Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(All dollar [$] amounts shown in thousands.)

The following Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our interim consolidated financial statements and the notes thereto contained elsewhere in this report and with our audited annual consolidated financial statements and related notes and other consolidated financial data (the "2025 Financial Statements") included in the Company's Annual Report on Form 10-K for the year ended December 31, 2025 (the "2025 Form 10-K"). See also "Cautionary Note Regarding Forward-Looking Statements" preceding Part I.

Overview

As of September 30, 2026, the Company's portfolio consisted of 179 construction loans with 49 borrowers and 13 development loans with 12 borrowers in 19 states.

As of September 30, 2026, the Company's gross loan receivables balance increased by $16,192 to $77,875 as compared to $61,683 as of December 31, 2025. As of September 30, 2026, the total committed amount (not necessarily funded) increased by $18,944 to $104,184 compared to $85,240, as of December 31, 2025, which was primarily due to construction loans. As of September 30, 2026 and December 31, 2025, our construction loan commitment amount increased $16,796 to $82,693 and $65,897, respectively. The increases in balances relate both to an increase in loan originations and a slowing of payoffs.

During the quarter and nine months ended September 30, 2026, our loan originations were $10,528 and $59,316 compared to $26,542 and $60,619 for the same periods of the prior year. The decrease in loan originations was due primarily to a reduction in one loan commitment amount of $4,250 during the third quarter of 2026 compared to one loan, which originated at $11,500 during the same period of 2025.

While the Company continues to face risks as it relates to the economy and the homebuilding industry, management has decided to focus on the following during the remainder of 2026 and the beginning of 2027:

	1.	Continue to manage the balance of non-interest-bearing assets, which includes foreclosed real estate and individually evaluated assets.
	2.	Control SG&A expenses.
	3.	Maintain gross margin prior to loan loss.
	4.	Maintain liquidity at a level sufficient for loan originations.
	5.	Manage loan loss and impairment expense.
	6.	Increase originations and loan balances.

While some geographic markets are seeing some declines in pricing at certain price levels, generally we are not seeing reductions in selling prices as something that is creating losses for us. There is still a housing shortage, and many homeowners are not moving out of their sub 3% interest rates. The high-end home market is strong in most geographic regions, as the overall economy and stock market usually impact this segment the most. The starter market is slowing in most geographic markets due to interest rates being higher than earlier in the year. The mid-market in most geographic regions is the toughest; unlike the starter home market where rents and interest rates both impact demand, interest rates alone carry a stronger impact in the mid-market, which slows sales of our customers' products.

During the quarter and nine months ended September 30, 2026, the Company continued to focus on the reduction of non-interest earning assets. As of September 30, 2026, 23 loans were classified as individually evaluated with a net loan receivables balance of $4,201 compared to 29 loans and $6,192 as of December 31, 2025. In addition, as of September 30, 2026, we had three assets with a net foreclosed asset balance of $1,554 compared to one and $499 as of December 31, 2025.

The estimated loss on interest income resulting from non-interest earning assets for the quarter and nine months ended September 30, 2026 was $222 and $887 compared to $108 and $453 for the same periods of 2025, respectively. Looking ahead, we expect the balance of non-interest earnings to remain somewhat consistent.

Net cash provided by operations increased $1,489 to $4,205 for the nine months ended September 30, 2026 compared to the same period of 2025. The increase in operating cash flow was due net income.

Critical Accounting Estimates

To assist in evaluating our interim consolidated financial statements, we describe below the critical accounting estimates that we use. We consider an accounting estimate to be critical if: (1) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (2) changes in the estimate that are reasonably likely to occur from period to period, or use of different estimates that we reasonably could have used, would have a material impact on our consolidated financial condition or results of operations. See our 2025 Form 10-K, as filed with the SEC, for more information on our critical accounting estimates. No material changes to our critical accounting estimates have occurred since December 31, 2025, unless listed below.

Credit Losses

Fair value of collateral has the potential to impact the calculation of the loan loss provision (the amount we have expensed over time in anticipation of loan losses we have not yet realized). Specifically, relevant to the allowance for loan loss reserve is the fair value of the underlying collateral supporting the outstanding loan balances. Fair value measurements are an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Due to a rapidly changing economic market, an erratic housing market, the various methods that could be used to develop fair value estimates, and the various assumptions that could be used, determining the collateral's fair value requires significant judgment.

Change in Fair Value Assumption		September 30, 2026 Loan Loss Provision Higher/(Lower)
Increasing fair value of the real estate collateral by 35%*		$	(922	)
Decreasing fair value of the real estate collateral by 35%**		$	9,768

* Increases in the fair value of the real estate collateral do not impact the loan loss provision, as the value generally is not "written up."

** Assumes the loans were non-performing and a book amount of the loans outstanding of $75,076.

Foreclosed Assets

The fair value of real estate will impact our foreclosed asset value, which is recorded at 100% of fair value (after selling costs are deducted).

Change in Fair Value Assumption		September 30, 2026 Foreclosed Assets Higher/(Lower)
Increasing fair value of the foreclosed asset by 35%*		$	-
Decreasing fair value of the foreclosed asset by 35%**		$	544

* Increases in the fair value of the foreclosed assets do not impact the carrying value, as the value generally is not "written up," except to the extent that we remove previously established reserves if the fair value of the property increases after initial impairment. All other gains would be recognized upon asset disposal.

