Home Point Capital Inc. (NASDAQ: HMPT) (together with its
subsidiaries, “Home Point Capital” or the “Company”), the parent
entity of Home Point Financial Corporation (“Homepoint”), today
announced its financial results for the first quarter ended
March 31, 2023.
In addition, as previously disclosed during the second quarter
of 2023, the Company has announced the following two strategic
transactions:
- On May 10, 2023, the Company announced the signing of a
definitive agreement (the “Merger Agreement”) that provides for a
wholly owned subsidiary of Mr. Cooper Group Inc. (“Mr. Cooper”) to
commence a tender offer (the “Offer”) to acquire all outstanding
shares of Home Point Capital for $324 million in cash (the
“Merger”). As part of the transaction, Mr. Cooper will assume $500
million Home Point Capital 5% senior notes, which are due in
February 2026. The transaction is expected to close in the third
quarter of 2023, subject to customary closing conditions including
receipt of regulatory approvals. Following the onboarding of Home
Point Capital customers and the closing of the transaction, Mr.
Cooper will wind down the remaining Home Point Capital
operations.
- On April 7, 2023, Homepoint entered into an Asset Purchase
Agreement with The Loan Store, Inc. pursuant to which Homepoint
agreed to sell certain agreements and assets used in or related to
Homepoint’s loan origination business to The Loan Store, Inc., and
The Loan Store, Inc. agreed to assume certain liabilities. This
sale was completed on May 1, 2023, at which time Homepoint was
issued shares of The Loan Store, Inc.’s Class A Common Stock
representing 9.99% of its issued and outstanding equity. This sale
marks the end of Homepoint’s nine-year tenure as a direct
participant in the originations market.
First Quarter 2023 Financial and Key Performance
Indicator Summary
($mm, except per share values) |
For the quarter ended |
|
3/31/2023 |
|
12/31/2022 |
|
3/31/2022 |
|
|
|
|
|
|
Total Funded Origination Volume |
$ |
891.2 |
|
|
$ |
1,691.3 |
|
|
$ |
12,555.1 |
Total
Fallout Adjusted Lock Volume |
$ |
802.5 |
|
|
$ |
1,403.1 |
|
|
$ |
12,589.1 |
Gain on
sale margin (bps)1 |
|
12 |
|
|
|
22 |
|
|
|
58 |
Servicing
portfolio - Units |
|
315,801 |
|
|
|
315,478 |
|
|
|
349,261 |
Servicing
portfolio - UPB |
$ |
88,386.3 |
|
|
$ |
88,668.6 |
|
|
$ |
101,984.8 |
|
|
|
|
|
|
Total
revenue, net |
$ |
(107.5 |
) |
|
$ |
19.2 |
|
|
$ |
158.2 |
Origination segment direct expenses |
|
21.1 |
|
|
|
27.2 |
|
|
|
81.2 |
Servicing segment direct expenses |
|
15.6 |
|
|
|
13.0 |
|
|
|
15.8 |
Corporate expenses |
|
33.2 |
|
|
|
22.9 |
|
|
|
39.7 |
Total
expenses |
|
69.9 |
|
|
|
63.1 |
|
|
|
136.7 |
Net
(loss) income |
$ |
(133.8 |
) |
|
$ |
(36.8 |
) |
|
$ |
11.9 |
Net
(loss) income per share |
|
|
|
|
|
Basic |
$ |
(0.97 |
) |
|
$ |
(0.27 |
) |
|
$ |
0.09 |
Diluted |
$ |
(0.97 |
) |
|
$ |
(0.27 |
) |
|
$ |
0.08 |
|
|
|
|
|
|
(1) Calculated as gain on sale divided by Fallout Adjusted Lock
Volume. Gain on sale includes gain on loans, net, loan fee income,
and interest income (expense), net for the Origination segment.
First Quarter 2023 Highlights
- Quarterly funded
origination volume was $0.9 billion, compared to $12.6 billion in
the first quarter of 2022, and $1.7 billion in the fourth quarter
of 2022.
- Total revenue, net
of $(107.5) million, compared to $158.2 million in the first
quarter of 2022 and $19.2 million in the fourth quarter of
2022.
- Total revenue in
the Origination segment of $1.0 million, compared to $72.8 million
in the first quarter of 2022 and $3.0 million in the fourth quarter
of 2022.
- Gain on sale margin
attributable to channels, before giving effect to the impact of
capital markets and other activity, was 97 basis points in the
first quarter of 2023, compared to 61 basis points in the first
quarter of 2022 and 86 basis points in the fourth quarter of
2022.
- Total expenses of
$69.9 million improved 48.9% versus the first quarter of 2022 and
increased by 10.8% from the fourth quarter of 2022.
- Changes in MSR fair
value in the first quarter of 2023 was $(159.2) million, primarily
driven by market changes and changes in valuation inputs and
assumptions, net of hedge. This loss was partially offset by a
decrease in loss from realization of cash flows resulting from a
decrease in prepayments due to higher interest rates and higher
scheduled payments collected on loans in our MSR portfolio, as well
as the loss on MSR sales in 2022.
- Net loss of $133.8
million (or $(0.97) per basic and diluted share), compared to net
income of $11.9 million (or $0.09 per basic and $0.08 per diluted
share) in the first quarter of 2022, and net loss of $36.8 million
(or $(0.27) per basic and diluted share) in the fourth quarter of
2022.
