Earnings Call Transcript - UWMC Q1 2023

Operator, Operator

Good morning. My name is Sarah and I will be your conference operator today. I would like to welcome everyone to the UWM Holdings Corporation First Quarter 2023 Earnings Conference Call. All lines have been muted to minimize background noise. After the speakers' remarks, there will be a question-and-answer session. Blake Kolo, you may now begin your conference.

Blake Kolo, Chief Business Officer and Head of Investor Relations

Good morning. This is Blake Kolo, Chief Business Officer and Head of Investor Relations. Thank you for joining us and welcome to the first quarter of 2023 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.

Mat Ishbia, Chairman and CEO

Thanks, Blake. A lot of great things to discuss today. I first want to start the call by thanking the 6,000 plus broker partners who were able to join us for UWM LIVE last week, which was an amazing event. Also, thank a lot of analysts and investors who were able to come out and make it; I enjoyed spending time with you and fielding great questions over the couple of days we had together. UWM LIVE is an amazing event that allows you to see and feel the growth momentum of the broker channel in one room. All those loan officers, broker owners, and even real estate agents flew out to Pontiac, Michigan on their own dime to get better share ideas for success and to try to win together as a team. This is what makes UWM in the brokerage channel different because we can work together as a team and are excited about growing together. Hopefully, everyone who attended was able to see for themselves. The combination of our culture and the amazing relationships we have with our broker partners uniquely positions us for growth and success, which is one of the main ingredients to our secret sauce here at UWM. It's all about the broker community winning, and we're here to help them grow and succeed. And it's happening together as a team. Before we get into the quarter, I want to take a few moments to address the current overall mortgage industry and market. Obviously, there's a lot going on in the industry, and it's still a tough time for most lenders. This is a time when scale efficiencies, investment in technology, and business strategy on purchase are showing the winners separating from the rest, while others are having to adjust their business for the worse. UWM is hiring, innovating, and preparing for further growth in 2024, 2025, and beyond. I've never been more confident in our modeling strategy than I am today. Now, let's get into the quarter. We delivered $22.3 billion of overall production, which is at the high end of our guidance. More importantly, the $19.2 billion of purchase buying was a first-quarter production purchase record for us. We've been very proud of these metrics, particularly in this rate environment and with the gentle declines for most in the industry. Our gain margin was 92 basis points, also at the higher end of the guidance and up from 51 basis points in the fourth quarter. We have controlled our business and are very happy with both our margin and volume in Q1. I also quickly want to provide some highlights of the 2022 HMDA data that was released in the first quarter. This is the government data that trumps some of the self-reported industry data for the full 2022 year. We were the number one overall mortgage lender in America when looking at purchases and refinances of single-family homes, which is the definition of residential lending. I'm proud of this because of the positive impact it had on the consumers who chose to work with mortgage brokers. From this HMDA data, on average, consumers saved 94 hours by working with a mortgage broker, and that number goes up to $10,004 hours for minorities. These facts make me feel great about the positive impact we have on the consumers in America that choose to work with independent mortgage brokers. Findamortgagebroker.com is becoming a great website where consumers are learning about the benefits of working with a mortgage broker. The data supports that the broker channel is the best place for consumers to get loans, and as we all know, the best place for a loan officer to work. And in addition to that, some of the best news is we're the number one mortgage lender in the country once again in the first quarter, helping consumers, helping our brokers, and we're continuing to win together as a team. We'll take a deeper dive into the financials, but before I pass it over, I want to give a couple of comments on the financial performance for the first quarter. As I previously mentioned, we achieved 92 basis points in margin and $22.3 billion in production, which were both very good numbers resulting in a favorable operating gain for the quarter. With that said, many of you are now aware of the two distinct components of our reported financials: the income from loan production, servicing income, and along with the MSR value, the value of our MSR portfolio. Because rates went down from Q4 to Q1, the write-down for our MSR book was large, and this markdown is driven primarily by rates outside of our control and is a non-cash gain loss. We reported a net loss of $139 million. But at the same time, there's a fair value markdown of over $337 million. Operationally, with higher margins and great volumes, we actually made money, and if you look at it compared to Q1 of 2022, we actually made more core earnings operating-wise than we did in 2022, which is still a good quarter in the industry. Making money profitably right now is a big deal. UWM is doing it, and we're going to continue to do it going forward. UWM has never been better positioned for growth and success going forward. I think back to where we were in the first quarter of 2020, and we are so much stronger today in all aspects of our business. With that said, I'm confident we'll be saying the same thing again three years from now as we continue to evolve. We have the capital, liquidity, technology, client relations, and infrastructure in place to thrive regardless of cycles, and we are doing that right now. I'm going to turn it over to Andrew, our CFO, for more details.

