| FAIR VALUE MEASUREMENTS |
NOTE 9—FAIR VALUE MEASUREMENTS: 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 June 30, 2026 and December 31, 2025: | | | | | | | | | | | | | | | | | | | | | | | | | Fair Value Measurements at June 30, 2026 | | Total | | Level 1 | | Level 2 | | Level 3 | | Assets: | | | | | | | | Debt securities available-for-sale, at fair value | | | | | | | | | U.S. Treasury notes | $ | 15,139 | | | $ | 15,139 | | | $ | — | | | $ | — | | | Government agency debentures | — | | | — | | | — | | | — | | Loans held for sale, at fair value1 | 500,783 | | | — | | | — | | | 500,783 | | Loans held for investment, at fair value1 | 721,568 | | | — | | | — | | | 721,568 | | Residuals in securitizations, at fair value1 | 204,001 | | | — | | | — | | | 204,001 | | Servicing assets, at fair value1 | 12,456 | | | — | | | — | | | 12,456 | | | | | | | | | | Joint ventures and other investments, at fair value1 | 43,766 | | | 6,960 | | 2 | — | | | 36,806 | | | | | | | | | | Total assets measured at fair value | $ | 1,497,713 | | | $ | 22,099 | | | $ | — | | | $ | 1,475,614 | | | Liabilities: | | | | | | | | Equity warrants1,3 | $ | 168 | | | $ | — | | | $ | — | | | $ | 168 | | Derivative instruments1,3 | 4 | | | — | | | 4 | | | — | | Total liabilities measured at fair value | $ | 172 | | | $ | — | | | $ | 4 | | | $ | 168 | |
1 Measured at fair value on a recurring basis with the net unrealized gains or losses recorded in current period earnings. 2 Includes four million shares of IPM Preferred Stock valued at the closing price per share of IPM common stock of $1.74 on June 30, 2026. 3 Included in Accounts payable, accrued expenses, and other liabilities on the Consolidated Statements of Financial Condition.
| | | | | | | | | | | | | | | | | | | | | | | | | Fair Value Measurements at December 31, 2025 | | Total | | Level 1 | | Level 2 | | Level 3 | | Assets: | | | | | | | | | Debt securities available-for-sale | | | | | | | | | U.S. Treasury notes | $ | 16,829 | | | $ | 16,829 | | | $ | — | | | $ | — | | | Government agency debentures | — | | | — | | | — | | | — | | Loans held for sale, at fair value1 | 971,837 | | | — | | | 324,467 | | | 647,370 | | Loans held for investment, at fair value1 | 281,198 | | | — | | | — | | | 281,198 | | Residuals in securitizations, at fair value1 | 76,701 | | | | | | | 76,701 | | Servicing assets, at fair value1 | 15,358 | | | — | | | — | | | 15,358 | | Joint ventures and other investments1 | 47,719 | | | 6,880 | | 3 | 1,983 | | 4 | 38,856 | | Derivative instruments1,2 | 737 | | | — | | | 737 | | | — | | | Total assets measured at fair value | $ | 1,410,379 | | | $ | 23,709 | | | $ | 327,187 | | | $ | 1,059,483 | | | Liabilities: | | | | | | | | Equity warrants1,5 | $ | 81 | | | $ | — | | | $ | — | | | $ | 81 | | | | | | | | | | Total liabilities measured at fair value | $ | 81 | | | $ | — | | | $ | — | | | $ | 81 | |
1 Measured at fair value on a recurring basis with the net unrealized gains or losses recorded in current period earnings. 2 Included in Other assets on the Consolidated Statements of Financial Condition. 3 Includes four million shares of IPM Preferred Stock valued at the closing price per share of IPM common stock of $1.72 on December 31, 2025. 4 Includes the Biller Genie investment valued at the price that settled in January 2026. 5 Included in Accounts payable, accrued expenses, and other liabilities on the Consolidated Statements of Financial Condition. The following tables represents the changes in the assets and liabilities measured at fair value on a recurring basis using Level 3 inputs for the six months ended June 30, 2026 and 2025: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Six Months Ended June 30, 2026 | | Loans HFI,
at FV | | Loans HFS,
at FV | | Joint Ventures and Other Investments | | Residuals in Securitizations, at FV | | Servicing Assets,
