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Guild Holdings Company Reports Third Quarter 2023 Results

  • Originations of $4.3 Billion in Third Quarter and $11.4 Billion YTD
  • Net Revenue of $257.3 Million in Third Quarter and $598.0 Million YTD
  • Net Income of $54.2 Million in Third Quarter and $54.0 Million YTD
  • Adjusted Net Income of $29.0 Million in Third Quarter and $35.5 Million YTD
  • Return on Equity of 17.2% and Adjusted Return on Equity of 9.2% in Third Quarter
  • Gain on Sale Margin on Originations of 377 bps in Third Quarter
  • 94% of Originations were Purchase Originations in the Third Quarter
  • Paid Special Cash Dividend of $0.50 Per Share in the Third Quarter
  • Acquired First Centennial Mortgage, a residential mortgage lender headquartered in Illinois

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 third quarter ended September 30, 2023.

“In the third quarter, we delivered revenue and earnings growth over the prior quarter, even as lower originations volume reflects ongoing industry headwinds of higher interest rates and limited home sales inventory,” stated Terry Schmidt, Guild Holdings Chief Executive Officer. “We have remained consistent with our strategy of growing market share in the retail purchase mortgage market, while retaining the servicing of those loans. This focus not only allows us to see more reliable income, it enables us to build an ongoing asset, where we believe we have the opportunity to realize repeat transactions over time. Through a combination of selective acquisitions and organic recruiting, we have continued to invest in our people and our platform to both drive market share in the near term, and to be positioned to accelerate growth when this cycle turns. We are well-capitalized, and remain confident that we have the right platform, products and people to allow us to deliver on our strategy.”

Third Quarter

2023

Highlights

 

Total in-house originations of $4.3 billion compared to $4.5 billion in the prior quarter

 

Originated 94% of closed loan origination volume from purchase business, compared to the Mortgage Bankers Association estimate of 82% for the same period

 

Net revenue of $257.3 million compared to $236.8 million in the prior quarter

 

Net income of $54.2 million compared to $36.9 million in the prior quarter

 

Servicing portfolio unpaid principal balance of $83.7 billion as of September 30, 2023, up 2% compared to $82.0 billion as of June 30, 2023

 

Adjusted net income and adjusted EBITDA totaled $29.0 million and $43.9 million, respectively, compared to $9.0 million and $16.5 million, respectively, in the prior quarter

 

Return on equity of 17.2% and adjusted return on equity of 9.2%, compared to 12.0% and 2.9%, respectively, in the prior quarter

Year-To-Date

2023

Highlights

 

Total in-house originations of $11.4 billion compared to $16.1 billion in the prior year

 

Originated 94% of closed loan origination volume from purchase business, compared to the Mortgage Bankers Association estimate of 81% for the same period

 

Net revenue of $0.6 billion compared to $1.0 billion in the prior year

 

Net income of $54.0 million compared to net income of $343.6 million in the prior year

 

Servicing portfolio unpaid principal balance of $83.7 billion as of September 30, 2023, up 8% compared to $77.7 billion as of September 30, 2022

 

Adjusted net income and adjusted EBITDA totaled $35.5 million and $61.6 million, respectively, compared to adjusted net income and adjusted EBITDA of $70.1 million and $101.6 million, respectively, in the prior year

 

Return on equity of 5.7% and adjusted return on equity of 3.8%, compared to 41.9% and 8.6%, respectively, in the prior year

Third 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)

3Q’23

2Q’23

%∆

YTD’23

YTD’22

%∆

Total in-house originations

$

4,263.8

 

$

4,458.5

 

(4

)%

$

11,423.8

 

$

16,147.3

 

(29

)%

Gain on sale margin on originations (bps)

 

377

 

 

310

 

22

%

 

343

 

 

375

 

(9

)%

Gain on sale margin on pull-through adjusted locked volume (bps)

 

389

 

 

314

 

24

%

 

333

 

 

342

 

(3

)%

UPB of servicing portfolio (period end)

$

83,705.7

 

$

82,030.4

 

2

%

$

83,705.7

 

$

77,735.7

 

8

%

Net revenue

$

257.3

 

$

236.8

 

9

%

$

598.0

 

$

1,030.5

 

(42

)%

Total expenses

$

183.7

 

$

186.4

 

(1

)%

$

524.8

 

$

587.3

 

(11

)%

Net income

$

54.2

 

$

36.9

 

47

%

$

54.0

 

$

343.6

 

(84

)%

Return on equity

 

