GHLD - Earnings call transcript Q3 2021

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Operator

Good afternoon, ladies and gentlemen, and welcome to the Guild Holdings Company Third Quarter 2021 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 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 a future or by or and Guild’s reports other greater U.S. Exchange Commission. and Securities

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

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

Mary Ann McGarry

Michael. Thank us. Good for joining thank you you, everyone, and afternoon,

done for As employees start recognizing drive to by calls, and work, continued wanted ambition, I Guild determination our success. prior and energy continued all their dedication their in hard I’ve

our Officer, by joined Schmidt; I’m Chief Terry Financial always, As our Amber and Kramer. President,

of reinforcing gain strength X sale of continued our months of to financial from up Neylan, meaningfully billion included volumes Our second pleased $X.X still XXXX originations, prepared Key remarks. the the platform. Through $XX margins. Q&A with for funded Chief XXXX, in the levels, I’m billion first total XX% our Operating the for highlights sustainability David us will and ahead on quarter. and third extremely Officer, of differentiated join quarter after our the strong results year-to-date strong track

positioned interest refinances and the favor spreads. and In to earnings well loans. share local expertise are our of away the quarter. Guild typically from Refinancing service mortgage consistent business volumes to per $X.XX adjusted more for million income and generated cycles. refinance $XX in across cyclical We and financial for remain the volumes net rates driven continues as mix more of commoditized. shift the Turning of function adjusted market of of We results. industry Moreover, has are largely compete growth volatile at the across contrast, we which level, on mostly a is purchased

differentiated purchase-focused a by other personalized the homebuyers. separates individualized to model from experience us providing Our business and lenders

Mortgage increased mortgage quarter In according this CoreLogic. fact, XX% third purchase the for of our loans market to Association. within to purchase to data share, Bankers lending, third the fourth quarter our compared for accounted volumes the compared the quarter XXXX just of XX% And to year of according in the from industry, in

growth The when age within capture footprint. volumes enhances well-recognized share Residential to refer us XX, cycles. And purchase they proprietary change year, to reaching long-standing after purchase platform the our others durable we consistent with people generation buy Mortgage renting next closed and relationships or and and age homes, year Services, channel. market are to technology to given across continue and from Focusing Guild RMS, market the which to to geographic well numbers We our platform in returns clients. positioned of believe further drives recently of average continues existing brand, acquisition owning. the our young with want Clients return to

States, the this on the loan well of and positioned because be and branches RMS officers our across with of states first-time for acquisition. across growing market United number to growing XX X,XXX over loan officers homebuyers after continue our We focus

channel. partners realtors, with to of and a XX% our retail in relationships other the their of builders across Our business loans of recurring the loan officers in into communities tap leverage network stream

market of Finally, delivered and first equity. a from a on consistently kinds X return quarters cycles through all generated XXXX, strong financial XX.X% of perspective, we we Through have the returns. managed

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

Terry Schmidt

long-term originations differentiates Thank approach More long-term business. near originations our well the a under our growth, diversification you, as positions trends Mary model balanced Ann. by channels. us positions and constructive I our well Starting as changing wanted to remain term, a favorably, government durable Volumes us Guild discussed, limited sustainable mortgage synergies discuss and industry how both depth pressure reflecting and respect purchase-focused from Ann across likely with in the in for rates perspective business Mary across servicing to agenda. and demographic greater inventory. as providing with our

component of scale-enabled model our is Another our key business servicing segment.

primarily portfolio retail XX% we MSRs reinforcing through year-to-date for complementary sold nature our retained consists of of loans total servicing To Our underlying point, rights businesses. September, originated X channel. our servicing through of that that

our addition, clients’ and In repeat next business origination drive our transaction. us build client to recapture referral -- mortgage platform segment our to servicing long-standing that relationships to capture allows back our

local a model, X purchase XXXX, ended cycles. September loan a we record able across interest business. believe their to XX% we power rate ended this clients. purchase more rate presence to us proprietary base The Guild. and compared therefore, purchase continuing of balanced our our recapture XX% to origination recapture recapture client We rate as achieve by well were XXXX. reconnect XX%, analytics strong maintaining predictive earnings XX, both servicing is on sustainable In segment and X more for the to with September generated the XX, for our servicing a brand the leveraging that pushing a respectively, back summary, to remain and During This existing information platform, technology and to officer again strength new as relationships. with focused that originating and provides develop speaks months the months XX% a XX% an increasingly rate and refinance recapture segment more to We