** Assumes a book amount of the foreclosed assets of $1,554.

Results of Operations

Interest Spread

The following table displays a comparison of our interest income, expense, fees, and spread:

		Three Months Ended																Nine Months Ended
		September 30,																September 30,
		2026								2025								2026								2025
Interest Income							*								*								*								*
Interest income on loans		$	2,815				14	%		$	2,273				17	%		$	8,106				15	%		$	6,059				16	%
Fee income on loans			1,005				5	%			767				6	%			2,890				5	%			2,249				5	%
Deferred loan fees			(118	)			(1	)%			(126	)			(1	)%			(331	)			(1	)%			(429	)			(1	)%
Fee income on loans, net			887				4	%			641				5	%			2,559				4	%			1,820				4	%
Interest and fee income on loans			3,702				19	%			2,914				22	%			10,665				19	%			7,879				20	%
Interest expense unsecured			1,051				6	%			864				7	%			3,026				6	%			2,541				7	%
Interest expense secured			641				3	%			451				3	%			1,680				3	%			1,060				3	%
Amortization offering costs			18				-	%			24				-	%			59				-	%			137				-	%
Interest expense			1,710				9	%			1,339				10	%			4,765				9	%			3,738				10	%
Net interest and fee income (spread)		$	1,992				10	%		$	1,575				12	%		$	5,900				10	%		$	4,141				10	%
Weighted average outstanding loan asset balance		$	79,272							$	54,269							$	72,931							$	51,433

*Annualized amount as percentage of weighted average outstanding gross loan balance

Primarily three main components impact our interest spread:

● Difference between the interest rate received (on our loan assets) and the interest rate paid (on our borrowings). Our loan originations include interest rates which are based on our cost of funds, with a minimum rate of 10.25%. Primarily, the margin is fixed at 2.5%; however, for our development loans the margin is generally fixed at 7%. This component is also impacted by the lending of money with no interest cost (our equity). For the quarter ended September 30, 2026, interest income on loans was 14% compared to 17% for the same period of 2025. For the nine months ended September 30, 2026, interest income on loans was 15% compared to 16% for the same period of 2025.

We anticipate our standard margin to be 2.5% on all future construction loans and generally 7% on all development loans, which yields a blended margin of approximately 3.5%. This 3.5% margin may increase because some customers run past the standard repayment time and pay a higher rate of interest after that.

● Fee income. Our construction loan fee is 5% on the amount we commit to lend, which is amortized over the expected life of each loan. When loans terminate before their expected life, the remaining fee is recognized at that time.

Fee income on loans before deferred loan fee adjustments was 5% and 6% for the quarter ended September 30, 2026 and 2025, respectively. For both the nine months ended September 30, 2026 and 2025, fee income on loans before deferred loan fee adjustments was 5%.

● Amount of non-performing assets. Generally, two types of non-performing assets negatively affect our interest spread which are loans not paying interest and foreclosed assets.

As of September 30, 2026 and December 31, 2025, we had 23 and 29 individually evaluated loans, net of reserves of $4,201 and $6,192, respectively, that were not paying interest.

As of September 30, 2026 and December 31, 2025, foreclosed assets, net of reserves were $1,554 and $499, respectively, which resulted in a negative impact to our interest spread.

Provision for Credit Losses

Provision for credit losses (expense throughout the period) was a benefit of $526 and an expense of $179 for the quarters ended September 30, 2026 and 2025, respectively. During the nine months ended September 30, 2026 and 2025, the Company had an expense $468 and $299, respectively.

The allowance for credit losses as of September 30, 2026 and December 31, 2025, was $1,369 and $1,113, respectively. The increase in the allowance for credit losses is due to the increase in originations and increase in individually evaluated allowances. As of September 30, 2026, the allowance on individually evaluated loans increased to $923 compared to $745 as of December 31, 2025. The Company believes it has properly reserved for all individually evaluated loans.

Non-Interest Income

Revenue from the Sale of Land Parcels

Revenue from the sale of land parcels was $0 for both the quarter and nine months ended September 30, 2026 compared to $0 and $2,805 for the same period of 2025, respectively. During the nine months ended September 30, 2025, the Company sold eight 339 land parcels for $2,805. No gain or loss was recognized in the sale of the lots. There were no 339 land parcel sales during the quarter ended September 30, 2025.

Option Fee Income

Option fee income was $0 during both the quarter and nine months ended September 30, 2026. During the quarter and nine months ended September 30, 2025 the Company recognized option fee income of $40 and $314, respectively.

Gain on the Sale of 339 Justabout Land Company

On August 6, 2025, we completed the sale of all assets owned by 339, a business segment. We recognized a gain on this sale of $193 during both the quarter and nine months ended September 30, 2025.

Gain on Sale of Foreclosed Assets

During the quarter and nine months ended September 30, 2026 we sold one and two foreclosed assets for a gain on sale of $10 and $12, respectively. During the quarter and nine months ended September 30, 2025, we sold one and three foreclosed assets with no gain on the sales incurred during the respective periods.

Other Income

During the quarters ended September 30, 2026, and 2025, we consulted several of our construction and development loan customers, which included accounting guidance. Other income related to our consulting fees were $58 and $52 for the quarters ended and $200 and $153 for the nine months ended September 30, 2026 and 2025, respectively. We anticipate continuing our consulting services to our customers on an as needed basis during 2026.

Non-Interest Expense

SG&A

The following table displays SG&A expenses:

		Three Months Ended September 30,								Nine Months Ended September 30,
		2026				2025				2026				2025
Legal and accounting		$	65			$	54			$	259			$	294
Salaries and related expenses			687				714				2,024				1,850
Board related expenses			30				27				90				81
Advertising			13				18				82				87
Rent and utilities			17				21				50				62
Loan and foreclosed asset expenses			63				65				146				94
Travel			27				65				121				188
Other			55				97				175				301
Total SG&A		$	957			$	1,061			$	2,947			$	2,957

Our SG&A expense decreased $104 to $957 during the quarter ended September 30, 2026 compared to the same period of 2025. The change in SG&A was primarily due to lower salaries and related expenses and travel, which were slightly offset by higher legal and accounting fees.

