Finance of America Companies Inc Aktie

Ladies and gentlemen, thank you for standing by. My name is Hilary, and I'll be your conference moderator today. At this time, I'd like to welcome you to the Finance of America Third Quarter 2026 Earnings Call. [Operator Instructions]

I will now turn the call over to Michael Fant, Senior Vice President of Finance. You may begin.

Thank you, and good afternoon, everyone, and welcome to Finance of America's Third Quarter 2026 Earnings Call. With me today are Graham Fleming, Chief Executive Officer; Kristen Sieffert, President; and Matt Engel, Chief Financial Officer.

As a reminder, this call is being recorded, and you can find the earnings release and related presentation on our Investor Relations website at ir.financeofamericacompanies.com.

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 will find in today's earnings release and related presentation. 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 Factors section of Finance of America's annual report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 13, 2026. Such risk factors may be amended and updated in our subsequent filings with the SEC. We are not undertaking any commitment to update these statements if conditions change.

Please note, today, we will be discussing interim period financials for our continuing operations, which are unaudited. In addition, we will refer to certain non-GAAP financial measures on this call. You can find reconciliations of non-GAAP to GAAP financial measures to the extent available without unreasonable efforts in our earnings press release and presentation on the Investor Relations page of our website.

Now I'll turn the call over to our Chief Executive Officer, Graham Fleming. Graham?

Thank you, Michael. Good afternoon, everyone, and thank you for joining us today. Before I go through the quarter in detail, I want to give you the 5 key takeaways from today's call. Everything in the rest of this call and the accompanying materials is an elaboration on these 5 points.

First, our volume this quarter grew 24% year-over-year, and we expect continued growth both in 2027 and beyond based on demographic trends and continued product development. Second, our retail platform is becoming more efficient and productive. Productivity per loan officer is up 40% compared to the third quarter of 2025. Third, margins compressed as the Fed shifted from cutting to raising interest rates. We have already made the necessary changes to product pricing, and we expect margins to return to historical levels in the first half of 2027.

Fourth, we have generated $145 million of cash from originations and capital markets activities year-to-date, including $33 million of cash this quarter, which we have used to complete several capital actions this year. And finally, we expect adjusted earnings per share of between $4 to $5 on an annual run rate basis during the second half of 2027, driven by higher volume and normalized margins, partially offset by lower portfolio management earnings resulting from higher discount rates.

Turning to Slide 5. Third quarter funded volume was $748 million, compared with $730 million in Q2 2026 and $603 million in Q3 2025, that means growth both sequentially and year-over-year. Through September, year-to-date production was approximately $2.1 billion versus $1.8 billion in the first 9 months of 2025 or an increase of 17% year-over-year. That progress is part of the longer story.

Since 2023, we have been investing in a more focused reverse mortgage platform, a broader proprietary product offering and the technology and distribution capabilities needed to reach more homeowners. Finance of America has grown volumes on average by 20% each year since 2023.

The third quarter was a challenging rate environment with the 10-year Treasury yields increasing over 75 basis points during the quarter, a reaction to the Fed's pivot to raising rates and elevated inflation. Higher rates create 2 distinct challenges, noncash fair value adjustments to certain assets within our portfolio and near-term pressure on origination margins and inventory due to the challenge of repricing customers already in our pipeline.

During the first 9 months of 2026, we recorded $167 million in unfavorable noncash changes in fair value of our portfolio assets and liabilities. That same mechanism produced $161 million in positive fair value changes during the first 9 months of 2025. This is primarily a discount rate effect, not a cash flow effect. The expected nominal cash flows from these assets has not materially changed.

Additionally, our Retirement Solutions revenue margin was impacted in the third quarter, decreasing to 9% compared with 11.3% in the third quarter of 2025 and a historical average since the start of 2024 of 10.7%. We believe these impacts are temporary and do not change the underlying fundamentals of our business.

Notably, neither of these challenges change the long-term demand for our products nor the opportunity we see to continue scaling our platform. In fact, we have successfully navigated similar periods before, such as 2022 when the Fed raised rates 7x for a total of 425 basis points. When rising rates reduced margins, we responded with product and pricing changes that improve the economics of new production over time.

During October, we made the necessary changes to our product offerings, and we expect that our revenue margin will return to our historical averages over the first half of 2027. While the near-term interest rate environment remains dynamic, we continue to focus on the levers within our control, pricing appropriately for the environment, improving conversion and productivity, managing costs and preserving financial flexibility.

With respect to capital allocation, we will repay $60 million of our senior secured notes and we will exercise our right to extend the remaining approximately $90 million to November 2027. We believe that in the current environment, this is a prudent choice as this increases the company's financial flexibility.

Before I turn it over to Kristen and Matt, I want to take a moment to acknowledge our team. Thanks to the hard work, our operating strategy is delivering on production and productivity.

And with that, I will turn the call over to Kristen.

Thanks, Graham, and good afternoon, everyone. Last quarter, I highlighted an important evolution in our business, our ability to generate more production from the opportunities already entering our platform. This quarter proved it under pressure.

Against the capital markets headwinds Graham described, that shift matters more than ever, and our focus remains on 3 things: sustaining growth, increasing productivity and turning our investments into compounding benefits. First, production growth remained resilient in a difficult market. We funded 24% more this quarter than in the third quarter of last year.

Turning to Slide 7. The contrast with the traditional mortgage market is stark. From 2024 through our 2027 outlook, our funded volume grows more than 60%, better than 17% per year. The forward mortgage industry grows about 6% a year over the same period. Next year, per the recent MBA forecast, the forward market shrinks by 5% against double-digit growth for FOA. The difference is demand. Ours is driven by retirement need, not refinancing incentives. Higher rates affect borrower proceeds, but they do not eliminate our customers' need for financial flexibility in retirement.

On Slide 8, we show the consistent growth our platform has experienced. Since 2023, our submission volumes have increased by 21% annually, while our funded volumes grown by 20% annually. This is across our product suite as HECM volume is up 14% year-over-year, HomeSafe first liens are up 15% and HomeSafe Second are up 63%. That breadth is deliberate. Each of our products serves a different homeowner need, and together, they give us multiple paths to growth even when pricing pressure affects individual products. That's why in a quarter when benchmark rates rose sharply and traditional mortgage industry applications declined, our submission volume grew by 20% and our funded UPB grew by 24% year-over-year. Our growth comes from conversion, productivity and product range and our 2027 outlook assumes no benefit from rates.

Wholesale remains our largest channel, representing nearly 60% of funded volume. It funded $444 million in the quarter, up 10% year-over-year, and submissions reached $625 million, up 6% sequentially and the highest level in 7 quarters. Second, our operating model is becoming more productive. Retail funded volume increased 11% sequentially and 54% year-over-year to $303 million.

Slide 9 shows how even with 12% fewer opportunities than in Q2, which was a result of a deliberate shift to quality over quantity, submissions held steady and funded loans rose 9%. This continued move to quality, coupled with our technology advancements, lifted production per loan officer to an average of $1.2 million per month in the third quarter, up nearly 9% sequentially and more than 40% year-over-year. Productivity has risen year-over-year in each quarter of 2026, and the gain is not a denominator effect. Total retail headcount is essentially unchanged from a year ago.

Third, the investments we made this year were built to compound. We expect to keep improving retail funnel conversion and loan officer productivity in 2027 and to deliver continued efficiency gains in operations and our G&A expenses as volume grows over a stable cost base.

Our digital platform is scaling. In the third quarter, prequalification starts rose 89%, digital opportunities grew 61% and time from lead to application fell to under 6 days from roughly 20. And new website launches in the first half of 2027 will lift funnel conversion further.

We are also broadening our product suite. The line of credit version of HomeSafe Second launches soon. And next year, we will expand the suite further as we move from the leader in reverse mortgages toward becoming the leader in home equity solutions for retirement.

We cannot control where rates go. We can control conversion, cost and pricing, and we are getting better at all 3. Our growth is driven by demographics, not the rate cycle, and that is why we expect to keep growing through this market and to convert that growth into stronger, more consistent earnings power.

With that, I'll turn it over to Matt.

Thank you, Kristen. Good afternoon, everyone. On a GAAP basis, the company recognized a pretax loss of $130 million, primarily reflecting noncash fair value changes on residual assets, partially offset by a reduction in the fair value liability of our convertible notes. It is important to distinguish these noncash fair value adjustments from the underlying economics of our portfolio. While changes in market rates affect the current valuation of certain assets, these assets continue to accrete, and we ultimately expect to monetize these assets over time. We continue to believe our residual assets represent meaningful long-term economic value, and our focus remains on managing the portfolio to maximize that value.

As shown on Slide 10, adjusted net income for the quarter was $6 million or $0.28 per share. As Graham and Kristen mentioned, the key driver of lower adjusted earnings was lower revenue margins in our Retirement Solutions segment. These results were impacted by the increase in benchmark rates during the third quarter. We consider these as temporary in nature, not because we anticipate the rate environment to move in our favor, but because of the nature of our platform.

Although fair values declined, our Portfolio Management segment still generated adjusted net income of $11 million as our portfolio continued to accrete a yield in the mid-teens against retained beneficial interest of approximately $500 million.

Cost discipline remained a key focus as well. Total expenses, excluding securitization-related expenses, increased by only $2 million, with this coming from an increase in subservicing expense associated with the HECM portfolio we acquired on June 30.

Variable compensation rose with the growth in our retail platform Kristen mentioned, and this was offset by a reduction in marketing expense as we focus our efforts on higher-value opportunities.

