Quarterly report pursuant to Section 13 or 15(d)

Business Segment Reporting

v3.23.1
Business Segment Reporting
 3 Months Ended
Mar. 31, 2023
Segment Reporting [Abstract]  
Business Segment Reporting
22. Business Segment Reporting
The following tables are a presentation of financial information by segment for the periods indicated (in thousands):
For the three months ended March 31, 2023
Retirement Solutions Portfolio Management Total Operating Segments Corporate and Other Eliminations Total
REVENUES
Gain (loss) on sale and other income from loans held for sale, net $ (1,312) $ (11,058) $ (12,370) $ —  $ (56) $ (12,426)
Net fair value gains on loans and related obligations 24,475  151,919  176,394  —  —  176,394 
Fee income 3,180  5,463  8,643  2,953  (5,244) 6,352 
Net interest expense — 
Interest income —  1,470  1,470  621  —  2,091 
Interest expense —  (23,996) (23,996) (7,560) —  (31,556)
Net interest expense —  (22,526) (22,526) (6,939) —  (29,465)
Total revenues 26,343  123,798  150,141  (3,986) (5,300) 140,855 
Total expenses 35,524  24,679  60,203  28,874  (5,300) 83,777 
Other, net 31  —  31  905  —  936 
Net income (loss) before taxes $ (9,150) $ 99,119  $ 89,969  $ (31,955) $ —  $ 58,014 
Depreciation and amortization $ 9,643  $ 14  $ 9,657  $ 448  $ —  $ 10,105 
Total assets $ 296,417  $ 26,327,259  $ 26,623,676  $ 1,912,801  $ (1,861,938) $ 26,674,539 

For the three months ended March 31, 2022
Retirement Solutions Portfolio Management Total Operating Segments Corporate and Other Eliminations Total
REVENUES
Gain on sale and other income from loans held for sale, net $ —  $ 10,928  $ 10,928  $ —  $ (4,707) $ 6,221 
Net fair value gains (losses) on loans and related obligations 105,755  (102,785) 2,970  —  3,990  6,960 
Fee income 3,805  54,525  58,330  9,039  (12,196) 55,173 
Net interest expense
Interest income 43  1,047  1,090  94  —  1,184 
Interest expense (54) (16,723) (16,777) (6,703) —  (23,480)
Net interest expense (11) (15,676) (15,687) (6,609) —  (22,296)
Total revenues 109,549  (53,008) 56,541  2,430  (12,913) 46,058 
Total expenses 47,427  34,711  82,138  38,283  (13,018) 107,403 
Other, net 3,214  27  3,241  (152) (105) 2,984 
Net income (loss) before taxes $ 65,336  $ (87,692) $ (22,356) $ (36,005) $ —  $ (58,361)
Depreciation and amortization $ 9,598  $ 91  $ 9,689  $ 509  $ —  $ 10,198 
Total assets $ 417,791  $ 19,628,648  $ 20,046,439  $ 1,769,059  $ (1,734,835) $ 20,080,663 
The Company has identified three reportable segments: Retirement Solutions, Portfolio Management, and Corporate and Other.
Retirement Solutions
Our Retirement Solutions segment is where we fulfill our goal to help older homeowners achieve their financial goals in retirement. This segment includes all loan origination activity for the Company, including reverse mortgage and home improvement loans. We originate or acquire reverse mortgage loans through our FAR operating subsidiary. This segment originates HECM and non-agency reverse mortgages. We securitize HECM into HMBS, which Ginnie Mae guarantees, and sell them in the secondary market while retaining the rights to service. Non-agency reverse mortgages, which complement the FHA HECM for higher value homes, may be sold as whole loans to investors or held for investment and pledged as collateral to securitized nonrecourse debt obligations. Non-agency reverse mortgage loans are not insured by the FHA. We originate reverse mortgage loans through a retail channel (consisting primarily of field offices and a centralized retail platform) and a third-party originator channel (consisting primarily of a network of mortgage brokers).
Additionally, this segment originates home improvement loans through our FAM subsidiary. Through these operations, the Company assists homeowners in the financing of short-term home improvement projects such as windows, HVAC, or remodeling, and relies on a network of partner contractors across the country to acquire, interact with, and serve these customers. These home improvement loans are then sold in the secondary market through our capital markets platform.
Portfolio Management
Our Portfolio Management segment provides product development, loan securitization, loan sales, risk management, servicing oversight, and asset management services to the enterprise. As part of the vertical integration of our business, our Portfolio Management team acts as the connector between borrowers and investors. The direct connections to investors, provided by our Financial Industry Regulatory Authority registered broker-dealer, allows us to innovate and manage risk through better price and product discovery. Given our scale, we are able to work directly with investors and where appropriate, retain assets on balance sheet for attractive return opportunities. These retained investments are a source of growing and recurring earnings. The Portfolio Management segment generates revenue and earnings in the form of gains on sale of loans, fair value gains on portfolio assets, interest income, and fee income related to mortgage servicing rights, underwriting, advisory, valuation, and other ancillary services.
Corporate and Other
Our Corporate and Other segment consists of our corporate services groups.
The Company's segments are based upon the Company's organizational structure which focuses primarily on the services offered. Corporate functional expenses are allocated to individual segments based on actual cost of services performed based on a direct resource utilization, estimate of percentage use for shared services or headcount percentage for certain functions. Non-allocated corporate expenses include administrative costs of executive management and other corporate functions that are not directly attributable to the Company's operating segments. Revenues generated on inter-segment services performed are valued based on similar services provided to external parties. To reconcile the Company's consolidated results, certain inter-segment revenues and expenses are eliminated in the "Eliminations" column in the previous tables.