PART I - Financial Information [Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) The company reported a **$75.0 million** net income in Q1 2025, reversing a **$20.3 million** net loss in Q1 2024, with total assets and equity increasing Condensed Consolidated Statements of Financial Condition (in thousands) | | March 31, 2025 (unaudited) | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$29,688,856** | **$29,156,490** | | Cash and cash equivalents | $52,016 | $47,383 | | Loans held for investment, subject to HMBS related obligations | $18,809,023 | $18,669,962 | | Loans held for investment, subject to nonrecourse debt | $9,630,150 | $9,288,403 | | **Total Liabilities** | **$29,293,970** | **$28,840,826** | | HMBS related obligations | $18,590,357 | $18,444,370 | | Nonrecourse debt | $9,163,399 | $8,954,068 | | **Total Equity** | **$394,886** | **$315,664** | Condensed Consolidated Statements of Operations (in thousands) | | For the three months ended March 31, 2025 | For the three months ended March 31, 2024 | | :--- | :--- | :--- | | **Total Revenues** | **$165,695** | **$74,682** | | Net Portfolio Interest Income | $70,435 | $70,175 | | Net Other Income (Expense) | $95,260 | $4,507 | | **Total Expenses** | **$86,369** | **$91,315** | | **Net Income (Loss) from Continuing Operations** | **$79,750** | **($15,780)** | | Net Loss from Discontinued Operations | ($4,750) | ($4,524) | | **Net Income (Loss)** | **$75,000** | **($20,304)** | | **Diluted Earnings (Loss) Per Share** | **$2.43** | **($0.78)** | - The financial statements for the three months ended March 31, 2024, were restated due to errors in the classification and presentation of cash flows from certain nonrecourse securitization transactions, which were incorrectly reported on a net basis instead of a gross basis[27](index=27&type=chunk)[29](index=29&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's home equity financing focus, a **1-for-10 reverse stock split**, and remediation of a material weakness in cash flow reporting - The company is a financial services holding company focused on providing home equity-based financing solutions for modern retirement, operating through its main lending subsidiary, **Finance of America Reverse LLC (FAR)**[24](index=24&type=chunk)[26](index=26&type=chunk) - On July 25, 2024, the company completed a **1-for-10 reverse stock split** of its Class A Common Stock. All share and per-share amounts in the report have been retroactively adjusted[37](index=37&type=chunk) - The company has outstanding unfunded commitments available to borrowers related to reverse mortgage loans totaling **$4.4 billion** as of March 31, 2025[95](index=95&type=chunk) - As an issuer of HMBS, subsidiary FAR is subject to minimum net worth, liquidity, and leverage requirements by Ginnie Mae. As of March 31, 2025, FAR was in compliance with these requirements, having received a waiver for the minimum outstanding capital requirements related to its accounting treatment of securitizations[106](index=106&type=chunk)[107](index=107&type=chunk)[109](index=109&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=45&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes Q1 2025's improved results to higher net origination gains and favorable fair value changes, driving pre-tax income from continuing operations to **$81.7 million** - The company's strategy focuses on growing its core retirement solutions business, utilizing multiple distribution channels, and connecting borrowers with investors through its Portfolio Management segment to efficiently monetize loans[136](index=136&type=chunk) Consolidated Results from Continuing Operations (in thousands) | | For the three months ended March 31, 2025 | For the three months ended March 31, 2024 | | :--- | :--- | :--- | | **Total Revenues** | **$165,695** | **$74,682** | | Net portfolio interest income | $70,435 | $70,175 | | Net fair value changes on loans and related obligations | $103,826 | $6,337 | | **Total Expenses** | **$86,369** | **$91,315** | | **Net Income (Loss) from Continuing Operations Before Income Taxes** | **$81,693** | **($15,780)** | - The **$97.5 million** improvement in pre-tax income from continuing operations was primarily driven by a **$74.7 million** increase in fair value changes from market inputs/model assumptions and a **$6.4 million** increase in net origination gains from higher loan volumes[156](index=156&type=chunk) Non-GAAP Reconciliation Summary (in thousands) | | For the three months ended March 31, 2025 | For the three months ended March 31, 2024 | | :--- | :--- | :--- | | Net income (loss) from continuing operations | $79,750 | ($15,780) | | **Adjusted net income (loss)** | **$12,930** | **($6,707)** | | **Adjusted EBITDA** | **$28,967** | **$7** | | **Adjusted earnings (loss) per share** | **$0.52** | **($0.29)** | [Segment Results](index=51&type=section&id=MD%26A%20-%20Segment%20Results) Retirement Solutions revenues increased to **$51.7 million** with higher loan