Walter Investment Management Corp.’s state of upheaval continued through the third quarter, as the nonbank announced Wednesday that it posted its third straight quarterly loss, pushing the company’s net loss for the year above $500 million.
For the third quarter, Walter Investment posted a GAAP net loss of $101.8 million, or $2.82 per share, as compared to a GAAP net loss of $76.9 million, or $2.04 per share for the same time period last year.
The nine-figure loss follows a second quarter where the company posted a GAAP net loss of $232.4 million, or $6.49 per share, compared to a GAAP net loss of $38.1 million, or $1.01 per share during the same time period last year.
And in the first quarter of this year, Walter Investment reported a GAAP net loss of $172.7 million, or $4.85 per share, compared to a GAAP net loss of $31 million, or $0.82 per share for the same time period in 2015.
All told, the company lost more than $506 million in the first three quarters of 2016, compared to a net loss of $146 million during the first three quarters of 2015.
According to Walter Investment, the loss includes goodwill and intangible assets impairment charges of $60.6 million after tax, and non-cash charges of $17 million after tax, resulting from fair value changes due to changes in valuation inputs and other assumptions.
The company said that the goodwill impairment charge it took during the third quarter relates to its servicing reporting unit and was primarily the result of “lower forecasted cash flows due to continued level of elevated expenses during the third quarter.”
According to the nonbank, as a result of the goodwill impairment charge it took during the third quarter, its servicing reporting unit “no longer has goodwill.”
Additionally, the intangible assets impairment was related to the reverse mortgage segment and was driven by the shift in strategic direction and reduced profitability expectations for the business.
While the company took another net loss, the news wasn’t all bad.
The company said that its total revenue for the third quarter of 2016 was $297.3 million, an increase of $77.9 million as compared to the previous year, primarily due to $113.4 million higher net servicing revenue and fees partially offset by $34.0 million lower fair value gains on reverse loans and liabilities.
The increase in net servicing revenue resulted from $138.9 million lower fair value losses on mortgage servicing rights primarily due to market-driven changes in interest rates, the company said.
The company cautioned that its total expenses for the third quarter of 2016 were $465.8 million, an increase of $101.7 million as compared to the prior year quarter, reflecting $97.7 million of goodwill and intangible assets impairment charges in the servicing and reverse mortgage reporting units, respectively.
The company’s financial performance isn’t the only thing that’s been in flux lately.
Earlier this year, Walter Investment named its fourth different CEO in less than a year.
Earlier this year, Walter Investment announced that Denmar Dixon was resigning as CEO and vice chairman of the company after serving in the role for only eight months.
Dixon took on the role of CEO in October 2015 after Mark O’Brien, the company’s former chairman and CEO, announced he was retiring.
After Dixon left, Walter Investment chose George Awad to fill in as executive chairman and interim CEO while the company’s board searched for a permanent CEO.
And the company chose Renzi, who most recently served as the chief operating officer, managing director and head of operations for Citigroup‘s North America retail bank, commercial bank and CitiMortgage, as its permanent CEO back in August.
According to Walter Investment, Renzi officially began serving as CEO in mid-September, and has overseen several changes to the company’s management team in an effort to create a “more streamlined and simple organization.”
One of those changes was the departure of David Schneider, who served as executive vice president and chief operating officer of Walter Investment and as president of Ditech Financial.
Schneider left the company in October as part of the company’s restructuring effort.
Despite those changes and the company’s negative results, Renzi said the company is on the right track.
“Since joining Walter I have channeled my energy to spending time in our business centers evaluating our organization front to back. Clearly we have work to do in a number of important areas but I was encouraged with what I learned and took quick initial actions to simplify, flatten and focus Walter on our customers, operational fundamentals, integration opportunities across our businesses and, most importantly, execution and performance accountability,” Renzi said.
“I believe that the strategic pillars of capital efficiency, process efficiency and new leadership along with an engaged workforce are the foundation to achieving our goals of delivering consistent profitability and sustainable growth,” Renzi continued.
“We continue to take actions to reduce our cost structure and generate additional ways in which we can leverage Lean process improvements, technologies and automation, and employee training to drive process efficiencies and additional productivity,” Renzi added.
“As we progress on these goals, we consistently focus on our core business fundamentals of caring for customers, managing risk and generating cash, with a strong emphasis on performance management and controls,” Renzi concluded. “I am excited to be a part of this organization and am ready to face the challenges ahead, confident that the changes underway will put Walter in the best position to succeed.”