UWM Q1 2023 Earnings Call Transcript

Quartr
Provided by Quartr
May 10, 2023

There are 11 speakers on the call.

Operator

Good morning. My name is Sarah, and I will be your conference operator today. At this time, I would like to welcome everyone to the UWM Holdings Corporation First Quarter 2023 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

Operator

UWM. Blake Kolo, you may now begin your conference.

Speaker 1

Good morning. This is Blake Kolo, Chief Business Officer and Head of Investor Relations. Thank you for joining us, and welcome to the Q1 2023 UWM Holdings Corporation's earnings call. Before we start, I would like to remind everyone that this conference call includes forward looking statements. For more information about factors that may cause actual results to differ From forward looking statements, please refer to the earnings release that we issued this morning.

Speaker 1

I will now turn the call over to Matt Ishpia, Chairman and CEO of UWM Holdings Corporation and United Wholesale Mortgage. Thanks, Blake. A lot of great things to discuss today. I first want to start the call by thanking the 1,000 plus broker partners that were able to join us for UWM Live last week, which is an amazing event. Also thank a lot of analysts and investors who were able to come out and make it.

Speaker 1

I enjoyed spending time with you and fielding the great questions over the couple of days we had together. UWM Live is an amazing event that allows You to see and feel the growth momentum of the broker channel in one room. All those loan officers, broker owners and even real estate agents flew out to Pontiac, Michigan on their own dime to get better, Share ideas for success and try to win together as a team. This is what makes UWM and the Broker Channel different because we can work together as a team and are excited about the growth together. Hopefully, everyone in TENS was able to see for themselves the combination of our culture, the amazing relationships we have with our broker partners uniquely positions us for growth and success is one of the main ingredients to our secret sauce here at UWM.

Speaker 1

All about the broker community winning and we are here to help them grow and succeed and it's happening together as a team. Before I get into the quarter, I want to take a few moments to address the current overall mortgage industry and market. Obviously, there's a lot going on in the industry and it's still a tough time for most lenders. This is a time when scale, efficiencies, investment in technology and business strategy on purchase are showing the winners separating from the rest. While others are having to adjust their business for the worse, UWM is hiring, innovating and preparing for further growth in 2024, 25 and beyond.

Speaker 1

I've never been more confident with our model and strategy than I am today. Now, let's get into the quarter. We delivered $22,300,000,000 of overall production, which is the high end of our guidance. More importantly, the 19 point $2,000,000,000 of purchase volume, which was a 1st quarter production purchase record for us. We've been very proud of these metrics, particularly in this rate environment and with the general declines for most in the industry.

Speaker 1

Our GAIN margin was 92 basis points, also at the higher end of the guidance and up from 51 basis points in the 4th quarter. We have control of our business and are very happy with both our margin and volume in Q1. I also quickly want to provide some highlights of the 2022 HMDA data that was released in the Q1. This is the government data that trump some of the self reported industry data. For the full 20 22 year, we were the number one overall mortgage lender in America when looking at purchases and refinances of single family homes, which is the definition of residential lending.

Speaker 1

I'm proud of this because the positive impact it had on the consumers who chose to work with mortgage brokers. Per this HMDA data, on average, consumers save $94 by working with a mortgage broker Number goes up to $10,004 for minorities. These facts make me feel great about the positive impact we have on the consumers in America that choose to work with independent mortgage brokers. Bindermortgagebroker.com is becoming a great website where consumers are learning about the benefits of working with a mortgage broker. The data supports the broker channel is the best place for a consumer to get a loan and as we all know the best place for loan officer work.

Speaker 1

And in addition to that, some of the best news is we're the number one mortgage rate area in the country once again in the Q1 helping consumers, helping our brokers and we're continuing to win together as a team. Andrew will take a deeper dive into the financials. Before I pass, I want to give a couple of comments on the financial performance from the Q1. As I previously mentioned, 92 basis points of margin and $22,300,000,000 of production, are both very good numbers, resulting in a favorable operating gain for the quarter. With that said, many of you are now aware of the 2 distinct components of our reported financials, the income from loan production and servicing income and along with the MSR value the value of the MSR portfolio.

