Guild pany(GHLD) - 2025 Q1 - Quarterly Report

Cautionary Statement Regarding Forward-Looking Statements Forward-Looking Statements This section highlights that the report contains forward-looking statements based on current expectations, estimates, and projections, which are inherently uncertain and subject to risks. Actual results may differ materially from those expressed or implied - The report contains forward-looking statements that reflect current views on future events and financial performance, identified by words like 'may,' 'should,' 'expect,' and 'anticipate'[6] - These statements are not historical facts and are based on current expectations, estimates, and projections about the industry, management's beliefs, and assumptions, many of which are inherently uncertain and beyond the Company's control[6] - Actual results, events, or circumstances could differ materially from those expressed or implied by the forward-looking statements due to various risks, assumptions, and uncertainties[6] Important Factors Affecting Results The Company identifies numerous factors that could cause actual results to differ materially from forward-looking statements, including disruptions in the secondary home loan market, macroeconomic conditions, interest rate changes, reliance on government-sponsored entities, and operational risks like cybersecurity breaches and regulatory compliance - Key risks include disruptions in the secondary home loan market or ability to sell loans, and adverse effects from macroeconomic and U.S. residential real estate market conditions[7] - Dependence on U.S. government-sponsored entities and agencies, changes in prevailing interest rates or U.S. monetary policies, and the termination or reduction of warehouse lines of credit are significant financial risks[7] - Operational risks encompass maintaining technology infrastructure, competition, referral relationships, servicing advances, fair value asset inaccuracies, adapting to technological changes, client adverse events, geographic concentration, cybersecurity breaches, and the need for additional capital[7][8] Part I—Financial Information Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for Guild Holdings Company, including the balance sheets, statements of operations, changes in stockholders' equity, and cash flows, along with detailed notes explaining business operations, accounting policies, fair value measurements, and specific financial accounts Condensed Consolidated Balance Sheets The Condensed Consolidated Balance Sheets show a decrease in total assets and liabilities from December 31, 2024, to March 31, 2025, with a corresponding decrease in total stockholders' equity Condensed Consolidated Balance Sheets | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :----------------------------------- | :----------------------------- | :------------------------------ | | Total assets | $4,549,729 | $4,768,303 | | Total liabilities | $3,349,484 | $3,514,293 | | Total stockholders' equity | $1,200,245 | $1,254,010 | - Mortgage loans held for sale decreased from $1.52 billion at December 31, 2024, to $1.36 billion at March 31, 2025[13] - Warehouse lines of credit, net, decreased from $1.41 billion at December 31, 2024, to $1.22 billion at March 31, 2025[13] Condensed Consolidated Statements of Operations For the three months ended March 31, 2025, Guild Holdings Company reported a net loss of $23.9 million, a significant decline from the net income of $28.4 million in the same period of 2024, primarily due to a negative valuation adjustment of mortgage servicing rights Condensed Consolidated Statements of Operations | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Net revenue | $198,486 | $231,782 | | Total expenses | $230,110 | $193,239 | | Net (loss) income attributable to Guild | $(23,897) | $28,498 | | Basic (Loss) earnings per share | $(0.39) | $0.47 | | Diluted (Loss) earnings per share | $(0.39) | $0.46 | - Valuation adjustment of mortgage servicing rights shifted from a gain of $20.78 million in Q1 2024 to a loss of $(69.94) million in Q1 2025, significantly impacting net revenue[14] - Loan origination fees and gain on sale of loans, net, increased by 38.2% from $134.06 million in Q1 2024 to $185.21 million in Q1 2025[14] Condensed Consolidated Statements of Changes in Stockholders' Equity The statements show a decrease in total stockholders' equity from $1,254,010 thousand at December 31, 2024, to $1,200,245 thousand at March 31, 2025, primarily due to a net loss and cash dividends declared Condensed Consolidated Statements of Changes in Stockholders' Equity | Metric | December 31, 2024 (in thousands) | March 31, 2025 (in thousands) | | :-------------------------------- | :----------------------------- | :---------------------------- | | Total Stockholders' Equity | $1,254,010 | $1,200,245 | | Net (loss) income | $(23,897) | $(23,897) | | Cash dividends declared | $(30,952) | $(30,952) | | Repurchase of Class A common stock | $(456) | $(456) | - The Company declared and paid $30.95 million in cash dividends during the three months ended March 31, 2025[15] - Repurchased and retired 35,216 shares of Class A common stock for $0.46 million during the three months ended March 31, 2025[15] Condensed Consolidated Statements of Cash Flows For the three months ended March 31, 2025, the Company generated significant net cash from operating activities, a notable improvement from a net cash outflow in the prior year, while cash used in investing activities decreased and financing activities resulted in a net cash outflow Condensed Consolidated Statements of Cash Flows | Cash Flow Activity | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | | Net