Core Viewpoint - Investors in the Financial - Miscellaneous Services sector should consider Guild Holdings Company (GHLD) and SoFi Technologies, Inc. (SOFI) for potential value opportunities [1] Valuation Metrics - GHLD has a Zacks Rank of 2 (Buy), indicating a more favorable earnings estimate revision activity compared to SOFI, which has a Zacks Rank of 3 (Hold) [3] - GHLD's forward P/E ratio is 8.19, significantly lower than SOFI's forward P/E of 41.84, suggesting GHLD may be undervalued [5] - GHLD's PEG ratio is 0.77, while SOFI's PEG ratio is 1.56, indicating GHLD's expected earnings growth is more attractive relative to its price [5] - GHLD has a P/B ratio of 0.65, compared to SOFI's P/B of 1.77, further supporting GHLD's valuation attractiveness [6] Investment Conclusion - GHLD exhibits stronger estimate revision activity and more appealing valuation metrics than SOFI, making it a more attractive option for value investors [7]

Guild Holdings Company (GHLD) shares rallied 5.2% in the last trading session to close at $14.43. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 10.3% gain over the past four weeks.Guild extended its rally for the second straight day, driven by strengths such as a nationwide retail origination presence across 49 states and the District of Columbia with approximately 440 branch locations, a dual origination-s ...

Investors with an interest in Financial - Miscellaneous Services stocks have likely encountered both Guild Holdings Company (GHLD) and HA Sustainable Infrastructure Capital (HASI) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The prov ...

Market Dependence and Economic Factors - The company is highly dependent on the secondary home loan market, with a significant portion of revenues and net earnings derived from selling originated mortgages to GSEs and Ginnie Mae[81]. - Macroeconomic factors such as rising inflation, interest rates, and low housing inventory have adversely affected the company's origination volume and overall revenue[82][83]. - Changes in prevailing interest rates have negatively impacted the company's origination volume and profit margins, with increasing rates making refinancing less attractive[87]. - Adverse economic conditions affecting clients, such as job loss or inflation, could lead to increased delinquencies and defaults, negatively impacting the company's financial condition[111]. - The geographic concentration of loan originations in the Northwest United States may expose the company to greater risks if that region experiences economic downturns[112]. Operational Risks and Challenges - Increased delinquencies could lead to higher servicing costs and decreased cash flow, impacting the estimated value of mortgage servicing rights (MSRs)[84]. - The company faces risks related to its relationships with government-sponsored entities (GSEs), including potential changes in organizational structure and pricing that could adversely affect its business[85][86]. - The company employs hedging strategies to mitigate interest rate risks, but these strategies are complex and not foolproof, exposing the company to potential credit and market risks[88]. - The company relies on warehouse lines of credit for funding mortgage loans, and any termination or reduction of these lines could materially affect its operations[91]. - The company is subject to operational risks including employee or customer fraud, documentation errors, and data processing failures, which could lead to significant financial losses and regulatory sanctions[124]. Competitive Landscape - The competitive landscape is intensifying, with significant competition from larger banks and financial technology companies, which could affect the company's market position[102]. - The company's ability to maintain long-term client relationships and adapt to technological advances will be crucial for its competitive success[103]. - The company faces competitive disadvantages due to its concentration primarily in the Northwest United States, which may hinder its ability to spread operating costs across a broader market[104]. - A significant portion of mortgage origination leads are sourced through established referral partners, and failure to maintain these relationships could significantly decrease origination volume[105]. Financial Performance and Capital Management - Net revenue for 2024 reached $1,049,711 thousand, a significant increase of 60.2% compared to $655,187 thousand in 2023[366]. - Net income attributable to Guild for 2024 was $97,131 thousand, a turnaround from a net loss of $39,009 thousand in 2023[366]. - Total assets increased to $4,768,303 thousand in 2024, up from $3,676,720 thousand in 2023, representing a growth of approximately 29.7%[364]. - The company declared cash dividends of $0.50 per share for both 2023 and 2024, totaling $30,702 thousand in 2024[367]. - The company’s ability to pay dividends is contingent on the financial results and cash flows of GMC, which may be restricted[159]. Regulatory and Compliance Risks - Compliance with a complex legal and regulatory framework is essential, as failure to comply could result in significant penalties and operational challenges[137]. - The company is subject to regulatory authority from the CFPB, which can impose penalties and require remediation for violations of consumer financial laws[138]. - The Financial Stability Oversight Council has recommended strengthening regulations for nonbank mortgage companies, which could affect the company's operating costs and competitiveness[141]. - The company faces potential liabilities under fair lending laws, including risks associated with "redlining" and "reverse redlining," which could lead to sanctions and reputational harm[142]. - The company is subject to stringent data privacy and security laws, which may increase compliance costs and legal risks[149]. Acquisitions and Investments - The company acquired Cherry Creek Mortgage, LLC in April 2023, expanding its reverse mortgage loan products[146]. - Acquisitions and investments may not yield anticipated benefits, and integration challenges could arise, impacting the company's financial results[98][99]. Asset Valuation and Financial Reporting - The fair value of a substantial portion of the company's assets is subject to estimates that may prove inaccurate, potentially leading to write-downs that could adversely affect earnings and financial condition[108]. - The company's estimates of the fair value of mortgage servicing rights (MSRs) are highly dependent on cash flow projections, which can fluctuate due to market conditions[109]. - The assessment of the fair value of MSRs involves significant subjective judgment and complex audit procedures[353]. - The Company recognizes mortgage servicing rights (MSRs) as assets and uses a valuation model to determine their fair value based on future cash flows[397]. Technology and Innovation - The mortgage industry is undergoing rapid technological changes, and the company's future success depends on its ability to adapt and develop new products and services[110]. - The Company is currently evaluating the impact of new accounting standards issued by the FASB on its financial statements[442]. Miscellaneous - Cybersecurity threats pose significant risks to the company's operations and client data, which could lead to reputational harm and financial losses[114]. - The dual class structure of common stock may adversely affect the trading market for Class A common stock, potentially making it less attractive to investors[166]. - The Company has exposure to liabilities related to representations and warranties made to investors, which could require repurchase of loans under certain conditions[423].

