SEGMENT REPORTING

3 Months Ended

Mar. 31, 2023

Segment Reporting [Abstract]

SEGMENT REPORTING

SEGMENT REPORTING

At March 31, 2023, Rithm Capital’s reportable segments include (i) Origination, (ii) Servicing, (iii) MSR Related Investments, (iv) Residential Securities, Properties and Loans, (v) Consumer Loans, (vi) Mortgage Loans Receivable and (vii) Corporate. The Corporate segment primarily consists of general and administrative expenses, corporate cash and related interest income, unsecured senior notes (Note 18) and related interest expense.

The following tables summarize segment financial information, which in total reconciles to the same data for Rithm Capital as a whole:

	Origination and Servicing								Residential Securities, Properties and Loans
	Origination		Servicing		MSR Related Investments		Total Origination and Servicing		Real Estate Securities		Properties and Residential Mortgage Loans		Consumer Loans		Mortgage Loans Receivable		Corporate		Total
Three Months Ended March 31, 2023
Servicing fee revenue, net and interest income from MSRs and MSR financing receivables	$	—	$	349,424	$	120,415	$	469,839	$	—	$	—	$	—	$	—	$	—	$	469,839
Change in fair value of MSRs and MSR financing receivables (includes realization of cash flows of $(105,691))	—		(37,526)		(104,778)		(142,304)		—		—		—		—		—		(142,304)
Servicing revenue, net	—		311,898		15,637		327,535		—		—		—		—		—		327,535
Interest income	25,533		84,233		24,559		134,325		114,247		22,766		14,287		58,337		2,652		346,614
Gain on originated residential mortgage loans, held-for-sale, net	112,822		(4,601)		—		108,221		—		1,047		—		—		—		109,268
Total revenues	138,355		391,530		40,196		570,081		114,247		23,813		14,287		58,337		2,652		783,417
Interest expense	29,995		81,074		31,702		142,771		98,292		26,192		1,680		30,692		9,441		309,068
G&A and other	140,512		100,834		69,241		310,587		630		9,383		1,766		16,231		17,438		356,035
Total operating expenses	170,507		181,908		100,943		453,358		98,922		35,575		3,446		46,923		26,879		665,103
Realized and unrealized gains (losses) on investments, net	168		(191)		(12,398)		(12,421)		(45,999)		(6,427)		(5,990)		(4,812)		—		(75,649)
Other income (loss), net	(590)		(12,837)		35,921		22,494		165		24,181		(8,722)		1,713		(9,353)		30,478
Total other income (loss)	(422)		(13,028)		23,523		10,073		(45,834)		17,754		(14,712)		(3,099)		(9,353)		(45,171)
Income (loss) before income taxes	(32,574)		196,594		(37,224)		126,796		(30,509)		5,992		(3,871)		8,315		(33,580)		73,143
Income tax expense (benefit)	(8,160)		4,488		(7,371)		(11,043)		—		(3,728)		59		(2,094)		—		(16,806)
Net income (loss)	(24,414)		192,106		(29,853)		137,839		(30,509)		9,720		(3,930)		10,409		(33,580)		89,949
Noncontrolling interests in income (loss) of consolidated subsidiaries	(42)		—		(146)		(188)		—		—		(1,112)		—		—		(1,300)
Dividends on preferred stock	—		—		—		—		—		—		—		—		22,395		22,395
Net income (loss) attributable to common stockholders	$	(24,372)	$	192,106	$	(29,707)	$	138,027	$	(30,509)	$	9,720	$	(2,818)	$	10,409	$	(55,975)	$	68,854

	Origination and Servicing								Residential Securities, Properties and Loans
	Origination		Servicing		MSR Related Investments		Total Origination and Servicing		Real Estate Securities		Properties and Residential Mortgage Loans		Consumer Loans		Mortgage Loans Receivable		Corporate		Total
March 31, 2023
Investments	$	1,420,850	$	7,273,627	$	1,985,193	$	10,679,670	$	8,987,572	$	2,443,105	$	340,525	$	1,946,422	$	—	$	24,397,294
Cash and cash equivalents	262,712		432,850		326,860		1,022,422		352,280		570		1,219		37,512		20,694		1,434,697
Restricted cash	96,823		145,268		72,192		314,283		4,427		6,923		16,759		23,257		—		365,649
Other assets	163,392		2,297,604		2,640,824		5,101,820		93,298		79,537		25,790		117,598		117,769		5,535,812
Goodwill	11,836		12,540		5,092		29,468		—		—		—		55,731		—		85,199
Total assets	$	1,955,613	$	10,161,889	$	5,030,161	$	17,147,663	$	9,437,577	$	2,530,135	$	384,293	$	2,180,520	$	138,463	$	31,818,651
Debt	$	1,403,564	$	4,820,673	$	2,954,585	$	9,178,822	$	8,343,730	$	2,025,068	$	286,653	$	1,655,262	$	545,490	$	22,035,025
Other liabilities	209,659		2,077,965		40,124		2,327,748		54,436		262,554		1,255		17,748		165,342		2,829,083
Total liabilities	1,613,223		6,898,638		2,994,709		11,506,570		8,398,166		2,287,622		287,908		1,673,010		710,832		24,864,108
Total equity	342,390		3,263,251		2,035,452		5,641,093		1,039,411		242,513		96,385		507,510		(572,369)		6,954,543
Noncontrolling interests in equity of consolidated subsidiaries	11,986		—		11,304		23,290		—		—		37,047		—		—		60,337
Total Rithm Capital stockholders’ equity	$	330,404	$	3,263,251	$	2,024,148	$	5,617,803	$	1,039,411	$	242,513	$	59,338	$	507,510	$	(572,369)	$	6,894,206
Investments in equity method investees	$	—	$	—	$	67,955	$	67,955	$	—	$	—	$	—	$	—	$	—	$	67,955

