Finance of America Companies Inc. and Subsidiaries Unaudited Pro Forma Condensed Consolidated Financial Statements | Exhibit 99.1 |
On February 28, 2023, Finance of America Companies Inc. (the “Company”) completed the previously announced discontinuation of the operations of its Mortgage Originations segment, other than its Home Improvement channel (the “Wind Down”). The commencement of the Wind Down was previously disclosed by the Company in its Current Report on Form 8-K filed with the Securities and Exchange Commission on October 21, 2022. The unaudited pro forma condensed consolidated financial information giving effect to the Wind Down is filed in this Exhibit 99.1.
The Wind Down constituted a significant disposition for the Company and qualifies for discontinued operations under U.S. generally accepted accounting principles. As a result, the following unaudited pro forma condensed consolidated statements of operations for the nine months ended September 30, 2022 (Successor), the nine months ended December 31, 2021 (Successor), the three months ended March 31, 2021 (Predecessor), and for the years ended December 31, 2020 and 2019 (Predecessor) are presented as if the Wind Down were completed on January 1, 2019. The following unaudited pro forma condensed consolidated statement of financial position as of September 30, 2022 is presented as if the Wind Down were completed on September 30, 2022.
The unaudited pro forma condensed consolidated financial statements are based on the historical financial statements prepared in accordance with U.S. generally accepted accounting principles and are presented based on information currently available. They are intended for informational and illustrative purposes only and are not intended to represent the Company’s financial position or results of operations had the Wind Down and related events occurred on the dates indicated or to project the Company’s financial performance for any future period. The unaudited pro forma condensed consolidated financial statements do not include adjustments to reflect any potential synergies or dis-synergies that may result from the Wind Down. The pro forma adjustments are based on available information and certain assumptions that management believes are reasonable under the circumstances, and are presented for informational purposes only.
The historical columns in the unaudited pro forma condensed consolidated financial statements reflect the Company’s historical financial statements for the periods presented and do not reflect any adjustments related to the Wind Down and related events.
The unaudited pro forma condensed consolidated financial statements have been prepared in accordance with Article 11 of Regulation S-X, and should be read in conjunction with the following: (i) the accompanying notes to the unaudited pro forma condensed consolidated financial information; (ii) the audited consolidated financial statements and accompanying notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company’s Annual Report on Form 10-K for the annual period ended December 31, 2021; and (iii) the unaudited condensed consolidated financial statements and accompanying notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company’s Quarterly Report on Form 10-Q for the nine months ended September 30, 2022.
Finance of America Companies Inc. and Subsidiaries Unaudited Pro Forma Condensed Consolidated Financial Statements | Exhibit 99.1 |
September 30, 2022 | |||||||||||||||||||||||
Finance of America Companies Inc. and Subsidiaries Historical | Discontinued Operations Adjustments | Finance of America Companies Inc. and Subsidiaries Pro Forma | |||||||||||||||||||||
ASSETS | |||||||||||||||||||||||
Cash and cash equivalents | $ | 169,072 | $ | (43,702) | (a) | $ | 125,370 | ||||||||||||||||
Restricted cash | 210,147 | — | (a) | 210,147 | |||||||||||||||||||
Loans held for investment, subject to Home Equity Conversion Mortgage-Backed Securities ("HMBS") related obligations, at fair value | 10,916,551 | — | 10,916,551 | ||||||||||||||||||||
Loans held for investment, subject to nonrecourse debt, at fair value | 6,741,391 | — | 6,741,391 | ||||||||||||||||||||
Loans held for investment, at fair value | 1,307,413 | — | 1,307,413 | ||||||||||||||||||||
Loans held for sale, at fair value | 859,650 | (614,199) | (a) | 245,451 | |||||||||||||||||||
Mortgage servicing rights ("MSRs"), at fair value, $59,800 subject to nonrecourse MSRs financing liability | 103,069 | — | 103,069 | ||||||||||||||||||||
Derivative assets | 89,899 | (17,596) | (a) | 72,303 | |||||||||||||||||||