17.2

%

 

12.0

%

43

%

 

5.7

%

 

41.9

%

(86

)%

Adjusted net income

$

29.0

 

$

9.0

 

223

%

$

35.5

 

$

70.1

 

(49

)%

Adjusted EBITDA

$

43.9

 

$

16.5

 

166

%

$

61.6

 

$

101.6

 

(39

)%

Adjusted return on equity

 

9.2

%

 

2.9

%

215

%

 

3.8

%

 

8.6

%

(56

)%

Earnings per share

$

0.89

 

$

0.61

 

47

%

$

0.89

 

$

5.63

 

(84

)%

Diluted earnings per share

$

0.88

 

$

0.60

 

47

%

$

0.87

 

$

5.56

 

(84

)%

Adjusted earnings per share

$

0.48

 

$

0.15

 

223

%

$

0.58

 

$

1.15

 

(49

)%

Origination Segment Results

Origination segment net income was $7.2 million in the third quarter compared to a net loss of $21.3 million in the prior quarter on lower origination volume and still reflecting the impact of higher interest rates and low housing inventory. During the three months ended September 30, 2023, we changed certain of our assumptions through enhancements to the models used in the valuation of our interest rate lock commitments and mortgage loans held for sale, which resulted in a $17.4 million increase to gain on sale of loans. Gain on sale margins on originations increased 67 bps quarter-over-quarter to 377 bps. Gain on sale margins on pull-through adjusted locked volume increased 75 bps quarter-over-quarter to 389 bps and total pull-through adjusted locked volume was $4.1 billion compared to $4.4 billion in the prior quarter.

($ amounts in millions)

3Q’23

2Q’23

%∆

YTD’23

YTD’22

%∆

Total in-house originations

$

4,263.8

$

4,458.5

 

(4

)%

$

11,423.8

 

$

16,147.3

(29

)%

In-house originations # (000’s)

 

13

 

13

 

%

 

35

 

 

50

(30

)%

Net revenue

$

163.3

$

140.3

 

16

%

$

397.2

 

$

616.4

(36

)%

Total expenses

$

156.1

$

161.6

 

(3

)%

$

444.1

 

$

525.8

(16

)%

Net income (loss) allocated to origination

$

7.2

$

(21.3

)

134

%

$

(46.9

)

$

90.6

(152

)%

Servicing Segment Results

Servicing segment net income was $84.0 million in the third quarter compared to $88.7 million in the prior quarter. The Company retained mortgage servicing rights (“MSRs”) for 80% of total loans sold in the third quarter of 2023.

Net revenue totaled $96.6 million compared to $98.9 million in the prior quarter. In the third quarter of 2023, fair value adjustments with respect to the Company’s MSRs totaled a gain of $22.1 million, compared to $27.9 million in the prior quarter. Guild’s purchase recapture rate was 25% in the third quarter of 2023, which aligns with the Company’s focus on customer service and synergistic business model.

($ amounts in millions)

3Q’23

2Q’23

%∆

YTD’23

YTD’22

%∆

UPB of servicing portfolio (period end)

$

83,705.7

$

82,030.4

2

%

$

83,705.7

 

$

77,735.7

8

%

# Loans serviced (000’s) (period end)

 

340

 

335

1

%

 

340

 

 

320

6

%

Loan servicing and other fees

$

61.9

$

60.2

3

%

$

182.3

 

$

165.4

10

%

Valuation adjustment of MSRs

$

22.1

$

27.9

(21

)%

$

(4.9

)

$

247.4

(102

)%

Net revenue

$

96.6

$

98.9

(2

)%

$

208.5

 

$

418.6

(50

)%

Total expenses

$

12.6

$

10.1

24

%

$

36.1

 

$

31.2

16

%

Net income allocated to servicing

$

84.0

$

88.7

(5

)%

$

172.5

 

$

387.5

(55

)%

Share Repurchase Program

During the three months ended September 30, 2023, the Company repurchased and subsequently retired 87,087 shares of its Class A common stock at an average purchase price of $11.74 per share. As of September 30, 2023, $12.3 million remained available for repurchase under the Company’s share repurchase program.

Balance Sheet and Liquidity Highlights

The Company’s cash and cash equivalents position was $114.4 million as of September 30, 2023. The Company’s unutilized loan funding capacity was $1.0 billion, while the unutilized MSR lines of credit was $336.2 million, based on total committed amounts and borrowing base limitations. The Company’s leverage ratio was 1.0x, defined as total secured debt including funding divided by tangible stockholders’ equity.

