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loanDepot announces year-end and fourth quarter 2021 financial results

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Successfully concludes its first year as a public company with a nationally-recognized and growing brand, increased diversification, and continued growth in market share during a year of changing market conditions

- Achieved market share growth of 3.4% for the full year 2021, up from 2.5% in 2020¹.

- Grew number of in-market retail loan officers by 18% and added four new joint venture partnerships during 2021, contributing to a corresponding 39% increase in purchase volume.

- Increased awareness for our nationally recognized brand by 80% through national advertising campaigns and successful partnerships with Major League Baseball and the Miami Marlins.

- Ended the year with a servicing portfolio of $162.1 billion in unpaid principal balance; continued to invest in building our in-house servicing platform, allowing us to maintain world-class service standards with our customers over the life of their loan and diversify our revenues.

- Returned capital to our shareholders with annual dividends totaling $0.85 per share².

- Reported quarterly total revenue of $705.0 million, diluted earnings per share of $0.05 and adjusted diluted earnings per share of $0.09, reflecting lower rate lock volume and lower gain on sale margins, partially offset by lower expenses.

FOOTHILL RANCH, Calif., Feb. 1, 2022 /PRNewswire/ -- loanDepot, Inc. (NYSE: LDI), (together with its subsidiaries, "loanDepot" or the "Company"), the innovative consumer lending and real estate services provider that is using its proprietary mello® technology to deliver best-in-class experiences to its customers, today announced results for year-end and the fourth quarter ended December 31, 2021.

loanDepot logo.  (PRNewsFoto/LoanDepot.com, LLC) (PRNewsfoto/LD Holdings Group LLC)
loanDepot logo. (PRNewsFoto/LoanDepot.com, LLC) (PRNewsfoto/LD Holdings Group LLC)

"2021 demonstrated the success of our strategy, successfully increasing market share during a period of changing market conditions," said loanDepot Founder and CEO Anthony Hsieh. "Our industry is a cyclical one, and the market conditions we face today have been faced before by loanDepot's experienced leadership team, the members of which have collectively navigated many housing and interest rate cycles over the last 35 years. Our business was purpose-built with periods of pressure in mind. Our proprietary tech stack, our intentionally diverse mix of channels and our sophisticated performance marketing machine mean we control our lead flow, our customer contact strategy and the point of loan origination. This is a critical competitive advantage, enabling us to pivot and adjust our production as market trends demand.

"Conditions like those we enjoyed in 2020 are when loanDepot drives revenue, but the conditions we expect in 2022 present an incredible opportunity for us to capture market share. We are well positioned to demonstrate the long-term value of loanDepot by remaining focused on our strategic priorities while seizing market share from competitors that are less capable of withstanding these challenging conditions.

"We are doing the necessary work to ensure our operations appropriately reflect these changing market dynamics. But we will continue to invest in technology to drive operational efficiencies, invest in our in-house servicing platform, and grow our in-market retail mortgage origination capabilities. We have all the necessary tools to seize market share even as total origination volume falls. We believe this will pay dividends when the market returns, as we will be poised to start the next cycle in a dominant competitive position.

Hsieh concluded, "The results of 2021 are only a preview of what's to come as we leverage our brand, develop and apply innovative technology solutions, drive down costs and add more products and services to help our customers successfully navigate one of the most important financial transactions of their lives. We remain focused on our long-term strategy and vision to become the most trusted homeowner fulfillment company in the world. loanDepot represents an incredible value, and we are confident we will continue to increase our market share, serve our customers, employees, shareholders and communities while outperforming in the long term."

Current Market Conditions:

  • Higher interest rates resulting in lower refinance transaction volumes.

  • Continuing strong demand for purchase transactions, which is somewhat adversely impacted by supply constraints on new and resale housing and seasonal slowdown in buying activity.

  • Increasing homeowner equity supports strong demand for cash-out refinance volume.

  • Decreasing number of borrowers experiencing distress, with lower delinquencies and fewer borrowers in forbearance.

  • Sharper focus on industry consolidation, driven partly by the strategic appetite of non-mortgage technology companies, and expansion of ancillary products and services to capture additional revenue sources by expanding customer engagement points.

