Q1 2022 UWM Holdings Corp Earnings Call
Last year when rates went up substantially and lenders had to figure out how to operate in a new environment. We were very profitable back then and while most of those lenders work you'll see the same story play out this year in Q1 was the beginning of that story.
We closed $38 8 billion in production for the quarter that is almost what we did in the whole year of 2018, which shows our massive scale and growth we've achieved in the last four years.
More importantly than that volume number as our production is only down 21% when comparing the first quarter of 2021 to the first quarter 2022, I invite you to compare our year over year first quarter Q1, the first quarter 2021 to 2022 comparison with any lender in the country as proof of the strength.
Our business. This trend will continue in 2022, but beyond that the $19 $1 billion production of purchase volume, which is the largest first quarter in our 36 year history here at <unk>. This is a big number by any one standard and we think we'll do even more in second quarter of 2022, we are confident that UWS.
Continue to be the number one purchase lender in America and eventually the number one overall and in America.
We delivered $453 3 million of net income for the quarter with a gain margin of 99 basis points that $453 3 million represents <unk> <unk> per share, which shows very strong earnings across the board.
In addition, only $170 million of F 153 million is a fair value adjustment to our MSR portfolio. So our business is very strong with our msr's and without the MSR value right now.
Now, let's talk about a couple of other focuses.
Scale Optionality broker channel first on scale, our technology is superior what we've provided for mortgage brokers. So they can win in this market is better than what retail lenders have this is helping brokers win now one of our big technologies Bolt is a great example is the best <unk> platform in America, we've seen a 50% <unk>.
The option increase just from the fourth quarter to the first quarter, that's big but it is going to continue to grow you'll see the bolt story play out more in Q2, Q3, and Q4, because not only drives productivity higher for Andreas lowered overall cost, but it also makes our quality better across the board more to come on bolt coming soon.
Also <unk>.
Now, let's talk about MSR values. Our MSR book is one of the best in the country. Our WAC is at $3 84 up from 294, but our values and our MSR book is so strong because we originate so much business every quarter, even after selling some MSR, which I'll reference in a little bit. The reality is this our MSR book is strong and win rates are.
Low we'll originate a lot of business that have high gain margin when rates go up will still originate a lot of business in the purchase side, but our MSR values will go up as well, we're very proud of where we are at 36 years in business and we're going to win regardless of the market.
Lastly, I want to mention one other thing about loan officers. The broker channel continues to grow this has been what we've been saying for years and it's really happening right now.
Lowe's are leaving retail to joined broker that is going to help you wm.
<unk> are realizing it reorders are relating that they should go to mortgage brokers and brokers are winning 35000 loan officers unique loan officers submitted loans that GW in 2021, and we think we'll have more unique loan officers limiting to us in 2022. So a very strong fact about the growth of the broker channel and UWS.
Now Tim Forrester, our CFO is unable to be year to date, so I'm going to give us a little bit of color from his perspective, and some of the things we've talked about to highlight a little bit about our business from the financial before I take some questions. So quickly as Tim would like to point out and we'd like to talk about from our financing 56% year over year growth from a purchase perspective.
That is a massive and a huge part of our success. If you notice income group a lot of that is tied to the business, but also our interest expense went down because we're using self funding using our cash to help us make more cash that's important for our success on the expense side. It's very important that we continue to manage our expenses. We have complete control of this and we feel great.
We're at our expenses looked higher year over year. However in reality they were lower a couple of things to note. There was a $20 million or so reversal from Q1 of 'twenty, 'twenty, one, which actually reduced our numbers last year. When they were actually higher also there is a change in presentation about $13 million. This year that affects that number and then also.
Don't forget our servicing book is about 50% is about $26 $7 million higher than servicing costs, you take that out our actual costs are down we are managing our cost we feel great about our costs, which are a big part of our significant profits also our assets a comment from the first quarter versus the fourth quarter. If you've recognized in October of two.
1021.
New conforming loan limits went out so our assets look bloated about $22 billion at the end of last year a lot of people when we comment on it it normalize back down to around $10 billion, because we held a lot of loans and the pls market also with Fannie and Freddie loans to pick up profitability, which we already see in the fourth quarter, but now those.