at FV | | Equity Warrants1 | | Fair value, December 31, 2025 | $ | 281,198 | | | $ | 647,370 | | | $ | 38,856 | | | $ | 76,701 | | | $ | 15,358 | | | $ | 81 | | | | | | | | | | | | | | | Reclasses between loans HFS and HFI | 34,596 | | | (34,596) | | | — | | | — | | | — | | | — | | Sales | 308 | | | (366,387) | | | — | | | — | | | — | | | — | | | Principal payments received | (28,400) | | | (5,283) | | | — | | | — | | | — | | | — | | | Foreclosed real estate acquired | (2,725) | | | — | | | — | | | — | | | — | | | — | | | SBA loans, funded | — | | | 83,666 | | | — | | | — | | | — | | | — | | C&I LA loans, funded2 | — | | | 189,800 | | | — | | | — | | | — | | | — | | | | | | | | | | | | | | Purchases and repurchases of loans | 2,987 | | | 22,179 | | | — | | | — | | | — | | | — | | | Residuals in securitizations, notional | — | | | — | | | — | | | 47,176 | | | — | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Change in valuation due to: | | | | | | | | | | | | Changes in valuation inputs or assumptions | 1,834 | | | (35,966) | | | (2,050) | | | 80,124 | | | — | | | 87 | | Other factors | (10,843) | | | — | | | — | | | — | | | (2,902) | | | — | | | | | | | | | | | | | | Transfers into Level 33 | 442,613 | | | — | | | — | | | — | | | — | | | — | | | Fair value, June 30, 2026 | $ | 721,568 | | | $ | 500,783 | | | $ | 36,806 | | | $ | 204,001 | | | $ | 12,456 | | | $ | 168 | |
1 Included in Accounts payable, accrued expenses, and other liabilities on the Consolidated Statements of Financial Condition. 2 Newtek Bank began originating C&I LA loans, also known as ALP loans, during the first quarter of 2026. 3 As a result of an agreement with the SBA with respect to Newtek Bank’s participation in the SBA Secondary Market, $442.6 million of loans held for sale, at fair value, as of June 30, 2026, were reclassified to loans held for investment, at fair value. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Six Months Ended June 30, 2025 | | Loans HFI, at FV | | Loans HFS,
at FV | | Joint Ventures and Other Investments | | Residuals in Securitizations, at FV | | Servicing Assets,
at FV | | Equity Warrants1 | | Fair value, December 31, 2024 | $ | 369,746 | | | $ | 372,286 | | | $ | 57,678 | | | $ | — | | | $ | 22,062 | | | $ | 133 | | | Reclass between loans at FV and LCM | — | | | 7,133 | | | — | | | — | | | — | | | — | | | Reclass between loans HFS and HFI | — | | | — | | | — | | | — | | | — | | | — | | | Sales | 130 | | | (251,089) | | | — | | | — | | | — | | | — | | | Principal payments received | (35,061) | | | (1,703) | | | — | | | — | | | — | | | — | | | Foreclosed real estate acquired | (2,425) | | | — | | | — | | | — | | | — | | | — | | | SBA loans, funded | — | | | 47,411 | | | — | | | — | | | — | | | — | | | ALP loans, funded | — | | | 146,775 | | | — | | | — | | | — | | | — | | | | | | | | | | | | | | | Purchases and repurchases of loans | 1,071 | | | — | | | — | | | — | | | — | | | — | | | Residuals in securitizations, notional | — | | | — | | | — | | | 32,481 | | | — | | | — | | Additions2 | — | | | — | | | 2,908 | | | — | | | — | | | — | | | Capital contributions/(distributions) | — | | | — | | | 71 | | | — | | | — | | | — | | | Change in valuation due to: | | | | | | | | | | | | | Changes in valuation inputs or assumptions | (22) | | | (4,934) | | | (96) | | | 45,220 | | | — | | | (69) | | | Other factors | (7,326) | | | — | | | — | | | — | | | (3,678) | | | — | | Transfers out of Level 33 | — | | | (4,856) | | | — | | | — | | | — | | | — | | | Fair Value, June 30, 2025 | $ | 326,113 | | | $ | 311,023 | | | $ | 60,561 | | | $ | 77,701 | | | $ | 18,384 | | | $ | 64 | |