- Servicing customers
of 315,801, down 9.6% from the first quarter of 2022, and
relatively consistent with the fourth quarter of 2022.
- Servicing portfolio
UPB totaled $88.4 billion as of March 31, 2023, down 13.3%
from the first quarter of 2022, and down 0.3% from the fourth
quarter of 2022.
- Servicing portfolio
delinquencies of 60 days or more of 0.8% remained relatively
consistent with 0.8% in the first quarter of 2022 and 0.9% in the
fourth quarter of 2022. The MSR multiple for the first quarter of
2022 of 5.3x decreased from 5.6x in the first quarter of 2022 and
6.0x in the fourth quarter of 2022, primarily driven by changes in
MSR fair value noted above.
Origination Segment
Prior to the above-mentioned sale of origination
assets, Home Point Capital’s Origination segment originated and
sold residential real estate mortgage loans. These loans were
sourced through the wholesale channel, where the Company works with
mortgage brokerages to source new customers. In 2022, the Company
completed the sale of the Correspondent channel, where customers
were acquired through a network of mortgage banks and financial
institutions. We also redirected our Direct channel resources to
wholesale. The Direct channel retained serviced customers in the
Home Point Capital ecosystem.
The Origination segment recorded a contribution
loss of $20.1 million in the first quarter of 2023, compared to
contribution losses of $8.4 million in the first quarter of 2022
and $24.2 million in the fourth quarter of 2022.
Origination Segment – Financial Highlights and Summary
of Key Performance Indicators
($mm) |
For the quarter ended |
|
3/31/2023 |
|
12/31/2022 |
|
3/31/2022 |
|
|
|
|
|
|
(Loss) gain on loans, net |
$ |
(1.5 |
) |
|
$ |
(1.3 |
) |
|
$ |
45.4 |
|
Loan fee
income |
|
1.7 |
|
|
|
3.3 |
|
|
|
19.9 |
|
Interest
income, net and other income |
|
0.8 |
|
|
|
1.0 |
|
|
|
7.5 |
|
Total Origination segment revenue |
|
1.0 |
|
|
|
3.0 |
|
|
|
72.8 |
|
Directly
attributable expense |
|
21.1 |
|
|
|
27.2 |
|
|
|
81.2 |
|
Contribution loss |
$ |
(20.1 |
) |
|
$ |
(24.2 |
) |
|
$ |
(8.4 |
) |
|
|
|
|
|
|
Key Performance Indicators1 |
For the quarter ended |
3/31/2023 |
|
12/31/2022 |
|
3/31/2022 |
|
|
|
|
|
|
Total
Funded Origination Volume |
$ |
891.2 |
|
|
$ |
1,691.3 |
|
|
$ |
12,555.1 |
|
Total
Fallout Adjusted Lock Volume |
$ |
802.5 |
|
|
$ |
1,403.1 |
|
|
$ |
12,589.1 |
|
|
|
|
|
|
|
Gain on
Sale Margin (bps)2 |
|
12 |
|
|
|
22 |
|
|
|
58 |
|
|
|
|
|
|
|
Origination Volume by Purpose: |
|
|
|
|
|
Purchase |
|
85.0 |
% |
|
|
83.8 |
% |
|
|
44.4 |
% |
Refinance |
|
15.0 |
% |
|
|
16.2 |
% |
|
|
55.6 |
% |
|
|
|
|
|
|
Third
Party Partners: |
|
|
|
|
|
Number of Broker Partners |
|
9,351 |
|
|
|
9,259 |
|
|
|
8,376 |
|
Number of Correspondent Partners3 |
|
N/A |
|
|
|
N/A |
|
|
|
669 |
|
|
|
|
|
|
|
(1) See Appendix for additional volume and gain
on sale information by channel.(2) Calculated as gain on sale
divided by Fallout Adjusted Lock Volume. Gain on sale includes gain
on loans, net, loan fee income, interest income (expense), net, and
loan servicing fees (expense) for the Origination segment.(3)
Number of Correspondent Partners from whom the Company purchased
loans is not applicable for the fourth quarter of 2022 and first
quarter of 2023 due to the sale of the Correspondent channel on
June 1, 2022.
Servicing Segment
Home Point Capital’s Servicing segment generates
revenue through contractual fees earned by performing daily
administrative and management activities for mortgage loans that
were primarily sourced by the Company’s Originations segment. These
loans are serviced on behalf of investors/guarantors, primarily
Fannie Mae, Freddie Mac and Ginnie Mae. In February 2022, Homepoint
announced an agreement with ServiceMac, LLC (“ServiceMac”) pursuant
to which ServiceMac subservices all mortgage loans underlying MSRs
held by Homepoint. Substantially all of Homepoint’s servicing staff
has transitioned to ServiceMac providing customers with continuity
and the same high-quality service. ServiceMac began subservicing
newly originated agency loans for Homepoint in the second quarter
of 2022. The transition of the balance of the agency portfolio and
all of the Ginnie Mae portfolio to ServiceMac was completed in the
third quarter of 2022. ServiceMac performs servicing functions on
Homepoint’s behalf, but Homepoint continues to hold the MSRs.
The Servicing segment generated a contribution
margin of $109.1 million in the first quarter of 2023, compared to
$83.2 million in the first quarter of 2022 and $15.3 million in the
fourth quarter of 2022.
