| Schedule of fair value, assets and liabilities measured on recurring basis |
The following tables present fair value measurements of certain of the Company’s assets and liabilities measured at fair value and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair values as of December 31, 2024 and December 31, 2023: | | | | | | | | | | | | | | | | | | | | | | | | | | Fair Value Measurements at December 31, 2024 | | Total | | Level 1 | | Level 2 | | Level 3 | | Assets: | | | | | | | | | Debt securities available-for-sale | | | | | | | | | U.S. Treasury notes | $ | 23,916 | | | $ | 23,916 | | | $ | — | | | $ | — | | | | | | | | | | | Loans held for sale, at fair value | 372,286 | | | — | | | — | | | 372,286 | | | Loans held for investment, at fair value | 369,746 | | | — | | | — | | | 369,746 | | Other real estate owned 1 | 3,764 | | | — | | | — | | | 3,764 | | Servicing assets2 | 22,062 | | | — | | | — | | | 22,062 | | Joint ventures and other non-control investments | 57,678 | | | — | | | — | | | 57,678 | | Assets held for sale3 | 21,308 | | | — | | | — | | | 21,308 | | Derivative instruments1,4 | 715 | | | — | | | 715 | | | — | | Total assets measured at fair value | $ | 871,475 | | | $ | 23,916 | | | $ | 715 | | | $ | 846,844 | | | Liabilities: | | | | | | | | Equity warrants4 | $ | 133 | | | $ | — | | | $ | — | | | $ | 133 | | Total liabilities measured at fair value | $ | 133 | | | $ | — | | | $ | — | | | $ | 133 | |
1 Included in Other assets on the Consolidated Statements of Financial Condition. 2 $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. 3 Non-recurring 4 Measured at fair value on a recurring basis with the net unrealized gains or losses recorded in current period earnings.
| | | | | | | | | | | | | | | | | | | | | | | | | | Fair Value Measurements at December 31, 2023 | | Total | | Level 1 | | Level 2 | | Level 3 | | Assets: | | | | | | | | | Debt securities available-for-sale | | | | | | | | | U.S. Treasury notes | $ | 29,305 | | | $ | 29,305 | | | $ | — | | | $ | — | | | Government agency debentures | 2,866 | | | — | | | 2,866 | | | — | | | Loans held for sale, at fair value | 118,867 | | | — | | | — | | | 118,867 | | | Loans held for investment, at fair value | 469,801 | | | — | | | — | | | 469,801 | | Other real estate owned 1 | 1,110 | | | — | | | — | | | 1,110 | | Servicing assets, at fair value2 | 29,336 | | | — | | | — | | | 29,336 | | | Joint ventures and other non-control investments | 41,587 | | | — | | | — | | | 41,587 | | | Total assets measured at fair value | $ | 692,872 | | | $ | 29,305 | | | $ | 2,866 | | | $ | 660,701 | | | Liabilities: | | | | | | | | Equity warrants3 | $ | 141 | | | $ | — | | | $ | — | | | $ | 141 | | Derivative instruments3,4 | 630 | | | — | | | 630 | | | — | | Total liabilities measured at fair value | $ | 771 | | | $ | — | | | $ | 630 | | | $ | 141 | |
1 Included in Other assets on the Consolidated Statements of Financial Condition. 2 $29.3 million of servicing assets held at FV and $10.4 million of servicing assets are held at LCM. Refer to NOTE 7—SERVICING ASSETS 3 Included in Accounts payable, accrued expenses, and other liabilities on the Consolidated Statements of Financial Condition. 