Home Point Capital (HMPT) 8-K Home Point Capital Reports Third Quarter 2021 Financial Results

Exhibit 99.3

Home Point Capital Inc.

Third Quarter 2021 Earnings

Supplemental Financial Data

November 4, 2021

Legal Disclaimers

1. Non-GAAP Financial Measures

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. 

We believe that Adjusted revenue, Adjusted net Income, and Adjusted net margin can provide useful information to investors and others in understanding and evaluating our operating results. These measures are not financial measures calculated in accordance with GAAP and should not be considered as a substitute for 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 believe that the presentation of Adjusted revenue, Adjusted net Income, and Adjusted net margin provides useful information to investors regarding our results of operations because each measure assists both investors and management in analyzing and benchmarking the performance and value of our business. Adjusted revenue, Adjusted net Income, and Adjusted net margin provide indicators of performance that are not affected by fluctuations in certain costs or other items. Accordingly, management believes that these measurements are useful for comparing general operating performance from period to period, and management relies on these measures for planning and forecasting of future periods. The Company measures the performance of the segments primarily on a contribution margin basis. Additionally, these measures allow management to compare our results with those of other companies that have different financing and capital structures. However, other companies may define Adjusted revenue, Adjusted net Income, and Adjusted net margin differently, and as a result, our measures of Adjusted revenue, Adjusted net Income, and Adjusted net margin may not be directly comparable to those of other companies.

2. Forward Looking Statements

This presentation contains certain “forward-looking statements,” as that term is defined in the U.S. federal securities laws, including the Private Securities Litigation Reform Act of 1995. In addition, from time to time, Home Point Capital Inc. (“we,” “our,” “us” or the “Company”) or its representatives have made, or may make, forward-looking statements orally or in writing. These forward-looking statements include, but are not limited to, statements other than statements of historical facts, including among others, statements relating to the Company’s future financial performance, the Company’s business prospects and strategy, anticipated financial position, liquidity and capital needs, the industry in which the Company operates and other similar matters. Words such as “anticipates,” “expects,” “intends,” “plans,” “predicts,” “believes,” “seeks,” “estimates,” “could,” “would,” “will,” “may,” “can,” “continue,” “potential,” “should” and the negative of these terms or other comparable terminology often identify forward-looking statements. These forward-looking statements, which are based on currently available information, operating plans, and projections about events and trends, are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results to differ materially from the results contemplated by the forward-looking statements. Factors, risks, and uncertainties that could cause actual outcomes and results to be materially different from those contemplated by forward-looking statements include, among others: our reliance on our financing arrangements to fund mortgage loans and otherwise operate our business; the dependence of our loan origination and servicing revenues on macroeconomic and U.S. residential real estate market conditions; counterparty risk; the requirement to make servicing advances that can be subject to delays in recovery or may not be recoverable in certain circumstances; competition for mortgage assets that may limit the availability of desirable originations, acquisitions and result in reduced risk-adjusted returns; our ability to continue to grow our loan origination business or effectively manage significant increases in our loan production volume; competition in the industry in which we operate; our success and growth of our production and servicing activities and the dependence upon our ability to adapt to and implement technological changes; the effectiveness of our risk management efforts; our ability to detect misconduct and fraud; any cybersecurity risks, cyber incidents and technology failures; our vendor relationships; our failure to deal appropriately with various issues that may give rise to reputational risk, including legal and regulatory requirements; risks and uncertainties associated with litigation, including any employment, intellectual property, consumer protection, class action and other litigation matters, and related unfavorable publicity; exposure to new risks and increased costs as a result of initiating new business activities or strategies or significantly expanding existing business activities or strategies; the impact of changes in political or economic stability or in government policies on our material vendors with operations in India; the impact of interest rate fluctuations; risks associated with hedging against interest rate exposure; the impact of any prolonged economic slowdown, recession or declining real estate values; risks associated with financing our assets with borrowings; risks associated with a decrease in value of our collateral; the dependence of our operations on access to our financing arrangements; risks associated with the financial and restrictive covenants included in our financing agreements; risks associated with higher risk loans that we service; risks associated with derivative financial instruments; our ability to foreclose on our mortgage assets in a timely manner or at all; our ability to obtain and/or maintain licenses and other approvals in those jurisdictions where required to conduct our business; legislative and regulatory changes that impact the mortgage loan industry or housing market; changes in regulations or the occurrence of other events that impact the business, operations or prospects of government agencies or such changes that increase the cost of doing business with such entities; and the spread of the COVID-19 outbreak and severe disruptions in the U.S. and global economy and financial markets it has caused. You should carefully consider the foregoing factors and the other risks and uncertainties that may affect the Company’s business, including those described in documents filed from time to time by the Company with the Securities and Exchange Commission. Many of the important factors that will determine these results are beyond our ability to control or predict. You are cautioned not to put undue reliance on any forward-looking statements, which speak only as of the date thereof. Except as required under applicable law, the Company does not assume any obligation to update these forward-looking statements.

