United Wholesale Mortgage Holdings Corp. — the publicly traded parent of wholesale lender UWM — on Tuesday reported a profit of $1.6 billion for 2021, down more than 53% from 2020's roughly $3.4 billion.
Meanwhile, for the fourth quarter, the Pontiac, Michigan-based company reported net income of $239.8 million, down more than 80% from the nearly $1.4 billion it reported in the same period of 2020.
Still, executives noted it was the company's 15th consecutive profitable year and its second most profitable ever — underscoring the boom the mortgage industry saw in 2020 as low interest rates fueled refinancing activity.
"Our continued focus on speed, service and best-in-class technology is why we continue to deliver these results," UWMC chairman and CEO Mat Ishbia said on a call with analysts. "However, our scale is now also a huge factor in our success."
For the full year, UWM reported loan origination volume — a key market indicator — of $226.5 billion, up 24% from 2020 and a new record for the company, executives said. Purchase originations were up more than 100% to $87.3 billion. Refinances totaled $139.3 billion, down slightly from $139.6 billion in 2020.
UWM's gain-on-sale margin was 1.14% in 2021, down from 2.49% in 2020.
In the fourth quarter, originations totaled $55.2 billion, up slightly from $54.7 billion in the same period of 2020. That included $24.5 billion in purchase volume, a 103% increase from Q4 2020.
Executives pointed to growth in purchase volume, as well as its model of selling loans exclusively through mortgage brokers, as indicators that UWM is well-positioned to leverage the ongoing shift away from refinancing activity to purchase loans.
"Our operations are built for the purchase market, to enable broker clients to provide a differentiated solution to American consumers," said chief financial officer Tim Forrester. "The competitive environment pushed margins lower as compared to record margins we saw in the fourth quarter of 2020 and dropped a bit from the prior quarter. Even with the increased competition, our financial performance remains strong and our return on equity for the quarter was impressive."
The company said it again was the largest wholesale mortgage lender in the U.S. by closed loan volume, with about one-third market share of the wholesale channel.
"As the industry navigates rising rates and low housing inventory, UWM is well-positioned to succeed by doing what we do best — proving a mortgage broker is the fastest, easiest and most affordable option for borrowers," Ishbia said in a statement. "With continued channel growth and elite industry-leading service, we are poised to reach our goal of becoming the nation's No. 1 overall mortgage lender."
The company said it expects first-quarter production to be in the range of $33 billion to $42 billion.
UWM had total equity of $3.2 billion at the end of 2021, up from $2.4 billion at the end of 2020. For the year, the company repurchased nearly 11.5 million Class A common stock shares for $81.6 million, at an average price per share of $7.10.
Tuesday was the second time the mortgage lender reported full-year results as a publicly traded company, after listing on the New York Stock Exchange in January 2020 following a $16.1 billion merger with a blank-check company.
UWM Holding Corp.'s stock closed at $4.34 per share Monday. It was trading down about 3% Tuesday afternoon.
Meanwhile, crosstown rival Rocket Cos. last week reported net income of more than $6 billion in 2021, down more than 35% from 2020. The country's largest mortgage originator closed a record $351 billion in loans last year, a nearly 10% rise from 2020.
Another Michigan-based mortgage lender, Ann Arbor's Home Point Capital Inc., posted $1.19 million in profit in 2021, down 73% year-over-year, with $96.203 billion in volume closed, up 55%.
Both UWM and Rocket saw their stocks plunge ahead of their earnings reports amid a broader slowdown for U.S. home mortgage lenders due to rising mortgage rates and a decline in refinance applications.
For the week ending Feb. 18, mortgage applications fell 13.1% from one week earlier, according to survey data released by the Mortgage Bankers Association last week.
Mortgage applications dropped to their lowest level since December 2019 and the 30-year fixed mortgage rate climbed to 4.06%, almost a full percentage point higher than a year ago, the organization reported.
UWM will pay a cash dividend of 10 cents per share on the outstanding shares of Class A common stock to stockholders of record as of close of business March 14. The dividend is payable on April 11.