Andrew Hubacker, CFO

Thanks, Matt. 2023 is off to a great start, as we achieved strong mortgage loan production volume and experienced improved gain margin in the first quarter as compared to the last half of 2022. As Matt mentioned, a higher gain margin contributed to improved profitability before considering the impact of the decline in fair value of MSRs. Our expenses moderated in Q1 as we continue to focus on prudent cost management, excluding interest in servicing costs and other non-operational expenses. Total expenses declined nearly $50 million, or 19% compared to the first quarter of 2022, which also contributed to our strong core operational performance in Q1 of 2023. During the first quarter, we continued to execute our plans to strengthen our balance sheet and improve liquidity. We completed two bulk MSR sales as well as two excess servicing strip sales in Q1, totaling loans with a UPB of approximately $98 billion, and completed two additional MSR sales subsequent to the quarter end. Net cash proceeds approximated $650 million from MSR and excess sales in Q1. In addition, we entered into a line of credit providing up to $500 million in borrowing capacity secured by our Ginnie Mae MSRs. This facility, along with the MSR facility secured by our Fannie and Freddie MSRs, provides up to $2 billion in borrowing capacity, of which only $500 million was drawn as of the end of the quarter. Considering available cash, self-warehouse, and remaining available borrowing capacity under our secured and unsecured lines of credit, our total liquidity increased to approximately $2.9 billion as of March 31, 2023, which is an approximate $800 million increase from the end of last year. We continue to believe the measures we have taken to enhance our liquidity and strengthen our balance sheet will allow for our continued investments and growth of both the wholesale channel and our market share. Okay, I'll now turn things back over to our chairman and CEO, Mat Ishbia, for some closing remarks.

Mat Ishbia, Chairman and CEO

Thanks a lot, Andrew. And before I get into Q&A, I want to hit on a couple of points before we go. First, we aren't stopping; we will continue to embrace every cycle of the mortgage industry, driving forward and winning together with the broker community. We will continue to launch new, relevant products. We've rolled out many in the first quarter, whether it's technology, whether it's actual products, at one-time close new construction, and controlling your price from a technology standpoint. We are going to continue to innovate and win. There's no hidden agenda here. The broker channel is the best place for the American consumer to get a mortgage. It's the fastest, easiest, and cheapest way for consumers to get a loan. We'll do everything we can to support growing the channel. We also appreciate the investor community, and for the tenth consecutive quarter, we're going to announce our $0.10 quarterly dividend. We want to continue to reward our shareholders, as I've said many times in the past, and I'm excited about the prospects of us continuing to do that going forward. In addition to that, in the second quarter, we expect production to be between $23 billion and $30 billion with our margins in the range of 75 basis points to 100 basis points. UWM is winning, we're making income, we have great liquidity, our technology, and our culture are strong. And I've never been so excited about what we're doing compared to our competitors in the mortgage market. We're going to keep winning together. We are now glad to take your questions. I'm going to turn it back to the moderator.

Operator, Operator

Your first question comes from the line of Kyle Joseph with Jefferies. Please go ahead.

Kyle Joseph, Analyst

Hey, good morning, Mat and Andrew, thanks for taking my questions. On the margin front, obviously, Game On was very successful. And it was nice to see how quickly margins are normalized in the first quarter? Can you give us a sense for where you are? Obviously, we have your second-quarter guidance, but longer term is this a steady state in terms of where you see your margins going?

