Home Point Capital Inc. - FORM 8-K - EX-99.3 - EXHIBIT 99.3 - May 6, 2021

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Exhibit 99.3



Home Point Capital Inc.

First Quarter 2021 Earnings

Supplemental Financial Data


May 6, 2021



Non-GAAP Financial Measures

To provide investors with information in addition to our results as determined under Generally Accepted Accounting Principles (“GAAP”), we disclose Adjusted revenue, Adjusted net Income, and Adjusted net margin as “non-GAAP measures,” which management believes provide useful information to investors. These measures are not financial measures calculated in accordance with GAAP and should not be considered as a substitute for revenue, net income, or any other operating performance measure calculated in accordance with GAAP, and may not be comparable to a similarly titled measure reported by other companies.


We define Adjusted revenue as Total net revenue exclusive of the impact of the change in fair value of MSRs related to changes in valuation inputs and assumptions, net of MSRs hedge and adjusted for Income from equity method investment. 


We define Adjusted net income as Net income (loss) exclusive of the impact of the change in fair value of MSRs related to changes in valuation inputs and assumptions, net of MSRs hedge. 


We exclude changes in fair value of MSRs, net of hedge from each of Adjusted revenue and Adjusted net income (loss) as they add volatility and are not indicative of the Company’s operating performance or results of operation. This adjustment does not include changes in fair value of MSRs due to realization of cash flows, which remain in each of Adjusted revenue and Adjusted net income (loss). Realization of cash flows occurs when cash is collected as customers make scheduled payments, partial prepayments of principal, or pay their mortgage in full. 


We define Adjusted net margin by dividing Adjusted net income by Adjusted revenue. 


We believe that the presentation of Adjusted revenue, Adjusted net Income, and Adjusted net margin provides useful information to investors regarding our results of operations because each measure assists both investors and management in analyzing and benchmarking the performance and value of our business. Adjusted revenue, Adjusted net Income, and Adjusted net margin provide indicators of performance that are not affected by fluctuations in certain costs or other items. Accordingly, management believes that these measurements are useful for comparing general operating performance from period to period, and management relies on these measures for planning and forecasting of future periods. The Company measures the performance of the segments primarily on a contribution margin basis. Additionally, these measures allow management to compare our results with those of other companies that have different financing and capital structures. However, these measures are not financial measures calculated in accordance with GAAP and should not be considered as a substitute for net income, or any other operating performance measure calculated in accordance with GAAP and may not be comprable to a similarly titled measure reported by other companies.


Home Point Capital Inc.
Condensed Consolidated Statements of Income and Non-GAAP Measurements
(Unaudited)
($ amounts in thousands)

     
Q1 2021
      
Q4 2020
      
Q3 2020
      
Q2 2020
      
Q1 2020
      
Q4 2019
  
Revenue:
                                                
Gain on loans, net
  
$
301,228
    
$
422,158
    
$
503,344
    
$
356,871
    
$
102,563
    
$
64,006
  
Loan fee income
    
44,115
      
35,488
      
28,205
      
20,394
      
12,031
      
12,284
  
Interest income
    
25,577
      
17,811
      
14,709
      
11,812
      
15,849
      
16,700
  
Interest expense
    
(32,935
)
    
(21,734
)
    
(17,559
)
    
(14,373
)
    
(15,913
)
    
(16,008
)
Interest Income (expense), net
    
(7,358
)
    
(3,922
)
    
(2,850
)
    
(2,561
)
    
(65
)
    
692
  
Loan servicing fees
    
70,338
      
54,328
      
48,350
      
42,308
      
43,246
      
40,139
  
Change in fair value of mortgage servicing rights
    
12,848
      
(54,728
)
    
(66,749
)
    
(72,248
)
    
(91,527
)
    
(21,966
)
Other income
    
801
      
568
      
498
      
260
      
1,380
      
1,568
  
Total revenue, net
    
421,972
      
453,891
      
510,798
      
345,024
      
67,629
      
96,724
  
                                                 
Expenses:
                                                
