v3.26.1
Loans and Allowance for Credit Losses
 6 Months Ended
Jun. 30, 2026
Receivables [Abstract]  
Loans and Allowance for Credit Losses Note 6. Loans and Allowance for Credit Losses
Loans includes (i) loans held for investment that are accounted for at amortized cost net of allowance for credit losses,
(ii) loans held at fair value under the fair value option, (iii) loans held for sale that are accounted for at the lower of cost
or fair value net of valuation allowance and (iv) loans held for sale at fair value under the fair value option. The
classification for a loan is based on product type and management’s strategy for the loan.
Loan portfolio
The table below summarizes the classification, unpaid principal balance (“UPB”), and carrying value of loans held by
the Company including loans of consolidated VIEs.
June 30, 2026
December 31, 2025
(in thousands)
Carrying Value
UPB
Carrying Value
UPB
Loans
Bridge
$1,656,219
$1,754,129
$2,024,033
$2,082,823
Fixed rate
79,252
80,188
93,002
93,828
Construction
404,254
525,249
388,042
509,085
Freddie Mac
10,961
10,782
3,945
3,756
SBA - 7(a)
1,204,838
1,247,270
908,714
958,755
Other
53,976
82,954
82,562
112,194
Total Loans, net
$3,409,500
$3,700,572
$3,500,298
$3,760,441
Loans in consolidated VIEs
Bridge
—
—
834,426
858,833
Fixed rate
508,215
510,964
558,119
560,230
SBA - 7(a)
271,938
291,596
134,761
145,185
Other
127,752
127,825
166,773
167,191
Total Loans, net, in consolidated VIEs
$907,905
$930,385
$1,694,079
$1,731,439
Loans, held for sale
Bridge
191,798
257,014
457,336
521,116
Fixed rate
—
—
55,390
58,000
Freddie Mac
9,967
9,841
16,555
16,425
SBA - 7(a)
42,068
39,283
52,598
49,203
Other
34,381
38,633
3,941
3,622
Total Loans, held for sale
$278,214
$344,771
$585,820
$648,366
Loans, held for sale in consolidated VIEs
Bridge
—
—
125,107
129,238
Total Loans, held for sale in consolidated VIEs
$—
$—
$125,107
$129,238
Total
$4,595,619
$4,975,728
$5,905,304
$6,269,484
In the table above, loans with the “Other” classification are generally LMM acquired loans that have nonconforming
characteristics for the Fixed rate, Bridge, Construction, or Freddie Mac classifications due to loan size, rate type,
collateral, or borrower criteria.
Loan vintage and credit quality indicators
The Company monitors the credit quality of its loan portfolio based on primary credit quality indicators, such as
delinquency rates. Loans that are 30 days or more past due, provide an indication of the borrower’s capacity and
willingness to meet its financial obligations.
The tables below summarize the classification, UPB, carrying value and gross write-offs of loans by year of origination.
Carrying Value by Year of Origination
(in thousands)
UPB
2026
2025
2024
2023
2022
Pre 2022
Total
June 30, 2026
Bridge
$1,754,129
$—
$13,911
$216,062
$65,097
$775,810
$585,339
$1,656,219
Fixed rate
591,152
—
—
—
—
25,712
561,755
587,467
Construction
525,249
—
47,824
90,875
19,300
121,710
124,545
404,254
Freddie Mac
10,782
—
—
2,568
7,016
1,377
—
10,961
SBA - 7(a)
1,538,866
44,149
288,099
358,398
201,332
233,711
351,087
1,476,776
Other
210,779
3,076
21,005
15,997
3,104
4,992
133,554
181,728
Total Loans, net
$4,630,957
$47,225
$370,839
$683,900
$295,849
$1,163,312
$1,756,280
$4,317,405
Gross write-offs
$—
$1,184
$6,250
$3,398
$30,538
$16,382
$57,752
UPB
2025
2024
2023
2022
2021
Pre 2021
Total
December 31, 2025
Bridge
$2,941,656
$86,350
$295,040
$186,723
$1,126,875
$1,089,802
$73,669
$2,858,459
Fixed rate
654,058
—
—
—
35,383
175,988
439,750
651,121
Construction
509,085
32,342
70,551
19,300
108,931
18,341
138,577
388,042
Freddie Mac
3,756
—
2,568
—
1,377
—
—
3,945
SBA - 7(a)
1,103,940
150,888
162,885
115,567
244,353
160,780
209,002
1,043,475
Other
279,385
21,197
16,220
3,130
5,026
581
203,181
249,335
Total Loans, net
$5,491,880
$290,777
$547,264
$324,720
$1,521,945
$1,445,492
$1,064,179
$5,194,377
Gross write-offs
$262
$4,515
$5,993
$1,438
$5,900
$184,402
$202,510
The tables below present delinquency information on loans, net by year of origination.
