Business Wire | Nov 8, 2021 04:15PM EST

Finance of America Reports Third Quarter 2021 Results

Nov. 08, 2021

IRVING, Texas--(BUSINESS WIRE)--Nov. 08, 2021--Finance of America Companies Inc., ("Finance of America" or the "Company")(NYSE: FOA), a high growth, consumer and specialty lending business, reported financial results for the quarter ended September 30, 2021.

Third Quarter 2021 Financial Highlights

* Strong growth across segments generated quarterly revenues of $457 million, up 17% compared to the second quarter * Mortgage Originations grew net rate lock volume and revenue by 15% and 8%, respectively, compared to the prior quarter * A second consecutive quarter of record funded volume and revenue in Reverse Originations delivered $69 million in pre-tax income, a 30% increase compared to the prior quarter * Record funded volume in Commercial Originations drove revenue and pre-tax income growth of 22% and 100%, respectively, compared to the prior quarter * Record Lender Services revenue generated pre-tax income of $9 million, up 13%, compared to the prior quarter * Net income for the quarter of $50 million or $0.36 per basic share and $0.22 per fully diluted share * Adjusted Net Income* totaled $75 million, an increase of 32% compared to $57 million in the prior quarter * Adjusted diluted EPS* of $0.39, up 30% compared to the prior quarter

*See the sections titled "Reconciliation to GAAP" and "Non-GAAP Financial Measures" for reconciliations to the most directly comparable GAAP measures and other important disclosures.

"Finance of America delivered solid growth across all segments in the third quarter, demonstrating the power of our diversified platform" stated Patricia Cook, Chief Executive Officer. "We saw strong performance across all of our businesses, reinforcing our strategic goal of building a comprehensive consumer and specialty lender that is primed for growth."

"Our Reverse business, which serves a large, under-penetrated market, generated another consecutive quarter of record revenue and pre-tax income. Our Commercial and Lender Services segments also continued their recent growth trajectories. Strong demand for single family rental loans from both borrowers and investors helped drive volume and margin expansion. The build out of our new Home Improvement business is also progressing well, and we expect it to start contributing to the bottom line in 2022."

"We remain laser focused on building resilience into the Mortgage business and driving meaningful, sustained growth across our other specialty finance and lender services segments through further investments. Our unmatched product offering, distribution and capital markets capabilities allow us to capture substantial lifetime household value as we continue to migrate from a product to a customer-centric organization."

Third Quarter Financial Summary

($ amounts in millions, Variance Variance Varianceexcept margin and per (%) (%) (%)share data)

Q3'21 Q2'21 Q3'21 vs Q3'20 Q3'21 vs YTD 2021 YTD 2020 2021 vs Q2'21 Q3'20 2020

Successor Predecessor Combined^ Predecessor (1)

Funded $ 8,988 $ 8,342 8 % $ 9,170 (2) % $ 26,844 $ 22,857 17 %volume

Total 457 389 17 % 607 (25) % 1,353 1,261 7 %revenue

Totalexpenses and 402 403 - % 365 10 % 1,187 914 30 %other, net

Pre-taxincome 55 (14) 493 % 242 (77) % 166 347 (52) %(loss)

Net income 50 (15) 433 % 242 (79) % 160 345 (54) %(loss)

Adjusted net 75 57 32 % 173 (57) % 239 307 (22) %income^(2)

Adjusted 110 87 26 % 236 (53) % 351 424 (17) %EBITDA^(2)

Basicearnings per $ 0.36 $ 0.04 800 % n/a n/a n/a n/a n/ashare

Dilutedearnings per $ 0.22 $ (0.05) 540 % $ 1.29 (83) % $ 0.80 $ 1.92 (58) %share^(3)

Adjusteddiluted $ 0.39 $ 0.30 30 % $ 0.91 (57) % $ 1.25 $ 1.61 (22) %earnings pershare^(3)

^(1) Financial results of combined successor and predecessor of the businesscombination with Replay.^(2) See Reconciliation to GAAP section for a reconciliation of Adjusted NetIncome and Adjusted EBITDA to Net (loss) income.^(3) Calculated on an if-converted basis. See Reconciliation to GAAP sectionfor more detail.

