Guild brings in $37 million in profit while growing origination volume by 69%
Gilde Holdings Co.the parent company of Guild Mortgagedelivered a profit in the second quarter of 2024, mainly due to the performance of its growing services portfolio. Meanwhile, production volume increased 69% from April to June compared to the previous quarter, but with lower margins.
Net income in the second quarter of 2024 rose to $37.6 million, compared to $28.5 million in the previous quarter, according to filings with the Securities and Exchange Commission (SEC). The data shows that adjusted net income was $30.7 million and adjusted EBITDA was $41.6 million.
Guild CEO Terry Schmidt said in a statement that the company’s performance reflects its strategy to grow market share “by investing in people and technology” and its ability to “perform effectively in a challenging market environment.”
During an earnings call with analysts, Schmidt also highlighted the integration of Academy Mortgageacquired in February, represented 18% to 20% of the company’s production volume. She also mentioned the launch of GuildGPT, an internal artificial intelligence (AI) system that allows “team members to easily access AI assistance for immediate delivery of customer information in the background.”
Schmidt said Guild will “pursue selective acquisitions that align with our model and culture.” She told analysts that activity has slowed despite a still-active M&A pipeline and that organic growth through hiring LOs remains a strong option.
Guild earned $6.5 billion in the second quarter, up 69% from the previous quarter, and 92% of the total was in purchase loans. Executives compared the volume increase to the industry average of 14%, indicating Guild gained market share during the period.
However, profit on sales margin fell to 326 basis points, compared to 364 basis points in the same period last year. Ultimately, the lender’s origination division posted a net loss of $3.1 million from April to June, compared to a loss of $24.2 million in the previous quarter.
The bright spot was the services segment, which had net income of $69.5 million in the second quarter of 2024, down from $83.9 million in the first quarter of 2024. This included a gain of $2.1 million related to the valuation adjustments of mortgage servicing rights (MSRs).
The company’s unpaid principal balance (UPB) in its servicing portfolio grew 9% to $89 billion, with the company retaining servicing rights for 68% of total loans sold in the second quarter of 2024. Guild’s repurchase rate was 27% in the second quarter. quarter.
The company sees more opportunity to make loans from its servicing portfolio as interest rates fall, as around 20% of UPB includes interest above 6% and over a quarter of that is above 5%. Executives said the retail platform works as a natural hedge for the service side of the business.
The lender’s cash and cash equivalents as of June 30 were $102.2 million.
During after-hours trading on Thursday Guild share price fell 0.06% to $15.90, after rising 12.6% on the day.