Compensation and benefits
    
153,642
      
151,784
      
117,177
      
81,334
      
52,950
      
51,626
  
Loan expense
    
22,418
      
16,827
      
11,861
      
9,920
      
6,800
      
5,444
  
Loan servicing expense
    
8,093
      
8,044
      
6,481
      
8,308
      
7,953
      
5,143
  
Occupancy and equipment
    
8,555
      
7,732
      
7,391
      
5,543
      
5,320
      
4,201
  
General and administrative
    
22,244
      
24,086
      
12,073
      
9,078
      
7,222
      
6,720
  
Depreciation and amortization
    
2,761
      
1,369
      
1,236
      
1,427
      
1,499
      
1,523
  
Other expenses
    
9,336
      
13,177
      
7,093
      
2,755
      
2,238
      
1,529
  
Total expenses
    
227,049
      
223,019
      
163,312
      
118,366
      
83,982
      
76,187
  
                                                 
Income (Loss) before income tax
    
194,923
      
230,872
      
347,486
      
226,658
      
(16,353
)
    
20,537
  
Income tax expense (benefit)
    
50,117
      
49,248
      
93,294
      
59,501
      
(3,489
)
    
4,580
  
Income from equity method investments
    
4,163
      
2,844
      
9,870
      
1,864
      
2,316
      
110
  
Net income (loss)
  
$
148,969
    
$
184,468
    
$
264,062
    
$
169,022
    
$
(10,548
)
  
$
16,067
  


Home Point Capital Inc.
Origination Segment
(Unaudited)
($ amounts in thousands)

     
Q1 2021
      
Q4 2020
      
Q3 2020
      
Q2 2020
      
Q1 2020
      
Q4 2019
  
Revenue:
                                                
Gain on loans, net
  
$
301,228
    
$
422,198
    
$
503,344
    
$
356,871
    
$
102,563
    
$
64,794
  
Loan fee income
    
44,115
      
35,488
      
28,205
      
20,394
      
12,031
      
12,284
  
Loan servicing fees
    
(8
)
    
(1,517
)
    
236
      
(1,656
)
    
(562
)
    
(387
)
Interest Income (expense), net
    
1,288
      
(228
)
    
318
      
960
      
526
      
461
  
Total Origination segment revenue
    
346,623
      
455,941
      
532,103
      
376,569
      
114,558
      
77,152
  
                                                 
Directly attributable expense
    
157,817
      
153,635
      
107,356
      
72,130
      
51,830
      
48,073
  
                                                 
Contribution margin
  
$
188,806
    
$
302,306
    
$
424,747
    
$
304,439
    
$
62,728
    
$
29,079
  


Home Point Capital Inc.
Servicing Segment
(Unaudited)
($ amounts in thousands)

     
Q1 2021
      
Q4 2020
      
Q3 2020
      
Q2 2020
      
Q1 2020
      
Q4 2019
  
Revenue:
                                                
Gain on loans, net
  
$
-
    
$
(40
)
  
$
-
    
$
-
    
$
-
    
$
(788
)
Loan servicing fees
    
70,346
      
55,845
      
48,113
      
43,964
      
43,808
      
40,526
  
Interest Income, net
    
252
      
295
      
598
      
1,269
      
5,264
      
5,628
  
Other income
    
128
      
113
      
89
      
58
      
58
      
8
  
Total Servicing segment revenue
    
70,726
      
56,214
      
48,801
      
45,291
      
49,130
      
45,375
  
                                                 
Directly attributable expense
    
18,722
      
18,314
      
13,937
      
15,461
      
13,267
      
9,825
  
                                                 
Primary margin
    
52,004
      
37,899
      
34,864
      
29,830
      
35,864
      
35,549
  
                                                 
Change in MSR fair value: amortization
    
(89,170
)
    
(71,900
)
    
(54,932
)
    
(41,138
)
    
(36,153
)
    
(32,411
)
Change in MSR fair value: mark-to-market, net of hedge
    
102,108
      
17,173
      
(11,817
)
    
(31,111
)
    
(55,375
)
    
10,445
  
                                                 
Contribution margin
  
$
64,942
    
$
(16,828
)
  
$
(31,885
)
  