Speaker 1

Because rates went down in Q4 to Q1, the write down of our MSR book This markdown is driven primarily by rates that are outside of our control and non cash gain loss. We reported a net loss of $139,000,000 But at the same time, there's a fair value markdown of over $337,000,000 Operationally, with higher margins In great volumes, we actually made money. And if you look at it compared to Q1 of 2022, we actually core wise made more money operating than we did in 2022, which is still a good quarter in the industry. Making money profitably right now is a big deal and UWM is doing it and we're going to continue to do it going forward. Unifin has never been better positioned for the growth and success going forward.

Speaker 1

I think back to where we were in the Q1 2020 And we are so much stronger today in all aspects of our business. With that said, I'm confident we'll be saying the same thing again in 3 years from now and how we continue to evaluate, continue to evolve has the capital, liquidity, technology, client relationship and infrastructure in place to thrive regardless of cycles and we are doing that right now. I'm going to turn over to Andrew, our CFO, for more details.

Speaker 2

Thanks, Matt. 2023 is off to a great start as we achieved strong mortgage loan production volume and experienced improved gain margin in the first quarter as compared to the last half of twenty twenty two. As Matt mentioned, the higher gain margin contributed to improved profitability before considering the impact of the decline in fair value of MSRs. Our expenses moderated in Q1 as we continue to focus on prudent cost management, Excluding interest and servicing costs and other non operational expenses, total expenses declined nearly $50,000,000 or 19% compared to the Q1 of 22, which also contributed to our strong core operational performance in Q1 of 2023. During the Q1, We continue to execute our plans to strengthen our balance sheet and improve liquidity.

Speaker 2

We completed 2 bulk MSR sales as well as 2 excess servicing strip sales in Q1 on loans with a total UPB of approximately $98,000,000,000 and completed 2 additional MSR sales subsequent quarter end. Net cash proceeds approximated $650,000,000 from MSR and excess sales in Q1. In addition, we entered into a line of credit providing up to $500,000,000 of borrowing capacity secured by our Ginnie Mae MSRs. This facility along with the MSR facility secured by our Fannie and Freddie MSRs provide up to $2,000,000,000 of borrowing capacity, of which only $500,000,000 was drawn as of the end of the quarter. Considering available cash, self warehouse and remaining available borrowing capacity under our Our total liquidity increased to approximately $2,900,000,000 as of March 31, 2023, which is an approximate $800,000,000 increase from the end of last year.

Speaker 2

We continue to believe the measures we have taken to enhance our liquidity and strengthen our balance sheet will allow for our continued investments in growing both the wholesale channel and our market share. Okay. I'll now Turn things back over to our Chairman and CEO, Matt Ishbia, for some closing remarks.

Speaker 1

Thanks a lot, Andrew. And before I get into Q and A, I want to hit on a couple of points before we go. First, we aren't stopping. We will continue to embrace every cycle of the mortgage industry, driving forward and winning together with the broker community. We will continue to launch new products, relevant products.

Speaker 1

We've rolled out many in the Q1, whether it's technology, whether it's actual products like one time close new construction, control your price from a technology, we're going to continue to innovate and win. There's no hidden agenda here. The broker channel is the best place for American consumer to get a mortgage. It's the fastest, easiest, cheapest way for consumers to get a loan, and we'll do everything we can to support growing the channel. We also appreciate the investor community.

Speaker 1

And for the 10th consecutive quarter, we're going to announce our $0.10 quarterly dividend. We want to continue to reward our shareholders, as I've said many times in the past, I'm excited about the prospects of us continuing to do that going forward. In addition to that, the second quarter, we expect production to be between $23,000,000,000 30,000,000,000 with our margins in the range of 75 to 100 basis points. UWM is winning. We're making income.

Speaker 1

We have great liquidity. Our technology and our culture are strong.