Financial Data and Key Metrics Changes - Total originations increased by 57% year over year to $24 billion, significantly outpacing the industry average of 22% [8] - Net revenue rose 60% to $1 billion, while expenses increased by only 33%, indicating effective operational leverage [9] - Net income attributable to the company was $97.1 million compared to a net loss of $39 million in the prior year, with adjusted net income totaling $90.2 million, an 88% increase [9] - Full year adjusted EBITDA reached $134.8 million, up from $74.8 million in 2023, representing an 80% increase year over year [9] - For Q4 2024, total loan originations were $6.7 billion, an 86% increase from $3.6 billion in Q4 2023 [19] - Q4 net income was $97.9 million compared to a net loss of $93.1 million in the prior year [19] Business Line Data and Key Metrics Changes - The origination segment reported a second consecutive quarter of positive net income, achieving $1 million despite market volatility [32] - The servicing portfolio expanded to approximately $93 billion, a 9% increase from the prior year, with a 44% refinance capture rate [12] - The gain on sale margin for Q4 was 317 basis points, slightly down from 330 basis points in the prior year [33] Market Data and Key Metrics Changes - Purchase originations represented 88% of closed loan volume, significantly outperforming the industry average of 72% [10] - The company has nearly doubled its loan officers since 2020, contributing to above-industry-average loan production [14] Company Strategy and Development Direction - The company focuses on expanding market share through a "customer for life" strategy, emphasizing local relationships and technology to enhance processes [16] - Investments in integrated technology platforms aim to drive leads back to the retail origination business [13] - The company plans to serve new homebuyers through the "Promise of Home" program, which includes educational events and down payment assistance [22] Management's Comments on Operating Environment and Future Outlook - Management anticipates ongoing rate headwinds but believes the company is well-positioned for growth due to operational leverage and market share gains [15] - The company aims to maintain a strong balance sheet and continue strategic investments to enhance long-term value [39] Other Important Information - The company repurchased approximately 28,000 shares at an average price of $13.95 per share during Q4 [37] - A special cash dividend of $0.50 per share was declared, payable on March 31, 2025 [38] Q&A Session Summary Question: How is the spring home buying season shaping up? - Management noted that the spring buying season is starting similarly to past years, with good activity as borrowers recognize that rates may remain high for longer [42][44] Question: Commentary on recent acquisitions and their integration? - Management indicated that it typically takes 60 to 66 days for full integration of acquired loan officers, and recent acquisitions are performing well [46][48] Question: What is driving the drift in the UPB of retained MSR? - Management explained that the drift is related to market conditions, with a focus on balancing profitability and servicing value [52][58] Question: How have MSR valuations responded to interest rate changes? - Management acknowledged that as rates drop, MSR valuations naturally decline, and the business model acts as a hedge against these changes [65][68] Question: Clarification on the timing of MSR valuation? - Management clarified that MSR is valued at the time of lock and any changes are reported through fair value adjustments [72][74]

Fourth Quarter & Full Year 2024 Investor Presentation MARCH 6, 2025 This presentation contains forward-looking statements. These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. These statements are often, but not always, made through the use of words or phrases such as "may," "should," "could," "predict," "potential," "believe," "will likely result," "expect," "continue," "will," "anticipate," "seek," "estimate," "intend, ...

