Shepherd's Finance Holds Steady in Q2 2025

TL;DR

**Shepherd's Finance is boringly stable, which is good for debt holders but offers no growth catalysts for equity.**

AI Summary

Shepherd's Finance, LLC's 10-Q filing for the period ending June 30, 2025, indicates a stable financial position with no significant changes in revenue or net income explicitly detailed in the provided data. The company maintained its capital structure, with no reported changes in the number of Preferred Class C or Common Class A shares outstanding from December 31, 2024, to June 30, 2025. The fair value of its secured debt was consistent with its carrying amount at both December 31, 2024, and June 30, 2025, suggesting stable market conditions for its debt instruments. Unsecured debt also showed a carrying amount consistent with its fair value at June 30, 2025. The company's financial instruments are primarily valued using Level 2 inputs, indicating reliance on observable market data for valuation. No specific risks or strategic outlook changes were detailed in the provided excerpt, but the consistent valuation methods suggest a predictable financial environment for the company.

Why It Matters

For investors, the consistent carrying and fair values of Shepherd's Finance's secured and unsecured debt suggest a stable, predictable financial environment, which can be reassuring in volatile markets. This stability implies that the company's debt is not experiencing significant market re-pricing, potentially indicating strong creditworthiness relative to its peers in the short-term business credit institutions sector. Employees might see this as a sign of operational stability, while customers could benefit from consistent lending practices. The broader market impact is limited given the company's specific niche, but its stability contributes to overall market confidence in the short-term credit sector.

Risk Assessment

Risk Level: low — The risk level is low because the fair value of both secured and unsecured debt consistently matches their carrying amounts at June 30, 2025, and December 31, 2024. This indicates that the market perceives the company's debt as stable and accurately valued, with no significant impairment or appreciation, reducing immediate financial risk.

Analyst Insight

Investors should consider Shepherd's Finance a stable, income-oriented investment, particularly for those interested in debt instruments. Given the consistent valuations, focus on the company's ability to generate consistent cash flow to service its debt rather than expecting significant capital appreciation.

Key Numbers

• 2025-06-30 — Conformed Period of Report (End date of the financial reporting period)
• 2025-08-08 — Filed As Of Date (Date the 10-Q was filed with the SEC)
• 6153 — Standard Industrial Classification (SIC) (Industry code for Short-Term Business Credit Institutions)
• 333-224557 — SEC File Number (Registration number with the SEC)
• 12276 SAN JOSE BLVD, SUITE 108 — Business Address (Primary physical location of Shepherd's Finance, LLC)

Key Players & Entities

• Shepherd's Finance, LLC (company) — filer of the 10-Q
• 02 Finance (company) — organization name associated with the filer
• SEC (regulator) — recipient of the 10-Q filing
• Jacksonville, FL (location) — business and mail address of Shepherd's Finance, LLC
• Delaware (location) — state of incorporation for Shepherd's Finance, LLC

FAQ

Industry Context

Shepherd's Finance, LLC operates within the Short-Term Business Credit Institutions sector (SIC 6153). This industry typically involves providing financing solutions to businesses with short-term needs. The competitive landscape likely includes other non-bank lenders and financial service providers offering similar credit facilities. Industry trends may involve adapting to evolving credit risk assessment models and regulatory changes impacting lending practices.

Regulatory Implications

As a financial institution, Shepherd's Finance, LLC is subject to various financial regulations. The consistency in its financial reporting and valuation methods suggests adherence to standard accounting principles. However, the specific regulatory environment for short-term business credit institutions could involve compliance with lending laws, consumer protection regulations, and capital adequacy requirements.

What Investors Should Do

1. Monitor for future disclosures on revenue and net income.
2. Analyze the fair value disclosures for debt instruments.
3. Review the company's capital structure in future filings.

Key Dates

• 2025-06-30: End of Reporting Period — Marks the conclusion of the financial period covered by the 10-Q filing.
• 2025-08-08: 10-Q Filing Date — Indicates when the company officially submitted its quarterly financial report to the SEC.

Glossary

Short-Term Business Credit Institutions

A classification for businesses primarily engaged in providing short-term credit to businesses. (Identifies Shepherd's Finance, LLC's core industry and operational focus.)

PreferredClassCMember

A specific class of preferred stock issued by Shepherd's Finance, LLC. (Indicates a component of the company's capital structure, with no reported changes in outstanding shares.)

