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 third quarter ended
September 30, 2022.
“We continue to take strategically proactive
steps to navigate the current environment by significantly reducing
expenses, building liquidity, and focusing on margins over loan
volume,” said Willie Newman, President and Chief Executive Officer.
“In the third quarter, we made considerable progress in boosting
our liquidity profile and reducing expenses, positioning our
company to create long-term value even in a reduced-volume
environment.”
Third Quarter 2022 Financial and Key Performance
Indicator Summary
($mm, except per share values) |
For the quarter ended |
|
|
9/30/2022 |
|
6/30/2022 |
|
9/30/2021 |
|
|
|
|
|
|
|
|
Total Funded Origination Volume |
$ |
4,142.0 |
|
|
$ |
9,291.9 |
|
|
$ |
20,795.6 |
|
Total
Fallout Adjusted Lock Volume |
$ |
3,734.7 |
|
|
$ |
8,878.2 |
|
|
$ |
21,894.4 |
|
Gain on
sale margin (bps)1 |
|
4 |
|
|
|
42 |
|
|
|
84 |
|
Servicing
portfolio - Units |
|
331,264 |
|
|
|
320,215 |
|
|
|
428,622 |
|
Servicing
portfolio - UPB |
$ |
94,087.8 |
|
|
$ |
90,516.4 |
|
|
$ |
125,832.3 |
|
|
|
|
|
|
|
|
Total
revenue, net |
$ |
8.3 |
|
|
$ |
70.0 |
|
|
$ |
274.7 |
|
Origination segment direct expenses |
|
46.1 |
|
|
|
67.1 |
|
|
|
116.6 |
|
Servicing segment direct expenses |
|
14.8 |
|
|
|
14.5 |
|
|
|
17.5 |
|
Corporate expenses |
|
54.8 |
|
|
|
37.8 |
|
|
|
41.1 |
|
Total
expenses |
|
115.7 |
|
|
|
119.4 |
|
|
|
175.2 |
|
Net
(loss) income |
$ |
(94.3 |
) |
|
$ |
(44.4 |
) |
|
$ |
71.5 |
|
Net (loss) income per share |
$ |
(0.68 |
) |
|
$ |
(0.32 |
) |
|
$ |
0.51 |
|
(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.
Third Quarter 2022 Highlights
- Quarterly funded
origination volume was $4.1 billion, compared to $20.8 billion in
the third quarter of 2021, and $9.3 billion in the second quarter
of 2022.
- Total revenue, net
of $8.3 million, compared to $274.7 million in the third quarter of
2021 and $70.0 million in the second quarter of 2022.
- Total revenue in
the Origination segment of $1.7 million, compared to $183.8 million
in the third quarter of 2021 and $37.2 million in the second
quarter of 2022.
- Gain on sale margin
attributable to channels, before giving effect to the impact of
capital markets and other activity, was 51 basis points in the
third quarter of 2022, compared to 73 basis points in the third
quarter of 2021 and 60 basis points in the second quarter of
2022.
- Total expenses of
$115.7 million included $13.4 million restructuring and $10.8
million goodwill impairment charges. Excluding those charges, total
expense improved 47.8% versus the third quarter of 2021 and 23.4%
from the second quarter of 2022 due to the Company’s cost
management initiatives.
- Net loss of $94.3
million (or $(0.68) per basic and diluted share), compared to net
income of $71.5 million (or $0.51 per basic and diluted share) in
the third quarter of 2021, and net loss of $44.4 million (or
$(0.32) per basic and diluted share) in the second quarter of
2022.
- Broker Partners of
9,116 as of September 30, 2022 increased by 1,664 from the
third quarter of 2021, and increased by 372 from the second quarter
of 2022.
- In the third
quarter of 2022, we had 2,569 active broker partners.
- Servicing customers
of 331,264, down 22.7% from the third quarter of 2021, and up 3.5%
compared to the second quarter of 2022.
- Servicing portfolio
UPB totaled $94.1 billion as of September 30, 2022, down 25.2%
from the third quarter of 2021, and an increase of 3.9% from the
second quarter of 2022.
