Market Opportunity - The U.S. reverse mortgage market opportunity is estimated at $12 trillion in home equity for homeowners aged 62 and older, with only 2% currently utilizing reverse mortgages[18][21] - The company is focusing on retirement solutions and reverse mortgage origination, having exited traditional mortgage lending and commercial lending segments[71] - The company is focused on developing innovative products for the senior population, enhancing its position as a market leader in reverse mortgages[22] Financial Position - As of December 31, 2022, the company had $2.8 billion in committed or uncommitted loan funding capacity and approximately $1.4 billion in liquidity sources[24] - The company generated net losses of $715.5 million and $1.176.7 million for the years ended December 31, 2022 and 2021, respectively, with an accumulated deficit of $634.3 million as of December 31, 2022[77] - Revenues decreased from $1.7 billion in fiscal year 2021 to $0.6 billion in fiscal year 2022 due to rising interest rates and lower origination volumes[74] Operations and Strategy - The company plans to acquire the assets and operations of AAG, a leading reverse mortgage lender, expected to close on March 31, 2023, creating the leading U.S. reverse mortgage originator[30] - The Mortgage Originations segment was authorized to wind down operations, except for the Home Improvement channel, which was completed by February 28, 2023[34] - The company has entered into an agreement to acquire certain business operations of American Advisors Group for a transaction expected to close at the end of Q1 2023, which is part of a $30 million equity raise[79] Regulatory Environment - The company is subject to extensive regulation by federal, state, and local authorities, which could adversely impact its results of operations and financial condition if any loans are found to have been originated in violation of such laws[54] - The company must comply with a complex array of federal, state, and local regulations, with noncompliance potentially leading to fines, loss of licenses, and other penalties[172] - The company is subject to increased legal, accounting, and financial compliance costs due to the requirements of the Exchange Act and Sarbanes-Oxley, which may strain resources[93] Employee and Culture - The company maintains a strong focus on employee mental health and offers a comprehensive benefits package, including health, dental, vision, life insurance, and a 401(k) with employer match[52] - The company has a commitment to diversity, equity, and inclusion (DEI), recognizing the value of varied experiences and perspectives to drive innovation and revenue growth[46] - As of December 31, 2022, the company had 1,943 U.S.-based employees, including 1,931 full-time and 12 part-time employees, along with 381 employees based in the Philippines[44] Risks and Challenges - The company faces competitive pressures from other financial institutions that may have greater financial resources and lower funding costs, particularly in a rising interest rate environment[40] - The company’s operations are significantly impacted by changes in interest rates, which could adversely affect its business and earnings[72] - The company faces risks associated with acquisitions, including the potential failure to identify liabilities or shortcomings prior to investment[96] Technology and Innovation - The company is making significant technology investments to enhance service offerings, but returns on these investments are unpredictable[98] - The company utilizes a modern learning management platform for employee training, covering compliance with consumer protection laws and other regulatory topics[48] - The company is subject to regulatory risks related to subservicer compliance, which could lead to fines and impact financial performance[153] Market Dynamics - The demand for loan originations is influenced by various factors, including national economic conditions, interest rates, and seasonal trends, with historically lower revenue levels in the first quarter[43] - The company’s mortgage origination activity is seasonal, with higher volumes typically in the second and third quarters[129] - Profitability is directly impacted by interest rate changes, with existing mortgage assets losing value as rates rise[135] Legal and Compliance Issues - The company is currently involved in litigation related to alleged violations of the California Labor Code, which could result in significant administrative costs[205] - The Company is subject to two enforcement matters with the CFPB, which could adversely affect its reverse mortgage business and financial results[189] - Legal proceedings may arise from alleged violations of consumer protection laws, which could result in significant financial liabilities[178]

