Equity Method Investments

9 Months Ended

Sep. 30, 2021

Equity Method Investments and Joint Ventures [Abstract]

Note 5 – Equity Method Investments

ICM

In the third quarter of 2020, we acquired a portion of ICM, a direct mortgage lender, and account for our ownership as an equity method investment, initially recorded at fair value and subsequently adjusted for our share of ICM's earnings. In accordance with Rule 8-03(b)(3) of Regulation S-X, we must assess whether our equity method investment is significant. In evaluating the significance of this investment, we performed the income, asset and investment tests described in S-X 3-05 and S-X 1-02(w). Rule 8-03(b)(3) of Regulation S-X requires summarized financial information in a quarterly report if any of the three tests exceeds 20%. Under the income test, our proportionate share of our equity method investee's aggregated net income exceeded the applicable threshold of 20%, and accordingly, we are required to provide summarized income statement information for this investee for all periods presented. Our share of net income from our equity method investment totaled $3.6 million and $14.6 million for the three and nine months ended September 30, 2021.

The following table presents summarized income statement information for our equity method investment for the period indicated.


	Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in thousands)	2021		2020		2021		2020
Total revenues	$	35,229	$	62,915	$	126,106	$	62,915
Net income	9,962		28,979		36,747		28,979

Gain on sale of loans	$	30,720	$	39,518	$	122,621	$	39,518
Volume of loans sold	$	1,098,475	$	1,215,512	$	4,368,875	$	1,215,512

As of September 30, 2021 and December 31, 2020, the mortgage pipeline was $1.15 billion and $1.54 billion, respectively.

Interchecks

In September 2021, we increased our equity investment in Interchecks by $4.5 million, for a total investment to $7.7 million as of September 30, 2021. The additional investment increased our ownership percentage to 16.9% and allows us to have significant influence over the operations and decision making at Interchecks; therefore, the investment has now been accounted for as an equity method investment as of September 30, 2021. The equity method investment in Interchecks is not considered a significant investment based on the criteria of Rule 8-03(b)(3) of Regulation S-X.

We have multiple business relationships with Interchecks beyond our investment. Interchecks is a banking client of ours and utilizes the Victor platform, which provides revenue to us. Additionally, Interchecks provides management services to MVB Technology, which provides revenue to Interchecks. Such revenues have not been material.