UWM Holdings Corp (UWMC) 2022 Q3 法說會逐字稿

Good morning. My name is Rob, and I will be your conference operator today. At this time, I would like to welcome everyone to the UWM Holdings Corporation Third Quarter 2022 Earnings Conference Call. (Operator Instructions) Thank you. Blake Kolo, you may begin your conference.

This is Blake Kolo, Chief Business Officer and Head of Investor Relations. Thank you for joining us, and welcome to the third quarter 2022 UWM Holdings Corporation's earnings call. Before we start, I would like to remind everyone that this conference call includes forward-looking statements.

For more information about factors that may cause actual results to differ materially from forward-looking statements, please refer to the earnings release that we issued this morning. I will now turn the call over to Mat Ishbia, Chairman and CEO of UWM Holdings Corporation and United Wholesale Mortgage.

Thanks, Blake, and thank you, everyone, for joining us. Today, we are excited to be hosting this call as the #1 overall mortgage lender in America. There has never been a 100% wholesale lender that has earned this title, and we are very proud to be #1. What a great day for the UWM family, our team members, our mortgage broker partners and our investors.

Well, I didn't know when I was confident that this day would come because I continue to say, brokers are the best place for consumers to get a loan and the wholesale channel is the best place for a loan officer work. And that is why we are #1 together as a community with our brokers. At this point, I would hope everyone realizes we consistently deliver on what we say. We said we'd dominate the purchase market.

We just had our best purchase quarter of all time and nearly $28 billion of purchase volume. We believe the combination of brokers and the real estate partners, coupled with UWM efficiencies and technologies make for a championship combination for the American consumer. We told you when we launched all in, in March of 2021 that this decision would help the broker channel grow and ultimately, our share of the channel.

Some questioned us and thought we would lose brokers in market share. However, the exact opposite has happened. I estimate that our share in the wholesale channel in the third quarter will be the largest ever recorded in history. I believe it will be north of 40% and perhaps even closer to 50%.

Most recently, we told you our game on strategy would separate us even further from our competitors. Since the start of game on, we've had thousands of loan officers tried for the first time, experiencing our technology, our service and quickly realizing that partnering with us can help them win in any market.

We said that loan off you would migrate from retail to wholesale this year and accelerate during Game on. This has happened. We estimate over 17,000 [loaners] that joined the mortgage broker channel this year and about half of them coming directly from the retail channel. These are highest numbers we've ever seen since tracking this data. We also told you that it will be better for us to focus on growing our market share organically instead of by acquisition.

How has that played out? I'll tell you, this has played out extremely well. There were a lot of uncommitted wholesale lenders in the market. And with Game On, some of them decided to exit because of their lack of efficiency and lack of commitment to the broker community. There are many committed wholesale lenders in the market that are doing very, very well. And brokers have so many choices, over 50 great wholesale options to choose for them.

But I want to make one thing very clear, the decisions we make continually force every wholesaler and that are competing in the wholesale channel to level up their game, which is a massive positive for every broker and consumer in America. Many people expressed their disbelief that a company only fighting for 2 out of every 10 loans, UWM in the broker channel, could ever be the largest lender in America. And here we are, the #1 overall mortgage company in America, about 1 year after I first publicly said that, that was a possibility that we would do it.

One other thing we've talked about that also sets UWM apart is that we've never had a layoff and never will have layoffs. We don't need to layoff people to go to our expenses. Year-to-date, we've made about $1 billion in one of the most difficult mortgage environments of all time. And we do this by lenient technology, our operational efficiencies, things such as Bolt and other technologies that we built from scratch here at UWM. We are about people and family and our culture, layoffs have never been on the table and never will be by controlling our expenses and managing our cost per loan is always a major priority at UWM.