Carrying Value by Year of Origination
(in thousands)
UPB
2026
2025
2024
2023
2022
Pre 2022
Total
June 30, 2026
Current
$3,712,136
$47,225
$367,041
$594,027
$261,342
$814,253
$1,438,766
$3,522,654
30 - 59 days past due
161,178
—
107
34
7,036
131,958
9,012
148,147
60+ days past due
757,643
—
3,691
89,839
27,471
217,101
308,502
646,604
Total Loans, net
$4,630,957
$47,225
$370,839
$683,900
$295,849
$1,163,312
$1,756,280
$4,317,405
UPB
2025
2024
2023
2022
2021
Pre 2021
Total
December 31, 2025
Current
$4,478,531
$286,900
$386,892
$293,829
$1,152,549
$1,171,991
$983,329
$4,275,490
30 - 59 days past due
392,885
1,788
126,870
9,336
147,167
92,247
11,691
389,099
60+ days past due
620,464
2,089
33,502
21,555
222,229
181,254
69,159
529,788
Total Loans, net
$5,491,880
$290,777
$547,264
$324,720
$1,521,945
$1,445,492
$1,064,179
$5,194,377
The table below presents delinquency information on loans, net by portfolio.
(in thousands)
Current
30 - 59 days
past due
60+ days past
due
Total
Non-Accrual
Loans
90+ days past
due and
Accruing
June 30, 2026
Bridge
$1,021,211
$114,373
$520,635
$1,656,219
$776,497
$7,596
Fixed rate
561,458
3,244
22,765
587,467
22,765
—
Construction
337,299
19,031
47,924
404,254
75,976
—
Freddie Mac
—
7,016
3,945
10,961
3,945
—
SBA - 7(a)
1,427,842
571
48,363
1,476,776
75,916
413
Other
174,844
3,912
2,972
181,728
2,774
—
Total Loans, net
$3,522,654
$148,147
$646,604
$4,317,405
$957,873
$8,009
Percentage of loans outstanding
81.6%
3.4%
15.0%
100%
22.2%
0.2%
December 31, 2025
Bridge
$2,099,318
$358,838
$400,303
$2,858,459
$1,151,022
$—
Fixed rate
621,708
3,279
26,134
651,121
20,738
—
Construction
343,450
1,496
43,096
388,042
62,395
—
Freddie Mac
—
—
3,945
3,945
3,945
—
SBA - 7(a)
971,069
20,669
51,737
1,043,475
84,795
90
Other
239,945
4,817
4,573
249,335
4,229
—
Total Loans, net
$4,275,490
$389,099
$529,788
$5,194,377
$1,327,124
$90
Percentage of loans outstanding
82.3%
7.5%
10.2%
100%
25.5%
—%
In addition to delinquency rates, the current estimated LTV ratio, geographic distribution of the loan collateral and
collateral concentration are primary credit quality indicators that provide insight into a borrower’s capacity and
willingness to meet its financial obligation. High LTV loans tend to have higher delinquency rates than loans where the
borrower has equity in the collateral. The geographic distribution of the loan collateral considers factors such as the
regional economy, property price changes and specific events such as natural disasters, which will affect credit quality.