Mat Ishbia, Chairman and CEO

Yeah, thanks for the question. Appreciate it. My quick perspective is, I think you would have been in UWM LIVE also. So, I think you know what I kind of answered this similarly. But let me just give my thoughts: in the tough times in the mortgage market, which we're seeing right now, we're actually winning. With that being said, I believe the margins in these trough times are probably more like 75 basis points to 100 basis points, which is where we guided towards. I think that's what you'll see. While the rest of the industry is laying people off, the rest of the other companies are whether they're going out of business or making massive changes to their businesses, that will continue to happen. And that's the margin level that we’ll be in, and so Game On, as you know, was a strategy that's been exceedingly successful and is continuing to be successful with what we've done. And as we talked about, we have complete control of our business always, and we told you what we would do. And that's where the margins are right now. And that's why we're guiding the same exact area for next quarter.

Kyle Joseph, Analyst

Got it? And then a follow-up for me, probably to Andrew. Obviously, you guys did a nice job of enhancing the balance sheet and liquidity in the quarter. As we're thinking about leverage, and in this rate environment is it around the 0.9 non-funding debt to equity, a steady state for things going forward?

Andrew Hubacker, CFO

Yeah, Kyle, it’s Andrew. Thanks for the question. I think that's where we've maintained sort of a 50 to 100 from 0.5 to 1 ratio for the last several quarters. And I think less than 1 to 1 is likely where we target that, and where I would expect we will remain for the foreseeable future.

Kyle Joseph, Analyst

Got it. Thanks a lot for answering my questions.

Operator, Operator

Your next question comes from the line of Steve Delaney with JMP Securities. Please go ahead.

Steve Delaney, Analyst

Thanks. Good morning, Mat and Andrew, congrats on meeting your production guidance. But that should not be a surprise. Now that the Fed is done with rate hikes and futures are expecting materially lower rates in 2024. How impactful do you think this will be to your current business volumes if the 30-year mortgage rate were to drop to say, 5%, from what is currently in the low sixes? I mean, just how impactful is just 100 basis points? 150 basis points, Mat is what I guess I'm asking. And kind of your outlook for ‘24 as well?

Mat Ishbia, Chairman and CEO

Yeah, thanks for the question. Appreciate it. So, real quick on that: how impactful would it be if rates drop 100 basis points? In your example with 5% interest rates, there's a good chance our business doubles, and our margins are higher. That's true. I explain to people that in 2024, 2025, and 2026, we'll make multiple billion dollars as our expectation; it just depends on when that happens. I don't control rates. Now with the flip side, as a lot of people realize, when rates go down slightly like they just did, you take an MSR markdown. We're silly reporters out there—not you guys—you're analysts; you understand. We’re talking about silly reporters who say, 'Oh, it looks like UWM lost money this quarter.' We made a lot of money this quarter; the MSR markdown of $337 million is a spill. It just shows that silly people don't understand the business. Just realize that when that happens, when rates drop 100 basis points, volume could double, margins could go up. We'd make an exceedingly large amount of money; excessive amounts of money would be really profitable for our shareholders and do some great things. However, the MSR markdown will go down, and I'm sure some reporters that don't know what they're doing will headline that UWM loses money or only makes this much money because they don't understand the business. So that's kind of my perspective on it. Yes, it will be a massive upward tick providing us rough advantages. It will also help a lot of other lenders even more because they're actually losing money right now and actually laying off people right now; we're hiring, and we're actually winning. And as you saw, I'm guiding even to do more volume in the second quarter than the first quarter. So, a lot of positive at UWM. It will help us significantly, but it will help a lot of other people in the industry. Early 2024, mid-2024, late-2024, I don't know when it's going to be, but it's happening. We all understand that anyone understands the mortgage business or just the economy in general realizes that rates aren't going up too much more from all of our perspectives.

Steve Delaney, Analyst

Well, thanks for that insight. Appreciate it.

Mat Ishbia, Chairman and CEO

Thank you.

Operator, Operator

Your next question comes from the line of Bose George with KBW. Please go ahead.

Bose George, Analyst

Good morning. Your market share obviously grew last year, and it looks like again, it grew in the first quarter. As you dial down programs like Game On, do you think we could see a dip in market share? How do you see the share outlook?

