Guild pany(US:GHLD)2021-03-23 03:21Financial Data and Key Metrics Changes - For the full year 2020, the company generated $35.2 billion in loan origination, representing a 62% year-over-year growth [18] - Net revenue totaled $1.6 billion, up 128% from $713 million in 2019 [18] - Net income reached $371 million, while adjusted net income increased by 277% year-over-year to $524 million [18] - For Q4 2020, originations were $10.6 billion, a 75% increase from $6 billion in the same period last year [19] - Total net revenues for Q4 were up 77% year-over-year to $454 million [19] - GAAP EPS for 2020 was $6.18, with adjusted EPS at $8.73 [19] Business Line Data and Key Metrics Changes - The origination strategy focuses on the retail channel, which has historically provided more durable volume and higher returns compared to refinancing [10] - Purchase loans accounted for 64% of total originations from 2016 to 2020, with a forecasted 10% increase in purchase originations for 2021 [10] - The gain on sale margin for Q4 was 436 basis points, up 67 basis points year-over-year but down from 552 basis points in the prior quarter [20] Market Data and Key Metrics Changes - The top 10 lenders in the retail channel captured approximately 22% of total originations in 2020 [12] - The company operates in a fragmented market with a focus on first-time homebuyers, supported by favorable demographic trends [13] Company Strategy and Development Direction - The company aims to drive long-term value for shareholders through a focus on purchase lending and a strong retail distribution model [9][10] - Plans to expand presence in existing markets and enter new territories through targeted acquisitions [17] - The company emphasizes the importance of maintaining a scalable, robust infrastructure while enhancing operational efficiencies through technology [15] Management's Comments on Operating Environment and Future Outlook - Management noted that the interest rate environment is shifting, but the company is well-positioned for sustainable growth [9] - The company anticipates a decline in refinancing activity as interest rates rise, but remains focused on its purchase-oriented business model [27] - The management expressed confidence in the ability to generate profitable growth regardless of interest rate cycles [27] Other Important Information - The company reported a forbearance request rate of 3.5% of its overall portfolio, compared to 5.5% for the industry [24] - The servicing portfolio was valued at $60 billion as of December 30, 2020, up 22% from the previous year [23] Q&A Session All Questions and Answers Question: Gain on sale for January and February - The gain on sale for January and February was relatively in line with Q4 2020 at 482 basis points [29] Question: Production expenses as a percentage of originations - The focus should be on the full year; expenses as a percentage of revenue were 57% for 2020 compared to 78% in 2019 [30] Question: Retained percentage of UPB this quarter - The retained percentage for the quarter was about 95% [34] Question: Sequential increase in servicing expenses - There were one-time expenses related to the Cares Act for foreclosure loss provision, but overall costs are expected to normalize [36] Question: Tax rate for the fourth quarter - The tax rate was in the low 20%s due to a slight adjustment for a deferred tax asset [63]