The collateral concentration of the loan portfolio considers economic factors or events may have a more pronounced
impact on certain sectors or property types.
The table below presents quantitative information on the credit quality of loans, net.
LTV(1)
(in thousands)
0.0 – 20.0%
20.1 – 40.0%
40.1 – 60.0%
60.1 – 80.0%
80.1 – 100.0%
Greater than
100.0%
Total
June 30, 2026
Bridge
$—
$17,765
$103,121
$508,402
$590,044
$436,887
$1,656,219
Fixed rate
—
22,353
266,096
273,687
20,381
4,950
587,467
Construction
801
5,663
101,274
144,360
70,746
81,410
404,254
Freddie Mac
—
—
7,016
3,945
—
—
10,961
SBA - 7(a)
21,333
75,173
204,805
471,620
271,314
432,531
1,476,776
Other
54,681
58,027
29,101
23,081
14,443
2,395
181,728
Total Loans, net
$76,815
$178,981
$711,413
$1,425,095
$966,928
$958,173
$4,317,405
Percentage of loans outstanding
1.8%
4.1%
16.5%
33.0%
22.4%
22.2%
100%
December 31, 2025
Bridge
$1,463
$29,207
$188,215
$1,235,997
$906,428
$497,149
$2,858,459
Fixed rate
19
23,042
294,209
308,158
17,368
8,325
651,121
Construction
11,162
14,708
84,525
147,776
49,540
80,331
388,042
Freddie Mac
—
—
—
3,945
—
—
3,945
SBA - 7(a)
13,516
58,812
148,369
305,993
158,710
358,075
1,043,475
Other
66,133
77,651
63,158
28,114
11,347
2,932
249,335
Total Loans, net
$92,293
$203,420
$778,476
$2,029,983
$1,143,393
$946,812
$5,194,377
Percentage of loans outstanding
1.8%
3.9%
15.0%
39.1%
22.0%
18.2%
100%
(1)LTV is calculated by dividing the current UPB by the most recent collateral value received. The most recent value for performing loans is often the third-party as-is
valuation utilized during the original underwriting process.
The table below presents the geographic concentration of loans, net, secured by real estate.
Geographic Concentration (% of UPB)
June 30, 2026
December 31, 2025
Texas
23.9%
25.8%
California
11.2
12.7
Arizona
10.8
9.2
Florida
6.0
8.9
Washington
5.7
3.1
Georgia
5.2
6.0
New York
4.2
3.7
North Carolina
2.5
2.0
Ohio
2.4
1.8
Oregon
2.2
1.3
Other
25.9
25.5
Total
100%
100%
The table below presents the collateral type concentration of loans, net.
Collateral Concentration (% of UPB)
June 30, 2026
December 31, 2025
Multi-family
44.8%
56.6%
SBA
33.2
20.1
Land
5.5
4.3
Retail
5.0
4.7
Industrial
3.4
4.0
Office
2.7
3.2
Mixed Use
2.3
3.0
Other
3.1
4.1
Total
100%
100%
The table below presents the collateral type concentration of SBA loans within loans, net.
Collateral Concentration (% of UPB)
June 30, 2026
December 31, 2025
Lodging
20.5%
19.3%
Gasoline Service Stations
16.5
13.8
Eating Places
7.0
6.8
Child Day Care Services
4.6
3.9
General Freight Trucking, Local
2.7
3.8
Grocery Stores
2.7
2.2
Car Washes
2.3
1.7
Offices of Physicians
2.1
2.6
Coin-Operated Laundries and Drycleaners
2.0
2.1
Funeral Service & Crematories
0.8
1.1
Other
38.8
42.7
Total
100%
100%
Allowance for credit losses
The allowance for credit losses consists of the allowance for losses on loans and lending commitments accounted for at
amortized cost. Such loans and lending commitments are reviewed quarterly considering credit quality indicators,
including probable and historical losses, collateral values, LTV ratios, and economic conditions.
The table below presents the allowance for loan losses by loan product and impairment methodology.