Mat Ishbia, Chairman and CEO

Yeah, good question. My perspective is I think we're running around 30%-32% market share pre-Game On. Game On was designed to help originators join the broker channel; it's been a massive success with thousands of loan officers joining and continuing to join, and you're starting to see some of that production come through. It's been fantastic. However, with that being said, your question on market share: we went from 32 to I think to 55% in the wholesale channel, which was more than we expected. I've always said with Game On, after Game On, if our margins stayed in the 40% range, that'd be a massive success; I think you're going to see it higher than that. So if we're in the 40%-45% range, think about what we just did: we just went from 32% to 40%-45%, a massive market share gain in a very tough market without the Game On pricing. So, just realizing that we're looking for it; if it stays in the 40% range, we think that's excessively successful, but I think it's going to be even higher than that. In the first quarter, just like it wasn't in the fourth quarter.

Bose George, Analyst

Okay, great. Thanks. And then just on the MSR sales, was that done at carrying value with any gains or losses on the MSR sale?

Mat Ishbia, Chairman and CEO

It's really tough to tell; there are some losses. It just depends on what day you sell it and what day you're marking it. If you're looking at it from December 31st, then there might be a loss that we'll get from the day we sold it; there might be some gains. I don't know the exact details on each deal, but it's hard to really track it. That's why it's all part of the fair value markdown, which is a $337 million markdown. In reality, if you take that out of the $130 million loss, whatever the number is, you can obviously tell from a core earnings perspective that it’s an amazing quarter, as I pointed out in my comments, even better than the first quarter. So, once again to reporters that don't know what they're talking about, I'm sure there are some of you guys listening; this shows that we made $450 million in the first quarter of last year, and this quarter, we lost $130 million, whatever the number is. However, if you look at core earnings, we actually made more money in the first quarter of this year than last year's first quarter. On top of that, we had less volume and lower margins but still made more money. So, think about how we're doing that; we're monitoring and managing our business beyond what other people are saying, but headline news doesn't explain that stuff. It's good for you to understand and see that the first quarter has been extremely successful from that perspective.

Bose George, Analyst

Thanks for that.

Operator, Operator

Your next question comes from the line of James Faucette with Morgan Stanley. Please go ahead.

Blake Netter, Analyst

Hi, good morning. This is Blake Netter on the line for James. Thanks for taking my questions. First off, I was wondering what size mortgage market are you managing the business for? And are there any particular areas of the business where lease or expense efficiencies of originations volumes come in lower than expected?

Andrew Hubacker, CFO

Yeah, so thanks for the question. I don't think origination volumes came in lower than expected. I think they're going to be as I've described, and it's going to be a great year from the way we look and manage the business. Overall, the mortgage market is definitely smaller than it was last year and the year before. However, most lenders out there have tried to right-size their businesses. Our business has been pretty sized well and prepared for scale. I'm more prepared for the future. What the two questions ago were about 2024 and 2025 and the dominance that we're going to have to show it that time. I think we hired 100 plus people joining this week alone, and so we're hiring people, we're growing, we're preparing to double this business over the next couple of years from the volumes you're seeing right now. I'd be shocked if that didn't happen.

Blake Netter, Analyst

Got it. And as a quick follow-up on your MSR portfolio, you highlighted that delinquency rates in your servicing portfolio are lower than the industry average. That said, are there any pockets of the portfolio where you see risk rising? And, as the broader macro environment normalizes, do you think you'll see a need to increase staffing and services to help manage loan workouts and modifications?

Mat Ishbia, Chairman and CEO

No. If you look at our delinquency rate, I think we were the lowest or one of the lowest—I'll say one of them—because everyone’s data is different. We have one of the lowest delinquency rates in America. The loan quality: we still don't do loans that everyone else does. Everyone else goes to 580 FICO scores and 550 FICO scores; they're all digging deep to just get a couple loans. We're still at 620 FICO, and we have the lowest delinquency rates or really low delinquencies, and one of the highest FICO scores of anyone in the market. Our loan quality will be hit a lot less than our delinquency will be hit a lot less than everyone else does. Do I see it being a massive issue in the industry? The answer is no, even without us being on the more conservative side of the credit profile. So, I don't see it as a big thing. I think it's overblown. I'm not as concerned about it as maybe other people would be talking about it. But in general, I think our book, our servicing book is strong, our strategy is strong, and I feel really great about where we're at. But thank you for the question.

Blake Netter, Analyst

Thank you.

Operator, Operator

Your next question comes from the line of Eric Hagen with BTIG. Please go ahead.