origination, and Portfolio Management pre-tax income surged to **$105.3 million** due to fair value changes Retirement Solutions Segment Results (in thousands) | | For the three months ended March 31, 2025 | For the three months ended March 31, 2024 | | :--- | :--- | :--- | | Total revenues | $51,721 | $45,708 | | Total expenses | $48,462 | $49,410 | | **Net Income (Loss) Before Income Taxes** | **$3,259** | **($3,876)** | | Loan origination volume | $560,678 | $423,453 | Portfolio Management Segment Results (in thousands) | | For the three months ended March 31, 2025 | For the three months ended March 31, 2024 | | :--- | :--- | :--- | | Total revenues | $129,009 | $37,249 | | Total expenses | $23,731 | $22,753 | | **Net Income Before Income Taxes** | **$105,278** | **$14,496** | | Net carrying value of earning assets | $597,594 | N/A | [Liquidity and Capital Resources](index=62&type=section&id=MD%26A%20-%20Liquidity%20and%20Capital%20Resources) Primary liquidity sources include loan sales and borrowings; cash decreased by **$50.1 million** in Q1 2025, with **$29.1 billion** in total debt obligations - Primary sources of liquidity include payments from the sale or securitization of loans, proceeds from participating interests in loans, and advances on various credit facilities[202](index=202&type=chunk) Cash Flow Summary (in thousands) | | For the three months ended March 31, 2025 | For the three months ended March 31, 2024 (As Restated) | | :--- | :--- | :--- | | Net cash used in operating activities | ($92,082) | ($132,243) | | Net cash provided by investing activities | $45,475 | $85,153 | | Net cash provided by (used in) financing activities | ($3,500) | $65,884 | | **Net (decrease) increase in cash and cash equivalents and restricted cash** | **($50,116)** | **$18,777** | Contractual Cash Obligations as of March 31, 2025 (in thousands) | Contractual cash obligations: | Total | Less than 1 year | 1 - 3 years | 3 - 5 years | More than 5 years | | :--- | :--- | :--- | :--- | :--- | :--- | | Nonrecourse debt | $9,548,811 | $2,567,083 | $4,710,853 | $874,476 | $1,396,399 | | Warehouse lines of credit | $513,357 | $482,412 | $30,945 | — | — | | Other secured lines of credit | $495,537 | $37,036 | $69,231 | — | $389,270 | | Notes payable | $434,955 | $137,408 | $150,754 | $146,793 | — | | **Total** | **$11,028,332** | **$3,229,283** | **$4,971,341** | **$1,028,016** | **$1,799,692** | [Quantitative and Qualitative Disclosures About Market Risk](index=69&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate fluctuations; a **25 basis point** rate increase could result in a **$70 million** net decrease in fair value - The company's primary market risk is interest rate risk. An increase in rates could adversely affect loan origination volume, increase servicing costs, and reduce the fair value of long-term assets. A decrease in rates could increase prepayment speeds, also reducing the fair value of long-term assets[248](index=248&type=chunk)[249](index=249&type=chunk)[253](index=253&type=chunk) Interest Rate Sensitivity Analysis as of March 31, 2025 (in thousands) | | Down 25 bps | Up 25 bps | | :--- | :--- | :--- | | **Increase (decrease) in assets** | | | | Loans held for investment, subject to HMBS related obligations | $31,369 | ($31,197) | | Loans held for investment, subject to nonrecourse debt | $123,475 | ($120,653) | | Loans held for investment | $5,965 | ($5,842) | | **Total assets** | **$160,809** | **($157,692)** | | **Increase (decrease) in liabilities** | | | | HMBS related obligations | $27,120 | ($26,887) | | Nonrecourse debt | $59,651 | ($60,980) | | **Total liabilities** | **$86,771** | **($87,867)** | [Controls and Procedures](index=70&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were ineffective due to a material weakness in cash flow statement preparation, with a remediation plan underway - Management concluded that disclosure controls and procedures were not effective as of March 31, 2025, due to a material weakness in internal control over financial reporting[259](index=259&type=chunk) - The material weakness relates to ineffective controls over the preparation and review of the consolidated cash flow statements, specifically regarding the classification of cash flows from nonrecourse securitization transactions[261](index=261&type=chunk)[262](index=262&type=chunk) - A remediation plan is in place, focusing on enhancing control documentation for cash flow statement presentation and providing additional training to accounting and financial reporting personnel on **ASC 230, Cash Flows**[264](index=264&type=chunk)[266](index=266&type=chunk) PART II - Other Information [Legal Proceedings](index=72&type=section&id=Item%201.%20Legal%20Proceedings) The company is defending three coordinated representative lawsuits under **PAGA** for alleged labor code violations, with individual claims settled and representative claims pending - The company is defending three coordinated representative lawsuits under the California Private Attorneys General Act (PAGA) for alleged labor code violations. Individual claims have been settled, but the representative claims remain pending[88](index=88&type=chunk)[89](index=89&type=chunk) [Risk Factors](index=72&type=section&id=Item%201A.