Home Point Capital Inc. (NASDAQ: HMPT) (together with its
subsidiaries, “Home Point Capital” or the “Company”), the parent
entity of Home Point Financial Corporation (“Homepoint”), today
announced its financial results for the first quarter ended
March 31, 2022.
“In the first quarter, we effectively navigated
through an increasingly challenging environment. We were able to
increase book value, enhance our liquidity position and reduce
costs while continuing to invest in our greatest growth opportunity
– expanding activity with our broker partners,” said Willie Newman,
President and Chief Executive Officer. “These will continue to be
our areas of focus. We strongly believe this will enable our
ability to effectively navigate through the most challenging
mortgage environment in years. In addition, we believe this
positioning will optimize the opportunity for Home Point longer
term as the efficiencies of the broker wholesale channel become
more prominent.”
First Quarter 2022 Financial and Key Performance
Indicator Summary
($mm, except per share values) |
For the quarter ended |
|
3/31/2022 |
|
12/31/2021 |
|
3/31/2021 |
Total Funded Origination Volume |
$ |
12,555.1 |
|
$ |
20,516.0 |
|
$ |
29,425.9 |
Total
Fallout Adjusted Lock Volume |
$ |
12,589.1 |
|
$ |
17,332.7 |
|
$ |
23,552.8 |
Gain on
sale margin (bps)1 |
|
58 |
|
|
59 |
|
|
147 |
Servicing
portfolio - Units |
|
349,261 |
|
|
425,989 |
|
|
396,641 |
Servicing
portfolio - UPB |
$ |
101,984.8 |
|
$ |
128,359.6 |
|
$ |
105,821.4 |
Total
revenue, net |
$ |
158.2 |
|
$ |
180.5 |
|
$ |
421.9 |
Origination segment direct expenses |
|
81.2 |
|
|
101.2 |
|
|
159.3 |
Servicing segment direct expenses |
|
15.8 |
|
|
15.9 |
|
|
18.7 |
Corporate expenses |
|
39.7 |
|
|
35.1 |
|
|
49.0 |
Total
expenses |
|
136.7 |
|
|
152.2 |
|
|
227.0 |
Net
income |
$ |
11.9 |
|
$ |
19.3 |
|
$ |
149.0 |
Net income per share |
$ |
0.09 |
|
$ |
0.14 |
|
$ |
1.07 |
(1) Calculated as
gain on sale divided by Fallout Adjusted Lock Volume. Gain on sale
includes gain on loans, net, loan fee income, interest income
(expense), net, and loan servicing fees (expense) for the
Origination segment. |
First Quarter 2022 Highlights
- Quarterly funded
origination volume was $12.6 billion, compared to $29.4 billion in
the first quarter of 2021, and $20.5 billion in the fourth quarter
of 2021.
- Total revenue, net
of $158.2 million, compared to $421.9 million in the first quarter
of 2021 and $180.5 million in the fourth quarter of 2021.
- Total revenue in
the Origination segment of $72.8 million, compared to $346.6
million in the first quarter of 2021 and $102.9 million in the
fourth quarter of 2021.
- Gain on sale margin
attributable to channels, before giving effect to the impact of
capital markets and other activity, was 61 basis points in the
first quarter of 2022, compared to 125 basis points in the first
quarter of 2021 and 58 basis points in the fourth quarter of
2021.
- Total expenses of
$136.7 million for the first quarter of 2022 improved 39.8% versus
the first quarter of 2021 and were 10.2% lower compared to the
fourth quarter of 2021. The sequential quarter improvement was due
to a 19.8% reduction in Origination segment direct expenses.
- Net Income of $11.9
million (or $0.08 per diluted share), compared to net income of
$149.0 million (or $1.07 per diluted share) in the first quarter of
2021, and net income of $19.3 million (or $0.14 per diluted share)
in the fourth quarter of 2021.
- Broker Partners of
8,376 as of March 31, 2022 increased by 2,353 from the end of the
first quarter of 2021, and increased by 364 from the end of the
fourth quarter of 2021.
- In the first
quarter of 2022, we had 3,603 active broker partners, an increase
of 3.5% from the fourth quarter and up over 24.1% from the prior
year.
- During the quarter,
Homepoint completed sales of mortgage servicing rights (“MSR”)
portfolios of single-family mortgage loans for a total purchase
price of approximately $434.5 million.
- Servicing customers
of 349,261, down 11.9% from the first quarter of 2021, and down
18.0% compared to the fourth quarter of 2021.
- Servicing portfolio
UPB totaled $102.0 billion as of March 31, 2022, down 3.6% from the
end of the first quarter of 2021, and a reduction of 20.5% from
year end 2021.
- Total servicing
portfolio delinquencies of 0.8%, compared to 2.7% in the first
quarter of 2021 and 0.7% in the fourth quarter of 2021, primarily
due to the servicing portfolio sales in the third and fourth
quarters of 2021 and first quarter of 2022, and growth in new
servicing customers. The MSR multiple for the first quarter of 2022
of 5.6x increased from 3.8x in the first quarter of 2021 and 4.6x
in the fourth quarter of 2021, primarily driven by slower
prepayment speeds due to higher mortgage interest rates.
