SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 3, 2022
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation)
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(Commission File Number)
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(IRS Employer Identification No.)
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(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (888 ) 616-6866
Not applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8−K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following
provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a−12 under the Exchange Act (17 CFR 240.14a−12)
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Pre−commencement communications pursuant to Rule 14d−2(b) under the Exchange Act (17 CFR 240.14d−2(b))
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Pre−commencement communications pursuant to Rule 13e−4(c) under the Exchange Act (17 CFR 240.13e− 4(c))
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Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol
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Name of each exchange on which
registered
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(The Nasdaq Global Select Market)
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2
of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.01 |
Completion of Acquisition or Disposition of Assets.
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On October 3, 2022, Home Point Capital Inc. (the “Company”) completed the previously announced sale of its 49.6% ownership interest (the “Ownership
Interest”) in Longbridge Financial, LLC to EF Holdco RER Assets, LLC (the “Purchaser”), an indirect subsidiary of Ellington Financial Inc., for a purchase price of approximately $38.9 million in cash. There are no material relationships between the
Company (or its subsidiaries or affiliates) and the Purchaser (or its subsidiaries or affiliates) other than with respect to the sale of the Ownership Interest.
| Item 9.01 |
Financial Statements and Exhibits.
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(b)
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Pro Forma Financial Information
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The unaudited pro forma condensed consolidated balance sheet of the Company as of June 30, 2022 and the unaudited pro forma condensed consolidated
statement of operations of the Company for the fiscal year ended December 31, 2021 and the six months ended June 30, 2022, which give effect to the sale of the Ownership Interest described in Item 2.01, are attached as Exhibit 99.1 to this Current
Report on Form 8-K and are incorporated by reference herein.
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(d)
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Exhibits
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Exhibit No.
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Description
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Unaudited Pro Forma Condensed Consolidated Financial Statements.
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104
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The cover page from this Current Report on Form 8-K, formatted in Inline XBRL.
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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HOME POINT CAPITAL INC.
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Date: October 7, 2022
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By:
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/s/ Mark E. Elbaum
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Name:
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Mark E. Elbaum
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Title:
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Chief Financial Officer
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Exhibit 99.1
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On October 3, 2022, Home Point Capital Inc. (the “Company”) completed the previously announced sale of its 49.6% ownership interest (the
“Ownership Interest”) in Longbridge Financial, LLC to EF Holdco RER Assets, LLC (the “Purchaser”), an indirect subsidiary of Ellington Financial Inc., for aggregate cash proceeds of approximately $38.9 million.
The following unaudited pro forma condensed consolidated financial statements of the Company have been derived from the Company’s historical
consolidated financial statements and have been adjusted to give effect to the sale of the Ownership Interest. The unaudited pro forma condensed consolidated statements of operations, which have been prepared for the six months ended June 30, 2022
and the year ended December 31, 2021, give effect to the sale of the Ownership Interest as if it had occurred on January 1, 2021. The unaudited pro forma condensed consolidated balance sheet has been prepared as of June 30, 2022 and gives effect to
the sale of the Ownership Interests as if it had occurred on that date.
The unaudited pro forma condensed consolidated financial statements are presented for informational purposes only and do not purport to be
indicative of the financial position or results of operations of the Company had the sale of the Ownership Interest been completed as of the beginning of the earliest period presented, nor indicative of future results of operations or future
financial position of the Company. The unaudited pro forma condensed consolidated financial statements should be read in conjunction with the Company’s historical consolidated financial statements and accompanying notes included in its Annual
Report on Form 10-K for the year ended December 31, 2021 and its Quarterly Report on Form 10-Q for the quarter ended June 30, 2022.
