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LoanDepot executives say they continue to make strides in their quest to return to profitability, but a January cyberattack that exposed the personal information of 16.6 million people sapped some of the company’s first-quarter momentum.
The Irvine, California-based mortgage lender reported Tuesday that Q1 revenue was up 7 percent from a year ago, to $223 million, while expenses were down by 2 percent, to $308 million. Those numbers still added up to a $72 million net loss for the quarter, down 22 percent from a year ago.
The January security breach — which ransomware group ALPHV/Blackcat has claimed responsibility for — weighed on first quarter results.
LoanDepot said it racked up $15 million in direct costs dealing with the incident and estimates that the company lost an additional $22 million in revenue while its systems were offline and unable to take customer rate locks. The company had previously reported that many of its systems, including a customer portal for taking online loan applications, were offline for 10 days following the Jan. 8 incident.
Frank Martell
“The company was able to restore operations relatively quickly; however lost revenue and additional expenses related to the incident impacted our first quarter financial results,” loanDepot President and CEO Frank Martell said in a statement. “We do not expect further disruptions in our operations stemming from this incident.”
LoanDepot also disclosed that it incurred $1.1 million of legal expenses “related to the expected settlement of legacy litigation.” In March, the company announced it had agreed to settle a 2022 appraisal bias lawsuit filed by a Baltimore couple who claimed their home was undervalued because they were Black.
Shares in loanDepot, which in the last year have traded for as little as $1.14 and as much as $3.71, were unchanged at $2.28 in after-hours trading following the release of earnings Tuesday.
Q1 mortgage originations down 9% from a year ago
At $4.56 billion, mortgage originations were down 15 percent from Q4 2023 and 9 percent from a year ago. As has been the case since rising mortgage rates took away the incentive for many homeowners to refinance, purchase loans accounted for the majority (72 percent) of loanDepot’s business.
While loanDepot made fewer loans, gain on sale margin — a measure of profitability when loanDepot sells the loans it originates to investors — was 2.84 percent, up from 2.43 percent a year ago.
LoanDepot said it expects business to pick up in Q2, with projected originations of $5 billion to $7 billion.
David Hayes
“Despite recent increases in interest rates that have reduced industry forecasts for 2024 market volumes, we continue to aggressively focus on our plan to return to profitability,” CFO David Hayes said, in a statement.
After slashing $693 million in costs last year as part of its “Vision 2025” strategy to return to profitability, loanDepot continues to trim its payroll, although at a slower pace than in previous quarters.
LoanDepot finished the quarter with 4,188 employees, down from 4,250 on Dec. 31 and 4,630 workers on June 30. LoanDepot started 2022 with 11,300 employees.
“We exited 2023 with positive top-line momentum and continued to make progress toward our Vision 2025 goals, including forward-looking investments in our people, products and technology platforms,” Martell said.
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