Finance of America Companies Inc.

Hello and welcome to the Financial of the Finance of America fourth quarter 2022 earnings call. My name is Jason and I'll be coordinating your call today. All lines will be muted during the presentation portion of the call and opportunity for questions and answers at the end. If you'd like to ask a question, please press star one on your top one keypad. I'll now hand you over to Michael Fant, senior vice president and finance to begin. Michael, please go ahead.

Thank you and good afternoon, everyone. Welcome to Finance of America's fourth quarter and full year 2022 earnings call. With me today are Graham Fleming, President and Interim Chief Executive Officer, and Johan Gehrig, Chief Financial Officer. As a reminder, this call is being recorded and you can find the earnings release and presentation on our investor relations website at www.financeofamerica.com. In addition, we will refer to certain non-GAAP financial metrics on this call. You can find reconciliations of non-gap-to-gap financial metrics to the extent available without unreasonable effort discussed on today's call in our earnings press release and presentation on the Investor Relations page of our website. Also, I would like to remind everyone that comments on this conference call may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding the company's expected operating financial performance for future periods. These statements are based on the company's current expectations and are subject to the Safe Harbor Statement for forward-looking statements that you'll find in today's earnings release. Actual results for future periods may differ materially from those expressed or implied by these forward-looking statements due to a number of risks or other factors, including those that are described in the Risk Factors section of Finance of America's Annual Report on Form 10-K for the year ended December 31, 2021. originally filed with the SEC on March 15, 2022. As such, risk factors may be amended and updated in our subsequent periodic filings with the SEC. We are not undertaking any commitment to update these statements if conditions change. Please note, these are interim period financials and are unaudited. Now, I would like to turn the call over to Finance of America's President and Interim Chief Executive Officer, Graham Fleming. Graham?

Thank you, Michael. Good afternoon, everyone, and thank you for joining us on our fourth quarter and full year 2022 earnings call. We're going to start by briefly discussing our financial results for the quarter and full year. I will then spend our remaining time focused on our business structure following the completion of the substantial transformation we started last year. During the fourth quarter, we recorded 182 million of net loss, or 90 cents per fully diluted share. On an adjusted basis, we recognized an adjusted net loss of $56 million in the fourth quarter and $61 million for the full year. The adjusted net loss for the year is entirely attributable to the losses associated with the wind down and operating losses of our mortgage originations business, as well as declining volumes in commercial and lender services. On a pro forma basis, when we strip out mortgage originations, commercial originations, and lender services, FOA recognized $53 million in adjusted net income for the year. When we think about these results in the broader context of the residential mortgage market, we believe it prudent to focus on streamlining our organization and investing in core businesses where we have significant competitive advantages. As such, I want to walk you through the steps we've taken over the past six months as part of our transformation. In October 2022, we announced our decision to discontinue our forward mortgage origination segment across both retail and wholesale channels. This wind down is now complete, and this segment will be reported as discontinued operations beginning in 2023. In February, we entered into an agreement to sell the title insurance business oven center for $100 million. As a complimentary service to our forward origination business, This sale is consistent with our decision to focus on opportunities where we have the greatest synergies and long-term growth potential. We are working through regulatory approval now and expect to close this transaction during the second quarter. Upon completion, we expect the influx of capital will positively contribute to the balance sheet. Finally, three weeks ago, we announced the sale of certain assets of Finance of America Commercial are subsidiary that offers residential real estate investment loans. The deal is expected to close in March, and we are in the process of closing out the remaining pipeline of the business. We made these decisions to account for uncertainty in the residential mortgage market. However, this did not stop us from prioritizing investments in high growth businesses like Reverse. Benefiting from strong demographic and economic tailwinds, our new strategic direction is fully centered on helping Americans achieve their retirement goals. With many older Americans' assets tied up in their homes, they often lack the resources to fund their day-to-day living in retirement. We firmly believe that home equity can help more Americans achieve their financial goals. By providing an innovative suite of solutions to our customers, we can make people's retirement goals a reality. To that end, in early December, we announced our intention to acquire certain assets and liabilities of reverse mortgage lender, AAG, which, upon closing, will make the combined company the largest reverse originator in the industry. AAG is the largest HECM originator, while we are the largest proprietary originator, making it a strategic fit within our company and our focus. AAG also has a broad direct consumer market presence that reaches more than 10 million consumers annually. Bringing this under the FOA umbrella will expand our ability to educate more Americans about levering home equity while mapping out their retirement plans. The deal recently received regulatory approval, and we anticipate closing on March 31st. We expect the acquisition to be immediately accretive to both tangible book value and earnings, and we look forward to providing more details upon completion. By simplifying our business structure and focusing on its inherent efficiency, we will be, one, well positioned for long-term growth, and two, set up to be the preeminent choice for Americans looking to achieve their retirement goals using their home equity. With our new structure, we will be able to offer solutions that truly set us apart in the market, enabling us to better serve our clients and solidify our position as a leader in the industry. Beyond our traditional non-agency reverse product, we continue to look at innovative products to bolster our reverse business. In February, we announced the relaunch of HomeSafe Second, the only second lien reverse mortgage product that allows homeowners 55 and older to access their home equity without making monthly payments. With senior home equity reaching a record $11.8 trillion in the third quarter, our products are well-positioned to help seniors utilize the increased value of their homes. Turning to our business segments, our reverse business continues to set a high bar in the industry as the premier wholesale origination platform. In 2022, our reverse business originated $4.8 billion in funded volume and produced $128 million in pre-tax income. As we move into the direct-to-consumer space under the AEG brand, we will be able to connect directly with our customers to better understand their needs and how we can find the right solution for them. FOA's portfolio management and capital markets capabilities play a crucial role in the company's operations, enabling the development of innovative proprietary products and connecting FOA's originated loans to a growing number of large institutional investors. During the last four months, Our team has successfully completed four securitizations for over $1.4 billion in proprietary reverse volume during a challenging market. This has allowed us to significantly de-lever our balance sheet. Finally, at the corporate level, we've taken proactive steps to streamline our operations and optimize our infrastructure to align with our new business model. The right-sizing of the business will allow us to operate more efficiently reduce costs, and improve overall performance. On a run rate basis, we anticipate saving between $80 and $100 million annually when compared to peak costs during 2022. In short, 2022 was a transformative year for the company. By divesting our non-core operations and adding to our reverse business, we are positioning ourselves for future growth and success. These transactions are an important step in our transformation as we focus on ongoing efforts to achieve our long-term goals and support our strategic direction. With the extensive changes we have made, we are confident that 2023 will bring more opportunity, and we are excited to see the continued evolution of our business. And with that, I will pass the call to Johan to discuss the financials.