Home Point Capital Inc.

Greetings and welcome to the HomePoint Capital fourth quarter and full year 2020 financial results conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during today's conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn this conference over to your host, Mr. Gary Stein, Head of Investor Relations. Please go ahead, sir. You may begin.

Thank you, operator. Welcome to our fourth quarter 2020 earnings call. Joining me this morning are Willie Newman, President and Chief Executive Officer, and Mark Elbaum, Chief Financial Officer. During our prepared remarks, we will be referring to a slide presentation, which is available in the events section of the HomePoint Investor Relations website. Before we begin, I'd like to remind you this call may include forward-looking statements, which do not guarantee future events or performance. please refer to HomePoint's most recent SEC filings, including the company's registration statement on Form S-1, which was declared effective on January 28, 2021, for risk factors related to these statements. We may be discussing certain non-GAAP measures on this call, which management believes are relevant in assessing the financial performance of the business. These non-GAAP measures are reconciled to the nearest GAAP figures in HomePoint's earnings release, which is available on the company's website. I'd now like to turn the call over to Willie Newman President and Chief Executive Officer.

Thanks, Gary, and good morning, everyone. I'd like to thank all of you for joining us for our first public investor call since we completed our IPO last month. During our prepared remarks, I'm going to touch on a few highlights regarding our performance, and then I'll discuss the key elements of our differentiated business model. I'll then turn the call over to Mark to provide more details on our fourth quarter and full year 2020 results. After that, we'll open up the call to take your questions. First, I'd like to thank our outstanding team of nearly 4,000 HomePoint associates for their extremely hard work and dedication, particularly during the last 12 months in a uniquely challenging environment. Without our extraordinary associates, we would not be where we are today as a company. And I know I speak for the entire leadership team when I say how incredibly proud and grateful I am for your tireless commitment to HomePoint's mission of creating financially healthy, happy homeowners. I'd also like to thank our nearly 6,000 partners and 360,000 customers who put their trust in us every day and have enabled HomePoint to become one of the country's leading residential mortgage originators and servicers. Turning briefly to our results for the fourth quarter and full year of 2020, we generated record origination volume of $62 billion for the year, which is nearly three times our volume in 2019. In the fourth quarter alone, we generated $24 billion of originations. In our primary growth engine, wholesale, HomePoint's market share doubled in 2020 to 7%. And for the fourth quarter of 2020, our wholesale channel share reached 8.2%, according to Inside Mortgage Finance. Also in the fourth quarter, we ranked as the seventh largest non-bank originator, which is a significant leap forward from our rank of number 14 in the fourth quarter of 2019. Looking at our mortgage servicing portfolio, we ended the year serving nearly 360,000 customers, which grew by more than 50% compared to 2019. I'll talk more about the strategic importance of our servicing platform in a few minutes. From a financial perspective, our performance in 2020 was outstanding. We generated revenue of more than $1.4 billion for the year, including $455 million in the fourth quarter. Due to the strength of our business model scale and operating leverage, we produced net income of more than $600 million in 2020, which translates into a net margin of 44%. The positive momentum we generated in 2020 has enabled us to enter 2021 in a position of strength, and we have already achieved several important milestones so far this year. Most importantly, we completed our initial public offering at the beginning of February. Our IPO marks an important milestone in the evolution of our company, and we believe our presence in the public markets will serve us well as we execute our long-term growth strategy. In January, we also completed our first senior unsecured notes offering, raising $550 million to further strengthen our balance sheet. In addition, we recently announced plans to pay a regular quarterly cash dividend, beginning with the second quarter of 2021, and we expect the initial dividend will be paid during the third quarter of 2021. We believe our dividend policy is a testament to the earnings power of our business model. Since this is our first opportunity to speak with the public investor community following our recent IPO, I'd like to take a few minutes to provide you with a quick overview of HomePoint and our differentiated business model, which is outlined on slides four and five of our earnings presentation. Put everything in perspective, ever since we launched HomePoint, our goal has been to build an industry-leading platform that is both sustainable and opportunistic. I've been in the mortgage business for more than 30 years, and during that time, I've built three businesses. In addition, our highly talented leadership team each have several decades of directly relevant experience. Collectively, we are leveraging everything we have learned in our careers across multiple cycles to build an industry leader that is focused on where the industry is going rather than where it has been historically. At the core of HomePoint's business is our origination platform, which has been designed to capitalize on the large and growing wholesale channel in a way that leverages scale and optimizes returns with lower fixed costs. We believe we have established a solid leadership position as a wholesale lender. As evidenced by the fact, we were able to double our market share in 2020 during a year when the market also doubled in size. One of the cornerstones of our business model is our use of in-market, highly experienced sales executives to acquire and build relationships with broker partners across the country. Through this approach, we were able to optimize the efficiency and productivity of our broker partners while ensuring the end customer has the best possible experience. In addition to our leading presence in the wholesale channel, we participate in the correspondent and direct channels, which share common characteristics of being low fixed cost and highly scalable. The correspondent channel provides us with a flexible alternative to acquire customers at low cost and high velocity. Our presence in the direct channels exclusively focused on addressing the preferences of our servicing customers while mitigating potential conflicts of interest that could arise between participants in the direct and wholesale channels. Our connected approach, which includes our in-house servicing platform, enables us to operate a business model that is balanced and capital efficient and leaves us well positioned to deliver consistent growth and strong returns through a variety of interest rate environments. From a process and technology perspective, we have built a flexible infrastructure that is highly componentized, integrating both best-in-class third party and proprietary solutions to maximize our flexibility and efficiency. while optimizing partner and customer satisfaction. By using this approach, we can leverage the latest technological innovations and avoid the burdens of being saddled with legacy systems and millions of lines of code. In-house servicing, which we currently provide to more than 360,000 customers, is also a key component of our origination growth strategy, providing a critical link between us, our customers, and our broker-partners. Our objective is to deliver the best possible experience for our customers throughout the homeownership lifecycle. We view servicing as the gateway to establishing a robust two-way dialogue that supports lasting customer relationships and our customer for life approach. Another critical component that drives HomePoint success every day is the culture we cultivate, which serves as the foundation for the sustainability and growth of our business. We operate with a simple philosophy in mind, we care. and this is rooted in everything we do. First and foremost, this is a people business, and we care about all of our stakeholders, including our customers, our associates, our partners, our shareholders, and the people in the communities in which we serve. We also continue to attract tremendous talent to our leadership team, and I'm pleased to note that John Forlines joined us this month as our Chief Risk Officer. John spent more than three decades at Fannie Mae, serving most recently as Chief Risk Officer, And we are thrilled that he is now serving in a similar capacity for HomePoint. Tying it all together, HomePoint is built on a platform centered around growth, opportunity, and sustainability. We source all our customers through a large and growing network of partners in the wholesale and correspondent channels. This provides us with the best opportunity to leverage scale while operating with a low fixed cost profile. Our in-house servicing platform enables us to control the customer experience during the life cycle of loans. We support that relationship through our direct channel, which is focused solely on retention and our wholesale channel, where we partner with brokers in order to keep customers within the HomePoint ecosystem for life. As I've noted, our results for the fourth quarter and full year of 2020 demonstrate the strengths of our differentiated model. Our origination volume and market share have been increasing. We have been expanding our broker relationships and our servicing portfolio has been growing and provides a natural hedge in the current rising rate environment. With that, I'd like to turn the call over to Mark. Mark?