We told you that dividends would continue, and I'm happy to announce for the eighth consecutive quarter, we will be paying $0.10 per share, which right now represents over a 10% annual yield. Now I'm going to tell you what all is going to happen. We are the best strategic position we've ever been in UWM because brokers are growing. Our competitors who are uncommitted to the channel are struggling and retail is falling apart, just like we said it would.

I'm very confident sometime in the very near future, whether it's '24, 2025, 2026, we will have years just like 2020 or even better. We are excited about the future, and we are in a great position to dominate.

We've been questioned about all in. We've been questioned about Game On. We've been questioned on whether we'd ever be #1. We've been -- whether the dividend will continue. Whether we win and purchase, whether the broker channel will grow. I don't know what else to say, but what we have said would happen has happened. Maybe, just maybe there really is one elite mortgage company in America. Maybe there is one CEO and his leadership team that really is in the weeds of the business and knows the business better than the rest. Who knows? That's what we believe. I hope you're starting to believe it as well.

All right. Let's get in the third quarter highlights. We closed about $33.5 billion in production for the quarter, candidly meeting our guidance. $27.7 million of this was purchase volume, 24% higher than last quarter. I described our purchase performance last quarter as dominant and 24% more is even more dominant. Again, we averaged about $24 billion in purchase for the last 6 quarters. We are winning in the purchase market.

I'm also proud to say we had over $325.6 million of net income per quarter with a gain margin of about 52 basis points, which was in our guidance. I'm still confident we'll average about 75 to 100 basis points for the full year, as I've been saying all along. We continue to deliver world-class service levels. Our NPS is plus 88% for the year, and our speed to close is nearly twice as fast as the rest of the industry. In addition, we delivered about fully diluted earnings of about $0.13 per share. Andrew will provide more color on some of these numbers in a few minutes, but I want to dig deeper on the long-term perspective of Game On.

As a refresher, Game On is a long-term investment in our business in the broker channel. We launched on June 22. And this strategy will help brokers and UWM win long term as partners together. We know with brokers having the best technology, service, partnership, they are (inaudible) that they can win. But now with a massive pricing advantage, they will grow and recruit even more loan officers, and they will continue to build their real estate relationships.

This is a winning combination. And brokers are winning right now, and Game on is a big part of it. Just like the all-in from March 2021, Game On received criticism from our competitors and other industry pundits. It's undeniable that Game On has been a massive success for the broker community. Brokers are adding LOs faster now than we've ever tracked. As I said earlier, brokers have added over 17,000 loan officers this year to our channel with a good amount of those coming in Q3. At UWM since the launch of Game on, we've also converted nearly 12,000 loan officers that have never worked with us before or haven't worked with us in a long time. We are winning with these new clients that are trying us for price and working with us because of how great we are from a service, technology and partnership perspective.

The broker channel is growing. Loan officers are joining the broker channel Game on is a huge part of this. As you can tell, I'm fired up about how far we've come and where we are going. Our business in the broker channel have never had more momentum than it has right now, and we're going to continue to grow together. I'll now turn things over to our Principal Financial Officer, Andrew Hubacker.

Thanks, Matt. As Matt discussed, we remain profitable in this environment as reflected in our reported net income of $325.6 million in the third quarter. Our Q3 results benefited from increases in the fair value of our MSR portfolio due to rising primary mortgage interest rates, our total origination volume for Q3 was very strong, as Matt mentioned, of approximate 12% sequentially from Q2.

Our servicing portfolio also remains very strong with a total UPB of approximately $306 billion. as newly originated and retained MSRs have largely kept pace with sales and payoffs to date in 2022 with a very low WACC, very low delinquencies and a high asset quality, our MSR portfolio is stronger than ever and continues to provide balance to our business model, a recurring quarterly cash flow stream and a strategic source of additional liquidity.

Speaking of liquidity, we took steps in Q3 to further improve our liquidity position, which allows us to continue to strategically invest in both the wholesale channel and in growing our market share. In early August, we entered into an unsecured line of credit with our principal shareholder with available borrowing capacity of $500 million. In late September, we entered into a line of credit secured by certain of our MSRs with available borrowing capacity of $1.5 billion.

