Q1 2024 Guild Holdings Co Earnings Call

May 9, 2024

Operator: Good afternoon, ladies and gentlemen, and welcome to the Guild Holdings Company first quarter 2024 earnings conference call. At this time, all participants are on a list. Later, we will conduct a question and answer session with instructions to follow at that time. As a reminder, this call will be recorded. I would now like to turn the conference over to Investor Relations. Please do so. Thank you.

Good afternoon, ladies and gentlemen, and welcome to the Gilt Holdings Company first quarter 2024 earnings Conference call. At this time, all participants are in a listen only mode.

Operator: Later, we will conduct a question and answer session with instructions will follow at that time as a reminder, this call will be recorded I would now like to turn the conference over to Investor Relations. Please go ahead. Thank you and good afternoon, everyone. Before we begin I'd like to remind everyone that comments on this conference call may contain certain forward looking statements.

Nikki Sacks: Thank you and good afternoon, everyone. Before we begin, I'd like to remind everyone that comments on this conference call may contain certain forward-looking statements regarding the company's expected operating and financial performance for future periods and industry trends. These statements are based on the company's current expectations, but actual results for future periods may differ materially from those expressed or implied by these forward-looking statements due to a number of risks or other factors that are described in detail under the section titled Risk Factors in Guild's most recently filed annual report on Form 10-K and in other reports subsequently filed with the U.S. Securities and Exchange Commission.

Nikki Sacks: Regarding the company's expected operating and financial performance for future periods and industry trends.

Nikki Sacks: Statements are based on the Companys current expectation.

Nikki Sacks: Actual results for future periods may differ materially from those expressed or implied by these forward looking statements due to a number of risks and other factors that are described in detail under the section titled risk factors in <unk>. Most recently filed annual report on Form 10-K and in <unk>.

Nikki Sacks: Other reports subsequently filed with the U S Securities and Exchange Commission.

Nikki Sacks: Additionally, today's remarks will refer to certain non-GAAP financial measures. Reconciliations of non-GAAP financial measures to the corresponding GAAP measures can be found in our earnings release furnished today with the SEC and are also available on Guild's Investor Relations website. I'd now like to turn the call over to Chief Executive Officer Terry Schmidt.

Nikki Sacks: Additionally, today's remarks will refer to certain non-GAAP financial measures.

Terry Lynn Schmidt: Reconciliations of non-GAAP financial measures to corresponding GAAP measures can be found in our earnings release furnished today with that D. C. And are also available on <unk> Investor Relations website.

Terry Lynn Schmidt: I'd now like to turn the call over to Chief Executive Officer, Terry Schmid.

Terry Lynn Schmidt: Thank you, Nikki. Good afternoon, everyone, and thank you for joining us to discuss our first quarter results and strategic update. I am joined by our President, David Neylan, as well as our Chief Financial Officer, Amber Kramer. I'm pleased to share that we are continuing to effectively execute on our strategy and gaining market share as we leverage our platform to take advantage of market dynamics. At the same time, we are demonstrating the benefit of our balanced business model, which is focused on retail mortgage originations and complemented by our servicing platform.

Nikki Sacks: Hey.

Terry Lynn Schmidt: Thank you Nikki and good afternoon, everyone and thank you for joining us to discuss our first quarter results and strategic update I am joined by our President David Neylon as well as our Chief Financial Officer, Andrew Kramer.

Terry Lynn Schmidt: I'm pleased to share that we are continuing to effectively execute on our strategy and gaining market share as we leverage our platform to take advantage of market dynamics.

Terry Lynn Schmidt: At the same time, we are demonstrating the benefit of our balanced business model, which is focused on retail mortgage origination and complemented by our servicing platform.

Terry Lynn Schmidt: By staying focused on this strategy, we have again achieved attractive market share gains. In the first quarter, total originations were $3.9 billion, up by $300 million sequentially from the fourth quarter, and up 40% year over year.

Terry Lynn Schmidt: By staying focused on this strategy, we have again achieved attractive market share gain in the first quarter total originations were $3 9 billion up by 300 million sequentially from the fourth quarter and up 40% year over year. This compares to an increase of 13% for the first quarter of 'twenty two.

Terry Lynn Schmidt: This compares to an increase of 13% for the first quarter of 2024, as compared to the same period of the prior year as reported by the NBA, a clear indicator of our share gain. We also delivered positive adjusted net income and return on equity. Our mission remains unwavering to deliver on the promise of homeownership through our leading product offerings and localized relationship-driven approach. This compelling strategy continues to resonate with customers and drive results, even in a challenging environment.

Terry Lynn Schmidt: Four as compared to the same period of the prior year as reported by the M. B, a a clear indicator of our share gain.

Terry Lynn Schmidt: We also delivered positive adjusted net income and return on equity.

Terry Lynn Schmidt: Our mission remains unwavering to deliver on the promise of homeownership through our leading product offerings and localized relationship driven approach.

Terry Lynn Schmidt: It's a compelling strategy continues to resonate with customers and drive results.

Terry Lynn Schmidt: Even in a challenging environment.

Terry Lynn Schmidt: A key highlight of the quarter was the successful completion of the Strategic Acquisition of Academy Mortgage, which represents a 25% increase in our origination volume based on 2023 data. We onboarded approximately 1,000 new employees in just two weeks and are very excited to welcome this group of like-minded individuals to the Guild family.

Terry Lynn Schmidt: A key highlight of the quarter was the successful completion of the strategic acquisition of Academy mortgage, which represents a 25% increase to our origination volume based on 2023 data.

