2016 Ellie Mae. All rights reserved. Finding Competitive Advantage Through Smarter Business Intelligence and Benchmarking

Transcription

1 Finding Competitive Advantage Through Smarter Business Intelligence and Benchmarking

2 Session Presenters Parvesh Sahi, Vice President Business Development Ellie Mae Jordan Brown, CEO MarketWise Advisors Tyler Sherman, Founder & CEO Motivity Solutions Erin Palmer, Managing Director Operations Talmer Bank & Trust AJ Franchi, CIO Gold Star Mortgage Financial Group Corp. Susan Meitner, President & CEO Centennial Lending Group

3 Jordan Brown MarketWise Advisors is a management consulting firm focused on the mortgage industry. Founded in 2005, MarketWise provides focused advisory and operational solutions to the banking industry to streamline cost and increase productivity. Whether through the application of technology solutions or expansion strategy, MarketWise can provide the strategic guidance to help build and execute the right business strategy. Staffed with industry experts that have the depth of experience that can assist financial services firms, MarketWise is committed to providing leadership and vision to the lending industry. Over the years, MarketWise has completed assignments across the globe with a diverse client base ranging from the community banker, technology vendor to the global money center bank.

4 Tyler Sherman Founder / CEO of Motivity Solutions Responsible for establishing the vision and long-term strategy of the company More than 20 years of sales, marketing, and executive leadership experience across the mortgage and technology industries Started and sold a top 10 FHA lender Technology company that manufactured loans Drove success through Mortgage Business Intelligence (MBI) In 2007 brought MBI to other lenders

5 Erin Palmer Mr. Palmer is Executive Managing Director for Talmer Bank s Mortgage Operations, where he leads the operations team and manages mortgage technology. He is also a member of the banks ALCO and Chairman of the Secondary Marketing Committee. He has been part of the due diligence team participating in the acquisition of nine banks, growing from 30 employees and assets of $90M to 1,500 employees and assets of roughly $6.3B in five years. Prior to joining Talmer Bank and Trust in early 2010, Mr. Palmer worked at a small start-up called Cole Taylor Mortgage, now MB Financial Mortgage. He was responsible for establishing secondary marketing capabilities including investor relationships, infrastructure and processes, pricing strategies and reporting. He also configured much of the logic and all of the operational rules within the loan origination system Avista. Within weeks of opening the pipeline grew to $100 million. The company is thriving and a dramatically larger pipeline continues to flow with precision and efficiency. The secondary executions are some of the best in the industry.

6 AJ Franchi AJ Franchi is Chief Information Officer for Gold Star Mortgage Financial Group Corp, one of the nation s premier mortgage bankers headquartered in Ann Arbor, MI. Upon graduating with honors from Michigan State University in the heart of a recession, AJ joined Gold Star in 2008 as an Intern at the age of 22. Fewer than four years passed before he was named Director of Retail Operations and appointed to Gold Star s Board of Directors as their youngest member of record. In 2013 AJ was invited to join Gold Star s executive leadership team as CIO, where he is charged with the development and administration of their corporate Information Technology Infrastructure, Financial Analysis Reporting, Branch Development, as well as New Technology and App Development.

7 Susan Meitner Susan Meitner is the President and CEO of Centennial Lending Group, LLC, a full-service mortgage bank in Maple Glen, Pennsylvania. Sue founded Centennial Lending Group, LLC in 2010 by using her 20-plus years experience in mortgage banking and recruiting the best talent from inside and outside the industry to form a stellar management team. Sue s business philosophy creates a unique culture. As the business has grown over the years, she has preserved the fine balance between sales and operations while making sure that both the employees and the customers of the company feel that they are most important. In 2014 and 2015, Centennial Lending Group was recognized by Inc. Magazine as one of the fastest-growing private companies in America and ranked #3 (2014) for the fastest-growing woman-led companies in America. Sue also was honored to be one of the HOT 100 and Elite Women in the mortgage industry by Mortgage Professionals of America. Locally, Centennial Lending Group has been recognized as an industry leader by Philadelphia Magazine for Best in Overall Satisfaction and has been the winner of the Five Star Professional Award multiple times. Sue is an active member of Entrepreneur s Organization and the Mortgage Bankers Association. Sue currently serves on the Board of Directors for The Mortgage Collaborative. Sue released her first book, Crazy Lucky Girl - Do YOU Have The Keys to Success?, which has hit the best seller list. As an expert in the mortgage industry Sue has been asked to be a speaker and has appeared in many publications. CLG is a licensed mortgage originator in Pennsylvania, New Jersey, Delaware, North Carolina, Maryland, California, Florida, and Virginia.

8 Agenda How Are KPIs Driving Lender Performance? Mortgage Business Intelligence Lender Perspectives Panel Discussion Introduction to a New Peer Report Questions?