Turning to the balance sheet. Our cash and cash equivalents increased to $118 million as of September 30 as we generated $33 million over the prior quarter. For the year, we have generated $145 million in cash from originations and capital markets activity, which we have used to complete several significant capital transactions, including the repurchase of Blackstone's remaining equity position and the acquisition of Onity's HECM servicing portfolio.

Leveraging our strong cash position, we will complete the $60 million paydown on our senior secured notes later this month.

Looking forward, we expect to achieve the low end of our previously communicated full year 2026 funded volume guidance range of $2.8 billion to $3.8 billion -- $3.1 billion, excuse me. However, we no longer expect to achieve our adjusted EPS guidance for the full year 2026 of $4.50 to $5 as a result of the decreased margins in the third quarter and the time it takes for the changes we have already made to make their way through our pipeline. We anticipate the fourth quarter will approximate our third quarter adjusted earnings results.

Looking ahead to 2027, we expect funded volume to reach $3.1 billion to $3.4 billion, a growth rate similar to what we have achieved over the past several years, supported by consumer demographics, our product breadth and ongoing conversion improvements. This increase in funded volume, combined with the expected return to normalized margins by product and channel, though partially offset by lower portfolio management earnings resulting from the higher discount rates, should allow Finance of America to achieve a run rate adjusted earnings per share of approximately $4 to $5 on an annualized basis during the second half of 2027.

Looking ahead, our priorities are unchanged, continue to grow our operating platform to produce strong recurring earnings, maintain sufficient liquidity to support the business and allocate capital where we believe it can produce the most attractive risk-adjusted returns.

With that, I will turn the call back to Graham for closing remarks.

Thank you, Matt. We have built a platform capable of delivering sustained production growth across different market environments, and this quarter demonstrated that progress. While the current rate environment has pressured earnings, we have taken action to improve margins and remain focused on increasing productivity, generating cash and maintaining financial flexibility.

Looking ahead, we are confident that the long-term demand for home equity solutions remains substantial. With our leading market position, expanding product offerings and continued operational improvements, we are well positioned to capitalize on this opportunity and translate our growth into stronger earnings over time.

And with that, I'll open the call to questions.

[Operator Instructions] Your first question comes from the line of Gaurav Mehta from Alliance Global Partners.

Matt, I wanted to go back to your comments about your expectations of revenue margins expected to go back to historical trends, and you talked about some pricing and product adjustments that you have made. Can you maybe provide some more color on those adjustments and what gives you confidence that you can get back to the historical revenue margins in a high rate environment?

I guess a couple of things, Gaurav. We have made changes to our pricing already in the last few weeks to LTVs and interest rates that we believe will restore those margins back to our historical levels. On top of that, of course, we don't know where the rates will go in the future, but rates have come back quite a bit during the month of October. And so we feel pretty confident that heading into 2027, as the pipeline with the old rates and LTVs works its way through that the new production coming in will be at that margin.

So our guidance kind of reflects that Q4 will still be a little bit down on the margin because we have that pipeline still coming through. But then as the new production starts to come through in the first quarter, we expect those margins to get back to historical levels.

Okay. And as a follow-up, can you also maybe discuss what your interest rate assumption is for your 2027 guidance?

What was the first part of the question, Gaurav?

Interest rate assumption for 2027.

We're agnostic to the interest rate environment. We'll adjust our products, our rates and our LTVs to yield the revenue margin -- the historical revenue margin that we had, which is, as I said in my remarks, 10.7%. So we will adjust our products to achieve that revenue margin. We don't have an expectation for interest rates in 2027. That's not -- we'll react to whatever the [indiscernible].

Your next question comes from the line of Timothy D'Agostino from B. Riley.

I guess just quickly circling back on the guidance. You mentioned your margins should return in the first half of '27, I believe you said the first quarter. So I guess thinking about the $4 to $5 of adjusted EBITDA or EPS, sorry, run rate for the second half of 2027. I guess it kind of -- it would be good to get some color on why you're leaning away from the first half. Again, you expect margins to return. Are there anything else -- is there anything else you want to kind of flag for the first half as to why you're maybe not talk about touching guidance there?

Yes. We just have a longer lead time with reverse mortgages as a senior cycle. So we don't have an application to funding cycle that's, call it, 21 days or 30 days, right? Consumers need to go through counseling, right? We need to go through process. We just have a longer lead time. And when we bring new submissions into the pipeline and new leads into the call center, it's roughly a 60- or 90-day time line before they turn into funded inventory. So that's the reason for potentially having a longer time line.

So I'm not going to say it won't be the first quarter, but we also -- look, we just had midterms today, potentially rates move again in December, maybe one more time, right, which will cause us to move our margins again. So we're probably building in a little bit of cushion. We're just a little uncertain if the rates are going to move 1 or 2 more times, and we'll have to adjust our products and margins again to match that.

I would probably add to that as well. If you look at our funding patterns in the last few years, generally, our first quarter fundings are the lowest of the year, submissions dip a little bit over the holiday period. So we still expect strong year-over-year growth, but sequentially, that Q1 is usually our softest. So it's a combination of what Graham said and perhaps that pattern as well.

Okay. That's helpful. And then if I could just ask a second one. Just on cash and capital allocation, you had mentioned using cash for Onity HECM servicing portfolio, Blackstone equity position, thinking out to now November, you have the $60 million of debt. So I guess, capital allocation and cash use in 2027, outside of that additional $90 million worth of debt, how else could you return capital to shareholders? Can you share with us maybe plans on that? Could it be potential share buybacks, a dividend? Just kind of trying to understand how you think about that.

Yes, all of the above. Like once we retire the $90 million, we are continuing to generate cash through our operations and our [indiscernible] activity on the balance sheet. So yes, share buybacks and dividends are both likely outcomes once we retire the $90 million unsecured debt.

Your next question comes from the line of Gabe Poggi from Raymond James.

So my first question is you guys are going to pay down $60 million on the notes this month. Can we just walk through and it kind of piggybacks on Tim's prior question, kind of how you're thinking about cash usage, et cetera, to get to the $90 million a year from now? That's 2?

Yes. I guess a couple of things, Gabe. I think, first, as Graham mentioned, we have a number of prior securitizations that we have continued to call and reissue activity. So we expect over the course of 2027 to generate additional cash from that activity. And then also, as we've talked about in prior calls, we are still pursuing financing on our HECM MSR asset that we don't know the exact timing of that, but we expect that certainly in the first half of '27, generated significant additional cash from that as well. So core operations, the call and reissue activity and the HECM MSR, the combination of those 3 gives us high level of confidence that the $90 million will be easily paid off at the end of next year.

Got it. And then I had a question on -- you guys talked about returning to historical margins late -- I guess, late one half '27, and that's been the inflection point to get to your new guidance in the back half of the year. What exactly is that historical margin number that you guys are using or pointing to just for modeling purposes? I know you've given some volume guidance, but where do you think margins should shake out or could shake out as we get towards the back half of next year?

So I'd say, on average, that historical margin is about 10.7%, right? We've seen some quarters higher than that. We've seen some quarters lower than that, right, as things change. But that's the number we're kind of targeting. Again, I think we'll get back to those margins in the first half of '27. The volume, we're down a little bit in Q1, most likely and then starting to hit our stride in Q2 seasonally. And so that's what really kind of leads to the guidance for the second half of the year.

This concludes our Q&A session. I will now turn the call back to Graham Fleming for closing remarks.

Yes. I want to thank everybody for joining our call today, and we look forward to updating you in March on our full year 2026 results. Thank you very much, everybody, for joining the call today.

This concludes today's call. Thank you for attending. You may now disconnect.

Thank you. Ladies and gentlemen, thank you for standing by. I'm Leah, and I'll be your conference moderator today. At this time, I welcome you to the... If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star one again. I will now turn the call over to Michael Fant, Senior Vice President of Finance. You may now begin.

Thank you and good afternoon everyone and welcome to Finance of America's second quarter 2026 earnings call. With me today are Graham Fleming, Chief Executive Officer, Kristin Seifert, President, and Matt Engel, Chief Financial Officer. As a reminder, this call is being recorded and you can find the earnings release and related presentation on our investor relations website at ir.financeofamericacompanies.com. Also, I would like to remind everyone that comments on this conference call may be forward-looking statements within the meaning of the private security's litigation reform. 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 will find in today's earnings release and related presentation. 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 factors section of Finance of America's annual report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 11. 13, 2026. Such risk factors may be amended and updated in our subsequent filings with the SEC.

We are not undertaking any commitment to update these statements if conditions change. Please note, today we will be discussing interim period financials for our continuing operations, which are unaudited. In addition, we will refer to certain non-GAAP financial measures on this call. You can find reconciliations of non-GAAP to GAAP financial measures, to the extent available without unreasonable efforts, in our earnings press release and presentation on the Investor Relations page of our website. Now I will turn the call over to our Chief Executive Officer, Graham Fleming.

Thank you, Michael. Good afternoon, everyone, and thank you for joining us. The second quarter reinforced what we've been communicating over the past several quarters, that the operational improvements and investments we have made are now translating into a stronger, more scalable business. While market movements can create volatility and fair value adjustments and gain on sale margins, we remain focused on areas we directly control. Production, operating efficiency, expense management, capital allocation, and cash generation. During the second quarter, our team delivered strong execution across each of those areas. To start, if you turn to slide five of the accompanying presentation, Finance of America recognized adjusted net income of $19 million, or $0.84 per share, during the second quarter. For the first half of 2026, we have generated $45 million in adjusted net income, or $1.94 per share, and 81% of the total net income was generated in the first quarter. improvement over the first half of 2025.

