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FAIR VALUE MEASUREMENTS

12 Months Ended

Dec. 31, 2025

NOTE 10—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 December 31, 2025 and December 31, 2024:


	Fair Value Measurements at December 31, 2025
	Total		Level 1			Level 2			Level 3
Assets:
Debt securities available-for-sale, at fair value
U.S. Treasury notes	$	16,829	$	16,829		$	—		$	—

Loans held for sale, at fair value	971,837		—			324,467			647,370
Loans held for investment, at fair value	281,198		—			—			281,198
Individually evaluated loans1	94,322		—			—			94,322
Other real estate owned, at fair value2	7,570		—			—			7,570
Other real estate owned, at LCM1,2	1,286		—			—			1,286
Residuals in securitizations, at fair value3	76,701		—			—			76,701
Servicing assets, at fair value	15,358		—			—			15,358
Servicing assets, at LCM1	29,564		—			—			29,564
Joint ventures and other investments, at fair value	47,719		6,880		5	1,983		6	38,856
Derivative instruments1,2,3	737		—			737			—
Total assets measured at fair value	$	1,543,121	$	23,709		$	327,187		$	1,192,225
Liabilities:
Equity warrants3,4	$	81	$	—		$	—		$	81

Total liabilities measured at fair value	$	81	$	—		$	—		$	81

1 Non-recurring.

2 Included in Other assets on the Consolidated Statements of Financial Condition.

3 Measured at fair value on a recurring basis with the net unrealized gains or losses recorded in current period earnings.

4 Included in Accounts payable, accrued expenses, and other liabilities on the Consolidated Statements of Financial Condition.

5 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

6 Includes the Biller Genie investment valued at the price that settled in January 2026.


	Fair Value Measurements at December 31, 2024
	Total		Level 1		Level 2		Level 3
Assets:
Debt securities available-for-sale
U.S. Treasury notes	$	23,916	$	23,916	$	—	$	—

Loans held for sale, at fair value	372,286		—		—		372,286
Loans held for investment, at fair value	369,746		—		—		369,746
Individually evaluated loans2	24,341		—		—		24,341
Other real estate owned, at fair value1	3,764		—		—		3,764

Servicing assets, at fair value	22,062		—		—		22,062
Servicing assets, at LCM1	24,195		—		—		24,195
Joint ventures and other investments	57,678		—		—		57,678
Derivative instruments1,3	715		—		715		—
Total assets measured at fair value	$	898,703	$	23,916	$	715	$	874,072
Liabilities:
Equity warrants3,4	$	133	$	—	$	—	$	133

Total liabilities measured at fair value	$	133	$	—	$	—	$	133

1 Included in Other assets on the Consolidated Statements of Financial Condition.

2 Non-recurring.

3 Measured at fair value on a recurring basis with the net unrealized gains or losses recorded in current period earnings.

4 Included in Accounts payable, accrued expenses, and other liabilities on the Consolidated Statements of Financial Condition.

The following tables represents the changes in the investments, servicing assets and liabilities measured at fair value using Level 3 inputs for the years ended December 31, 2025 and 2024:


	Year Ended December 31, 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		Other Real Estate Owned2
Fair value, December 31, 2024	$	369,746	$	372,286		$	57,678		$	—	$	22,062	$	133	$	3,764
Reclasses between loans at FV and LCM	—		7,133			—			—		—		—		—

Sales	483		(270,910)			—			—		—		—		(2,371)
Principal payments received	(71,830)		(12,293)			—			—		—		—		—
Foreclosed real estate acquired	(5,781)		—			—			—		—		—		7,778
SBA loans, funded	—		125,262			—			—		—		—		—
ALP loans, funded	—		363,410			—			—		—		—		—

Purchases and repurchases of loans	4,669		25,094			—			—		—		—		—
Residuals in securitizations, notional	—		—			—			32,481		—		—		—
Additions3	—		—			2,268			—		—		—		—
Asset purchase of controlling interest, net of cash acquired						10,120
Capital contributions	—		—			85			—		—		—		—
Returns of capital4	—		—			(26,227)			—		—		—		—
Change in valuation due to:
Changes in valuation inputs or assumptions	(1,468)		42,244			(3,568)			44,220		(19)		(52)		(1,601)
Other factors	(14,621)		—			—			—		(6,685)		—		—
Transfers out of Level 3	—		(4,856)		5	(1,500)		6	—		—		—		—
Fair value, December 31, 2025	$	281,198	$	647,370		$	38,856		$	76,701	$	15,358	$	81	$	7,570

1 Included in Accounts payable, accrued expenses, and other liabilities on the Consolidated Statements of Financial Condition.

2 Included in Other assets on the Consolidated Statements of Financial Condition.

3 Investment in IPM.

4 Includes $26.2 million of loans and accrued interest returned as part of the asset purchase of controlling interest in NCL JV.

5 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.

6 As of October 1, 2025, the Company is using the sales offering agreement to calculate the fair value of its investment in Biller Genie, moving it from Level 3 to Level 2. The sale of Biller Genie was completed in January 2026 at the anticipated pricing that was used in the December 31, 2025 valuation model.


