loanDepot, Inc. ((LDI)) has held its Q4 earnings call. Read on for the main highlights of the call.
The recent earnings call for loanDepot, Inc. presented a mixed sentiment, reflecting both achievements and challenges. The company celebrated significant milestones such as the completion of Vision 2025 and growth in several key financial metrics. However, it also faced hurdles, including an increased adjusted net loss, decreased servicing fee income, and higher total expenses.
Completion of Vision 2025 Strategic Program
LoanDepot successfully completed its Vision 2025 strategic program, which was pivotal in resetting the company’s cost structure and making critical investments in people, processes, products, and technology. This strategic initiative was instrumental in the company’s return to profitability during the third quarter.
Increase in Rate Lock Volume
The company reported a 27% increase in pull-through weighted rate lock volume from the previous year, reaching $5.6 billion. This growth was attributed to strategic investments in recruiting and developing loan officers, which positively impacted the company’s performance.
Improved Gain on Sale Margin
LoanDepot’s pull-through weighted gain on sale margin reached 334 basis points, exceeding the guidance range of 295 to 305 basis points. This improvement was driven by wider overall margins and a favorable channel mix shift.
Loan Origination Volume Growth
Loan origination volume saw a significant increase, reaching $7.2 billion, up 34% from the prior year’s $5.4 billion. This growth was fueled by increased lock activity due to a temporary decrease in market rates.
Strong Cash Position
Despite challenging market conditions, loanDepot maintained a strong liquidity position, ending the quarter with $422 million in cash. This financial stability underscores the company’s resilience in navigating market fluctuations.
Adjusted Net Loss
The company reported an adjusted net loss of $47 million in the fourth quarter, compared to $27 million in the previous year. This increase was primarily due to higher volume-related expenses.
Decrease in Servicing Fee Income
Servicing fee income decreased from $132 million in the fourth quarter of 2023 to $108 million in the fourth quarter of 2024. This decline was consistent with a reduction in the portfolio size following second-quarter bulk sales.
Increased Total Expenses
Total expenses rose by $39 million, or 13%, in the fourth quarter of 2024 compared to the previous year. The increase was driven by higher volume-related commissions, direct origination, and marketing expenses.
Forward-Looking Guidance
Looking ahead, loanDepot provided guidance for the first quarter of 2025, anticipating a pull-through weighted lock volume between $4.8 billion and $5.8 billion and origination volume between $4.5 billion and $5.5 billion. The company expects a pull-through weighted gain on sale margin of 320 to 340 basis points and a decline in total expenses due to lower volume-related and G&A expenses. LoanDepot emphasized its commitment to maintaining a strong liquidity position, ending the quarter with $422 million in cash.
In summary, loanDepot’s earnings call highlighted a balanced narrative of progress and challenges. While the company has made strides in strategic initiatives and financial growth, it continues to face financial pressures. The forward-looking guidance suggests cautious optimism, with expectations of continued growth and expense management in the coming quarters.