Servicing Segment – Financial Highlights
and Key Performance Indicators
($mm) |
For the quarter ended |
|
3/31/2023 |
|
12/31/2022 |
|
3/31/2022 |
|
|
|
|
|
|
Loan servicing fees |
$ |
58.8 |
|
|
$ |
61.2 |
|
|
$ |
81.1 |
|
Interest
income, net and other income |
|
6.9 |
|
|
|
5.9 |
|
|
|
0.7 |
|
Total Servicing segment revenue |
|
65.7 |
|
|
|
67.1 |
|
|
|
81.8 |
|
Directly
attributable expense |
|
15.6 |
|
|
|
13.0 |
|
|
|
15.8 |
|
Primary Margin |
|
50.1 |
|
|
|
54.1 |
|
|
|
66.0 |
|
Change in
MSR fair value: amortization |
|
(19.4 |
) |
|
|
(20.8 |
) |
|
|
(49.0 |
) |
Adjusted contribution margin |
|
30.7 |
|
|
|
33.3 |
|
|
|
17.1 |
|
Change in
MSR fair value: mark-to-market, net of hedge |
|
(139.8 |
) |
|
|
(18.0 |
) |
|
|
66.1 |
|
Contribution (loss) margin |
$ |
(109.1 |
) |
|
$ |
15.3 |
|
|
$ |
83.2 |
|
|
|
|
|
|
|
Key Performance Indicators |
For the quarter ended1 |
3/31/2023 |
|
12/31/2022 |
|
3/31/2022 |
|
|
|
|
|
|
MSR servicing portfolio - UPB |
$ |
88,386 |
|
|
$ |
88,669 |
|
|
$ |
101,985 |
|
Average MSR servicing portfolio - UPB |
$ |
88,527 |
|
|
$ |
91,378 |
|
|
$ |
115,172 |
|
MSR servicing portfolio - Units |
|
315,801 |
|
|
|
315,478 |
|
|
|
349,261 |
|
Weighted average coupon rate |
|
3.38 |
% |
|
|
3.35 |
% |
|
|
3.00 |
% |
60+ days delinquent, incl. forbearance |
|
0.8 |
% |
|
|
0.9 |
% |
|
|
0.8 |
% |
MSR multiple |
|
5.3 |
|
|
|
6.0 |
|
|
|
5.6 |
|
|
|
|
|
|
|
(1) Figures as of period end, except "Average MSR servicing
portfolio - UPB" which is average for the period.
Balance Sheet and Liquidity Highlights
Home Point Capital had available liquidity of
$623.0 million as of March 31, 2023, comprising $100.0 million of
cash and cash equivalents and $523.0 million of undrawn capacity
from its mortgage servicing rights line of credit and other credit
facilities. The Company had total warehouse capacity of $2.8
billion, and unused capacity of $2.4 billion as of March 31,
2023, compared to total capacity of $2.8 billion, and unused
capacity of $2.3 billion as of December 31, 2022.
($mm) |
As of |
|
3/31/2023 |
|
12/31/2022 |
|
|
|
|
Cash and cash equivalents |
$ |
100.0 |
|
$ |
97.2 |
Mortgage
servicing rights (at fair value) |
$ |
1,251.6 |
|
$ |
1,402.5 |
Warehouse
lines of credit |
$ |
409.5 |
|
$ |
496.5 |
Term debt
and other borrowings, net |
$ |
892.9 |
|
$ |
942.1 |
Total shareholders' equity |
$ |
470.6 |
|
$ |
603.5 |
|
|
|
|
About Home Point Capital
Home Point is a residential mortgage servicer and mortgage
servicing rights (MSR) asset manager.
Home Point Financial Corporation d/b/a
Homepoint. NMLS No. 7706 (For licensing information, go to:
nmlsconsumeraccess.org). Home Point Financial Corporation does not
conduct business under the name, "Homepoint" in IL, KY, LA, MD, NY,
or WY. In these states, the Company conducts business under the
full legal name, Home Point Financial Corporation, 2211 Old Earhart
Road, Suite 250, Ann Arbor, MI 48105. Toll-Free Tel:
888-616-6866.
Forward Looking Statements
This press release contains certain
“forward-looking statements,” within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements other
than statements of historical fact are forward-looking statements.
Forward-looking statements include, but are not limited to,
statements relating to our future financial performance, our
business prospects and strategy, anticipated financial position,
liquidity and capital needs, the industry in which we operate and
other similar matters. Words such as “anticipates,” “expects,”
“intends,” “plans,” “predicts,” “believes,” “seeks,” “estimates,”
“could,” “would,” “will,” “may,” “can,” “continue,” “potential,”
“should” and the negative of these terms or other comparable
terminology often identify forward-looking statements.