Balance Sheet Highlights

($ amounts in millions) September June 30, Variance 30, (%)

2021 2021 Q3'21 vs Q2'21

Successor

Cash and cash equivalents $ 192 $ 157 22 %

Securitized loans held for investment (HMBS & 16,287 15,741 3 %nonrecourse)

Mortgage Servicing Rights (MSR) 341 291 17 %

Total assets 22,668 22,228 2 %

Total liabilities 20,236 19,849 2 %

Total equity 2,432 2,379 2 %

Total tangible equity^(1) 441 377 17 %

^(1) Total tangible equity calculated as Total equity less Goodwill andIntangible assets, net.

* Cash and cash equivalents ended the third quarter at $192 million. The $35 million increase was primarily attributable to the successful execution of three securitizations of loans held for investment or sale during the quarter, net of investments in MSR. * Total assets grew $440 million from June 30, 2021, primarily as a result of growth in securitized loans held for investment, capitalized MSR, and an increase in cash and cash equivalents. * Total liabilities grew $387 million on a sequential quarter basis primarily due to an increase in HMBS related obligations and nonrecourse debt of $453 million offset by a decrease in warehouse financing of $87 million.

Segment Results

Mortgage Originations

The Mortgage Originations segment generates revenue through fee income from loan originations and gain on sale of mortgage loans into the secondary market.

($ amounts in millions) Variance Variance Variance (%) (%) (%)

Q3'21 Q2'21 Q3'21 vs Q3'20 Q3'21 vs YTD 2021 YTD 2020 2021 vs Q2'21 Q3'20 2020

Successor Predecessor Combined^ Predecessor (1)

Funded volume $ 7,383 $ 6,928 7 % $ 8,454 (13) % $ 22,716 $ 20,257 12 %(Total)

Funded volume 3,759 3,495 8 % 3,023 24 % 9,918 6,781 46 %(Purchase)

Funded volume 994 795 25 % 293 239 % 2,826 791 257 %(Non-agency)

Net rate lock 7,679 6,669 15 % 9,286 (17) % 22,753 22,303 2 %volume

Total revenue 235 218 8 % 444 (47) % 773 925 (16) %

Mortgageoriginations 2.61 % 2.78 % (6) % 4.39 % (41) % 2.95 % 3.73 % (21) %margin

Pre-tax income $ 15 $ (6) 350 % $ 204 (93) % $ 104 $ 331 (69) %(loss)

^(1) Financial results of combined successor and predecessor of the businesscombination with Replay.

* Net rate lock volume totaled $7,679 million, an increase of 15% relative to the prior quarter, driven by growth in our wholesale channel. * Mortgage Originations Margin declined 6% relative to last quarter, driven by an increased share of wholesale originations due to the full quarter impact of the recently announced Parkside acquisition.

Reverse Originations

The Reverse Originations segment generates revenue and earnings in the form of net origination gains and origination fees earned on the origination of reverse mortgage loans.

($ amounts in millions) Variance Variance Variance (%) (%) (%)

Q3'21 Q2'21 Q3'21 vs Q3'20 Q3'21 vs YTD 2021 YTD 2020 2021 vs Q2'21 Q3'20 2020

Successor Predecessor Combined^ Predecessor (1)

Funded volume $ 1,157 $ 1,013 14 % $ 626 85 % $ 2,939 $ 2,052 43 %

Total revenue 111 95 17 % 49 127 % 275 139 98 %

Pre-tax 69 53 30 % 24 188 % 168 74 127 %income

^(1) Financial results of combined successor and predecessor of the businesscombination with Replay.

* Funded volume and revenue of $1,157 million and $111 million, respectively, exceeded the highest levels on record set in the previous quarter. This was driven by growth in both new originations and cash-out refinances due to recent home price appreciation. * As a result, Reverse Originations generated record pre-tax income of $69 million during the third quarter, 30% higher than the previous quarter.

Commercial Originations

The Commercial Originations segment provides business purpose lending solutions for residential real estate investors. The Commercial Originations segment generates revenue and earnings in the form of net origination gains and origination fees earned on the origination of mortgage loans.