The unaudited pro forma condensed consolidated financial statements reflect management’s best estimates based on currently available information.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 2022
(dollars in thousands, except per share amounts)
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Historical
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Transaction
Accounting
Adjustments
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Pro Forma
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|||||||||||
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Assets:
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|||||||||||||
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Cash and cash equivalents
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$
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135,843
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$
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38,886
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(a)
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$
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174,729
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||||||
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Restricted cash
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27,065
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—
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27,065
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Cash and cash equivalents and Restricted cash
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162,908
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38,886
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201,794
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Mortgage loans held for sale (at fair value)
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2,018,640
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—
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2,018,640
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Mortgage servicing rights (at fair value)
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1,419,105
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—
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1,419,105
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Property and equipment, net
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18,039
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—
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18,039
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Accounts receivable, net
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176,995
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—
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176,995
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Derivative assets
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59,280
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—
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59,280
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Goodwill
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10,789
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—
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10,789
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Government National Mortgage Association loans eligible for repurchase
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117,092
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—
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117,092
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Assets held for sale
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50,748
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(50,748
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)
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(b)
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—
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Other assets
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40,824
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—
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40,824
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Total assets
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$
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4,074,420
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$
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(11,862
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)
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$
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4,062,558
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Liabilities and Shareholders’ Equity:
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Liabilities:
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Warehouse lines of credit
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$
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1,910,395
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$
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—
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$
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1,910,395
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Term debt and other borrowings, net
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845,531
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—
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845,531
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Accounts payable and accrued expenses
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106,005
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—
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106,005
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Government National Mortgage Association loans eligible for repurchase
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117,092
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—
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117,092
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Deferred tax liabilities
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214,871
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(2,839
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)
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(c)
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212,032
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Derivative liabilities
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60,309
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—
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60,309
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Other liabilities
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87,815
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—
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87,815
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Total liabilities
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3,342,018
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(2,839
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)
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3,339,179
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Commitments and Contingencies
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Shareholders’ Equity:
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Preferred stock (250,000,000 authorized shares, none issued and outstanding, $0.0000000072 par value per
share)
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—
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—
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—
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Common stock (1,000,000,000 authorized shares, 138,380,272 shares issued and outstanding as of June 30,
2022, $0.0000000072 par value per share)
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—
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—
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—
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Additional paid-in capital
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511,675
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—
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511,675
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Retained earnings
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220,727
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(9,023
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(d)
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211,704
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Total shareholders’ equity
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732,402
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(9,023
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)
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723,379
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Total liabilities and shareholders’ equity
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$
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4,074,420
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$
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(11,862
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)
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$
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4,062,558
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See accompanying notes to the unaudited pro forma condensed consolidated financial statements.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2022
(dollars in thousands, except per share amounts)
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Historical
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Transaction Accounting
Adjustments
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Pro Forma
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Revenue:
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Gain on loans, net
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$
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58,638
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$
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—
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$
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58,638
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Loan fee income
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35,159
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—
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35,159
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Interest income
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54,610
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—
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54,610
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||||||||||
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Interest expense
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(62,015
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)
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—
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(62,015
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)
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Interest expense, net
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(7,405
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)
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—
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(7,405
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)
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Loan servicing fees
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143,936
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—
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143,936
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Change in fair value of mortgage servicing rights
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(12,704
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)
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—
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(12,704
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)
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Other income
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10,555
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—
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10,555
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Total revenue, net
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228,179
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—
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228,179
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Expenses:
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Compensation and benefits
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165,033
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—
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165,033
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Loan expense
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15,984
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—
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15,984
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Loan servicing expense
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12,867
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—
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12,867
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Production technology
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9,208
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—
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9,208
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General and administrative
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36,640
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—
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36,640
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Depreciation and amortization
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5,314
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—
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5,314
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Other expenses
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11,068