Forward-looking statements are not guarantees of future
performance, are based upon assumptions, and are subject to risks
and uncertainties that could cause actual results to differ
materially from the results contemplated by the forward-looking
statements. Factors, risks, and uncertainties that could cause
actual outcomes and results to be materially different from those
contemplated include, among others: the risk that the proposed
transaction may not be completed in a timely manner or at all;
uncertainty surrounding the number of shares of the Company’s
common stock that will be tendered in the Offer; the risk of legal
proceedings that may be instituted related to the Merger Agreement,
which may result in significant costs of defense, indemnification
and liability; the possibility that competing offers or acquisition
proposals for the Company will be made; the possibility that any or
all of the various conditions to the consummation of the Offer or
the Merger may not be satisfied or waived, including that a
governmental entity may prohibit, delay or refuse to grant approval
for the consummation of the Offer or the Merger; the occurrence of
any event, change or other circumstance that could give rise to the
termination of the Merger Agreement; the costs related to the
Merger if the Merger is not consummated; the effects of disruption
from the transactions of the Company’s business and the fact that
the announcement and pendency of the transactions may make it more
difficult to establish or maintain relationships with employees and
business partners; our reliance on our financing arrangements to
fund mortgage loans and otherwise operate our business; the
dependence of our loan servicing revenues on macroeconomic and U.S.
residential real estate market conditions; the requirement to
repurchase mortgage loans or indemnify investors if we breach
representations and warranties; counterparty risk; the requirement
to make servicing advances that can be subject to delays in
recovery or may not be recoverable in certain circumstances; risks
related to any subservicer; competition for mortgage assets that
may limit the availability of desirable acquisitions and result in
reduced risk-adjusted returns; difficult conditions or disruptions
in the mortgage-backed securities (“MBS”), mortgage, real estate
and financial markets; competition in the industry in which we
operate; our ability to acquire loans and sell the resulting MBS in
the secondary markets on favorable terms in our production
activities; our ability to adapt to and implement technological
changes; the effectiveness of our risk management efforts; our
ability to detect misconduct and fraud; any failure to attract and
retain a highly skilled workforce, including our senior executives;
our ability to obtain, maintain, protect and enforce our
intellectual property; any cybersecurity risks, cyber incidents and
technology failures; material changes to the laws, regulations or
practices applicable to reverse mortgage programs operated by the
Federal Housing Administration (“FHA”) and the U.S. Department of
Housing and Urban Development; our vendor relationships; our
failure to deal appropriately with various issues that may give
rise to reputational risk, including legal and regulatory
requirements; any employment litigation and related unfavorable
publicity; exposure to new risks and increased costs as a result of
initiating new business activities or strategies or significantly
expanding existing business activities or strategies; the impact of
changes in political or economic stability or by government
policies on our material vendors with operations in India; our
ability to fully utilize our net operating loss (“NOL”) and other
tax carryforwards; any challenge by the Internal Revenue Service of
the amount, timing and/or use of our NOL carryforwards; possible
changes in legislation and the effect on our ability to use the tax
benefits associated with our NOL carryforwards; the impact of other
changes in tax laws; the impact of interest rate fluctuations;
risks associated with hedging against interest rate exposure; the
impact of any prolonged economic slowdown, recession or declining
real estate values; risks associated with financing our assets with
borrowings; risks associated with a decrease in value of our
collateral; the dependence of our operations on access to our
financing arrangements, which are mostly uncommitted; risks
associated with the financial and restrictive covenants included in
our financing agreements; risks associated with changes in the
London Inter-Bank Offered Rate reporting practices and the use of
alternative reference rates; our ability to raise the debt or
equity capital required to finance our assets and grow our
business; risks associated with derivative financial instruments;
our ability to comply with continually changing federal, state and
local laws and regulations; the impact of revised rules and
regulations and enforcement of existing rules and regulations by
the Consumer Financial Protection Bureau; the impact of revised
rules and regulations and enforcement of existing rules and
regulations by state regulatory agencies; our ability to comply
with the Government-Sponsored Enterprises (“GSE”), FHA, U.S.
Department of Veterans Affairs (“VA”) and U.S. Department of
Agriculture (“USDA”) guidelines and changes in these guidelines or
GSE and Government National Mortgage Association (“Ginnie Mae”)
guarantees; changes in regulations or the occurrence of other
events that impact the business, operations or prospects of
government agencies such as Ginnie Mae, the FHA or the VA, the
USDA, or GSEs such as the Federal National Mortgage Association or
the Federal Home Loan Mortgage Corporation, or such changes that
increase the cost of doing business with such entities; our ability
to obtain and/or maintain licenses and other approvals in those
jurisdictions where required to conduct our business; our ability
to comply with the regulations applicable to our investment
management subsidiary; the impact of private legal proceedings;
risks associated with our acquisition of mortgage servicing rights;
the impact of our counterparties terminating our servicing rights
under which we conduct servicing activities; risks associated with
higher risk loans that we service; and our ability to foreclose on
our mortgage assets in a timely manner or at all. You should
carefully consider the foregoing factors and the other risks and
uncertainties that may affect the Company’s business, including
those listed under the heading “Risk Factors” in our Annual Report
on Form 10-K for the year ended December 31, 2022, as such risk
factors may be amended, supplemented, or superseded from time to
time by other reports filed by the Company with the Securities and
Exchange Commission. Many of the important factors that will
determine these results are beyond our ability to control or
predict. You are cautioned not to put undue reliance on any
forward-looking statements, which speak only as of the date
thereof. Except as required under applicable law, the Company does
not assume any obligation to update these forward-looking
statements.