Our SG&A expense decreased $10 to $2,947 during the nine months ended September 30, 2026 compared to the same period of 2025.

Cost of Land Parcels Sold

Cost of land parcels sold was $0 for both the quarter and nine months ended September 30, 2026 compared to $0 and $2,805 for the same period of 2025, respectively. During the quarter and nine months ended September 30, 2025, the Company sold eight 339 land parcels and recognized cost on land parcels sold of $2,805.

Loss on Real Estate Investments

During the nine months ended September 30, 2026, we sold one real estate investment, which resulted in a loss of $3. No loss on real estate investments was incurred during the nine months ended September 30, 2025.

Loss on Foreclosed Assets

During the quarter and nine months ended September 30, 2026, we transferred one and four loan receivable assets to foreclosed assets, which resulted in a loss on foreclosed assets of $37 and $120, respectively During the nine months ended September 30, 2025, we transferred two loan receivable assets to foreclosed assets, which resulted in a gain of $90.

Consolidated Financial Position

Loans Receivables, net

The loans receivable balance is comprised of the following, gross to net:

		September 30, 2026				December 31, 2025
Loans receivable, gross		$	77,875			$	61,683
Less: Deferred loan fees			(1,675	)			(1,516	)
Plus: Deferred origination costs			245				169
Less: Allowance for credit losses			(1,369	)			(1,113	)
Loans receivable, net		$	75,076			$	59,223

Commercial Loans - Construction Loan Portfolio Summary

We anticipate that the aggregate balance of our construction loan portfolio will increase as built homes take longer to sell.

The following is a summary of our loan portfolio to builders for home construction loans as of September 30, 2026:

State		Number of Borrowers				Number of Loans				Value of Collateral(1)				Commitment Amount				Gross Amount Outstanding				Loan to Value Ratio(2)				Loan Fee
Arizona			1				1			$	640			$	437			$	434				68	%			5	%
California			1				1				3,731				2,127				768				57	%			5	%
Connecticut			1				3				1,076				1,162				964				108	%			5	%
Florida			11				69				34,179				22,675				15,979				66	%			5	%
Georgia			4				8				3,983				2,961				2,653				74	%			5	%
Idaho			2				6				5,442				3,372				2,459				62	%			5	%
Illinois			1				2				2,840				1,839				184				65	%			5	%
Louisiana			1				4				2,322				1,656				638				71	%			5	%
Michigan			2				3				1,466				1,035				448				71	%			5	%
Missouri			1				2				975				690				690				71	%			5	%
New Jersey			1				1				425				308				271				73	%			5	%
New York			1				5				2,248				1,631				1,101				73	%			5	%
North Carolina			10				24				9,718				6,363				4,462				65	%			5	%
Pennsylvania			1				13				20,076				18,526				16,234				92	%			5	%
South Carolina			8				32				14,070				10,788				7,393				77	%			5	%
Utah			2				3				9,512				6,761				3,721				71	%			5	%
Virginia			1				2				592				362				285				61	%			5	%
Total			49				179			$	113,295			$	82,693			$	58,684				73	%			5	%

	(1)	The value is determined by the appraised value.
	(2)	The loan to value ratio is calculated by taking the commitment amount and dividing by the appraised value.

The following is a summary of our loan portfolio to builders for home construction loans as of December 31, 2025:

State		Number of Borrowers				Number of Loans				Value of Collateral(1)				Commitment Amount				Gross Amount Outstanding				Loan to Value Ratio(2)				Loan Fee
Arizona			2				4			$	1,719			$	1,126			$	1,126				66	%			5	%
California			1				1				1,285				1,750				1,439				137	%			5	%
Connecticut			1				3				1,730				1,162				890				67	%			5	%
Florida			10				50				23,854				16,637				10,984				70	%			5	%
Georgia			7				10				6,448				4,228				3,068				66	%			5	%
Idaho			1				1				2,770				1,500				874				54	%			5	%
Illinois			1				1				1,500				815				606				54	%			5	%
Louisiana			2				3				825				623				594				76	%			5	%
Michigan			1				1				970				582				171				60	%			5	%
Mississippi			1				1				335				258				258				77	%			5	%
Montana			2				2				975				683				578				70	%			5	%
New Jersey			1				4				1,798				1,531				1,471				85	%			5	%
New York			1				5				2,248				1,345				488				60	%			5	%
North Carolina			8				14				6,530				4,135				1,861				63	%			5	%
Oklahoma			1				1				167				117				77				70	%			5	%
Pennsylvania			2				18				20,748				16,368				13,055				79	%			5	%
South Carolina			7				26				10,739				8,394				4,808				78	%			5	%
Tennessee			2				3				1,061				743				718				70	%			5	%
Utah			1				1				4,880				3,538				1,213				73	%			5	%
Virginia			1				2				592				362				236				61	%			5	%
Total			53				151			$	91,174			$	65,897			$	44,515				72	%			5	%

	(1)	The value is determined by the appraised value.
	(2)	The loan to value ratio is calculated by taking the commitment amount and dividing by the appraised value.

