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 (or date of earliest event reported): March 8, 2023
_____________________
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) |
6561 Irvine Center Drive
Irvine, California 92618
(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
Item 2.02 Results of Operations and Financial Condition.
On March 8, 2023, loanDepot, Inc. (the "Company") issued a press release announcing its results for the fourth quarter and year ending December 31, 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 March 8, 2023, 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 fourth quarter and year ending December 31, 2022 at 5:00 p.m. Eastern time on March 8, 2023.
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 Number | Description |
|---|---|
| 99.1 | loanDepot, Inc. press release dated March 8, 2023 |
| 99.2 | loanDepot, Inc. Q4 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: March 8, 2023
Document
loanDepot announces year-end and fourth quarter 2022 financial results
Company exits 2022 with significantly lower expense base driven by strong execution of Vision 2025 Plan.
Investments in technology and expanded product offerings position the Company for future success.
Fourth quarter 2022 highlights:
•Quarterly revenue decrease of $104.5 million driven primarily by lower market activity due to increased interest rates and seasonal slowdown in purchase volume.
•Reduced total expenses by $91.4 million, or 21%, from third quarter primarily driven by lower staffing levels, marketing spend and Vision 2025 related costs.
•Net loss increased 15% to $157.8 million in fourth quarter from third quarter driven by lower revenues partially offset by aggressive expense reductions.
•Company exited the year with cash balance of $864.0 million.
Full-year 2022 highlights:
•Total revenue declined from $3.7 billion during 2021 to $1.3 billion during 2022 driven primarily by lower market volumes and exit of wholesale channel.
•Exceeded Vision 2025 expense reduction target by reducing non-volume related expenses by $129.8 million from the second quarter to the fourth quarter, an annualized reduction of $519.3 million.
•Reduced total expenses by $1.1 billion, or 36% from 2021 to 2022; excluding goodwill impairment of $40.7 million and Vision 2025 related expenses of $60.5 million incurred during 2022; total expenses decreased $1.2 billion, or 40%.
•Launched our HELOC solution providing customers fast, easy way to harness their home equity to improve overall financial wellness.
•Completed transition of mortgage servicing portfolio to in-house platform, improving customer experience, increasing cross-sell opportunities, and benefiting from the operating leverage.
IRVINE, Calif., March 8, 2023 - loanDepot, Inc. (NYSE: LDI), (together with its subsidiaries, “loanDepot” or the “Company”), today announced results for the year-end and fourth quarter ended December 31, 2022.
“2022 was a year of dramatic volatility and extreme challenge for the mortgage and broader housing markets,” said President and Chief Executive Officer Frank Martell. “Virtually no part of the housing ecosystem was left unaffected as participants in the housing market grappled with substantial and rapid increases in the cost of home loans, the cumulative impact of significant home price appreciation over the past four to five years driven by structural supply and demand imbalances, as well as the depressive impact of high inflation on available household incomes.
“To address the short- to medium-term impacts of lower market activity, as well as to position loanDepot to capitalize on longer-term opportunities inherent in shifts in homebuyer demographics, technology enhancements and process optimization, we announced the launch of our Vision 2025 strategic plan in July 2022.
“Vision 2025 focuses on creating long-term shareholder value by creating an innovative, purpose-driven, and durable mortgage origination footprint focused on first-time homebuyers and serving diverse communities. We believe that a laser focus around putting first-time buyers into homes positions loanDepot to be a customer’s
trusted resource when making key homeownership and other financial decisions. We also continued to centralize our operational functions and unified the leadership of our origination channels to sharpen our focus and accelerate the implementation of Vision 2025.
“In addition to centralizing and simplifying our organization, we also focused on growing revenue generating opportunities, including the successful launch of our HELOC solution in the fourth quarter of 2022 as well as the formation of our tenth joint venture. To support the goals of Vision 2025, loanDepot also made important and significant investments in its quality, delivery, compliance and risk management capabilities over the course of 2022.
“In response to unprecedented market conditions, loanDepot had to reset it’s cost structure during 2022. When we announced Vision 2025, we established a goal of reducing our expenses by an annualized $375 to $400 million. During the year, we exceeded the expense reduction goal by more than 25%.
“The size of our targeted reductions and the bias for speed of implementation reflect just how unique and sizable this market downturn has been. We believe that the mortgage market will remain challenged in 2023 and we must remain vigilant and respond quickly to unfavorable changes in the market. We plan to continue to reduce our costs and optimize our operating model. With a sizable cash balance, we believe we are positioned to continue to invest in our people and platforms, as we benefit from ongoing industry consolidation.”