Condensed Consolidated Statements of Operations ($
in millions, except per share data) (Unaudited) |
|
|
($mm, except per share values) |
For the quarter ended |
|
3/31/2023 |
|
12/31/2022 |
|
3/31/2022 |
|
|
|
|
|
|
(Loss) gain on loans, net |
$ |
(1.5 |
) |
|
$ |
(1.3 |
) |
|
$ |
45.4 |
|
Loan fee
income |
|
1.7 |
|
|
|
3.3 |
|
|
|
19.9 |
|
Interest income |
|
12.5 |
|
|
|
15.4 |
|
|
|
27.1 |
|
Interest expense |
|
(20.5 |
) |
|
|
(23.9 |
) |
|
|
(33.1 |
) |
Interest
expense, net |
|
(8.0 |
) |
|
|
(8.5 |
) |
|
|
(6.0 |
) |
Loan
servicing fees |
|
58.8 |
|
|
|
61.2 |
|
|
|
81.1 |
|
Change in
fair value of mortgage servicing rights |
|
(159.2 |
) |
|
|
(38.8 |
) |
|
|
17.2 |
|
Other
income |
|
0.7 |
|
|
|
3.3 |
|
|
|
0.6 |
|
Total revenue, net |
|
(107.5 |
) |
|
|
19.2 |
|
|
|
158.2 |
|
|
|
|
|
|
|
Compensation and benefits |
|
30.2 |
|
|
|
29.1 |
|
|
|
89.4 |
|
Loan
expense |
|
1.3 |
|
|
|
1.9 |
|
|
|
9.0 |
|
Loan
servicing expense |
|
13.2 |
|
|
|
11.3 |
|
|
|
5.7 |
|
Production technology |
|
4.6 |
|
|
|
3.3 |
|
|
|
4.9 |
|
General
and administrative |
|
11.8 |
|
|
|
11.2 |
|
|
|
19.7 |
|
Depreciation |
|
4.3 |
|
|
|
2.8 |
|
|
|
2.7 |
|
Other
expenses |
|
4.5 |
|
|
|
3.5 |
|
|
|
5.3 |
|
Total
expenses |
|
69.9 |
|
|
|
63.1 |
|
|
|
136.7 |
|
|
|
|
|
|
|
(Loss) income before income tax |
|
(177.4 |
) |
|
|
(43.9 |
) |
|
|
21.5 |
|
Pre-tax margin |
|
165.0 |
% |
|
|
(228.6 |
)% |
|
|
13.6 |
% |
Income
tax benefit (expense) |
$ |
43.6 |
|
|
$ |
7.1 |
|
|
$ |
(4.3 |
) |
Loss from
equity method investment |
$ |
— |
|
|
$ |
— |
|
|
$ |
(5.3 |
) |
Net (loss) income |
$ |
(133.8 |
) |
|
$ |
(36.8 |
) |
|
$ |
11.9 |
|
Net margin |
|
124.5 |
% |
|
|
(191.7 |
)% |
|
|
7.5 |
% |
(Loss) earnings per share: |
|
|
|
|
|
Basic |
$ |
(0.97 |
) |
|
$ |
(0.27 |
) |
|
$ |
0.09 |
|
Diluted |
$ |
(0.97 |
) |
|
$ |
(0.27 |
) |
|
$ |
0.08 |
|
Basic
weighted average common stock outstanding (mm) |
|
138.4 |
|
|
|
138.4 |
|
|
|
138.9 |
|
Diluted
weighted average common stock outstanding (mm) |
|
138.4 |
|
|
|
138.4 |
|
|
|
140.6 |
|
|
|
|
|
|
|
Adjusted income statement metrics 1: |
|
|
|
|
|
Adjusted revenue |
$ |
32.4 |
|
|
$ |
37.2 |
|
|
$ |
86.8 |
|
Adjusted net loss |
$ |
(28.3 |
) |
|
$ |
(21.7 |
) |
|
$ |
(41.0 |
) |
Adjusted net margin |
|
(87.3 |
)% |
|
|
(58.4 |
)% |
|
|
(47.2 |
)% |
(1) Non-GAAP measures. See non-GAAP reconciliation
for a reconciliation of each measure to the nearest GAAP
measure.
