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Operator
Ladies and gentlemen, thank you for standing by and welcome to the Loan Depot Inc. Q4 in 2020 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Nicole Carrero, Chief Accounting Officer at Loan Depot. Thank you. Please go ahead.
Nicole Carrero
Thanks, Lindsay. Good morning, everyone, and thank you for joining our first earnings call as a public company. Today we will discuss Loan Depot's fourth quarter and full year 2020 results. We are excited to share the financial information and other highlights of the quarter with you. Before we begin, I would like to remind everyone that this conference call may include forward-looking statements regarding the company's operating and financial performance in future periods. These statements are based on the company's current expectations and available information. Actual results for future periods may differ materially from these forward-looking statements due to risks or other factors that are described in the risk factors sections of our filing with the SEC. On today's call, we have Loan Depot founder, chairman, and CEO Anthony Shea, our Chief Financial Officer Patrick Flanagan. They are going to provide an overview of the quarter as well as our financial and operational results. And to answer your questions, we're also going to be joined by Chief Capital Markets Officer Jeff DeGarian, our Chief Analytics Officer John Lee, and our Chief Revenue Officer Jeff Walsh. With that, I would like to turn it over to Anthony to get us started. Anthony?
Lindsay
Thank you, Nicole, and good morning, everyone. I want to start by thanking all of you for your interest in Loan Depot. It really is an honor to be newly listed on the New York Stock Exchange, and we look forward to building long-term value for all of our stakeholders, including our new shareholders. I also want to thank Team Loan Depot, now 10,000 strong. The team has gone above and beyond during this unprecedented period, working remotely and remarkably, further improving their efficiency as consumer demand steadily grew during this time. I am proud of and humbled by the team's performance, their innovative spirit, and their commitment to the individuals and families that rely upon us each day. For our first earnings call as a public assets enabled us to respond to the unprecedented consumer demand in 2020 across all of our lines of business. And later on, our CFO, Pat Flanagan, will provide a deeper dive into the Q4 of full year 2020 numbers. As I mentioned, Lone People has a set of proprietary assets that deliver our financial results, but also enabled us to grow through all mortgage market cycles. Our diversified operating model is different from most others in the industry and allows us to drive volumes in all market conditions. This entails a combination of a retail strategy, including direct-to-consumer and in-market mortgage professionals, as well as a partner strategy consisting of a network of joint venture and referral partnerships. We have established relationships with key industry partners, including some of the largest home builders in the nation, real estate brokerage firms, and independent mortgage brokers. These strategies resulted in more than 50% growth in our purchase loan volume. That's three times faster than the market grew. And 170% growth in our refinance loan volume, more than 1.5 times faster than the market grew. This emphasis on purchase market growth has been a long-term focus of both our retail and partner strategies. During 2020, we achieved a number of new partnerships, notably including our joint venture with Brookfield Residential recently announced, adding to some of the best and largest home builders in the nation, including Meritage Homes, TriPoint Homes, and LGI. Today, Loan Depot currently is the largest new home builder lender in the country. This growth in both of our strategies across both purchase and refinance was powered by Mellow, our proprietary technology. Mellow powers our top of funnel prowess by utilizing predictive analytics, machine learning, and artificial intelligence to ensure our customers are quickly and intelligently routed across our diversified channel suite. and match with the right loan officer and the right product at the right price at the right time. Mellow powers additional operational efficiency throughout our customer's mortgage journey, which not only increases our customer satisfaction, but increases our profitability, decreases cost, and allows us to scale to meet consumer demand more efficiently. At Loan Depot, everything we do is centered upon helping our customers and making the mortgage journey as seamless and straightforward as possible. Our goal at Loan Depot is to ensure the customer wins. We know what customers want and expect the ease of bundle services in all aspects of their lives, including the home financing transaction. When, and I say when, not if, it makes sense for us to make acquisitions Our proprietary mellow technology and the way in which we approach data will ensure that we are able to integrate quickly with other platforms and origination models. Another key asset is Lone Depot's national brand. We are the second most recognized brand in the mortgage industry. We are focused on building additional brand strength through a combination of broad market and targeted campaigns to increase brand awareness and consideration. In addition to generating new customers, our positive brand strength allows us to retain more of our servicing customers and help drive repeat and referral business. When customers are in the market for their next loan, we want our brand awareness to drive high consideration for our products. Our ability to convert that customer is a key asset that Loan Depot possesses and is a major barrier to entry for others. Our mellow database of over 40 million unique individuals and almost 10 billion data points allows us to optimize lead, conversion, and better understand market and competitor performance. Our models give us the visibility to create strategies to take share from competitors and to maintain that share as market conditions change. We continue to invest in our brand through, among other things, our whole means everything national ad campaign. which has delivered more than 7 billion household impressions between May and December 2020. This significant reach is in addition to a monthly average of 1.6 million website visits and 330 million online media exposure during the fourth quarter of 2020. Our brand awareness is further poised to grow with our recently announced multi-year partnership agreement