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Nationstar Reports Fourth Quarter and Full Year 2014 Financial Results

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Nationstar Mortgage Holdings Inc. (NYSE:NSM) (“Nationstar”), a leading residential mortgage services company, today reported financial results for its fourth quarter and full year ended December 31, 2014.

Full Year 2014 Financial Results

Net income for the year was $221 million, or $2.45 per share, up from $217 million, or $2.40 per share for full-year 2013. Nationstar generated core EPS of $2.86 per share, up 61% from 2013, due to greater earnings contribution from core operations versus increases in the fair value of mortgage servicing rights. Core EPS was up year-over-year as a function of increased servicing earnings, significant growth in the Solutionstar business from increased property sales, valuation and title orders, and more stable originations earnings. Operating cash flow increased over 900% to $363 million for 2014.

Fourth Quarter 2014 Financial Results

Nationstar reported quarterly net income of $19 million, or $0.21 per share for the fourth quarter, down from $111 million or $1.22 per share in the third quarter. Excluding a deferred tax allowance released in the third quarter, Q3’14 net income was $68 million, or $0.75 per share. GAAP EPS in the quarter was down principally due to a $46 million non-cash MSR mark-to-market adjustment and increased amortization in our servicing segment. Core EPS for the quarter was $0.58, down from $0.80 in the third quarter. Core EPS was down principally related to increased amortization and higher servicing expenses in the quarter. Core EPS excludes one-time items and MSR fair value adjustments. We generated strong operating cash flows during the quarter of $118 million, similar to operating cash flows generated during the third quarter, indicative that the primary driver of the decrease in earnings quarter over quarter was related to non-cash items such as amortization and MSR fair value adjustments.

“Heading into 2015, growth prospects for Nationstar are significant, and we are well positioned from a capital, technology and operational perspective,” said Jay Bray, Chief Executive Officer. “Looking forward we believe customer satisfaction is a source of competitive advantage and a single customer provides extreme value to our portfolio over time. We are relentlessly focused on retaining our ‘Customers for Life’ through a robust suite of products and solutions, offered at a competitive price, with a customer-centric focus.”

Business Highlights

Servicing Segment

The servicing segment generated $327 million of core pretax earnings in 2014, up from $316 million in 2013. Servicing core margin increased year-over-year from 26% to 30% as we executed on profitability initiatives that reduced cost per loan and improved the performance of acquired portfolios. The initiatives reduced operating costs by 17%. Nationstar’s servicing portfolio ended 2014 at $381 billion, nearly in line with the 2013 ending balance despite a challenging transfer market. Nationstar completed over 80,000 workouts during 2014 that contributed to an overall decline in the 60+ day delinquency rate from 11.8% to 9.9%. The servicing portfolio CPR declined during 2014 to 13.3%, down from 14.8% in 2013. The decrease in delinquency and reduction in CPR will have a positive impact on servicing profitability over time through the extension of cash flows and a lower operating cost structure due to performing loans being less costly to service.

Solutionstar Segment

The Solutionstar segment generated $133 million of pretax earnings in 2014, up 295% from $34 million in 2013. Solutionstar margin increased year-over-year from 23% to 41% due to an increase in property sales and an increase in unit volume orders in our valuation, title and closing services as a result of the expansion in our existing client relationships. Solutionstar sold nearly 21,000 properties over the course of 2014, a 68% increase from 2013. Additionally, Solutionstar sold its first third-party property through the HomeSearch platform in the fourth quarter and has 47 agreements to sell properties on behalf of third-party clients. We expect the economics of the additional third-party business to begin to materialize in 2015.

Originations Segment

The originations segment generated $209 million of core pretax earnings in 2014, up 25% from $168 million in 2013. Originations core margin increased year-over-year from 24% to 36% as a result of the strategic decision to exit lower margin channels in late 2013, increased margins on consumer direct originated loans and maximizing capacity utilization on a single integrated platform. Nationstar funded $16.9 billion of volume in 2015, with approximately 67% of the volume from the consumer direct channel. In 2014, 28% of all originations were purchase money as compared to 17% in 2013, reflecting the broader market shift toward more purchase money originations as the housing market recovers. The recapture rate in 2014 was 34%.

