Shepherd's Finance, LLC Reports First Quarter 2018 Results


JACKSONVILLE, Fla., June 13, 2018 (GLOBE NEWSWIRE) — Shepherd’s Finance, LLC (“Shepherd’s” or the “Company”) announced its operating results for the first quarter ended March 31, 2018.

2018 Financial Highlights to Date

  • Earnings Growth – Net income increased approximately $0.1 million, or 50.2%, to $0.3 million for the quarter ended March 31, 2018 compared to net income of approximately $0.2 million for the quarter ended March 31, 2017.
     
  • Interest Income Growth – Interest and fees on loans increased approximately $0.7 million, or 55.6%, to approximately $1.8 million for the quarter ended March 31, 2018 compared to interest and fees on loans of approximately $1.2 million for the quarter ended March 31, 2017. The increase resulted from increased average loan volume.
     
  • Loan Growth – Loans receivable, net increased approximately $9.6 million, or 32.1%, to approximately $39.7 million for the quarter ended March 31, 2018 compared to loans receivable, net of approximately $30.0 million for the year ended December 31, 2017.

“During the first quarter of 2018 we saw substantial loan asset growth at Shepherd’s Finance, which allowed for significant increases in interest income and net income,” commented Daniel M. Wallach, CEO of Shepherd’s Finance, LLC.

Results of Operations

  • Net interest income totaled approximately $0.9 million for the quarter ended March 31, 2018, compared to approximately $0.6 million for the quarter ended March 31, 2017. The increase of approximately $0.3 million resulted primarily from the increase in our weighted average outstanding loan asset balance of approximately $14 million to approximately $37.8 million for the quarter ended March 31, 2018, compared to approximately $23.8 million for the quarter ended March 31, 2017.
     
  • Non-interest expense increased approximately $0.1 million to approximately $0.6 million for the quarter ended March 31, 2018 compared to approximately $0.5 million for the quarter ended March 31, 2017. The increase in non-interest expense related primarily to our payroll costs as we hired a number of new employees during the first quarter of 2018.

Balance Sheet Management

  • We had approximately $0.4 million in cash as of March 31, 2018, compared to approximately $3.5 million as of December 31, 2017.
     
  • Loan receivables, net totaled approximately $39.7 million as of March 31, 2018, compared to approximately $30.0 million as of December 31, 2017. The increase primarily included approximately $7.3 million in commercial loans and $2.4 million in in real estate development loans.
     
  • Notes payable unsecured, net totaled approximately $18.0 million as of March 31, 2018, compared to approximately $16.9 million as of December 31, 2017. A significant portion of our notes payable unsecured, net was from our public notes offering, constituting approximately $13.5 million and $13.8 million of the total notes payable unsecured as of March 31, 2018 and December 31, 2017, respectively. We expect our notes payable unsecured balance to increase as we raise funds in our public notes offering.
     
  • Notes payable secured, net totaled approximately $17.6 million as of March 31, 2018, compared to approximately $11.6 million as of December 31, 2017.

Notable 2018 Events to Date

  • Announcement of an Interest Rate Increase in the Subordinated Notes Program – Shepherd’s announced the following increases in interest rates for its public notes offering, effective as of June 7, 2018:
Maturity
(Duration)
  Annual
Interest
Rate
  Annual
Effective
Yield (i)
  Effective
Yield to
Maturity (ii)
             
12 Months   11 %   11.57%   11.57%
26 Months   11 %   11.57%   26.78%
42 Months   11 %   11.57%   46.70%
48 Months   11 %   11.57%   54.96%

(i) The Annual Effective Yield is determined by taking the Annual Interest Rate as a decimal and dividing it by 12 for a monthly rate, then taking that rate plus 1 and multiplying that by itself 11 more times, then subtracting the one back off and converting back to a percentage. For instance, for an Annual Interest Rate of 11.00%, we take .11/12 which is .00917 plus 1 which is 1.00917, and then multiply 1.00917 by itself 11 more times which yields 1.1157, then subtracting off the 1, leaving .1157, and finally converting to a percentage, which gives us an Annual Effective Yield of 11.57%.

