Analyst: Jonathon Clements Email: jonathonclements@gmail.

com
Nationstar Mortgage (NSM) | LONG | Price Target: $78.00 18 months

Investment Thesis .
Nationstar is non-bank mortgage servicer that was taken public by Fortress Investment Group in
2012. While the company experienced rapid growth coming out of the crisis capitalizing on Basel III
and HARP origination fees, shares have sold off over the past 6 months on fears of increasing
regulation and decreasing profitability. Trading 43% below its 52 week high and 9.33x FY2014 P/E,
I believe $32.92 offers a great entry point for considerable upside.

Catalysts .
Solutionstar Spin-off. Solutionstar is a rapidly growing division within Nationstar providing fee-
based mortgage-related services to financial institutions spanning the life cycle of a mortgage loan.
NSMs management previously discussed the spin-off, but decided to delay in order to pursue TTM
acquisitions. Once the division can show accurate, annualized financials I believe it will be spun-
off. Applying three comparables average FY2014 P/E multiple of 15.47x to an EPS of ~$1.22,
values Solutionstar at $18.89 a share. Therefore, investors can acquire Nationstars servicing and
origination businesses for $14.03 per share at 6.43x FY2014 earnings.

Growth in Reverse Mortgages (RM). RMs offer one of the most compelling and underpenetrated
markets in the world. Since 2011, Nationstar has accumulated a $28.9 billion RM servicing portfolio
(32% of the market). While the true market size is difficult at best to define, as of 2009 only 1% of
the eligible borrowers had been tapped while a peer mortgage servicer has estimated the market at
$1.9 trillion, compared to $90 billion outstanding.

Increasing MSR Values. As interest rates rise, slower refinances and fewer defaults will improve
the overall quality and value of Nationstars current mortgage servicing rights portfolio. Unlike
almost every other investment that loses money when rates rise, MSRs increase in value.

Neutral consensus on Wall Street. 11 sell side analysts that follow NSM: 2 OW, 7 N and 2 UW.
The consensus 12 month PT is $34.00, citing regulatory scrutiny over non-bank servicers, declining
origination activity, and UPB pipeline and profitability concerns. However, none of the 11 reports
mention the concentrated short position in the float or the underlying future economics of reverse
mortgages. Future upgrades will support upward price movement.

Increasing Profitability. Since 2007, servicing right premiums have compressed from 4-6x to
1-2x their yearly return. Nationstar has laid out a plan to further increase pretax servicing
profitability from 7 to 11bps FY2014 on its UPB (1bp = 4% EPS growth).

Short Squeeze. Factoring four long shareholders (3/31/14) into NSMs float reveals a 64% S.I.

Risks .
Regulatory scrutiny. Due to being a fairly new and developing industry, there will most likely be
some form of further oversight to come. Regulation could harness scalability and profitability.

Ownership Concentration. Fortress owns 74% of the common stock, therefore controls all matters requiring a stockholder vote. The
latest 10Q cited, the interest of [Fortress] may not always coincide with our interest or other stockholders.

Nationstar does not capture market share. Regardless of the massive potential for the RM servicing market, there is the possibility
that Nationstar is not able to secure a material market share in the servicing business.

Timeline .
Mar 2012 Sept 2013
IPO at $14 in (3/2012)
Quadruped servicing UPB
Originated large refinancing (HARP) fees
Hit high of $57.95 (9/2013)

Oct 2013 Present
Shares lost 43% of their value
Fears of increased regulation on
non-bank mortgage servicing
Declining refinancing revenues

Next 18 Months
Short squeeze / upward pressure
Solutionstar spin-off
Market will price in increasing
profitability and RM opportunity

Solutionstar Nationstar FY2015 Value
FY2015 Rev $400 FY2015 Rev xSolutionstar $1,791 Solutionstar $25.50
Pretax Income $180 Pretax Income $477 Nationstar $52.53
Net Income $111 Net Income $294 PRICE TARGET $78.13

