startup to stardom - lendit conference...
TRANSCRIPT
July 18, 2016
Startup to Stardom
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Our vision
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“America is at the threshold of a new generation of lending, and it won’t be
the neighborhood bank as it has been for decades. Changes in technology,
market trends and consumer demand for credit are creating new
opportunities for non-bank lenders. loanDepot is poised to capitalize on the
evolving landscape to become America’s premiere consumer lender.”
Anthony Hsieh
Chairman and Chief Executive Officer
“美国正在开启贷款业的新时代 – 它将不再是多年形成的邻家银行模式。 科技
的变化，市场的潮流 ，以及顾客对信贷的需求，正在为非银行贷款创造出全
新的机会。 loanDepot 将受益于这市场格局的变迁，而成为美国首屈一指
的消费者贷款公司。”
谢礼谦
董事长兼首席行政官
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Immigrated to the US in 1974 at age of 8
The life we left behind in China
The optics of an immigrant
Day 3 in U.S. I started 4th grade in rough LA
neighborhood
Facing Significant Barriers
● Language
● Cultural
● Stereotypes
Working in my parent’s liquor store where I was
robbed twice at gunpoint
My first exposure to lending came
at age 10, translating for my
parents in negotiating their
home loan
Our connection
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Modern lending
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Leading Technology-Enabled U.S. Consumer Lending Platform
Corporate Profile:
Headquartered near Irvine, CA
Launched in 2010
~5,200 employees
Capital-lite model
Profitable since 2012
Privately held
Nationwide Distribution:
Licensed home loan lender in 50
states.
1,700+ licensed loan officers
9,500 individual state licenses
4 web fulfillment centers
150+ local offices across the U.S.
550,000+ new leads each month
Lending Infrastructure:
Product suite includes mortgage,
home equity and personal loans
~$29 billion of loan originations for
12ME 3.31.16
Originating over $3.0Bn/mo today
2007 - 2008
Housing crisis
“resets” consumer
borrowing and
lending landscape
2009 - 2010
loanDepot
conceived and
launched
2010 - 2014
Scale to 2nd
largest non-bank
consumer lender
in U.S.
2015+
Expansion into non-
home loan credit
products and
unsecured consumer
loans
$29 billion originated volume for 12ME 3.31.16
118% year/year origination
growth in FY 2015
1,700+ licensed loan officers
>$80 billion originated volume
since launch1
2nd largest non-bank consumer lender
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loanDepot by the numbers
1. Based on originated volume through mid-July 2016.
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Lending platform built for post-crisis environment
(1) As of Dec. 31, 2015.
(2) FYE 2015 relative to FYE 2014.
• Approval to offer
FHA/VA home
loans
• Approval for 50th
state license
• Acquired
imortgage,
launching
Distributed Retail
offering
2013
$31.7 Bn
137,243 customers
• Launched LD
Wholesale Division
to continue to grow
customer
relationships
2010 2011 2012 2014 2015
• Launched home
lending offering via
loanDepot.com in
January
• Exceeded 1,000
funded units in
November
• Approval to offer
Agency home loans
• Acquired
MortgageMaster to
grow Distributed
Retail offering
• Expanded offering
to include personal
and home equity
loans
Cumulative Home Loan Dollars and Units Funded Since Inception
70% Growth YoY 129% Growth YoY 40% Growth YoY 57% Growth YoY
$1.5 Bn in Fundings $2.6 Bn in Fundings $6.0 Bn in Fundings $8.4 Bn in Fundings $13.2 Bn in Fundings ~$28 Bn in Fundings(1)
$1.5 Bn
6,134 customers
$4.1 Bn
16,865 customers
$10.1 Bn
40,727 customers
~$60 Bn(1)
275,000+ customers
$18.5 Bn
78,286 customers
118% Growth YoY(2)
Consistent market share growth in US residential lending; now supporting product expansion
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Product suite dissolves lines between mortgage & non-mortgage
Rate/Term
Refinance
Home Purchase
Loans
Cash-out
Refinance
Home Equity
Loans
• Uniquely positioned non-bank lender capable of pivoting between secured and unsecured loan products
• Agnostic to how consumer demand and capital markets demand fluctuates between cycles
• Platform is capable of delivering across both
• Home loans are foundation of US consumer household credit, but also has the highest barriers to entry
• State specific licensing and regulatory oversight
• US government is main source of liquidity post-crisis
• Increasing regulatory burdens (loan officer licensing, CFPB, TRID, etc.)
Auto
Loans
$1.1 Trillion
Home Loans &
Home Equity Loans
$8.7 Trillion
Credit Cards &
Other Unsecured
Personal Loans
$1.1 Trillion Student
Loans
$1.2 Trillion
Product Suite $9.8 Trillion Addressable Market (1)
1. Federal Reserve Bank of New York (Q1 2016).
Personal
Loans
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$12.4
$12.7
$12.2
$11.7 $11.5
$11.3 $11.5
$11.8
$12.1
79%
72%
70%
73%
75%
78%
80%
$10.0
$10.5
$11.0
$11.5
$12.0
$12.5
$13.0
2007 2008 2009 2010 2011 2012 2013 2014 2015
Total Household Debt
% Housing Share
$ in T
rillio
ns
US Consumer Debt Outstanding
Source: Federal Reserve Bank of New York (Q1 2016).
