Finance of America Companies Inc.

Thank you for standing by. My name is Stephanie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Finance of America second quarter 2023 earnings call. All lines have been placed on mute to prevent any feedback noise. After the speaker's remarks, there will be a Q&A session. If you would like to ask a question during this time, simply press the star followed by the number one in your telephone keypad. If you would like to withdraw your question, again, press the star and the number one. Thank you. Michael Flant, Senior Vice President of Finance, you may begin your conference.

Thank you, and good afternoon, everyone, and welcome to Finance of America's second quarter 2023 earnings call. With me today are Graham Fleming, Chief Executive Officer, and Johan Gehrig, Chief Financial Officer. As a reminder, this call is being recorded. In addition, we will refer to certain non-GAAP financial measures on this call. You can find reconciliations of non-GAAP to GAAP financial measures to the extent available without unreasonable efforts discussed on today's call in our earnings press release on the investor relations page of our website at www.financeofamerica.com. Also, I would like to remind everyone that comments on this conference call regarding the company's expected operating and financial performance for future periods may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the company's current expectations and are subject to the Safe Harbor Statement for forward-looking statements that you will 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, 2022, filed with the SEC on March 16, 2023. As such, risk factors may be amended and updated in our subsequent 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 Chief Executive Officer, Graham Fleming. Graham?

Thank you, Michael. Good afternoon, everyone, and thank you for joining us on our second quarter 2023 earnings call. Finance of America continues to lead the way in helping provide older Americans with more choices and flexibility when it comes to meeting the evolving needs of today's modern retirees. More importantly, Finance of America is now at an exciting inflection point. Over the last several months, we executed a series of strategic actions, including the sale of our title insurance business, the sale of the majority stake of the remaining lender services business, and most importantly, the initial steps in the integration of the AAG platform. The completion of these transactions marks an important and pivotal step in the execution of our long-term growth strategy designed to help Americans achieve their retirement goals with the use of home equity. Our business is now fully transformed into a leading modern retirement solutions platform, and we believe it is well positioned for long-term success. For today's call, I'm going to begin by briefly reviewing our financial results for the quarter. I'll then spend time discussing business structure updates and the progress we've made against executing against our strategic priorities. Johan will then discuss our financials in more detail. Our results this quarter illustrate our commitment to streamlining the organization, and making significant investments in our retirement solutions business, which we believe is poised for long-term growth due to demographic tailwinds. However, today's cyclical mortgage market has been significantly impacted by wider spreads and higher interest rates, which place downward pressure on our results due to negative fair value adjustments and reduced volumes. On a continuing operations basis, we recorded gap net loss of $221 million or $0.91 per basic share in Q2, driven primarily by negative impact of rates and spreads during the quarter. On an adjusted basis, we recognize a loss of $26 million, or $0.12 per fully diluted share, as the growth in volume in a reverse business does not yet fully offset the increased costs of the expanded operational infrastructure as we integrate the AAG platform. We continue to manage our business with discipline and a focus on our long-term strategic priorities. This includes streamlining our operations to reduce expenses and investing in business lines with the greatest long-term growth potential. Corporate expenses continue to trend downward, and we expect to see additional savings in the second half of the year as we realign our corporate infrastructure in light of recent activity. As of June 30th, we are approximately 80% of the way to our savings target of $80 to $100 million annually, and expect to secure an additional $20 million in annualized savings by the end of the year. The combined Finance of America and AEG brands now have a commanding market share lead in reverse mortgages, with a nearly 40% share of the HECM market year-to-date, measured by HMBS issuance. Our acquisition of the AEG platform has a sophisticated marketing engine that has the ability to further raise product awareness and increase the addressable market. Despite a difficult economic environment and amid a complex integration, we are starting to see positive traction in our pipeline and operational processes. During the second quarter, Finance of America assisted over 2,300 customers in finding ways to thrive in retirement through the use of a reverse mortgage. Compared to the first quarter, this resulted in a 95% increase in the number of funded loans. This quarter, we funded $447 million in UPP, a 25% increase from the prior quarter, as we began the integration of the AAG platform into our business. Prior to our acquisition of the AAG platform, AAG was the leading originator of HECM loans in the reverse industry. Our HECM volume in Q2 doubled compared to Q1, and we believe a substantial opportunity exists to sell our proprietary jumbo reverse loans through the AAG platform as well. We've done significant work to successfully integrate the AAG teams and operations into our existing infrastructure, and we are already seeing the results. Today, the team is unified, morale is high, and we're energized for the opportunity and long-term potential in front of us. Since the start of the AAG integration, we have onboarded over 400 employees to bolster our retail channel and support our corporate segment, continuing to streamline overhead costs. Many of these resources were temporary as we worked through the transitional phase. Additionally, we onboard nearly 150 vendors into our ecosystem, the majority of which are marketing vendors engaged to expand and strengthen our advertising and educational reach. Finally, we are working tirelessly to identify and consolidate redundant vendor engagements and overlapping loan origination systems in an effort to optimize costs and alleviate the reporting and leadership challenges that come from working out of multiple systems. The AAG Brand's direct-to-consumer retail channel reaches more than 10 million consumers annually via targeted marketing and advertising. Once fully integrated, the AAG Brand and REACH will enable us to better serve the growing needs of retirees across the nation. We're encouraged by the continued strength in submission volumes in the quarter, and are optimistic about the rest of 2023. Finance of America's reverse legacy wholesale channel, which has been a market leader for over 10 years, has seen growth in its pipeline since the end of March, and it currently stands at its highest level since late 2022. This pipeline growth and increase in submission volume is a positive sign that should drive funded volume growth in the coming months. We know we have a substantial opportunity to address the retirement gap in America. which we believe we are well positioned to help solve. If we can continue to increase awareness of our products and solutions, grow our customer base, and innovate new financial solutions centered around the home. Our goal is to help our existing customers as they harness the power of their home and the different ways it can be used to help obtain a better outcome later in life. This is consistent with macroeconomic trends we've seen for the last few quarters. The U.S. retirement savings gap is approaching $4 trillion, yet senior homeowners have amassed more than $12 trillion in home equity value, according to the latest data from Nirmala. This is our market opportunity at its core, helping older homeowners use their homes as a superpower to achieve their financial goals. In summary, I'm proud of how our team navigated challenges this quarter while making huge strides in a complex integration. We continue to prudently manage our operations and right-size our expenses while investing in our core business segments where we're seeing prominent signs of growth. With that, I will pass the call to Johan to discuss the financials.