%20Risk%20Factors) The company is not aware of any material changes from the risk factors previously disclosed in its Form 10-K/A filed with the SEC on May 20, 2025 - There are no material changes from the risk factors previously disclosed in the company's Annual Report on **Form 10-K/A**[269](index=269&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=72&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) None - There were no unregistered sales of equity securities during the period[271](index=271&type=chunk) [Defaults Upon Senior Securities](index=72&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) None - There were no defaults upon senior securities during the period[272](index=272&type=chunk) [Other Information](index=72&type=section&id=Item%205.%20Other%20Information) No directors or Section 16 officers adopted, modified, or terminated **Rule 10b5-1** or non-Rule 10b5-1 trading arrangements during the quarter - No directors or Section 16 officers reported any new, modified, or terminated Rule 10b5-1 trading plans during the quarter[274](index=274&type=chunk) [Exhibits](index=72&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the report, including transaction agreements, corporate governance documents, and CEO/CFO certifications

Financial Data and Key Metrics Changes - The company reported funded volume of $561 million in Q1 2025, exceeding guidance and marking a 32% increase from Q1 2024 [5][15] - GAAP net income for Q1 2025 was $80 million, or $3.17 per share, compared to a net loss of $16 million, or $0.58 per share in Q1 2024 [6][16] - Adjusted net income improved to $13 million, or $0.52 per share, a $20 million improvement year-over-year [7][17] - Adjusted EBITDA totaled $29 million, representing a significant increase from breakeven in Q1 2024 [17] Business Line Data and Key Metrics Changes - The wholesale channel exceeded volume expectations, contributing to overall guidance being surpassed, although it carries lower margins [18] - The company saw a 40% increase in initial thirty-day sales conversion rates and a 12% reduction in cost per opportunity [12][19] Market Data and Key Metrics Changes - The company benefited from a lower rate environment, with the ten-year treasury falling approximately 35 basis points [6] - April 2025 was noted as the best month for submission and funded volume in the last two years, indicating strong market performance [26] Company Strategy and Development Direction - The company launched the "A Better Way with FOA" campaign to reposition reverse mortgages as a mainstream financial planning tool for homeowners aged 55 and up [8][10] - The strategic focus is on enhancing customer engagement and optimizing the customer journey, with a goal of improving lead conversion metrics [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to execute its strategy, highlighting the increasing awareness among older homeowners regarding home equity [22] - The company reaffirmed its full-year guidance for funded volume between $2.4 billion and $2.7 billion and adjusted EPS between $2.6 and $3 [20] Other Important Information - The company has seen a 25% year-over-year reduction in general and administrative expenses, with a notable 35% decrease in communication and data processing expenses [19] - The leadership change with John Scarpatti being promoted to Chief Production Officer is expected to unlock growth potential [13] Q&A Session Summary Question: How did rate volatility in April impact volumes? - Management noted that April was the best month for submission and funded volume in the last two years, indicating strong performance despite rate volatility [26][27] Question: What is the outlook for expenses going forward? - Management indicated that the fixed cost base is relatively stable, with opportunities for cost reductions as contracts renew, while variable expenses may increase with production [28][29]

Financial Data and Key Metrics Changes - The company reported $561 million in funded volume for Q1 2025, exceeding guidance and marking a 32% increase compared to Q1 2024 [5][6][15] - GAAP net income was $80 million or $3.17 per basic share, a significant turnaround from a net loss of $16 million or $0.58 per share in Q1 2024 [6][16] - Adjusted net income improved to $13 million or $0.52 per share, up $20 million year-over-year from an adjusted net loss of $7 million in Q1 2024 [6][17] - Adjusted EBITDA totaled $29 million, reflecting an increase from breakeven in Q1 2024 and an $11 million improvement from Q4 2024 [17] Business Line Data and Key Metrics Changes - The company experienced a 5% increase in funded volume from Q4 2024, indicating consistent growth across its operations [15] - Product level margins improved