Eric Hagen, Analyst

Hi, thanks. Good morning. Hope you're doing well. I think a follow-up on the MSR. How are you guys thinking about the size of the MSR portfolio? What do you consider to be maybe a sustainable and comfortable level for you to manage that composition of that portfolio? I don't think we saw any MSR sales in the quarter. But how are you guys thinking about that too? Thanks.

Mat Ishbia, Chairman and CEO

Hey, thanks a lot, Eric. I appreciate the question. There were actually some MSR sales in the quarter, but to address how big our MSR book is going to be: I think it finished around $300 billion. I always just tell people we're originally at auto volume. I basically assume even if we do MSR sales or if we don't, I think the book basically stays plus or minus 10% to 15% at where it’s at right now. So could it grow 15%-20% if we don't do any sales? Sure. But if we do a bunch of sales, it could go down by 10%-15%. Basically, think $300 billion seems like a good target. I think we're at $297 billion—could be off slightly, but we'll call it $300 billion. That's what we're looking at going forward. Our liquidity is so strong right now that the need for selling MSRs is not there. Our cash position, which is a critical focus of ours, is being managed by Andrew and the team. So, looking at those numbers, our liquidity is in great position. We don't need to sell any MSR; therefore, our MSR book could grow. However, if someone wants to offer us a good price, and we’re opportunistic out there, we will do it as long as we're doing the right things for our brokers, our business, and our shareholders.

Eric Hagen, Analyst

That's great detail. Can you say how many of UPB MSRs that you sold in the quarter?

Andrew Hubacker, CFO

You know, it's not that straightforward. So, I don't know the exact number because sometimes you're not selling the UPB; you're selling the excess servicing. Therefore, it's really not actually any UPB because I still hold the servicing, but I sold the excess, which is a capital markets transaction. So, I don't have the exact numbers as I told you we did 20 billion, but we brought in 500 million; that math doesn't work out. That's kind of how I think about it. So, it's not apples to apples. That's why I've got to just look at the overall MSR book, calling it $300 billion plus or minus 10%-15%. We're driving pretty consistently in that number.

Eric Hagen, Analyst

Yeah, that's really helpful. One more: how are you guys thinking about managing the interest rate risk in the origination pipeline? I guess both from the perspective of hedging the pipeline before delivery, and anything you're doing maybe to mitigate the higher interest expense from holding loans on warehouse. Thanks, guys.

Mat Ishbia, Chairman and CEO

Yeah, I mean, we have our pipeline every day; we don't really take any risk on our pipeline. That's been a constant for years and years. We try to be risk free in that. Obviously, there's always risk when you're hedging and trying to handle things in capital markets, but we have an amazing capital markets team, and I feel really great about what we're doing there. So, that's how I think about that risk. I'm sorry, your second part of the question, Eric, if you're still on the line?

Eric Hagen, Analyst

Yeah, just mitigating anything you guys are doing to mitigate the higher interest expense from holding loans on warehouse and the net interest margin that you're kind of earning there?

Mat Ishbia, Chairman and CEO

Yeah. The interest expense, I know it's hard to see, but it's actually pretty low relative to the market. However, we have debt, and the interest expense includes that debt. So, a lot of us have there, but we're doing self-warehousing with some of our excess cash to drive that number down. We'll continue to take advantage of that opportunity because there's so much liquidity. Just sitting there, we're just sitting there looking at it. So, how do we use it? Blake Kolo and his team and Andrew and his team do a great job of managing that. I think the interest expense versus the interest income, the fact that it's a positive number shows that we're doing a really great job managing that because remember, it's not just warehouse lines and loans; we've got interest expense in there from our servicing, servicing from our debt that we have out there.

Eric Hagen, Analyst

Yeah, that's really helpful. Thank you, guys.

Operator, Operator

Your next question comes from Doug Harter with Credit Suisse. Please go ahead.

Doug Harter, Analyst

Thanks. This quarter looked like the G&A expense fell by a meaningful amount. Just hoping to give some details as to what drove that.

