Quarterly report pursuant to Section 13 or 15(d)

Business Segment Reporting

v3.23.3
Business Segment Reporting
 9 Months Ended
Sep. 30, 2023
Segment Reporting [Abstract]  
Business Segment Reporting
20. Business Segment Reporting
The following tables are a presentation of financial information by segment (in thousands), and have been restated to reflect the new segment structure as described in Note 1 - Organization and Description of Business:
For the three months ended September 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 $ (2,212) $ (4,772) $ (6,984) $ —  $ —  $ (6,984)
Net fair value gains (losses) on loans and related obligations 31,376  (84,511) (53,135) —  —  (53,135)
Fee income 10,983  2,473  13,456  1,354  (1,609) 13,201 
Net interest expense
Interest income —  4,118  4,118  325  —  4,443 
Interest expense —  (20,298) (20,298) (7,667) —  (27,965)
Net interest expense —  (16,180) (16,180) (7,342) —  (23,522)
Total revenues 40,147  (102,990) (62,843) (5,988) (1,609) (70,440)
Total expenses 60,034  21,490  81,524  25,511  (1,609) 105,426 
Impairment of other assets —  —  —  (558) —  (558)
Other, net 16  —  16  3,837  —  3,853 
Net loss before taxes $ (19,871) $ (124,480) $ (144,351) $ (28,220) $ —  $ (172,571)
Depreciation and amortization $ 9,503  $ 30  $ 9,533  $ 421  $ —  $ 9,954 
Total assets $ 309,534  $ 26,022,716  $ 26,332,250  $ 1,510,951  $ (1,454,095) $ 26,389,106 
For the three months ended September 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 $ 142  $ (6,650) $ (6,508) $ —  $ —  $ (6,508)
Net fair value gains (losses) on loans and related obligations 71,204  (80,721) (9,517) —  (727) (10,244)
Fee income 3,906  7,147  11,053  5,774  (6,615) 10,212 
Net interest expense
Interest income —  2,051  2,051  476  —  2,527 
Interest expense —  (26,098) (26,098) (7,436) —  (33,534)
Net interest expense —  (24,047) (24,047) (6,960) —  (31,007)
Total revenues 75,252  (104,271) (29,019) (1,186) (7,342) (37,547)
Total expenses 43,369  27,463  70,832  28,891  (7,372) 92,351 
Impairment of intangible assets —  (3,800) (3,800) —  —  (3,800)
Other, net 24  784  808  19,690  (30) 20,468 
Net income (loss) before taxes $ 31,907  $ (134,750) $ (102,843) $ (10,387) $ —  $ (113,230)
Depreciation and amortization $ 9,671  $ 109  $ 9,780  $ 1,105  $ —  $ 10,885 
Total assets $ 356,776  $ 19,871,260  $ 20,228,036  $ 1,585,163  $ (1,560,617) $ 20,252,582 
For the nine months ended September 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 $ (5,789) $ (17,675) $ (23,464) $ —  $ —  $ (23,464)
Net fair value gains (losses) on loans and related obligations 88,777  (58,651) 30,126  —  —  30,126 
Fee income 24,236  10,914  35,150  6,352  (8,125) 33,377 
Net interest expense
Interest income —  8,788  8,788  946  —  9,734 
Interest expense —  (68,400) (68,400) (22,855) —  (91,255)
Net interest expense —  (59,612) (59,612) (21,909) —  (81,521)
Total revenues 107,224  (125,024) (17,800) (15,557) (8,125) (41,482)
Total expenses 154,325  68,407  222,732  84,601  (8,125) 299,208 
Impairment of other assets —  —  —  (558) —  (558)
Other, net 75  —  75  2,777  —  2,852 
Net loss before taxes $ (47,026) $ (193,431) $ (240,457) $ (97,939) $ —  $ (338,396)
Depreciation and amortization $ 31,057  $ 78  $ 31,135  $ 1,296  $ —  $ 32,431 
Total assets $ 309,534  $ 26,022,716  $ 26,332,250  $ 1,510,951  $ (1,454,095) $ 26,389,106 
For the nine months ended September 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 $ 220  $ (462) $ (242) $ —  $ —  $ (242)
Net fair value gains (losses) on loans and related obligations 254,831  (255,755) (924) —  (4,185) (5,109)
Fee income 12,646  62,870  75,516  23,053  (26,344) 72,225 
Net interest expense
Interest income 43  4,613  4,656  664  —  5,320 
Interest expense (54) (63,108) (63,162) (20,877) —  (84,039)
Net interest expense (11) (58,495) (58,506) (20,213) —  (78,719)
Total revenues 267,686  (251,842) 15,844  2,840  (30,529) (11,845)
Total expenses 141,239  96,728  237,967  109,739  (30,508) 317,198 
Impairment of intangible assets —  (3,800) (3,800) —  —  (3,800)
Other, net 3,276  848  4,124  33,461  21  37,606 
Net income (loss) before taxes $ 129,723  $ (351,522) $ (221,799) $ (73,438) $ —  $ (295,237)
Depreciation and amortization $ 28,980  $ 306  $ 29,286  $ 2,783  $ —  $ 32,069 
Total assets $ 356,776  $ 19,871,260  $ 20,228,036  $ 1,585,163  $ (1,560,617) $ 20,252,582 
The Company operates through two operating segments: Retirement Solutions and Portfolio Management.
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. 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).
Portfolio Management
Our Portfolio Management segment provides product development, loan securitization, loan sales, risk management, servicing oversight, and asset management services to the Company. 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 ("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 earnings. The Portfolio Management segment generates revenues 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.