9 Safe Harbor This presentation may contain forward-looking statements under the safe harbor provisions under The Private Securities Litigation Reform Act of These forward-looking statements may include the company s ability to enhance the features and functionality of the Encompass software, the timing of the introduction and acceptance of additional services and the timing of new product launches. Additional risks and uncertainties related to the company s business are discussed in the company s Securities and Exchange Commission filings, including but not limited to the to the final prospectus relating to its initial public offering [and the company s most recent Quarterly Report on Form 10-Q]. Unless otherwise required by applicable laws, the company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

10 Leveraging KPI to Drive Profitability JORDAN BROWN

11 Key Performance Metrics How to choose the right KPI s Why do it? Identify key drivers of business (revenue, volume, profit, cost) Establishes performance baseline to understand trends and proactively manage/adjust focus Highlights performing and nonperforming areas Establish unique differential advantages over competition Builds a team environment focused on specific actions, goals and performance measurements What approach do you take? Establish business goals (performance objectives) Determine and select performance measures that best track and achieve the objective KPI s are both financial and operational Involve team in building a strategy Loan profitability measure ($/loan) Volume level (# of units or $ volume) Technology Investment System implementation Market expansion

12 Typical Industry KPI Financial Metrics Gross Profit Operating Profit Net Income Origination Volume Operational KPI Cost per Lead Cost of Origination Cost of Production Cost of Loan Servicing Hedge Cost Secondary Marketing Gain/Loss Technology Cost Technology ROI Loan Cycle (# of days) Employee Units per Originator Units per Processor Units per Closer Units per Funder Industry Resources to Benchmark Performance MBA Trade Publications Vendor Community

13 Key Performance Metrics How to Establish Specific and Effective KPI s Establish Specific Criteria and Measurements Core Attributes of Effective KPI s Keep it short and simple focused on cause/effect Establish both input metrics and output metrics Example: Lower cost processing 4506T by $9 through electronic processing Specific Reasonable Achievable Positive Communicate

14 From a Diagnosis to Action Plan with KPIs 1. Start with the analysis of the reasons for the problem 5. Track metrics, numerical values for these points 2. Map results to show a connection between factors 4. Find key points that will tell if a hypothesis actually works 3. Formulate these factors as actionable objectives

15 Driving Operational Excellence Industry Study of Ellie Mae ROI Performance A few of the activities driving operational excellence Ellie Mae ROI Study, MarketWise Advisors 2015 Total Business Function Product Time Impact BPS Impact Resource Type $ Impact Time Operational BPS Impact ($) Impact ($) 4506t Encompass, TQL 0.18 $ - Underwriter $ 7.71 $ - $ 7.71 Loan underwriter cycle time Encompass 0.25 $ - Underwriter $ $ - $ Asset verifications Encompass 0.39 $ - Processing/Underwriting $ $ - $ Income verifications 4506t 0.34 $ - Processing/Underwriting $ $ - $ This is a small sample of performance measures (4 out of 100) used to determine system operational performance. If you drill down to the details and develop KPI s for the team, it will influence profitability significantly.

16 Focus on The Metrics Performance Drives Profitability Key Financial Metrics ROI Return 355% ROI (Discounted NPV) 168% 5yr System ROI NPV $ 6,671,874 5 yr Cost $ 3,968,962 5 yr Benefit $ 14,075,482 Avg Orig Cost Decrease $ 457 Avg Profitability $ Impact/Year $ 2,023,403

17 KPI Technology Investment Benchmarking Performance to Peer Group Financial Impact ($) Year 1 Year 2 Year 3 Year 4 Year 5 Average 5 year Annual Operational Improvement Expectation Cost of Origination ($ /loan level) $ 27 $ 339 $ 556 $ 637 $ 727 $ 457 Anticipated Profitability Change ($) Impact Level ($) $ 120,725 $ 1,499,888 $ 2,461,368 $ 2,819,566 $ 3,215,469 $ 2,023,403 Industry Cost of Origination/Loan Estimated Level ($/loan) $ 6,932 $ 7,140 $ 7,354 $ 7,575 $ 7,802 Industry Cost of Origination (profit advantage vs competition) Impact Level (%) 0.39% 4.75% 7.56% 8.41% 9.31% 6.09%

18 Key Takeaways Building, measuring and reporting on the right KPI metrics can help understand the true business drivers to improve financial performance Effective measurement and management is critical to objectively evaluate your operation It is important to establish business metrics that are measurable, achievable within a defined timeframe and support the overall business goals Keep it simple but focus on the details of what drives key metrics to make a difference Involve team members in building key metrics, keep it positive

19 Mortgage Business Intelligence TYLER SHERMAN, MOTIVITY SOLUTIONS

20 Motivity Solutions Motivity Solutions is the industry s leading provider of Mortgage Business Intelligence (MBI) Helping the nation s top lenders become more efficient, more productive, and more compliant Motivity's flagship product, Movation, increases pull through, reduces cycle time, and drives more volume from the origination side through a plug-n-play application and pre-configured targeted solutions Motivity Solutions has been consistently recognized as one of the industry s top technology firms and one of Colorado's top private companies.