cash provided by (used in) operating activities | $180,781 | $(261,443) | | Net cash used in investing activities | $(30,904) | $(40,942) | | Net cash (used in) provided by financing activities | $(154,593) | $276,806 | | Decrease in cash, cash equivalents and restricted cash | $(4,716) | $(25,579) | - The shift to net cash provided by operating activities in Q1 2025 was primarily due to higher proceeds on sale of and payments from mortgage loans held for sale ($5.02 billion) compared to originations and purchases ($4.70 billion)[16] - Cash used in financing activities in Q1 2025 was largely influenced by repayments on warehouse lines of credit exceeding borrowings, and $30.95 million in dividends paid[16] Notes to Condensed Consolidated Financial Statements These notes provide detailed explanations of Guild Holdings Company's business, accounting policies, fair value measurements, and specific financial accounts, offering context and breakdowns for the condensed consolidated financial statements NOTE 1—Business, Basis of Presentation, and Significant Accounting Policies Guild Holdings Company originates, sells, and services residential mortgage loans across 49 states and D.C., operating in two segments: origination and servicing. The financial statements are prepared under GAAP, reflecting normal recurring adjustments, and include consolidated subsidiaries - Guild Holdings Company operates in two reportable segments: origination and servicing, with approximately 430 branches licensed in 49 states and D.C[19] - The Company is certified with HUD and VA, and is an approved issuer/seller/servicer with Ginnie Mae, Fannie Mae, Freddie Mac, and USDA[20] - Escrow and fiduciary funds, excluded from the balance sheets, totaled $976.8 million at March 31, 2025, up from $788.6 million at December 31, 2024[23] NOTE 2—Fair Value Measurements This note details the Company's fair value measurements, categorizing assets and liabilities into a three-level hierarchy based on input observability. Mortgage loans held for sale are Level Two, while reverse mortgage loans, MSRs, IRLCs, notes receivable, HMBS-related borrowings, and contingent liabilities are primarily Level Three due to significant unobservable inputs - Fair value measurements are categorized into Level One (quoted prices in active markets), Level Two (observable inputs other than quoted prices), and Level Three (unobservable inputs reflecting management's assumptions)[26][30] Assets and Liabilities Measured at Fair Value (March 31, 2025) | (in thousands) | Level 1 | Level 2 | Level 3 | Total | | :------------------------------------------ | :------ | :-------- | :-------- | :-------- | | Assets: | | | | | | Mortgage loans held for sale | $— | $1,358,920 | $— | $1,358,920 | | Reverse mortgage loans held for investment | $— | $— | $482,151 | $482,151 | | Mortgage servicing rights | $— | $— | $1,312,377 | $1,312,377 | | Derivative assets (IRLCs) | $— | $— | $23,092 | $23,092 | | Notes receivable | $— | $— | $12,077 | $12,077 | | Liabilities: | | | | | | HMBS-related borrowings | $— | $— | $461,002 | $461,002 | | Derivative liabilities (Forward delivery commitments) | $— | $10,460 | $— | $10,460 | | Contingent liabilities due to acquisitions | $— | $— | $29,733 | $29,733 | - The fair value of Interest Rate Lock Commitments (IRLCs) increased from $7.96 million at December 31, 2024, to $23.09 million at March 31, 2025, primarily due to net transfers and revaluation gains[43] NOTE 3—Advances, Net Advances, net, decreased from $85.5 million at December 31, 2024, to $65.1 million at March 31, 2025, primarily driven by a reduction in trust advances. The foreclosure loss reserve increased due to a higher provision for foreclosure losses NOTE 3—Advances, Net | (in thousands) | March 31, 2025 | December 31, 2024 | | :-------------------- | :------------- | :---------------- | | Trust advances | $46,576 | $65,048 | | Foreclosure advances | $25,500 | $25,761 | | Foreclosure loss reserve | $(6,931) | $(5,286) | | Total advances, net | $65,145 | $85,523 | Provision for Foreclosure Losses | (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Balance — beginning of period | $5,286 | $5,694 | | Provision for foreclosure losses | $2,378 | $392 | | Realized losses, net | $(733) | $(260) | | Balance — end of period | $6,931 | $5,826 | NOTE 4—Derivative Financial Instruments The Company uses derivative instruments, primarily forward commitments, to hedge interest rate risk, with changes in fair value recognized in current period earnings. For the three months ended March 31, 2025, unrealized hedging losses were $5.97 million, a significant shift from gains in the prior year - Unrealized hedging losses were $5.97 million for the three months ended March 31, 2025, compared to gains of $25.07 million for the same period in 2024[52] Notional and Fair Value of Derivative Instruments (March 31, 2025) | (in thousands) | Notional Value | Derivative Asset | Derivative Liability | | :------------------------------------------ | :------------- | :--------------- | :------------------- | | IRLCs | $1,861,654 | $23,092 | $— | | Forward delivery commitments and best efforts sales commitments | $2,611,427 | $— | $10,460 | - The weighted average loan funding probability ('pull-through') for IRLCs increased to 89.8% at March 31, 2025, from 88.7% at December 31, 2024[54] NOTE 5—Mortgage Servicing Rights Mortgage Servicing Rights (MSRs) decreased in fair value to $1,312.4 million at March 31, 2025, from $1,343.8 million at the beginning of the period, primarily due to a $55.0 million negative valuation adjustment from changes in model inputs and assumptions. The UPB of mortgage loans serviced for others increased to $94.0 