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CURRENT EXPECTED CREDIT LOSSES (Tables)

9 Months Ended

Sep. 30, 2023

Schedule of Financing Receivable, Allowance for Credit Loss

Activity related to the CECL Reserve for outstanding balances on the Company’s loans held for investment as of and for the three and nine months ended September 30, 2023 was as follows ($ in thousands):



Balance at June 30, 2023 (1)	$	108,114

Provision for current expected credit losses	4,318
Write-offs	—
Recoveries	—
Balance at September 30, 2023 (1)	$	112,432

Balance at December 31, 2022 (1)	$	65,969

Provision for current expected credit losses	46,463
Write-offs	—
Recoveries	—
Balance at September 30, 2023 (1)	$	112,432

__________________________

(1) The CECL Reserve related to outstanding balances on loans held for investment is recorded within current expected credit loss reserve in the Company’s consolidated balance sheets.

Current Expected Credit Loss Reserve for Unfunded Loan Commitments

Activity related to the CECL Reserve for unfunded commitments on the Company’s loans held for investment as of and for the three and nine months ended September 30, 2023 was as follows ($ in thousands):



Balance at June 30, 2023 (1)	$	4,340
Provision for current expected credit losses	(1,091)

Write-offs	—
Recoveries	—
Balance at September 30, 2023 (1)	$	3,249

Balance at December 31, 2022 (1)	$	5,339

Provision for current expected credit losses	(2,090)
Write-offs	—
Recoveries	—
Balance at September 30, 2023 (1)	$	3,249

__________________________

(1) The CECL Reserve related to unfunded commitments on loans held for investment is recorded within other liabilities in the Company’s consolidated balance sheets.

Schedule of Company Loan Risk Definitions

Based on a 5-point scale, the Company’s loans are rated “1” through “5,” from less risk to greater risk, which ratings are defined as follows:


Ratings						Definition
1						Very Low Risk
2						Low Risk
3						Medium Risk
4						High Risk/Potential for Loss: Asset performance is trailing underwritten expectations. Loan at risk of impairment without material improvement to performance
5						Impaired/Loss Likely: A loan that has a significantly increased probability of default and principal loss

Schedule of Financing Receivable Credit Quality Indicators

As of September 30, 2023, the carrying value, excluding the CECL Reserve, of the Company’s loans held for investment within each risk rating by year of origination is as follows ($ in thousands):


	2023		2022		2021		2020		2019		Prior		Total
Risk rating:
1	$	—	$	37,712	$	5,597	$	—	$	—	$	—	$	43,309
2	46,768		11,408		202,263		—		—		56,804		317,243
3	66,789		458,777		576,810		121,953		103,317		29,207		1,356,853
4	—		84,626		—		210,662		68,716		16,440		380,444
5	—		—		—		—		31,385		51,178		82,563
Total	$	113,557	$	592,523	$	784,670	$	332,615	$	203,418	$	153,629	$	2,180,412