1 Included in Accounts payable, accrued expenses, and other liabilities on the Consolidated Statements of Financial Condition. 2 Investment in IPM. 3 As of April 1, 2025, the Company is using broker quotes to calculate the fair value of its unguaranteed portions of its SBA 7(a) loans moving them from Level 3 to Level 2. The following tables provide a summary of quantitative information about the Company’s Level 3 fair value measurements as of June 30, 2026 and December 31, 2025. 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 June 30, 2026 and December 31, 2025.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Fair Value as of | | | | Weighted | | Range | | | June 30, 2026 | | Unobservable Input | | Average | | Minimum | | Maximum | | Assets: | | | | | | | | | | | Loans HFI, at FV - accrual | | $ | 611,953 | | | Market yields | | 5.57 | % | | 5.40 | % | | 6.00 | % | | | | | 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 | | $ | 109,615 | | | Market yields | | 7.26 | % | | 7.00 | % | | 8.59 | % | | | | | | | | | | | | | | | | Average cumulative default rate | | 30.00 | % | | 30.00 | % | | 30.00 | % | Loans HFS, at FV | | $ | 500,783 | | | Market yields | | 7.66 | % | | 6.89 | % | | 9.04 | % | | | | | Cumulative prepayment rate | | 54.82 | % | | 50.00 | % | | 60.00 | % | | | | | Average cumulative default rate | | 9.82 | % | | 5.00 | % | | 15.00 | % | | Joint ventures and other investments | | $ | 36,806 | | | Market yields | | 8.15 | % | | 8.09 | % | | 8.59 | % | | | | | Cost of equity | | 14.00 | % | | 12.00 | % | | 16.00 | % | | | | | Weighted average cost of capital | | 8.00 | % | | 6.00 | % | | 10.00 | % | | Residuals in securitizations, at FV | | $ | 204,001 | | | Market yields | | 8.11 | % | | 8.09 | % | | 8.59 | % | | | | | Cost of equity | | 14.00 | % | | 12.00 | % | | 16.00 | % | | | | | Weighted average cost of capital | | 8.00 | % | | 6.00 | % | | 10.00 | % | | Servicing assets, at FV | | $ | 12,456 | | | Market yields | | 11.25 | % | | 11.25 | % | | 11.25 | % | | | | | Cumulative prepayment rate | | 22.50 | % | | 22.50 | % | | 22.50 | % | | | | | Average cumulative default rate | | 21.00 | % | | 21.00 | % | | 21.00 | % | Liabilities: | | | | | | | | | | | Equity warrants | | $ | 168 | | | Expected volatility | | 45.00 | % | | 45.00 | % | | 45.00 | % | | | | | Dividend yield | | 6.70 | % | | 6.70 | % | | 6.70 | % | | | | | Risk free rate | | 3.95 | % | | 3.95 | % | | 3.95 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Fair Value as of | | | | | | Weighted | | Range | | | December 31, 2025 | | | | Unobservable Input | | Average | | Minimum | | Maximum | | Assets: | | | | | | | | | | | | | Loans HFI, at FV - accrual | | $ | 208,655 | | | | | 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 | | $ | 72,543 | | | | | Market yields | | 7.00 | % | | 7.00 | % | | 7.00 | % | | | | | | | | | | | | | | | | | | | | Average cumulative default rate | | 30.00 | % | | 30.00 | % | | 30.00 | % | Loans HFS, at FV | | $ | 647,370 | | | | | Market yields | | 7.19 | % | | 6.43 | % | | 8.13 | % | | | | | | | Cumulative prepayment rate | | 56.17 | % | | 50.00 | % | | 60.00 | % | | | | | | | Average cumulative default rate | | 11.17 | % | | 5.00 | % | | 15.00 | % | | Joint ventures and other investments | | $ | 38,856 | | | | | Market yields | | 7.40 | % | | 6.71 | % | | 12.49 | % | | | | | | | Cost of equity | | 14.00 | % | | 12.00 | % | | 16.00 | % | | | | | | | Weighted average cost of capital | | 9.00 | % | | 7.00 | % | | 11.00 | % | | | | | | | | | | | | | | | Residuals in securitizations, at FV | | $ | 76,701 | | | | | Market yields | | 7.58 | % | | 7.58 | % | | 7.58 | % | | | | | | | Cost of equity | | 14.00 | % | | 12.00 | % | | 16.00 | % | | | | | | | Weighted average cost of capital | | 9.00 | % | | 7.00 | % | | 11.00 | % | | Servicing assets, at FV | | $ | 15,358 | | | | | Market yields | | 11.25 | % | | 11.25 | % | | 11.25 | % | | | | | | | Cumulative prepayment rate | | 22.50 | % | | 22.50 | % | | 22.50 | % | | | | | | | Average cumulative default rate | | 21.00 | % | | 21.00 | % | | 21.00 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Liabilities: | | | | | | | | | | | | | | Equity warrants | | $ | 81 | | | | | Expected volatility | | 45.00 | % | | 45.00 | % | | 45.00 | % | | | | | | | Dividend yield | | 6.70 | % | | 6.70 | % | | 6.70 | % | | | | | | | Risk free rate | | 3.95 | % | | 3.95 | % | | 3.95 | % |
Estimated Fair Value of Other Financial Instruments