	Origination and Servicing								Residential Securities, Properties and Loans
	Origination		Servicing		MSR Related Investments		Total Origination and Servicing(A)		Real Estate Securities		Properties and Residential Mortgage Loans		Consumer Loans		Mortgage Loans Receivable		Corporate		Total
Three Months Ended March 31, 2022
Servicing fee revenue, net and interest income from MSRs and MSR financing receivables	$	—	$	326,396	$	130,004	$	456,400	$	—	$	—	$	—	$	—	$	—	$	456,400
Change in fair value of MSRs and MSR financing receivables (includes realization of cash flows of $(200,325))	—		497,317		78,076		575,393		—		—		—		—		—		575,393
Servicing revenue, net	—		823,713		208,080		1,031,793		—		—		—		—		—		1,031,793
Interest income	55,371		11,353		15,702		82,426		56,349		26,989		18,933		34,277		6,439		225,413
Gain on originated residential mortgage loans, held-for-sale, net	407,269		61,762		—		471,430		—		566		—		—		—		471,996
Total revenues	462,640		896,828		223,782		1,585,649		56,349		27,555		18,933		34,277		6,439		1,729,202
Interest expense	29,435		33,706		26,365		89,506		9,029		20,868		2,262		6,969		10,199		138,833
G&A and other	408,758		102,833		77,957		589,548		772		23,434		2,254		16,408		31,630		664,046
Total operating expenses	438,193		136,539		104,322		679,054		9,801		44,302		4,516		23,377		41,829		802,879
Realized and unrealized gains (losses) on investments, net	—		(347)		(3,608)		(3,955)		(76,529)		12,164		(13,733)		(3,882)		—		(85,935)
Other income (loss), net	2,095		943		28,881		31,919		(2,600)		14,316		8,772		—		(75)		52,332
Total other income (loss)	2,095		596		25,273		27,964		(79,129)		26,480		(4,961)		(3,882)		(75)		(33,603)
Income (loss) before income taxes	26,542		760,885		144,733		934,559		(32,581)		9,733		9,456		7,018		(35,465)		892,720
Income tax expense (benefit)	6,516		161,116		31,463		199,095		—		3,657		37		—		—		202,789
Net income (loss)	20,026		599,769		113,270		735,464		(32,581)		6,076		9,419		7,018		(35,465)		689,931
Noncontrolling interests in income (loss) of consolidated subsidiaries	407		—		228		635		—		—		4,974		—		—		5,609
Dividends on preferred stock	—		—		—		—		—		—		—		—		22,461		22,461
Net income (loss) attributable to common stockholders	$	19,619	$	599,769	$	113,042	$	734,829	$	(32,581)	$	6,076	$	4,445	$	7,018	$	(57,926)	$	661,861

(A)Includes elimination of intercompany transactions of $2.4 million primarily related to loan sales.

Servicing Segment Revenues

The table below summarizes the components of servicing segment revenues:

	Three Months Ended March 31,
	2023		2022
Base servicing
MSR-owned assets	$	298,959	$	258,448
Residential whole loans	2,416		3,389
Third party	22,363		23,653
	323,738		285,490
Other fees
Ancillary and other fees(A)	25,686		40,906
Change in fair value due to:
Realization of cash flows	(72,015)		(133,276)
Change in valuation inputs and assumptions and other	34,489		630,593
Total servicing fees	$	311,898	$	823,713
Servicing data – unpaid principal balance (“UPB”) (period end) (in millions)
UPB – MSR-owned assets	$	401,414	$	398,730
UPB – Residential whole loans	8,564		11,982
UPB – Third party	94,070		86,179

(A)Includes incentive, boarding and other fees.