Assets have been normalized and Youll see our $10 billion roughly number out there also one other thing on MSR sales I mentioned earlier, we sold some MSR is about $73 billion and brought in liquidity of $872 million.
As of April one that doesn't impact our P&L. Much. However, liquidity is important and as you see our liquidity is in a great position across the board.
Liquidity being strong is important which is why we're once again continuing to pay out a dividend we've done at six quarters consecutive we will continue to pay our dividend our board feel strong about it we want to reward our shareholders and our dividend is very strong and will continue to be we feel great about that that dividend is out once again for the first quarter and as you saw in the earnings release that shows the dates.
Along with when we will pay it out now really quickly before I turn it over questions I want to highlight a couple of things our scale enables us to win in any market. The balance sheet is strong our MSR portfolio is a key asset is the best MSR book in the business and our business model allows us to stay on the offensive.
Loan officer migration to the wholesale channel is gaining steam just as I've said before and it will continue to go going forward. Please watch how we continue to see production going forward and we continue to win and like I said the dividend is demonstrating.
Our commitment to returning cash to our shareholders.
<unk> second quarter, 2022, ICR production growing between 26% and $33 billion and our gain on sale margins around 75% to 90 basis points. It will be another fantastic quarter and Q2, we look forward to seeing many of you here at <unk> headquarters for our <unk> live we're about 5000 of our clients will be out here at UWS tomo.
Growth looking out to build their business and we're going to be here excited Tony Robbins is going to be here I'm going to speak about some things looking forward to it now let's turn it back over to the moderator for some questions and happy to answer any questions about gws business or the marketplace in general.
Thank you at this time I'd like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad, we'll pause for just a moment to compile the Q&A roster.
Our first question from Doug Harter with Credit Suisse. Your line is now open.
Yeah.
Okay.
Thanks, Matt I was hoping you could talk a little bit about the gain on sale margin for the first quarter it was above expectations.
Just kind of what drove that for the quarter.
Yes, Thanks, Doug.
As we've talked about before we control our margins here were not.
Reactive to the market we control the market we talked about in my last call that 75 to 85 is the bottom.
And so we're obviously not going to go below those numbers, we felt good about where margins were a lot of other people have a long ways to come down and that's where we differentiate in purchase market is a lot less rate sensitive from a perspective of margins and so we feel strong in our position right now and we feel that margins will not be going down below the numbers I've sold June tried to <unk>.
Distant with that for every quarter I've been on these earnings call.
Yes.
I guess just first following up on that.
Comment I guess, what do you see differently in the second quarter that would kind of have margins come kind of come back down to the range. You had previously given for the first quarter versus kind of where they came in.
Once again I feel strong about where our margins are I would like to make sure. We guide to the point, where we will not be going low 75, as I pointed out in the call.
Also in the earnings release $75 to $90, where I feel confident however, there are a lot of factors that have <unk>.
Ability to make it so that we don't go below that number but at the same time there is competitive pressure on everybody else. We've already felt those competitive pressures and we control our margins where they are usually following us not the other way around so therefore once again, we'll choose to put our margins different spots. However, that's not the major indicator of our profitability, but theres a lot of different factors into our profitability and the 75%.
Andy I feel really confident in.
Going forward.
Alright, Thank you Matt.
Okay.
Next we'll go to Henry Coffey Junior with Wedbush. Your line is open.
Good morning.
Thank you for putting up another great quarter couple of issues and questions.
Number one.
You've made the much much.
Well receive comment that you werent reducing staffing.
Like so many others are as as originations obviously are trending lower.
But as the mechanism you have in place then to keep operating profitability up.
Without yes, thanks, Henry our culture is key to our success and I know a lot of you guys will be out here at <unk>, you will see our 5000 clients out here you also see.
Our campus with our.
All of our people here in the growth and the success there.
Yes. It is.
Question Youre asking is how can we do it and others don't is because of technology technology and efficiencies, we're going to be extremely profitable like I said last quarter as long as we continue to run our business the way we run it with the purchase market everyone else has been so dependent on a refinance for so long that there is there are costs were bloated and so they had to reduce that we did not do that.
We did not scale up the people because of our technology and it requires to do and so therefore, we don't have scale down the people to stay profitable as you saw in the first quarter I mentioned it in the fourth quarter that we would be highly profitable and obviously, we were and we will continue to be very successful going forward without having to have any reduction in team members. That's not who we are and what we believe in and that is not going to move the needle.