with Major League Baseball. partnering with the nation's preeminent sport league, a league which holds a special place in the hearts of American families, as our national pastime is a natural fit for us. Lone Depot is now the official mortgage provider of Major League Baseball, which further extends our brand reach and reinforces our brand promise with millions of fans across the country. We expect to continue to deploy these types of investments to expand Lone Depot's brand awareness and market presence. We should also note that Lone Depot is very focused on its various stakeholders across all communities in which we operate. During this order, we continue our tradition of serving our communities by supporting individuals and families impacted by COVID-19. as well as several key charitable organizations through a donation on behalf of our employees. The spirit of service, unity, and community from Team Loan Depot to our customers and to each other during this time of remote work is something truly special to see. I'm grateful and proud to work alongside what I believe to be the best team in the industry. We found the Loan Depot to transform the industry and to create intuitive, seamless experience designed to satisfy customers. Our strong results reflect our dedication to the customer experience and to our goal of fulfilling the dream of home ownership for individuals and families across the country. We are confident that our proprietary assets will enable us to continue our momentum, further grow our business, and enhance our position as an industry leader. regardless of shifts in the mortgage market as we move further ahead into 2021. I'd now like to turn things over to our CFO, Pat Flanagan, who will take you through our financial results in more detail.
Nicole
Pat? Thanks, Anthony, and good morning, everyone. We spoke to many of you recently during our IPO Roadshow about our strong business model and the financial advantage created by our platform and cutting-edge technology. More importantly, our growth and profitability during the last 12 months is further evidence of our scalability of our platform and validates the investments that we continue to make in brand and technology. As Anthony mentioned, in the fourth quarter, our excellent financial performance was highlighted by record loan origination volume of $37 billion, representing an increase of 38% from the third quarter of 2020. Where the full year ended December 31, 2020, loan origination volume totaled $101 billion, an increase of 122% year-over-year. Our digital-first approach across our retail and partner strategies have created a strong direct-to-consumer network and helped us build deep relationships across our partnership channels. Our retail channel accounted for $30 billion or 79% of our loan originations and our partner channel accounted for $8 billion or 21% of our loan originations in the fourth quarter. For the full year ended December 31st, 2020, our retail and partnership channels accounted for 80% and 20% of loan originations respectively. And within our partner channel, our joint ventures contributed income of $4 million in the fourth quarter and $10 million for the year. Our record rate lock volume of $50 billion during the fourth quarter of 2020 resulted in total quarterly revenues of $1.3 billion, a decrease of $71 million, or 5%, from the third quarter of 2020, primarily due to gain-on-sale margins returning to a more normalized level of 338 basis points during the fourth quarter of 2020 from record highs of 498 basis points in the third quarter. For the full year ended December 31, 2020, our rate lock volume totaled $161 billion, resulting in total revenues of $4 billion and gain on sale margin of 427 basis points as the demand of the mortgages remained strong throughout the year. We reported adjusted EBITDA of $530 million and adjusted net income of $376 million as compared to $745 million and $525 million in the third quarter of 2020. The decrease is driven by the decline in gain-on-sale margin and increased expenses from higher loan origination volume. For the year ended December 31st, 2020, that income totaled $2 billion, an increase of over 5,749% from 2019. With the unprecedented growth in our business, as mentioned earlier, we also continue to simultaneously invest in our brand, people, and technology. Our total expenses for the fourth quarter of 2020 increased by $110 million, or 17%, from the third quarter of 2020. due to higher direct expenses on loan originations, but this increase in expenses supported significantly larger growth in loan origination volume, demonstrating the scalability of our platform. The unpaid balance of our servicing portfolio grew by $67 billion throughout the year, with $26 billion, or 39% of that growth coming from the fourth quarter, driven by originations. Our servicing income increased by 57% to $186 million for the year and increased by 33% to $64 million for the fourth quarter of 2020. We are exceptionally well positioned for 2021 and beyond as we look at the impacts of the COVID-19 pandemic. Only 2.4% or $2.4 billion of our servicing portfolio was in active forbearance as of December 31, 2020, representing a decline from 3.4% or $2.6 billion at the end of the third quarter of 2020. We're optimistic and continue to see improvements in the forbearance trend into the first quarter of 2021. The fair value of our mortgage servicing rights increased by 45% or $347 million during the fourth quarter to a record $1.1 billion, driven by $411 million of new additions partially offset by runoff of $80 million. Our total funding capacity increased to $8.1 billion at year end from $5.5 billion at September 30, 2020, due to the addition of two new longer-term facilities and increases to our existing facilities. We've historically maintained liquidity levels that allow us to fund our loan origination business, manage our day-to-day operations, and protect us against foreseeable market risks. Our unrestricted cash and cash equivalence balance was $284 million at December 31, 2020. The decrease in cash from September 30, 2020 was primarily due to earnings being offset by tax distributions of $71 million as required and profit distributions of $454 million as allowed under the company's operating agreement. While our focus will always remain on the long term, we are committed to providing transparency to our analysts and investors about the trends we are seeing in our business and the broader industry in the near term as well. We look forward to providing guidance on our Q1 performance in the near future. Now let me turn it back over to Anthony.
