GHLD - Earnings call transcript Q4 2020

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Operator

Good afternoon ladies and gentlemen, and welcome to the Guild Holdings Company Fourth Quarter 2020 Earnings Conference Call. [Operator Instructions] As a reminder, this call will be recorded. I would now like to turn the conference over to Michael Kim, Investor Relations. Please go ahead, Michael.

Michael Kim

Thank you and good afternoon, everyone.

performance like may everyone regarding contain expected and I'd this comments the begin, operating call periods. conference certain financial we to that remind on company's Before future for forward-looking statements statements based the current company's These expectations. are on XX-Q differ factors periods implied forward-looking in other Risk Securities detail that and to are for due those of number Factors these from Form under may described results with expressed materially in XX-K filed Actual risks the statements Exchange a and future or by or and Guild's reports other greater US Commission.

remarks Relations to be SEC the will corresponding Additionally, we Schmidt; in Chief Officer, financial Officer, today's Chief on to in Executive David financial well can measures release Participating Neylan. Chief are and refer Guild's the the found measures. non-GAAP Financial Terry Reconciliations with Mary today of GAAP appropriate today's non-GAAP as Ann President, where Operating Officer, Investor website. Amber Elwell; measures earnings certain McGarry; filed call as

over to Mary Now, I'd Ann? the McGarry. Ann to turn Mary like call

Mary Ann McGarry

marketing for growth our just and drive more success than and their work remarkable for going clients existing continuing to shareholders. relationships of we Without profits are market like focused few financial interest levels good will efforts to contributions wanted the also employees we long-term is fourth with as quarter and trust growth. a Chief Officer, Guild on build will all for finally, our shift. more everyone. long-term environment value of growth what the prepared positioned for Operating differentiated of I'm I full how we for acknowledging for the our And dedication, and how by and our spend and business. driving clients XXXX, Terry not by will would drive to and have thank Michael is growth discuss Neylan and and discussing we minutes achieved I'd joined share. been sustainable and cycles. was results of Thanks, their David all hard Amber consistent afternoon, ongoing walk through in be year sustainable their we report rate to a start our platform then and remain Guild We throughout Guild's prospective year. Q&A. XXXX. able to and across

reinforcing Guild low For XXXX, purchase exceptional to we across growth Consistent the track activity and continue interest XX-year and deliver historically refinancing durable which on some delivered originations, generated of across business business industry with record. rate differentiation benefited driving sustainable more net income, reinforced model from by adjusted rates, lending, our is well to record we the remain activity providers, peers, revenue, lending focused mortgage At returns has across results cycles, year. historically our and volume income model. refinance and versus our net higher strength core, average cycle. the other Unlike last positioned profitable on across interest

accounted loans for increase of XXXX, while in February's expected year-over-year. to And Mortgage XX% ahead, to are forecast five-year the looking XX% decline Association according XXXX to purchase the refinancing originations total period, XXXX, Bankers from purchase our For originations to originations. forecast,

mortgage It recognition, over engenders client brand and Next, and loan officers where our on the local with origination throughout strategy personalized retail more favorable borrowing our is channel, this time. that directly experience interact lifecycle. unit centers borrowers the and client economics trust

rate stream flows, business a servicing natural environment. during generates client hedge helps to a recurring scale-enabled Finally, of and works our interest relationship extend cash as rising

Terry turn it our to So Schmidt. over President, with that, Terry? to I'd like

Terry Schmidt

Ann. Thanks, Mary

start, growth most importantly, every fragmented capturing XXXX. some a of in I has Ann annual since profitability how compounded our think year with the an is total as different rate initiatives. market To Guild mentioned, detail retail positioned of growth lenders rate proven Guild of to of volumes and in well XX key grown at top times, going XX%, We operate for XXXX, maintained across backdrops. greater growth has Since important in track interest Mary origination I'm it's have highlight as XX% market in XX large XXXX. while our As strategic discuss record share and approximately the channel to our by originations

with to well-positioned share constant Within the first-time to continue broader on focus our market, we remain gain homebuyers.

