Guild (GHLD) 2 Dec 202020 Q3 Earnings call transcript

Good afternoon, ladies and gentlemen, and welcome to the Guild Holdings Company Third 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.

Thank you, and good afternoon, everyone.

Before we begin, I would like to remind everyone that comments on this conference call may contain certain forward-looking statements regarding the company's expected operating and financial performance for future periods. on current based are statements the expectations. company's These factors may from forward-looking detail those results or due for statement or under materially prospectus periods future other risks Guild's of these Actual Risk expressed Factors in IPO differ implied filed a with number are U.S. in that described to registration greater statements and by the and Ann Financial the Securities today are Elwell; Mary Commission. Participating Officer, Officer, Chief Schmidt; in call Operating Neylan. McGarry; Exchange David Terry and Executive President, Officer, Chief Amber Chief

Mary Now call I would over to like McGarry. to turn Guild's the Chief Mary Executive Ann Ann? Officer,

transition Thanks, Guild's of them a help of would continuing I like I of like us forward employees Michael, We our would with public I you. to and thank look their our to everyone. continuing and also of for thank their our all clients would work trust hard with thank year to all And and for all the build afternoon, dedication relationships company. like good all welcome throughout shareholders. to needs. to to during continuing new to financing and to

financial provide first on business Terry would a thought as As be our details conference growth of discuss and will Amber overview public we provide helpful the then company, earnings our how will call we differentiated. to an our it are and strategy, quarter.

Operating and since Officer, then loans and company Neylan, residential some originated Chief will is by mortgage David serviced our XXXX. a banking has We that be joined questions. Guild take leading mortgage

purchase are We the focused on market.

business was origination XX% over and XXXX, consistent in returns. December our ending years, X volume last purchase Purchase business. durable the volume provides Over of

profitability and us business record purchase a many has interest market on through generate track to cycles. focus Our allowed consistent rate of

that strong pays built the through their where takes experience, we personalized a high-trust off, also a our have utilize model, an team and time the transaction. We've technology. matters. presence capture when a loan opportunity local from the relationship scalable, officer We've an leverages reputation, application, client and created to growth-oriented platform time our a sales-centric We loan and next

we in Our apart. neighborhoods strong helps and to us serve reputation set the communities

we servicing stream more view Our origination extension an of as flow. just than servicing But recurring a teams. We it asset. as of see cash segment an generates our

Turning model We financial and to million GAAP level, record of income as originations the $XXX quarter year's some strength the of over we and generated highlights representing strategy. billion, for quarter. reinforcing reported $XX of the differentiated business of XX% prior our growth net

Guild continue well believe ahead, success. to we positioned its is Looking

continue to the We expect market. purchase to focus on our platform

value. continuing We are enhancing business and shareholder to looking forward to our grow to

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

Ann. build past I'm we with and proven, to our going model. scalable repeatable growth and our Thanks, on we strategy why discuss Mary can believe our success

First, we into remain recruiting MSAs growing by focused platform. in our organically new getting and new officers on to our loan existing business MSAs

share. XX expanding rates highly productivity, robust XX% captured fragmented. Federal that is operate continue to back, our recruit to channel XXXX, targeted retail continue to accretive just capture in large also The officers. market And on expects we remain XXXX. additional market originations, trends mortgage to market our macro to in support to In third, loan total a provides expect footprint opportunity but which increase to acquisitions. Stepping mortgage signal it we only not Second, that a lenders continue Furthermore, growth. continues interest of top low to Reserve the to with we focused technology the use remain great through the through and

we in in as nationally. our our moved the in into retail started and XX and South, states. strategy. we broaden today, organic only our growth We growth we territories In then footprint new plan operate X in to on expand XXXX, the business we our Focusing operated Western and states, states

an opportunity penetrate existing believe to also We to new continue there's and MSAs.

market As currently an existing to in-state share locations, the and our operate, illustrative in productivity example, we additional we add of capture believe as roughly further loan we enhance in billion loan increase X% can we states volume officers. we were where if retail $XX able could we an add the annually. Moreover, officers growth of in new

been Our very loan officer being generated with still our that averaged with volume today. officers X% overall retaining excluding our from And acquisitions. since headcount organic has loan officers, successful XX% the X and loan growth of XXXX, our are us years at for past we've

platform enables on one that located client Second, to system. is and all prospecting from fulfillment, solution our technology everything, retention, a production proprietary servicing end-to-end