FY 2015 EPS $1.22 FY 2015 EPS $3.24 Valuation Range Multiple Price
Current Peer Multiple 20.88x Normalized Mulitple 16.25x Solutionstar 13x 27x $16 - $33

Nationstar 13x 24x $42 - $78
Solutionstar Value $25.50 Remaning NSM Value $52.63 Range (wght ave) 13x 25x $58 - $111

USD millions, except per share (8.6.2014)
Bloomberg statistics / NSM IR / SEC filings

Key Statistics
Ticker NSM
Price (8.6.2014) 32.92
Vol 3 months (000) 568
52 wk High / Low 24.50 / 57.95

Ownership
Shares Out / Float 90.8 / 21.6
Fortress Ownership 67.7
Short Interest 6.6

Valuation
08.14 P/E 21.01
12.14 P/E 9.33

Mkt Cap 2,995
Debt 7,036
Cash (404)
Enterprise Value 9,632

Price Target
Target 78.00
% Upside 137%
Timeline (months) 18

Multiple Range 13x-25x
Price Range $58 - $111

"
BUSINESS DESCRIPTION
Overview
Nationstar Mortgage Holdings (NSM) is the second largest non-bank residential mortgage servicer with a
fully integrated mortgage origination platform. The company can be viewed as three divisions: mortgage
servicing, loan originations, and Solutionstar. Nationstars primary line of business is mortgage servicing in
which they allocate payments between the borrower and lender, among other services. The integrated
originations platform enhances its servicing business by allowing Nationstar to originate and recapture
refinancing activity as portions of its servicing portfolio are paid off over time. Along with this effort,
Nationstar has the ability to sell or securitize the conforming mortgage loans to government-sponsored
entities or other third-party investors. Solutionstar, an in-house division of Nationstar, offers fee-based
mortgage-related services spanning the life cycle of a mortgage loan to financial institutions and
originators, including brokerage, title
insurance, loan settlement, appraisal,
and recovering processing services.
Nationstars FY2014 estimated
revenue is comprised of: 47.5%
mortgage servicing (forward and
reverse), 24.0% originations
(forward), and 28.5% Solutionstar.
History
Nationstar was founded in 1994 as a residential mortgage originator under the name Centrex. From the
mid-1990s to the mid-2000s the company organically grew into a very profitable originations business. In
2006, Fortress Investment Group took Centrex private for $520 million, changing the name to Nationstar.
A year later the housing bubble popped, leaving the originations business no longer able to create loans as a
result of frozen credit markets. In 2007, Nationstar rebranded itself as a mortgage servicer expanding their
new business eight fold over the next four years (70.2% per annum) growing revenues from $3.9 million in
2007 to $858.6 million in 2011. In 2012, Fortress sold a 19% stake in Nationstar to the public through an
IPO raising $233 million. NSM rose 120% in its first year of trading as investors capitalized on zero
interest rate policies and the reg cap trade. As the Federal Reserve supressed rates near zero, refinancing
surged steadily attributing to Nationstars servicing business. Regulation also played a role in the
companys success as a non-bank servicer after Basel III incentivizied banks to sell off their servicing
portofolios in order to meet new capital requirements. NSM hit an all time high of $57.95 in September
2013, but since has lost value due to fears of increased regulation and decreasing profitability.