Origination Segment
Home Point Capital’s Origination segment
originates and sells residential real estate mortgage loans. These
loans are sourced through three channels. The primary channel is
Wholesale, where the Company works with mortgage brokerages to
source new customers. In the Correspondent channel, customers are
acquired through a network of mortgage banks and financial
institutions. The Direct channel retains serviced customers in the
Home Point Capital ecosystem.
The Origination segment recorded a contribution
loss of $8.4 million in the first quarter of 2022, compared to
contribution margin of $187.3 million in the prior-year quarter and
$1.7 million in the fourth quarter of 2021.
Origination Segment – Financial Highlights and Summary
of Key Performance Indicators
($mm) |
For the quarter ended |
|
3/31/2022 |
|
12/31/2021 |
|
3/31/2021 |
Gain on loans, net |
$ |
45.4 |
|
|
$ |
64.2 |
|
|
$ |
301.2 |
|
Loan fee
income |
|
19.9 |
|
|
|
32.8 |
|
|
|
44.1 |
|
Interest
income, net and other income |
|
7.5 |
|
|
|
5.9 |
|
|
|
1.3 |
|
Total Origination segment revenue |
|
72.8 |
|
|
|
102.9 |
|
|
|
346.6 |
|
Directly
attributable expense |
|
81.2 |
|
|
|
101.2 |
|
|
|
159.3 |
|
Contribution margin |
$ |
(8.4 |
) |
|
$ |
1.7 |
|
|
$ |
187.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Key
Performance Indicators1 |
For the quarter ended |
3/31/2022 |
|
12/31/2021 |
|
3/31/2021 |
Total
Funded Origination Volume |
$ |
12,555.1 |
|
|
$ |
20,516.0 |
|
|
$ |
29,425.9 |
|
Total
Fallout Adjusted Lock Volume |
$ |
12,589.1 |
|
|
$ |
17,332.7 |
|
|
$ |
23,552.8 |
|
Gain on
Sale Margin (bps)2 |
|
58 |
|
|
|
59 |
|
|
|
147 |
|
Origination Volume by Purpose: |
|
|
|
|
|
|
|
|
|
|
|
Purchase |
|
44.4 |
% |
|
|
37.5 |
% |
|
|
20.4 |
% |
Refinance |
|
55.6 |
% |
|
|
62.5 |
% |
|
|
79.6 |
% |
Third
Party Partners: |
|
|
|
|
|
|
|
|
|
|
|
Number of Broker Partners |
|
8,376 |
|
|
|
8,012 |
|
|
|
6,023 |
|
Number of Correspondent Partners |
|
669 |
|
|
|
676 |
|
|
|
620 |
|
(1) See Appendix
for additional volume and gain on sale information by channel. |
(2) Calculated as
gain on sale divided by Fallout Adjusted Lock Volume. Gain on sale
includes gain on loans, net, loan fee income, interest income
(expense), net, and loan servicing fees (expense) for the
Origination segment. |
Servicing Segment
Home Point Capital’s Servicing segment generates
revenue through contractual fees earned by performing daily
administrative and management activities for mortgage loans that
were primarily sourced by the Company’s Originations segment. These
loans are serviced on behalf of investors/guarantors, primarily
Fannie Mae, Freddie Mac and Ginnie Mae. In February 2022, Homepoint
announced an agreement with ServiceMac, LLC (“ServiceMac”) pursuant
to which ServiceMac will subservice all mortgage loans underlying
MSRs Homepoint holds. ServiceMac is expected to begin subservicing
loans for Homepoint in the second quarter of 2022. Once ServiceMac
begins subservicing loans for Homepoint, they will perform
servicing functions on Homepoint’s behalf, but Homepoint will
continue to hold the MSRs.
The Servicing segment generated a contribution
margin of $83.2 million in the first quarter of 2022, compared to
$64.8 million in the first quarter of 2021 and $74.4 million in the
fourth quarter of 2021.