As you saw the first quarter was obviously highly profitable.
So in terms of measuring the mic.
Gration from retail to two.
Broker channel.
You have your own numbers.
Youre looking at the unique brokers that you're working with can you put that that 35000 into historical perspective for us how much of has it grown over the last few years and then secondly, any thoughts on how we can track that as outsiders. I mean is there some one place we should be looking.
Watch this data on a monthly basis or something.
I don't know if theres any great external sources for it.
The reality I agree.
It's Adam.
So it's so backwards looking as it looks so far back in.
I don't have a great data source to show you. Besides that can give you my data off of what we've grown in 35000 lows last year and my point is I think.
We will do more business with more loan officers this year and so if we do less volume in the market as last time, but we do visit more loan officers. That's a very good indicators that the loan officers are coming to the broker channel and that's what we've been saying for years I think actually one of the analysts that wells Fargo has even made a made a comment and showed how the broker channel alone offset gross.
One.
What they were back in it was 7% or eight how they dip down and how they are coming back up to maybe the highest levels of all time, and so youll start to see that trend and we've been talking about it for years and I think it's starting to show face now with the market conditions.
I'll have the IMF data that shows that but what I'm wondering is.
What what was your account say a year or two ago. So we can understand where you are in terms of growth and expansion.
Yes, I don't have that number in front of me, but I can get it for you and you can follow up with Blake Colo and he'll get you that information.
Ill give blake the call.
And then finally in terms of benchmarking profitability, obviously, youre looking at market share and volume you're looking at what you can do in the purchase market all of which are coming on really strong.
Do you have some sort of bottom line metrics that we should keep our eyes on not short term, but long term.
In terms of earnings our Roe or.
I think.
I think you pretty much demonstrated that you have gain on sale margin under control.
<unk>.
What are your thoughts in terms of the businesses ultimate.
Earnings either in terms of dollars or.
Per share figures are OE.
Yes, I mean, so you can obviously do the math and see what we're going to be doing based on we have our dividend, which I told you for years not three years I guess for two years now, but that we're highly confident paying its 40 <unk> per.
After a year of being 10 cents a quarter at $640 million a year well earn that.
The first quarter shows that when we make a $1 billion plus I mean, it seems like that's where it's trending obviously I feel very comfortable comfortable that were profitable in all cycles and as I told you last quarter highly profitable and I think the first quarter shows that and then some and I think the second quarter will be very strong as well and youre going to see the whole year that way because we feel really.
Confident in what our business is done in the past and what we built for the future and where other companies might not be ready for a purchase focused environment with these margins. We are and I think the first quarter really demonstrate that and I think youll see more of that in the second quarter.
Thank you.
Yeah.
Thank you and excellent go to James Fawcett with Morgan Stanley . Your line is now open.
Hi, This is actually sandy BD on for James.
Yeah.
How are you thinking about any private provided a little bit of color here, but capital allocation just in terms of the balance between liquidity, obviously capital returns and even buybacks.
All within the context of internal investments as well within technology.
Particularly as originations contract.
Throughout this year.
Yes.
We're very cash strong right now we feel good about that we plan on continuing to pay the dividend as I have already announced.
We always have to balance what's the best use of cash we really like to reward our long term shareholders and we'll continue to do that where the stock prices today I think it's one of the best investments out there based on our dividend yield and so people are going to get rewarded for being a partner with you Wm and being a shareholder UWS with in addition to that we look at all different reasons and ways to use our cash in the most beneficial way for our.
Our company, our shareholders, our clients and Theres a lot of things on the horizon that we're looking at doing to continue to build going forward.
Got it got it thank you.
And just one quick follow up can you just talk to us a little bit just with regards to the strength in purchase.
Anything specific there close time things like that that you'd like to call out just with regards to share gains and how you might expect that to track over the remainder of the year.
Okay.
Yes, there's a lot of pieces to purchase that people don't understand you have a lot of companies.
Our so refi centric and rate and term refinance and I think there are a lot of people talked about how the refinance their book.
They are servicing book and that was how they were being so successful that wasn't UWS UWS purchase business of course, we do refinances of course, we do cash out refinances, but we dominate in the purchase business. It's a much more complex transaction involving notches of borrower.