Mat Ishbia, Chairman and CEO

One thing is the reality, Doug, that we've been managing this for years. Everyone wants to comment every time, 'Oh, Mat's not laying anyone off.' Of course, I'm not laying anyone off, and while I'm actually hiring, the G&A expenses are not just about people; there are a lot of things we manage. Once again, Andrew, our CFO, does a heck of a job. I'll let him make a comment here in a second so he can give any of his thoughts. The reality is we manage our costs to the tee, to the dollar; we understand everything we're spending. It's not just about people—which everyone talks about a lot of times—but it's also careful negotiation with vendors and working on new deals. You'll actually see some of those things come through throughout the year that we've been working on, not just in the first quarter, but also in the second, third, and fourth quarters. The most important thing, Doug, to look at is operating core income. We made more money this year in the first quarter than last year's first quarter. Last year's first quarter, we did significantly more volume, more gain on sale, so obviously, we're managing the business very well, and all these details are coming through in a positive way, as I said they would over the last four or five quarters. I've been getting that question. So, Andrew, do you have any comments to add?

Andrew Hubacker, CFO

I think he covered it well, Matt. I think just on a sequential basis, it was down partially due to a slight increase in our repurchase reserve in Q4 of last year. On a year-over-year basis, it found a little bit relatively flat, but Mat's comments remain the same.

Doug Harter, Analyst

Okay, thank you.

Operator, Operator

Your next question comes from the line of Kevin Barker with Piper Sandler. Please go ahead.

Unidentified Analyst, Analyst

Hi, this is Brett Suzy on for Kevin Barker. Thanks for taking my question. I see you guys continue to guide high production and stable margins. Most of our questions have been answered just following up on Doug's question. With G&A coming down, how do you guys view expenses going forward?

Mat Ishbia, Chairman and CEO

Well, I guess my perspective, depending on how you look at this, the volume is going to go up. There are a lot of expenses that are variable. So, some of those numbers will go up. Obviously, we're going to continue to manage, and I just told you we're hiring, so some of those expenses will go up. Overall, the thing I focus on less on expenses and more on is are we profitable? We're extremely profitable; the core earnings were great, especially in one of the hardest markets. Because now the first quarter was tough, but the fourth quarter ended on December, which was a slow month; that really bleeds into the first quarter across the board. I feel really good about it. Are we managing expenses? Yes. Do I have more expenses that are coming out of the business that aren't tied to anything besides vendors and partnerships? Yes, but I will not sacrifice. I'm not trying to save a dollar by jumping over dollars to pick up pennies. I'm going to make sure we run our business the right way, and if I'm going to make investments in people, technology, and strategy, we're going to continue to do that. So, I spend very little time focused on expenses while we're making a lot of money. What I focus on is how do we drive revenue and help our brokers grow their business? When the brokers grow, UWM grows, and that's what's happening. That's why I talked at the beginning of the call about UWM LIVE. If you were at UWM LIVE, you would have seen the broker channel, the camaraderie, the culture, the opportunity, the innovation, and the upside. I think you’ll see some of that in the second quarter; it’s going to be one of the great quarters I guided to. It's going to continue to roll, and while expenses are important, if it's one of the first five things I talk about, then I'm not doing my job as a CEO because I'm jumping over pennies or dollars to pick up pennies. And that's not who we are and never who we will be.

Unidentified Analyst, Analyst

Thanks for taking my questions.

Operator, Operator

Your final question comes from the line of Michael K. with Wells Fargo. Please go ahead.

Michael K., Analyst

Hi, good morning. So, Q1 gain on sale margin of 92 basis points was towards the high end of your guidance last quarter. But for Q2, you're still guiding to that original 75 basis point to 100 basis point range. So the question is, why aren’t you taking more that keen on some momentum in Q1? And maybe top up the bottom end of that, Q2 gain on sale margin guidance? Is it more control of your pricing program in Q2, or maybe other factors? Like trying to provide extra pricing support for the brokers in important spring purchases? And or is this just more conservatism, as you have a good track record of coming in toward the high end of guidance?