Home Point Capital Inc.

Condensed Consolidated Statements of Income and Non-GAAP Measurements

(Unaudited)

($ amounts in thousands)

		Q3 2021			Q2 2021			Q1 2021			Q4 2020			Q3 2020			Q2 2020			Q1 2020			Q4 2019
Revenue:
Gain on loans, net	$	145,471		$	75,029		$	301,228		$	422,158		$	503,344		$	356,871		$	102,563		$	64,006
Loan fee income		34,484			39,500			44,115			35,488			28,205			20,394			12,031			12,284
Interest income		36,719			34,648			25,577			17,811			14,709			11,812			15,849			16,700
Interest expense		(45,532	)		(44,136	)		(32,935	)		(21,734	)		(17,559	)		(14,373	)		(15,913	)		(16,008	)
Interest Income (expense), net		(8,813	)		(9,488	)		(7,358	)		(3,922	)		(2,850	)		(2,561	)		(65	)		692
Loan servicing fees		91,831			85,584			70,338			54,328			48,350			42,308			43,246			40,139
Change in fair value of mortgage servicing rights		3,544			(106,905	)		12,848			(54,727	)		(66,749	)		(72,248	)		(91,527	)		(21,966	)
Other income		8,084			652			801			568			498			260			1,380			1,568
Total revenue, net		274,601			84,372			421,972			453,892			510,798			345,024			67,629			96,724
Expenses:
Compensation and benefits		114,612			127,296			153,642			151,784			117,177			81,334			52,950			51,626
Loan expense		16,618			17,483			17,695			12,915			8,733			7,624			5,329			4,037
Loan servicing expense		6,681			7,507			8,093			8,044			6,481			8,308			7,953			5,143
Production technology		7,583			8,169			9,286			7,617			6,378			5,049			3,113			2,860
General and administrative		21,741			26,549			26,237			28,113			16,213			11,867			10,900			9,468
Depreciation and amortization		2,440			2,350			2,761			1,369			1,236			1,427			1,499			1,523
Other expenses		5,649			8,638			9,336			13,177			7,093			2,755			2,238			1,529
Total expenses		175,324			197,992			227,049			223,019			163,312			118,366			83,982			76,187
Income (Loss) before income tax		99,277			(113,620	)		194,923			230,873			347,486			226,658			(16,353	)		20,537
Income tax expense (benefit)		27,341			(27,209	)		50,117			49,248			93,294			59,501			(3,489	)		4,580
Income from equity method investments		(713	)		13,198			4,163			2,844			9,870			1,864			2,316			110
Net income (loss)	$	71,223		$	(73,213	)	$	148,969		$	184,470		$	264,062		$	169,022		$	(10,548	)	$	16,067

Home Point Capital Inc.