Neither of these facilities have been drawn upon as of the end of Q3, and we ended Q3 with approximately $2.9 billion in total available liquidity, including over $800 million of cash and self warehouse and $2 billion of available borrowings under our secured and unsecured lines of credit. This is a significant enhancement to our liquidity position for Q2 and the beginning of the year.

Excluding the impact of an increase to our representation in warranty indemnification reserves recorded in Q3, total expenses were down sequentially in Q3 despite the increase in loan production. We continue to be focused on staying disciplined with cost management in the current origination environment and are comfortable that more aggressive cost reduction actions are unnecessary and would be shortsighted.

As noted in our earnings release, the Board again authorized the eighth consecutive quarter of regular dividend to be paid to our public shareholders for Q4. We continue to be comfortable with the amount and timing of the dividend and believe it is appropriate to continue to reward our stockholders. Okay. I will now turn things back over to our Chairman and CEO, Mathew Ishbia, for some closing remarks.

Thank you, Andrew. Appreciate it. Before turning to your questions, I wanted to reemphasize a few things. Almost all things that we have talked about publicly since UWM went public, whether the predictions or interpretation of the market of the business have come true. And I talked about some of those things earlier in the call. We are dedicated to the broker channel. We have been and the channel will continue to grow as we have been discussing. While it's great to be #1 overall, we're just getting started. There's a lot of upside ahead, and I'm so excited for the next 3 to 5 years and what we're doing here together at UWM and with our broker partners. And with that being said, we elect our fourth quarter production to be between $19 billion and $26 billion, and our margins in the range of 40 to 70 basis points.

I want to take a second to thank our amazing team members and clients. Being #1 is a testament to all of you and your hard work. While we certainly celebrate this great achievement and all of our progress, we already have a saying here at UWM which is never relax. I believe we are at the best strategic position we've ever been in. Yet, we will keep going. We'll keep winning together. You can count on that. We're now glad to take your questions. I'll turn it over to the moderator.

(Operator Instructions) Our first question comes from the line of Doug Harter from Credit Suisse.

Matt, I think you mentioned that you would expect your market share within the channel to be around 50% this quarter. I guess, how do you think about where that could go in kind of both the short and in intermediate term?

Yes. Thanks. Yes, I said I think it was over 40 and maybe as high as 50. I've said before, I think we can be 50% of the market in wholesale. Can we be more? We probably could be. The reality is as the broker channel grows and grows, it will be harder to beat that big a percentage of the market share. There's a lot of other wholesale lenders that are doing well. And at the same time, there's a lot of brokers. You've got to commit a lot of people to work with you. And so we're doing really well. We feel great about our market share. We feel great about the growth A lot of the reason our market share is growing at the level it is.

There's a lot of the brokers that are partners -- UWM are growing faster than the rest of the market and succeeding and they're really winning in the purchase market. Right now, that's the game. It's the purchase market. So we feel great about the market share perspective of UWM, but most importantly, focused on the mortgage broker market share and how that's growing because that's the key to the success. As the brokers grow as LOs added to the channel, we're going to keep winning right now, and you guys have seen that, but '24, '25, '26 when all these loan officers have left the retailer in the broker channel, it's going to make 2020. Like I said, we're going to do years that make that look like hopefully, just an average or a good year.

And then I guess on that, can you talk about how you -- the stickiness of kind of customers that you've brought in during kind of the Game on initiative kind of has that eventually kind of rolled off the stickiness of that volume or brokers that you brought in?

Yes. What we've done a similar thing in 2019, and we see a high percentage of the people that start working with us, stay working with us, whether they start -- stay doing 3 loans a year with us 6 months a year with us 12 loans a year, 20 loans a year, that all determines based on how big of originated they are and how much they buy into some of the tools we have. And so the stickiness factor is a big part of it, but the reality is Game On is much more of a strategic play to help the channel grow. When new UWM market share goes from 40% or 50% down to 25%, but the mortgage broker channel is 40%.

