Current expected credit losses (“CECL”) reflected the Company’s estimate of potential credit losses related to loans receivable included in the Company’s consolidated balance sheets pursuant to ASU No. 2016-13, Financial Instruments Credit Losses, and subsequent amendments. There was no activity in the Company’s CECL for the six months ended June 30, 2026, due to the sale of the Company’s lending division in January 2026, as further discussed below.


	Loans Receivable









Allowance for credit losses as of December 31, 2024	$	2,032
Net adjustment to reserve for expected credit losses	39

Allowance for credit losses as of March 31, 2025	2,071
Net adjustment to reserve for expected credit losses	380
Allowance for credit losses as of June 30, 2025	$	2,451

The net adjustments to the reserve for expected credit losses were recognized through net income on the Company’s consolidated statements of operations. During the three and six months ended June 30, 2025, the Company recorded an increase of $380,000 and $419,000, respectively, in its CECL related to its loans receivable, which was recorded in general and administrative expenses in the consolidated statement of operations.

As previously announced on November 12, 2025, the Company and First Western SBLC, LLC, a Florida limited liability company (formerly known as First Western SBLC, Inc.) and an indirect wholly owned subsidiary of the Company (“First Western”), entered into a membership interest purchase agreement, dated as of November 6, 2025 (the “Membership Interest Purchase Agreement”), with PG FR Holding, LLC, a Delaware limited liability company (the “Buyer”). The closing (the “Closing”) of the transactions contemplated by the Membership Interest Purchase Agreement (the “Transactions”) occurred on January 21, 2026, for a gross purchase price of $44.9 million (which is net of the outstanding balance of debt related to the 2023 securitization of certain loan receivables), resulting in proceeds of $31.2 million after the repayment of the Lending Division Revolving Credit Facility, and a net gain of $1.7 million. The Company received $1.0 million of incremental proceeds held in escrow which was previously contemplated in connection with the Transactions during the three months ended June 30, 2026.

As of December 31, 2025, the Company classified the assets and liabilities of First Western as held for sale. The following is the detail of the carrying amounts of assets and liabilities classified as held for sale on the consolidated balance sheets as of December 31, 2025:


	December 31, 2025
Assets:



Restricted cash	$	4,423
Loans receivable, net (1)	54,213
Accounts receivable, net	633

Other intangible assets (2)	2,957
Other assets	3,633

Total assets held for sale	$	65,859

Liabilities:
Debt, net (3)	$	17,330
Accounts payable and accrued expenses	2,508


Other liabilities	2,128

Total liabilities associated with assets held for sale	$	21,966

(1)Loans receivable, net as of December 31, 2025 consisted of total Small Business Administration (the “SBA”) 7(a) loans receivable of $53.2 million and net deferred capitalized costs of $1.0 million. Upon the reclassification of First Western to held for sale, the CECL balance related to the loans receivable was reversed. The loans receivable were subsequently written down to their estimated fair value (based on the contractual sales price) less costs to sell, resulting in a loss on assets held for sale of $298,000 for the year ended December 31, 2025. Following the loss on assets held for sale, as of December 31, 2025, the aggregate net assets and liabilities of First Western were recorded at fair value, less costs to sell. During the six months ended June 30, 2026, the Company finalized the sale and based on additional operating and investing activity at First Western and certain transaction-related adjustments, recognized a net gain of $1.7 million.

(3)Debt, net as of December 31, 2025 consisted of the following: Secured borrowings – government guaranteed loans of $1.3 million, along with net unamortized premiums of $19,000, and SBA 7(a) loan-backed notes of $16.4 million, net of deferred debt origination costs of $402,000.