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Note 4 - SECURITIZATIONS AND VARIABLE INTEREST ENTITIES | 9 Months Ended
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Sep. 30, 2024
SECURITIZATIONS AND VARIABLE INTEREST ENTITIES |
SECURITIZATIONS AND VARIABLE INTEREST ENTITIES | NOTE 4. SECURITIZATIONS AND VARIABLE INTEREST ENTITIES ​ Freddie Mac Securitizations ​ In 2023, the Company completed two Freddie Mac sponsored securitizations. The Company retained beneficial interests which are classified as trading securities on the consolidated balance sheets. Details related to the 2023 securitizations and related VIEs can be found in the Company's Annual Report on Form 10-K for the year ended December 31, 2023. ​ On August 15, 2024, the Company entered into an arrangement with Freddie Mac to securitize and sell $230.7 million of nontaxable LIHTC loans was securitized through Freddie Mac and sold to investors. The Company retained beneficial interests totaling $36.7 million, which are classified as trading securities on the Company’s consolidated balance sheets. The transfer of these loans was accounted for as a sale for financial reporting purposes, in accordance with ASC 860, and a $473 thousand net loss on sale was recognized, which included the impact of the fair value of retained beneficial interests and transaction costs. ​ Two classes of M-Series certificates were issued in conjunction with the 2024 securitization. Freddie Mac guarantees timely payment of interest and scheduled principal on M-Series Class A Certificates, which were sold to third-party investors through a Freddie Mac Securitization special purpose entity. M-Series Class B Certificates are subordinated to M-Series Class A Certificates and were issued to the Company. Class B Certificates provide 15% first loss support to Freddie Mac on the Class A Certificates, or approximately $34.9 million. In addition, the Company pledged $10.1 million of related taxable loans. The Company’s ongoing involvement in this transaction is limited to customary obligations of loan sales, including any indemnification for material breach in the Company’s representations. ​ As part of the 2024 securitization transaction, the Company released all servicing obligations and rights to a third party, which include obligations to collect and remit payments of principal and interest, manage payments of taxes and insurance, and otherwise administer the underlying loans. ​ At September 30, 2024 and December 31, 2023, the Company determined it was not the primary beneficiary of the VIEs related to all securitizations to date, primarily because the Company did not have the power to direct the activities that most significantly impact the VIEs. Evaluation and assessment of VIEs for consolidation is performed on an ongoing basis by management. Any changes in facts and circumstances occurring since the previous primary beneficiary determination will be considered as part of this ongoing assessment. ​ As of September 30, 2024, and December 31, 2023, the Company’s total assets associated with the VIEs related to all securitizations to date, were $58.7 million and $22.4 million, respectively, and there were no liabilities recorded. The Company’s maximum exposure to loss associated with these VIEs consists of the capital invested plus any unfunded equity commitments that are binding. As of September 30, 2024, the maximum exposure to loss was $66.6 million.

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