Guild Mortgage Strategically Expands with Acquisition of Academy Mortgage

Rhea-AI Summary

Guild Mortgage (GHLD) acquires Academy Mortgage, adding 200 branches and 1,000+ team members, becoming 8th largest non-bank retail mortgage lender with 25% increase in origination volume. Both companies share a commitment to the purchase mortgage market and aim to deliver on the promise of homeownership.

Positive

• Acquisition of Academy Mortgage enhances Guild's market share and origination volume significantly.
• Guild Mortgage and Academy Mortgage share core values and commitment to the purchase mortgage market.
• The transaction is expected to be accretive to earnings once fully integrated.
• Guild Mortgage continues to expand its reach and strengthen its position in the mortgage lending industry.
• Guild's platform of choice strategy is evident through successful acquisitions like Academy Mortgage.

Negative

• None.

Insights

Financial Analyst

The acquisition of Academy Mortgage Corporation by Guild Mortgage represents a strategic expansion in the non-bank retail mortgage lending space. The transaction is expected to yield a 25% increase in origination volume for Guild, potentially enhancing its competitive position from the 10th to the 8th largest non-bank retail lender nationally. This move can be seen as a consolidation within the industry, a common response to the competitive pressures and the need for scale in the mortgage lending market.

For investors and stakeholders, the key focus should be on the synergies expected from this acquisition. Guild Mortgage's projection that the transaction will be accretive to earnings post-integration suggests that they anticipate operational efficiencies, cost savings and an expanded customer base that could drive profitability. However, it is essential to monitor the integration process closely, as the assimilation of new branches and employees can present challenges that may affect the projected benefits.

Furthermore, the acquisition's timing may be strategic, considering the current high-rate market cycle. If Guild anticipates a moderation in interest rates, the expanded platform could position it to capture increased demand for home loans. Nonetheless, investors should consider the risks associated with economic cycles and interest rate fluctuations that could impact the mortgage market.

Market Research Analyst

The combined entity's retail and purchase market commitment is a significant aspect to consider. With over 95% of their loan volume stemming from the local retail market, Guild's acquisition of Academy Mortgage emphasizes the importance of a strong presence in community-based lending. This local focus aligns with the trend of personalized customer service and may help in retaining and attracting customers who value local expertise and relationships.

It is also worth noting the emphasis on customer-first technology. The integration of Academy into Guild's existing technology and servicing platforms is expected to streamline operations and provide a consistent customer experience. This technology-driven approach can lead to increased customer retention rates and attract new business through enhanced service offerings. The success of this integration can be a critical factor in realizing the long-term value of the acquisition.

From a market perspective, the expansion through acquisition could signal to competitors that Guild is aggressively pursuing growth, potentially triggering further consolidation in the sector. Stakeholders should watch for responses from other market participants which may influence the competitive landscape.

Legal Expert

With the acquisition involving a significant transfer of assets, including branches and personnel, it is crucial to consider the regulatory compliance aspects. Guild Mortgage's established track record in regulatory compliance suggests they are well-positioned to manage the complexities of integrating Academy's operations across different states. This is particularly relevant given that both entities are licensed to originate loans in 49 states and Washington, D.C.

Moreover, the transition of Academy's Chief Executive to Guild's senior leadership team indicates an effort to maintain continuity and leverage existing expertise. Such moves can facilitate a smoother regulatory transition and integration of corporate cultures. However, stakeholders should remain aware of potential regulatory scrutiny that large-scale acquisitions can attract, particularly in the financial sector.

It is also important to assess the transaction's impact on competition within the industry. As the market consolidates, regulatory bodies may examine the implications for consumer choice and market fairness. Guild's and Academy's commitment to serving their communities and maintaining a customer-focused approach could be a mitigating factor in such assessments.

National Lender Brings approximately 200 Branches and 1,000+ Team Members to Guild’s Retail Channel; Guild to become 8^th largest non-bank retail mortgage lender with 25% increase to origination volume

SAN DIEGO--(BUSINESS WIRE)-- Guild Mortgage (NYSE: GHLD), a growth-oriented mortgage lending company originating and servicing residential loans since 1960, has agreed to acquire the retail lending assets of Academy Mortgage Corporation, a privately held Utah-based lender. Academy boasts approximately 200 branches and more than 1,000 employees who will transition to Guild, including more than 600 licensed mortgage originators.