Operator

Your first question comes from the line of Kyle Joseph with Jefferies. Please go ahead.

Speaker 3

Hey, good morning, Matt and Andrew. Thanks for taking my questions. On the margin front, obviously, Game On was very successful and it was nice to see how quickly margins normalized in the Q1. Can you give us a sense for where you obviously, we have your second quarter guidance, but longer term, is this kind of a steady state in terms of where you see your margins going.

Speaker 1

Yes, thanks for the question. Appreciate it. UWM. My quick perspective is, as I think you're at UWM Live also, so I think you know what I kind of answered this similarly, but let me just give my thoughts is that in the tough times in the mortgage market, which a lot of people are seeing right now, we're actually winning. And with that being said, I believe the margins in these trough times It's probably more like 75 basis points to 100 basis points, which is where we guided towards.

Speaker 1

I think that's what you'll see while the Rest of our industry is laying people off. The rest of the other companies are whether they're going out of business or making massive changes to their businesses That will continue to happen and that's kind of the margin level that it will be in. And so Game On as you know was a strategy that's been exceedingly Successful and it was continuing to be successful with what we've done. And as we talked about, we have complete control of our business always. And we told you what we would do and that's kind of where the margins are right now and that's why we're guiding to the same exact area for next quarter.

Speaker 3

Got it. And then a follow-up from me to probably to Andrew. Obviously, you guys did a nice job enhancing the balance sheet and liquidity in the quarter. As we're thinking about leverage and kind of in this rate environment, it's kind of the around the 0.9 non funding debt to equity kind of a steady state. Would you think that's going forward?

Speaker 2

Yes, Kyle, it's Andrew. Thanks for the question. I think that's where we've maintained sort of in the 50 to 100 1.5:one ratio for the last several quarters. And I think less than 1:one is likely where We target that and where I would expect we would remain for the foreseeable future.

Speaker 3

Got it. Thanks a lot for answering my questions.

Operator

Your next question comes from the line of Steve Delaney with JMP Securities. Please go ahead.

Speaker 4

Thanks. Good morning, Matt and Andrew. Congrats on meeting your production guidance, but That should not be a surprise. Now that the Fed is done with rate hikes and the futures is expecting materially lower rates in 2024, How impactful do you think to your current business volumes if the 30 year mortgage rate was to drop to say UWM. 5% from what low 6s or whatever right now.

Speaker 4

I mean, just how impactful is just 100 basis points, 150 point is Matt is what I guess I'm asking. And kind of your outlook for 2024 as well?

Speaker 1

Yes. Thanks for the question. Appreciate it, Steve. So real quick on that is how impactful If rates drop 100 basis points to your example on a 5% interest rates, there's a good chance our business doubles And our margins are higher. That's why I try to explain to people that in 2024, 2025, 2025, 2020 6, we'll make multiple $1,000,000,000 is our expectation.

Speaker 1

It just depends on when that happens. I don't control rates. Now with the flip side, as a lot of people realize, when rates go down slightly like they just did, take an MSR mark down where still the reporters out there, not you guys as your analysts, you understand what you're talking about, still the reporters say, Oh, it looks like UWM lost money this quarter. We made a lot of money this quarter. The MSR mark going down $337,000,000 and it's still it's just silly people don't understand the business.

Speaker 1

Bruce realized that when that happens, when rates drop 100 basis points, volume could double, margins could go up and we make Excessive amount of money and are really profitable for our shareholders and do some great things. However, the MSR mark will go down and I'm sure some Reporters that don't know what they're doing and talking about will headline UWM loses money or UWM only makes this much money because they don't understand the business. And so that's kind of my perspective on it is, Yes, it will be a massive, massive uptick providing not just for us, but for everyone else. And actually, yes, it will help us. It will help a lot of other lenders even more because they're Actually losing money right now and actually laying out people right now where we're hiring and we're actually winning and as you saw I'm guiding even to do more volume in the Q2 than the Q1.