Terry Lynn Schmidt: We on boarded approximately 1000, new employees in just two weeks and are very excited to welcome. This group of like minded individuals to the Guild family.

Terry Lynn Schmidt: As we anticipated, their corporate culture and values are closely aligned with our own. Consistent with our mission, we have expanded our offerings to help more families attain homeownership. This includes enhancing our down payment assistance grant program and launching our special purpose credit program, or SPCP, which is specifically designed to make loan qualification more accessible for underserved populations.

Terry Lynn Schmidt: As we have anticipated their corporate culture and values are closely aligned with our own.

Terry Lynn Schmidt: Consistent with our mission, we have expanded our offerings to help more families attain homeownership.

Terry Lynn Schmidt: This includes enhancing our down payment assistance Grant program and launching our special purpose credit program or S. P. C. P, which are specifically designed to make long qualification more accessible for underserved population. We believe these initiatives will open doors for even more deserving homebuyers.

Terry Lynn Schmidt: We believe these initiatives will open doors for even more deserving homebuyers. Our balanced originations and servicing model continues to be a cornerstone of our success, providing earnings stability across market cycles. This allows us to effectively navigate challenges and capitalize on opportunities. We are executing judiciously across all our capital priorities, investing in our organic growth, selectively pursuing accretive acquisitions, and enhancing technology and servicing capabilities, while also returning capital to stockholders. I'm pleased to announce the board has declared a 50 cents per share dividend. This is in addition to our ongoing share repurchase program that has been extended to May of 2025.

Terry Lynn Schmidt: Our balanced origination and servicing model continues to be a cornerstone of our success providing earnings stability across market cycles.

Terry Lynn Schmidt: Allows us to effectively navigate challenges and capitalize on opportunities.

Terry Lynn Schmidt: We are executing judiciously across all our capital priorities investing in our organic growth.

Terry Lynn Schmidt: <unk> pursuing accretive acquisition and enhancing technology and servicing capabilities.

Terry Lynn Schmidt: While also returning capital to stockholders.

Terry Lynn Schmidt: I am pleased to announce that the board has declared a 50 cent per share dividend.

Terry Lynn Schmidt: This is in addition to our ongoing share repurchase program that has been extended to may of 2025 or.

David Manuel Neylan: Our prudent balance sheet management with low leverage is allowing us to continue to create value for our shareholders. We believe that our focus on purchase market origination, coupled with our strategy of retaining servicing rights, allows us to generate more reliable cash flow. Moreover, our commitment to maintaining strong customer relationships underpins our customers for life philosophy, positioning us as the leader of choice for our customers' future transactions. While still a challenging environment for origination, the current backdrop also presents an opportunity for us to further strengthen our position as the cycle turns.

Terry Lynn Schmidt: Our prudent balance sheet management with low leverage is allowing us to continue to create value for our shareholders.

David Manuel Neylan: We believe that our focus on purchase market origination coupled with our strategy of retaining servicing right allows us to generate more reliable cash flow.

David Manuel Neylan: Moreover, our commitment to maintaining strong customer relationships underpins our customers for life philosophy positioning us as the leader of choice for our customers' future transactions.

David Manuel Neylan: While still a challenging environment for origination the current backdrop also presents an opportunity for us to further strengthen our position as the cycle turns.

David Manuel Neylan: We have maintained a disciplined approach to capital management, enabling us to selectively pursue growth opportunities. We firmly believe that Guild is well positioned to navigate the current landscape and emerge even stronger. We are confident in our strategy, our execution, and our ability to deliver long-term value for our shareholders. I'll now turn the call over to David. Thank you, Terry.

David Manuel Neylan: We have maintained a disciplined approach to capital management, enabling us to selectively pursue growth opportunities.

David: We firmly believe that killed is well positioned to navigate the current landscape and emerge even stronger we are confident in our strategy our execution.

David: And our ability to deliver long term value for our shareholders.

David Manuel Neylan: I'll now turn the call over to David.

David Manuel Neylan: Thank you, Terry. I'm pleased to report on our proven ability to successfully execute our strategy and gain market share even as the industry navigates continued headwinds from higher rates and limited housing supply. The over 600 licensed loan officers we onboarded from recent acquisitions are ramping up quickly. We are excited to have them on board given their close alignment to our culture, values, and approach of having local sales and fulfillment that supports our Customer for Life strategy.

David: Thank you Terry I'm pleased to report on our proven ability to successfully execute our strategy and gain market share even as the industry navigates continued headwinds from higher rates and limited housing supply.

David Manuel Neylan: Over 600 license loan officers, we on boarded from recent acquisitions are ramping up quickly.

David Manuel Neylan: We're excited to have them on board given their close alignment to our culture values and approach of having local sales and fulfillment. It supports our customer for life strategy.

David Manuel Neylan: We expect them to start contributing more meaningfully to our origination volumes in the coming quarters. As Terry mentioned, introducing new products to serve evolving customer needs is a priority. In today's environment, loan qualification and down payments can be challenging, especially in underserved communities. We've recently added and expanded two key programs. First, our special purpose credit program, in partnership with Freddie Mac and Fannie Mae, offers lower interest rates, smaller down payments, or assistance with closing costs, saving qualified homebuyers thousands and increasing attainability.

David Manuel Neylan: We expect them to start contributing more meaningfully to our origination volumes in the coming quarters.