Commercial Loans - Real Estate Development Loan Portfolio Summary

The following is a summary of our loan portfolio to builders for land development as of September 30, 2026:

States		Number of Borrowers				Number of Loans				Value of Collateral(1)				Commitment Amount				Gross Amount Outstanding				Loan to Value Ratio(2)				Interest Spread(3)
California			1				1				8,640				2,950				1,598				34	%			7	%
Florida			3				3				8,870				6,359				4,470				72	%			7	%
Georgia			1				1				113				100				99				88	%			7	%
New Jersey			1				1				348				77				56				22	%			7	%
North Carolina			1				1				315				248				171				79	%			7	%
Pennsylvania			1				2				10,289				9,200				10,189				89	%			varies
South Carolina			1				1				1,500				487				621				32	%			7	%
Texas			1				1				62				28				28				45	%			7	%
Utah			1				1				510				300				219				59	%			7	%
Wyoming			1				1				2,875				1,742				1,740				61	%			7	%
Total			12				13			$	33,522			$	21,491			$	19,191				64	%			7	%

(1)	The value is determined by the appraised value.
(2)	The loan to value ratio is calculated by taking the commitment amount and dividing by the appraised value.
(3)	The interest spread varies for the state of Pennsylvania and is 7% across other states.

The following is a summary of our loan portfolio to builders for land development as of December 31, 2025:

States		Number of Borrowers				Number of Loans				Value of Collateral(1)				Commitment Amount				Gross Amount Outstanding				Loan to Value Ratio(2)				Interest Spread(3)
Florida			2				2				550				630				350				115	%			7	%
Georgia			1				1				560				100				99				18	%			7	%
Louisiana			1				1				150				88				88				59	%			7	%
New Jersey			1				1				88				56				56				64	%			7	%
North Carolina			2				2				3,037				681				680				22	%			7	%
Pennsylvania			1				2				15,337				14,066				12,854				92	%			varies
South Carolina			1				1				1,500				487				539				32	%			7	%
Utah			2				2				3,146				1,600				868				51	%			7	%
Wyoming			1				1				2,750				1,635				1,634				59	%			7	%
Total			12				13			$	27,118			$	19,343			$	17,168				71	%			7	%

(1)	The value is determined by the appraised value.
(2)	The loan to value ratio is calculated by taking the commitment amount and dividing by the appraised value.
(3)	The interest spread varies for the state of Pennsylvania and is 7% across other states.

The following is a roll forward of our loans receivable, net:

		September 30, 2026				December 31, 2025				September 30, 2025
Beginning balance		$	59,223			$	49,254			$	49,254
Originations and modifications			49,817				59,571				51,325
Principal collections			(30,230	)			(48,205	)			(40,424	)
Transferred to (from) loans receivables, net			(3,395	)			(909	)			(909	)
Change in allowance for credit losses			(256	)			(245	)			527
Change in loan fees, net			(83	)			(243	)			(484	)
Ending balance		$	75,076			$	59,223			$	59,289

Credit Quality Information

The following table presents the Company's gross loans receivable, commitment value and allowance for credit loss ("ACL") for each respective credit rank loan pool category as of September 30, 2026:

		Loans Receivable Gross				Commitment Value				ACL
Construction Loans Collectively Evaluated:
A Credit Risk		$	26,942			$	40,380			$	164
B Credit Risk			27,338				36,336				241
C Credit Risk			-				-				-
Individually Evaluated			4,404				5,977				923
Development Loans Collectively Evaluated:
A Credit Risk		$	8,111			$	11,456			$	2
B Credit Risk			10,360				9,448				39
C Credit Risk			-				-				-
Individually Evaluated			720				587				-
Total		$	77,875			$	104,184			$	1,369

The following table presents the Company's gross loans receivable, commitment value and ACL for each respective credit rank loan pool category as of December 31, 2025.

		Loans Receivable Gross				Commitment Value				ACL
Construction Loans Collectively Evaluated:
A Credit Risk		$	23,490			$	37,488			$	122
B Credit Risk			13,799				18,830				151
C Credit Risk			828				1,099				12
Individually Evaluated			6,399				8,480				745
Development Loans Collectively Evaluated:
A Credit Risk		$	3,457			$	4,390			$	2
B Credit Risk			13,072				14,366				79
C Credit Risk			99				100				2
Individually Evaluated			539				487				-
Total		$	61,683			$	85,240			$	1,113

The following table presents the amortized cost basis of loans on non-accrual status and loans past due over 90 days non-accruing as of September 30, 2026:

		Non-accrual without ACL				Non-accrual with ACL				Accrual Loans Past Due Over 90 Days
Construction Loans:
Individually Evaluated		$	1,803			$	2,158			$	-
Development Loans:
Individually Evaluated		$	720			$	-			$	-
Total		$	2,523			$	2,158			$	-

The following table presents the amortized cost basis of loans on individually evaluated status and loans past due over 90 days non-accruing as of December 31, 2025:

		Non-accrual without ACL				Non-accrual with ACL				Accrual Loans Past Due Over 90 Days
Construction Loans:
Individually Evaluated		$	3,239			$	3,160			$	-
Development Loans:
Individually Evaluated		$	539			$	-			$	-
Total		$	3,778			$	3,160			$	-

The following is an aging of our gross loan portfolio as of September 30, 2026:

		Gross Loan				Current				Past Due				Past Due				Past Due
		Value				0 - 89				90 - 179				180 - 269				>270
Construction Loans:
A Credit Risk		$	26,942			$	26,942			$	-			$	-			$	-
B Credit Risk			27,338				27,338				-				-				-
C Credit Risk			-				-				-				-				-
Individually Evaluated			4,404				1,984				1,223				-				1,197
Development Loans:
A Credit Risk			8,111				8,111				-				-				-
B Credit Risk			10,360				10,360				-				-				-
C Credit Risk			-				-				-				-				-
Individually Evaluated			720				-				99				-				621
Total		$	77,875			$	74,735			$	1,322			$	-			$	1,818

The following is an aging of our gross loan portfolio as of December 31, 2025:

		Gross Loan				Current				Past Due				Past Due				Past Due
		Value				0 - 89				90 - 179				180 - 269				>270
Construction Loans:
A Credit Risk		$	23,490			$	23,490			$	-			$	-			$	-
B Credit Risk			13,799				13,799				-				-				-
C Credit Risk			828				828				-				-				-
Individually Evaluated			6,399				5,201				618				446				134
Development Loans:
A Credit Risk			3,457				3,457				-				-				-
B Credit Risk			13,072				13,072				-				-				-
C Credit Risk			99				99				-				-				-
Individually Evaluated			539				-				539				-				-
Total		$	61,683			$	59,946			$	1,157			$	446			$	134

The Company modifies loans for borrowers for various reasons, including but not limited to changes in what the builder is building versus what was appraised, changes in loan-to-value ("LTV") or market conditions, and a builder's inability to pay interest. This last grouping (builder's inability to pay interest) is done through forbearance agreements which will allow the builder to have a specified period not to pay interest while the home is either completed or marketed. Typically, those interest amounts are collected at final payoff of the loan.

