Equity Method Investments

9 Months Ended

Sep. 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 September 30,				Nine Months Ended September 30,
(Dollars in thousands)	2024		2023		2024		2023
Total revenues	$	11,530	$	9,943	$	34,251	$	31,588
Net income (loss)	724		(1,520)		1,419		(5,691)

Gain on loans sold	$	6,961	$	5,880	$	20,532	$	18,568
Gain (loss) on loans held-for-sale	665		(745)		1,060		(165)
Volume of loans sold	356,537		359,791		1,016,775		1,071,795

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 $23.8 million at September 30, 2024, is accounted for as an equity method investment. Our share of ICM's net income totaled $0.2 million and $0.4 million for the three and nine months ended September 30, 2024, respectively, while our share of ICM's net loss totaled $0.6 million and $2.3 million for the three and nine months ended September 30, 2023, respectively. As of September 30, 2024 and December 31, 2023, the mortgage pipeline was $518.1 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 September 30,				Nine Months Ended September 30,
(Dollars in thousands)	2024		2023		2024		2023
Total revenues	$	42,542	$	28,672	$	110,695	$	104,005
Net income (loss)	1,339		(218)		$	(3,012)	8,707

Gain on loans sold	$	13,770	$	3,985	$	35,309	$	11,915
Gain (loss) on loans held-for-sale	1,797		(4,735)		1,879		12,480
Volume of loans sold	463,811		381,486		1,082,435		979,692

Our ownership percentage of 37.5% of Warp Speed allows us to have significant influence over its operations and decision making. Accordingly, the investment, which had a carrying value of $51.9 million at September 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 $0.5 million and $0.3 million for the three and nine months ended September 30, 2024, respectively, while our share of net loss and income totaled $0.1 million and $3.3 million for the three and nine months ended September 30, 2023, respectively. As of September 30, 2024 and December 31, 2023, the mortgage pipeline was $530.8 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 nine months ended September 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 a 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.