2015 Outlook

Business Outlook

Nationstar acquired most of its servicing assets at, or near, historic low valuations, improved the performance of the portfolios, cross-sold additional high-quality origination and ancillary services, and increased the value and stream of portfolio cash flows, enabling Nationstar to make additional investments in other accretive opportunities. Looking forward, we believe Nationstar is one of the best positioned servicers to acquire additional servicing portfolios based on this proven track record. Ultimately, Nationstar’s success depends on our ability to work productively with our customers, regulators and investors.

During the first quarter of 2015, Nationstar has entered into new commitments to acquire $35 billion of agency servicing assets, primarily from two counterparties. Assuming a 12% annual run-off, we have already replenished 95% of the servicing annuity and are well on our way to achieving our 10%, or greater, UPB growth target for the year. Transfer activity from both banks and non-banks has increased since the end of 2014, and is expected to remain elevated over the course of 2015 when compared against 2014. In addition to growing our servicing portfolio, Nationstar continues to evaluate ways to improve efficiency, reduce delinquencies, strengthen the transfer process and increase overall profitability.

Technology Outlook

Nationstar is committed to transforming the home ownership experience through the deployment of new innovative technologies to make the home purchase experience simpler, accessible and transparent for all market participants.

In the first quarter of 2015, Solutionstar will deploy its next generation technology for HomeSearch.com which delivers a state-of-the-art experience to allow customers to seamlessly purchase distressed and non-distressed property listings starting with one click. This new version of HomeSearch will contain over 75% of all active MLS listings in the United States. HomeSearch offers an enticing value proposition to customers by launching the first ever end-to-end residential real estate search and transaction engine where the customer could receive up to 1% cash back at closing. Unlike traditional real estate transactions that are notoriously complicated, HomeSearch customers will be able to select a real estate agent from a panel or retain their own agent as they are effortlessly guided through the process, all while a specialist is available to answer any questions. The platform integrates all of the front and back-end services with an unbeatable value proposition of “1 click, 1 call, 1% savingsTM..”

With the launch of the next generation HomeSearch.com platform, Solutionstar will possess an industry leading real estate search and transaction portal and software ecosystem providing enhanced technology and data solutions to homebuyers, home sellers, real estate agents and companies engaged in residential real estate transactions. Solutionstar utilizes the power of technology and data analytics to deliver a comprehensive suite of end-to-end services, from front-end real estate auctions to world class back-office software and services for agents/brokers, appraisal, title, close and escrow.

Nationstar continues to invest in and develop technologies, comprising both back-office work flow processing systems as well as consumer-facing products that will be deployed over the course of 2015. We expect these technologies to have a top and bottom line impact through new revenue streams and efficiency improvements that will reduce our operating costs. Additional details on these technology initiatives will be provided in upcoming quarters.

Customers

Providing customers a best-in class experience will result in significant tangible benefits to customers, shareholders, regulators and the GSEs. Recent progress towards this goal includes the launch of the customer feedback portal that allows customers to easily provide feedback, have direct interaction with support staff, track complaint statistics, including progress towards stated goals, and provide transparency for all constituents.

The next step in improving the customer experience includes the upcoming launch of the “Customer for Life” and “Customer Select” campaigns. These initiatives represent the next evolution for engaging with customers, including providing useful data and insights, more personalized service and a strong value proposition. The Customer Select program will combine real estate and home loan services thereby potentially reducing the cost of buying, selling, or refinancing a house by thousands of dollars. These initiatives will strengthen the relationship with the next generation of homeowners by reducing transaction costs, providing timely data and insights, and automating time consuming manual processes.