(in thousands)
Bridge
Fixed rate
Construction
SBA - 7(a)
Other
Total
June 30, 2026
General
$18,311
$2,092
$931
$29,235
$1,663
$52,232
Specific
77,700
1,699
21,855
11,884
10,091
123,229
PCD
—
—
75,265
—
—
75,265
Ending balance
$96,011
$3,791
$98,051
$41,119
$11,754
$250,726
December 31, 2025
General
$7,921
$1,749
$587
$28,615
$1,427
$40,299
Specific
72,714
1,596
22,917
10,039
10,091
117,357
PCD
—
—
60,861
—
—
60,861
Ending balance
$80,635
$3,345
$84,365
$38,654
$11,518
$218,517
The table below presents a summary of the changes in the allowance for loan losses.
(in thousands)
Bridge
Fixed rate
Construction
SBA - 7(a)
Other
Total
Three Months Ended June 30, 2026
Beginning balance
$82,828
$3,077
$99,388
$38,835
$11,539
$235,667
Provision for (recoveries of) loan losses
16,738
714
(651)
7,626
215
24,642
Time value of money adjustment
—
—
3,648
—
—
3,648
Charge-offs and sales
(3,555)
—
(4,334)
(5,490)
—
(13,379)
Recoveries
—
—
148
—
148
Ending balance
$96,011
$3,791
$98,051
$41,119
$11,754
$250,726
Three Months Ended June 30, 2025
Beginning balance
$31,049
$9,230
$166,051
$30,035
$2,855
$239,220
Provision for (recoveries of) loan losses
9,661
(3,313)
(834)
3,412
427
9,353
Measurement period adjustment - PCD
—
—
(7,198)
—
—
(7,198)
Charge-offs and sales
—
(802)
(7,882)
(396)
—
(9,080)
Recoveries
—
—
—
284
—
284
Ending balance
$40,710
$5,115
$150,137
$33,335
$3,282
$232,579
Six Months Ended June 30, 2026
Beginning balance
$80,635
$3,345
$84,365
$38,654
$11,518
$218,517
Provision for (recoveries of) loan losses
57,895
446
12,251
12,012
236
82,840
Time value of money adjustment
—
—
6,775
—
—
6,775
Charge-offs and sales
(42,519)
—
(5,340)
(9,893)
—
(57,752)
Recoveries
—
—
—
346
—
346
Ending balance
$96,011
$3,791
$98,051
$41,119
$11,754
$250,726
Six Months Ended June 30, 2025
Beginning balance
$170,445
$5,114
$140,139
$22,087
$2,154
$339,939
Provisions for (recoveries of) loan losses
(129,735)
1,803
9,656
11,500
1,128
(105,648)
PCD(1)
—
—
9,428
—
—
9,428
Charge-offs and sales
—
(1,802)
(9,086)
(622)
—
(11,510)
Recoveries
—
—
—
370
—
370
Ending balance
$40,710
$5,115
$150,137
$33,335
$3,282
$232,579
(1)Includes the impact of a measurement period adjustment related to the UDF IV Merger. Refer to Note 5 for further details on assets acquired and liabilities assumed in
connection with the UDF Merger.
The table above excludes $3.8 million and $2.3 million of allowance for loan losses on unfunded lending commitments
as of June 30, 2026 and June 30, 2025, respectively. Refer to Note 3 – Summary of Significant Accounting Policies for
more information on accounting policies, methodologies and judgment applied to determine the allowance for loan
losses and lending commitments.
Non-accrual loans
A loan is placed on nonaccrual status when it is probable that principal and interest will not be collected under the
original contractual terms. At that time, interest income is no longer accrued.
The table below presents information on non-accrual loans.