billion MSR Activity (Three Months Ended March 31, 2025 vs. 2024) | (in thousands) | 2025 | 2024 | | :------------------------------------------ | :----- | :----- | | Balance — beginning of period | $1,343,829 | $1,161,357 | | MSRs originated | $38,484 | $34,234 | | Changes in fair value: | | | | Due to collection/realization of cash flows | $(14,916) | $(12,119) | | Due to changes in valuation model inputs or assumptions | $(55,020) | $32,897 | | Balance — end of period | $1,312,377 | $1,216,483 | - The weighted average prepayment rate for MSRs increased to 8.6% at March 31, 2025, from 8.2% at December 31, 2024, and 8.0% at March 31, 2024[56][158] - The UPB of mortgage loans serviced for others increased to $94.0 billion at March 31, 2025, from $92.9 billion at December 31, 2024[57] NOTE 6—Mortgage Loans Held for Sale Mortgage loans held for sale (MLHS) decreased to $1,358.9 million at March 31, 2025, from $1,523.4 million at the beginning of the period, reflecting higher proceeds from sales compared to originations and purchases MLHS Activity (Three Months Ended March 31, 2025 vs. 2024) | (in thousands) | 2025 | 2024 | | :------------------------------------------ | :----------- | :----------- | | Balance — beginning of period | $1,523,447 | $901,227 | | Origination and purchase of MLHS | $4,700,821 | $3,605,155 | | Proceeds on sale of and payments from MLHS | $(5,017,499) | $(3,454,907) | | Gain on sale of MLHS excluding fair value of other financial instruments, net | $143,204 | $81,092 | | Valuation adjustment of MLHS | $8,947 | $(6,408) | | Balance — end of period | $1,358,920 | $1,126,159 | - Origination and purchase of MLHS increased to $4.70 billion in Q1 2025 from $3.61 billion in Q1 2024[61] - Proceeds on sale of and payments from MLHS increased to $5.02 billion in Q1 2025 from $3.45 billion in Q1 2024[61] NOTE 7—Reverse Mortgage Loans Held for Investment and HMBS-related Borrowings Reverse mortgage loans held for investment increased to $482.2 million at March 31, 2025, from $451.7 million at the beginning of the period, while HMBS-related borrowings also increased. The Company recognized a gain of $2.9 million from its reverse mortgage portfolio in Q1 2025 Reverse Mortgage Loans Held for Investment and HMBS-related Borrowings (March 31, 2025) | (in thousands) | Reverse Mortgage Loans Held for Investment | HMBS-Related Borrowings | | :------------------------------------------ | :----------------------------------------- | :------------------------ | | Balance — beginning of period | $451,704 | $(425,979) | | Originations and purchases | $30,214 | $— | | Securitization of HECM loans and tails | $— | $(37,651) | | Repayments (principal payments received) | $(9,259) | $9,205 | | Change in fair value recognized in earnings | $9,492 | $(6,577) | | Balance — end of period | $482,151 | $(461,002) | Gains on Reverse Mortgage Loans and HMBS-related Borrowings (Three Months Ended March 31, 2025 vs. 2024) | (in thousands) | 2025 | 2024 | | :------------------------------------------ | :----- | :----- | | Gain on new originations | $1,807 | $1,284 | | Gain on tail securitizations | $501 | $322 | | Net interest income | $24 | $23 | | Change in fair value | $583 | $1,601 | | Fair value gain recognized in earnings | $2,915 | $3,230 | - The weighted average life in years for reverse mortgage loans held for investment was 6.6 years at March 31, 2025, with a discount rate of 12.0% and a conditional prepayment rate of 7.9%[63] NOTE 8—Goodwill and Intangible Assets, Net Goodwill remained stable at $198.7 million, while intangible assets, net, decreased to $25.0 million at March 31, 2025, from $27.3 million at December 31, 2024, due to amortization NOTE 8—Goodwill and Intangible Assets, Net | (in thousands) | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :------------- | :---------------- | | Goodwill | $198,724 | $198,724 | | Intangible assets, net | $25,041 | $27,270 | | Goodwill and intangible assets, net | $223,765 | $225,994 | - Amortization expense related to intangible assets was $2.2 million for the three months ended March 31, 2025 and 2024[67] NOTE 9—Warehouse Lines of Credit, Net Warehouse lines of credit, net, decreased to $1,224.1 million at March 31, 2025, from $1,414.6 million at December 31, 2024. The weighted average interest rate decreased to 5.9% from 6.7%. The Company was in compliance with all debt covenants Warehouse Lines of Credit, Net (March 31, 2025 vs. December 31, 2024) | (in thousands) | March 31, 2025 | December 31, 2024 | | :-------------------------- | :------------- | :---------------- | | Outstanding Balance | $1,226,643 | $1,417,453 | | Debt issuance costs | $(2,516) | $(2,890) | | Warehouse lines of credit, net | $1,224,127 | $1,414,563 | - The weighted average interest rate for warehouse lines of credit decreased from 6.7% at December 31, 2024, to 5.9% at March 31, 2025[71] - The Company was in compliance with all debt covenants for its warehouse lines of credit at March 31, 2025, and December 31, 2024[72] NOTE 10—Notes Payable Notes payable increased to $340.0 million at March 31, 2025, from $300.0 million at December 31, 2024, across three revolving notes collateralized by MSRs. The weighted average interest rate decreased to 7.5% from 8.3% - Outstanding borrowings on notes payable increased to $340.0 million at March 31, 2025, from $300.0 million at December 31, 2024[13][74][75][78] - The aggregate facility size of notes payable facilities totaled $750.0 million at March 31, 2025, with $195.0 million of borrowing capacity available[218] - The weighted average interest rate for notes payable decreased from 8.3% at December 31, 2024, to 7.5% at March 31, 2025[224] NOTE 11—Stockholders' Equity