(in millions, except per share amounts)

September 30,

2023

 

December 31,

2022

Cash and cash equivalents

$

114.4

 

$

137.9

Mortgage servicing rights, net

$

1,258.3

 

$

1,139.5

Warehouse lines of credit

$

839.1

 

$

713.2

Notes payable

$

148.8

 

$

126.3

Total stockholders’ equity

$

1,277.0

 

$

1,249.3

 

 

 

 

Tangible net book value per share(1)

$

17.46

 

$

17.06

_________________

(1)

See “GAAP to Non-GAAP Reconciliation” for a description of this non-GAAP measure and reconciliation to the nearest comparable financial measures calculated and presented in accordance with GAAP.

Webcast and Conference Call

The Company will host a webcast and conference call on Wednesday, November 8, 2023 at 5:00 p.m. Eastern Time to discuss the Company’s results for the third quarter ended September 30, 2023.

The conference call will be available on the Company's website at https://ir.guildmortgage.com/. To listen to a live broadcast, go to the site at least 15 minutes prior to the scheduled start time to register. The conference call can also be accessed by the following dial-in information:

  • 1-877-300-8521 (Domestic)
  • 1-412-317-6026 (International)

A replay of the call will be available on the Company's website at https://ir.guildmortgage.com/ approximately two hours after the live call through November 22, 2023. The replay is also available by dialing 1-844-512-2921 (United States) or 1-412-317-6671 (international). The replay pin number is 10183072.

About Guild Holdings Company

Founded in 1960 when the modern U.S. mortgage industry was just forming, Guild Holdings Company is a nationally recognized independent mortgage lender providing residential mortgage products and local in-house origination and servicing. Guild’s collaborative culture and commitment to diversity and inclusion enable it to deliver a personalized experience for each customer. With more than 4,200 employees and over 340 retail branches, Guild has relationships with credit unions, community banks, and other financial institutions and services loans in 49 states and the District of Columbia. Guild’s highly trained loan professionals are experienced in government-sponsored programs such as FHA, VA, USDA, down payment assistance programs and other specialized loan programs. Its shares of Class A common stock trade on the New York Stock Exchange under the symbol GHLD.

Forward-Looking Statements

This press release contains forward-looking statements, including statements about the Company’s expectations for gaining market share and accelerating growth, ongoing pursuit of M&A opportunities, expectations for benefits from recent acquisitions and expansion of retail reach, expectations for increased home sales and mortgage activity, and ability to continue to repurchase shares of the Company’s Class A common stock pursuant to its share repurchase program. These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” “would” and “outlook,” or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These forward-looking statements are not historical facts and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements.

Important factors that could cause our actual results to differ materially from those indicated in these forward-looking statements include, but are not limited to, the following: any disruptions in the secondary home loan market and their effects on our ability to sell the loans that we originate; any changes in macroeconomic and U.S. residential real estate market conditions; any changes in certain U.S. government-sponsored entities and government agencies, and any organizational or pricing changes in these entities, their guidelines or their current roles; any changes in prevailing interest rates or U.S. monetary policies; the effects of any termination of our servicing rights; the effects of our existing and future indebtedness on our liquidity and our ability to operate our business; any disruption in the technology that supports our origination and servicing platform; our failure to identify, develop and integrate acquisitions of other companies or technologies; pressure from existing and new competitors; any failure to maintain or grow our historical referral relationships with our referral partners; any delays in recovering service advances; inaccuracies in the estimates of the fair value of the substantial portion of our assets that are measured on that basis (including our MSRs); any failure to adapt to and implement technological changes; the failure of the internal models that we use to manage risk and make business decisions to produce reliable or accurate results; the degree of business and financial risk associated with certain of our loans; any cybersecurity breaches or other vulnerability involving our computer systems or those of certain of our third-party service providers; our inability to secure additional capital, if needed, to operate and grow our business; the impact of operational risks, including employee or consumer fraud, the obligation to repurchase sold loans in the event of a documentation error, and data processing system failures and errors; any repurchase or indemnification obligations caused by the failure of the loans that we originate to meet certain criteria or characteristics; the seasonality of the mortgage origination industry; any failure to protect our brand and reputation; any non-compliance with the complex laws and regulations governing our mortgage loan origination and servicing activities; material changes to the laws, regulations or practices applicable to reverse mortgage programs; our control by, and any conflicts of interest with, McCarthy Capital Mortgage Investors, LLC; the risks related to our status as a “controlled company”; the significant influence on our business that members of our board and management team are able to exercise as stockholders; our dependence, as a holding company, upon distributions from Guild Mortgage Company LLC to meet our obligations; the risks related to the trading market of our Class A common stock due to our dual class common stock structure; our ability to complete repurchases under the share repurchase program in the amount authorized or at all and the impact of the share repurchase program on our business and financial condition; the identification of material weaknesses in our internal control over financial reporting; and the other risks, uncertainties and factors set forth under Item IA. – Risk Factors and all other disclosures appearing in Guild’s Annual Report on Form 10-K for the year ended December 31, 2022, Quarterly Report on Form 10-Q for the quarter ended June 30, 2023 as well as other documents Guild files from time to time with the Securities and Exchange Commission.

