U.S. markets closed
  • S&P Futures

    4,271.25
    -5.50 (-0.13%)
     
  • Dow Futures

    33,941.00
    -22.00 (-0.06%)
     
  • Nasdaq Futures

    13,463.00
    -30.25 (-0.22%)
     
  • Russell 2000 Futures

    1,989.50
    +0.40 (+0.02%)
     
  • Crude Oil

    88.00
    -0.11 (-0.12%)
     
  • Gold

    1,780.60
    +3.90 (+0.22%)
     
  • Silver

    19.75
    +0.02 (+0.10%)
     
  • EUR/USD

    1.0192
    +0.0011 (+0.11%)
     
  • 10-Yr Bond

    2.8930
    +0.0690 (+2.44%)
     
  • Vix

    19.90
    +0.21 (+1.07%)
     
  • GBP/USD

    1.2055
    +0.0003 (+0.03%)
     
  • USD/JPY

    134.8400
    -0.2500 (-0.19%)
     
  • BTC-USD

    23,462.07
    -532.01 (-2.22%)
     
  • CMC Crypto 200

    558.05
    -14.76 (-2.58%)
     
  • FTSE 100

    7,515.75
    -20.31 (-0.27%)
     
  • Nikkei 225

    28,946.30
    -276.47 (-0.95%)
     

loanDepot announces third quarter 2021 financial results

  • Oops!
    Something went wrong.
    Please try again later.
·16 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

Driven by a rising brand and a unique, diversified model, loanDepot successfully increased market share and purchase volume in the third quarter of 2021

- Reports quarterly total revenue of $923.8 million, diluted earnings per share of $0.40 and adjusted diluted earnings per share of $0.46, reflecting higher rate lock volume and gain on sale margins.

- 9th consecutive quarter of year-over-year market share growth, growing 46% year-over-year to 3.5%¹.

- Continued investments in brand and successful conclusion of first year of multi-year Major League Baseball partnership drove significant gains in brand awareness, growing by 14% quarter-over-quarter.

- Purchase mortgage transactions increased by 6% quarter-over-quarter and by 29% year-over-year demonstrating the power and resilience of loanDepot's channel diversification strategy.

- Servicing portfolio increased to record $145 billion, representing over 469,000 homeowners, and resulted in quarterly servicing fee income of $102 million, increasing 112% year-over-year.

FOOTHILL RANCH, Calif., Nov. 1, 2021 /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 the third quarter ended September 30, 2021.

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

"The third quarter proved to be another strong milestone in market share growth, increasing to 3.5% from 2.4% during the same quarter last year," said loanDepot Founder and CEO Anthony Hsieh. "Our growing brand, proprietary mello tech stack, diversified channel strategy--which is the industry's only at-scale model of this type--and the hard work and enthusiasm of our talented employees delivered higher revenues, higher earnings, and higher earnings per share.

"Our results demonstrate the agility and operational flexibility of our multi-channel strategy which enables us to succeed in any market condition, including challenging ones. The results of the third quarter are only a preview of what is to come in the future as we intend to continue to hire the best, 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.

"Our marketing engine and customer acquisition abilities are one of the best in the business. Notably in October, we wrapped up the successful first year of our multi-year partnership with Major League Baseball by dominating media exposure at one of the biggest stages in professional sports: the League Championship Series presented by loanDepot. Our brand reached more than millions of baseball fans during ALCS and NLCS and was further supported by the launch of a new national advertising campaign featuring the success stories of real loanDepot customers. We believe our market share increase is a direct result of our growing investments and increased marketing reach, as well as our technology that matches customers to the best loan officer for their needs across our multi-channel strategy. And, thanks to our 'Home Means Everything,' RBI campaign, we donated more than $665,000 to the Boys & Girls Clubs of America, exemplifying our deep commitment to communities in which we live and work and delivering life-changing support for more than four million young people nationwide.

"Looking ahead, we believe our industry is moving towards consolidation of service providers for products and services for the homeowner and loanDepot is leading the way. We are uniquely positioned with the brand, technology and scale to invest in these additional products and services. The loanDepot Grand Slam is paving the way towards this consolidation with early success in the form of substantial increases in purchase lead volume, real estate agent introductions, and real estate listings. We won't stop there; we're already planning to offer additional products and services for the benefit of our customers."