MORTGAGE SERVICING
Industry Explanation
Mortgage servicing involves managing the relationship between the borrower and mortgage investor. A
servicers reponsibilities include: connecting monthly payments, answering borrower inquires and
resolving issues should borrowers go deliquent. Once a loan is orignated and securtizied, a mortgage
servicing right (MSR) is created in which 25-35bps of the loans interest is paid to the servicer. Originators
can service MSRs in-house to retain this fee or they can sell the MSR for cash upfront (currently 1-2x the
MSRs yearly revenue). Nationstar offers primary servicing and subservicing (special servicing). A primary
servicer pays upfront to own the MSRs, receiving a fee based on the portfolios unpaid principle loan
balance (UPB). A subservicer (special servicer) collects a contracted fee for their servicing function on an
outsourced MSR. Most of the servicing volume between 2008-2011 was driven by special servicing of
high-touch loans often 60 days or more delinquent. Nationstar also acquires MSRs on a capital-light basis
by co-investing with a financial partner who receives an excess MSR fee, cash flows outside of the basic
servicing fee. In these transactions, Nationstar provides the servicing functions then shares the excess fee
with its co-investment partners on a pro-rata basis. This proves profitable for both parties, as Nationstar
only has to pay for a portion of the MSR allowing the company to increase its ROE and leverage its capital
to further grow its UPB. Nationstars origination business enhances the servicing portfolio through
refinancing and organic growth, extending the longevity of the servicing cash flows. With interest rates
rising, borrowers will become less likely to prepay, extending the life of the servicing contract and duration
of the cash flows. This makes posessing MSRs attractive, because unlike almost every other investment
that loses value when interest rates rise, MSRs increase in value.
"
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REVERSE MORTGAGES
Description
Reverse mortgages are not actually a mortgage, but a loan. Available to homeowners over the age of 62
years old, these loans convert home equity into tax-free income. The loan is due with interest when the
borrower dies, sells the house, or fails to pay property taxes and homeowners insurance.
Growth Thesis
Baby Boomers: The facts are this generation is not financially fit for retirement, the majority of these 72
million Americans have a mortgage, and over the coming years they will be faced with few alternatives for
aiding retirement as they deal with light personal savings, disappearing pensions and the questionable
future of Social Security. A 2013 survey by Charles Schwab found that 60% of baby boomers over the age
of 55 have less than $100,000 in savings, excluding home equity. Buying a home with a 30YR mortgage
became a cultural phenomenon for baby boomers and over many years of accumulating principal, has now
resulted in a sizable portion of their net worth. In order to tap into
this equity homeowners can (1) sell their home or (2) apply for a
reverse mortgage. A 2010 AARP study revealed that 73% of
homeowners over 45 years of age stated a strong desire to live in
their current residence as long as possible. This means that potentially over
the next 10 years 43.2 million baby boomers (60%) will be entering the
market for reverse mortgages at a rate of ~4 million year. Retirees: In 2010
Employee Benefit Research Institute cited in a study that the average debt held
by Americans over the age of 65 was $50,000, up 83% since 2001. The 2010 US Census cited a total of ~50
million Americans over the age of 65, of which EBRI notes 49% hold debt. These statistics further increase
the market growth opportunity for reverse mortgages due to the fact that homeowners do not have to own the
home outright to qualify for a reverse mortgage. These retirees could implement a reverse mortgage in order
to eliminate a remaining monthly mortgage payment or another form of debt. Combined: The demographics
of these two surveys represent 67.8 million potential reverse mortgage borrowers through 2025.
Historical Highlights
The current form of reverse mortgages was founded in 1987 with the Federal Housing Administrations
(FHA) creation of the HECM program, insuring reverse mortgages and offering liquidity to the market.
Today 90% of the outstanding reverse mortgages are backed by the HECM program. The market grew
slowly in the 90s then expanded eight-fold from 2001 to 2009. Despite this impressive growth, by 2009
less than 1% of elible seniors borrowers had been tapped (below right). In 2010 the big bank lenders (Wells
Fargo, BofA and Metlife) left the business due to inflated, unpredictable home values and the rising level of
delinquencies on required real esate tax and insurance payments. On June 24
th
, 2014 the complete pay off
of SASC 1999-RM1 became the second successfully paid off securitization trust of reverse mortgages this
year. SASC 1999-RM1 was the first reverse mortgage securitization in US history carrying a principle
balance of $317 milion secured by 2,500
homes. This securitization of reverse
mortgages weathered the financial crisis
and the darkest years of the mortgage
crisis while never suffering a loss or
write down, showcasing the products
securiztion feasabilty.
New HECM Regulation
In late 2013, the FHA implemented new regulation to the HECM program in a move to strengthen the
product as a long-term financial planning tool. New rules include: (1) borrowers will be limited to
withdraw 60% of the available loan amount in the first 12 months, (2) previous loan types, the saver and
the standard are now consolidated into a new proprietary version deriving the loan amount based on age,
home value and the prevailing interest rate, (3) the loans cost will now be based on LTV withdrawn in
addition to the annual insurance premium of 1.25% the appraised value, (4) lenders will be required to audit