The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in this press release. If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate. Many of the important factors that will determine these results are beyond our ability to control or predict. Accordingly, you should not place undue reliance on any such forward-looking statements.

Any forward-looking statement speaks only as of the date on which it is made, and, except as otherwise required by law, we undertake no obligation to update any forward-looking statement made in this press release to reflect events or circumstances after the date of this press release or to reflect new information or the occurrence of unanticipated events. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments we may make.

Non-GAAP Financial Measures

To supplement our financial statements presented in accordance with GAAP and to provide investors with additional information regarding our GAAP financial results, we disclose certain financial measures for our consolidated and operating segment results on both a GAAP and a non-GAAP (adjusted) basis. The non-GAAP financial measures disclosed should be viewed in addition to, and not as an alternative to, results prepared in accordance with GAAP. These non-GAAP financial measures are not based on any standardized methodology prescribed by GAAP and are not necessarily comparable to similarly titled measures presented by other companies.

Adjusted Net Income. We define Adjusted Net Income as earnings attributable to Guild before the change in the fair value measurements related to our MSRs, contingent liabilities and note receivable related to completed acquisitions due to changes in valuation assumptions, amortization of acquired intangible assets and stock-based compensation. We exclude these items because we believe they are non-cash expenses that are not reflective of our core operations or indicative of our ongoing operations. Adjusted Net Income is also adjusted by applying an estimated effective tax rate to these adjustments. In addition we exclude the change in the fair value of MSRs due to changes in model inputs and assumptions from Adjusted Net Income and Adjusted EBITDA below because we believe this non-cash, non-realized adjustment to net revenues is not indicative of our operating performance or results of operations but rather reflects changes in model inputs and assumptions (e.g., prepayment speed, discount rate and cost to service assumptions) that impact the carrying value of our MSRs from period to period.

Adjusted Earnings Per Share. We define Adjusted Earnings Per Share as our adjusted net income divided by the basic weighted average shares outstanding of our Class A and Class B common stock.

Adjusted EBITDA. We define Adjusted EBITDA as earnings before interest (without adjustment for net warehouse interest related to loan fundings and payoff interest related to loan prepayments), taxes, depreciation and amortization and net income attributable to the non-controlling interests exclusive of any change in the fair value measurements of our MSRs due to valuation assumptions, contingent liabilities and note receivable related to completed acquisitions due to changes in valuation assumptions and stock-based compensation. We exclude these items because we believe they are non-cash expenses that are not reflective of our core operations or indicative of our ongoing operations.

Adjusted Return on Equity. We define Adjusted Return on Equity as annualized Adjusted Net Income as a percentage of average beginning and ending stockholders’ equity during the period.

Tangible Net Book Value Per Share. We define Tangible Net Book Value Per Share as total stockholders’ equity attributable to Guild, less intangible assets, net and goodwill divided by the total shares of our Class A and Class B common stock outstanding. The most directly comparable GAAP financial measure for tangible net book value per share is book value per share.

We use these non-GAAP financial measures (other than tangible net book value per share) to evaluate our operating performance, to establish budgets and to develop operational goals for managing our business. These non-GAAP financial measures are designed to evaluate operating results exclusive of fair value adjustments that are not indicative of management’s operating performance. Accordingly, we believe that these financial measures provide useful information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and future prospects. In addition, management uses the non-GAAP financial measure of tangible net book value per share to evaluate the adequacy of our stockholders’ equity and assess our capital position and believes tangible net book value provides useful information to investors in assessing the strength of our financial position.