Speaker 1

So a lot of positive at UWM. So it will help us significantly, but it will help a lot of other people in the whole industry. So early 2024, mid 2024, late 2024, I don't know when it's going to be, but It's happening. We all understand that. Anyone that understands the mortgage business or just the economy in general realizes that rates aren't going up too much more from all of our perspectives.

Speaker 4

Well, thanks for that insight. Appreciate it.

Speaker 1

Thank you.

Operator

Your next question comes from the line of Bose George with KBW. Please go ahead.

Speaker 5

Yes, good morning. Your market share obviously grew last year. It looks like again grew in the Q1. As you dial down programs like Game On, do you think We could see the share dip a little, how do you sort of see the share outlook?

Speaker 1

Yes, good question. My perspective, I think we're running around 30%, 32% market share pre Game On. Game On was designed to help originators join the broker channel. It's been a massive success. Thousands of loan officers joining, continue to join.

Speaker 1

You're starting to see some of that production come through, starting to see some of the success come through. It's been fantastic. However, with that being said, with your question on market share, we went from 32%, I think to 55% in the wholesale channel. That was more than we expected. I said always that if with Game On, after Game On, which Q1 is after Game On as you can see, If our margins stayed in the 40% range, that would be a massive success.

Speaker 1

I think you're going to see it higher than that is your point. And so if we're in the 40%, 45% range, And think about what we just did. We just went from 32% to 40%, 45%, a massive market share gain in a very tough market without the game on pricing. And so just realizing that we were looking for it. If it stays in the 40 range, we think it's excessively successful.

Speaker 1

However, I think it's going to be even higher than that in the Q1 just like it was in the Q4.

Speaker 5

Okay, great. Thanks. And then just on the MSR sales, Was that done at carrying value? Were there any sort of gains or losses on the MSR sale?

Speaker 1

It's really tough to tell. There's some losses. It just depends on what day you sell it and what day you're marking it comparing it to. If you're looking at from December 31st, then there might be some losses. You're looking from the day we sold it, there might be some gains.

Speaker 1

Like I don't know the exact details on each deal, but it's hard to really track it. That's why we just it's all part of the fair value markdown, which is a $337,000,000 markdown. And in reality, if you take that out of the $130,000,000 loss or whatever the number is. We obviously you can tell from a core earnings perspective had an amazing quarter as I pointed in my comments Even better than the Q1. So once again, the reporters that don't know what they're talking about, I'm sure there's some of you guys listening, it shows that we made $450,000,000 in the Q1 of last year.

Speaker 1

And this quarter we lost $130,000,000 whatever the number is. However, if you look at core earnings, we actually made more money in the Q1 of this year than last year's Q1. And on top of that, we had less volume and lower margins, but I still made more money. So think about how we're doing that. We're monitoring and managing our business beyond what other people understand, but headline news and clickbait doesn't explain that stuff.

Speaker 1

So it's good for you to understand and see that The Q1 has been extremely successful from that perspective.

Speaker 5

Great. Thanks for that.

Operator

Your next question comes from the line of James Faucette with Morgan Stanley. Please go ahead.

Speaker 6

Hi, good morning. This is Blake Netter on the line for James. Thanks for taking my questions. First off, I'm wondering what size mortgage market are you managing the business for? And are there any particular areas of the business where you're looking at these for expense efficiencies If originations volumes come in lower than expected?

Speaker 1

Yes. So thanks for the question. I don't think originations volumes are coming lower than expected. I think they're going to be as I've described and I think it's going to be a great year from the way we look at and manage the business. And so The all around mortgage market is definitely smaller than it was last year and the year before.

Speaker 1

However, Most lenders out there have tried to right size their businesses. Our business has been pretty sized well and prepared for scale. And so I'm more prepared for The future and what the last two questions ago was about the 24 and 25 and the dominance that we're going to have to show at that time. And so like I said, I think we hired 100 plus people hired joining this week alone. And so we're hiring people.

Speaker 1

We're growing. We're preparing for doubling this business over the next couple of years, Right from the volumes that you're seeing right now. And I'd be shocked if that didn't happen.