Our a applications, strong seamless quality, scale, efficiency our and is environments, if our or electronic a prefers platform engage particularly generate and point-of-sale in think to us we flexibility most rate allows helpful serve closings. approach this enables interest verifications, This favorable alerts to with about of online automatic us a operational We as can experience. experience client provide they This times us prefer. clients with -- importantly, statuses, digital as terms client manner. in our customers to in refinances to

expertise has the returns, really deliver personalized helps locally our business our lies our generated focus experience. However, where a officers higher differentiation on consistent that, in and of average, home-buying to loan purchase us on more

using returns reduce stay strategy, second gain-on-sale of success acquired we cultural attractive ensure Origination transaction. minimize of business our and good good businesses investment. and acquisition terms proven. sellers increased average a our in an back-office on for alignment to component marketing sophistication leaders and can designed expenses. The acquisitions, foothold in acquisitions to marketplace payment, and volumes increase to is upfront of scale the look their Past want we've have on the fit, their and in secondary also post our for Finally, leverage years growth. opportunities seek enhanced XX% who accelerate third business in owners XX% earnout a group platform cash including to and the with the and the our who our margins are We

years Looking proven ahead, capture multifaceted now we the our the like Officer, Financial to approach. I of Chief poised to would in our Amber in given coming financials attributes detail. more growth discuss remains and Amber? our believe turn Elwell, to business to platform the our incremental

Terry. Thanks,

we reminder, IPO completed XXXX, were a in XXXX. October the As our in of and we quarter third public not

income net quarter lastly, As change billion, growth the the model value of Mary $XXX Net million, from due the Ann volumes capitalizing for fair $XXX year very XXXX. year-over-year. compared of loan income $XXX This refinance total on net of than to and doubled to MSRs EBITDA represents to than tripled million. mentioned, million up representing adjusted and to strong prior increased expanding results income margins. to quarter, purchase origination we focused acquisitions. elevated And generated business XXX% of third while inputs third $XXX net assumptions $XX revenues exclude GAAP including to million. We're more continuing XX% to more adjusted liabilities year-over-year. and on contingent in to due stay Adjusted

represented purchase of QX. Our total XX% originations our origination in volume

our service, have and We established access through direct are to selling relationships and not price. networks referral consumers

more we the loan, consistent of don't result capture pay have and intermediary to a higher we gain-on-sale generated because this margins. an As and

increase points, to a Our basis XX% gain-on-sale on margins XXX year-over-year. originations increased

same lock adjusted is basis lock up $XX.X period. the points, adjusted prior volume XX% pull-through increased pull-through which volume on to the at for XX% time year, billion gain-on-sale XXX from Our with

most relationships the loan is to which that With our new believe and purchase billion the an retail a preserve side, distinction. for has increased end servicing loan servicing the by is important rise $XX.X servicing XX% the production the the client, through through our the portfolio. we channel. our and third servicing fees year-over-year loan $XX grown other It in stickiness officer officer have believe why between is driven loans. totaled at established important million quarter in-house by On in of of particularly future the between coming clients this majority retail, This the with to time of we our underlying and servicing quarter, already for they the the creates the segment. enter for client organically portfolio, place relationship We transactions, company. Total our

electing -- the by the under of to with forbearance delinquency We Act, from September ago. primarily on up our from as the XX, to fee year XX-plus-day a continue XXXX to clients associated relief CARES forbearance to Due our accept income expect Act. rate will X.X% servicing to -- increased servicing CARES be impacted portfolio X.X%

industry Our forbearance at to September requests for were the X.X% as our of XX, portfolio data favorably overall of same which MBA's period. the X.X% compares of

refinance recapture time, $XX quarter In lower fair million interest over the quarter, prepayments. terms At date, XX%. value same million the rates the higher and to value our of September declined a reflecting third $XXX had MSRs, we for of during by of a

and as well maintained cash lines our million $X.X to liquidity used with capacity We with warehouse billion. of $XXX cash equivalents, Turning funds excluding pay unused to ample lines balance sheet. warehouse $X.X down of of of our credit, billion as

capital-light to for with XXX.X% leads service. ROE the high is ROEs, adjusted business and turn, quarter. originate because the Our in sell loans This, we at we an third

reflecting we generate positioning, call and we ahead, market ahead questions. open we'll that, positioned our the believe for Looking infrastructure strong are scale to existing unique Operator? go and profitable with well relationships. And and growth across continue cycles, up to