21 Mortgage Business Intelligence

24 Mortgage Business Intelligence It s all about ROI Encompass + Mortgage Business Intelligence o 16% increase in pull through o 25% reduction in cycle time

25 Mortgage Business Intelligence The ROI of improved pull through (16%) Currently closing 100 loans / month Add Mortgage Business Intelligence o +16 loans per month o Average profit of $1,500/ loan o $24,000 additional profit / month

26 Mortgage Business Intelligence The ROI of lower cycle times (25%) Industry average cycle time is 50 days Cycle time increased by 9% from October to January (TRID) Cost / Ops Employee - $5,000 Funded / Ops Employee / Mo 4 Ops Employee Cost / Funded - $1,250

27 Mortgage Business Intelligence Add Mortgage Business Intelligence Average cycle time is 40 days Cycle time increased by only 5% from October to January (TRID) Cost / Ops Employee - $5,000 Funded / Ops Employee / Mo 5 Ops Employee Cost / Funded - $1,000 Savings of $250 / Funded Loan

28 Mortgage Business Intelligence You can do the same number of loans with 25% less people or You can do 25% more loans with the same number of people Either way, you save or make an additional $25,000 / 100 funded loans

29 Mortgage Business Intelligence $24,000 additional profit / month by increasing pull through $25,000 / 100 loans saved by lowering cycle time Better prepared to handle an everchanging industry

30 Mortgage Business Intelligence And that is only looking at two metrics imagine that type of improvement across your entire company.

31 Lender Perspectives ERIN PALMER, TALMER BANK & TRUST

32 Talmer Bank and Trust Founded in 2007 HQ: Troy, Michigan Midwest Community Bank with $6.6 Billion in Assets Became a publicly traded company in 2014 Annual mortgage loan volume - $1.5 Billion 100% Retail 70 Mortgage Loan Officers Fannie Mae, Freddie Mac and Ginnie Mae approved

33 Loan Officer Name

34 Processor Report Card KPI Weight Average Loan Level 15% Processing to Underwriting (# of days) 20% Conditional Approval to Resubmit (# of days) 20% Average Resubmit(s) per file 20% Quality 25%

35 Underwriter Report Card KPI Weight Average Loan Level 15% Average Decisions per Day 20% Submitted to Initial Decision (hours) 20% Resubmit to Final Decision (hours) 20% Quality 25%

36 Lender Perspectives AJ FRANCHI, GOLD STAR MORTGAGE

37 Gold Star Mortgage Financial Group Over a billion in origination per year Licensed in 30 states 350 Users 47 offices Non-Depository Ellie Mae client since 2009

38 Productivity For the Day

39 Forecasting Production for Future Investment

40 Reallocating Resources with Data

41 Introduction to a New Peer Report TYLER SHERMAN

42 Executive Insight Report Peer group metrics are a form of high level Mortgage Business Intelligence Ellie Mae is providing this through the Executive Insight Report

43 Executive Insight Report

44 Executive Insight Report

46 Mortgage Business Intelligence Some VA 30 Year loans are taking over 50 Days this is driving our average up and takes less than 5 minutes to figure out Ellie Ellie Mae. Mae. All rights All rights reserved.

50 EIR + MBI Understand where you stand against your peers Quickly identify why you are performing the way you are Drive optimal behavior You can also - Automate spreadsheet creation Automate spreadsheet distribution Automate spreadsheet analysis Automate communications regarding analysis Resource optimization / repurpose Utilize exception analysis (fire prevention vs. putting out fires) Trending / forecasting Become goal oriented vs. task oriented Reliable strategic output

51 Lender Perspectives SUSAN MEITNER, CENTENNIAL LENDING GROUP

52 Centennial Lending Group LLC Founded in 2010 Privately Owned Residential Banker Annual Production $300 million with 50 employees Headquarters in Eastern Pennsylvania Licensed in: Pennsylvania, New Jersey, Delaware, Virginia, Maryland, North Carolina, Florida, California, Ohio, and Michigan Ellie Mae client since 2010 and Motivity since 2014 Member of The Mortgage Collaborative Honored by Inc. Magazine for one of the Fastest Privately held companies two years in a row and National Mortgage Professional in the Hot 100 (2014 and 2015) and Elite Women (2015). Honored to be Five Star Best in Philadelphia for the last five years.

53 A client s perspective on the EIR This report is a comparison of CLG vs our Peer group. By analyzing this report, you can see how CLG is doing in many different categories, and the best part is it tells us where we need to improve and how to do it Very Valuable information! There are 6 key performance indicators each with a ranking

54 A client s perspective on the EIR There are a total of 18 companies in our peer group. A ranking of #1 is great. Many categories we are ranked at 5 or 6 - pretty good, but we see the How to improve section on each slide and then decide how to implement. This will be the answer to improving CLG performance and getting the most out of this report. Every company to do the above with their report to see where they are doing well and what areas they need to make improvements By having an independent, unbiased analysis of our workflow, companies can determine areas of weakness and action plans to correct

55 Find Out More Executive Insight Report Visit the Motivity Solutions Booth (511)

56 Questions?