($ amounts in Variance Variance Variancemillions) (%) (%) (%)

Q3'21 Q2'21 Q3'21 vs Q3'20 Q3'21 vs YTD 2021 YTD 2020 2021 vs Q2'21 Q3'20 2020

Successor Predecessor Combined Predecessor ^(1)

Funded $ 448 $ 400 12 % $ 90 398 % 1,189 548 117 %volume

Total 28 23 22 % 5 460 % 65 24 171 %revenue

Pre-taxincome 6 3 100 % (2) 400 % 10 (5) 300 %(loss)

^(1) Financial results of combined successor and predecessor of the businesscombination with Replay.

* Funded volume of $448 million set a record for the highest quarterly volume for the segment, eclipsing the prior quarter's level by 12%. * Revenue grew 22% quarter over quarter driven by growth in funded volume and expanding margins due to strong borrower and investor demand.

Lender Services

The Lender Services business generates revenue and earnings in the form of fees. Lender Services supports over 1,700 third party clients across the lending industry.

($ amounts in millions) Variance Variance Variance (%) (%) (%)

Q3'21 Q2'21 Q3'21 vs Q3'20 Q3'21 vs YTD 2021 YTD 2020 2021 vs Q2'21 Q3'20 2020

Successor Predecessor Combined Predecessor ^(1)

Total revenue $ 88 $ 81 9 % $ 53 66 % 245 139 76 %

% of revenue fromthird-party 81 % 80 % 1 % 80 % 1 % 79 % 79 % - %clients

Pre-tax income 9 8 13 % 8 13 % 30 15 100 %

^(1) Financial results of combined successor and predecessor of the businesscombination with Replay.

* The Lender Services segment generated revenue of $88 million; this marks the highest level of revenue on record for the Lender Services segment. * We remain focused on expanding business lines to deepen cross-sell and onboarding new third-party customers to drive growth.

Portfolio Management

The Portfolio Management segment generates revenue and earnings in the form of gain on sale of loans, fair value gains, interest income, servicing income, fees for underwriting, advisory and valuation services and other ancillary fees.

($ amounts in millions) Variance Variance Variance (%) (%) (%)

Q3'21 Q2'21 Q3'21 vs Q3'20 Q3'21 vs YTD 2021 YTD 2020 2021 vs Q2'21 Q3'20 2020

Successor Predecessor Combined Predecessor ^(1)

Assets under $ 18,403 $ 17,966 2 % $ 16,639 11 % 18,403 16,639 11 %management

AssetsexcludingHMBS and 2,356 2,372 (1) % 1,904 24 % 2,356 1,904 24 %non-recourseobligations^(2)

MortgageServicing 341 291 17 % 101 238 % 341 101 238 %Rights (MSR)

Total 10 7 43 % 42 (76) % 46 31 48 %revenue

Pre-tax(loss) (20) (27) 26 % 19 (205) % (41) (30) 37 %income

^(1) Financial results of combined successor and predecessor of the businesscombination with Replay.^(2) Calculated for each period as Assets under management less HMBS relatedobligations, at fair value and nonrecourse debt, at fair value

* Completed three securitizations of originations during the quarter totaling $1.2 billion, and served as co-manager on a third-party securitization totaling $0.2 billion. * The decrease in revenue and pre-tax income compared to the prior year quarter reflects the impact of fair value adjustments related predominantly to increases in modeled prepayment speeds on securitized mortgage assets and MSR.

Reconciliation to GAAP

($ amounts in Q3'21 Q2'21 Q3'20 YTD 2021 YTD 2020millions)

Successor Predecessor Combined^ Predecessor (1)

Reconciliation ofNet income (loss)to Adjusted Net income andAdjusted EBITDA

Net income (loss) $ 50 $ (15) $ 242 $ 160 $ 345

Adjustments for:

Changes in fair 20 24 (17) 55 54 value^(2)

Amortization andimpairment of 13 13 - 28 2 intangibles^(3)

Equity based 11 11 - 21 - compensation^(4)

Certainnon-recurring 3 43 8 53 13 costs^(5)

