Hello and welcome to the Finance of America Fourth Quarter 2022 Earnings Call. My name is John and I’ll be coordinating your call today. [Operator Instructions] I’ll now hand you over to Michael Fant, Senior Vice President, Finance to begin. Michael, please go ahead.

Thank you and good afternoon, everyone. Welcome to Finance of America’s fourth quarter and full year 2022 earnings call. With me today are Graham Fleming, President and Interim Chief Executive Officer and Johan Gericke, Chief Financial Officer. As a reminder, this call is being recorded and you can find the earnings release and presentation on our Investor Relations website at www.financeofamerica.com. In addition, we will refer to certain non-GAAP financial metrics on this call. You can find reconciliations of non-GAAP to GAAP financial metrics to the extent available without unreasonable effort discussed on today’s call in our earnings press release and presentation on the Investor Relations page of our website. Also, I would like to remind everyone that comments on this conference call may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding the Company’s expected operating and financial performance for future periods. These statements are based on the Company’s current expectations and are subject to the Safe Harbor statement for forward-looking statements that you’ll find in today’s earnings release. Actual results for future periods may differ materially from those expressed or implied by these forward-looking statements due to a number of risks or other factors, including those that are described in the Risk Factor section of Finance of America’s annual report on Form 10-K for the year ended December 31, 2021, originally filed with the SEC on March 15, 2022. As such risk factors may be amended and updated in our subsequent periodic filings with the SEC. We are not undertaking any commitment to update these statements if conditions change. Please note these are interim period financials and are unaudited. Now, I would like to turn the call over to Finance of America’s President and Interim Chief Executive Officer, Graham Fleming. Graham?

Thank you Michael. Good afternoon, everyone and thank you for joining us on our fourth quarter and full year 2022 earnings call. We're going to start by briefly discussing our financial results for the quarter and full year. I will then spend our remaining time focused on our business structure following the completion of the substantial transformation we started last year. During the fourth quarter, we recorded $182 million of net loss or $0.90 per fully diluted share. On an adjusted basis, we recognized an adjusted net loss of $56 million in the fourth quarter and $61 million for the full year. The adjusted net loss for the year is entirely attributable to the losses associated with the wind down and operating losses of our mortgage originations business, as well as declining volumes in commercial and lender services, on a pro forma basis, when we strip out mortgage originations, commercial originations and lender services, FOA recognized $53 million in adjusted net income for the year. When we think about these results in the broader context of the residential mortgage market, we believe it prudent to focus on streamlining our organization and investing in core businesses where we have significant competitive advantages. As such, I want to walk you through the steps we've taken over the past six months as part of our transformation. In October, 2022, we announced our decision to discontinue our forward mortgage origination segment across both retail and wholesale channels. This wind down is now complete, and this segment will be reported as discontinued operations beginning in 2023. In February, we entered into an agreement to sell the title insurance business up in center for $100 million. As a complimentary service to our forward origination business, this sale is consistent with our decision to focus on opportunities…

Thank you, Graham. I will provide a brief overview of our financial results before I dive into specifics on the quarter and the full here. Turning to the operating results, the overall company recognized an adjusted net loss for the quarter and the year, which was entirely driven by the wind down and operating losses of our Mortgage Origination segment and declining volumes in the commercial and lender services segments. If we eliminate the impact of those businesses, the company would've generated adjusted net income of $53 million for the year. You can see the buildup of these results on Slide four of the earnings presentation available on our Investor Relations website. From a balance sheet perspective, cash and Q4 decreased to $97 million solely due to the operational losses in our mortgage origination segment. We remain committed to preserving liquidity in this volatile environment. Book value as of December 31, stands at $405 million of which tangible net worth was $30 million. Throughout the fourth quarter and year-to-date, we have taken steps to deliver and strengthen the balance sheet. The acquisition of AAG and the divestitures of our title and commercial businesses will add significant tangible net worth and liquidity to the balance sheet. During the last six months, our capital markets team has been able to securitize approximately $1.4 billion in proprietary reverse loans amidst a very challenging market. This has allowed us to materially reduce the inventory of loans health for investment and related funding liabilities. We expect modest losses in the mortgage business in Q1 2023, and going forward, losses will essentially be eliminated as we completed the wind-down in the first quarter of this year. As Graham mentioned, we sold the operating assets of the commercial business and are actively working to sell the remaining…