This stems from the 14% increase in origination so far in 2026 compared to the first half of 2025, including $730 million in reverse mortgages funded in the second quarter. This represents a 21% increase over the second quarter of last year and leaves us confident in our ability to achieve our full year guidance rate. Perhaps the clearest demonstration of our execution this quarter was the strength of our cash generation, allowing us to invest in strategic growth and strengthen the balance sheet. During the quarter, we generated $58 million in cash through our Originations and Capital Markets activities. use those proceeds to complete the acquisition of the mortgage servicing rights with respect to a $5.2 billion HECM MSR from Audity, make a semi-annual interest payment towards our non-funding corporate notes, and still maintain strong cash balances at quarter end. As discussed previously, the Honoree transaction, which closed on June 30th, represents more than the acquisition of servicing assets. diversifies our servicing footprint, broadens the population of homeowners and conserved, and creates additional opportunities to introduce our proprietary solutions to customers who may benefit from them. further strengthening our position as the leading reverse mortgage company in the industry. Before turning the call over to Kristen, I'd like to spend a moment on why we remain so optimistic about the long-term opportunity. As shown on slide six, older homeowners hold substantial wealth in their homes. where rising costs are placing greater pressure on retirement cashflow.

In today's rate environment, many traditional options for accessing that equity are less attractive. Together, these dynamics create a durable need for responsible home equity solutions and reinforce the long-term relevance of our platform. We believe Finance of America is well positioned to serve that need, given our specialized platform, broad product capabilities, and focus on helping homeowners thoughtfully incorporate home equity into their retirement planning. The macroeconomic and demographic need is clear. Great Kirsten will now discuss how the investments we have made across distribution, technology and proprietary products are strengthening our ability to capture that opportunity.

Thank you, Graham, and good afternoon, everyone. Last quarter, I said we were reaching an inflection point in the platform. The second quarter gives us greater confidence in that view. The investments we've made over the past two years across distribution, technology, and product are beginning to compound. The results are stronger demand, a more productive operating model, with term earnings power. First, demand is strengthening. Turning to slide eight, submissions exceeded $1 billion during the quarter, even in a rising rate environment, increasing approximately 11% sequentially and 19% year over year, while funded volume increased approximately 21% year over year to $730 million. Second, we're converting demand more efficiently.

The clearest proof point shown on slide nine is retail. Retail opportunities increased 9%, submissions increased 19%, and funded loans increased 33%. Importantly, we achieved that growth with stable sales capacity, resulting in meaningful productivity improvements. Funded loans per call center loan officer increased nearly 30% from the first quarter. These results reflect structural improvements in how we engage customers, convert demand, and move borrowers through the origination process. Historically, growth depended more heavily on generating additional top of funnel opportunities. Now we're demonstrating our ability to generate more production from the pipeline we already have.

Our proprietary technology platform and AI enabled capabilities are also supporting these improvements, helping us better understand customer needs, match homeowners with appropriate solutions, and improve efficiency throughout the origination process. Our digital experience is showing similar progress. In June, approximately 10,000 site visitors engaged with our pre-qualification engine, achieving our year end monthly target six months ahead of schedule. More importantly, monthly pre-qualification offers increased nearly 90% from the first quarter, and time to application improved approximately 57%. These metrics demonstrate that we're creating a larger pool of engaged borrowers while making it easier and faster for customers to move through the application process. Third, our platform is becoming more valuable and scalable. Our proprietary products continue expanding the addressable market by providing customers greater flexibility and additional ways to access home equity.

During the quarter, proprietary submissions increased approximately 20% and proprietary fundings increased approximately 25%. As shown on slide 10, our retail and wholesale channels continue to reinforce one another. Retail provides direct consumer engagement and greater visibility into the customer journey, while wholesale extends our reach through trusted partners and brings our proprietary solutions to more borrowers across more markets. Together, they create multiple avenues for profitable growth while leveraging the same product platform and operating infrastructure. Stepping back, three things stood out this quarter. Demand is strengthening, conversion is improving, and our investments are compounding into a more scalable platform with durable earnings power. Market opportunity ahead of us is still large and underpenetrated, but the real story this quarter is conviction.

We're building a stronger, more valuable business, not simply a bigger one. With that, I'll turn it over to Matt.

Thank you, Kristen, and good afternoon, everyone. As Graham mentioned, the second quarter demonstrated continued strength in the underlying business, while reported earnings reflected several market-driven and non-operating items. I will provide additional color on the quarter, which is summarized by segment on slide 11 and in today's earnings release. We recognized a gap net loss of $29 million for the quarter, while adjusted net income totaled $19 million, or $0.84 per share. The difference primarily reflects non-cash fair value adjustments on our portfolio, combined with certain one-time impacts during the quarter, which negatively impacted our GAAP results. We recorded 84 million of negative fair value adjustments during the quarter. In addition to those impacting our portfolio related to higher interest rates, this also includes a $24 million adjustment related to our convertible notes as our stock price increased nearly $11 per share during the quarter.

Because the convertible notes are carried at fair value, indexed to our stock price, an increase in our stock price increases the value of the associated liability, creating a non-cash expense under GAAP. We also released our deferred tax asset valuation allowance, creating a tax benefit in the quarter of $42 million. This non-cash accounting adjustment reflects our expectation that future taxable income will support realization of these tax assets, and investors should expect a more normalized effective tax rate going forward. While these accounting adjustments can create meaningful quarter-to-quarter volatility in our gap earnings, they do not affect the underlying operating performance or cash generation of the business. We believe that adjusted net income continues to provide the clearest picture of the underlying earnings power of FOA. Adjusted earnings per share of $0.84 is a 53% improvement over the second quarter of 2025, and first half of 2026 adjusted EPS of $1.94 improved 81% over the first half of 2025. Beginning with retirement solutions, continued demand, as evidenced by the 21% increase in funded volume compared to the second quarter of 2025, allowed the business to contribute relatively stable adjusted earnings for the sequential quarter, even while we continued investing in the business with higher personnel and marketing expenses to support future business. production.

For the first half of 2026, Retirement Solutions generated a 21% increase in adjusted net income on 14% higher funded volume compared to the first half of 25. And we believe these investments will continue to support higher production, stronger operating leverage, and increased earnings power over time. Portfolio management completed a securitization of over $1 billion during June, which contributed to FOA's strong cash flow from originations and capital markets activity for the quarter. For the first half of the year, the segment has recognized $46 million in adjusted net income, a 24% improvement over the first half of 2025. Based on our first half performance and continued momentum across submissions and funded production, we are reaffirming our full year guidance of funded volume between 2.8 and 3.1 billion and adjusted EPS between 450 and $5 per share. Turning to our balance sheet and cash flows, as shown in slide 12, cash generation from originations and capital markets activities remains strong at $58 million in the quarter and approximately $116 million for the first half of 2026. enabled us to complete the entity portfolio acquisition, make the semiannual interest payment on our non-funding corporate debt, and maintain strong quarter-end cash balances. As we have said before, strengthening the balance sheet remains foundational to unlocking the full value of the operating franchise we have built over the past several years.

We are very pleased with the progress we have made. When we think about our balance sheet, we identify three key components, inventory loans, HECM MSR, and the residual fair value of our proprietary securitizations. The first The first category is inventory loans held at fair value that are yet to be sold or securitized. This is represented by loans held for investment and loans held for sale on our balance sheet. At the time of sale or securitization, we will recognize a cash premium and, depending on the securitization type, record a HECM MSR or residual interest at fair value. These loans are financed via warehouse facilities, and we hold a small balance of haircut equity in them. When loans are securitized, in most cases, the assets will remain on our balance sheet with the corresponding liability in accordance with GAAP.

For HECM loans, these are HMBS obligations, and for proprietary loans, these are non-recourse securitizations. For both categories, FOA recognizes an accreted yield on the adjusted net asset value we hold. Regarding the HECM MSR, the adjusted net asset value, or the delta between the loans held for investment subject to HMBS obligations and the corresponding HMBS obligations, totals $326 million as of June 30th, with financing of only $46 million, or roughly 14% leverage. continue to pursue increased financing secured by this asset at a more appropriate attachment With respect to our residuals and proprietary securitizations, we have the ability over time to monetize the equity held in these assets through the call and reissue of the non-recourse securitizations. Proceeds from the monetization of the HECM MSR and proprietary residuals provides financial flexibility to our business. Our first priority is retiring the remaining $150 million of senior secured notes this November, which will materially reduce our non-funding debt, lower our financing costs, and improve recurring earnings. Looking ahead, once that debt is retired, the company will have greater options for a broad range of potential actions, such as further due leveraging, stock repurchases, dividends, or business investment. Before wrapping up, I want to call your attention to an amendment effective July 31st to the reporting structure of our Class B shares, which establishes a one-to-one alignment of the reported Class B shares with the underlying LLC ownership.

This amendment does not change economic ownership or voting power, but provides a clear view of fully diluted shares and market capitalization.

With that, I'll turn the call back to Grant. Thank you, Matt. The second quarter demonstrated continued progress across the business. We delivered strong growth in funded volume, expanded adjusted earnings, generated significant cash, completed the on-any transaction, and continued strengthening our balance sheet. The long-term opportunity in reverse mortgages continues to expand, and we believe Finance of America remains strategically positioned to capitalize on that opportunity. Just as importantly, the operational improvements we have discussed over the past several quarters are producing measurable results. Demand is strengthening, conversion and sales productivity are improving, and our proprietary products are expanding the ways we can serve older homeowners. We remain confident in our full year outlook and focus on discipline and execution.