Fourth Quarter Highlights:

Financial Summary


Three Months Ended


Year Ended

($ in thousands)

(Unaudited)

December 31,

2021


September 30,

2021


December 31,

2020


December 31,

2021


December 31,

2020

Rate lock volume

$ 34,761,321


$ 43,673,515


$ 49,711,270


$ 166,263,478


$ 160,984,531

Pull through weighted lock volume(1)

23,025,038


30,354,123


35,516,887


116,628,597


114,205,923

Loan origination volume

29,041,625


31,985,805


37,395,352


137,000,747


100,760,151

Gain on sale margin(2)

2.23 %


2.84 %


3.29 %


2.61 %


4.13 %

Pull through weighted gain on sale margin(3)

2.81 %


2.99 %


3.46 %


3.07 %


3.65 %

Financial Results










Total revenue

$ 705,026


$ 923,756


$ 1,298,394


$ 3,724,704


$ 4,312,174

Total expense

694,133


744,771


750,433


3,058,187


2,296,816

Net income

14,732


154,277


547,170


623,146


2,013,110

Diluted EPS(4)

$ 0.05


$ 0.40


N/A


$ 0.87


N/A

Non-GAAP Financial Measures(5)










Adjusted total revenue

$ 723,642


$ 948,770


$ 1,252,767


$ 3,739,182


$ 4,253,276

Adjusted net income

28,907


147,533


375,755


555,576


1,486,137

Adjusted EBITDA

63,747


238,261


530,424


869,368


2,084,905

Adjusted Diluted EPS

$ 0.09


$ 0.46


N/A


$ 1.72


N/A


(1)

Pull through weighted rate lock volume is the unpaid principal balance of loans subject to interest rate lock commitments, net of a pull-through factor for the loan funding probability.


(2)

Gain on sale margin represents the total of (i) gain on origination and sale of loans, net, and (ii) origination income, net, divided by loan origination volume during period.


(3)

Pull through weighted gain on sale margin represents the total of (i) gain on origination and sale of loans, net, and (ii) origination income, net, divided by the pull through weighted rate lock volume.


(4)

On February 11, 2021, the Company's common stock began trading on the New York Stock Exchange. Since loanDepot did not have any shares outstanding prior to this date, earnings per share ("EPS") information was not determinable. The diluted EPS calculation includes net income attributable to loanDepot, Inc. divided by the diluted weighted average shares of Class A and Class D common stock outstanding for the period after February 11, 2021.


(5)

See "Non-GAAP Financial Measures" for a discussion of how we define and calculate Adjusted Total Revenue, Adjusted Net Income, Adjusted EBITDA, and Adjusted Diluted EPS and for a reconciliation of these metrics to their closest GAAP measure.

Fourth Quarter Operational Results

  • Pull through weighted lock volume of $23.0 billion for the three months ended December 31, 2021 resulted in quarterly total revenue of $705.0 million, which represents a decrease of $218.7 million, or 24%, from the third quarter of 2021.

  • Loan origination volume for the fourth quarter of 2021 was $29.0 billion, a decrease of $2.9 billion or 9% from the third quarter of 2021.

  • Our Retail and Partner strategies delivered $10.0 billion of purchase loan originations and $19.0 billion of refinance loan originations during the fourth quarter of 2021.

  • Net income for the fourth quarter of 2021 decreased to $14.7 million as compared to $154.3 million in the prior quarter. The quarter over quarter decrease was primarily driven by the decrease in rate lock volume and gain on sale margin, partially offset by a decrease in total expense.

  • Primarily as a result of lower net income, adjusted EBITDA for the fourth quarter of 2021 decreased to $63.7 million as compared to $238.3 million for the third quarter of 2021. Adjusted EBITDA excludes the impact of fair value changes of our mortgage servicing rights, net of hedging results, and other non-core operating expenses.

  • Total expenses for the fourth quarter of 2021 decreased by $50.6 million, or 7% from the third quarter of 2021, due to lower personnel expenses, primarily lower commissions, and lower marketing expenses reflecting seasonal declines in spending.

Other Highlights

  • Bolstered governance during 2021 by adding Mike Linton and Pamela Hughes Patenaude to our board of directors.

  • Returned value to shareholders through a regular cash dividend of $0.08 per share paid on January 18, 2022, to shareholders of record on January 3, 2022.

  • For the year ended December 31, 2021, our preliminary organic refinance consumer direct recapture rate[3] increased to 72% as compared to the final recapture rate of 64% for the year ended December 31, 2020. This highlights the efficacy of our marketing efforts and the strength of our customer relationships, which includes our growing servicing portfolio that reached a record level of $162.1 billion in unpaid principal balance serviced as of December 31, 2021. This increase was against the backdrop of growing our servicing portfolio in-house and relying less on third party sub-servicing arrangements. We also recently announced that we are bringing the servicing of FHA, VA and USDA funded Ginnie Mae loans in-house.

  • We believe our position as the second largest independent retail mortgage brand[4] grew even stronger in 2021, delivering approximately 14.4 billion linear TV household impressions and 876 million digital impressions during 2021. Our marketing reach resulted in an increase in website traffic of 51% over the previous year.

