Equity Method Investments

6 Months Ended

Jun. 30, 2024

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 4-08(g) of Regulation S-X requires summarized financial information for all equity method investees in a quarterly 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%, 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 separate financial statements in accordance with Rule 3-09.

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 presents summarized income statement information for ICM for the periods shown:


	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in thousands)	2024		2023		2024		2023
Total revenues	$	12,864	$	12,239	$	22,721	$	21,645
Net income (loss)	1,117		(1,089)		695		(4,171)

Gain on loans sold	$	7,748	$	7,240	$	13,571	$	12,688
Gain (loss) on loans held-for-sale	373		(777)		395		579
Volume of loans sold	393,641		409,222		618,624		712,004

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 $23.4 million at June 30, 2024, is accounted for as an equity method investment. Our share of ICM's net income totaled $0.4 million and $0.2 million for the three and six months ended June 30, 2024, respectively, while our share of ICM's net loss totaled $0.4 million and $1.7 million for the three and six months ended June 30, 2023, respectively. As of June 30, 2024 and December 31, 2023, the mortgage pipeline was $537.8 million and $439.0 million, respectively.

Warp Speed

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


	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in thousands)	2024		2023		2024		2023
Total revenues	$	30,656	$	39,816	$	68,153	$	75,333
Net income (loss)	(1,903)		6,243		$	(4,351)	8,925

Gain on loans sold	$	10,331	$	10,858	$	21,539	$	18,677
Gain (loss) on loans held-for-sale	(505)		7,508		82		17,215
Volume of loans sold	314,165		307,999		618,624		598,206

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 $50.9 million at June 30, 2024, 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 and loss totaled $0.1 million and $0.8 million for the three and six months ended June 30, 2024, respectively, while our share of net income totaled $2.3 million and $3.3 million for the three and six months ended June 30, 2023, respectively. As of June 30, 2024 and December 31, 2023, the mortgage pipeline was $390.1 million and $267.8 million, respectively.

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 is accounted for as an equity method investment. Our share of net income from Ayers Socure II for the three and six months ended June 30, 2024 was not significant. The equity method investment in Ayers Socure II is not considered a significant investment based on the criteria of Rules 3-09 and 4-08(g) 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 the aggregate.