Guild Mortgage reported its first quarterly loss since
While servicing income helped keep Guild solidly in the black for much of 2022, it wasn't enough to counter
But full-year net income still jumped 15.8% to $328.6 million compared to $283.8 for 2021, a result which could be credited to its business approach, its leaders said.
"Our model is built around a retail strategy, which focuses on servicing the loans that we originate," Guild CEO Mary Ann McGarry said in its earnings call. "By focusing on the purchase business, we see more consistency across interest rate cycles. And by originating our service volume, we believe our earnings are more durable and sustainable in all market cycles."
The industrywide plunge in originations, especially refinances, still took a bite out of the company's bottom line, though. Net loss from Guild's originations segment in the fourth quarter — traditionally a slower period for purchases — came out to $26.6 million, after it had eked out $1.5 million in profit over the preceding three-month period. Loan production volume totaled $3 billion, with the majority, over 93%, in the form of purchase originations. Full-year origination net income came in at $64 million, compared to $392.8 million gained in 2021.
Gain on sale margin of originated mortgages in the fourth quarter fell to 331 basis points from 354 in the third. For all of 2022, the gain on sale came in at 368 basis points.
Servicing income, which has provided much needed revenue for some businesses in a subdued lending environment, fell to $21.5 million from $96.8 million between third and fourth quarters due primarily to adjustments to the fair value of mortgage servicing rights, the company said. Guild's in-house servicing portfolio grew 1% to $78.9 billion. Full-year net income for the segment accelerated to $409 million, compared to $55.6 million in 2021.
Guild garnered $134.3 million in net revenue over the final three months of the year, compared to $261.2 million in the third quarter, representing a 48.6% decrease.
With home lending contracting dramatically over the past year, many mergers and acquisitions have transpired, and Guild took part in several itself. Guild's fourth quarter featured the
"Looking ahead, we believe we can continue to realize attractive growth through M&A, particularly as we anticipate ongoing dislocation in the market," Schmidt said. The company also said it had introduced more than 175 new products in the past 12 months to support the range of clients.
Hinting at potential dealmaking to come, McGarry said, "There is a lot of interest for a lot of production companies to find out options. So we are very pleased with the opportunities that we see ahead of us."
Since Guild's purchase of Legacy Mortgage in early February, several other
Guild's earnings numbers missed analysts' estimates, and investors reacted by pushing its stock value down 12.2% between Thursday's close and Friday's start of trading from $11.51 to $10.10. The stock had risen back up above $11.00 by the afternoon.