Fourth Quarter Highlights:
Financial Summary
| Three Months Ended | Year Ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands except per share data) <br>(Unaudited) | Dec 31,<br>2022 | Sep 30,<br>2022 | Dec 31,<br>2021 | Dec 31,<br>2022 | Dec 31,2021 | |||||||||
| Rate lock volume | $ | 6,933,099 | $ | 12,032,026 | $ | 34,761,321 | $ | 68,553,340 | ||||||
| Pull through weighted lock volume(1) | 4,196,894 | 8,755,082 | 23,025,038 | 45,164,915 | 116,628,597 | |||||||||
| Loan origination volume | 6,382,743 | 9,849,927 | 29,041,625 | 53,778,456 | 137,000,747 | |||||||||
| Gain on sale margin(2) | 1.45 | % | 1.80 | % | 2.23 | % | 1.63 | % | 2.61 | % | ||||
| Pull through weighted gain on sale margin(3) | 2.21 | % | 2.03 | % | 2.81 | % | 1.94 | % | 3.07 | % | ||||
| Financial Results | ||||||||||||||
| Total revenue | $ | 169,655 | $ | 274,192 | $ | 705,026 | $ | 1,255,796 | ||||||
| Total expense | 343,735 | 435,125 | 694,133 | 1,945,773 | 3,058,187 | |||||||||
| Net (loss) income | (157,762) | (137,482) | 14,732 | (610,385) | 623,146 | |||||||||
| Diluted (loss) earnings per share | $ | (0.46) | $ | (0.37) | $ | 0.05 | $ | (1.75) | 0.87 | |||||
| Non-GAAP Financial Measures(4) | ||||||||||||||
| Adjusted total revenue | $ | 188,501 | $ | 249,663 | $ | 723,642 | $ | 1,216,041 | ||||||
| Adjusted net (loss) income | (110,703) | (116,846) | 28,907 | (475,850) | 555,576 | |||||||||
| Adjusted (LBITDA) EBITDA | (92,013) | (114,133) | 63,747 | (472,064) | 869,368 | |||||||||
| Adjusted diluted (loss) earnings per share(5) | N/A | N/A | 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.
Vision 2025
Our 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 have achieved the following since the announcement of Vision 2025:
•Rolled out our HELOC solution initially in five states and are currently offering the product in 38 states, with plans to include more. This solution gives homeowners a powerful option for accessing the equity they have built in a fast, easy and efficient way without refinancing their low-cost first mortgage. Only a small number of HELOC loans were funded before quarter end so their contribution to revenue was not material to our results.
•Recently completed our two-year project to transition our mortgage servicing portfolio from our third-party sub-servicer to our in-house platform. Eliminating sub-servicing costs further reduces our third-party
vendor spending, which allows us to benefit from the operating leverage of this highly scalable business. Transitioning servicing in-house also resulted in a significantly improved customer experience.
•Achieved quarterly non-volume related expense reductions of $129.8 million since announcing Vision 2025, an annualized impact of $519.3 million, surpassing our Vision 2025 goal of $375-$400 million in savings.
•Quarterly volume related expenses, consisting of commissions and direct origination expenses, decreased by $87.1 million since the second quarter.
•Incurred expenses related to the Vision 2025 plan during the quarter of $11.9 million, including $6.3 million of real estate exit costs, $3.2 million of personnel related expenses, and $2.5 million of professional services fees. Vision 2025 expenses totaled $37.0 million in the third quarter and totaled $101.3 million, including goodwill impairment, since announcing the plan in the second quarter.
Operational Results
•Pull through weighted lock volume of $4.2 billion for the three months ended December 31, 2022, a decrease of $4.6 billion or 52% from the third quarter of 2022, resulting in quarterly total revenue of $169.7 million, a decrease of $104.5 million, or 38%, over the same period. The decrease in volume was related primarily to the seasonal slowdown in home buying activity and higher interest rates reducing borrower demand.
•Loan origination volume for the fourth quarter of 2022 was $6.4 billion, a decrease of $3.5 billion or 35% from the third quarter of 2022.
•Purchase volume increased to 76% of total loans during the fourth quarter, up from 70% of total loans during the third quarter of 2022 and 34% of total loans during the fourth quarter of 2021, reflecting our progress in executing a purpose-driven lending strategy of assisting our customers in buying a home.
•For the twelve months ended December 31, 2022, our preliminary organic refinance consumer direct recapture rate1 remained strong at 71%. 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 fourth quarter of 2022 of $157.8 million as compared to net loss of $137.5 million in the third quarter of 2022. Net loss increased quarter over quarter primarily due to lower revenues offset somewhat by a decrease in total expenses.
•Adjusted LBITDA for the fourth quarter of 2022 was $92.0 million as compared to adjusted LBITDA of $114.1 million for the third 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.
Outlook for the first quarter of 2023
•Origination volume of between $3 billion and $5 billion.
•Pull-through weighted rate lock volume of between $4 billion and $6 billion.
•Pull-through weighted gain on sale margin of between 180 basis points and 220 basis points.
1 We define organic refinance consumer direct recapture rate as the total unpaid principal balance (“UPB”) of loans in our servicing portfolio that are paid in full for purposes of refinancing the loan on the same property, with the Company acting as lender on both the existing and new loan, divided by the UPB of all loans in our servicing portfolio that paid in full for the purpose of refinancing the loan on the same property. The recapture rate is finalized following the publication date of this release when external data becomes available.