	Year Ended December 31, 2024
	Loans HFI, at FV		Loans HFS, at FV		Joint Ventures and Other Investments		Servicing Assets, at FV		Assets HFS		Equity Warrants1		Other Real Estate Owned2
Fair value, December 31, 2023	$	469,801	$	118,867	$	41,587	$	29,336	—		$	141	$	1,110
Reclasses between loans HFS and HFI	—		(599)		—		—		—		—		—
Reclasses between loans at FV and LCM	263		4,077		—		—		—		—		—
Sales	(2,586)		(179,949)		—		—		—		—		(1,446)
Principal payments received	(71,791)		(16,178)		—		—		—		—		—
Foreclosed real estate acquired	(4,569)		—		—		—		—		—		4,569
SBA loans, funded	122		26,863		—		—		—		—		—
ALP loans, funded	—		283,822		—		—		—		—		—
Mortgage loans, funded	—		103,838		—		—		—		—		—
Additions	—		—		—		14		21,924		—		—
Purchases and repurchases of loans	4,851		—		—		—		—		—		—
Capital contributions/(distributions)	—		—		5,379		—		—		—		—
Change in valuation due to:
Changes in valuation inputs or assumptions	597		31,569		10,712		924		(616)		(8)		(469)
Other factors	(26,942)		(24)		—		(8,212)		—		—		—
Fair Value, December 31, 2024	$	369,746	$	372,286	$	57,678	$	22,062	$	21,308	$	133	$	3,764

1 Included in Accounts payable, accrued expenses, and other liabilities on the Consolidated Statements of Financial Condition.

2 Included in Other assets on the Consolidated Statements of Financial Condition.

The following tables provide a summary of quantitative information about the Company’s Level 3 fair value measurements as of December 31, 2025 and December 31, 2024. 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 December 31, 2025 and December 31, 2024.


	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 FV1	$	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	%
Other real estate owned, at FV	$	7,570	Appraised value	N/A		N/A		N/A
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	%

1 $15.4 million of servicing assets held at FV and $29.6 million of servicing assets held at LCM. Refer to NOTE 7—SERVICING ASSETS.


	Fair Value as of			Weighted		Range
	December 31, 2024		Unobservable Input	Average		Minimum		Maximum
Assets:
Loans HFI, at FV - accrual	$	302,442	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	$	67,304	Market yields	7.30	%	7.30	%	7.30	%

			Average cumulative default rate	30.00	%	30.00	%	30.00	%
Loans HFS, at FV	$	372,286	Market yields	7.62	%	7.08	%	8.18	%
			Cumulative prepayment rate	59.78	%	50.00	%	70.00	%
			Average cumulative default rate	9.89	%	5.00	%	15.00	%
Joint ventures and other investments	$	57,678	Market yields	8.40	%	8.00	%	12.00	%
			Cost of equity	11.00	%	8.00	%	14.00	%
			Weighted average cost of capital	7.72	%	6.00	%	23.98	%

Servicing assets, at FV1	$	22,062	Market yields	12.00	%	12.00	%	12.00	%
			Cumulative prepayment rate	22.50	%	22.50	%	22.50	%
			Average cumulative default rate	21.00	%	21.00	%	21.00	%
Assets held for sale	$	21,308	Present value factor	90.70	%	89.50	%	93.20	%
			Discount rate	10.23	%	7.27	%	11.71	%
Other real estate owned, at FV	$	3,764	Appraised value	N/A		N/A		N/A
Liabilities:
Equity warrants	$	133	Expected volatility	48.00	%	48.00	%	48.00	%
			Dividend yield	6.00	%	6.00	%	6.00	%
			Risk free rate	4.52	%	4.52	%	4.52	%

1 $22.1 million of servicing assets held at FV and $24.2 million of servicing assets held at LCM. Refer to NOTE 7—SERVICING ASSETS.

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:


	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
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

	December 31, 2024
	Carrying Amount		Fair Value Amount by Level:						Total Fair Value
			Level 1		Level 2		Level 3
Financial Assets:
Cash and due from banks	$	6,941	$	6,941	$	—	$	—	$	6,941
Restricted cash	28,226		28,226		—		—		28,226
Interest bearing deposits in banks	346,207		346,207		—		—		346,207


Loans HFS, at LCM	58,803		—		—		58,856		58,856

Loans HFI, at amortized cost, net of deferred fees and costs	621,651		—		—		668,687		668,687
Federal Home Loan Bank and Federal Reserve Bank stock	3,585		—		3,585		—		3,585

Financial Liabilities:
Time deposits	409,251		—		410,442		—		410,442
Borrowings	708,041		—		306,549		413,818		720,367

The fair values of the components of Borrowings are included in the chart below:


	December 31, 2025				December 31, 2024
	Closing Price		Fair Value		Closing Price		Fair Value
Public Parent Company Notes1:

2026 Notes (5.50%)2	$	25.19	$	95,722	$	25.21	$	115,966
2028 Notes (8.00%)	25.20		40,320		25.28		40,448
2029 Notes (8.50%)	25.16		72,267		25.32		72,795
2029 Notes (8.625%)	25.23		75,690		25.78		77,340
Subtotal (Level 2)			$	283,999			$	306,549

Private Parent Company Notes3			$	102,758			$	80,926
Securitizations4			127,050				186,635
FHLB Borrowings4			7,349				15,330
Bank Borrowings4			306,842				130,927
Subtotal (Level 3)			$	543,999			$	413,818

Total Borrowings			$	827,998			$	720,367

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. See “NOTE 24—SUBSEQUENT EVENTS - Exchange of 2026 Notes for 2031 Notes and Repayment of 2026 Notes” for additional information.

3 Not recorded at fair value on a recurring basis. The fixed rate private Notes are held at par as of December 31, 2025 and December 31, 2024. 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 13—BORROWINGS.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References

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