- Servicing portfolio
delinquencies of 60 days or more of 1.0% remained relatively
consistent with 0.9% in the third quarter of 2021 and 0.9% in the
second quarter of 2022. The MSR multiple for the third quarter of
2022 of 5.8x increased from 4.2x in the third quarter of 2021 and
was comparable with 5.8x in the second quarter of 2022, primarily
driven by slower prepayment speeds due to higher mortgage interest
rates.
- Company’s available
liquidity of $569.1 million as of September 30, 2022.
Origination Segment
Home Point Capital’s Origination segment
originates and sells residential real estate mortgage loans. These
loans are sourced through two channels. The primary channel is
Wholesale, where the Company works with mortgage brokerages to
source new customers. The Direct channel retains serviced customers
in the Home Point Capital ecosystem.
The Origination segment recorded a contribution
loss of $44.4 million in the third quarter of 2022, compared to
contribution margin of $67.2 million in the third quarter of 2021
and contribution loss of $29.9 million in the second quarter of
2022.
Origination Segment – Financial Highlights and Summary
of Key Performance Indicators
($mm) |
For the quarter ended |
|
9/30/2022 |
|
6/30/2022 |
|
9/30/2021 |
|
|
|
|
|
|
Gain on loans, net |
$ |
(10.3 |
) |
|
$ |
13.2 |
|
|
$ |
145.3 |
|
Loan fee
income |
|
7.6 |
|
|
|
15.3 |
|
|
|
34.5 |
|
Interest
income, net and other income |
|
4.4 |
|
|
|
8.7 |
|
|
|
4.0 |
|
Total Origination segment revenue |
|
1.7 |
|
|
|
37.2 |
|
|
|
183.8 |
|
Directly
attributable expense |
|
46.1 |
|
|
|
67.1 |
|
|
|
116.6 |
|
Contribution margin |
$ |
(44.4 |
) |
|
$ |
(29.9 |
) |
|
$ |
67.2 |
|
|
|
|
|
|
|
Key Performance Indicators1 |
For the quarter ended |
9/30/2022 |
|
6/30/2022 |
|
9/30/2021 |
|
|
|
|
|
|
Total
Funded Origination Volume |
$ |
4,142.0 |
|
|
$ |
9,291.9 |
|
|
$ |
20,795.6 |
|
Total
Fallout Adjusted Lock Volume |
$ |
3,734.7 |
|
|
$ |
8,878.2 |
|
|
$ |
21,894.4 |
|
|
|
|
|
|
|
Gain on
Sale Margin (bps)2 |
|
4 |
|
|
|
42 |
|
|
|
84 |
|
|
|
|
|
|
|
Origination Volume by Purpose: |
|
|
|
|
|
Purchase |
|
81.1 |
% |
|
|
71.3 |
% |
|
|
34.6 |
% |
Refinance |
|
18.9 |
% |
|
|
28.7 |
% |
|
|
65.4 |
% |
|
|
|
|
|
|
Third
Party Partners: |
|
|
|
|
|
Number of Broker Partners |
|
9,116 |
|
|
|
8,744 |
|
|
|
7,452 |
|
Number of Correspondent Partners3 |
N/A |
|
|
670 |
|
|
|
652 |
|
(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.(3)
Number of Correspondent Partners from whom the Company purchased
loans is not applicable for the third quarter of 2022 due to the
sale of the Correspondent channel on June 1, 2022.
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 held by Homepoint. Substantially all of Homepoint’s servicing
staff has transitioned to ServiceMac providing customers with
continuity and the same high-quality service. ServiceMac began
subservicing newly originated agency loans for Homepoint in the
second quarter of 2022. The transition of the balance of the agency
portfolio and all of the Ginnie Mae portfolio to ServiceMac was
completed in the third quarter of 2022. ServiceMac performs
servicing functions on Homepoint’s behalf, but Homepoint continues
to hold the MSRs.
The Servicing segment generated a contribution
margin of $3.2 million in the third quarter of 2022, compared to
$86.2 million in the third quarter of 2021 and $20.0 million in the
second quarter of 2022.