4 Measured at fair value on a recurring basis with the net unrealized gains or losses recorded in current period earnings. The following tables represents the changes in the investments, servicing assets and liabilities measured at fair value using Level 3 inputs for the years ended December 31, 2024 and 2023: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Year Ended December 31, 2024 | | Loans HFI, at FV | | Loans HFS, at FV | | Joint Ventures and Other Non-Control Investments | | Servicing Assets, at FV | | Assets HFS | | Warrant Liabilities1 | | Other Real Estate Owned2 | | Fair value, December 31, 2023 | $ | 469,801 | | | $ | 118,867 | | | $ | 41,587 | | | $ | 29,336 | | | $ | — | | | $ | 141 | | | $ | 1,110 | | | Reclasses between loans at FV and LCM | 263 | | | 4,077 | | | — | | | — | | | — | | | — | | | — | | | Reclasses between loans HFS and HFI | — | | | (599) | | | — | | | — | | | — | | | — | | | — | | Sales | (2,586) | | | (179,949) | | | — | | | — | | | — | | | — | | | (1,446) | | | Principal payments received | (71,791) | | | (16,178) | | | — | | | — | | | — | | | — | | | — | | | Foreclosed real estate acquired | (4,569) | | | — | | | — | | | — | | | — | | | — | | | 4,569 | | | SBA loans, funded | 122 | | | 26,863 | | | — | | | — | | | — | | | — | | | — | | ALP loans, funded | — | | | 283,822 | | | — | | | — | | | — | | | — | | | — | | Mortgage loans, funded | — | | | 103,838 | | | — | | | — | | | — | | | — | | | — | | Additions | — | | | — | | | — | | | 14 | | | 21,924 | | | — | | | — | | Purchases and repurchases of loans | 4,851 | | | — | | | — | | | — | | | — | | | — | | | — | | | Capital contributions/(distributions) | — | | | — | | | 5,379 | | | — | | | — | | | — | | | — | | Change in valuation due to: | | | | | | | | | | | | | | Changes in valuation inputs or assumptions | 597 | | | 31,569 | | | 10,712 | | | 924 | | | (616) | | | (8) | | | (469) | | Other factors | (26,942) | | | (23) | | | — | | | (8,212) | | | — | | | — | | | — | | | Fair value, December 31, 2024 | $ | 369,746 | | | $ | 372,287 | | | $ | 57,678 | | | $ | 22,062 | | | $ | 21,308 | | | $ | 133 | | | $ | 3,764 | |
1 Included in Accounts payable, accrued expenses, and other liabilities on the Consolidated Statements of Financial Condition. 2 Included in Other assets on the Consolidated Statements of Financial Condition.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Year Ended December 31, 2023 | | Loans HFI, at FV | | Loans HFS,
at FV | | Controlled Investments | | Joint Ventures and Other Non-Control Investments | | Servicing Assets,
at FV | | Warrant Liabilities1 | | Other Real Estate Owned2 | | Fair value, December 31, 2022 | $ | 505,268 | | | $ | 19,171 | | | $ | 259,217 | | | $ | 24,382 | | | $ | 30,268 | | | $ | — | | | $ | 3,529 | | | Additions/(removal) of entities consolidating after Conversion to BHC | — | | | 69,745 | | | (259,217) | | | — | | | — | | | — | | | — | | | Reclasses between loans at FV and LCM | 5,879 | | | (28,513) | | | — | | | — | | | — | | | — | | | — | | | Sales | (23,783) | | | (180,784) | | | — | | | — | | | — | | | — | | | (4,248) | | | Principal payments received | (77,966) | | | (6,233) | | | — | | | — | | | — | | | — | | | — | | | Foreclosed real estate acquired | (2,978) | | | | | — | | | — | | | — | | | — | | | 2,978 | | | SBA loans, funded | 38,889 | | | 167,124 | | | — | | | — | | | — | | | — | | | — | | | ALP loans, funded | — | | | 69,835 | | | — | | | — | | | — | | | — | | | — | | | Additions | — | | | — | | | — | | | — | | | 2,617 | | | 311 | | | — | | | Purchases and repurchases of loans | 9,728 | | | 5,279 | | | — | | | — | | | — | | | — | | | — | | | Capital contributions/(distributions) | — | | | — | | | — | | | 13,986 | | | — | | | — | | | — | | | Change in valuation due to: | | | | | | | | | | | | | | | Changes in valuation inputs or assumptions | 13,515 | | | 3,931 | | | — | | | 3,219 | | | 1,847 | | | (170) | | | — | | | Other factors | 1,249 | | | (688) | | | — | | | — | | | (5,396) | | | — | | | (1,149) | | | Fair Value, December 31, 2023 | $ | 469,801 | | | $ | 118,867 | | | $ | — | | | $ | 41,587 | | | $ | 29,336 | | | $ | 141 | | | $ | 1,110 | |