Speaker 6

Got it. And as a quick follow-up On your MSR portfolio, you guys highlighted that delinquency rates in your servicing portfolio are lower than the industry average. That said, are there any pockets of the portfolio where you see risk rising? And as the broader macro environment normalizes, do you You'll see a need to increase staffing and servicing to help manage bone workouts and modifications?

Speaker 1

No. So if you look at our delinquency I think we have the lowest or one of the lowest, I'll say one of them because I don't have everyone's data. 1 of the lowest delinquency rates in America. The loan quality, we still don't do loans that everyone else does. Everyone else goes to 580 FICO scores and 550 FICO scores.

Speaker 1

They're all digging deep to try to just get a couple of loans. We're still at 620 FICO. We have the lowest delinquency rates or really low delinquencies, I'll call, one of the lowest and one of the highest FICO scores of anyone in the market. And so our loan quality will get hit a lot less than our delinquency get hit a lot less than everyone else. I see it being a massive issue in the industry?

Speaker 1

The answer is no, even without us being on the more conservative side of the credit profile. So I don't see it as a big thing. I think it's overblown. And I'm not as concerned about it as maybe other people would be talking. But in general, I think our book Our servicing book is strong.

Speaker 1

Our strategy is strong. And I feel really great about where we're at. But thank you for the question. Thank you.

Operator

Your next question comes from the line of Eric Hagen with BTIG. Please go ahead.

Speaker 7

Hey, thanks. Good morning. Hope you're doing well. I think a follow-up on the MSR. How are you guys thinking about the size of the MSR portfolio?

Speaker 7

What you consider to be maybe a sustainable and comfortable level for you to manage that the composition of that portfolio. I don't think we saw any MSR sales in the quarter, but How you guys are thinking about that too? Thanks.

Speaker 1

Hey, thanks a lot, Eric. I appreciate the question. There actually were some MSR sales in the quarter. But to answer, I think we're trying to figure out how big our MSR book is going to be. And so what I would tell you, I think it finished around $300,000,000,000 and I always just tell people, We're originating a lot of volume.

Speaker 1

I basically assume even with if we do MSR sales, if we don't do MSR sales, I think the book basically stays or minus 10% to 15% of where it's at right now. So could it if we don't do any sales, it will grow 15%, 20% maybe. But if we do a bunch of sales, it could go down 10%, 15%. Basically think $300,000,000,000 seems like a good target. I think we're at $297,000,000 if I could be off by slightly, but call it $300,000,000 And That's kind of what we're looking at it going forward.

Speaker 1

So I look at it as it's been pretty consistent with that number. Our liquidity is so strong right now that the need for selling MSRs is not there. As you can see our cash position, which is a critical focus of ours and Andrea has a heck of a job for us on that Along with Blake and the team, managing that. And so looking at those numbers, our liquidity is in great position. So we don't need to sell an MSR, so our MSR book could grow.

Speaker 1

However, someone wants to offer us a good price and we're opportunistic out there, we will do it, as long as we're doing the right things by our brokers and by our business and by our shareholders.

Speaker 7

That's great detail. Can you say how many UPB of MSRs that you sold in the quarter was?

Speaker 1

It's Not that clean, so I don't know the exact number because it doesn't really represent it because there's sometimes you're not selling the UPB, you're selling the excess servicing. So therefore, it's really not actually any UPB because I still hold the servicing, but I sold the Access, which is a capital markets transaction, if you think of it that way. So I don't have the exact like it wouldn't if I told you we did $20,000,000,000 but we brought in $500,000,000 to say that that math doesn't work out. That's kind of how I think about it. So not apples to apples and that's why I kind of just look at the overall MSR book as, hey, dollars 300,000,000,000 plus or minus 10%, 15% and it'll probably be pretty consistent in that number.