Providing existing and future customers with exceptional service, technologies and products will increase the value of the servicing portfolio as a result of greater customer retention and a longer time horizon over which to deliver innovative services. Finally, a best-in-class homeownership experience will improve standing with investors, including the agencies, thereby increasing opportunities to selectively acquire additional portfolios.

Conference Call Webcast and Investor Presentation

Chief Executive Officer, Jay Bray, and Chief Financial Officer, Robert Stiles, will host a conference call for investors and analysts to discuss Nationstar’s fourth quarter and full year 2014 results and other general business matters at 9:00 a.m. ET on Thursday, February 26, 2014. To listen to the event live or in an archive which will be available for 14 days, visit the investor section of Nationstar’s website at http://www.nationstarmtg.com. The conference call will also be accessible by dialing 1-866-318-8611, or 1-617-399-5130 internationally. Please use the participant passcode 79218194 to access the live conference call. An investor presentation will also be available on the investor section of Nationstar’s website at http://www.nationstarmtg.com.

Non-GAAP Financial Measures

This disclaimer applies to every usage of “Core Earnings per Share” or “Core EPS”, “Core Pretax Earnings,” “Core Earnings,” “Operating Cash Flow” and “Servicing Core Pretax Earnings” in this release. Core EPS is a metric that is used by management to normalize earnings for one-time expenses and changes in fair value of the MSR. Core pretax earnings and core earnings are metrics used by management to exclude certain non-recurring items, and changes in the fair value of the MSR, in an attempt to provide better earnings per share comparison to prior periods. Operating Cash Flow is a metric that is used by management to provide an estimate of cash flow generated by the operating segments. Operating Cash Flow begins with pretax income and makes adjustments for cash and non-cash items including changes in the fair value of MSRs, value of capitalized servicing retained, depreciation and amortization, stock based compensation and cash taxes. Servicing core pretax earnings is a metric that is used by management to exclude certain non-recurring items to provide a better earnings per share comparison to prior periods.

About Nationstar

Based in Dallas, Texas, Nationstar earns fees through the delivery of quality servicing, origination and transaction based services related principally to single-family residences throughout the United States. Additional corporate information is available on the investors tab at www.nationstarmtg.com.

Forward Looking Statements

Any statements in this release that are not historical or current facts are forward looking statements. These forward looking statements include, but are not limited to, statements regarding: 2015 growth prospects, amount of acquisitions, expectations of HomeSearch, the impacts of our customer focused campaigns and our recapture rate. Servicing acquisition commitments represent a signed letter of intent or definitive agreement, but the transaction has not yet closed. Forward looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-statements. Certain of these risks and uncertainties are described in the “Risk Factors” section of our most recent annual report and other required documents as filed with the SEC which are available at the SEC’s website at http://www.sec.gov. Nationstar undertakes no obligation to publicly update or revise any forward looking statements or any other financial information contained herein, and the statements made in this press release are current as of the date of this release only.

Financial Tables

NATIONSTAR MORTGAGE HOLDINGS INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(dollars and shares in thousands, except per share data)

For the Three Months Ended For the Twelve Months Ended
December 31, 2014 September 30, 2014 December 31, 2014 December 31, 2013
Revenues:
Service related $

295,825

$ 376,388 $ 1,375,862 $ 1,384,222
Net gain on mortgage loans held for sale

153,539

127,936 597,206 702,763
Total revenues

449,364

504,324 1,973,068 2,086,985
Total expenses and impairments 362,623 327,224 1,357,691 1,402,278
Other income (expense):
Interest income 49,394 43,314 179,592 197,220
Interest expense (103,692 ) (116,673 ) (516,387 ) (538,805 )
Gain on disposal of property 4,898 4,898
Gain (loss) on interest rate swaps and caps (404 ) 940 2,404 3,132
Total other income (expense) (54,702 ) (67,521 ) (329,493 ) (338,453 )
Income before taxes 32,039 109,579 285,884 346,254
Income tax expense / (benefit) 12,618 (1,700 ) (1 ) 64,860 129,200
Net income 19,421 111,279 221,024 217,054
Less: Net gain (loss) attributable to noncontrolling interests

