$860 Million in 1Q21 Net Income; $49.1
Billion in 1Q21 Loan Volume
UWM Holdings Corporation (NYSE: UWMC), the publicly
traded indirect parent of United Wholesale Mortgage (“UWM”), the #1
wholesale mortgage lender in America, today announced the results
for the first quarter ended March 31, 2021. UWMC reported 1Q21 net
income of $860 million, a 42x increase over 1Q20 net income of
$20.3 million. Additionally, the Board of Directors of UWMC
declared a quarterly dividend of $0.10 per share on the outstanding
shares of Class A Common Stock. The dividend is payable on July 6,
2021 to stockholders of record at the close of business on June 10,
2021. The Board of Directors also authorized a share repurchase
program of up to $300 million over the next 24 months, beginning on
May 11, 2021.
Mat Ishbia, Chairman and CEO of UWMC said: "The first quarter of
2021 was not only the best first quarter in our 35-year history, it
also marked our first quarter as a public company and solidified
our foundation for growth. We believe we now have the capital,
liquidity, technology, campus and staffing necessary to further
scale our business and grow to become the largest mortgage
originator in the country. We welcome the shift to more of a
purchase market and the pressure on margins as we believe our
business model is built to outperform competitors under those
conditions. Moving forward, our priorities remain the same: our
people, the industry-leading service we offer to our brokers, and
creating long-term value for our shareholders."
First Quarter 2021 Financial Highlights
- Originations of $49.1 billion in loan volume, a 16% increase
from the 1Q20 $42.4 billion loan volume
- Total gain margin of 219 bps in 1Q21 compared to 95 bps in
1Q20
- First quarter net income of $860.0 million, as compared to
$20.3 million for 1Q20
- Increased total equity to $2.78 billion at March 31, 2021 as
compared to $681.5 million at March 31, 2020
- Unpaid principal balance of mortgage servicing rights increased
to $221.0 billion in 1Q21 from $85.6 billion in 1Q20
Production and Income Statement Highlights (dollars in
thousands)
Q1 2021
Q4 2020
Q1 2020
Closed loan volume(1)
$
49,094,240
$
54,678,923
$
42,441,727
Total gain margin(1)(2)
2.19
%
3.05
%
0.95
%
Net income
$
860,005
$
1,371,791
$
20,349
Adjusted net income(3)
$
665,318
$
1,046,303
$
15,510
(1)
Key operational metric - see discussion
below.
(2)
Represents total loan production income
divided by total production.
(3)
Non-GAAP metric - see discussion
below.
Balance Sheet Highlights as of Period-end (dollars in
thousands)
Q1 2021
Q4 2020
Q1 2020
Cash and cash equivalents
$
1,592,663
$
1,223,837
$
56,207
Mortgage loans at fair value
5,503,271
7,916,515
5,572,903
Mortgage servicing rights (fair value
at Q1 2021; amortized cost in Q4 2020 and Q1 2020)(1)
2,300,434
1,756,864
721,202
Total assets
10,372,626
11,493,476
7,641,791
Non-funding debt (2)
1,270,167
1,159,283
500,278
Total equity
2,778,036
2,374,280
681,495
Non-funding debt to equity (2)
0.46
0.49
0.73
(1)
The Company elected the fair value method
of accounting for mortgage servicing rights effective January 1,
2021.
(2)
Non-GAAP metric - please see discussion
below.
