Finance of America Reports Third Quarter 2022 Results
– Net loss for the quarter of $302 million or $1.35 per basic share and diluted loss per share entirely attributable to balance sheet adjustments and Mortgage Originations segment which will be discontinued –
– Adjusted net income* in SF&S for the quarter of $7 million, or $0.04 per fully diluted share –
– Reverse Originations segment generated $34 million in pre-tax income –
PLANO, Texas–(BUSINESS WIRE)–Finance of America Companies Inc., (“Finance of America” or the “Company”) (NYSE: FOA), a customer focused, consumer and specialty lending business, reported financial results for the quarter ended September 30, 2022.
Third Quarter 2022 Financial Highlights
- For the third quarter of 2022, the Company recognized a net loss of $302 million or $1.35 per basic share and diluted loss per share.
- The net loss is primarily non-cash. It includes negative changes in fair value of long-term assets and liabilities of $116 million and impairment of intangible and other long-lived assets of $138 million predominantly related to the Mortgage Originations segment, which will be discontinued.
- For the third quarter of 2022, the Company recognized an adjusted net loss* of $20 million or $0.10 per fully diluted share. The components of which are: Specialty Finance and Services (SF&S) adjusted net income* of $7 million or $0.04 per fully diluted share and Mortgage Originations adjusted net loss* of $27 million or $0.14 per fully diluted share.
- Strong liquidity position with $169 million of cash after paying down $56 million of secured debt in the third quarter of 2022.
*See the sections titled “Reconciliation to GAAP” and “Non-GAAP Financial Measures” for reconciliations to the most directly comparable GAAP measures and other important disclosures.
Graham A. Fleming, President and Interim Chief Executive Officer commented, “To begin, I would like to thank all of our team members for their hard work this quarter, and in particular those members of our Mortgage Originations segment who will be leaving us as we exit this business. The exit from Mortgage will allow FOA to optimize our resources and prioritize high-growth businesses where we already hold distinct competitive advantages and leading positions in markets with positive macro tailwinds.”
Third Quarter Financial Summary
|
($ amounts in millions, except margin and per share data) |
|
|
|
Variance (%) |
|
|
|
Variance (%) |
|
|
|
|
|
Variance (%) |
|||||||||||||
|
|
|
Q3’22 |
|
Q2’22 |
|
Q3’22 vs |
|
Q3’21 |
|
Q3’22 vs |
|
YTD 2022 |
|
YTD 2021 |
|
2022 vs |
|||||||||||
|
|
|
Successor |
|
Successor |
|
|
|
Successor |
|
|
|
Successor |
|
Combined (1) |
|
|
|||||||||||
|
Funded volume |
|
$ |
4,187 |
|
|
$ |
6,349 |
|
|
(34 |
) % |
|
$ |
8,988 |
|
(53 |
) % |
|
$ |
17,689 |
|
|
$ |
26,844 |
|
(34 |
) % |
|
Total revenue |
|
|
71 |
|
|
|
141 |
|
|
(50 |
) % |
|
|
457 |
|
(84 |
) % |
|
|
480 |
|
|
|
1,353 |
|
(65 |
) % |
|
Total expenses and other, net |
|
|
237 |
|
|
|
310 |
|
|
(24 |
) % |
|
|
402 |
|
(41 |
) % |
|
|
892 |
|
|
|
1,187 |
|
(25 |
) % |
|
Pre-tax net income (loss) |
|
|
(305 |
) |
|
|
(169 |
) |
|
(80 |
) % |
|
|
55 |
|
(655 |
) % |
|
|
(551 |
) |
|
|
166 |
|
(432 |
) % |
|
Net income (loss) |
|
|
(302 |
) |
|
|
(168 |
) |
|
(80 |
) % |
|
|
50 |
|
(704 |
) % |
|
|
(534 |
) |
|
|
160 |
|
(434 |
) % |
|
Pre-tax income (loss) excluding impairment of intangibles and other assets(2) |
|
|
(167 |
) |
|
|
(169 |
) |
|
1 |
% |
|
|
55 |
|
(404 |
) % |
|
|
(413 |
) |
|
|
166 |
|
(349 |
) % |
|
Adjusted net income (loss)(3) |
|
|
(20 |
) |
|
|
(22 |
) |
|
9 |
% |
|
|
75 |
|
(127 |
) % |
|
|
(4 |
) |
|
|
239 |
|
(102 |
) % |
|
Adjusted EBITDA(3) |
|
|
(17 |
) |
|
|
(19 |
) |
|
11 |
% |
|
|
111 |
|
(115 |
) % |
|
|
24 |
|
|
|
352 |
|
(93 |
) % |
|
Basic earnings (loss) per share |
|
$ |
(1.35 |
) |
|
$ |
(0.65 |
) |
|
(108 |
) % |
|
$ |
0.36 |
|
(475 |
) % |
|
$ |
(2.16 |
) |
|
|
N/A |
|
N/A |
|
|
Diluted earnings (loss) per share(4) |
|
$ |
(1.35 |
) |
|
$ |
(0.70 |
) |
|
(93 |
) % |
|
$ |
0.22 |
|
(714 |
) % |
|
$ |
(2.34 |
) |
|
|
N/A |
|
N/A |
|
|
Adjusted diluted earnings (loss) per share(4) |
|
$ |
(0.10 |
) |
|
$ |
(0.12 |
) |
|
17 |
% |
|
$ |
0.39 |
|
(126 |
) % |
|
$ |
(0.02 |
) |
|
$ |
1.25 |
|
(102 |
) % |
|
(1) |
Financial results of combined successor and predecessor of the business combination with Replay. |