Our lender, it's a borrower lender to title companies many times to Reorders May times Frasier's Theres, a lot of nuances and you have to be great on all aspects to be able to grow your purchase market share and that's why we've been the number one purchase lender for two consecutive years. This will be the third consecutive year, where we'll reach that achievement and theres a lot of nuance to it and it's not.
Easiest, saying, hey, let's just start focusing on purchases, which is by purchase leads that will do purchase business. That's what a lot of other companies are trying to do and as you see in the first quarter, that's not how it works and you'll see that going forward.
As brokers dominate the purchase market brokers will continue to dominate a purchase market. We are the predominant partner for mortgage brokers.
Got it thank you.
Thank you.
Next we'll go to Kevin Barker with Piper Sandler Your line is open.
Good morning, Thanks for taking my questions.
You made a.
I mentioned several items that were not core expenses this quarter.
Went through them pretty quickly can you reiterate those and what you would view as.
Our core quarterly operating expense estimate for the first quarter.
Yes, so I didn't say they werent core expenses, what I was pointing out to you that they were not.
<unk> from Q1 to Q1, so when it looks like our expenses went up actually didn't go up actually went down quite substantially I'll rattle them off for you.
Just so you get a one was a $19 six I said about 29 by $19 $6 million contingency reserve reversal in G&A from last year. So last year's were deflated by $19 6 million. So that's one thing I mentioned.
There is another $30 million change in presentation on the loan production income so that was another $30 million in the bigger one was the $26 7 million people don't realize our servicing book is up 50% from about $200 billion of over 300 billion and so those expenses are just aligned with that Theres actually a couple of others that I didn't mention because I don't want to get into.
Overall thing was to point out that we're all over and we control our expenses very well and.
We're very efficient with our cost and we're excited to continue going forward with our cost structure as is and will continue to win with this in this market, even though margins where they're at with opportunity for us to continue to grow.
Okay and then.
Going back to some of the capital questions I mean, your debt to equity ratio is now below two times.
One six times tangible common equity ratios nearly 29%.
You seem very overcapitalized from that standpoint.
And.
It seems like there's a lot of opportunity out there just given valuations across the space.
Do you see any opportunity to make.
Whether it's a strategic acquisition or maybe some other.
Structural changes too.
To take advantage of the capital base you have today.
Yeah, we feel really great about our capital base, our cash position are strong our size our scale and our structure and we definitely look at opportunities to take advantage of that.
So theres a lot of opportunities in the market.
We've been organic builders and we will continue to be that however, we always look at other things and that's one of the benefits of having so much cash and such a strength of our business right now and scale and so we are looking at a lot of things that we'll continue to do so we feel really good about where our businesses right now and I think youll continue to feel confident in us as a partner.
Okay. Thank you very much.
Yeah.
Next well go to next.
Next we'll go to Michael <unk> with Wells Fargo. Your line is open.
Hi, Good morning, I Wonder if I wanted to chat more about the key to gain on sale margin. My understanding was that you significantly improved pricing to brokers in April and then implement that our price matching program compete and beat in May how much of that's impacting your Q2 margins and what's the strategy behind these pricing adjustments is this more just.
Going after the purchase market.
Yes, so thanks for the question.
We do different types of incentives and opportunities I.
I won't say every month, but very often we had one in the first quarter as well so.
<unk> guidance is and telling all of these types of things and none of those things will impact the guidance that I've given we.
We feel really good about the volume we feel really good about putting pressure on some competitors, while helping our brokers continue to win that's the game right now is helping brokers when helping retail loan officers convert over to broker income have more success in the broker channel. They did in the retail channel. So then they thriving and more will come. So we are continuing to bill.
The pie of the broker channel with a lot of these structures and incentives and concepts that we come out with and it's working very very well as the data shows.
Okay, and I know you've been very vocal no layoffs, no plant layouts, but how much benefit you get just from attrition of employees over time like for example, how many employees the app today.
Low could it go by year end, just with attrition alone.
While we are still hiring people. So we're different and these other guys and gals companies. However, you want to say it. So we're hiring and we look for great people to join our company all the time and so we'll attrition effective of course when you have so many team members always some people leave some people move out of town things happen, but in general that's not going to drive our costs down our costs are in a <unk>.