Allowance for Credit Losses on Loans

The following table provides a roll forward of the allowance for credit losses and unfunded commitments for the nine months ended September 30, 2026:

		Construction																Development
		A Credit Risk				B Credit Risk				C Credit Risk				Individually Evaluated				A Credit Risk				B Credit Risk				C Credit Risk				Individually Evaluated				Total
Allowance for credit losses as of December 31, 2025		$	(122	)		$	(151	)		$	(12	)		$	(746	)		$	(2	)		$	(78	)		$	(2	)		$	-			$	(1,113	)
Charge-offs			-				-				-				206				-				-				-				-				206
Recoveries			-				-				-				(17	)			-				-				-				-				(17	)
(Provision) benefit for credit losses on funded balances			(42	)			(90	)			12				(366	)			-				39				2				-				(445	)
Allowance for credit losses as of September 30, 2026		$	(164	)		$	(241	)		$	-			$	(923	)		$	(2	)		$	(39	)		$	-			$	-			$	(1,369	)
Reserve for unfunded commitments as of December 31, 2025		$	(73	)		$	(55	)		$	(4	)		$	-			$	-			$	(8	)		$	-			$	-			$	(140	)
(Provision) benefit for credit losses on unfunded commitments			(9	)			(24	)			4				-				(1	)			7				-				-				(23	)
Reserve for unfunded commitments as of September 30, 2026		$	(82	)		$	(79	)		$	-			$	-			$	(1	)		$	(1	)		$	-			$	-			$	(163	)

The following table provides a roll forward of the allowance for credit losses and unfunded commitments for the nine months ended September 30, 2025:

		Construction																Development
		A Credit Risk				B Credit Risk				C Credit Risk				Individually Evaluated				A Credit Risk				B Credit Risk				C Credit Risk				Individually Evaluated				Total
Allowance for credit losses as of December 31, 2024		$	(150	)		$	(28	)		$	(13	)		$	(658	)		$	(1	)		$	-			$	(18	)		$	-			$	(868	)
Charge-offs			-				-				-				822				-				-				-				-				822
Recoveries			-				-				-				(7	)			-				-				-				-				(7	)
Provision for credit losses on funded balances			47				(111	)			4				(160	)			(1	)			(83	)			16				-				(288	)
Allowance for credit losses as of September 30, 2025		$	(103	)		$	(139	)		$	(9	)		$	(3	)		$	(2	)		$	(83	)		$	(2	)		$	-			$	(341	)
Reserve for unfunded commitments as of December 31, 2024		$	(65	)		$	(10	)		$	(12	)		$	-			$	(1	)		$	-			$	-			$	-			$	(88	)
Provision for credit losses on unfunded commitments			22				(37	)			5				-				1				-				(2	)			-				(11	)
Reserve for unfunded commitments as of September 30, 2025		$	(43	)		$	(47	)		$	(7	)		$	-			$	-			$	-			$	(2	)		$	-			$	(99	)

Allowance for Credit Losses on Unfunded Loan Commitments

Unfunded commitments to extend credit, which have similar collateral, credit and market risk to our outstanding loans, were $26,309 and $23,557 as of September 30, 2026 and December 31, 2025, respectively. Outstanding letters of credit were $710 and $59 and included in the commitment value of $104,184 and $85,240 as of September 30, 2026 and December 31, 2025, respectively. The ACL is calculated at an estimated loss rate on the total commitment value for loans in our portfolio. The ACL on unfunded commitments is calculated as the difference between the ACL on commitment value less the estimated loss rated and the total gross loan value for loans in our portfolio. As of September 30, 2026, and December 31, 2025, the ACL for unfunded commitments was $163 and $140, respectively, and we had no off-balance sheet transactions, nor do we currently have any such arrangements or obligations.

Loan Portfolio by Year of Origination

The table below presents the Company's loan portfolio by year of origination, category, and credit quality indicator as of September 30, 2026. Loans acquired are shown in the tables by origination year.

		2026				2025				2024				2023				2022				Prior				Total
Construction loans Collectively Evaluated:
A Credit Risk		$	15,129			$	8,442			$	812			$	2,559			$	-			$	-			$	26,942
B Credit Risk			8,995				15,006				2,371				629				337				-				27,338
C Credit Risk			-				-				-				-				-				-				-
Individually Evaluated			-				1,945				1,797				542				120				-				4,404
			24,124				25,393				4,980				3,730				457				-				58,684
Development Loans Collectively Evaluated:
A Credit Risk			6,097				2,014				-				-				-				-				8,111
B Credit Risk			-				8,693				-				-				-				1,667				10,360
C Credit Risk			-				-				-								-				-
Individually Evaluated			-				-				-				99				-				621				720
			6,097				10,707				-				99				-				2,288				19,191
Total		$	30,221			$	36,100			$	4,980			$	3,829			$	457			$	2,288			$	77,875

The table below presents the Company's loan portfolio by year of origination, category, and credit quality indicator as of December 31, 2025. Loans acquired are shown in the tables by origination year.

