Guild Holdings Company [1] and Residential Mortgage Services Holdings (RMS) [2] have signed a definitive merger agreement under which Guild will acquire RMS, subject to regulatory approval and other customary closing conditions. Through the acquisition of retail originator RMS, Guild will expand its presence in the Northeastern U.S.
Following the transaction, which has a purchase price estimated at $196.7 million based on March 31, 2021 tangible book value, the RMS management team will continue to manage the business.
Established in 1991, RMS has 70 offices across 14 New England and Mid-Atlantic states. The RMS management team averages more than 30 years of industry experience, and like Guild, specializes in conventional and government lending.
“We have a history of growing through targeted acquisitions, and the transaction with RMS supports our strategy to expand into the Northeast,” said Mary Ann McGarry [3], CEO of Guild. “Our close cultural alignment and commitment to strong values across both organizations, combined with a retail and purchase market focus provide us with confidence that this acquisition will contribute to our ongoing success. With both teams dedicated to providing exceptional customer service, and the many synergies between our products, sales tools, and servicing teams, this is a natural fit. We expect the combination will result in an even stronger platform that will continue to deliver profitable sustained growth, as we create long-term value for all our stakeholders. We look forward to welcoming RMS to the Guild team.”
In 2020, RMS generated $8.5 billion in loan originations, achieving a compounded annual growth rate of 26% since 2010.
“We are excited to join forces with Guild Mortgage to drive continued growth for our respective stakeholders,” said Jim Seely, President and CEO of RMS. “Guild and RMS share a similar entrepreneurial culture–one that places a high value on market expertise, efficiency, and productivity. This transaction is a natural next step to build on our success and take our business to the next level by partnering with a national powerhouse in the residential mortgage market. Leveraging Guild’s technology, in-house servicing platform and enhanced access to the capital markets will enable us to further expand our value to our customers, provide new opportunities for our employees and continue growing our market share in the Northeast.”
Guild reported that it generated originations of $9.8 billion in Q1 2021 [4], representing year-over-year growth of 70%. Guild also reported Q1 net revenue having increased 209% year-over-year to $526 million.
“Looking ahead, we remain well-positioned to grow given our focus on purchase loans in the retail channel, an expanding geographic footprint, and our scale-enabled servicing platform,” said McGarry [4]. “While rising interest rates, slowing refinancing activity, low supply of homes, and contracting margins will impact Guild and the entire mortgage industry, we will continue to focus on creating shareholder value across all cycles and extending our history of profitable growth.”