Rithm Capital’s third-quarter earnings fall sharply

The parent company of Newrez saw net income cut in half from a year earlier

Rithm Capital’s third-quarter earnings fall sharply

The parent company of Newrez saw net income cut in half from a year earlier

Rithm Capital Corp., the parent company of Newrez, announced third quarter results Wednesday that included a net income of $97 million, or $0.20 per diluted common share. The earnings were down from the $213.2 million Rithm reported in the second quarter of this year.

The results were about half of last year’s third-quarter numbers when the real estate services company announced a net income of $193.9 million, or $0.40 per diluted common share.

Despite the lower earnings, Rithm reported growth in many sectors. Its total mortgage servicing rights portfolio for the third quarter was $878 billion in unpaid principal balance (UPB), an increase of $233 billion UPB from the second quarter. Loan originations increased to $15.9 billion, a 9% bump from the second quarter and a 43% increase from last year.

Newrez recorded a pre-tax income of $245.9 million, and a total servicing UPB of $755 billion, up 34% year-over-year. That figure included $233 billion UPB of third-party servicing, an increase of 116% year-over-year.

Rithm’s other main subsidiaries, Genesis Capital and Sculptor Capital Management, showed strong growth during the quarter. Genesis posted origination volume of $761 million, an increase of 26% from last year’s third quarter. Sculptor, which was acquired in November of last year, saw assets under management increase to $34 billion.

“Rithm had another terrific quarter in Q3, with the entire business demonstrating both operational resilience and earnings durability, which are increasingly the hallmarks of our well-balanced model,” said Michael Neirenberg, the company’s chairman, president and CEO. “Our core businesses are consistently creating value for shareholders through earnings, which is either distributed as dividends or reinvested back into compounding our growth, diversifying earnings and positioning the business for future success to benefit our shareholders and LPs alike.”

During an earnings call for the publicly traded company, Neirenberg told analysts that the company had raised $300 million during the quarter to help fuel continued growth, mentioning that Rithm had expanded its business and acquired subsidiaries, including Sculptor and Genesis, in the past three years.

“As many of you know, we’re always engaged in activity to grow our platform through M&A,” Neirenberg said. “So, I would say all of these factors are good reasons why we want to have more capital.”

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