1 Included in Accounts payable, accrued expenses, and other liabilities on the Consolidated Statements of Financial Condition. 2 Included in Other assets on the Consolidated Statements of Financial Condition. The carrying amounts and estimated fair values of the Company’s financial instruments not measured at fair value on a recurring or non-recurring basis are as follows: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | December 31, 2024 | | | | Carrying Amount | | Fair Value Amount by Level: | | Total Fair Value | | | Level 1 | | Level 2 | | Level 3 | | | Financial Assets: | | | | | | | | | | | Cash and due from banks | $ | 6,941 | | | $ | 6,941 | | | $ | — | | | $ | — | | | $ | 6,941 | | | Restricted cash | 28,226 | | | 28,226 | | | — | | | — | | | 28,226 | | | Interest bearing deposits in banks | 346,207 | | | 346,207 | | | — | | | — | | | 346,207 | | | Debt securities available-for-sale, at FV | 23,916 | | | 23,916 | | | — | | | — | | | 23,916 | | | Loans HFS, at FV | 372,286 | | | — | | | — | | | 372,286 | | | 372,286 | | | Loans HFS, at LCM | 58,803 | | | — | | | — | | | 58,856 | | | 58,856 | | | Loans HFI, at FV | 369,746 | | | — | | | — | | | 369,746 | | | 369,746 | | | Loans HFI, at amortized cost, net of deferred fees and costs | 621,651 | | | — | | | — | | | 668,687 | | | 668,687 | | | Federal Home Loan Bank and Federal Reserve Bank stock | 3,585 | | | — | | | 3,585 | | | — | | | 3,585 | | | Joint ventures and other non-control investments, at FV | 57,678 | | | — | | | — | | | 57,678 | | | 57,678 | | | Financial Liabilities: | | | | | | | | | | | Time deposits | 409,251 | | | — | | | 410,442 | | | — | | | 410,442 | | | Borrowings | 708,041 | | | — | | | 306,549 | | | 413,818 | | | 720,367 | | | | | | | | | | | | | December 31, 2023 | | | | Carrying Amount | | Fair Value Amount by Level: | | Total Fair Value | | | Level 1 | | Level 2 | | Level 3 | | | Financial Assets: | | | | | | | | | | | Cash and due from banks | $ | 15,398 | | | $ | 15,398 | | | $ | — | | | $ | — | | | $ | 15,398 | | | Restricted cash | 30,919 | | | 30,919 | | | — | | | — | | | 30,919 | | | Interest bearing deposits in banks | 137,689 | | | 137,689 | | | — | | | — | | | 137,689 | | | Debt securities available-for-sale, at FV | 32,171 | | | 29,305 | | | 2,866 | | | — | | | 32,171 | | | Loans HFS, at FV | 118,867 | | | — | | | — | | | 118,867 | | | 118,867 | | | Loans HFS, at LCM | 56,607 | | | — | | | — | | | 56,733 | | | 56,733 | | | Loans HFI, at FV | 469,801 | | | — | | | — | | | 469,801 | | | 469,801 | | | Loans HFI, at amortized cost, net of deferred fees and costs | 336,305 | | | — | | | — | | | 337,133 | | | 337,133 | | | Federal Home Loan Bank and Federal Reserve Bank stock | 3,635 | | | — | | | 3,635 | | | — | | | 3,635 | | | Joint ventures and other non-control investments, at FV | 41,587 | | | — | | | — | | | 41,587 | | | 41,587 | | | Financial Liabilities: | | | | | | | | | | | Time deposits | 167,041 | | | — | | | 168,542 | | | — | | | 168,542 | | | Borrowings | 644,122 | | | — | | | 187,555 | | | 454,239 | | | 641,794 | |
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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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