Servicing Segment – Financial Highlights
and Key Performance Indicators
($mm) |
For the quarter ended |
|
9/30/2022 |
|
6/30/2022 |
|
9/30/2021 |
|
|
|
|
|
|
Loan servicing fees |
$ |
60.1 |
|
|
$ |
62.9 |
|
|
$ |
91.8 |
|
Interest
income, net and other income |
|
4.1 |
|
|
|
1.5 |
|
|
|
0.9 |
|
Total Servicing segment revenue |
|
64.2 |
|
|
|
64.4 |
|
|
|
92.7 |
|
Directly
attributable expense |
|
14.8 |
|
|
|
14.5 |
|
|
|
17.5 |
|
Primary Margin |
|
49.4 |
|
|
|
49.9 |
|
|
|
75.2 |
|
Change in
MSR fair value: amortization |
|
(28.7 |
) |
|
|
(33.4 |
) |
|
|
(73.9 |
) |
Adjusted contribution margin |
|
20.7 |
|
|
|
16.5 |
|
|
|
1.3 |
|
Change in
MSR fair value: mark-to-market, net of hedge |
|
(17.5 |
) |
|
|
3.5 |
|
|
|
84.9 |
|
Contribution margin |
$ |
3.2 |
|
|
$ |
20.0 |
|
|
$ |
86.2 |
|
|
|
|
|
|
|
Key Performance Indicators |
For the quarter ended1 |
9/30/2022 |
|
6/30/2022 |
|
9/30/2021 |
|
|
|
|
|
|
MSR servicing portfolio - UPB |
$ |
94,088 |
|
|
$ |
90,516 |
|
|
$ |
125,832 |
|
Average MSR servicing portfolio - UPB |
$ |
92,302 |
|
|
$ |
96,251 |
|
|
$ |
125,046 |
|
MSR servicing portfolio - Units |
|
331,264 |
|
|
|
320,215 |
|
|
|
428,622 |
|
Weighted average coupon rate |
|
3.30 |
% |
|
|
3.18 |
% |
|
|
2.98 |
% |
60+ days delinquent, incl. forbearance |
|
1.0 |
% |
|
|
0.9 |
% |
|
|
0.9 |
% |
MSR multiple |
|
5.8 |
|
|
|
5.8 |
|
|
|
4.2 |
|
(1) 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
$569.1 million as of September 30, 2022, comprising $130.3
million of cash and cash equivalents and $438.7 million of undrawn
capacity from its mortgage servicing rights line of credit and
other credit facilities. The Company had total warehouse capacity
of $3.2 billion, and unused capacity of $2.3 billion as of
September 30, 2022, compared to total capacity of $6.0
billion, and unused capacity of $4.1 billion as of June 30,
2022. In light of the recent decline in the Origination volumes,
the Company continues to strategically rightsize its warehouse
lines of credit in order to minimize associated costs and more
efficiently operate in the environment of rising interest rates and
increased competition.
($mm) |
As of |
|
|
9/30/2022 |
|
6/30/2022 |
|
12/31/2021 |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
130.3 |
|
$ |
135.8 |
|
$ |
171.0 |
|
Mortgage
servicing rights (at fair value) |
$ |
1,492.5 |
|
$ |
1,419.1 |
|
$ |
1,525.1 |
|
Warehouse
lines of credit |
$ |
870.6 |
|
$ |
1,910.4 |
|
$ |
4,718.7 |
|
Term debt
and other borrowings, net |
$ |
941.3 |
|
$ |
845.5 |
|
$ |
1,226.5 |
|
Total shareholders' equity |
$ |
639.1 |
|
$ |
732.3 |
|
$ |
776.6 |
|
Dividend and Stock Repurchase Program
Home Point Capital’s board of directors has
determined not to declare a dividend for the third quarter. The
board’s determination reflects the Company’s desire to maintain a
strong liquidity position to support operations in the current
macroeconomic environment, including rising interest rates and
inflationary pressure, and the potential impact on the Company’s
results of operations and financial condition.
During the quarter, the Company did not
repurchase any shares. The Company has $4.3 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, November
10, 2022 at 8:30 a.m. ET to review the Company’s financial results
for the third quarter ended September 30, 2022.