Mat Ishbia, Chairman and CEO

I don't know if it’s conservatism. We always come up with our guidance; I’d say always. We’ve been reporting on it for 10 quarters now, I believe. Just like we were paying our dividend for 10 straight quarters. The way I look at it is I'm guiding you to what I think the numbers will be; margins can change, things can change up and down. We control how we price on a daily basis. Different products have different margins, different opportunities, and more conventional, more government, or more jumbo margins that are different on those different loan sizes. I think that 75 to 100 is a good number. I would assume that's going to be in the middle of that number; it could be lower or higher, and that's why I give a 25 basis points range. We make sure it's at 23 billion to 30 billion; could we be on the low, middle, or high end of that? If I felt really confident, I'd be in a different part of it. However, honestly, Michael, you know me—I’m not that focused on what I guide; I’m focused on running the business on a day-to-day basis. I see an opportunity to do more volume, and if margins go down, I'll do it; I see an opportunity for margins to go up. There's a lot of complexities, and we just want to give you a range of what we think. It’s a guidance based of experience, and we work extremely hard to hit those targets and deliver what we tell you're going to deliver just like we have every single time I’ve spoken on these calls. I plan on continuing to do so.

Michael K., Analyst

So, what would it take for you to be towards the bottom end of the guidance? You're saying it's more of a mix, or maybe you'll push pricing programs. I’m just trying to understand that if you move from like 92 basis points towards that low end?

Mat Ishbia, Chairman and CEO

Yeah, once again, there are a lot of things that vary. There are things that happened that pushed it off 92. That could have made it 78 this quarter. There are things that could have made it 99 or 76 next quarter. I have to give a range because gain on sale is not clean; there are derivatives and a lot of moving parts. It's more complex than putting a number on a piece of paper and letting it flow. I want to give a little bit of a range for you. So, 75 to 100; I feel really strong about it. I will deliver once again, so you can be confident in it, but to try to narrow me to the higher end or lower end of the range, I can't do it for you, Michael, although I love and appreciate the question. But once again, 75 to 100 in ‘23-‘30, and we’ll deliver for the 11th straight quarter.

Michael K., Analyst

Okay, thank you so much.

Operator, Operator

And you have a final follow-up question from Bose George. Please go ahead.

Mike Smith, Analyst

Amen. This is actually Mike Smith on for Bose. Just kind of touching on the UWM LIVE, but I was wondering if you could just touch on the opportunities in Jumbo or any other products for that matter, considering some of the stuff going on with banks. Thanks a lot.

Mat Ishbia, Chairman and CEO

Yeah, thanks for the question. I appreciate it. So, yeah, I think Jumbo is one of those spots that we're really focused on to hopefully help gain some opportunity for our broker community. The only reason a retail loan officer stays at a bank is if they're A, they can't generate any business themselves or B, they do a lot of Jumbo loans; some banks can offer Jumbo prices as a loss leader. I think with some of the bank failures recently, as we've talked about, some of the banks are going to back off that strategy a little bit, which gives us an upside opportunity for UWM in the broker community. How that will play out? I don't know to be honest with you. It’s a focus, and we’re looking to figure it out. We don’t have it solved yet, but with that being said, that's all upside because right now our Jumbo production is very low. On the product side, in general, we are looking for high-quality loans that can be done faster, easier, and cheaper because brokers and findamortgagebroker.com, which is the website where consumers are going, is growing. We want to continue to drive people there and educate them on the fastest, easiest, and cheapest way to get a mortgage through brokers. They are the experts that will shop on your behalf. If I can add a couple more products, Jumbo being one of them, and a better Jumbo product, will that help that website? Will that help brokers? Yes. So, we are working on it, but at the same time, that's all upside because what you saw in the first quarter and my guidance in the second quarter assume that that's not really solved by that time.

Mike Smith, Analyst

Great. That's helpful. Thanks a lot for taking the question.

Mat Ishbia, Chairman and CEO

Yeah, thank you for the question. I know that was the last question I believe. I want to say thank you to everyone who jumps on these calls. I appreciate your questions and thoughts. We thank all of you that came out to UWM LIVE to really understand our culture and our team and the broker community. We’re exceedingly excited about the broker community because it’s growing, and everyone that was at UWM LIVE on this call I see. Hopefully, you guys feel that energy and that passion we have and the brokers have. We are going to keep winning together. Q2 is going to be a heck of a quarter, and we're excited to share it with you. I'll be talking to you guys after the quarter. If you have anything in between, Blake's available, I'm available, Andrew and our team. We appreciate you guys and girls; have a fantastic day.

Operator, Operator

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