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—
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11,068
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Total expenses
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256,114
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—
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256,114
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Loss before income tax
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(27,935
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)
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—
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(27,935
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)
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Income tax benefit
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9,798
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(3,450
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)
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(e)
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6,348
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Loss from equity method investment
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(14,416
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)
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14,416
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(f)
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—
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Net loss
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$
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(32,553
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)
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$
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10,966
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$
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(21,587
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)
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Loss per share:
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|||||||||||||
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Basic
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$
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(0.23
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)
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$
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(0.16
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)
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Diluted
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$
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(0.23
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)
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$
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(0.16
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)
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|||||||
See accompanying notes to the unaudited pro forma condensed consolidated financial statements.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2021
(dollars in thousands, except per share amounts)
|
Historical
|
Reclassifications
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Transaction
Accounting Adjustments
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Pro Forma
|
||||||||||||||
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Revenue:
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|||||||||||||||||
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Gain on loans, net
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$
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585,762
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$
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—
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$
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—
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$
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585,762
|
|||||||||
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Loan fee income
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150,921
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—
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—
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150,921
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|||||||||||||
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|
|||||||||||||||||
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Interest income
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136,477
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—
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—
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136,477
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|||||||||||||
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Interest expense
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(169,390
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)
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—
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—
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(169,390
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)
|
|||||||||||
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Interest expense, net
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(32,913
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)
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—
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—
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(32,913
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)
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|||||||||||
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Loan servicing fees
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331,382
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—
|
331,382
|
||||||||||||||
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Change in fair value of mortgage servicing rights
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(113,856
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)
|
37,025
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—
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(76,831
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)
|
|||||||||||
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Other income
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40,220
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(37,025
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)
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—
|
3,195
|
||||||||||||
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Total revenue, net
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961,516
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—
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—
|
961,516
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|||||||||||||
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Expenses:
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|||||||||||||||||
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Compensation and benefits
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494,227
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—
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—
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494,227
|
|||||||||||||
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Loan expense
|
63,912
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—
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—
|
63,912
|
|||||||||||||
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Loan servicing expense
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27,373
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—
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—
|
27,373
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|||||||||||||
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Production technology
|
31,866
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—
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—
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31,866
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|||||||||||||
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General and administrative
|
95,476
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—
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—
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95,476
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|||||||||||||
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Depreciation and amortization
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10,127
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—
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—
|
10,127
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|||||||||||||
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Other expenses
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29,638
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—
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—
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29,638
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|||||||||||||
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Total expenses
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752,619
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—
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—
|
752,619
|
|||||||||||||
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Income before income tax
|
208,897
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—
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—
|
208,897
|
|||||||||||||
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Income tax expense
|
(57,998
|
)
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—
|
3,679
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(e)
|
(54,319
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)
|
||||||||||
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Income from equity method investment
|
15,373
|
—
|
(15,373
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)
|
(f)
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—
|
|||||||||||
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Net income
|
$
|
166,272
|
$
|
—
|
$
|
(11,694
|
)
|
$
|
154,578
|
||||||||
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Earnings per share:
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|||||||||||||||||
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Basic
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$
|
1.19
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$
|
1.11
|
|||||||||||||
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Diluted
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$
|
1.19
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$
|
1.10
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|||||||||||||
See accompanying notes to the unaudited pro forma condensed consolidated financial statements.
1 – Description of the Transaction and Basis of Presentation
On October 3, 2022, Home Point Capital Inc. (the “Company”) completed the previously announced sale of its 49.6% ownership interest (the “Ownership
Interest”) in Longbridge Financial, LLC to EF Holdco RER Assets, LLC (the “Purchaser”), an indirect subsidiary of Ellington Financial Inc., for aggregate cash proceeds of approximately $38.9 million.
The Company’s Ownership Interest was classified as Assets Held for Sale. The Company recorded income from its Ownership Interest in Income from
equity investment in the consolidated statements of operations.
The Company’s historical consolidated financial statements have been adjusted in the unaudited pro forma condensed consolidated financial
information to reflect all adjustments that are: (i) directly attributable to the sale of the Ownership Interest; (ii) factually supportable; and (iii) with respect to the unaudited pro forma condensed consolidated statements of operations,
expected to have a continuing impact on the Company’s consolidated results following the sale of the Ownership Interest.
Reclassifications
The Company reclassified gain on sale of mortgage servicing rights from Other income to the Change in fair value of mortgage servicing rights on the
condensed consolidated statement of operations for the year ended December 31, 2021 for consistency with the presentation for the six months ended June 30, 2022.
The explanations that follow correspond to the note references identified in the unaudited pro forma condensed consolidated financial statements
provided above:
(a) Adjustment reflects estimated cash proceeds from the sale of the Ownership Interest.
(b) Adjustment reflects the sale of the Ownership Interest, which was classified as Assets Held for Sale in the Company’s Quarterly Report on Form
10-Q for the quarterly period ended June 30, 2022.
(c) Adjustment reflects the reduction to the deferred tax liability that relates to the estimated loss arising on the disposition of the Ownership
Interest. The tax effect of the pro forma adjustment was calculated using the historical statutory rates in effect for the period presented.
(d) Adjustment reflects the estimated loss of $11.9 million from the disposition of the Ownership Interest, net of $2.8 million in income tax
benefit related to the loss. An impairment charge of the held for sale balance of the Ownership Interest will be recorded in the Quarterly Report on Form 10-Q for the period ended September 30, 2022. The actual net gain (loss) on the disposition
will be recorded pursuant to the closing date of October 3, 2022 in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022. The actual results may differ from the current estimate.
(e) Adjustment reflects the effect of estimated income tax benefit (expense) from the elimination of the historical (loss) income from the Ownership
Interest. The loss on the disposition of the Ownership Interest is not reflected in the unaudited pro forma condensed consolidated statements of operations as it is not expected to have a continuing impact on the Company’s operating results.
(f) Adjustment reflects the elimination of historical (loss) income from the Ownership Interest recognized during the respective periods.