|
|
(2) |
Calculated for each period as pre-tax income (loss) excluding impairment of intangibles and other assets. |
|
|
(3) |
See Reconciliation to GAAP section for a reconciliation of Adjusted net income (loss) and Adjusted EBITDA to Net income (loss). |
|
|
(4) |
Calculated on an if-converted basis. See Reconciliation to GAAP section for more detail. |
Balance Sheet Highlights
|
($ amounts in millions) |
|
September 30, |
|
June 30, |
|
Variance (%) |
|||
|
|
|
|
2022 |
|
|
2022 |
|
Q3 2022 vs. Q2 2022 |
|
|
Cash and cash equivalents |
|
$ |
169 |
|
$ |
219 |
|
(23 |
) % |
|
Securitized loans held for investment (HMBS & nonrecourse) |
|
|
17,658 |
|
|
17,483 |
|
1 |
% |
|
Mortgage servicing rights (MSRs) |
|
|
103 |
|
|
359 |
|
(71 |
) % |
|
Total assets |
|
|
21,190 |
|
|
21,736 |
|
(3 |
) % |
|
Total liabilities |
|
|
20,615 |
|
|
20,873 |
|
(1 |
) % |
|
Total equity |
|
|
575 |
|
|
863 |
|
(33 |
) % |
|
Total tangible equity(1) |
|
|
137 |
|
|
288 |
|
(52 |
) % |
|
(1) |
Total tangible equity calculated as total equity less intangible assets, net. |
- Cash and cash equivalents ended the second quarter at $169 million. The $50 million decrease in cash was primarily attributable to repayment of secured debt.
- MSR balances declined 71% quarter over quarter following strategic asset sales in the period.
- Total assets declined 3% from prior quarter due to reduced loans held for sale, at fair value, lower MSR balances, and impairments of intangible and other assets.
- Total liabilities declined $258 million on a sequential quarter basis primarily due to paying down outstanding financing lines of credit.
- Total tangible equity decreased $151 million to $137 million, predominantly due to the impact of non-cash fair value marks from wider credit spreads and rising interest rates.
- Residual value of assets subject to nonrecourse debt within the securitization trusts as of September 30, 2022 was $61 million, down from $390 million as of December 31, 2021.
Segment Results
Mortgage Originations
The Mortgage Originations segment generates revenue through fee income from loan originations and gain on sale of mortgage loans into the secondary market.
|
($ amounts in millions) |
|
|
|
Variance (%) |
|
|
|
Variance (%) |
|
|
|
|
|
Variance (%) |
|||||||||||||||
|
|
|
Q3’22 |
|
Q2’22 |
|
Q3’22 vs |
|
Q3’21 |
|
Q3’22 vs |
|
YTD 2022 |
|
YTD 2021 |
|
2022 vs |
|||||||||||||
|
|
|
Successor |
|
Successor |
|
|
|
Successor |
|
|
|
Successor |
|
Combined (1) |
|
|
|||||||||||||
|
Funded volume (Total) |
|
$ |
2,697 |
|
|
$ |
4,229 |
|
|
(36 |
) % |
|
$ |
7,383 |
|
|
(63 |
) % |
|
$ |
12,032 |
|
|
$ |
22,716 |
|
|
(47 |
) % |
|
Funded volume (Purchase) |
|
|
2,278 |
|
|
|
3,336 |
|
|
(32 |
) % |
|
|
3,759 |
|
|
(39 |
) % |
|
|
8,380 |
|
|
|
9,918 |
|
|
(16 |
) % |
|
Funded volume (non-agency) |
|
|
504 |
|
|
|
945 |
|
|
(47 |
) % |
|
|
994 |
|
|
(49 |
) % |
|
|
2,568 |
|
|
|
2,826 |
|
|
(9 |
) % |
|
Net rate lock volume |
|
|
2,474 |
|
|
|
3,800 |
|
|
(35 |
) % |
|
|
7,679 |
|
|
(68 |
) % |
|
|
11,591 |
|
|
|
22,753 |
|
|
(49 |
) % |
|
Mortgage originations margin |
|
|
1.87 |
% |
|
|
2.14 |
% |
|
(13 |
) % |
|
|
2.61 |
% |
|
(28 |
) % |
|
|
2.07 |
% |
|
|
2.95 |
% |
|
(30 |
) % |
|
Total revenue |
|
|
61 |
|
|
|
103 |
|
|
(41 |
) % |
|
|
235 |
|
|
(74 |
) % |
|
|
300 |
|
|
|
773 |
|
|
(61 |
) % |
|
Impairment of intangibles and other assets |
|
|
(129 |
) |
|
|
— |
|
|
N/A |
|
|
|
— |
|
|
N/A |
|
|
|
(129 |
) |
|
|
— |
|
|
N/A |
|
|
Pre-tax income (loss) |
|
|
(170 |
) |
|
|
(35 |
) |
|
(386 |
) % |
|
|
15 |
|
|
(1233 |
) % |
|
|
(226 |
) |
|
|
104 |
|
|
(317 |
) % |
|
Pre-tax income (loss) excluding impairment of intangibles and other assets(2) |
|
$ |
(41 |
) |
|
$ |
(35 |
) |
|
(17 |
) % |
|
$ |
15 |
|
|
(373 |
) % |
|
$ |
(97 |
) |
|
$ |
104 |
|
|
(193 |
) % |
|
(1) |
Financial results of combined successor and predecessor of the business combination with Replay. |
|
|
(2) |
Calculated for each period as pre-tax income (loss) excluding impairment of intangibles and other assets. |
- Net rate lock volume totaled $2,474 million compared to $3,800 million in the prior quarter
- Total revenue of $61 million for the third quarter compared to $103 million in the prior quarter, which reflects the impact of lower volumes and competitive market dynamics impacting margins.
