| Segments |
14. Segments
ASC 280, Segment Reporting, establishes the standards for reporting information about segments in financial statements. In applying the criteria set forth in that guidance, the Company has determined that it has two reportable segments — Loan Origination and Servicing.
Origination — The Company operates its loan origination business in approximately forty-eight states. Its licensed sales professionals and support staff cultivate deep relationships with referral partners and clients and provide a customized approach to the loan transaction whether it is a purchase or refinance. The originations segment is primarily responsible for loan origination, acquisition and sale activities.
Servicing — The Company services loans out of its corporate office in San Diego, California. Properties of the loans serviced by the Company are disbursed throughout the United States and as of December 31, 2019 the Company serviced at least one loan in forty-eight different states. The servicing segment provides a steady stream of cash flow to support the origination segment and more importantly it allows for the Company to build long standing client relationships that drive repeat and referral business back to the origination segment to recapture the client’s next mortgage transaction. The servicing segment is primarily responsible for the servicing activities of all loans in the Company’s servicing portfolio which includes, but is not limited to, collection and remittance of loan payments, managing borrower’s impound accounts for taxes and insurance, loan payoffs, loss mitigation and foreclosure activities.
The Company does not allocate assets to its reportable segments as they are not included in the review performed by the Chief Operating Decision Maker for purposes of assessing segment performance and allocating resources. The balance sheet is managed on a consolidated basis and is not used in the context of segment reporting. The Company also does not allocate certain corporate expenses, which are represented by All Other in the tables below.
The following table presents the financial performance and results by segment for the three months ended September 30, 2020:
|
|
|
Production
|
|
|
Servicing
|
|
|
Total
Segments
|
|
|
All Other
|
|
|
Total
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan origination fees and gain on sale of loans, net
|
|
$
|
563,162
|
|
|
$
|
1,847
|
|
|
$
|
565,009
|
|
|
$
|
—
|
|
|
$
|
565,009
|
|
|
Loan servicing and other fees
|
|
|
—
|
|
|
|
40,159
|
|
|
|
40,159
|
|
|
|
—
|
|
|
|
40,159
|
|
|
Valuation adjustment of mortgage servicing rights
|
|
|
—
|
|
|
|
(41,006
|
)
|
|
|
(41,006
|
)
|
|
|
—
|
|
|
|
(41,006
|
)
|
|
Interest income (expense)
|
|
|
3,864
|
|
|
|
(2,386
|
)
|
|
|
1,478
|
|
|
|
(2,061
|
)
|
|
|
(583
|
)
|
|
Other income (expense)
|
|
|
7
|
|
|
|
—
|
|
|
|
7
|
|
|
|
(42
|
)
|
|
|
(35
|
)
|
|
Net revenue
|
|
|
567,033
|
|
|
|
(1,386
|
)
|
|
|
565,647
|
|
|
|
(2,103
|
)
|
|
|
563,544