The conference call may be accessed by dialing
(877) 423-9813 (toll-free) or (201) 689-8573 (international), using
the passcode 13730527. 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, November 17, 2022 by dialing (844) 512-2921 (toll-free)
or (412) 317-6671 (international), passcode 13730527. 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 9100 mortgage broker
partners with deep knowledge and expertise about the communities
and customers they serve.
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 KY, LA, 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: 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; our ability to foreclose on our
mortgage assets in a timely manner or at all; and the effects of
the COVID-19pandemic on our business. 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 |
|
9/30/2022 |
|
6/30/2022 |
|
9/30/2021 |
|
|
|
|
|
|
(Loss) gain on loans, net |
$ |
(10.3 |
) |
|
$ |
13.2 |
|
|
$ |
145.5 |
|
Loan fee
income |
|
7.6 |
|
|
|
15.3 |
|
|
|
34.5 |
|
Interest income |
|
21.5 |
|
|
|
27.5 |
|
|
|
36.7 |
|
Interest expense |
|
(26.3 |
) |
|
|
(28.9 |
) |
|
|
(45.5 |
) |
Interest
expense, net |
|
(4.8 |
) |
|
|
(1.4 |
) |
|
|
(8.8 |
) |
Loan
servicing fees |
|
60.1 |
|
|
|
62.9 |
|
|
|
91.8 |
|
Change in
fair value of mortgage servicing rights |
|
(46.2 |
) |
|
|
(29.9 |
) |
|
|
11.0 |
|
Other
income |
|
1.9 |
|
|
|
9.9 |
|
|
|
0.7 |
|
Total revenue, net |
|
8.3 |
|
|
|
70.0 |
|
|
|
274.7 |
|
|
|
|
|
|
|
Compensation and benefits |
|
62.8 |
|
|
|
75.6 |
|
|
|
114.6 |
|
Loan
expense |
|
4.0 |
|
|
|
7.0 |
|
|
|
16.6 |
|
Loan
servicing expense |
|
11.2 |
|
|
|
7.1 |
|
|
|
6.7 |
|
Production technology |
|
3.7 |
|
|
|
4.3 |
|
|
|
7.6 |
|
General
and administrative |
|
12.5 |
|
|
|
17.0 |
|
|
|
21.7 |
|
Depreciation and amortization |
|
2.6 |
|
|
|
2.6 |
|
|
|
2.4 |
|
Impairment of goodwill |
|
10.8 |
|
|
|
— |
|
|
|
— |
|
Other
expenses |
|
8.1 |
|
|
|
5.8 |
|
|
|
5.6 |
|
Total
expenses |
|
115.7 |
|
|
|
119.4 |
|
|
|
175.2 |
|
|
|
|
|
|
|
(Loss) income before income tax |
|
(107.4 |
) |
|
|
(49.4 |
) |
|
|
99.5 |
|
Pre-tax margin |
|
(1294.0) |
% |
|
|
(70.6) |
% |
|
|
36.2 |
% |
Income
tax benefit (expense) |
$ |
25.0 |
|
|
$ |
14.1 |
|
|
$ |
(27.3 |
) |
(Loss)
income from equity method investment |
$ |
(11.9 |
) |
|
$ |
(9.1 |
) |
|
$ |
(0.7 |
) |
Net (loss) income |
$ |
(94.3 |
) |
|
$ |
(44.4 |
) |
|
$ |
71.5 |
|
Net margin |
|
(1136.1) |
% |
|
|
(63.4) |
% |
|
|
26.0 |
% |
(Loss) earnings per share: |
|
|
|
|
|
Basic |
$ |
(0.68 |
) |
|
$ |
(0.32 |
) |
|
$ |
0.51 |
|
Diluted |
$ |
(0.68 |
) |
|
$ |
(0.32 |
) |
|
$ |
0.51 |
|
Basic
weighted average common stock outstanding (mm) |
|
138.4 |
|
|
|
138.5 |
|
|
|
139.1 |
|
Diluted
weighted average common stock outstanding (mm) |
|
138.4 |
|
|
|
138.5 |
|
|
|
140.0 |
|
|
|
|
|
|
|
Adjusted income statement metrics
1: |
|
|
|
|
|
Adjusted revenue |
$ |
13.9 |
|
|
$ |
57.4 |
|
|
$ |
189.1 |
|
Adjusted net (loss) income |
$ |
(80.9 |
) |
|
$ |
(46.9 |
) |
|
$ |
9.9 |
|
Adjusted net margin |
|
(581.8) |
% |
|
|
(81.7) |
% |
|
|
5.2 |
% |
(1) Non-GAAP measures. See non-GAAP reconciliation
for a reconciliation of each measure to the nearest GAAP
measure.
