| Schedule of servicing assets |
The following table summarizes the unpaid principle balance of loans serviced at December 31, 2024 and 2023: | | | | | | | | | | | | | December 31, 2024 | | December 31, 2023 | SBA 7(a) | $ | 1,996,715 | | | $ | 1,787,258 | | ALP | 169,842 | | | 63,494 | | | 504 | 12,475 | | | — | | Total loans serviced | $ | 2,179,032 | | | $ | 1,850,752 | |
| | | | | | | | | Servicing Assets, at LCM | | December 31, 2024 | | December 31, 2023 | | $ | 10,389 | | Amortization1 | | (5,378) | | Additions2 | | 19,184 | | Impairment assessment | | — | | | December 31, 2024 | | $ | 24,195 | |
1 Included within Net loss on loan servicing assets in the Consolidated Statements of Income 2 Included within Net gains on sales of loans in the Consolidated Statements of Income | | | | | | | | | Servicing Assets, at LCM | | December 31, 2023 | | December 31, 2022 | | $ | — | | Additions/(removal) of entities consolidating after Conversion to BHC | | 486 | | Amortization1 | | (733) | | Additions2 | | 10,636 | | Impairment assessment | | — | | | December 31, 2023 | | $ | 10,389 | |
1 Included within Net loss on loan servicing assets in the Consolidated Statements of Income 2 Included within Net gains on sales of loans in the Consolidated Statements of Income
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| Fair value and valuation assumption |
The following table summarizes the fair value and valuation assumptions related to servicing assets at December 31, 2024 and 2023: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | December 31, 2024 | | December 31, 2023 | | | | | Weighted | | Range | | | Weighted | | Range | | Unobservable Input | | Amount | | Average | | Minimum | | Maximum | | Amount | Average | | Minimum | | Maximum | Servicing assets at FV: | | $ | 22,062 | | | | | | | | | $ | 29,336 | | | | | | | Discount factor1 | | | | 12.00 | % | | 12.00 | % | | 12.00 | % | | | 13.50 | % | | 13.50 | % | | 13.50 | % | | Cumulative prepayment rate | | | | 22.50 | % | | 22.50 | % | | 22.50 | % | | | 22.50 | % | | 22.50 | % | | 22.50 | % | | Average cumulative default rate | | | | 21.00 | % | | 21.00 | % | | 21.00 | % | | | 19.00 | % | | 19.00 | % | | 19.00 | % | Servicing assets at LCM: | | 24,195 | | | | | | | | | 10,389 | | | | | | | Discount factor1 | | | | 12.97 | % | | 12.00 | % | | 13.50 | % | | | 13.50 | % | | 13.50 | % | | 13.50 | % | | Cumulative prepayment rate | | | | 34.65 | % | | 22.50 | % | | 75.00 | % | | | 29.76 | % | | 22.50 | % | | 75.00 | % | | Average cumulative default rate | | | | 18.90 | % | | 5.00 | % | | 20.00 | % | | | 19.14 | % | | 19.00 | % | | 20.00 | % | Total | | $ | 46,257 | | | | | | | | | $ | 39,725 | | | | | | |
1 Determined based on risk spreads and observable secondary market transactions. The following tables provide a summary of quantitative information about the Company’s Level 3 fair value measurements as of December 31, 2024 and December 31, 2023. In addition to the inputs noted in the table below, according to our valuation policy we may also use other valuation techniques and methodologies when determining our fair value measurements. The tables below are not intended to be all-inclusive, but rather provide information on the significant Level 3 inputs as they relate to the Company’s fair value measurements at December 31, 2024 and December 31, 2023.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Fair Value as of | | | | | | Weighted | | Range | | | December 31, 2024 | | | | Unobservable Input | | Average | | Minimum | | Maximum | | Assets: | | | | | | | | | | | | | Loans HFI, at FV - accrual | | $ | 302,442 | | | | | Market yields | | 6.55 | % | | 6.55 | % | | 6.55 | % | | | | | | | Cumulative prepayment rate | | 22.50 | % | | 22.50 | % | | 22.50 | % | | | | | | | Average cumulative default rate | | 21.00 | % | | 21.00 | % | | 21.00 | % | Loans HFI, at FV - non-accrual | | $ | 67,304 | | | | | Market yields | | 7.30 | % | | 7.30 | % | | 7.30 | % | | | | | | | Cumulative prepayment rate | | — | % | | — | % | | — | % | | | | | | | Average cumulative default