Fandetti Fargo. comes Our Don question first from with Wells

originations. QX for in gain-on-sale Amber, what see, wanted loan margins terms and to I are funded your also of thoughts

increased look providing to lock for MBA We QX. in lock pull-through the pull-through forecasting has providing industry $XX.X volume year-to-date Q, in release, drop is Overall, have volume. Overall, again, margins, billion. X.X%. not to guidance the not I for adjusted would that, is QX at the on -- is in do are expecting volume in of and about gain-on-sale which QX. Forecast basis earnings the We our the guidance, through points XXX adjusted terms

demand really account that, now business overall the over months. the that will QX. So and into margins next thinking happen what just they will can few and take supply when into gain-on-sale QX you're the that and and continue are that you of expand about And thinking refi

Okay.

at funded expenses also if Or QX, and higher segment, was of it in originations guidance guess Did a come Q-over-Q. percentage the comp no there. the I a G&A? So little that your a was terms for I higher? of as line expectation seemed production little bit with it like, in look

bit was original higher a little It expectations. than

tiers amounts. high our of with hit as compensation are numbers high-volume those have they're higher hitting volume sales-related those we're salespeople hitting, all -- tiered, that Our so people higher

year-to-date the quarter-over-quarter and to -- is our than lower that, last still expenses last key think I year in basis year. points overall, still are

as we expectations. grow. getting a it compensation, tiers of So little sales it those -- than But because is still original the was we're higher in higher scale that, bit

JPMorgan. from question next comes Our Shane Instructions] Rick [Operator with

long-term you the expansion as Look, point? you I talked any with Guild business, mortgage in the try strength a scale firms am retention? little Are bit and curious, strategy. this competitor the employee about actually your you to base? want of happening also Are to originators about see your join seeing that you is at finding market, you up turnover what talked

turnover we in platform retain I new And very pickup not can recruit at a handle that. this and time. are to Well, seeing attractive our talent. is

David, technology why he and platform I it platform over So productive to it we more our why you turn can and and more have. under can tell talent. successful us our They're -- we retain it just our believe that helps more about

you that? would like David, So on expand to

Ann. Sure. Thanks, Mary

to that developed our coaching program their and through have seeing programs and commitment believe also tools recapture talent retain differentiated through attract Elevate. that approach we that We combination our grow like help We side. we our we mousetrap reduction are particularly proprietary a on them to officer provide internally to loan built of them, our business, our technology a a better not call

In officer fact, amount we retaining have seen in of success a talent. tremendous loan

has X production officers still of today. that loan the with -- have company Over we XX% produced the that last are years, by is the been

today's So new even market, we're loan in records. officers hit seeing

see continue and is value industry helping Our productivity them through officers, standards. continuing we're to proposition loan to grow. And increased to outperform them our we're seeing

to continuing really we're retaining in sales and loan so good our And to our force. grow work success seeing officers

question, is question last Great. then helpful. That's my Amber. second the very And for

can in make we see there any curious of all just the portfolio. purchases was there. the want Just moving sales of but the MSRs -- I or to terms what parts during understand quarter? We sure servicing what retained, Were the

was there not. No,

from comes question next Our Compass Point. Bologna with Giuliano

of realize on I'm how the through in X/X outlook. just on it a kind way initial congratulations expectations. we're cetera, move quarter bit now of part initial a I more et first and And the you're the is get Christmas, part company. jumping of obviously, any seeing kind quarter full that -- to interesting fundings, than as the And trending of shaped not -- a of public little quarter, the if curious kind around your your trends just terms the kind get a versus guess your would quarter of side, original origination input, looking a fundings in so of how up quarter I of side. the be I'm little I'm that on they Thanksgiving, around, curious for has

their Well, again, on X.X% quarter would of to the the I we quarter Forecast totality. provide fourth expectations can't only fourth and the guidance in from point dropping MBA QX.

