Finance Of America Companies Inc. · NYSE:FOA
Finance Of America Companies — Q2 2021 Earnings Presentation
23 slides from Finance Of America Companies's earnings presentation, Aug 12, 2021
Slide 1: Earnings Presentation | Q2 2021
Earnings Presentation | Q2 2021 August 2021 ©2021 Finance of America Companies
Slide 2: Disclaimer
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 subsidiar
Slide 3: The Finance of America Difference
The Finance of America Difference A highly differentiated, diversified consumer lending platform producing cycle-resistant earnings • The business is built around multiple products that are distributed through multiple channels ⎯ Our three lending segments, Mortgage Originations, Reverse Origination
Slide 4: Q2 2021 Highlights
Q2 2021 Highlights1 Diversified model mitigated • Mortgage revenue decreased $102 million, or 32%, in line with industry trends mortgage impacts • Record volumes in Reverse and Lender Services businesses drove revenue increase of $32 million, or 22%, for those segments • Non-mortgage revenue account
Slide 5: Segment Results
A FINANCE of AMERICA COMPANIES Segment Results
Slide 6: Q2 Summary Financials and Non-GAAP Reconciliation
Q2 Summary Financials and Non-GAAP Reconciliation $ millions Q2 2021 Q1 2021 Q2 2020 $ millions, except per share data Q2 2021 Q1 2021 Q2 2020 Mortgage ($6) $96 $117 Other Key Metrics Reverse 53 45 33 Cash taxes paid 2 - - Commercial 3 1 (6) Provision for income taxes 1 1 - Lender Services 8 13 5 Po
Slide 7: Mortgage revenue impacted by industry trends
Mortgage revenue impacted by industry trends Highlights Funded Volumes ($B) 10.0 8.5 8.8 • Pre-tax loss of $6 million for the quarter 8.4 9.0 7.6 driven by 32% decline in revenue, non- 9.3 8.0 8.4 6.9 recurring expense items, and impacts from 7.0 7.9 recent acquisitions. For Q2, the latter two 6.0 6
Slide 8: Reverse volume and revenue led to record quarter
Reverse volume and revenue led to record quarter Highlights Funded Volumes ($B)1 1.2 • Pre-tax income of $53 million for the 1.0 quarter driven by record revenue 1.0 0.8 0.8 0.8 • Record quarterly funded volume in 0.6 0.7 Reverse of $1.0 billion, up 32% year over 0.6 year 0.4 • Reverse originations
Slide 9: Commercial Originations continued to build momentum
Commercial Originations continued to build momentum Highlights Funded Volumes ($B)1 0.4 • Pre-tax income of $3 million for the 0.4 0.4 quarter 0.3 0.2 0.3 • Funded volume increased 37% on a 0.3 sequential-quarter basis as borrower and 0.2 investor demand remains robust 0.2 0.1 0.1 • Current pipeline
Slide 10: Capital markets activity remained strong
Capital markets activity remained strong Highlights Mortgage Servicing Rights, at fair value ($M) 350.0 • Pre-tax loss of $27 million in the quarter 300.0 290.9 was negatively impacted by fair value 267.4 adjustments and non-recurring expenses 250.0 related to the Business Combination 200.0 180.7 •
Slide 11: Growing client base fueled Lender Services growth
Growing client base fueled Lender Services growth Highlights Title Agent Closings and Underwriter Policies (#) 120,000 • Pre-tax income of $8 million for the 100,000 quarter as non-recurring expenses related to the Business Combination offset 7% 80,000 quarter over quarter revenue growth 48,814 56,1
Slide 12: Business Combination Impacts
Business Combination Impacts
Slide 13: What happened?
What happened? • Some of our peers have recently gone public, either via traditional IPO or SPAC merger • In a traditional IPO, there is no business combination to evaluate, and as a result, no purchase accounting is required • In a SPAC merger, there are various reasons why the accounting treatment
Slide 14: Segment Spotlight: Finance of America Reverse
Segment Spotlight: Finance of America Reverse
Slide 15: Fact: Seniors have inadequate savings for retirement
Fact: Seniors have inadequate savings for retirement Annual Cash Flow Shortfall 1 Savings Depletion Over Time 2 20,000 17,000 15,000 $5K Annual Gap 12,000 10,000 7,000 $19,378 5,000 2,000 Other income $49,542 0 Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Social security & retirement -5,0
Slide 16: Fact: Seniors have substantial untapped home equity
Fact: Seniors have substantial untapped home equity Seniors' home equity as a % of wealth1 Our experience has shown that: 6% • Many seniors are unclear how 0-50% (16%) 50-70% (24%) 16% 84% of senior to access home equity as part of their retirement plan 70-90% (54%) homeowners hold 90%+ (6%) 24% mor
Slide 17: Solution: A Reverse Mortgage can monetize untapped home equity
Solution: A Reverse Mortgage can monetize untapped home equity to mitigate savings shortfalls Reverse mortgages are flexible financial products, that allow seniors who are typically 62 years or older to convert the equity in their home to cash Typical Reverse Borrower Financial Planning Tool Mortgag
Slide 18: Our Competitive Advantage: industry leading platform
Our Competitive Advantage: FOA has built an industry leading platform to address this problem Background • Finance of America Reverse has been originating reverse mortgages since 2003 • Management team averages 15 years of reverse mortgage experience; ~300 FTEs across the country • Licensed to origi
Slide 19: FOA Opportunity: grow the market as opposed to compete for share
FOA Opportunity: Along with our peers, to grow the market as opposed to compete for share Seniors have substantial untapped home equity1 Home Ownership Rate By Age4 79% 81% <2% Market 74% Senior home value1 Penetration2 $10tn 52% Senior home equity1 $8tn Reverse mortgage loans outstanding3 $105bn <5
Slide 20: Appendix
A FINANCE of AMERICA COMPANIES Appendix
Slide 21: The Reverse Industry has gone through significant change
The Reverse Industry has gone through significant change Substantial consumer protections have been mandated to the reverse mortgage market in the past decade Activity 2013 2014 2015 2017 2018 2019 2020 60% cap on upfront draws Reduced PLF (the reverse LTV): reduced percentage of borrowers who quali
Slide 22: Finance of America Reverse goes above and beyond
Finance of America Reverse goes above and beyond We are heavily invested to support our customers in their time of need FOA has established a Borrower Care team (independent of our sub-servicer) who: • Provides, at FOA’s expense, access to assistance with property claims or repair needs • Provides “
Slide 23: Reverse Mortgage Research
Reverse Mortgage Research Optimizing Retirement Income by PROTECTING SENIORS: A REVIEW Integrating Retirement Plans, IRAs, and Merton: Combine these 2 financial OF THE FHA’S HOME EQUITY Home Equity: A Framework for products to fund retirement CONVERSION MORTGAGE (HECM) Evaluating Retirement Income P
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