Guild Holdings Company (NYSE: GHLD) (“Guild” or the “Company”), a growth-oriented mortgage company that employs a relationship-based loan sourcing strategy to execute on its mission of delivering the promise of homeownership, today announced results for the second quarter ended June 30, 2023.
“We continue to effectively execute on our differentiated strategy to gain market share through both organic growth and selective acquisitions. While broader industry challenges persist due to higher interest rates and limited home inventory, we believe Guild is well-positioned given our focus on the purchase mortgage market, innovative new products to meet the needs of even more buyers, and our growing network of loan officers with deep relationships,” stated Terry Schmidt, Chief Executive Officer. “We are pleased with the contributions from our recent acquisitions and believe we will realize additional benefits and further our retail reach as they are fully integrated. We have prioritized maintaining a strong balance sheet and liquidity position, which supports our ongoing pursuit of additional external growth opportunities. We cannot control the economic environment, however we will continue to leverage our proven business and aim to further increase market share and to accelerate growth as the markets normalize.”
Second Quarter 2023 Highlights | Total in-house originations of $4.5 billion compared to $2.7 billion in the prior quarter | |
Originated 94% of closed loan origination volume from purchase business, compared to the Mortgage Bankers Association estimate of 80% for the same period | ||
Net revenue of $236.8 million compared to $103.9 million in the prior quarter | ||
Net income of $36.9 million compared to net loss of $37.2 million in the prior quarter | ||
Servicing portfolio unpaid principal balance of $82.0 billion as of June 30, 2023, up 3% compared to $79.9 billion as of March 31, 2023 | ||
Adjusted net income and adjusted EBITDA totaled $9.0 million and $16.5 million, respectively, compared to adjusted net loss and adjusted EBITDA of $2.5 million and $1.1 million, respectively, in the prior quarter | ||
Return on equity of 12.0% and adjusted return on equity of 2.9%, compared to (12.1)% and (0.8)%, respectively, in the prior quarter |
Year-To-Date 2023 Highlights | Total in-house originations of $7.2 billion compared to $11.8 billion in the prior year | |
Originated 93% of closed loan origination volume from purchase business, compared to the Mortgage Bankers Association estimate of 80% for the same period | ||
Net revenue of $340.7 million compared to $769.3 million in the prior year | ||
Net loss of $0.3 million compared to net income of $266.3 million in the prior year | ||
Servicing portfolio unpaid principal balance of $82.0 billion as of June 30, 2023, up 8% compared to $75.9 billion as of June 30, 2022 | ||
Adjusted net income and adjusted EBITDA totaled $6.4 million and $17.7 million, respectively, compared to adjusted net income and adjusted EBITDA of $46.0 million and $68.6 million, respectively, in the prior year | ||
Return on equity of 0% and adjusted return on equity of 1.0%, compared to 50.5% and 8.7%, respectively, in the prior year |
Other Highlights Subsequent to Quarter End
On August 2, 2023, the board of directors of Guild declared a special cash dividend of $0.50 per share on its Class A and Class B common stock. The $0.50 per share dividend will be paid on or about September 7, 2023 to stockholders of record on August 23, 2023.
Second Quarter Summary
Please refer to “Key Performance Indicators” and “GAAP to Non-GAAP Reconciliations” elsewhere in this release for a description of the key performance indicators and definitions of the non-GAAP measures and reconciliations to the nearest comparable financial measures calculated and presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
($ amounts in millions, except per share amounts) | 2Q’23 | 1Q’23 | %∆ | YTD’23 | YTD’22 | %∆ | ||||||||||
Total in-house originations | $ | 4,458.5 | $ | 2,701.4 | 65 | % | $ | 7,159.9 | $ | 11,783.5 | (39 | )% | ||||
Gain on sale margin on originations (bps) | 310 | 343 | (10 | )% | 323 | 382 | (15 | )% | ||||||||
Gain on sale margin on pull-through adjusted locked volume (bps) | 314 | 284 | 11 | % | 299 | 347 | (14 | )% | ||||||||
UPB of servicing portfolio (period end) | $ | 82,030.4 | $ | 79,916.6 | 3 | % | $ | 82,030.4 | $ | 75,856.6 | 8 | % | ||||
Net revenue | $ | 236.8 | $ | 103.9 | 128 | % | $ | 340.7 | $ | 769.3 | (56 | )% | ||||
Total expenses | $ | 186.4 | $ | 154.7 | 20 | % | $ | 341.1 | $ | 412.7 | (17 | )% | ||||
Net income (loss) | $ | 36.9 | $ | (37.2 | ) | 199 | % | $ | (0.3 | ) | $ | 266.3 | (100 | )% | ||
Return on equity | 12.0 | % | (12.1 | )% | 199 | % | — | % | 50.5 | % | (100 | )% | ||||
Adjusted net income (loss) | $ | 9.0 | $ | (2.5 | ) | 463 | % | $ | 6.4 | $ | 46.0 | (86 | )% | |||
Adjusted EBITDA | $ | 16.5 | $ | 1.1 | NM | $ | 17.7 | $ | 68.6 | (74 | )% | |||||
Adjusted return on equity | 2.9 | % | (0.8 | )% | 463 | % | 1.0 | % | 8.7 | % | (88 | )% | ||||
Earnings (loss) per share | $ | 0.61 | $ | (0.61 | ) | 199 | % | $ | — | $ | 4.36 | (100 | )% | |||
Diluted earnings (loss) per share | $ | 0.60 | $ | (0.61 | ) | 198 | % | $ | — | $ | 4.31 | (100 | )% | |||
Adjusted earnings (loss) per share | $ | 0.15 | $ | (0.04 | ) | 463 | % | $ | 0.10 | $ | 0.75 | (86 | )% | |||
Origination Segment Results
Origination segment net loss was $21.3 million in the second quarter compared to $32.8 million in the prior quarter on higher origination volumes, but still reflecting the impact of higher interest rates and low housing inventory. Gain on sale margins on originations was 310 bps, down 33 bps from the prior quarter due to a continued competitive market environment. Gain on sale margins on pull-through adjusted locked volume increased 30 bps quarter-over-quarter to 314 bps and total pull-through adjusted locked volume was $4.4 billion compared to $3.3 billion in the prior quarter.