Fixed assets and leasehold improvements, net | 19,828 | — | 19,828 | ||||||||||||||||||||
Intangible assets, net | 438,300 | — | 438,300 | ||||||||||||||||||||
Other assets, net | 334,577 | (42,920) | (a) | 291,657 | |||||||||||||||||||
TOTAL ASSETS | $ | 21,189,897 | $ | (718,417) | $ | 20,471,480 | |||||||||||||||||
LIABILITIES AND EQUITY | |||||||||||||||||||||||
HMBS related obligations, at fair value | $ | 10,784,841 | $ | — | $ | 10,784,841 | |||||||||||||||||
Nonrecourse debt, at fair value | 6,745,526 | — | 6,745,526 | ||||||||||||||||||||
Other financing lines of credit | 2,305,999 | (601,635) | (a) | 1,704,364 | |||||||||||||||||||
Payables and other liabilities | 395,635 | (116,782) | (a) | 278,853 | |||||||||||||||||||
Notes payable, net (includes amounts due to related parties of $30,000) | 382,810 | — | 382,810 | ||||||||||||||||||||
TOTAL LIABILITIES | 20,614,811 | (718,417) | 19,896,394 | ||||||||||||||||||||
Commitments and Contingencies | |||||||||||||||||||||||
EQUITY | |||||||||||||||||||||||
Class A Common Stock, $0.0001 par value; 6,000,000,000 shares authorized; 62,959,276 shares issued and outstanding at September 30, 2022 | 6 | — | 6 | ||||||||||||||||||||
Class B Common Stock, $0.0001 par value; 1,000,000 shares authorized, 15 shares issued and outstanding at September 30, 2022 | — | — | — | ||||||||||||||||||||
Additional paid-in capital | 876,140 | — | 876,140 | ||||||||||||||||||||
Accumulated deficit | (577,272) | — | (577,272) | ||||||||||||||||||||
Accumulated other comprehensive loss | (367) | — | (367) | ||||||||||||||||||||
Noncontrolling interest | 276,579 | — | 276,579 | ||||||||||||||||||||
TOTAL EQUITY | 575,086 | — | 575,086 | ||||||||||||||||||||
TOTAL LIABILITIES AND EQUITY | $ | 21,189,897 | $ | (718,417) | $ | 20,471,480 | |||||||||||||||||
(a) Amounts attributable to the Mortgage Originations segment, excluding the Home Improvement channel.
Finance of America Companies Inc. and Subsidiaries Pro Forma Condensed Consolidated Statement of Operations (Unaudited) (In thousands, except share data) | Exhibit 99.1 |
For the nine months ended September 30, 2022 | |||||||||||||||||||||||
Successor | |||||||||||||||||||||||
Finance of America Companies Inc. and Subsidiaries Historical | Discontinued Operations Adjustments | Finance of America Companies Inc. and Subsidiaries Pro Forma | |||||||||||||||||||||
REVENUES | |||||||||||||||||||||||
Gain on sale and other income from loans held for sale, net | $ | 226,336 | $ | (239,210) | (a) | $ | (12,874) | ||||||||||||||||
Net fair value gains on loans and related obligations | 5,672 | — | 5,672 | ||||||||||||||||||||
Fee income | 316,798 | (44,350) | (a) | 272,448 | |||||||||||||||||||
Net interest expense: | |||||||||||||||||||||||
Interest income | 41,748 | (35,054) | (a) | 6,694 | |||||||||||||||||||
Interest expense | (110,900) | 26,716 | (a) | (84,184) | |||||||||||||||||||
Net interest expense | (69,152) | (8,338) | (77,490) | ||||||||||||||||||||
TOTAL REVENUES | 479,654 | (291,898) | 187,756 | ||||||||||||||||||||
EXPENSES | |||||||||||||||||||||||
Salaries, benefits, and related expenses | 549,755 | (264,639) | (a) | 285,116 | |||||||||||||||||||
Occupancy, equipment rentals, and other office related expenses | 22,103 | (13,566) | (a) | 8,537 | |||||||||||||||||||
General and administrative expenses | 361,613 | (92,945) | (a) | 268,668 | |||||||||||||||||||
TOTAL EXPENSES | 933,471 | (371,150) | 562,321 | ||||||||||||||||||||
IMPAIRMENT OF INTANGIBLES AND OTHER ASSETS | (138,184) | 128,884 | (a) | (9,300) | |||||||||||||||||||
OTHER, NET | 41,234 | — | 41,234 | ||||||||||||||||||||
NET LOSS BEFORE INCOME TAXES | (550,767) | 208,136 | (342,631) | ||||||||||||||||||||
Benefit for income taxes | (17,249) | — | (a) | (17,249) | |||||||||||||||||||
NET LOSS | (533,518) | 208,136 | (325,382) | ||||||||||||||||||||
Noncontrolling interest | (399,859) | 140,806 | (a) | (259,053) | |||||||||||||||||||
NET LOSS ATTRIBUTABLE TO CONTROLLING INTEREST | $ | (133,659) | $ | 67,330 | $ | (66,329) | |||||||||||||||||
EARNINGS PER SHARE | |||||||||||||||||||||||
Basic weighted average shares outstanding | 61,993,353 | 61,993,353 | 61,993,353 | ||||||||||||||||||||
Basic net loss per share | $ | (2.16) | $ | (1.09) | (a) | $ | (1.07) | ||||||||||||||||
Diluted weighted average shares outstanding | 188,375,945 | 188,375,945 | 188,375,945 | ||||||||||||||||||||
Diluted net loss per share | $ | (2.34) | $ | (0.82) | (a) | $ | (1.52) |
(a) Amounts attributable to the Mortgage Originations segment, excluding the Home Improvement channel.