quarter-over-quarter, although total Retirement Solutions revenue margin remained flat due to a shift in channel mix [18] Market Data and Key Metrics Changes - The company benefited from a lower rate environment, with the ten-year treasury falling approximately 35 basis points, contributing to a positive fair value environment [6] - The wholesale channel exceeded volume expectations, although it carries lower margins, impacting overall revenue margin [18] Company Strategy and Development Direction - The company launched the "A Better Way with FOA" campaign to reposition reverse mortgages as a mainstream financial planning tool for homeowners aged 55 and up [7][10] - The strategic focus is on enhancing customer engagement and optimizing the customer journey, with early results showing a 16% improvement in inquiry to lead conversion [11][12] - The company aims to introduce new solutions to address emerging customer needs amid economic uncertainties [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to meet its full-year guidance of $2.4 billion to $2.7 billion in funded volume and $2.6 to $3 in adjusted earnings per share [6][20] - The company noted that April was the best month for submission and funded volume in the last two years, indicating strong market performance [24] - Management acknowledged ongoing rate volatility but indicated it has not significantly impacted volumes thus far [25] Other Important Information - The company has seen a 25% year-over-year reduction in general and administrative expenses, highlighting ongoing cost management efforts [19] - Operational productivity improved, with a 33% increase in loans per employee compared to Q1 2024 [20] Q&A Session Summary Question: How did rate volatility in April impact volumes? - Management noted that April was the best month for submission and funded volume in the last two years, indicating strong performance despite rate volatility [24] Question: What is the outlook for expenses going forward? - Management indicated that the fixed cost base is relatively stable, with opportunities for cost reductions as contracts renew, while variable expenses may increase with production [26][27]

Strategic Goals - Finance of America aims to mainstream home equity for retirement by positioning reverse mortgages alongside common financing options[4] - The company intends to break the adoption barrier and increase customer numbers by elevating its brand and offering a customer-centric experience[4] - Finance of America is targeting homeowners 55+ to leverage their home equity for retirement[13] Key Initiatives - Finance of America is modernizing messaging, developing progressive digital experiences, and providing unparalleled customer care to attract a new kind of borrower[5] - The company launched the "A Better Way with FOA" campaign[6] - Finance of America is using performance ads to bring reverse mortgages from the fringe to the mainstream[8] - Finance of America is setting a new standard as the voice of the category through consumer education[11] Brand Positioning - The "Better Way" brand platform positions Finance of America as a trusted partner[13]

Financial Performance - Basic earnings per share for Q1 2025 were $3.17, resulting in $80 million of net income from continuing operations[1] - Adjusted earnings per share for the quarter were $0.52, with adjusted net income of $13 million, reflecting a $20 million improvement compared to Q1 2024[4] - Total revenues for the quarter were $166 million, a 121% increase compared to $75 million in Q1 2024[5] - Net income from continuing operations for Q1'25 was $79.8 million, compared to a loss of $142.6 million in Q4'24 and a loss of $15.8 million in Q1'24[16] - Basic earnings per share from continuing operations for Q1'25 was $3.17, a significant improvement from a loss of $5.95 in Q4'24 and a loss of $0.58 in Q1'24[17] - Adjusted net income for Q1'25 was $13 million, up from $5 million in Q4'24 and a loss of $7 million in Q1'24[17] - Total revenues for Q1'25 were $165.7 million, compared to a loss of $49.4 million in Q4'24 and $74.7 million in Q1'24[16] Equity and Assets - Total equity increased to $395 million as of March 31, 2025, representing a 25% growth from $316 million at the end of 2024[6] - Tangible equity grew by 89% from $99 million at the end of 2024 to $187 million as of March 31, 2025[6] - Total equity increased to $395 million in Q1'25 from $316 million in Q4'24 and $256 million in Q1'24[17] Segment Performance - The Retirement Solutions segment reported a pre-tax income of $3 million, with adjusted net income of $9 million, marking a 200% increase in pre-tax income compared to Q4 2024[11] - The Portfolio Management segment achieved a pre-tax income of $105 million, an increase from a loss of $168 million in Q4 2024, with adjusted net income of $20 million[12] Operational Metrics - Funded volume reached $561 million in Q1 2025, a 32% increase from $424 million in Q1 2024, exceeding the high end of the guidance