Consolidated Balance Sheet($ in
millions)
($mm) |
As of |
|
|
9/30/2022 |
|
6/30/2022 |
|
12/31/2021 |
|
|
(Unaudited) |
|
|
|
Assets: |
|
|
|
|
|
|
Cash and cash equivalents |
$ |
130.3 |
|
$ |
135.8 |
|
$ |
171.0 |
|
Restricted cash |
|
18.1 |
|
|
27.1 |
|
|
36.8 |
|
Cash and
cash equivalents and Restricted cash |
|
148.4 |
|
|
162.9 |
|
|
207.8 |
|
Mortgage
loans held for sale (at fair value) |
|
917.8 |
|
|
2,018.6 |
|
|
5,107.1 |
|
Mortgage
servicing rights (at fair value) |
|
1,492.5 |
|
|
1,419.1 |
|
|
1,525.1 |
|
Property
and equipment, net |
|
13.4 |
|
|
18.0 |
|
|
21.9 |
|
Accounts
receivable, net |
|
167.7 |
|
|
177.0 |
|
|
129.1 |
|
Derivative assets |
|
72.2 |
|
|
59.3 |
|
|
84.4 |
|
Goodwill |
|
— |
|
|
10.8 |
|
|
10.8 |
|
Government National Mortgage Association loans eligible for
repurchase |
|
194.5 |
|
|
117.1 |
|
|
65.2 |
|
Assets
held for sale |
|
38.9 |
|
|
50.7 |
|
|
63.7 |
|
Other
assets |
|
36.8 |
|
|
40.9 |
|
|
43.2 |
|
Total assets |
$ |
3,082.2 |
|
$ |
4,074.4 |
|
$ |
7,258.3 |
|
|
|
|
|
|
|
|
Liabilities and Shareholders’ Equity: |
|
|
|
|
|
|
Warehouse
lines of credit |
|
870.6 |
|
|
1,910.4 |
|
|
4,718.7 |
|
Term debt
and other borrowings, net |
|
941.3 |
|
|
845.5 |
|
|
1,226.5 |
|
Accounts
payable and accrued expenses |
|
82.9 |
|
|
106.0 |
|
|
138.2 |
|
Government National Mortgage Association loans eligible for
repurchase |
|
194.5 |
|
|
117.1 |
|
|
65.2 |
|
Deferred
tax liabilities |
|
193.9 |
|
|
214.9 |
|
|
229.8 |
|
Derivative liabilities |
|
92.8 |
|
|
60.3 |
|
|
26.7 |
|
Other
liabilities |
|
67.1 |
|
|
87.9 |
|
|
76.6 |
|
Total liabilities |
|
2,443.1 |
|
|
3,342.1 |
|
|
6,481.7 |
|
|
|
|
|
|
|
|
Shareholders’ Equity: |
|
|
|
|
|
|
Common
stock |
|
— |
|
|
— |
|
|
— |
|
Additional paid in capital |
|
512.5 |
|
|
511.6 |
|
|
523.8 |
|
Retained
earnings |
|
126.6 |
|
|
220.7 |
|
|
252.8 |
|
Treasury
stock |
|
— |
|
|
— |
|
|
— |
|
Total shareholders' equity |
|
639.1 |
|
|
732.3 |
|
|
776.6 |
|
Total liabilities and shareholders' equity |
$ |
3,082.2 |
|
$ |
4,074.4 |
|
$ |
7,258.3 |
|
Volume and Margin Detail by
Channel
VOLUME DETAIL BY CHANNEL
($mm) |
For the quarter ended |
|
|
9/30/2022 |
|
|
6/30/2022 |
|
|
9/30/2021 |
|
|
|
|
|
|
|
|
|
|
Funded Origination Volume by Channel |
|
|
|
|
|
|
|
|
Wholesale |
$ |
4,019.9 |
|
|
$ |
7,382.4 |
|
|
$ |
16,355.4 |
|
Correspondent |
|
64.1 |
|
|
|
1,731.8 |
|
|
|
3,434.2 |
|
Direct |
|
58.0 |
|
|