Speaker 7

Yes, yes, that's really helpful. One more, how are you guys thinking about managing the interest rate risk in the origination pipeline? I guess both from the perspective of hedging the pipeline before delivery and anything you're doing maybe to mitigate the higher interest expense from holding loans on warehouse? Thanks guys.

Speaker 1

Yes. I mean, so we hedge our pipeline every day. We don't take any risk on any of our pipeline. So that's been a constant for years years years. And so We try to be risk free in that.

Speaker 1

And obviously there's always risk when you're hedging and trying to handle things in the capital markets world. But we have an amazing capital markets team And feel really great about what we're doing there. So that's kind of how I think about that risk. I'm sorry, your second part of the question, Eric, if you're still on the line.

Speaker 7

Yes, just mitigating anything you guys are doing to mitigate the higher interest expense from holding loans on warehouse and The NIM that you're kind of earning there?

Speaker 1

Yes. So I mean the interest expense I know it's hard to see it, but it's actually pretty low relative to the market. However, we have debt and so the interest expense includes that debt. And so a lot of stuff there, but we're doing self warehousing with some of our excess cash to drive that number down and we'll continue to do that and take advantage of that opportunity because we have so much liquidity and just sitting there. We're just sitting there looking at it.

Speaker 1

So how do we use it? And Blake Colo and his team and Andrew and his team do a great job of managing that. So I think the interest expense Versus interest income, the fact that it's a positive number shows that we're doing a really great job managing that because remember it's not just warehouse line and loans. We have interest expense in there from our servicing not from servicing from our debt that we have out there.

Speaker 7

Yes. That's really helpful. Thank you, guys.

Operator

Keypad. Your next question comes from the line of Doug Harter with Credit Suisse. Please go ahead.

Speaker 5

Thanks. This quarter it looked like the G and A expense fell by a meaningful amount. I was just hoping you Give some detail as to what drove that?

Speaker 1

Well, I think the reality Doug is we've been managing this For years, everyone thinks everyone kind of wants to comment every time, oh, Matt's not laying anyone off. Of course, we're not laying anyone off, but actually hiring. But the G and A expense is not just people. There's a lot of things we manage. And Once again, Andrew, our CFO does a heck of a job.

Speaker 1

And I'll let him make a comment here in a second, so he can give you any of his thoughts in addition. But the reality is We manage our costs. We manage our business to the T, to the dollar, understand everything we're spending. And it's not people, which everyone likes to talk about. A lot of times it's vendors.

Speaker 1

A lot of times it's negotiating new deals and we've done a great job of that. And you'll actually see that some of those things come through throughout the year that we've been working on Not just in the Q1, but last year in the second, third and fourth quarter. And so the way I look at it is the most important thing Doug to look at is operating core income. We make more money this year's Q1 than last year's Q1. Last year's Q1, we did significantly more volume, more gain on sale.

Speaker 1

So obviously we're managing the business very well and all these details are coming through in a positive way. As I said it would over the last 4, 5 quarters, I've been getting that question. So Andrew, I don't know if you have any comments to throw in that I maybe I didn't hit.

Speaker 2

I think you covered it well, Matt. I think on a sequential basis, it's down. Partially, there was a slight increase to our repurchase reserve in Q4 of last year. On a year over year basis, it's down a little bit relatively flat, but Matt's comments remain the same.

Speaker 8

Okay. Thank you.

Operator

Your next question comes from the line of Kevin Barker with Piper Sandler. Please go ahead.

Speaker 9

Hi, this is Brad Cusi on with Kem Barker. Thanks for taking my question. It's nice to see you guys continue to guide the higher production stable margins. Most of my questions have been answered. Just following up on Doug's question with G and A coming down.

Speaker 9

How do you guys view expenses going forward?

Speaker 1

Well, I guess my perspective depending on how you look at this, the volume is going to go up, Right. And so there are a lot of our expenses that are variable. So some of those numbers will go up. Obviously, we're going to continue to manage. I just told you we're hiring, so some of those expenses will go up.