419

54 306
Net income attributable to Nationstar

19,002

111,225 220,718 217,054
Other comprehensive income, net of tax:
Change in value of designated cash flow hedge, net of tax of ($1,183), $1,183, and $0, respectively (1,963 ) 1,963
Comprehensive income $ 19,421 $ 111,225 $ 218,755 $ 219,017
Earnings per share:
Basic earnings per share $ 0.22 $ 1.23 $ 2.47 $ 2.43
Diluted earnings per share $ 0.21 $ 1.22 $ 2.45 $ 2.40
Weighted average shares:
Basic

89,596

90,120

89,521

89,415
Dilutive effect of stock awards 789 1,001 499 853
Diluted

90,385

91,121

90,020

90,268
Dividends declared per share

(1) In the third quarter, Nationstar released a deferred tax valuation allowance in the amount of $44 million which resulted in a tax credit during the period. The valuation allowance was released as a result of Nationstar’s recent growth and profitable results and the expectation of continued growth and profitability in the future.

NATIONSTAR MORTGAGE HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(dollars in thousands)

December 31, 2014 September 30, 2014 December 31, 2013
Assets
Cash and cash equivalents $ 299,002 $ 269,735 $ 441,902
Restricted cash 285,530 294,044 592,747
Mortgage servicing rights 2,961,321 2,910,640 2,503,162
Advances 2,546,362 2,770,622 5,002,202
Reverse mortgage interests 2,383,647 1,956,952 1,528,000
Mortgage loans held for sale 1,277,931 1,697,041 2,603,380
Mortgage loans held for investment 191,569 195,432 211,050
Property and equipment 129,611 121,635 119,185
Derivative financial instruments 91,051 88,333 123,878
Other assets 946,651 572,610 901,183
Total assets $ 11,112,675 $ 10,877,044 $ 14,026,689
Liabilities and equity
Unsecured senior notes $ 2,159,231 $ 2,159,651 $ 2,444,062
Advance facilities 1,901,783 1,601,219 4,550,424
Warehouse facilities 1,572,622 1,931,524 2,433,927
Payables and accrued liabilities 1,322,078 1,344,895 1,308,450
MSR related liabilities – nonrecourse 1,080,465 1,106,993 1,016,284
Derivative financial instruments 18,525 9,621 8,526
Mortgage servicing liabilities 65,382 78,954 82,521
Participating interest financing 1,433,145 1,367,382 1,103,490
2014-1 HECM securitization 259,328
Nonrecourse debt – Legacy Assets 75,838 78,481 89,107
Total liabilities $ 9,888,397 $ 9,678,720 $ 13,036,791
Total equity 1,224,278 1,198,324 989,898
Total liabilities and Shareholders’ equity $ 11,112,675 $ 10,877,044 $ 14,026,689

SERVICING SEGMENT

FINANCIAL AND OPERATING METRICS

(dollars in millions, unless noted)

2014 2013 % Change Q4’14 Q3’14 % Change
Total revenue $ 1,071 $ 1,237 (13 )% $ 215 $ 280 (23 )%
Pretax income $ 221 $ 441 (50 )% $ 14 $ 90 (84 )%
One-time items (1) 57 81 (31 )% 8 4 93 %
MSR Mark 49 (207 ) (124 )% 46 (1 ) N/A
Core pretax income $ 327 $ 316 3 % $ 69 $ 93 (26 )%
Core pretax income margin 30 % 26 % 19 % 32 % 33 % (3 )%
Core operating profitability (bps) 8.5 10.6 (20 )% 7.3 9.9 (26 )%
Ending UPB ($B) $ 381 $ 391 (2 )% $ 381 $ 378 1 %
Average UPB ($B) $ 386 $ 299 29 % $ 379 $ 378 %
60+ day delinquency rate 9.9 % 11.8 % (16.1 )% 9.9 % 10.6 % (7 )%
Annualized CPR rate 13.3 % 14.8 % (10.1 )% 13.3 % 14.0 % (5 )%

(1) One-time items include expenses related to advance sale transactions and ramp costs associated with bulk acquisitions.

