loanDepot returns to profitability, announces new strategic plan
It achieved profitability in the third quarter of 2024, ending an 11-quarter streak of financial losses. Spending cuts and revenue growth led the turnaround amid low interest rates that boosted activity.
As a result, loanDepot is canceling its Vision 2025 strategic plan, which began in July 2022 to help the company reduce its non-volume costs by more than $730 million.
Vision 2025 will be replaced by a program called Project North Star, which focuses on the home ownership journey. There is an emphasis on this; acquire loans through an expanded geographic footprint and partnerships; scale and storage; operational leverage quality to reduce turnaround times; and recruiting, developing and retaining the best talent.
“The launch of Project North Star builds on the strategic pillars of Vision 2025, including our focus on sustainable revenue growth, positive operating leverage, productivity and investments in platforms and solutions that support our customer's home ownership journey,” said loanDepot President and CEO. statement.
California-based loanDepot on Tuesday reported a non-GAAP adjusted net loss for Q3 2024 compared to a loss of $15.9 million for Q2 2024 and a loss of $29.2 million for Q3 2023 reported that the income was 7 million dollars. According to GAAP accounting standards, net income in the third quarter of 2024 was $2.6 million.
In a statement, Chief Financial Officer David Hayes said the third quarter saw “modest improvement in the mortgage market combined with the company's positive operating leverage,” which has fueled a return to profitability.
“As we look to 2025, we expect continued market challenges, but we believe the implementation of the North Star Project will enable us to benefit from higher market volumes while continuing to capitalize on our ongoing investments in operational efficiency to achieve sustainable profitability. in different operating environments,” Hayes said.
As an example of the initiatives included in the new plan, the agreement with the lender was announced this week Smith Douglas HomesTop 50 home builders with a solid book of business in the southern states. During the earnings call, executives told analysts that loanDepot is seeking more JVs with developers, real estate brokers and retail lenders across the country.
According to SEC filings, loanDepot's third-quarter expenses were $311 million, down 9% quarter-over-quarter and up 1.9% year-over-year. The increase was primarily due to higher commissions, direct sourcing costs, marketing and overtime reflecting volume growth.
Costs may increase as the company continues to add loan officers and operations team members. The company expects to grow in 2025, as it did in 2023 and 2024.
Meanwhile, the company's total revenues reached $314.6 million in the third quarter of 2024, up more than 18% on both a quarterly and annual basis.
Operational work
loanDepot returned to profitability by increasing mortgage production and volume. Source volume was $6.7 billion between July and September, at the high end of investor guidance and up from $6 billion in the previous quarter. Its profit margin on sales was 3.29% in 2Q2024 compared to 3.22% in 2Q2024.
In August, a first-tier home equity line of credit (HELOC) was added to the product suite that allows homeowners without a mortgage to borrow against their home equity. In September, the (VA) hired a military attorney to increase its lending capacity.
Purchase loans accounted for 66% of loanDepot's total volume in 3Q2024, down from 71% in the same period in 2023. Meanwhile, the company's organic refinancing direct-to-consumer return rate was 71%, up from 69% a year ago.
As for LoanDepot's servicing portfolio, outstanding principal balance (UPB) rose to $114.9 billion on September 30 from $114.3 billion on June 30. Service fee revenue fell to $124 million in the third quarter of 2024, compared to $125 million in the prior quarter.
Company executives forecast initial revenue of $6 billion to $8 billion in the fourth quarter of 2024. The profit margin on sales is expected to be between 2.85% and 3.05%. loanDepot ended the quarter with $480 million in cash.
We look forward to it Mortgage Bankers Association“We feel pretty good about our chances of making money,” said Martell, citing industry-wide production volume expectations for 2025, adding that “it's a fluid situation with rates.”
After the earnings release, it traded up 9.3% to $2.35 in after-market hours.