Lindsay
Thank you, Pat. We've gotten to where we are today by thinking and doing differently. We've done this by building and harnessing data and technology in a way that leads to customer satisfaction and loyalty. We're just one click away from millions of customers at all times, and to be able to intelligently and nimbly match them with the right loan officer and the right product at the right price and at the right time. In terms of the road ahead, we'll continue to make investments into our brand and our technology. These include specific ongoing enhancements to our middle platform to improve the user experience and reduce costs over time. We're excited to be able to deliver these results to this group and look forward to engaging with you as we move forward. With that, we are ready to turn it back to the operator for Q&A. Operator?
Operator
At this time, if you would like to ask a question, please press star followed by the number 1 on your telephone keypad. We'll pause for a moment to compile the Q&A roster. Our first question comes from the line of Timothy Chiodo with Credit Suisse. Your line is open.
Lindsay
Great. Thanks a lot for taking the question.
Nicole
All right. I wanted to touch really on a combination of factors that could be really supporting your market share. So in terms of the growing service book and also the increasing recapture, it seems to be a pretty good combination.
Lindsay
Maybe you can talk about how that might support some of your market share gains potentially over the next few years and also how that might also be supportive of your marketing efficiencies. Great question. So let me address that holistically, and perhaps either Jessica or Pat can talk about some of the recapture and how that plays a role into marketing, as well as John Lee. So our direct lending operation, in my opinion, is only one of two scale-sophisticated direct lending fulfillment engines in the country. What makes our direct lending operations unique is the fact that we play both offense and defense well. And when I say offense, I'm talking about new customer acquisition strategies that allows us to leverage our brand, allow us to produce leads at the top of the funnel, and sophistication on converting those leads until there is a tracking mechanism for return on marketing with customer acquisition costs. We use the exact same fulfillment and model to play defense, which is to defend our servicing portfolio with recapture, and currently we're above 60% recapture rates. That is significant for a number of reasons. Number one is the second bite of the apple has zero marketing costs. So it really fuels our original top of the funnel marketing leverage. And number two allows us to generate additional volume as well as to increase or defend our market share. So I will turn it over to the team here for any additional comments. Thanks, Anthony. This is Jeff Degury.
Jessica
I think Anthony covered that pretty thoroughly. We are focused on trying to enhance our surveillance of the portfolio going forward and being nimble as market trends change so that we can continue to support the recapture rate that we've seen here throughout 2020.
Lindsay
That's excellent. Thank you so much for all that context. Really appreciate it.
Nicole
And then also, as a minor follow-up here, fully respectful of the fact that you mentioned providing guidance today, but just for the sake of investors, is there anything you could at least comment directly around how things have been trending thus far this quarter, or perhaps maybe just talk around exit rates coming out of Q4, how things trended into the earlier part of 2021? Any directional context I'm sure would be much appreciated.
Lindsay
Yeah, I don't think we'll comment to specific trends, but what I will tell you is this is my 36th year of being in this industry. We started this organization a little over 11 years ago, and this DiverseBuy model is built for this industry. So we are the most diverse originator in today's marketplace. We've worked very hard over the last 11 years to set up retail, both with in-market loan officers and direct lending in our partnership channel with Joint Ventures. other financial institutions as well as the wholesale mortgage broker channel so we are prepared fully prepared for the next 11 years as the industry continues to adjust as it always has and always will excellent well thank you for taking both of those questions really appreciate it thank you our next question comes from trevor cranston with jmp securities
Operator
Your line is now open.
