Earnings call transcript Q4 2022

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Operator

Hello, and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I'd like to welcome everyone to the Impac Mortgage Holdings Fourth Quarter 2022 Earnings Conference Call. [Operator Instructions]

I'd now like to turn the conference over to Joe Joffrion, General Counsel. ahead. go Please

Joe Joffrion

and Year-End everyone, for Impac joining Good Earnings thank Conference Holdings XXXX Call. Mortgage afternoon, you

During this GAAP call, statements we and and will make projections mortgage exposure, to cash interest production not market earnings, risk in market or but limited taxable to conditions. and general flows, rate regards other forward-looking

of recently update differ actual contain the results including from refer and the Form XX-K is date any our identify in to the like projections business and to Securities would that we Form Exchange to outlook forward-looking to the could effective documents presentation, risk filed information filed under materially XXXX. This herein. factors important factors and those of the I disclaim given, contained you statements. in and and as guidance, or Act our These most expressly cause any XX-Qs duty

I would CEO started Mortgage and get Impac Holdings. introducing Chairman Mangiaracina, by George like to George? of

George Mangiaracina

me Jon Administrative Thank Officer. this Chief you, afternoon our Principal Joe. Gloeckner, Accounting and Moisio, are With Justin Officer; our

March a model expense operating the initiative. market issued of industry discussing Events including the environment. and business update evidenced to its in has company how aggressive its and of week, it On a it, navigate proactively conditions week recent an conditions, had and adjusted last an business market pivot X strategy deterioration of reduction accelerating

and excess pursuit Despite net by Fed credit industry XXXX. pricing market offerings. widening mortgage of our evidenced to in dislocation share. of tightening, closures, rate in residential decrease has the commenced origination The and credit market with ushered by spreads, in adverse addressable been as coupled has by reduced for and consolidation participants product market capacity margins remains fourth conditions competitor that challenged inflation Non-transitory quarter the macroeconomic

The and visibility industry has the to abate normalized stakeholders XXXX of has its early in aligned These volumes permitting return intention expense the noneconomic opportunities complementary and load. company the capital the these the and and company The initiatives and in continue adjacent to thus corporate of strategic that dislocations proactive when verticals, to systematic undertook engaging The reducing raise margins. stack no and activities. theme as and have company no will reduced 'XX ventures, eliminating company's explore and attendant the overall complexity operating costs the from company's of operating company activities. corporate accomplishments finance capital revenue

results Jon Gloeckner will the financial for now Jon? discuss XXXX.

Jon Gloeckner

and everyone. you, good afternoon, Thank George,

to million the a the For $X.X reported a compared for loss loss of the as third GAAP quarter, $XX quarter the $XX.X XXXX. quarter of fourth million a company and fourth in million of of gain

the adjusted to in loss million $XX quarter in an loss the million loss of of fourth a $X fourth was Our million third XXXX. adjusted of $XX.X as and quarter quarter compared

quarter for increasing rates, results reflect year credit and market inflation, a and financial pressure interest risk. The significant as the result of liquidity

has significant pressure mortgage as as results issues. suffered Our and of mortgage the inventory which from purchase mortgage refinance of interest intense the well increase weakening to market affordability collapse lack peers' dramatic in performance housing mortgage the on originations reflects in rates the market, a of resulting our and due many

felt risk-off and liquidity this were first previous we and conservative path we As sacrificing calls approach, appropriate we decisively lending posture, quarter, for year, rate steep was defensive adopting a stability, on in heading our have into the which beginning discussed deliberate in headwinds. the more results

the $XX.X and million with originations have as quarter in declining originations suffered million $XX a the to Our originations as third of compared XXXX. quarter fourth to result, in margins of

compared of XXX XX margins million to basis $XXX points in basis to decreased billion of originations points. XXXX total XXXX, $X.X margins as During with with

reductions, pipeline increased posture fallout the margins origination with which were of during conjunction the drivers in and shock rate year. in primary risk-off the Our and resulted lower continued

full-time $X.X in personnel to result head compared from Operating but to compared reduced flat at the the a reduction fourth primarily which $XX well the decrease costs or $X.X of XX% personnel decreased were million in same primarily XXX year-end of decrease from costs, quarter of decreased volume. as employees the at to variable approximately as XXXX. as reduction declined with reduced today. to quarter as a in to the fourth support quarter $XX.X count was million due quarter compensation million commensurate XXXX Head during in in a third originations XXXX expenses XX million as in count The