As we continue reducing debt and improving the efficiency and scalability of the platform, we believe Finance of America is well positioned to capture the long-term opportunity in home equity and create durable shareholder value. Thank you for joining us today. We'll now open the line for questions.

We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster.

Your first question comes from the line of Gaurav Mehta with Alliance Global Partners. Your line is open.

Thank you. I wanted to ask you on your comments around demand and submission volume. I was wondering if you're seeing any difference between the demand for your proprietary products.

Yes, we've seen growing demand for proprietary products recently, mostly as a function of the proprietary products offering better cash flow to the consumer. So those products, the amount available changes as interest rates change. So it's typically whatever is best suited for the customer. is where that demand lands. And right now that's with the proprietary channel.

Okay. As a follow up, I wanted to ask you on your tangible equity value per share, it seems like it was slightly lower than one Q. Can you help us understand why the tangible equity value went lower this quarter?.

Yes, part of it is just the reported loss for the quarter. The gap loss is the number we quoted, which includes the fair value adjustment. So that book number is what's driving it primarily.

Okay, thank you. Your next question comes from the line of Timothy D'Agostino with B. Riley Securities. Your line is open. Please go ahead.

Yes, hi, thanks for taking the questions today. Just in mind, it'd be great to get an update if there's anything meaningful on the Helix platform and then the Joy AI. There's a slide in the last deck last quarter, and I was just wondering if there's any meaningful updates there and what you're seeing in the accelerating operating leverage through more.

production, if that's what's driving it. Yes, it's definitely the foundational platform that's driving those improvements. When we talk about the productivity gains from our loan officers, as well as the improvements in the digital funnel with the metrics that I shared earlier, all of that is being driven through these AI platforms.

Okay, great. Thank you. And if I could ask a second one. Just to clarify, on capital allocation, with the Onity MSR portfolio acquisition behind us and looking forward to the $150 million of potential debt repurchase, it kind of sounds like share buybacks might be a good be on hold until that event. Is that the right way to think about it? Or can you provide a little more color and higher thinking about capital allocation before the potential repurchase of $150 million? Thank you.

Yes, Tim, I think that's fair. I do think that our primary focus is the retirement of the $150 million here in just a few months from now, right? You know, past that, you know, I think at our next quarterly range release, we have a better sense of how, you know, wrap up 26 and looking forward to 27. You know, where our stock's trading at the time, how the balance sheet looks, and mixing those decisions going forward. But between now and then, our primary focus is just retiring that 150.

Okay, great. Thank you so much for taking the questions today. Your next question comes from the line of Gabe Pogge with Raymond James. Your line is open. Please go ahead.

Hey everybody, thanks for taking the questions. I've got a couple with it if it's OK. Can you talk about? gain on sale margin in the quarter for a heckum product and home safe product and how that trended relative to the first quarter.

Yes, you know, the interest rate volatility did create a little volatility in the gain and sale margins as well during the quarter. I think HECM spreads remain tight, not in not a lot of change there. I think on the proprietary side, we did see a little bit impact there in terms of the executed securitization price we expect on those assets. I think Graham has talked in the past that, you know, when interest rates move suddenly, we don't always choose to reprice our pipeline, right? We have the ability to, but sometimes we choose not to from a customer disruption standpoint, and that'll create some volatility in our margins going forward, but over the long term, we can kind of manage that a little better.

Do you have a specific number you can provide for the quarter for each of those?.

I don't think we break that number out right off top, but let me see if we can get you something on the follow up on that one.

Okay. Rates have obviously moved a lot since June 30th. Do you have any update on kind of, I know it's a gap mark and it's subject to a lot of volatility, but any update on where book value is today on a tangible basis?.

So I think it's funny. I think you're absolutely right. I think it's even reversed itself a little bit in the last two days. Certainly, but if generally portfolio markdowns are tied to higher interest rates, rates moved up considerably in July. And one would expect we would have a fair value right down in July. Now, the first four days of August, that's gone the other way a little bit. I think we would have recouped some of that. So, I can't give the exact numbers.

We haven't closed our books.

for July or for the third quarter yet, but directionally you're correct on that assessment. Oh Gabe, just to add to that, right? Some other components that go into fair value are home price appreciation, which has continued to remain strong and ultimately credit spreads. And we'll get an update on credit spreads in our September transaction. So it's not just driven by the movement of rates. There's kind of three, it's a three legged stool.

On the Onity acquisition, can you talk about the kind of the impact of the bottom line? I know there's two parts to it, but what's closed? How do you think about that just beyond diversification of services?.

Yes, so we acquired the asset roughly had a book value of around $70 million. So we'll expect to earn a yield in the mid-teens and that will flow through the P&L here in the second half of the year.

Do you intend to add that to guidance as you think about guidance in the back half? Or I could say it another way, is that incorporated in current guidance? Yes, it's incorporated into the current guidance. OK. OK, that's helpful. And then lastly, just if you can, maybe we take this offline. Can you help tie the $58 million of cash flows you guys are referring to in the 2Q to the $19 million of A&I?.

So I think probably the best way to do that is let's, we'll get our 10Q filed later this week, right? And there's some information there with earnings by segment, which help you kind of bridge some of that. And I think we can kind of help you walk through that 10Q and the relative disclosures to see if we can build you back to that number.

Okay, that works. We can just circle up when the queue smiles. Thank you. There are no further questions at this time. I will now turn the call back to Graham Fleming for closing remarks.

Thank you, everybody, for participating in the Q2 call.

This live transcript is auto-generated without human intervention or review.

[Call has ended.]

Hello, everyone. Thank you for joining us, and welcome to the Finance of America First Quarter 2026 Earnings Call. [Operator Instructions]

I will now hand the conference over to Michael Fant, Senior Vice President of Finance. Michael, please go ahead.

Thank you, and good afternoon, everyone, and welcome to Finance of America's First Quarter 2026 Earnings Call. With me today are Graham Fleming, Chief Executive Officer; Kristen Sieffert, President; and Matt Engel, Chief Financial Officer. As a reminder, this call is being recorded, and you can find the earnings release and related presentation on our Investor Relations website at ir.financefamericacompanies.com (sic) [ [email protected] ].

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 will 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 Factors section of Finance of America's annual report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 13, 2026. Such risk factors may be amended and updated in our subsequent filings with the SEC.

We are not undertaking any commitment to update these statements if conditions change. Please note, today, we will be discussing interim period financials for our continuing operations, which are unaudited. In addition, we will refer to certain non-GAAP financial measures on this call. You can find reconciliations of non-GAAP to GAAP financial measures to the extent available without unreasonable efforts in our earnings press release and presentation on the Investor Relations page of our website.

Now I will turn the call over to our Chief Executive Officer, Graham Fleming. Graham?

Thank you, Michael, and good afternoon, everyone. The first quarter of 2026 was an outstanding quarter, with operational momentum in originations driving an acceleration of volumes, excellent profitability in our Portfolio Management segment, and steady improvement in our financial results, liquidity, and capital position. On our call today, I will take you through the highlights, then spend a moment commenting on the market opportunity in reverse mortgages, which we believe is significant; Kristen will dive into our originations performance; Matt will comment on the financials; and then we will take your questions.

To start with, if you turn to Slide 5 of the accompanying presentation, Finance of America generated net income of $35 million and adjusted net income of $26 million, or $1.10 per share, up 112% from last year's first quarter results. This powered a strong increase in tangible equity to $268 million, or approximately $15 per share. These results are consistent with the guidance we have issued for 2026, which Matt will update you on in a moment. From a production standpoint, we funded $596 million in the quarter, up 6% year-over-year. As you will recall, we talked about operational enhancements to our platform, driving an inflection point in results, and we are starting to see that in the March and April fundings, consistent with the volume guidance we have shared with you.

Separately, I'm excited to see us rolling out a new second-lien reverse mortgage line of credit, which is a great product to help seniors tap directly with the timing and amounts that precisely suit their needs. Regarding the previously announced PHH transaction, the transaction has been modified to close in 2 distinct phases. The first phase, consisting of the origination, marketing of our products and subservicing components, is expected to close in May. The second phase, which includes the purchase of HECM servicing rights, will follow as we continue to work with our primary regulator, Ginnie Mae, on the related approval. Additional information can be found in today's 8-K filing with the SEC.

Before turning the call over to Kristen, I would like to spend a moment on the opportunity in reverse mortgages, which are typically viewed as a niche product in the broader mortgage universe, and in our experience are not well understood by investors missing the growth potential. If you turn to Slide 6, let me share with you a snapshot on current industry volumes. As you can see from the top chart of this slide, government-insured reverse mortgages, or HECMs, have been running roughly flat for the last 3 years at approximately $4 billion per year, down significantly from the boom experienced during the pandemic, driven by refinance activity.

What is noteworthy, but is somewhat hard to see given the lack of consistently available industry data, is the market expansion related to proprietary products. This is one of the reasons we believe the equity markets have been slow to pick up on the opportunity. These proprietary products significantly expand the market by making reverse mortgages available to borrowers aged 55 and older in certain states, compared to age 62 for government-insured products, and by offering jumbo balances and a range of product structures, including first liens, second liens, and lines of credit.

For example, Finance of America's second-lien products can provide a solution for borrowers who want to access home equity while maintaining a low rate primary mortgage. These products are really important to watch because their increasing origination volumes demonstrate the growing mainstream acceptance of reverse mortgages by American seniors. Finance of America has been the market leader in proprietary reverse products for over a decade. These products have been a significant and accelerating driver of our growth over the last 3 years as they continue to gain acceptance from our customers and from our investors alike.

