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Rocket Mortgage made $9.5B in profits in 2020

Lender originated $107B in mortgages during fourth quarter, and margins checked in at 4.41%

Rocket Companies, the parent company of Rocket Mortgage, cleared another $2.48 billion in profits during the fourth quarter, giving the nation’s biggest mortgage lender a total of $9.5 billion in profits for 2020.

Rocket originated $107.2 billion in mortgages, with net rate lock volume of $96 billion in the fourth quarter, the company disclosed in a filing with the Securities and Exchange Commission on Thursday afternoon.

Rocket managed to produce a gain-on-sale margin of 4.41% in the fourth quarter, which was up 100 basis points from the fourth quarter in 2019 but a decline of 11 basis points from the third quarter. Revenue during the fourth quarter checked in at $4.7 billion, up from $1.9 billion in the fourth quarter of the prior year.

“Rocket Companies’ record-breaking fourth quarter and full year 2020 results demonstrate the sheer power of the technology platform we have built and refined for more than two decades,” Jay Farner, Rocket Companies’ vice chairman and CEO, said in a statement on Thursday.

For the full year, Rocket originated an eye-popping $320 billion in mortgages and posted net rate lock volume of $338.7 billion, year-over-year improvements of 121% and 123%, respectively. That helped generate $15.7 billion in total revenues.

Notably, Rocket Companies disclosed that its platform generated 153 million unique visitors in 2020, a 61% increase from 2019. “Our vast data lake includes proprietary first-party data on more than 58 million consumers and extends to 220 million consumers in total or 85% of the population of adults in the United States,” the company said in a statement Thursday. “Rocket Companies’ partner relationships include over 25,000 real estate agents, 50,000 mortgage professionals, and 9,000 partners and our internal Rocket Cloud Force3 includes more than 6,600 professionals.”

That data lake is key to Rocket’s larger corporate growth strategy.

“As more and more consumers shift their preferences toward an increasingly digital experience, we are better positioned than ever to provide them with innovative, technology-driven solutions that simplify even the most stressful and complex transactions,” Farner said in a statement. “Looking ahead, we will continue to invest in our world-class technology driven solutions that allow us to diversify our scalable platform business model.”

Rocket also announced during its earnings call that it had struck a partnership with Morgan Stanley and E-Trade to originate and service conventional mortgages for their millions of clients, which could significantly boost its purchase business. Given the uptick in rates, investors will likely be pleased to hear of new pipelines to capture purchase business.

Rocket is projecting between $98 billion to $103 billion in originations for the first quarter of 2021. Gain on sale margins are expected to fall to between 3.6% to 3.9%.

Despite the incredible growth over 2020 and the strength of its platform, Wall Street has not fully embraced the Detroit lender. At the close of trading on Thursday, Rocket’s stock was trading just below $20 a share, barely above its debut at $18 in the summer.

As an effort to bring shareholders more value, Rocket said its board of directors approved a significant special dividend of $1.11 per share.

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