The addition of Academy Mortgage will extend Guild’s market share across its national footprint. Academy’s loan volume represents an approximate 25% increase in annual origination volume for Guild, based on results from both organizations through the third quarter of 2023, and the combined company would be the 8th largest non-bank retail lender in the country¹. Guild is currently the 10th largest non-bank retail lender. Both Guild and Academy Mortgage are licensed to originate loans in 49 states and Washington, D.C.

“Guild and Academy share a commitment to the purchase mortgage market and believe in local sales and fulfillment that builds on our customers for life strategy. Our aligned core values attract employees dedicated to serving their communities and delivering on the promise of homeownership,” said Guild Chief Executive Terry Schmidt. “This transaction represents two like-minded organizations joining forces to continue to grow stronger together. Each acquisition we’ve completed has brought new talent to Guild, making us a better company. We’re excited to extend a warm welcome to our new Academy teammates and build on their talent with the support of Guild behind them.”

Founded in 1988, Academy Mortgage has earned a reputation as a values-based organization that serves customers, communities, and employees, above all. Academy has grown into one of the top independent lenders in the U.S., with approximately 200 branches across the West, Central, and Southeast regions. In 2023, Academy generated $5.59 billion in loan originations. The company was recently named the #1 Top Rated Mortgage Lender on Zillow.

Academy Mortgage Chief Executive Adam Kessler will join Guild’s senior leadership team through the transition and newly combined organization. Academy branches will operate as a division within Guild and transition to the Guild brand.

“Academy has always led the industry in its commitment to Inspiring Hope, Delivering Dreams, and Building Prosperity – for our homeowners, partners, and employees. Joining forces with Guild Mortgage will allow us to accelerate our collective desire to preserve and promote that vision as we work together to become the nation's best independent mortgage lender,” said Kessler. “I’ve known Terry and the Guild team for a long time, and our common mission, vision, and values made it clear joining forces would be a win-win for both companies. Joining Guild provides new opportunities for our team to access Guild’s industry-leading product suite and leverage Guild’s robust reputation, technology, and servicing platform while strengthening both organization’s focus on people, purpose, productivity, and prosperity.”

Headquartered in San Diego, Guild Mortgage is a leading national lender with an established history of offering a comprehensive array of loan products and partnering with government organizations to help deliver the promise of home in every neighborhood and community it serves. Its loan professionals can serve the needs of any homebuyer, from helping first-time buyers achieve homeownership, often through government loan programs, to homebuyers looking for a jumbo loan. Guild also helps active duty and retired military personnel who qualify for VA loans with 100% financing and flexible qualifying standards. The company is consistently recognized for its impact in the communities it serves, commitment to customer service, strength in regulatory compliance, and workplace culture.

Transaction Highlights:

• Platform of choice: The acquisition of Academy’s retail lending assets illustrates the successful execution of Guild's strategy to position itself as the preferred platform for local, retail mortgage originators seeking long-term growth and stability. Academy will be the sixth lender to join forces with Guild via acquisition since 2021 and will increase Guild’s number of licensed originators to more than 2,100. Based on origination volume of both organizations through the third quarter of 2023, the combined enterprise would represent 1.3% of retail market share among non-bank retail mortgage lenders, which would rank 8th nationally ¹.

• Retail and purchase commitment: Guild and Academy are committed to the retail purchase mortgage market, with more than 95% of their combined loan volume in 2023 generating from the local retail market in communities they serve. This positions Guild to continue generating durable volume and margins post-close.
• Customer-first technology: Similarities in the two companies’ client-centric approach is expected to make integration of Academy efficient and provide clients with a consistent experience across the United States. Guild’s internally-developed servicing platform and servicing expertise positions Academy branches to capture additional repeat business and build clients for life.
• Creating long-term value: The transaction positions the company and its sales force to realize substantial volume growth as the current high-rate market cycle moderates and creates more favorable conditions for homebuyers in the future. Guild expects the transaction to be accretive to earnings once it is fully integrated as the benefits of a greater market share, expense synergies, and a disciplined focus on the purchase mortgage market are fully realized.