Mortgage Servicing Rights (dollars in thousands)
Q1 2021
Q4 2020
Q1 2020
Unpaid principal balance
$
220,978,670
$
188,268,883
$
85,645,355
Weighted average interest rate
3.00
%
3.13
%
3.79
%
Weighted average age (months)
7
6
6
Operational and Community Highlights
- We maintained an average application to clear to close time
(“Days to Close”) of approximately 17 days in 1Q21 as compared to
18 days in 4Q20, while management estimates that the first quarter
industry average remains in line with previous performance, which
was 52 days for the fourth quarter 2020
- Our 1.54% 60+ days delinquency and our 1.44% forbearance rates,
as of March 31, 2021, are significantly better than the industry
averages of 4.3% and 4.8%, highlighting our strong credit
quality
- Hired industry veteran Desmond P. Smith, previously an
executive for Fannie Mae, to be the company's first Chief Growth
Officer
- Our team members completed 457,052 training hours in 1Q21 and
UWM was ranked #1 on Training magazine’s Training Top 100 Award
winners list
- We continued to support our community by purchasing food from
locally owned restaurants and having the food delivered to homeless
shelters, serving nearly 10,000 meals to those in need
Technology Update
- Continued investment into machine learning and Robotic Process
Automation (RPA) to further advance our operational excellence
while driving down costs
- Continued to invest in our technology platform and on-site
teams resulting in additional operational efficiencies focused on
reducing costs, reducing closing times, and increasing loan
processing speed
- Our continued investments in the cloud, as well as technologies
that increase Underwriting efficiency, such as Automated Document
Recognition and Optical Character Recognition, have strengthened
our technology advantage while driving greater efficiency, and
reducing both fixed and variable costs
Product and Investor Mix - Unpaid Principal Balance as
of Period-end (dollars in thousands)
Purchase:
Q1 2021
Q4 2020
Q1 2020
Conventional
$
10,310,924
$
10,638,926
$
8,076,736
Jumbo
13,264
661
521,255
Government
1,893,354
1,457,197
3,927,328
Total Purchase
$
12,217,542
$
12,096,784
$
12,525,319
Refinance:
Q1 2021
Q4 2020
Q1 2020
Conventional
$
33,623,348
$
37,647,428
$
22,191,960
Jumbo
5,446
—
765,097
Government
3,247,904
4,934,711
6,959,351
Total Refinance
$
36,876,698
$
42,582,139
$
29,916,408
Total Originations
$
49,094,240
$
54,678,923
$
42,441,727
Chairman and CEO of UWMC, Mat Ishbia, added: “While others in
our industry guide towards lower volumes in 2Q21, UWMC is quite the
opposite. Because of our purchase focus and our broker network, we
expect to do more business in 2Q21 than 1Q21 and believe that we
will be one of the only mortgage companies in America that grows in
a rising rate environment.”
Share Repurchase Program
The Board of Directors has authorized a share repurchase program
of up to $300 million in aggregate value of the Company’s Class A
common stock effective May 11, 2021. The share repurchase program
authorizes the Company to repurchase shares of the Company’s Class
A common stock from time to time, in the open market or through
privately negotiated transactions, at management's discretion based
on market and business conditions, applicable legal requirements
and other factors. Shares purchased will be retired. The new plan
will expire on May 11, 2023 unless otherwise modified or terminated
by the Company's Board of Directors at any time in the Company's
sole discretion.
Second Quarter 2021 Outlook
We anticipate second quarter production to be in the $51-$55
billion range, with expected gain margin between 75 and 110
bps.
Earnings Conference Call Details
As previously announced, UWMC will hold a conference call for
financial analysts and investors on Tuesday, May 11 at 10 AM ET to
review the results and answer questions. Interested parties may
register for a toll-free dial-in number by visiting:
- http://www.directeventreg.com/registration/event/8291654
- Conference ID 8291654
- Conference Call Name: UWM Holdings Corporation 1Q 2021 Earnings
Call
Please dial in at least 15 minutes in advance to ensure a timely
connection to the call. Audio webcast, taped replay and transcript
will be available on the UWMC investor relations website at
https://investors.uwm.com/.
Key Operational Metrics
“Closed loan volume” and “Total gain margin” are key operational
metrics that UWMC management uses to evaluate the performance of
the business. “Closed loan volume” is the aggregate principal of
the residential mortgage loans originated by UWMC during a period.
“Total gain margin” represents total loan production income divided
by total production.
Non-GAAP Metrics
UWMC's net income for periods prior to the first quarter of 2021
does not reflect an income tax provision, since UWM (UWMC's
accounting predecessor) is a pass-through entity not subject to
federal and most state income taxes. For periods commencing with
the first quarter of 2021, UWMC's net income does not reflect the
income tax provision that would otherwise be reflected if 100% of
the economic interest in UWM was owned by UWMC. Therefore, for
comparison purposes, UWMC provides “Adjusted net income”, which is
our pre-tax income adjusted for a 23.78% estimated effective tax
rate. “Adjusted net income” is a Non-GAAP Metric.
In addition, we disclose “Non-funding debt” and the “Non-funding
debt to equity ratio” as a Non-GAAP metric. We define “Non-funding
debt” as UWMC’s total of operating lines of credit, senior notes,
equipment note payable, and finance leases as reported on our
balance sheet, and the “Non-funding debt to equity ratio” as
Non-funding debt divided by UWMC’s total equity.
