principal balances of $3.3 billion and $2.9 billion, respectively. | |
PHH CORPORATION AND SUBSIDIARIES |
||||||||||||||||||||||||
CHANGE IN FAIR VALUE OF MORTGAGE SERVICING RIGHTS |
||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Three Months Ended | Full Year Ended | |||||||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||||||
2010 | 2009 | % Change | 2010 | 2009 | % Change | |||||||||||||||||||
Actual prepayments of the underlying mortgage loans | $ | (67 | ) | $ | (44 | ) | (52 | )% | $ | (184 | ) | $ | (244 | ) | 25 | % | ||||||||
Actual receipts of recurring cash flows | (10 | ) | (13 | ) | 23 | % | (41 | ) | (56 | ) | 27 | % | ||||||||||||
Credit-related fair value adjustments(1) | (11 | ) | (25 | ) | 56 | % | (36 | ) | (91 | ) | 60 | % | ||||||||||||
Market-related fair value adjustments(2) | 287 | 96 | 199 | % | (166 | ) | 111 | n/m(3) | ||||||||||||||||
Change in fair value of mortgage servicing rights | $ | 199 | $ | 14 |
n/m(3) |
$ | (427 | ) | $ | (280 | ) | (53 | )% | |||||||||||
(1) |
Represents the change in fair value of MSRs primarily due to changes in portfolio delinquencies and foreclosures. | |
(2) | Represents the change in fair value of MSRs due to changes in market inputs and assumptions used in the valuation model. | |
(3) | n/m — Not meaningful. | |
PHH CORPORATION AND SUBSIDIARIES | ||||||||
NET INVESTMENT IN FLEET LEASES DETAIL | ||||||||
December 31, | ||||||||
|
2010 | 2009 | ||||||
Vehicles under open-end leases | 97 | % | 95 | % | ||||
Vehicles under closed-end leases | 3 | % | 5 | % | ||||
Vehicles under variable-rate leases | 80 | % | 76 | % | ||||
Vehicles under fixed-rate leases | 20 | % | 24 | % |
Our Fleet Management Services segment’s historical net credit losses as a percentage of Net investment in fleet leases has averaged 2 basis points annually, and did not exceed 6 basis points annually, over the last ten fiscal years. During the year ended December 31, 2010, net credit losses as a percentage of Net investment in fleet leases were less than 3 basis points for the period. |
AVAILABLE FUNDING UNDER ASSET-BACKED DEBT ARRANGEMENTS AND UNSECURED COMMITTED CREDIT FACILITIES |
(In millions) |
Capacity under all borrowing agreements is dependent upon maintaining compliance with, or obtaining waivers of, the terms, conditions and covenants of the respective agreements. Capacity under asset-backed funding arrangements may be further limited by the asset eligibility requirements. |
Available capacity under committed asset-backed debt arrangements and unsecured credit facilities as of December 31, 2010 consisted of: |
Utilized | Available | |||||||||
Capacity | Capacity | Capacity | ||||||||
Vehicle Management Asset-Backed Debt: | ||||||||||
Term notes, in revolving period | $ | 989 | $ | 989 | $ | — | ||||
Variable funding notes | 1,301 | 871 | 430 | |||||||
Mortgage Asset-Backed Debt: | ||||||||||
Committed warehouse facilities | 2,825 | 2,419 | 406 | |||||||
Servicing advance facility | 120 | 68 | 52 | |||||||
Unsecured Committed Credit Facilities(1) | 810 | 17 | 793 |
(1) | Utilized capacity reflects $17 million of letters of credit issued under the Amended Credit Facility, which are not included in Debt in the Consolidated Balance Sheet. |
The capacity of our Unsecured committed credit facilities was reduced to $525 million as of January 6, 2011 upon the expiration of certain commitments. Capacity for Mortgage-asset backed debt does not reflect $750 million not drawn under uncommitted warehouse facilities and $580 million available under committed off-balance sheet gestation facilities. |
PHH CORPORATION AND SUBSIDIARIES |
||||||
BOOK VALUE PER SHARE |
||||||
(In millions, except per share data) |
||||||
December 31, |
December 31, |
|||||
2010 |
2009 |
|||||
Total PHH Corporation stockholders’ equity(1) | $ | 1,564 | $ | 1,492 | ||
Book value per share | $ | 28.08 | $ | 27.24 | ||
(1) | Outstanding shares of common stock were 55.699 million and 54.775 million as of December 31, 2010 and December 31, 2009, respectively. | |
COMPONENTS OF PHH CORPORATION STOCKHOLDERS’ EQUITY | |||
(In millions) | |||
December 31, | |||
2010 | |||
PHH Corporation Stockholders’ Equity(1): | |||