income sources and credit history when factoring whether the homeowners can continue to pay property tax
and insurance payments over the life of the loan and (5) borrowers who can not meet #4 will have to set
aside money from exisiting cash or a portion of the reverse mortgage proceeds. One major exception to the
new regulation is that a borrower can surpass the 60% LTV limit if the proceeds are being used to pay off
their exisiting mortgage or other federal debts.
"
VALUATION
How NSM got here?
Shares of NSM rose 314% from going public at $14 in
March 2012 to an all time high of $57.95 in September
2013. This tremendous growth culminated from
quadrupling the servicing UPB and collecting large
origination fees. Since this high, shares have lost 42% in
value. Reasons: (1) Increased regulation on special
servicing because the broader mortgage servicing industry
was expanding too fast and the special servicers were
gathering complaints from delinquent borrowers, (2)
decreasing servicing profitability and (3) declining
origination revenues and rising rates and the exhausted
HARP loan program. Rebuttal: (1) Compass Point wrote
a report addressing the overhyped regulation fears stating,
we have found special servicers have lower servicing-
related complaints at the Consumer Financial Protection
Bureau per delinquent loan, higher than average marks
from Fannie Mae in their STAR program and inline to
below average servicer ratings from the rating agencies.
So regulatory risk not only regards a small fraction of
Nationstar (11.1% Q1 2014 UPB) but also has little
substance to inflict real industry change. (2) Nationstar
has attacked this market sentiment head on detailing a
path to 11bps of profitability FY2014 (1bp = 4% growth
in EPS). Management hit 9bps in Q2 2014 and is implementing increased automation and improving
delinquency levels among other methods (above left) to hit its FY 2014 11bps target. (3) Nationstar is
evolving from largely a HARP loan origination business pre-2013 to servicing business going forward.
Short Squeeze
Taking 90.8 million shares outstanding and factoring in the four largest long shareholders (3/31/2014)
Fortress 69.4mm, Hayman Capital 4.8mm, Select Equity Group 4.4mm and BHR Capital 1.8mm, the true
market float is 10.4 million shares. Given that 6.6 million of those shares are short, NSM has an effective
64% short interest. Any positive news on NSM could trigger a significant short squeeze in the shares.
Solutionstar Spin-off
Within the next 9-12 months I believe shareholders will see straightforward conversation from management
about Solutionstars spin-off and expected date. In January 2013, Nationstar acquired Equifax Settlement
Services for $12.5 million and re-branded it as Solutionstar, which currently has two business lines: sales of
REO properties and settlement services such as titles, appraisals, and closing services. The division has
since improved revenue and pretax margins (below left). In Q1 2014, the division acquired Real Estate
Digital (RED) for $18 million, a provider of online marketing data, transaction management and digital
media solutions as well as the company has organically been growing Homesearch.com. These strategic
moves have broadened Solutionstars industry reach and I believe once they are fully integrated into
Solutionstar the division will be spun-off. A prime example of the spin-off opportunity is Ocwen
Financials (OCN) spin-off of Altisource Portfolio
Solutions (ASPS). OCN is also a mortgage servicer and
ASPS operates almost identical to Solutionstar. In
2009, ASPS went public climbing 303% in the first 12
months of trading. Using Solutionstars projected 2014
revenue and assuming neutral sentiment of 0% revenue
growth YOY into 2015 the divisions EPS would be
~$1.22 ($400 Rev / Q1 pretax margin of 45% / 38.4%
tax rate). Applying the average current P/E multiple of
20.88x from three comparables, Solutionstar would be
valued at $25.50 a share by the end of 2015. These
results convey sell sides neutral outlook on the
"
divisions 0% YOY growth and continued pretax margin of 45%. Using Nationstars outlook of 54% per
tax margin (detailed on prior page) would value the division as much as $30.60 a share FY2015.
Value in Reverse Mortgages
The reverse mortgage market
today is underpenetrated and
positioned for growth in the
coming years as baby boomers
transition into and finally begin
preparing for retirement.
Nationstar has been active in
the reverse mortgage space
since the financial crisis
acquiring Bank of Americas
reverse mortgage servicing
portfolio in 2011 and MetLifes in 2012. Nationstar currently holds 32% of the outstanding reverse mortgage
servicing market with their $28.9 billion portfolio. In June 2014, Nationstar began winding down a small
reverse mortgage origination business they received through their 2013 acquisition of Greenlight Financial.
The division originated 678 loans in 2013 barely attributing to Nationstars overall top line. The CEO
commented, Our emphasis in reverse has always been and continues to be on servicing. Although the
company is giving up future potential origination fees (~$3,850 per loan based on FHA costs), the capital
required to grow the origination business would have been extremely costly, only further subjecting
Nationstar to the more cyclical part of the mortgage sector of originations. A better use of this capital would
be growing the servicing portfolio. Going forward the company is uniquely positioned to be competitive in
capturing increased market share as opportunities come available. From its history and size in the market,
Nationstar has experienced knowledge of the costs and administration efforts required to service reverse
loans that its competitors do not. Also as the second largest non-bank servicer of forward mortgages, the
portfolio immediately allows for scalability with Solutionstar providing attractive economics, cutting cost of
third party appraisals among other services. While the true market size for reverse mortgages is difficult at
best to define, a couple of noteworthy statistics include:


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DOWNSIDE RISKS
Nationstar does not capture market share. Reverse mortgages have been around since the early 1990s, yet
only $90 billion of the loans are outstanding. I believe this has mainly been caused by (1) a suffering public
image from headlines about retirees losing their home for missing required tax / insurance payments and (2)
the young age of the product compared to forward mortgages which have been around since the 1930s.
However, there is a possibility that these two reasons continue to mitigate the markets growth. Regardless
of the massive potential for the reverse mortgage market, there is the possibility that Nationstar is not able to
secure a material market share in the originating or servicing business.

Regulatory scrutiny. Since mortgage servicing is a fairly new and developing industry, there will most
likely be some form of further oversight to come. Regulation could harness scalability and profitability.

Ownership concentration. Cited in Nationstars 2013 annual report, If the ownership of our common
stock continues to be highly concentrated, it may prevent new investors from influencing significant
corporate decisions and may result in conflicts of interest. The interest of [Fortress] may not always
coincide with our interest or other stockholders. This includes: election of directors; mergers,
consolidations and acquisitions; decisions affecting the capital structure; the amendment of our certificate
of incorporation and our bylaws; and our winding up and dissolution. Fortress owns 74.5% of the common
stock and therefore controls the majority interest over all matters requiring a stockholder vote.

6
WHY THE OPPORTUNITY EXISTS?
In the table below, the Market Price column analyzes the markets view and why investors have placed
such a low valuation on Nationstar. The Price Target column refutes these misconceptions with facts and
solid reasoning, culminating in my view of where NSM shares should be valued in 18 months.