David Manuel Neylan: As Terry mentioned, introducing new products to serve evolving customer needs is a priority.

David Manuel Neylan: Today's environment long qualification and down payments can be challenging, especially in underserved communities. We've recently added an expanded two key programs.

David Manuel Neylan: First.

David Manuel Neylan: Special purpose credit program in partnership with Freddie Mac, and Fannie Mae offer lower interest rates smaller down payments or assistance with closing cost saving qualified homebuyers, thousands and increasing accountability.

David Manuel Neylan: Second, our down payment assistant grant programs have expanded into new regions. These are designed for buyers who can afford monthly payments but lack sufficient funds for a down payment, often a roadblock for first-time home buyers.

David Manuel Neylan: Second our down payment assistance grant programs have expanded into new regions. These are designed for buyers, who can afford monthly payments, but lack sufficient funds for a down payment Austin, a roadblock for first time homebuyers.

David Manuel Neylan: Additionally, to provide more value and convenience to our customers, we've recently acquired Waterton Insurance, an agency focused on nationwide home insurance solutions. This enables a convenient insurance shopping experience for our mortgage customers, providing a more seamless and efficient home buying process. We remain focused on both originations and on our servicing portfolio, with an unpaid servicing balance that has grown to $86 billion and generates consistent cash flow. In the first quarter, we retained servicing rights on 72% of our originated loans, and we continue to grow our servicing portfolio.

David Manuel Neylan: Additionally to provide more value and convenience store customers. We've recently acquired water to an insurance and agency focused on nationwide home insurance solutions.

David Manuel Neylan: This enables a convenient insurance shopping experience for our mortgage customers, providing a more seamless and efficient home buying process.

David Manuel Neylan: We remain focused on both the originations and on our servicing portfolio with an unpaid servicing balance that has grown to 86 billion and generates consistent cash flow in the first quarter, we retained servicing rights on 72% of our originated loans and we continue to grow our servicing portfolio.

David Manuel Neylan: This allows us to maintain an attractive income stream while preserving customer relationships for future purchase, origination, and refinancing opportunities. While near-term headwinds will likely persist throughout 2024, we are encouraged by our market share momentum and disciplined approach, which position us to deliver improved performance as conditions recover. Our confidence remains high in our strategy, business model, and the powerful platform we've built. I'll now turn the call over to our Chief Financial Officer, Amber Kramer, to discuss the details of our financials. Amber

David Manuel Neylan: This allows us to maintain an attractive income stream, while preserving customer relationships for future purchase originations and refinancing opportunities.

Desiree A. Kramer: While near term headwinds will likely persist throughout 2024.

Desiree A. Kramer: We are encouraged by our market share momentum.

Desiree A. Kramer: <unk> approach, which position us to deliver improved performance as conditions recover.

Desiree A. Kramer: Our confidence remains high and our strategy business model and the powerful platform we've built.

David Manuel Neylan: Now I'll turn the call over to our Chief Financial Officer, Amber Kramer to discuss the detailed financials amber.

Desiree A. Kramer: Thank you David.

Desiree A. Kramer: David. As is our standard practice, my comments will focus on sequential quarter comparisons. For the first quarter of 2024, we generated $3.9 billion of total loan originations compared to $3.6 billion in the first quarter. Net revenue totaled $232 million compared to $57 million in the prior quarter, which generated net income attributable to Guild of $28 million compared to a net loss of $93 million in the fourth quarter. Adjusted net income was $8 million, or $0.13 per diluted share, and adjusted EBITDA was $16 million.

Desiree A. Kramer: As is our standard practice my comments will focus on sequential quarter comparison for the first quarter of 2024, we generated $3 9 billion of total loan originations compared to $3 6 billion in the fourth quarter.

Desiree A. Kramer: Net revenue totaled $232 million compared to 57 million in the prior quarter, which generated net income attributable to guild of $28 million compared to a net loss of $93 million in the fourth quarter adjust.

Desiree A. Kramer: Adjusted net income was 8 million or 13 cents per diluted share and adjusted EBITDA was $16 million.

Desiree A. Kramer: These results are primarily driven by higher origination volume and higher servicing income, partially offset by the short-term earnings impact we had anticipated from the Academy acquisitions as loan originators integrate into our pipeline and production volume starts to ramp on the Guild platform. Focusing on our origination segment, our gain on sale margin came in at 364 basis points compared to 330 basis points in the prior quarter on funded originations. Gain on sale margins on pull-through adjusted lock volume were 290 basis points compared to 347 basis points in the prior quarter, and total pull-through adjusted lock volume was $4.6 billion compared to $3.3 billion in the prior quarter.

Desiree A. Kramer: These results are primarily driven by higher origination volume and higher servicing income partially offset by the short term earnings impact we had anticipated from the Academy acquisition as loan originators integrate into our pipeline and production volumes start to ramp on the gilt platform.

Desiree A. Kramer: Focusing on our origination segment, our gain on sale margin came in at 364 basis points compared to 330 basis points in the prior quarter unfunded origination.

Desiree A. Kramer: Gain on sale margins on pull through adjusted lock volume were 290 basis points compared to 347 basis points in the prior quarter and total pull through adjusted lock volume was $4 6 billion compared to $3 3 billion in the prior quarter.

Desiree A. Kramer: The increase in gain on sales was primarily driven by the timing of locked and funded volume and is not indicative of our operational gain on sale margin. For our servicing segment, our portfolio grew to $86 billion. We reported a net income of $84 million compared to a net loss of $72 million in the fourth quarter.