Our non-GAAP financial measures are not prepared in accordance with GAAP and should not be considered in isolation of, or as an alternative to, measures prepared in accordance with GAAP. There are a number of limitations related to the use of these non-GAAP financial measures rather than net income (loss), which is the most directly comparable financial measure calculated and presented in accordance with GAAP for Adjusted Net Income and Adjusted EBITDA, Earnings per share, which is the most directly comparable financial measure calculated and presented in accordance with GAAP for Adjusted Earnings per share, Return on Equity, which is the most directly comparable financial measure calculated and presented in accordance with GAAP for Adjusted Return on Equity, and Book Value Per Share, which is the most directly comparable financial measure calculated and presented in accordance with GAAP for Tangible Net Book Value Per Share. These limitations include that these non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles and many of the adjustments to the GAAP financial measures reflect the exclusion of items that are recurring and may be reflected in our financial results for the foreseeable future. In addition, other companies may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison.

For more information on these non-GAAP financial measures, please see the “GAAP to Non-GAAP Reconciliations” included at the end of this release.

 

Condensed Consolidated Balance Sheets (unaudited)

 

(in thousands, except share and per share amounts)

September 30,

2023

 

December 31,

2022

Assets

 

 

 

Cash and cash equivalents

$

114,352

 

$

137,891

Restricted cash

 

3,532

 

 

8,863

Mortgage loans held for sale

 

932,771

 

 

845,775

Reverse mortgage loans held for investment

 

81,457

 

 

Ginnie Mae loans subject to repurchase right

 

639,023

 

 

650,179

Accounts, notes and interest receivable

 

63,649

 

 

58,304

Derivative assets

 

24,401

 

 

3,120

Mortgage servicing rights, net

 

1,258,313

 

 

1,139,539

Intangible assets, net

 

27,113

 

 

33,075

Goodwill

 

186,183

 

 

176,769

Other assets

 

165,839

 

 

186,076

Total assets

$

3,496,633

 

$

3,239,591

Liabilities and stockholders’ equity

 

 

 

Warehouse lines of credit

$

839,122

 

$

713,151

HMBS-related borrowings

 

71,278

 

 

Notes payable

 

148,766

 

 

126,250

Ginnie Mae loans subject to repurchase right

 

639,370

 

 

650,179

Accounts payable and accrued expenses

 

33,194

 

 

34,095

Accrued compensation and benefits

 

33,600

 

 

29,597

Investor reserves

 

20,022

 

 

16,094

Contingent liabilities due to acquisitions

 

7,239

 

 

526

Derivative liabilities

 

 

 

5,173

Operating lease liabilities

 

80,287

 

 

85,977

Note due to related party

 

 

 

530

Deferred compensation plan

 

95,394

 

 

95,769

Deferred tax liabilities

 

251,384

 

 

232,963

Total liabilities

 

2,219,656

 

 

1,990,304

Commitments and contingencies

 

 

 

Stockholders’ equity

 

 

 

Preferred stock, $0.01 par value; 50,000,000 shares authorized; no shares issued and outstanding

 

 

 

Class A common stock, $0.01 par value; 250,000,000 shares authorized; 20,558,055 and 20,583,130 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

 

205

 

 

206

Class B common stock, $0.01 par value; 100,000,000 shares authorized; 40,333,019 shares issued and outstanding at September 30, 2023 and December 31, 2022

 

403

 

 

403

Additional paid-in capital

 

47,529

 

 

42,727

Retained earnings

 

1,228,361

 

 

1,205,885

Non-controlling interests

 

479

 

 

66

Total stockholders' equity

 

1,276,977

 

 

1,249,287

Total liabilities and stockholders’ equity

$

3,496,633

 

$

3,239,591

 

Condensed Consolidated Statements of Income (unaudited)

 

 

Three Months Ended

 

Nine Months Ended

September 30,

(in thousands, except per share amounts)

Sep 30,

2023

 

Jun 30,

2023

 

 

2023

 

 

 

2022

 

Revenue

 

 

 

 

 

 

 

Loan origination fees and gain on sale of loans, net

$

158,126

 

 

$

136,925

 

 

$

387,702

 

 

$

605,229

 

Gain on reverse mortgage loans held for investment and HMBS-related borrowings, net

 

2,755

 

 

 

2,306

 

 

 

5,061

 

 

 

 

Loan servicing and other fees

 

61,941

 

 

 

60,211

 

 

 

182,239

 

 

 

165,419

 

Valuation adjustment of mortgage servicing rights

 

22,077

 

 

 

27,890

 

 

 

(4,904

)

 

 

247,439

 

Interest income

 