Speaker 1

But overall, the thing I focus on less on expenses and more on are we profitable. And we're extremely profitable. Core earnings were great, especially in one of the hardest markets, because not only the Q1 was tough, but the Q4 ended December was a slow month and so that really bleeds into the Q1 across the board. And so I feel really good about it. Are we managing expenses?

Speaker 1

Yes. Do I have more expenses that are coming out of the business that you guys that aren't tied to anything besides vendors and partnerships and things we have outside, yes, But I will not sacrifice. I'm not trying to save a dollar, jump over dollars to pick up pennies. And so I'm going to make sure we run our business the right way. And if I'm going to make investments in people, In technology and in business strategies, we're going to continue to do that.

Speaker 1

So I spend very little time focused on expenses, While we're making a lot of money, what I do focus on is how do we drive revenue and help our brokers grow their business. When the brokers grow, UWM grows and that's what's happening. That's why I talked at the beginning of the call about UWM Live. And I don't think you were there, but if you were at UWM Live, you would have seen the broker channel, the camaraderie, The culture, the opportunity, the innovation and the upside. And I think you'll see some of that in the second quarter, but we'll have a great quarter as I already guided to.

Speaker 1

But on top of that, it's going to continue to roll. And so expenses is important, but if it's one of the first five things I talked about, then I'm not doing my job as a CEO because I'm jumping over pennies or dollars picking up pennies and that's not who we are and never who we will be.

Speaker 9

Thanks for taking my question.

Operator

Your final question comes from the line of Michael Kaye with Wells Fargo. Please go ahead.

Speaker 8

Hi, good morning. The Q1 gain on sale margin of 92 basis points was towards the high end of your guidance last quarter. But for Q2, you're still guiding to that original 75 basis point to 100 basis point range. So the question is, Why are you not taking more of that gain on sale momentum in Q1 and maybe top up the bottom end of that Q2 gain on sale margin guidance? Is it more control your own price program in Q2 or maybe other factors like trying to provide extra pricing support for the brokers in the port in spring purchase season or is it just more conservatism as you have a good track record of coming in toward the high end of guidance?

Speaker 1

Yes. No, I don't know if it's conservative. We always come in with our guidance. I'd say always, but we always have been 10 quarters now I believe, Just like we're paying our dividend for 10 straight quarters. The way I look at it is I'm guiding you what I think the numbers will be.

Speaker 1

Margins Things can change up and down. We control how we price on a daily basis. But also there's different products at different margins, Different opportunities to do more conventional, more government, more jumbo margins are different on those different loan sizes. And so I think the 75 to 100 is a good number. I would assume that's going to be in the middle of that number.

Speaker 1

Could it be in the little on the lower end or higher end? That's why I got give 25 basis points. But we make sure same thing with the $23,000,000,000 to $30,000,000,000 Could we be on the low end of that, at the middle or the high? Like that's if I felt really confident we'd be in a different part of it, I'd to a lower number. However, honestly, Michael, and you know me, like I'm not that focused on exactly those guys.

Speaker 1

I'm focused on running On a day to day basis, I see an opportunity to do more volume and margins go down, I'll do it. I see an opportunity for margins, we'll take advantage of that and maybe we'll do a little less volume. There's a lot of things we do, but the reality of our business is we're running it for the broker success. We want to bring on more mortgage brokers To the channel, we want to help more brokers, loan officers grow their business and we can do that in many ways. As you saw at UWM Live, Michael, you were here, The training, the coaching, the opportunity to learn, that's available.

Speaker 1

But there's also things on price. There's also things on helping them do social media. And so there's all these things we're doing. And so I guess a long way of saying, I feel confident $23,000,000,000 to 30,000,000,000 I feel confident 75 to 100 basis points. And as I said at the very beginning of this call, in the tranche of the mortgage industry, Wholesale will be between $75100100 I think I said that last year and I'm saying it again this year.