SOLUTIONSTAR SEGMENT

FINANCIAL AND OPERATING METRICS

(dollars in millions, unless noted)

2014 2013 % Change Q4’14 Q3’14 % Change
Revenue – Real Estate Exchange $ 154 $ 50 208 % $

42

$ 43

(1)

%
Revenue – Real Estate Services 168 96 75 %

46

43

7

%

Pretax income $ 133 34 295 % $ 34 $ 35 (4 )%
Pretax income margin 41 % 23 % 78 % 39 % 41 % (5 )%
Property sales 20,937 12,456 68 %

5,514

5,225

6

%
REO ending inventory 9,062 7,433 22 % 9,062 9,639 (6 )%
3rd party business % 14 % 29 % (52 )% 17 % 14 % 19 %

ORIGINATIONS SEGMENT

FINANCIAL AND OPERATING METRICS

(dollars in millions, unless noted)

2014 2013 % Change Q4’14 Q3’14 % Change
Revenue $ 579 $ 712 (19 )% $ 145 $ 139 5 %
Pretax income 191 131 45 % 46 51 (9 )%
One-time items (1) 19 37 3

Core pretax income $ 209 $ 168 25 % $ 46 $ 54 (14 )%
Core pretax income margin 36 % 24 % 50 % 32 % 39 % (18 )%
Funded volume – consumer direct ($B) $ 11.3 $ 19.5 (42 )% $ 2.5 $ 2.7 (6 )%
Funded volume – total ($B) $ 16.9 $ 23.8 (29 )% $ 3.6 $ 4.1 (12 )%
Application volume ($B) $ 3.2 $ 5.0 (36 )% $ 3.2 $ 3.5 (10 )%
Locked pipeline ($B) $ 3.1 $ 5.0 (37 )% $ 2.8 $ 2.4 19 %
Recapture percentage 34 % 48 % (29 )% 27 % 29 % (7 )%
Purchase origination percentage of funded volume 28 % 17 % 65 % 28 % 31 % (10 )%

(1) One-time items include expenses related to sight-sizing of operations, transition to single operating platform and ramp costs.

OPERATING CASH FLOW RECONCILIATION

(dollars in millions, unless noted)

For the Three Months Ended For the Twelve Months Ended
December 31, 2014 September 30, 2014 December 31, 2014 December 31, 2013
GAAP pretax income $ 32 $ 110 $ 286 $ 346
Fair value adjustments / amortization 107 53 258 14
Servicing value retained (52 ) (66 ) (238 ) (248 )
Other 31 24 57 (77 )
Operating cash flow $ 118 $ 121 $ 363 $ 35

(1) Includes depreciation and amortization, stock based compensation, and cash taxes.

2015 KEY METRICS

The following are key metrics Nationstar will use to measure our performance in 2015.

FY’15E
Servicing
UPB Growth > 10%
Core Margin % > 30%
Customer Complaint % (1) <1.0%
Solutionstar
Overall Earnings Growth > 30%
% of 3rd Party Revenue > 20%
% Non-Default Revenue Mix < 20%
Core Margin % >35%
Originations
Volume ($B) – consumer direct (2) $ 13.0
Recapture (% of voluntary run-off) 45%
Operational Turn Times (3) <45 days
Pretax Income Margin (bps) – includes secondary gains 125

1) Customer complaint volume measures as number of complaints divided by average number of customers during the period.

2) Consumer direct includes portfolio recapture, new customer acquisition and Home Community Mortgage. Does not include correspondent.

3) Operational turn times defined as time from when application is submitted to processor to when the loan is funded.