Finance of America Companies Inc. and Subsidiaries Pro Forma Condensed Consolidated Statement of Operations (Unaudited) (In thousands, except share data) | Exhibit 99.1 |
For the nine months ended December 31, 2021 | |||||||||||||||||||||||
Successor | |||||||||||||||||||||||
Finance of America Companies Inc. and Subsidiaries Historical | Discontinued Operations Adjustments | Finance of America Companies Inc. and Subsidiaries Pro Forma | |||||||||||||||||||||
REVENUES | |||||||||||||||||||||||
Gain on sale and other income from loans held for sale, net | $ | 564,525 | $ | (547,101) | (a) | $ | 17,424 | ||||||||||||||||
Net fair value gains on loans and related obligations | 341,750 | — | 341,750 | ||||||||||||||||||||
Fee income | 386,065 | (80,453) | (a) | 305,612 | |||||||||||||||||||
Net interest expense: | |||||||||||||||||||||||
Interest income | 43,925 | (41,524) | (a) | 2,401 | |||||||||||||||||||
Interest expense | (107,694) | 34,205 | (a) | (73,489) | |||||||||||||||||||
Net interest expense | (63,769) | (7,319) | (71,088) | ||||||||||||||||||||
TOTAL REVENUES | 1,228,571 | (634,873) | 593,698 | ||||||||||||||||||||
EXPENSES | |||||||||||||||||||||||
Salaries, benefits, and related expenses | 768,105 | (466,397) | (a) | 301,708 | |||||||||||||||||||
Occupancy, equipment rentals, and other office related expenses | 23,389 | (13,947) | (a) | 9,442 | |||||||||||||||||||
General and administrative expenses | 392,262 | (133,062) | (a) | 259,200 | |||||||||||||||||||
TOTAL EXPENSES | 1,183,756 | (613,406) | 570,350 | ||||||||||||||||||||
IMPAIRMENT OF GOODWILL AND INTANGIBLE ASSETS | (1,380,630) | 768,897 | (a) | (611,733) | |||||||||||||||||||
OTHER, NET | 14,142 | — | 14,142 | ||||||||||||||||||||
NET LOSS BEFORE INCOME TAXES | (1,321,673) | 747,430 | (574,243) | ||||||||||||||||||||
Benefit for income taxes | (20,671) | 15,574 | (a) | (5,097) | |||||||||||||||||||
NET LOSS | (1,301,002) | 731,856 | (569,146) | ||||||||||||||||||||
Noncontrolling interest | (929,202) | 513,948 | (a) | (415,254) | |||||||||||||||||||
NET LOSS ATTRIBUTABLE TO CONTROLLING INTEREST | $ | (371,800) | $ | 217,908 | $ | (153,892) | |||||||||||||||||
EARNINGS PER SHARE | |||||||||||||||||||||||
Basic weighted average shares outstanding | 59,849,638 | 59,849,638 | 59,849,638 | ||||||||||||||||||||
Basic net loss per share | $ | (6.21) | $ | (3.64) | (a) | $ | (2.57) | ||||||||||||||||
Diluted weighted average shares outstanding | 190,597,249 | 190,597,249 | 190,597,249 | ||||||||||||||||||||
Diluted net loss per share | $ | (6.52) | $ | (3.65) | (a) | $ | (2.87) |
(a) Amounts attributable to the Mortgage Originations segment, excluding the Home Improvement channel.