Financial Data and Key Metrics Changes - The company recorded a net loss of $182 million or $0.90 per fully diluted share in Q4 2022, with an adjusted net loss of $56 million for the quarter and $61 million for the full year [7][37] - Cash decreased to $97 million in Q4, primarily due to operational losses in the mortgage origination segment, with a book value of $405 million and tangible net worth of $30 million as of December 31 [21][22] - On a pro forma basis, excluding the wind-down and divested businesses, the company recognized adjusted net income of $53 million for the year [20][43] Business Line Data and Key Metrics Changes - The reverse mortgage business originated $4.8 billion in funded volume in 2022, generating $128 million in pre-tax income despite declining revenue margins [32][42] - The mortgage origination segment recorded a $98 million adjusted net loss, while the commercial segment had a pre-tax loss of $26 million and lender services recorded a pre-tax loss of $25 million [41][42] - The company expects modest losses in the mortgage business in Q1 2023, with losses anticipated to be eliminated as the wind-down is completed [38] Market Data and Key Metrics Changes - The company is focusing on the reverse mortgage market, which is benefiting from strong demographic and economic tailwinds, with senior home equity reaching a record $11.8 trillion [18][30] - The acquisition of AAG is expected to enhance the company's market presence and expand its ability to educate consumers about leveraging home equity for retirement [10][11] Company Strategy and Development Direction - The company has decided to discontinue its forward mortgage origination segment due to uncertainty in the residential mortgage market, focusing instead on high-growth businesses like reverse mortgages [8][9] - The strategic direction is centered on helping Americans achieve their retirement goals through innovative home equity solutions [30][31] - The company anticipates significant cost and revenue synergies from the AAG acquisition, which will strengthen its capital and liquidity [39][40] Management's Comments on Operating Environment and Future Outlook - Management remains bullish on the earnings power of the organization but expects some volatility in near-term performance due to the recent business transformation [45] - The company believes that the actions taken will lead to improved performance in 2023, with a focus on completing announced transactions and integrating the AAG platform [24][40] Other Important Information - The company has taken steps to streamline operations and optimize infrastructure, expecting annual savings of $80 million to $100 million compared to peak costs in 2022 [34] - The company has completed four securitizations for over $1.4 billion in proprietary reverse volume during a challenging market [33] Q&A Session Summary Question: What is the current state of the Reverse business and expected volumes? - Management noted that volumes in the Reverse space have decreased, but they expect the AAG acquisition to add approximately $100 million in proprietary product volume post-acquisition [47][48] Question: What are the expectations for adjusted net income in Q1? - Management indicated that Q1 is likely to be the trough for the year, with improvements expected in Q2 as synergies from the AAG transaction materialize [49][50] Question: Are there any additional business lines that need to be wound down? - Management expressed confidence that the process of divesting non-core operations is largely complete, with no immediate plans for further monetization of remaining business lines [51]

Business Transformation & Financial Performance - Finance of America (FOA) transformed its business by completing the wind-down of its Mortgage Originations business in Q1 2023[11] - The company generated $53 million in ProForma Adjusted Net Income in 2022[16] - FOA's full year 2022 Adjusted Net Loss was $(61) million[13] - In Q4 2022, the Adjusted Net Loss was $(56) million[28] De-leveraging and Capital Strengthening - FOA is focused on de-leveraging and de-risking its balance sheet[5] - The company securitized approximately $1.4 billion in proprietary reverse loans over the past four months[14] - Over $200 million in Commercial loans were sold since the end of 2022[14] - In Q4 2022, over $750 million of proprietary reverse loans were securitized[31] - Roughly $700 million of proprietary reverse loans were securitized[32] Strategic Transactions - Sales of Title Insurance and Commercial Originations are expected to generate approximately $70 million in tangible equity and future liquidity[14,24] - The AAG acquisition is anticipated to generate more than $70 million of tangible net worth plus substantial operational synergies[14,35]

| --- | --- | |------------------------------------|-------| | | | | | | | Earnings Presentation \| Q3 2022 | | | | | | | | | November 2022 | | | ©2022 Finance of America Companies | | Disclaimer Forward-Looking Statements This presentation includes "forward-looking statements" within the meaning of the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts or statements of current conditions, but instead represent only mana ...

Finance of America Companies, Inc. (NYSE:FOA) Q3 2022 Earnings Conference Call November 9, 2022 8:00 AM ET Company Participants Michael Fant - Senior Vice President, Finance Graham Fleming - President and Interim Chief Executive Officer Johan Gericke - Chief Financial Officer Conference Call Participants Stephen Laws - Raymond James Doug Harter - Credit Suisse James Faucette - Morgan Stanley Operator Welcome to the Finance of America Third Quarter 2022 Earnings Call. My name is Harry and I’ll be coordinatin ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _________________________ FORM 10-Q _________________________ (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-40308 _________________________ FINANCE OF AMERICA COMPANIES INC. (Exact ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-40308 FINANCE OF AMERICA COMPANIES INC. (Exact name of registrant as specified in its charter) (State or other ...