Hsieh concluded, "We remain focused on our long-term strategy and vision to become the most trusted homeowner fulfillment company in the world, using our industry-leading position to drive the type of value and ease that today's customers expect and demand. loanDepot represents an incredible value, and we are confident we will continue to accelerate our growth, 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 homeowners' 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 and expansion of ancillary products and services to capture additional revenue sources and expand customer engagement points.

Third Quarter Highlights:

Financial Summary


Three Months Ended


Nine Months Ended

($ in thousands)

(Unaudited)

September 30,
2021


June 30,
2021


September 30,
2020


September 30,
2021


September 30,
2020

Rate lock volume

$

43,673,515



$

42,065,981



$

49,280,386



$

131,502,157



$

111,273,261


Pull through weighted lock volume(1)

30,354,123



29,787,081



35,596,250



93,603,559



78,689,036


Loan origination volume

31,985,805



34,494,166



27,157,669



107,959,122



63,364,799


Gain on sale margin(2)

2.84

%


2.28

%


4.87

%


2.71

%


4.63

%

Pull through weighted gain on sale margin(3)

2.99

%


2.64

%


3.72

%


3.13

%


3.73

%











Financial Results










Total revenue

$

923,756



$

779,914



$

1,368,930



$

3,019,678



$

3,013,780


Total expense

744,771



749,405



640,014



2,364,054



1,546,384


Net income

154,277



26,284



728,349



608,414



1,465,939


Diluted EPS(4)

$

0.40



$

0.07



N/A



$

0.82



N/A












Non-GAAP Financial Measures(4)




















Adjusted total revenue

$

948,770



$

825,330



$

1,345,630



$

3,015,540



$

3,000,509


Adjusted net income

147,533



57,504



539,057



524,564



1,109,284


Adjusted EBITDA

238,261



109,264



745,579



805,622



1,554,480


Adjusted Diluted EPS

$

0.46



$

0.18



N/A



$

1.62



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 Diluted EPS, and Adjusted EBITDA, and for a reconciliation of these metrics to their closest GAAP measure.

Operational Results

  • Rate lock volume of $43.7 billion for the three months ended September 30, 2021 resulted in quarterly total revenue of $923.8 million, which represents an increase of $143.8 million, or 18%, from the second quarter of 2021.

  • Loan origination volume for the third quarter of 2021 was $32.0 billion, a decrease of $2.5 billion or 7% from the second quarter of 2021.

  • Our Retail and Partner strategies delivered $11.0 billion of purchase loan originations and $21.0 billion of refinance loan originations during the third quarter of 2021.

  • Net income for the third quarter of 2021 increased to $154.3 million as compared to $26.3 million in the prior quarter. The quarter over quarter increase was primarily driven by the increase in rate lock volume and gain on sale margins, and a decrease in personnel expense.

  • Primarily as a result of higher net income, adjusted EBITDA for the third quarter of 2021 increased to $238.3 million as compared to $109.3 million for the second 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 third quarter of 2021 decreased by $4.6 million, or 1% from the second quarter of 2021, due primarily to lower personnel expenses, partially due to the cost cutting initiatives that we initiated in the second quarter, and somewhat offset by higher marketing and advertising expenses.

Other Highlights

  • Returned value to shareholders through a regular cash dividend of $0.08 per share paid on October 18, 2021, to shareholders of record on October 4, 2021.

  • For the twelve month period ending September 30, 2021, our preliminary organic refinance consumer direct recapture rate2 increased to 71% as compared to the final recapture rate of 61% for the twelve month period ending September 30, 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 $145.3 billion in unpaid principal balance serviced as of September 30, 2021. This increase was against the backdrop of growing our servicing portfolio in-house and relying less on third party sub-servicing arrangements.

  • We believe our position as the second largest independent retail mortgage brand grew even stronger through our ongoing national television ad campaign delivering over 20 billion household impressions from May 2020 through September 2021. This resulted in an increase in website visits during the third quarter by 16% from the third quarter of 2020.

