Measuring Against Your peers Why Measure Your Performance Common things we hear from our clients My board wants to know how we are doing How do we compare to the industry and our competitors ID: 528006
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Slide1
Industry Benchmarking Analytics:
Measuring Against Your peersSlide2
Why Measure Your Performance?
Common things we hear from our clients
:
My board wants to know how we are
doing.How do we compare to the industry and our competitors?Help with budgeting and goal setting.Are we getting enough in Secondary?Are our costs to originate on par?What is the market doing and how is if affecting other companies?How much are others paying their LO’s?Slide3
Why Companies Do Not Benchmark
Finding
Relevant
Peer Data
Achieving “Apples to Apples” Comparison Amongst the Various Available ReportsTimeliness of Available ReportingSlide4
Benchmarking
should
aid
and drive informed DECISION MAKING…but it must be timely to achieve
this…Slide5
What Items Should You Be Including in Your Benchmark Reporting?Slide6
Financial Metrics
Loan Margins
Cost to Originate
Compliance Costs
Secondary Marketing GainsPre-Tax Net IncomeLoss ReservesCharge-off LossesServicing CostsFair Value AdjustmentsMarketing CostsFixed CostsProfitability by Operating UnitBranch ProfitabilitySlide7
Compensation Metrics
Base Compensation
Bonus Compensation
Commission
Employees per Functional AreaSlide8
Why Does This All Matter?Slide9
Sample Mortgage Co
Retail Lender
Annual Production - $1.5 Billion
Average Gross Margins (Q3-2015) – 390 Bps
Production Declined 7% from Q2 to Q3 – 2015Personnel Costs of $6,100 per LoanSlide10
Sample Company – 390 Bps
390 Bps appears to be in-line with the market conditions.
Significantly underperforms
the “Top
Select Performers” and the Retail Peer Group.
Outperforms the Retail Medium Peer Group.
Depending on the Peer Group, the Company can arrive at many different conclusions. Slide11
Sample Company – 7% Decline
Similar to the Gross Margins this metric can be viewed as a “Positive” or a “Negative” depending on the Peer Group and the data being used.
Understanding other peer groups, i.e., Top Select, Retail Large, etc., allows the Company to make informed decisions.Slide12
Sample Company – $6,100 per loanSlide13
Comparisons
SCENARIO #1
Top Select
Sample Mtg
Difference
Loan Volume
$ 2,750,000,000
$ 1,500,000,000
$ 1,250,000,000
Loan Count
12,841
7,004
5,837
Average Loan Size
214,158
214,158 - Gross Margins4.135% 3.900% 0.235% Change in Production Prior Quarter-3% -7% 4% Personnel Costs per Loan $ 5,500 $ 6,100 $ (600)
SCENARIO #2 Retail Medium Sample Mtg Difference Loan Volume $ 1,900,000,000 $ 1,500,000,000 $ 400,000,000 Loan Count 8,872 7,004 1,868 Average Loan Size 214,158 214,158 - Gross Margins3.768% 3.900% -0.132% Change in Production Prior Quarter-9% -7% -2% Personnel Costs per Loan $ 6,147 $ 6,100 $ 47 Slide14
Comparisons
ANALYSIS OF FINANCIAL RESULTS - #1
Excess (Deficit) Revenue
$ (2,937,500)
(Excess) Deficit Expenses
(3,502,200)
Income (Loss) Over Peer Group
$ (6,439,700)
ANALYSIS OF FINANCIAL RESULTS - #2
Excess (Deficit) Revenue
$ 528,000
(Excess) Deficit Expenses
87,796
Income (Loss) Over Peer Group $ 615,796 Two VERY different conclusions can be reached on Sample Mortgage Co., depending on what peer group they are being evaluated against. Slide15
Keys to Benchmarking
Define Where You
Are
Define Where You Want To
BeUnderstand What Data Is Being Presented and How it Pertains to Your OperationsSelect Appropriate Peer GroupsBenchmarking and Forecasting Needs to Be Reviewed Frequently as the Data is Constantly ChangingYou Need to Understand Both Financial and Operational Metrics as They Feed Each Other.Slide16
Richey May Select
Data from all the Peer Groups was pulled from Richey May Select through Q3 – 2015
Richey May Select is a joint venture with
Motivity
Solutions and is the winner of the Mortgage Technology 2013 “Synergy Award”Richey May Select is the “Next-Generation” in peer-to-peer benchmarking and operational metrics.Slide17