Loading...
01/11 16:21
Loading...
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents mixed signals. While there is a reduction in operating expenses and NPLs, the decrease in book value per share and minimal net income are concerning. The Q&A highlights potential positive outcomes from the Naples property mediation, but management's unclear responses on yield specifics and REO expenses create uncertainty. The company's strategic plans indicate optimism, but the financial results suggest caution. Overall, the sentiment is neutral, reflecting a balance between potential opportunities and existing financial challenges.
Total Revenue $12 million for the quarter, down from $14.8 million in the third quarter of '24, but up 11.4% from $10.8 million in the second quarter of '25. The year-over-year decline reflects a smaller performing loan portfolio and a higher nonaccrual mix. The sequential quarter increase reflects modest growth in average loan performing balances and steady fee generation.
Interest Income on Loans $8.3 million for the quarter. This is part of the total revenue mix.
Loan Fees $2 million for the quarter. This is part of the total revenue mix.
Income from LLC Investments $1.1 million for the quarter. This is part of the total revenue mix.
Other Investment Income $0.1 million for the quarter. This is part of the total revenue mix.
Other Income $0.5 million for the quarter. This is part of the total revenue mix.
Operating Expenses $12.4 million for the quarter, down from $19.6 million a year ago. The decrease is primarily due to a reduction in the provision for credit losses, which fell to $0.8 million from $8.1 million as last year's reserve build gave way to a steadier credit cadence.
Interest Expense $6.6 million for the quarter.
Compensation and Benefits $2.3 million for the quarter, reflecting team rebuild costs and one-time bonuses of about $0.4 million.
GAAP Net Income $1 million for the quarter. After $1.1 million of Series A preferred dividends, net loss to common shares was $0.12 million or $0.00 per share, an improvement from the $0.13 loss per share in the prior year quarter.
Book Value Per Share $2.47 as of September 30, 2025, representing a 2.8% decrease from June 30, 2025. The decrease was due to preferred and common share aggregate dividends of approximately $3.5 million exceeding the quarter's GAAP breakeven net income.
Nonperforming Loans (NPLs) Approximately $104.1 million gross unpaid principal balance as of September 30, 2025, down $15.5 million gross from $119.6 million as of June 30, 2025. The reduction was due to cash resolutions and migrations to REO outpacing additions.
Real Estate Owned (REO) $18.9 million across 19 properties as of September 30, 2025. This represents an increase of $300,000 or 1.5% over the June 30 quarter.
Allowance for Credit Losses on Loans $11.1 million as of September 30, 2025, down from $17.6 million at the second quarter. The decrease was due to charge-offs on assets moving into REO and reserve rightsizing as individual loan files progressed.
Weighted Average Contractual Rate on Loans 13.21% as of September 30, 2025.
Cash at Quarter End $11.2 million as of September 30, 2025.
Urbane operations: Converted 2 land assets totaling $4.3 million into investment in developmental real estate for multifamily development, contributing to a significant development partner for equity.
Development initiatives: Progressed on 4 projects managed by Urbane, including Westport, Connecticut office asset and 3 single-family residences in Coconut Grove, Florida. Construction is on schedule.
Shem Creek Capital investments: Invested $33.7 million in projects managed by Shem Creek Capital, generating $4.1 million in revenue for the 9 months ended September 30, 2025.
Market conditions: Federal Reserve implemented its second rate cut this year, lowering the target range to 3.75%-4%. Medium- and long-term rates remain elevated, impacting affordability and home sales.
Pipeline opportunities: Strong pipeline of new opportunities as traditional financing remains limited, focusing on single-family and multifamily residential assets in markets with strong fundamentals.
Balance sheet strengthening: Fully repaid and delisted 7.75% unsecured notes due September 30, 2025, enhancing financial flexibility.
Nonperforming loans (NPLs): Gross unpaid principal balance of NPLs reduced to $104.1 million, down $15.5 million from June 30, 2025.
Real Estate Owned (REO): REO net increased by $300,000, with ongoing efforts to resolve legacy assets and monetize value.
Focus on disciplined lending: Maintaining underwriting standards emphasizing experienced and creditworthy sponsors, focusing on single-family and multifamily residential assets.
Legacy asset resolution: Prioritizing resolution of REO and NPLs to facilitate capital sourcing and future growth.
Nonperforming Loans (NPLs): The company has approximately $104.1 million gross unpaid principal balance of nonperforming loans, which continues to weigh on financial performance. Resolving these NPLs is a lengthy and challenging process.
Real Estate Owned (REO) Properties: The REO balance increased nominally, and the process of resolving these assets is time-consuming. The company faces challenges in monetizing these properties effectively.
