8-K
loanDepot, Inc. (LDI)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
FORM 8-K
_____________________
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report: August 9, 2022
_____________________
loanDepot, Inc.
(Exact Name of Registrant as Specified in its Charter)
_____________________
| Delaware | 001-40003 | 85-3948939 |
|---|---|---|
| (State or other jurisdiction<br><br>of incorporation) | (Commission<br><br>File Number) | (I.R.S. Employer<br><br>Identification Number) |
26642 Towne Centre Drive
Foothill Ranch, California 92610
(Address of Principal Executive Offices) (Zip Code)
Registrant’s telephone number, including area code: (888) 337-6888
_____________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | | --- | --- || ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | | --- | --- || ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | | --- | --- || ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | | --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading<br><br>Symbol(s) | Name of each exchange<br><br>on which registered |
|---|---|---|
| Class A Common Stock, $0.001 Par Value | LDI | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Explanatory Notes
Item 2.02 Results of Operations and Financial Condition.
On August 9, 2022, loanDepot, Inc. (the "Company") issued a press release announcing its results for the quarter ending June 30, 2022 (the “Earnings Press Release”). The full press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
Item 7.01 Regulation FD Disclosure.
On August 9, 2022, the Company posted on its website at www.loandepot.com a presentation (the “loanDepot Presentation”) on certain financial and operating initiatives available for viewing during the Company’s conference call and webcast announcing its financial results for the quarter ending June 30, 2022 at 5:00 p.m. Eastern time on August 9, 2022.
A copy of the loanDepot Presentation is furnished pursuant to this Item 7.01 as Exhibit 99.2 to this Current Report on Form 8-K and incorporated by reference herein in its entirety. The loanDepot Presentation includes references to non-GAAP financial information. Reconciliations between the non-GAAP financial measures and the comparable GAAP financial measures are available in the loanDepot Presentation. The loanDepot Presentation should be read in conjunction with the Earnings Press Release. The Company reserves the right to discontinue availability of the loanDepot Presentation from its website at any time.
The information furnished pursuant to Items 2.02 and 7.01, including Exhibits 99.1 and 99.2, shall not be deemed “filed” for purposes of Section 18 of the Exchange Act nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, or the Exchange Act, as amended, except as specifically identified therein as being incorporated by reference.
Additionally, the submission of the information set forth in this Item 7.01 is not deemed an admission as to the materiality of any information in this Current Report on Form 8-K that is required to be disclosed solely by Regulation FD.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit | Description |
|---|---|
| 99.1 | loanDepot, Inc. press release dated August 9, 2022 |
| 99.2 | loanDepot, Inc. Q2 2022 Investor Presentation |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| loanDepot, Inc. | |
|---|---|
| By: | /s/ Patrick Flanagan |
| Name: Patrick Flanagan | |
| Title: Chief Financial Officer |
Date: August 9, 2022
Document
loanDepot announces second quarter 2022 financial results
Vision 2025 Plan launched to simplify business model and accelerate cost reduction, providing pathway for run-rate profitability by year-end 2022 and long-term value creation
•Revenue of $308.6 million, and diluted loss per share of $0.66, driven principally by lower origination volumes and profit margins, partially offset by higher servicing revenues.
•Expenses decreased by $45.6 million, or 8%, on pace to achieve targeted annualized expense savings of $375 million to $400 million during second half of 2022.
•Recorded $46.7 million in charges for impairment of goodwill, real estate and other intangible assets, as well as $6.0 million of severance, professional fees and other expenses related to Vision 2025.
•Strong balance sheet with unrestricted cash and equivalents totaling $954.9 million at June30, 2022.
•Servicing portfolio grew to $155.2 billion, growing in-house servicing from 67% to 88% of UPB.
•Company makes strategic decision to exit wholesale business.
FOOTHILL RANCH, Calif., August 9, 2022 - loanDepot, Inc. (NYSE: LDI), (together with its subsidiaries, “loanDepot” or the “Company”), a leading consumer lending and real estate services provider, today announced results for the second quarter ended June 30, 2022.
“Our second quarter results reflect the extremely challenging market environment that continues in our industry, which led to ongoing declines in our mortgage volumes and profit margins,” said loanDepot President and Chief Executive Officer Frank Martell. “During the quarter we took aggressive actions that are part of our recently announced Vision 2025 plan, designed to address current and anticipated market conditions, achieve run-rate profitability exiting 2022 and position the company for long-term value creation. This plan was launched on the foundation of a strong balance sheet and ample liquidity.
"Importantly, Vision 2025 addresses today’s challenges and future opportunities. Its four primary pillars are: 1) increasing focus on purchase transactions while serving increasingly diverse communities across the country, 2) executing previously announced growth-generating initiatives, 3) centralizing management of loan originations and loan fulfillment to enhance quality and effectiveness, and 4) aggressively right-sizing our cost structure.
“We have already made significant progress by consolidating management spans to create operating efficiencies and reducing headcount from approximately 11,300 at year-end 2021 to approximately 8,500 at the end of June, 2022, to approximately 7,400 at the beginning of August 2022. We are accelerating our execution of the plan and expect to end the third quarter of 2022 with headcount below our previously stated year-end goal of 6,500. In addition we are exiting our wholesale channel consistent with our strategy of becoming a more purpose-driven organization with direct customer engagement throughout the entire lending process. Our exit from wholesale will also enable us to direct resources to other origination channels, reduce operational complexities and increase margins.
“As we move into the second half of the year, we are confident in the growing momentum of our Vision 2025 plan and we look forward to sharing our progress in the coming months and beyond.”
Second Quarter Highlights:
Financial Summary
| Three Months Ended | Six Months Ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands except per share data) <br>(Unaudited) | June 30,<br>2022 | March 31,<br>2022 | June 30,<br>2021 | June 30,<br>2022 | June 30,2021 | |||||||||
| Rate lock volume | $ | 19,596,763 | $ | 29,991,452 | $ | 42,065,981 | $ | 49,588,215 | ||||||
| Pull through weighted lock volume(1) | 12,412,894 | 19,800,045 | 29,787,081 | 32,212,939 | 63,249,436 | |||||||||
| Loan origination volume | 15,995,055 | 21,550,731 | 34,494,166 | 37,545,786 | 75,973,317 | |||||||||
| Gain on sale margin(2) | 1.16 | % | 1.96 | % | 2.28 | % | 1.62 | % | 2.66 | % | ||||
| Pull through weighted gain on sale margin(3) | 1.50 | % | 2.13 | % | 2.64 | % | 1.89 | % | 3.19 | % | ||||
| Financial Results | ||||||||||||||
| Total revenue | $ | 308,639 | $ | 503,311 | $ | 779,914 | $ | 811,949 | ||||||
| Total expense | 560,657 | 606,256 | 749,405 | 1,166,913 | 1,619,283 | |||||||||
| Net (loss) income | (223,822) | (91,318) | 26,284 | (315,141) | 454,137 | |||||||||
| Diluted (loss) earnings per share | $ | (0.66) | $ | (0.25) | $ | 0.07 | $ | (0.93) | 0.42 | |||||
| Non-GAAP Financial Measures(4) | ||||||||||||||
| Adjusted total revenue | $ | 273,273 | $ | 504,606 | $ | 825,330 | $ | 777,877 | ||||||
| Adjusted net (loss) income | (167,855) | (81,732) | 57,504 | (249,587) | 377,031 | |||||||||
| Adjusted (LBITDA) EBITDA | (191,510) | (74,403) | 109,264 | (265,916) | 567,361 | |||||||||
| Adjusted diluted (loss) earnings per share(5) | N/A | $ | (0.26) | N/A | N/A | N/A |
All values are in US Dollars.
