Overview of loanDepot’s Financial Performance

loanDepot is a customer-centric, technology-empowered residential mortgage platform that has significantly expanded its origination and servicing capabilities since its inception. The company’s primary sources of revenue are derived from the origination of conventional and government mortgage loans, servicing conventional and government mortgage loans, and providing ancillary services.

For the year ended December 31, 2024, loanDepot reported a net loss of $202.2 million, a decrease of $33.4 million compared to the net loss of $235.5 million in 2023. This improvement was primarily driven by an increase in total net revenues of $86.2 million, partially offset by a $50.8 million increase in total expenses.

Revenue and Profit Trends

loanDepot’s total net revenues increased by 8.9% to $1.06 billion in 2024, up from $974.0 million in 2023. This was primarily due to:

• A 22.4% increase in gain on origination and sale of loans, net to $642.1 million, driven by higher gain on sale margin and increased loan origination volumes.
• A 26.2% increase in origination income, net to $82.3 million, resulting from higher loan origination volume and an increase in HELOC fees.

These increases were partially offset by:

• A 2.3% decrease in servicing fee income to $481.7 million, due to a decline in the average unpaid principal balance (UPB) of the servicing portfolio.
• A 16.7% decrease in the change in fair value of servicing rights, net to a loss of $215.1 million, reflecting increased losses from fair value adjustments, bulk sales, and higher prepayment speeds.

Despite the increase in total net revenues, loanDepot reported a net loss of $202.2 million in 2024, an improvement from the $235.5 million net loss in 2023. This was primarily due to:

• A 4.8% increase in personnel expense to $600.5 million, driven by higher commissions on increased loan origination volume.
• A 25.5% increase in direct origination expense to $84.2 million, due to higher credit reporting costs and increased loan origination activity.
• An 8.3% increase in other interest expense to $188.6 million, primarily related to a loss on debt extinguishment and higher interest rates on outstanding debt.

Strengths and Weaknesses

Strengths:

• Diversified revenue streams from mortgage originations, servicing, and ancillary services.
• Increased pull-through weighted gain on sale margin, up 42 basis points to 3.17% in 2024.
• 6.4% increase in pull-through weighted lock volume, indicating strong demand for the company’s mortgage products.
• Successful implementation of the Vision 2025 strategic plan, achieving profitability in the third quarter of 2024.

Weaknesses:

• Continued net losses, although reduced from the prior year.
• Decline in servicing fee income and change in fair value of servicing rights, net, due to portfolio runoff and higher prepayment speeds.
• Increased expenses, particularly in personnel, direct origination, servicing, and interest expense.
• Reliance on short-term warehouse financing and potential exposure to changes in the mortgage market and investor demand.

Outlook and Future Prospects

As loanDepot looks toward 2025, the company faces continued market challenges but believes the implementation of its Project North Star strategy will allow it to capture the benefit of higher market volumes while continuing to capitalize on operational efficiency improvements to achieve sustainable profitability.

Key elements of the Project North Star strategy include:

• Becoming the lifetime lending partner of choice for homeowners.
• Growing the company’s mortgage reach and capabilities.
• Expanding the servicing portfolio over the long-term.
• Investing in low-touch, data-driven mortgage processing workflows to drive operating leverage.

loanDepot’s liquidity position remains strong, with $421.6 million in unrestricted cash and cash equivalents and $1.2 billion in committed and uncommitted available capacity under its warehouse and other lines of credit as of December 31, 2024. The company believes its current sources of liquidity will be sufficient to maintain operations and fund loan originations for the next twelve months.

However, loanDepot will continue to review its liquidity needs in light of current and anticipated mortgage market conditions and is taking steps to align its cost structure with expected origination volumes. The company remains subject to various financial covenants and regulatory requirements related to its operations as a mortgage seller and servicer.

Overall, loanDepot’s financial performance in 2024 showed signs of improvement, with increased revenues and reduced net losses. The company’s focus on operational efficiency, diversified revenue streams, and strategic initiatives like Project North Star provide a foundation for potential future growth and profitability, though the company continues to navigate a challenging mortgage market environment.