Home Point Capital Inc.
First Quarter 2021 Earnings
Supplemental Financial Data
May 6, 2021
To provide investors with information in addition to our results as determined under Generally Accepted Accounting Principles (“GAAP”), we disclose Adjusted revenue, Adjusted net Income, and Adjusted net margin as “non-GAAP measures,” which management believes provide useful information to investors. These measures are not financial measures calculated in accordance with GAAP and should not be considered as a substitute for revenue, net income, or any other operating performance measure calculated in accordance with GAAP, and may not be comparable to a similarly titled measure reported by other companies.
We define Adjusted revenue as Total net revenue exclusive of the impact of the change in fair value of MSRs related to changes in valuation inputs and assumptions, net of MSRs hedge and adjusted for Income from equity method investment.
We define Adjusted net income as Net income (loss) exclusive of the impact of the change in fair value of MSRs related to changes in valuation inputs and assumptions, net of MSRs hedge.
We exclude changes in fair value of MSRs, net of hedge from each of Adjusted revenue and Adjusted net income (loss) as they add volatility and are not indicative of the Company’s operating performance or results of operation. This adjustment does not include changes in fair value of MSRs due to realization of cash flows, which remain in each of Adjusted revenue and Adjusted net income (loss). Realization of cash flows occurs when cash is collected as customers make scheduled payments, partial prepayments of principal, or pay their mortgage in full.
We define Adjusted net margin by dividing Adjusted net income by Adjusted revenue.
Home Point Capital Inc. |
Condensed Consolidated Statements of Income and Non-GAAP Measurements |
(Unaudited) |
($ amounts in thousands) |
Q1 2021 | Q4 2020 | Q3 2020 | Q2 2020 | Q1 2020 | Q4 2019 | |||||||||||||||||||
Revenue: | ||||||||||||||||||||||||
Gain on loans, net | $ | 301,228 | $ | 422,158 | $ | 503,344 | $ | 356,871 | $ | 102,563 | $ | 64,006 | ||||||||||||
Loan fee income | 44,115 | 35,488 | 28,205 | 20,394 | 12,031 | 12,284 | ||||||||||||||||||
Interest income | 25,577 | 17,811 | 14,709 | 11,812 | 15,849 | 16,700 | ||||||||||||||||||
Interest expense | (32,935 | ) | (21,734 | ) | (17,559 | ) | (14,373 | ) | (15,913 | ) | (16,008 | ) | ||||||||||||
Interest Income (expense), net | (7,358 | ) | (3,922 | ) | (2,850 | ) | (2,561 | ) | (65 | ) | 692 | |||||||||||||
Loan servicing fees | 70,338 | 54,328 | 48,350 | 42,308 | 43,246 | 40,139 | ||||||||||||||||||
Change in fair value of mortgage servicing rights | 12,848 | (54,728 | ) | (66,749 | ) | (72,248 | ) | (91,527 | ) | (21,966 | ) | |||||||||||||
Other income | 801 | 568 | 498 | 260 | 1,380 | 1,568 | ||||||||||||||||||