		2025				2024				2023				2022				2021				Prior				Total
Construction loans Collectively Evaluated:
A Credit Risk		$	15,907			$	3,786			$	2,277			$	939			$	581			$	-			$	23,490
B Credit Risk			7,228				4,938				620				1,013				-				-				13,799
C Credit Risk			-				827				-				-				-				-				827
Individually Evaluated			2,323				2,429				1,050				597				-				-				6,399
			25,458				11,980				3,947				2,549				581				-				44,515
Development Loans Collectively Evaluated:
A Credit Risk			3,020				438				-				-				-				-				3,458
B Credit Risk			11,602				-				-				-				-				1,470				13,072
C Credit Risk			-				-				99				-				-				-				99
Individually Evaluated			-				-				-				-				-				539				539
			14,622				438				99				-				-				2,009				17,168
Total		$	40,080			$	12,418			$	4,046			$	2,549			$	581			$	2,009			$	61,683

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentration of credit risk consist principally of loans receivable. Our concentration risks for our top three customers listed by geographic real estate market are summarized in the table below:

September 30, 2026

December 31, 2025

Percent of

Percent of

Borrower

Loan

Borrower

Loan

Location

Commitments

Location

Commitments

Highest concentration risk

Pittsburgh, PA

27

%

Pittsburgh, PA

36

%

Second highest concentration risk

Southwest FL

9

%

Central and Southwest FL

7

%

Third highest concentration risk

Central FL

6

%

St. George, UT

6

%

Foreclosed Assets

Below is a roll forward of foreclosed assets:

		Nine Months Ended September 30, 2026				Year Ended December 31, 2025				Nine Months Ended September 30, 2025
Beginning balance		$	499			$	1,356			$	1,356
Foreclosed assets transferred from loan receivables, net			1,915				909				909
Additions for construction in foreclosed assets			8				96				83
Sale proceeds			(760	)			(1,657	)			(921	)
Gain on sale of foreclosed assets			12				-				-
Loss on foreclosed assets			(120	)			(205	)			(104	)
Ending balance		$	1,554			$	499			$	1,323

Segment Reporting

Effective January 1, 2026, the Company changed their reportable segments to a single reportable segment. Following the sale of 339 Justabout Land Company on August 6, 2025, which was a reportable segment of the Company, the Company no longer has any separately reportable segments.

The Company's one reportable segment generates income principally from interest on loans, as well as from fees charged in connection with various lending services. The chief operating decision maker ("CODM") is the Chief Executive Officer, who for the purposes of assessing performance, making operating decisions, and allocating Company resources, regularly reviews net income as reported in the consolidated statements of operations. The level of disaggregation and amounts of significant segment income and expenses, such as interest and fee income, interest expense, provision for credit losses, salaries and employee benefits expense and other items, that are regularly provided to the CODM are the same as those presented in the accompanying consolidated statements of operations. Likewise, the measure of segment assets is reported on the accompanying consolidated balance sheets as total assets.

Information about reportable segments, and reconciliations of such information to the Interim Consolidated Financial Statements are described below.

Reconciliation of Consolidated Statements of Operations:

Shepherd's Finance, LLC

Interim Consolidated Statements of Operations

For the Three Months Ended September 30, 2025

(in thousands of dollars)		339 Justabout Land Company, LLC				Shepherds Finance, LLC				Total
Net Interest and Fee Income
Interest and fee income on loans		$	-			$	2,914			$	2,914
Interest expense:
Interest related to secure borrowings			-				451				451
Interest related to unsecured borrowings			-				888				888
Interest expense			-				1,339				1,339
Net interest and fee income			-				1,575				1,575
Less: Provision for credit losses			-				179				179
Net interest and fee income after provision for credit losses			-				1,396				1,396
Non-Interest Income
Revenue from the sale of land parcels			-				-				-
Option fee income			40				-				40
Gain on sale of 339 Justabout Land Company			193				-				193
Other income			-				52				52
Total non-interest income			233				52				285
Income before non-interest expense			233				1,448				1,681
Non-Interest Expense
Cost on the sale of land parcels			-				-				-
Selling, general and administrative			-				1,061				1,061
Depreciation and amortization			-				16				16
Loss on foreclosed assets			-				85				85
Total non-interest expense			-				1,162				1,162
Net income		$	233			$	286			$	519
Net income attributable to preferred equity holders			-				-				263
Net income attributable to common equity holders		$	-			$	-			$	256

Shepherd's Finance, LLC

Interim Consolidated Statements of Operations

For the Nine Months Ended September 30, 2025

(in thousands of dollars)		339 Justabout Land Company, LLC				Shepherds Finance, LLC				Total
Net Interest and Fee Income
Interest and fee income on loans		$	-			$	7,879			$	7.879
Interest expense:
Interest related to secure borrowings			-				1,060				1,060
Interest related to unsecured borrowings			-				2,678				2,678
Interest expense			-				3,738				3,738
Net interest and fee income			-				4,141				4,141
Less: Provision for credit losses			-				299				299
Net interest and fee income after provision for credit losses			-				3,842				3,842
Non-Interest Income
Revenue from the sale of land parcels			2,805				-				2,805
Option fee income			314				-				314
Gain on sale of 339 Justabout Land Company			193				-				193
Other income			-				153				153
Total non-interest income			3,312				153				3,465
Income before non-interest expense			3,312				3,995				7,307
Non-Interest Expense
Cost on the sale of land parcels			2,805				-				2,805
Selling, general and administrative			-				2,957				2,957
Depreciation and amortization			-				56				56
Loss on foreclosed assets			-				104				104
Total non-interest expense			2,805				3,117				5,922
Net income		$	507			$	878			$	1,385
Net income attributable to preferred equity holders			-				-				720
Net income attributable to common equity holders		$	-			$	-			$	665