Servicing
| Three Months Ended | Year Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Servicing Revenue Data:<br><br>($ in thousands)<br><br>(Unaudited) | Dec 31,<br>2022 | Sep 30,<br>2022 | Dec 31,<br>2021 | Dec 31,<br>2022 | Dec 31,<br>2021 | |||||
| Due to changes in valuation inputs or assumptions | $ | (10,094) | $ | 75,366 | $ | (29,896) | $ | 363,064 | $ | 68,399 |
| Due to collection/realization of cash flows | (37,427) | (49,519) | (98,516) | (230,449) | (421,624) | |||||
| Realized gains (losses) on sales of servicing rights | 2,285 | (13,489) | (1,536) | (3,663) | (9,759) | |||||
| Net (loss) gain from derivatives hedging servicing rights | (8,752) | (50,837) | 11,280 | (323,309) | (82,878) | |||||
| Changes in fair value of servicing rights, net | $ | (53,988) | $ | (38,479) | $ | (118,668) | $ | (194,357) | $ | (445,862) |
| Servicing fee income | $ | 107,221 | $ | 113,544 | $ | 113,942 | $ | 449,150 | $ | 393,680 |
| Three Months Ended | Year Ended | |||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Servicing Rights, at Fair Value:<br><br>($ in thousands)<br><br>(Unaudited) | Dec 31,<br>2022 | Sep 30,<br>2022 | Dec 31,<br>2021 | Dec 31,<br>2022 | Dec 31,<br>2021 | |||||
| Balance at beginning of period | $ | 2,013,269 | $ | 2,204,593 | $ | 1,836,694 | $ | 1,999,402 | $ | 1,124,302 |
| Additions | 73,256 | 124,244 | 307,712 | 647,716 | 1,610,596 | |||||
| Sales proceeds, net | (13,868) | (341,415) | (16,592) | (754,597) | (382,271) | |||||
| Changes in fair value: | ||||||||||
| Due to changes in valuation inputs or assumptions | (10,094) | 75,366 | (29,896) | 363,064 | 68,399 | |||||
| Due to collection/realization of cash flows | (37,427) | (49,519) | (98,516) | (230,449) | (421,624) | |||||
| Balance at end of period (1) | $ | 2,025,136 | $ | 2,013,269 | $ | 1,999,402 | $ | 2,025,136 | $ | 1,999,402 |
(1)Balances are net of $12.3 million, $16.8 million, and $7.3 million of servicing rights liability as of December 31, 2022, September 30, 2022, and December 31, 2021, respectively.
| % Change | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Servicing Portfolio Data:<br><br>($ in thousands)<br><br>(Unaudited) | Dec 31,<br>2022 | Sep 30,<br>2022 | Dec 31,<br>2021 | Dec-22<br>vs<br>Sep-22 | Dec-22<br>vs<br>Dec-21 | ||||||||
| Servicing portfolio (unpaid principal balance) | $ | 141,170,931 | $ | 139,709,633 | $ | 162,112,965 | 1.0 | % | (12.9) | % | |||
| Total servicing portfolio (units) | 471,022 | 463,471 | 524,992 | 1.6 | (10.3) | ||||||||
| 60+ days delinquent ($) | $ | 1,421,722 | $ | 1,365,774 | $ | 1,510,261 | 4.1 | (5.9) | |||||
| 60+ days delinquent (%) | 1.0 | % | 1.0 | % | 0.9 | % | |||||||
| Servicing rights, net to UPB | 1.4 | % | 1.4 | % | 1.2 | % |
As of December 31, 2022, approximately $257.0 million, or 0.2%, of our servicing portfolio was in active forbearance. This represents a decrease from $319.5 million, or 0.2%, as of September 30, 2022.
Balance Sheet Highlights
| % Change | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands)<br><br>(Unaudited) | Dec 31,<br>2022 | Sep 30,<br>2022 | Dec 31,<br>2021 | Dec-22<br>vs<br>Sep-22 | Dec-22<br>vs<br>Dec-21 | |||||
| Cash and cash equivalents | $ | 863,956 | $ | 1,143,948 | $ | 419,571 | (24.5) | % | 105.9 | % |
| Loans held for sale, at fair value | 2,373,427 | 2,692,820 | 8,136,817 | (11.9) | (70.8) | |||||
| Servicing rights, at fair value | 2,037,447 | 2,030,026 | 2,006,712 | 0.4 | 1.5 | |||||
| Total assets | 6,609,934 | 7,378,536 | 11,812,313 | (10.4) | (44.0) | |||||
| Warehouse and other lines of credit | 2,146,602 | 2,529,436 | 7,457,199 | (15.1) | (71.2) | |||||
| Total liabilities | 5,688,461 | 6,300,039 | 10,182,953 | (9.7) | (44.1) | |||||
| Total equity | 921,473 | 1,078,497 | 1,629,360 | (14.6) | (43.4) |
The decrease in cash and cash equivalents from September 30, 2022, was due to a reduction in our cash collateral requirements related to our hedges and our decision to fund more loans available for sale with cash instead of warehouse line advances. A decrease in loans held for sale at December 31, 2022, resulted in a corresponding decrease in the balance on our warehouse lines of credit. Total funding capacity with our lending partners decreased to $4.1 billion at December 31, 2022 from $5.7 billion at September 30, 2022. The decrease of $1.7 billion was primarily due to our decision to reduce our borrowing capacity, reflecting lower volume expectations. Available borrowing capacity was $1.8 billion at December 31, 2022.