Total revenue, net | 421,972 | 453,891 | 510,798 | 345,024 | 67,629 | 96,724 | ||||||||||||||||||
Expenses: | ||||||||||||||||||||||||
Compensation and benefits | 153,642 | 151,784 | 117,177 | 81,334 | 52,950 | 51,626 | ||||||||||||||||||
Loan expense | 22,418 | 16,827 | 11,861 | 9,920 | 6,800 | 5,444 | ||||||||||||||||||
Loan servicing expense | 8,093 | 8,044 | 6,481 | 8,308 | 7,953 | 5,143 | ||||||||||||||||||
Occupancy and equipment | 8,555 | 7,732 | 7,391 | 5,543 | 5,320 | 4,201 | ||||||||||||||||||
General and administrative | 22,244 | 24,086 | 12,073 | 9,078 | 7,222 | 6,720 | ||||||||||||||||||
Depreciation and amortization | 2,761 | 1,369 | 1,236 | 1,427 | 1,499 | 1,523 | ||||||||||||||||||
Other expenses | 9,336 | 13,177 | 7,093 | 2,755 | 2,238 | 1,529 | ||||||||||||||||||
Total expenses | 227,049 | 223,019 | 163,312 | 118,366 | 83,982 | 76,187 | ||||||||||||||||||
Income (Loss) before income tax | 194,923 | 230,872 | 347,486 | 226,658 | (16,353 | ) | 20,537 | |||||||||||||||||
Income tax expense (benefit) | 50,117 | 49,248 | 93,294 | 59,501 | (3,489 | ) | 4,580 | |||||||||||||||||
Income from equity method investments | 4,163 | 2,844 | 9,870 | 1,864 | 2,316 | 110 | ||||||||||||||||||
Net income (loss) | $ | 148,969 | $ | 184,468 | $ | 264,062 | $ | 169,022 | $ | (10,548 | ) | $ | 16,067 |
Home Point Capital Inc. |
Origination Segment |
(Unaudited) |
($ amounts in thousands) |
Q1 2021 | Q4 2020 | Q3 2020 | Q2 2020 | Q1 2020 | Q4 2019 | |||||||||||||||||||
Revenue: | ||||||||||||||||||||||||
Gain on loans, net | $ | 301,228 | $ | 422,198 | $ | 503,344 | $ | 356,871 | $ | 102,563 | $ | 64,794 | ||||||||||||
Loan fee income | 44,115 | 35,488 | 28,205 | 20,394 | 12,031 | 12,284 | ||||||||||||||||||
Loan servicing fees | (8 | ) | (1,517 | ) | 236 | (1,656 | ) | (562 | ) | (387 | ) | |||||||||||||
Interest Income (expense), net | 1,288 | (228 | ) | 318 | 960 | 526 | 461 | |||||||||||||||||
Total Origination segment revenue | 346,623 | 455,941 | 532,103 | 376,569 | 114,558 | 77,152 | ||||||||||||||||||
Directly attributable expense | 157,817 | 153,635 | 107,356 | 72,130 | 51,830 | 48,073 | ||||||||||||||||||
Contribution margin | $ | 188,806 | $ | 302,306 | $ | 424,747 | $ | 304,439 | $ | 62,728 | $ | 29,079 |
Home Point Capital Inc. |
Servicing Segment |
(Unaudited) |
($ amounts in thousands) |
Home Point Capital Inc. |
Condensed Consolidated Balance Sheets |
(Unaudited) |
($ amounts in thousands) |
Q1 2021 | Q4 2020 | Q3 2020 | Q2 2020 | Q1 2020 | Q4 2019 | |||||||||||||||||||
Assets: | ||||||||||||||||||||||||
Cash and cash equivalents | $ | 219,285 | $ | 165,230 | $ | 271,587 | $ | 127,395 | $ | 35,844 | $ | 30,630 | ||||||||||||
Restricted cash | 41,863 | 31,663 | 41,907 | 48,937 | 52,308 | 51,101 | ||||||||||||||||||
Cash and cash equivalents and Restricted cash | 261,148 | 196,893 | 313,494 | 176,332 | 88,152 | 81,731 | ||||||||||||||||||