Desiree A. Kramer: The increase of gain on sales, primarily driven by timing of locked and funded volume and not indicative of our operational gain on sale margin.

Desiree A. Kramer: Our servicing segment, our portfolio grew to 86 billion.

Desiree A. Kramer: <unk> net income of $84 million compared to a net loss of $72 million in the fourth quarter.

Desiree A. Kramer: Our servicing portfolio continues to be a valuable source of ongoing cash flow, future opportunities for loan recapture, and it reinforces our customer for life strategy. Our balance sheet remains strong and provides us with the flexibility to continue to invest in our growth. Turning to liquidity, as of March 31st, cash and cash equivalents totaled $95 million, while unutilized loan funding capacity was $540 million, and the unutilized mortgage servicing rates lines of credit were $300 million, based on total committed amounts and borrowing-based limitations.

Desiree A. Kramer: Our servicing portfolio continues to be a valuable source for ongoing cash flow future opportunities for lawn recapture and it reinforces our customer for life strategy.

Desiree A. Kramer: Our balance sheet remains strong and provides us with the flexibility to continue to invest in our growth.

Desiree A. Kramer: Turning to liquidity as of March 31, cash and cash equivalents totaled $95 million well Unutilized loan funding capacity was $540 million and the Unutilized mortgage servicing rights lines of credit with 300 million based on total committed Mount and borrowing base limitations.

Desiree A. Kramer: Our leverage ratio, defined as total secured debt including funding divided by tangible stockholder equity, was 1.6 times. Book value per share at the end of the quarter was $19.86, while tangible net book value per share was $16.05.

Desiree A. Kramer: Our leverage ratio defined as total secured debt, including funding divided by tangible stockholders' equity was one six times.

Desiree A. Kramer: Value per share at the end of the quarter was $19 86, then well tangible net book value per share was $16.05.

Desiree A. Kramer: We believe we are well positioned to both manage through the current more challenging operating environment while allowing us to invest to create additional value. In addition, during the first quarter, we repurchased approximately 17,747 shares at an average stock price of $14.16 per share. On March 7, 2024, our Board of Directors extended the share repurchase program to May 5, 2025. As of March 31, 2024, there was $10.9 million remaining under the original $20 million share repurchase authorization.

Desiree A. Kramer: We believe we are well positioned to both manage through the current more challenging operating environment, while allowing us to invest to create additional value.

Desiree A. Kramer: In addition, during the first quarter, we repurchased approximately 17747 shares at an average stock price of $14 16 per share.

Desiree A. Kramer: On March seven 2024, our board of directors extended the share repurchase program May five 2025.

Desiree A. Kramer: As of March 31, 2024, there was $10 $9 million remaining under the original $20 million share repurchase authorization.

Desiree A. Kramer: As Terry mentioned, our board of directors approved a dividend of 50 cents per share of Class A common stock and Class B common stock payable on June 6th to shareholders of record as of May 20th. Our disciplined capital management and low leverage have allowed us to invest in growth while also returning capital to our stockholders. In April, we generated $2 billion of loan originations and $2.2 billion of pull-through-adjusted lock volume.

Desiree A. Kramer: As Terry mentioned, our board of directors approved a dividend of 50 cents per share of class a common stock and class B common stock payable on June six.

Desiree A. Kramer: Shareholders of record on May 20th.

Desiree A. Kramer: Our disciplined capital management and low leverage has allowed us to invest in growth while also returning capital to our stockholders.

Desiree A. Kramer: In April we generated 2 billion of loan originations and $2 2 billion of pull through adjusted lock volume.

Desiree A. Kramer: Looking to the remainder of the year, we anticipate continued pressure on origination volume and gain on sale margin. However, we remain confident in our balanced business model, which we believe results in more durable and sustainable performance across market cycles. Operator, thank you.

Desiree A. Kramer: Looking to the remainder of the year, we anticipate continued pressure on origination volume and gain on sale margin. However, we remain confident in our balanced business model, which we believe result in more durable and sustainable performance across market cycles.

Speaker Change: And with that we'll open up the call for questions operator.

Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key.

Speaker Change: Thank you we will now be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue.

Operator: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Operator: One moment, please, while we poll for questions. Our first question comes from Don Fandetti with Wells Fargo. Please proceed with your question.

Operator: One moment, please while we poll for questions.

Donald James Fandetti: Our first question comes from Don <unk> with Wells Fargo. Please proceed with your question.

Donald James Fandetti: Yes. Amber, can you talk a little bit about the G&A costs for Q2? They came in higher than we were expecting in Q1, I think because of the deal-related expenses.

Donald James Fandetti: Oh, yes ever can you talk a little bit about the G&A cost for Q2. They came in higher than we were expecting in Q1, I think because of the.

Donald James Fandetti: Deal related expenses.

Desiree A. Kramer: Yeah, the overall change from Q4 to Q1, there's a couple things driving that. It's the addition of the employees coming on for the academy acquisition. So salaries related to that for that, and other compensation. There's also in the overall cost. When you go into Q1, you have payroll taxes that increase. We had our annual sales event in Q1. And then just some other acquisition-related costs with that. So there are some one-time items in there and also just some timing differences going into Q1.

Amber: Yeah. The overall the change from Q4 to Q1, there's a couple of things driving that it's the addition of the employees, bringing coming on for the Academy acquisition, so salaries related with that for that and other compensation theirs.

