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Friday, Nov 25, 2022

Guild Mortgage Listed on the New York Stock Exchange

Kearny Mesa-based Guild Mortgage is San Diego’s newest publicly traded company.

Existing stockholders of Guild sold 6.5 million shares of Class A common stock at $15.00 per share on Oct. 21. Shares of Guild Holdings Co. (NYSE: GHLD) closed Nov. 3 at $14.86, up from $14.75 the previous day.

The company did not receive any net proceeds from the sale of the stock by the selling stockholders.

McCarthy Capital of Omaha, a majority investor in Guild and the holder of Class B stock, still owns a major portion of the company after the IPO.

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Representatives of Guild declined comment about the IPO or the business in general, saying they were in a quiet period — a common practice that lasts 40 days after a stock is listed for public trading.

An Expanding Business

Guild describes itself as a growth-oriented mortgage company that employs a relationship-based loan sourcing strategy. Its stated mission is to deliver the promise of home ownership in neighborhoods and communities across the United States. Year by year, Guild has expanded its retail origination footprint, which by now has reached 31 states.

The business boasts 12 years of profitable growth. Since 2007, Guild has experienced a compound annual growth rate of 27% in loan origination volume.

Mortgage loans are the largest class of consumer debt in the United States. According to the New York Federal Reserve, there was approximately $10.2 trillion of residential mortgage debt outstanding as of June 30.

In connection with the IPO, the selling stockholders have granted the underwriters a 30-day option to purchase 975,000 shares of the company’s Class A common stock.

Wells Fargo Securities, BofA Securities and J.P. Morgan are acting as lead joint book-running managers for the offering. JMP Securities is acting as a joint book-running manager and Compass Point and C.L. King & Associates are acting as co-managers for the offering.

Record First Half

Guild reported a record first half of 2020 — in spite of conditions brought on by the COVID-19 pandemic in the second quarter.

Total volume through June 30, 2020 was a record $14.60 billion, up 69.5% from $8.61 billion in the first half of 2019. Refinances, which were driven by record low mortgage rates, reached $8.03 billion for the first half, up 326.4% from $1.88 billion in the first six months of 2019.

“The second quarter brought challenges we’ve never seen before. Fortunately, we were prepared to transition to working from home and a new model for serving our customers since we had been investing in new technology and digital processes for some time,” said Mary Ann McGarry, Guild’s CEO, in a statement issued on Aug. 21.

The business originated $27.8 billion worth of mortgages in the 12 months ending June 30, 2020.

To help ensure the safety of its customers, partners and employees, Guild announced a partnership with eOriginal in April that allowed borrowers to review and sign an eNote remotely as part of the loan closing process. The move gave Guild the ability to execute fully digital mortgages. It closed nearly 2,900 loans using its secure eClose solution in the first half of the year, including five completely digital transactions, compared to 42 loans closed through eClose in 2019.

Through Ups and Downs

Guild was founded in 1960 by Martin Gleich, who retired in 2007. That was the year that Guild management — including McGarry — led a buyout of the company with McCarthy Capital.

In a December 2018 interview, McGarry noted that Guild has seen a range of market conditions in more than a half century of existence.

“Living through all the market cycles — it’s not new to us, and we know how to deal with it,” McGarry said at the time. Some of Guild’s acquisitions began during economic periods that were generally deemed unfavorable. Guild acquired Washington-based Liberty Financial Group, gaining branches in Washington and Colorado, in the recession of 2008. “That’s when we took advantage of the dislocation in the market and we grew,” the CEO said.

After the October 2020 IPO, McCarthy Capital will hold 100% of Guild’s issued and outstanding Class B common stock and will control approximately 94.8% of the combined voting power of the company’s outstanding common stock.

As of June 30, Guild’s senior leadership team owned approximately 25% of outstanding common stock. Following the IPO, it will own approximately 21%. 


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