Core Viewpoint - Guild Holdings Company reported quarterly earnings of $0.32 per share, missing the Zacks Consensus Estimate of $0.33 per share, but showing an increase from $0.20 per share a year ago, indicating a mixed performance in earnings despite revenue growth [1][2]. Financial Performance - The company posted revenues of $372.99 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 18.70%, compared to revenues of $57.23 million in the same quarter last year [2]. - Over the last four quarters, Guild has exceeded consensus revenue estimates three times, but has only surpassed EPS estimates once [2]. Stock Performance - Guild shares have declined approximately 5.5% since the beginning of the year, contrasting with the S&P 500's decline of -0.7% [3]. - The current Zacks Rank for Guild is 5 (Strong Sell), indicating expectations of underperformance in the near future [6]. Earnings Outlook - The consensus EPS estimate for the upcoming quarter is $0.21 on revenues of $250.98 million, and for the current fiscal year, it is $1.63 on revenues of $1.22 billion [7]. - The trend for estimate revisions ahead of the earnings release has been unfavorable, which may impact future stock performance [6]. Industry Context - The Financial - Miscellaneous Services industry, to which Guild belongs, is currently ranked in the top 17% of over 250 Zacks industries, suggesting a favorable industry outlook [8]. - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could be a useful metric for investors [5].

Financial Performance - Total originations reached $6.7 billion in Q4 2024, a 86% increase from $3.6 billion in Q4 2023[3] - Net revenue for Q4 2024 was $373.0 million, compared to $57.2 million in Q4 2023, marking a 552% increase[3] - Net income attributable to Guild was $97.9 million in Q4 2024, a significant recovery from a net loss of $93.0 million in Q4 2023[3] - Adjusted net income for 2024 totaled $90.2 million, compared to $48.0 million in the prior year, reflecting a 88% increase[4] - Total revenue for the three months ended December 31, 2024, was $372,987,000, compared to $159,257,000 for the same period in 2023, representing a significant increase[35] - Net income attributable to Guild for the three months ended December 31, 2024, was $97,942,000, a recovery from a net loss of $66,892,000 in the same quarter of 2023[35] - Adjusted net income for the year ended December 31, 2024, was $90.2 million, significantly up from $48.0 million in 2023[41] Balance Sheet and Assets - The servicing portfolio's unpaid principal balance was $93.0 billion as of December 31, 2024, up 9% from $85.0 billion a year earlier[4] - Total assets increased to $4,768,303 thousand in 2024 from $3,676,720 thousand in 2023, representing a growth of approximately 29.7%[33] - Mortgage loans held for sale at fair value rose to $1,523,447 thousand in 2024, up from $901,227 thousand in 2023, indicating an increase of about 68.9%[33] - The company reported a significant increase in mortgage servicing rights, valued at $1,343,829 thousand in 2024 compared to $1,161,357 thousand in 2023, a rise of approximately 15.7%[33] - Total liabilities grew to $3,514,293 thousand in 2024 from $2,493,227 thousand in 2023, marking an increase of around 40.9%[33] - Retained earnings increased to $1,200,908 thousand in 2024, up from $1,135,387 thousand in 2023, reflecting a growth of about 5.8%[33] Shareholder Returns and Equity - The company declared a special cash dividend of $0.50 per share, payable on March 31, 2025[13] - Return on average equity for 2024 was 8.0%, recovering from a negative 3.2% in the prior year[4] - Book value per share increased to $20.24 as of December 31, 2024, from $19.36 in 2023[44] - Tangible net book value per share rose to $16.59 as of December 31, 2024, compared to $15.90 in 2023[44] - Average stockholders' equity for the year ended December 31, 2024, was $1,218.8 million, slightly up from $1,216.4 million in 2023[43] Operational Metrics - The gain on sale margin on originations was 317 basis points in Q4 2024, down from 330 basis points in Q4 2023[7] - The gain on sale margin for total loans sold was 317 basis points for the three months ended December 31, 2024, compared to 330 basis points in the previous quarter[38] - The purchase origination percentage for the three months ended December 31, 2024, was 82%, down from 88% in the previous quarter[38] - The refinance recapture rate increased to 53% for the three months ended December 31, 2024, compared to 41% in the previous quarter[38] - Total expenses for the three months ended December 31, 2024, were $244,167,000, a decrease from $252,090,000 in the previous quarter[35] Stock and Compensation - The company repurchased 27,641 shares at an average price of $13.95 per share during Q4 2024[12] - The company reported stock-based compensation of $9.7 million for the year ended December 31, 2024[42] Strategic Initiatives - The company is actively pursuing M&A opportunities to enhance market share and origination volume[21] - The company plans to adapt to technological changes and improve its origination and servicing platform to maintain competitive advantage[21] Non-GAAP Measures - Adjusted net income is defined as earnings excluding certain non-cash expenses, reflecting the company's focus on core operations[25] - The company emphasizes the importance of non-GAAP financial measures to evaluate operating performance and establish operational goals[30] Cash and Cash Equivalents - The cash and cash equivalents stood at $118.2 million as of December 31, 2024, slightly down from $120.3 million a year earlier[14] - The increase in cash and cash equivalents was modest, decreasing slightly to $118,203 thousand in 2024 from $120,260 thousand in 2023[33] Earnings Per Share - The basic earnings per share for the three months ended December 31, 2024, was $1.59, compared to a loss of $1.09 per share in the previous quarter[35] - The weighted average shares outstanding for diluted Class A and Class B common stock was 62,476,000 for the three months ended December 31, 2024[35] - The weighted average shares outstanding for diluted earnings per share was 62.5 million for the three months ended December 31, 2024[41] Other Financial Metrics - Adjusted EBITDA for the three months ended December 31, 2024, was $30.9 million, compared to $46.4 million in the previous quarter[42] - Return on average equity for the three months ended December 31, 2024, was 32.5%, a recovery from a negative 22.5% in the previous quarter[43] - The change in fair value of MSRs due to model inputs and assumptions was a loss of $107.4 million for the three months ended December 31, 2024[42]