Management believes that these Non-GAAP metrics 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 any other operating performance measure calculated
in accordance with GAAP, and may not be comparable to a similarly
titled measure reported by other companies.
The following table presents these non-GAAP financial measures
along with their most directly comparable financial measure
calculated in accordance with GAAP (dollars in thousands):
Adjusted net income
Q1 2021
Q4 2020
Q1 2020
Earnings before income taxes
$
872,891
$
1,372,741
$
20,349
Impact of estimated effective tax rate of
23.78%
(207,573
)
(326,438
)
(4,839
)
Adjusted net income
$
665,318
$
1,046,303
$
15,510
Non-funding debt and non-funding debt
to equity
Q1 2021
Q4 2020
Q1 2020
Senior notes
$
789,870
$
789,323
$
—
Operating lines of credit
400,000
320,300
471,721
Equipment note payable
25,424
26,528
28,557
Finance lease liability
54,873
23,132
—
Total non-funding debt
$
1,270,167
$
1,159,283
$
500,278
Total equity
$
2,778,036
$
2,374,280
$
681,495
Non-funding debt to equity
0.46
0.49
0.73
Forward Looking Statements
This press release and our earnings call include forward-looking
statements. These forward-looking statements are generally
identified by the use of words such as “anticipate,” “believe,”
“estimate,” “expect,” “intend,” “may,” “plan,” “potential,”
“predict,” and similar words indicating that these reflect our
views with respect to future events. Forward-looking statements in
this press release include statements regarding: (1) our foundation
and strategies for growth and the drivers of that growth; (2) our
ability to scale operations and increase market share with current
resources; (3) our performance in shifting market conditions and
the comparison of such performance against our competitors; (4)
growth of the wholesale channel; (5) our investments in technology
and the impact to our operations; (6) our Jumbo and Government
loans production and purchase levels; and (7) our anticipated
ranges for production volume and margin in the second quarter of
2021. These statements are based on management’s current
expectations, but are subject to risks and uncertainties, many of
which are outside of our control, and could cause future events or
results materially differ from those stated or implied in the
forward-looking statements, including (i) UWM’s dependence on
macroeconomic and U.S. residential real estate market conditions,
including changes in U.S. monetary policies that affect interest
rates; (ii) UWM’s reliance on its warehouse facilities and the risk
of a decrease in the value of the collateral underlying certain of
its facilities causing an unanticipated margin call; (iii) UWM’s
ability to sell loans in the secondary market; (iv) UWM’s
dependence on the government sponsored entities such as Fannie Mae
and Freddie Mac; (v) changes in the GSEs’, FHA, USDA and VA
guidelines or GSE and Ginnie Mae guarantees; (vi) UWM’s dependence
on Independent Mortgage Advisors to originate mortgage loans; (vii)
the risk that an increase in the value of the MBS UWM sells in
forward markets to hedge its pipeline may result in an
unanticipated margin call; (viii) UWM’s inability to continue to
grow, or to effectively manage the growth of, its loan origination
volume; (ix) UWM’s ability to continue to attract and retain its
Independent Mortgage Advisor relationships; (x) UWM’s ability to
implement technological innovation; (xi) UWM’s ability to continue
to comply with the complex state and federal laws regulations or
practices applicable to mortgage loan origination and servicing in
general; and (xii) other risks and uncertainties indicated from
time to time in our filings with the Securities and Exchange
Commission including those under “Risk Factors” therein. With
respect to expectations regarding the share repurchase program, the
amount and timing of share repurchases will depend upon, among
other things, market conditions, share price, liquidity targets,
regulatory requirements. We wish to caution readers that certain
important factors may have affected and could in the future affect
our results and could cause actual results for subsequent periods
to differ materially from those expressed in any forward-looking
statement made by or on behalf of us. We undertake no obligation to
update forward-looking statements to reflect events or
circumstances after the date hereof
About UWM Holdings Corporation and United Wholesale
Mortgage
Headquartered in Pontiac, Michigan, UWM Holdings Corporation is
the publicly traded indirect parent of United Wholesale Mortgage
(“UWM”). UWM is the #1 wholesale lender in the nation six years in
a row, providing state-of-the-art technology and unrivaled client
service. UWM underwrites and provides closing documentation for
residential mortgage loans originated by independent mortgage
brokers, correspondents, small banks and local credit unions. UWM
focuses on providing highly efficient, accurate and expeditious
lending support. UWM’s exceptional teamwork and focus on technology
result in the delivery of innovative mortgage solutions that drive
the company’s ongoing growth in market share and its leadership
position as the foremost advocate for independent mortgage brokers.