  • Millions of consumers interacted with the loanDepot brand as the presenting sponsor of two of the nation's preeminent sporting events - Major League Baseball's American League Championship Series and National League Championship Series, both of which averaged approximately five million viewers per game over each six-game series. loanDepot was featured during 54 commercials played during both series and delivered more than 198 million impressions across MLB and club digital channels resulting in a 50% increase in brand awareness from viewers.

  • Continued to deliver momentum in building our joint venture channel, which is an attractive source of purchase mortgage volume. We signed a national homebuilder JV partner in December, making it the fourth deal of the year, and bringing the total to ten JV partnerships.

Strategic Channel Overview
Our diverse origination strategy ensures we can serve customers in the way they want to be served, with the right mortgage professional, with the right product, at the right price, and at the right time. Complementing our origination strategy is our servicing portfolio, which ensures we can serve the customer through their entire mortgage journey.

Retail Channel



Three Months Ended


Year Ended

($ in thousands)

(Unaudited)


December 31,

2021


September 30,

2021


December 31,

2020


December 31,

2021


December 31,

2020

Volume data:







Rate locks


$ 27,751,625


$ 35,924,760


$ 40,066,201


$ 134,676,230


$ 132,448,124

Loan originations


22,461,394


24,938,035


29,665,251


108,708,990


80,256,667

Gain on sale margin


2.61 %


3.28 %


3.47 %


2.93 %


4.41 %

The Company employs more than 3,000 licensed mortgage loan professionals who work in our Retail Channel that reach customers through our organic marketing or their own relationships in either our proprietary call centers or local in-market branches. During the fourth quarter of 2021, our Retail Channel accounted for $22.5 billion, or 77%, of our loan originations.

Partner Channel



Three Months Ended


Year Ended

($ in thousands)

(Unaudited)


December 31,

2021


September 30,

2021


December 31,

2020


December 31,

2021


December 31,

2020

Volume data:







Rate locks


$ 7,009,696


$ 7,748,755


$ 9,645,069


$ 31,587,248


$ 28,536,407

Loan originations


6,580,231


7,047,770


7,730,101


28,291,757


20,503,484

Gain on sale margin


1.01 %


1.24 %


2.58 %


1.38 %


3.06 %

Our Partner Channel originates loans through our network of approved mortgage brokers, as well as a series of exclusive joint ventures with some of the nation's largest homebuilders and depositories, who market our broad spectrum of products utilizing our innovative mello® technology platform to efficiently underwrite, process and fund mortgage loans, while delivering an exceptional customer experience. During the fourth quarter of 2021, our Partner Channel accounted for $6.6 billion, or 23%, of our loan originations. Margins in this channel have been adversely impacted by increased competitive pressures from some of the larger wholesale focused lenders.

The returns were complemented by $3.8 million of income recorded from our joint ventures for the fourth quarter of 2021, reflecting the wide variety of industry partners we work with in the channel.

Servicing



Three Months Ended


Year Ended

Servicing Revenue Data:

($ in thousands)

(Unaudited)


December 31,

2021


September
30,
2021


December 31,

2020


December 31,

2021


December 31,

2020

Changes in fair value:











Due to changes in valuation inputs or assumptions


$ (29,896)


$ (3,461)


$ 16,294


$ 68,399


$ (95,764)

Other changes in fair value(1)


(98,516)


(99,230)


(80,007)


(421,624)


(200,546)

Realized gains (losses) on sales of servicing rights


(1,536)


(14,218)


(151)


(9,759)


(2,701)

Net gain (loss) from derivatives hedging servicing rights


11,280


(21,553)


29,332


(82,878)


154,663

Changes in fair value of servicing rights, net


$ (118,668)


$ (138,462)


$ (34,532)


$ (445,862)


$ (144,348)












Servicing fee income


$ 113,942


$ 102,429


$ 64,375


$ 393,680


$ 185,895


(1)

Other changes in fair value include fallout and decay from loan payoffs and principal amortization.



Three Months Ended


Year Ended

Servicing Rights, at Fair Value:

($ in thousands)

(Unaudited)


December 31,

2021


September 30,

2021


December 31,

2020


December 31,

2021


December 31,

2020

Balance at beginning of period


$ 1,836,694


$ 1,776,395


$ 776,993


$ 1,124,302


$ 444,443

Additions


307,712


345,882


411,282


1,610,596


986,050

Sales proceeds, net


(16,592)


(182,892)


(260)


(382,271)


(9,881)

Changes in fair value:











Due to changes in valuation inputs or assumptions


(29,896)


(3,461)


16,294


68,399


(95,764)

Other changes in fair value


(98,516)


(99,230)


(80,007)


(421,624)


(200,546)

Balance at end of period (1)


$ 1,999,402


$ 1,836,694


$ 1,124,302


$ 1,999,402


$ 1,124,302


(1)

Balances are net of $7.3 million, $4.8 million, and $3.6 million of servicing rights liability as of December 31, 2021, September 30, 2021, and December 31, 2020, respectively.