Condensed Consolidated Balance Sheets ($ in
millions) (Unaudited) |
|
($mm) |
As of |
|
3/31/2023 |
|
12/31/2022 |
|
|
|
|
Assets: |
|
|
|
Cash and cash equivalents |
$ |
100.0 |
|
|
$ |
97.2 |
Restricted cash |
|
10.3 |
|
|
|
11.3 |
Cash and
cash equivalents and Restricted cash |
|
110.3 |
|
|
|
108.5 |
Mortgage
loans held for sale (at fair value) |
|
473.0 |
|
|
|
642.9 |
Mortgage
servicing rights (at fair value) |
|
1,251.6 |
|
|
|
1,402.5 |
Property
and equipment, net |
|
6.5 |
|
|
|
11.7 |
Accounts
receivable, net |
|
117.6 |
|
|
|
124.7 |
Derivative assets |
|
30.7 |
|
|
|
25.6 |
Government National Mortgage Association loans eligible for
repurchase |
|
91.8 |
|
|
|
85.9 |
Assets
held for sale |
|
1.6 |
|
|
|
— |
Other
assets |
|
30.2 |
|
|
|
36.2 |
Total assets |
$ |
2,113.3 |
|
|
$ |
2,438.0 |
|
|
|
|
Liabilities and Shareholders’ Equity: |
|
|
|
Warehouse
lines of credit |
|
409.5 |
|
|
|
496.5 |
Term debt
and other borrowings, net |
|
892.9 |
|
|
|
942.1 |
Accounts
payable and accrued expenses |
|
50.3 |
|
|
|
64.3 |
Government National Mortgage Association loans eligible for
repurchase |
|
91.8 |
|
|
|
85.9 |
Deferred
tax liabilities |
|
140.2 |
|
|
|
183.9 |
Derivative liabilities |
|
3.6 |
|
|
|
4.1 |
Liabilities held for sale |
|
0.8 |
|
|
|
— |
Other
liabilities |
|
53.6 |
|
|
|
57.7 |
Total liabilities |
|
1,642.7 |
|
|
|
1,834.5 |
|
|
|
|
Shareholders’ Equity: |
|
|
|
Common
stock |
|
— |
|
|
|
— |
Additional paid in capital |
|
514.5 |
|
|
|
513.7 |
(Accumulated deficit) retained earnings |
|
(43.9 |
) |
|
|
89.8 |
Total shareholders' equity |
|
470.6 |
|
|
|
603.5 |
Total liabilities and shareholders' equity |
$ |
2,113.3 |
|
|
$ |
2,438.0 |
Volume and Margin Detail by Channel |
|
VOLUME DETAIL BY CHANNEL |
|
|
|
|
|
($mm) |
For the quarter ended |
|
3/31/2023 |
|
12/31/2022 |
|
3/31/2022 |
|
|
|
|
|
|
Funded Origination Volume by Channel |
|
|
|
|
|
Wholesale |
$ |
890.4 |
|
$ |
1,673.3 |
|
$ |
9,317.7 |
Correspondent |
|
— |
|
|
— |
|
|
2,733.3 |
Direct |
|
0.8 |
|
|
18.0 |
|
|
504.1 |
Total Funded Origination Volume |
$ |
891.2 |
|
$ |
1,691.3 |
|
$ |
12,555.1 |
|
|
|
|
|
|
Fallout Adjusted Lock Volume by Channel |
|
|
|
|
|
Wholesale |
$ |
802.5 |
|
$ |
1,396.6 |
|
$ |
9,563.7 |
Correspondent |
N/A |
|
N/A |
|
|
2,610.8 |
Direct |
N/A |
|
|
6.5 |
|
|
414.6 |
Total Fallout Adjusted Lock Volume |
$ |
802.5 |
|
$ |
1,403.1 |
|
$ |
12,589.1 |
|
|
|
|
|
|
GAIN ON SALE MARGIN DETAIL BY CHANNEL |
($mm) |
For the quarter ended |
|
3/31/2023 |
|
12/31/2022 |
|
3/31/2022 |
|
$ Amount |
|
BasisPoints |
|
$ Amount |
|
BasisPoints |
|
$ Amount |
|
BasisPoints |
Gain on Sale Margin by Channel |
|
|
|
|
|
|
|
|
Wholesale |
$ |
7.8 |
|
|
97 |
|
|
$ |
11.6 |
|
|
85 |
|
|
$ |
62.6 |
|
|
65 |
|
Correspondent |
|
N/A |
|
|
N/A |
|
|
|
N/A |
|
|
N/A |
|
|
|
3.5 |
|
|
13 |
|
Direct |
|
N/A |
|
|
N/A |
|
|
$ |
0.2 |
|
|
254 |
|
|
|
10.7 |
|
|
258 |
|
Margin Attributable to Channels |
|
7.8 |
|
|
97 |
|
|
$ |
11.8 |
|
|
86 |
|
|
|
76.8 |
|
|
61 |
|
Other (Loss) Gain on Sale1 |
|
(6.8 |
) |
|
(85 |
) |
|
$ |
(8.7 |
) |
|
(64 |
) |
|
|
(4.0 |
) |
|
(3 |
) |
Gain on Sale Margin2 |
$ |
1.0 |
|
|
12 |
|
|
$ |
3.1 |
|
|
22 |
|
|
$ |
72.8 |
|
|
58 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes interest income (expense), net,
realized and unrealized gains (losses) on locks and mortgage loans
held for sale, net hedging results, the provision for the
representation and warranty reserve, and differences between
modeled and actual pull-through.(2) Calculated as gain on sale
divided by Fallout Adjusted Lock Volume. Gain on sale includes gain
on loans, net, loan fee income, interest income (expense), net, and
loan servicing fees (expense) for the Origination segment.