The Company declared $31.0 million in cash dividends and repurchased 35,216 shares of Class A common stock for $0.5 million during the three months ended March 31, 2025. The share repurchase program was extended to May 5, 2026, with $9.5 million remaining available - The Company declared and paid $31.0 million in dividends during the three months ended March 31, 2025[79] - 35,216 shares of Class A common stock were repurchased and retired for $0.5 million at an average price of $12.94 per share during Q1 2025[81] - The share repurchase program was extended to May 5, 2026, with $9.5 million remaining available for repurchase as of March 31, 2025[81] NOTE 12—Earnings (Loss) Per Share Basic and diluted loss per share for Q1 2025 was $(0.39), a decrease from earnings per share of $0.47 (basic) and $0.46 (diluted) in Q1 2024, reflecting the net loss attributable to Guild NOTE 12—Earnings (Loss) Per Share | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net (loss) income attributable to Guild | $(23,897) | $28,498 | | Weighted average shares outstanding—Basic | 61,909 | 61,109 | | Weighted average shares outstanding—Diluted | 61,909 | 62,157 | | (Loss) earnings per share—Basic | $(0.39) | $0.47 | | (Loss) earnings per share—Diluted | $(0.39) | $0.46 | - Approximately 0.5 million potential shares of Class A common stock related to unvested RSUs were excluded from diluted loss per share calculation in Q1 2025 due to being anti-dilutive[84] NOTE 13—Stock-Based Compensation Stock-based compensation expense was $1.6 million for the three months ended March 31, 2025, a decrease from $2.1 million in the prior year. Unrecognized compensation costs totaled $6.8 million, expected to be recognized over 1.3 years - Compensation costs recognized for restricted stock grants were approximately $1.6 million for Q1 2025, down from $2.1 million for Q1 2024[85] - As of March 31, 2025, there was approximately $6.8 million of unrecognized compensation costs related to unvested RSUs, with a weighted average recognition period of 1.3 years[85] NOTE 14—Commitments and Contingencies The Company's investor reserves for loan repurchases increased to $21.9 million at March 31, 2025. Total commitments to originate forward mortgage loans, adjusted for pull-through, were $1.7 billion, and derivative commitments were $2.6 billion NOTE 14—Commitments and Contingencies | (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Balance — beginning of period | $23,362 | $19,973 | | Provision for investor reserves | $5,095 | $520 | | Realized losses, net | $(6,508) | $(2,215) | | Balance — end of period | $21,949 | $18,278 | - Total commitments to originate forward mortgage loans, adjusted for pull-through, were approximately $1.7 billion at March 31, 2025, up from $1.0 billion at December 31, 2024[236] - Total commitments related to derivative instruments (forward loan sales, mandatory delivery, options, futures) were approximately $2.6 billion at March 31, 2025, compared to $2.1 billion at December 31, 2024[88] NOTE 15—Regulatory Capital and Liquidity Requirements Guild Holdings Company is subject to minimum net worth and capital requirements from secondary market investors and state regulators. As of March 31, 2025, the Company was in compliance with the most restrictive requirement of maintaining a minimum adjusted net worth of $282.8 million - The Company must maintain a minimum adjusted net worth of $282.8 million as of March 31, 2025, and was in compliance with this requirement[93] - Failure to meet these requirements could lead to sanctions, suspension, or termination of selling and servicing agreements, impacting the Company's ability to originate, securitize, or service mortgage loans[91] NOTE 16—Segments Guild Holdings Company operates in two reportable segments: Origination and Servicing. The Origination segment focuses on loan origination, acquisition, and sale, while the Servicing segment manages the servicing portfolio, providing cash flow and driving client retention. Net income is the primary measure for assessing segment performance - The Company has two reportable segments: Origination and Servicing, which are considered intricately related and interdependent[94][191] - The Origination segment is responsible for loan origination, acquisition, and sale activities, while the Servicing segment handles loan servicing, including collections, impound accounts, and loss mitigation[95][96] - The Chief Operating Decision Maker (CODM) uses net income for both segments to assess performance and allocate resources; assets and certain corporate expenses are not allocated to segments[97] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on Guild Holdings Company's financial condition and operating results, highlighting key financial information, market trends, performance indicators, and a detailed analysis of revenue, expenses, segment performance, and liquidity for the periods presented Executive Summary Guild Holdings Company reported a net loss of $23.9 million for Q1 2025, a decrease from net income in prior periods, despite an increase in mortgage loan originations to $5.2 billion. The servicing portfolio grew to $94.0 billion UPB, and adjusted net income was $21.6 million - Guild originated $5.2 billion of mortgage loans in Q1 2025, an increase from $3.9 billion in Q1 2024, but a decrease from $6.7 billion in Q4 2024[105] - Purchase originations accounted for 87.6% of total originations in Q1 2025, higher than the MBA's forecast of 70.8% for the industry[105] Key Financial Highlights (Three Months Ended) | Metric | March 31, 2025 | December 31, 2024 | March 31, 2024 | | :-------------------------------- | :------------- | :---------------- | :------------- | | Net (loss) income (in millions) | $(23.9) | $97.9 | $28.5 | | Diluted (loss) earnings per share | $(0.39) | $1.57 | $0.46 | | Adjusted net income (in millions) | $21.6 | $19.7 | $8.0 | | Adjusted diluted earnings per share | $0.35 | $0.32 | $0.13 | | Adjusted EBITDA (in millions) | $36.4 | $30.9 | $16.0 | | Servicing portfolio UPB (in billions) | $94.0 | $93.0 | $86.3 | Market and Economic Overview The FOMC's rate cuts in late 2024 led to elevated market expectations and high 10-year Treasury yields. The MBA forecasts a 16.7% increase in total origination volume for 2025, with Guild outpacing the market in Q1 2025. MSR values could decrease if rates decline, and market challenges have led to lower gain on sale margins - The Federal Open Market Committee (FOMC) initiated multiple rate cuts starting September 2024, with the target range at 4.25% to 4.5% by December 2024[105][106] - The MBA forecasts a 16.7% increase in total industry origination volume to $2.1 trillion in 2025, with Guild's Q1 2025 originations increasing by 35.1%, outpacing the market's 1.9% forecast[108] - Guild recorded a loss of $69.9 million for changes in the fair value of MSRs in Q1 2025, compared to a gain of $20.8 million in Q1 2024, reflecting market volatility[107] Key Performance Indicators Guild's origination volume decreased by 22.9% QoQ but increased by 35.1% YoY in Q1 2025, with purchase originations dominating. The servicing portfolio's UPB grew by 1.1% QoQ and 8.9% YoY, while the overall recapture rate decreased QoQ but increased YoY Origination Data (QoQ Comparison) | Metric | March 31, 2025 | December 31, 2024 | % Change | | :------------------------------------------ | :------------- | :---------------- | :--------- | | Total originations (in thousands) | $5,204,565 | $6,746,440 | (22.9)% | | Total originations (units) | 15.3 | 19.6 | (21.9)% | | Gain on sale margin (bps) | 376 | 317 | 18.6% | | Purchase origination % | 87.6% | 82.3% | 6.4% | | Refinance recapture rate | 30.9% | 53.3% | (42.0)% | | Overall recapture rate | 28.7% | 42.3% | (32.2)% | Origination Data (YoY Comparison) | Metric | March 31, 2025 | March 31, 2024 | % Change | | :------------------------------------------ | :------------- | :------------- | :--------- | | Total originations (in thousands) | $5,204,565 | $3,852,539 | 35.1% | | Total originations (units) | 15.3 | 11.9 | 28.6% | | Gain on sale margin (bps) | 376 | 364 | 3.3% | | Purchase origination % | 87.6% | 90.8% | (3.5)% | | Refinance recapture rate | 30.9% | 25.9% | 19.3% | | Overall recapture rate | 28.7% | 25.6% | 12.1% | Servicing Data (QoQ & YoY Comparison) | Metric | March 31, 2025 | December 31, 2024 | March 31, 2024 | % Change (QoQ) | % Change (YoY) | | :------------------------------------------ | :------------- | :---------------- | :------------- | :------------- | :------------- | | UPB of servicing portfolio (period end, in thousands) | $94,005,693 | $92,998,862 | $86,319,074 | 1.1% | 8.9% | | Loans serviced (period end, in thousands) | 373 | 370 | 349 | 0.8% | 6.9% | | Weighted average prepayment speed | 8.6% | 8.2% | 8.0% | 4.9% | 7.5% | | Loan delinquency rate 60-plus days (period end) | 1.8% | 2.0% | 1.6% | (10.0)% | 12.5% | Non-GAAP Financial Measures This section defines and reconciles non-GAAP financial measures such as adjusted net income, adjusted earnings per share, adjusted EBITDA, adjusted return on average equity, and tangible net book value per share. These metrics exclude non-cash and non-core operational items to provide a clearer view of the Company's underlying performance - Adjusted net income excludes changes in MSR fair value due to model inputs, changes in contingent liabilities and notes receivable, amortization of acquired intangibles, and stock-based compensation, adjusted for tax impact[125] Adjusted Net Income and EPS (Three Months Ended) | Metric | March 31, 2025 | December 31, 2024 | March 31, 2024 | | :------------------------------------------ | :------------- | :---------------- | :------------- | | Net (loss) income attributable to Guild (in thousands) | $(23,897) | $97,942 | $28,498 | | Adjusted net income (in thousands) | $21,620 | $19,734 | $8,042 | | (Loss) earnings per share—Diluted | $(0.39) | $1.57 | $0.46 | | Adjusted earnings per share—Diluted | $0.35 | $0.32 | $0.13 | Adjusted EBITDA (Three Months Ended) | Metric | March 31, 2025 | December 31, 2024 | March 31, 2024 | | :------------------------------------------ | :------------- | :---------------- | :------------- | | Net (loss) income (in thousands) | $(23,959) | $97,892 | $28,400 | | Adjusted EBITDA (in thousands) | $36,395 | $30,863 | $15,952 | Tangible Net Book Value Per Share | Metric | March 31, 2025 | December 31, 2024 | | :------------------------------------------ | :------------- | :---------------- | | Book value per share | $19.39 | $20.24 | | Tangible net book value per share | $15.77 | $16.59 | Results of Operations Guild Holdings Company experienced a significant net loss in Q1 2025 compared to net income in prior periods, driven by a negative valuation adjustment of mortgage servicing rights. While loan origination fees and gain on sale increased YoY, overall net revenue declined due to MSR valuation and lower interest income QoQ. Expenses increased YoY, particularly salaries and foreclosure losses Consolidated Statements of Operations (QoQ Comparison) | ($ in thousands) | March 31, 2025 | December 31, 2024 | $ Change | % Change | | :------------------------------------------ | :------------- | :---------------- | :------- | :------- | | Net revenue | $198,486 | $372,987 | $(174,501) | (46.8)% | | Total expenses | $230,110 | $244,167 | $(14,057) | (5.8)% | | Net (loss) income