Guild Holdings Company

Good afternoon, ladies and gentlemen, and welcome to the Guild Holdings Company second quarter 2022 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 is being recorded, and I would now like to turn the conference over to Michael Kim of 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 and industry trends. 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 GILDS 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. Despite higher interest rates, excess capacity, and limited inventories, I am pleased we were once again able to deliver solid financial results for the second quarter of 2022. Adjusted net income and adjusted earnings per share came in at 14 million and 23 cents per share, respectively, for the second quarter of this year, compared to 32 million and 53 cents per share for the prior quarter. Much of the sequential declines in revenue and income can be tied to lower origination volumes and margins consistent with broader industry trends. From our perspective, as cycles turn, near-term challenges present longer-term opportunities, and our tenured management team maintains a proven track record of generating consistent financial performance over market cycles. We believe our differentiated, purchase-focused business model positions us well going forward, as refinancing volumes continued to fade. In the second quarter, purchase loans accounted for 84% of our total origination volumes, compared to 66% in the prior quarter and an estimated 70% for the mortgage industry, according to the Mortgage Bankers Association. We remain focused on product development to stay in front of shifting market trends. Last quarter, we discussed our new Green Smart Advantage product in partnership with the Home Depot. The program is designed to help homebuyers save on utility costs and manage multiple payments by bundling the costs of new energy-efficient appliances into mortgage loans. This quarter, we introduced Cash Pass, a new program to help homebuyers compete with all cash offers in today's competitive housing market. GILD's Cash Pass program allows homebuyers to write a cash offer and be more competitive against other all-cash bids or multiple offers. In July, we introduced Complete Rate, a new program that provides a more inclusive path to homeownership based on residual income analysis and rent payment history, an alternative to the traditional FICO credit score. As indicated by our operating history during many market cycles, we right-sized the business to align costs with volume trends while capitalizing on market dislocations. Through the first half of this year, we realized approximately $40 million of cost savings primarily through headcount reductions on an annualized basis, and we will continue to manage the business as market dynamics evolve. our strong and liquid balance sheet remains a key differentiating factor. We maintain favorable leverage ratios and healthy liquidity levels to fund growth despite market conditions. Pursuant to our share repurchase program, we recently returned excess capital to shareholders by repurchasing approximately 142,000 shares in May and June at an average stock price of $10.18 per share. We believe we remain well positioned to capitalize on M&A opportunities. The mortgage industry remains highly fragmented, and we believe smaller firms are finding it increasingly difficult to maintain profitability in the face of lower revenue, shifting competitive dynamics, and overcapacity. Broader market disruptions are driving a flight to quality with individual salespeople and teams, as well as companies increasingly attracted to Guild's differentiated, purchase-focused business model, along with our successful acquisition track record. In addition to our ongoing organic recruiting efforts, which are tracking ahead of expectations, we are increasingly benefiting from a flight to stability. The number of inbound calls we are receiving from individual loan officers and teams continues to trend higher, especially as competitors exit the business. While it will take time for incoming loan officers to build volume, we see the current market as presenting opportunities to add talent as we continue to generate profitable growth across market cycles. I am confident in our growth prospects as we increasingly leverage our existing capabilities and balance sheet as well as broaden the platform. So with that, I'd like to turn it over to our president, Terry Schmidt. Terry?