Origination Segment

(Unaudited)

($ amounts in thousands)

		Q3 2021		Q2 2021			Q1 2021			Q4 2020			Q3 2020		Q2 2020			Q1 2020			Q4 2019
Revenue:
Gain on loans, net	$	145,302	$	75,004		$	301,228		$	422,198		$	503,344	$	356,871		$	102,563		$	64,794
Loan fee income		34,484		39,500			44,115			35,488			28,205		20,394			12,031			12,284
Loan servicing fees		28		-			(8	)		(1,517	)		236		(1,656	)		(562	)		(387	)
Changes in fair value of MSRs		-		-			-			-			-		-			-			-
Interest Income (expense), net		4,035		2,697			1,288			(228	)		318		960			526			461
Total Origination segment revenue		183,849		117,201			346,623			455,941			532,103		376,569			114,558			77,152
Directly attributable expense		116,524		137,987			157,817			153,635			108,077		75,528			51,830			48,073
Contribution margin	$	67,325	$	(20,786	)	$	188,806		$	302,306		$	424,026	$	301,041		$	62,728		$	29,079

Home Point Capital Inc.

Servicing Segment

(Unaudited)

($ amounts in thousands)

		Q3 2021			Q2 2021			Q1 2021			Q4 2020			Q3 2020			Q2 2020			Q1 2020			Q4 2019
Revenue:
Gain on loans, net	$	173		$	17		$	-		$	(40	)	$	-		$	-		$	-		$	(788	)
Loan servicing fees		91,803			85,584			70,346			55,845			48,113			43,965			43,808			40,526
Interest Income, net		623			417			252			295			598			1,269			5,264			5,628
Other income		7,476			50			128			113			89			58			58			8
Total Servicing segment revenue		100,075			86,068			70,726			56,214			48,801			45,292			49,130			45,375
Directly attributable expense		17,440			18,768			18,722			18,314			13,937			15,463			13,267			9,825
Primary margin		82,635			67,300			52,004			37,899			34,864			29,829			35,863			35,549
Change in MSR fair value: amortization		(73,942	)		(77,724	)		(89,170	)		(71,900	)		(54,932	)		(41,137	)		(36,153	)		(32,411	)
Adjusted contribution margin		8,693			(10,424	)		(37,166	)		(34,001	)		(20,068	)		(11,308	)		(290	)		3,139
Change in MSR fair value: mark-to-market, net of hedge		77,486			(29,181	)		102,108			17,173			(11,817	)		(31,111	)		(55,375	)		10,445
Contribution margin	$	86,179		$	(39,605	)	$	64,942		$	(16,828	)	$	(31,885	)	$	(42,419	)	$	(55,665	)	$	13,584

Home Point Capital Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

($ amounts in thousands)

		Q3 2021		Q2 2021		Q1 2021		Q4 2020		Q3 2020		Q2 2020		Q1 2020			Q4 2019
Assets:
Cash and cash equivalents	$	160,636	$	209,880	$	219,285	$	165,230	$	271,587	$	127,395	$	35,844		$	30,630
Restricted cash		42,491		42,994		41,863		31,663		41,907		48,937		52,308			51,101
Cash and cash equivalents and Restricted cash		203,127		252,874		261,148		196,893		313,494		176,332		88,152			81,731
Mortgage loans held for sale (at fair value)		6,680,196		5,412,452		5,191,261		3,301,694		2,281,835		1,904,174		1,732,384			1,554,230
Mortgage servicing rights (at fair value)		1,402,140		1,267,253		1,156,357		748,457		583,263		499,782		475,870			575,035
Property and equipment, net		22,945		23,350		23,027		21,710		18,595		15,623		13,422			12,051
Accounts receivable, net		117,538		177,360		290,555		152,845		79,320		45,185		59,631			57,872
Derivative assets		164,602		125,217		186,909		334,323		284,359		244,058		281,237			40,544
Goodwill and intangibles		10,789		10,789		10,789		10,789		10,789		10,789		11,106			11,935
GNMA loans eligible for repurchase		265,132		988,218		1,446,495		2,524,240		2,919,881		2,351,249		500,460			499,207
Other assets		111,640		112,143		103,850		87,622		83,897		77,110		99,377			76,162
Total assets	$	8,978,109	$	8,369,656	$	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	$	6,308,477	$	5,057,590	$	4,847,431	$	3,005,415	$	2,092,477	$	1,767,511	$	1,621,236		$	1,478,183
Term debt and other borrowings, net		1,065,762		1,166,538		888,437		454,022		374,090		348,901		429,226			424,958
Accounts payable and accrued expenses		127,793		146,138		196,542		167,532		313,887		78,216		127,823			39,739
GNMA loans eligible for repurchase		265,132		988,218		1,446,495		2,524,240		2,919,881		2,351,249		500,460			499,207
Deferred tax liabilities		224,303		196,791		217,783		174,002		112,978		35,279		-			-
Other liabilities		225,440		105,053		291,406		125,888		19,355		110,084		119,110			56,368
Total liabilities		8,216,907		7,660,328		7,888,094		6,451,099		5,832,668		4,691,240		2,797,856			2,498,455
Shareholders’ Equity:
Common stock		-		-		-		-		-		-		-			-
Additional paid-in capital		522,080		520,505		69,451		519,510		363,354		517,702		517,449			454,861
Retained earnings (accumulated deficit)		239,122		188,823		712,846		407,964		379,411		115,353		(53,665	)		(44,549	)
Total shareholders’ equity		761,202		709,328		782,297		927,474		742,765		633,055		463,784			410,312
Total liabilities and shareholders’ equity	$	8,978,109	$	8,369,656	$	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)