attributable to Guild | $(23,897) | $97,942 | $(121,839) | (124.4)% | Consolidated Statements of Operations (YoY Comparison) | ($ in thousands) | March 31, 2025 | March 31, 2024 | $ Change | % Change | | :------------------------------------------ | :------------- | :------------- | :------- | :------- | | Net revenue | $198,486 | $231,782 | $(33,296) | (14.4)% | | Total expenses | $230,110 | $193,239 | $36,871 | 19.1% | | Net (loss) income attributable to Guild | $(23,897) | $28,498 | $(52,395) | (183.9)% | Revenue Net revenue decreased significantly QoQ and YoY, primarily due to a large negative valuation adjustment of mortgage servicing rights. Loan origination fees and gain on sale of loans, net, increased YoY but decreased QoQ, while loan servicing and other fees showed modest growth Loan Origination Fees and Gain on Sale of Loans, Net (QoQ Comparison) | ($ in thousands) | March 31, 2025 | December 31, 2024 | $ Change | % Change | | :------------------------------------------ | :------------- | :---------------- | :------- | :------- | | Gain on sale of loans | $122,914 | $133,779 | $(10,865) | (8.1)% | | Fair value of originated MSRs | $38,484 | $62,078 | $(23,594) | (38.0)% | | Changes in fair value of MLHS and IRLCs | $26,795 | $(29,871) | $56,666 | 189.7% | | Changes in fair value of forward commitments | $(21,100) | $17,211 | $(38,311) | (222.6)% | | Total loan origination fees and gain on sale of loans, net | $185,213 | $203,272 | $(18,059) | (8.9)% | Loan Servicing and Other Fees (YoY Comparison) | ($ in thousands) | March 31, 2025 | March 31, 2024 | $ Change | % Change | | :------------------------------------------ | :------------- | :------------- | :------- | :------- | | Servicing fee income | $71,300 | $64,034 | $7,266 | 11.3% | | Late fees | $2,548 | $2,056 | $492 | 23.9% | | Total loan servicing and other fees | $72,751 | $65,788 | $6,963 | 10.6% | - The valuation adjustment of mortgage servicing rights shifted from a gain of $20.78 million in Q1 2024 to a loss of $(69.94) million in Q1 2025, a change of $(90.71) million or (436.6)%[158] Expenses Total expenses decreased QoQ but increased YoY, primarily driven by higher salaries, incentive compensation, and benefits due to increased headcount and origination volume. Provision for foreclosure losses significantly increased YoY due to more loans in foreclosure Salaries, Incentive Compensation and Benefits (YoY Comparison) | ($ in thousands) | March 31, 2025 | March 31, 2024 | $ Change | % Change | | :------------------------------------------ | :------------- | :------------- | :------- | :------- | | Salaries | $86,217 | $73,990 | $12,227 | 16.5% | | Incentive compensation | $58,744 | $42,081 | $16,663 | 39.6% | | Benefits | $28,251 | $23,996 | $4,255 | 17.7% | | Total salaries, incentive compensation and benefits expense | $173,212 | $140,067 | $33,145 | 23.7% | - Provision for foreclosure losses increased from $0.4 million in Q1 2024 to $2.4 million in Q1 2025, a 506.6% increase, due to a rise in loans in foreclosure[187] - General and administrative expenses remained relatively flat YoY, but advertising and promotions increased by 11.0% YoY to support sales professionals and origination volumes[178][179] Income Taxes Income tax shifted from an expense of $30.9 million in Q4 2024 to a benefit of $7.7 million in Q1 2025, primarily driven by the change from net income to net loss. The effective tax rate for Q1 2025 was 24.2% - Income tax changed from an expense of $30.9 million in Q4 2024 to a benefit of $7.7 million in Q1 2025[189] - The effective tax rate for Q1 2025 was 24.2%, compared to 24.0% in Q4 2024 and 26.3% in Q1 2024[189] Segment Results The Origination segment's net loss improved significantly YoY due to increased net revenue from higher origination volume, despite a QoQ decline. The Servicing segment experienced a substantial net loss QoQ and YoY, primarily driven by negative MSR valuation adjustments, although total revenue for servicing increased YoY Origination The Origination segment's net loss improved by $21.3 million YoY to $(2.9) million in Q1 2025, driven by a 38.2% increase in net revenue from higher origination volume. However, QoQ, net income declined due to decreased originations and volume-related expenses Origination Segment Results (QoQ Comparison) | ($ in thousands) | March 31, 2025 | December 31, 2024 | Change | % Change | | :------------------------------------------ | :------------- | :---------------- | :----- | :------- | | Total originations | $5,204,565 | $6,746,440 | $(1,541,875) | (22.9)% | | Net revenue | $190,601 | $209,705 | $(19,104) | (9.1)% | | Total expenses | $193,457 | $208,863 | $(15,406) | (7.4)% | | Net (loss) income allocated to origination | $(2,856) | $842 | $(3,698) | (439.2)% | Origination Segment Results (YoY Comparison) | ($ in thousands) | March 31, 2025 | March 31, 2024 | Change | % Change | | :------------------------------------------ | :------------- | :------------- | :----- | :------- | | Total originations | $5,204,565 | $3,852,539 | $1,352,026 | 35.1% | | Net revenue | $190,601 | $137,922 | $52,679 | 38.2% | | Total expenses | $193,457 | $162,079 | $31,378 | 19.4% | | Net loss allocated to origination | $(2,856) | $(24,157) | $21,301 | 88.2% | - Gain on sale margins for the Origination segment increased to 376 basis points in Q1 2025 from 317 basis points in Q4 2024 and 364 basis points in Q1 2024, reflecting interest rate and market volatility[198][201] Servicing The Servicing segment reported a net loss of $(4.6) million in Q1 2025, a significant decrease from net income in prior periods, primarily due to a $(154.3) million QoQ and $(90.7) million YoY decrease in MSR valuation