We're doing more business overall. We're going to grow with the channel. That's the focus. It's less about UWM although UWM is winning, and I told you guys, we'd win when rates go up because we win and purchase. We're not only dependent. We're not a one-trick pony on refis. We're focused on all-in strategic business, we'll do refis, but purchase market, broker channel, that's the focus, and that's what wins in all market cycles. Of course, in the refi market cycle, other things win, but in the purchase cycle, this is the game plan that wins, and it's winning for us right now.

Your next question comes from the line of Jay McCanless from Wedbush Securities.

So when I look at the originations in the quarter, your government purchase originations up about 70% versus last year and up 30% plus sequentially. Are you guys managing the servicing on that paper or someone subservicing it for UWM?

Yes. Thanks. All of our originations are up quite a bit quarter-over-quarter. Government, obviously, as well, I think it's pretty much in line. But yes, we subservice with 2 subservices right now, and we've been doing that for years. and that's continuing. And those guys do a great job for us. We have a whole team here that oversees it and works with them and make sure we are able to help with any consumer issues. But everything is great, our delinquency rate is really the thing to focus on not only our government convention. I think we have the best MSR book in America. So if you look at them, MSR book not the biggest, but it's the best for loan quality, delinquency, FICO score, WACC, which is weighted average coupon. We have the best MSR book in America, I believe, and we're starting to see some of that, and that will come through for years and years to come because of the WACC and we're at (inaudible) right now.

You stole my next question, Matt. That's what I was going to add on the delinquency trends, but then also just starting with some of the distress we're starting here at there, just early payment trends, how that's looking on the government book.

Looking fantastic. Our business is, like I said, we're significantly better than the market. on all the metrics that I look at from a delinquency perspective. Remember, we're one of those lenders that doesn't chase volume by going low on quality. A lot of my competitors, almost all my competitors go down to, for instance, a 580 credit score. We don't do that. We stay at 620. We don't do certain things to chase volume. And that sounds good right now. If people are like, oh, chase volume and the more profitable loans, yes. But in 2 years, 3 years, 4 years, you're going to have delinquencies you're gonna have a lot of different issues. We're not focused on. We're not only focus on being the biggest, which we are the #1 overall lender, but being the best lender in America, and we think we've had that title for a long time now.

Your next question comes from the line of Bose George from KBW.

Actually, I was wondering the Game on program, how long is that likely to continue? And what percentage of your loans participate in that program?

Yes. I mean it's a strategy. It's not -- so it's not a percentage of our loans fit into it. So it's all of our loans are focused on the same strategies as our whole business is. How long will it last. Well, with the returns and the success we're seeing with it right now with the loan officer conversions, it's lasting longer than maybe we had expected. Obviously, we're extremely profitable even with that mindset. And so we're feeling really good about it. And I know a lot of competitors and a lot of retail lenders would love us to stop.

But the reality is their loan officers are joining the broker channel because the broker channel is better for loan officers and Game On is just -- not only showing it is accentuating it or highlighting it because everyone already knew that, but it's kind of pushing it. So right now, Game On is a massive success. We're going to continue with that until we decide to change that. I don't have a deadline or a date on that, but I look at pricing, I look at margins on a, I won't say daily based, I'll say, multiple times a day basis.

Okay. Great. And then just in terms of your volume, your guidance for 4Q at the low end suggests a decline versus the market and 3Q obviously took a ton of share. So just curious, anything to read into that or just a broad range that you're providing for your guidance?

