Finance Of America Companies Inc. (FOA) Earnings

Management highlights

### Long-Term Market Opportunity - Macroeconomic and demographic trends create sustained, durable demand for responsible home equity solutions, particularly for homeowners incorporating home equity into retirement planning. - The home equity market for older homeowners remains large and underpenetrated, giving Finance of America (FOA) significant room for long-term growth. ### Operational Progress and Investment Compounding - Q2 2026 results confirm the company is at an inflection point, with two years of investments in distribution, technology, and product beginning to deliver compounding returns, including stronger demand, a more efficient operating model, and growing long-term earnings power. - Total quarterly submissions exceeded $1 billion, up 11% sequentially and 19% year-over-year, even amid rising interest rates. Funded volume increased 21% year-over-year to $730 million. - The retail channel grew opportunities 9%, submissions 19%, and funded loans 33% quarter-over-quarter with stable sales headcount, driving a nearly 30% sequential increase in funded loans per call center loan officer, demonstrating improved conversion of existing pipeline rather than reliance on new top-of-funnel growth. ### Technology and Digital Improvements - FOA's proprietary AI-enabled technology platform supports operational improvements by better matching homeowners to appropriate solutions and increasing end-to-end origination efficiency. - In June 2026, 10,000 site visitors engaged with the digital prequalification engine, hitting the full-year 2026 monthly target six months ahead of schedule. Monthly prequalification offers rose nearly 90% sequentially, and time to application improved by 57%. ### Channel and Product Strategy - Retail and wholesale channels reinforce one another: retail delivers direct consumer engagement and full visibility into the customer journey, while wholesale extends reach through third-party partners to bring proprietary solutions to more borrowers across more markets. Both channels leverage the same product and operating infrastructure to enable profitable, scalable growth. ### Balance Sheet and Capital Structure - Q2 2026 cash generation from originations and capital markets activity was $58 million, bringing first-half 2026 total cash generation to $116 million, which funded the Onity portfolio acquisition, the semi-annual corporate debt interest payment, and maintained strong ending cash balances. - As of June 30, 2026, the adjusted net asset value of HECM MSR is $326 million, with only ~14% leverage ($46 million in financing). The company continues pursuing additional financing secured by this asset at an appropriate attachment point. - FOA's first near-term capital allocation priority is retiring the remaining $150 million of senior secured notes due in November 2026, which will reduce non-funding debt, lower financing costs, and boost recurring earnings. After debt retirement, the company will evaluate options including further deleveraging, stock repurchases, dividends, or additional business investment. - A Class B share reporting amendment effective July 31, 2026 aligns reported shares with underlying LLC ownership, creating clearer visibility into fully diluted share count and market capitalization without changing economic or voting rights. ### Financial Reporting - Q2 2026 GAAP net loss was $29 million, while adjusted net income was $19 million ($0.84 per share). The gap between GAAP and adjusted results stems from $84 million in non-cash negative fair value adjustments (including a $24 million adjustment for convertible notes tied to FOA's rising stock price) partially offset by a $42 million non-cash tax benefit from releasing the deferred tax asset valuation allowance. - Adjusted EPS for Q2 2026 was $0.84, a 53% improvement year-over-year. First-half 2026 adjusted EPS was $1.94, an 81% improvement over the first half of 2025. Non-cash accounting adjustments do not impact underlying operating performance or cash generation.

Guidance

- Management reaffirmed full-year 2026 guidance, maintaining the target range for total funded volume at $2.8 billion to $3.1 billion, and the adjusted EPS target range at $4.50 to $5.00. - The expected mid-teens yield from the recently completed Onity MSR portfolio acquisition is already incorporated into the current full-year 2026 guidance.

Segment performance

1. Retirement Solutions: In the first half of 2026, the segment achieved a 14% increase in funded volume year-over-year, with a 21% increase in adjusted net income compared to the first half of 2025. The segment saw a 21% year-over-year increase in Q2 2026 funded volume, reaching $730 million, and delivered relatively stable sequential adjusted earnings as the company continues investing in personnel and marketing to support future growth. Proprietary product submissions increased 20% quarter-over-quarter, and proprietary fundings increased 25% quarter-over-quarter. 2. Portfolio Management: In the first half of 2026, the segment generated $46 million in adjusted net income, representing a 24% improvement year-over-year. The segment completed a >$1 billion securitization in June 2026 that contributed to the company's strong Q2 cash flow from originations and capital markets activity.

Risks & headwinds

- Rising and volatile interest rates create quarterly volatility in GAAP earnings via non-cash fair value adjustments to the company's loan portfolio and convertible notes, and can also create short-term volatility in gain-on-sale margins for proprietary products. - When interest rates move suddenly, the company may choose not to reprice its existing pipeline to avoid customer disruption, which can compress margins in the near term.

Analyst Q&A

• Q: Is there a difference in demand growth between FOA's proprietary products and HECM products? /

  A: Management confirmed that demand is growing faster for proprietary products at present. This is because proprietary products currently deliver better cash flow outcomes for consumers, as available withdrawal amounts adjust with interest rate changes, and they are better suited to current customer needs.

• Q: Is it correct that share buybacks and other capital allocation actions beyond debt retirement are on hold until the $150 million senior secured note retirement in November 2026? /

  A: Management confirmed this framing is accurate. The company's sole near-term capital allocation priority is retiring the November 2026 senior notes. After that, management will evaluate market conditions, balance sheet strength, and share price to make decisions on future capital actions at the next quarterly release.

• Q: How did gain-on-sale margins trend for HECM and proprietary products in Q2, and what impact has interest rate movement had on tangible book value? /

  A: Interest rate volatility created margin volatility, with little change in HECM spreads, but some modest margin pressure on proprietary products from securitization pricing shifts. Higher interest rates in July 2026 would be expected to push down Q3 fair value marks, though rate declines in early August have already recouped some of this impact. Fair value is also supported by ongoing strong home price appreciation, so it is not driven solely by interest rate movements.

• Q: What is the expected earnings impact of the Onity acquisition, and is it included in current guidance? /

  A: The acquired Onity MSR assets had a book value of roughly $70 million, and are expected to generate a mid-teens yield that will flow through the income statement in the second half of 2026. The impact of this acquisition is already incorporated into FOA's existing full-year 2026 guidance.