Guild Mortgage teases further expansion

Guild Mortgage's efforts to expand market share seem to be bearing fruit, with the lender reporting an increase in its profits and revenue in the third quarter. The company is continuing to prioritize attracting loan origination talent in the quarters ahead.

Guild's net income almost doubled in the third quarter, growing to $54.2 million from $36.9 million in the second quarter. Its net revenue saw more muted growth, rising to $257.3 million in the third quarter, up from $236.8 million in the prior period.

Its gain on sale margin on originations in the third quarter of 2023 was 377 basis points, a 22% increase from the second quarter. Guild's total in-house originations pulled back to $4.3 billion, down from $4.5 billion worth of volume in the previous quarter. Volume fell in reaction to interest rates ballooning past 7%.

During the company's earnings call Terry Schmidt, CEO of Guild, forecasted that there will be "ongoing muted demand in the near term."

"However, with this backdrop, Guild has maintained its proven approach centered on providing a personalized mortgage borrowing experience, delivered by our knowledgeable loan officers and supported by our diverse product offerings," Schmidt said.

The unpaid principal balance of the lender's servicing portfolio grew by 2% to $83.7 billion as of Sept. 30, compared to $82 billion in the second quarter. Its servicing segment had a net income of $84 million, down from $89 million in the second quarter.

The company's balance sheet, buoyed by its servicing portfolio, provides the mortgage shop with "flexibility to continue to invest in our growth in a disciplined manner," said Amber Kramer, chief financial officer at Guild. 

One such investment for Guild may be bringing more companies and mortgage branches under its helm.

"Our pipeline is still very strong," said Schmidt. "It seemed like things slowed down a little bit in the summer months, but it's picking up again, so we do anticipate that we'll still be in the market to do additional acquisitions going forward…outside of acquisitions we're always focused on organically growing as well and bringing in originators."

For the past year, the lender has been on a buying spree, acquiring First Centennial Mortgage, reverse mortgage lender Cherry Creek Mortgage, Legacy Mortgage and Inlanta Mortgage. It also brought on eight branches from Fairway Independent Mortgage in March, adding to its headcount of over 2,000 loan officers, according to the Nationwide Mortgage Licensing System.

Guild has noted in the past its M&A strategy is focused on expanding its footprint and market share, which will position it to grab more business once origination volume recovers.

Schdmit also addressed the recent real estate commission verdict – which has sent shockwaves across the real estate industry – noting that Guild is "very aware of this outcome in Missouri."

"There are various thoughts right now going around the marketplace, whether it's related to real estate or the lending side and there really isn't any consensus that we've come to consider at this point," she said. "We do anticipate that there's going to be some sort of change. This industry is always evolving. We expect this may be another development that we'll need to adjust to."