Finance of America Companies Inc. and Subsidiaries Pro Forma Condensed Consolidated Statement of Operations (Unaudited) (In thousands, except share data) | Exhibit 99.1 |
For the three months ended March 31, 2021 | |||||||||||||||||||||||
Predecessor | |||||||||||||||||||||||
Finance of America Companies Inc. and Subsidiaries Historical | Discontinued Operations Adjustments | Finance of America Companies Inc. and Subsidiaries Pro Forma | |||||||||||||||||||||
REVENUES | |||||||||||||||||||||||
Gain on sale and other income from loans held for sale, net | $ | 291,334 | $ | (286,481) | (a) | $ | 4,853 | ||||||||||||||||
Net fair value gains on loans and related obligations | 76,663 | — | 76,663 | ||||||||||||||||||||
Fee income | 161,371 | (32,731) | (a) | 128,640 | |||||||||||||||||||
Net interest expense: | |||||||||||||||||||||||
Interest income | 12,661 | (12,483) | (a) | 178 | |||||||||||||||||||
Interest expense | (34,366) | 11,592 | (a) | (22,774) | |||||||||||||||||||
Net interest expense | (21,705) | (891) | (22,596) | ||||||||||||||||||||
TOTAL REVENUES | 507,663 | (320,103) | 187,560 | ||||||||||||||||||||
EXPENSES | |||||||||||||||||||||||
Salaries, benefits, and related expenses | 238,530 | (174,030) | (a) | 64,500 | |||||||||||||||||||
Occupancy, equipment rentals, and other office related expenses | 7,597 | (5,220) | (a) | 2,377 | |||||||||||||||||||
General and administrative expenses | 127,187 | (40,443) | (a) | 86,744 | |||||||||||||||||||
TOTAL EXPENSES | 373,314 | (219,693) | 153,621 | ||||||||||||||||||||
OTHER, NET | (8,892) | — | (8,892) | ||||||||||||||||||||
NET INCOME BEFORE INCOME TAXES | 125,457 | (100,410) | 25,047 | ||||||||||||||||||||
Provision for income taxes | 1,137 | — | 1,137 | ||||||||||||||||||||
NET INCOME | 124,320 | (100,410) | 23,910 | ||||||||||||||||||||
Contingently Redeemable Noncontrolling Interest ("CRNCI") | 4,260 | — | 4,260 | ||||||||||||||||||||
Noncontrolling interest | 201 | — | 201 | ||||||||||||||||||||
NET INCOME ATTRIBUTABLE TO CONTROLLING INTEREST | $ | 119,859 | $ | (100,410) | $ | 19,449 |
(a) Amounts attributable to the Mortgage Originations segment, excluding the Home Improvement channel.
Finance of America Companies Inc. and Subsidiaries Pro Forma Condensed Consolidated Statement of Operations (Unaudited) (In thousands, except share data) | Exhibit 99.1 |
For the year ended December 31, 2020 | |||||||||||||||||||||||
Predecessor | |||||||||||||||||||||||
Finance of America Companies Inc. and Subsidiaries Historical | Discontinued Operations Adjustments | Finance of America Companies Inc. and Subsidiaries Pro Forma | |||||||||||||||||||||
REVENUES | |||||||||||||||||||||||
Gain on sale and other income from loans held for sale, net | $ | 1,178,995 | $ | (1,171,368) | (a) | $ | 7,627 | ||||||||||||||||
Net fair value gains on loans and related obligations | 311,698 | — | 311,698 | ||||||||||||||||||||
Fee income | 389,869 | (118,237) | (a) | 271,632 | |||||||||||||||||||
Net interest expense: | |||||||||||||||||||||||
Interest income | 42,584 | (41,688) | (a) | 896 | |||||||||||||||||||
Interest expense | (123,001) | 39,792 | (a) | (83,209) | |||||||||||||||||||
Net interest expense | (80,417) | (1,896) | (82,313) | ||||||||||||||||||||
TOTAL REVENUES | 1,800,145 | (1,291,501) | 508,644 | ||||||||||||||||||||
EXPENSES | |||||||||||||||||||||||
Salaries, benefits, and related expenses | 868,265 | (656,264) | (a) | 212,001 | |||||||||||||||||||
Occupancy, equipment rentals, and other office related expenses | 29,621 | (21,817) | (a) | 7,804 | |||||||||||||||||||
General and administrative expenses | 395,871 | (145,317) | (a) | 250,554 | |||||||||||||||||||
TOTAL EXPENSES | 1,293,757 | (823,398) | 470,359 | ||||||||||||||||||||
OTHER, NET | (6,131) | — | (6,131) | ||||||||||||||||||||
NET INCOME BEFORE INCOME TAXES | 500,257 | (468,103) | 32,154 | ||||||||||||||||||||
Provision for income taxes | 2,344 | — | 2,344 | ||||||||||||||||||||
NET INCOME | 497,913 | (468,103) | 29,810 | ||||||||||||||||||||
Contingently Redeemable Noncontrolling Interest ("CRNCI") | (21,749) | — | (21,749) | ||||||||||||||||||||
Noncontrolling interest | 1,274 | — | 1,274 | ||||||||||||||||||||
NET INCOME ATTRIBUTABLE TO CONTROLLING INTEREST | $ | 518,388 | $ | (468,103) | $ | 50,285 |
(a) Amounts attributable to the Mortgage Originations segment, excluding the Home Improvement channel.