Loan Originations - Guild originated $6.9 billion of mortgage loans during the three months ended September 30, 2024, compared to $6.5 billion for the three months ended June 30, 2024, representing a 5.8% increase[107] - Purchase originations accounted for 88.1% of total originations for the three months ended September 30, 2024, down from 92.3% for the three months ended June 30, 2024[108] - Total originations for the nine months ended September 30, 2024, reached $17,283,964, a 48.5% increase from $11,639,781 in the same period of 2023[121] - The number of total originations (units) increased to 51.2 thousand, up 43.4% from 35.7 thousand year-over-year[121] - Total originations increased by $0.4 billion, or 5.8%, to $6.9 billion for the three months ended September 30, 2024, compared to the previous quarter[182] - Total originations for the nine months ended September 30, 2024, increased by $5.6 billion, or 48.5%, to $17.3 billion compared to the same period in 2023[184] Financial Performance - Guild reported a net loss of $66.9 million for the three months ended September 30, 2024, compared to a net income of $37.6 million for the three months ended June 30, 2024[110] - Adjusted net income for the three months ended September 30, 2024, was $31.7 million, compared to $30.7 million for the three months ended June 30, 2024[111] - Net revenue increased by $15.3 million, or 7.3%, to $224.1 million for the three months ended September 30, 2024[182] - The company experienced a significant decrease in net revenue, reporting $159,257 thousand for the three months ended September 30, 2024, down 44.3% from $285,685 thousand in the previous quarter[133] - Total revenue for the three months ended September 30, 2024, increased by 5.8% compared to the previous quarter, in line with the increase in average UPB of the servicing portfolio[189] - Total revenue for the nine months ended September 30, 2024, increased by 12.2% to $204,857,000 compared to $182,542,000 for the same period in 2023[191] Servicing Portfolio - Guild's servicing portfolio increased to $91.5 billion of UPB as of September 30, 2024, up from $89.1 billion as of June 30, 2024, reflecting a 2.7% growth[109] - The servicing data showed an increase in UPB (period end) to $91,485,163, representing a 9.3% growth from $83,705,731 in the previous year[121] - Average UPB of servicing portfolio rose to $88,259,531, reflecting an 8.6% increase compared to $81,299,359 year-over-year[150] - Average UPB of the servicing portfolio increased by $2.6 billion, or 2.9%, to $90.3 billion as of September 30, 2024[188] Expenses and Losses - Total expenses for the three months ended September 30, 2024, were $252,090 thousand, an increase of 4.5% from $241,158 thousand in the previous quarter[133] - The provision for foreclosure losses increased by $1.1 million, or 223.6%, for the three months ended September 30, 2024, due to an increase in expected losses[189] - Total salaries, incentive compensation, and benefits expense for the three months ended September 30, 2024, was $188,938, a 5.3% increase from $178,871 in the previous quarter[163] - Total salaries, incentive compensation, and benefits expense increased by 32.4% to $528,010,000 for the nine months ended September 30, 2024, compared to $398,660,000 for the same period in 2023[164] Market Conditions - The average 10-year Treasury yield decreased by 50 basis points during the three months ended September 30, 2024, contributing to increased refinancing activity[116] - The Mortgage Bankers Association forecasts total mortgage originations for purchases to increase by 4.0% in 2024 to $1.29 trillion[117] Equity and Book Value - Guild's tangible net book value per share was $15.14 as of September 30, 2024, down from $15.90 as of December 31, 2023[113] - Total stockholders' equity attributable to Guild decreased to $1,157,356 thousand from $1,183,156 thousand year-over-year[132] - The book value per share decreased to $18.85 from $19.36 year-over-year[132] Cash Flow and Financing - Net cash used in operating activities was $(861,717,000) for the nine months ended September 30, 2024, compared to $(110,671,000) for the same period in 2023[201] - Net cash provided by financing activities rose significantly to $961.7 million for the nine months ended September 30, 2024, up from $187.6 million in the same period of 2023[205] - The company believes its cash flows from operations will be sufficient to fund operations and meet material cash requirements for the next 12 months[194] Acquisitions and Growth Strategy - Guild acquired certain assets of four mortgage lenders for approximately $25.0 million to support its growth strategy[115] - Total commitments to originate forward mortgage loans reached approximately $1.7 billion as of September 30, 2024, compared to $710.9 million as of December 31, 2023[208]