Single Borrower Exposure in Naples, Florida: Two cross-collateralized loans totaling $50.4 million remain in the nonperforming loan portfolio. These loans are impacted by permitting delays, hurricanes, contractor and borrower performance issues, and legal disputes, which continue to weigh on earnings by approximately $450,000 monthly.
Macroeconomic Conditions: Elevated medium- and long-term interest rates, tighter credit conditions, and permitting hurdles are impacting origination activity and contributing to elevated NPLs and REO levels.
Liquidity and Debt Management: The company faces challenges in managing liquidity and debt maturities, including the repayment of unsecured notes and reliance on secured credit facilities with covenants.
Development Projects: Ongoing development projects, such as those in Westport, Connecticut, and Coconut Grove, Florida, face risks related to construction timelines, permitting, and market conditions.
Future Lending Opportunities: The company is well-positioned for growth as opportunities arise, with a strong pipeline of new opportunities. It plans to capitalize on these opportunities as the market adjusts to the evolving environment.
Market Conditions and Interest Rates: The Federal Reserve has implemented its second rate cut this year, lowering the target range to 3.75% to 4%. Another 0.25 point cut is expected before year-end. Medium- and longer-term rates remain elevated, keeping affordability stretched and existing home sales below historical averages.
Focus on Residential and Multifamily Assets: The company remains committed to single-family and multifamily residential assets in markets with strong fundamentals. It emphasizes underwriting standards that prioritize highly experienced and creditworthy sponsors.
Development Projects: The company has four development initiatives managed by Urbane, including projects in Westport, Connecticut, and Coconut Grove, Florida. One residence in Coconut Grove is expected to reach substantial completion in mid-fourth quarter 2025, with the remaining two scheduled for completion in the first half of 2026.
Resolution of Nonperforming Loans (NPLs) and Real Estate Owned (REO): The company is focused on resolving legacy NPLs and REO assets to facilitate further capital sourcing and future portfolio and dividend growth. A mediation event scheduled for November 7, 2025, could clear the path for resolution of significant NPLs.
Shem Creek Capital Investments: The company has invested $33.7 million in projects managed by Shem Creek Capital, generating approximately $4.1 million in revenue for the nine months ended September 30, 2025. These investments are expected to continue delivering attractive double-digit returns.
Strategic Direction and Risk Management: The company remains confident in its strategic direction and ability to capitalize on opportunities ahead. It plans to focus on working through legacy assets while pursuing accretive growth opportunities aligned with its risk management principles.
Dividend Growth: The company emphasized its focus on resolving non-performing loans (NPLs) and real estate owned (REO) assets as a critical step to facilitate future portfolio and dividend growth. The Board declared and paid dividends in September 2025, amounting to $0.05 per common share and $0.484375 per share on the 7.75% Series A preferred shares. The Board will address the fourth quarter dividend declaration in December 2025.
Share Repurchase: The company opportunistically repurchased $0.6 million of other unsecured notes during the quarter, recording a small gain on the extinguishment.
The earnings call presents mixed signals. While there is a reduction in operating expenses and NPLs, the decrease in book value per share and minimal net income are concerning. The Q&A highlights potential positive outcomes from the Naples property mediation, but management's unclear responses on yield specifics and REO expenses create uncertainty. The company's strategic plans indicate optimism, but the financial results suggest caution. Overall, the sentiment is neutral, reflecting a balance between potential opportunities and existing financial challenges.
The earnings call reflects mixed sentiment. While there is an improvement in net income and operating expenses, revenue has decreased significantly. The Q&A reveals concerns over asset quality and nonaccrual loans, though management is optimistic about resolution. The company's strategic partnerships and pipeline development are positive, yet the lack of clarity on key issues like the Naples loan and Urbane pipeline tempers enthusiasm. Given these factors, the stock price is likely to remain stable, leading to a neutral prediction.
The earnings call reveals a challenging financial situation with a significant revenue decline and a net loss attributable to common shareholders. Competitive pressures and tariff uncertainties further complicate the outlook. While there is a dividend growth plan, it is tied to unlocking non-performing loans, indicating potential risks. The Q&A session highlights management's unclear responses regarding leverage levels, adding to investor concerns. Despite a slight increase in cash reserves, the overall financial health and strategic outlook appear weak, suggesting a negative stock price reaction.
The earnings call reveals several challenges: increased nonperforming loans, supply chain issues, economic pressures, and high interest rates. Despite a slight decrease in operating expenses and a dividend declaration, the company faces a net loss, revenue decline, and reduced book value. The Q&A section indicates uncertainty in debt management and loan origination opportunities. These factors, combined with competitive pressures, suggest a negative outlook for the stock price.
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