31,348

 

 

 

26,584

 

 

 

76,177

 

 

 

47,661

 

Interest expense

 

(19,394

)

 

 

(17,329

)

 

 

(48,985

)

 

 

(36,411

)

Other income, net

 

404

 

 

 

224

 

 

 

663

 

 

 

1,182

 

Net revenue

 

257,257

 

 

 

236,811

 

 

 

597,953

 

 

 

1,030,519

 

Expenses

 

 

 

 

 

 

 

Salaries, incentive compensation and benefits

 

142,637

 

 

 

144,903

 

 

 

398,660

 

 

 

502,893

 

General and administrative

 

18,809

 

 

 

20,448

 

 

 

60,140

 

 

 

20,153

 

Occupancy, equipment and communication

 

18,536

 

 

 

18,402

 

 

 

54,368

 

 

 

54,587

 

Depreciation and amortization

 

3,664

 

 

 

3,661

 

 

 

11,063

 

 

 

11,616

 

Provision for (reversal of) foreclosure losses

 

84

 

 

 

(1,044

)

 

 

554

 

 

 

(1,974

)

Total expenses

 

183,730

 

 

 

186,370

 

 

 

524,785

 

 

 

587,275

 

Income before income tax expense

 

73,527

 

 

 

50,441

 

 

 

73,168

 

 

 

443,244

 

Income tax expense

 

19,284

 

 

 

13,505

 

 

 

19,184

 

 

 

99,615

 

Net income

 

54,243

 

 

 

36,936

 

 

 

53,984

 

 

 

343,629

 

Net (loss) income attributable to non-controlling interests

 

(6

)

 

 

 

 

 

(11

)

 

 

25

 

Net income attributable to Guild

$

54,249

 

 

$

36,936

 

 

$

53,995

 

 

$

343,604

 

 

 

 

 

 

 

 

 

Net income per share attributable to Class A and Class B Common Stock:

 

 

 

 

 

 

 

Basic

$

0.89

 

 

$

0.61

 

 

$

0.89

 

 

$

5.63

 

Diluted

$

0.88

 

 

$

0.60

 

 

$

0.87

 

 

$

5.56

 

Weighted average shares outstanding of Class A and Class B Common Stock:

 

 

 

 

 

 

 

Basic

 

60,956

 

 

 

60,962

 

 

 

60,940

 

 

 

61,004

 

Diluted

 

61,913

 

 

 

61,801

 

 

 

61,976

 

 

 

61,806

 

Key Performance Indicators

Management reviews several key performance indicators to evaluate our business results, measure our performance and identify trends to inform our business decisions. Summary data for these key performance indicators is listed below.

 

Three Months Ended

 

Nine Months Ended September 30,

($ and units in thousands)

Sep 30, 2023

 

Jun 30, 2023

 

 

2023

 

 

 

2022

 

Origination Data

 

 

 

 

 

 

 

$ Total in-house origination(1)

$

4,263,841

 

 

$

4,458,502

 

 

$

11,423,769

 

 

$

16,147,287

 

# Total in-house origination

 

13

 

 

 

13

 

 

 

35

 

 

 

50

 

$ Retail forward in-house origination

$

4,087,820

 

 

$

4,125,328

 

 

$

10,771,949

 

 

$

15,458,986

 

# Retail forward in-house origination

 

13

 

 

 

12

 

 

 

33

 

 

 

47

 

$ Retail reverse in-house origination

$

19,984

 

 

$

7,858

 

 

$

27,842

 

 

$

 

# Retail reverse in-house origination

 

 

 

 

 

 

 

 

 

 

 

$ Retail brokered origination(2)

$

74,517

 

 

$

64,240

 

 

$

180,461

 

 

$

161,279

 

$ Wholesale reverse origination

$

8,948

 

 

$

26,603

 

 

$

35,551

 

 

$

 

Total originations

$

4,347,306

 

 

$

4,549,345

 

 

$

11,639,781

 

 

$

16,308,566

 

Gain on sale margin (bps)(3)

 

377

 

 

 

310

 

 

 

343

 

 

 

375

 

Pull-through adjusted locked volume(4)

$

4,067,137

 

 

$

4,362,354

 

 

$

11,643,939

 

 

$

17,692,129

 

Gain on sale margin on pull-through adjusted locked volume (bps)(5)

 

389

 

 

 

314

 

 

 

333

 

 

 

342

 

Purchase recapture rate(6)

 

25

%

 

 

27

%

 

 

28

%

 

 

31

%

Refinance recapture rate(7)

 

22

%

 

 

22

%

 

 

26

%

 

 

45

%

Purchase origination %

 

94

%

 

 

94

%

 

 

94

%

 

 

79

%

Servicing Data

 

 

 

 

 

 

 

UPB (period end)(8)

$

83,705,731

 

 

$

82,030,408

 

 

$

83,705,731

 

 

$

77,735,730

 

_________________

(1)

Includes retail forward, correspondent and retail reverse and excludes wholesale reverse and brokered loans.