Desiree A. Kramer: So in an overall cost when you go into Q1, you have payroll taxes that increase we had our annual sales event in Q1, and then just some other acquisition related cost with that so there is some one time items in there and also just some timing differences I'm going into Q1.

Donald James Fandetti: So how should we think about, you know, it was $29 million this quarter. I believe, will Q2 be higher or lower? Can you just sort of provide some thoughts on that? Just because I don't know if you have more deal-related expenses flowing through when they're all fully loaded?

Speaker Change: So how should we think about it was $29 million this quarter I believe well Q2 be higher lower or can you just sort of provide some thoughts on that just because I don't know if you have more deal related expenses flowing through them.

Donald James Fandetti: Or they're all fully loaded.

Desiree A. Kramer: Yeah, I mean, some of GNA is variable, right? So as volume increases, you're going to have that increase. So we have, you know, verification costs and other loan-related costs that go into that. So I would expect an increase going into next quarter.

Speaker Change: Yeah, I mean, some of G&A is variable rate so as volume increases youre going to have that increase so we have you know.

Desiree A. Kramer: Verification costs and other loan related costs that go into that so I would expect an increase going into next quarter.

Donald James Fandetti: Got it. And I think you mentioned the gain on cell. So we should maybe think of a gain on cell as more like the 330 range, rather than the higher 364 this quarter. Is that the way to think about it? Yeah.

Speaker Change: Got it.

Desiree A. Kramer: I think you mentioned the gain on sale. So we should maybe pick up again on sales more like the 330 range.

Donald James Fandetti: Rather than the higher can we.

Donald James Fandetti: <unk> 64, this quarter or is that the way to think of it yet.

Desiree A. Kramer: Yeah, that's exactly right. This is, I mean, this is typical for Q1 timing where we have this difference in the increase in the pull through adjusted lock volume versus the originations. And you can see that difference in the gain on sale. And if you look back about a year and a half ago, we're running about a 340 average. And so you know, we haven't really seen meaningful changes in our operational gain on sale. So that really is just driven by timing.

Donald James Fandetti: Yeah. That's exactly right. This is I mean this is typical for Q1 timing, where we have this difference in the the increase in the pull through adjusted lock volume versus the originations and you can see that difference in the gain on sale and if you look back about a year and a half we're running about a $3 40 average and so you know we have.

Desiree A. Kramer: <unk> really seen meaningful changes in our operational gain on sale. So that really is just driven by timing.

Donald James Fandetti: All right, my last question is just on Academy volume. I guess we won't see a lot of that this quarter or maybe a little bit later in the quarter.

Speaker Change: Alright, and my last question is just on the Academy volume I guess, we won't see a lot of that this quarter or maybe a little bit later in the quarter.

Desiree A. Kramer: Q1 was minimal as we closed the deal at the end of February. So we only had, you know, one month for that. Hopefully, we would see a pickup of that in Q2.

Donald James Fandetti: Q1 was minimal as they you know we closed the deal at the end of February. So we only had one month for that for that so that we would see a pickup of that in Q2, yes.

Donald James Fandetti: Okay, so the guidance includes...or not the guidance, but the numbers you quoted include some impact from Academy. Yeah, the AP

Speaker Change: Okay. So the guidance includes.

Donald James Fandetti: We're not the guidance, but the numbers you quoted include some impact from our Academy.

Desiree A. Kramer: Yeah, the April closings and pull-through adjusted lock volume would have Academy included in there. And there's also, you know, a pickup as well just from market volatility and rates dropping. I think some people kind of jumped in on locking in April. So, you know, we would expect some increase for the academy and just some spring home buying as well. Great, thank you.

Donald James Fandetti: Yeah, the April closings and pull through adjusted lock volume would have academy included in there and there's also you know.

Desiree A. Kramer: There was a pick up as well just from market volatility in rates dropping I think some people kind of jumped in in unlocking in April.

Desiree A. Kramer: So you know, we we would expect some increase for the Academy and just some spring home buying as well.

Speaker Change: Great. Thank you.

Donald James Fandetti: Yeah, one other point that I want to make is that Even though our cost structure went up, a lot of it was related to academy, of course. But if you compare, you know, on the origination channel, if you compare the net loss, change in the net loss quarter over quarter, we made some headway there in percentage; it was 9.7% better than it was in Q4. And if you look at Q124 compared to Q123, we're 26% better in the net loss that we have for the channel. So the scale is working, and, you know, we should continue to see improvement there. Our next question comes from Kyle Joseph with Jeffries. Please proceed with your question.

Speaker Change: Yeah, one other point that I want to make is that.

Kyle Joseph: Even though our cost structure went up a lot of it was related to a cat. It's the of course, but if you compare you know on the origination channel. If you compare the net loss a change in the net loss quarter over quarter. We made some headway there in percentage it was nine 7%.

Kyle Joseph: Better than it was in Q4, and if you look at Q1 'twenty for you compared that to Q1 'twenty three we're 26% better so in the net loss that we have for the channel. So the scale is working and you know we should continue to see improvement there.

Donald James Fandetti: Yes.

Donald James Fandetti: Our next question comes from Kyle Joseph with Jefferies. Please proceed with your question.

Donald James Fandetti: Okay.

Kyle Joseph: Hey guys, good afternoon, thanks for taking my questions. Unknown Speaker. I just wanted to ask about an uptick in refi volume, you know, is that a function of the second lien or was that just kind of January when we had a little respite from higher rates or a combination of both, to be fair?

Kyle Joseph: Hey, guys. Good afternoon, thanks for taking my questions sorry.