Consolidated Statements of Operations
| ($ in thousands except per share data)<br>(Unaudited) | Three Months Ended | Year Ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Dec 31,<br>2022 | Sep 30,<br>2022 | Dec 31,<br>2021 | Dec 31,<br>2022 | Dec 31,<br>2021 | ||||||
| REVENUES: | ||||||||||
| Interest income | $ | 33,316 | $ | 51,202 | $ | 74,854 | $ | 200,204 | $ | 262,478 |
| Interest expense | (29,676) | (41,408) | (53,327) | (150,897) | (218,457) | |||||
| Net interest income | 3,640 | 9,794 | 21,527 | 49,307 | 44,021 | |||||
| Gain on origination and sale of loans, net | 82,547 | 156,300 | 566,022 | 748,540 | 3,213,351 | |||||
| Origination income, net | 10,287 | 21,268 | 81,433 | 129,736 | 362,257 | |||||
| Servicing fee income | 107,221 | 113,544 | 113,942 | 449,150 | 393,680 | |||||
| Change in fair value of servicing rights, net | (53,988) | (38,479) | (118,668) | (194,357) | (445,862) | |||||
| Other income | 19,948 | 11,765 | 40,770 | 73,420 | 157,257 | |||||
| Total net revenues | 169,655 | 274,192 | 705,026 | 1,255,796 | 3,724,704 | |||||
| EXPENSES: | ||||||||||
| Personnel expense | 165,626 | 218,819 | 406,739 | 1,027,008 | 1,929,752 | |||||
| Marketing and advertising expense | 31,539 | 42,940 | 111,860 | 236,828 | 467,590 | |||||
| Direct origination expense | 14,239 | 19,463 | 46,712 | 120,854 | 193,264 | |||||
| General and administrative expense | 68,590 | 83,412 | 64,980 | 265,680 | 214,965 | |||||
| Occupancy expense | 6,633 | 9,889 | 9,487 | 35,306 | 38,443 | |||||
| Depreciation and amortization | 10,085 | 10,243 | 9,715 | 42,195 | 35,541 | |||||
| Servicing expense | 6,633 | 14,221 | 22,337 | 53,106 | 99,068 | |||||
| Other interest expense | 40,390 | 36,138 | 22,303 | 124,060 | 79,564 | |||||
| Goodwill impairment | — | — | — | 40,736 | — | |||||
| Total expenses | 343,735 | 435,125 | 694,133 | 1,945,773 | 3,058,187 | |||||
| (Loss) income before income taxes | (174,080) | (160,933) | 10,893 | (689,977) | 666,517 | |||||
| Income tax (benefit) expense | (16,318) | (23,451) | (3,839) | (79,592) | 43,371 | |||||
| Net (loss) income | (157,762) | (137,482) | 14,732 | (610,385) | 623,146 | |||||
| Net (loss) income attributable to noncontrolling interests | (80,492) | (77,401) | 6,119 | (337,365) | 509,622 | |||||
| Net (loss) income attributable to loanDepot, Inc. | $ | (77,270) | $ | (60,081) | $ | 8,613 | $ | (273,020) | $ | 113,524 |
| Basic (loss) earnings per share | $ | (0.46) | $ | (0.37) | $ | 0.06 | $ | (1.75) | $ | 0.87 |
| Diluted (loss) earnings per share | $ | (0.46) | $ | (0.37) | $ | 0.05 | $ | (1.75) | $ | 0.87 |
Consolidated Balance Sheets
| ($ in thousands) | Dec 31,<br>2022 | Sep 30,<br>2022 | Dec 31,<br>2021 | |||
|---|---|---|---|---|---|---|
| (Unaudited) | ||||||
| ASSETS | ||||||
| Cash and cash equivalents | $ | 863,956 | $ | 1,143,948 | $ | 419,571 |
| Restricted cash | 116,545 | 160,926 | 201,025 | |||
| Accounts receivable, net | 145,279 | 108,253 | 56,183 | |||
| Loans held for sale, at fair value | 2,373,427 | 2,692,820 | 8,136,817 | |||
| Derivative assets, at fair value | 39,411 | 316,647 | 194,665 | |||
| Servicing rights, at fair value | 2,037,447 | 2,030,026 | 2,006,712 | |||
| Trading securities, at fair value | 94,243 | 97,210 | 72,874 | |||
| Property and equipment, net | 92,889 | 98,944 | 104,262 | |||
| Operating lease right-of-use asset | 35,668 | 39,480 | 55,646 | |||
| Prepaid expenses and other assets | 155,982 | 115,452 | 140,315 | |||
| Loans eligible for repurchase | 634,677 | 554,892 | 363,373 | |||
| Investments in joint ventures | 20,410 | 19,938 | 18,553 | |||
| Goodwill and other intangible assets, net | — | — | 42,317 | |||
| Total assets | $ | 6,609,934 | $ | 7,378,536 | $ | 11,812,313 |
| LIABILITIES AND EQUITY | ||||||
| LIABILITIES: | ||||||
| Warehouse and other lines of credit | $ | 2,146,602 | $ | 2,529,436 | $ | 7,457,199 |
| Accounts payable and accrued expenses | 488,696 | 716,048 | 624,444 | |||
| Derivative liabilities, at fair value | 67,492 | 149,837 | 37,797 | |||
| Liability for loans eligible for repurchase | 634,677 | 554,892 | 363,373 | |||
| Operating lease liability | 61,675 | 66,122 | 71,932 | |||
| Debt obligations, net | 2,289,319 | 2,283,704 | 1,628,208 | |||
| Total liabilities | 5,688,461 | 6,300,039 | 10,182,953 | |||
| EQUITY: | ||||||
| Total equity | 921,473 | 1,078,497 | 1,629,360 | |||
| Total liabilities and equity | $ | 6,609,934 | $ | 7,378,536 | $ | 11,812,313 |
Loan Origination and Sales Data
| ( in thousands)(Unaudited) | Three Months Ended | Year Ended | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Sep 30,<br>2022 | Dec 31,<br>2021 | Dec 31,<br>2022 | Dec 31,<br>2021 | ||||||
| Loan origination volume by type: | |||||||||
| Conventional conforming | 3,823,857 | 6,002,765 | 21,405,365 | 35,931,625 | 108,129,659 | ||||
| FHA/VA/A | 2,104,409 | 3,038,467 | 4,287,947 | 12,769,696 | 18,385,497 | ||||
| Jumbo | 242,785 | 571,509 | 2,962,898 | 4,197,841 | 9,072,305 | ||||
| Other | 211,692 | 237,186 | 385,415 | 879,294 | 1,413,286 | ||||
| Total | 6,382,743 | 9,849,927 | 29,041,625 | 53,778,456 | 137,000,747 | ||||
| Loan origination volume by purpose: | |||||||||
| Purchase | 4,864,187 | 6,938,408 | 10,013,662 | 29,333,525 | 39,321,538 | ||||
| Refinance - cash out | 1,432,195 | 2,682,330 | 6,412,079 | 19,613,365 | 38,305,625 | ||||
| Refinance - rate/term | 86,361 | 229,189 | 12,615,884 | 4,831,566 | 59,373,584 | ||||
| Total | 6,382,743 | 9,849,927 | 29,041,625 | 53,778,456 | 137,000,747 | ||||
| Loans sold: | |||||||||
| Servicing retained | 4,165,552 | 6,604,979 | 22,996,748 | 38,461,896 | 117,934,385 | ||||
| Servicing released | 2,634,855 | 5,132,350 | 6,673,702 | 20,855,416 | 18,148,290 | ||||
| Total | 6,800,407 | 11,737,329 | 29,670,450 | 59,317,312 | 136,082,675 | ||||
| Loan origination margins: | |||||||||
| Gain on sale margin | 1.45 | 1.80 | 2.23 | 1.63 | 2.61 |
All values are in US Dollars.