GAAP also requires disclosure of the fair value of financial instruments carried at book value 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:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | June 30, 2026 | | Carrying Amount | | Fair Value Amount by Level: | | Total Fair Value | | | Level 1 | | Level 2 | | Level 3 | | | Financial Assets: | | | | | | | | | | | Cash and due from banks | $ | 5,190 | | | $ | 5,190 | | | $ | — | | | $ | — | | | $ | 5,190 | | | Restricted cash | 22,744 | | | 22,744 | | | — | | | — | | | 22,744 | | | Interest bearing deposits in banks | 367,073 | | | 367,073 | | | — | | | — | | | 367,073 | | | Loans HFS, at LCM | 20,473 | | | — | | | — | | | 20,473 | | | 20,473 | | | Loans HFI, at amortized cost, net of deferred fees and costs | 1,139,537 | | | — | | | — | | | 1,158,268 | | | 1,158,268 | | | OREO, at LCM | 12,080 | | | — | | | — | | | 12,047 | | | 12,047 | | | Servicing assets, at LCM | 39,500 | | | — | | | — | | | 48,158 | | | 48,158 | | | Federal Home Loan Bank and Federal Reserve Bank stock | 4,548 | | | — | | | 4,548 | | | — | | | 4,548 | | | Financial Liabilities: | | | | | | | | | | | Time deposits | 636,376 | | | — | | | 635,793 | | | — | | | 635,793 | | | Borrowings | 554,192 | | | — | | | 198,110 | | | 364,623 | | | 562,733 | | | | | | | | | | | | | December 31, 2025 | | Carrying Amount | | Fair Value Amount by Level: | | Total Fair Value | | | Level 1 | | Level 2 | | Level 3 | | | Financial Assets: | | | | | | | | | | | Cash and due from banks | $ | 4,196 | | | $ | 4,196 | | | $ | — | | | $ | — | | | $ | 4,196 | | | Restricted cash | 26,477 | | | 26,477 | | | — | | | — | | | 26,477 | | | Interest bearing deposits in banks | 279,618 | | | 279,618 | | | — | | | — | | | 279,618 | | | Loans HFS, at LCM | 26,532 | | | — | | | — | | | 26,532 | | | 26,532 | | | Loans HFI, at amortized cost, net of deferred fees and costs | 896,689 | | | — | | | — | | | 1,012,200 | | | 1,012,200 | | | OREO, at LCM | 8,856 | | | — | | | — | | | 8,969 | | | 8,969 | | | Servicing assets, at LCM | 29,564 | | | — | | | — | | | 34,957 | | | 34,957 | | | Federal Home Loan Bank and Federal Reserve Bank stock | 4,234 | | | — | | | 4,234 | | | — | | | 4,234 | | | Financial Liabilities: | | | | | | | | | | | Time deposits | 439,805 | | | — | | | 440,688 | | | — | | | 440,688 | | | Borrowings | 819,888 | | | — | | | 283,999 | | | 543,999 | | | 827,998 | |
The fair values of the components of Borrowings are included in the chart below: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | June 30, 2026 | | December 31, 2025 | | | Closing Price | | Fair Value | | Closing Price | | Fair Value | Public Parent Company Notes1: | | | | | | | | | | | | | | | | | | 2026 Notes (5.50%)2 | | $ | — | | | $ | — | | | $ | 25.19 | | | $ | 95,722 | | 2028 Notes (8.00%) | | 25.27 | | | 40,432 | | | 25.20 | | | 40,320 | | 2029 Notes (8.50%) | | 25.55 | | | 73,387 | | | 25.16 | | | 72,267 | | 2029 Notes (8.625%) | | 25.34 | | | 76,020 | | | 25.23 | | | 75,690 | | 2031 Notes (8.50%) | | 26.25 | | | 8,271 | | | — | | | — | | Subtotal (Level 2) | | | | $ | 198,110 | | | | | $ | 283,999 | | | | | | | | | | | Private Parent Company Notes3 | | | | $ | 117,555 | | | | | $ | 102,758 | | Securitizations4 | | | | 105,099 | | | | | 127,050 | | FHLB Borrowings4 | | | | 6,310 | | | | | 7,349 | | Other Bank Borrowings4 | | | | 135,659 | | | | | 306,842 | | Subtotal (Level 3) | | | | $ | 364,623 | | | | | $ | 543,999 | | | | | | | | | | | Total Borrowings | | | | $ | 562,733 | | | | | $ | 827,998 | |
1 Fair values are based on the closing public share price on the date of measurement. 2 On February 1, 2026, the 2026 Notes matured. 3 Not recorded at fair value on a recurring basis. The fixed rate private Notes are held at par as of June 30, 2026 and December 31, 2025. Fair value calculations are performed based on implied treasury rates as of year end. 4 Fair value is calculated as the Borrowings Outstanding. Refer to NOTE 11—BORROWINGS.
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