|
177.7 |
|
|
|
1,006.0 |
|
Total Funded Origination Volume |
$ |
4,142.0 |
|
|
$ |
9,291.9 |
|
|
$ |
20,795.6 |
|
|
|
|
|
|
|
|
|
|
Fallout Adjusted Lock Volume by Channel |
|
|
|
|
|
|
|
|
Wholesale |
$ |
3,688.8 |
|
|
$ |
7,483.3 |
|
|
$ |
16,709.8 |
|
Correspondent |
N/A |
|
|
|
1,269.1 |
|
|
|
4,150.0 |
|
Direct |
|
45.9 |
|
|
|
125.9 |
|
|
|
1,034.6 |
|
Total Fallout Adjusted Lock Volume |
$ |
3,734.7 |
|
|
$ |
8,878.3 |
|
|
$ |
21,894.4 |
|
GAIN ON SALE MARGIN DETAIL BY CHANNEL |
|
($mm) |
For the quarter ended |
|
|
9/30/2022 |
|
6/30/2022 |
|
9/30/2021 |
|
|
$ Amount |
|
BasisPoints |
|
$ Amount |
|
BasisPoints |
|
$ Amount |
|
BasisPoints |
|
Gain on Sale Margin by Channel |
|
|
|
|
|
|
|
|
|
Wholesale |
$ |
17.9 |
|
|
48 |
|
|
$ |
47.7 |
|
|
64 |
|
|
$ |
122.0 |
|
73 |
|
Correspondent |
N/A |
|
N/A |
|
$ |
2.0 |
|
|
16 |
|
|
|
8.4 |
|
20 |
|
Direct |
|
1.2 |
|
|
260 |
|
|
$ |
3.2 |
|
|
256 |
|
|
|
30.3 |
|
292 |
|
Margin Attributable to Channels |
|
19.1 |
|
|
51 |
|
|
$ |
52.9 |
|
|
60 |
|
|
|
160.7 |
|
73 |
|
Other (Loss) Gain on Sale1 |
|
(17.4 |
) |
|
(47 |
) |
|
$ |
(15.7 |
) |
|
(18 |
) |
|
|
23.2 |
|
11 |
|
Gain on Sale Margin2 |
$ |
1.7 |
|
|
4 |
|
|
$ |
37.2 |
|
|
42 |
|
|
$ |
183.9 |
|
84 |
|
(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 ended September 30, 2022 |
|
Origination |
|
Servicing |
|
Segments Total |
|
All Other |
|
Total |
|
Reconciliation Item1 |
|
Segments Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on loans, net |
$ |
(10.3 |
) |
|
$ |
— |
|
|
$ |
(10.3 |
) |
|
$ |
— |
|
|
$ |
(10.3 |
) |
|
$ |
— |
|
$ |
(10.3 |
) |
Loan fee
income |
|
7.6 |
|
|
|
— |
|
|
|
7.6 |
|
|
|
— |
|
|
|
7.6 |
|
|
|
— |
|
|
7.6 |
|
Loan
servicing fees |
|
— |
|
|
|
60.1 |
|
|
|
60.1 |
|
|
|
— |
|
|
|
60.1 |
|
|
|
— |
|
|
60.1 |
|
Change in
fair value of mortgage servicing rights |
|
— |
|
|
|
(46.2 |
) |
|
|
(46.2 |
) |
|
|
— |
|
|
|
(46.2 |
) |
|
|
— |
|
|
(46.2 |
) |
Interest
income (expense), net |
|
4.4 |
|
|
|
4.1 |
|
|
|
8.5 |
|
|
|
(13.3 |
) |
|
|
(4.8 |
) |
|
|
— |
|
|
(4.8 |
) |
Other
(expense) income |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(10.0 |
) |
|
|
(10.0 |
) |
|
|
11.9 |
|
|
1.9 |
|
Total Revenue |
$ |
1.7 |
|
|
$ |
18.0 |
|
|
$ |
19.7 |
|
|
$ |
(23.3 |
) |
|
$ |
(3.6 |
) |
|
$ |
11.9 |
|
$ |
8.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contribution margin |
$ |
(44.4 |
) |
|
$ |
3.2 |
|
|
$ |
(41.2 |
) |
|
$ |