Trevor
Hey, thanks. Good morning and congratulations on completing the IPO and an exceptionally strong 2020. I guess first question, you guys mentioned that the employee count I think was up about 15% in the fourth quarter. Can you comment on how we should think about that going into 2021? Given that, I think, even though it should be a strong origination year again, it seems like the pace of growth in terms of origination volume may slow down some. Do the employee counts at the end of the year sort of where you want it to be, or are you continuing to add more employees in the first quarter?
Lindsay
Yeah, thanks for that question, Trevor. We are still aggressively onboarding full-time employees. And, of course, their majority, I think 98-plus percent, are working from home. Now, keep in mind that year over year, we're one of only two non-banks that grew over 100%. because of our efficient technology, innovation, and brand. So the fact that we continue to be very bullish and growing into this market share, we will continue to add full-time employees. We are still under 3% market share, although we are clearly number two retail focused non-bank lender in the country. There's lots of green field for us to run, particularly knowing that we have set up diversified origination channels. So we are fishing from multiple ponds as compared to some of our competitors. So as the market continues to change, as we continue to witness what is happening in our economy and our housing cycle, we are still very bullish on growing into this market because of our diversified strategy.
Trevor
Great. Okay, that's helpful. And then second question, you know, you guys talked a lot about, you know, brand awareness and your strength in the brand of Loan Depot. I was curious if you could provide some sort of big picture thoughts around how that's evolved over the course of 2020, you know, given how many customers you guys have been able to touch and how strong the origination space has been. You know, and if you feel like the brand of Loan Depot and, you know, the number one lender Has there solidified itself and increased the gap between yourselves and the smaller players or any commentary around how that perception of the brand value has evolved over the course of the year?
Lindsay
Yeah, we've got to rewind a little bit to the financial crisis of 12, 13 years ago, 2007, 2008. Obviously, no reminder to everyone that the prominent brand at the time was Countrywide, and that brand went away. Since then, housing continues to grow. We have household formation. So the number of homes continue to be added, and the average loan amount continues to climb. And today, there's just not a lot of brands in the marketplace. Our number one competitor we're rooting for because we are drafting off the bumper of the number one brand as the logical other solution as consumers are performing their diligence of selecting a contemporary mortgage brand today. We like that fact. We like the Coke and Pepsi mix. And at the same time, because of our young history being 11 years old, I will tell you that the brand is building faster than our ability to hire. So most recently, we have made an adjustment to our brand and ad spend. At the top of the funnel has been very healthy, and we're starting to reduce the top of the funnel in incoming data. But I would like John Lee to chime in. John, if you can speak to some of the third-party indications and endorsements of our current brand awareness, I think that would be helpful.
Countrywide
Yep. Good morning. So we actually partner with YouGov to monitor our brand health on a daily basis. We utilize their brand index to monitor metrics. Obviously, two of the major metrics we measure are brand awareness at the top of the funnel. And what we have seen over the last six months is we've solidified our position as the clear number two mortgage lender after rocket click-in. And we do see that gap continue to narrow and widen against the other competitors. We also measure brand consideration at the lower funnel. So as customers are looking for mortgage products, we want to make sure we're in consideration. And we've also through our targeted and national marketing campaigns, we've been able to clearly establish that number two leadership position there as well. But this is something we monitor very actively. We have multiple really brand health and brand index monitoring components out there. And we are going to continue to build into the brand strength that we generated in 2020.
Trevor
Okay, great. I appreciate that, Colin. Thank you.
Operator
Our next question comes from Bob Napoli with William Blair. Your line is now open.
Bob Napoli
Thank you. And Appreciate the questions and congratulations, Anthony, uh, and, uh, on, uh, on the IPO and a great year as well. And Pat, uh, I mean, there obviously have been a number of, uh, players in the market. It has come public recently, uh, one way or another, a number of people want to gain market share and, you know, appreciating your, your technology and brand, uh, the market still has, you know, uh, cyclical elements and competitive elements. What is, Anthony, how do you view managing this business through those cycles, the market share versus profitability balance? Maybe I'll leave it there.