Speaker Change: Couple of things.

Speaker Change: Just wanted to ask about.

Kyle Joseph: Uptick in refi volume.

Kyle Joseph: That a function of second lien or was that just kind of January when we had a little respite from higher rates or combination of both to be fair.

Kyle Joseph: Yeah.

David Manuel Neylan: I noticed that too, and in the first quarter, I think some of that we have, we are doing more second-lean products. We rolled one out last, towards the end of last year, and it's going very well, and I think the other part is just the tax season when people need to refinance for very

Kyle Joseph: I noticed that to you and first quarter I think some of that we have we are doing more second lien product.

David Manuel Neylan: One out of the last.

David Manuel Neylan: Towards the end of last year, and it's going very well.

David Manuel Neylan: And and I think the other part is just the tax season that people need to refinance for various reasons, but it did tick up a tiny bit yeah.

David Manuel Neylan: Yeah, and I see your point. I think most of that was earlier in the year when we had some of those rate drops, you know, people capitalized on that, and it's, you know, 2% up from the prior quarter, so not too significant.

Speaker Change: Yeah, and I fully agree your point I think.

David Manuel Neylan: That was earlier in the you know when we had some of those rate drops you know people capitalized on that and as you know, it's 2% up from prior quarter, so not too significant.

Kyle Joseph: Got it. And then just to rehash on capital allocation, obviously, you guys have been very acquisitive over the last 18 months. And then obviously, the specials out there, but just kind of tell us how you're thinking about capital allocation from here. Are there still attractive acquisition opportunities at this point?

Speaker Change: Got it and then just to rehash on capital allocation. Obviously, you guys have been very acquisitive over the last 18 months.

Kyle Joseph: And then obviously the specials out there, but just kind of rehash us how youre thinking about capital allocation from here or are there still attractive acquisition opportunities at this point.

Terry Lynn Schmidt: Yeah, we're still pretty busy. And, you know, we believe that our capital base can continue to support our growth initiatives and any investment we have in technology. And so we felt that it was, you know, a good time to distribute a dividend.

Speaker Change: Yeah, we're still pretty busy and I'm you know we.

Terry Lynn Schmidt: We believe that our capital base can continue to support our growth initiatives in any investment we have in technology and so we felt that it was a.

Terry Lynn Schmidt: A good time to distribute a dividend.

Kyle Joseph: That's great. That's it for me. Thanks for answering my question.

Speaker Change: That's great. That's it for me thanks for answering my question.

Desiree A. Kramer: Amber, did you want to add anything more to that at all?

Kyle Joseph: Amber did you want to add any more to that at all.

Desiree A. Kramer: I mean, I think the big thing is when we look at our leverage profile and we, and, you know, we still don't have any unsecured debt. It's really only on the MSRs, and we're really focused on our percent of percent of our fair value that we're leveraging, which is at 15% as of Q1. So we're, we're very low. And as Terry said, you know, we want to make sure we have the optionality to invest back in the business and our growth and return value to shareholders. And because of, you know, how we've managed our capital liquidity over the last few years, we have the ability to do all of that right now.

Amber: I mean, I think the big thing is when we look at our leverage profile and we and you know we still we don't have any unsecured debt. It's really only on the MSR. Then we're really focused on our present a percent of our fair value that were leveraging which is at 15% as of Q1. So.

Desiree A. Kramer: Were very low and as Terry said, you know, we we want to make sure we have the optionality to invest back in the business and our growth and return value to shareholders and because of you know how we managed our capital and liquidity over the last few years, we have the ability to do all of that right now.

Kyle Joseph: Great, thanks so much guys; I appreciate it.

Speaker Change: Great. Thanks, so much guys I appreciate it.

Kyle Joseph: Mhm.

Operator: Our next question comes from Rick Shane with J.P. Morgan. Please proceed with your question. Hey guys.

Kyle Joseph: Our next question comes from Rick Shane with J P. Morgan. Please proceed with your question.

Richard Barry Shane: Hey guys, thanks for taking my question. Kyle really answered it or really asked it, and Amber really answered it, but I'd love to talk a little bit about the dividend. Help us understand how you size that dividend. Is it driven by earnings? The last two special dividends have both been 50 cents. And it's not it does not seem per se correlated to earnings book values being down in that time. You talk about leverage being down. I'm just trying to think about when you're determining that number, what what are the variables, and how do you how do you do it?

Richard Barry Shane: Hey, guys. Thanks for taking my question, Kyle really answered it or really asked it in amber really answered it but I'd love to talk a little bit about the dividend.

Richard Barry Shane: Help us understand how you size that dividend is it.

Richard Barry Shane: Driven by.

Richard Barry Shane: Earnings the last two special dividends have both been 50 cents.

Richard Barry Shane: And it's not it does not seem per se correlated to earnings book values down in that time.

Richard Barry Shane: You talked about leverage being down I'm, just trying to think about.

Richard Barry Shane: When you're determining that number what what are the variables and how do you how do you size it.

Richard Barry Shane: Were really bad.

Terry Lynn Schmidt: We're really late. First of all, the capital that we have been in has been extremely conservative. And we, you know, over the last several years, we've, you know, kept a lot of capital in the business. And so we felt that, you know, it was, it was reasonable to issue this dividend. And Amber, did you want to say something else?

Speaker Change: First of all the capital that we the capital position, we've been it's been extremely conservative and we you know over the last several years.

