loanDepot(US:LDI)2022-02-01 21:33Financial Data and Key Metrics Changes - In Q4 2021, loan origination volume was $29 billion, a decrease of 9% from Q3 2021, which was near the high end of the guidance range of $26 billion to $31 billion [17] - Quarterly loan revenue was $705 million, representing a decrease of 24% from the previous quarter [19] - The pull-through weighted gain on sale margin for Q4 was 281 basis points, down from 299 basis points in Q3 but exceeding the guidance of 210 to 260 basis points [20] - The unpaid principal balance of the servicing portfolio grew to a record level of $162.1 billion as of December 31, 2021, compared to $145.3 billion as of September 30, 2021 [21] Business Line Data and Key Metrics Changes - Retail Channel accounted for 77% and Partner Channel 23% of loan originations, with $10 billion in purchase loan originations and $19 billion in refinance loan originations during Q4 [17][18] - Purchase origination volume grew by 39% in 2021, and if including less interest-rate sensitive cash-out refinance, growth was 56% year-over-year [11][12] Market Data and Key Metrics Changes - The company ended 2021 with a 3.4% market share, up from 2.5% at the end of 2020 [11] - The Mortgage Bankers Association expects mortgage volumes to decrease by 35% in 2022, which is a repeat of previous cycles [28] Company Strategy and Development Direction - The company aims to capture market share during changing market conditions, leveraging its proprietary tech stack and diverse mix of channels [10] - Investment in in-house servicing platform and Ginnie Mae servicing is expected to enhance customer care and retention [14] - The company plans to continue investing in technology and brand to drive efficiencies and customer relationships [33] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the current market pressures but believes the company's diversified origination channels will allow it to adapt and grow [30] - The company is adjusting its capacity to align with expected market conditions while maintaining a focus on profitable market share growth [33][34] - Management expresses confidence in the company's ability to seize market share even as total market origination volume falls [34] Other Important Information - The company intends to maintain its regular quarterly dividend, currently yielding 6.8% [26] - The cost of servicing the portfolio decreased from 3.6 basis points in Q4 2020 to 2.3 basis points in Q4 2021 [23] Q&A Session Summary Question: Expectations for expenses in 2022 - Management discussed ongoing efforts to reduce expenses and improve efficiencies, with a focus on adjusting capacity and vendor consolidation [40] Question: Sustainability of positive earnings amid pressure - Management indicated that while there are pressures on margins, they are focused on profitable market share growth and adjusting capacity accordingly [50] Question: Impact of purchase versus refinance market - Management highlighted the company's diversified origination strategy, which positions it well to capture market share in a purchase-dominated market [102] Question: Strategy regarding cash-out refinance - Management noted that cash-out refinance remains a significant segment, although it is expected to be smaller than in previous years [66] Question: Growth of servicing business and MSR capacity - Management confirmed that they have capacity to retain MSRs and are focused on maintaining healthy liquidity and leverage levels [71] Question: Dividend sustainability amid competitive pressures - Management expressed confidence in maintaining the dividend due to strong cash flow and the attractiveness of the current yield [76]