range[4] - Adjusted EBITDA for the quarter was $29 million, a 61% increase from $18 million in Q4 2024[5] - Adjusted EBITDA for Q1'25 was $29 million, compared to $18 million in Q4'24[17] - Portfolio interest income for Q1'25 was $480.6 million, an increase from $473.2 million in Q4'24 and $464.0 million in Q1'24[16] Changes and Adjustments - The company reported net fair value changes on loans and related obligations of $103.8 million in Q1'25, compared to a loss of $169.1 million in Q4'24 and a gain of $6.3 million in Q1'24[16] - The company experienced a net loss from discontinued operations of $4.8 million in Q1'25, compared to no loss in Q4'24 and a loss of $4.5 million in Q1'24[16] - The company revised its definitions of adjusted net income (loss), adjusted EBITDA, and adjusted earnings (loss) per share to include all equity-based compensation starting from the third quarter of 2024[21] Company Strategy and Initiatives - The company launched a new brand platform, 'A Better Way with FOA,' along with a national advertising campaign to increase awareness of reverse mortgages[4] - The company is a leading provider of home equity-based financing solutions, focusing on optimizing the distribution of originated loans to investors[24] - Management considers adjusted earnings (loss) per share important for evaluating the company's overall performance[46] Conference and Reporting - The company will host a conference call on May 6, 2025, to discuss the results for the first quarter ended March 31, 2025[22]

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Financial Data and Key Metrics Changes - In 2024, the company recognized GAAP net income of $40 million, adjusted net income of $14 million, and adjusted EBITDA of $60 million, reflecting a $200 million increase in GAAP net income and nearly $100 million increase in adjusted net income from 2023 to 2024 [12][25][36] - The company funded more than $1.93 billion in loans, a 19% increase in volume year-over-year, with expectations for 2025 origination volumes to be between $2.4 billion to $2.7 billion, representing a 26% to 42% increase from 2024 [11][23] Business Line Data and Key Metrics Changes - The reverse loan volumes grew by 19%, with a 73% increase in non-agency reverse volume year-over-year and nearly 400% year-over-year growth in the HomeSafe Second product [27][28][19] - The revenue margin on originations increased from 9.2% in 2023 to 10.7% in 2024, reflecting a 16% increase driven by a shift towards higher-margin proprietary products [28][29] Market Data and Key Metrics Changes - The demand for loans among homeowners aged 55 and above represented over 31% of all second lien originations in 2023, with seniors accounting for roughly $50 million in second lien originations annually [19][20] - HomeSafe Second originations accounted for only one-tenth of 1% of the total lending to this demographic, indicating a significant market opportunity [20] Company Strategy and Development Direction - The company aims to make home equity a mainstream component of retirement planning, focusing on expanding its reach and driving value for customers and stakeholders [13][34] - Strategic initiatives include integrating the retail platform, enhancing operational efficiency, and launching a new advertising campaign to optimize marketing efforts [10][15][50] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term value of the business, citing favorable demographic trends and a growing retiree population with substantial home equity exceeding $14 trillion [36] - The company anticipates continued growth and profitability in 2025, supported by disciplined cost management and strategic initiatives [34][31] Other Important Information - The company completed the largest securitization from non-agency proprietary products in its history in February 2025, enhancing liquidity and supporting growth [33] - New leadership hires were made to drive transformation, including a Chief Information Officer and a Chief Customer Officer [18] Q&A Session Summary Question: Margin pressure due to rising rates - Management acknowledged that there was some headwind in Q4 due to rising rates, but they expect improvements in Q1 as rates stabilize [41][43] Question: Guidance on origination volumes - Management reaffirmed guidance, indicating expectations for a ramp in origination volumes throughout the year, particularly with the HomeSafe Second product [46][48] Question: Update on HECM 2.0 - Management provided an update on HECM 2.0, noting progress but no effective date yet for implementation [56]

