Guild Holdings Company

Good afternoon, ladies and gentlemen, and welcome to the Guild Holdings Company third 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 will be recorded today. I would now like to turn the conference 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 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 and 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 and President Terry Schmidt. 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. Today, I'm joined by our President, Terry Schmidt, and our Chief Operating Officer, David Nalin. Our Chief Financial Officer, Amber Kramer, is out on maternity leave, and I'm excited to announce she recently welcomed twins to her growing family. Market dynamics across the industry remained challenging during the third quarter. Mortgage rates continued to trend higher, and inventories remained limited. As a result, industry-wide origination volumes remained under pressure, with ongoing overcapacity issues and shifting competitive dynamics weighing on profitability trends across the industry. However, Guild delivered strong financial performance for the quarter, which we believe reinforces the benefits of our differentiated and decentralized business model across cycles and shifting competitive backdrops. we generated compelling sequential quarter growth in gap net income, adjusted net income, and earnings per share for the third quarter, while maintaining strong profitability despite quarter-over-quarter declines in originations and gain-on-sale margins reflecting ongoing macro headwinds. On a gap basis, we grew both net income and earnings per share by 33% on a sequential quarter basis, while posting a return on equity north of 25% for the third quarter. Even after excluding fair value changes related to MSRs and contingent liabilities, adjusted net income and adjusted earnings per share came in at $24 million and 40 cents per share, respectively, for the third quarter of this year. both 74% higher compared to second quarter results. We believe our tenured management team, strong culture, retail infrastructure in local markets across the country, long-term strategic focus, and consistent execution enable us to drive sustainable profits through market downturns. Because of our long-term expertise and experience across cycles, We've been able to manage successfully through recent market shifts and delivered adjusted return on equity of nearly 8% for the third quarter of this year and during the trailing 12 months ended September 30th, 2022. Guild's business model is different. From a distribution perspective, our scale-enabled and nationwide retail platform leverages in-house loan officers who build and maintain strong relationships with customers and referral partners in local markets. Focusing on talent, our product mix, technology, and servicing capability resonate with recruits. To that point, we remain well ahead of our goals as it relates to net new hirings of loan officers thus far this year. Furthermore, GILDA is a leader in the purchase market. In the third quarter, 91% of our originated loans were purchase mortgages, up from 84% in the prior quarter, and meaningfully above 81% for the industry according to estimates from the Mortgage Bankers Association. We believe buyers are waiting on the sidelines because of current volatility and affordability challenges and are looking for a return to stable markets. As we manage through this dislocation in the market, we see opportunity and remain focused on serving first-time homebuyers and underserved markets. Turning to our balance sheet, we maintain healthy leverage ratios and ample liquidity to continue to fund our business and invest for growth, either organically or by capitalizing on accretive M&A opportunities. We believe our long and successful acquisition track record is attractive to smaller firms dealing with ongoing revenue pressures, shifting competitive dynamics, and diminishing profitability. Our differentiated business model and consistent profitability across cycles position us to be selective and financially disciplined when evaluating potential acquisition opportunities. In the meantime, we remain focused on returning excess capital to shareholders through ongoing share repurchases. In summary, I am very proud of the results we delivered in the third quarter in what has been a challenging environment for the industry. Looking ahead, I'm excited about our growth opportunity as we capitalize on the dislocation in the market given our balanced business model and strong and liquid balance sheet. So with that, I'd like to turn it over to our president, Terri Schmidt. Terri?