rate | | 30.00 | % | | 30.00 | % | | 30.00 | % | Loans HFS, at FV | | $ | 372,286 | | | | | Market yields | | 7.62 | % | | 7.08 | % | | 8.18 | % | | | | | | | Cumulative prepayment rate | | 59.78 | % | | 50.00 | % | | 70.00 | % | | | | | | | Average cumulative default rate | | 9.89 | % | | 5.00 | % | | 15.00 | % | Joint ventures and other non-control investments | | $ | 57,678 | | | | | Market yields | | 8.40 | % | | 8.00 | % | | 12.00 | % | | | | | | | Cost of equity | | 11.00 | % | | 8.00 | % | | 14.00 | % | | | | | | | Weighted average cost of capital | | 7.72 | % | | 6.00 | % | | 23.98 | % | Servicing assets, at FV1 | | $ | 22,062 | | | | | Market yields | | 12.00 | % | | 12.00 | % | | 12.00 | % | | | | | | | Cumulative prepayment rate | | 22.50 | % | | 22.50 | % | | 22.50 | % | | | | | | | Average cumulative default rate | | 21.00 | % | | 21.00 | % | | 21.00 | % | Assets held for sale | | $ | 21,308 | | | | | Present value factor | | 90.70 | % | | 89.50 | % | | 93.20 | % | | | | | | | Discount rate | | 10.23 | % | | 7.27 | % | | 11.71 | % | | Other real estate owned | | $ | 3,764 | | | | | Appraised value | | N/A | | N/A | | N/A | | | | | | | | | | | | | | Liabilities: | | | | | | | | | | | | | Equity warrants | | $ | 133 | | | | | Expected volatility | | 48.00 | % | | 48.00 | % | | 48.00 | % | | | | | | | Dividend yield | | 6.00 | % | | 6.00 | % | | 6.00 | % | | | | | | | Risk free rate | | 4.52 | % | | 4.52 | % | | 4.52 | % |
1 $22.1 million of servicing assets at held at FV and $24.2 million of servicing assets are held at LCM. Refer to NOTE 7—SERVICING ASSETS. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Fair Value as of | | | | | | Weighted | | Range | | | December 31, 2023 | | | | Unobservable Input | | Average | | Minimum | | Maximum | | Assets: | | | | | | | | | | | | | Loans HFI, at FV - accrual | | $ | 421,627 | | | | | Market yields | | 7.75 | % | | 7.75 | % | | 7.75 | % | | | | | | | Cumulative prepayment rate | | 22.50 | % | | 22.50 | % | | 22.50 | % | | | | | | | Average cumulative default rate | | 19.00 | % | | 19.00 | % | | 19.00 | % | Loans HFI, at FV - non-accrual | | $ | 48,174 | | | | | Market yields | | 7.39 | % | | 7.39 | % | | 7.39 | % | | | | | | | Cumulative prepayment rate | | — | % | | — | % | | — | % | | | | | | | Average cumulative default rate | | 30.00 | % | | 30.00 | % | | 30.00 | % | Loans HFS, at FV | | $ | 118,867 | | | | | Market yields | | 6.85 | % | | 6.50 | % | | 7.75 | % | | | | | | | Cumulative prepayment rate | | 61.03 | % | | 55.60 | % | | 75.00 | % | | | | | | | Average cumulative default rate | | 20.00 | % | | 20.00 | % | | 20.00 | % | Joint ventures and other non-control investments | | $ | 41,227 | | | | | Market yields | | 8.02 | % | | 8.00 | % | | 12.00 | % | | | | | | | Cost of equity | | 12.00 | % | | 10.00 | % | | 14.00 | % | | | | | | | Weighted average cost of capital | | 8.50 | % | | 7.50 | % | | 9.50 | % | | | $ | 360 | | | | | Cost | | N/A | | N/A | | N/A | Servicing assets, at FV1 | | $ | 29,336 | | | | | Market yields | | 13.50 | % | | 13.50 | % | | 13.50 | % | | | | | | | Cumulative prepayment rate | | 22.50 | % | | 22.50 | % | | 22.50 | % | | | | | | | Average cumulative default rate | | 19.00 | % | | 19.00 | % | | 19.00 | % | | Other real estate owned | | $ | 1,110 | | | | | Appraised value | | N/A | | N/A | | N/A | | | | | | | | | | | | | | | Liabilities: | | | | | | | | | | | | | | Equity warrants | | $ | 141 | | | | | Expected volatility | | 43.00 | % | | 43.00 | % | | 43.00 | % | | | | | | | Dividend yield | | 5.20 | % | | 5.20 | % | | 5.20 | % | | | | | | | Risk free rate | | 3.88 | % | | 3.88 | % | | 3.88 | % |
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| Schedule of servicing fee income |
Servicing fee income earned for the years ended December 31, 2024, 2023 and 2022 was as follows: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Year Ended December 31, | | | | | | | 2024 | | 2023 | | 2022 | | Servicing fee income | | | | | | $20,087 | | $18,289 | | $13,698 |
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