Securities Held-To-Maturity

6 Months Ended

Jun. 30, 2025

Debt Securities, Held-to-Maturity, Amortized Cost, after Allowance for Credit Loss, Maturity [Abstract]

Agency Private Label Certificates (“APL certificates”). In connection with our Private Label securitizations, we retain the most subordinate class of the APL certificates in satisfaction of credit risk retention requirements. At June 30, 2025, we held APL certificates with an initial face value of $192.8 million, which were purchased at a discount for $119.0 million. These certificates are collateralized by 5-year to 10-year fixed rate first mortgage loans on multifamily properties, bear interest at an initial weighted average variable rate of 3.94% and have an estimated weighted average remaining maturity of 5.8 years. The weighted average effective interest rate was 8.84% at both June 30, 2025 and December 31, 2024, including the accretion of a portion of the discount deemed collectible. Approximately $63.6 million is estimated to mature in one to five years and $129.2 million is estimated to mature in five to ten years.

Agency B Piece Bonds. Freddie Mac may choose to hold, sell or securitize loans we sell to them under the Freddie Mac SBL program. As part of the securitizations under the SBL program, we have the ability to purchase the B Piece bond through a bidding process, which represents the bottom 10%, or highest risk, of the securitization. At June 30, 2025, we held 49%, or $106.2 million initial face value, of seven B Piece bonds, which were previously purchased at a discount for $74.7 million, and sold the remaining 51% to a third party. These securities are collateralized by a pool of multifamily mortgage loans, bear interest at an initial weighted average variable rate of 3.74% and have an estimated weighted average remaining maturity of 12.6 years. The weighted average effective interest rate was 11.52% and 11.76% at June 30, 2025 and December 31, 2024, respectively, including the accretion of a portion of the discount deemed collectible. Approximately $37.1 million is estimated to mature after ten years.

A summary of our securities held-to-maturity is as follows (in thousands):


	Face Value		Net Carrying Value		Unrealized Gain (Loss)		Estimated Fair Value		Allowance for Credit Losses
June 30, 2025
APL certificates	$	192,791	$	137,258	$	(16,487)	$	120,771	$	2,107
B Piece bonds	37,099		19,662		12,372		32,034		11,552
Total	$	229,890	$	156,920	$	(4,115)	$	152,805	$	13,659
December 31, 2024
APL certificates	$	192,791	$	134,834	$	(22,803)	$	112,031	$	1,658
B Piece bonds	37,221		22,320		10,157		32,477		9,188
Total	$	230,012	$	157,154	$	(12,646)	$	144,508	$	10,846

A summary of the changes in the allowance for credit losses for our securities held-to-maturity is as follows (in thousands):


	Three Months Ended June 30, 2025						Six Months Ended June 30, 2025
	APL Certificates		B Piece Bonds		Total		APL Certificates		B Piece Bonds		Total
Beginning balance	$	1,659	$	9,108	$	10,767	$	1,658	$	9,188	$	10,846
Provision for credit loss expense/(reversal)	448		2,444		2,892		449		2,364		2,813
Ending balance	$	2,107	$	11,552	$	13,659	$	2,107	$	11,552	$	13,659

	Three Months Ended June 30, 2024						Six Months Ended June 30, 2024
Beginning balance	$	2,157	$	5,440	$	7,597	$	2,272	$	3,984	$	6,256
Provision for credit loss expense/(reversal)	133		1,402		1,535		18		2,858		2,876
Ending balance	$	2,290	$	6,842	$	9,132	$	2,290	$	6,842	$	9,132

The allowance for credit losses on our held-to-maturity securities consists of (1) a general reserve estimated on a collective basis by major security type and was based on a reasonable and supportable forecast period and a historical loss reversion for similar securities, and (2) a specific reserve for underlying loans that are probable of, or are, in foreclosure. The issuers continue to make timely principal and interest payments and we continue to accrue interest on all our securities.

We recorded interest income (including the amortization of discount) related to these investments of $3.4 million and $7.1 million during the three and six months ended June 30, 2025, respectively, and $4.6 million and $8.3 million during the three and six months ended June 30, 2024, respectively.