With this thought in mind, if you will turn to Slide 7, I will end my prepared remarks by reminding you that American seniors control a massive amount of home equity, approximately $14.6 trillion. And this equity is expected to continue to grow as homes continue to appreciate and as the population ages. Between 2024 and 2026, census data shows that over 11,000 Americans turn 65 every day. Now these are big numbers, making the addressable market more than 100x greater than the size of the entire reverse mortgage population outstanding today, and not everyone is going to become a reverse customer. However, as the proprietary product set continues to expand and American seniors turn to home equity for an ever -widening set of use cases, we believe there is a massive multiyear growth opportunity shaping up for Finance of America.

And with that, I'll turn the call over to Kristen.

Thanks, Graham, and good afternoon, everyone. Last quarter, I said we were reaching an inflection point in the platform. What we saw in the first quarter reinforces that view, and we can see it clearly in the numbers.

Turning to Slide 8. Overall originations were up 6% year-over-year, and first quarter submissions reached a new high of $918 million, which is up 20% year-over-year. Submissions represent customers who've completed their application and provided all supporting paperwork. They're one of our clearest leading indicators of future funded volume and why we remain confident in our volume guidance. Our volumes reflect a mix of both HECM and proprietary products across first and second liens.

I specifically call out our HomeSafe Second, which reached a high watermark in the quarter, increasing 32% year-over-year. And as Graham mentioned, we rolled out a new line of credit option for HomeSafe Second, further expanding the use cases for our customers. Finance of America has long been a leader in proprietary products supported by our understanding of the customer and strong capital markets relationships, which continue to support growth across both our retail and wholesale channels. While HECM is structured to a one-size-fits-all approach, FOA's industry-leading product development and partnerships allow us to better target the various and bespoke needs of our massive customer base, which will lead to continued profitable growth.

Turning to Slide 9. At the top of the funnel, momentum exiting the quarter was strong. Inquiry volume in March was up 84% versus the 2025 average, while cost per inquiry declined 19%. Opportunities, defined as qualified warm transfers to loan officers, also reached a new high in March, up roughly 58% over 2025 levels. Further down the funnel, we're seeing equally strong progress in early conversion. Borrowers opting into our digital prequalification experience more than doubled sequentially, and submissions per loan officer in March reached the highest level in the history of our retail channel, up 47% compared to 2025 levels. These improvements are being driven by the operating model we've been building.

Helix is our proprietary, industry-first, end-to-end platform that connects how we acquire, evaluate, and move customers through the process, with Joy operating as the AI layer across that system. The deployment of AI is helping us in 2 ways: first, by allowing us to more consistently match customers with the right solution and improve their overall experience; and second, by improving our top-of-funnel marketing and resulting cost per lead. Incorporating AI across the platform is driving meaningful improvements that will compound as we grow and scale. Helix and Joy give us a competitive advantage over peers who rely on vendor systems, and I look forward to updating you on our progress as we build out new capabilities.

Stepping back, this is happening in a market that remains significantly underpenetrated. As Graham mentioned, today, there's less than $100 billion of reverse mortgage volume outstanding compared to an estimated $14.6 trillion of senior home equity. As the category leader with approximately 30% market share, our scale, product breadth, and operating model position us to capture more of this underpenetrated opportunity, supporting better outcomes for customers in retirement, and strengthening the durability and scalability of our earnings.

With that, I'll turn it over to Matt.

Thank you, Kristen, and good afternoon, all. Graham already gave you the headline results, so I'll give you some added color for the quarter, which you can find in today's earnings release and summarized by segment on Slide 11. As mentioned, we generated $35 million of net income and $26 million of adjusted net income. Adjusted earnings per share of $1.10 was up 112% year-over-year. Starting with Retirement Solutions, which represents our originations platform, adjusted net income was $14 million, down from the fourth quarter due to the typical seasonality in originations, but up substantially year-over-year, in fact, up by 56%. Driving these results was the higher conversion rates Kristen mentioned, as well as improved revenue margins, which increased year-over-year, reflecting the strong execution we are seeing as proprietary production continues to grow.

Portfolio Management delivered strong results for the quarter, generating $28 million in adjusted net income. Performance was driven primarily by $1.7 billion of securitization activity across both proprietary reverse and HECM buyouts. Results benefited from favorable market conditions, including tight spreads and relatively lower interest rates, as well as the timing of execution within the quarter. While timing can vary quarter-to-quarter, our results reflect the strength of our platform and our ability to consistently identify and execute on attractive capital markets opportunities.

Corporate segment adjusted earnings, which reflects overhead and interest expense on our nonfunding debt, was materially in line with prior quarters, reflecting reduced nonfunding interest expense, offset by investments in technology. Overall, these results drove a sequential increase in tangible equity to $268 million, or approximately $15 per share. With respect to our valuation, we believe the growing origination and earnings power that we continue to demonstrate will, over time, warrant a higher multiple on both an earnings and tangible equity basis.

Turning to key balance sheet metrics on Slide 12. You can see that our cash balances increased from $90 million at the end of 2025 to $108 million at the end of the first quarter, and are up by 108% year-over-year. During the quarter, we generated $58 million in cash flow from our originations and capital markets activities, and utilized $40 million to complete the repurchase of Blackstone's equity position. At this time, we view our plan to retire the $150 million balance of our senior secured corporate notes later this year as the most prudent use of our liquidity and capital in the near term. This deleveraging plan will create a very strong balance sheet, which we view as an appropriate foundation for the valuable operating franchise we have built. Having said that, given the strong results we posted this quarter, we also see considerable value in our own shares. We expect to revisit capital allocation priorities as we make progress against the deleveraging plan.

If you turn to Slide 13, I'll conclude my prepared remarks by giving you an update on our guidance. For 2026, we are maintaining our funded volume outlook of $2.8 billion to $3.1 billion. We're also increasing our guidance for full year adjusted earnings per share above our previously stated range to between $4.50 and $5.00 per share, reflecting the strong first quarter performance and the momentum we are seeing in our business.

With that, I'd like to ask the operator to open the call for questions.

[Operator Instructions] Your first question comes from the line of Timothy D'Agostino with B. Riley Securities.

Congrats on the quarter. So on origination volume, it sounds like March was a pretty strong month. And I was wondering if you could add some color as to maybe why March was stronger than February and January. And if that volume that was seen in March persisted through April and into the beginning of May?

Tim, I think a couple of things. One, I mentioned there's some normal seasonality. So our lead generation capabilities in November and December has always curtailed a little bit just from the holiday periods at the end of November and the end of December, of course. So that will lead naturally to some lower fundings in January and February. But as you start to get into the new year and start to crank that engine back up, you start to see a lead flow come in, which really starts to kick in February-March. That's just kind of normal seasonal stuff. I'll maybe let Kristen expand on the improved performance we're seeing from that marketing spend as well.

Yes, I touched on Helix, and really what we saw in March was the work that we've been doing actually producing the results that we expected it to, starting to come together in March. So we really started to hit a different speed as it relates to our origination volume in March as a result, and we expect that to continue for the year.

And then on the funded volume by product, especially thinking about the first quarter, obviously it's shifted more towards that proprietary product. But I guess regarding originations in the first quarter from the HECM product and the proprietary product, was there any changes in demand or any color you can provide on how homeowners are interacting with each product? Is the proprietary product gaining more traction? Just any color on how homeowners are interacting.

Homeowners typically choose a product that best suits their needs, which in most cases is a function of the amount of proceeds relative to the debt that they have and their home value. So where we see proprietary as natural fits are more of the jumbo home sizes on our traditional suite. But the difference for us in Q1 is we're really starting to see our second-lien product increase in originations. And those products are for people that really have a different use case in the sense that they're happy with their first mortgage, typically a low interest rate, they can afford that payment, but they have a tremendous amount of home equity that they'd like to tap and can't afford or don't want another payment to impact their cash flow. So for a HECM versus HomeSafe on the traditional side, it's typically a function of which product provides the customer access to the most funds and dependent on property value. And then on the HomeSafe second-lien, it's based on what I just described, borrowers looking for a different alternative.

[Operator Instructions] And we have a follow-up question from Timothy D'Agostino from B. Riley Securities.

Let's take the third question here. I just wanted to see if you had any more updates or just touch on anything else regarding the PHH acquisition. I know in the slide deck it was mentioned that it was progressing, but I don't know if there was any additional color you could provide.

Yes. All the additional information, Tim, will be in the 8-K that we filed after the market today. So as I said in my remarks, we've bifurcated the transactions and the originations, the marketing of our product, and subservicing, which we expect to close here in May. We have a small pool of HECM MSR in front of Ginnie Mae, which we'll work with Ginnie Mae on gaining the appropriate approvals and then close on that when the timing is correct, and we receive that approval.

We have reached the end of the Q&A session. I will now turn the call back to Graham Fleming for closing remarks.

Yes. Thank you. The takeaway from the first quarter is straightforward. We're seeing clear improvement in the underlying drivers of the business, and that improvement is starting to translate into stronger production and financial results. And with that, we look forward to updating you in August with our Q2 results. So thank you, everybody, for joining the call today.

This concludes today's call. Thank you for attending. You may now disconnect.

Ladies and gentlemen, thank you for standing by. My name is Colby and I'll be your conference operator today. At this time, I'd like to welcome you to the Finance of America Fourth Quarter and Full Year 2025 Earnings Call. [Operator Instructions] I will now turn the call over to Michael Fant, Senior Vice President of Finance. You may begin.