(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)See “Non-GAAP Financial Measures” for a discussion of Non-GAAP Financial Measures and a reconciliation of these metrics to their closest GAAP measure.
(5)Omitted adjusted diluted (loss) earnings per share measures that included the impact of assumed exchange of shares to the extent the exchange was antidilutive.
Operational Results
•Pull through weighted lock volume of $12.4 billion for the three months ended June 30, 2022 resulted in quarterly total revenue of $308.6 million, a decrease of $194.7 million, or 39%, from the first quarter of 2022.
•Loan origination volume for the second quarter of 2022 was $16.0 billion, a decrease of $5.6 billion or 26% from the first quarter of 2022.
•Purchase volume increased to 59% of total originations.
•Market share decreased to 2.4%1 due to the intense competitive pressure from decreasing origination volume.
1 Total market originations based on data as of July 18,2022, from the Mortgage Bankers Association
•Gain on origination and sales of loans, net as well as gain on sale margin decreased from the first quarter of 2022 due primarily to lower pull through weighted lock volume and lower profit margins as a result of higher interest rates. The decrease was also due in part to an increase in provision for repurchases from $13.2 million in the first quarter of 2022 to $82.4 million in the second quarter of 2022. The increase was driven by increased market rates which have reduced the fair value of loans subject to repurchase that were originated in prior periods at lower interest rates.
•Cash-out refinance and purchase volume increased to 95% of total production during the second quarter of 2022 compared to 83% of total production during the first quarter of 2022 and 59% of total production during the second quarter of 2021, reflecting our strategy of reducing the volatility of our revenue by focusing on less interest rate sensitive mortgage products.
•For the twelve months ended June 30, 2022, our preliminary organic refinance consumer direct recapture rate2 remained strong at 72%. This highlights the efficacy of our marketing efforts, the strength of our customer relationships, and the value of our servicing portfolio for additional revenue opportunities.
•Net loss for the second quarter of 2022 of $223.8 million as compared to net loss of $91.3 million in the prior quarter. Net loss increased quarter over quarter primarily due to the decrease in rate lock volume and gain on sale margin, partially offset by a decrease in total expenses.
•Adjusted LBITDA for the second quarter of 2022 was $191.5 million as compared to adjusted LBITDA of $74.4 million for the first quarter of 2022. Adjusted (LBITDA) EBITDA excludes the impact of fair value changes of our mortgage servicing rights, net of hedging results, impairment charges, and other operating expenses.
Our outlook for the third quarter of 2022 is
•Origination volume of between $5.5 billion and $10.5 billion.
•Pull-through weighted rate lock volume of between $5.5 billion and $10.5 billion.
•Pull-through weighted gain on sale margin of between 175 basis points and 225 basis points.
Vision 2025
Our previously announced Vision 2025 plan is designed to address current and anticipated mortgage market conditions and position loanDepot for sustainable long-term value creation. Building on the foundation of our strong balance sheet and liquidity, we are:
1.Increasing our focus on purchase transactions while serving increasingly diverse communities across the country, in line with shifting home buyer demographics and with an increased focus on addressing persistent gaps in equitable housing through initiatives that expand access to credit while advancing the goal of growing our share of lending for purchase transactions and maintaining responsible management of credit risk;
2.Executing previously announced growth-generating initiatives, including our unique, all-digital home equity line of credit (HELOC), which we intend to launch by fourth quarter 2022, and through continued investments in in-house servicing;
3.Centralizing management of loan originations and loan fulfillment to enhance quality and effectiveness with a streamlined organizational structure better positioned for today’s market. This involves:
•All mortgage origination functions will be led by LDI Mortgage President Jeff Walsh;
•All digital lending and mortgage-adjacent products and services will be led by LDI Digital Products and Services President Zeenat Sidi;
2 We define organic refinance consumer direct recapture rate as the total unpaid principal balance (“UPB”) of loans in our servicing portfolio that are paid in full for purposes of refinancing the loan on the same property, with the Company acting as lender on both the existing and new loan, divided by the UPB of all loans in our servicing portfolio that paid in full for the purpose of refinancing the loan on the same property. The recapture rate is finalized following the publication date of this release when external data becomes available.
•All loan fulfillment and servicing functions will be led by LDI Managing Director of Operations and Servicing Dan Binowitz;
4.Aggressively rightsizing our cost structure through a program expected to generate approximately $375 - $400 million of annualized savings and expected run rate profitability exiting 2022, through headcount reduction, attrition, business process optimization, reduced marketing and third-party spending, and real estate consolidation.
Strategic Channel Overview
Our purpose driven origination strategy ensures we can serve customers in the way they want to be served, with the right mortgage professional, with the right product, at the right price, and at the right time. Complementing our origination strategy is our servicing portfolio, which ensures we can serve the customer through their entire mortgage journey.
Retail Channel
| Three Months Ended | Six Months Ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands)<br>(Unaudited) | June 30,<br>2022 | March 31,<br>2022 | June 30,<br>2021 | June 30,<br>2022 | June 30,<br>2021 | ||||||||||
| Volume data: | |||||||||||||||
| Rate locks | $ | 12,584,274 | $ | 21,849,219 | $ | 33,925,833 | $ | 34,433,493 | $ | 70,999,845 | |||||
| Loan originations | 10,877,875 | 16,479,390 | 27,881,773 | 27,357,265 | 61,309,562 | ||||||||||
| Gain on sale margin | 1.03 | % | 2.24 | % | 2.50 | % | 1.76 | % | 2.91 | % |
Partner Channel
| Three Months Ended | Six Months Ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands)<br>(Unaudited) | June 30,<br>2022 | March 31,<br>2022 | June 30,<br>2021 | June 30,<br>2022 | June 30,<br>2021 | ||||||||||
| Volume data: | |||||||||||||||
| Rate locks | $ | 7,012,489 | $ | 8,142,233 | $ | 8,140,148 | $ | 15,154,722 | $ | 16,828,797 | |||||
| Loan originations | 5,117,180 | 5,071,341 | 6,612,393 | 10,188,521 | 14,663,755 | ||||||||||
| Gain on sale margin | 1.45 | % | 1.07 | % | 1.32 | % | 1.26 | % | 1.61 | % |
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.
The increase in the provision for repurchases was primarily allocated to the Retail Channel, negatively impacting the channel’s gain on sale margin for the second quarter. The increase in the Partner Channel gain on sale margin for the quarter was primarily due to a mix shift in favor of joint venture volume.
