Guild swings to profit ahead of privatization deal

Guild Mortgage saw profits and business volume return to the upside in the second quarter in one of its final earnings reports issued as a publicly traded company. 

The San Diego-based lender and servicer posted net income of $18.7 million for the three-month period, improving from a $23.9 million loss at the end of the first quarter.  Year-over-year profits came in 50.6% lower from $37.6 million posted 12 months earlier. 

Originations and servicing segments both contributed to the second-quarter return to the black. Totals included changes in fair market value within its servicing portfolio based on interest rate changes. 

"Our team delivered in the second quarter the strongest performance in many categories that we've reported in several years, despite a constrained and challenging market," said CEO Terry Schmidt in a press statement. 

Guild announced plans to return to private hands through a merger with Bayview Asset Management in June, with the deal coming just months after Rocket and Mr. Cooper signaled their intentions to combine their two companies. Similar to the strategy that likely led toward the creation of the new Rocket brand, servicing operations at Bayview are expected to provide a pipeline of refinance leads to Guild.  

"We look forward to further building our leading platform and completing our pending transaction with Bayview," Schmidt said. 

Due to the pending merger, an earnings call with Guild executives was not provided. The deal is expected to close in the fourth quarter this year. 

Guild net income came off of $279.4 million second-quarter revenue. The number was 40.8% higher from the first quarter total of $198.5 million but down by 2.2% from $285.7 million a year ago.  

Originations contributed a profit of $23.4 million, recovering from a first-quarter loss of $2.9 million. Net income from originations also represented an improvement from a $3.1 million loss during second quarter 2024

Meanwhile, servicing operations posted net income of $27.3 million, improving on a quarterly basis from a $4.6 million loss from January to March, inclusive of fair value changes. Compared to second quarter 2024, servicing income decreased 60.7% from $69.5 million. 

Guild's production and servicing balances both rise

The company produced $7.5 billion worth of loans in the most recent quarter, increasing from volumes or $5.2 billion three months earlier. On a comparable year-over-year basis, origination production accelerated 14.5% from $6.5 billion.

Expense and profitability metrics in the segment also improved to levels Guild last delivered in 2022, company officials said. Companies saw originations decrease substantially in the ensuing three years that have also been marked by waves of consolidation, with Guild acquiring several lenders during that period. 

Gain on sale margins came in at an average of 329 basis points over the second quarter, down from 376 bps three months earlier but up from 326 bpm year over year.  

Meanwhile, Guild's servicing segment recorded total unpaid principal balance of $96.3 trillion at the end of June. The total rose 2.5% from a first-quarter balance of $94 trillion and was also 8% higher from $89.1 trillion a year ago.

Earrings per share came in 0.30 cents, missing consensus analyst estimates, according to Standard and Poor's.