CommonClassAMember

A specific class of common stock issued by Shepherd's Finance, LLC. (Indicates a component of the company's capital structure, with no reported changes in outstanding shares.)

FairValueInputsLevel2Member

Refers to financial instruments valued using inputs that are observable either directly or indirectly, such as quoted prices for similar assets or liabilities in active markets. (Suggests that the company's financial instruments are valued based on reliable market data, indicating a stable valuation environment.)

SecuredDebtMember

Debt that is backed by specific collateral, providing a claim on that asset in case of default. (Highlights a portion of the company's debt, noting its fair value is consistent with its carrying amount.)

UnsecuredDebtMember

Debt that is not backed by any specific collateral. (Highlights another portion of the company's debt, noting its carrying amount is consistent with its fair value.)

Year-Over-Year Comparison

The 10-Q filing for the period ending June 30, 2025, indicates a stable financial posture compared to the previous reporting period. No significant changes in revenue or net income were explicitly detailed, and the company maintained its existing capital structure with no alterations in the number of Preferred Class C or Common Class A shares outstanding. The fair value of secured debt remained consistent with its carrying amount, and unsecured debt also showed consistency between carrying amount and fair value, suggesting a steady market environment for the company's debt instruments.

Filing Documents

• form10-q.htm (10-Q) — 2448KB
• ex31-1.htm (EX-31.1) — 19KB
• ex31-2.htm (EX-31.2) — 19KB
• ex32-1.htm (EX-32.1) — 8KB
• ex32-2.htm (EX-32.2) — 8KB
• form10-q_001.jpg (GRAPHIC) — 22KB
• form10-q_002.jpg (GRAPHIC) — 24KB
• 0001493152-25-011771.txt ( ) — 10792KB
• shep-20250630.xsd (EX-101.SCH) — 76KB
• shep-20250630_cal.xml (EX-101.CAL) — 73KB
• shep-20250630_def.xml (EX-101.DEF) — 232KB
• shep-20250630_lab.xml (EX-101.LAB) — 493KB
• shep-20250630_pre.xml (EX-101.PRE) — 380KB
• form10-q_htm.xml (XML) — 2526KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION Item 1. Financial Statements Interim Consolidated Balance Sheets as of June 30, 2025 (Unaudited) and December 31, 2024 4 Interim Consolidated Statements of Operations (Unaudited) for the Three and Six Months Ended June 30, 2025 and 2024 5 Interim Consolidated Statement of Changes in Members' Capital (Unaudited) for the Three and Six Months Ended June 30, 2025 and 2024 6 Interim Consolidated Statements of Cash Flows (Unaudited) for the Six Months Ended June 30, 2025 and 2024 7 Notes to Interim Consolidated Financial Statements (Unaudited) 8

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 27

Quantitative and Qualitative Disclosure About Market Risk

Item 3. Quantitative and Qualitative Disclosure About Market Risk 55

Controls and Procedures

Item 4. Controls and Procedures 55

OTHER INFORMATION

PART II. OTHER INFORMATION 56

Legal Proceedings

Item 1. Legal Proceedings 56

Risk Factors

Item 1A. Risk Factors 56

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 56

Defaults upon Senior Securities

Item 3. Defaults upon Senior Securities 56

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 55

Other Information

Item 5. Other Information 55

Exhibits

Item 6. Exhibits 57 2 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS Certain "anticipate," "believe," "estimate," "continue," "predict," or other similar words identify forward-looking statements. Forward-looking statements appear in a number of places in this report, including without limitation, "Management's Discussion and Analysis of Financial Condition and Results of Operations," and include statements regarding our intent, belief or current expectation about, among other things, trends affecting the markets in which we operate, our business, financial condition and growth strategies. Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, forward-looking statements are not guarantees of future performance and involve risks and uncertainties. These risks and uncertainties include, but are not limited to: the impact of inflation and rising interest rates on the economy and housing markets; general economic uncertainty in key global markets and a worsening of global economic conditions or low levels of economic growth; the rate and the pace of economic recovery following economic downturns; and those other risks described in other risk factors as outlined in our Registration Statement on Form S-1, as amended, and our Annual Report on Form 10-K for the year ended December 31, 2024. Actual results may differ materially from those predicted in the forward-looking statements as a result of various factors, including but not limited to those set forth in the "Risk Factors" section of our Registration Statement on Form S-1, as amended, and our Annual Report on Form 10-K. For further information regarding risks and uncertainties associated with our business, an

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View this 10-Q filing on SEC EDGAR