  • Millions of consumers recently interacted with the loanDepot brand as the presenting sponsor of two of the nation's preeminent sporting events - the ALCS and NLCS, which averaged approximately five million viewers per game over each six game series.

  • The fourth annual War Heroes on Water (WHOW) sport fishing tournament founded by loanDepot CEO Anthony Hsieh and supported by loanDepot, served 100 veterans directly and raised $1.4 million for WHOW's philanthropic partner, Freedom Alliance, to serve the needs of thousands more. In addition to the "Home Means Everything" RBI Campaign, loanDepot was also honored as the first "Corporate Champion" for the Boys & Girls Clubs of Central Orange Coast in recognition of our continued passion and support for its mission.

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


Nine Months Ended

($ in thousands)

(Unaudited)


September 30,
2021


June 30,
2021


September 30,
2020


September 30,
2021


September 30,
2020

Volume data:







Rate locks


$

35,924,760



$

33,925,833



$

40,903,946



$

106,924,605



$

92,381,923


Loan originations


24,938,035



27,881,773



21,714,870



86,247,597



50,591,416


Gain on sale margin


3.28

%


2.50

%


5.07

%


3.02

%


4.96

%

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 third quarter of 2021, our Retail Channel accounted for $24.9 billion, or 78%, of our loan originations.

Partner Channel



Three Months Ended


Nine Months Ended

($ in thousands)

(Unaudited)


September 30,
2021


June 30,
2021


September 30,
2020


September 30,
2021


September 30,
2020

Volume data:







Rate locks


$

7,748,755



$

8,140,148



$

8,376,440



$

24,577,552



$

18,891,338


Loan originations


7,047,770



6,612,393



5,442,799



21,711,525



12,773,383


Gain on sale margin


1.24

%


1.32

%


4.06

%


1.49

%


3.34

%

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 third quarter of 2021, our Partner Channel accounted for $7.0 billion, or 22%, 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 $3.0 million of income recorded from our joint ventures for the third quarter of 2021, reflecting the wide variety of industry partners we work with in the channel.

Servicing



Three Months Ended


Nine Months Ended

Servicing Revenue Data:

($ in thousands)

(Unaudited)


September 30,
2021


June 30,
2021


September 30,
2020


September 30,
2021


September 30,
2020

Changes in fair value:











Due to changes in valuation inputs or assumptions


$

(3,461)



$

(129,267)



$

(3,009)



$

98,295



$

(112,059)


Other changes in fair value(1)


(99,230)



(105,771)



(50,007)



(323,107)



(120,539)


Realized (losses) gains on sales of servicing rights


(14,218)



6,089



(2,606)



(8,224)



(2,549)


Net (loss) gain from derivatives hedging servicing rights


(21,553)



83,851



26,309



(94,158)



125,330


Changes in fair value of servicing rights, net


$

(138,462)



$

(145,098)



$

(29,313)



$

(327,194)



$

(109,817)













Servicing fee income


$

102,429



$

94,742



$

48,406



$

279,738



$

121,520




(1)

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



Three Months Ended


Nine Months Ended

Servicing Rights, at Fair Value:

($ in thousands)

(Unaudited)


September 30,
2021


June 30,
2021


September 30,
2020


September 30,
2021


September 30,
2020

Balance at beginning of period


$

1,776,395



$

1,766,088



$

569,927



$

1,124,302



$

444,443


Additions


345,882



427,458



262,401



1,302,884



574,768


Sales proceeds, net


(182,892)



(182,113)



(2,319)



(365,680)



(9,620)


Changes in fair value:











Due to changes in valuation inputs or assumptions


(3,461)



(129,267)



(3,009)



98,295



(112,059)


Other changes in fair value


(99,230)



(105,771)



(50,007)



(323,107)



(120,539)


Balance at end of period (1)


$

1,836,694



$

1,776,395



$

776,993



$

1,836,694



$

776,993




(1)

Balances are net of $4.8 million, $5.3 million, and $3.5 million of servicing rights liability as of September 30, 2021, June 30, 2021, and September 30, 2020, respectively.





