Guild Holdings Co., the parent company of Guild Mortgage, sustained a $66.9 million loss in the third quarter of 2024 after delivering a profit of $37 million in the prior quarter, but much of that loss was driven by market value changes to its $91 billion servicing portfolio stemming from lower interest rates, the company said.
Meanwhile, its origination volume increased to $6.9 billion, up 6% from the second quarter and 49% higher than the same period in 2023. This led its originations segment to “profitable” results, according to CEO Terry Schmidt.
Amber Kramer, the company’s chief financial officer, went deeper into the company’s financial results on an earnings call Wednesday. The company’s servicing portfolio grew to $91.4 billion in unpaid principal balance (UPB), but it recorded a net loss of $74.6 million that is attributed to “the downward valuation adjustment of MSRs of $124 million reflecting the interest rate decline,” Kramer said.
The servicing portfolio’s UPB was up 3% compared to the $89.1 billion total at the end of June.
Net revenue dropped from $285.7 million in Q2 2024 to $159.3 million in Q3. The net loss attributable to Guild was $66.9 million, while adjusted net income was $31.7 million, according to an 8-K filing with the Securities and Exchange Commission (SEC). Adjusted EBITDA for the quarter stood at $46.4 million.
Schmidt said in a statement that the company’s trajectory continues to reflect “positive momentum” based on investments it has made in prior acquisitions.
Schmidt added that a “clear differentiator” the company has is “the realization of the growth platform” stemming from its acquisitions, which included Academy Mortgage at the beginning of the year. She added that originations are expected to grow regardless of the interest rate environment.
“Our focus on achieving profitable, long-term market share gains, along with our balanced business model of originations and servicing, positions us for success throughout macroeconomic environments,” Schmidt said.
“We are confident in our platform, products and people, and anticipate seeing enhanced production from our expanded origination network over time, while we will remain disciplined in order to deliver long-term value to our shareholders.”
Kramer also lauded the servicing portfolio’s contribution to the overall business.
“Our servicing portfolio continues to be a valuable source for ongoing cash flow, future opportunities for loan recapture, and it reinforces our customers-for-life strategy,” Kramer said. “Furthermore, our business model — which combines the originations in the servicing segments — provides for a natural hedge over time, as rate declines should translate into higher originations, both purchase and refinances.”
The company’s cash and cash equivalents position was $106.2 million at the end of September, up $3.8 million quarter over quarter.
In after-hours trading on Wednesday, Guild’s share price was down to $12.99 after peaking at $14.37 earlier in the day.
Editor’s note: This story has been updated to reflect that changes in the value of the servicing portfolio contributed to the reported loss figure.