Servicing Segment – Financial Highlights
and Key Performance Indicators
($mm) |
For the quarter ended |
|
3/31/2022 |
|
12/31/2021 |
|
3/31/2021 |
Loan servicing fees |
$ |
81.1 |
|
|
$ |
83.6 |
|
|
$ |
70.3 |
|
Interest
income, net and other income |
|
0.7 |
|
|
|
0.4 |
|
|
|
0.4 |
|
Total Servicing segment revenue |
|
81.8 |
|
|
|
84.0 |
|
|
|
70.7 |
|
Directly
attributable expense |
|
15.8 |
|
|
|
15.9 |
|
|
|
18.7 |
|
Primary Margin |
|
66.0 |
|
|
|
68.1 |
|
|
|
52.0 |
|
Change in
MSR fair value: amortization |
|
(49.0 |
) |
|
|
(66.7 |
) |
|
|
(89.2 |
) |
Adjusted contribution margin |
|
17.1 |
|
|
|
1.4 |
|
|
|
(37.2 |
) |
Change in
MSR fair value: mark-to-market, net of hedge1 |
|
66.1 |
|
|
|
73.0 |
|
|
|
102.0 |
|
Contribution margin |
$ |
83.2 |
|
|
$ |
74.4 |
|
|
$ |
64.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Key
Performance Indicators |
For the quarter ended2 |
3/31/2022 |
|
12/31/2021 |
|
3/31/2021 |
MSR servicing portfolio - UPB |
$ |
101,985 |
|
|
$ |
128,360 |
|
|
$ |
105,821 |
|
Average MSR servicing portfolio - UPB |
$ |
115,172 |
|
|
$ |
127,096 |
|
|
$ |
97,049 |
|
MSR servicing portfolio - Units |
|
349,261 |
|
|
|
425,989 |
|
|
|
396,641 |
|
Weighted average coupon rate |
|
3.00 |
% |
|
|
2.96 |
% |
|
|
3.19 |
% |
60+ days delinquent, incl. forbearance |
|
0.8 |
% |
|
|
0.7 |
% |
|
|
2.7 |
% |
MSR multiple |
|
5.6 |
|
|
|
4.6 |
|
|
|
3.8 |
|
(1) Change in MSR
fair value: mark-to-market, net of hedge includes $53.5 million
loss and $29.6 million gain on MSR sales for the first quarter of
2022 and fourth quarter of 2021, respectively. |
(2) Figures as of
period end, except "Average MSR servicing portfolio - UPB" which is
average for the period. |
Balance Sheet and Liquidity
Highlights
Home Point Capital had available liquidity of
$656.1 million as of March 31, 2022, comprising $160.7 million of
cash and cash equivalents and $495.4 million of undrawn capacity
from its mortgage servicing rights line of credit and other credit
facilities. The Company had total warehouse capacity of $6.6
billion, and unused capacity of $3.9 billion as of March 31, 2022,
compared to total capacity of $7.5 billion, and unused capacity of
$2.8 billion as of December 31, 2021.
($mm) |
As of |
|
3/31/2022 |
|
12/31/2021 |
Cash and cash equivalents |
$ |
160.7 |
|
$ |
171.0 |
Mortgage
servicing rights (at fair value) |
$ |
1,490.2 |
|
$ |
1,525.1 |
Warehouse
lines of credit |
$ |
2,724.9 |
|
$ |
4,718.7 |
Term debt
and other borrowings, net |
$ |
942.2 |
|
$ |
1,226.5 |
Total shareholders' equity |
$ |
783.2 |
|
$ |
776.6 |
Dividend and Stock Repurchase Program
Home Point Capital’s board of directors has
declared a cash dividend of $0.04 per share for the first quarter
of 2022, payable on or about June 7, 2022 to all stockholders of
record at the close of business on May 24, 2022.
During the quarter, the Company repurchased
461,690 shares at a weighted average price of $3.26 per share. The
Company has $6.5 million of availability remaining under its $8.0
million stock repurchase program.
Conference Call and Webcast
Members of Home Point Capital’s management team
will host a conference call and live webcast on Thursday, May 12,
2022 at 8:30 a.m. ET to review the Company’s financial results for
the first quarter ended March 31, 2022.
The conference call may be accessed by dialing
(877) 423-9813 (toll-free) or (201) 689-8573 (international), using
the passcode 13728623. The number should be dialed at least ten
minutes prior to the start of the call. A simultaneous webcast will
also be available and can be accessed through the Investor
Relations section of Home Point Capital’s website at
investors.homepoint.com.
An investor presentation will be referenced
during the call, and it will be available prior to the call through
the Investor Relations section of Home Point Capital’s website.
A telephonic replay of the call will be
available approximately two hours after the live call through
Thursday, May 19, 2022 by dialing (844) 512-2921 (toll-free) or
(412) 317-6671 (international), passcode 13728623. To access a
replay of the webcast, please visit Events in the Investor
Relations section of Home Point Capital’s website.
About Home Point Capital
Home Point Capital is the parent company of
Homepoint, one of the nation’s leading mortgage originators and
servicers, putting people front and center of the homebuying and
homeownership experience. The Company supports successful
homeownership as a crucial element of broader financial security
and well-being through delivering long-term value beyond the loan.
Founded in 2015 and headquartered in Ann Arbor, Michigan, Homepoint
works with a nationwide network of more than 8,300 mortgage broker
partners with deep knowledge and expertise about the communities
and customers they serve. Today, Homepoint is the nation’s
third-largest wholesale mortgage lender and the 7th-largest
non-bank mortgage lender.
Home Point Financial Corporation d/b/a
Homepoint. NMLS No. 7706 (For licensing information, go to:
nmlsconsumeraccess.org). Home Point Financial Corporation does not
conduct business under the name, “Homepoint” in IL, KY, LA, MD, NY,
or WY. In these states, the company conducts business under the
full legal name, Home Point Financial Corporation, 2211 Old Earhart
Road, Suite 250, Ann Arbor, MI 48105. Toll-Free Tel:
888-616-6866.