capabilities people Bureau, local According Census to in presence turn in with strategy. homebuyers We our as XX view trends our the differentiating rate combined age a retail our of focus digital with interest decade. XX, a within distribution Our particularly first-time million rising factor, will around complement U.S. the the approach MSAs key favorable average demographic environment. next

focused scalable, and local experience. We a MSAs X% existing has on our platform. existing past generating we in a officers Through growing while that maintaining new years excluding by XX% of than in relationship-driven more loan deliver have since loan headcount loan strong overall officer officers to our markets built five maintain and retention reputation volume a remain recruiting XXXX, personalized client high our and averaged XXXX, XXXX. robust growth infrastructure the annual organically through entering a business new acquisitions rates can We with model

the officers, through enhancements. loan further growth we of productivity coaching to and loan ongoing enhance new our increasing system by adding existing addition our programs In officers can

ways. prospecting that data lead to operational and competitive generation and scale From in our identify opportunities. our remain technology end-to-end leveraging profitability, key we are increasingly and enhance a proprietary variety stack perspective, analyze we advantages improved tech proprietary can efficiencies Next, a of

by which experience recommend our score improves can servicing alerts the we client XX% our Once loan, delivered client evidenced clients, verification the digital us platform opportunities loan and to are enhances our our application, retention. and portfolio to designed Refinancing provide online to board, fulfillment, XX increases to of retention anticipate originated automatic and to production activity, officer with point electronic on relationship to allowing clients of a prefer. closings, likelihood the they retention. Turning refi XXXX. and as sale is of portfolio and This is which our for back that serve

interest rise, growth to assuming to rates enhance Finally, provide often through openings organically acquisitions. market continue opportunistic dislocations

to Focusing for businesses more detail. nearly remain and as by average Amber presence in leveraged third-year efficiencies. new existing accelerate territories financials not committed our acquisition, and to now Elwell over our to accretive the on expanding Chief necessarily Financial Amber? realize on to in I'll through MSAs in following growth Officer, M&A, we acquired call while volumes and the have platform into scale-enabled our does past discuss And we the prologue, transactions. origination turn increased companies XX% that operating increasingly targeted

Amber Elwell

Company. Guild for Thanks, Terry. to again I'm strong financial report pleased results Holdings

totaled of channel volume, due For assumptions, purchase-focused in MSRs from year-over-year net and primarily full origination, income $XX.X reflecting XXXX. inputs generated up liabilities of differentiated Net up fair contingent model in was strong XXX% stock-based change and $XXX year retail year-over-year. income, million excludes our Net the billion, acquisition-related while technology loan XX% representing we model platform. to $X.X growth adjusted and origination million compensation to value million, driven by billion $XXX which revenue XXX% XXXX, $XXX growth totaled in the

originations XX% $X.XX GAAP fourth of reaching particularly a for For we strong EPS $XX.X on quarter billion, EPS totaled adjusted the XXXX for billion $X.XX note, of period. an year-ago over reported XXXX. with finished increase the while year, $X We

income Following net $XX XXXX. suit, totaled XXX% million of with million, were up year-over-year quarter up million. XX% totaled total fourth net $XXX net GAAP compared revenues the adjusted income to income while net adjusted to $XX

GAAP adjusted at XXXX, fourth EPS and $X.XX in and the quarter of $X.XX came respectively. For

of wanted margin origination our points came to spend margin. for in XXX I basis points on sale fourth to but from quarter. XXXX, fourth down up few the basis minutes gain walking the sale points Next, at XXX on on a the gain quarter, Based total in prior compared XX volumes, through basis quarter

Our our remained to peers. to demand public third compression well gain basis several largely of key was volume margins believe sequential pull-through for margin a points and company on reflected margin XXX generate of trends lock XXX The and We sale sale as both relative converge XXXX competition X normalizing compared light among on the points quarter on and the basis intense. highest of refinancing remains basis on down on remains and to to drivers. gain basis strong absolute to activity in spreads an continue Guild positioned peers supply our for company adjusted public

rate for interest Forecast next volume the First, model. well our boding increasingly industry's cycle as the MBA turns favor to purchase originations purchase-focused

record of mentioned in cycles. we purchase from our over purchases growth represented originations XXXX, interest of as have across total Ann the of during Mary to XXXX fourth of While XX% and origination track were our year, proven originations a earlier, last XX% volume rate profitable quarter

higher scale-enabled channel wholesale relative other gain mix on sale enables margin to growth. channel retail lower Second, drive our matters, that margins to captured channel companies