Financial Performance - Net income from continuing operations for 2024 was $40 million, translating to $1.78 basic earnings per share[4]. - Adjusted net income for the year was $14 million, or $0.60 adjusted earnings per share, reflecting a $97 million improvement compared to 2023[4]. - Adjusted EBITDA for 2024 was $60 million, marking a significant recovery in profitability[4]. - Total revenue for 2024 increased by 44% compared to 2023, driven by higher funded volumes and improved margins[13]. - Total expenses decreased from $209 million in 2023 to $195 million in 2024, reflecting operational efficiencies[13]. - The Retirement Solutions segment achieved pre-tax income of $11 million and adjusted net income of $38 million for the year[10]. - The Portfolio Management segment recognized pre-tax income of $84 million, benefiting from positive fair value adjustments and increased yield on residual interests[12]. - For the year ended December 31, 2024, the company reported a pre-tax income of $11 million for Retirement Solutions, $84 million for Portfolio Management, and a loss of $52 million for Corporate & Other, totaling a pre-tax income of $43 million[29]. - The adjusted net income for the year 2024 was $38 million for Retirement Solutions, $42 million for Portfolio Management, and a loss of $66 million for Corporate & Other, resulting in a total adjusted net income of $14 million[29]. Quarterly Performance - Total revenues for Q4'24 were $(105.623) million, compared to $290.073 million in Q3'24 and $338.171 million in 2023, indicating a significant decline[18]. - Net income (loss) from continuing operations for Q4'24 was $(142.629) million, compared to $203.748 million in Q3'24 and $40.418 million in 2023[18]. - Basic earnings (loss) per share from continuing operations for Q4'24 was $(5.95), down from $8.48 in Q3'24 and $1.78 in 2023[20]. - Adjusted EBITDA for Q4'24 was $18 million, down from $32 million in Q3'24 and $(17) million in Q4'23[21]. - The company reported a net loss attributable to controlling interest of $(59.088) million in Q4'24, compared to a profit of $84.203 million in Q3'24[21]. - Total expenses for Q4'24 were $87.056 million, an increase from $80.308 million in Q3'24[18]. - For the three months ended December 31, 2024, adjusted net income for Retirement Solutions was $8 million, Portfolio Management was $13 million, and Corporate & Other reported a loss of $15 million, resulting in a total adjusted net income of $5 million[26]. - The adjusted earnings per share for the same period were $0.31 for Retirement Solutions, $0.52 for Portfolio Management, and $(0.61) for Corporate & Other, leading to an overall adjusted earnings per share of $0.21[26]. - The weighted average share count for the three months ended December 31, 2024, was 24,429,615 shares[26]. Capital and Equity - Total equity rose from $272 million in 2023 to $316 million in 2024, an increase of 16%[8]. - Tangible net worth improved by 421%, from $19 million at the end of 2023 to $99 million at the end of 2024[8]. - The weighted average shares outstanding for Q4'24 were 9,930,520, slightly up from 9,924,671 in Q3'24[20]. Operational Insights - Reverse mortgage funded volume increased by 19% year-over-year, with $534 million produced in Q4, exceeding guidance[4]. - The company emphasizes its focus on expanding its customer base and enhancing its digital capabilities to improve loan origination quality[36]. - The company is subject to various risks, including changes in interest rates and compliance with extensive regulations, which could impact future performance[36]. Non-GAAP Measures - The company has revised its definitions of adjusted net income (loss), adjusted EBITDA, and adjusted earnings (loss) per share to include all non-cash equity-based compensation starting from Q3 2024[43]. - Adjusted net income (loss) is utilized by management to assess the underlying key drivers and operational performance of the continuing operations of the business[46]. - Adjusted EBITDA provides visibility to the underlying operating performance by excluding certain items that management does not believe are representative of core earnings[50]. - Adjusted earnings (loss) per share is calculated as adjusted net income (loss) divided by the weighted average shares outstanding, including various classes of stock[52]. - The company emphasizes that non-GAAP financial measures should not be considered as alternatives to net income (loss) or other performance measures determined in accordance with U.S. GAAP[41]. - Management believes that the presentation of non-GAAP measures enhances investors' understanding of certain aspects of financial performance[40]. - Adjusted EBITDA includes adjustments for income taxes, changes in fair value of loans and securities, and certain non-recurring costs[48]. - The company cautions users of its financial statements not to place undue reliance on non-GAAP financial measures due to their limitations[42]. - Adjusted net income (loss) may include other adjustments based on facts and circumstances to provide a supplemental means of evaluating operating performance[47]. - The company’s management evaluates performance through non-GAAP measures to maintain and grow the business[39]. Future Outlook - The company plans to host a conference call on March 11, 2025, to discuss the results for the fourth quarter and full year ended December 31, 2024[32].