Great position, our profitability is excellent and we feel really good about our business. So that's not a part of the thought process here right now at our company, we feel really good about where we are from a team member count we feel really good about hiring a lot because we have lots of open positions. We are hiring some people that maybe were not part of other companies anymore. Because we believe in the long term benefit of our business that will continue.
When our people was an investment and we'll continue to win with it Thats, how we got here and that's how we're going to get there to the next level.
Okay. Thank you very much.
Thank you and next we'll go to Steve Delaney with JMP Securities. Your line is now open.
Hey, Thanks, Matt Congrats on the strong quarter could you remind us.
You talked a lot about the organic flow of producers from retail to wholesale it seems to clearly be happening, but can you remind us about what kind of regional infrastructure that <unk> has in place around the country to just help move that process along.
Yes. Thanks for the question. Thanks for the support I appreciate Steve.
We have.
Our whole process and team of helping build out.
The brokers throughout the country help loan officers convert over many loan officers, we talk about in the audit reports show how many of these loan officers leave X Y Z retail company to start their own broker shop, but a lot of people don't capture is when Johnny Smith leaves ABC retail lender and just joined Xyz broker not.
Necessarily starting their own broker shop, and so we have infrastructure in place teams in place.
<unk> ships in place throughout America to help make this being a reality and it's been picking up substantially.
We saw a huge pick up in the first quarter from the fourth quarter and I see the momentum continuing its like a snowball going downhill, it's always better for a loan or should it be at a mortgage broker shop. They can offer better rates and have better technology and better processes and Abbott retail that is fact, and so for consumers to go over there and the realtors to follow those loan officers, that's happening and so.
It's just a matter of how fast it happened and I think a lot of data out there showing that the speed is picking up because as I think I said last year, a bunch of times when the market is so busy.
The loan officers are closing 25 loans a month, it's hard to pick up and leave a retail shop well when their volume goes from 25 down to 10 and Theyre not getting those leads on the refinancing of the servicing book they start to look around a little bit and say why these brokers, making more money and offering better rates with better technology than I have and so they start to migrate and have those conversations. So we are having so many <unk>.
Conversations that we have so many teams right now built to help facilitate those conversations and help these loan officers start their own shops or join a broker shopping their market.
Matt what's the current the broker relationship head count currently.
The broker relationship head count I'm not familiar with what Youre asking you talked about the teams that are doing this.
The number the number of brokers that you have signed up at U W. M.
That's something I assume you track and to keep track of how many.
This migration that you're referring to.
The loan officers is right track more closely than the broker shops, I don't have an economy right now, but as Blake can get you that information.
11000 brokers is the number that popped in my head and then I also think of $35 40 to 45000 loan officers I don't have the exact number.
How many are using us and that was the data Ive said earlier, which is 35000 incentives alone last year more loan hospital centers alone this year, which is really the.
The most important factor Dominion Hanmi loan officer, there, but how many are using <unk> as the key focus that we have.
Okay.
Okay.
Thank you and next we'll go to Brocker Vandervliet with UBS. Your line is open.
Yeah.
Thank you and good morning.
And just to clarify Matt or any of those.
Special items that you called out in the expense area with those in the salary and salary and benefit line or was that.
160, a solid number.
No I think thats, a solid number the $1 60.
Okay.
I just.
Youre guiding for another not surprisingly, but material decline sell in volume in Q2, given where mortgage rates are that.
Makes sense.
I just.
This is it's a cyclical business.
I don't understand why you are not taking out more costs more aggressively.
Yes, that's why I'm, the CEO I feel pretty good about what we're doing here.
$453 million in the quarter. So that's why I sit here and you sit there.
And the reality is youll see our profitability going forward.
I guess you have to just continue to follow us that's why I run the show and so I feel really good about it I think all of our shareholders feel really good about our team members feel good about it.
From a culture perspective, a team member perspective, there's a lot of things that I don't think you would understand and I would just put out there as some people think very shortsighted, Oh can I say $5 million a month, great job $50 million, a quarter $60 million a year high five and everybody, let's say I say the 120 million over the next two years, we'll if I keep my team members I do a great job supporting.
<unk> build the culture that we've built what happens in July of 2024 <unk>.