There's nothing to read into it. There's two things as you know. One, obviously, we went up significantly when everyone else went down. So it's -- you're looking at it relative to our current number. But second, what I would mention is purchases in the fourth quarter and first quarter, a lot of people that -- all they do is refi. Refis don't matter the month of part of the year, purchases are a little different. So that's why you'll see a little bit of a decline in the purchase volume overall. But in general, we're feeling really good about not only our volume in the fourth quarter, but also into 2023 and not only maintaining the #1 overall lender spot, but actually growing our market share. and growing our lead.

Your next question comes from the line of James Faucette from Morgan Stanley.

Matt, Can I just ask a quick follow-up to the previous question. What are your assumptions for underlying assumptions for what the market will do, particularly in purchase in the December quarter?

Well, I mean, obviously, I've said it publicly before that I thought that the end of the third quarter, beginning of the fourth quarter become more of a buyer's market, that's what's happening, right? The market has softened. So now there's a lot more opportunity where sellers are chasing the buyers -- it was reversed just 6 months ago. So purchase will be slower. Obviously, in the northern states winter and also with people in school, people don't buy houses in December as often as they do in August, right? That's just obvious stuff. So we're prepared for that. We've done this for years and years. And so we feel really good about it.

Our purchase volume was $27.7 billion, which is our highest reading of all time. I think our purchase volume actually just our purchase alone was bigger than every other mortgage company in America, all of their volume purchase and refi combined. So purchases are down a little bit? We'll do a little bit less business than we did in the third quarter. That's not a concern at all. We're really focused on continue to grow the market share, helping the brokers win, helping more LOs join the broker channel and getting ready to dominate in 2023, '24 and '25.

So -- and then looking to that longer horizon, Matt, can you give us an idea how much room you think there is to improve efficiencies in mortgage servicing. As loans tend to exit forbearance programs, do you see the risk that the number of loans requiring more labor-intensive servicing could increase as part of [deal] with those modifications and for closure activity? And can you bring incremental efficiencies there to further help your opportunities in that longer horizon?

Yes, I don't see that at all. I don't really -- I'm not concerned about that. Do I think there will be more delinquencies if the recession hit? Of course. So I think that -- but you got to realize our book and our quality of paper is just not the same as everyone else. The age of our book, along with the WACC, along with the quality of our paper, makes it so we'll have a lot less of those concerns. Will delinquencies in the market go up with a recession? Yes. Well, things happen in the market? Yes. But from an efficiency perspective, what we're doing on the servicing side, I don't see any massive incremental costs or expenses that will hurt us in any way that's material.

Your next question comes from the line of Kyle Joseph from Jefferies.

Just want to get a little bit more color on what's going on in the broker channel. Obviously, we saw a number of participants announcing we're exiting, but you're talking about it taking share. So does that mean just essentially the players in that existing market are taking an even bigger piece of that pie?

Yes. The wholesale lenders that are committed to the channel are leveling up their game just like we are, helping brokers win, doing more than just being a wholesale lender, the 2005 version of a wholesale lender, the 2015 versions lender was throw a rate sheet out and close the loan for the broker. That's not the game anymore. And so people that were uncommitted that are just thinking they could to rate sheet out and get loans from a wholesale brokers aren't sticking around because they can't compete at that level. If you're not going to invest in technology, help brokers grow, you're not going to help train brokers, help them from a compliance perspective, help them build their business, help them market like help teach them, help them succeed, be their true partner, you're not going to win in wholesale.

That's the bar and anti to play. And a lot of people don't want to pay that, anti. And so if they're not around, they're not around, there's so many wholesale lenders that are around that are starting to level up and do great things for brokers. And I love that. I love it. I love when UWM's market share goes down in the wholesale channel because I know when that's happening that the other wholesaler lenders are doing great things, one, and through the broker channel is a lot bigger than it is today, which will be a win-win for everybody.

Your next question comes from the line of (inaudible) from RBC.

Can you get started maybe on fourth quarter your guidance is based on the historical market share or the market share that you see in the third quarter?