For more information, visit www.uwm.com.
UWM HOLDINGS
CORPORATION
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands, except shares
and per share amounts)
March 31, 2021
December 31,
2020
Assets
(Unaudited)
Cash and cash equivalents
$
1,592,663
$
1,223,837
Mortgage loans at fair value
5,503,271
7,916,515
Derivative assets
113,168
61,072
Accounts receivable, net
549,381
253,600
Mortgage servicing rights
2,300,434
1,756,864
Premises and equipment, net
111,964
107,572
Operating lease right-of-use asset,
net
(includes $87,440 and $92,571 with related
parties)
87,896
93,098
Finance lease right-of-use asset
(includes $29,192 and $0 with related
parties)
54,456
22,929
Other assets
59,393
57,989
Total assets
$
10,372,626
$
11,493,476
Liabilities and Equity
Warehouse lines of credit
$
4,823,740
$
6,941,397
Accounts payable and accrued expenses
1,185,499
847,745
Accrued dividends payable
160,517
—
Derivative liabilities
55,479
66,237
Equipment note payable
25,424
26,528
Operating lines of credit
400,000
320,300
Senior notes
789,870
789,323
Operating lease liability
(includes $98,733 and $104,006 with
related parties)
99,188
104,534
Finance lease liability
(includes $29,241 and $0 with related
parties)
54,873
23,132
Total liabilities
7,594,590
9,119,196
Equity:
Preferred stock, $0.0001 par value -
100,000,000 shares authorized, none issued and outstanding as of
March 31, 2021
—
—
Class A common stock, $0.0001 par value -
4,000,000,000 shares authorized, 103,104,205 shares issued and
outstanding as of March 31, 2021
10
—
Class B common stock, $0.0001 par value -
1,700,000,000 shares authorized, none issued and outstanding as of
March 31, 2021
—
—
Class C common stock, $0.0001 par value -
1,700,000,000 shares authorized, none issued and outstanding as of
March 31, 2021
—
—
Class D common stock, $0.0001 par value -
1,700,000,000 shares authorized, 1,502,069,787 shares issued and
outstanding as of March 31, 2021
150
—
Additional paid-in capital
—
24,839
Retained earnings
113,078
2,349,441
Non-controlling interest
2,664,798
—
Total equity
2,778,036
2,374,280
Total liabilities and equity
$
10,372,626
$
11,493,476
UWM HOLDINGS
CORPORATION
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(in thousands, except shares
and per share amounts)
(Unaudited)
For the three months
ended
March 31, 2021
December 31,
2020
March 31, 2020
Revenue
Loan production income
$
1,074,665
$
1,667,252
$
404,214
Loan servicing income
123,789
105,648
50,097
Change in fair value of mortgage servicing
rights
(59,259
)
—
—
Gain (loss) on sale of mortgage servicing
rights
4,763
3,538
(50,222
)
Interest income
45,912
41,852
51,367
Total revenue, net
1,189,870
1,818,290
455,456
Expenses
Salaries, commissions and benefits
213,061
89,437
121,784
Direct loan production costs
13,162
14,595
12,554
Marketing, travel, and entertainment
10,495
6,452
7,434
Depreciation and amortization
7,289
8,749
2,645
Servicing costs
20,508
29,549
13,322
Amortization, impairment and pay-offs of
mortgage servicing rights
—
215,390
218,754
General and administrative
16,778
28,024
15,576
Interest expense
52,990
53,353
43,038
Other (income)/expense
(17,304
)
—
—
Total expenses
316,979
445,549
435,107
Earnings before income taxes
872,891
1,372,741
20,349
Provision for income taxes
12,886
950
—
Net income
860,005
1,371,791
20,349
Net income attributable to
non-controlling interest
812,020
N/A
N/A
Net income attributable to UWMC
$
47,985
N/A
N/A
Earnings per share of Class A common
stock:
Basic
$
0.47
N/A
N/A
Diluted
$
0.33
N/A
N/A
Weighted average shares
outstanding:
Basic
103,104,205
N/A
N/A
Diluted
1,605,173,992
N/A
N/A
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210510005855/en/
INVESTOR CONTACT MATT ROSLIN InvestorRelations@uwm.com
MEDIA CONTACT NICOLE YELLAND Media@uwm.com
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