we much in kind in tick-up obviously, servicing that of I and should little expect And slightly amortization different bit rate amortization sense. angle. quarter, the the how in purchase, quarter, see the down fourth in quarter? we as then the not fourth on with coming a especially are a kind of about makes That volumes the pickup rate, When likely think if in the of down most a -- fourth

In of off, running off? much -- how terms many paying loans are how

dollar That's you of then right. Kind perspective? will from be a how

Sure.

the MBA QX. slightly So go is forecasting up refis in the to

proxy. So I as that would a use

QX, were is they XX% Guild a have XX%. purchase. QX, -- sorry, We they I'm XX%. In in So were at running

to using into bet. servicing think what's And happen that going continue are of a back and XX% the for originations going on feeding continuing the I refis, with and about would QX the we happen to that so the that for And recapture portfolio portfolio what forward. focus proxy to as is best in

Trevor comes with Our Cranston next JMP from question Securities.

last are question who in Can of in maybe are be companies would out be seen to acquisition of this color looking have landscape. the helpful. guys seeing years? point some maybe like couple terms we first that provide terms might The are to provide there around relative the if is you sell acquired potentially or you at could more guys what there color of Any you what over around

talk always transaction. a So that to we and ready have always that we list negotiate can so we that arise a opportunities companies of for any are

So more expect. strategy it going tell we our to I and -- Terry over turn you to about forward but can what

they those a that starts sense Thanks, of say sellers of kind kind many based the Mary in would maybe stronger, on contract what purchase when want of refis start get subsiding, volumes kind that business, years really the see little we've I Ann. that Sure. market just to of been that on were bit. fence, typically becoming is the Typically, a what's there. out we

has so appetite And the traditionally increased acquisitions. for

so similar forward. if we -- that would see on our would be going based And something path,

Got it.

thinking are forward. Ginnie at and curious you on amount then can about side. is buyout Okay. meaningful the any then that the a And XQ That's point activity this say servicing you guess much how of there in question helpful. was first, servicing portfolio I was how I early Mae? of also, And if going

haven't million on we that we overall, not capacity overall with related to have a we our the servicing. heavy that. early of Ginnie early to looking portfolio, line, And Mae XX% our at, -- going but business. of portfolio it's our about did consistent in amount as that what with wanted. would aren't do in on do have buyout overall, We're are our normal our the of course really we line that buyout stance a about QX still we in to is still modifications our with regular buyouts. And early early happen of We in buyouts not changed an any forbearances. do the doing And We option what's $XX

comes question America. Derek Bank Our Hewett final with of from

the near be the organically? of in back in question. through in earlier significant M&A to the Circling see -- over term, those gaining will the the focus term? in Kind XX near on could M&A we Or share markets growth the states existing

And with acquisitions. share. opportunistic you to and grow we our loan share, productivity through to on grow our and expect would at platform looking Well, our as Terry, we're technology we additional as that all? to well expand -- officers like always organically is market market our will increased

Sure.

think And we X% offices, got going earlier, about -- acquisitions. officers next a their good been typically, a to very we've successful I as Mary them the on even -- our we growth that -- career, always as the of can we're we've of of centralized to some -- take we've some that as organic level at said, of far Ann mid-tier averaged said taken at division, have every kind we're we've existing we we year. more As growing officers. our there. grow we've we're better And think with side, amount a loan to footprint geographic and opportunistic kind where being which backfilling success know then organically, always getting loan And but doing in we looking recruiting

We well are territory. interested into within as new getting existing states XX as always our

my channel, then the on in question correspondent given retail either at there the or entering just wholesale is last channels this point? interest And the Okay. focus any is

Not this at point.

We add our to gaining focused that on but I just little aren't in would channel correspondent, whenever growing back that, have the We're typically, market a focused share. on we historically, and M&A growing share able this we've And retail bit that grown been advantage there's that. share. grow. we've since year in the and market to grown in XXXX, that market XXx and when grown we've market that's during dislocation, most market and we've any take of And been our

all on X share I earlier. market with gaining focused definitely components we're mentioned So the

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

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

today's this webcast. Ladies concludes and gentlemen,

disconnect now Thank may great this for lines your participation, and your have a You time. you day. at