Guild Holdings Co., the parent company of Guild Mortgage, returned to profitability in the second quarter and posted a sharp rise in refinance recapture ahead of its proposed $1.3 billion sale to Bayview Asset Management.
Guild reported net income of $18.7 million for the quarter, reversing a $23.9 million loss in Q1. Adjusted net income totaled $41.4 million and adjusted EBITDA was $58 million, according to Securities and Exchange Commission (SEC) filings.
Despite a constrained and challenging market, “We delivered our best adjusted net income, adjusted EBITDA and adjusted return on average equity since 2021,” said Guild CEO Terry Schmidt.
“In the origination segment, we delivered origination growth of 44% quarter-over-quarter and 15% year-over-year, with expense and profitability metrics improving to levels we last delivered in 2022,” Schmidt added.
The company’s refinance recapture rate climbed to 37% as of June 30, up from 31% as of March 31 and 22% a year earlier. Purchase recapture held steady at about 27%.
The metric will be closely watched as loan officers assess how Guild might integrate its refinance capabilities with the $770 billion servicing portfolio of soon-to-be sister company Lakeview Loan Servicing, the nation’s second-largest mortgage servicer.
Guild reported earnings, but executives did not hold a conference call with analysts due to the merger proposal.
Guild originated $7.4 billion in mortgages in Q2, with 89% from purchase loans compared to the industry’s 67% average. That’s up from $5.2 billion in Q1 and $6.5 billion a year earlier. The company’s gain-on-sale margin was 329 basis points, down from 376 bps in Q1 but above 326 bps a year ago.
Its servicing portfolio reached $96.2 billion at quarter’s end, compared to $94 billion in Q1 and $89 billion a year ago. The segment delivered $27.3 million in net income, factoring in a $41.3 million MSR valuation adjustment due to interest rate volatility. Guild retains 61% of the loans it sells.
Bayview has signaled interest in Guild’s “customer-for-life” strategy and grassroots brand. Schmidt described the company as operating with two integrated channels — distributed retail and servicing — that feed into each other, with no plans to turn the lender into a refinance-focused shop.
The company’s cash and equivalents were $107.4 million as of June 30.
English