adjustments. Despite this, total revenue for the segment increased YoY, aligning with growth in the average UPB of the servicing portfolio Servicing Segment Results (QoQ Comparison) | ($ in thousands) | March 31, 2025 | December 31, 2024 | Change | % Change | | :------------------------------------------ | :------------- | :---------------- | :----- | :------- | | Average UPB of servicing portfolio | $93,502,278 | $92,242,013 | $1,260,265 | 1.4% | | Net revenue | $12,980 | $168,091 | $(155,111) | (92.3)% | | Total expenses | $17,545 | $15,729 | $1,816 | 11.5% | | Net (loss) income allocated to servicing | $(4,565) | $152,362 | $(156,927) | (103.0)% | Servicing Segment Results (YoY Comparison) | ($ in thousands) | March 31, 2025 | March 31, 2024 | Change | % Change | | :------------------------------------------ | :------------- | :------------- | :----- | :------- | | Average UPB of servicing portfolio | $93,502,278 | $85,676,487 | $7,825,791 | 9.1% | | Net revenue | $12,980 | $97,440 | $(84,460) | (86.7)% | | Total expenses | $17,545 | $13,506 | $4,039 | 29.9% | | Net (loss) income allocated to servicing | $(4,565) | $83,934 | $(88,499) | (105.4)% | - The provision for foreclosure losses in the Servicing segment increased by $1.3 million QoQ and $2.0 million YoY, reflecting an increase in expected losses[208][209] Liquidity, Capital Resources and Cash Flows Guild Holdings Company's liquidity is primarily supported by cash flows from operations, warehouse lines of credit, and notes payable. The Company generated net cash from operating activities in Q1 2025, a reversal from the prior year, while financing activities resulted in a net cash outflow due to dividend payments and warehouse line repayments - Primary sources of liquidity include cash flows from operations (loan sales, origination fees, servicing income, interest income on MLHS), borrowings on warehouse lines of credit, and notes payable[212] - Primary uses of funds include origination of MLHS, payment of interest and operating expenses, servicing advances, repayments on warehouse lines and notes payable, acquisitions, share repurchases, and dividends[212][221] Cash Flow Summary (Three Months Ended March 31) | ($ in thousands) | 2025 | 2024 | | :------------------------------------------ | :----- | :----- | | Net cash provided by (used in) operating activities | $180,781 | $(261,443) | | Net cash used in investing activities | $(30,904) | $(40,942) | | Net cash (used in) provided by financing activities | $(154,593) | $276,806 | | Decrease in cash, cash equivalents and restricted cash | $(4,716) | $(25,579) | Debt Obligations Guild utilizes $2.8 billion in warehouse lines of credit and $750.0 million in notes payable to fund loan originations and operations. As of March 31, 2025, outstanding balances were $1.2 billion for warehouse lines and $340.0 million for notes payable, with the Company in compliance with all debt covenants - As of March 31, 2025, total facility size under loan funding facilities was approximately $2.8 billion, with combined outstanding balances of approximately $1.2 billion[217] - The aggregate facility size of notes payable facilities totaled $750.0 million, with combined outstanding balances of $340.0 million and $195.0 million of available borrowing capacity[218] - The Company was in compliance with all operating and financial covenants for its loan funding facilities and notes payable as of March 31, 2025[223] Secondary Market Investors Secondary market investors impose operating and financial covenants on Guild, including minimum net worth, liquidity, and total liquid assets. The Company was in compliance with all these covenants as of March 31, 2025, and December 31, 2024 - Investors require maintenance of minimum net worth, liquidity, total liquid assets, adjusted net worth to total assets ratio, and fidelity bond/E&O coverage[226] - Breach of these covenants could lead to default and impact the ability to sell mortgage loans in the secondary market[226] - The Company was in compliance with all investor covenants as of March 31, 2025, and December 31, 2024[226] Cash Flows Operating activities provided $180.8 million in cash in Q1 2025, a significant improvement from a cash outflow in Q1 2024, driven by higher loan sales than originations. Investing activities used less cash due to no acquisitions in Q1 2025, while financing activities used cash primarily for dividend payments and warehouse line repayments - Net cash provided by operating activities was $180.8 million in Q1 2025, compared to net cash used of $(261.4) million in Q1 2024, primarily due to a decline in loans held for sale[228][229] - Net cash used in investing activities decreased to $(30.9) million in Q1 2025 from $(40.9) million in Q1 2024, mainly because there were no business acquisitions in the current quarter[228][230] - Net cash used in financing activities was $(154.6) million in Q1 2025, a shift from $276.8 million provided in Q1 2024, largely due to $31.0 million in dividend payments and higher repayments on warehouse lines of credit[228][233] Share Repurchase Program The Board of Directors extended the share repurchase program to May 5, 2026, with $9.5 million remaining available. In Q1 2025, the Company repurchased 35,216 shares of Class A common stock for $0.5 million at an average price of $12.94 per share - The share repurchase program was extended to May 5, 2026, with $9.5 million remaining available for repurchase as of March 31, 2025[235] - During Q1 2025, 35,216 shares of Class A common stock were repurchased and retired for $0.5 million at an average price of $12.94 per share[235] Interest Rate Lock Commitments Total commitments to originate forward mortgage