UWM Holdings Corporation Class A

Good morning. My name is Sarah and I will be your conference operator today. At this time, I would like to welcome everyone to the UWM Holdings Corporation first quarter 2023 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, simply press star followed by one on your telephone keypad. If at any time you would like to remove yourself from the queue, please repress star 1. Blake Colo, you may now begin your conference.

Good morning. This is Blake Colo, Chief Business Officer in Hive Investor Relations. Thank you for joining us and welcome to the first quarter 2023 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 Ishvia, Chairman and CEO of UWM Holdings Corporation and United Wholesale Mortgage. Thanks, Blake.

A lot of great things to discuss today. I first want to start the call by thanking the 6,000-plus broker partners of ours that were able to join us for UWM Live last week, which is an amazing event. Also, thank a lot of analysts and investors who were able to come out and make it. I enjoyed spending time with you and fielding the great questions over the couple days we had together. UWM Live is an amazing event that allows you to see and feel the growth momentum of the broker channel in one room. All those loan officers, broker owners, and even real estate agents, flew out to Pontiac, Michigan on their own dime to get better, share ideas for success, and try to win together as a team. This is what makes UWM and the Broker Channel different, because we can work together as a team and are excited about the growth together. Hopefully, everyone in attendance was able to see for themselves how the combination of our culture, the amazing relationships we have with our broker partners uniquely positions us for growth and success. is one of the main ingredients to our secret sauce here at UWM. It's all about the broker community winning and we're here to help them grow and succeed and it's happening together as a team. Before I get into the quarter, I want to take a few moments to address the current overall mortgage industry and market. Obviously there's a lot going on in the industry and it's still a tough time for most lenders. This is a time when scale, efficiencies, investment in technology, and business strategy around purchase are showing the winners separating from the rest. While others are having to adjust their business for the worse, UWM is hiring, innovating, and preparing for further growth in 24, 25, and beyond. I've never been more confident with our model and strategy than I am today. Now, let's get into quarter. We delivered $22.3 billion of overall production, which is the high end of our guidance. More importantly, the $19.2 billion of purchase volume, which was a first quarter purchase record for us. We've been very proud of these metrics, particularly in this rate environment and with the general declines for most in the industry. Our gain margin was 92 basis points, also at the higher end of the guidance, and up from 51 basis points in the fourth quarter. We have control of our business and are very happy with both our margin and volume in Q1. I also quickly want to provide some highlights of the 2022 HMDA data that was released in the first quarter. This is the government data that trumps some of the self-reported industry data. For the full 2022 year, we were the number one overall mortgage lender in America when looking at purchases and refinances of single-family homes, which is the definition of residential lending. I'm proud of this because the positive impact it had on the consumers who chose to work with mortgage brokers. Per this HUMDA data, on average, consumers saved $9,400 by working with a mortgage broker, and the number goes up to $10,400 for minorities. These facts make me feel great about the positive impact we have on the consumers in America that choose to work with independent mortgage brokers. BuyTheMortgageBroker.com is becoming a great website where consumers are learning about the benefits of working with a mortgage broker. The data supports the broker channel as the best place for a consumer to get a loan and, as we all know, the best place for a loan officer to work. And in addition to that, some of the best news is we're the number one mortgage retailer in the country worldwide. once again in the first quarter, helping consumers, helping our brokers, and we're continuing to win together as a team. Andrew will take a deeper dive into the financials, but before I pass it, I want to give a couple comments on the financial performance from the first quarter. As I previously mentioned, 92 basis points of margin and $22.3 billion of production, which were both very good numbers, resulting in a favorable operating gain for the quarter. With that said, many of you are now aware of the two distinct components of our reported financials, the income from loan production and servicing income, and along with the MSR value, the value of the MSR portfolio. Because rates went down in Q4 to Q1, the write-down of our MSR book was large. This markdown is driven primarily by rates that are outside of our control and non-cash gain loss. We reported a net loss of $139 million, but at the same time, there's a fair value markdown of over $337 million. Operationally, with higher margins and great volumes, we actually made money. And if you look at it compared to Q1 of 2022, we actually core-wise made more money operating than we did in 2022, which is still a good core in the industry. Making money profitably right now is a big deal, and UWM is doing it, and we're going to continue to do it going forward. UWM has never been better positioned for the growth and success going forward. I think back to where we were in the first quarter of 2020, and we are so much stronger today in all aspects of our business. With that said, I'm confident we'll be seeing the same thing again in three years from now and how we continue to evaluate, continue to evolve. UWM has the capital, liquidity, technology, client relations, and infrastructure in place to thrive regardless of cycles, and we are doing that right now. I'm going to turn it over to Andrew, our CFO, for more details.