Loandepot has earmarked a hefty sum to end a consumer data breach complaint, an expense that dampened its second-quarter earnings.
The company accrued $27 million, "primarily as part of reaching an agreement in principle," in a lawsuit over its massive January hack, said David Hayes, chief financial officer, in an earnings call Tuesday. That payment, and other non-operating expenses contributed to Loandepot's $65.9 million net loss in the second quarter.
That loss was a 7% quarterly improvement from $71.5 million but represented a year-over-year decline of 32% from $49.8 million. Executives pointed to green shoots during a busy quarter, including a 57% improvement in adjusted net income for a $16.9 million loss. The lender and servicer's $278 million in adjusted net revenue was also the company's highest mark since the market began its decline, executives said.
"I believe we delivered our strongest operational results since the beginning of the market downturn," said CEO Frank Martell during the call.
Loandepot reported a second-quarter pull-through weighted gain-on-sale margin of 322 basis points, a leap from 272 bps to close the prior period and 285 bps a year earlier. The greater margin was partially due to more contributions from the lender's home equity products, it said.
The company reported pull-through weighted lock volume of $5.7 billion between April and June, and reported $125 million in servicing income, both relatively flat compared to last June.
Expenses shot up to $342.5 million. Minus the accrued settlement expense, a $6 million cost to extinguish more debt, and $4 million in additional restructuring charges, a $306 million mark represented a 6% quarterly gain, company leaders said.
Another $120 million slash in annual expenses, announced in the early spring, was completed over the second quarter. Martell hinted that Loandepot will pivot from its Vision 2025 plan, and will disclose more details in its next quarterly earnings.
The company also sold $28.7 billion worth of mortgage servicing rights, reducing its portfolio to $114.3 billion, it said. The assets were lower-coupon, 2020 and 2021 vintages.
Loandepot maintains cash and cash equivalents of $533.1 million, and claims a steady 1.4% market share in the origination industry. Company leaders said they've hired more loan officers in the past six months, while slight market-share gains were aided by the firm's homebuilder relationships and home equity loan activity.
Attorneys for both Loandepot and plaintiffs in a California federal data breach case wrote in a June filing they had reached an agreement on the "general contours" of a settlement, but needed additional time to negotiate the terms. A company spokesperson didn't immediately respond whether the $27 million accrual was related to that specific case.
