Annual report pursuant to Section 13 and 15(d)

Business Segment Reporting

v3.24.0.1
Business Segment Reporting
 12 Months Ended
Dec. 31, 2023
Segment Reporting [Abstract]  
Business Segment Reporting
27. Business Segment Reporting
The following tables are a presentation of financial information by segment (in thousands), and have been recast to reflect the new segment structure as described in Note 1 - Organization and Description of Business:
For the year ended December 31, 2023
Retirement Solutions Portfolio Management Total Reportable Segments Corporate and Other Eliminations Total
REVENUES
Net fair value gains on loans and related obligations $ 121,646  $ 200,683  $ 322,329  $ —  $ —  $ 322,329 
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)
Net interest expense:
Interest income —  10,923  10,923  1,270  —  12,193 
Interest expense —  (87,839) (87,839) (30,889) —  (118,728)
Net interest expense —  (76,916) (76,916) (29,619) —  (106,535)
Total revenues 148,510  115,359  263,869  (21,494) (8,125) 234,250 
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)
Depreciation and amortization $ 40,571  $ 107  $ 40,678  $ 1,691  $ —  $ 42,369 
Total assets $ 276,605  $ 26,773,101  $ 27,049,706  $ 1,521,058  $ (1,469,895) $ 27,100,869 
For the year ended December 31, 2022
Retirement Solutions Portfolio Management Total Reportable Segments Corporate and Other Eliminations Total
REVENUES
Net fair value gains (losses) on loans and related obligations $ 283,808  $ (195,231) $ 88,577  $ —  $ 912  $ 89,489 
Fee income 15,526  66,761  82,287  27,578  (28,050) 81,815 
Gain (loss) on sale and other income from loans held for sale, net 367  (6,298) (5,931) —  —  (5,931)
Net interest expense:
Interest income 43  5,319  5,362  676  —  6,038 
Interest expense (54) (90,926) (90,980) (27,669) —  (118,649)
Net interest expense (11) (85,607) (85,618) (26,993) —  (112,611)
Total revenues 299,690  (220,375) 79,315  585  (27,138) 52,762 
Total expenses 182,287  124,060  306,347  139,014  (27,135) 418,226 
Impairment of intangibles and other assets (3,500) (3,800) (7,300) (2,228) —  (9,528)
Other, net 3,290  860  4,150  27,839  3  31,992 
Net income (loss) before taxes $ 117,193  $ (347,375) $ (230,182) $ (112,818) $ —  $ (343,000)
Depreciation and amortization $ 38,654  $ 319  $ 38,973  $ 3,055  $ —  $ 42,028 
Total assets $ 297,361  $ 20,185,979  $ 20,483,340  $ 1,610,355  $ (1,534,400) $ 20,559,295 
The Company has identified two reportable segments: Retirement Solutions and Portfolio Management.
Retirement Solutions
The mission of our Retirement Solutions segment is to help senior homeowners achieve their financial goals in retirement. This segment includes all loan origination activity for the Company, including the origination of HECM, proprietary reverse mortgage loans, and hybrid mortgage loans through both the retail and wholesale/TPO 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.
While FAM has sold certain operational assets of its home improvement lending business and expects to substantially complete the process of winding down the operations of the home improvement lending business by the end of March 2024, the operations of the home improvement lending business are reported as part of the Company’s Retirement Solutions segment rather than as discontinued operations. This is because the wind-down of the home improvement lending business is not considered by the Company to be a strategic shift that has 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 servicing income categorized within its net fair value gains. The Portfolio Management segment generates revenue from the sale or securitization of loans, fair value gains on portfolio assets,
interest income, fee income related to MSR, and mortgage advisory fees earned on various investment and capital markets services we provide to our internal and external customers.
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.