Tax effect on netincome (loss)attributable to (7) 4 (62) (35) (89) noncontrollinginterest^(6)

Tax effect of (15) (23) 2 (43) (18) adjustments^(6)

Adjusted Net $ 75 $ 57 $ 173 $ 239 $ 307 Income

Effective income 26 21 61 84 108 taxes

Depreciation 2 2 2 7 5

Interest expenseon non-funding 7 7 - 21 4 debt

Adjusted EBITDA $ 110 $ 87 $ 236 $ 351 $ 424



OTHER KEY METRICS

Cash taxes paid $ - $ 2 $ 1 $ 2 $ 1

Provision for $ 4 $ 1 $ 1 $ 7 $ 2 income taxes

^(1) Financial results of combined successor and predecessor of the businesscombination with Replay.^(2) Changes in fair value include changes in fair value of loans andsecurities held for investment, deferred purchase price obligations, warrantliability, and minority investments.^(3) Successor period amortization includes amortization of intangiblesrecognized from the business combination with Replay^(4) Funded 85% by the non-controlling shareholders.^(5) Certain non-recurring costs relate to various one-time expenses andadjustments that management believes should be excluded as these do not relateto a recurring part of the core business operations. These items includecertain one-time charges including amounts recognized for settlement of legaland regulatory matters, acquisition related expenses and other one-timecharges.^(6) We applied a 26% effective tax rate to pre-tax income and adjustments(excluding change in fair value of warrant liability, which is a permanent book/tax difference) for the respective period to determine the tax effect of netincome (loss) and adjustments attributable to the noncontrolling interests andadjustments.

($ amounts in millions, except shares and $ per share)

Q3'21

Q2'21

Q3'20

YTD 2021

YTD 2020

Successor

Predecessor

Combined(1)

Predecessor

GAAP PER SHARE MEASURES

Net income attributable to controlling interest

$

21

$

2

N/A

N/A

N/A

Weighted average outstanding share count

59,861,171

59,881,714

N/A

N/A

N/A

Basic earnings per share

$

0.36

$

0.04

N/A

N/A

N/A

If-converted method net income (loss)

43

(10)

246

153

367

Weighted average diluted share count

191,161,431

191,200,000

191,200,000

191,180,610

191,200,000

Diluted earnings per share

$

0.22

$

(0.05)

$

1.29

$

0.80

$

1.92

NON-GAAP PER SHARE MEASURES

Adjusted net income

$

75

$

57

$

173

$

239

$

307

Weighted average diluted share count

191,161,431

191,200,000

191,200,000

191,180,610

191,200,000

Adjusted diluted EPS

$

0.39

$

0.30

$

0.91

$

1.25

$

1.61

(1) Financial results of combined successor and predecessor of the business combination with Replay.

($ amountsin millions,except Q3'21 Q2'21 Q3'20 YTD 2021 YTD 2020shares and $per share)

Successor Predecessor Combined^(1) Predecessor

GAAP PERSHARE MEASURES

Net incomeattributableto $ 21 $ 2 N/A N/A N/Acontrollinginterest

Weightedaverage 59,861,171 59,881,714 N/A N/A N/Aoutstandingshare count

Basicearnings per $ 0.36 $ 0.04 N/A N/A N/Ashare

If-convertedmethod net 43 (10) 246 153 367 income(loss)

Weightedaverage 191,161,431 191,200,000 191,200,000 191,180,610 191,200,000 dilutedshare count

Dilutedearnings per $ 0.22 $ (0.05) $ 1.29 $ 0.80 $ 1.92 share



NON-GAAP PERSHARE MEASURES

Adjusted net $ 75 $ 57 $ 173 $ 239 $ 307 income

Weightedaverage 191,161,431 191,200,000 191,200,000 191,180,610 191,200,000 dilutedshare count

Adjusted $ 0.39 $ 0.30 $ 0.91 $ 1.25 $ 1.61 diluted EPS

^(1) Financial results of combined successor and predecessor of the businesscombination with Replay.

