Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Finance of America Companies Inc (FOA, Financial) reported a net income of $204 million, translating to $8.48 in basic earnings per share, indicating strong financial performance.
- The company exceeded its guidance range with a funded volume of $513 million for the quarter, showcasing effective execution of strategic initiatives.
- FOA completed a reverse stock split and finalized an exchange offer for its 2025 unsecured notes, significantly enhancing its balance sheet and financial flexibility.
- The company saw a 38% productivity improvement in its retail channel, measured by funding per loan officer, compared to the previous quarter.
- FOA's Home Safe Second product saw an 89% increase in loans compared to Q2, highlighting growth in innovative home equity-based retirement products.
Negative Points
- Net portfolio interest income saw a slight decline due to higher interest expenses from new non-agency financing facilities.
- The company faces challenges with higher interest rates, which could impact future volumes and profitability.
- There is potential seasonality in Q1 volumes due to lower lead generation during the holiday period in November and December.
- Despite strong performance, the company remains exposed to market volatility, particularly in interest rates and home price appreciation.
- Fair value marks could be negatively impacted by rate volatility, although some offset may occur due to spread tightening.
Q & A Highlights
Q: Could you provide an outlook for volume given the recent increase in rates?
A: We achieved over $500 million in volume in Q3 and expect similar figures for Q4. For 2025, we anticipate growth, projecting around $2.7 billion for the full year, despite rate fluctuations. Our Home Safe second program is designed to thrive in varying rate environments. β Graham Fleming, CEO and Matthew Engel, CFO
Q: Can you update us on the timing and impact of HECM 2.0?
A: We recently met with Ginnie Mae, and they indicated that we might see developments around mid-November. We are awaiting further communication. β Graham Fleming, CEO
Q: How do you view the impact of rate volatility on your pipeline and Q1 seasonality?
A: October was our strongest month for funding and submissions, setting a solid start for Q4. However, holiday periods might affect lead generation. Any seasonality will likely impact Q1 volumes. We see potential growth in 2025 as more traditional mortgage bankers show interest in our products. β Matthew Engel, CFO and Kristen Sieffert, President
Q: How should we think about the impact of rate movements on fair value marks?
A: Fair value is influenced by multiple factors, including interest rates and spreads. While rates increased in October, we've seen spread tightening, which could offset some rate impacts. We'll assess other factors like home price appreciation at the end of the quarter. β Matthew Engel, CFO
Q: What are your expectations for adjusted earnings per share in 2025?
A: We expect to deliver adjusted earnings per share between $2.60 and $3 in 2025, driven by our strategic initiatives and operational efficiencies. β Graham Fleming, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
