San Diego-based lender Guild Mortgage, which has been on an acquisition spree, faced financial challenges in 2023, reporting a net loss for the year, the company said during its earnings call on Tuesday.
Like many other major lenders, Guild Mortgage experienced a downturn, reporting a net loss of $39.1 million for 2023, a significant decrease from the $328.6 million net income it reported in 2022. The fourth quarter of 2023 was particularly challenging, with Guild Mortgage reporting a net loss of $93.1 million, compared to a net income of $54.2 million in the previous quarter. Adjusted net income for the fourth quarter stood at $12.5 million, down from $29 million in Q3 2023.
"As we look forward, we are encouraged by the market stabilization that is emerging, but anticipate a more muted environment in the near term, particularly in the seasonally slower first quarter," Guild Holdings CEO Terry Schmidt said in a press release.
She attributed the challenges to the market conditions, including higher interest rates and limited housing inventory.
However, Schmidt expressed confidence in the company's model and platform, emphasizing its focus on purchase mortgage originations and the strategy of retaining servicing to generate reliable cash flow and maintain customer relationships.
Guild Mortgage posted an origination volume of $15 billion in 2023, with $3.5 billion generated in the fourth quarter alone. Approximately 93% of the closed volume in Q4 came from purchase business, surpassing the industry average of 81% for the same period.
In the originations segment, Guild Mortgage reported a net loss of $73.7 million for the year, including a net loss of $26.8 million in the fourth quarter. This loss was primarily attributed to lower volume resulting from low for-sale supply and purchase seasonality, compounded by prolonged higher interest rates. Gain-on-sale margins on originations also declined to 330 basis points in the fourth quarter, down 47 bps from the third quarter.
"By being disciplined and focusing on maintaining a robust capital position, we have effectively pursued complementary and compelling acquisitions and team additions to position us for growth when the cycle turns," Schmidt said.
Guild Mortgage recently announced the acquisition of Academy Mortgage Corp. This acquisition, along with others completed in 2023, including First Centennial Mortgage, Cherry Creek Mortgage, and Legacy Mortgage, contributed to Guild Mortgage's growth strategy.
Guild Mortgage reported a decline in net revenues, with net revenues dropping 78% to $57.2 million in Q4 2023 from $257.3 million in the prior quarter. Total expenses decreased by 4% to $176.5 million in Q4 2023 from $183.7 million in Q3 2023. For the full year 2023, the company posted net revenue of $700 million, down from $1.2 billion in 2022.
Guild Mortgage's servicing portfolio continued to grow, reaching $85 billion as of December 31, 2023, up 2% from $83.7 billion as of September 30, 2023. Looking ahead, Guild Mortgage acknowledged ongoing headwinds expected to persist through much of 2024, including pressure on origination volume and gain-on-sale margins.