Servicing
| Three Months Ended | Six Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Servicing Revenue Data:<br><br>($ in thousands)<br><br>(Unaudited) | June 30,<br>2022 | March 31,<br>2022 | June 30,<br>2021 | June 30,<br>2022 | June 30,<br>2021 | |||||
| Due to changes in valuation inputs or assumptions | $ | 98,795 | $ | 198,996 | $ | (129,267) | $ | 297,792 | $ | 101,757 |
| Due to collection/realization of cash flows | (66,380) | (77,122) | (105,771) | (143,502) | (223,877) | |||||
| Realized (losses) gains on sales of servicing rights | (2,493) | 10,034 | 6,089 | 7,540 | 5,992 | |||||
| Net (loss) gain from derivatives hedging servicing rights | (63,429) | (200,291) | 83,851 | (263,720) | (72,605) | |||||
| Changes in fair value of servicing rights, net | $ | (33,507) | $ | (68,383) | $ | (145,098) | $ | (101,890) | $ | (188,733) |
| Servicing fee income | $ | 117,326 | $ | 111,059 | $ | 94,742 | $ | 228,385 | $ | 177,309 |
| Three Months Ended | Six Months Ended | |||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Servicing Rights, at Fair Value:<br><br>($ in thousands)<br><br>(Unaudited) | June 30,<br>2022 | March 31,<br>2022 | June 30,<br>2021 | June 30,<br>2022 | June 30,<br>2021 | |||||
| Balance at beginning of period | $ | 2,078,187 | $ | 1,999,402 | $ | 1,766,088 | $ | 1,999,402 | $ | 1,124,302 |
| Additions | 180,455 | 269,760 | 427,458 | 450,215 | 957,001 | |||||
| Sales proceeds, net | (86,464) | (312,849) | (182,113) | (399,314) | (182,788) | |||||
| Changes in fair value: | ||||||||||
| Due to changes in valuation inputs or assumptions | 98,795 | 198,996 | (129,267) | 297,792 | 101,757 | |||||
| Due to collection/realization of cash flows | (66,380) | (77,122) | (105,771) | (143,502) | (223,877) | |||||
| Balance at end of period (1) | $ | 2,204,593 | $ | 2,078,187 | $ | 1,776,395 | $ | 2,204,593 | $ | 1,776,395 |
(1)Balances are net of $9.1 million, $7.8 million, and $5.3 million of servicing rights liability as of June 30, 2022, March 31, 2022, and June 30, 2021, respectively.
| % Change | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Servicing Portfolio Data:<br><br>($ in thousands)<br><br>(Unaudited) | June 30,<br>2022 | March 31,<br>2022 | June 30,<br>2021 | Jun-22<br>vs<br>Mar-22 | Jun-22<br>vs<br>Jun-21 | ||||||||
| Servicing portfolio (unpaid principal balance) | $ | 155,217,012 | $ | 153,385,817 | $ | 138,767,860 | 1.2 | % | 11.9 | % | |||
| Total servicing portfolio (units) | 507,231 | 496,868 | 446,606 | 2.1 | 13.6 | ||||||||
| 60+ days delinquent ($) | $ | 1,511,871 | $ | 1,444,779 | $ | 1,976,658 | 4.6 | (23.5) | |||||
| 60+ days delinquent (%) | 1.0 | % | 0.9 | % | 1.4 | % | |||||||
| Servicing rights, net to UPB | 1.4 | % | 1.4 | % | 1.3 | % |
The increase in unpaid principal balance of our servicing portfolio was driven primarily by portfolio growth offset somewhat by sales of $3.8 billion of unpaid principal balance during the quarter.
As of June 30, 2022, approximately 0.4%, or $587.8 million, of our servicing portfolio was in active forbearance. This represents an aggregate decrease from 0.6%, or $898.5 million as of March 31, 2022.
Balance Sheet Highlights
| % Change | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands)<br><br>(Unaudited) | June 30,<br>2022 | March 31,<br>2022 | June 30,<br>2021 | Jun-22<br>vs<br>Mar-22 | Jun-22<br>vs<br>Jun-21 | |||||
| Cash and cash equivalents | $ | 954,930 | $ | 554,135 | $ | 419,283 | 72.3 | % | 127.8 | % |
| Loans held for sale, at fair value | 4,656,338 | 6,558,668 | 9,120,653 | (29.0) | (48.9) | |||||
| Servicing rights, at fair value | 2,213,700 | 2,086,022 | 1,781,686 | 6.1 | 24.2 | |||||
| Total assets | 9,195,187 | 10,640,248 | 13,097,643 | (13.6) | (29.8) | |||||
| Warehouse and other lines of credit | 4,265,343 | 5,806,907 | 8,498,365 | (26.5) | (49.8) | |||||
| Total liabilities | 7,981,324 | 9,129,079 | 11,528,809 | (12.6) | (30.8) | |||||
| Total equity | 1,213,863 | 1,511,169 | 1,568,834 | (19.7) | (22.6) |
The increase in cash and cash equivalents from March 31, 2022 included draws on our MSR secured borrowing facilities, loans sold in excess of loans originated during the quarter, and the proceeds from MSR sales. A decrease in loans held for sale at June 30, 2022, resulted in a corresponding decrease in the balance on our warehouse lines of credit. Total funding capacity with our lending partners decreased to $9.9 billion at June 30, 2022 from $10.9 billion at March 31, 2022. The decrease of $1.0 billion was primarily due to our decision to reduce our borrowing capacity, reflecting lower volume expectations. Available borrowing capacity was $5.5 billion at June 30, 2022.
Consolidated Statements of Operations
| ($ in thousands except per share data)<br>(Unaudited) | Three Months Ended | Six Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| June 30, 2022 | March 31, 2022 | June 30, 2021 | June 30, 2022 | June 30, 2021 | ||||||
| REVENUES: | ||||||||||
| Interest income | $ | 62,722 | $ | 52,965 | $ | 61,874 | $ | 115,687 | $ | 116,605 |
| Interest expense | (39,923) | (39,889) | (54,848) | (79,813) | (108,346) | |||||
| Net interest income | 22,799 | 13,076 | 7,026 | 35,874 | 8,259 | |||||
| Gain on origination and sale of loans, net | 146,562 | 363,131 | 692,479 | 509,692 | 1,826,054 | |||||
| Origination income, net | 39,108 | 59,073 | 92,624 | 98,181 | 194,223 | |||||
| Servicing fee income | 117,326 | 111,059 | 94,742 | 228,385 | 177,309 | |||||
| Change in fair value of servicing rights, net | (33,507) | (68,383) | (145,098) | (101,890) | (188,733) | |||||
| Other income | 16,351 | 25,355 | 38,141 | 41,707 | 78,810 | |||||
| Total net revenues | 308,639 | 503,311 | 779,914 | 811,949 | 2,095,922 | |||||
| EXPENSES: | ||||||||||
| Personnel expense | 296,569 | 345,993 | 470,125 | 642,563 | 1,073,861 | |||||
| Marketing and advertising expense | 60,837 | 101,513 | 114,133 | 162,350 | 223,759 | |||||
| Direct origination expense | 33,996 | 53,157 | 50,017 | 87,153 | 96,993 | |||||
| General and administrative expense | 63,927 | 49,748 | 48,654 | 113,675 | 99,972 | |||||
| Occupancy expense | 9,388 | 9,396 | 9,283 | 18,784 | 19,270 | |||||
| Depreciation and amortization | 11,323 | 10,545 | 8,686 | 21,867 | 17,139 | |||||
| Servicing expense | 10,741 | 21,511 | 27,241 | 32,252 | 53,851 | |||||
| Other interest expense | 33,140 | 14,393 | 21,266 | 47,533 | 34,438 | |||||
| Goodwill impairment | 40,736 | — | — | 40,736 | — | |||||
| Total expenses | 560,657 | 606,256 | 749,405 | 1,166,913 | 1,619,283 | |||||
| (Loss) income before income taxes | (252,018) | (102,945) | 30,509 | (354,964) | 476,639 | |||||
| Income tax (benefit) expense | (28,196) | (11,627) | 4,225 | (39,823) | 22,502 | |||||
| Net (loss) income | (223,822) | (91,318) | 26,284 | (315,141) | 454,137 | |||||
| Net (loss) income attributable to noncontrolling interests | (122,894) | (56,577) | 17,723 | (179,472) | 400,701 | |||||
| Net (loss) income attributable to loanDepot, Inc. | $ | (100,928) | $ | (34,741) | $ | 8,561 | $ | (135,669) | $ | 53,436 |
| Basic (loss) earnings per share | $ | (0.66) | $ | (0.25) | $ | 0.07 | $ | (0.93) | $ | 0.42 |
| Diluted (loss) earnings per share | $ | (0.66) | $ | (0.25) | $ | 0.07 | $ | (0.93) | $ | 0.42 |
Consolidated Balance Sheets
| ($ in thousands) | June 30,<br>2022 | March 31,<br>2022 | December 31,<br>2021 | |||