Combined Mortgage Services Segments | $ | 1,060 | |
Fleet Management Services Segment | 447 | ||
Other | 57 | ||
Total PHH Corporation stockholders’ equity | $ | 1,564 | |
(1) | The composition of Total PHH Corporation stockholders’ equity by business may be useful in determining return on stockholders’ equity by business; however, the reporting of equity by segment is not prescribed nor required by GAAP. As such, these amounts may be deemed non-GAAP financial measures under Regulation G. | |
PHH CORPORATION AND SUBSIDIARIES | ||||||||||||||||
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 these Non-GAAP Financial Measures. |
||||||||||||||||
Regulation G Reconciliation |
||||||||||||||||
Three Months Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Income before income taxes – as reported | $ | 313 | $ | 169 | $ | 115 | $ | 280 | ||||||||
Less: net income attributable to noncontrolling interest | 6 | 8 | 28 | 20 | ||||||||||||
Segment income | 307 | 161 | 87 | 260 | ||||||||||||
Certain MSRs fair value adjustments: | ||||||||||||||||
Market-related(1) | (287 | ) | (96 | ) | 166 | (111 | ) | |||||||||
Credit-related(2) | 11 | 25 | 36 | 91 | ||||||||||||
Core earnings (pre-tax) | $ | 31 | $ | 90 | $ | 289 | $ | 240 | ||||||||
Net income attributable to PHH Corporation – as reported | $ | 181 | $ | 97 | $ | 48 | $ | 153 | ||||||||
Certain MSRs fair value adjustments: | ||||||||||||||||
Market-related, net of taxes(1)(3) | (170 | ) | (57 | ) | 98 | (65 | ) | |||||||||
Credit-related, net of taxes(2)(3) | 6 | 15 | 21 | 54 | ||||||||||||
Core earnings (after-tax) | $ | 17 | $ | 55 | $ | 167 | $ | 142 | ||||||||
Basic earnings per share attributable to PHH Corporation – as reported | $ | 3.26 | $ | 1.76 | $ | 0.87 | $ | 2.80 | ||||||||
Certain MSRs fair value adjustments: | ||||||||||||||||
Market-related, net of taxes(1)(4) | (3.06 | ) | (1.04 | ) | 1.76 | (1.19 | ) | |||||||||
Credit-related, net of taxes(2)(4) | 0.11 | 0.27 | 0.38 | 0.99 | ||||||||||||
Core earnings per share | $ | 0.31 | $ | 0.99 | $ | 3.01 | $ | 2.60 | ||||||||
(1) | Represents the Change in fair value of MSRs due to changes in market inputs and assumptions used in the valuation model. | |
(2) | Represents the Change in fair value of MSRs primarily due to the impact of changes in estimated portfolio delinquencies and foreclosures. | |
(3) | An incremental effective tax rate of 41% was applied to the MSRs fair value adjustments to arrive at the net of taxes amounts. | |
(4) | Basic weighted-average shares outstanding of 55.699 million and 54.871 million for the three months ended December 31, 2010 and 2009, respectively, and 55.480 million and 54.625 million for the years ended December 31, 2010 and 2009, respectively were used to calculate per share amounts. | |
PHH CORPORATION AND SUBSIDIARIES | ||||||||||||||||||
NON-GAAP RECONCILIATIONS – CORE EARNINGS BY SEGMENT | ||||||||||||||||||
(In millions) | ||||||||||||||||||
Regulation G Reconciliation |
||||||||||||||||||
Fourth Quarter 2010 | ||||||||||||||||||
Combined | Fleet | |||||||||||||||||
Mortgage | Mortgage | Mortgage | Management | |||||||||||||||
Production | Servicing | Services | Services | |||||||||||||||
Segment | Segment | Segment | Segment | Other | ||||||||||||||
Segment profit (loss) | $ | 33 | $ | 251 | $ | 284 | $ | 25 | $ | (2 | ) | |||||||
Certain MSRs fair value adjustments: | ||||||||||||||||||
Market-related (1) | — | (287 | ) | (287 | ) | — | — | |||||||||||
Credit-related(2) | — | 11 | 11 | — | — | |||||||||||||
Core Earnings | $ | 33 | $ | (25 | ) | $ | 8 | $ | 25 | $ | (2 | ) | ||||||
2010 | ||||||||||||||||||
Combined | Fleet | |||||||||||||||||
Mortgage | Mortgage | Mortgage | Management | |||||||||||||||
Production | Servicing | Services | Services | |||||||||||||||
Segment | Segment | Segment | Segment | Other | ||||||||||||||
Segment profit (loss) | $ | 268 | $ | (241 | ) | $ | 27 | $ | 63 | $ | (3 | ) | ||||||
Certain MSRs fair value adjustments: | ||||||||||||||||||
Market-related (1) | — | 166 | 166 | — | — | |||||||||||||
Credit-related(2) | — | 36 | 36 | — | — | |||||||||||||
Core Earnings | $ | 268 | $ | (39 | ) | $ | 229 | $ | 63 | $ | (3 | ) | ||||||
