Guild Holdings Company

Good afternoon, ladies and gentlemen, and welcome to Guild Holding Company's fourth quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. 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 call over to Michael Kim, Investor Relations. Please go ahead, Michael.

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, including the expected market for purchase loans and anticipated volumes and margins for the first quarter of 2022. These statements are based on the company's current expectations. 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 greater detail under the section titled Risk Factors in GILD's Form 10-K and 10-Q and in other reports filed with the U.S. Securities and Exchange Commission. 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 filed today with the SEC and are also available on GILD's Investor Relations website. Participating in the call today are Chief Executive Officer Mary Ann McGarry, President Terry Schmidt, and Chief Financial Officer Amber Kramer. Now I'd like to turn the call over to Mary Ann McGarry. Mary Ann?

Thank you, Michael. Good afternoon, everyone, and thank you for joining us. As always, I'm joined by our President, Terry Schmidt, and our Chief Financial Officer, Amber Kramer. Our Chief Operating Officer, David Nalen, will join us for Q&A after our prepared remarks. I am proud of the results skilled was able to deliver during the fourth quarter and full year of 2021. We originated nearly $9 billion of mortgage loans in the fourth quarter, bringing our full year total to approximately $37 billion, up 5% compared to 2020. Consistent with industry trends, our gain-on-sale margins softened through the course of the year, but we maintained higher margins relative to those typically generated in the wholesale or correspondent channels, in part driven by our focused product and distribution strategies. Turning to our financial results, we generated adjusted net income of $22 million for the fourth quarter of 2021 and $259 million for the full year. Adjusted earnings per share came in at $0.37 and $4.27 for the fourth quarter and full year, respectively. And we delivered an adjusted return on equity ratio of 31% for the 2021. underlining the resiliency of our return profile across cycles. Stepping back, our consistent growth across cycles can be linked to two key differentiating factors for Guild. First, we have built a scale-enabled and balanced business. While rising interest rates represent a macro headwind for origination volumes and gain on sale margins across the industry, our servicing business provides recurring revenue and cash flow, with higher interest rates compounding the value of the MSR assets on our balance sheet, all else equal. Second, our originations business is unique. While some of our peers have recently started shifting focus to purchase business as refinance activity flows and industry volumes increasingly shift in favor of purchase loans. We have been building the requisite scale, relationships, and expertise in purchase over the last 60 plus years. What we are is a purchase-focused mortgage provider. Purchase loans accounted for 62% of our mortgage volumes in the fourth quarter, well above the 44% figure for the fourth quarter of 2020. From an industry perspective, Purchase loans accounted for an estimated 47% of overall mortgage volumes in the fourth quarter of 2021, according to the Mortgage Bankers Association. Looking ahead, we're not immune to macro headwinds around rising interest rates and inventory limitations. That said, the MBA is forecasting steady growth in purchase volumes through 2023. and Guild has historically captured market share during periods of rising interest rates. Furthermore, unlike more commoditized refinancing lending, all purchase business isn't the same. Our durable competitive advantages include our product mix, brand equity, proprietary technology stack, and exceptional client service. We compete on service by providing a personalized, and customized experience to home buyers. And the efficacy of our client service was recently validated by our J.D. Power Award for highest in customer satisfaction in its 2021 study. This focus on customer service has resulted in more consistent volume across market cycles while enhancing referral and retention rates. Turning to distribution, our retail-focused platform remains a key differentiating factor. We have local infrastructure and boots on the ground, which engenders strong relationships and superior client service, which has expanded across the country following the acquisition of residential mortgage services. When selecting a mortgage provider, our clients place a premium on the relationships and trust built with our loan officers over time. Our loan officer's expertise translates into putting clients in the right product. We also stand to benefit from powerful demographic trends that will drive strong growth in purchase loans for years to come. Approximately 70 million millennials age 20 to 34 are increasingly reaching the age when individuals typically transition from renting to owning. Millennial homeownership rates still lag comparable data for Generation X and the Baby Boomers generation, which we believe provides an opportunity for us to tap into the market for this demographic. These tailwinds align well with our longstanding focus on underserved and first-time homebuyers with our established retail loan officer network. For all these reasons and more, I am more confident than ever that Guild remains well-positioned to drive sustainable and profitable growth across various market backdrops. Finally, I want to thank all of our more than 5,000 employees for their continued hard work and dedication. It is their efforts every day that help us win new clients and maintain strong relationships with our existing clients. which in turn drives consistent and durable growth. So with that, I'd like to turn it over to our President, Terry Schmidt. Terry?