$
(42,418
)
  
$
(55,664
)
  
$
13,584
  

 
Home Point Capital Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
($ amounts in thousands)

     
Q1 2021
      
Q4 2020
      
Q3 2020
      
Q2 2020
      
Q1 2020
      
Q4 2019
  
Assets:
                                                
Cash and cash equivalents
  
$
219,285
    
$
165,230
    
$
271,587
    
$
127,395
    
$
35,844
    
$
30,630
  
Restricted cash
    
41,863
      
31,663
      
41,907
      
48,937
      
52,308
      
51,101
  
Cash and cash equivalents and Restricted cash
    
261,148
      
196,893
      
313,494
      
176,332
      
88,152
      
81,731
  
Mortgage loans held for sale (at fair value)
    
5,191,261
      
3,301,694
      
2,281,835
      
1,904,174
      
1,732,384
      
1,554,230
  
Mortgage servicing rights (at fair value)
    
1,156,357
      
748,457
      
583,263
      
499,782
      
475,870
      
575,035
  
Property and equipment, net
    
23,027
      
21,710
      
18,595
      
15,623
      
13,422
      
12,051
  
Accounts receivable, net
    
290,555
      
152,845
      
79,320
      
45,185
      
59,631
      
57,872
  
Derivative assets
    
186,909
      
334,323
      
284,359
      
244,058
      
281,237
      
40,544
  
Goodwill and intangibles
    
10,789
      
10,789
      
10,789
      
10,789
      
11,106
      
11,935
  
GNMA loans eligible for repurchase
    
1,446,495
      
2,524,240
      
2,919,881
      
2,351,249
      
500,460
      
499,207
  
Other assets
    
103,850
      
87,622
      
83,897
      
77,110
      
99,377
      
76,162
  
Total assets
  
$
8,670,391
    
$
7,378,573
    
$
6,575,434
    
$
5,324,301
    
$
3,261,639
    
$
2,908,767
  
                                                 
Liabilities and Shareholders’ Equity:
                                                
Liabilities:
                                                
Warehouse lines of credit
  
$
4,847,431
    
$
3,005,415
    
$
2,092,477
    
$
1,767,511
    
$
1,621,236
    
$
1,478,183
  
Term debt and other borrowings, net
    
888,437
      
454,022
      
374,090
      
348,901
      
429,226
      
424,958
  
Accounts payable and accrued expenses
    
196,542
      
167,532
      
313,887
      
132,839
      
127,823
      
39,739
  
GNMA loans eligible for repurchase
    
1,446,495
      
2,524,240
      
2,919,881
      
2,351,249
      
500,460
      
499,207
  
Other liabilities
    
509,189
      
299,890
      
132,333
      
90,746
      
119,110
      
56,368
  
Total liabilities
    
7,888,094
      
6,451,099
      
5,832,668
      
4,691,246
      
2,797,856
      
2,498,455
  
Shareholders’ Equity:
                                                
Common stock
    
-
      
-
      
-
      
-
      
-
      
-
  
Additional paid-in capital
    
69,451
      
519,510
      
363,354
      
517,702
      
517,449
      
454,861
  
Retained earnings (accumulated deficit)
    
712,846
      
407,964
      
379,411
      
115,353
      
(53,665
)
    
(44,549
)
Total shareholders’ equity
    
782,297
      
927,474
      
742,765
      
633,055
      
463,784
      
410,312
  
Total liabilities and shareholders’ equity
  
$
8,670,391
    
$
7,378,573
    
$
6,575,434
    
$
5,324,301
    
$
3,261,639
    
$
2,908,767
  



Home Point Capital Inc.
Key Performance Indicators (KPIs)

     
Q1 2021
        
Q4 2020
        
Q3 2020
        
Q2 2020
        
Q1 2020
        
Q4 2019
  
Origination Volume by Channel ($ thousands)
                                                          
