Mr Cooper Group Inc (COOP)

[Uncle RD]

Taken from FORM 10-Q
WASHINGTON MUTUAL, INC
06/30/2008 - 08/11/2008
DOC ID. 45883437

Financial Highlights By Operating Segments (in millions):

Average Assets:
Retail Banking Group - $145,800
Card Services Group - $28,844
Commercial Group - $43,875
Home Loans Group $65,074
Corporate Support/Treasury and Other - $47,151

Reconciling Adjustments
Securitization - ($14,739)
Other - ($1,123)

Total Assets - $314,882

See Note 10 for description of each operating group
At link pg. 24 - 30 http://investors.mrcoopergroup.com/Doc/Index?did=45883437

Note 10: Operating Segments

The Company has four operating segments for the purpose of management reporting: the Retail Banking Group, the Card Services Group, the Commercial Group and the Home Loans Group. The Company's operating segments are defined by the products and services they offer. The Retail Banking Group, the Card Services Group and the Home Loans Group are consumer-oriented while the Commercial Group serves commercial customers. In addition, the category of Corporate Support/Treasury and Other includes the community lending and investment operations; the Treasury function, which manages the Company's interest rate risk, liquidity position and capital; the Corporate Support function, which provides facilities, legal, accounting and finance, human resources and technology services; and the Enterprise Risk Management function, which oversees the identification, measurement, monitoring, control and reporting of credit, market and operational risk.

The principal activities of the Retail Banking Group include:(1) offering a comprehensive line of deposit and other retail banking products and services to consumers and small businesses; (2) holding the substantial majority of the Company's held for investment portfolios of home loans, home equity loans and home equity lines of credit (but not the Company's held for investment portfolios of home loans, home equity loans and home equity lines of credit made to higher risk borrowers through

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the subprime mortgage channel); (3) originating home equity loans and lines of credit; and (4) providing investment advisory and brokerage services, sales of annuities and other financial services.

Deposit products offered to consumers and small businesses include the Company's signature free checking and interest-bearing Platinum checking accounts, as well as other personal checking, savings, money market deposit and time deposit accounts. Many products are offered in retail banking stores and online. Financial consultants provide investment advisory and securities brokerage services to the public.



The Card Services Group manages the Company's credit card operations. The segment's principal activities include: (1) issuing credit cards; (2) either holding outstanding balances on credit cards in portfolio or securitizing and selling them; (3) servicing credit card accounts; and (4) providing other cardholder services. Credit card balances that are held in the Company's loan portfolio generate interest income from finance charges on outstanding card balances, and noninterest income from the collection of fees associated with the credit card portfolio, such as interchange, performance fees (late, overlimit and returned check charges) and cash advance and balance transfer fees.

In response to tightening secondary markets, the Company has substantially ceased credit card securitizations, resulting in on-balance sheet funding of new originations.

The Card Services Group acquires new customers primarily by leveraging the Company's retail banking distribution network and through direct mail solicitations, augmented by online and telemarketing activities and other marketing programs including affinity programs. In addition to credit cards, this segment markets a variety of other products to its customer base.

The Company evaluates the performance of the Card Services Group on a managed basis. Managed financial information is derived by adjusting the GAAP financial information to add back securitized loan balances and the related interest, fee income and provision for credit losses.

The principal activities of the Commercial Group include: (1) providing financing to developers and investors, or acquiring loans for the purchase or refinancing of multi-family dwellings and other commercial properties; (2) either holding multi-family and other commercial real estate loans in portfolio or selling these loans while retaining the servicing rights; and (3) providing deposit services to commercial customers.

The principal activities of the Home Loans Group[color=blue][/color] include: (1) the origination, fulfillment and servicing of home loans and home equity loans and lines of credit; (2) managing the Company's capital markets operations, which includes the selling of all types of real estate secured loans in the secondary market, which in light of continuing illiquid market conditions, are substantially limited to conforming loans sold to government-sponsored enterprises; and (3) holding the Company's held for investment portfolios of home loans, home equity loans and home equity lines of credit made to higher risk borrowers through the subprime mortgage channel, of which all lending activities were discontinued in the fourth quarter of 2007.

In conjunction with the resizing of the home loans business, the Company has decided to eliminate negatively amortizing products including the Option ARM from the product line, discontinue all lending conducted through its wholesale channel, close all of its freestanding home loan centers and sales offices and close or consolidate certain loan fulfillment centers.

The segment offers a wide variety of real estate secured residential loan products and services. Such loans are held in portfolio by the Home Loans Group, sold to secondary market participants or

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ransferred through inter-segment sales to the Retail Banking Group. Beginning in the second half of 2007, loans that historically had been transferred to the held for investment portfolio within the Retail Banking Group were retained within the held for investment portfolio within the Home Loans Group. The decision to retain or sell loans, and the related decision to retain or not retain servicing when loans are sold, involves the analysis and comparison of expected interest income and the interest rate and credit risks inherent with holding loans in portfolio, with the expected servicing fees, the size of the gain or loss that would be realized if the loans were sold and the expected expense of managing the risk related to any retained mortgage servicing rights.

The principal activities of, and charges reported in, the Corporate Support/Treasury and Other category include:

•
management of the Company's interest rate risk, liquidity position and capital. These responsibilities involve managing a majority of the Company's portfolio of investment securities and providing oversight and direction across the enterprise over matters that impact the profile of the Company's balance sheet. Such matters include determining the optimal product composition of loans that the Company holds in portfolio, the appropriate mix of wholesale and capital markets borrowings at any given point in time and the allocation of capital resources to the business segments;

•
enterprise-wide management of the identification, measurement, monitoring, control and reporting of credit, market and operational risk;

•
community lending and investment activities, which help fund the development of affordable housing units in traditionally underserved communities;

•
general corporate overhead costs associated with the Company's facilities, legal, accounting and finance functions, human resources and technology services;

•
costs that the Company's chief operating decision maker did not consider when evaluating the performance of the Company's four operating segments, including costs associated with the Company's restructuring activities;

•
the impact of changes in the unallocated allowance for loan losses;

•
the net impact of funds transfer pricing for loan and deposit balances; and

•
items associated with transfers of loans from the Retail Banking Group to the Home Loans Group when home loans previously designated as held for investment are transferred to held for sale, such as lower of cost or fair value adjustments and the write-off of the inter-segment profit factor.
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