INDEMNIFIED AND REPURCHASED LOANS (Tables)
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9 Months Ended |
Sep. 30, 2026 |
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| INDEMNIFIED AND REPURCHASED LOANS |
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| Schedule of indemnified and repurchased loans and their location |
| | | | | | Other Assets and Other Liabilities Related to Indemnified and Repurchased Loans (in thousands) | September 30, 2026 | | December 31, 2025 | Other Assets | | | | | | Indemnified loans | $ | 91,861 | | $ | 46,253 | Repurchased loans | | 53,092 | | | 36,926 | Valuation allowance(1) | | (76,849) | | | (5,410) | Loans held for sale - indemnified and repurchased loans(1) | $ | 68,104 | | $ | 77,769 | | | | | | | Other assets, gross(2)(3)(4) | $ | 13,469 | | $ | 50,380 | Impairment(3)(4) | | (4,700) | | | (11,500) | Other assets, net(4) | $ | 8,769 | | $ | 38,880 | Total other assets – Loans and OREO held for sale | $ | 76,873 | | $ | 116,649 | | | | | | | Other Liabilities | | | | | | Secured borrowings | $ | 108,278 | | $ | 83,402 | Indemnification reserves(5) | | 7,961 | | | 23,920 | Total other liabilities | $ | 116,239 | | $ | 107,322 |
| (1) | The valuation allowance presented as of December 31, 2025 represents the Allowance for loan losses related to these loans as of that date, as they were previously classified as loans held for investment. | |
| (2) | Comprised of Other real estate owned (“OREO”) and an Other asset as of December 31, 2025 and only OREO as of September 30, 2026 as described in NOTE 2 of the Company’s 2025 Form 10-K. The fair value for the OREO asset was determined based on a contractual sales price. OREO and other asset, net are presented as components of Other assets on the Condensed Consolidated Balance Sheets. | |
| (3) | The OREO asset was held for sale as of September 30, 2026. Upon reclassification from held for use to held for sale in the first quarter of 2026, the Company recorded an impairment charge of $1.5 million. The Company recorded an additional impairment charge of $4.3 million in the third quarter of 2026. These impairment charges can be seen in the table below. | |
| (4) | These real estate assets were held for sale as of September 30, 2026 and held for use as of December 31, 2025. | |
| (5) | NOTE 2 in the 2025 Form 10-K contains information about the nature of these reserves. | |
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| Schedule of maximum expected future payments |
| | | | | | Maximum Expected Future Payments (in thousands) | September 30, 2026 | | December 31, 2025 | Secured borrowings | $ | 108,278 | | $ | 83,402 | Collateral for secured borrowings(1) | | (37,718) | | | (22,668) | Total | $ | 70,560 | | $ | 60,734 |
| (1) | The Company has funded this balance with corporate cash into an escrow account held by the GSE to collateralize the secured borrowing. The collateral is included in Receivables, net on the Condensed Consolidated Balance Sheets. | |
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| Schedule of allowance for loan losses related to indemnified and repurchased loans |
| | | | | | | | | | | | | As of and for the three months ended | | As of and for the nine months ended | Roll Forward of Allowance for Loan Losses
(in thousands) | September 30, 2026 | | September 30, 2025 | | September 30, 2026 | | September 30, 2025 | Beginning balance | $ | 39,635 | | $ | 4,560 | | $ | 5,410 | | $ | 4,060 | Provision (benefit) for loan losses(1) | | (18,468) | | | — | | | (5,410) | | | 500 | Transfers in from purchased credit deteriorated ("PCD") initial allowance | | — | | | — | | | 21,167 | | | — | PCD initial allowance transferred to LHFS valuation allowance | | (21,167) | | | — | | | (21,167) | | | — | Write-offs | | — | | | — | | | — | | | — | Ending balance | $ | — | | $ | 4,560 | | $ | — | | $ | 4,560 |
| (1) | Presented as a component of Provision (benefit) for credit losses on the Condensed Consolidated Statements of Income. | |
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| Schedule of activity related to the valuation adjustments and impairments for Loans held for sale |
| | | | | | | | | | | | | As of and for the three months ended | | As of and for the nine months ended | Roll Forward of Valuation Allowance
(in thousands) | September 30, 2026 | | September 30, 2025 | | September 30, 2026 | | September 30, 2025 | Beginning balance | $ | — | | $ | — | | $ | — | | $ | — | Fair value adjustments(1)(2) | | 37,514 | | | — | | | 37,514 | | | — | Transfers from Allowance for Loan Losses(1)(2)(4) | | 18,468 | | | — | | | 18,468 | | | — | Transfers of PCD initial allowance(3) | | 21,167 | | | — | | | 21,167 | | | — | Valuation adjustments released upon disposition(1)(2) | | (300) | | | — | | | (300) | | | — | Ending balance | $ | 76,849 | | $ | — | | $ | 76,849 | | $ | — |
| (1) | Presented as a component of Indemnified and repurchased loan expenses, net on the Condensed Consolidated Statements of Income. | |
| (2) | Presented as a component of “Fair value adjustments” in the “Impact of Indemnified and Repurchased Loans” table below. | |
| (3) | Portion of Allowance for loan losses/Valuation Allowance originally recognized as Loan repurchase losses (defined below). | |
| (4) | Previously recognized as “Provision (benefit) for loan losses”. | |
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| Schedule of indemnified and repurchased loan expenses |
| | | | | | | | | | | | | For the three months ended | | For the nine months ended | Impact of Indemnified and Repurchased Loans (in thousands) | September 30, 2026 | | September 30, 2025 | | September 30, 2026 | | September 30, 2025 | Initial loan repurchase costs | $ | 235 | | $ | — | | $ | 1,032 | | $ | 322 | Indemnified and repurchased loan operating costs | | 6,585 | | | 3,526 | | | 14,119 | | | 4,744 | Expected principal losses on loan repurchase ("loan repurchase losses") | | 570 | | | — | | | 9,184 | | | — | Fair value adjustments | | 55,682 | | | — | | | 55,682 | | | — | Indemnified and repurchased loan expenses, net | $ | 63,072 | | $ | 3,526 | | $ | 80,017 | | $ | 5,066 | | | | | | | | | | | | | Other Activity Related to Indemnified and Repurchased Loans | | | | | | | | | | | | Provision (benefit) for loan losses(1) | | (18,468) | | | — | | | (5,410) | | | 500 | Provision (benefit) for risk sharing obligations(1)(2) | | 7,851 | | | — | | | 13,603 | | | — | Other operating expenses(3) | | 4,349 | | | — | | | 5,887 | | | — | Other interest income(4) | | (463) | | | — | | | (2,005) | | | — | Total net expense impact of indemnified and repurchased loans | $ | 56,341 | | $ | 3,526 | | $ | 92,092 | | $ | 5,566 |
| (1) | Included as a component of Provision (benefit) for credit losses in the Condensed Consolidated Statements of Income. | |
| (2) | Impact on Provision (benefit) for risk-sharing obligations resulting from modified loss sharing in lieu of repurchase on $86.6 million of defaulted loans. | |
| (3) | Includes impairment charges related to the OREO asset that was previously repurchased and included as a component of Other operating expenses in the Condensed Consolidated Statements of Income. | |
| (4) | Included as a component of Placement fees and other interest income in the Condensed Consolidated Statements of Income. | |
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