while continued Third, on outside to refinance refi business is we model different. our have volumes, capitalize

not purchase on are with leverage compete drive Given and going commoditized, service, relationships focus, clients. our dependent largely existing in while Moreover, price on business the refinance to forward. growth refinance we originations our we activity is not longstanding

deliver and interest key another backdrops. differentiating us helps rate that Our of business sustainable across servicing the to factor is market variety growth

fourth of Furthermore, XXXX. the $XX fees turn, a come First, and as growth XX% we strengthened total loan increased up servicing through XXXX, channel, with In during of are which officers from the $XX with a quarter further ago. servicing has activities. our are clients most for XX% XX, the servicing provider year-over-year December by process relationships of established million our billion other to portfolio scale-enabled retail through origination year loan

officers impact So the has rate, down the the loan reinforced when this the XX% a for to remained refinance business, near-term, under at strong Cares looking we recapture Act. quarter. by positioned are refinance our capture well and clients continue monitor fourth forbearance the which In to that road, to are

industry the of forbearance overall X.X% our portfolio the based MBA to on XXXX Our of X.X% compared represented for as of end data. request

and well capacity used XX, warehouse million lines to at of excluding Our strong warehouse XXXX. remained cash December highly $X.X of funds billion as $X.X of as billion our balance cash with pay down with liquid outstanding equivalents, and $XXX unused credit sheet of lines

overriding are allocation and an investment origination, ongoing returns focus very We reinvestment funding opportunities, as Capital priorities our and with focused accretive and on and on allocation the shareholders. value a include driving capital M&A optimizing strategic for board. with team capitalizing on in on long-term business

I provide first update an to the Finally, wanted on quarter.

don't stated, previously we intend have guidance. to forward-looking we provide As

platform fell billion. Given of $X.X our interest open date distribution And quarter to lock XXXX, release and industry We earnings anticipate months a the This interest trend exceeding billion rates $X.X entire share XXXX through with the were on pull-through first XXXX that, for XXXX. rise. growth two questions. actual first January differentiated for of pull in loan retail Long-term, call first up gain of February the profitable pull-through year-to-date and sale totaled at us for Operator? lock and to first as basis of volumes rate was in which purchase-focused quarter regardless total XXX the on volume Based we well adjusted This billion these points. volume calendar on the position the months, the of and proprietary relatively February, recently sale generated $X.X fourth to this we'll strong quarter on approximately year. our softened continue year, normalize gain technology the on with of business line adjusted the to ahead the back and of origination more has margins on we deliver bit volume model an two refinance to margins based cycles. with wanted combined

Operator

question from first your Fargo. Wells with Fandetti Thank Our you. comes [Operator with question. Please Don proceed Instructions]

Don Fandetti

I missed thanks January, something for Yes. Amber, for February. did January, numbers might you about on for gain the but it, sale volume say have Feb?

Amber Elwell

Don. Thanks Yes.

sale on and lock with lock basis billion. was January adjusted XXX the on relatively adjusted which for sale our on volume in February, volume And pull-through fourth was gain For XXXX points. was line pull-through $X.X gain quarter

Don Fandetti

if is, I expenses versus okay. quite bit a Thank should I QX, much. bit up as then the this you. quarter going at how that can look move you up on we the little have went it, forward? one And And production dynamic question about you Got yet and it as sort talk think a volumes originations a percentage about expenses guess didn't of they

Amber Elwell

Sure.

ended for XXX the XXXX. as focus at I be points revenue, XX year. you compared XXXX our on basis origination to expenses look XXX a our at And full XXX XXXX segment the full our XX% expenses compared for for basis year for the XX% we're compared in total profitability year last basis should think points really of to the year. the and in When of were to percent year points overall, at in at

focusing the year there So it, to some think about I best get timing the and full that to from are of quarter-to-quarter. way out differences, some on but think is timing really difference

Don Fandetti

you. Thank Okay.

Operator

Thank you.

comes with proceed question from next your Rick Our with question. Please Shane JPMorgan.