Reconciliation of total assets:

(in thousands of dollars)		339 Justabout Land Company, LLC				Shepherds Finance, LLC				Elimination				Total
Total assets as of December 31, 2025		$	-			$	68,536			$	-			$	68,536

Certificate of Deposits

The Company has a certificate of deposit ("CD") with a lender which is used as collateral for a line of credit on a dollar for dollar basis. When less than the maximum drawn on the line of credit, the undrawn amount could be redeemed from the CD with penalty. As a result, the amount borrowed against the CD is restricted and the amount available to draw is unrestricted. As of September 30, 2026 the restricted CD was $955 and the unrestricted CD was $1,320. As of December 31, 2025 the CD was $2,275 and fully restricted.

Real Estate Investments

During the quarter ended September 30, 2026, the Company sold and transferred from real estate investments to loans receivable, net one real estate development lot for $455.

During the nine months ended September 30, 2026, the Company sold one asset for sale proceeds of $169 and a loss on sale of $3.

The following table is a roll forward of real estate investment:

		Nine Months Ended September 30, 2026				Year Ended December 31, 2025				Nine Months Ended September 30, 2025
Beginning balance		$	169			$	13,529			$	13,529
Proceeds from disposal of 339			-				(9,876	)			-
Gain on sale of real estate investments			-				276				-
Loss on sale of real estate investments			(3	)			-				-
Proceeds from the sale of real estate investments			(169	)			(4,956	)			(2,805	)
Real estate investments transferred from/to loan receivables, net			1,480				-				-
Investments in real estate assets			25				-				-
Additions for construction/development			4				1,196				940
Disposal of 339 segment			-				-				(9,683	)
Ending balance		$	1,506			$	169			$	1,981

Capitalized Interest Activity

The following table is capitalized interest included in additions for construction/development for real estate investment assets:

		September 30, 2026				September 30, 2025
Capitalized interest		$	2			$	489
Cost of funds			9.24	%			9.35	%

The capitalized interest is included within real estate investment assets on the consolidated balance sheet.

Refundable Prepaid Interest

Below is a roll forward of refundable prepaid interest:

		Nine Months Ended September 30, 2026				Year Ended December 31, 2025				Nine Months Ended September 30, 2025
Beginning balance		$	965			$	353			$	353
Additions from loans			1,788				2,510				2,126
Interest, fees, principal or repaid to borrower			(2,038	)			(1,898	)			(1,120	)
Ending balance		$	715			$	965			$	1,359

Related Party Borrowings

As of September 30, 2026 and December 31, 2025, the Company had $0 and $26 borrowed against its lines of credit from affiliates, respectively, with a total limit of $2,500 as of September 30, 2026 and December 31, 2025.

Secured Borrowings

Lines of Credit

Lines of Credit with Mr. Wallach and His Affiliates

As of September 30, 2026 and December 31, 2025, the Company had $0 and $26 borrowed against its lines of credit from affiliates, respectively, with a total limit of $2,500 as of September 30, 2026 and December 31, 2025.

United Lines of Credit

In January 2025, we established a revolving line of credit with United Bank for $2,275, maturing in January 2027. The interest rate on this line of credit is 5.5%. The line is secured by $2,275 CD. The unborrowed portion of the line may be withdrawn from the CD with a penalty which decreases its availability. As of September 30, 2026 and December 31, 2025, the amount due on this line of credit was $955 and $2,275, respectively.

In January 2025, we established a revolving line of credit with United Bank for $725, with an expiration date of January 2040. The interest rate on this line of credit is 7.5%. As of September 30, 2026 and December 31, 2025, the amount due on this line of credit was $0 and $725, respectively. The Company's office in Jacksonville, FL, is used as collateral for this line of credit.

Liberty Savings Bank Line of Credit

In December 2025, we established a revolving line of credit with Liberty Savings Bank for $5,000, which may be terminated upon 90 days' written notice. The interest rate on this line of credit varies and is indexed to the current Prime rate plus 0.5%. As of September 30, 2026 and December 31, 2025, the Company had borrowed $5,000 and $0 against the revolving line of credit, respectively.

Loan Purchase and Sale Agreements

As of September 30, 2026 and December 31, 2025, there is no limit on the maximum principal amount under the Builder Finance loan purchase and sale agreement, and the outstanding principal under such agreement was $4,418 and $1,458, respectively, with an interest rate of 8.99% for both periods. The agreement has a term of 12 months and renews automatically for an additional 12 months unless either party provides written notice of intent not to renew at least six months prior to the end of the term.

As of September 30, 2026 and December 31, 2025, the maximum principal amount under the S.K. Funding loan purchase and sale agreement was $6,500 for both period end dates. Borrowings up to $1,400 over the principal amount may be unsecured. There were $495 and $0 of unsecured borrowings as of September 30, 2026 and December 31, 2025; respectively, with an interest rate of 9.50% for both periods. The agreement is automatically renewed every six months unless notice is given by either party. Additionally, the Company executed an amendment to the agreement with S.K. Funding that allowed the Company to sell participating interests in loans. The balance of the portion sold on these loans is removed from the balance sheet of the Company and interest on the portion sold is not reflected in its statement of operations. As of September 30, 2026 and December 31, 2025, the loan receivable principal balance sold under the secured portion of this agreement was $850 and $1,400, respectively.

Secured Deferred Financing Costs

The Company had secured deferred financing costs of $10 and $12 as of September 30, 2026 and December 31, 2025, respectively.