Industry Overview - The Zacks Mortgage & Related Services industry is facing challenges due to mortgage rate volatility and macroeconomic factors, leading to a tightening purchase market and declining refinancing volumes [1][5] - The industry consists of providers of mortgage-related loans, refinancing, and loan-servicing, with non-banks gaining market share as banks retreat due to higher compliance and capital requirements [3] Current Trends - High mortgage rates have kept homebuyers sidelined, with the 30-year fixed rate remaining between 6% and 7% for over two years, affecting mortgage demand and origination [4] - Mortgage rates are expected to remain elevated due to strong U.S. economic fundamentals, leading to a negative trend in mortgage originations and refinancing activities [5] - The competitive landscape is intensifying, with forecasts indicating an increase in U.S. single-family mortgage debt outstanding, driven by house price appreciation, but tighter margins may challenge profitability for many originators [6] Servicing Segment Insights - The servicing segment is expected to provide support as companies face declines in gain-on-sale margins and lower loan origination volumes, with slow prepayment speeds creating tailwinds for mortgage service rights (MSR) [7] - The U.S. single-family mortgage debt outstanding is projected to reach $14.7 trillion by the end of 2025, presenting significant growth opportunities in servicing portfolios [7] Industry Performance - The Zacks Mortgage & Related Services industry currently holds a Zacks Industry Rank of 141, placing it in the bottom 43% of over 249 Zacks industries, indicating bleak near-term prospects [8][9] - The industry has underperformed the broader Zacks Finance sector and the S&P 500, gaining 13.8% over the past year compared to 28.8% and 25.2% for the sector and index, respectively [11] Valuation Metrics - The industry trades at a price-to-book (P/B) ratio of 4.77X, compared to the S&P 500's 8.89X, with historical trading ranges showing a high of 11.62X and a low of 1.18X over the past five years [13] - The Zacks Finance sector's trailing 12-month P/B ratio is 4.16X, indicating that the mortgage and related services industry is trading at a premium compared to its broader sector [15] Company Highlights - **PennyMac Financial Services, Inc. (PFSI)**: Focuses on mortgage origination and servicing, with a projected earnings estimate of $14.02 per share for 2025, reflecting a 21.7% increase year-over-year [19] - **Lending Tree, Inc. (TREE)**: Operates an online marketplace and is diversifying its offerings, with a 2025 earnings estimate of $3.37 per share, indicating a 26.4% rise from the previous year [24] - **Finance of America Companies (FOA)**: A diversified consumer lending platform with a focus on mortgages and innovative products, projecting a 256% increase in earnings to $2.67 per share for 2025 [28]

Core Viewpoint - Momentum investing focuses on "buying high and selling higher" rather than the traditional "buying low and selling high" approach, aiming for quicker profits [1] Group 1: Momentum Investing Characteristics - Momentum investing can be risky as stocks may lose momentum if their valuations exceed future growth potential, leading to potential losses for investors [2] - A safer strategy involves investing in bargain stocks that exhibit recent price momentum, which can be identified using tools like the Zacks Momentum Style Score [3] Group 2: Finance of America Companies Inc. (FOA) Analysis - FOA has shown significant recent price momentum with a four-week price change of 54.2%, indicating growing investor interest [4] - Over the past 12 weeks, FOA's stock has gained 184.1%, demonstrating its ability to deliver positive returns over a longer timeframe [5] - FOA has a Momentum Score of B, suggesting it is an opportune time to invest in the stock to capitalize on its momentum [6] Group 3: Earnings Estimates and Valuation - FOA has received a Zacks Rank 1 (Strong Buy) due to upward revisions in earnings estimates, which typically attract more investors and drive prices higher [7] - The stock is currently trading at a Price-to-Sales ratio of 0.39, indicating it is undervalued, as investors pay only 39 cents for each dollar of sales [7] Group 4: Additional Investment Opportunities - Besides FOA, there are other stocks that meet the criteria of the 'Fast-Paced Momentum at a Bargain' screen, suggesting further investment opportunities [8] - Investors can explore over 45 Zacks Premium Screens tailored to different investing styles to identify potential winning stocks [9]