Financial & Operational Metrics & Benchmarking TYLER HOUSE, - - PowerPoint PPT Presentation

Financial & Operational Metrics & Benchmarking

TYLER HOUSE, MANAGER, ADVISORY SERVICES

2017 HMDA Volume Stats

Industry Volume down 13%

• IMBs: volume down 12%
• Depositories: volume down 16%

Industry Purchase Vol. hits 1 trill., 8% YoY increase

• IMBs: purchase volume up 12%
• Depositories: purchase volume up 6%

Industry Refi Vol. was 650 bill., 35% YoY decrease

• IMBs: refi volume down 35%
• Depositories: refi volume down 36%

2017 HMDA M&A Stats

Almost 1/3rd of IMBs volume increased YoY (+23%)* 1/4th of Depositories volume increased YoY (+26%)* ~ 120 lenders active in M&A or significant growth

• IMB avg “M&A” was a 40% or 560 mill. increase in vol.
• Depository avg “M&A” was a 115% or 340 mill. increase in vol.

*Includes only lenders who originated at least 250 mill. In 2017 and 2016.

2017 HMDA Market Share Stats

IMBs market share up 1.2% Depositories market share down 0.9% IMB’s share increased for all products/purposes:

• Conv: +1.7%
• Govt: +0.8%
• Jumbo: +2.6%
• Purchase: +1.6%
• Refi: +0.7%

• 11%

Mountain

• 22%

West Coast

• 16%

Midwest

• 8%

Gulf Coast

• 6%

Atlantic South

• 15%

Great Lakes

• 12%

Mid- Atlantic

• 17%

Northeast

:: All 1-4 Fam., 1st Lien

Production Volume

In 2017: down 9% YoY Q1-2018: down 17% QoQ, but up 6% YoY Q1-2018 volume was highest average volume for any Q1 back to 2012… Looking forward to a more predictable purchase market…

Secondary Gain on Sale

2017 GOS 337 bps, was on par with 2016. Starting Q1.2017 there has been 4 consecutive quarters

• f declines in GOS. From 354

bps to 315 bps. Is GOS rebounding during Q2?

Annual Costs to Originate

2017 Costs were $8,264 per loan. YoY increase of +$659 per loan. 5 consecutive years of increases in costs…

Q1’s Costs to Originate

Q1-2018 costs were $9,170 per loan YoY increase of +$159 per loan. Q1-2018 costs reach highest point, even though volume was higher than all the previous Q1s.

Annual Pretax Income

27 bps in 2017 is lowest profitability in 6 years. What will 2018 look like?

Q1’s Pretax Income

11 bps second lowest earnings total among previous Q1s.

What separates the most profitable lenders from the rest of the industry?

3 Groups

Top – top 3rd of the peer group for profitability in each of the last 2 years Bottom – bottom 3rd of the peer group for profitability in each of the last 2 years

• Avg. – everyone else

***looked at retail lenders only***

Top Avg Bottom Avg Bottom Secondary Gain on Sale 411.8 359.6 364.5

• 52.2
• 47.3

Origination fees 65.6 35.9 17.4

• 29.7
• 48.2

Total Sales Costs (177.2) (155.6) (161.8) + 21.6 + 15.4 Contribution Margin 303.2 242.0 221.1

• 61.2
• 82.1

Personnel Expense 132.0 130.8 132.0

• 1.2
• Operating (fixed) Expense

72.2 67.8 80.1

• 4.4

+ 7.9 Total Expense 204.2 198.6 212.1

• 5.6

+ 7.9 Profits 99.1 43.4 8.9

• 55.7
• 90.2

Volume (Bill. / Mill.) 1.6B 2.1B 1.8B + 500M + 200M Avg Loan size (k) 232k 257k 253k + 25k + 21k Govt Mix 44% 36% 35%

• 7%
• 9%

ROE (annualized) 41% 19% 3%

• 22%
• 38%

Loans Per FTE 1.38 1.49 1.35 + 0.11

• 0.03

2017 Variance from Top

Financial Results (Basis Points)

Where Do Revenues Go?

480.5 397.6 382.8

$10,846

$9,510 $9,629

Profit Gap Trend

The gap in profitability is growing… Avg compared to Top

• was 33 bps lower in 2015,
• was 78 bps lower in Q1.2018

Bottom compared to Top

• was 60 bps lower in 2015
• was 105 bps lower in Q1.2018

Why items are driving the gap?

For the average group: Top line revenues fall behind by 25 bps For the bottom group: Expenses increase by additional 27 bps

Contact Info

Tyler House, Manager, Advisory Services tyler@richeymay.com 303.409.2697