- Pre-tax loss was $170 million for the third quarter compared to pre-tax loss of $35 million in the prior quarter, which includes $129 million of impairment charges.
- As previously disclosed on Form 8-K filed October 21, 2022, the Company will discontinue substantially all of its Mortgage Originations operations as a part of its Resource Optimization Plan.
Reverse Originations
The Reverse Originations segment generates revenue and earnings in the form of net origination gains and origination fees earned on the origination of reverse mortgage loans.
|
($ amounts in millions) |
|
|
|
Variance (%) |
|
|
|
Variance (%) |
|
|
|
|
|
Variance (%) |
||||||||||
|
|
|
Q3’22 |
|
Q2’22 |
|
Q3’22 vs |
|
Q3’21 |
|
Q3’22 vs |
|
YTD 2022 |
|
YTD 2021 |
|
2022 vs |
||||||||
|
|
|
Successor |
|
Successor |
|
|
|
Successor |
|
|
|
Successor |
|
Combined (1) |
|
|
||||||||
|
Funded volume |
|
$ |
1,135 |
|
$ |
1,580 |
|
(28 |
) % |
|
$ |
1,157 |
|
(2 |
) % |
|
$ |
4,190 |
|
$ |
2,939 |
|
43 |
% |
|
Total revenue |
|
|
72 |
|
|
80 |
|
(10 |
) % |
|
|
111 |
|
(35 |
) % |
|
|
260 |
|
|
275 |
|
(5 |
) % |
|
Pre-tax income |
|
|
34 |
|
|
36 |
|
(6 |
) % |
|
|
69 |
|
(51 |
) % |
|
|
138 |
|
|
168 |
|
(18 |
) % |
|
(1) |
Financial results of combined successor and predecessor of the business combination with Replay. |
- Third quarter 2022 funded reverse volume was $1,135 million, a decrease from the prior quarter primarily due to a strategic decision to reduce Correspondent aggregation. Despite the volume decline, we saw our seventh consecutive quarter of new-to-reverse growth in our proprietary HomeSafe product.
- Third quarter 2022 revenue of $72 million declined 10% from the second quarter 2022 due primarily to the impact of lower volumes during the quarter, partially offset by improved margins.
- Pre-tax income of $34 million declined only 6% as $6 million in expense reductions partially offset the decline in revenue.
- Year-to-date 2022 volume of $4,190 million represents a 43% increase compared to the same period in 2021, which was driven by strong growth in both refinance and new-to-reverse volumes period over period.
Commercial Originations
The Commercial Originations segment provides business purpose lending solutions for residential real estate investors. The Commercial Originations segment generates revenue and earnings in the form of net origination gains and origination fees earned on the origination of mortgage loans.
|
($ amounts in millions) |
|
|
|
Variance (%) |
|
|
|
Variance (%) |
|
|
|
|
|
Variance (%) |
|||||||||||||
|
|
|
Q3’22 |
|
Q2’22 |
|
Q3’22 vs |
|
Q3’21 |
|
Q3’22 vs |
|
YTD 2022 |
|
YTD 2021 |
|
2022 vs |
|||||||||||
|
|
|
Successor |
|
Successor |
|
|
|
Successor |
|
|
|
Successor |
|
Combined (1) |
|
|
|||||||||||
|
Funded volume |
|
$ |
355 |
|
|
$ |
540 |
|
|
(34 |
) % |
|
$ |
448 |
|
(21 |
) % |
|
$ |
1,468 |
|
|
$ |
1,189 |
|
23 |
% |
|
Total revenue |
|
|
12 |
|
|
|
13 |
|
|
(8 |
) % |
|
|
28 |
|
(57 |
) % |
|
|
46 |
|
|
|
65 |
|
(29 |
) % |
|
Impairment of intangibles and other assets |
|
|
(6 |
) |
|
|
— |
|
|
N/A |
|
|
|
— |
|
N/A |
|
|
|
(6 |
) |
|
|
— |
|
N/A |
|
|
Pre-tax income (loss) |
|
|
(12 |
) |
|
|
(12 |
) |
|
— |
% |
|
|
6 |
|
(300 |
) % |
|
|
(27 |
) |
|
|
10 |
|
(370 |
) % |
|
Pre-tax income (loss) excluding impairment of intangibles and other assets(2) |
|
$ |
(6 |
) |
|
$ |
(12 |
) |
|
50 |
% |
|
$ |
6 |
|
(200 |
) % |
|
$ |
(21 |
) |
|
$ |
10 |
|
(310 |
) % |
|
(1) |
Financial results of combined successor and predecessor of the business combination with Replay. |
|
|
(2) |
Calculated for each period as pre-tax income (loss) excluding impairment of intangibles and other assets. |
- Third quarter 2022 funded volume of $355 million represents a 34% decline quarter over quarter and a 21% decrease compared to the prior year quarter. Year to date volumes of $1,468 million represent a 23% increase over prior year.