Topic Market Price Price Target



Solutionstar
Investors, sell side research, and NSMs management were
planning / commenting on the possible spinoff of
Solutionstar since 2012. But with a falling stock price,
management chose to delay the spinoff in order to pursue
acquisitions for the division and grow earnings. The market
has largely forgot about this opportunity and left
Solutionstar to be undervalued at the lower servicing and
origination multiples.
Once Solutionstar is able to stabilize its acquisitions and present annualized
division financials to investors, plans of the spinoff will resume presenting a very
profitable opportunity for NSM shareholders. I believe this 12-18 month effort has
begun as of the most recent quarter. For the first time ever, Nationstar segmented
its earnings from 2 divisions to 3: servicing, originations, and now Solutionstar.
This is the first step in valuing the division at a correct multiple and executing the
spinoff in the future.

Reverse
Mortgages
The opportunity of RMs is unknown by the majority of
market participants and therefore is not priced into the
shares. In addition, sell side research has projected little to
zero growth in NSMs financials of servicing RMs.
Although at this point RMs added value is too ambiguous to accurately calculate,
I believe the opportunity will benefit Nationstar for many years to come and can
currently be best viewed as added upside for NSM shareholders on top of the
already fundamentally undervalued shares.

Neutral
Rating
Of 11 sell side analysts that follow NSM: 2 OW, 7 N and 2
UW. The 12-month consensus price target is currently
$34.00 citing industry wide concerns and uncertainty.
NSM shares will drastically outperform the market over the next 18 months as
the company hits profitability targets, provides clarity on Solutionstars spinoff,
continues to complete MSR acquisitions, and separates itself from the industry
concerns. Future upgrades will reinforce this upward price movement.


Profitability
The market has been skeptical of Nationstars
announcement to increase servicing pretax profitability from
7bps in Q1 2014 to 11bps for FY 2014. Evidence of the
markets lack of confidence can be seen in the low FY2014
P/E multiple.
Q2 2014 servicing pretax profitability was 9bps, hitting NSMs quarter target and
reconfirming the path towards FY 2014 target of 11bps. For every 1bp increase,
servicing EPS grows by 4%. In combination of hitting the FY 2014 target, NSM
shares will price in these higher margins.



Regulation
Fears
In Fall 2013 Ocwen Financial (OCN) was approached by
regulators due to concerns of the companys special
servicing practices over delinquent mortgages. This news
along with concerns of the rapid growth in the non-bank
industry expanded to fears of inability to acquire future
MSRs and increased expenses. These fears have culminated
in the majority of downward pressure on NSM shares over
the past 9 months.
Q2 earnings results were a prime example of why I believe regulation fears for
NSM are overhyped. OCN shares lost 26% of their value on news of increased
legal expenses. In the days following OCNs announcement shares of NSM also
sold off on similar fears. Following Nationstars earnings release, shares surged
9.6% as company did not incur the same level of fees. I believe this negative
sentiment on the non-bank servicers will begin to move from an industry wide
perspective to specific companies such as Ocwen. As this market view changes,
shares of NSM will properly value higher.



UPB
Past valuation expansions for non-bank servicers have come
on news of increasing UPBs. NSM shares rose 314% on
repetitive MSR acquisitions following the financial crisis.
But since regulation fears have slowed down MSR
acquisitions, investors and sell side research have priced in
their concerns on the future UPB pipeline based purely on
the numeric value reported.
It is worthy to highlight the current quality of Nationstars UPB has drastically
improved compared to the constant uncertainty of the UPB in the past. From
2010-2013 although MSR acquisitions rapidly occurred, the UPB was constantly
being turned over through refinancing activity. Today, Nationstars UPB has
never had better dynamics strong underwriting, stringent appraisals, and rising
interest rates which in culmination will provide years of stable cash flows. In
addition, Nationstar has reported MSR acquisition commitments exceeding $20B
in Q3 as well as an increased cash balance of $624mm from $404M Q1. This cash
balance will aid in future MSR acquisitions.

Ownership
The market holds some apprehension towards investing in
Nationstar on worries of Fortresss concentrated ownership.
Fortress has the job of returning maximum profits to its shareholders. I feel having
Fortress as the majority owner increases the attractiveness of this opportunity, as
they will continue to hold their ownership until NSM shares are properly valued.