expenses fourth preferred while expenses our exchange fees included of completed were to operating legal the $X that million approximately as were the professional compared flat to offers related Additionally, during quarter operating quarter. our third quarter, and

further with With million XX, outstanding to with minimal warehouse capacity the we the pipeline, company loans wholesale associated At or December XXXX, had warehouse $XX reducing not obligations one activity. warehouse thereby in active no its renew million our counterparty facility, counterparty. $XX did

model, to business in mentioned company's to broker not to originations. the fund As model update our a week, the will pivot be last we broker with upon relying pivot -- a the warehouse borrowings

compared the and remained physical a feet run total the thereby buyout lease, with minimizing its The relocation of workforce during possible our terms prior million $X nearly through million, made to by terms XX,XXX of office ability a XX, to approximately -- term July negotiated the needs. legacy lease $X.X new $XXX,XXX $X its a of the space company's and company commercial reducing hybrid XXXX, savings for lease a office million. over both of space December, the COVID expense from remote under XXX,XXX building following was square of maintain footprint In lease the total that new square feet. lease The as crisis, to the

restricted carefully liquidity balance million year-end. our million of our position on Additionally, manage we $X.X evidenced as to $XX at unencumbered and continue by loans in sheet cash

CARES is to credit, received be the the part end XXXX, the In by company of filed of of retention million as $X.X Act, the expected first which XXXX. for quarter employee of

meet on our near-term our defensive current position, posture, resources needs. necessary Based we liquidity production and cash feel to have we borrowing the

turn recent developments now Justin I our within it will origination platform. over to to discuss

Justin?

Justin Moisio

Jon. Good you, afternoon, Thank everyone.

volume in purchased both number the as interest mortgage of quarter, production in refinanced the Our the reduction the side historically impacting reflective in in on a lenders purchase rate previously and decrease the with home mortgage the business, preceding due had to is in to refinance market, current loans the third during low loans resulting due volume that credit in a environment. also fourth quarter, the challenges and of of affordability rate

$XX $XX NonQM quarter. compared $XX third $XX total the to compared our decreased third the to to million million During in million fourth as quarter. quarter, decreased originations to the as originations for million

expense company discussed its and recently a call that into we staffing, serve retail consumer a In a reduction line cost originate broker initiatives, center repositioned model mortgage broker fulfillment promotion. business allows products variety at with a consumer-direct of to the our shift relative the model. to reduced to due previously operations, expense loan specialized national per base technology significant abatement The to

consumers receive in partnered broker continue to originations experience. dominant to the flexibility and programs, will development products maintenance technology to be our product with and of mortgage We've lenders channel. established pricing, respect broker credit, an ensure loan The expanded to do suite We optimized continue product to the support best-in-class with expect offering and enhanced channel an NonQM

will a broker recognition also Mortgage This continue associated in pivot space. the call leverage to with to CashCall allow the the to direct-to-consumer model center the brand name

borrowers loan marketing reduced to head officer market these From adjust well to calibrate to looking as the to an at a deterioration quality our and expense of management shrinking spend rate perspective, as levels. transact the we lead continue count addressable of

the and from decrease XX% fourth $X an expense Our a to quarter million the promotion fourth decreased quarter, of prior in quarter business year. the decrease $XXX,XXX last or XX% from

continuing our We will the to to support spend origination continue model focus expense adjust broker management. while on to capabilities

update week, as has in line mentioned into conditions persisted of margin the volume in company's XXXX. TPO And cohorts, the with origination industry first to the decided These XXXX. its business deterioration have a down significant third-party within result, company channel, the and in As wind quarter experienced channel. operations last our

and done investors, The have its company standing whole as remains good lenders, in obligations partners consumer and business-to-business subservicing counterparties. related and warehouse vendors company pipeline commitments and takeout loan The we honored its to to historically. with its business

in In light of commitment to the business. steadfast risk the managing its within challenging core its remains company market ahead,

to exploration and increasing the As top during or includes contribute revenue mentioned our offer previous call, risk-off of this approach complement line opportunities may results. and today services operating improving we earnings that supplement

At our questions remarks. prepared concludes the our had prepared corresponding shareholders by that results have the and prior this received time, to answers incorporated within financial call remarks. Any

the near Thank everyone afternoon, thank to and speak we'll to in this joining I us wanted you you. for future.

Impac Mortgage (IMPM) 16 Mar 232022 Q4 Earnings call transcript