Finance of America Companies Inc. and Subsidiaries

Selected Financial Information

Consolidated Statements of Financial Condition

(Dollars in thousands, except share data)

September 30, 2021

June 30, 2021

Successor

Successor

(unaudited)

(unaudited)

ASSETS

Cash and cash equivalents

$

191,736

$

157,336

Restricted cash

325,226

354,390

Reverse mortgage loans held for investment, subject to HMBS related obligations, at fair value

10,347,459

10,316,027

Mortgage loans held for investment, subject to nonrecourse debt, at fair value

5,939,651

5,424,621

Mortgage loans held for investment, at fair value

1,077,670

1,225,090

Mortgage loans held for sale, at fair value

2,047,015

2,057,542

Debt securities

7,317

8,694

Mortgage servicing rights, at fair value, $96,073 and $65,129, subject to nonrecourse MSR financing liability, respectively

340,949

290,938

Derivative assets

54,993

61,811

Fixed assets and leasehold improvements, net

29,503

28,669

Goodwill

1,298,796

1,298,324

Intangible assets, net

692,676

704,243

Other assets, net

315,102

300,253

TOTAL ASSETS

$

22,668,093

$

22,227,938

LIABILITIES, CONTINGENTLY REDEEMABLE NONCONTROLLING INTEREST ("CRNCI") AND EQUITY

HMBS related obligation, at fair value

$

10,216,310

$

10,168,224

Nonrecourse debt, at fair value

5,831,083

5,425,732

Other financing lines of credit

3,325,156

3,412,234

Payables and other liabilities

509,803

488,735

Notes payable, net

353,567

353,718

TOTAL LIABILITIES

20,235,919

19,848,643

EQUITY

Class A Common Stock (Successor), $0.0001 par value; 6,000,000,000 shares authorized; 58,936,744 shares issued and outstanding at September 30, 2021

6

6

Class B Common Stock (Successor), $0.0001 par value; 1,000,000 shares authorized, 6 shares issued and outstanding at September 30, 2021

-

-

Additional paid-in capital (Successor)

821,316

807,521

Accumulated deficit (Successor)

(48,164)

(69,548)

Accumulated other comprehensive (loss) income

(92)

(27)

Noncontrolling interest

1,659,108

1,641,343

TOTAL EQUITY

2,432,174

2,379,295

TOTAL LIABILITIES AND EQUITY

$

22,668,093

$

22,227,938

Finance of America Companies Inc. and Subsidiaries

Selected Financial Information

Consolidated Statements of Financial Condition

(Dollars in thousands, except share data)

September 30, June 30, 2021 2021

Successor Successor

(unaudited) (unaudited)

ASSETS

Cash and cash equivalents $ 191,736 $ 157,336

Restricted cash 325,226 354,390

Reverse mortgage loans held for investment,subject to HMBS related obligations, at fair 10,347,459 10,316,027 value

Mortgage loans held for investment, subject 5,939,651 5,424,621 to nonrecourse debt, at fair value

Mortgage loans held for investment, at fair 1,077,670 1,225,090 value

Mortgage loans held for sale, at fair value 2,047,015 2,057,542

Debt securities 7,317 8,694

Mortgage servicing rights, at fair value,$96,073 and $65,129, subject to nonrecourse 340,949 290,938 MSR financing liability, respectively

Derivative assets 54,993 61,811

Fixed assets and leasehold improvements, net 29,503 28,669

Goodwill 1,298,796 1,298,324

Intangible assets, net 692,676 704,243

Other assets, net 315,102 300,253

TOTAL ASSETS $ 22,668,093 $ 22,227,938



LIABILITIES, CONTINGENTLY REDEEMABLE NONCONTROLLING INTEREST ("CRNCI") AND EQUITY

HMBS related obligation, at fair value $ 10,216,310 $ 10,168,224

Nonrecourse debt, at fair value 5,831,083 5,425,732

Other financing lines of credit 3,325,156 3,412,234

Payables and other liabilities 509,803 488,735

Notes payable, net 353,567 353,718

TOTAL LIABILITIES 20,235,919 19,848,643



EQUITY

Class A Common Stock (Successor), $0.0001 parvalue; 6,000,000,000 shares authorized; 6 6 58,936,744 shares issued and outstanding atSeptember 30, 2021