Fourth 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 April 7, 2023.
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 other 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 and disposal of fixed assets, 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 | Year Ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Sep 30,<br>2022 | Dec 31,<br>2021 | Dec 31,<br>2022 | Dec 31,<br>2021 | |||||||||||
| Total net revenue | $ | 169,655 | $ | 274,192 | $ | 705,026 | $ | 1,255,796 | $ | 3,724,704 | ||||
| Change in fair value of servicing rights, net of hedging gains and losses(1) | 18,846 | (24,529) | 18,616 | (39,755) | 14,478 | |||||||||
| Adjusted total revenue | $ | 188,501 | $ | 249,663 | $ | 723,642 | $ | 1,216,041 | $ | 3,739,182 |
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 | Year Ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Sep 30,<br>2022 | Dec 31,<br>2021 | Dec 31,<br>2022 | Dec 31,<br>2021 | |||||||||||
| Net (loss) income attributable to loanDepot, Inc. | $ | (77,270) | $ | (60,081) | $ | 8,613 | $ | (273,020) | $ | 113,524 | ||||
| Net (loss) income from the pro forma conversion of Class C common shares to Class A common shares (1) | (80,492) | (77,401) | 6,119 | (337,365) | 509,622 | |||||||||
| Net (loss) income | (157,762) | (137,482) | 14,732 | (610,385) | 623,146 | |||||||||
| Adjustments to the provision for income taxes(2) | 25,339 | 20,124 | (1,512) | 92,337 | (132,502) | |||||||||
| Tax-effected net (loss) income | (132,423) | (117,358) | 13,220 | (518,048) | 490,644 | |||||||||
| Change in fair value of servicing rights, net of hedging gains and losses(3) | 18,846 | (24,529) | 18,616 | (39,755) | 14,478 | |||||||||
| Change in fair value - contingent consideration | — | — | — | — | (77) | |||||||||
| Stock compensation expense and management fees | 8,790 | 4,773 | 2,220 | 20,583 | 67,304 | |||||||||
| IPO expenses | — | — | — | — | 6,041 | |||||||||
| Gain on extinguishment of debt | — | — | — | (10,528) | — | |||||||||
| Loss on disposal of fixed assets | 1,568 | 11,026 | — | 12,594 | — | |||||||||
| Goodwill impairment | — | — | — | 40,736 | — | |||||||||
| Other impairment | 2,388 | 9,149 | — | 17,500 | — | |||||||||
| Tax effect of adjustments(4) | (9,872) | 93 | (5,149) | 1,068 | (22,814) | |||||||||
| Adjusted net (loss) income | $ | (110,703) | $ | (116,846) | $ | 28,907 | $ | (475,850) | $ | 555,576 |
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 | Year Ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Dec 31,<br>2022 | Sep 30,<br>2022 | Dec 31,<br>2021 | Dec 31,<br>2022 | Dec 31,<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) | 10.48 | % | 5.00 | % | 3.71 | % | 6.37 | % | 5.00 | % | |||||
| Effective income tax rate | 31.48 | % | 26.00 | % | 24.71 | % | 27.37 | % | 26.00 | % |
(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 using the aforementioned effective income tax rates, excluding certain discrete tax items.