Summary Segment Results |
|
|
($mm) |
For the quarter March 31, 2023 |
|
Origination |
|
Servicing |
|
SegmentsTotal |
|
All Other |
|
Total |
|
Reconciliation Item1 |
|
Segments Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on loans, net |
$ |
(1.5 |
) |
|
$ |
— |
|
|
$ |
(1.5 |
) |
|
$ |
— |
|
|
$ |
(1.5 |
) |
|
$ |
— |
|
$ |
(1.5 |
) |
Loan fee
income |
|
1.7 |
|
|
|
— |
|
|
|
1.7 |
|
|
|
— |
|
|
|
1.7 |
|
|
|
— |
|
|
1.7 |
|
Loan
servicing fees |
|
— |
|
|
|
58.8 |
|
|
|
58.8 |
|
|
|
— |
|
|
|
58.8 |
|
|
|
— |
|
|
58.8 |
|
Change in
fair value of mortgage servicing rights2 |
|
— |
|
|
|
(159.2 |
) |
|
|
(159.2 |
) |
|
|
— |
|
|
|
(159.2 |
) |
|
|
— |
|
|
(159.2 |
) |
Interest
expense (income), net |
|
0.8 |
|
|
|
6.9 |
|
|
|
7.7 |
|
|
|
(15.7 |
) |
|
|
(8.0 |
) |
|
|
— |
|
|
(8.0 |
) |
Other
income (expense), net |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.7 |
|
|
|
0.7 |
|
|
|
— |
|
|
0.7 |
|
Total Revenue |
$ |
1.0 |
|
|
$ |
(93.5 |
) |
|
$ |
(92.5 |
) |
|
$ |
(15.0 |
) |
|
$ |
(107.5 |
) |
|
$ |
— |
|
$ |
(107.5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contribution loss |
$ |
(20.1 |
) |
|
$ |
(109.1 |
) |
|
$ |
(129.2 |
) |
|
$ |
(48.3 |
) |
|
$ |
(177.5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($mm) |
For the quarter December 31, 2022 |
|
Origination |
|
Servicing |
|
SegmentsTotal |
|
All Other |
|
Total |
|
ReconciliationItem1 |
|
SegmentsTotal |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on loans, net |
$ |
(1.3 |
) |
|
$ |
— |
|
|
$ |
(1.3 |
) |
|
$ |
— |
|
|
$ |
(1.3 |
) |
|
$ |
— |
|
$ |
(1.3 |
) |
Loan fee
income |
|
3.3 |
|
|
|
— |
|
|
|
3.3 |
|
|
|
— |
|
|
|
3.3 |
|
|
|
— |
|
|
3.3 |
|
Loan
servicing fees |
|
— |
|
|
|
61.2 |
|
|
|
61.2 |
|
|
|
— |
|
|
|
61.2 |
|
|
|
— |
|
|
61.2 |
|
Change in
fair value of mortgage servicing rights2 |
|
— |
|
|
|
(38.8 |
) |
|
|
(38.8 |
) |
|
|
— |
|
|
|
(38.8 |
) |
|
|
— |
|
|
(38.8 |
) |
Interest
income (expense), net |
|
1.0 |
|
|
|
5.9 |
|
|
|
6.9 |
|
|
|
(15.4 |
) |
|
|
(8.5 |
) |
|
|
— |
|
|
(8.5 |
) |
Other
income (expense), net |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3.3 |
|
|
|
3.3 |
|
|
|
— |
|
|
3.3 |
|
Total Revenue |
$ |
3.0 |
|
|
$ |
28.3 |
|
|
$ |
31.3 |
|
|
$ |
(12.1 |
) |
|
$ |
19.2 |
|
|
$ |
— |
|
$ |
19.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contribution (loss) margin |
$ |
(24.2 |
) |
|
$ |
15.3 |
|
|
$ |
(8.9 |
) |
|
$ |
(34.9 |
) |
|
$ |
(43.8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($mm) |
For the quarter March 31, 2022 |
|
Origination |
|
Servicing |
|
Segments Total |
|
All Other |
|
Total |
|
ReconciliationItem1 |
Segments Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
Gain on loans, net |
$ |
45.4 |
|
|
$ |
— |
|
$ |
45.4 |
|
$ |
— |
|
|
$ |
45.4 |
|
|
$ |
— |
|
$ |
45.4 |
|
Loan fee
income |
$ |
19.9 |
|
|
$ |
— |
|
$ |
19.9 |
|
$ |
— |
|
|
$ |
19.9 |
|
|
$ |
— |
|
$ |
19.9 |
|
Loan
servicing fees |
$ |
— |
|
|
$ |
81.1 |
|
$ |
81.1 |
|
$ |
— |
|
|
$ |
81.1 |
|
|
$ |
— |
|
$ |
81.1 |
|
Change in
fair value of mortgage servicing rights |
$ |
— |
|
|
$ |
17.2 |
|
$ |
17.2 |
|
$ |
— |
|
|
$ |
17.2 |
|
|
$ |
— |
|
$ |
17.2 |
|
Interest
income (expense), net |
$ |
7.5 |
|
|
$ |
0.7 |
|
$ |
8.2 |
|
$ |
(14.2 |
) |
|
$ |
(6.0 |
) |
|
$ |
— |
|
$ |
(6.0 |
) |
Other
income (expense), net |
$ |
— |
|
|
$ |
— |
|
$ |
— |
|
$ |
(4.6 |
) |
|
$ |
(4.6 |
) |
|
$ |
5.2 |
|
$ |
0.6 |
|
Total Revenue |
$ |
72.8 |
|
|
$ |
99.0 |
|
$ |
171.8 |
|
$ |
(18.8 |
) |
|
$ |
153.0 |
|
|
$ |
5.2 |
|
$ |
158.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contribution (loss) margin |
$ |
(8.4 |
) |
|
$ |
83.2 |
|
$ |
74.8 |
|
$ |
(58.7 |
) |
|
$ |
16.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The Company includes the income from its equity method
investments in the All Other category. In order to reconcile to
Total net revenue on the condensed consolidated statements of
operations, it must be removed as is presented above.(2) Change in
fair value of mortgage servicing rights includes $53.5 million loss
and $8.0 million gain on MSR sales for the first quarter of 2022
and fourth quarter of 2022, respectively.