Forward Looking StatementsThis
press release contains certain “forward-looking statements,” within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. All statements other than statements of historical fact
are forward-looking statements. Forward-looking statements include,
but are not limited to, statements relating to our future financial
performance, our business prospects and strategy, anticipated
financial position, liquidity and capital needs, the industry in
which we operate and other similar matters. Words such as
“anticipates,” “expects,” “intends,” “plans,” “predicts,”
“believes,” “seeks,” “estimates,” “could,” “would,” “will,” “may,”
“can,” “continue,” “potential,” “should” and the negative of these
terms or other comparable terminology often identify
forward-looking statements. Forward-looking statements are not
guarantees of future performance, are based upon assumptions, and
are subject to risks and uncertainties that could cause actual
results to differ materially from the results contemplated by the
forward-looking statements. Factors, risks, and uncertainties that
could cause actual outcomes and results to be materially different
from those contemplated include, among others: the effects of the
COVID-19 pandemic on our business; our reliance on our financing
arrangements to fund mortgage loans and otherwise operate our
business; the dependence of our loan origination and servicing
revenues on macroeconomic and U.S. residential real estate market
conditions; the requirement to repurchase mortgage loans or
indemnify investors if we breach representations and warranties;
counterparty risk; the requirement to make servicing advances that
can be subject to delays in recovery or may not be recoverable in
certain circumstances; risks related to any subservicer;
competition for mortgage assets that may limit the availability of
desirable originations, acquisitions and result in reduced
risk-adjusted returns; our ability to continue to grow our loan
origination business or effectively manage significant increases in
our loan production volume; difficult conditions or disruptions in
the mortgage-backed securities (“MBS”), mortgage, real estate and
financial markets; competition in the industry in which we operate;
our ability to acquire loans and sell the resulting MBS in the
secondary markets on favorable terms in our production activities;
our ability to adapt to and implement technological changes; the
effectiveness of our risk management efforts; our ability to detect
misconduct and fraud; any failure to attract and retain a highly
skilled workforce, including our senior executives; our ability to
obtain, maintain, protect and enforce our intellectual property;
any cybersecurity risks, cyber incidents and technology failures;
material changes to the laws, regulations or practices applicable
to reverse mortgage programs operated by the Federal Housing
Administration (“FHA”) and the U.S. Department of Housing and Urban
Development; our vendor relationships; our failure to deal
appropriately with various issues that may give rise to
reputational risk, including legal and regulatory requirements; any
employment litigation and related unfavorable publicity; exposure
to new risks and increased costs as a result of initiating new
business activities or strategies or significantly expanding
existing business activities or strategies; the impact of changes
in political or economic stability or by government policies on our
material vendors with operations in India; our ability to fully
utilize our net operating loss (“NOL”) and other tax carryforwards;
any challenge by the Internal Revenue Service of the amount, timing
and/or use of our NOL carryforwards; possible changes in
legislation and the effect on our ability to use the tax benefits
associated with our NOL carryforwards; the impact of other changes
in tax laws; the impact of interest rate fluctuations; risks
associated with hedging against interest rate exposure; the impact
of any prolonged economic slowdown, recession or declining real
estate values; risks associated with financing our assets with
borrowings; risks associated with a decrease in value of our
collateral; the dependence of our operations on access to our
financing arrangements, which are mostly uncommitted; risks
associated with the financial and restrictive covenants included in
our financing agreements; risks associated with changes in the
London Inter-Bank Offered Rate reporting practices and the use of
alternative reference rates; our ability to raise the debt or
equity capital required to finance our assets and grow our
business; risks associated with derivative financial instruments;
our ability to comply with continually changing federal, state and
local laws and regulations; the impact of revised rules and
regulations and enforcement of existing rules and regulations by
the Consumer Financial Protection Bureau; the impact of revised
rules and regulations and enforcement of existing rules and
regulations by state regulatory agencies; our ability to comply
with the Government-Sponsored Enterprises (“GSE”), FHA, U.S.
Department of Veterans Affairs (“VA”) and U.S. Department of
Agriculture (“USDA”) guidelines and changes in these guidelines or
GSE and Government National Mortgage Association (“Ginnie Mae”)
guarantees; changes in regulations or the occurrence of other
events that impact the business, operations or prospects of
government agencies such as Ginnie Mae, the FHA or the VA, the
USDA, or GSEs such as the Federal National Mortgage Association or
the Federal Home Loan Mortgage Corporation, or such changes that
increase the cost of doing business with such entities; our ability
to obtain and/or maintain licenses and other approvals in those
jurisdictions where required to conduct our business; our ability
to comply with the regulations applicable to our investment
management subsidiary; the impact of private legal proceedings;
risks associated with our acquisition of mortgage servicing rights;
the impact of our counterparties terminating our servicing rights
under which we conduct servicing activities; risks associated with
higher risk loans that we service; and our ability to foreclose on
our mortgage assets in a timely manner or at all. You should
carefully consider the foregoing factors and the other risks and
uncertainties that may affect the Company’s business, including
those listed under the heading “Risk Factors” in our Annual Report
on Form 10-K for the year ended December 31, 2021, as such risk
factors may be amended, supplemented, or superseded from time to
time by other reports filed by the Company with the Securities and
Exchange Commission. Many of the important factors that will
determine these results are beyond our ability to control or
predict. You are cautioned not to put undue reliance on any
forward-looking statements, which speak only as of the date
thereof. Except as required under applicable law, the Company does
not assume any obligation to update these forward-looking
statements.