Speaker 1

Now if the mortgage market comes out of the trough then I will move the guidance up a little bit more, or if it goes if it changes in a way, I'll move it up as we see fit. But that's my best estimate at this point, 75 to 100 and 23 to 30. And I'm working we're working extremely hard to hit those targets to make sure that we deliver what we tell you're going to deliver like we have every single time I've spoken on these calls and I plan on continuing to do.

Speaker 8

So what would it take for you to be towards that bottom end of the guidance? So you're saying it's more of mix or maybe you'll push pricing programs more. I'm just trying to understand That double that why would you go from like 92 basis points towards that low end?

Speaker 1

Yes. I mean once again it's There's a lot of things that vary there's things that happen maybe that pushed it up 92 that it could have made it at 78 this quarter, right? And this thing that could be make it next quarter could be 99 or 76, Right. I have to give a range because gain on sale is not as clean. There's derivatives.

Speaker 1

There's a lot of different numbers coming in. There's a lot of different things. There's Timing of issues when we sell loans, there's timing of hedges, there's market movements. It's a lot more complex than just like Haiti, you put a number on this paper and it just goes through. And so I want to give a little bit of a range for you.

Speaker 1

And so 75 to 100, I feel really strong about, and I will deliver that once again, so you can be confident in that. But to try to narrow you to the higher end or the lower end of the range, I'm not going to be able to do it for you, Michael. I love you and I appreciate the question. 75 to 100, 23 to 30, I'll deliver once again for the 11th straight quarter with what I told you.

Speaker 8

Okay. Thank you so much.

Operator

And you have a final follow-up question from Bose George. Please go ahead.

Speaker 10

Hey, Matt. This is actually Mike Smith on for Bose. You kind of hit on this at UWM Live, but I was wondering if you could just touch on kind of the opportunities at Jumbo or any other products for that matter just with some of the stuff going on with banks? Thanks a lot.

Speaker 1

Yes. Thanks for the question. Appreciate it. And so, yes, I think Jumbo is one of the spots that we're really focused on to Hopefully help gain some opportunity for our broker community. The only reason the retail loan officer stays at a bank would be because A, they can't generate any business themselves or B, they do a lot of jumbo loans and sometimes banks can offer jumbo product as a loss leader.

Speaker 1

I think with some of the bank values recently as we've talked about, I think some of the banks are in a back off that strategy a little bit, which actually gives an opportunity upside for UWM and the broker community. How that will play out? I don't know. To be honest with you, as you know, it's a focus and we'd like to figure it out. We don't have it solved yet.

Speaker 1

But with that being said, that's all upside because right now our jumbo production is very low. On the product side in general, we're looking for high quality loans like looking for high quality loans that could be done faster, easier and cheaper because brokers and findamortgagebroker.com Which is the website where consumers are going to is growing and we want to continue to drive people there and educate them the fastest, easiest, They are the experts that will shop on your behalf. And if I can add a couple more products, jumbo being one of them and a better product of jumbo, Will that help that website? Will that help brokers? Yes, yes.

Speaker 1

So we are working on it. But at the same time, that's all upside because what you saw in the Q1 and what you see by guidance in the second quarter Assuming that that's not really solved by that time.

Speaker 10

Great. That's helpful. Thanks a lot for taking the question.

Speaker 1

Yes. Thank you for the question. And I know that was last question, I believe. And so I just want to say thank you to everyone who jumps on these calls. I appreciate your questions.

Speaker 1

I appreciate your thoughts. We appreciate all of you that came out to UWM Live to really understand our culture and our team and the broker community. We're excessively, exceedingly, if that's a better word, Excited about the broker community. The broker community is growing and everyone that was at UWM Live and the body of you on this call I see saw it. And so hopefully you guys feel that energy and We have and the brokers have.

Speaker 1

And so we're going to keep winning together. Q2 is going to be a heck of a quarter and we're excited to share with you. I'll be talking to you guys after the quarter. And if you have anything in between, Blake's available, I'm available, Andrew and our team. We appreciate you guys and gals have a fantastic day.

Operator

This concludes today's conference call. You may now disconnect your

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Earnings Conference Call
UWM Q1 2023
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