Thank you, and good afternoon, everyone, and welcome to Finance of America's Fourth Quarter and Full Year 2025 Earnings Call. With me today are Graham Fleming, Chief Executive Officer; Kristen Sieffert, President; and Matt Engel, Chief Financial Officer.

As a reminder, this call is being recorded, and you can find the earnings release and related presentation on our Investor Relations website at ir.financeofamericacompanies.com. 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 will 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 Factors section of Finance of America's amended annual report on Form 10-K for the year ended December 31, 2024, filed with the SEC on May 20, 2025.

Such risk factors may be amended and updated in our subsequent filings with the SEC. We are not undertaking any commitment to update these statements if conditions change. Please note, today, we will be discussing interim period financials for our continuing operations, which are unaudited. In addition, we will refer to certain non-GAAP financial measures on this call. You can find reconciliations of non-GAAP to GAAP financial measures to the extent available without unreasonable efforts in our earnings press release on the Investor Relations page of our website.

Now I'll turn the call over to our Chief Executive Officer, Graham Fleming. Graham?

Thank you, Michael, and good afternoon, everyone. As we look back at 2025, it was a year of continued strong execution for Finance of America as we delivered improving operating performance and took deliberate steps to strengthen the balance sheet and improve alignment, all while operating in a dynamic market environment.

For the full year, we reported GAAP net income of $110 million or $5.04 per share, representing a 175% improvement compared to the prior year. On an adjusted basis, which we believe is representative of our recurring earnings power, we generated full year adjusted net income of $74 million or $3.04 per share, up $60 million from 2024, representing a 429% increase and above our stated guidance range.

Lastly, the company recognized adjusted EBITDA of $143 million, a 138% increase versus 2024. These results reflect the progress we've made improving earnings quality and capitalizing on operating leverage as the platform scales. Because the securitization activity can shift between quarters, we continue to view the second half of 2025 average earnings as the best indicator of recent normalized run rate earnings power.

For the second half of the year, the company recognized $47 million in adjusted net income or $2.05 in adjusted EPS, an annualized run rate of $4.10 per share. From a production standpoint, we funded $2.4 billion of originations in 2025, representing a 24% increase from $1.9 billion in 2024. Fourth quarter volume totaled $619 million. And importantly, this growth was achieved alongside structural enhancements to our technology and operational processes, which should allow us to continue to see positive momentum in 2026.

During the fourth quarter, we continued our momentum with additional capital actions designed to strengthen the business, solidify the balance sheet and support durable growth. In November, we announced an agreement to acquire the reverse mortgage servicing portfolio and related assets from PHH Mortgage, a subsidiary of Onity Group. This transaction, which we expect to close in the second quarter, will expand our servicing platform, add experienced origination talent and pave the way for a long-term relationship with Onity that accelerates our mission to make responsible home equity access available to more homeowners aged 55 and older.

Also in December, we announced a $50 million equity investment supporting our continued growth initiatives. Stepping back, we believe home equity is increasingly becoming an important component of broader family financial planning. For many seniors, it represents not only retirement security, but also flexibility to support evolving family needs across generations. The investments we've made in our platform, product suite and capital structure position us to serve that opportunity with discipline, consistency and scale.

Overall, 2025 marked an important step forward for Finance of America, not only in what we earned, but in how repeatable and durable those earnings have become. And with that, I'll turn it over to Kristen to discuss the operational drivers behind this performance and positive early signals in '26. Kristen?

Thanks, Graham, and good afternoon, everyone. The fourth quarter marked an inflection point for the platform. 2025 was a year of disciplined investment, modernizing our technology stack, embedding AI across the customer journey and strengthening marketing precision. As we enter 2026, those investments are translating into measurable operating momentum. For the full year, we funded $2.4 billion of originations, a 24% increase compared to 2024.

Fourth quarter funded volume totaled $619 million, closing the year with strong sequential performance. In a rate-sensitive environment, this growth reflects improved funnel productivity and the durability of our category leadership. As the reverse mortgage market leader, marking the largest marketing investments in the space, we are uniquely positioned to see demand trends develop in real time. In January, inquiry volume increased more than 75% year-over-year, while speed to answer calls improved by over 60%.

These improvements drove opportunities approximately 30% above baseline while reducing cost per opportunity by 12% compared to the second half of 2025, demonstrating early operating leverage within our acquisition engine. A key structural differentiator is the rollout of Joy, our AI-powered customer ambassador. Joy is delivering more than 5x the conversion performance of our prior third-party call center while materially improving responsiveness across peak and off hours.

This is not simply a productivity improvement, it represents a permanent shift in our acquisition model, lowering variable costs while increasing scalability and conversion efficiency. Our digital acquisition engine is also accelerating performance. So far in Q1, prequalification engagement has doubled compared to Q4 of 2025. Among customers choosing the digital path, we saw a 47% increase in speed to application, a 36% improvement in speed to submission and a 77% increase in submission rate.

We expect these gains to shorten cycle times, improve pull-through and lower our cost to produce. We're also seeing external signals that reflect an increase in consumer interest in reverse mortgages. Google Trends data shows reverse mortgage-related search activity trending approximately 40% higher year-over-year at seasonal peaks, significantly outpacing prior year trends.

Given our scale and brand leadership, increased category search activity positions us well to capture incremental demand. Underpinning this progress are our people and culture. We're a team willing to challenge legacy approaches, embrace innovation and hold ourselves to a higher standard of execution. Our team is and will remain a critical driver of our performance.

As we look to the year ahead, we have clear visibility into the drivers of performance, stronger cross-functional alignment and a structurally more efficient platform. The work completed in 2025 has improved funnel productivity, reduced customer acquisition friction, expanded operating leverage and has positioned us for a breakthrough year. As volumes grow, we expect these dynamics to translate into sustained earnings expansion and margin improvement.

With that, I'll turn it over to Matt to walk through the financials.

Thank you, Kristen, and good afternoon, everyone. The fourth quarter was the latest example of solid execution at Finance of America with full year results highlighting consistent operating progress and our ability to execute effectively as opportunities arise.

For the full year, Finance of America reported GAAP net income of $110 million or $5.04 per basic share. These results reflect the impact of interest rate and credit spread movements, partially offset by changes in model assumptions on the fair value of our residual assets, which, as we've discussed previously, are noncash in nature.

On an adjusted basis, for the full year, we generated adjusted net income of $74 million or $3.04 per share, representing a 429% increase compared to 2024. We also generated adjusted EBITDA of $143 million, a 138% increase year-over-year. These results reflect our ability to realize the platform's operating leverage and continued improvement in earnings quality as the platform has scaled.

Total revenue increased 26% year-over-year to $497 million in 2025 and compared to $394 million in 2024. This $103 million increase in revenue directly translated into improved profitability as fixed expenses remained largely consistent year-over-year. Excluding noncash fair value changes to our balance sheet, revenue increased approximately $83 million year-over-year.

After tax, that equates to roughly $61 million of incremental earnings, which closely aligns with the $60 million year-over-year increase in adjusted net income. This demonstrates the operating leverage embedded in the platform as volume scales.

Turning to our fourth quarter. We reported a GAAP net loss of $21 million or $1.30 per basic share. While our Q4 results were impacted by fair value movements, so far in 2026, interest rates have moved lower and spreads have tightened. At current levels, we would expect our first quarter fair value adjustments to more than offset the fourth quarter impact.

On an adjusted basis for the fourth quarter, we generated adjusted net income of $14 million or $0.69 per share, representing a 180% increase compared to the fourth quarter of 2024. Adjusted EBITDA for the quarter totaled $28 million, up 56% year-over-year, reflecting continued operating momentum and improved earnings consistency as the platform has scaled.

Despite the volatility in GAAP, adjusted earnings have remained resilient, reflecting the strength of the core economics and the consistency of cash generation across the platform. As mentioned earlier, the company recognized adjusted earnings per share of $3.04 for the full year 2025, which was above our stated guidance range.

As Graham noted earlier, because securitization timing can shift between quarters, we view the second half of 2025 combined as a reasonable reference point for the underlying earnings power of the company. For the second half of 2025, the company reported adjusted net income of $47 million or adjusted earnings per share of $2.05. This would approximate $4.10 per share on an annualized basis.

Looking ahead to 2026, we continue to expect volume growth of 15% to 25% year-over-year for a range of $2.8 billion to $3.1 billion, supporting our previously communicated 2026 adjusted earnings per share guidance of $4.25 to $4.75 per share. For the full year, the company's cash and cash equivalents increased by $42 million. During 2025, Finance of America generated over $150 million in cash flows through our core origination and capital markets activities. This reflects stronger performance driven by higher funded volumes, improved operating leverage and meaningful bottom line expansion.

In addition to the $150 million generated from our core operations, we raised an additional $40 million in the form of a 0% coupon convertible note and a $50 million preferred equity investment. From these sources of cash, we paid down $117 million of corporate debt and working capital facilities, paid $40 million of interest on our nonfunding financing and used $40 million to acquire the first half of Blackstone's equity position.

Please see our earnings supplement on our Investor Relations website for further detail. In February, we completed the second half of the Blackstone purchase, fully exiting that legacy ownership position. Looking forward to 2026, we anticipate that cash flows from our core origination and asset level capital markets financing activities will be sufficient to fund both the acquisition of PHH as well as the paydown of the $150 million of senior secured notes.

Once the senior secured notes have been paid off, we'll be left with only $40 million of convertible notes and $150 million of exchangeable corporate bonds, both of which have the ability to convert to equity. Lastly, given the company's strong performance and investments made by our strategic partners, Finance of America ended 2025 with a tangible equity position 117% greater than December 2024.