|---|---|---|---|---|---|---|
| (Unaudited) | ||||||
| ASSETS | ||||||
| Cash and cash equivalents | $ | 954,930 | $ | 554,135 | $ | 419,571 |
| Restricted cash | 194,645 | 153,700 | 201,025 | |||
| Accounts receivable, net | 91,766 | 115,976 | 56,183 | |||
| Loans held for sale, at fair value | 4,656,338 | 6,558,668 | 8,136,817 | |||
| Derivative assets, at fair value | 153,607 | 351,097 | 194,665 | |||
| Servicing rights, at fair value | 2,213,700 | 2,086,022 | 2,006,712 | |||
| Trading securities, at fair value | 105,308 | 93,466 | 72,874 | |||
| Property and equipment, net | 111,443 | 108,135 | 104,262 | |||
| Operating lease right-of-use asset | 48,443 | 52,818 | 55,646 | |||
| Prepaid expenses and other assets | 140,145 | 116,338 | 140,315 | |||
| Loans eligible for repurchase | 506,454 | 389,140 | 363,373 | |||
| Investments in joint ventures | 18,408 | 18,559 | 18,553 | |||
| Goodwill and other intangible assets, net | — | 42,194 | 42,317 | |||
| Total assets | $ | 9,195,187 | $ | 10,640,248 | $ | 11,812,313 |
| LIABILITIES AND EQUITY | ||||||
| LIABILITIES: | ||||||
| Warehouse and other lines of credit | $ | 4,265,343 | $ | 5,806,907 | $ | 7,457,199 |
| Accounts payable and accrued expenses | 643,144 | 804,405 | 624,444 | |||
| Derivative liabilities, at fair value | 72,758 | 113,366 | 37,797 | |||
| Liability for loans eligible for repurchase | 506,454 | 389,140 | 363,373 | |||
| Operating lease liability | 66,485 | 67,681 | 71,932 | |||
| Debt obligations, net | 2,427,140 | 1,947,580 | 1,628,208 | |||
| Total liabilities | 7,981,324 | 9,129,079 | 10,182,953 | |||
| EQUITY: | ||||||
| Total equity | 1,213,863 | 1,511,169 | 1,629,360 | |||
| Total liabilities and equity | $ | 9,195,187 | $ | 10,640,248 | $ | 11,812,313 |
Loan Origination and Sales Data
| ( in thousands)(Unaudited) | Three Months Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| March 31,<br>2022 | June 30,<br>2021 | ||||||||||
| Loan origination volume by type: | |||||||||||
| Conventional conforming | $ | 10,392,730 | $ | 15,712,273 | $ | 27,933,929 | |||||
| FHA/VA/A | 3,658,309 | 3,968,511 | 4,231,466 | ||||||||
| Jumbo | 1,595,843 | 1,787,704 | 2,057,466 | ||||||||
| Other | 348,173 | 82,243 | 271,305 | ||||||||
| Total | $ | 15,995,055 | $ | 21,550,731 | $ | 34,494,166 | |||||
| Loan origination volume by channel: | |||||||||||
| Retail | $ | 10,877,875 | $ | 16,479,390 | $ | 27,881,773 | |||||
| Partnership | 5,117,180 | 5,071,341 | 6,612,393 | ||||||||
| Total | $ | 15,995,055 | $ | 21,550,731 | $ | 34,494,166 | |||||
| Loan origination volume by purpose: | |||||||||||
| Purchase | $ | 9,500,164 | $ | 8,030,766 | $ | 10,382,964 | |||||
| Refinance | 6,494,891 | 13,519,965 | 24,111,202 | ||||||||
| Total | $ | 15,995,055 | $ | 21,550,731 | $ | 34,494,166 | |||||
| Loans sold: | |||||||||||
| Servicing retained | $ | 10,568,649 | $ | 17,122,716 | $ | 30,981,299 | |||||
| Servicing released | 7,342,889 | 5,745,322 | 3,309,151 | ||||||||
| Total | $ | 17,911,538 | $ | 22,868,038 | $ | 34,290,450 | |||||
| Loan origination margins: | |||||||||||
| Gain on sale margin | 1.16 | % | 1.96 | % | 2.28 | % |
All values are in US Dollars.
Second Quarter Earnings Call
Management will host a conference call and live webcast today at 5:00 p.m. ET on loanDepot’s Investor Relations website, investors.loandepot.com, to discuss its earnings results.
The conference call can also be accessed by dialing (888) 440-6385 using conference ID number 2021948. Please call five minutes in advance to ensure that you are connected prior to the call. A replay of the webcast and transcript will also be made available on the Investor Relations website following the conclusion of the event, or can be accessed by dialing (800) 770-2030 following the conclusion of the event through September 8, 2022.
For more information about loanDepot, please visit the company’s Investor Relations website: investors.loandepot.com.
Non-GAAP Financial Measures
To provide investors with information in addition to our results as determined by GAAP, we disclose certain non-GAAP measures to assist investors in evaluating our financial results. We believe these non-GAAP measures provide useful information to investors regarding our results of operations because each measure assists both investors and management in analyzing and benchmarking the performance and value of our business. They facilitate company-to-company operating performance comparisons by backing out potential differences caused by variations in hedging strategies, changes in valuations, capital structures (affecting interest expense on non-funding debt), taxation, the age and book depreciation of facilities (affecting relative depreciation expense), the amortization of intangibles, and certain historical cost or benefit items which may vary for different companies for reasons unrelated to operating performance. These non-GAAP measures include our Adjusted Total Revenue, Adjusted Net Income (Loss), Adjusted Diluted Earnings (Loss) Per Share, and Adjusted EBITDA (LBITDA). We exclude from each of these non-GAAP financial measures the change in fair value of MSRs and related hedging gains and losses as they add volatility and are not indicative of the Company’s operating performance or results of operation. We also exclude stock compensation expense, which is a non-cash expense, management fees, IPO expenses, gains or losses on extinguishment of debt, non-cash goodwill impairment, and other impairment charges to intangible assets and operating lease right-of-use assets as management does not consider these costs to be indicative of our performance or results of operations. Adjusted EBITDA (LBITDA) includes interest expense on funding facilities, which are recorded as a component of “net interest income (expense)”, as these expenses are a direct operating expense driven by loan origination volume. By contrast, interest expense on our non-funding debt is a function of our capital structure and is therefore excluded from Adjusted EBITDA (LBITDA). Adjustments for income taxes are made to reflect historical results of operations on the basis that it was taxed as a corporation under the Internal Revenue Code, and therefore subject to U.S. federal, state and local income taxes. These non-GAAP measures have limitations as analytical tools, and should not be considered in isolation or as a substitute for revenue, net income, or any other operating performance measure calculated in accordance with GAAP, and may not be comparable to a similarly titled measure reported by other companies. Some of these limitations are:
•they do not reflect every cash expenditure, future requirements for capital expenditures or contractual commitments;
•Adjusted EBITDA (LBITDA) does not reflect the significant interest expense or the cash requirements necessary to service interest or principal payment on our debt;
•although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced or require improvements in the future, and Adjusted Total Revenue, Adjusted Net Income (Loss), and Adjusted EBITDA (LBITDA) do not reflect any cash requirement for such replacements or improvements; and
•they are not adjusted for all non-cash income or expense items that are reflected in our statements of cash flows.