| Reconciliation of Adjusted Diluted Weighted Average Shares Outstanding to Diluted Weighted Average Shares Outstanding( in thousands except per share data)(Unaudited) | Three Months Ended | Year Ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Sep 30,<br>2022 | Dec 31,<br>2021 | Dec 31,<br>2022 | Dec 31,<br>2021 | |||||||||||
| Net (loss) income attributable to loanDepot, Inc. | $ | (77,270) | $ | (60,081) | $ | 8,613 | $ | (273,020) | $ | 113,524 | ||||
| Adjusted net (loss) income | (110,703) | (116,846) | 28,907 | (475,850) | 555,576 | |||||||||
| Share Data: | ||||||||||||||
| Diluted weighted average shares of Class A and Class D common stock outstanding | 168,617,732 | 162,464,369 | 135,187,530 | 156,030,350 | 129,998,894 | |||||||||
| Assumed pro forma conversion of weighted average Class C shares to Class A common stock (1) | 150,278,656 | 156,677,534 | 185,521,379 | 163,541,101 | 192,465,222 | |||||||||
| Adjusted diluted weighted average shares outstanding | 318,896,388 | 319,141,903 | 320,708,909 | 319,571,451 | 322,464,116 | |||||||||
| Diluted (loss) earnings per share | $ | (0.46) | $ | (0.37) | $ | 0.05 | $ | (1.75) | $ | 0.87 | ||||
| Adjusted diluted (loss) earnings per share(2) | N/A | N/A | 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 the 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 | Year Ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Sep 30,<br>2022 | Dec 31,<br>2021 | Dec 31,<br>2022 | Dec 31,<br>2021 | |||||||||||
| Net (Loss) Income | $ | (157,762) | $ | (137,482) | $ | 14,732 | $ | (610,385) | $ | 623,146 | ||||
| Interest expense - non-funding debt (1) | 40,390 | 36,138 | 22,303 | 124,060 | 79,564 | |||||||||
| Income tax (benefit) expense | (16,318) | (23,451) | (3,839) | (79,592) | 43,371 | |||||||||
| Depreciation and amortization | 10,085 | 10,243 | 9,715 | 42,195 | 35,541 | |||||||||
| Change in fair value of servicing rights, net ofhedging gains and losses(2) | 18,846 | (24,529) | 18,616 | (39,755) | 14,478 | |||||||||
| Change in fair value - contingent consideration | — | — | — | — | (77) | |||||||||
| Stock compensation expense and management fees | 8,790 | 4,773 | 2,220 | 20,583 | 67,304 | |||||||||
| IPO expense | — | — | — | — | 6,041 | |||||||||
| Loss on disposal of fixed assets | 1,568 | 11,026 | — | 12,594 | — | |||||||||
| Goodwill impairment | — | — | — | 40,736 | — | |||||||||
| Other impairment | 2,388 | 9,149 | — | 17,500 | — | |||||||||
| Adjusted (LBITDA) EBITDA | $ | (92,013) | $ | (114,133) | $ | 63,747 | $ | (472,064) | $ | 869,368 |
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, our HELOC product, 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 as well as any subsequent filings with the Securities and Exchange Commission, 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 one of the nation's largest non-bank retail mortgage lenders, 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
a4q22investorpresentatio
4Q 2022 INVESTOR PRESENTATION March 8, 2023
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, our HELOC, 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 as well as any subsequent filings with the Securities and Exchange Commission, 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 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 other 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 and disposal of fixed assets, 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. 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 FOURTH QUARTER FACT SHEET Financial Operational • Originations: $6.4 billion in funded volume, near the high-end of fourth quarter 2022 guidance • Total Revenue: $169.7 million on $4.2 billion of pull-through weighted lock volume • Total Expenses: Decreased by $91.4 million, or 21% from the third quarter of 2022, primarily due to lower personnel, marketing and G&A expenses • Liquidity: Unrestricted cash and equivalents of $864 million and undrawn borrowing capacity totaling $29 million at year-end • Servicing: Increased UPB to $141.2 billion at end of quarter, compared to $139.7 billion in Q3 ’22 • Continued progress towards our Vision 2025 strategy to address current and anticipated market conditions and position company for long-term value creation o Headcount: Reduced headcount to approx. 5,200 by end of year from approx. 11,300 at year-end 2021 o Successful roll-out of proprietary, HELOC product • Purchase Mix: 76% of total Originations • Organic Refinance Consumer Direct Recapture Rate: Remained Strong at 65% for the quarter