- Pre-tax income excluding impairment of goodwill and intangibles improved by 50% relative to Q2 2022 due to a $7 million reduction in expenses.
Lender Services
The Lender Services business generates revenue and earnings in the form of lender service support fees. Lender Services supports over 2,800 third party clients across the lending industry.
|
($ amounts in millions) |
|
|
|
Variance (%) |
|
|
|
Variance (%) |
|
|
|
|
|
Variance (%) |
|||||||||||||||
|
|
|
Q3’22 |
|
Q2’22 |
|
Q3’22 vs |
|
Q3’21 |
|
Q3’22 vs |
|
YTD 2022 |
|
YTD 2021 |
|
2022 vs |
|||||||||||||
|
|
|
Successor |
|
Successor |
|
|
|
Successor |
|
|
|
Successor |
|
Combined (1) |
|
|
|||||||||||||
|
Total revenue |
|
$ |
44 |
|
|
$ |
58 |
|
|
(24 |
) % |
|
$ |
88 |
|
|
(50 |
) % |
|
$ |
178 |
|
|
$ |
245 |
|
|
(27 |
) % |
|
% of revenue from third-party clients |
|
|
80 |
% |
|
|
81 |
% |
|
(1 |
) % |
|
|
81 |
% |
|
(1 |
) % |
|
|
81 |
% |
|
|
79 |
% |
|
3 |
% |
|
Pre-tax income (loss) |
|
$ |
(11 |
) |
|
$ |
(5 |
) |
|
(120 |
) % |
|
$ |
9 |
|
|
(222 |
) % |
|
$ |
(9 |
) |
|
$ |
30 |
|
|
(130 |
) % |
|
(1) |
Financial results of combined successor and predecessor of the business combination with Replay. |
- Third quarter 2022 revenue was $44 million, down 24% compared to the prior quarter as the segment faced continued pressure from rising interest rates and declining refinance volumes.
- Third quarter 2022 pre-tax loss was $11 million, as the $14 million quarter over quarter decline in revenue more than offset an $8 million reduction in expenses.
- Revenue from third-party clients was 80% in the third quarter of 2022, down 1% from the prior quarter.
Portfolio Management
The Portfolio Management segment generates revenue and earnings in the form of gain on sale of loans, fair value gains or losses, interest income, servicing income, fees for underwriting, advisory and valuation services and other ancillary fees.
|
($ amounts in millions) |
|
|
|
Variance (%) |
|
|
|
Variance (%) |
|
|
|
|
|
Variance (%) |
|||||||||||||||
|
|
|
Q3’22 |
|
Q2’22 |
|
Q3’22 vs |
|
Q3’21 |
|
Q3’22 vs |
|
YTD 2022 |
|
YTD 2021 |
|
2022 vs |
|||||||||||||
|
|
|
Successor |
|
Successor |
|
|
|
Successor |
|
|
|
Successor |
|
Combined (1) |
|
|
|||||||||||||
|
Assets under management |
|
$ |
19,871 |
|
|
$ |
19,881 |
|
|
— |
% |
|
$ |
18,403 |
|
|
8 |
% |
|
$ |
19,871 |
|
|
$ |
18,403 |
|
|
8 |
% |
|
Assets excluding HMBS and non-recourse obligations |
|
|
2,560 |
|
|
|
2,687 |
|
|
(5 |
) % |
|
|
2,452 |
|
|
4 |
% |
|
|
2,560 |
|
|
|
2,452 |
|
|
4 |
% |
|
Mortgage servicing rights (MSRs) |
|
|
103 |
|
|
|
359 |
|
|
(71 |
) % |
|
|
341 |
|
|
(70 |
) % |
|
|
103 |
|
|
|
341 |
|
|
(70 |
) % |
|
Total revenue |
|
|
(104 |
) |
|
|
(95 |
) |
|
(9 |
) % |
|
|
10 |
|
|
(1140 |
) % |
|
|
(250 |
) |
|
|
46 |
|
|
(643 |
) % |
|
Impairment of intangibles and other assets |
|
|
(4 |
) |
|
|
— |
|
|
N/A |
|
|
|
— |
|
|
N/A |
|
|
|
(4 |
) |
|
|
— |
|
|
N/A |
|
|
Pre-tax loss |
|
|
(135 |
) |
|
|
(129 |
) |
|
(5 |
) % |
|
|
(20 |
) |
|
(575 |
) % |
|
|
(350 |
) |
|
|
(41 |
) |
|
(754 |
) % |
|
Pre-tax loss excluding impairment of intangibles and other assets(2) |
|
$ |
(131 |
) |
|
$ |
(129 |
) |
|
(2 |
) % |
|
$ |
(20 |
) |
|
(555 |
) % |
|
$ |
(346 |
) |
|
$ |
(41 |
) |
|
(744 |
) % |
|
(1) |
Financial results of combined successor and predecessor of the business combination with Replay. |
|
|
(2) |
Calculated for each period as Pre-tax income (loss) excluding impairment of intangibles and other assets. |
- Third quarter 2022 mortgage servicing rights were down 71% to $103 million compared to the prior quarter due to strategic sales of MSR during the quarter. We continue to monitor our MSR balances to take advantage of opportunities that the market presents.