SERVICING FEE INCOME BEFORE FAIR VALUE ADJUSTMENTS RECONCILIATION

(dollars in thousands)

For the Three Months Ended For the Twelve Months Ended

December 31,
2014

September 30,
2014

December 31,
2014

December 31,
2013

Base servicing fee $ 223,984 $ 223,989 $ 906,491 $ 847,120
Loss mitigation and performance-based incentive fees 17,550 15,088 57,219 47,943
Modification fees 12,726 30,611 68,196 117,062
Late fees and other ancillary charges 15,252 15,645 64,609 59,372
Reverse mortgage fees 26,352 13,093 68,351 55,559
Other servicing fee related revenues 23,872 19,960 113,625 63,306
Total base servicing fee income before MSR fair value adjustments 319,736 318,386 1,278,491 1,190,362
Changes in fair value due to inputs / assumptions:
MSR (46,954 ) 63,449 2,825 355,586
MSR financing liability (6,844 ) (17,749 ) 11,598
Excess spread financing 7,600 (44,464 ) (63,839 ) (148,852 )
Net change in fair value due to inputs / assumptions: (46,198 ) 1,236 (49,416 ) 206,734
Other changes in fair value (amortization):
MSR (71,079 ) (68,757 ) (250,204 ) (297,128 )
MSR financing liability 1,864 6,752 21,681
Excess spread financing (4,074 ) 7,151 6,285 75,519
Net other changes in fair value: (73,289 ) (54,854 ) (222,238 ) (221,609 )
Service related revenue 200,249 264,768 1,006,837 1,175,487
Net gain on mortgage loans held for sale 14,372 15,632 64,506 61,624
Total revenue $ 214,621 $ 280,400 $ 1,071,343 $ 1,237,111

CORE EARNINGS PER SHARE RECONCILIATION

(dollars and shares in thousands, except per share data)

For the Three Months Ended For the Twelve Months Ended

December 31,
2014

September 30,
2014

December 31,
2014

December 31,
2013

Net income attributable to Nationstar Inc. $

19,002

$ 111,225 $ 220,718 $ 217,054
Net gain (loss) attributable to noncontrolling interests

419

54 306
Net income 19,421 111,279 221,024 217,054
Income taxes (1) 12,618 (1,700 ) 64,860 129,200
Income before taxes 32,039 109,579 285,884 346,254
One-time items (2) 8,482 6,836 80,462 118,348
MSR mark 46,198 (1,236 ) 49,416 (206,734 )
Core pretax income 86,719 115,179 415,762 257,868
Income taxes (34,601 ) (42,478 ) (157,990 ) (97,401 )
Core income $ 52,118 $ 72,701 $ 257,772 $ 160,467
Average share count

90,385

91,121 90,020 90,268
Core EPS $ 0.58 $ 0.80 $ 2.86 $ 1.78

(1) In the third quarter, Nationstar released a deferred tax valuation allowance in the amount of $44 million which resulted in a tax credit during the period. The valuation allowance was released as a result of Nationstar’s recent growth and profitable results and the expectation of continued growth and profitability in the future.

(2) 4Q’14 one-time items include legacy legal / advance reserves. 3Q’14 one-time items include gain on sale of facility in Scottsbluff, expenses related to the retirement of 10 7/8 unsecured notes, expenses related to the originations platform consolidation, expenses related to the completion of the sale of advances to NRZ, legal expenses, and severance expenses related to consolidation of servicing operations. 2013 one-time items include certain expenses related to the acquisition of the $200 billion servicing portfolio from Bank of America and other one-time expenses. These expenses include the advance hiring of servicing staff, recruiting expenses and licensing expenses, severance expenses and expenses related to the write-off of advance financing facility fees related to the advance sale to NRZ. 2014 one-time items include expenses related to right-sizing of operations, retirement of 10 7/8 unsecured notes and legacy legal / advance reserves.