(in thousands)
June 30, 2026
December 31, 2025
Non-accrual loans
With an allowance
$904,919
$1,290,859
Without an allowance
52,954
36,265
Total carrying value of non-accrual loans
$957,873
$1,327,124
Allowance for loan losses related to non-accrual loans
$(140,644)
$(133,750)
UPB of non-accrual loans
$1,112,311
$1,466,969
June 30, 2026
June 30, 2025
Interest income on non-accrual loans for the three months ended
$7,509
$2,198
Interest income on non-accrual loans for the six months ended
$14,618
$6,366
Loan modifications made to borrowers experiencing financial difficulty
In certain situations, the Company may provide loan modifications to borrowers experiencing financial difficulty. These
modifications may include interest rate reductions, principal forgiveness, term extensions, and other-than-insignificant
payment delays intended to minimize the Company’s economic loss and to avoid foreclosure or repossession of
collateral.Three months ended June 30, 2026. During the three months ended June 30, 2026, the Company entered into 27 loan
modifications with an aggregate carrying value of $87.7 million, or 2.0% of total loans, net. These modified loans
include a combination of changes to the contractual terms which were in the form of interest rate reductions, principal
forgiveness, term extensions and other-than-insignificant payment delays.
There was 1 loan with a carrying value of $60.5 million, or 1.4% of loans, net that was modified to include both a 25
month term extension added to the original loan term and an interest rate reduction from SOFR + 5.85% to SOFR +
4.00% from May 2026 to November 2027. There was 1 loan with a carrying value of $17.8 million, or 0.4% of loans, net
that was modified to include a 39 month term extension added to the original loan term, a 24 month interest payment
deferral, and principal forgiveness of $1.2 million. There were 23 loans with an aggregate carrying value of $8.9 million,
or 0.2% of loans, net that were modified to include interest payment deferrals which ranged between 3 and 24 months
with a weighted average of 8 months and include payments for periods before the modification date. There were 2 loans
with an aggregate carrying value of $0.5 million, or less than 0.1% of loans, net that were modified to include a 60
month term extension added to the original loan term. Interest payment deferral payment modifications include the
reduction of interest payments to equal excess net operating income with the difference between the original rate and the
interest collected due at maturity.
During the three months ended June 30, 2026, $2.6 million of total capital was invested by the borrowers, substantially
all in the form of payment towards principal or contribution to a reserve account.
Six months ended June 30, 2026. During the six months ended June 30, 2026, the Company entered into 72 loan
modifications with an aggregate carrying value of $251.8 million, or 5.8% of total loans, net. These modified loans
include a combination of changes to the contractual terms which were in the form of interest rate reductions, principal
forgiveness, term extensions and other-than-insignificant payment delays.
There were 4 loans with an aggregate carrying value of $138.3 million, or 3.2% of loans, net that were modified to
include both term extensions which ranged between 3 and 60 months with a weighted average of 14 months added to the
original loan term and interest payment deferrals which ranged between 2 and 9 months with a weighted average of 3
months. There was 1 loan with a carrying value of $60.5 million, or 1.4% of loans, net that was modified to include a 25
month term extension added to the original loan term, a 4 month interest payment deferral, and an interest rate reduction
from SOFR + 5.85% to SOFR + 4.00% from May 2026 to November 2027. There were 63 loans with an aggregate
carrying value of $34.7 million, or 0.8% of loans, net that were modified to include interest payment deferrals which
ranged between 3 and 24 months with a weighted average of 5 months and include payments for periods before the
modification date. There was 1 loan with a carrying value of $17.8 million, or 0.4% of loans, net that was modified to
include a 39 month term extension added to the original loan term, a 24 month interest payment deferral, and principal
forgiveness of $1.2 million. There were 2 loans with an aggregate carrying value of $0.5 million, or less than 0.1% of
loans, net that were modified to include a 60 month term extension added to the original loan term. There was 1 loan
with a carrying value of less than $0.1 million, or less than 0.1% of loans, net that was modified to include both a 26
month interest payment deferral and an interest rate reduction from Prime + 2.75% to a fixed rate of 9.00% from
February 2026 to May 2033. Interest payment deferral payment modifications include the reduction of interest payments
to equal excess net operating income with the difference between the original rate and the interest collected due at
maturity.