Because of these limitations, Adjusted Total Revenue, Adjusted Net Income (Loss), Adjusted Diluted Earnings (Loss) Per Share, and Adjusted EBITDA (LBITDA) are not intended as alternatives to total revenue, net income (loss), net income (loss) attributable to the Company, or Diluted Earnings (Loss) Per Share or as an indicator of our operating performance and should not be considered as measures of discretionary cash available to us to invest in the growth of our business or as measures of cash that will be available to us to meet our obligations. We compensate for these limitations by using Adjusted Total Revenue, Adjusted Net Income (Loss), Adjusted Diluted Earnings (Loss) Per Share, and Adjusted EBITDA (LBITDA) along with other comparative tools, together with U.S. GAAP measurements, to assist in the evaluation of operating performance. See below for a reconciliation of these non-GAAP measures to their most comparable U.S. GAAP measures.
| Reconciliation of Total Revenue to Adjusted Total Revenue ( in thousands)(Unaudited) | Three Months Ended | Six Months Ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| March 31,<br>2022 | June 30,<br>2021 | June 30,<br>2022 | June 30,<br>2021 | |||||||||||
| Total net revenue | $ | 308,639 | $ | 503,311 | $ | 779,914 | $ | 811,949 | $ | 2,095,922 | ||||
| Change in fair value of servicing rights, net of hedging gains and losses(1) | (35,366) | 1,295 | 45,416 | (34,072) | (29,152) | |||||||||
| Adjusted total revenue | $ | 273,273 | $ | 504,606 | $ | 825,330 | $ | 777,877 | $ | 2,066,770 |
All values are in US Dollars.
(1)Represents the change in the fair value of servicing rights attributable to changes in assumptions, net of hedging gains and losses.
| Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss)( in thousands)(Unaudited) | Three Months Ended | Six Months Ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| March 31,<br>2022 | June 30,<br>2021 | June 30,<br>2022 | June 30,<br>2021 | |||||||||||
| Net (loss) income attributable to loanDepot, Inc. | $ | (100,928) | $ | (34,741) | $ | 8,561 | $ | (135,669) | $ | 53,436 | ||||
| Net (loss) income from the pro forma conversion of Class C common shares to Class A common shares (1) | (122,894) | (56,577) | 17,723 | (179,472) | 400,701 | |||||||||
| Net (loss) income | (223,822) | (91,318) | 26,284 | (315,141) | 454,137 | |||||||||
| Adjustments to the provision for income taxes(2) | 31,952 | 14,710 | (4,684) | 46,663 | (105,905) | |||||||||
| Tax-effected net (loss) income | (191,870) | (76,608) | 21,600 | (268,478) | 348,232 | |||||||||
| Change in fair value of servicing rights, net of hedging gains and losses(3) | (35,366) | 1,295 | 45,416 | (34,072) | (29,152) | |||||||||
| Stock compensation expense and management fees | 4,712 | 2,309 | 2,126 | 7,021 | 62,202 | |||||||||
| IPO expenses | — | — | 1,261 | — | 6,095 | |||||||||
| Gain on extinguishment of debt | — | (10,528) | — | (10,528) | — | |||||||||
| Goodwill impairment | 40,736 | — | — | 40,736 | — | |||||||||
| Other impairment | 5,963 | — | — | 5,963 | — | |||||||||
| Tax effect of adjustments(4) | 7,970 | 1,800 | (12,899) | 9,771 | (10,346) | |||||||||
| Adjusted net (loss) income | $ | (167,855) | $ | (81,732) | $ | 57,504 | $ | (249,587) | $ | 377,031 |
All values are in US Dollars.
(1)Reflects net income (loss) to Class A common stock and Class D common stock from the pro forma exchange of Class C common stock.
(2)loanDepot, Inc. is subject to federal, state and local income taxes. Adjustments to income tax (benefit) reflect the effective income tax rates below, and the pro forma assumption that loanDepot, Inc. owns 100% of LD Holdings.
| Three Months Ended | Six Months Ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30,<br>2022 | March 31,<br>2022 | June 30,<br>2021 | June 30,<br>2022 | June 30,<br>2021 | |||||||||||
| Statutory U.S. federal income tax rate | 21.00 | % | 21.00 | % | 21.00 | % | 21.00 | % | 21.00 | % | |||||
| State and local income taxes (net of federal benefit) | 5.00 | % | 5.00 | % | 5.43 | % | 5.00 | % | 5.43 | % | |||||
| Effective income tax rate | 26.00 | % | 26.00 | % | 26.43 | % | 26.00 | % | 26.43 | % |
(3)Represents the change in the fair value of servicing rights attributable to changes in assumptions, net of hedging gains and losses.
(4)Amounts represent the income tax effect of (a) change in fair value of servicing rights, net of hedging gains and losses, (b) stock compensation expense and management fees, (c) IPO expense, and (d) gain on extinguishment of debt at the aforementioned effective income tax rates.
| Reconciliation of Adjusted Diluted Weighted Average Shares Outstanding to Diluted Weighted Average Shares Outstanding( in thousands except per share data)(Unaudited) | Three Months Ended | Six Months Ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| March 31,<br>2022 | June 30,<br>2021 | June 30,<br>2022 | June 30,<br>2021 | |||||||||||
| Net (loss) income attributable to loanDepot, Inc. | $ | (100,928) | $ | (34,741) | $ | 8,561 | $ | (135,669) | $ | 53,436 | ||||
| Adjusted net (loss) income | (167,855) | (81,732) | 57,504 | (249,587) | 377,031 | |||||||||
| Share Data: | ||||||||||||||
| Diluted weighted average shares of Class A and Class D common stock outstanding | 153,822,380 | 139,007,890 | 126,726,876 | 146,415,135 | 126,392,949 | |||||||||
| Assumed pro forma conversion of weighted average Class C shares to Class A common stock (1) | 165,281,304 | 181,035,804 | 196,741,703 | 173,245,208 | 197,366,213 | |||||||||
| Adjusted diluted weighted average shares outstanding | 319,103,684 | 320,043,694 | 323,468,579 | 319,660,343 | 323,759,162 | |||||||||
| Diluted (loss) earnings per share | $ | (0.66) | $ | (0.25) | $ | 0.07 | $ | (0.93) | $ | 0.42 | ||||
| Adjusted diluted (loss) earnings per share(2) | N/A | (0.26) | N/A | N/A | N/A |
All values are in US Dollars.