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 • Target cost savings of approx. $375 - $400 million of annualized savings for second half of 2022, through headcount reduction, attrition, business process optimization, reduced marketing and third-party spending, and real estate consolidation • Actual non-volume related expenses decreased by an annualized $519 million • Based on these savings, the Company is positioning itself for a market size totaling $1.5 trillion • Launch of home equity line of credit (HELOC) 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 • Streamline organizational structure to better position the company for the rapidly evolving mortgage market and enhance quality and effectiveness • Increase share of lending for purchase transactions, while achieving best in class quality, increasing automation, and achieving operating leverage 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 Frank Martell President and CEO Jeff Walsh President, LDI Mortgage Zeenat Sidi President, LDI Digital Products & Services Patrick Flanagan Chief Financial Officer Dan Binowitz Managing Director Operations & Servicing Jeff DerGurahian Chief Investment Officer and Head Economist TJ Freeborn Chief Administrative Officer George Brady Chief Information Officer Nicole Carrillo Chief Accounting Officer Town & Country Credit Corp. 5 Gregg Smallwood Chief Legal Officer, Corporate Secretary Joe Grassi Chief Risk Officer Kevin Tackaberry Chief Human Resources Officer
$35 $33 $45 $101 $137 $54 2.0% 2.0% 2.0% 2.5% 3.4% 2.4% – 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 2022 loanDepot Historical Mortgage Origination Volume SCALED ORIGINATOR DELIVERING CUSTOMERS A COMPLETE SOLUTION Inception to FY-22 Origination CAGR: 34%(1) loanDepot Originations loanDepot Market Share $1.7 $2.3 $4.1 Total market volume ($ trillion) $4.0 $2.2 (1) CAGR includes annualized volume for 2010 Source: Historical market share based on MBA industry volume as of 2/21/2023 and historical loanDepot origination volume ($ 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® 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 • Additions to executive team to position company for next era • Launch of HELOC product $1.8 6 Title Insurance Escrow Services Homeowners Insurance First Mortgage HELOC
ORIGINATION GROWTH RELATIVE TO INDUSTRY (1) MBA as of 2/21/2023 Note: Pull through weighted rate lock volume is the unpaid principal balance of loans subject to interest rate lock commitments, net of a pull-through factor for the loan funding probability 7 2017- 2022 Origination CAGR 9% 5%Industry(1) Purchase Mix % : 26% 31% 26%29% ($ in billions) Total Market Share (%) 2.1% 2.4% 2.8%2.5% 3.8% 19% 3.3% 30% 34% 3.4% 3.3% 34% 37% 3.1% 59% 2.4% 2.2% 70% $18 $25 $36 $36 $33 $30 $30 $23 $20 $12 $9 $4 $15 $21 $27 $37 $41 $34 $32 $29 $22 $16 $10 $6 270 447 372 346 369 264 299 281 213 150 203 221 - 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 Q3 2022 Q4 2022 Pull-Through Weighted (PTW) Lock Volume Origination Volume PTW GOS Margin, bps 1.6% 76%
128 129 96 78 72 125 79 78 73 74 68 66 61 58 41 26 34 44 22 25 21 12 14 22 11 15 9 8 7 10 53 64 48 29 27 94 354 bps 369 bps 288 bps 228 bps 223 bps 362 bps 2017 2018 2019 2020 2021 2022 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 234 bps (128) bps FY-22 Expenses to Note: • $40.7 million of goodwill impairment • $15.4 million of personnel- related payments • $33.0 million of real estate exit costs and other asset impairment charges • $12.2 million of consulting and other professional expenses related to Vision 2025 • Total FY-22 of $101.3 million (19 bps)
ACHIEVED VISION 2025 EXPENSE SAVINGS TARGET 9 ($MM) 4Q ’22 3Q ‘22 2Q ’22 4Q vs. 2Q Notes Revenue $169.7 $274.2 $308.6 ($139.0) Expenses Personnel $165.6 $218.8 $296.6 ($130.9) 1,2 Marketing and Advertising 31.5 42.9 60.8 (29.3) 3 Direct Origination Expense 14.2 19.5 34.0 (19.8) 4 Other General & Administrative Expense 68.6 83.4 63.9 4.7 Occupancy 6.6 9.9 9.4 (2.8) Depreciation & Amortization 10.1 10.2 11.3 (1.2) Servicing Expense 6.6 14.2 10.7 (4.1) Other Interest Expense 40.4 36.1 33.1 7.3 Goodwill & Other Impairment - - 40.7 (40.7) Total Expenses $343.7 $435.1 $560.7 ($216.9) (Loss) Income Before Taxes ($174.1) ($160.9) ($252.0) $77.9 Vision 2025 Related Expenses Personnel Related 3.2 8.6 3.5 ($0.3) Vision 2025 Related Professional Services Fees 2.5 7.0 2.7 (0.2) Lease & and Other Asset Impairment 6.3 20.8 6.0 0.3 Goodwill Impairment 0.0 0.0 40.7 (40.7) Total Vision 2025 Expenses $11.9 $36.4 $54.6 ($43.5) Notes: Non-Volume Related: 1. Approximately $63.6 million reduction due to headcount decreasing from 8,500 to 5,200 between Q2 and Q4 3. Marketing reduction resulting from smaller mortgage market, seasonality and fewer customer conversions Total non-volume related expenses - $129.8 million, or $519.3 million annualized Volume Related: 2. Approximately $67.3 million reduction in commissions 4. Reduction in direct origination expenses due to lower volume Total volume related expenses - $87.1 million
