United Wholesale Mortgage (UWM) reported net income of $301 million in the third quarter, which includes a $92.9 million increase in the fair value of mortgage servicing rights (MSRs), and diluted earnings per share were $0.15.
While total income is up, but originations are down from the second quarter as mortgage interest rates hovered around 8% for the third quarter.
The company originated $29.7 billion in loans in the third quarter, which is down from $31.8 billion in the second quarter. There's also been an increase in total gain margin which came in at 97 basis points, which is higher than the 88 basis points in the second quarter.
"The strength of UWM and the broker channel is on full display," UWM Chairman and CEO Mat Ishbia said in a press release. "While others choose to dwell on high mortgage rates and low housing inventory, at UWM we remain focused on growing our market share and the broker channel. We are investing in new technology and hiring new team members to ensure that we are prepared for the eventual turn in rates."
Key financial highlights for the third quarter included:
- Originations of $29.7 billion in 3Q23, compared to $31.8 billion in 2Q23 and $33.5 billion in 3Q22
- Purchase originations of $25.9 billion in 3Q23, compared to $28.0 billion in 2Q23 and $27.7 billion in 3Q22
- Total gain margin of 97 bps in 3Q23 compared to 88 bps in 2Q23 and 52 bps in 3Q22
- Net income of $301.0 million in 3Q23 compared to $228.8 million in 2Q23 and $325.6 million 3Q22
- Adjusted EBITDA of $112.1 million in 3Q23 compared to $125.4 million in 2Q23 and $(1.4) million in 3Q22
- Total equity of $3.1 billion at September 30, 2023, compared to $2.9 billion at June 30, 2023, and $3.4 billion at September 30, 2022
- Unpaid principal balance of MSRs of $281.4 billion with a WAC of 4.20% at September 30, 2023, compared to $294.9 billion with a WAC of 3.84% at June 30, 2023, and $306.0 billion with a WAC of 3.44% at September 30, 2022
- Ended 3Q23 with approximately $2.9 billion of available liquidity, including $0.9 billion of cash and self-warehouse, and $2 billion of available borrowing capacity, which includes $1.5 billion under lines of credit secured by agency and Ginnie Mae MSRs, and $500 million under an unsecured line of credit
"We certainly recognize that many in the industry are facing challenges," said Ishbia. "With that said, UWM will continue to embrace this cycle as a time for purchase dominance and investment in our future. We are not resting on any laurels, nor are we relaxing. We will continue to stay on offense while much of the industry is on defense."
Ishbia said UWM loves purchase because it's hard for others to compete at their level and the business is less cyclical.
Like in the second quarter, Ishbia said "when refis turn, we will be ready."
He said they embrace the down cycle every time it happens because they come out stronger and other lenders, many of whom have closed up shop, can't say that.
“We’ve always said we’d rather be the best lender than the biggest, but we’ve in fact been both," Ishbia said.