- Revenue in the third quarter 2022 was negative due to fair value adjustments on long-term assets and liabilities as we updated model assumptions to account for higher credit spreads and increased interest rates. The residual value of assets subject to nonrecourse debt within the securitization trusts as of September 30, 2022 was $61 million, down from $390 million as of December 31, 2021.
Reconciliation to GAAP
|
($ amounts in millions) |
Q3’22 |
|
Q2’22 |
|
Q3’21 |
|
YTD 2022 |
|
YTD 2021 |
||||||||||
|
|
Successor |
|
Combined (1) |
||||||||||||||||
|
Reconciliation of net income (loss) to adjusted net income (loss) and adjusted EBITDA |
|
|
|
|
|
|
|
|
|
||||||||||
|
Net income (loss) |
$ |
(302 |
) |
|
$ |
(168 |
) |
|
$ |
50 |
|
|
$ |
(534 |
) |
|
$ |
160 |
|
|
Add back: Benefit (provision) for income taxes |
|
3 |
|
|
|
1 |
|
|
|
(4 |
) |
|
|
17 |
|
|
|
(7 |
) |
|
Net income (loss) before taxes |
|
(305 |
) |
|
|
(169 |
) |
|
|
54 |
|
|
|
(551 |
) |
|
|
167 |
|
|
Adjustments for: |
|
|
|
|
|
|
|
|
|
||||||||||
|
Changes in fair value(2) |
|
116 |
|
|
|
111 |
|
|
|
20 |
|
|
|
323 |
|
|
|
55 |
|
|
Amortization and impairment of intangibles and other assets(3) |
|
152 |
|
|
|
14 |
|
|
|
13 |
|
|
|
180 |
|
|
|
28 |
|
|
Share-based compensation(4) |
|
7 |
|
|
|
7 |
|
|
|
11 |
|
|
|
23 |
|
|
|
21 |
|
|
Certain non-recurring costs(5) |
|
3 |
|
|
|
9 |
|
|
|
3 |
|
|
|
21 |
|
|
|
53 |
|
|
Adjusted net income (loss) before taxes |
|
(27 |
) |
|
|
(28 |
) |
|
|
101 |
|
|
|
(4 |
) |
|
|
324 |
|
|
(Provision) benefit for income taxes(6) |
|
7 |
|
|
|
6 |
|
|
|
(26 |
) |
|
|
— |
|
|
|
(85 |
) |
|
Adjusted net income (loss) |
|
(20 |
) |
|
|
(22 |
) |
|
|
75 |
|
|
|
(4 |
) |
|
|
239 |
|
|
Provision (benefit) for income taxes(6) |
|
(7 |
) |
|
|
(6 |
) |
|
|
26 |
|
|
|
— |
|
|
|
85 |
|
|
Depreciation |
|
3 |
|
|
|
2 |
|
|
|
3 |
|
|
|
8 |
|
|
|
7 |
|
|
Interest expense on non-funding debt |
|
7 |
|
|
|
7 |
|
|
|
7 |
|
|
|
20 |
|
|
|
21 |
|
|
Adjusted EBITDA |
$ |
(17 |
) |
|
$ |
(19 |
) |
|
$ |
111 |
|
|
$ |
24 |
|
|
$ |
352 |
|
|
OTHER KEY METRICS |
|
|
|
|
|
|
|
|
|
||||||||||
|
Cash paid for income taxes |
$ |
— |
|
|
$ |
— |
|
|
$ |
2 |
|
|
$ |
— |
|
|
$ |
2 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
($ amounts in millions except shares and $ per share) |
Q3’22 |
|
Q2’22 |
|
Q3’21 |
|
YTD 2022 |
|
YTD 2021 |
||||||||||
|
|
Successor |
|
Combined (1) |
||||||||||||||||
|
GAAP PER SHARE MEASURES |
|
|
|
|
|
|
|
|
|
||||||||||
|
Net income (loss) attributable to controlling interest |
$ |
(85 |
) |
|
$ |
(41 |
) |
|
$ |
21 |
|
|
$ |
(134 |
) |
|
|
N/A |
|
|
Weighted average outstanding share count |
|
62,804,809 |
|
|
|
62,379,041 |
|
|
|
59,861,171 |
|
|
|
61,993,353 |
|
|
|
N/A |
|
|
Basic earnings (loss) per share |
$ |
(1.35 |
) |
|
$ |
(0.65 |
) |
|
$ |
0.36 |
|
|
$ |
(2.16 |
) |
|
|
N/A |
|
|
If-converted method net earnings (loss) |
|
(85 |
) |
|
|
(131 |
) |
|
|
43 |
|
|
|
(441 |
) |
|
|
N/A |
|
|
Weighted average diluted share count |
|
62,804,809 |
|
|
|
187,818,255 |
|
|
|
191,161,431 |
|
|
|
188,375,945 |
|
|
|
N/A |
|
|
Diluted earnings (loss) per share |
$ |
(1.35 |
) |
|
$ |
(0.70 |
) |
|
$ |
0.22 |
|
|
$ |
(2.34 |
) |
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
NON-GAAP PER SHARE MEASURES |
|
|
|
|
|
|
|
|
|
||||||||||
|
Adjusted net income (loss) |
$ |
(20 |
) |
|
$ |
(22 |
) |
|
$ |
75 |
|
|
$ |
(4 |
) |
|
$ |
239 |
|
|
