Home Point mortgage lender exceeds expectations in first earnings report
Home Point Capital Inc. announced its first earnings as a public company.
Ann Arbor-based wholesale mortgage lender (NASDAQ: HMPT), which debuts in government markets in late January, reported 2020 profits of $ 607 million on total revenue of more than $ 1.37 billion.
In comparison, the private equity-backed lender, which has grown by acquisition since its inception in 2015, reported a net loss of $ 29 million on revenue of $ 200 million a year earlier.
For 2020, Home Point claims to have generated $ 62 billion in total mortgage creation. The year has been “transformative” for the company, according to Willie Newman, President and CEO of Home Point.
“The positive momentum we generated in 2020 has allowed us to enter 2021 in a position of significant strength, and the recent completion of Home Point Capital’s IPO marks an important step in the evolution of our business, ”Newman said in a press release. . “I want to thank all of Home Point Capital’s constituents – our associates, partners, customers and shareholders for promoting our principles and continuing our mission of creating happy and financially healthy home owners.”
While 2020 has brought massive growth for the business, with a 178% increase in mortgage openings from the previous year, Home Point is also spending more to keep up with growth.
Total spending more than doubled from the previous year, reaching $ 588.6 million in 2020, according to the earnings report.
For the fourth quarter of 2020, the lender reported earnings per share of $ 1.33, beating analysts’ expectations of 5 cents per share, according to on the Seeking Alpha financial news site. The company also exceeded analysts’ expectations for revenue of more than $ 4 million.
Home Point stock was down around 2% on Thursday morning, with a share trading around $ 11.50, giving the company a market cap of around $ 1.57 billion.
While Home Point experienced significant growth last year, 2020 overall was a banner year for the mortgage industry. But hard times are not expected for much longer, as interest rates are expected to start climbing from current lows.
Much to the chagrin of market analysts, Home Point executives have so far adopted a policy of refusing to share any guidance with investors for the next quarter. Analysts in particular bristled at the lack of a forward-looking view of overall mortgage volume and selling profit margins.
Newman said the decision not to provide guidance stems from the overall cyclical nature of the mortgage industry, particularly now that rates are starting to rise.
“It’s more a function of our experience in the mortgage market and the fact that the company continues to grow and evolve,” Newman told analysts. “There may be a point where … it makes sense to provide some level of advice. But at this point, especially with the variability we’ve experienced in the market, we don’t think that it is prudent to do so. “