% Change

Servicing Portfolio Data:

($ in thousands)

(Unaudited)


December 31,

2021


September 30,

2021


December 31,

2020


Dec-21

vs

Sep-21


Dec-21

vs

Dec-20












Servicing portfolio (unpaid principal balance)


$ 162,112,965


$ 145,305,182


$ 102,931,258


11.6 %


57.5 %












Total servicing portfolio (units)


524,992


469,019


342,600


11.9


53.2












60+ days delinquent ($)


$ 1,510,261


$ 1,679,691


$ 2,162,585


(10.1)


(30.2)

60+ days delinquent (%)


0.9 %


1.2 %


2.1 %
















Servicing rights, net to UPB


1.2 %


1.3 %


1.1 %





The increase in unpaid principal balance of our servicing portfolio was driven by servicing-retained loan sales. We continued to invest in growing our high-quality servicing portfolio, which is also a valuable origination source for us.

As of December 31, 2021, approximately 0.6%, or $1.0 billion, of our servicing portfolio was in active forbearance. This represents a decrease from 1.1%, or $1.6 billion as of September 30, 2021.

Balance Sheet Highlights









% Change

($ in thousands)

(Unaudited)


December 31,

2021


September 30,

2021


December 31,

2020


Dec-21

vs

Sep-21


Dec-21
vs
Dec-20

Cash and cash equivalents


$ 419,571


$ 506,608


$ 284,224


(17.2) %


47.6 %

Loans held for sale, at fair value


8,136,817


8,873,736


6,955,424


(8.3)


17.0

Servicing rights, at fair value


2,006,712


1,841,512


1,127,866


9.0


77.9

Total assets


11,812,313


12,749,278


10,893,228


(7.3)


8.4

Warehouse and other lines of credit


7,457,199


8,212,142


6,577,429


(9.2)


13.4

Total liabilities


10,182,953


11,091,114


9,236,615


(8.2)


10.2

Total equity


1,629,360


1,658,164


1,656,613


(1.7)


(1.6)

The decrease in cash and cash equivalents from September 30, 2021 reflects the timing of increased restricted cash balances posted to our warehouse lines and derivative counterparties at quarter end. A decrease in loans held for sale at December 31, 2021, resulted in a corresponding decrease in the balance on our warehouse lines of credit as loans sold exceeded loan originations. Total funding capacity with our lending partners increased to $11.8 billion at December 31, 2021 from $11.1 billion at September 30, 2021. The funding capacity increase of $0.7 billion was primarily due to the addition of one new facility and the increase on an existing facility, partially offset by the expiration of one facility. Available borrowing capacity was $4.3 billion at December 31, 2021.

Consolidated Statements of Operations

($ in thousands)

Three Months Ended


Year Ended


December 31, 2021


September 30, 2021


December 31, 2020


December 31, 2021


December 31, 2020


(Unaudited)


(Unaudited)

REVENUES:










Interest income

$ 74,854


$ 71,020


$ 44,730


$ 262,478


$ 142,879

Interest expense

(53,327)


(56,785)


(42,562)


(218,457)


(131,443)

Net interest income

21,527


14,235


2,168


44,021


11,436











Gain on origination and sale of loans, net

566,022


821,275


1,138,847


3,213,351


3,905,986

Origination income, net

81,433


86,601


91,253


362,257


258,807

Servicing fee income

113,942


102,429


64,375


393,680


185,895

Change in fair value of servicing rights, net

(118,668)


(138,462)


(34,532)


(445,862)


(144,348)

Other income

40,770


37,678


36,283


157,257


94,398

Total net revenues

705,026


923,756


1,298,394


3,724,704


4,312,174











EXPENSES:










Personnel expense

406,739


449,152


508,638


1,929,752


1,531,371

Marketing and advertising expense

111,860


131,971


90,709


467,590


264,337

Direct origination expense

46,712


49,559


36,127


193,264


124,754

General and administrative expense

64,980


50,013


51,146


214,965


171,712

Occupancy expense

9,487


9,686


9,826


38,443


39,262

Depreciation and amortization

9,715


8,688


8,547


35,541


35,669

Subservicing expense

22,337


22,879


29,556


99,068


81,710

Other interest expense

22,303


22,823


15,884


79,564


48,001

Total expenses

694,133


744,771


750,433


3,058,187


2,296,816











Income before income taxes

10,893


178,985


547,961


666,517


2,015,358

Income tax (benefit) expense

(3,839)


...

24,708


791


43,371


2,248

Net income

...