Consolidated Statements of Income
(Loss)($ in millions, except per share
data)(Unaudited)
($mm, except per share values) |
For the quarter ended |
|
3/31/2022 |
|
12/31/2021 |
|
3/31/2021 |
Gain on loans, net |
$ |
45.4 |
|
|
$ |
64.0 |
|
|
$ |
301.2 |
|
Loan fee
income |
|
19.9 |
|
|
|
32.8 |
|
|
|
44.1 |
|
Interest income |
|
27.1 |
|
|
|
39.5 |
|
|
|
25.6 |
|
Interest expense |
|
(33.1 |
) |
|
|
(46.8 |
) |
|
|
(32.9 |
) |
Interest
expense, net |
|
(6.0 |
) |
|
|
(7.3 |
) |
|
|
(7.3 |
) |
Loan
servicing fees |
|
81.1 |
|
|
|
83.6 |
|
|
|
70.3 |
|
Change in
fair value of mortgage servicing rights |
|
17.2 |
|
|
|
6.3 |
|
|
|
12.8 |
|
Other
income |
|
0.6 |
|
|
|
1.1 |
|
|
|
0.8 |
|
Total revenue, net |
|
158.2 |
|
|
|
180.5 |
|
|
|
421.9 |
|
Compensation and benefits |
|
89.4 |
|
|
|
98.7 |
|
|
|
153.6 |
|
Loan
expense |
|
9.0 |
|
|
|
12.1 |
|
|
|
17.7 |
|
Loan
servicing expense |
|
5.7 |
|
|
|
5.1 |
|
|
|
8.1 |
|
Production technology |
|
4.9 |
|
|
|
6.8 |
|
|
|
9.3 |
|
General
and administrative |
|
19.7 |
|
|
|
20.9 |
|
|
|
26.2 |
|
Depreciation and amortization |
|
2.7 |
|
|
|
2.6 |
|
|
|
2.8 |
|
Other
expenses |
|
5.3 |
|
|
|
6.0 |
|
|
|
9.3 |
|
Total
expenses |
|
136.7 |
|
|
|
152.2 |
|
|
|
227.0 |
|
Income before income tax |
|
21.5 |
|
|
|
28.3 |
|
|
|
194.9 |
|
Pre-tax margin |
|
13.6 |
% |
|
|
15.7 |
% |
|
|
46.2 |
% |
Income
tax expense |
$ |
(4.3 |
) |
|
$ |
(7.7 |
) |
|
$ |
(50.1 |
) |
(Loss)
income from equity method investment |
$ |
(5.3 |
) |
|
$ |
(1.3 |
) |
|
$ |
4.2 |
|
Net income |
$ |
11.9 |
|
|
$ |
19.3 |
|
|
$ |
149.0 |
|
Net margin |
|
7.5 |
% |
|
|
10.7 |
% |
|
|
35.3 |
% |
Earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.09 |
|
|
$ |
0.14 |
|
|
$ |
1.07 |
|
Diluted |
$ |
0.08 |
|
|
$ |
0.14 |
|
|
$ |
1.07 |
|
Basic
weighted average common stock outstanding (mm) |
|
139.2 |
|
|
|
139.1 |
|
|
|
138.9 |
|
Diluted
weighted average common stock outstanding (mm) |
|
140.6 |
|
|
|
140.8 |
|
|
|
139.7 |
|
Adjusted income statement metrics 1: |
|
|
|
|
|
|
|
|
|
|
|
Adjusted revenue |
$ |
86.8 |
|
|
$ |
106.2 |
|
|
$ |
324.1 |
|
Adjusted net income |
$ |
(41.0 |
) |
|
$ |
(33.8 |
) |
|
$ |
73.2 |
|
Adjusted net margin |
|
(47.2 |
)% |
|
|
(31.9 |
)% |
|
|
22.6 |
% |
(1) Non-GAAP measures. See non-GAAP reconciliation for a
reconciliation of each measure to the nearest GAAP measure. |
Consolidated Balance Sheet($ in
millions)(Unaudited)
($mm) |
As of |
|
3/31/2022 |
|
12/31/2021 |
Assets: |
|
|
|
Cash and cash equivalents |
$ |
160.7 |
|
|
$ |
171.0 |
Restricted cash |
|
37.0 |
|
|
|
36.8 |
Cash and
cash equivalents and Restricted cash |
|
197.7 |
|
|
|
207.8 |
Mortgage
loans held for sale (at fair value) |
|
2,889.0 |
|
|
|
5,107.1 |
Mortgage
servicing rights (at fair value) |
|
1,490.2 |
|
|
|
1,525.1 |
Property
and equipment, net |
|
21.4 |
|
|
|
21.9 |
Accounts
receivable, net |
|
218.0 |
|
|
|
129.1 |
Derivative assets |
|
183.5 |
|
|
|
84.4 |
Goodwill |
|
10.8 |
|
|
|
10.8 |
Government National Mortgage Association loans eligible for
repurchase |
|
81.3 |
|
|
|
65.2 |
Assets
held for sale |
|
58.4 |
|
|
|
63.7 |
Other
assets |
|
48.7 |
|
|
|
43.2 |
Total assets |
$ |
5,199.0 |
|
|
$ |
7,258.3 |
Liabilities and Shareholders’ Equity: |
|
|
|
Warehouse
lines of credit |
|
2,724.9 |
|
|
|
4,718.7 |
Term debt
and other borrowings, net |
|
942.2 |
|
|
|
1,226.5 |
Accounts
payable and accrued expenses |
|
135.5 |
|
|
|
138.2 |
Government National Mortgage Association loans eligible for
repurchase |
|
81.3 |
|
|
|
65.2 |
Deferred
tax liabilities |
|
232.7 |
|
|
|
229.8 |
Derivative liabilities |
|
219.4 |
|
|
|
26.7 |
Other
liabilities |
|
79.8 |
|
|
|
76.6 |
Total liabilities |
|
4,415.8 |
|
|
|
6,481.7 |
Shareholders’ Equity: |
|
|
|
Common
stock |