Weighted average diluted share count |
|
187,877,936 |
|
|
|
187,818,225 |
|
|
|
191,161,431 |
|
|
|
188,375,945 |
|
|
|
191,180,610 |
|
|
Adjusted diluted earnings (loss) per share |
$ |
(0.10 |
) |
|
$ |
(0.12 |
) |
|
$ |
0.39 |
|
|
$ |
(0.02 |
) |
|
$ |
1.25 |
|
|
($ amounts in millions) |
SF&S |
|
Mortgage |
|
|
Total |
||||||
|
Reconciliation of net loss before taxes to adjusted net income (loss) for the three months ended September 30, 2022 |
|
|
|
|
|
|
||||||
|
Net loss before taxes |
$ |
(135 |
) |
|
$ |
(170 |
) |
|
|
$ |
(305 |
) |
|
Adjustments for: |
|
|
|
|
|
|
||||||
|
Changes in fair value(2) |
|
116 |
|
|
|
— |
|
|
|
|
116 |
|
|
Amortization and impairment of intangibles and other assets(3) |
|
21 |
|
|
|
131 |
|
|
|
|
152 |
|
|
Share-based compensation(4) |
|
6 |
|
|
|
1 |
|
|
|
|
7 |
|
|
Certain non-recurring costs(5) |
|
2 |
|
|
|
1 |
|
|
|
|
3 |
|
|
Adjusted net income (loss) before taxes |
|
10 |
|
|
|
(37 |
) |
|
|
|
(27 |
) |
|
(Provision) benefit for income taxes(6) |
|
(3 |
) |
|
|
10 |
|
|
|
|
7 |
|
|
Adjusted net income (loss) |
$ |
7 |
|
|
$ |
(27 |
) |
|
|
$ |
(20 |
) |
|
|
|
|
|
|
|
|
||||||
|
($ amounts in millions, except shares and $ per share) |
|
|
|
|
|
|
||||||
|
NON-GAAP PER SHARE MEASURES |
|
|
|
|
|
|
||||||
|
Adjusted net income (loss) |
$ |
7 |
|
|
$ |
(27 |
) |
|
|
$ |
(20 |
) |
|
Weighted average diluted share count |
|
187,877,936 |
|
|
|
187,877,936 |
|
|
|
|
187,877,936 |
|
|
Adjusted diluted earnings (loss) per share |
$ |
0.04 |
|
|
$ |
(0.14 |
) |
|
|
$ |
(0.10 |
) |
|
($ amounts in millions) |
SF&S |
|
Mortgage |
|
|
Total |
||||||
|
Reconciliation of net loss before taxes to adjusted net income (loss) for the nine months ended September 30, 2022 |
|
|
|
|
|
|
||||||
|
Net loss before taxes |
$ |
(324 |
) |
|
$ |
(227 |
) |
|
|
$ |
(551 |
) |
|
Adjustments for: |
|
|
|
|
|
|
||||||
|
Changes in fair value(2) |
|
323 |
|
|
|
— |
|
|
|
|
323 |
|
|
Amortization and impairment of intangibles and other assets(3) |
|
45 |
|
|
|
135 |
|
|
|
|
180 |
|
|
Share-based compensation(4) |
|
17 |
|
|
|
6 |
|
|
|
|
23 |
|
|
Certain non-recurring costs(5) |
|
12 |
|
|
|
9 |
|
|
|
|
21 |
|
|
Adjusted net income (loss) before taxes |
|
73 |
|
|
|
(77 |
) |
|
|
|
(4 |
) |
|
Provision (benefit) for income taxes(6) |
|
(20 |
) |
|
|
20 |
|
|
|
|
— |
|
|
Adjusted net income (loss) |
$ |
53 |
|
|
$ |
(57 |
) |
|
|
$ |
(4 |
) |
|
|
|
|
|
|
|
|
||||||
|
($ amounts in millions, except shares and $ per share) |
|
|
|
|
|
|
||||||
|
NON-GAAP PER SHARE MEASURES |
|
|
|
|
|
|
||||||
|
Adjusted net income (loss) |
$ |
53 |
|
|
$ |
(57 |
) |
|
|
$ |
(4 |
) |
|
Weighted average diluted share count |
|
188,375,945 |
|
|
|
188,375,945 |
|
|
|
|
188,375,945 |
|
|
Adjusted diluted earnings (loss) per share |
$ |
0.28 |
|
|
$ |
(0.30 |
) |
|
|
$ |
(0.02 |
) |
|
(1) |
Financial results of combined successor and predecessor of the business combination with Replay. |
|
|
(2) |
Changes in fair value include changes in fair value of loans and securities held for investment, deferred purchase price obligations, warrant liability, and minority investments. |
|
|
(3) |
Successor period amortization includes amortization of intangibles recognized from the business combination with Replay and an impairment charge on intangibles and other certain long lived assets recognized in the third quarter of 2022. |
|
|
(4) |
Funded 85% by the non-controlling shareholders. |
|
|
(5) |