Rick Shane

Thanks taking my questions everybody afternoon. for this

sold? what retained of was percentage was and what First, the this UPB quarter

Amber Elwell

On retain was about the XX%. the percentage for quarter

Rick Shane

right? Got our way is the of, the quarter, the it. model ballpark the in sort we at we're portfolio during Are the does looking of on seeing XX% And CPR that seem about numbers, there? the

Amber Elwell

for CPR year payoffs basis, the in as On XX% that annualized XX%. we're is an using the and the for December yep, that was of around in model

Rick Shane

sort sequential in changed increase should going see we -- the was Got servicing run is or trajectory, it, a one-time rate that okay. new forward? that drove And that of then, the expenses what increase as

Amber Elwell

one-time some as regulations was a foreclosures -- looked in from be Cares around for length that expenses at changing the the loss Act would on, we of and and some cost. foreclosure increasing There our the there rules and of the perspective moratorium provision,

cost Act next consider of would a the prepare forbearances year. we've I and through one-time, bit Cares of little year higher of as more staffing service this is a work although just into all then our for So had continuing to that to

Rick Shane

help think a the And saw or volume we sort fourth through timing then, expense, but lock help alignment move point what quarter question. is sort I'm will Don's between quarter for about And year, compensation Got of to trued expenses the try the or there a relationship models the so in that When of third on terms that get as origination better we question. adjusted us that function a is originations, put of it. and differential of pull-through many, just apologize us up? I about think and last finer we

Amber Elwell

question. good Yes,

focus year I quarter-to-quarter. the I a at think on on of would it more thinking really looking There and the the is where think well. to at expenses an as not focusing aligned, looking we that the is expenses ended XXXX impact was with obviously expenses the expenses think as year would But it. and is XXXX at for anomaly I and year for basis XXXX knows the the of full overall be trailing that the straight-line about any -- full-year roll, everyone to well, me so margins than way

Rick Shane

locks but understood. see environment are Yes, that, get we the sort divergence we certainly how people to Got going it. quarter, But likely between that going and well? forward, and to in correlation where there important is at be time, appreciate understanding especially fundings an of that looking same as at and some a inflection so we're

Amber Elwell

key payments performance fourth compensate on growth quarter. do certain to resulted business profitability, higher We which some in and based management both Sure. members in employees team in volume and our the of

that volumes profitability and when straight-lining as as that so and revenue down you accordingly. and overall it shift of think well when would some variability about out takes And goes

Rick Shane

it, Got okay.

to some up and So of hear true management compensation? we this related

Amber Elwell

Yes.

Rick Shane

Okay, that's Thank all. you.

Operator

Thank you.

Giuliano Our with Please question comes with next Compass your question. proceed from Bologna Point.

Giuliano Bologna

are Well, thanks questions. about in on your pro for warehouse kind And position in general cash liquidity just basis? sense much forma of sheet down kind get warehouse lines sense of you that kind taking what liquidity? paying second, of balance is your different my there a that's is a of for to how lines, have a a your excess Thinking of

Amber Elwell

million was paved in the sitting in rest debt on MSR the our were warehouse cash our overall. we year, leveraged So down about XX% only it had at was of we of and that and $XX the end

pay and cash our in as forward. market any And always continue going so that with the on a is the and cash of liquidity sure operating strong handle we focused to just at million the we're changes position, a $XXX majority the we poised to and have little make are maintaining down

Giuliano Bologna

to... I just wanted

Terry Schmidt

Amber's Terry. to point. Yes, This is

of was our XX%, around Amber, we collateral was The down outstandings higher. bought it number, value XX%. the XX% What MSR third it the quarter, to much was and

another So position. in change the that cash was

Amber Elwell

the up Yes. was Yes, quarter. in XX% third it -- around

Giuliano Bologna

out of I a about the guess makes very do that have you large to liquidity liquidity a you from position since And maximum position. or how the return? there you pivoting little And entertain or great. might does obviously sense how any that I'm curious about That's a bit there at are how then candidates from when amount there, think acquisition -- pipeline potential liquidity there, look think capital moment?

Amber Elwell

our about talk position... can I cash Yes,

Mary Ann McGarry

about I Amber. want it, Go talk to ahead, okay sounds good. --

Amber Elwell

ahead. go Overall,

Mary Ann McGarry

Go ahead.