(1) | Represents the Change in fair value of MSRs due to changes in market inputs and assumptions used in the valuation model. | |
(2) | Represents the Change in fair value of MSRs primarily due to the impact of changes in estimated portfolio delinquencies and foreclosures. | |
PHH CORPORATION AND SUBSIDIARIES | ||||||||||||||||||
NON-GAAP RECONCILIATIONS – CORE EARNINGS BY SEGMENT (continued) | ||||||||||||||||||
(In millions) | ||||||||||||||||||
Regulation G Reconciliation |
||||||||||||||||||
Fourth Quarter 2009 | ||||||||||||||||||
Combined | Fleet | |||||||||||||||||
Mortgage | Mortgage | Mortgage | Management | |||||||||||||||
Production | Servicing | Services | Services | |||||||||||||||
Segment | Segment | Segment | Segment | Other | ||||||||||||||
Segment profit (loss) | $ | 65 | $ | 86 | $ | 151 | $ | 15 | $ | (5 | ) | |||||||
Certain MSRs fair value adjustments: | ||||||||||||||||||
Market-related (1) | — | (96 | ) | (96 | ) | — | — | |||||||||||
Credit-related(2) | — | 25 | 25 | — | — | |||||||||||||
Core Earnings | $ | 65 | $ | 15 | $ | 80 | $ | 15 | $ | (5 | ) | |||||||
2009 | ||||||||||||||||||
Combined | Fleet | |||||||||||||||||
Mortgage | Mortgage | Mortgage | Management | |||||||||||||||
Production | Servicing | Services | Services | |||||||||||||||
Segment | Segment | Segment | Segment | Other | ||||||||||||||
Segment profit (loss) | $ | 306 | $ | (85 | ) | $ | 221 | $ | 54 | $ | (15 | ) | ||||||
Certain MSRs fair value adjustments: | ||||||||||||||||||
Market-related (1) | — | (111 | ) | (111 | ) | — | — | |||||||||||
Credit-related(2) | — | 91 | 91 | — | — | |||||||||||||
Core Earnings | $ | 306 | $ | (105 | ) | $ | 201 | $ | 54 | $ | (15 | ) | ||||||
(1) | Represents the Change in fair value of MSRs due to changes in market inputs and assumptions used in the valuation model. | |
(2) | Represents the Change in fair value of MSRs primarily due to the impact of changes in estimated portfolio delinquencies and foreclosures. | |
PHH CORPORATION AND SUBSIDIARIES | ||||||||||||||||||||||||||
NON-GAAP RECONCILIATIONS- CORE REVENUE | ||||||||||||||||||||||||||
(In millions) | ||||||||||||||||||||||||||
Regulation G Reconciliation |
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Fourth | ||||||||||||||||||||||||||
Quarter | ||||||||||||||||||||||||||
Fourth Quarter 2010 | 2009 | |||||||||||||||||||||||||
Combined | Fleet | |||||||||||||||||||||||||
Mortgage | Mortgage | Mortgage | Management | |||||||||||||||||||||||
Production | Servicing | Services | Services | Total PHH | Total PHH | |||||||||||||||||||||
Segment | Segment | Segment | Segment | Other | Corporation | Corporation | ||||||||||||||||||||
Net revenues | $ | 221 | $ | 299 | $ | 520 | $ | 399 | $ | (1 | ) | $ | 918 | $ | 744 | |||||||||||
Certain MSRs fair value adjustments: | ||||||||||||||||||||||||||
Market-related (1) | — | (287 | ) | (287 | ) | — | — | (287 | ) | (96 | ) | |||||||||||||||
Credit-related(2) | — | 11 | 11 | — | — | 11 | 25 | |||||||||||||||||||
Core Revenue | $ | 221 | $ | 23 | $ | 244 | $ | 399 | $ | (1 | ) | $ | 642 | $ | 673 | |||||||||||
2010 | 2009 | |||||||||||||||||||||||||
Combined | Fleet | |||||||||||||||||||||||||
Mortgage | Mortgage | Mortgage | Management | |||||||||||||||||||||||
Production | Servicing | Services | Services | Total PHH | Total PHH | |||||||||||||||||||||
Segment | Segment | Segment | Segment | Other | Corporation | Corporation | ||||||||||||||||||||
Net revenues | $ | 911 | $ | (63 | ) | $ | 848 | $ | 1,593 | $ | (3 | ) | $ | 2,438 | $ | 2,606 | ||||||||||
Certain MSRs fair value adjustments: | ||||||||||||||||||||||||||
Market-related (1) | — | 166 | 166 | — | — | 166 | (111 | ) | ||||||||||||||||||
Credit-related(2) | — | 36 | 36 | — | — | 36 | 91 | |||||||||||||||||||
Core Revenue | $ | 911 | $ | 139 | $ | 1,050 | $ | 1,593 | $ | (3 | ) | $ | 2,640 | $ | 2,586 | |||||||||||
(1) | Represents the Change in fair value of MSRs due to changes in market inputs and assumptions used in the valuation model. | |
(2) | Represents the Change in fair value of MSRs primarily due to the impact of changes in estimated portfolio delinquencies and foreclosures. |