|
— |
|
|
|
— |
Additional paid in capital |
|
525.6 |
|
|
|
523.8 |
Retained
earnings |
|
259.1 |
|
|
|
252.8 |
Treasury
stock |
|
(1.5 |
) |
|
|
— |
Total shareholders' equity |
|
783.2 |
|
|
|
776.6 |
Total liabilities and shareholders' equity |
$ |
5,199.0 |
|
|
$ |
7,258.3 |
Volume and Margin Detail by
Channel
VOLUME DETAIL BY CHANNEL |
|
|
|
|
|
|
|
|
($mm) |
For the quarter ended |
|
3/31/2022 |
|
12/31/2021 |
|
3/31/2021 |
Funded Origination Volume by Channel |
|
|
|
|
|
|
|
|
Wholesale |
$ |
9,317.7 |
|
$ |
15,046.9 |
|
$ |
19,668.3 |
Correspondent |
|
2,733.3 |
|
|
4,500.0 |
|
|
8,243.4 |
Direct |
|
504.1 |
|
|
969.3 |
|
|
1,514.3 |
Total Funded Origination Volume |
$ |
12,555.1 |
|
$ |
20,516.2 |
|
$ |
29,426.0 |
Fallout Adjusted Lock Volume by Channel |
|
|
|
|
|
|
|
|
Wholesale |
$ |
9,563.7 |
|
$ |
12,605.7 |
|
$ |
16,139.9 |
Correspondent |
|
2,610.8 |
|
|
4,042.1 |
|
|
6,673.1 |
Direct |
|
414.6 |
|
|
684.8 |
|
|
739.8 |
Total Fallout Adjusted Lock Volume |
$ |
12,589.1 |
|
$ |
17,332.6 |
|
$ |
23,552.8 |
GAIN ON SALE MARGIN DETAIL BY CHANNEL |
($mm) |
For the quarter ended |
|
3/31/2022 |
|
12/31/2021 |
|
3/31/2021 |
|
$ Amount |
|
Basis Points |
|
$ Amount |
|
Basis Points |
|
$ Amount |
|
Basis Points |
Gain on Sale Margin by Channel |
|
|
|
|
|
|
|
|
Wholesale |
$ |
62.6 |
|
|
65 |
|
|
$ |
76.4 |
|
61 |
|
$ |
245.1 |
|
152 |
Correspondent |
|
3.5 |
|
|
13 |
|
|
$ |
7.4 |
|
18 |
|
|
22.2 |
|
33 |
Direct |
|
10.7 |
|
|
258 |
|
|
$ |
17.5 |
|
256 |
|
|
26.8 |
|
362 |
Margin Attributable to Channels |
|
76.8 |
|
|
61 |
|
|
$ |
101.3 |
|
58 |
|
|
294.1 |
|
125 |
Other (Loss) Gain on Sale1 |
|
(4.0 |
) |
|
(3 |
) |
|
$ |
1.6 |
|
1 |
|
|
52.7 |
|
22 |
Gain on Sale Margin2 |
$ |
72.8 |
|
|
58 |
|
|
$ |
102.9 |
|
59 |
|
$ |
346.8 |
|
147 |
(1) Includes
interest income (expense), net, realized and unrealized gains
(losses) on locks and mortgage loans held for sale, net hedging
results, the provision for the representation and warranty reserve,
and differences between modeled and actual pull-through. |
(2) Calculated as
gain on sale divided by Fallout Adjusted Lock Volume. Gain on sale
includes gain on loans, net, loan fee income, interest income
(expense), net, and loan servicing fees (expense) for the
Origination segment. |
Summary Segment Results
($mm) |
For the quarter March 31, 2022 |
|
Origination |
|
Servicing |
|
SegmentsTotal |
|
All Other |
|
Total |
|
Reconciliation Item1 |
|
Segments Total |
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on loans, net |
$ |
45.4 |
|
|
$ |
— |
|
$ |
45.4 |
|
$ |
— |
|
|
$ |
45.4 |
|
|
$ |
— |
|
$ |
45.4 |
|
Loan fee
income |
|
19.9 |
|
|
|
— |
|
|
19.9 |
|
|
— |
|
|
|
19.9 |
|
|
|
— |
|
|
19.9 |
|
Loan
servicing fees |
|
— |
|
|
|
81.1 |
|
|
81.1 |
|
|
— |
|
|
|
81.1 |
|
|
|
— |
|
|
81.1 |
|
Change in
fair value of mortgage servicing rights2 |
|
— |
|
|
|
17.2 |
|
|
17.2 |
|
|
— |
|
|
|
17.2 |
|
|
|
— |
|
|
17.2 |
|
Interest
expense (income), net |
|
7.5 |
|
|
|
0.7 |
|
|
8.2 |
|
|
(14.2 |
) |
|
|
(6.0 |
) |
|
|
— |
|
|
(6.0 |
) |
Other
income (expense) |
|
— |
|
|
|
— |
|
|
— |
|
|
(4.7 |
) |
|
|
(4.7 |
) |
|
|
5.3 |
|
|
0.6 |
|
Total Revenue |
$ |
72.8 |
|
|
$ |
99.0 |
|
$ |
171.8 |
|
$ |
(18.9 |
) |
|
$ |
152.9 |
|
|
$ |
5.3 |
|
$ |
158.2 |
|
Contribution margin |
$ |
(8.4 |
) |
|
$ |
83.2 |
|
$ |
74.8 |
|
$ |
(58.7 |
) |
|
$ |
16.1 |
|
|
|
|
|
($mm) |
For the quarter December 31, 2021 |
|
Origination |
|
Servicing |
|
Segments Total |
|
All Other |
|
Total |
|
Reconciliation Item1 |
|
Segments Total |
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on loans, net |
$ |
64.2 |
|
$ |
(0.2 |
) |
|
$ |
64.0 |
|
$ |
— |
|
|
$ |
64.0 |
|
|
$ |
— |
|
$ |
64.0 |
|
Loan fee
income |
|
32.8 |
|
|
— |
|
|
|
32.8 |
|
|