Financial Data and Key Metrics Changes - The company recorded a net loss of $168 million or $0.70 per fully diluted share for Q2 2022, primarily due to operating losses and balance sheet write-downs [8][10] - On an adjusted basis, the company generated an adjusted net loss of $22 million, largely attributed to the Mortgage Originations segment due to a significant drop in refinance volumes [10][32] - Tangible equity decreased by $155 million, mainly due to non-cash fair value marks from wider spreads [33] Business Line Data and Key Metrics Changes - Mortgage Originations revenue decreased by 24% compared to Q1 2022, with a 29% decline in net rate lock volume, resulting in a $21 million adjusted net loss [34] - Reverse Origination segment achieved a record funded volume of $1.58 billion in Q2, a 7% increase quarter-over-quarter, but revenue decreased by 26% due to margin compression [21][36] - Commercial Originations originated $540 million in funded volume, a slight decline from Q1, with expectations of lower volumes in Q3 due to rising rates [23][38] - Lender Services revenue fell by 24% quarter-over-quarter, impacted by lower refinance volumes, but advisory income saw strong growth [39] Market Data and Key Metrics Changes - The tenure increased by 115 basis points to 3.49% and then decreased by 51 basis points to close the quarter at 2.98%, resulting in a 64 basis point increase for the quarter [29] - Spreads on both agency and non-agency mortgages reached new highs, significantly impacting the Origination businesses and balance sheet [30] Company Strategy and Development Direction - The company is focused on three strategic priorities: optimizing the mortgage business, investing in Specialty Financing Services, and leveraging technology to transform into a customer-centric organization [15][26] - The company aims to capitalize on the growing purchase market, with purchase originations currently comprising approximately 85% of total volume [18] - The Home Improvement business is expected to become an effective customer acquisition channel, with plans to cross-sell additional products [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating current market challenges and emphasized the long-term fundamentals of the business remain sound [14][27] - The company anticipates continued volatility in the market but expects margins to improve as conditions stabilize [42] - Management is not providing specific financial guidance due to market uncertainty but remains optimistic about long-term growth opportunities [42] Other Important Information - The company has reduced overall headcount and expenses by approximately 20% since the beginning of the year to align with current market demand [11][12] - The company is actively managing costs and has implemented expense initiatives to right-size the business [11] Q&A Session Summary Question: Customer Growth Prospects - Management is optimistic about growing customers in the Reverse channel through education and strategic partnerships, and in the Mortgage business by filling geographic gaps [46][47] Question: Reverse Volume Projections - Management refrained from providing specific numbers for Reverse volumes but expressed optimism about long-term growth due to significant market opportunities [49][50] Question: Stock Repurchase Strategy - Management indicated no current intention to buy back stock, citing the need for equity to fund growth in the Reverse business and the importance of maintaining liquidity amid market volatility [55][56]

Market Trends and Impact - The 30-year fixed mortgage rate doubled from 2.9% in December 2020 to 5.8% by June 2022[9] - This increase comprised a 2.1% increase in the 10-year Treasury Yield and a 0.8% increase in credit spreads[9] - Non-QM spreads have increased over 130 bps since the end of 2020[14] Mortgage Business - Refinance volume dropped 64% between Q1 and Q2 2022 due to the rapid increase in rates and spreads[12] - This drop was partially offset by a 21% quarter-over-quarter growth in Purchase volumes[12] - Mortgage originations funded volume decreased 29%[11] Reverse and Commercial Businesses - In Q2 2022, 3-year swaps increased by 40 bps to 3.1% after peaking at 3.8% during the quarter[14] - Spreads widened by 40 bps to new highs during the same period[14] - Reverse mortgage volume was $1580 million in Q2 2022 with a revenue margin of 5.1%, compared to $1475 million and 7.3% in Q1 2022[15] - Commercial mortgage volume was $507 million in Q2 2022 with a revenue margin of 2.5%, compared to $499 million and 4.1% in Q1 2022[16] Financial Outlook - Q3 2022 Mortgage Adjusted Net Loss is expected to fall between Q1 ($-10 million) and Q2 ($-21 million)[20] - Q3 2022 SF&S Adjusted Net Income (Loss) is expected to fall between Q1 ($47 million) and Q2 ($-1 million)[20]

FINANCE of AME | --- | --- | |------------------------------------|-------| | | | | | | | Earnings Presentation \| Q1 2022 | | | | | | | | | May 2022 | | | ©2022 Finance of America Companies | | Disclaimer Forward-Looking Statements This presentation includes "forward-looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. The actual results of Finance of America Companies Inc., together with its subsidiaries and affiliate ...