(1)Reflects the assumed pro forma conversion of all outstanding shares of Class C common stock to Class A common stock.
(2)Omitted adjusted diluted (loss) earnings per share measures that included the impact of assumed exchange of shares to the extent the exchange was antidilutive.
| Reconciliation of Net (Loss) Income to Adjusted (LBITDA) EBITDA ( in thousands)(Unaudited) | Three Months Ended | Six Months Ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| March 31,<br>2022 | June 30,<br>2021 | June 30,<br>2022 | June 30,<br>2021 | |||||||||||
| Net (Loss) Income | $ | (223,822) | $ | (91,318) | $ | 26,284 | $ | (315,141) | $ | 454,137 | ||||
| Interest expense - non-funding debt (1) | 33,140 | 14,393 | 21,266 | 47,533 | 34,438 | |||||||||
| Income tax (benefit) expense | (28,196) | (11,627) | 4,225 | (39,823) | 22,502 | |||||||||
| Depreciation and amortization | 11,323 | 10,545 | 8,686 | 21,867 | 17,139 | |||||||||
| Change in fair value of servicing rights, net ofhedging gains and losses(2) | (35,366) | 1,295 | 45,416 | (34,072) | (29,152) | |||||||||
| Stock compensation expense and management fees | 4,712 | 2,309 | 2,126 | 7,021 | 62,202 | |||||||||
| IPO expense | — | — | 1,261 | — | 6,095 | |||||||||
| Goodwill impairment | 40,736 | — | — | 40,736 | — | |||||||||
| Other impairment | 5,963 | — | — | 5,963 | — | |||||||||
| Adjusted (LBITDA) EBITDA | $ | (191,510) | $ | (74,403) | $ | 109,264 | $ | (265,916) | $ | 567,361 |
All values are in US Dollars.
(1)Represents other interest expense, which includes gain on extinguishment of debt and amortization of debt issuance costs, in the Company’s consolidated statement of operations.
(2)Represents the change in the fair value of servicing rights attributable to changes in assumptions, net of hedging gains and losses.
Forward-Looking Statements
This press release may contain "forward-looking statements," which reflect loanDepot's current views with respect to, among other things, its business strategies, including the Vision 2025 plan, financial condition and liquidity, competitive position, industry and regulatory environment, potential growth opportunities, the effects of competition, operations and financial performance. You can identify these statements by the use of words such as "outlook," "potential," "continue," "may," "seek," "approximately," "predict," "believe," "expect," "plan," "intend," "estimate," “project,” or "anticipate" and similar expressions or the negative versions of these words or comparable words, as well as future or conditional verbs such as "will," "should," "would" and "could." These forward-looking statements are based on current available operating, financial, economic and other information, and are not guarantees of future performance and are subject to risks, uncertainties and assumptions, including the risks in the "Risk Factors" section of loanDepot, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2021 and Quarterly Reports on Form 10-Q , which are difficult to predict. Therefore, current plans, anticipated actions, financial results, as well as the anticipated development of the industry, may differ materially from what is expressed or forecasted in any forward-looking statement. loanDepot does not undertake any obligation to publicly update or revise any forward-looking statement to reflect future events or circumstances, except as required by applicable law.
About loanDepot
loanDepot (NYSE: LDI) is a digital commerce company committed to serving its customers throughout the home ownership journey. Since its launch in 2010, loanDepot has revolutionized the mortgage industry with a digital-first approach that makes it easier, faster and less stressful to purchase or refinance a home. Today, as the nation's second largest retail mortgage lender, loanDepot enables customers to achieve the American dream of homeownership through a broad suite of lending and real estate services that simplify one of life's most complex transactions. With headquarters in Southern California and offices nationwide, loanDepot is committed to serving the communities in which its team lives and works through a variety of local, regional and national philanthropic efforts.
Investor Relations Contact:
Gerhard Erdelji
Senior Vice President, Investor Relations
(949) 822-4074
gerdelji@loandepot.com
Media Contact:
Rebecca Anderson
Senior Vice President, Communications & Public Relations
(949) 822-4024
rebeccaanderson@loandepot.com
LDI-IR
13
q22022investorpresentati
2Q 2022 INVESTOR PRESENTATION August 9, 2022
DISCLAIMER 2 Forward-Looking Statements and Other Information This presentation may contain "forward-looking statements," which reflect loanDepot's current views with respect to, among other things, its business strategies, including the Vision 2025 plan, financial condition and liquidity, competitive position, industry and regulatory environment, potential growth opportunities, the effects of competition, operations and financial performance. You can identify these statements by the use of words such as "outlook," "potential," "continue," "may," "seek," "approximately," "predict," "believe," "expect," "plan," "intend," "estimate," “project,” or "anticipate" and similar expressions or the negative versions of these words or comparable words, as well as future or conditional verbs such as "will," "should," "would" and "could." These forward-looking statements are based on current available operating, financial, economic and other information, and are not guarantees of future performance and are subject to risks, uncertainties and assumptions, including the risks in the "Risk Factors" section of loanDepot, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2021 and Quarterly Reports on Form 10-Q , which are difficult to predict. Therefore, current plans, anticipated actions, financial results, as well as the anticipated development of the industry, may differ materially from what is expressed or forecasted in any forward-looking statement. loanDepot does not undertake any obligation to publicly update or revise any forward-looking statement to reflect future events or circumstances, except as required by applicable law. Non-GAAP Financial Information To provide investors with information in addition to our results as determined by GAAP, we disclose Adjusted Total Revenue, Adjusted Net Income, Adjusted Diluted EPS, and Adjusted EBITDA as non-GAAP measures. We believe Adjusted Total Revenue, Adjusted Net Income, Adjusted Diluted EPS, and Adjusted EBITDA provide useful information to investors regarding our results of operations because each measure assists both investors and management in analyzing and benchmarking the performance and value of our business. They facilitate company-to-company operating performance comparisons by backing out potential differences caused by variations in hedging strategies, changes in valuations, capital structures (affecting net interest expense), taxation, the age and book depreciation of facilities (affecting relative depreciation expense) and the amortization of intangibles, which may vary for different companies for reasons unrelated to operating performance, as well as certain historical cost (benefit) items which may vary for different companies for reasons unrelated to operating performance. These measures are not financial measures calculated in accordance with GAAP and should not be considered as a substitute for revenue, net income, or any other operating performance measure calculated in accordance with GAAP, and may not be comparable to a similarly titled measure reported by other companies. Market and Industry Data This presentation also contains information regarding the loanDepot’s market and industry that is derived from third-party research and publications. That information may rely upon a number of assumptions and limitations, and the Company has not independently verified its accuracy or completeness.
