Finance of America Companies Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Discontinued Operations

Discontinued Operations

3 Months Ended

Mar. 31, 2024

Discontinued Operations and Disposal Groups [Abstract]

4. Discontinued Operations

During the fourth quarter of 2022 and calendar year 2023, the Company entered into a series of transactions, discontinuing certain business lines while enhancing our reverse mortgage loan business, in order to transform our business from a vertically integrated, diversified lending and complementary services platform to a modern retirement solutions platform. This transformation included the wind-down of the previously reported Mortgage Originations segment and sale of the previously reported Commercial Originations and Lender Services segments. This constitutes a strategic shift that has or will have a major effect on our operations and financial results.

The following table summarizes the major classes of assets and liabilities classified as discontinued operations as of March 31, 2024 and December 31, 2023 (in thousands):


	March 31, 2024		December 31, 2023
Assets
Other assets, net	$	7,290	$	6,721
Liabilities
Payables and other liabilities	20,647		18,304

The following table summarizes the major components of net loss from discontinued operations (in thousands):


	For the three months ended March 31, 2024		For the three months ended March 31, 2023
Revenues
Net fair value gains on loans and related obligations	$	—	$	308
Fee income	—		32,628
Gain on sale and other income from loans held for sale, net	—		396
Net interest expense:
Interest income	—		517
Interest expense	—		(820)
Net interest expense	—		(303)
Total revenues	—		33,029

Expenses
Salaries, benefits, and related expenses	—		30,851
Loan production and portfolio related expenses	—		1,037
Marketing and advertising expenses	—		540
Depreciation and amortization	—		2,778
General and administrative expenses	1,524		25,150
Total expenses	1,524		60,356
Impairment of other assets(1)	—		(1,055)
Other, net(2)	(3,000)		(9,089)
Net loss from discontinued operations before income taxes	(4,524)		(37,471)
Provision for income taxes from discontinued operations	—		3,419
Net loss from discontinued operations	(4,524)		(40,890)
Net loss from discontinued operations attributable to noncontrolling interest	(2,621)		(25,217)
Net loss from discontinued operations attributable to controlling interest	$	(1,903)	$	(15,673)

(1) The Company evaluates the carrying value of long-lived assets, including fixed assets, leasehold improvements as well as right-of-use assets in operating leases when indicators of impairment exist in accordance with Accounting Standards Codification (“ASC”) 360, Property, Plant, and Equipment. Based on the analysis, the Company recognized an impairment

charge in the three months ended March 31, 2023, related to the sale of the previously reported Commercial Originations segment.

(2) Includes a $3.0 million contingent liability related to our discontinued operations for the three months ended March 31, 2024 and a $10.2 million loss on the sale of our commercial originations operational assets for the three months ended March 31, 2023.

The Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023 included the following material activities related to discontinued operations (in thousands):


	For the three months ended March 31, 2024		For the three months ended March 31, 2023
Gain on sale and other income from loans held for sale, net	$	—	$	396
Unrealized fair value changes on loans, related obligations, and derivatives	—		308
Impairment of other assets	—		1,055
Depreciation and amortization	—		2,778
Acquisition of fixed assets	—		1,815