% Change

Servicing Portfolio Data:

($ in thousands)

(Unaudited)


September 30,
2021


June 30,
2021


September 30,
2020


Sep - 21

vs

Jun - 21


Sep - 21
vs
Sep - 20












Servicing portfolio (unpaid principal balance)


$

145,305,182



$

138,767,860



$

77,171,998



4.7

%


88.3

%












Total servicing portfolio (units)


469,019



446,606



272,701



5.0



72.0













60+ days delinquent ($)


$

1,679,691



$

1,976,658



$

2,073,862



(15.0)



(19.0)


60+ days delinquent (%)


1.2

%


1.4

%


2.7

%
















Servicing rights, net to UPB


1.3

%


1.3

%


1.0

%





The increase in unpaid principal balance of our servicing portfolio was driven by an increase in servicing-retained loan sales, offset somewhat by sales of $13.5 billion of unpaid principal balance during the quarter. We continued to invest in growing our high-quality servicing portfolio, which is also a valuable origination source for us.

As of September 30, 2021, approximately 1.1%, or $1.6 billion, of our servicing portfolio was in active forbearance. This represents a decrease from 1.4%, or $1.9 billion as of June 30, 2021.

Balance Sheet Highlights









% Change

($ in thousands)

(Unaudited)


September 30,
2021


June 30,
2021


September 30,
2020


Sep - 21
vs.
Jun - 21


Sep - 21
vs.
Sep-20

Cash and cash equivalents


$

506,608



$

419,283



$

637,511



20.8

%


(20.5)

%

Loans held for sale, at fair value


8,873,736



9,120,653



4,888,364



(2.7)



81.5


Servicing rights, at fair value


1,841,512



1,781,686



780,451



3.4



136.0


Total assets


12,749,278



13,097,643



8,651,314



(2.7)



47.4


Warehouse and other lines of credit


8,212,142



8,498,365



4,601,062



(3.4)



78.5


Total liabilities


11,091,114



11,528,809



7,017,793



(3.8)



58.0


Total equity


1,658,164



1,568,834



1,633,521



5.7



1.5


The increase in cash and cash equivalents from June 30, 2021 was primarily due to net proceeds of $152.4 million from the bulk sale of MSR servicing rights and loans sold in excess of loans originated during the quarter, partially offset by a reduction in debt obligations from the paydown of repo facilities. A decrease in loans held for sale at September 30, 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 $11.1 billion at September 30, 2021 from $9.5 billion at June 30, 2021. The funding capacity increase of $1.6 billion was primarily due to the addition of one new facility and increased commitments on existing facilities. Available borrowing capacity was $2.8 billion at September 30, 2021.

Consolidated Statements of Operations

($ in thousands)

Three Months Ended


Nine Months Ended


September 30, 2021


June 30, 2021


September 30, 2020


September 30, 2021


September 30, 2020


(Unaudited)


(Unaudited)

REVENUES:










Interest income

$

71,020



$

61,874



$

31,453



$

187,625



$

98,149


Interest expense

(56,785)



(54,848)



(29,553)



(165,130)



(88,881)


Net interest income

14,235



7,026



1,900



22,495



9,268












Gain on origination and sale of loans, net

821,275



692,479



1,251,141



2,647,328



2,767,140


Origination income, net

86,601



92,624



71,740



280,824



167,554


Servicing fee income

102,429



94,742



48,406



279,738



121,520


Change in fair value of servicing rights, net

(138,462)



(145,098)



(29,313)



(327,194)



(109,817)


Other income

37,678



38,141



25,056



116,487



58,115


Total net revenues

923,756



779,914



1,368,930



3,019,678



3,013,780












EXPENSES:










Personnel expense

449,152



470,125



441,818



1,523,012



1,022,734


Marketing and advertising expense

131,971



114,133



60,435



355,730



173,628


Direct origination expense

49,559



50,017



33,465



146,553



88,627


General and administrative expense

50,013



48,654



52,372



149,984



120,565


Occupancy expense

9,686



9,283



9,997



28,956



29,437


Depreciation and amortization

8,688



8,686



8,585



25,827



27,122


Subservicing expense

22,879



27,241



22,820



76,731



52,154


Other interest expense

22,823



21,266



10,522



57,261



32,117


Total expenses

...

744,771



749,405



640,014



2,364,054

...