Lindsay
Hey, Bob. So, you know, the way we look at it is, The total TAM continues to grow, right? We're looking at $11 trillion. The annual originations based on housing and economic trends and cycles as well as interest rates is highly cyclical. And because of that, goth and margin pressure and overall revenue of the industry moves and can move dramatically and sometimes violently. But that said, although we are in a cyclical business, we are in a predictable business. most of the time you can see what is about to happen. And what you need to do is to maintain a strategy where you can go and explore new revenue opportunities. The fact that the number one and two retail players today have less than 15% market share is a great opportunity for us to grow into any market. our long-term outlook bob is about market penetration increasing our market share with our origination diversity and the fact that we continue to grow into these markets regardless of interest rate cycles when rates are low we use the opportunity to make profits and when rates rise that is an opportunity to increase market share And certainly short-term trends are important, and we will always remain focused to look at the opportunities or the low-hanging fruit that's in front of us. But make no mistake, we are here to build a long-term organization and long-term success. And the way to do that is to maintain focus on a diversified origination strategy. So as this year unfolds, we expect another great year. We expect some margin pressures. And at the end of the day, if you have scale, if you have technology savings, and you have the lowest in fulfillment cost on an individual loan funding basis, and you have the lowest customer acquisition cost because you have invested into your brand, it really puts the company at a great position to compete.
Bob Napoli
Thank you. That's very helpful. How do you think about profit? What is the right level of profitability on average over time? Like, where are the right returns for this business? Understanding, you know, you're going to have a year like last year where, you know, it's off the charts and other years where it's more challenging.
Nicole
Hi, Bob. It's Pat Flanagan. Thanks for the question. So I think as we think about it, largely the top line will revert back to normalized means, and we saw that with gain-on-sale margins compressing in the fourth quarter. And so our focus will continue to be gaining efficiency through technology advances and improvement in our marketing and big data platform and an increasing portion of our originations coming from a capture of our servicing book. And so, you know, it largely is, you know, the profit comes out the other side of that or largely how successful we are at driving that cost down. So we do look at, you know, at that view and with our current run rate of expenses on a normalized revenue basis where, you know, some are, you know, around 100 basis points down. pre-tax operating margins as a result of that. And we think that that's a level that's both attractive from a return standpoint and a level that we can build on with efficiency over time.
Bob Napoli
Thank you. And just maybe last quick question. Do you expect the servicing portfolio over the long run to drive an important part of the earnings stream, or is it really driving the retention rate that drives the origination business.
Lindsay
All of us are wanting to climb on this one top. Our primary focus of value here is to build a contemporary business model led by technology and brand. I think the servicing portfolio is a function of math for us. It's not a function of strategy. And I'm not discounting that at all. But we need to understand that that's not our differentiation point. The math will work. It lifts marketing. It helps delight our customers. But I'll let the rest of the folks chime in on this bullet point.
Nicole
Sure. Thanks, Anthony. Bob, the way we look at it, there's two reasons for us to end servicing. One is to control and improve and build relationships through the customer experience. And the second, we sort of look at servicing. So we think the return is good, but if we're allocating capital between growth and servicing, we ordinarily would choose the growth, but the enhancement we get through recapture makes it extremely attractive. And so we look at servicing in some ways as almost a prepaid pool of marketing where you get paid to wait and it's a decent return while we're waiting to do another transaction with the customer. But when you eliminate or vastly reduce the The marketing expense of doing a second transaction for a customer that we've already acquired, that's what makes it a really compelling, you know, business model for us going forward. So as we measure the returns in servicing, we try to put the revenue for recapture in and look at it on a combined basis rather than just servicing on a standalone basis.
Bob Napoli
Thank you. Appreciate it.
Operator
Our next question comes from the line of Aaron Saganowicz with Citi. Your line is now open.
Jessica
Thanks. I was wondering if you could just talk a little bit about your customer acquisition strategy and what you're seeing in terms of the competitive environment for cost of acquisition for new customers.
Lindsay
Yeah. Hi, Aaron. It's Anthony Shane. I'll let John Lee chime in after my comment. You know, creating a brand over time and understanding marketing leverage and creating that top of the funnel is really a skill set that Loan Depot possesses. Over the course of our last 11 years, as well as my previous experience, Myself and this management team really has been along the rise since intranet mortgages started in day one since the 90s. My last post being at LendingTree, part of IEC, really gave me insight. a bird's eye view of this changing landscape. So, you know, understanding brand and producing leads at the top of the funnel is a unique skill set. But more importantly, at the top of the funnel, conversion of a fatiguing online lead is both the art and science. This is a combination that creates the barrier to entry of a contemporary business model in a traditional industry, such as the mortgage industry. So this is where disruption happens. Many of our competitors are great, great operators, but some of them do not have some of these contemporary skill sets. And this is one of the reasons why we are highly bullish as we continue to move our brand. But I'll let John Lee sort of chime in. John, if you have anything to add to that.