Certain non-recurring costs relate to various one-time expenses and adjustments that management believes should be excluded as these do not relate to a recurring part of the core business operations. These items include certain one-time charges including amounts recognized for settlement of legal and regulatory matters, acquisition related expenses and other one-time charges. |
|
|
(6) |
We applied an effective combined corporate tax rate to adjusted consolidated pre-tax income (loss) for the respective period to determine the tax effect of adjusted consolidated net income (loss). |
|
Finance of America Companies Inc. and Subsidiaries |
|||||||
|
Selected Financial Information |
|||||||
|
Consolidated Statements of Financial Condition |
|||||||
|
(In thousands, except share data) |
|||||||
|
(Unaudited) |
|||||||
|
|
September 30, 2022 |
|
June 30, 2022 |
||||
|
ASSETS |
|
|
|
||||
|
Cash and cash equivalents |
$ |
169,072 |
|
|
$ |
219,033 |
|
|
Restricted cash |
|
210,147 |
|
|
|
354,803 |
|
|
Loans held for investment, subject to HMBS related obligations, at fair value |
|
10,916,551 |
|
|
|
10,882,441 |
|
|
Loans held for investment, subject to nonrecourse debt, at fair value |
|
6,741,391 |
|
|
|
6,600,762 |
|
|
Loans held for investment, at fair value |
|
1,307,413 |
|
|
|
1,058,410 |
|
|
Loans held for sale, at fair value |
|
859,650 |
|
|
|
1,229,594 |
|
|
Mortgage servicing rights (“MSRs”), at fair value, $59,800 and $142,435 subject to nonrecourse MSRs financing liability, respectively |
|
103,069 |
|
|
|
359,006 |
|
|
Derivative assets |
|
89,899 |
|
|
|
55,186 |
|
|
Fixed assets and leasehold improvements, net |
|
19,828 |
|
|
|
29,805 |
|
|
Intangible assets, net |
|
438,300 |
|
|
|
575,284 |
|
|
Other assets, net |
|
334,577 |
|
|
|
371,902 |
|
|
TOTAL ASSETS |
$ |
21,189,897 |
|
|
$ |
21,736,226 |
|
|
|
|
|
|
||||
|
LIABILITIES AND EQUITY |
|
|
|
||||
|
HMBS related obligations, at fair value |
$ |
10,784,841 |
|
|
$ |
10,745,879 |
|
|
Nonrecourse debt, at fair value |
|
6,745,526 |
|
|
|
6,752,084 |
|
|
Other financing lines of credit |
|
2,305,999 |
|
|
|
2,593,290 |
|
|
Payables and other liabilities |
|
395,635 |
|
|
|
428,768 |
|
|
Notes payable, net |
|
382,810 |
|
|
|
353,005 |
|
|
TOTAL LIABILITIES |
|
20,614,811 |
|
|
|
20,873,026 |
|
|
|
|
|
|
||||
|
EQUITY |
|
|
|
||||
|
Class A Common Stock, $0.0001 par value; 6,000,000,000 shares authorized; 62,959,276 shares issued and outstanding at September 30, 2022 |
|
6 |
|
|
|
6 |
|
|
Class B Common Stock, $0.0001 par value; 1,000,000 shares authorized, 15 shares issued and outstanding at September 30, 2022 |
|
— |
|
|
|
— |
|
|
Additional paid-in capital |
|
876,140 |
|
|
|
860,232 |
|
|
Accumulated deficit |
|
(577,272 |
) |
|
|
(492,786 |
) |
|
Accumulated other comprehensive loss |
|
(367 |
) |
|
|
(262 |
) |
|
Noncontrolling interest |
|
276,579 |
|
|
|
496,010 |
|
|
TOTAL EQUITY |
|
575,086 |
|
|
|
863,200 |
|
|
TOTAL LIABILITIES AND EQUITY |
$ |
21,189,897 |
|
|
$ |
21,736,226 |
|
|
Finance of America Companies Inc. and Subsidiaries |
||||||||||||||||||||
|
Selected Financial Information |
||||||||||||||||||||
|
Consolidated Statements of Operations |
||||||||||||||||||||
|
(In thousands, except share data) |
||||||||||||||||||||
|
(Unaudited) |
||||||||||||||||||||
|
|
Q3’22 |
|
Q2’22 |
|
Q3’21 |
|
YTD 2022 |
|
|
YTD 2021 |
||||||||||
|
|
Successor |
|
|
Combined(1) |
||||||||||||||||
|
REVENUES |
