10-Q

Large accelerated filer

Accelerated filer

Non-accelerated
filer

Smaller reporting company

Emerging growth company

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, 2021

☐	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)


Delaware		85-3474065
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

Street Address 909 Lake Carolyn Parkway, Suite 1550, Irving Texas		75039
(Address of Principal Executive Offices)		(Zip Code)

(972)

999-1833

Registrant’s telephone number, including area code

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock, par value $0.0001 per share	FOA	The New York Stock Exchange
Warrants to purchase shares of Class A Common Stock	FOA.WS	The New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation

S-T

(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a

non-accelerated

filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule

12b-2

of the Exchange Act. (Check one):

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule

12b-2

of the Act). Yes ☐ No ☒

As of November 12, 2021, 58,936,744 of the registrant’s Class A common stock, par value $0.0001 per share, were issued and outstanding.

Table of Contents

Finance of America Companies Inc.

and Subsidiaries


Table of Contents	Page
Part I - Financial Information		1
Item 1. Financial Statements		1

Consolidated Financial Statements		1

Consolidated Statements of Financial Condition		1

Consolidated Statements of Operations		3

Consolidated Statements of Comprehensive Income		4

Consolidated Statements of Equity		5

Consolidated Statements of Cash Flows		7

Notes to Consolidated Financial Statements		9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		76

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q 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 management’s beliefs regarding future events, many of which, by their nature, are inherently uncertain and outside of the Company’s control. It is possible that our actual results, financial condition and liquidity may differ, possibly materially, from the anticipated results, financial condition and liquidity in these forward-looking statements. The Company’s actual results may differ from its expectations, estimates, and projections and, consequently, you should not rely on these forward-looking statements as predictions of future events. Words such as “expect,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believes,” “predicts,” “potential,” “continue,” and similar expressions (or the negative versions of such words or expressions) are intended to identify such forward-looking statements. The Company cautions readers not to place undue reliance upon any forward-looking statements, which are current only as of the date of this report. Results for any specified quarter are not necessarily indicative of the results that may be expected for the full year or any future period. The Company does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in its expectations or any change in events, conditions, or circumstances on which any such statement is based, except as required by law. Such forward-looking statements are subject to various risks and uncertainties including, among others; the effect of the COVID-19 pandemic on the Company’s business; changes in prevailing interest rates or U.S. monetary policies that affect interest rates that may have a detrimental effect on our business; the possibility that the Company may be adversely affected by other economic, business, and/or competitive factors in our markets; our ability to obtain sufficient capital to meet the financing requirements of our business; the use estimates in measuring or determining the fair value of the majority of our assets and liabilities; the possibility of disruption in the secondary home loan market, including the mortgage-backed securities market; and other risks and uncertainties set forth in the section entitled “Risk Factors” included in our Registration Statement on Form S-1 originally filed with the SEC on May 25, 2021, as such factors may be further updated from time to time in the Company’s periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this report and in the Company’s other filings with the SEC.

Website Disclosure

The Company may use its website as a distribution channel of material company information. Financial and other important information regarding the Company is routinely posted on and accessible through the Company’s investor relations website at https://www.financeofamerica.com/investors. In addition, you may automatically receive email alerts and other information about the Company when you enroll your email address by visiting “Email Alerts” under the “News & Events” tab of our investor relations website. Information on the Company’s website is not incorporated by reference herein and is not a part of this Form 10-Q.

Table of Contents

Part I - Financial Information

Item 1. Financial Statements

Finance of America Companies Inc. and Subsidiaries

Consolidated Statements of Financial Condition

(In thousands, except share data)


	September 30, 2021			December 31, 2020
	Successor			Predecessor
	(unaudited)
ASSETS
Cash and cash equivalents	$	191,736		$	233,101
Restricted cash		325,226			306,262
Reverse mortgage loans held for investment, subject to HMBS related obligations, at fair value		10,347,459			9,929,163
Mortgage loans held for investment, subject to nonrecourse debt, at fair value		5,939,651			5,396,167
Mortgage loans held for investment, at fair value		1,077,670			730,821
Mortgage loans held for sale, at fair value		2,047,015			2,222,811
Debt securities		7,317			10,773
Mortgage servicing rights, at fair value, $96,073 and $14,088, subject to nonrecourse MSR financing liability, respectively		340,949			180,684
Derivative assets		54,993			92,065
Fixed assets and leasehold improvements, net		29,503			24,512
Goodwill		1,298,796			121,233
Intangible assets, net		692,676			16,931
Other assets, net		315,102			300,632

TOTAL ASSETS	$	22,668,093		$	19,565,155

LIABILITIES, CONTINGENTLY REDEEMABLE NONCONTROLLING INTEREST (“CRNCI”) AND EQUITY
HMBS related obligation, at fair value	$	10,216,310		$	9,788,668
Nonrecourse debt, at fair value		5,831,083			5,271,842
Other financing lines of credit		3,325,156			2,973,743
Payables and other liabilities		509,803			400,058
Notes payable, net		353,567			336,573