(77.9 |
) |
|
$ |
(119.1 |
) |
|
|
|
|
($mm) |
For the quarter ended June 30, 2022 |
|
Origination |
|
Servicing |
|
Segments Total |
|
All Other |
|
Total |
|
Reconciliation Item1 |
|
Segments Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on loans, net |
$ |
13.2 |
|
|
$ |
— |
|
|
$ |
13.2 |
|
|
$ |
— |
|
|
$ |
13.2 |
|
|
$ |
— |
|
$ |
13.2 |
|
Loan fee income |
|
15.3 |
|
|
|
— |
|
|
|
15.3 |
|
|
|
— |
|
|
|
15.3 |
|
|
|
— |
|
|
15.3 |
|
Loan servicing fees |
|
— |
|
|
|
62.9 |
|
|
|
62.9 |
|
|
|
— |
|
|
|
62.9 |
|
|
|
— |
|
|
62.9 |
|
Change in
fair value of mortgage servicing rights |
|
— |
|
|
|
(29.9 |
) |
|
|
(29.9 |
) |
|
|
— |
|
|
|
(29.9 |
) |
|
|
— |
|
|
(29.9 |
) |
Interest income (expense), net |
|
8.6 |
|
|
|
1.5 |
|
|
|
10.1 |
|
|
|
(11.5 |
) |
|
|
(1.4 |
) |
|
|
— |
|
|
(1.4 |
) |
Other income |
|
0.1 |
|
|
|
— |
|
|
|
0.1 |
|
|
|
0.7 |
|
|
|
0.8 |
|
|
|
9.1 |
|
|
9.9 |
|
Total Revenue |
$ |
37.2 |
|
|
$ |
34.5 |
|
|
$ |
71.7 |
|
|
$ |
(10.8 |
) |
|
$ |
60.9 |
|
|
$ |
9.1 |
|
$ |
70.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contribution margin |
$ |
(29.9 |
) |
|
$ |
20.0 |
|
|
$ |
(9.9 |
) |
|
$ |
(48.7 |
) |
|
$ |
(58.6 |
) |
|
|
|
|
($mm) |
For the quarter ended September 30, 2021 |
|
Origination |
|
Servicing |
|
Segments Total |
|
All Other |
|
Total |
|
Reconciliation Item1 |
|
Segments Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on loans, net |
$ |
145.3 |
|
$ |
0.2 |
|
$ |
145.5 |
|
$ |
— |
|
|
$ |
145.5 |
|
|
$ |
— |
|
$ |
145.5 |
|
Loan fee
income |
$ |
34.5 |
|
$ |
— |
|
$ |
34.5 |
|
$ |
— |
|
|
$ |
34.5 |
|
|
$ |
— |
|
$ |
34.5 |
|
Loan
servicing fees |
$ |
— |
|
$ |
91.8 |
|
$ |
91.8 |
|
$ |
— |
|
|
$ |
91.8 |
|
|
$ |
— |
|
$ |
91.8 |
|
Change in
fair value of mortgage servicing rights |
$ |
— |
|
$ |
11.0 |
|
$ |
11.0 |
|
$ |
— |
|
|
$ |
11.0 |
|
|
$ |
— |
|
$ |
11.0 |
|
Interest
income (expense), net |
$ |
4.0 |
|
$ |
0.6 |
|
$ |
4.6 |
|
$ |
(13.5 |
) |
|
$ |
(8.9 |
) |
|
$ |
— |
|
$ |
(8.9 |
) |
Other
income (expense) |
$ |
— |
|
$ |
0.1 |
|
$ |
0.1 |
|
$ |
(0.1 |
) |
|
$ |
— |
|
|
$ |
0.8 |
|
$ |
0.8 |
|
Total Revenue |
$ |
183.8 |
|
$ |
103.7 |
|
$ |
287.5 |
|
$ |
(13.6 |
) |
|
$ |
273.9 |
|
|
$ |
0.8 |
|
$ |
274.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contribution margin |
$ |
67.2 |
|
$ |
86.2 |
|
$ |
153.4 |
|
$ |
(54.8 |
) |
|
$ |
98.6 |
|
|
|
|
|
(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.