Class B Common Stock (Successor), $0.0001 parvalue; 1,000,000 shares authorized, 6 shares - - issued and outstanding at September 30, 2021

Additional paid-in capital (Successor) 821,316 807,521

Accumulated deficit (Successor) (48,164) (69,548)

Accumulated other comprehensive (loss) income (92) (27)

Noncontrolling interest 1,659,108 1,641,343

TOTAL EQUITY 2,432,174 2,379,295

TOTAL LIABILITIES AND EQUITY $ 22,668,093 $ 22,227,938

Finance of America Companies Inc. and Subsidiaries

Selected Financial Information

Consolidated Statements of Operations

(Dollars in thousands, except share data)

(Unaudited)

Q3 2021

Q2 2021

Q3 2020

YTD 2021

YTD 2020

Successor

Predecessor

Combined(1)

Predecessor

REVENUES

Gain on sale and other income from mortgage loans held for sale, net

$

210,095

$

187,577

$

407,926

$

689,006

$

836,901

Net fair value gains on mortgage loans and related obligations

122,509

131,151

95,955

330,323

221,638

Fee income

145,725

90,864

119,375

397,960

266,002

Net interest expense:

Interest income

15,862

13,151

9,937

41,674

29,615

Interest expense

(37,691)

(33,626)

(25,935)

(105,683)

(93,165)

Net interest expense

(21,829)

(20,475)

(15,998)

(64,009)

(63,550)

TOTAL REVENUES

456,500

389,117

607,258

1,353,280

1,260,991

EXPENSES

Salaries, benefits and related expenses

262,000

274,731

240,381

775,261

615,034

Occupancy, equipment rentals and other office related expenses

8,283

6,720

8,184

22,600

22,795

General and administrative expenses

141,595

119,301

113,804

388,113

273,584

TOTAL EXPENSES

411,878

400,752

362,369

1,185,974

911,413

OTHER, NET

9,928

(2,103)

(2,470)

(1,037)

(2,514)

NET INCOME BEFORE INCOME TAXES

54,550

(13,738)

242,419

166,269

347,064

Provision for income taxes

4,440

1,086

808

6,663

1,574

NET INCOME

50,110

(14,824)

241,611

159,606

345,490

CRNCI

-

-

(4,953)

-

(22,959)

Noncontrolling interest

28,726

(17,089)

276

16,098

1,076

NET INCOME ATTRIBUTABLE TO CONTROLLING INTEREST

$

21,384

$

2,265

$

246,288

$

143,508

$

367,373

EARNINGS PER SHARE

Basic weighted average shares outstanding

59,861,171

59,881,714

N/A

Basic net income per share

$

0.36

$

0.04

N/A

Diluted weighted average shares outstanding

191,161,431

191,200,000

191,180,610

Diluted net income per share

$

0.22

$

(0.05)

$

0.80

(1) Financial results of combined successor and predecessor of the business combination with Replay.

Webcast and Conference Call

Management will host a webcast and conference call on Tuesday, November 9, 2021 at 8:00 am ET to discuss the Company's results for the quarter ended September 30, 2021.

The conference call will be made available in the Investors section of the Company's website at https://www.financeofamerica.com/. To listen to a live broadcast, go to the site at least 15 minutes prior to the scheduled start time in order to register.

The conference call can also be accessed by the following dial-in information:

* 1-877-300-8521 (Domestic) * 1-412-317-6026 (International) * Conference ID: 10161020 Replay

A replay of the call will also be available on the Company's website approximately two hours after the live call through November 23, 2021. To access the replay, dial 1-844-512-2921 (United States) or 1-412-317-6671 (international). The replay pin number is 10161020. The replay can also be accessed on the investors section of the Company's website at https://www.financeofamerica.com/investors.

About Finance of America

Finance of America (NYSE: FOA) is a diversified, vertically integrated consumer lending platform. Product offerings include mortgages, reverse mortgages, and loans to residential real estate investors distributed across retail, third party network, and digital channels. In addition, Finance of America offers complementary lender services to enhance the customer experience, as well as capital markets and portfolio management capabilities to optimize distribution to investors. The company is headquartered in Irving, Texas. For more information, please visit https://www.financeofamerica.com.

