No one can predict the future of real estate, but you can prepare. Find out what to prepare for and pick up the tools you’ll need at the immersive Virtual Inman Connect on Nov. 1-2, 2023. And don’t miss Inman Connect New York on Jan. 23-25, 2024, where AI, capital and more will be center stage. Bet big on the roaring future, and join us at Connect.
San Diego-based Guild Mortgage is looking to boost its presence in the Midwest with the acquisition of First Centennial Mortgage, a family-owned lender based in Aurora, Illinois, for terms that were not disclosed.
Founded in 1995 by brothers Steven and David McCormick, First Centennial Mortgage is licensed in 17 states and sponsors 159 mortgage loan originators working out of 21 branch locations, according to the Nationwide Multistate Licensing System.
“We continue to effectively execute our strategy to grow and gain market share through acquisitions where there exists a strong cultural match and the potential for value is present for both parties,” Guild CEO Terry Schmidt said in a statement.
The deal, announced Monday, marks the fourth expansion of Guild’s footprint since December.
In April Guild announced the formation of a new district in Northern California, with eight branch offices staffed by 40 former employees of rival Fairway Independent Mortgage Corp. who followed Fairway division manager John Lowe to Guild.
Guild expanded its national network of retail branches by nearly 25 percent in March with the acquisition of Colorado-based Cherry Creek Mortgage, which operates 68 branch offices in 45 states, agreeing to pay up to $8.3 million including earn-outs.
In February, Guild added 13 branches in four Southwestern states with the acquisition of Albuquerque, New Mexico-based Legacy Mortgage for up to $4 million including earn-outs.
Guild kicked off its recent acquisition streak in December, agreeing to pay up to $4 million to acquire the assets of a distressed lender, Wisconsin-based Inlanta Mortgage Inc., which operated in 27 states.
Guild typically doesn’t disclose terms of acquisitions until it files quarterly or annual reports to investors. Guild’s recent acquisitions have included both cash payments and performance-based earn-outs.
In its second quarter 2023 earnings release, Guild said it could ultimately pay up to $8.3 million for Cherry Creek Mortgage, including $2.6 million in cash and the potential for an additional $4.4 million in earn-out payments over four years. Guild said it also issued an $11.3 million note to Cherry Creek Mortgage in March in connection with the acquisition, and recognized a $1.3 million discount on the note when the deal closed on April 3.
Guild said it agreed to pay up to $5 million for Legacy Mortgage, including $3.3 million and up to $1.7 million in earn-outs over three years.
Guild revealed in its 2022 annual report to investors that the Inlanta deal closed on Dec. 12 and that it paid $4 million for the troubled lender, including $3.5 million in cash and up to $500,000 in earn-outs.
Guild managed to turn a $328 million profit last year, despite racking up a $15 million fourth-quarter net loss.
Guild Mortgage originations 2007-2023
Source: Guild Mortgage earnings reports.
In its most recent earnings report, Guild said it originated $4.5 billion in loans during the second quarter, up from $2.7 billion during the first three months of the year. Purchase loans to homebuyers accounted for 94 percent of loans by dollar volume, compared to 80 percent for the industry as a whole, the company said.
At $7.2 billion, originations for the year to date were down 39 percent from the same time a year ago. But after posting a $37.2 million net loss during the first three months of the year, Guild managed to generate a $36.9 million profit in Q2 and declared a special cash dividend of 50 cents per share.
“We are pleased with the contributions from our recent acquisitions and believe we will realize additional benefits and further our retail reach as they are fully integrated,” Schmidt said in a statement. “We have prioritized maintaining a strong balance sheet and liquidity position, which supports our ongoing pursuit of additional external growth opportunities. We cannot control the economic environment, however we will continue to leverage our proven business and aim to further increase market share and to accelerate growth as the markets normalize.”
Schmidt, who succeeded Mary Ann McGarrry as Guild’s CEO midyear, told investment analysts on the company’s Aug. 4 earnings call that Guild is “still actively pursuing acquisitions.”
Potential acquisitions are “more about what value add is it going to be to the company, rather than the size,” Schmidt said. “So are they a really big purchase shop? What kind of products do they do? What footprint are they in? And more importantly culture, does the culture fit?”
Get Inman’s Mortgage Brief Newsletter delivered right to your inbox. A weekly roundup of all the biggest news in the world of mortgages and closings delivered every Wednesday. Click here to subscribe.