Rithm Capital Corp. reported significant financial developments in its latest 10-Q filing for the quarter ending September 30, 2024. The company’s total assets increased to $42.3 billion, up from $39.7 billion at the end of 2023. This growth was driven by increases in mortgage servicing rights and government-backed securities, which rose to $9.3 billion and $10.1 billion, respectively. Cash and cash equivalents also saw a rise, reaching $1.6 billion compared to $1.3 billion at the end of 2023.
Total liabilities increased to $34.5 billion, up from $32.6 billion, primarily due to higher secured financing agreements, which rose to $15.4 billion. Rithm Capital's stockholders’ equity improved to $7.7 billion from $7.0 billion, reflecting a solid financial position.
In terms of revenue, Rithm Capital reported total revenues of $619.5 million for Q3 2024, a decrease from $1.1 billion in Q3 2023. The decline was attributed to a significant drop in servicing fee revenue, which fell to $493.2 million from $442.4 million year-over-year. Interest income also increased to $550.7 million, up from $462.5 million in the same quarter last year. The net income for Q3 2024 was $123.6 million, down from $221.2 million in Q3 2023, with net income attributable to common stockholders at $97.0 million compared to $193.9 million in the prior year.
Rithm Capital's strategic developments included the acquisition of Computershare Mortgage Services and its affiliates for $708 million, which contributed to a bargain purchase gain of $28.2 million. Additionally, the company completed the acquisition of Sculptor Capital Management in November 2023, enhancing its asset management capabilities.
The company faced challenges in its mortgage origination business, with net cash used in operating activities for the nine months ending September 30, 2024, reported at $(431.8) million, a stark contrast to $1.7 billion in the same period of 2023. This was influenced by increased mortgage origination volumes and higher interest expenses, which rose significantly due to increased borrowings related to the acquisitions.
Rithm Capital's management acknowledged a material weakness in internal controls over financial reporting, prompting the implementation of a remediation plan to enhance oversight and review processes. The company continues to monitor the effectiveness of these measures.
Overall, Rithm Capital's performance reflects a complex interplay of growth in assets and liabilities, strategic acquisitions, and challenges in revenue generation amid changing market conditions.
About Rithm Capital Corp.
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