% o
f Tota
l
U.S. consumer deleveraging ended in 2012
However, Housing Debt share of 72% is lowest since Q1 2003
Consumers are seeking credit again, but from different sources
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Filling a void left by disappearance of home equity credit $ in B
illions
US Home Equity & Cash Out Refinance Originations (1)
1. Cash-out Refinance data from Black Knight Financial Mortgage Monitor Report, Dec 2015. Home Equity data from Inside Mortgage Finance.
2015 data is TTM as of 9/30/15.
2. Wall Street Equity Research / Lending Tree customer survey.
Pre-crisis, home equity borrowing (including cash-out refinance) was a mainstream source of credit for US
consumers the market is not as simple as ‘purchase vs. refi’
Despite recovery in home values across the country, liquidity in this market has not returned
$430
$349
$116 $81
$49 $50 $44 $60 $71 $90
$315
$255
$131
$88
$53 $47 $44 $55 $42
$64
$745
$604
$247
$169
$102 $97 $88 $115 $113
$154
$-
$200
$400
$600
$800
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Cash-Out Refinance (Cash-Back Portion Only)
Home Equity Loans (HELOC & CES)Pre-crisis, 70%+ of home
equity proceeds were used
for debt consolidation or
home improvement (2)
Signs of momentum in
2015 – 36% year-over-
year growth highest
since pre-crisis
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Case study: LD Personal Loan launch
Program Specifics
Acquisition Fee 1.00% - 5.00%
Tenor 36 and 60 months
Loan Amount $5,000 - $35,000
Interest Rates 5.50% - 29.99%
FICO Score 660+
DTI Less than 40%
Launched May 2015 – 10 months from concept
For FY 2015 – $353 million originations & 23,000 customers
Significant overlap with home loan leads:
• 78% homeownership
• 715 FICO
Massive Demand – $9.1 billion in applied loan volume in 2015
$2
$12
$28
$44 $54
$65 $66
$81
$-
$20
$40
$60
$80
$100
May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15
Monthly Personal Loan Originations
$ in M
illions
FY 2015 Applications
$ in M
illions
$9,100
$353
$-
$2,000
$4,000
$6,000
$8,000
$10,000
Applications Originations
Conversion <4%
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Personal Loans
Consolidate credit card
debt
Finance large purchases
Refinance higher-rate
loan(s)
~$15,000 average balance
Home Equity Loans
Home improvement
Consolidate credit card
debt
~$50,000 average balance
Home Loans
Purchase
Cash-back Refi
Rate/Term Refi
>$250,000 average balance Complex Simple
Borr
ow
er
Cost
Complexity
Current Solutions Offered
Hig
her
Low
er
Potential Future Solutions
Primed for further product expansion
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~$150 MM Annual
Marketing Spend
Existing
Leads Database
12+ million
• Proprietary Dialing, Lead
Flow, And Routing System
• Dedicated Contact
Management Team making
500,000+ Calls Each Day
Contact
Management System
Systems designed for product cross-sell
Retail distribution + marketing scale drive 550,000+ unique leads to LD each month
Proprietary lead routing platform provides significant strategic advantage vs. competition
>$3.0 bn
home loans funded each
month
550,000 Unique Leads
Customer Contacts
Loan
Apps
Monthly Direct Home Loan Lead Flow
80,000 Unique Leads
Customer Contacts
Loan
Apps
Monthly Personal Loan Lead Flow
>$80 mm
personal loans funded
each month
Maximize
ROI with
Cross Sell
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Experienced leadership team
Anthony Hsieh Founder, Chairman & CEO
LoansDirect.com E*TRADE
Financial | Home Loan Center
LendingTree
Experience from High Growth, Technology, and Consumer Finance Companies
Bryan Sullivan EVP, Chief Financial Officer
PIMCO Goldman Sachs
FBR & Co. KPMG
Dominick
Marchetti Chief Technology
Officer
Brian
Biglin Chief Risk
Officer
Jeff
DerGurahian EVP, Capital
Markets
Peter
Macdonald EVP, General
Counsel
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Supported by significant lending infrastructure
Sophisticated technology with proprietary loan origination system and data warehouse
Licensed in 50 states and with all relevant government agencies
Established capital markets relationships
Compliance expertise in the most highly regulated consumer credit product
Management team of experienced operators and lenders through various credit cycles
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Lessons learned along the way
Continually build and invest in your brand – 6.5 year old company w/ $150mm+
marketing budget, and growing
Leverage technology & process engineering to create efficiencies and reduce
fulfillment costs while scaling
Take advantage of most efficient sources of capital when available – including public
equity/IPO markets
Consumer demand for credit is consistent – not a demand problem
Be positioned to access capital flows as credit cycles develop and mature
Leverage capital to develop new lending programs and assets – for example, non-
Agency home loans
Barrier to entry is protection against new scale competitors
Q&A Session