Amber Elwell

about we risk we our requirements run back potential strategic the need that continue then our these margin would it for liquidity, to think and And market capital, top really operating business to at the forbearance, in business capital based relates looking -- reserve Board. in investing sort to CG then to advances return remains thing, covenant priority. capital capital We with at we'll associated that is our that business, And so point, need needs, and your bank investing on beyond whether discuss of any with options as calls. our excess

Mary Ann McGarry

everybody because wasn't industry volume the XX% independent it's are opportunity lot really in cash we bankers, and of their kind we're maybe from that of believe of so in mortgage question. chips year, industry but lot mind thinking, of great On seeing in handling. to still speak. volumes kind that just time And a the the there's coming activity there IMBS sort a coming of of over Last the of your acquisition was is that the keep -- and all

just we're that and and point anything key sellers and activity, activity, considerations valuation to the more right of the very going to to that pipeline always considering will is we're growing we're is we're stewards definitely want make price be sure seeing so careful good of reasonable. capital, getting So about the be

Giuliano Bologna

I'll Thank That's and back very jump into helpful. queue. you,

Operator

Thank you.

Our your next Trevor question. Please question Securities. with JMP with comes proceed Cranston from

Trevor Cranston

of has Hi, questions from data so average share refi the thanks. a estimate the speeds both around in refi generate help weighted us to Couple portion or overall would incentive servicing to any or the still kind of the ability the X.XX% to of maybe sort Can that significant of portfolio, respect of you recapture. so? about and to terms MSR rates volume the related mortgage servicing think with forward book up pre-pay looking coupon you

Amber Elwell

with start in I'll Sure. retention. the that then on can jump and David refi

overall, [indiscernible]. weighted its we our So like for average is And our have, coupon X.X% said, I portfolio.

So X.X to your the what year. based talk if the multiple then ending is want you David, and on analysis. of at then money the a of end And about

David Neylan

Amber. Thanks, Sure.

our as So XXXX client portfolio the just to of to actually came is recapture and that billion in. for This close as a opportunity that ability think $X things, XXXX. We activity the nearly our positioned technology all is rate we're that there amount has us good in XXXX. Market area purchase in generate favorable, an billion that's activity really going well look helped from portfolio, new refinance refinance anticipate couple XX% to of the but continuing our forward. and favorably of to invest $XX in from reinvestment we were conditions also XXXX, doubled continue volume at in to certainly

anticipate able regardless well rate rates cycle. when again, market repeat take identify being that low, activity, or buying of normalizes, tailwinds, we're interest indicated, for we the whether buying but advantage positioned to that borrowers up there's you've the to opportunity are of As also And purchase down. still it's strong

Mary Ann McGarry

to little in Ann. would to I I to because it's that, on probably move just more inventory markets, just would this be going start the a David, some an bit refi, add up. is add Mary cash-out And issue is

tend we come improvements, our we are lot I be us. to bet seeing and to salespeople, more So will be back -- -- there'd that customers a remodeling

Trevor Cranston

lot makes a That Yes. sense. of

been Okay, I addressed. have already of my think the questions rest

jump I'll queue. into So you. back Thank

David Neylan

Sure.

Operator

with next with comes question. of from Please your America. Derek proceed Instructions] Our [Operator question Bank Hewett

Derek Hewett

volume afternoon, very think I tax it there rate, and for was that's and XX%s what margin already about normalize investors. and data a my we everyone, -- bit to but Most back little February, XX%s you for it were talk you the looks of thank quarter, very questions through could Good the the of low much helpful like the next kind parts were the fourth year? where during to then it moving the mid in should addressed, expect

Amber Elwell

would we what regulatory is expect range XX%-ish changes. The the for Yes.

Derek Hewett

And tax causing then, quarter? the what rate the for fourth was

Amber Elwell

tax full a year. There adjustment the for put that just deferred was we slight a asset for on

Derek Hewett

Okay, Thank all right. you.

Operator

no floor the you. Thank at this back closing comments. management I questions to further like There would any for turn are time. over to

Mary Ann McGarry

you thank discuss Okay. on interest, our Well, and time progress look everyone to for we your to and future forward continuing call.

everyone. you thank So,

Operator

concludes conference. This today's

may wonderful this You Have your your for you at lines participation. evening. Thank time. a disconnect

Guild (GHLD) 23 Mar 212020 Q4 Earnings call transcript