		Q3 2021			Q2 2021			Q1 2021			Q4 2020			Q3 2020			Q2 2020			Q1 2020			Q4 2019
Origination Volume by Channel ($ thousands)
Wholesale	$	16,355,449		$	18,380,041		$	19,668,264		$	14,130,341		$	10,982,207		$	7,844,172		$	4,946,545		$	4,541,560
Correspondent		3,434,186			5,695,078			8,243,380			8,575,794			6,280,149			3,490,965			2,925,706			3,538,842
Direct		1,005,985			1,390,698			1,514,287			1,249,459			851,980			431,714			292,812			196,020
Total Originations	$	20,795,621		$	25,465,816		$	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	$	16,709,845		$	15,566,192		$	16,139,923		$	13,704,506		$	11,242,589		$	8,170,570		$	6,962,668		$	3,634,264
Correspondent		4,149,963			3,962,583			6,673,059			6,607,574			6,547,672			4,694,408			3,227,697			3,324,317
Direct		1,034,634			835,980			739,796			838,727			799,514			591,015			335,386			136,219
Total Fallout Adjusted Lock Volume	$	21,894,442		$	20,364,755		$	23,552,778		$	21,150,807		$	18,589,775		$	13,455,993		$	10,525,750		$	7,094,799
Gain on Sale Margin by Channel (in thousands)1
TPO	$	121,999		$	114,486		$	245,050		$	321,105		$	359,512		$	252,534		$	130,171		$	42,402
Corr		8,351			9,270			22,162			20,207			40,431			50,163			21,412			13,489
Retail		30,252			26,322			26,758			33,451			33,564			25,943			14,579			6,872
Other2		23,247			(32,877	)		52,652			47,394			98,596			47,928			(51,604	)		1,244
Total Gain on Sale Margin	$	183,849		$	117,201		$	346,623		$	422,158		$	532,103		$	376,569		$	114,558		$	64,006
Gain on Sale Margin (bps)1
TPO		73			74			152			234			320			309			187			117
Corr		20			23			33			31			62			107			66			41
Retail		292			315			362			399			420			439			435			504
Other		11			(16	)		22			22			53			38			(60	)		2
Total Gain on Sale Margin		84			58			147			200			286			280			97			90
Market Share for the period ended3
Overall share of origination market	NA4				2.2	%		2.2	%		1.9	%		1.6	%		1.2	%		1.2	%		1.1	%
Share of wholesale channel	NA4				10.2	%		10.4	%		8.2	%		7.3	%		6.2	%		4.7	%		4.5	%
Origination Volume by Purpose
Purchase		34.6	%		35.2	%		20.4	%		29.5	%		29.0	%		30.7	%		39.3	%		44.3	%
Refinance		65.4	%		64.8	%		79.6	%		70.5	%		71.0	%		69.3	%		60.7	%		55.7	%
Third Party Partners
Number of Broker Partners		7,452			6,738			6,023			5,372			4,921			4,338			3,512			3,085
Number of Correspondent Sellers		652			642			620			604			587			580			552			537
Mortgage Servicing
MSR Servicing Portfolio - UPB	$	125,832,286		$	124,258,935		$	105,821,372		$	91,482,967		$	73,951,042		$	64,160,826		$	57,904,789		$	52,600,547
Average MSR Servicing Portfolio - UPB	$	125,045,611		$	106,268,092		$	97,049,311		$	72,041,757		$	70,426,343		$	59,751,095		$	54,658,802		$	47,012,186
MSR Servicing Portfolio - Units		428,622			449,029			396,641			359,323			307,236			285,353			255,817			236,362
Weighted average coupon rate		2.98	%		3.09	%		3.19	%		3.41	%		3.63	%		3.82	%		3.94	%		4.01	%
60+ days delinquent, incl. forbearance		0.9	%		1.6	%		2.7	%		4.4	%		6.6	%		7.8	%		1.7	%		1.7	%
60+ days delinquent, excl. forbearance		0.7	%		1.3	%		1.0	%		1.5	%		2.6	%		1.4	%	NA			NA
MSR Multiple		4.20	x		3.69	x		3.84	x		2.85	x		2.57	x		2.51	x		2.61	x		3.43	x