SERVICING: CORE PRETAX INCOME RECONCILIATION

(dollars in thousands)

For the Three Months Ended For the Twelve Months Ended

December 31,
2014

September 30,
2014

December 31,
2014

December 31,
2013

Pretax income $ 14,144 $ 89,938 $ 220,751 $ 441,401
One-time items (1) 8,482 4,403 56,587 81,431
Changes in fair value due to inputs or assumptions
MSR 46,954 (63,449 ) (2,825 ) (355,586 )
MSR financing liability 6,844 17,749 (11,598 )
Excess spread (7,600 ) 44,464 63,839 148,852
Net change in fair value due to inputs or assumptions 46,198 (1,236 ) 49,416 (206,734 )
Servicing core pretax income $ 68,824 $ 93,105 $ 326,754 $ 316,098

(1) 4Q’14 one-time items include legacy legal / advance reserves. 3Q’14 one-time items include expenses related to the completion of the sale of advances to NRZ and severance expenses related to consolidation of servicing operations. 2014 one-time items include expenses related to right-sizing of operations and legacy legal / advance reserves. 2013 one-time items include expenses related to ramp costs associated with bulk acquisitions.

ORIGINATIONS: CORE PRETAX INCOME RECONCILIATION

(dollars in thousands)

For the Twelve Months Ended
December 31, 2014 December 31, 2013
Pretax income $ 190,524 $ 130,989
One-time items (1) 18,733 36,917
Originations core pretax income $ 209,257 $ 167,906

(1) 2014 one-time items related to the originations platform consolidation. 2013 one-time items related to restructuring.

SEGMENT INCOME STATEMENT

(dollars in thousands)

For the quarter ended December 31, 2014
Servicing Originations Solutionstar Operating Corporate and Other Elim. Total
REVENUES:
Service related $ 200,249 $ 5,566 $ 87,915 $ 293,730 $ 2,438 $ (343 ) $ 295,825
Net gain on mortgage loans held for sale 14,372 139,517 153,889 (350 ) 153,539
Total revenues 214,621 145,083 87,915 447,619 2,088 (343 ) 449,364
Total expenses and impairments 185,880 98,994 54,141 339,015 23,608 362,623
Other income (expense):
Interest income 32,522 14,280 46,802 2,249 343 49,394
Interest expense (46,635 ) (13,904 ) 136 (60,403 ) (43,289 ) (103,692 )
Gain on sale of property
Gain (loss) on interest rate swaps and caps (484 ) (484 ) 80 (404 )
Total other income (expense) (14,597 ) 376 136 (14,085 ) (40,960 ) 343 (54,702 )
Pretax income (loss) 14,144 46,465 33,910 94,519 (62,480 ) 32,039
One-time items (1) 8,482 8,482 8,482
MSR Mark 46,198 46,198 46,198
Core pretax income $ 68,824 $ 46,465 $ 33,910 $ 149,199 $ (62,480 ) $ $ 86,719
Earnings per share $ 0.21
Core earnings per share $ 0.58

(1) One-time items include expenses related to legacy legal / advance reserves.

SEGMENT INCOME STATEMENT

(dollars in thousands)

For the quarter ended September 30, 2014
Servicing Originations Solutionstar Operating Corporate and Other Elim. Total
REVENUES:
Service related $ 264,768 $ 25,318 $ 85,523 $ 375,609 $ 1,133 $ (354 ) $ 376,388
Net gain on mortgage loans held for sale 15,632 113,476

129,108 (1,172 )

127,936
Total revenues 280,400 138,794 85,523 504,717 (39 ) (354 ) 504,324
Total expenses and impairments 160,975 89,369 50,006 300,350 26,874

327,224
Other income (expense):
Interest income 18,369 18,903

37,272 5,688 354 43,314
Interest expense (48,651 ) (17,085 ) (352 ) (66,088 ) (50,585 ) (116,673 )
Gain on sale of property 4,898 4,898
Gain (loss) on interest rate swaps and caps 795 795 145 940
Total other income (expense) (29,487 ) 1,818 (352 ) (28,021 ) (39,854 ) 354 (67,521 )
Pretax income (loss) 89,938 51,243 35,165 176,346 (66,767 ) 109,579
One-time items (1) 4,403 2,833 7,236 (400 ) 6,836
MSR Mark (1,236 )