During the six months ended June 30, 2026, $2.6 million of total capital was invested by the borrowers, substantially all
in the form of payment towards principal or contribution to a reserve account.
Three months ended June 30, 2025. During the three months ended June 30, 2025, the Company entered into 36 loan
modifications with an aggregate carrying value of $261.8 million, or 3.6% of total loans, net. These modified loans
include a combination of changes to the contractual terms which were in the form of interest rate reductions, term
extensions and other-than-insignificant payment delays.
There were 9 loans with an aggregate carrying value of $81.4 million, or 1.1% of loans, net that were modified to
include term extensions which ranged between 2 and 72 months with a weighted average of 21 months added to the
original loan term. There was 1 loan with a carrying value of $33.4 million, or 0.5% of loans, net that was assumed by a
new borrower with an 18 month term extension added to the original loan term. There was 1 loan with a carrying value
of $31.3 million, or 0.4% of loans, net that was modified to include both a 24 month term extension added to the original
loan term and an interest rate reduction from SOFR + 4.50% to SOFR + 4.00% from May 2025 to October 2027. There
was 1 loan with a carrying value of $31.1 million, or 0.4% of loans, net that was modified to include both a 26 month
interest payment deferral and an interest rate reduction from SOFR + 3.60% to a fixed rate of 6.0% from June 2024 to
December 2025, 6.25% from January 2026 to December 2026, and 6.5% from January 2027 to September 2027. There
were 15 loans with an aggregate carrying value of $30.7 million, or 0.4% of loans, net that were modified to include
interest payment deferrals which ranged between 6 and 28 months with a weighted average of 7 months and include
payments for periods before the modification date. There were 8 loans with an aggregate carrying value of $28.5 million,
or 0.4% of loans, net that were modified to include both term extensions and interest payment deferrals. The term
extensions ranged between 3 and 60 months with a weighted average of 14 months added to the original loan term.
Interest payment deferrals ranged between 6 and 11 months with a weighted average of 9 months. Payment
modifications include the reduction of interest payments to equal excess net operating income with the difference
between the original rate and the interest collected due at maturity. In most cases, default interest is waived. There was 1
loan with a carrying value of $25.4 million, or 0.4% of loans, net that was modified to include a 12 month term extension
added to the original loan term, a 7 month interest payment deferral, and an interest rate reduction from SOFR + 5.75%
to SOFR + 3.50% from June 2025 to March 2026.
During the three months ended June 30, 2025, $0.4 million of total capital was invested by the borrowers, substantially
all in the form of payments in contribution to reserve accounts.
Six months ended June 30, 2025. During the six months ended June 30, 2025, the Company entered into 61 loan
modifications with an aggregate carrying value of $429.8 million, or 6.0% of total loans, net. These modified loans
include a combination of changes to the contractual terms which were in the form of interest rate reductions, term
extensions and other-than-insignificant payment delays.