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Gain on sale and other income from loans held for sale, net |
$ |
36,179 |
|
|
$ |
71,805 |
|
|
$ |
210,095 |
|
|
$ |
226,336 |
|
|
|
$ |
689,006 |
|
|
Net fair value gains (losses) on mortgage loans and related obligations |
|
(6,376 |
) |
|
|
1,613 |
|
|
|
122,509 |
|
|
|
5,672 |
|
|
|
|
330,323 |
|
|
Fee income |
|
70,512 |
|
|
|
88,681 |
|
|
|
145,725 |
|
|
|
316,798 |
|
|
|
|
397,960 |
|
|
Net interest expense: |
|
|
|
|
|
|
|
|
|
|
— |
|
||||||||
|
Interest income |
|
12,022 |
|
|
|
15,853 |
|
|
|
15,862 |
|
|
|
41,748 |
|
|
|
|
41,674 |
|
|
Interest expense |
|
(41,236 |
) |
|
|
(36,834 |
) |
|
|
(37,691 |
) |
|
|
(110,900 |
) |
|
|
|
(105,683 |
) |
|
Net interest expense |
|
(29,214 |
) |
|
|
(20,981 |
) |
|
|
(21,829 |
) |
|
|
(69,152 |
) |
|
|
|
(64,009 |
) |
|
TOTAL REVENUES |
|
71,101 |
|
|
|
141,118 |
|
|
|
456,500 |
|
|
|
479,654 |
|
|
|
|
1,353,280 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
EXPENSES |
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Salaries, benefits, and related expenses |
|
146,385 |
|
|
|
194,294 |
|
|
|
262,000 |
|
|
|
549,755 |
|
|
|
|
775,261 |
|
|
Occupancy, equipment rentals, and other office related expenses |
|
7,003 |
|
|
|
7,262 |
|
|
|
8,283 |
|
|
|
22,103 |
|
|
|
|
22,600 |
|
|
General and administrative expenses |
|
105,533 |
|
|
|
123,457 |
|
|
|
141,595 |
|
|
|
361,613 |
|
|
|
|
388,083 |
|
|
TOTAL EXPENSES |
|
258,921 |
|
|
|
325,013 |
|
|
|
411,878 |
|
|
|
933,471 |
|
|
|
|
1,185,944 |
|
|
IMPAIRMENT OF INTANGIBLES AND OTHER ASSETS |
|
(138,184 |
) |
|
|
— |
|
|
|
— |
|
|
|
(138,184 |
) |
|
|
|
— |
|
|
OTHER, NET |
|
21,330 |
|
|
|
15,132 |
|
|
|
9,928 |
|
|
|
41,234 |
|
|
|
|
(1,067 |
) |
|
NET INCOME (LOSS) BEFORE INCOME TAXES |
|
(304,674 |
) |
|
|
(168,763 |
) |
|
|
54,550 |
|
|
|
(550,767 |
) |
|
|
|
166,269 |
|
|
Provision (benefit) for income taxes |
|
(2,974 |
) |
|
|
(940 |
) |
|
|
4,440 |
|
|
|
(17,249 |
) |
|
|
|
6,663 |
|
|
NET INCOME (LOSS) |
|
(301,700 |
) |
|
|
(167,823 |
) |
|
|
50,110 |
|
|
|
(533,518 |
) |
|
|
|
159,606 |
|
|
CRNCI |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
4,260 |
|
|
Noncontrolling interest |
|
(217,214 |
) |
|
|
(127,143 |
) |
|
|
28,726 |
|
|
|
(399,859 |
) |
|
|
|
11,838 |
|
|
NET INCOME (LOSS) ATTRIBUTABLE TO CONTROLLING INTEREST |
$ |
(84,486 |
) |
|
$ |
(40,680 |
) |
|
$ |
21,384 |
|
|
$ |
(133,659 |
) |
|
|
$ |
143,508 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
EARNINGS (LOSS) PER SHARE |
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Basic weighted average shares outstanding |
|
62,804,809 |
|
|
|
62,379,041 |
|
|
|
59,861,171 |
|
|
|
61,993,353 |
|
|
|
|
N/A |
|
|
Basic net earnings (loss) per share |
$ |
(1.35 |
) |
|
$ |
(0.65 |
) |
|
$ |
0.36 |
|
|
$ |
(2.16 |
) |
|
|
|
N/A |
|
|
Diluted weighted average shares outstanding |
|
62,804,809 |
|
|
|
187,818,225 |
|
|
|
191,161,431 |
|
|
|
188,375,945 |
|
|
|
|
N/A |
|
|
Diluted earnings (loss) per share |
$ |
(1.35 |
) |
|
$ |
(0.70 |
) |
|
$ |
0.22 |
|
|
$ |
(2.34 |
) |
|
|
|
N/A |
|
Webcast and Conference Call
Management will host a webcast and conference call on Wednesday, November 9, 2022 at 8:00 am Eastern Time to discuss the Company’s results for the third quarter ended September 30, 2022.
Contacts
For Finance of America Media: pr@financeofamerica.com
For Finance of America Investor Relations: ir@financeofamerica.com