HISTORICAL SERVICING PORTFOLIO TREND 10 ($ in billions) Retention %(2) : Recapture %(1) : (1) 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. (3) At time of origination. 78% 70% Total Serv Exp$ to Avg. UPB $, bps: 2.3 75% 72% 2.4 58% 72% 2.0 56% 69% 2.4 $162 $153 $155 $140 $141 123 135 142 144 143 - 20 40 60 80 100 120 140 $- $20 $40 $60 $80 $100 $120 $140 $160 $180 Q4'21 Q1 '22 Q2 '22 Q3 '22 Q4 '22 UPB $ MSR FV, bps 61% 65% 2.0 Portfolio @ 12/31/22 W.A. Coupon 3.13% W.A. FICO (3) 737 W.A. LTV 71% W.A. Life (Mths) 18.5 DQ Rate 60D+ 1.0% 90D+ 0.8% Composition GSE 66.5% Gov’t/EBO 26.3% Other 7.2%
$38 $822 $29 $7 $29 $420 $554 $955 $1,144 $864 $458 $1,376 $984 $1,151 $893 Q4 '21 Q1 '22 Q2 '22 Q3 '22 Q4 '22 Unused Lines Unrestricted Cash STRONG LIQUIDITY AND BALANCE SHEET Note: Please see Appendix for Non-GAAP Reconciliation 11 Liquidity Overview ($M) Non-Funding Debt / Tangible Net Worth 1.3x 1.4x 1.8x 1.9x 2.2x Q4 '21 Q1 '22 Q2 '22 Q3 '22 Q4 '22 MSR / Tangible Net Worth 1.0x 1.0x 2.0x 2.1x 2.5x Q4 '21 Q1 '22 Q2 '22 Q3 '22 Q4 '22 4% 13% 11% 16% 14% Liquidity / Total Assets
12 Q1 2023 OUTLOOK Metric Low High Pull-through Weighted Rate Lock Volume ($bn) $4.0 $6.0 Origination Volume ($bn) $3.0 $5.0 Pull-through Weighted GOS Margin, bps 180 220 Current Market Conditions • Higher interest rates adversely impacts home affordability • Increasing homeowner equity drives demand for cash-out refinance and HELOC 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 expectations Q1 2023 outlook reflects current interest rate environment, seasonality, and competitive pressures
APPENDIX: FINANCIALS
BALANCE SHEET & SERVICING PORTFOLIO HIGHLIGHTS 14 $ in MM except units and % 4Q’22 3Q’22 4Q’21 4Q’22 vs 3Q’22 4Q’22 vs 4Q’21 Cash and cash equivalents $864.0 $1,144.0 $419.6 (24.5%) 105.9% Loans held for sale, at fair value 2,373.4 2,692.8 8,136.8 (11.9%) (70.8%) Servicing rights, at fair value 2,037.4 2,030.0 2,006.7 0.4% 1.5% Total assets 6,609.9 7,378.5 11,812.3 (10.4%) (44.0%) Warehouse and other lines of credit 2,146.6 2,529.4 7,457.2 (15.1%) (71.2%) Total liabilities 5,688.5 6,300.0 10,183.0 (9.7%) (44.1%) Total equity 921.5 1,078.5 1,629.4 (14.6%) (43.4%) Servicing portfolio (unpaid principal balance) $141,170.9 $139,709.6 $162,113.0 1.0% (12.9%) Total servicing portfolio (units) 471,022 463,471 524,992 1.6% (10.3%) 60+ days delinquent ($) $1,421.7 $1,365.8 $1,510.3 4.1% (5.9%) 60+ days delinquent (%) 1.0% 1.0% 0.9% N/A N/A Servicing rights, net to UPB 1.4% 1.4% 1.2% N/A N/A
NON-GAAP FINANCIAL RECONCILIATION 15 ($MM) Q4 ‘22 3Q ‘22 4Q’21 FY22 FY21 Adjusted Revenue Total Net Revenue $169.7 $274.2 $705.0 $1,255.8 $ 3,724.7 Change in FV of Servicing Rights, Net of Hedge 18.9 (24.5) 18.3 (39.8) 14.5 Adjusted Total Revenue $188.5 $249.7 $723.6 $1,216.0 $ 3,739.2 Adjusted (LBITDA) EBITDA Net (Loss) Income ($157.8) ($137.5) $14.7 ($610.4) $ 623.1 Interest Expense - Non-Funding Debt 40.4 36.1 22.3 124.1 79.6 Income Tax (Benefit) Expense (16.3) (23.5) (3.8) (79.6) 43.4 Depreciation and Amortization 10.1 10.2 9.7 42.2 35.5 Change in FV of Servicing Rights, Net of Hedge 18.9 (24.5) 18.6 (39.8) 14.5 Change in FV of Contingent Consideration 0.0 0.0 0.0 0.0 (0.1) Stock Compensation Expense and Management Fees 8.8 4.8 2.2 20.3 67.3 IPO Expenses 0.0 0.0 0.0 0.0 6.0 Goodwill Impairment 0.0 0.0 0.0 40.7 0.0 Loss on Disposal of Fixed Assets & Other Impairments 4.0 20.2 0.0 30.1 0.0 Adjusted (LBITDA) EBITDA ($92.0) ($114.1) $63.7 ($472.1) $ 869.4
NON-GAAP FINANCIAL RECONCILIATION (CONT’D) 16 ($MM) Q4 ‘22 3Q ‘22 4Q’21 FY22 FY21 Adjusted Net (Loss) Income Net (Loss) Income ($157.8) ($137.5) $14.7 ($610.4) $ 623.1 Adjustments to Income Taxes 25.3 20.1 (1.5) 92.3 (132.5) Tax-Effected Net (Loss) Income ($132.4) ($117.4) $13.2 ($518.0) $ 490.6 Change in FV of Servicing Rights, Net of Hedge 18.8 (24.5) 18.6 (39.8) 14.5 Change in FV of Contingent Consideration 0.0 0.0 0.0 0.0 (0.1) Stock Compensation Expense and Management Fees 8.8 4.8 2.2 20.3 67.3 IPO Expenses 0.0 0.0 0.0 0.0 6.0 Loss on Disposal of Fixed Assets 1.6 11.0 0.0 12.6 0.0 Gain on Extinguishment of Debt 0.0 0.0 0.0 (10.5) 0.0 Goodwill & Other Impairment 2.4 9.1 0.0 58.2 0.0 Tax Effect of Adjustments (9.8) 0.1 (5.1) 1.1 (22.8) Adjusted Net (Loss) Income ($110.7) ($116.9) $28.9 ($476.0) $ 555.6
NON-GAAP FINANCIAL RECONCILIATION (CONT’D) 17 ($MM) 4Q ‘22 3Q ’22 2Q ’22 1Q ’22 4Q’21 Tangible Net Worth Total Equity $921.5 $1,078.5 $1,213.9 $1,511.2 $1,629.4 Less: Goodwill 0.0 0.0 0.0 (40.7) (40.7) Less: Intangibles 0.0 0.0 0.0 (1.5) (1.6) Tangible Net Worth $921.5 $1,078.5 $1,213.9 $1,469.0 $1,587.0 Non-Funding Debt Total Debt, net $2,289.3 $2,283.7 $2,427.1 $1,947.6 $1,628.2 Less: Securitization Debt, net 0.0 0.0 0.0 (421.3) 0.0 Non-Funding Debt $2,289.3 $2,283.7 $2,427.1 $1,526.3 $1,628.2