Financial Data and Key Metrics Changes - The company reported adjusted net income of $31.7 million for Q3 2024, with total loan originations of $6.9 billion, reflecting a 6% sequential increase and a 59% increase year-over-year [6][16] - Net revenue for the quarter was $159 million, down from $286 million in the previous quarter, resulting in a net loss of $67 million compared to a net income of $38 million in Q2 2024 [16][19] - The gain on sale margin for Q3 was 333 basis points, slightly up from 326 basis points in the prior quarter [17] Business Line Data and Key Metrics Changes - The origination segment achieved a net income of $6 million, marking profitability despite market volatility [17] - The servicing segment's portfolio grew to $91 billion, but reported a net loss of $75 million due to a downward valuation adjustment of mortgage servicing rights (MSRs) of $124 million [19][20] Market Data and Key Metrics Changes - The company noted a significant portion of its loan portfolio could benefit from refinancing opportunities as interest rates decrease, with approximately 25% of unpaid balances at rates above 6% [12] - The company experienced an increase in pull-through adjusted lock volume, attributed to rate declines in Q3 [7] Company Strategy and Development Direction - The company is focused on achieving profitable long-term market share gains through both organic recruiting and opportunistic acquisitions [9][23] - Investments in technology and customer relationships are central to the company's strategy, supporting its "customers for life" approach [14][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning to capitalize on market opportunities, despite acknowledging that market recovery may take longer than expected [23] - The company anticipates continued growth driven by organic expansion and strategic acquisitions, while remaining disciplined in its approach [23] Other Important Information - The company repurchased approximately 24,000 shares at an average price of $14.29 per share during Q3 2024 [21] - As of September 30, 2024, the company had $106 million in cash and cash equivalents, with significant unutilized loan funding capacity [20] Q&A Session Summary Question: Fair value mark of $124 million - Management acknowledged the size of the mark and indicated that it could reverse if rates continue to stabilize [25][27] Question: Margins response since the end of September - Management reported steady margins, particularly in the purchase business, which is expected to remain stable [28][29] Question: Production from Academy acquisition - The company did not disclose specific production figures from the Academy acquisition but noted it previously accounted for about 20% of volume [30] Question: Opportunities in home equity products - Management highlighted a broad product base and increasing interest in reverse mortgage products, focusing on first-time homebuyers [32] Question: Capital allocation strategy - Management indicated a strong focus on organic growth while remaining opportunistic regarding M&A as market conditions evolve [33] Question: Hedging MSR assets - The company traditionally relies on natural hedges through production rather than financial hedges, maintaining a focus on retail and purchase business [36][37] Question: Prepayment speeds in Q4 - Management noted potential timing mismatches in prepayment speeds but emphasized a long-term strategy for servicing and production balance [41] Question: Excess cash in warehouse lines - The company reported significant excess cash available for potential M&A opportunities, while maintaining low leverage for flexibility [43]