Thank you, Johann. As we reflect on 2022, it is clear that the company has taken substantial steps to improve its trajectory. Our current focus is on completing the announced transactions and successfully integrating the AAG direct-to-consumer platform into our operations. We look forward to providing additional updates on our next quarterly call. Looking ahead to 2023, we remain bullish on the earnings power of the organization; however, we do expect there will be some volatility in our near term performance as we navigate the recent business transformation. While these actions will impact our first half results, we anticipate our performance will smooth out in the second half of the year. During this time, we will remain both nimble and dynamic to meet the needs of the evolving business with a focus on completing the steps we have laid out today to build a stronger foundation for Finance of America. With our new model as a retirement-focused home equity solutions business, the future looks bright for both the company and our stakeholders. And with that operator will open it up for questions.

[Operator instructions] Our first question is from Stephen Laws with Raymond James. Your line is now open.

Hi, good afternoon. Graham, I want to start with the Reverse business and kind of what you're seeing there. Volumes for Q4, down sequentially a decent amount. I think you mentioned reference rates in the prepared remarks, but can you talk about what -- we're almost done with Q1. So can you talk about what you've seen for Reverse volumes year-to-date, and how do you expect closing the AAG deal? How will that impact volumes as you put those two platforms together for Q2? And then the impact on margin, I guess follow up with that. Johan, you mentioned some operational cost synergies there as you work that in. Kind of how long will it take to achieve those expense synergies from the AAG platform?

Thank you, Steven. Hope all is well. Yes, so we have seen -- we have seen volumes come down in the Reverse space. As I mentioned, we have been focused on delivering the balance sheet, right? We, to remind, we had a bankruptcy in December, right? We had some uncertainty around securitization execution. So we were primarily focused in Q4 and Q1 on de-levering the balance sheet and moving those assets into securitizations. We have introduced, as I mentioned, a second lean product, which allows a senior to retain the current low coupon first, which is an amortizing payment, and the second loan will be a slower accreting balance. So, in the long term, we think that this option is actually, it enhances the credit quality of the product, right? But we've just recently introduced that in February, and we're looking to educate our brokers and our correspondence on the benefits of this particular product. So yes, we have seen volume come down. We've been more focused on the balance sheet than new originations. We think as the interest rate market here stabilizes and spreads, return to a more normal level, we'll be able to improve those prices. When it comes to AAG, they have not been originating our proprietary product for the last couple of quarters. So we do expect some volume from that acquisition. We do expect that to add to our current volume levels and expect to be at something like a $100 million of proprietary product in that space, post the AAG acquisition.

Great. And as a follow up, I know a couple of segments I'll move to discontinued ops, starting with Q1, can you talk about, I think adjusted net income was minus $6 million on a pro-forma basis for Q4. Do you expect that to troughed -- has it troughed, will we profitable there in Q1? Kind of how do you expect to see kind of that A&I build through the year as we look at things on a pro-forma basis moving forward?

Yes, Steven, it's Johan. Hi there. You asked earlier also just on the synergy. So, as I -- as we mentioned, we expect the AAG deal to close at the end of the quarter. We've been planning a transition, but obviously the transition will be in full flight once we've closed. And so I would expect over the course of Q2, both the revenue and the expense synergies to start materializing over the course of Q2. So that being said, Q1 is probably going to be the trough for this year for sure, as we pick up the volume and start realizing the synergies in Q2 from the AAG transaction, that'll obviously start driving earnings. And so you should think of the earnings kind of profile to be trough and Q1 for the year, Q2 better, and then in Q3 and Q4 we'll obviously have from the reverse side, the business fully integrated and working and achieving synergies.

Great. And one final one, if I might. Graham, you've moved a couple of businesses that you don't view as core. When you look at what you have left, is there anything left that you think you need to wind down or maybe look to monetize other business lines or kind of, do you feel like you've largely completed that process at this point? Thanks.

Nothing imminent, Steven. We think we've completed the majority of the divestitures, but there's nothing else imminent this point.

Great. Thank you.

There are no more questions, so I'll pass the call back over to the management team for closing remarks.

Thank you, everybody for joining our call, and we look forward to updating you on our next earnings call in May.