MSR favorable detail. duration Amber? turn now a over discuss flows, the servicing in interest creating in Assuming rise, Amber Chief as more our our assets. Officer, Financial a our cash to functions I’ll longer rates of call servicing Kramer, to resulting to the origination to adjustments our business hedge segment, financials natural valuation

Amber Kramer

Thank Terry. you,

XXXX, third share. $X.XX the we of quarter revenue or billion the a or per third in the of third Net volume declines function for million net were share loans. lower adjusted quarter while $XXX $XXX million sales quarter. quarter consistent quarter. with delivered loan $X.XX on the $XX for For originations, million the in totaled million of mostly $XX while totaled diluted totaled compared year third ago XXXX Year-over-year generated Adjusted EBITDA to income gain income $XX totaled million net $XXX per the of

origination year-to-date X X income at Net billion up adjusted $XX $XXX per $X.XX the first totaled EBITDA revenue the million originations of for at XX, And X generated while basis in million X% with was XXX $XXX segment loan XX%. billion, ended quarters of adjusted diluted XXXX. lock for of funded $XX.X average in while we estimated Turning Gain share. came margin points. on income the $X.X quarter came and on net Pull-through Based totaled pull-through up X% for million versus our and results. for XXXX, the well on basis Starting XXXX on billion first XX% of generated we quarters September points volume Association Bankers totaled or Mortgage third quarter-over-quarter Total up the $XXX the net XXX sale the originations months of to loans, business, quarter. margins above adjusted XX% year-over-year. closed originations. originations adjusted was $XX.X purchased volume of volume billion total of lock while

to servicing our business. Turning

fees income due the a foreclosure from quarter year-over-year third million XX% in as reserve quarter, to negative $XX avoided balance and and to higher $XX the lower XXXX. other homeowners fair foreclosure. net and segment adjustments September grew This forbearance principal of reflecting expenses the total to $XX a loss reversal reductions quarter Our million with MSR our for unpaid in year-over-year exited as billion XXXX plans XXXX, value for by of $XX recorded loss XX, third fees, more in increasing XX% XXXX, less million of loan servicing of of primarily

same to XXXX, on our of For liquid and shareholder leverage maximize balance to strong to the the to slower sheet to $XX.X of fair focused primarily prepayment the related was continuing We in due million long-term loss value for the our quarter speeds. third compared $XX remain million value. quarter MSRs XXXX

cash was the balance which capacity billion. As and funds of our warehouse of $X.X in cash the credit upfront of $XXX end billion to to July of of down pay payment million function sequential RMS equivalents, acquisition, of related the largely our with third unused cash X. excluding quarter, closed of lines maintained we well a as quarterly The on $XXX as warehouse the used lines decline $X.X million

continued a funding Looking originations ahead, in shareholder reinvesting focus growing the and capital value. priorities and on include business allocation

up, differentiated per highly the margins by which stability that Class fit have platform, XX, approach. to short-term remain long remain the for To stock be while Macro of headwinds margins our economics. accretive Board opportunities market generating $X and addition, our of special on motivated strategic, third to the the of through margin, remain trends, In relative cash industry, compared remain a margins the strong with sale further series the of expense demand liquidity share quarter out acquisition, in and aren’t we dividend gain And degree and note, at declared on focused the basis we’ve of by criteria. footprint to Directors built financial position, gains sustainable important and on a capitalizing complementary on Guild reflected the the of share by on perspective interest for growth XXX quarter. its points as for we reflecting to volumes. gain came run. over In to and second which capacity sale intra-quarter on unfavorable X, well about on capacity November conjunction common record We eased above geographic retail on wrap or It’s and around at gain on focus I’d sale will Class stockholders our pricing and our focused disciplined XXXX. A B paid some on basis origination provide points market and our influenced purchase like distribution December constraints some XXXX, rates XXX our