Countrywide
Yeah, absolutely. So we maintain a very wide funnel in terms of both our lead generation capabilities and our branding capabilities. And we use both. And the way we do this is we use brand. We look at a brand-to-demand model, right? And we use brand to drive that top-of-funnel awareness and that lower funnel consideration. We couple that with a very broad strategy around lead gen We connected our AI machine learning models and the data that comes out of that to our ad tech partners and ad tech integration. This allows us to really refine our activations in paid media and our digital marketing strategies. We also have a very wide reach within our lead gen partners, as well as our affiliate marketing network. So we use a combination of organic and online digital marketing media. We also have very strong partnerships with lead generation partners and affiliates. And the way we make it work very efficiently is by putting on top of that are really our connected ad tech platform where we're utilizing data from the very beginning to when leads are generated and as prospects are managed to our platform. We continue to see very positive trends in terms of lead generation. Thank you.
Operator
Our next question comes from Kevin Barker with Piper Sandler. Your line is now open.
Kevin Barker
Good morning. Congrats on becoming a public company as well. So I want to follow up on some of your comments about the distributed framework that you have with your mortgage professionals across the U.S. and that competitive advantage. Can you talk about how – that's what's going to happen when you know we start to see a purchase dominated market and how those loan officers are going to you know be able to address that type of market as as we as the refi wave starts to slow down um we've noticed that you know refis have been you know a larger share of your overall originations um you know throughout most of 2020 um but can you explain like how we how we're going to see that shift play out as we move through the next year or two
Lindsay
Hey, Kevin, Anthony. It's a great question. So let me sort of sort it out because this is an answer that could get really long-winded. So the diversified retail strategy, and I think we're approaching 80% or close to high 70% is our retail balance these days. and i'm not discounting our partnership strategy whatsoever the partnership strategy in both wholesale as well as joint venture partners is a significant growth area for us and we've worked very hard to maintain the optionality to grow both of those segments now active retail we have a very unique retail structure at the top is mellow and the brand and the data and the fulfillment the diversified in-market loan officers, as well as our direct lending loan officers, we look at that as the same species. And how John Lee looks at it is how he routes a particular customer or lead to our 2,300 employee licensed loan officers is what we continue to evaluate. No one in the marketplace is building this type of learning. And we are new at it, too. This is all new for the industry. So this allows us to penetrate both purchase and refinances differently. But understand that the parts are completely interchangeable. The industry right now has a good problem, and that is there is not enough capacity. We will look at our direct lending fulfillment and drive the type of customers that product and use into our direct lending platform to maximize profitability and to maximize efficiency once the refinance market lifts and if it does and when it does then we can make the opportunity make the decision whether or not we want to drive purchase leads and purchase activity into our direct lending platform understanding purchases is a longer sales cycle purchases a slightly less efficient product. But right now, we have the luxury of selecting what type of loans and what type of profitability that we can inject into our direct lending operation. That is one of the advantages of having direct lending. Now, in-market loan officers, this is where one plus one equals three. And that is in-market loan officers have established relationships. They work and they work. in the communities in which they live. They have existing relationships with realtors, financial partners, builders, et cetera. Many of these loan officers are feeling the disruption. Many of them are working for companies that lack brand, that lack tech tools, that lack marketing, and that lack leads. By joining Loan Depot, these loan officers immediately get our brand. They get brand recognition. They add it to their personal brand that they develop over sometimes decades in the community. They also get lead delivery from John Lee's top-of-the-funnel lead engine, and they have all of the user tools and digital first strategy along with the company. This really differentiates us, and it's completely enhanced to our direct lending operation. There's almost zero overlap. So when I say that we're fishing in multiple ponds, this is exactly what I'm talking about. And this strategy goes back to 2012. We started the company in 2010. We made a decision to be in market in 2012. And it's been a lot of work. There's no other model like this today. But we're glad that we did the work, and we're glad that we're well positioned today.
Kevin Barker
Thank you for taking the questions.
Operator
And there are no further questions in queue at this time. I'll turn the call back over to Anthony Shea for closing comments.
Lindsay
Well, thank you all again for joining us and taking the time to ask questions. We look forward to getting to know each of you better and deepening our relationship with you over the long term. Thank you and have a great rest of the day. Bye-bye.
Operator
This concludes today's conference call. You may now disconnect.
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