Mortgage loans held for sale (at fair value) | 5,191,261 | 3,301,694 | 2,281,835 | 1,904,174 | 1,732,384 | 1,554,230 | ||||||||||||||||||
Mortgage servicing rights (at fair value) | 1,156,357 | 748,457 | 583,263 | 499,782 | 475,870 | 575,035 | ||||||||||||||||||
Property and equipment, net | 23,027 | 21,710 | 18,595 | 15,623 | 13,422 | 12,051 | ||||||||||||||||||
Accounts receivable, net | 290,555 | 152,845 | 79,320 | 45,185 | 59,631 | 57,872 | ||||||||||||||||||
Derivative assets | 186,909 | 334,323 | 284,359 | 244,058 | 281,237 | 40,544 | ||||||||||||||||||
Goodwill and intangibles | 10,789 | 10,789 | 10,789 | 10,789 | 11,106 | 11,935 | ||||||||||||||||||
GNMA loans eligible for repurchase | 1,446,495 | 2,524,240 | 2,919,881 | 2,351,249 | 500,460 | 499,207 | ||||||||||||||||||
Other assets | 103,850 | 87,622 | 83,897 | 77,110 | 99,377 | 76,162 | ||||||||||||||||||
Total assets | $ | 8,670,391 | $ | 7,378,573 | $ | 6,575,434 | $ | 5,324,301 | $ | 3,261,639 | $ | 2,908,767 | ||||||||||||
Liabilities and Shareholders’ Equity: | ||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||
Warehouse lines of credit | $ | 4,847,431 | $ | 3,005,415 | $ | 2,092,477 | $ | 1,767,511 | $ | 1,621,236 | $ | 1,478,183 | ||||||||||||
Term debt and other borrowings, net | 888,437 | 454,022 | 374,090 | 348,901 | 429,226 | 424,958 | ||||||||||||||||||
Accounts payable and accrued expenses | 196,542 | 167,532 | 313,887 | 132,839 | 127,823 | 39,739 | ||||||||||||||||||
GNMA loans eligible for repurchase | 1,446,495 | 2,524,240 | 2,919,881 | 2,351,249 | 500,460 | 499,207 | ||||||||||||||||||
Other liabilities | 509,189 | 299,890 | 132,333 | 90,746 | 119,110 | 56,368 | ||||||||||||||||||
Total liabilities | 7,888,094 | 6,451,099 | 5,832,668 | 4,691,246 | 2,797,856 | 2,498,455 | ||||||||||||||||||
Shareholders’ Equity: | ||||||||||||||||||||||||
Common stock | - | - | - | - | - | - | ||||||||||||||||||
Additional paid-in capital | 69,451 | 519,510 | 363,354 | 517,702 | 517,449 | 454,861 | ||||||||||||||||||
Retained earnings (accumulated deficit) | 712,846 | 407,964 | 379,411 | 115,353 | (53,665 | ) | (44,549 | ) | ||||||||||||||||
Total shareholders’ equity | 782,297 | 927,474 | 742,765 | 633,055 | 463,784 | 410,312 | ||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 8,670,391 | $ | 7,378,573 | $ | 6,575,434 | $ | 5,324,301 | $ | 3,261,639 | $ | 2,908,767 |
Home Point Capital Inc. |
Key Performance Indicators (KPIs) |
Q1 2021 | Q4 2020 | Q3 2020 | Q2 2020 | Q1 2020 | Q4 2019 | ||||||||||||||||||||||||
Origination Volume by Channel ($ thousands) | |||||||||||||||||||||||||||||
Wholesale | $ | 19,668,264 | $ | 14,130,341 | $ | 10,982,207 | $ | 7,844,172 | $ | 4,946,545 | $ | 4,541,560 | |||||||||||||||||
Correspondent | 8,243,380 | 8,575,794 | 6,280,149 | 3,490,965 | 2,925,706 | 3,538,842 | |||||||||||||||||||||||