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries, incentive compensation and benefits
|
|
|
244,787
|
|
|
|
5,013
|
|
|
|
249,800
|
|
|
|
23,760
|
|
|
|
273,560
|
|
|
General and administrative
|
|
|
22,432
|
|
|
|
3,060
|
|
|
|
25,492
|
|
|
|
1,779
|
|
|
|
27,271
|
|
|
Occupancy, equipment and communication
|
|
|
10,721
|
|
|
|
1,581
|
|
|
|
12,302
|
|
|
|
2,015
|
|
|
|
14,317
|
|
|
Depreciation and amortization
|
|
|
1,165
|
|
|
|
115
|
|
|
|
1,280
|
|
|
|
260
|
|
|
|
1,540
|
|
|
Provision for foreclosure losses
|
|
|
—
|
|
|
|
547
|
|
|
|
547
|
|
|
|
—
|
|
|
|
547
|
|
|
Income tax expense
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
64,223
|
|
|
|
64,223
|
|
|
Net income (loss) allocated to segments
|
|
$
|
287,928
|
|
|
$
|
(11,702
|
)
|
|
$
|
276,226
|
|
|
$
|
(94,140
|
)
|
|
$
|
182,086
|
|
The following table presents the financial performance and results by segment for the three months ended September 30, 2019:
|
|
|
Production
|
|
|
Servicing
|
|
|
Total
Segments
|
|
|
All Other
|
|
|
Total
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan origination fees and gain on sale of loans, net
|
|
$
|
269,382
|
|
|
$
|
711
|
|
|
$
|
270,093
|
|
|
$
|
—
|
|
|
$
|
270,093
|
|
|
Loan servicing and other fees
|
|
|
—
|
|
|
|
36,540
|
|
|
|
36,540
|
|
|
|
—
|
|
|
|
36,540
|
|
|
Valuation adjustment of mortgage servicing rights
|
|
|
—
|
|
|
|
(90,968
|
)
|
|
|
(90,968
|
)
|
|
|
—
|
|
|
|
(90,968
|
)
|
|
Interest income (expense)
|
|
|
2,303
|
|
|
|
1,697
|
|
|
|
4,000
|
|
|
|
(1,892
|
)
|
|
|
2,108
|
|
|
Other income
|
|
|
12
|
|
|
|
—
|
|
|
|
12
|
|
|
|
(7
|
)
|
|
|
5
|
|
|
Net revenue
|
|
|
271,697
|
|
|
|
(52,020
|
)
|
|
|
219,677
|
|
|
|
(1,899
|
)
|
|
|
217,778
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries, incentive compensation and benefits
|
|
|
166,909
|
|
|
|
3,857
|
|
|
|
170,766
|
|
|
|
5,950
|
|
|
|
176,716
|
|
|
General and administrative
|
|
|
14,527
|
|
|
|
2,171
|
|
|
|
16,698
|
|
|
|
1,799
|
|
|
|
18,497
|
|
|
Occupancy, equipment and communication
|
|
|
10,988
|
|
|
|
1,133
|
|
|
|
12,121
|
|
|
|
1,300
|
|
|
|
13,421
|
|
|
Depreciation and amortization
|
|
|
1,588
|
|
|
|
77
|
|
|
|
1,665
|
|
|
|
147
|
|
|
|
1,812
|
|
|
Provision for foreclosure losses
|
|
|
—
|
|
|
|
1,497
|
|
|
|
1,497
|
|
|
|
—
|
|
|
|
1,497
|
|
|
Income tax benefit
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(2,661
|
)
|
|
|
(2,661
|
)
|
|
Net income (loss) allocated to segments
|
|
$
|
77,685
|
|
|
$
|
(60,755
|
)
|
|
$
|
16,930
|
|
|
$
|
(8,434
|
)
|
|
$
|
8,496
|
|
The following table presents the financial performance and results by segment for the nine months ended September 30, 2020:
|
|
|
Production
|
|
|
Servicing
|
|
|
Total
Segments
|
|
|
All Other
|
|
|
Total
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan origination fees and gain on sale of loans, net
|
|
$
|
1,293,621
|
|
|
$
|
4,681
|
|
|
$
|
1,298,302
|
|
|
$
|
—
|
|
|
$
|
1,298,302
|
|
|
Loan servicing and other fees
|
|
|
—
|
|
|
|
116,469
|
|
|
|
116,469
|
|
|
|
—
|
|
|
|