(1,236 ) (1,236 )
Core pretax income $ 93,105 $ 54,076 $ 35,165 $ 182,346 $ (67,167 ) $ $ 115,179
MSR Mark $ 1.22
Core earnings per share $ 0.80

(1) One-time items include gain on sale of facility in Scottsbluff, expenses related to the retirement of 10 7/8 unsecured notes, expenses related to the originations platform consolidation, expenses related to the completion of the sale of advances to NRZ and severance expenses related to consolidation of servicing operations.

SEGMENT INCOME STATEMENT

(dollars in thousands)

For the fiscal year ended December 31, 2014
Servicing Originations Solutionstar Operating Corporate and Other Elim. Total
REVENUES:
Service related $ 1,006,837 $ 43,954 $ 321,801 $ 1,372,592 $ 4,713 $ (1,443 ) $ 1,375,862
Net gain on mortgage loans held for sale 64,506 535,273 599,779 (2,573 ) 597,206
Total revenues 1,071,343 579,227 321,801 1,972,371 2,140 (1,443 ) 1,973,068
Total expenses and impairments 697,878 390,497 188,866 1,277,241 80,450 1,357,691
Other income (expense):
Interest income 91,713 72,031 163,744 14,405 1,443 179,592
Interest expense (246,099 ) (70,237 ) (360 ) (316,696 ) (199,691 ) (516,387 )
Gain on sale of property 4,898 4,898
Gain (loss) on interest rate swaps and caps 1,672 1,672 732 2,404
Total other income (expense) (152,714 ) 1,794 (360 ) (151,280 ) (179,656 ) 1,443 (329,493 )
Pretax income (loss) 220,751 190,524 132,575 543,850 (257,966 ) 285,884
One-time items (1) 56,587 18,733 75,320 5,142 80,462
MSR Mark 49,416 49,416 49,416
Core pretax income $ 326,754 $ 209,257 $ 132,575 $ 668,586 $ (252,824 ) $ $ 415,762
Earnings per share $ 2.45
Core earnings per share (1) $ 2.86

(1) One-time items include expenses related to right-sizing of operations, retirement of 10 7/8 unsecured notes and legacy legal / advance reserves.

SEGMENT INCOME STATEMENT

(dollars in thousands)

For the fiscal year ended December 31, 2013
Servicing Originations Solutionstar Operating Corporate and Other Elim. Total
REVENUES:
Service related $ 1,175,487 $ 62,011 $ 146,608 $ 1,384,106 $ 1,750 $ (1,634 ) $ 1,384,222
Net gain on mortgage loans held for sale 61,624 650,357 711,981 (9,218 ) 702,763
Total revenues 1,237,111 712,368 146,608 2,096,087 (7,468 ) (1,634 ) 2,086,985
Total expenses and impairments 608,978 589,986 112,739 1,311,703 90,575 1,402,278
Other income (expense):
Interest income 90,913 87,713 178,626 16,960 1,634 197,220
Interest expense (279,501 ) (79,106 ) (264 ) (358,871 ) (179,934 ) (538,805 )
Gain (loss) on interest rate swaps and caps 1,856 1,856 1,276 3,132
Total other income (expense) (186,732 ) 8,607 (264 ) (178,389 ) (161,698 ) 1,634 (338,453 )
Pretax income (loss) 441,401 130,989 33,605 605,995 (259,741 ) 346,254
One-time items (1) 81,431 36,917 118,348 118,348
MSR Mark (206,734 ) (206,734 ) (206,734 )
Core pretax income $ 316,098 $ 167,906 $ 33,605 $ 517,609 $ (259,741 ) $ $ 257,868
Earnings per share $ 2.40
Core earnings per share $ 1.78

(1) One-time items include expenses related to ramp costs associated with bulk acquisitions and expenses related to right-sizing of operations.

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