3 SECOND QUARTER FACT SHEET Financial Operational • Originations: $16 billion in funded volume, the midpoint of second quarter 2022 guidance • Total Revenue: $309 million on $12 billion of pull-through weighted lock volume • Total Expenses: Decreased by $46 million or 8% from the first quarter of 2022, due to lower marketing and personnel expenses o Non-Operating Expenses include: $40.7 million of goodwill impairment, $6.0 million of real estate and other intangible assets impairment, $3.5 million of severance, and $2.5 million of consulting and other professional expenses related to Vision 2025 • Liquidity: Unrestricted cash and equivalents totaling $954.9 million, or 10.4% of total assets, at quarter end • Servicing: Increased UPB to $155 billion at end of quarter, compared to $153 billion in Q1 ‘22 • Announced Vision 2025 to address current and anticipated market conditions and position company for long-term value creation o Headcount: Reduced headcount to approx. 8,500 by end of quarter from approx. 11,300 at year-end 2021 o Channel Strategy: Exit Wholesale channel to reduce expenses, consolidate operations, and control the entire customer experience • Product Strategy: Purchase and Cash-Out refinance volume increased to 95% of total production in Q2 ’22 vs 83% Q1 ’22 • Purchase Mix: 59% of total Originations • Organic Refinance Consumer Direct Recapture Rate: Remained Strong at 72%
4 VISION 2025 PLAN • Purpose-driven organization, increasing purchase transactions and serving diverse communities across the country • Increase our focus on addressing persistent gaps in equitable housing, advancing the goal of growing our share of lending for purchase transactions while maintaining responsible management of credit risk • Cost Savings of approx. $375 - $400 million of annualized savings by the end of 2022, through headcount reduction, attrition, business process optimization, reduced marketing and third-party spending, and real estate consolidation • Based on these savings, the Company continues to target a return to run-rate operating profitability exiting 2022 • Launch of all-digital home equity line of credit (HELOC) by the fourth quarter of 2022 giving efficient access to record levels of home equity in as little as seven days • Continued investment in our in-house servicing business to complement our origination strategy and serve customers through the entire mortgage journey • Capture additional revenue by leveraging marketing and customer acquisition expenses • Mortgage origination functions will be led by LDI Mortgage President Jeff Walsh • Digital lending and mortgage-adjacent products and services will be led by LDI Digital Products and Services President Zeenat Sidi • Loan fulfillment and servicing functions will be led by LDI Managing Director of Operations and Servicing Dan Binowitz Focus on Purchase Transactions and Serving Diverse Communities Execute Growth Generating Initiatives Aggressively Right-Size Cost Structure Optimize Organizational StructureVISION 2025
DIVERSE & EXPERIENCED MANAGEMENT TEAM WITH UNIQUE SKILLSETS Anthony Hsieh Founder and Executive Chairman Frank Martell Chief Executive Officer Jeff Walsh President, LDI Mortgage President, LDI Digital Products & Services Patrick Flanagan Chief Financial Officer Dan Binowitz Managing Director LDI Operations & Servicing TJ Freeborn Chief Administrative Officer George Brady Chief Digital Officer Nicole Carrillo Chief Accounting Officer Saeed Ghasemzadeh EVP, Enterprise Contact Strategy Town & Country Credit Corp. Jeff DerGurahian Chief Capital Markets Officer Zeenat Sidi Peter Macdonald EVP, General Counsel 5
$35 $33 $45 $101 $137 $38 2.0% 2.0% 2.0% 2.5% 3.4% 2.7% – 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 0 20 40 60 80 100 120 140 2017 2018 2019 2020 2021 YTD '22 loanDepot Historical Mortgage Origination Volume SCALED ORIGINATOR DELIVERING CUSTOMERS A COMPLETE SOLUTION Inception to LTM Q2’22 Origination CAGR: 43%(1) loanDepot Originations loanDepot Market Share $1.7 $2.3 $4.1 Total market volume ($ trillion) $4.0 $1.4 (1) CAGR includes annualized volume for 2010 Source: Historical market share based on MBA industry volume as of 7/10/2022 and historical loanDepot origination volume ($ in billions) The loanDepot Ecosystem Established Scalable Infrastructure 2010 to 2012 Diversification & Expansion 2013 to 2015 Brand, Technology & Operational Transformation 2016 to 2021 Vision 2025 & Beyond 2022 + • Launched with the goal of disrupting mortgage • Created scalable platform and infrastructure • Expanded in-market retail reach through acquisitions • Leveraged infrastructure to launch LD Wholesale • Strategic decision to begin retaining servicing • Launched proprietary mello® technology • Grew servicing book with long-term relationships to a half million loanDepot customers • Launched mellohome and melloInsurance • Acquired leading title insurance company • Formed mello® operating unit focused on mortgage adjacent, digital-first products and services • Repositioning the Company for long term value creation • Purpose driven sustainable lending • Simplifying operational structure and increasing operating leverage • Maintaining strong Balance Sheet liquidity $1.8 6
ORIGINATION GROWTH RELATIVE TO INDUSTRY (1) MBA as of 7/10/2022 Note: Pull through weighted rate lock volume is the unpaid principal balance of loans subject to interest rate lock commitments, net of a pull-through factor for the loan funding probability 7 2017- LTM Q2 ‘22 Origination CAGR 26% 14%Industry(1) Purchase Mix % : 26% 31% 26%29% Retail Mix % : 82% 80% 79%77% ($ in billions) Total Market Share (%) : 2.1% 2.4% 2.8%2.5% 3.8% 81% 19% 3.3% 81% 30% 78% 34% 3.4% 3.3% 77% 34% 76% 37% 3.1% $18 $25 $36 $36 $33 $30 $30 $23 $20 $12 $15 $21 $27 $37 $41 $34 $32 $29 $22 $16 270 447 372 346 369 264 299 281 213 150 - 50 100 150 200 250 300 350 400 450 500 $0 $10 $20 $30 $40 $50 $60 $70 $80 Q1 2020A Q2 2020A Q3 2020A Q4 2020A Q1 2021A Q2 2021A Q3 2021 Q4 2021 Q1 2022 Q2 2022 Pull-Through Weighted (PTW) Lock Volume Origination Volume PTW GOS Margin, bps 68% 59% 2.4%