— |
|
|
|
32.8 |
|
|
|
— |
|
|
32.8 |
|
Loan
servicing fees |
|
— |
|
|
83.6 |
|
|
|
83.6 |
|
|
— |
|
|
|
83.6 |
|
|
|
— |
|
|
83.6 |
|
Change in
fair value of mortgage servicing rights2 |
|
— |
|
|
6.3 |
|
|
|
6.3 |
|
|
— |
|
|
|
6.3 |
|
|
|
— |
|
|
6.3 |
|
Interest
income (expense), net |
|
5.9 |
|
|
0.6 |
|
|
|
6.5 |
|
|
(13.8 |
) |
|
|
(7.3 |
) |
|
|
— |
|
|
(7.3 |
) |
Other
income (expense) |
|
— |
|
|
— |
|
|
|
— |
|
|
(0.2 |
) |
|
|
(0.2 |
) |
|
|
1.3 |
|
|
1.1 |
|
Total Revenue |
$ |
102.9 |
|
$ |
90.3 |
|
|
$ |
193.2 |
|
$ |
(14.0 |
) |
|
$ |
179.2 |
|
|
$ |
1.3 |
|
$ |
180.5 |
|
Contribution margin |
$ |
1.7 |
|
$ |
74.4 |
|
|
$ |
76.1 |
|
$ |
(50.6 |
) |
|
$ |
25.5 |
|
|
|
|
|
($mm) |
For the quarter March 31, 2021 |
|
Origination |
|
Servicing |
|
SegmentsTotal |
|
All Other |
|
Total |
|
ReconciliationItem1 |
|
Segments Total |
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on
loans, net |
$ |
301.2 |
|
$ |
— |
|
$ |
301.2 |
|
$ |
— |
|
|
$ |
301.2 |
|
|
$ |
— |
|
|
$ |
301.2 |
|
Loan fee
income |
$ |
44.1 |
|
$ |
— |
|
$ |
44.1 |
|
$ |
— |
|
|
$ |
44.1 |
|
|
$ |
— |
|
|
$ |
44.1 |
|
Loan
servicing fees |
$ |
— |
|
$ |
70.3 |
|
$ |
70.3 |
|
$ |
— |
|
|
4 |
70.3 |
|
|
$ |
— |
|
|
$ |
70.3 |
|
Change in
fair value of mortgage servicing rights |
$ |
— |
|
$ |
12.8 |
|
$ |
12.8 |
|
$ |
— |
|
|
$ |
12.8 |
|
|
$ |
— |
|
|
$ |
12.8 |
|
Interest
income (expense), net |
$ |
1.3 |
|
$ |
0.3 |
|
$ |
1.6 |
|
$ |
(8.9 |
) |
|
$ |
(7.3 |
) |
|
$ |
— |
|
|
$ |
(7.3 |
) |
Other
income (expense) |
$ |
— |
|
$ |
0.1 |
|
$ |
0.1 |
|
$ |
4.8 |
|
|
$ |
4.9 |
|
|
$ |
(4.1 |
) |
|
$ |
0.8 |
|
Total Revenue |
$ |
346.6 |
|
$ |
83.5 |
|
$ |
430.1 |
|
$ |
(4.1 |
) |
|
$ |
426.0 |
|
|
$ |
(4.1 |
) |
|
$ |
421.9 |
|
Contribution margin |
$ |
187.3 |
|
$ |
64.8 |
|
$ |
252.1 |
|
$ |
(53.0 |
) |
|
$ |
199.1 |
|
|
|
|
|
|
|
|
|
(1) The Company
includes the income from its equity method investments in the All
Other category. In order to reconcile to Total net revenue on the
condensed consolidated statements of operations, it must be removed
as is presented above. |
(2) Change in
fair value of mortgage servicing rights includes $53.5 million loss
and $29.6 million gain on MSR sales for the first quarter of 2022
and fourth quarter of 2021, respectively. |
GAAP to Non-GAAP Reconciliations
RECONCILIATION OF ADJUSTED REVENUE TO TOTAL REVENUE,
NET |
|
|
|
|
|
|
|
|
|
|
|
|
($mm) |
For the quarter ended |
|
3/31/2022 |
|
12/31/2021 |
|
3/31/2021 |
Total revenue, net |
$ |
158.2 |
|
|
$ |
180.5 |
|
|
$ |
421.9 |
|
(Loss)
income from equity method investment |
|
(5.3 |
) |
|
|
(1.3 |
) |
|
|
4.2 |
|
Change in
fair value of MSR, net of hedge |
|
(66.1 |
) |
|
|
(73.0 |
) |
|
|
(102.0 |
) |
Adjusted revenue |
$ |
86.8 |
|
|
$ |
106.2 |
|
|
$ |
324.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF ADJUSTED NET INCOME TO TOTAL NET INCOME
(LOSS) |
|
|
|
|
|
|
|
|
|
|
|
|
($mm) |
For the quarter ended |
|
3/31/2022 |
|
12/31/2021 |
|
3/31/2021 |
Total net
income |
$ |
11.9 |
|
|
$ |
19.3 |
|
|
$ |
149.0 |
|
Change in
fair value of MSR, net of hedge |
|
(66.1 |
) |
|
|
(73.0 |
) |
|
|
(102.0 |
) |
Income
tax effect of change in fair value of MSR, net of hedge |
|
13.2 |
|
|
|
19.9 |
|
|
|
26.2 |
|
Adjusted net (loss) income |
$ |
(41.0 |
) |
|
$ |
(33.8 |
) |
|
$ |
73.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF ADJUSTED NET MARGIN TO NET
MARGIN |
|
|
|
|
|
|
|
|
|
|
|
|
($mm) |
For the quarter ended |
|
3/31/2022 |
|
12/31/2021 |
|
3/31/2021 |
Total
revenue, net |
$ |
158.2 |
|
|
$ |
180.5 |
|
|
$ |
421.9 |
|
Total net
income |
|
11.9 |
|
|
|
19.3 |
|
|
|
149.0 |
|
Net margin |
|
7.5 |
% |
|
|
10.7 |
% |
|
|
35.3 |
% |
Adjusted
revenue |
$ |
86.8 |
|
|
$ |
106.2 |
|
|
$ |
324.1 |
|