Direct | 1,514,287 | 1,249,459 | 851,980 | 431,714 | 292,812 | 196,020 | |||||||||||||||||||||||
Total Originations | $ | 29,425,931 | $ | 23,955,593 | $ | 18,114,336 | $ | 11,766,851 | $ | 8,165,063 | $ | 8,276,422 | |||||||||||||||||
Fallout Adjusted Lock Volume by Channel ($ thousands) | |||||||||||||||||||||||||||||
Wholesale | $ | 16,139,923 | $ | 13,704,506 | $ | 11,242,589 | $ | 8,170,570 | $ | 6,962,668 | $ | 3,634,264 | |||||||||||||||||
Correspondent | 6,673,059 | 6,607,574 | 6,547,672 | 4,694,408 | 3,227,697 | 3,324,317 | |||||||||||||||||||||||
Direct | 739,796 | 838,727 | 799,514 | 591,015 | 335,386 | 136,219 | |||||||||||||||||||||||
Total Fallout Adjusted Lock Volume | $ | 23,552,778 | $ | 21,150,807 | $ | 18,589,775 | $ | 13,455,993 | $ | 10,525,750 | $ | 7,094,799 | |||||||||||||||||
Gain on Sale Margin ($ thousands) | |||||||||||||||||||||||||||||
Wholesale | $ | 245,050 | $ | 321,105 | $ | 359,512 | $ | 252,534 | $ | 130,171 | $ | 42,402 | |||||||||||||||||
Correspondent | 22,162 | 20,207 | 40,431 | 50,163 | 21,412 | 13,489 | |||||||||||||||||||||||
Direct | 26,758 | 33,451 | 33,564 | 25,943 | 14,579 | 6,872 | |||||||||||||||||||||||
Total Gain on Sale Margin by Channel | 293,971 | 374,764 | 433,507 | 328,641 | 166,162 | 62,762 | |||||||||||||||||||||||
Other1 | 7,272 | 47,394 | 69,838 | 28,230 | (63,598 | ) | 1,244 | ||||||||||||||||||||||
Total Gain on Sale Margin | $ | 301,243 | $ | 422,158 | $ | 503,344 | $ | 356,871 | $ | 102,563 | $ | 64,006 | |||||||||||||||||
Gain on Sale Margin (bps)2 | |||||||||||||||||||||||||||||
Wholesale | 152 | 234 | 320 | 309 | 187 | 117 | |||||||||||||||||||||||
Correspondent | 33 | 31 | 62 | 107 | 66 | 41 | |||||||||||||||||||||||
Direct | 362 | 399 | 420 | 439 | 435 | 504 | |||||||||||||||||||||||
Total Gain on Sale Margin by Channel | 125 | 177 | 233 | 244 | 158 | 88 | |||||||||||||||||||||||
Other1 | 3 | 22 | 38 | 21 | (60 | ) | 2 | ||||||||||||||||||||||
Total Gain on Sale Margin | 128 | 200 | 271 | 265 | 97 | 90 | |||||||||||||||||||||||
Market Share for the period ended3 | |||||||||||||||||||||||||||||
Overall share of origination market | 2.3 | %4 | 1.9 | % | 1.6 | % | 1.2 | % | 1.2 | % | 1.1 | % | |||||||||||||||||
Share of wholesale channel | NA4 | 8.2 | % | 7.3 | % | 6.2 | % | 4.7 | % | 4.5 | % | ||||||||||||||||||
Origination Volume by Purpose | |||||||||||||||||||||||||||||
Purchase | 20.4 | % | 29.5 | % | 29.0 | % | 30.7 | % | 39.3 | % | 44.3 | % | |||||||||||||||||
Refinance | 79.6 | % | 70.5 | % | 71.0 | % | 69.3 | % | 60.7 | % | 55.7 | % | |||||||||||||||||
Third Party Partners | |||||||||||||||||||||||||||||
Number of Broker Partners | 6,023 | 5,372 | 4,921 | 4,338 | 3,512 | 3,085 | |||||||||||||||||||||||
Number of Correspondent Sellers | 620 | 604 | 594 | 580 | 552 | 537 | |||||||||||||||||||||||
Mortgage Servicing | |||||||||||||||||||||||||||||