Amber: Kept a lot of capital in the business and so we felt that it was.

Amber: It was reasonable to.

Terry Lynn Schmidt: Issue the dividend and Amber did you want to say something else.

Desiree A. Kramer: I just think, Rick, it's a combination of a lot of factors, right? We're looking at the business now, what we think the future holds. We do stress tests on our MSR. And we're just ensuring that we have ample liquidity in any given situation. And then, based on those factors, what do we feel comfortable with, and making sure that we stay in a strong position from a capital liquidity point of view.

Amber: I just think Rick it's a combination of a lot of factors right. We're looking at the business now what we think the future holds we do stress test on our on our MSR and we're just ensuring that we have ample liquidity in any given situation and and then based on those factors, what do we feel comfortable with them and making sure that.

Desiree A. Kramer: We stay in a strong position from a capital and liquidity.

Richard Barry Shane: Got it. And look, you referenced a couple of different things during the call. And one of the things is that you did say that the environment is going to remain challenging, and you guys are managing through that profitably and gaining share. When you think about a challenging environment and declaring a special dividend, the consideration is, hey, we believe that we're in a position where we are going to be profitable. So we don't need to worry about sort of putting in the extra 50 cents, saving an extra 50 cents of capital for now.

Rick: Got it and look you you referenced a couple of different things.

Richard Barry Shane: <unk>.

Richard Barry Shane: During the call and one of the things as you did say that the environment is going to remain challenging and you guys are managing through that.

Richard Barry Shane: <unk> and gaining share.

Richard Barry Shane: When you think about a challenging environment and declaring a special dividend.

Richard Barry Shane: Is the consideration hey, we believe that we're in a position where we are going to be profitable.

Richard Barry Shane: So we don't we don't need to worry about sort of.

Richard Barry Shane: Putting in the extra 50 saving that extra 50 cents of capital for now and at the same time.

Richard Barry Shane: And at the same time, if you were sort of looking forward to a market where you thought originations were going to be really strong, you might actually, even though you know that profitability would improve, you might actually Unknown Attendee, Kyle Joseph, Guild Hldg.

Richard Barry Shane: You were sort of looking forward to a market, where you thought originations, we're going to be really strong you might actually even though you know that profitability would improve you might actually see.

Richard Barry Shane: Mean retain a little bit more capital because you might need it into a more vibrant market is is that the sort of balance your working here, which is thinking about profitability, but also thinking hey, it's going to be a slow market, we don't need as much capital.

Terry Lynn Schmidt: We're constantly looking at what our opportunities are out there, and we feel like the opportunities for continued growth are still very strong through this year. So, and, and, and then we evaluate what capital we have, what we think we're going to need, and make sure that we've got plenty of access to capital, and we're in a good position. So and I, I mean, I do think again that the rest of the year is still going to be an opportunity opportunistic year and what's really important.

Richard Barry Shane: No.

Kyle Joseph: We're constantly looking at what our opportunities are out there and we feel like the opportunities for continued to growth is still very strong through this year. So.

Terry Lynn Schmidt: And in and then we evaluate what capital we have what do we think we're going to need it and make sure that.

Richard Barry Shane: Got it. And then last question.

Terry Lynn Schmidt: We've got <unk>.

Terry Lynn Schmidt: Plenty of access to capital and we're in a good position.

Richard Barry Shane: So and I I mean I do.

Richard Barry Shane: Well again that that the rest of the year is still going to be an opportunity opportunistic year and what's what's really.

Richard Barry Shane: Great about Guild is it doesn't matter what market. We're in whether we're in this market. We can take advantage of and gain share whether we're in the refi market and our loans in the portfolio are paying off we can recapture we recapture better than anybody so.

Richard Barry Shane: Where what whichever direction the market turns we're in a good position.

Richard Barry Shane: And look, I understand that a special dividend sends a signal to the market at the same time that you guys did increase the buyback, but finance theory would suggest that if you're trading at a discount to book, trading at a discount to tangible book, the more efficient way to return capital would be through repurchase. What's the rationale? Again, like if your stock is trading at a premium, to book the dividends makes more sense. But what's the rationale of returning the preponderance of the capital through dividends versus repurchase when you're trading at a discount?

Speaker Change: Got it and then last question and look I understand that a special dividend.

Richard Barry Shane: A signal to the market.

Richard Barry Shane: At the same time.

Richard Barry Shane: You guys did increase the buyback but <unk>.

Richard Barry Shane: Finance theory would suggest if you're trading at a discount to book trading at a discount to tangible book the more efficient way to return capital would be through repurchase.

Richard Barry Shane: What's the rationale.

Richard Barry Shane: Again like if you if your stock was trading at a premium to book the dividends makes more sense.

Richard Barry Shane: But what's the rationale of returning the preponderance of the capital through dividend versus repurchase when you're trading at a discount.

Terry Lynn Schmidt: Well, we're doing both, right? I mean, we're continuing to do our share repurchase program and returning dividends. And, you know, we look at transcripts provided by Transcription Outsourcing, LLC.

Richard Barry Shane: Yes.

Speaker Change: Well, we're doing both right I mean, we're continuing to do our share repurchase program.

Terry Lynn Schmidt: And returning dividend and you know we look at.

Terry Lynn Schmidt: What what makes sense on the pricing, where we're training trading in tangible net book value and and looking at that so we.

Speaker Change: We feel like like we said, we can do the share repurchase program due to the dividend and continue to invest in both organic growth acquisitions and technology back into our business.