Wholesale
  
$
19,668,264
      
$
14,130,341
      
$
10,982,207
      
$
7,844,172
      
$
4,946,545
      
$
4,541,560
  
Correspondent
    
8,243,380
        
8,575,794
        
6,280,149
        
3,490,965
        
2,925,706
        
3,538,842
  
Direct
    
1,514,287
        
1,249,459
        
851,980
        
431,714
        
292,812
        
196,020
  
Total Originations
  
$
29,425,931
      
$
23,955,593
      
$
18,114,336
      
$
11,766,851
      
$
8,165,063
      
$
8,276,422
  
                                                           
Fallout Adjusted Lock Volume by Channel ($ thousands)
                                                          
Wholesale
  
$
16,139,923
      
$
13,704,506
      
$
11,242,589
      
$
8,170,570
      
$
6,962,668
      
$
3,634,264
  
Correspondent
    
6,673,059
        
6,607,574
        
6,547,672
        
4,694,408
        
3,227,697
        
3,324,317
  
Direct
    
739,796
        
838,727
        
799,514
        
591,015
        
335,386
        
136,219
  
Total Fallout Adjusted Lock Volume
  
$
23,552,778
      
$
21,150,807
      
$
18,589,775
      
$
13,455,993
      
$
10,525,750
      
$
7,094,799
  
                                                           
Gain on Sale Margin ($ thousands)
                                                          
Wholesale
  
$
245,050
      
$
321,105
      
$
359,512
      
$
252,534
      
$
130,171
      
$
42,402
  
Correspondent
    
22,162
        
20,207
        
40,431
        
50,163
        
21,412
        
13,489
  
Direct
    
26,758
        
33,451
        
33,564
        
25,943
        
14,579
        
6,872
  
Total Gain on Sale Margin by Channel
    
293,971
        
374,764
        
433,507
        
328,641
        
166,162
        
62,762
  
Other1
    
7,272
        
47,394
        
69,838
        
28,230
        
(63,598
)
      
1,244
  
Total Gain on Sale Margin
  
$
301,243
      
$
422,158
      
$
503,344
      
$
356,871
      
$
102,563
      
$
64,006
  
                                                           
Gain on Sale Margin (bps)2
                                                          
Wholesale
    
152
        
234
        
320
        
309
        
187
        
117
  
Correspondent
    
33
        
31
        
62
        
107
        
66
        
41
  
Direct
    
362
        
399
        
420
        
439
        
435
        
504
  
Total Gain on Sale Margin by Channel
    
125
        
177
        
233
        
244
        
158
        
88
  
Other1
    
3
        
22
        
38
        
21
        
(60
)
      
2
  
Total Gain on Sale Margin
    
128
        
200
        
271
        
265
        
97
        
90
  
                                                           
Market Share for the period ended3
                                                          
Overall share of origination market
    
2.3
%4
      
1.9
%
      
1.6
%
      
1.2
%
      
1.2
%
      
1.1
%
Share of wholesale channel
  
NA4
        
8.2
%
      
7.3
%
      
6.2
%
      
4.7
%
      
4.5
%
                                                           
Origination Volume by Purpose
                                                          
Purchase
    
20.4
%
      
29.5
%
      
29.0
%
      
30.7
%
      
39.3
%
      
44.3
%
Refinance
    
79.6
%
      
70.5
%
      
71.0
%
      
69.3
%
      
60.7
%
      
55.7
%
                                                           
Third Party Partners
                                                          
Number of Broker Partners
    
6,023
        
5,372
        
4,921
        
4,338
        
3,512
        
3,085
  
Number of Correspondent Sellers
    
620
        
604
        
594
        
580
        
552
        
537
  
                                                           
Mortgage Servicing
                                                          
MSR Servicing Portfolio - UPB (end of period)
  