With that, I'll turn it back to Graham for closing remarks.

Thank you, Matt. As we reflect on 2025, the takeaway is straightforward. The fundamentals of our business are working. Our operating platform is performing consistently. Margins remain disciplined and execution continues to improve. Finance of America's earnings power is becoming more visible and durable. As the business scales, adjusted results increasingly reflect the underlying economics of the platform and are less influenced by timing-related volatility.

We enter 2026 expecting to grow volume by 15% to 25%, generate cash flow from originations and capital markets similar to 2025 of $150 million and use these proceeds to pay down debt and delever our balance sheet. Over the coming years, we expect Finance of America to be free of all corporate debt, leaving a company better capitalized, more resilient and well positioned to expand our reach. We believe demographic trends continue to support long-term demand for responsible home equity solutions.

The progress we've made across our platform, products and capital structure enables us to meet those evolving needs with discipline and consistency. As we continue building a more scalable technology-enabled platform, we remain confident that there is a better way with FOA for our customers, our partners and our shareholders. And with that, we'll open the call for any questions.

[Operator Instructions] Your first question comes from the line of Ethan Brown with Omega.

Nice job on the quarter. I have a question just trying to clarify what you said about the balance sheet and uses of cash. I heard you can fund the PHH acquisition and pay down some senior secured notes. When you consider all the free cash that you've got coming in and you consider the share repurchase program that you've got, are you going to be able to extend the share repurchases beyond just what you bought from Blackstone? Or is that going to be a 2026 strategy for capital allocation? Or should we expect share repurchases to be larger in 2027 and going forward?

I think really, we don't have any announced share repurchase activities beyond the Blackstone repurchase, which we noted we did the first half of that in the fourth quarter, we completed that purchase in February of 2026. So that's now behind us. With that in mind, looking at the free cash flow from this year, really our focus is looking at retiring that $150 million of corporate debt. And once that has been extinguished, then I think we're in the world where we're talking about potentially doing further share repurchases into 2027. But for 2026, right now, our goal would be on paying off the $150 million of corporate debt, which, again, would be a little early. I think our latest amendments to the facility only require us to pay off $60 million by this November, and we can extend $90 million. But we have drawn up plans. We'd like to see if we can retire that full $150 million during 2026.

Just a follow-up. When would you see the $90 million -- the full $150 million or the $90 million in 2027 being paid down? And when would the gates be wide open to more aggressive share repurchases?

Yes. So again, there's a lot of long here with a lot of activity to do, but our goal would be to pay off that $60 million and the $90 million in 2026. And so the gates will be open for further share repurchase activity going into 2027.

The outside date for that payment, Ethan, will be November '27. But our expectation is we'll pay the $150 million in November '26.

Your next question comes from the line of Leon Cooperman with Omega Family Office.

Yes, I think you've answered the question through Ethan. I got a question on Bloomberg from a friend of mine. Can you ask the following question this way. Do you have enough cash generation to pay off the first lien this year in its entirety? The answer is yes. So if so, how much cash do you think you will leave you with? And do you think you'll be in a position to buy back stock this year? And you're saying you don't think about stock back this year?

Yes, I think it sounds like pretty much the question that Ethan asked as well. So again, I think the -- our goal for this year is to pay off the entire $150 million. $60 million, we've agreed to pay down this year for sure. $90 million we could extend. But based upon our plans for the year, we think we can retire the entire $150 million this year. And then next year, we would have all free cash flow to do other things with, including repurchasing shares if that was an option.

All right. And in terms of -- you have so many different measures of earnings. I've asked this before, what is the measure that you run the company by that's most important to you?

So we look at the adjusted EPS [ ANI, ] which was $3.04. If you recall, we gave guidance repeated guidance of between $2.60 and $3 for last year, and we finished the year at $3.04. So just over the high end of the range. This year's guidance is $4.25 to $4.75. And we're -- as we started the year here and we look at the early funnel metrics, we're confident, right, that we'll be in that range again in 2026.

So your stock is less than 4x earnings? What makes -- why do you want to wait to 2027 and buyback?

It's a good question, Lee. I think as we think about alternatives of cash, buying back shares and extinguishing debt, there's certainly arguments on both sides of that equation. I think different stakeholders have different points of view. I think certainly removing the corporate debt overhang is beneficial, helps with the rating agency's overall perception of the company, which benefits equity holders in the long term. But at these prices, I think the share repurchase options are also kind of attractive. So I mean, we'll definitely weigh both of those. But I think at this point in time, I think our focus is on retiring the corporate debt, but that could change either way as the year unfolds.

Your next question comes from the line of Eric Hagen with BTIG.

This is [indiscernible] on for Eric. Can you discuss the current warehouse financing conditions for both new originations and MSRs? And more specifically, given the consolidation we've seen in the space over the past few years, do you believe that dynamic has actually improved funding terms and availability for the remaining players in the space?

Yes. I maybe can't speak to the other players in the space. But from our own experience, I'd say that warehouse financing is ample. We have increased some of our facilities. We've added some new financing partners. Credit has been pretty readily available in the space. We've talked about in previous calls, we're pursuing financing on our mortgage servicing right asset, our HMBS asset. That's going pretty well. So I think that overall, we view credit positively in the space. As I mentioned earlier, we've seen spreads generally tighten across the spectrum. So we're seeing some benefit there as well. I would suspect others are seeing similar things, but I have no firsthand knowledge of what our competitors are seeing.

Yes. We're generally seeing is we're renewing our facilities over the course of the year that we're gaining improved terms, either higher advance rates or lower spreads. So yes, we have no concerns about -- we have ample warehouse liquidity, and we continue to increase where we can and add new participants as necessary.

And with no further questions in queue, I'd like to turn the conference back over to Graham Fleming for closing remarks.

I want to thank everybody for joining the call today. We look forward to updating you on our progress in May with our Q1 results, and have a great afternoon, everybody. Thank you.

This concludes today's conference call. You may now disconnect.

Good day, everyone, and welcome to the Finance of America Third Quarter 2025 Earnings Call.

At this time, I would like to hand the call over to Mr. Michael Fant. Please go ahead, sir.

Thank you, and good afternoon, everyone, and welcome to Finance of America's Third Quarter 2025 Earnings Call.

With me today are Graham Fleming, Chief Executive Officer; Kristen Sieffert, President; and Matt Engel, Chief Financial Officer.

As a reminder, this call is being recorded, and you can find the earnings release on our Investor Relations website at ir.financeofamericacompanies.com.

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 will 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 Factors section of Finance of America's amended annual report on Form 10-K for the year ended December 31, 2024, filed with the SEC on May 20, 2025. Such risk factors may be amended and updated in our subsequent filings with the SEC. We are not undertaking any commitment to update these statements if conditions change.

Please note, today, we will be discussing interim period financials for our continuing operations, which are unaudited. In addition, we will refer to certain non-GAAP financial measures on this call. You can find reconciliations of non-GAAP to GAAP financial measures to the extent available without unreasonable efforts in our earnings press release on the Investor Relations page of our website.

Now I'll turn the call over to our Chief Executive Officer, Graham Fleming. Graham?

Thank you, Michael, and good afternoon, everyone. The third quarter of 2025 marked a period of strategic execution and strong performance for Finance of America. In a dynamic market environment, we remain focused on operational excellence, proactive balance sheet management and long-term growth.

Year-to-date, we have reported GAAP net income of $131 million or $5.78 per basic share, reflecting the benefit of lower interest rates and tighter spreads, partially offset by softer home price appreciation projections in the third quarter.

On an adjusted basis, we generated adjusted net income of $33 million for the quarter or $1.33 per share, representing a significant sequential improvement and more than double the level from a year ago. The increase was driven by improving revenues across our business with increased margins on HomeSafe and HECM products, stronger origination fee income and higher capital markets revenue as a result of the over $3 billion of notes issued in our securitizations backed by our proprietary loans during the quarter.

Compared to the first 9 months of 2024, we have seen funded volumes increase by over 28% and adjusted net income grow by more than 5x from $9 million in 2024 to $60 million in the first 9 months of 2025. This translates to $2.33 of adjusted earnings per share, a major step toward our full year guidance.

Turning to adjusted EBITDA. The company generated $114 million for the first 9 months of 2025, a 171% improvement compared to the same period a year ago.

During the quarter, we completed a series of transactions to enhance liquidity and balance sheet flexibility. We repaid $85 million of higher cost working capital facilities and entered into an agreement to repurchase the entirety of Blackstone's equity stake in FOA. We also closed our largest proprietary securitization in company history in September, a nearly $2 billion issuance.

As of September 30, these actions left the company with $110 million in cash and cash equivalents compared to $46 million as of June 30. This increase in cash provides FOA with enough liquidity to satisfy the $53 million corporate bond payments due later this month.

In addition to our strong results, in October, we announced a strategic partnership with Better.com, expanding our product offerings and enhancing our technology backbone to better serve our demographic, which Kristen will touch on in more detail.

Over the last several years, we've continued to invest in digital innovation, AI and data analytics, strengthening the foundation of our business. While still very early in the adoption of AI technology, we fully expect these investments to improve the customer experience, enhance the ROI on our marketing spend and increase the productivity of the organization, driving improved operating leverage.

Kristen will share more on the progress we've made in these areas and the impact across our platform. Kristen?

Thanks, Graham, and good afternoon, everyone. The third quarter represented a disciplined period of execution across Finance of America. We delivered solid origination performance, advanced our technology transformation and continued to strengthen the core fundamentals that position FOA for sustainable, profitable growth into 2026 and beyond.