Rates go down a little bit I make an extra 400 million that month, so I saved $200 million over the last two years and your high five and me, but you don't realize I mean, I didn't make 400 million in July of 2024, that's how I run the business. That's why we keep winning and that's why we're sitting here, making $450 million in first quarter and my competitors are losing money.
Matt This isn't subtle, though I mean the <unk>.
<unk> gone from four trailing a Chilean our Chilean and a half in like six months, even your competitive areas.
They're not laying off or furloughing people.
I just don't.
And your results.
I mean, maybe you feel comfortable about the future MSR fair value Mark, but yes.
Yes.
<unk>.
I don't understand.
That's why you sit there and I sit here. So that's the reality is $170 million of our $450 million was fair value markup.
Not $450 million of it so understand our business is extremely profitable as I told you guys last quarter, it's going to be extremely profitable again in the second quarter. So you'll have to be confident that I sit over here and I run the show and we're doing a great job. Once again 2018 I referenced that earlier in the call was the last time. This happened most companies didn't make money we did I've seen this before this isn't like.
My first day on the job I've been here 19 years I built the company, we're doing pretty well I think you would understand that and agree with that.
Alright, thanks for the questions. Okay, we'll move to Kevin Barker with Piper Sandler.
Hey, Matt just wanted to follow up if I take out the change in the fair value of the MSR $391 million.
As your pre tax income of $4 57.
Getting like an operating income around $57 million or about <unk> <unk> per share, which is slightly below the dividend 10.
I mean do you feel like you can continue to generate.
Operating earnings excluding the fair value marks.
Of equal to roughly 10 cents per share where the dividend is today.
And then what are the main drivers of that besides.
Continuing to maintain margins at the current level.
Yes, so once again, the fair value changes of $170 million Youre not looking at it correctly, we feel very confident I won't say I won't say confident I'll say very two extremely confident.
That will always generate more than that money, we're going to pay the dividend. So people have question, whether we will pay the dividend.
Just don't understand our business once again and its fine because people don't understand our business in general that's why our stock price is so low.
It's irrational at this point, so we feel really good about the dividend we feel really good about our earnings will continue to make a lot of money you'll be on the call next quarter and youll be able to ask me about it again and I'll show you, we made a bunch of money and if you're a shareholder youll get all the money every quarter and you'll feel really good about being part of it and so we're excited about that we run the business very profitably very successfully and it is going.
Continue going that way.
Okay and then.
Our guidance.
Implies something about production income declining.
Over maybe about $100 million, if we assume everything is just.
The same servicing and maybe a little bit lower amortization expense, where will you make up the decline in production income.
On the income statement would it primarily be other.
Other expenses or will we see interest income come up a lot just due to higher interest rates.
There's a lot of spots, where youll see the income there theres revenue sources that you probably don't see that we see there is obviously interest income, but also really the thing is interest expense will go down because we can self warehouse with our excess cash there is a lot of pieces to it to the puzzle once again the key to everything that people have to realize and I think you do realize this is our overall <unk>.
Costs to originate we've always said to enforce it was not year to date always talked about our cost to originate is better than everyone else in the country because of our technology investments that's going to come through and we'll also have to continue to drop margins. We don't have to and at the same time, we're in a position where we're profitable highly profitable at these levels and so you'll see more of in the second quarter. Our servicing book is strong.
<unk>, we make money there too, but we're not dependent on fair value markups to be profitable.
Going to be continuing to be profitable operationally as we have been every quarter.
And then one last one have you considered potentially bringing servicing in house.
And then if so whats the timing on something like that.
Yeah, no. It's a good question, we've looked at that bringing servicing analysis. It could save US a couple of million dollars have opportunities, but at the same time, there's a lot. Other places that we invest our time and technology to grow and so we balanced that actually mean, the risk team talk about it quite often about bringing servicing in house.
And its definitely a discussion that we have out there, but theres a lot of other things that are out there that we think will generate income along with generate growth for our broker channel, helping our loan officers win and so which is a balance of where do we want to focus our attention going forward.
Thank you Matt.
Thank you.
Next we'll go to our Henry <unk>.
Coffee junior with Wedbush.
Hey, good morning again, thank you.
You gave out the fair value Mark number I didn't I didn't write fast enough can you give that to me again.