$
109,922,914
      
$
91,482,967
      
$
75,127,985
      
$
64,160,826
      
$
57,904,789
      
$
52,600,547
  
Average MSR Servicing Portfolio - UPB
  
$
100,702,940
      
$
83,305,476
      
$
69,644,405
      
$
61,032,808
      
$
56,041,430
      
$
52,479,793
  
MSR Servicing Portfolio - Units
    
409,075
        
359,323
        
310,729
        
276,357
        
255,817
        
236,362
  
                                                           
Weighted average coupon rate
    
3.19
%
      
3.41
%
      
3.63
%
      
3.82
%
      
3.94
%
      
4.01
%
                                                           
60+ days delinquent, incl. forbearance
    
2.7
%
      
4.4
%
      
6.6
%
      
7.8
%
      
1.7
%
      
1.7
%
60+ days delinquent, excl. forbearance
    
1.0
%
      
1.5
%
      
2.6
%
      
1.4
%
    
NA
     
NA
 
                                                           
MSR Multiple
    
3.84
  
x
    
2.85
  
x
    
2.57
  
x
    
2.51
  
x
    
2.61
  
x
    
3.43
  

(1) Includes realized and unrealized gains/(losses) on locks and mortgage loans held for sale, net hedging results, the provision for the representation and warranty reserve, and differences between modeled and actual pull-through.

(2) Calculated as gain on sale, net, divided by Fallout Adjusted Lock Volume. We previously calculated gain on sale margin as gain on sale, net, divided by Total Funded Origination Volume. We believe that the calculation of gain on sale margin presented herein aligns more closely with when revenue is recognized under U.S. GAAP and we intend to use such presentation on a go-forward basis.

(3) For each period, overall share calculated as the Company’s originations dollar value divided by the total residential originations in the United States per Inside Mortgage Finance, a third party provider of residential mortgage industry news and statistics. For each period, wholesale channel share calculated as the Company’s wholesale originations dollar value divided by the total wholesale originations in the United States per Inside Mortgage Finance.

(4) Overall share for Q1 2021 based on Inside Mortgage Finance and company data. Wholesale channel share information for Q1 2021 not available as of the date of the release of this quarterly financial supplement..



Home Point Capital Inc.
GAAP to Non-GAAP Reconciliations
(Unaudited)
($ amounts in thousands)

     
Q1 2021
      
Q4 2020
      
Q3 2020
      
Q2 2020
      
Q1 2020
      
Q4 2019
  
                                                 
Reconciliation of Adjusted Revenue to Total Revenue, Net
                                                
Total revenue, net
  
$
421,972
    
$
455,007
    
$
510,798
    
$
345,024
    
$
67,629
    
$
96,722
  
Income from equity method investment
    
4,163
      
2,844
      
9,870
      
1,864
      
2,316
      
110
  
Change in FV of MSR, net of hedge
    
(102,020
)
    
(17,173
)
    
11,817
      
31,111
      
55,375
      
(10,445
)
Adjusted revenue
  
$
324,115
    
$
440,678
    
$
532,485
    
$
377,999
    
$
125,319
    
$
86,387
  
                                                 
Reconciliation of Adjusted Net Income (Loss) to Total Net Income (Loss)
                                                
Total net income (loss)
  
$
148,969
    
$
184,397
    
$
264,062
    
$
169,022
    
$
(10,548
)
  
$
16,067
  
Change in FV of MSR, net of hedge
    
(102,020
)
    
(17,173
)
    
11,817
      
31,111
      
55,375
      
(10,445
)
Income tax effect of change in FV of MSR
    
25,709
      
3,664
      
(3,173
)
    
(8,167
)
    
(11,814
)
    
2,329
  
Adjusted net income
  
$
72,658
    
$
170,889
    
$
272,706
    
$
191,965
    
$
33,012
    
$
7,952
  
                                                 
Reconciliation of Adjuted Net Margin to Net Margin
                                                
Total revenue, net
  
$
421,972
    
$
455,007
    
$
510,798
    
$
345,024
    
$
67,629
    
$
96,722
  
Total net income (loss)
    
148,969
      
184,397
      
264,062
      
169,022
      
(10,548
)
    
16,067
  
Net margin
    
35
%
    
41
%
    
52
%
    
49
%
  
NM
      
17
%
                                                 
Adjusted revenue
  
$
324,115
    
$
440,678
    
$
532,485
    
$
377,999
    
$
125,319
    
$
86,387
  
Adjusted net income
    
72,658
      
170,889
      
272,706
      
191,965
      
33,012
      
7,952
  
Adjusted net margin
    
22
%
    
39
%
    
51
%
    
51
%
    
26
%
    
9
%