GAAP to Non-GAAP Reconciliations
RECONCILIATION OF TOTAL REVENUE, NET TO ADJUSTED
REVENUE |
|
|
|
|
|
|
($mm) |
For the quarter ended |
|
3/31/2023 |
|
12/31/2022 |
|
3/31/2022 |
|
|
|
|
|
|
Total revenue, net |
$ |
(107.5 |
) |
|
$ |
19.2 |
|
|
$ |
158.2 |
|
Loss from
equity method investment |
|
— |
|
|
|
— |
|
|
|
(5.3 |
) |
Change in
fair value of MSR, net of hedge |
|
139.9 |
|
|
|
18.0 |
|
|
|
(66.1 |
) |
Adjusted
revenue |
$ |
32.4 |
|
|
$ |
37.2 |
|
|
$ |
86.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF TOTAL NET (LOSS) INCOME TO ADJUSTED NET
LOSS |
|
|
|
|
|
|
($mm) |
For the quarter ended |
|
3/31/2023 |
|
12/31/2022 |
|
3/31/2022 |
|
|
|
|
|
|
Total net
(loss) income |
$ |
(133.8 |
) |
|
$ |
(36.8 |
) |
|
$ |
11.9 |
|
Change in
fair value of MSR, net of hedge |
|
139.9 |
|
|
|
18.0 |
|
|
|
(66.1 |
) |
Income
tax effect of change in fair value of MSR, net of hedge |
|
(34.4 |
) |
|
|
(2.9 |
) |
|
|
13.2 |
|
Adjusted
net loss |
$ |
(28.3 |
) |
|
$ |
(21.7 |
) |
|
$ |
(41.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF NET MARGIN TO ADJUSTED NET
MARGIN |
|
|
|
|
|
|
($mm) |
For the quarter ended |
|
3/31/2023 |
|
12/31/2022 |
|
3/31/2022 |
|
|
|
|
|
|
Total
revenue, net |
$ |
(107.5 |
) |
|
$ |
19.2 |
|
|
$ |
158.2 |
|
Total net
(loss) income |
|
(133.8 |
) |
|
|
(36.8 |
) |
|
|
11.9 |
|
Net margin |
|
124.5 |
% |
|
|
(191.7 |
)% |
|
|
7.5 |
% |
|
|
|
|
|
|
Adjusted
revenue |
$ |
32.4 |
|
|
$ |
37.2 |
|
|
$ |
86.8 |
|
Adjusted
net loss |
|
(28.3 |
) |
|
|
(21.7 |
) |
|
|
(41.0 |
) |
Adjusted net margin |
|
(87.3 |
)% |
|
|
(58.4 |
)% |
|
|
(47.2 |
)% |
|
|
|
|
|
|
Non-GAAP Financial Measures
To provide investors with information in
addition to our results as determined under Generally Accepted
Accounting Principles (“GAAP”), we disclose Adjusted revenue,
Adjusted net Income (Loss), and Adjusted net margin as “non-GAAP
measures,” which management believes provide useful information to
investors. These measures are not financial measures calculated in
accordance with GAAP and should not be considered as a substitute
for revenue, net income, or any other operating performance measure
calculated in accordance with GAAP, and may not be comparable to a
similarly titled measure reported by other companies.
We define Adjusted revenue as Total net revenue
exclusive of the impact of the change in fair value of MSRs related
to changes in valuation inputs and assumptions, net of MSRs hedge
and adjusted for Income from equity method investment.
We define Adjusted net income as Net income
(Loss) exclusive of the impact of the change in fair value of MSRs
related to changes in valuation inputs and assumptions, net of MSRs
hedge.
We exclude changes in fair value of MSRs, net of
hedge from each of Adjusted revenue and Adjusted net income (loss)
as they add volatility and are not indicative of the Company’s
operating performance or results of operation. This adjustment does
not include changes in fair value of MSRs due to realization of
cash flows, which remain in each of Adjusted revenue and Adjusted
net income (Loss). Realization of cash flows occurs when cash is
collected as customers make scheduled payments, partial prepayments
of principal, or pay their mortgage in full.
We define Adjusted net margin by dividing
Adjusted net income (Loss) by Adjusted revenue.
We believe that Adjusted revenue, Adjusted net
Income (Loss), and Adjusted net margin provide useful information
to investors and others in understanding and evaluating our
operating results. These measures are not financial measures
calculated in accordance with GAAP and should not be considered as
a substitute for net income, or any other operating performance
measure calculated in accordance with GAAP and may not be
comparable to a similarly titled measure reported by other
companies.
We believe that the presentation of Adjusted
revenue, Adjusted net Income, and Adjusted net margin provides
useful information to investors regarding our results of operations
because each measure assists both investors and management in
analyzing and benchmarking the performance and value of our
business. Adjusted revenue, Adjusted net Income (Loss), and
Adjusted net margin provide indicators of performance that are not
affected by fluctuations in certain costs or other items.
Accordingly, management believes that these measurements are useful
for comparing general operating performance from period to period,
and management relies on these measures for planning and
forecasting of future periods. The Company measures the performance
of the segments primarily on a contribution margin basis.
Additionally, these measures allow management to compare our
results with those of other companies that have different financing
and capital structures. However, other companies may define
Adjusted revenue, Adjusted net Income (Loss), and Adjusted net
margin differently, and as a result, our measures of Adjusted
revenue, Adjusted net Income (Loss), and Adjusted net margin may
not be directly comparable to those of other companies.
Investor Relations Contact:
Home Point Capital:investor@hpfc.com
Home Point Capital (NASDAQ:HMPT)
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