($ amounts in millions) | 2Q’23 | 1Q’23 | %∆ | YTD’23 | YTD’22 | %∆ | |||||||||
Total in-house originations | $ | 4,458.5 | $ | 2,701.4 | 65 | % | $ | 7,159.9 | $ | 11,783.5 | (39 | )% | |||
In-house originations # (000’s) | 13 | 9 | 44 | % | 22 | 37 | (41 | )% | |||||||
Net revenue | $ | 140.3 | $ | 93.6 | 50 | % | $ | 233.9 | $ | 457.7 | (49 | )% | |||
Total expenses | $ | 161.6 | $ | 126.3 | 28 | % | $ | 288.0 | $ | 368.7 | (22 | )% | |||
Net (loss) income allocated to origination | $ | (21.3 | ) | $ | (32.8 | ) | (35 | )% | $ | (54.1 | ) | $ | 89.1 | (161 | )% |
Servicing Segment Results
Servicing segment net income was $88.7 million in the second quarter compared to a net loss of $0.3 million in the prior quarter. The Company retained mortgage servicing rights (“MSRs”) for 84% of total loans sold in the second quarter of 2023.
Net revenue totaled $98.9 million compared to $13.1 million in the prior quarter. In the second quarter of 2023, fair value adjustments with respect to the Company’s MSRs totaled a gain of $27.9 million, compared to a loss of $54.9 million in the prior quarter. Guild’s purchase recapture rate was 27% in the second quarter of 2023 compared to 24% in the prior quarter, which reinforces the Company’s focus on customer service and synergistic business model.
($ amounts in millions) | 2Q’23 | 1Q’23 | %∆ | YTD’23 | YTD’22 | %∆ | ||||||||
UPB of servicing portfolio (period end) | $ | 82,030.4 | $ | 79,916.6 | 3 | % | $ | 82,030.4 | $ | 75,856.6 | 8 | % | ||
# Loans serviced (000’s) (period end) | 335 | 328 | 2 | % | 335 | 314 | 7 | % | ||||||
Loan servicing and other fees | $ | 60.2 | $ | 60.1 | — | % | $ | 120.3 | $ | 107.8 | 12 | % | ||
Valuation adjustment of MSRs | $ | 27.9 | $ | (54.9 | ) | 151 | % | $ | (27.0 | ) | $ | 205.7 | (113 | )% |
Net revenue | $ | 98.9 | $ | 13.1 | 658 | % | $ | 111.9 | $ | 314.5 | (64 | )% | ||
Total expenses | $ | 10.1 | $ | 13.4 | (24 | )% | $ | 23.5 | $ | 23.9 | (2 | )% | ||
Net income (loss) allocated to servicing | $ | 88.7 | $ | (0.3 | ) | NM | $ | 88.4 | $ | 290.7 | (70 | )% | ||
Share Repurchase Program
During the three months ended June 30, 2023, the Company repurchased and subsequently retired 51,588 shares of its Class A common stock at an average purchase price of $10.58 per share. As of June 30, 2023, $13.3 million remained available for repurchase under the Company’s share repurchase program.
Balance Sheet and Liquidity Highlights
The Company’s operating cash position was $106.0 million as of June 30, 2023. The Company’s unutilized loan funding capacity was $0.9 billion, while the unutilized MSR lines of credit was $205.0 million, based on total committed amounts and borrowing base limitations. The Company’s leverage ratio was 1.1x, defined as total secured debt including funding divided by tangible stockholders’ equity.
(in millions) | June 30,
| December 31,
| ||
Cash and cash equivalents | $ | 106.0 | $ | 137.9 |
Mortgage servicing rights, net | $ | 1,184.5 | $ | 1,139.5 |
Warehouse lines of credit | $ | 1,053.1 | $ | 713.2 |
Notes payable | $ | 123.8 | $ | |