(1) Calculated as gain on sale divided by Fallout Adjusted Lock Volume. Gain on sale includes gain on loans, net, loan fee income, interest income (expense), net, and loan servicing fees (expense) for the Origination segment.

(2) Includes interest income (expense), net, realized and unrealized gains (losses) on locks and mortgage loans held for sale, net hedging results, the provision for the represeentation and warranty reserve, and differences between modeled and actual pull-through.

(3) For each period, overall share calculated as the Company’s originations dollar value divided by the total residential originations in the United States per Inside Mortgage Finance, a third party provider of residential mortgage industry news and statistics. For each period, wholesale channel share calculated as the Company’s wholesale originations dollar value divided by the total wholesale originations in the United States per Inside Mortgage Finance.

(4) Information for this time period not available as of the date of the release of this quarterly financial supplement.

Homepoint Capital Inc.

Condensed Consolidated Statements of Income and Non-GAAP Measurements

(Unaudited)

($ amounts in thousands)

		Q3 2021			Q2 2021			Q1 2021			Q4 2020			Q3 2020			Q2 2020			Q1 2020			Q4 2019
Reconciliation of Adjusted Revenue to Total Revenue, Net
Total revenue, net	$	274,601		$	84,372		$	421,972		$	455,007		$	510,798		$	345,024		$	67,629		$	96,722
Income from equity method investment		(713	)		13,198			4,163			2,844			9,870			1,864			2,316			110
Change in FV of MSR, net of hedge		(77,486	)		29,181			(102,020	)		(17,173	)		11,817			31,111			55,375			(10,445	)
Adjusted revenue	$	196,402		$	126,751		$	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)	$	71,223		$	(73,213	)	$	148,969		$	184,397		$	264,062		$	169,022		$	(10,548	)	$	16,067
Change in FV of MSR, net of hedge		(77,486	)		29,181			(102,020	)		(17,173	)		11,817			31,111			55,375			(10,445	)
Income tax effect of change in FV of MSR		21,340			(6,989	)		25,709			3,664			(3,173	)		(8,167	)		(11,814	)		2,329
Adjusted net income	$	15,077		$	(51,021	)	$	72,658		$	170,889		$	272,706		$	191,965		$	33,012		$	7,952
Reconciliation of Adjuted Net Margin to Net Margin
Total revenue, net	$	274,601		$	84,372		$	421,972		$	455,007		$	510,798		$	345,024		$	67,629		$	96,722
Total net income (loss)		71,223			(73,213	)		148,969			184,397			264,062			169,022			(10,548	)		16,067
Net margin		26	%	NM				35	%		41	%		52	%		49	%	NM				17	%
Adjusted revenue	$	196,402		$	126,751		$	324,115		$	440,678		$	532,485		$	377,999		$	125,319		$	86,387
Adjusted net income		15,077			(51,021	)		72,658			170,889			272,706			191,965			33,012			7,952
Net margin		8	%	NM				22	%		39	%		51	%		51	%		26	%		9	%