Annual report [Section 13 and 15(d), not S-K Item 405]

Business Segment Reporting

v3.25.0.1
Business Segment Reporting
 12 Months Ended
Dec. 31, 2024
Segment Reporting [Abstract]  
Business Segment Reporting
24. Business Segment Reporting
The following tables are a presentation of financial information by segment (in thousands):
For the year ended December 31, 2024
Retirement Solutions Portfolio Management Total Reportable Segments Corporate and Other Eliminations Total
Portfolio interest income
Interest income $ —  $ 1,905,214  $ 1,905,214  $ —  $ —  $ 1,905,214 
Interest expense —  (1,637,286) (1,637,286) —  —  (1,637,286)
Net portfolio interest income —  267,928  267,928  —  —  267,928 
Other income (expense)
Net origination gains 179,837  —  179,837  —  —  179,837 
Gain on securitization of HECM tails, net —  45,535  45,535  —  —  45,535 
Fair value changes from model amortization —  (201,101) (201,101) —  —  (201,101)
Fair value changes from market inputs or model assumptions —  55,924  55,924  —  —  55,924 
Net fair value changes on loans and related obligations 179,837  (99,642) 80,195  —  —  80,195 
Fee income 26,553  3,183  29,736  —  (492) 29,244 
Gain (loss) on sale and other income from loans held for sale, net (76) 378  302  —  —  302 
Non-funding interest expense, net —  —  —  (39,498) —  (39,498)
Net other income (expense) 206,314  (96,081) 110,233  (39,498) (492) 70,243 
Total revenues 206,314  171,847  378,161  (39,498) (492) 338,171 
Expenses
Salaries, benefits, and related expenses 83,448  15,513  98,961  39,399  —  138,360 
Loan production and portfolio related expenses 7,887  28,318  36,205  —  —  36,205 
Loan servicing expenses —  31,323  31,323  —  —  31,323 
Marketing and advertising expenses 39,337  41  39,378  51  —  39,429 
Depreciation and amortization 37,751  77  37,828  1,119  —  38,947 
General and administrative expenses 26,521  12,177  38,698  21,256  (492) 59,462 
Total expenses 194,944  87,449  282,393  61,825  (492) 343,726 
Impairment of other assets (291) —  (291) (600) —  (891)
Gain on extinguishment of debt —  —  —  56,193  —  56,193 
Other, net (174) —  (174) (6,757) —  (6,931)
Net income (loss) before taxes $ 10,905  $ 84,398  $ 95,303  $ (52,487) $ —  $ 42,816 
Total assets $ 250,519  $ 28,877,278  $ 29,127,797  $ 1,343,803  $ (1,317,561) $ 29,154,039 
For the year ended December 31, 2023
Retirement Solutions Portfolio Management Total Reportable Segments Corporate and Other Eliminations Total
Portfolio interest income
Interest income $ —  $ 1,628,877  $ 1,628,877  $ —  $ —  $ 1,628,877 
Interest expense —  (1,360,998) (1,360,998) —  —  (1,360,998)
Net portfolio interest income —  267,879  267,879  —  —  267,879 
Other income (expense)
Net origination gains 121,646  —  121,646  —  —  121,646 
Gain on securitization of HECM tails, net —  25,583  25,583  —  —  25,583 
Fair value changes from model amortization —  (228,391) (228,391) —  —  (228,391)
Fair value changes from market inputs or model assumptions —  58,696  58,696  —  —  58,696 
Net fair value changes on loans and related obligations 121,646  (144,112) (22,466) —  —  (22,466)
Fee income 33,167  10,283  43,450  8,125  (8,125) 43,450 
Loss on sale and other income from loans held for sale, net (6,303) (18,691) (24,994) —  —  (24,994)
Non-funding interest expense, net —  —  —  (29,619) —  (29,619)
Net other income (expense) 148,510  (152,520) (4,010) (21,494) (8,125) (33,629)
Total revenues 148,510  115,359  263,869  (21,494) (8,125) 234,250 
Expenses
Salaries, benefits, and related expenses 96,574  19,874  116,448  61,871  —  178,319 
Loan production and portfolio related expenses 9,555  16,935  26,490  —  —  26,490 
Loan servicing expenses —  30,729  30,729  —  —  30,729 
Marketing and advertising expenses 31,668  24  31,692  204  —  31,896 
Depreciation and amortization 40,571  107  40,678  1,691  —  42,369 
General and administrative expenses 30,468  16,354  46,822  43,507  (8,125) 82,204 
Total expenses 208,836  84,023  292,859  107,273  (8,125) 392,007 
Impairment of intangibles and other assets —  (6,400) (6,400) (2,896) —  (9,296)
Other, net 75  —  75  136  —  211 
Net income (loss) before taxes $ (60,251) $ 24,936  $ (35,315) $ (131,527) $ —  $ (166,842)
Total assets $ 276,605  $ 26,773,101  $ 27,049,706  $ 1,521,058  $ (1,469,895) $ 27,100,869 
The Company has identified two reportable segments: Retirement Solutions and Portfolio Management. The CODM are certain officers of the Company, which include the Chief Executive Officer, Chief Financial Officer, and Chief Investment Officer. The CODM evaluates the performance of the Company’s segments based on net income (loss) before taxes. The CODM uses this reported measure along with periodic reviews of results and overall market activity to allocate resources to segments in the planning and forecasting process.
Retirement Solutions
Our Retirement Solutions segment conducts all of our Company’s loan origination activity, including the origination and acquisition of HECM and non-agency reverse mortgage loans through both the retail and third-party originator channels. The Retirement Solutions segment generates revenue from fees earned at the time of loan origination as well as from the initial estimate of net origination gains, with all originated loans accounted for at fair value. Once
originated, the loans are transferred to our Portfolio Management segment, and any future fair value adjustments, including interest earned, on these originated loans are reflected in the revenues of our Portfolio Management segment until final disposition.
The Company sold the operational assets of its home improvement lending business and substantially completed the process of winding down the operations of the home improvement lending business as of March 31, 2024. For reporting purposes, the previous operations of the home improvement lending business are reported as part of the Company’s Retirement Solutions segment rather than as discontinued operations as the wind-down of the home improvement lending business was not considered by the Company to be a strategic shift that has had or will have a major effect on our operations and financial results.
Portfolio Management
Our Portfolio Management segment provides product development, loan securitization, loan sales, risk management, servicing oversight, and asset management services to the Company. Our Portfolio Management team acts as the connector between borrowers and investors. The direct connections to investors, provided by our Financial Industry Regulatory Authority (“FINRA”) 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 the balance sheet for attractive return opportunities. These retained investments are a source of growing and recurring interest and other servicing-related income. The Portfolio Management segment primarily generates revenue from the net interest income and fair value changes on portfolio assets, monetized through securitization, sale, or other financing of those assets.
Corporate and Other
Corporate and Other consists of our corporate services groups, which support the operations of our Company.
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 reportable 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.