Guild Mortgage reported a $37.2 million net loss in the first quarter, due to "a challenging backdrop of rising rates and limited inventory," but the company believes that its growth plan, which includes an expansion of market share, will bring it back to profitability once purchase demand returns.
This is the second reported net loss by the lender since
Both its servicing and origination segment took a hit in the first three months of 2023, with the latter division reporting a net loss of $32.8 million. The company's expenses dropped slightly to $154.7 million from $157.5 million at the end of 2022.
The servicing division had a net loss of $300,000, compared to a net income of $21.5 million the quarter prior, "due primarily to $55 million of downward fair value adjustments to the company's mortgage servicing rights," said Terry Schmidt, president of Guild, during the company's earnings call Monday.
Despite the loss, Guild's in-house servicing portfolio grew 1.3% to $79.9 billion, up from $78.9 billion in the fourth quarter of 2022. The net income for its servicing division totaled $13.1 million, down from $34.8 million three months before.
During the first quarter, the mortgage shop amassed $103.9 million in net revenue, less than the $134.3 million reported in the fourth quarter of 2022, while its gain on sale margin grew to 343 basis points from 331 basis points in the previous quarter.
The lender generated $2.7 billion worth of loan originations, compared to $3 billion in the fourth quarter of 2022. Of that sum, 92% of the volume came from purchase business.
Guild's earnings numbers missed analysts' estimates, with Wedbush noting that the company's adjusted earnings per share loss of 4 cents per share was well below the investment firm's estimates of 6 cents per share, and even lower than consensus expectations of 8 cents per share.
Wedbush's report pointed out that Guild's gain on sale and servicing revenues were higher than expected, but were offset by elevated operating expenses.
According to Mary Ann McGarry, the
"We're seeing the benefits of our focus on the purchase mortgage market, our new products to meet the evolving needs of buyers, and our network of loan officers with deep relationships," she said. "With our recent acquisitions we are further building our foundation to drive growth, and we anticipate gaining additional market share as the acquisitions are fully integrated and continue to ramp."
During the first quarter, Guild moved to acquire
And from the looks of it, further expansion is in the works with McGarry hinting that the company "will continue to seek selective opportunities to invest and best position."
The mortgage shop is looking to grow its footprint in the South and Southeast, executives noted.
"Our balance sheet remains strong and provides us with the flexibility to continue to invest in our growth in a disciplined manner and our assets consist primarily of high quality loans and MSRs," said Schmidt during the earnings call. "As we progress through this cycle, Guild will focus on seeking out additional opportunities including potential acquisitions, which should position us to accelerate our growth over time as market conditions improve."