Adjusted
net (loss) income |
|
(41.0 |
) |
|
|
(33.8 |
) |
|
|
73.2 |
|
Adjusted net margin |
|
(47.2 |
)% |
|
|
(31.9 |
)% |
|
|
22.6 |
% |
Non-GAAP Financial Measures
To provide investors with information in
addition to our results as determined under Generally Accepted
Accounting Principles (“GAAP”), we disclose Adjusted revenue,
Adjusted net Income, and Adjusted net margin as “non-GAAP
measures,” which management believes provide useful information to
investors. These measures are not financial measures calculated in
accordance with GAAP and should not be considered as a substitute
for revenue, net income, or any other operating performance measure
calculated in accordance with GAAP, and may not be comparable to a
similarly titled measure reported by other companies.
We define Adjusted revenue as Total net revenue
exclusive of the impact of the change in fair value of MSRs related
to changes in valuation inputs and assumptions, net of MSRs hedge
and adjusted for Income from equity method investment.
We define Adjusted net income as Net income
(loss) exclusive of the impact of the change in fair value of MSRs
related to changes in valuation inputs and assumptions, net of MSRs
hedge.
We exclude changes in fair value of MSRs, net of
hedge from each of Adjusted revenue and Adjusted net income (loss)
as they add volatility and are not indicative of the Company’s
operating performance or results of operation. This adjustment does
not include changes in fair value of MSRs due to realization of
cash flows, which remain in each of Adjusted revenue and Adjusted
net income (loss). Realization of cash flows occurs when cash is
collected as customers make scheduled payments, partial prepayments
of principal, or pay their mortgage in full.
We define Adjusted net margin by dividing
Adjusted net income by Adjusted revenue.
We believe that Adjusted revenue, Adjusted net
Income, and Adjusted net margin can provide useful information to
investors and others in understanding and evaluating our operating
results. These measures are not financial measures calculated in
accordance with GAAP and should not be considered as a substitute
for net income, or any other operating performance measure
calculated in accordance with GAAP and may not be comparable to a
similarly titled measure reported by other companies.
We believe that the presentation of Adjusted
revenue, Adjusted net Income, and Adjusted net margin provides
useful information to investors regarding our results of operations
because each measure assists both investors and management in
analyzing and benchmarking the performance and value of our
business. Adjusted revenue, Adjusted net Income, and Adjusted net
margin provide indicators of performance that are not affected by
fluctuations in certain costs or other items. Accordingly,
management believes that these measurements are useful for
comparing general operating performance from period to period, and
management relies on these measures for planning and forecasting of
future periods. The Company measures the performance of the
segments primarily on a contribution margin basis. Additionally,
these measures allow management to compare our results with those
of other companies that have different financing and capital
structures. However, other companies may define Adjusted revenue,
Adjusted net Income, and Adjusted net margin differently, and as a
result, our measures of Adjusted revenue, Adjusted net Income, and
Adjusted net margin may not be directly comparable to those of
other companies.
Investor Relations Contact:
Home Point Capital:Ginger Wilcoxinvestor@hpfc.com
Media Contact:
Home Point Capital:Brad Pettifordbpettiford@hpfc.com
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