GAAP to Non-GAAP Reconciliations
RECONCILIATION OF TOTAL REVENUE, NET TO ADJUSTED
REVENUE
($mm) |
For the quarter ended |
|
9/30/2022 |
|
6/30/2022 |
|
9/30/2021 |
|
|
|
|
|
|
Total revenue, net |
$ |
8.3 |
|
|
$ |
70.0 |
|
|
$ |
274.7 |
|
Loss from
equity method investment |
|
(11.9 |
) |
|
|
(9.1 |
) |
|
|
(0.7 |
) |
Change in
fair value of MSR, net of hedge |
|
17.5 |
|
|
|
(3.5 |
) |
|
|
(84.9 |
) |
Adjusted
revenue |
$ |
13.9 |
|
|
$ |
57.4 |
|
|
$ |
189.1 |
|
RECONCILIATION OF TOTAL NET (LOSS) INCOME TO ADJUSTED NET
(LOSS) INCOME |
|
|
|
($mm) |
For the quarter ended |
|
9/30/2022 |
|
|
6/30/2022 |
|
|
9/30/2021 |
|
|
|
|
|
|
|
|
|
|
Total net (loss) income |
$ |
(94.3 |
) |
|
$ |
(44.4 |
) |
|
$ |
71.5 |
|
Change in
fair value of MSR, net of hedge |
|
17.5 |
|
|
|
(3.5 |
) |
|
|
(84.9 |
) |
Income
tax effect of change in fair value of MSR, net of hedge |
|
(4.1 |
) |
|
|
1.0 |
|
|
|
23.3 |
|
Adjusted net (loss) income |
$ |
(80.9 |
) |
|
$ |
(46.9 |
) |
|
$ |
9.9 |
|
RECONCILIATION OF NET MARGIN TO ADJUSTED NET
MARGIN |
|
|
|
($mm) |
For the quarter ended |
|
9/30/2022 |
|
|
6/30/2022 |
|
|
9/30/2021 |
|
|
|
|
|
|
|
|
|
|
Total revenue, net |
$ |
8.3 |
|
|
$ |
70.0 |
|
|
$ |
274.7 |
|
Total net
(loss) income |
|
(94.3) |
|
|
|
(44.4) |
|
|
|
71.5 |
|
Net margin |
|
(1136.1) |
% |
|
|
(63.4) |
% |
|
|
26.0 |
% |
|
|
|
|
|
|
|
|
|
Adjusted
revenue |
$ |
13.9 |
|
|
$ |
57.4 |
|
|
$ |
189.1 |
|
Adjusted
net (loss) income |
|
(80.9) |
|
|
|
(46.9) |
|
|
|
9.9 |
|
Adjusted net margin |
|
(581.8) |
% |
|
|
(81.7) |
% |
|
|
5.2 |
% |
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 (Loss), 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 (Loss) by Adjusted revenue.
We believe that Adjusted revenue, Adjusted net
Income (Loss), 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 (Loss), 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 (Loss), and Adjusted net
margin differently, and as a result, our measures of Adjusted
revenue, Adjusted net Income (Loss), and Adjusted net margin may
not be directly comparable to those of other companies.
Investor Relations Contact:
Home Point Capital:Lesley Alliinvestor@hpfc.com
Media Contact:
Home Point Capital:Brad Pettifordmedia@hpfc.com
Home Point Capital (NASDAQ:HMPT)
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