About Guild Mortgage

Founded in 1960 when the modern U.S. mortgage industry was just forming, Guild Mortgage Company is a nationally recognized independent mortgage lender providing residential mortgage products and local in-house origination and servicing. Guild’s collaborative culture and commitment to diversity and inclusion enable it to deliver a personalized experience for each customer. With more than 4,000 employees and over 300 retail branches, Guild has relationships with credit unions, community banks, and other financial institutions and services loans in 49 states and the District of Columbia. Guild’s highly trained loan professionals are experienced in government-sponsored programs such as FHA, VA, USDA, down payment assistance programs and other specialized loan programs. Guild Mortgage Company is a wholly owned subsidiary of Guild Holdings Company, whose shares of Class A common stock trade on the New York Stock Exchange under the symbol GHLD.

About Academy Mortgage Corporation

Academy Mortgage is ranked as one of the top 25 lenders in the country by leading industry publications. It is the company's mission to be 1st CHOICE in delivering the dream of sustainable homeownership by inspiring hope, delivering dreams, and building prosperity in the families and communities it serves. The company is headquartered in Draper, Utah; has more than 200 branches across the country; and is licensed to originate loans in 49 states and Washington, D.C. For more information, visit www.academymortgage.com. #1-rated in Zillow

Forward-Looking Statements

This press release of Guild Holdings Company contains forward-looking statements. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “projection,” “would” and “outlook,” or the negative version of those words or other comparable words or phrases of a future or forward-looking nature.

These forward-looking statements include, but are not limited to, statements about (i) the benefits of the proposed acquisition of the retail lending assets of Academy Mortgage Corporation, (ii) Guild’s ability to integrate Academy Mortgage Corporation, (iii) the expected impact of the acquisition on Guild’s origination volume, number of origination staff, market share, expense synergies or earnings per share, and (iv) the timeline for the completion of the acquisition, each of which is subject to a number of significant risks and uncertainties. Actual results may vary materially from those expressed or implied by any forward-looking statements due to risks and uncertainties such as: the ability to meet the conditions to closing the transaction; the ability to complete the transaction as expected and within the expected timeframe; disruptions to customer and employee relationships and business operations caused by the transaction; the ability to implement integration plans associated with the transaction, which integration may be more difficult, time-consuming or costly than expected; the ability to achieve the benefits and synergies contemplated by the transaction within the expected timeframe, or at all; and the other factors detailed under Part II, Item 1A. “Risk Factor” of Guild’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 and its subsequent filings with the Securities and Exchange Commission. These forward-looking statements reflect Guild’s current expectations and beliefs and speak only as of the date on which they are made. Guild undertakes no obligation to update any forward-looking statement to reflect actual events unless required by law.

¹Source: Inside Mortgage Finance Publications, Inc. Copyright © 2024. Used with permission.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240213073869/en/

Media Contact

Melissa Rue

Nuffer, Smith, Tucker

mkr@nstpr.com

(208) 850-5939

Investors

investors@guildmortgage.net

858-956-5130

Source: Guild Mortgage Company

FAQ

How many branches and team members will Guild Mortgage acquire through the acquisition of Academy Mortgage?

Guild Mortgage will acquire approximately 200 branches and more than 1,000 team members through the acquisition of Academy Mortgage.

What will be the impact on Guild Mortgage's origination volume after acquiring Academy Mortgage?

The acquisition of Academy Mortgage will result in an approximate 25% increase in annual origination volume for Guild Mortgage.

What is the combined national ranking of Guild Mortgage and Academy Mortgage among non-bank retail lenders?

The combined enterprise of Guild Mortgage and Academy Mortgage would rank 8th nationally among non-bank retail mortgage lenders.

What is the primary focus of Guild Mortgage and Academy Mortgage in the mortgage market?

Both Guild Mortgage and Academy Mortgage are committed to the retail purchase mortgage market.

How does Guild Mortgage plan to create long-term value through the acquisition of Academy Mortgage?

Guild Mortgage expects the transaction to be accretive to earnings by realizing benefits of greater market share, expense synergies, and a focus on the purchase mortgage market.