I said about 170 I think it is actually 172 of an exact but 170 million is what I think I said earlier, but I think it's once everything thats exact.
And then.
The discussion on the dividend is interesting and it shows how important this is to everybody.
<unk>.
There is.
There are a couple of interesting mechanisms there because you've got a.
If I get the alphabet stuff right wrong forgive me, but you've got what is it the D shares in the a shares and you could.
If you wanted to defer the dividend on the D shares and pay the dividend on the shares.
If I'm right on that that gives you a lot of flexibility and then the other question is theres a subtle difference between declared dividend and irregular.
Have you thought of switching the terminology around how you define the dividend or.
So people could have even more confidence in that number.
Yes, so youre correct in your comments.
Don't know how to give people more confidence than telling you that im going to pay the dividend and I'm, the chairman and CEO and we paid the dividend every quarter I've said that I continue to say everything we say always comes through and Youll eventually feel that after a quarter after quarter the dividend gets paid out.
I own quite a bit of it and so people can have confidence but at these levels.
People are going to continue to pay the dividend we continue to make a lot of money. We are cash strong across the board as you can see an even stronger than we were at the end of the first quarter from a cash perspective, the dividend not being paid is not even a concept that crosses my mind this year or in the future beyond that like I, just don't even it doesn't cross my mind to be honest, obviously I meet with the board and we talk about those things.
We talked about everything because I got great partners on the board and we discuss how to strategize on how to grow this channel and to grow the business, but it's not even a concept where my competitors might cut the dividend or change it not even crossing my mind.
When you think about keeping the business going forward. Obviously, there is a lot of momentum here.
From a capital point of view.
What is it that you need quote capital for us It just to hold MSR is for a while is it.
Business, the origination business looks like it's profitable.
So.
What as you grow the business forward, what sort of capital do you need and what do you need it for.
Yes. So the key is cash is king and how do we make sure that we used cash to have flexibility to take care of opportunities as opportunities that could come up in the market there's opportunities.
That we can invest heavily from a technology perspective, so I like having more cash than last but at the same time I'd like to share our cash with our shareholders, which is why I continue to pay the dividend and we'll continue to do so so we look at.
Let's make sure we have cash was strong for all different opportunities because there's a lot of things out there as I think someone asked me. The question earlier about a lot of other companies struggling are things out there and how can we pounce and having a strong cash position that we're in we feel really good about that and so we will continue to have a lot of cash on balance sheet will continue to pay a dividend everyone's going to be happy.
Great. Thank you.
Thank you.
Next we'll go to Bose George with <unk>. Your line is open.
Yes, good morning, actually I wanted to follow up on the gain on sale question.
The gain on sale margin trend down during the quarter.
Curious if the <unk> guidance closer to what you guys saw in March.
No it's in trend down through the quarter, we felt good about it and I still feel good about it.
And so just understanding that there's a lot of things that a lot of moving parts and we want to make sure that.
You should feel confident that everything I would tell you we'll come through and that we will we'll never missed these numbers, we feel really good about 75% to 90 range.
Everyone else has to continue to cut margins as Youll see.
We don't need to do that we feel really good about the first quarter numbers and we feel good about the second quarter numbers going forward.
Okay, great. Thanks, and then actually I just wanted to go back to the MSR Mark in the release you guys had the change in fair value of the MSR, The 399 8 million.
And you mentioned the $170 million as of March So does that $390 million include the MSR decay as well as that.
Yes, because I thought this between 90 I thought was the MSR Mark.
Yes, $1 70 is the number so the $3 90 includes a lot of different things I think that you are referencing the 170 is what the change in valuation. So a lot of other companies are out there marketing up their msr's.
And we obviously marked ours up in line, but ours was $170 million of our $450 million.
Im giving round numbers 170, <unk> hundred 53, whatever it may be.
Okay, great. Thanks.
Thank you for the questions I appreciate everyone's thoughts on <unk> and our team will be available for any other follow ups I think that was all the questions in queue I'll turn it back over to the moderator.
Okay.
Yes.
That wraps up the Q&A portion I'd like to turn the call back over to Matt <unk> for any closing or additional remarks.
Thank you guys for the time today, we appreciate the support and look forward to talking to you guys. In the next earnings call have a great day.
This concludes today's conference call you may now disconnect.
Okay.