Origination performance remained robust with funded volume reaching $603 million and submission volume reaching $887 million for the quarter compared to $764 million in the same period last year.

By the end of October, for the year 2025, we funded $1.97 billion in reverse mortgages, surpassing our entire 2024 production of $1.92 billion, and October submissions totaled $336 million, the highest month in 3 years.

Beyond headline volume, the team continues to make substantial progress in transforming the business model. We're embedding AI, digital automation and advanced data analytics across our wholesale and retail channels, driving measurable gains in efficiency and conversion.

We're already seeing tangible results from our digital-first strategy. Over 20% of customers who engaged with our new digital prequalification completed the process without loan officer intervention. The tool, which includes a soft credit pull, delivers a 3-minute prequalification experience, setting a new benchmark for speed and customer engagement in the reverse mortgage industry. This will translate into greater efficiency per loan officer, and we saw this in October's numbers as our loan officers were able to service 25% more opportunities and generated a 32% increase in monthly submission volume over the year-to-date averages.

Our continued investment in and attention to the top of the funnel is driving stronger digital engagement and setting the foundation for efficient volume growth in 2026. Unique web leads increased 16% quarter-over-quarter. Customer e-mail retention increased 36% from the time of the AAG platform acquisition and leads generated through e-mail nurture from our database increased 206% quarter-over-quarter.

In the coming months, we're enhancing this digital ecosystem further with SMS engagement tools for sales teams, AI-powered call agents to provide 24/7 borrower support and AI-powered wholesale tools to improve our partner experience. These initiatives are expected to increase conversion at critical funnel points, expanding our operating leverage and the scalability of our model.

We are also continuing to advance our diversification strategy through a strategic partnership with Better.com that broadens our impact into the total addressable market. These traditional home equity products enable us to serve approximately 30% more of the potential borrowers already engaging with our brand who need higher loan-to-value solutions than our current reverse suite provides.

At FOA, we're not just adapting to the future of home equity, we're defining it. Our investments in digital automation, data infrastructure and AI are structurally enhancing unit economics, driving margin expansion and strengthening our long-term earnings power.

As home equity continues to move from the most underused retirement asset to a mainstream solution for the modern retiree, FOA is positioned at the center of this transformation, committed to unlocking opportunities for millions of Americans to realize the full potential of their retirement.

With that, I'll turn it over to Matt to review the financials. Matt?

Thank you, Kristen, and good afternoon, everyone. The third quarter reflected strategic execution and strong performance for Finance of America, highlighting both the consistent progress of our operating performance and our ability to take advantage of opportunities as they arise.

On a GAAP basis, the company reported a net loss of $29 million for the quarter as lower interest rates and tighter spreads were more than offset by softer home price appreciation projections impacting the noncash fair value of our residuals.

Year-to-date, the company is still significantly positive, reporting $131 million of pretax income for the first 9 months of 2025.

Adjusted net income for the quarter totaled $33 million or $1.33 per share, a 125% increase from the prior quarter and more than double the level from the same period last year. This improvement was driven by higher origination margins and increased capital markets activity.

For the first 9 months of 2025, we have funded approximately $1.8 billion in originations compared with $1.4 billion during the same period last year, an increase of 28% year-over-year.

Adjusted net income totaled $60 million or $2.33 per share, up meaningfully from $9 million or $0.38 per share in the same period of 2024. This improvement reflects stronger margins, increased capital markets activity and continued expense discipline across our platform.

Excluding fair value changes from market and model assumptions, Q3 revenues totaled $103 million, bringing year-to-date total revenue to $263 million, an increase of 22% year-over-year from $215 million in the first 9 months of 2024.

During the quarter, we strengthened our liquidity through the issuance of $40 million of 0% convertible notes as well as the monetization of residual assets, completing over $3 billion in securitizations, including a nearly $2 billion securitization in September, the largest in the company's history.

Additionally, we paid down $125 million of working capital and other financing facilities with $60 million remaining to be redrawn for future use. Despite these paydowns, cash levels increased from $46 million as of June 30 to $110 million as of September 30, allowing us to set aside funds for the scheduled $53 million corporate debt paydown later this month.

As announced in August, we entered into an agreement to repurchase all existing shares owned by Blackstone. In accordance with GAAP accounting rules, this agreement is seen as an obligation and therefore, accounted for as a liability and a reduction to equity as of the date of the announcement. Our September 30 balance sheet reflects this liability and reduction to equity.

Turning to guidance. We are reaffirming our full year 2025 adjusted EPS target of $2.60 to $3 and anticipate tracking toward the low end of our previously stated volume range of $2.4 billion to $2.7 billion.

Looking ahead to 2026, we expect volume growth of 20% to 25% year-over-year, supporting a 2026 adjusted earnings per share guidance of $4.25 to $4.75 per share, which is up from $2.60 to $3 in 2025.

With that, I'll turn it back to Graham for closing remarks.

Thank you, Matt. As we close the third quarter, I want to take a moment to reflect on the progress we've made. In just over a year since our transformation, we have achieved consistent profitability and expanded our leadership in reverse lending while delevering and strengthening our balance sheet.

As Kristen mentioned, we're seeing strong momentum at the top of the funnel with record lead generation, higher digital engagement and continued efficiency gains, all of which give us confidence to achieve a 60% year-over-year increase in 2026 adjusted EPS guidance.

These accomplishments demonstrate our progress in building a stronger, more efficient and more diversified Finance of America.

Our continued investment in modernization, digital innovation and AI is enhancing productivity, expanding operating leverage and positioning us to scale efficiently as demand for home equity solutions grows.

We believe we are well positioned to deliver sustained volume growth of roughly 20% annually over the coming years as we build the most trusted and technologically advanced platform for retirement-focused home equity solutions in America.

We are confident in our direction, encouraged by our results and excited about the opportunities ahead. As we look to 2026, we remain committed to driving sustainable growth, enhancing shareholder value and helping more Americans discover there is a better way with FOA.

And with that, we'll open the call for questions.

[Operator Instructions] We'll take the first question today from Doug Harter, UBS.

Just on the buyback, I guess, has that been completed yet? Or what is the updated time frame on that completion?

It has not been completed yet, Doug. It's really -- we're on track to complete it. Most likely that will begin later this month and into December perhaps.

And can you remind me the cash total of that, just as we think about kind of this, the uses of your current cash position?

It's about $80 million.

Okay. And then how do you think about what is the right level of cash to hold? Like how much of that capacity do you have to redraw do you think you need to do in the coming months?

So if you kind of piece it together, Doug, I think we ended the quarter with $110 million. We indicated we had paid down during the quarter $125 million of working capital facilities, right, which was $85 million of the kind of corporate general facilities and then other kind of warehouse debt.

So of that $125 million, $60 million of it is available really to be redrawn as necessary. So you can really kind of add that to the $110 million we had on hand at the end of September to give you the kind of the adjusted cash capacity we have heading into the fourth quarter.

Got it. And then I guess, how should we -- obviously, a strong securitization quarter, which I imagine was a big part of the cash generation. How should we think about your cadence in the coming months, quarters of securitization? And just any update on how that market is functioning right now?

Yes. I think generally, our cadence has been to do kind of one large securitization every quarter. We did accelerate. We probably accelerated, pulled one that we had planned for Q4 into Q3.

But that said, we do have a smaller securitization we expect to complete this month and it remains to be seen exactly what that timing looks like. But I do think the Q3 activity was larger than what you'd normally expect to see on a go-forward basis.

The market has been performing very well. Spreads have been tight. Demand has been good. One thing we've seen, especially as we started doing some larger deals. Remember, we did a $1 billion deal in July, which at the time was our largest deal ever, followed that up with a $2 billion deal in September, doubled that. Both were very well received. And that when you start talking bigger numbers, you just get a different class of investor, multiple new investors coming in. So we saw a very good reception for our bonds in those deals.

The next question is from Leon Cooperman from Omega Advisors.

There are lots of different measures of earnings. How much cash do you generate in a typical year? In other words, how much cash would you generate in a 12-month period on average?

So Leon, I'll answer that one. So in any given year, when you look at our PTI, it may -- because we create residuals in MSR, I would say within 24 to 36 months after our P&L, that number all turns green. So if we post $100 million or $120 million of PTI for this year, you would expect over the course of 3 years that, that would all become cash?

Okay. But I want to take the $100 million divide by 3, it's a typical year.

Well, we do have currently on our balance sheet, we still have roughly $300 million of residuals and retained securities, right, that over the coming years, we'll continue to monetize those residuals, and they'll continue to turn to cash. And then our new residuals -- we'll create new residuals and new MSR on a go-forward basis.

So basically, how many shares is the new capitalization going to be?

So total what we have today about 24 million shares outstanding, right? 8 million of that will be repurchased in the Blackstone transaction, which leaves you with about 16 million. And then the convertible notes, both the $150 million we have from the prior convertible notes and the $40 million notes we just added would add about 7 million plus our stock options get you back to about 24 million. So you'll see our total fully diluted share count go from what today is about 31 million, down to about 24 million on an adjusted basis going forward.

So are you suggesting that you generate about $4 a share in cash earnings?

Yes, at $100 million in PTI, that would be correct.

And everyone, at this time, there are no further questions. I'll hand the conference back to Graham Fleming for any additional or closing remarks.

Yes. Thank you, everybody, for joining. We appreciate your participation, and we look forward to updating the full year numbers in March of next year. So thank you very much, everybody.

Once again, everyone, that does conclude today's conference. We would like to thank you all for your participation today. You may now disconnect.