(ii) The Effective Yield to Maturity is determined by taking the Annual Interest Rate as a decimal and dividing it by 12 for a monthly rate, then taking that rate plus 1 and multiplying that by itself by (the total number of months of the investment minus one) times, then subtracting the one back off and converting back to a percentage. For instance, for a 48 month investment with an Annual Interest Rate of 11.00%, we take .11/12 which is .00917 plus 1 which is 1.00917, and then multiply 1.00917 by itself 47 more times which yields 1.5496, then subtracting off the 1, leaving .5496, and finally converting to a percentage, which gives us an Effective Yield To Maturity of 54.96%.

About Shepherd’s Finance, LLC

Shepherd’s Finance, LLC is headquartered in Jacksonville, Florida and is focused on commercial lending to participants in the residential construction and development industry. As of March 31, 2018, Shepherd’s Finance, LLC had approximately $40.0 million in loan assets and had 199 construction loans in 17 states with 64 borrowers. For more information, please visit http://shepherdsfinance.com/.

Forward Looking Statements

This press release may contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements can generally be identified by our use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “continue,” or other similar words. Because such statements include risks, uncertainties and contingencies, actual results may differ materially from the expectations, intentions, beliefs, plans, or predictions of the future expressed or implied by such forward-looking statements. The Company undertakes no obligation to update these statements following the date of this press release, except as required by law. In addition, the Company, through its senior management, may make from time to time forward-looking public statements concerning the matters described herein. Such forward-looking statements are necessarily estimates reflecting the best judgment of the Company’s senior management based upon current information and involve a number of risks and uncertainties. Certain factors that could affect the accuracy of such forward-looking statements are identified in the public filings made by the Company with the Securities and Exchange Commission, and forward-looking statements contained in this press release or in other public statements of the Company or its senior management should be considered in light of those factors. This is neither an offer nor a solicitation to purchase securities.

 
 
Shepherd’s Finance, LLC
Interim Condensed Consolidated Balance Sheets
 
    As of
(in thousands of dollars)   March 31,
2018
    December 31,
2017
    (Unaudited)      
Assets          
Cash and cash equivalents   $ 380     $ 3,478
Accrued interest receivable     966       720
Loans receivable, net     39,692       30,043
Foreclosed assets     1,079       1,036
Property, plant and equipment, net     1,033       1,020
Other assets     92       58
               
Total assets   $ 43,242     $ 36,355
               
Liabilities, Redeemable Preferred Equity and Members’ Capital              
               
Liabilities              
               
Customer interest escrow   $ 786     $ 935
Accounts payable and accrued expenses     478       705
Accrued interest payable     1,373       1,353
Notes payable secured, net of deferred financing costs     17,554       11,644
Notes payable unsecured, net of deferred financing costs     18,002       16,904
Due to preferred equity member     31       31
               
Total liabilities     38,224       31,572
               
Commitments and Contingencies              
               
Redeemable Preferred Equity              
               
Series C preferred equity   $ 1,130     $ 1,097
               
Members’ Capital              
               
Series B preferred equity     1,240       1,240
Class A common equity     2,648       2,446
Members’ capital     3,888       3,686
               
Total liabilities, redeemable preferred equity and members’ capital   $ 43,242     $ 36,355
               
               
Shepherd’s Finance, LLC
Interim Condensed Consolidated Statements of Operations – Unaudited
For the Three Months ended March 31, 2018 and 2017
 
    Three Months Ended
    March 31,
(in thousands of dollars)   2018   2017
Interest Income            
Interest and fee income on loans   $ 1,827   $ 1,174
Interest expense:            
Interest related to secured borrowings     411     179
Interest related to unsecured borrowings     450     367
Interest expense     861     546
             
Net interest income     966     628
Less: Loan loss provision     40     11
             
Net interest income after loan loss provision     926     617
             
Non-Interest Income            
Gain from foreclosure of assets         77
             
Total non-interest income         77
             
Income     926     694
             
Non-Interest Expense            
Selling, general and administrative     617     448
Depreciation and amortization     17     6
Impairment loss on foreclosed assets     5     49
             
Total non-interest expense     639     503
             
Net Income   $ 287   $ 191
             
Earned distribution to preferred equity holders     63     31
             
Net income attributable to common equity holders   $ 224   $ 160
             

Contact:

Catherine Loftin

Shepherd’s Finance, LLC

13241 Bartram Park Blvd, STE 2401 | Jacksonville, FL, 32258  

Direct (904) 518-3422 | Office (302) 752-2688

catherineloftin@shepherdsfinance.com | www.shepherdsfinance.com



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