Turning for to volumes October.

for total originations pull-through adjusted approximately Our billion volume billion. open Operator? that, $X we’ll $X.X totaled with and call was lock And up the questions. loan

Mary Ann McGarry

share to was Mortgage announcement jump an to #X overall in like Before originations. I’d reported Q&A, Power satisfaction ranked for Guild today. by customer exciting J.D. we

really results performance. our of pleased We the are with

for now So up -- up questions. open open call for Operator? it the we’ll

Operator

[Operator question Instructions] the Cranston Trevor JMP with comes Securities. from Our first of line

Trevor Cranston

A couple And just XQ? of strong you generally, room prepayment look you do there provide any I to as think Congratulations speed much one, quarters, handy servicing have you portfolio down questions you on related as guys forward a over continues come up? in can number the on portfolio. speeds guess, of the the next presumably sort quarter. the further couple refinancing to of is for burn commentary how to on

Amber Kramer

Trevor, Thanks, MSRs. our question. prepayment on speed in on portfolio your QX for for is CPR The at the Sure. XX.X%

going decline. so that going And obviously, continue rates as are see up, to -- as to we’re

-- somewhat does should overall. dropping steady MBA next down And it a XX% Although reach refinances has a of year. state into

I this So don’t overall. you’ve I through the impact a know changes? long doing cycle in Terry, don’t know, been would historically we’ve obviously market it that been you like know And for a time. Do where where rate bottom this is.

Terry Schmidt

say seen XX% prepayment the last would that I Yes, is an several we’ve years speed. in lowest the

Mary Ann McGarry

Yes.

Trevor Cranston

you. Got really That’s Okay. helpful.

on loans It servicing quarter percentage of looked curious so of in I reason little why quarter the retained And bit had particular like any servicing you where loans the been. on it thing dropped more book. you from if percent one servicing just was a there’s this this the retained particular. dipped on

Amber Kramer

the service Yes. were a function Great XXX% release. question, That’s Trevor. really selling of acquisition. They

Guild the we still So which and were ours into down. same of XX%. we’re as platform we’re at on service will seeing RMS what bonds, both around it would. they expect occupied, And at we specifically, our looked releasing is increased And still would which numbers, XX%. as -- our them percentage bring still jumbos If funds retain primarily we that incorporate we nonowner we would but that overall slightly some in and

Trevor Cranston

you maybe pay Okay. of the lot retain come to opposed share or thoughts just maybe pay Can declaration. a around commentary That out why around opposed regular sense. why special also on then makes like time capital guys was case And you. to opportunities you this any a dividend felt any dividends in had Got made And as along? the as was to quarterly? a you decision any good thoughts a setting out acquisition special dividend to

Amber Kramer

position, cash will the our our the by cash we end see We in can where at the up we’re a with year. position. you review as Well, end of strong believe cash Board

priority. business, funding look dividend. to felt any investing priority sense recurring we that’s is the this going and of opportunities, makes at at always not and originating of time, in any capital balance, acquisition Our we our the special originations shareholders. dividend take kind cash When return at as looking And that we’re to doing and a that

We’re a make stay that And anything in acquisitions to able and and capitalize in make always we’ll poised long and term and want of we based definitely financial we be recruiting term. assessing what that our to be on on terms opportunities position short needs where decisions up for the are, to that comes that. strong are, sure

Operator

JP Rick Shane of question next Our line from comes with the Morgan.