I'm not exactly sure what you're asking. You're saying our guidance is -- I mean, our guidance is based on what I believe we're going to do. And so obviously, understanding the purchase market, understanding our market share, understanding our perspective, that's what I try to give you as much accuracy on what I think we'll do from a production and MSR production and gain on sale perspective. So that's kind of where the guidance comes from. At the same time, we focus on I guess I keep saying, we grow the broker channel. We have an extreme amount of liquidity. Our MSR book is extremely strong. Our delinquencies are extremely low. We feel really good about our position in the fourth quarter and more importantly, in '23, '24, '25 and beyond. So I think that's -- hopefully, that answers your questions, if not clarify for me.

Got it. No. So I was just trying to see whether you could outperform just as you did in the third quarter, but this is helpful. The second thing is, you guys have talked about 70% to 90% gain on sale margin on an annual basis, just given that your gain on sale guidance for fourth quarter continues to remain in the 40% to 70% range. Should we think that next quarter, like in 2023, you will revert back to the 70% to 90% or should we expect continued lower gain on sales?

I haven't made that decision yet, (inaudible). What I've always said is that in wholesale, margin, 75 to 100 are kind of the bottom level I see. I think I said it even earlier in my call, that 75 to 100 is kind of like the low end range in wholesale. We're going to be in that range this year. right? And so we feel confident with that. Obviously, the first half of the year, margin was a little bigger, second half a little lower. I actually only -- in my head, I don't count the Game On margins is like dropping margin.

I consider it an investment long term, whether you want to think about it as a research development, marketing expense, like building the business for the long term rather than like what do we make this quarter, but I know everyone looks at their own way. We're thinking long term right now. And so whether the margins -- I gave the 40 to 70 basis point range. We'll be within that range and between 75 and 100 basis points on a yearly basis.

That's what we're doing. But it's a long-term investment. I told you guys last time, the Game on investment is going to spend a couple of hundred million dollars instead of acquiring companies, we're going to spend a couple of hundred million dollars, you're going to see it come out of by gain on sale. And if you flip that around and say, what's that going to return? It's going to return multiple, multiple times on that because the broker channel is going to grow and UWM will grow with it.

Got it. And just one last question. On the MSR line that you guys have drawn, how long will you keep that liquidity? And would you use it for bone buybacks? How should we be thinking about that?

Yes, we're focused on liquidity. We look at everything from share buybacks. Obviously, there's a float thing, so we don't do that -- can't do that bond buyback thing. We look at all aspects of the business at all times. Andrew does a heck of a job in the finance team, helping us make those right decisions. But right now, we feel really good about our business and where we stand right now, and we're going to continue to focus on originations, building our servicing book, helping the mortgage brokers grow and succeed and grow their market share. And when that happens, we'll continue to make decisions around our liquidity. Liquidity is the key, and we have a massive model of liquidity right now. We feel really great about our position. Thank you.

(Operator Instructions) Your next question comes from the line of Courtney Bahlman from Barclays.

Congrats on the results. Just a quick one for me on leverage. You guys have pretty consistently kept non-funding debt to equity within about a half to 3/4 of a turn. Should we think about this as the sweet spot moving forward and how you're managing the balance sheet?

Yes. No, thanks for the question. That's what we're at right now. Obviously, we feel really comfortable in that range. Could we go higher? Absolutely, we could go higher than that. I think almost everyone is a lot higher than that in our market and just in the industry in general. But we feel really good about where we stand. We manage liquidity very closely. We manage our debt and all the ratios that you're speaking of and probably more very closely, and Andrew has seemed to do a great job. Anything you want to add to that Andrew?

No, I think you covered it well.

Awesome. And then just 1 follow-up on the MSR front. How are you guys thinking about retention moving forward and the potential -- I know you mentioned you remain at -- sorry that you'd remain acquisitive, but how are you thinking about what types of MSRs you'd to want to acquire you open to Ginnie additions? Or would you say that you're more focused on conforming?

