UWM Holdings Corporation Class A

Good morning, my name is Chantal and I'll be your conference operator today. At this time, I would like to welcome everyone to the UWM Holdings Corporation fourth quarter 2021 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, please press star followed by the number one on your telephone keypad. If at any time you'd like to remove yourself from the queue, please repress star one. Thank you. Blake Colo, you may begin your conference.

Good morning, everyone. This is Blake Colo, Chief Business Officer and Head of Investor Relations. Thank you for joining us and welcome to the fourth quarter and full year of 2021 UWM Holdings Corporation's earnings call. Before we start, I would like to remind everyone that this conference call includes forward-looking statements. For more information about factors that may cause actual results to differ materially from forward-looking statements, please refer to the earnings release that we issued this morning. I will now turn the call over to Matt Ishbia, Chairman and CEO of UWM Holdings Corporation and United Wholesale Mortgage.

Thanks, Blake. Appreciate it. So let's jump into it. Appreciate you guys all joining the call today. First off, let's start about 2021. It was an amazing year for UWM, and I think it makes sense for me to focus on recapping our key achievements for the year before getting into the quarterly results and outlook for 2022. First, UWM set a new production record in 2021 with just under $227 billion in origination, up almost $44 billion from 2020. One of the most impressive aspects of this is that 87 billion dollars of production was purchased business which is most in company history in any given year in addition we averaged about 25 billion dollars in purchase production in each of the last three quarters of 2021. my second key point is our consistent growth and profitability quarter over quarter and year over year 2021 marked our seven consecutive year of origination growth and our 15 consecutive year of profitability we delivered $1.6 billion in net income, our second most profitable year ever. Our continued focus on speed, service, and best-in-class technologies is why we continue to deliver these results. However, our scale is now also a huge factor in our success. Our scale is what gives us increased confidence in our continued ability to deliver strong and consistent results for all of our shareholders. My third point is our continued advancement in technology. In 2021, we launched many amazing technologies, but the biggest one of note is Bolt, the most advanced underrunning system in the industry. Bolt gives brokers more control up front in the loan registration process, and we found that brokers more control of the process naturally becomes more efficient and lowers our cost per loan. We implemented UCO's technology several years ago with the same goal of making the process and closing more efficient, and that has been a huge success as well. It's technology like Bolt and uClose that help us close loans faster than anyone in the industry and at lower origination costs. Lastly, I have to express that none of these accomplishments of 2021, which were amazing across the board, would not be happening without our amazing team members, our amazing broker partners, you know, and the ideas we get from them and the partnership we've had. It's a huge part of our success. With the great partnership, I'm excited for our continued success and growth together. Now, let's talk about the fourth quarter. We delivered $55 billion in production, representing our best fourth quarter of all time, beating our 2020 fourth quarter numbers. The $24.5 billion of purchase we delivered in the fourth quarter was a record for us, and astounding 103% year over year, once again, from Q4 on the purchase side. We know brokers are the dominant player in the purchase market, and we are confident you'll see the number one direct funded purchase lender again in 2022. We delivered $239.8 million of net income for the quarter, with gain margins of 80 basis points. With these being some of the lowest margins we've seen in a quarter in our history, we still remained very, very profitable. I believe these margin numbers are near the bottom, and I see the first quarter of 2022 being very similar to the fourth quarter, somewhere between 75 and 85 basis points of margin, with $33 to $42 billion of production. We'll be very profitable at these numbers and will remain so even if it were lower. Lastly, I want to focus on the most important part, which is 2022. Number one, the broker channel will continue to grow. The refi business slows. We're seeing retailers converting the wholesale channel the fastest pace in many years. We've dedicated teams helping these loan officers. with transition and making sure they're successful from day one. We're seeing the most activity since inception of our BMMortgageBroker.com platform. All signs show the broker channel is growing and at a faster pace than we've seen in years. We saw some of this happen in 2018 and 19, but this time it will be much more dramatic and we're seeing early signs at this point. Number two, we've achieved significant scale and remain laser focused on becoming more efficient. You know, we believe our cost alone will go down over the next 24 months. With Bolt, as it gets more adoption and we continue to enhance the technology to make it even greater. And there's other big technologies in the works as well. And finally, we continue to contemplate the best time to bring servicing in-house. You know, we have a large servicing book with one of the lowest WAX, weighted average coupons, in the country. We'll likely finish 2022 over $400 billion. We know there's a lot of opportunity with this. We are exploring financial upside of bringing servicing in-house. We also think there's a great opportunity to develop our own best-in-class servicing platform, which have many additional benefits and present other business opportunities for UWM. I appreciate everyone on the call for spending time with us today and look forward to seeing a lot of you on our campus for May 12th for UWM Live, which is an event where a lot of our clients will be there. A very big positive thing about the broker channel. We'd love to invite many of you guys to join us. Now I'm going to turn it over to our CFO, Tim Forrest, to give a couple other details about 2021 and the fourth quarter as well.