While the first few days were up and down on the stock market, Guild Mortgage's IPO will ultimately position the 60-year-old San Diego-based non-bank lender for the next phase of its growth, said CEO Mary Ann McGarry.
"It gives us more access to a variety of sources of capital when and when we need it," said McGarry. "We don't need it right now, but if there's a chance to grow and we need money, it's a good source."
The company began trading on October 22, after valuating its offering at $ 15 per share. After a bit of volatility during the day, it closed at this price.
Regarding the decision to downsize the offering, McGarry and Guild President Terry Schmidt pointed to the recent volatility in non-bank mortgage stocks and noted that prices for these companies, including Rocket Cos., Went through during the IPO Guild fell by around 10%. Therefore, the selling shareholders decided to keep more shares than planned.
But that didn't dampen the mood on the Guild management team.
"We're excited, we're here for the long term, and we're looking forward to the future. We're looking forward to the next 60 years of growth," said McGarry on Thursday.
McGarry noted some additional benefits to going public.
"It increases our credibility in the marketplace through counterparties, potential loan officers and potential acquisitions," she said. "It's a great brand awareness nationally."
Guild Mortgage differs from the competition by finding "customers for life," said McGarry. The proprietary technology that employees use helps them run the process end to end from creation to service to a potential next loan.
The company found in J.D. Power mortgage lenders ranked third in 2019 and ninth in 2020 survey of service providers.
For 2019, Guild's reclamation volume to existing retail customers was $ 4.9 billion, with a reclamation rate of 26% on purchase, a reclamation rate of 64% on refinance, and an overall recovery rate of 56%.
The total volume for the year was $ 21.8 billion.
Guild Mortgage is primarily a branch mortgage lender, although there is also a small direct banking business. There is also a correspondence channel which was only 3.5% of total 2019 production.
When McCarthy Partners and the current management team took control of Guild in 2007, they decided to focus their efforts on the retail channel.
"This is a capital light model, so we have enough cash flow to continue operating and growing our business. This is evidence of the return on equity we have achieved," said Schmidt. Since 2007 the average ROE has been 34%.
The guild made $ 10 billion in the third quarter, up from $ 7.1 billion last year. According to the prospectus, net income is expected to be between $ 178 million and $ 187 million.
That compares with net income of $ 123.3 million in the second quarter and $ 8.5 million in the third quarter of 2019.
For the third quarter, a sales gain of between 548 and 576 basis points is expected. In the same quarter last year it was 379 basis points.