(2)

Brokered loans are defined as loans we originate in the retail channel that are processed by us but underwritten and closed by another lender. These loans are typically for products we choose not to offer in-house.

(3)

Represents loan origination fees and gain on sale of loans, net plus gain on reverse mortgage loans held for investment and HMBS-related borrowings, net divided by total originations, excluding brokered loans, to derive basis points. This includes a $17.4 million increase in the valuation of our interest rate lock commitments and mortgage loans held for sale recognized in the three months ended September 30, 2023 due to model enhancements.

(4)

Pull-through adjusted locked volume is equal to total locked volume, which excludes reverse loans, multiplied by pull-through rates of 84.3%, 85.4% and 94.6% as of September 30, 2023, June 30, 2023 and September 30, 2022, respectively. We estimate the pull-through rate based on changes in pricing and actual borrower behavior using a historical analysis of loan closing data and “fallout” data with respect to the number of commitments that have historically remained unexercised.

(5)

Represents loan origination fees and gain on sale of loans, net divided by pull-through adjusted locked volume. This includes a $17.4 million increase in the valuation of our interest rate lock commitments and mortgage loans held for sale recognized in the three months ended September 30, 2023 due to model enhancements.

(6)

Purchase recapture rate is calculated as the ratio of (i) UPB of our clients that originated a new mortgage with us for the purchase of a home in a given period, to (ii) total UPB of our clients that paid off their existing mortgage as a result of selling their home in a given period.

(7)

Refinance recapture rate is calculated as the ratio of (i) UPB of our clients that originated a new mortgage loan for the purpose of refinancing an existing mortgage with us in a given period, to (ii) total UPB of our clients that paid off their existing mortgage as a result of refinancing their home in the same period.

(8)

Excludes reverse mortgage loans of $73.7 million and $34.5 million as of September 30, 2023 and June 30, 2023, respectively.

 

GAAP to Non-GAAP Reconciliations

Reconciliation of Net Income to Adjusted Net Income (unaudited)

 

 

Three Months Ended

 

Nine Months Ended

September 30,

(in millions, except per share amounts)

Sep 30,

2023

 

Jun 30,

2023

 

 

2023

 

 

 

2022

 

Net income

$

54.2

 

 

$

36.9

 

 

$

54.0

 

 

$

343.6

 

Net (loss) income attributable to non-controlling interests(1)

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Guild

$

54.2

 

 

$

36.9

 

 

$

54.0

 

 

$

343.6

 

Add adjustments:

 

 

 

 

 

 

 

Change in fair value of MSRs due to model inputs and assumption

 

(38.2

)

 

 

(43.8

)

 

 

(38.3

)

 

 

(317.8

)

Change in fair value of contingent liabilities, net due to acquisitions

 

(0.4

)

 

 

1.3

 

 

 

0.9

 

 

 

(45.1

)

Amortization of acquired intangible assets

 

2.0

 

 

 

2.0

 

 

 

6.0

 

 

 

6.0

 

Stock-based compensation

 

2.3

 

 

 

2.3

 

 

 

6.4

 

 

 

4.9

 

Tax impact of adjustments(2)

 

9.0

 

 

 

10.2

 

 

 

6.6

 

 

 

78.5

 

Adjusted Net Income

$

29.0

 

 

$

9.0

 

 

$

35.5

 

 

$

70.1

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding of Class A and Class B Common Stock

 

61

 

 

 

61

 

 

 

61

 

 

 

61

 

Earnings per share

$

0.89

 

 

$

0.61

 

 

$

0.89

 

 

$

5.63

 

Adjusted earnings per share

$

0.48

 

 

$

0.15

 

 

$

0.58

 

 

$

1.15

 

_________________

Amounts may not foot due to rounding

(1)

Net (loss) income attributable to non-controlling interests was $(6) thousand, $0, $(11) thousand and $25 thousand for the three months ended September 30, 2023 and June 30, 2023 and the nine months ended September 30, 2023 and 2022, respectively.