Historical expenses in bps of funded mortgage volume HISTORICAL COST STRUCTURE COMPARISON 8 338 bps 295 bps 428 bps362 bps Total Revenue (bps funded volume): Pre-tax Net Income (bps funded volume): (31) bps 7 bps 200 bps8 bps Salary Expense Marketing and Advertising Expense Direct Origination Expense (incl. Investor Fees) Subservicing Expense Other G&A 272 bps 49 bps Commission Expense 216 bps (95) bps YTD ’22 Included: • $40.7 million of goodwill impairment • $10.5 million gain on the extinguishment of debt • $6.2 million of severance benefits • $6.0 million of real estate and other intangible assets impairment • $2.5 million of consulting and other professional expenses related to Vision 2025 • $2.4 million expense to deboard servicing rights from our subservicer to our in-house platform • Total of $47.3 million or 13 bps 128 129 96 78 72 106 79 78 73 74 68 65 61 58 41 26 34 43 22 25 21 12 14 23 11 15 9 8 7 9 53 64 48 29 27 65 354 bps 369 bps 288 bps 228 bps 223 bps 311 bps 2017 2018 2019 2020 2021 YTD '22
HISTORICAL SERVICING PORTFOLIO TREND 9 ($ in billions) Retention %(2) : Recapture %(1) : 58% 70% 94% 64% 95% 54% 96% 66% 94% 72% 90% 78% 82% 68% (1) Organic refinance consumer direct recapture rate is defined as the total unpaid principal balance (“UPB”) of loans in our servicing portfolio that are paid in full for purposes of refinancing the loan on the same property, with the Company acting as lender on both the existing and new loan, divided by the UPB of loans in our servicing portfolio that paid in full for the purpose of refinancing the loan on the same property. (2) Portion of loan origination volume that was sold servicing retained in the period divided by total sold volume in the period. 78% 70% Total Serv Exp$ to Avg. UPB $, bps: 4.1 3.9 4.1 3.6 3.1 2.6 2.4 2.3 75% 72% 2.4 $42 $58 $77 $103 $130 $139 $145 $162 $153 $155 102 98 101 109 136 128 126 123 135 142 - 20 40 60 80 100 120 140 $- $20 $40 $60 $80 $100 $120 $140 $160 $180 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1 '22 Q2 '22 UPB $ MSR FV, bps 58% 72% 2.0
$175 $130 $265 $38 $822 $29 $630 $419 $507 $420 $554 $955 $805 $549 $772 $458 $1,376 $984 Q1 '21 Q2 '21 Q3 '21 Q4 '21 Q1 '22 Q2 '22 Liquidity ($m) Unused Lines Unrestricted Cash STRONG LIQUIDITY AND BALANCE SHEET Note: Please see Appendix for Non-GAAP Reconciliation 10 6% 4% 6% 4% 13% 11% Liquidity / Total Assets 1.0x 1.2x 1.1x 1.3x 1.4x 1.8x Q1 '21 Q2 '21 Q3 '21 Q4 '21 Q1 '22 Q2 '22 MSR / Tangible Net Worth 0.8x 1.0x 0.9x 1.0x 1.0x 2.0x Q1 '21 Q2 '21 Q3 '21 Q4 '21 Q1 '22 Q2 '22 Non-Funding Debt / Tangible Net Worth
11 Q3 2022 OUTLOOK Q3 2022 Guidance Metric Low High Pull-through Weighted Rate Lock Volume ($bn) $5.5 $10.5 Origination Volume ($bn) $5.5 $10.5 Pull-through Weighted GOS Margin, bps 175 225 Current Market Conditions • Higher interest rates adversely impacts home affordability • Increasing homeowner equity drives demand for cash-out refinance and other equity linked products • Higher interest rates resulting in little incentive for rate and term refinance • Sharper focus on industry consolidation, driven primarily by headcount reductions and competitor exits to shed excess capacity given lower industry volume expectationsQ3 2022 outlook reflects increased interest rates, limited housing supply, and ongoing competitive pressures
APPENDIX: FINANCIALS
BALANCE SHEET & SERVICING PORTFOLIO HIGHLIGHTS 13 $ in MM except units and % 2Q’22 1Q’22 2Q’21 2Q’22 vs 1Q’22 2Q’22 vs 2Q’21 Cash and cash equivalents $954.9 $554.1 $419.3 72% 128% Loans held for sale, at fair value 4,656.3 6,558.7 9,120.7 (29%) (49%) Servicing rights, at fair value 2,213.7 2,086.0 1,781.6 6% 24% Total assets 9,195.2 10,640.2 13,097.6 (14%) (30%) Warehouse and other lines of credit 4,265.3 5,806.9 8,498.4 (27%) (50%) Total liabilities 7,981.3 9,129.1 11,528.8 (13%) (31%) Total equity 1,213.9 1,511.2 1,568.8 (20%) (23%) Servicing portfolio (unpaid principal balance) $155,217.0 $153,385.8 $138,767.9 1% 12% Total servicing portfolio (units) 507,231 496,868 446,606 2% 14% 60+ days delinquent ($) 1,511.9 1,444.8 1,976.7 5% (24%) 60+ days delinquent (%) 1.0% 0.9% 1.4% Servicing rights, net to UPB 1.4% 1.4% 1.3%
NON-GAAP FINANCIAL RECONCILIATION 14 ($MM) 2Q ’22 1Q ’22 2Q’21 FY21 FY20 Adjusted Revenue Total Net Revenue $308.6 $503.3 $779.9 $ 3,724.7 $ 4,312.2 Change in FV of Servicing Rights, Net of Hedge (35.4) 1.3 45.4 14.5 (58.9) Adjusted Total Revenue $273.3 $504.6 $825.3 $ 3,739.2 $ 4,253.3 Adjusted (LBITDA) EBITDA Net (loss) Income ($223.8) ($91.3) $26.3 $ 623.1 $ 2,013.1 Interest Expense - Non-Funding Debt 33.1 14.4 21.3 79.6 48.0 Income Tax (benefit) Expense (28.2) (11.6) 4.2 43.4 2.2 Depreciation and Amortization 11.3 10.5 8.7 35.5 35.7 Change in FV of Servicing Rights, Net of Hedge (35.4) 1.3 45.4 14.5 (58.9) Change in FV of Contingent Consideration 0.0 0.0 0.0 (0.1) 32.7 Stock Compensation Expense and Management Fees 4.7 2.3 2.1 67.3 9.6 IPO Expenses 0.0 0.0 0.0 6.0 2.6 Goodwill & Other Impairment 46.7 0.0 0.0 0.0 0.0 Adjusted (LBITDA) EBITDA ($191.5) ($74.4) $109.3 $ 869.4 $ 2,084.9 Adjusted Net (loss) Income Net (loss) Income ($223.8) ($91.3) $26.3 $ 623.1 $ 2,013.1 Adjustments to Income Taxes 32.0 14.7 (4.7) (132.5) (516.5) Tax-Effected Net (loss) Income ($191.8) ($76.6) ($21.6) $ 490.6 $ 1,496.6 Change in FV of Servicing Rights, Net of Hedge (35.4) 1.3 45.4 14.5 (58.9) Change in FV of Contingent Consideration 0.0 0.0 0.0 (0.1) 32.7 Stock Compensation Expense and Management Fees 4.7 2.3 2.1 67.3 9.6 IPO Expenses 0.0 0.0 1.2 6.0 2.6 Gain on Extinguishment of Debt 0.0 (10.5) 0.0 0.0 0.0 Tax Effect of Adjustments 8.0 1.8 (12.9) (22.8) 3.6 Goodwill & Other Impairment 46.7 0.0 0.0 0.0 0.0 Adjusted Net (loss) Income ($167.9) ($81.7) $57.5 $ 555.6 $ 1,486.1
NON-GAAP FINANCIAL RECONCILIATION 15 ($MM) 2Q ’22 1Q ’22 4Q’21 3Q’21 2Q’21 Tangible Net Worth Total Equity $1,213.9 $1,511.2 $1,629.4 $1,658.2 $1,568.8 Less: Goodwill 0.0 (40.7) (40.7) (40.7) (40.7) Less: Intangibles 0.0 (1.5) (1.6) (1.7) (1.8) Tangible Net Worth $1,213.9 $1,469.0 $1,587.0 $1,615.7 $1.526.3 Non-Funding Debt Total Debt, net $2,427.1 $1,947.6 $1,628.2 $1,408.8 $1,473.3 Less: Securitization Debt, net 0.0 (421.3) 0.0 0.0 0.0 Non-Funding Debt $2,427.1 $1,526.3 $1,628.2 $1,408.8 $1,473.3