Short
Interest
Currently 6.6mm NSM shares are held short. Similar short
interest levels have built up across all non-bank mortgage
servicers over the past 9 months following regulators
interest of further oversight for the industry.
Q2 2014 earnings showed signs of this trade ending for short sellers following
NSMs 9.6% jump on positive results compared to a competitors 26% selloff. I
believe going forward investors will start looking at specific names to short versus
the whole industry. As traders exit their short position in NSM, shares will benefit
from a short squeeze as the true float comprises of only 10.4mm shares.

PRICE TARGET
(1) (2)

Solutionstar

Nationstar FY2015 Value
FY2015 Rev $400.00

FY2015 Rev xSolutionstar $1,791 Solutionstar $25.50
Pretax Margin 45.0%

Pretax Margin 26.7% Nationstar $52.63
Pretax Income $180.00

Pretax Income $ 477.42 PRICE TARGET
(4)
$78.13
Tax Rate 38.4%

Tax Rate 38.4%

Net Income $110.88

Net Income $294.09




Shares Out. 90.8

Shares Out. 90.8


FY2015 EPS $1.22

FY2015 EPS $3.24 Valuation Range
(5)
Multiple Price

Solutionstar 13x 27x $16 - $33
Peer Multiple
(3)
20.88x

Current Multiple 16.25x Nationstar 13x 24x $42 - $78
Solutionstar Value $25.50

Remaining NSM Value $52.63 Range 13x 25x $58 - $111

(1) Values in USD millions except per share data.
(2) The above financials present a baseline case for 2015 EPS of $4.46.
(3) Solutionstars peers include: CoreLogic (CLGX), Altisource (ASPS) and First American (FAF).
(4) The PT does not take into consideration the short squeeze or reverse mortgage opportunity, although I believe these events will positively impact the
price over the next 18 months. At this time their added value is too ambiguous to accurately calculate.
(5) The range includes low to high multiples from FY2013. The range for both is the weighted average based on net income.
"
COMPETITOR ANALYSIS

Comp Set
Market
Cap
FY2014
P/E
1Yr Rev
Growth
EBIT % EBITDA % ROA ROE
NSM 2,995 9.3 116.3% 16.1% 39.8% 1.7% 19.5%

Average 2,294 9.1 99.3% 24.4% 44.1% 2.0% 14.8%

OCN 4,820 10.4 142.9% 20.9% 36.6% 4.2% 17.8%
WAC 1,026 6.8 188.9% 27.4% 42.3% 1.6% 22.6%
PHH 1,388 - 3.6% 10.5% 52.2% 0.5% 2.6%
PFSI 1,168 9.8 45.0% 47.1% 49.5% 1.8% 11.6%

FINANCIALS / STREET ESTIMATES

Account FY2011 FY2012 FY2013
Est.
FY2014
Est.
FY2015
Interest Income 66.8 71.6 197.2

(Interest Expense) 105.4 197.3 538.8

Net Interest Income -38.6 -125.7 -341.6

Trading Account Profit 109.1 487.2 702.8

Commissions & Fees Earned 233.4 462.5 1084.2

Other Operating Income 35.2 34.7 300.0

Net Revenue 339.2 858.6 1745.4 2084.6 2164.8
Provisions for Loan Losses
3.5 2.4 13.3

Net Revenue After Provisions 335.6 856.2 1732.1

Non-Interest Expense
302.6 579.7 1389.0

Operating Income 33.0 276.5 343.1 703.5 840.5
Net Non-Operating Losses (Gains)
12.1 -0.1 -3.1

Pretax Income 20.9 276.6 346.3 578.3 661.5
Income Tax Expenses
0.0 71.3 129.2

Net Income 20.9 205.3 217.1 357.0 416.3


Basic EPS - 2.41 2.43 3.40 4.46