Well, we're not really acquiring MSRs. That's not really our game. What we're doing is originating loans. And so we originate agency loans, usually Fannie, Freddie and Ginnie. And depending on what the focus is at UWM and what our brokers are looking for is what we deliver. So I don't know if you misspoke or I misunderstand your question, but we're not acquiring MSRs. We originate MSRs at the highest level in the industry. And I think people try to buy our MSRs, obviously. And we're much more efficient at originating than even if we were going to buy them, and so we just focus on originating -- buying MSRs is not our game, but continue to build our businesses.

And your final question comes from the line of Kevin Barker from Piper Sandler.

I just want to follow up, how much MSR did you sell in the quarter? And then could you give us an idea of whether that was a seasoned portfolio or new production that you're selling?

Yes. Most of the stuff we sell is usually over 12 months. I don't know the exact details of it, but we sold about, let's call it, between $20 billion and $25 billion, I think, in the third quarter. And so we look at servicing sales as an opportunistic way to bring in cash. We don't really need to do it. However, we look at all things and we're always checking the markets and seeing what's going on. And so we feel really good about our position and our MSR book is extremely valuable right now.

Yes. It seems like the higher interest rates have definitely pushed up MSR values. But we've seen -- we hear that the market softened or like seems attractive to be buying MSRs right now compared to purchase. I mean are you seeing fairly strong bids? Or is there a flow programs that you're using to continue to have decent bids on the MSR sales that you're doing?

Yes. Our MSR sale bids are extremely high, actually, and very strong with a lot of people coming to us. You got to remember, our MSRs, people don't want to buy MSRs from someone if they don't think they're going to be around for the rep and warrant to be there for the long term. And everyone knows we are going to be around and strong. And so -- that actually gives -- if you think of it makes the supply in the market less because there's only so many lenders that people feel confident buying big portfolios of MSR from we are one of those, and we feel really good about our position.

On that. So the MSR bids have actually been very strong. We feel good about it. But at the same time, we haven't really been acting on much of it because our servicing book is fantastic. We don't need the liquidity. We have a lot of liquidity right now. And we feel really good about just focusing on our core business of helping mortgage brokers grow and win and continue to originate at the highest level in the country, which is what we've been doing.

Okay. And then your GAAP earnings were really strong. You definitely had a lot of liquidity, access to MSRs. But it appears like on an operating basis, it's still negative cash flow, which is not surprising just given the environment. But I mean, how long do you feel that you can continue to operate on a negative operating cash flow, excluding MSR sales just given -- it is a tough environment out there.

Yes, I really don't think that tough of an environment. So you know I think it's obviously tougher than it was last year, but last year wasn't real and people that were succeeding last year doing 90% refi are finding that out now. So Kevin, like my perspective is, cash flow is a different thing than income. We're extremely -- we're profitable running the business right now, the way we are running it. Operating income, we had a $236 million fair value increase. We made $325 million. We're making money right now running our business, and I'm very confident in that going forward.

On the cash flow side, wholesale lending is always negative cash flow. It's been forever, always has been, always really will be and that's why liquidity is such an important part to dominate in the wholesale channel. And so we feel great about where we're at. We're going to continue to focus on running the business, originating, helping brokers grow, helping brokers succeed in this market and taking market share, and it's been working for us. But thank you for the questions. I appreciate it.

And this will wrap up the Q&A portion. I would like to turn the call back over to Matt Ishbia for closing remarks.

Yes. Thanks a lot. Appreciate all the questions people joining the call. Hopefully, you're understanding a little bit about our business and understand what we're trying to do, and we really appreciate all the support and the positivity and we're going to continue to drying and work hard over here at UWM help mortgage brokers win, help you UWM win and take good care of our team members, brokers, shareholders and everyone alike. So thank you for the time. Have a fantastic day. Talk to you next quarter.

This concludes today's conference call. You may now disconnect.