Operator: Thank you very much. I really appreciate it.

Speaker Change: Okay. Thank you very much really appreciate it.

Eric J. Hagen: Our next question comes from Eric Hagen with BTIG. Please proceed with your question.

Operator: Our next question comes from Eric Hagen with BTG. Please proceed with your question.

Eric J. Hagen: Hey, thanks, hope you guys are well. Hey, I want to get your perspectives on the stability of gain on sale margins, especially for the purchase loans, and how much of an impact do you think the various concessions that you guys are offering have had on the margin, maybe even the trajectory for margins, you know, for the remainder of the quarter.

Eric J. Hagen: Hey, So I just hope you guys are well, hey, I wanted to get your perspectives on the stability for gain on sale margins, especially for the purchased loans.

Eric J. Hagen: How much of an impact do you think the various concessions.

Eric J. Hagen: Or offering have had on the margin maybe even the trajectory for margins.

Eric J. Hagen: Yeah.

Eric J. Hagen: For the remainder of the quarter.

Desiree A. Kramer: We really haven't seen much change in overall margin. I mean, both on the, you know, pricing margin side and execution, it's about flat, like I said. If you take out all the timing differences over the last year and a half, we're about 340 average, I think, a couple quarters ago, I said 330. And we haven't seen much change. And so I think it will stay that way until something else changes in the market.

Speaker Change: Are we really haven't seen much change in overall margin am I mean, we are both on the.

Desiree A. Kramer: Pricing Martin decided in execution, it's about flat like I said, if you take out all the timing differences over the last year and a half or about 340 average I think couple of quarters ago, I said 330, and we haven't seen much change and so I think until something else changes in the market.

Unknown Speaker: Unknown Speaker, we're thinking. Unknown Attendee, Kyle Joseph, Guild Hldg.

Desiree A. Kramer: We're thinking.

Speaker Change: Yeah, ideally that it'll be stable, we haven't seen anything else that has ticked it up or down right now except within you know the volatility within certain days.

Eric J. Hagen: Okay, yeah, I would say that. Yeah, that's right. I mean, if the rates start declining, typically, we historically have found that that's when there's more movement on the gain on sale because then people have, you know, you're getting more business in, and you're not fighting for every loan that you get. And until we're, you know, in a meaningful refinance situation, this is We're not seeing much change here on the Ganon. Gotcha. Yeah, that's helpful.

Kyle Joseph: Okay Yeah.

Kyle Joseph: Yeah, that's right I mean, we if the rates start declining typically we historically have found that that's when really there's more movement on the gain on sale. Because then people have youre getting more business in <unk> and.

Eric J. Hagen: You're not fighting for every loan that you get and.

Eric J. Hagen: Until we are you know in a meaningful refinance situation. This is.

Eric J. Hagen: We're not seeing much change here on the gain on sale.

Eric J. Hagen: I think you mentioned holding on to around 75% of your production and then selling MSRs for the remaining 25%. Can you kind of comment on conditions for selling MSRs? What are some variables that could get you to sell more MSRs than you know you've currently targeted?

Eric J. Hagen: Got you that's helpful.

Eric J. Hagen: Thank you mentioned holding onto around 75% of your production and then selling MSR is for the remaining 25% can you kind of comment on conditions for selling M. S ours.

Eric J. Hagen: What are some variables that could get you to sell more <unk> than you currently are targeted.

David Manuel Neylan: you know, for the remainder of the year.

Eric J. Hagen: For the remainder of the year.

Speaker Change: Thank you guys.

David Manuel Neylan: Yeah, typically, you know, we're always looking at on a daily basis the service released versus the service retained option. And when we've got correspondence that is out there that is paying up more than we think that loan's worth, we're going to, you know, look at Service Releasing that Loan. Historically, our retention is about 80-85%.

David Manuel Neylan: Yeah typically you know we're always looking at on a daily basis, the the service release versus the service retained option.

David Manuel Neylan: And when we've got correspondence that are out there that are paying up more than we think that loans worth we're going to you know look at <unk>.

David Manuel Neylan: Service releasing that loan if in.

David Manuel Neylan: Majority of historically, it's typically our.

David Manuel Neylan: Retention is about 80, 85%, we're just in a little market little different market, just because everybody. You know are there kind of wanting to get more production in the door.

David Manuel Neylan: We're just in a little different market just because everybody is kind of wanting to get more production in the door. We can change that strategy, but with our capital position we're at right now, we don't really need to. So, you know, that's our plan. It can and will continue to be our plan going forward.

David Manuel Neylan: So we.

David Manuel Neylan: We can change that strategy, but with our capital position. We're at right now we don't really need to so that's our plan.

David Manuel Neylan: Our continuing to be our plan going forward.

Eric J. Hagen: Got you. All right. Thank you guys so much.

Speaker Change: Gotcha Alright, thank you guys so much.

Eric J. Hagen: Yeah.

Terry Lynn Schmidt: We've reached the end of our question and answer session. I would now turn the floor back over to Terry Schmidt for closing comments.

Eric J. Hagen: We've reached the end of our question and answer session I would like to now turn the floor back over to Terry Schmid for closing comments.

Terry Lynn Schmidt: Thank you everybody for your continued interest in Guild, and we will keep executing on our strategy, and we hope to hear from you next quarter. Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Terry Lynn Schmidt: Thanks, everybody for your continued interest in Guild, and we will keep executing on our strategy and we hope to hear from you next quarter. Thank you.

Terry Lynn Schmidt: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.