There were 15 loans with an aggregate carrying value of $100.4 million, or 1.4% of loans, net that were modified to
include term extensions which ranged between 2 and 72 months with a weighted average of 20 months added to the
original loan term. There were 2 loans with an aggregate carrying value of $77.6 million, or 1.1% of loans, net that were
assumed by new borrowers and modified to include term extensions. The term extensions ranged between 18 and 35
months with a weighted average of 28 months added to the original loan term. There were 2 loans with an aggregate
carrying value of $65.3 million, or 0.9% of loans, net that were assumed by new borrowers and modified to include both
term extensions and interest payment deferrals. The term extensions ranged between 19 and 32 months with a weighted
average of 25 months added to the original loan term. Interest payment deferrals ranged between 12 and 24 months with
a weighted average of 17 months. There were 11 loans with an aggregate carrying value of $57.5 million, or 0.8% of
loans, net that were modified to include both term extensions and interest payment deferrals. The term extensions ranged
between 3 and 60 months with a weighted average of 14 months added to the original loan term. Interest payment
deferrals ranged between 6 and 24 months with a weighted average of 12 months. Payment modifications include the
reduction of interest payments to equal excess net operating income with the difference between the original rate and the
interest collected due at maturity. In most cases, default interest is waived. There were 28 loans with an aggregate
carrying value of $41.2 million, or 0.6% of loans, net that were modified to include interest payment deferrals which
ranged between 3 and 28 months with a weighted average of 7 months and include payments for periods before the
modification date. There was 1 loan with a carrying value of $31.3 million, or 0.4% of loans, net that was modified to
include both a 24 month term extension added to the original loan term and an interest rate reduction from SOFR +
4.50% to SOFR + 4.00% from May 2025 to October 2027. There was 1 loan with a carrying value of $31.1 million, or
0.4% of loans, net that was modified to include both a 26 month interest payment deferral and an interest rate reduction
from SOFR + 3.60% to a fixed rate of 6.0% from June 2024 to December 2025, 6.25% from January 2026 to December
2026, and 6.5% from January 2027 to September 2027. There was 1 loan with a carrying value of $25.4 million, or 0.4%
of loans, net that was modified to include a 12 month term extension added to the original loan term, a 7 month interest
payment deferral, and an interest rate reduction from SOFR + 5.75% to SOFR + 3.50% from June 2025 to March 2026.
During the six months ended June 30, 2025, $10.6 million of total capital was invested by the borrowers, substantially all
in the form of payments in contribution to reserve accounts.
The remaining elements of the Company’s modification programs are generally considered insignificant and do not have
a material impact on financial results.
Allowance for loan losses. The Company’s allowance for loan losses reflects estimates of expected life-time loan losses,
which considers historical loan losses including losses from modified loans to borrowers experiencing financial
difficulty. The Company continues to estimate the allowance for loan losses after modification using loan-specific
inputs. Substantially all of the modified loans during the three and six months ended June 30, 2026 were performing in
accordance with the modified contractual terms, however, $69.8 million and $169.7 million, respectively were on
nonaccrual status regarding the ultimate collectability of the contractually due principal and interest. Majority of the
modified loans during the three and six months ended June 30, 2025 were on accrual status and performing in
accordance with the modified contractual terms.
Loans with modifications disclosed in the previous twelve months are performing in accordance with their modified
terms as of June 30, 2026, except for 34 loans with a carrying value of $107.4 million which did not make payments in
accordance with their modified terms during the three months ended June 30, 2026.
On loans for which the Company determines foreclosure of the collateral is probable, expected losses are measured
based on the difference between the fair value of the collateral and the amortized cost basis of the loan as of the
measurement date. As of June 30, 2026 and December 31, 2025, the Company’s total carrying amount of loans in the
foreclosure process was $10.8 million and $17.9 million, respectively.
Lending commitments. For the three and six months ended June 30, 2026, lending commitments to borrowers
experiencing financial difficulty for which the Company has modified the loan terms were $0.4 million and $1.9 million,
respectively. For the three and six months ended June 30, 2025, lending commitments to borrowers experiencing
financial difficulty for which the Company has modified the loan terms were $22.3 million and $28.8 million,
respectively.
PCD loans
On March 13, 2025, the Company acquired PCD loans in connection with the UDF IV Merger. Subsequent to the
determination of the preliminary purchase price allocation, based on updated valuations obtained, the Company recorded
a measurement period adjustment of $36.3 million to increase the PCD allowance. Refer to Note 5 for further details on
assets acquired and liabilities assumed in connection with the UDF IV Merger. The table below presents a reconciliation
of the Company’s purchase price with the par value of the purchased loans.
(in thousands)
Preliminary Purchase
Price Allocation
Measurement Period
Adjustments
Updated Purchase Price
Allocation
UPB
$200,729
$(37,205)
$163,524
Allowance for credit losses
(16,626)
(36,291)
(52,917)
Non-credit discount
(87,141)
48,456
(38,685)
Purchase price of loans classified as PCD
$96,962
$(25,040)
$71,922
The Company did not acquire any PCD loans during the three months ended June 30, 2026 or June 30, 2025.