Forward-Looking Statements

This press release includes "forward-looking statements" within the meaning of the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts or statements of current conditions, but instead represent only management's beliefs regarding future events, many of which, by their nature, are inherently uncertain and outside of the Company's control. It is possible that our actual results, financial condition and liquidity may differ, possibly materially, from the anticipated results, financial condition and liquidity in these forward-looking statements. The Company's actual results may differ from its expectations, estimates, and projections and, consequently, you should not rely on these forward-looking statements as predictions of future events. Words such as "expect," "estimate," "project," "budget," "forecast," "anticipate," "intend," "plan," "may," "will," "could," "should," "believes," "predicts," "potential," "continue," and similar expressions (or the negative versions of such words or expressions) are intended to identify such forward-looking statements. The Company cautions readers not to place undue reliance upon any forward-looking statements, which are current only as of the date of this release. Results for any specified quarter are not necessarily indicative of the results that may be expected for the full year or any future period. The Company does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in its expectations or any change in events, conditions, or circumstances on which any such statement is based, except as required by law. Such forward-looking statements are subject to various risks and uncertainties including, among others; the effect of the COVID-19 pandemic on the Company's business; changes in prevailing interest rates or U.S. monetary policies that affect interest rates that may have a detrimental effect on our business; the possibility that the Company may be adversely affected by other economic, business, and/or competitive factors in our markets; our ability to obtain sufficient capital to meet the financing requirements of our business; the use of estimates in measuring or determining the fair value of the majority of our assets and liabilities; the possibility of disruption in the secondary home loan market, including the mortgage-backed securities market; and other risks and uncertainties set forth in the section entitled "Risk Factors" included in our Registration Statement on Form S-1 originally filed with the SEC on May 25, 2021, as such factors may be amended and updated from time to time in the Company's subsequent periodic filings with the SEC, which are accessible on the SEC's website at www.sec.gov. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this press release and in the Company's filings with the SEC.

Non-GAAP Financial Measures

The Company's management evaluates performance of the Company through the use certain non-GAAP financial measures, including Adjusted Net Income, Adjusted EBITDA and Adjusted Diluted Earnings per Share.

We define Adjusted Net Income as net income (loss) adjusted for change in fair value of loans and securities held for investment due to assumption changes, amortization and other impairments, equity based compensation, change in fair value of deferred purchase price obligations (including earnouts and TRA obligations), warrant liability, and minority investments and certain non-recurring costs.

We define Adjusted EBITDA as Adjusted Net Income (defined above) adjusted for taxes, interest on non-funding debt and depreciation.

We define Adjusted Diluted Earnings Per Share as Adjusted Net Income (defined above) divided by our weighted average diluted share count, which includes our issued and outstanding Class A Common Stock shares plus Finance of America Equity Capital LLC's Class A LLC units owned by our noncontrolling interest on an if-converted basis.

The presentation of non-GAAP measures is used to enhance investors' understanding of certain aspects of our financial performance. This discussion is not meant to be considered in isolation, superior to, or as a substitute for the directly comparable financial measures prepared in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"). Management believes these key financial measures provide an additional view of our performance over the long-term and provide useful information that we use in order to maintain and grow our business.

These non-GAAP financial measures should not be considered as an alternate to (i) net income (loss) or any other performance measures determined in accordance with GAAP or (ii) operating cash flows determine in accordance with GAAP. Adjusted Net Income and Adjusted EBITDA have important limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Some of the limitations of these metrics are: (i) cash expenditures for future contractual commitments; (ii) cash requirements for working capital needs; (iii) cash requirements for certain tax payments; and (iv) all non-cash income/expense items.

Because of these limitations, Adjusted Net Income and Adjusted EBITDA should not be considered as measures of discretionary cash available to us to invest in the growth of our business or distribute to stockholders. We compensate for these limitations by relying primarily on our GAAP results and using our non-GAAP financial measures only as a supplement. Users of our interim unaudited consolidated financial statements are cautioned not to place undue reliance on our non-GAAP financial measures.

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