(2)

Estimated effective tax rate used was 26.3%, 26.8%, 26.3% and 22.3% for the three months ended September 30, 2023 and June 30, 2023 and the nine months ended September 30, 2023 and 2022, respectively.

 

Reconciliation of Earnings Per Share to Adjusted Earnings Per Share (unaudited)

 

 

Three Months Ended

 

Nine Months Ended

September 30,

 

Sep 30,

2023

 

Jun 30,

2023

 

 

2023

 

 

 

2022

 

Earnings per share

$

0.89

 

 

$

0.61

 

 

$

0.89

 

 

$

5.63

 

Add back (subtract):

 

 

 

 

 

 

 

Per share impact of non-GAAP adjustments, net of tax

 

(0.41

)

 

 

(0.46

)

 

 

(0.30

)

 

 

(4.48

)

Adjusted earnings per share(1)

$

0.48

 

 

$

0.15

 

 

$

0.58

 

 

$

1.15

 

_________________

(1)

Adjusted earnings per share uses the same denominator as earnings per share.

 

Reconciliation of Net Income to Adjusted EBITDA

(unaudited)

 

 

Three Months Ended

 

Nine Months Ended

September 30,

(in millions)

Sep 30,

2023

 

Jun 30,

2023

 

 

2023

 

 

 

2022

 

Net income

$

54.2

 

 

$

36.9

 

 

$

54.0

 

 

$

343.6

 

Add adjustments:

 

 

 

 

 

 

 

Interest expense on non-funding debt

 

3.0

 

 

 

2.6

 

 

 

8.4

 

 

 

4.7

 

Income tax expense

 

19.3

 

 

 

13.5

 

 

 

19.2

 

 

 

99.6

 

Depreciation and amortization

 

3.7

 

 

 

3.7

 

 

 

11.1

 

 

 

11.6

 

Change in fair value of MSRs due to model inputs and assumptions

 

(38.2

)

 

 

(43.8

)

 

 

(38.3

)

 

 

(317.8

)

Change in fair value of contingent liabilities, net due to acquisitions

 

(0.4

)

 

 

1.3

 

 

 

0.9

 

 

 

(45.1

)

Stock-based compensation

 

2.3

 

 

 

2.3

 

 

 

6.4

 

 

 

4.9

 

Adjusted EBITDA

$

43.9

 

 

$

16.5

 

 

$

61.6

 

 

$

101.6

 

 

Reconciliation of Return on Equity to Adjusted Return on Equity

(unaudited)

 

 

Three Months Ended

 

Nine Months Ended

September 30,

($ in millions)

Sep 30,

2023

 

Jun 30,

2023

 

 

2023

 

 

 

2022

 

Income Statement Data:

 

 

 

 

 

 

 

Net income attributable to Guild

$

54.2

 

 

$

36.9

 

 

$

54.0

 

 

$

343.6

 

Adjusted net income

$

29.0

 

 

$

9.0

 

 

$

35.5

 

 

$

70.1

 

 

 

 

 

 

 

 

 

Average stockholders’ equity

$

1,264.2

 

 

$

1,232.4

 

 

$

1,263.1

 

 

$

1,092.8

 

Return on Equity

 

17.2

%

 

 

12.0

%

 

 

5.7

%

 

 

41.9

%

Adjusted Return on Equity

 

9.2

%

 

 

2.9

%

 

 

3.8

%

 

 

8.6

%

 

Reconciliation of Book Value Per Share to Tangible Net Book Value Per Share

(unaudited)

 

(in millions, except per share amounts)

September 30, 2023

 

December 31, 2022

Total stockholders' equity

$

1,277.0

 

 

$

1,249.3

 

Less: non-controlling interests

 

0.5

 

 

 

0.1

 

Total stockholders' equity attributable to Guild

$

1,276.5

 

 

$

1,249.2

 

Adjustments:

 

 

 

Intangible assets, net

 

(27.1

)

 

 

(33.1

)

Goodwill

 

(186.2

)

 

 

(176.8

)

Tangible common equity

$

1,063.2

 

 

$

1,039.4

 

 

 

 

 

Ending shares of Class A and Class B common stock outstanding

 

61

 

 

 

61

 

 

 

 

 

Book value per share

$

20.96

 

 

$

20.51

 

Tangible net book value per share(1)

$

17.46

 

 

$

17.06

 

_________________

(1)

Tangible net book value per share uses the same denominator as book value per share.

 

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