loans, adjusted for pull-through, increased to approximately $1.7 billion at March 31, 2025, from $1.0 billion at December 31, 2024. These commitments expose the Company to market risk if interest rates change - Total commitments to originate forward mortgage loans, adjusted for pull-through, were approximately $1.7 billion at March 31, 2025, compared to $1.0 billion at December 31, 2024[236] - IRLCs expose the Company to market risk from interest rate changes and credit loss if originated loans are not sold and customers default[236] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Guild Holdings Company is not required to provide specific quantitative and qualitative disclosures about market risk - The Company is exempt from providing quantitative and qualitative disclosures about market risk as it qualifies as a smaller reporting company[237] Item 4. Controls and Procedures Management, including the CEO and CFO, concluded that Guild Holdings Company's disclosure controls and procedures were effective as of March 31, 2025. No material changes in internal control over financial reporting were identified during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of March 31, 2025[238] - No changes in internal control over financial reporting were identified during Q1 2025 that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[239] - Management believes that disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance, but not absolute assurance, of achieving their objectives[240] Part II—Other Information Item 1. Legal Proceedings Guild Holdings Company is involved in various lawsuits and regulatory proceedings in the ordinary course of business but does not expect any current matters to have a material adverse effect on its financial position or results of operations - The Company is routinely subject to various examinations and legal/regulatory proceedings in the normal course of business[242] - Management does not expect current legal or regulatory matters to have a material adverse effect on the Company's consolidated financial position or results of operations[242] Item 1A. Risk Factors This section updates risk factors, emphasizing potential disruptions from significant changes in federal government size, structure, powers, and operations, as well as adverse impacts from macroeconomic policy shifts, such as trade restrictions, tariffs, and inflation, which could affect mortgage origination volumes and housing affordability - Significant changes in federal government priorities, operations, and regulatory frameworks, including at agencies like FHA, HUD, VA, and CFPB, could disrupt the regulatory environment and adversely impact business[244] - Discussions regarding the privatization of Fannie Mae and Freddie Mac pose a risk, as the majority of Guild's loan products are sold to these GSEs, and changes could materially and adversely affect the business[245] - Rapid shifts in macroeconomic policies, such as trade restrictions, tariffs, and increased inflation, could lead to higher mortgage rates, reduced refinancing, and decreased housing supply, negatively impacting mortgage origination volumes and overall business results[246][247] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During Q1 2025, Guild Holdings Company repurchased 35,216 shares of its Class A common stock for $0.5 million under its extended share repurchase program, with $9.5 million remaining available Class A Common Stock Repurchases (Three Months Ended March 31, 2025) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Approximate Dollar Value of Shares that May Yet be Purchased (in thousands) | | :-------------------------------- | :----------------------------- | :--------------------------- | :-------------------------------------------------------------------- | | January 1, 2025 to January 31, 2025 | 12,829 | $12.79 | $9,790 | | February 1, 2025 to February 28, 2025 | 9,336 | $12.55 | $9,673 | | March 1, 2025 to March 31, 2025 | 13,051 | $13.36 | $9,498 | | Total | 35,216 | $12.94 | | - The share repurchase program was extended to May 5, 2026, with $9.5 million remaining available for repurchase as of March 31, 2025[251] Item 3. Defaults Upon Senior Securities There were no defaults upon senior securities reported by Guild Holdings Company - No defaults upon senior securities were reported[252] Item 4. Mine Safety Disclosures This item is not applicable to Guild Holdings Company - Mine Safety Disclosures are not applicable to the Company[253] Item 5. Other Information No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the fiscal quarter ended March 31, 2025 - No directors or officers informed the Company of the adoption or termination of Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q1 2025[254] Item 6. Exhibits This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including organizational documents, incentive plans, compensation agreements, and certifications - The exhibit index includes the Amended and Restated Certificate of Incorporation and Bylaws, Registration Rights Agreement, and the 2020 Omnibus Incentive Plan[256] - Executive compensation agreements and various forms of Restricted Stock Unit Agreements are also listed as exhibits[256] - Certifications from the Chief Executive Officer and Chief Financial Officer, pursuant to Rule 13a-14(a) and 18 U.S.C. Section 1350, are filed herewith[256][257] Signatures Signatures The report is duly signed on behalf of Guild Holdings Company by Terry L. Schmidt, Chief Executive Officer, and Desiree A. Kramer, Chief Financial Officer, on May 8, 2025 - The report was signed by Terry L. Schmidt, Chief Executive Officer, and Desiree A. Kramer, Chief Financial Officer, on May 8, 2025[259]