Quarterly report pursuant to Section 13 or 15(d)

Business Segment Reporting

v3.23.2
Business Segment Reporting
 6 Months Ended
Jun. 30, 2023
Segment Reporting [Abstract]  
Business Segment Reporting
20. 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 June 30, 2023
Retirement Solutions Portfolio Management Total Operating Segments Corporate and Other Eliminations Total
REVENUES
Loss on sale and other income from loans held for sale, net $ (2,265) $ (1,845) $ (4,110) $ —  $ 56  $ (4,054)
Net fair value gains (losses) on loans and related obligations 32,926  (126,059) (93,133) —  —  (93,133)
Fee income 10,073  2,978  13,051  2,045  (1,272) 13,824 
Net interest expense — 
Interest income —  3,200  3,200  —  —  3,200 
Interest expense —  (24,106) (24,106) (7,628) —  (31,734)
Net interest expense —  (20,906) (20,906) (7,628) —  (28,534)
Total revenues 40,734  (145,832) (105,098) (5,583) (1,216) (111,897)
Total expenses 58,767  22,238  81,005  30,216  (1,216) 110,005 
Other, net 28  —  28  (1,965) —  (1,937)
Net loss before taxes $ (18,005) $ (168,070) $ (186,075) $ (37,764) $ —  $ (223,839)
Depreciation and amortization $ 11,911  $ 34  $ 11,945  $ 427  $ —  $ 12,372 
Total assets $ 332,516  $ 26,063,685  $ 26,396,201  $ 1,250,637  $ (1,222,574) $ 26,424,264 
For the six months ended June 30, 2023
Retirement Solutions Portfolio Management Total Operating Segments Corporate and Other Eliminations Total
REVENUES
Loss on sale and other income from loans held for sale, net $ (3,577) $ (12,903) $ (16,480) $ —  $ —  $ (16,480)
Net fair value gains on loans and related obligations 57,401  25,860  83,261  —  —  83,261 
Fee income 13,253  8,441  21,694  4,998  (6,516) 20,176 
Net interest expense — 
Interest income —  4,670  4,670  621  —  5,291 
Interest expense —  (48,102) (48,102) (15,188) —  (63,290)
Net interest expense —  (43,432) (43,432) (14,567) —  (57,999)
Total revenues 67,077  (22,034) 45,043  (9,569) (6,516) 28,958 
Total expenses 94,291  46,917  141,208  59,090  (6,516) 193,782 
Other, net 59  —  59  (1,060) —  (1,001)
Net loss before taxes $ (27,155) $ (68,951) $ (96,106) $ (69,719) $ —  $ (165,825)
Depreciation and amortization $ 21,554  $ 48  $ 21,602  $ 875  $ —  $ 22,477 
Total assets $ 332,516  $ 26,063,685  $ 26,396,201  $ 1,250,637  $ (1,222,574) $ 26,424,264 
For the three months ended June 30, 2022
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 $ 78  $ (4,740) $ (4,662) $ —  $ (101) $ (4,763)
Net fair value gains (losses) on loans and related obligations 77,872  (72,249) 5,623  —  (3,458) 2,165 
Fee income 4,935  1,198  6,133  8,240  (7,533) 6,840 
Net interest expense
Interest income —  1,515  1,515  94  —  1,609 
Interest expense —  (20,287) (20,287) (6,738) —  (27,025)
Net interest expense —  (18,772) (18,772) (6,644) —  (25,416)
Total revenues 82,885  (94,563) (11,678) 1,596  (11,092) (21,174)
Total expenses 50,443  34,554  84,997  38,758  (10,936) 112,819 
Other, net 38  37  75  13,923  156  14,154 
Net income (loss) before taxes $ 32,480  $ (129,080) $ (96,600) $ (23,239) $ —  $ (119,839)
Depreciation and amortization $ 9,711  $ 106  $ 9,817  $ 1,169  $ —  $ 10,986 
Total assets $ 418,005  $ 19,880,825  $ 20,298,830  $ 1,746,031  $ (1,728,600) $ 20,316,261 
For the six months ended June 30, 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 $ 78  $ 6,188  $ 6,266  $ —  $ (818) $ 5,448 
Net fair value gains (losses) on loans and related obligations 183,627  (175,034) 8,593  —  (3,458) 5,135 
Fee income 8,740  55,723  64,463  17,279  (19,729) 62,013 
Net interest expense
Interest income 43  2,562  2,605  188  —  2,793 
Interest expense (54) (37,010) (37,064) (13,441) —  (50,505)
Net interest expense (11) (34,448) (34,459) (13,253) —  (47,712)
Total revenues 192,434  (147,571) 44,863  4,026  (24,005) 24,884 
Total expenses 97,870  69,265  167,135  80,848  (23,954) 224,029 
Other, net 3,252  64  3,316  13,771  51  17,138 
Net income (loss) before taxes $ 97,816  $ (216,772) $ (118,956) $ (63,051) $ —  $ (182,007)
Depreciation and amortization $ 19,309  $ 197  $ 19,506  $ 1,678  $ —  $ 21,184 
Total assets $ 418,005  $ 19,880,825  $ 20,298,830  $ 1,746,031  $ (1,728,600) $ 20,316,261 
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.