TOTAL LIABILITIES		20,235,919			18,770,884

Commitments and Contingencies (Note 21)
CRNCI		—			166,231
EQUITY (Note 30)
FoA Equity Capital LLC member’s equity		—			628,176
Class A Common Stock (Successor), $0.0001 par value; 6,000,000,000 shares authorized; 58,936,744 shares issued and outstanding at September 30, 2021		6			—
Class B Common Stock (Successor), $0.0001 par value; 1,000,000 shares authorized, 6 shares issued and outstanding at September 30, 2021		—			—
Additional paid-in capital (Successor)		821,316			—
Accumulated deficit (Successor)		(48,164	)		—
Accumulated other comprehensive (loss) income		(92	)		9
Noncontrolling interest		1,659,108			(145	)

TOTAL EQUITY		2,432,174			628,040

TOTAL LIABILITIES, CRNCI AND EQUITY	$	22,668,093		$	19,565,155

See accompanying notes to unaudited consolidated financial statements

Table of Contents

Finance of America Companies Inc. and Subsidiaries

Consolidated Statements of Operations

(In thousands, except share data)

(Unaudited)


	For the three months ended September 30, 2021			April 1, 2021 to September 30, 2021			January 1, 2021 to March 31, 2021			For the three months ended September 30, 2020			For the nine months ended September 30, 2020

	Successor						Predecessor
REVENUES
Gain on sale and other income from mortgage loans held for sale, net	$	210,095		$	397,672		$	291,334		$	407,926		$	836,901
Net fair value gains on mortgage loans and related obligations		122,509			253,660			76,663			95,955			221,638
Fee income		145,725			236,589			161,371			119,375			266,002
Net interest expense:
Interest income		15,862			29,013			12,661			9,937			29,615
Interest expense		(37,691	)		(71,317	)		(34,366	)		(25,935	)		(93,165	)

Net interest expense		(21,829	)		(42,304	)		(21,705	)		(15,998	)		(63,550	)

TOTAL REVENUES		456,500			845,617			507,663			607,258			1,260,991

EXPENSES
Salaries, benefits and related expenses		262,000			536,731			238,530			240,381			615,034
Occupancy, equipment rentals and other office related expenses		8,283			15,003			7,597			8,184			22,795
General and administrative expenses		141,595			260,896			127,217			113,804			273,584

TOTAL EXPENSES		411,878			812,630			373,344			362,369			911,413
OTHER, NET		9,928			7,825			(8,862	)		(2,470	)		(2,514	)

NET INCOME BEFORE INCOME TAXES		54,550			40,812			125,457			242,419			347,064
Provision for income taxes		4,440			5,526			1,137			808			1,574

NET INCOME		50,110			35,286			124,320			241,611			345,490
CRNCI		—			—			4,260			(4,953	)		(22,959	)
Noncontrolling interest		28,726			11,637			201			276			1,076

NET INCOME ATTRIBUTABLE TO CONTROLLING INTEREST	$	21,384		$	23,649		$	119,859		$	246,288		$	367,373

EARNINGS PER SHARE (Note 28)
Basic weighted average shares outstanding		59,861,171			59,871,386
Basic net income per share	$	0.36		$	0.39
Diluted weighted average shares outstanding		191,161,431			191,180,610
Diluted net income per share	$	0.22		$	0.17

See accompanying notes to unaudited consolidated financial statements

Table of Contents


	For the three months ended September 30, 2021			April 1, 2021 to September 30, 2021			January 1, 2021 to March 31, 2021			For the three months ended September 30, 2020			For the nine months ended September 30, 2020

	Successor						Predecessor
NET INCOME	$	50,110		$	35,286		$	124,320		$	241,611		$	345,490
COMPREHENSIVE LOSS ITEM:
Impact of foreign currency translation adjustment		(65	)		(92	)		(11	)		26			37

TOTAL COMPREHENSIVE INCOME		50,045			35,194			124,309			241,637			345,527
Less: Comprehensive income (loss) attributable to the noncontrolling interest and CRNCI		28,681			11,573			4,461			(4,677	)		(21,883	)

COMPREHENSIVE INCOME ATTRIBUTABLE TO CONTROLLING INTEREST	$	21,364		$	23,621		$	119,848		$	246,314		$	367,410


	FoA Equity Capital LLC Member’s Equity			Accumulated Other Comprehensive (Loss) Income			Noncontrolling Interest		Total
Predecessor:
Balance at December 31, 2019 (audited)	$	482,719		$	(51	)	$	145	$	482,813
Contributions from members		1,042			—			—		1,042
Net (loss) income		(27,249	)		—			229		(27,020	)
Foreign currency translation adjustment		—			(8	)		—		(8	)

Balance at March 31, 2020		456,512			(59	)		374		456,827
Distributions to members		(578	)		—			—		(578	)
Noncontrolling interest distributions		—			—			(310