MSR Servicing Portfolio - UPB (end of period) | $ | 109,922,914 | $ | 91,482,967 | $ | 75,127,985 | $ | 64,160,826 | $ | 57,904,789 | $ | 52,600,547 | |||||||||||||||||
Average MSR Servicing Portfolio - UPB | $ | 100,702,940 | $ | 83,305,476 | $ | 69,644,405 | $ | 61,032,808 | $ | 56,041,430 | $ | 52,479,793 | |||||||||||||||||
MSR Servicing Portfolio - Units | 409,075 | 359,323 | 310,729 | 276,357 | 255,817 | 236,362 | |||||||||||||||||||||||
Weighted average coupon rate | 3.19 | % | 3.41 | % | 3.63 | % | 3.82 | % | 3.94 | % | 4.01 | % | |||||||||||||||||
60+ days delinquent, incl. forbearance | 2.7 | % | 4.4 | % | 6.6 | % | 7.8 | % | 1.7 | % | 1.7 | % | |||||||||||||||||
60+ days delinquent, excl. forbearance | 1.0 | % | 1.5 | % | 2.6 | % | 1.4 | % | NA | NA | |||||||||||||||||||
MSR Multiple | 3.84 | x | 2.85 | x | 2.57 | x | 2.51 | x | 2.61 | x | 3.43 |
Home Point Capital Inc. |
GAAP to Non-GAAP Reconciliations |
(Unaudited) |
($ amounts in thousands) |
Q1 2021 | Q4 2020 | Q3 2020 | Q2 2020 | Q1 2020 | Q4 2019 | |||||||||||||||||||
Reconciliation of Adjusted Revenue to Total Revenue, Net | ||||||||||||||||||||||||
Total revenue, net | $ | 421,972 | $ | 455,007 | $ | 510,798 | $ | 345,024 | $ | 67,629 | $ | 96,722 | ||||||||||||
Income from equity method investment | 4,163 | 2,844 | 9,870 | 1,864 | 2,316 | 110 | ||||||||||||||||||
Change in FV of MSR, net of hedge | (102,020 | ) | (17,173 | ) | 11,817 | 31,111 | 55,375 | (10,445 | ) | |||||||||||||||
Adjusted revenue | $ | 324,115 | $ | 440,678 | $ | 532,485 | $ | 377,999 | $ | 125,319 | $ | 86,387 | ||||||||||||
Reconciliation of Adjusted Net Income (Loss) to Total Net Income (Loss) | ||||||||||||||||||||||||
Total net income (loss) | $ | 148,969 | $ | 184,397 | $ | 264,062 | $ | 169,022 | $ | (10,548 | ) | $ | 16,067 | |||||||||||
Change in FV of MSR, net of hedge | (102,020 | ) | (17,173 | ) | 11,817 | 31,111 | 55,375 | (10,445 | ) | |||||||||||||||
Income tax effect of change in FV of MSR | 25,709 | 3,664 | (3,173 | ) | (8,167 | ) | (11,814 | ) | 2,329 | |||||||||||||||
Adjusted net income | $ | 72,658 | $ | 170,889 | $ | 272,706 | $ | 191,965 | $ | 33,012 | $ | 7,952 | ||||||||||||
Reconciliation of Adjuted Net Margin to Net Margin | ||||||||||||||||||||||||
Total revenue, net | $ | 421,972 | $ | 455,007 | $ | 510,798 | $ | 345,024 | $ | 67,629 | $ | 96,722 | ||||||||||||
Total net income (loss) | 148,969 | 184,397 | 264,062 | 169,022 | (10,548 | ) | 16,067 | |||||||||||||||||
Net margin | 35 | % | 41 | % | 52 | % | 49 | % | NM | 17 | % | |||||||||||||
Adjusted revenue | $ | 324,115 | $ | 440,678 | $ | 532,485 | $ | 377,999 | $ | 125,319 | $ | 86,387 | ||||||||||||
Adjusted net income | 72,658 | 170,889 | 272,706 | 191,965 | 33,012 | 7,952 | ||||||||||||||||||
Adjusted net margin | 22 | % | 39 | % | 51 | % | 51 | % | 26 | % | 9 | % |