Equity Method Investments

12 Months Ended

Dec. 31, 2023

Equity Method Investments and Joint Ventures [Abstract]

Note 5 – Equity Method Investments

In accordance with Rules 3-09 and 4-08(g) of Regulation S-X, we must assess whether our equity method investments are significant. In evaluating the significance of these investments, we performed the income, investment and asset tests described in S-X 1-02(w) for each equity method investment. Rule 3-09 of Regulation S-X requires separate audited financial statements of an equity method investee in an annual report if either the income or investment test exceeds 20%. Rule 4-08(g) of Regulation S-X requires summarized financial information for all equity method investees in an annual report if any of the equity method investees, individually or in the aggregate, result in any of the tests exceeding 10%.

Under the income test, our proportionate share of the revenue from equity method investments in the aggregate exceeded the applicable threshold under Rule 4-08(g) of 10% for the year ended December 31, 2023, accordingly, we are required to provide summarized income statement information for all investees for all periods presented. There were no equity method investments which met any of the applicable thresholds for reporting Rule 3-09 for reporting separate financial statements as of the year ended December 31, 2023.

Our equity method investments are initially recorded at cost, including transaction costs to obtain the equity method investment, and are subsequently adjusted for changes due to our share of the entities' earnings.

ICM

The following table provides summarized income statement information for ICM for the years ended December 31, 2023 and 2022:


	December 31,
(Dollars in thousands)	2023		2022		2021
Total revenues	$	39,283	$	67,207	$	153,549
Net income (loss)	(9,418)		343		41,381

Gain on loans sold	22,782		44,921		150,896
Gain (loss) on loans held for sale	457		(2,834)		(10,223)
Volume of loans sold	1,353,410		2,325,709		5,326,757

Our ownership percentage of 40% of ICM allows us to have significant influence over the operations and decision making at ICM. Accordingly, the investment, which had a carrying value of $21.6 million at December 31, 2023, is accounted for as an equity method investment. Our share of net loss and net income from our investment in ICM was $3.8 million and $16.4 million for the years ended December 31, 2023 and 2021, respectively. Our share of net income for the year ended December 31, 2022 was not material. As of December 31, 2023 and 2022, the locked mortgage pipeline was $439.0 million and $678.3 million, respectively.

Warp Speed

The following table presents summarized income statement information for our equity method investment in Warp Speed for the periods shown:


(Dollars in thousands)	2023
Total revenues	$	143,784
Net income	7,234

Gain on loans sold	37,218
Gain on loans held for sale	8,210
Volume of loans sold	1,370,313

In October 2022, we acquired a 37.5% interest in Warp Speed and accounted for our ownership as an equity method investment, initially recorded at cost including costs incurred to obtain the equity method investment. It was determined that our ownership percentage of Warp Speed provides that we have significant influence over its operations and decision making. Accordingly, the investment, which had a carrying value of $52.7 million at December 31, 2023, is accounted for as an equity method investment. At the time of acquisition, we made a policy election to record our proportionate share of net income of the investee on a three month lag. Our share of Warp Speed's net income for the year ended December 31, 2023 totaled $2.7 million. As of December 31, 2023, the mortgage pipeline was $267.8 million.

Ayers Socure II

Our ownership percentage of Ayers Socure II is 10% and it was determined that we have significant influence over the company. Accordingly, the investment, which had a carrying value of $1.5 million at December 31, 2023, is accounted for as an equity method investment. Our share of net income from Ayers Socure II for the twelve months ended December 31, 2023 was not significant. The equity method investment in Ayers Socure II is not considered a significant investment based on the criteria of Rule 10-01(b)(1) of Regulation S-X.

Ayers Socure II's sole business is ownership of equity securities in Socure Inc. ("Socure"). In addition to our equity method investment in Ayers Socure II, we also have direct equity security ownership interest in Socure. With the combination of our investments in both Ayers Socure II and Socure directly, we own less than 1% of Socure in total.