Rick Shane

MSR it’s Day. guess I

-- how million call of of was that $XXX sold? XXX being on of First were it, much how that point question MSRs much capitalization cash of sale? revenue, is, in that the And

Amber Kramer

added MSRs So our was $XX in loans that we for noncash. million

coming basis they’re right now. XXX So about points on

Rick Shane

it. Got

Okay. That’s pretty was close to getting. what I

So I sales any originated and the the look when at loans besides were there during quarter? --

Amber Kramer

No.

Rick Shane

Okay.

So the billion. UPB? started quarter $XX.X can walk the UPB we So through at

MSR is is of that payoff billion the you XX%, after was billion the had the of go billion. quarter? about valuing UPB, or $X.X decided during $X.X guess retained -- about there CPR retain twofold. $X.X of You amortization assumed you actual would you my you CPR $XX I billion for amortization if question the billion. in One, That originations that be $XX to net XX%, the from or billion implies $XX.X

Amber Kramer

And That was runoff foreclosures, payoffs the we if normal And have the then would be or model. and CPR then refinances. there’s will off. that terms And MSR -- run of in have and little I’m through in high. RMS number. how I’d that has the overall. And they’re playing to that with walk seems sure Overall, if it there. to do not included a into

Mary Ann McGarry

of $X.X service yes, prepayments assumed, loan $X.X billion it prepayment sold released. and we have is We And rate. billion of

Amber Kramer

Yes.

Rick Shane

Got it.

So during the speed prepayment what actual was quarter? the

Mary Ann McGarry

If don’t, always have we get we Amber, do that? you. to can you back

Amber Kramer

get Rick. Yes, Yes. I’ll for you, that

Mary Ann McGarry

But for was than Yes, we higher that get can it XX%. definitely you.

Rick Shane

XXs? I’m you’re -- I’m again, the using slightly XXs, amortization. maybe. -- high XXs, Yes. billion in the it’s but is And a I $X different thinking think getting -- XXs it I Okay. number, in of low likely

Mary Ann McGarry

We’ll for you. have to get that

Operator

line Fargo. question Instructions] [Operator next Don of Wells Our comes the from Fandetti with

Don Fandetti

coming Amber, can for bit quantify a of better. in release, the sort of just was gain from little talk some sort But obviously, expectations last But of What see concern investors about in fourth and can competition. can QX you mean, on about to it’s seeing? in I guide. sale know what changed? there good quarter? quarter lot talk know And press happened? terms the I there what conservatism were also, some better. you’re the you just numbers in a about I came you comments

Amber Kramer

than guidance better to direction some forward. there were around that points any of XXX that were we’re going to the unexpected. as XXXX starting at provide market fluctuations and provides still expected We in going in come did of that you. that think It don’t if levels we basis end well, to QX for get and We see Yes. QX, the

Don Fandetti

Okay.

to of in competitive better that just what better that trying sort third Just the Is in it moves quarter? so came was much. that much so And it how dynamics? understand

Mary Ann McGarry

just rise was the Well, were they strong. to. much demand rates And as didn’t expected as there’s --

gain on to pricing. seem didn’t down, didn’t push seem the rates. sale push So It to margin our

Don Fandetti

Got it.

was I great conservative. Well, see drove estimates like Okay. that of it’s what just it curious mean, sort time. to said, I I the

Operator

of the Rick line from comes Morgan. question JP with Shane next Our

Rick Shane

number, dialed a on gets I to incorrectly your you number. logic a $X a I walked XX% everybody of amortization billion sort clarification. owe into I And roughly I the which CPR. I owed felt since call, clearer that through

Amber Kramer

Thank you, Rick.

Operator

turn and like I’d we time, remarks. this for the closing the end of over question-and-answer any back have session, to call Mary to At reached Ann the

Mary Ann McGarry

on call. Stay next you us a our have we and forward great you. thank for joining Thank updating holiday to healthy. you Well, look today, And season.

Operator

conference. today’s concludes This

may have lines You day. you time. disconnect great a And for at joining. Thank this much very your

Guild (GHLD) 13 Nov 212021 Q3 Earnings call transcript