Finance of America Companies Inc. and Subsidiaries Pro Forma Condensed Consolidated Statement of Operations (Unaudited) (In thousands, except share data) | Exhibit 99.1 |
For the year ended December 31, 2019 | |||||||||||||||||||||||
Predecessor | |||||||||||||||||||||||
Finance of America Companies Inc. and Subsidiaries Historical | Discontinued Operations Adjustments | Finance of America Companies Inc. and Subsidiaries Pro Forma | |||||||||||||||||||||
REVENUES | |||||||||||||||||||||||
Gain on sale and other income from loans held for sale, net | $ | 464,308 | $ | (462,700) | (a) | $ | 1,608 | ||||||||||||||||
Net fair value gains on loans and related obligations | 329,526 | — | 329,526 | ||||||||||||||||||||
Fee income | 199,099 | (64,372) | (a) | 134,727 | |||||||||||||||||||
Net interest expense: | |||||||||||||||||||||||
Interest income | 37,323 | (36,673) | (a) | 650 | |||||||||||||||||||
Interest expense | (138,731) | 37,076 | (a) | (101,655) | |||||||||||||||||||
Net interest expense | (101,408) | 403 | (101,005) | ||||||||||||||||||||
TOTAL REVENUES | 891,525 | (526,669) | 364,856 | ||||||||||||||||||||
EXPENSES | |||||||||||||||||||||||
Salaries, benefits, and related expenses | 529,250 | (369,526) | (a) | 159,724 | |||||||||||||||||||
Occupancy, equipment rentals, and other office related expenses | 32,811 | (25,453) | (a) | 7,358 | |||||||||||||||||||
General and administrative expenses | 256,217 | (105,966) | (a) | 150,251 | |||||||||||||||||||
TOTAL EXPENSES | 818,278 | (500,945) | 317,333 | ||||||||||||||||||||
OTHER, NET | 4,332 | — | 4,332 | ||||||||||||||||||||
NET INCOME BEFORE INCOME TAXES | 77,579 | (25,724) | 51,855 | ||||||||||||||||||||
Provision for income taxes | 949 | — | 949 | ||||||||||||||||||||
NET INCOME | 76,630 | (25,724) | 50,906 | ||||||||||||||||||||
Contingently Redeemable Noncontrolling Interest ("CRNCI") | 21,707 | — | 21,707 | ||||||||||||||||||||
Noncontrolling interest | 511 | — | 511 | ||||||||||||||||||||
NET INCOME ATTRIBUTABLE TO CONTROLLING INTEREST | $ | 54,412 | $ | (25,724) | $ | 28,688 |
(a) Amounts attributable to the Mortgage Originations segment, excluding the Home Improvement channel.
Finance of America Companies Inc. and Subsidiaries Notes to Pro Forma Condensed Consolidated Financial Statements (Unaudited) | Exhibit 99.1 |
1.Basis of Presentation
The unaudited pro forma condensed consolidated financial statements are based on the historical condensed consolidated financial statements of the Company as adjusted to give effect to the Wind Down of the operations of its Mortgage Originations segment, other than its Home Improvement channel. The unaudited pro forma condensed consolidated statements of operations for the nine months ended September 30, 2022 (Successor), the nine months ended December 31, 2021 (Successor), the three months ended March 31, 2021 (Predecessor), and the years ended December 31, 2020 (Predecessor) and December 31, 2019 (Predecessor) give effect to the Wind Down as if it were completed on January 1, 2019. The unaudited pro forma condensed consolidated statement of financial condition as of September 30, 2022 gives effect to the Wind Down as if it were completed on September 30, 2022. The discontinued operations adjustments for the Wind Down consist of those necessary to account for the Wind Down and are based on available information and certain assumptions that management believes are reasonable. Actual future results may be different than what is presented in these unaudited pro forma condensed consolidated financial statements.