116,469
|
|
|
Valuation adjustment of mortgage servicing rights
|
|
|
—
|
|
|
|
(245,816
|
)
|
|
|
(245,816
|
)
|
|
|
—
|
|
|
|
(245,816
|
)
|
|
Interest income (expense)
|
|
|
10,274
|
|
|
|
(4,997
|
)
|
|
|
5,277
|
|
|
|
(6,352
|
)
|
|
|
(1,075
|
)
|
|
Other income
|
|
|
32
|
|
|
|
—
|
|
|
|
32
|
|
|
|
(71
|
)
|
|
|
(39
|
)
|
|
Net revenue
|
|
|
1,303,927
|
|
|
|
(129,663
|
)
|
|
|
1,174,264
|
|
|
|
(6,423
|
)
|
|
|
1,167,841
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries, incentive compensation and benefits
|
|
|
594,830
|
|
|
|
14,230
|
|
|
|
609,060
|
|
|
|
41,398
|
|
|
|
650,458
|
|
|
General and administrative
|
|
|
59,579
|
|
|
|
10,033
|
|
|
|
69,612
|
|
|
|
5,851
|
|
|
|
75,463
|
|
|
Occupancy, equipment and communication
|
|
|
34,876
|
|
|
|
2,796
|
|
|
|
37,672
|
|
|
|
3,600
|
|
|
|
41,272
|
|
|
Depreciation and amortization
|
|
|
3,766
|
|
|
|
329
|
|
|
|
4,095
|
|
|
|
591
|
|
|
|
4,686
|
|
|
Provision for foreclosure losses
|
|
|
—
|
|
|
|
2,407
|
|
|
|
2,407
|
|
|
|
—
|
|
|
|
2,407
|
|
|
Income tax expense
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
100,688
|
|
|
|
100,688
|
|
|
Net income (loss) allocated to segments
|
|
$
|
610,876
|
|
|
$
|
(159,458
|
)
|
|
$
|
451,418
|
|
|
$
|
(158,551
|
)
|
|
$
|
292,867
|
|
The following table presents the financial performance and results by segment for the nine months ended September 30, 2019:
|
|
|
Production
|
|
|
Servicing
|
|
|
Total
Segments
|
|
|
All Other
|
|
|
Total
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan origination fees and gain on sale of loans, net
|
|
$
|
594,864
|
|
|
$
|
2,732
|
|
|
$
|
597,596
|
|
|
$
|
—
|
|
|
$
|
597,596
|
|
|
Loan servicing and other fees
|
|
|
—
|
|
|
|
104,977
|
|
|
|
104,977
|
|
|
|
—
|
|
|
|
104,977
|
|
|
Valuation adjustment of mortgage servicing rights
|
|
|
—
|
|
|
|
(251,190
|
)
|
|
|
(251,190
|
)
|
|
|
—
|
|
|
|
(251,190
|
)
|
|
Interest income (expense)
|
|
|
9,107
|
|
|
|
1,690
|
|
|
|
10,797
|
|
|
|
(6,495
|
)
|
|
|
4,302
|
|
|
Other income
|
|
|
37
|
|
|
|
—
|
|
|
|
37
|
|
|
|
1,149
|
|
|
|
1,186
|
|
|
Net revenue
|
|
|
604,008
|
|
|
|
(141,791
|
)
|
|
|
462,217
|
|
|
|
(5,346
|
)
|
|
|
456,871
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries, incentive compensation and benefits
|
|
|
397,594
|
|
|
|
11,300
|
|
|
|
408,894
|
|
|
|
9,138
|
|
|
|
418,032
|
|
|
General and administrative
|
|
|
34,805
|
|
|
|
7,249
|
|
|
|
42,054
|
|
|
|
5,067
|
|
|
|
47,121
|
|
|
Occupancy, equipment and communication
|
|
|
35,033
|
|
|
|
2,006
|
|
|
|
37,039
|
|
|
|
3,324
|
|
|
|
40,363
|
|
|
Depreciation and amortization
|
|
|
4,923
|
|
|
|
231
|
|
|
|
5,154
|
|
|
|
482
|
|
|
|
5,636
|
|
|
Provision for foreclosure losses
|
|
|
—
|
|
|
|
2,271
|
|
|
|
2,271
|
|
|
|
—
|
|
|
|
2,271
|
|
|
Income tax benefit
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(18,050
|
)
|
|
|
(18,050
|
)
|
|
Net income (loss) allocated to segments
|
|
$
|
131,653
|
|
|
$
|
(164,848
|
)
|
|
$
|
(33,195
|
)
|
|
$
|
(5,307
|
)
|
|
$
|
(38,502
|
)
|
|