Secured Borrowings Secured by Loan Assets

Borrowings secured by loan assets are summarized below:

		September 30, 2026								December 31, 2025
		Book Value of Loans which Served as Collateral				Due from Shepherd's Finance to Loan Purchaser or Lender				Book Value of Loans which Served as Collateral				Due from Shepherd's Finance to Loan Purchaser or Lender
Loan Purchaser
Builder Finance		$	6,801			$	4,418			$	1,813			$	1,458
S.K. Funding			16,946				6,500				9,011				6,500
Lender
Shuman			-				-				210				125
Jeff Eppinger			6,396				1,500				5,789				200
R. Scott Summers			1,460				928				2,731				903
John C. Solomon			931				563				1,057				563
Judith Swanson			10,136				6,721				12,568				6,407
Liberty Savings Bank			5,603				5,000				-				-
Total		$	48,273			$	25,630			$	33,179			$	16,156

Unsecured Borrowings

Unsecured Notes through the Public Offering ("Notes Program")

The effective interest rate on borrowings through our Notes Program as of September 30, 2026 and December 31, 2025, was 9.00% and 8.90%, respectively.

We generally offer four durations at any given time, ranging from 12 to 48 months from the date of issuance. All Notes sold in our fifth public offering, which was declared effective on April 30, 2026, include a mandatory early redemption option, provided that the proceeds are reinvested. In our other historical offerings, there were limited rights of early redemption. Our 36-month Note sold in our third public note offering had a mandatory early redemption option, subject to certain conditions.

The following table is a roll forward of our Notes Program:

		Nine Months Ended September 30, 2026				Year Ended December 31, 2025				Nine Months Ended September 30, 2025
Gross Notes outstanding, beginning of period		$	22,164			$	19,968			$	19,968
Notes issued			4,205				7,612				6,300
Note repayments / redemptions			(3,803	)			(5,416	)			(4,386	)
Gross Notes outstanding, end of period		$	22,566			$	22,164			$	21,882
Less deferred financing costs, net			(268	)			(229	)			(185	)
Notes outstanding, net		$	22,298			$	21,935			$	21,697

The following is a roll forward of deferred financing costs related to the Notes Program:

		Nine Months Ended September 30, 2026				Year Ended December 31, 2025				Nine Months Ended September 30, 2025
Deferred financing costs, beginning balance		$	1,302			$	1,060			$	1,060
Additions			98				242				172
Disposals			(693	)			-				-
Deferred financing costs, ending balance			707				1,302				1,232
Less accumulated amortization			(439	)			(1,073	)			(1,047	)
Deferred financing costs, net		$	268			$	229			$	185

The following is a roll forward of the accumulated amortization of deferred financing costs:

		Nine Months Ended September 30, 2026				Year Ended December 31, 2025				Nine Months Ended September 30, 2025
Accumulated amortization, beginning balance		$	1,073			$	910			$	910
Additions			59				163				137
Disposals			(693	)			-				-
Accumulated amortization, ending balance		$	439			$	1,073			$	1,047

Other Unsecured Debts

The following table is a detail of other unsecured debts:

Loan		Maturity Date		Interest Rate(1)				September 30, 2026				December 31, 2025
Subordinated Promissory Note		October 2026			10.0	%			1,142				1,142
Subordinated Promissory Note		November 2026			9.5	%			200				200
Unsecured Line of Credit		October 2026(2)			9.50	%			495				-
Subordinated Promissory Note		February 2027			9.0	%			600				600
Subordinated Promissory Note		February 2027			8.5	%			200				200
Subordinated Promissory Note		March 2027			10.0	%			26				26
Subordinated Promissory Note		March 2027			9.5	%			1,000				1,000
Unsecured Line of Credit		April 2027			10.0	%			500				500
Subordinated Promissory Note		May 2027			10.0	%			97				97
Unsecured Line of Credit		October 2027			10.0	%			279				592
Subordinated Promissory Note		September 2027			10.0	%			108				108
Subordinated Promissory Note		October 2027			8.5	%			200				200
Subordinated Promissory Note		November 2027			10.0	%			120				120
Subordinated Promissory Note		December 2027			10.0	%			20				20
Subordinated Promissory Note		March 2028			9.75	%			500				500
Subordinated Promissory Note		April 2028			10.0	%			149				149
Subordinated Promissory Note		July 2028			8.5	%			100				100
Senior Subordinated Promissory Note		October 2028(3)			1.0	%			1,072				1,072
Junior Subordinated Promissory Note		October 2028(3)			20.0	%			666				666
Subordinated Promissory Note		October 2028			10.0	%			1,043				1,043
Subordinated Promissory Note		October 2028			8.5	%			100				100
Subordinated Promissory Note		December 2028			10.0	%			149				149
Subordinated Promissory Note		January 2029			9.0	%			-				15
Subordinated Promissory Note		March 2029			10.0	%			1,200				1,200
Subordinated Promissory Note		March 2029			6.5	%			306				-
Subordinated Promissory Note		April 2029			11.0	%			2,000				2,000
Subordinated Promissory Note		April 2029			9.0	%			301				301
Subordinated Promissory Note		December 2029			8.0	%			248				248
Senior Subordinated Promissory Note		July 2030(3)			1.0	%			1,637				740
Junior Subordinated Promissory Note		July 2030(3)			20.0	%			1,018				460
Subordinated Promissory Note		July 2030			10.0	%			33				-
Subordinated Promissory Note		August 2030			10.0	%			400				291
Subordinated Promissory Note		February 2031			11.0	%			400				-
Subordinated Promissory Note		February 2031			11.0	%			300				-
Subordinated Promissory Note		February 2031			11.0	%			365				-
Subordinated Promissory Note		February 2031			11.0	%			300				-
Subordinated Promissory Note		February 2031			11.0	%			400				-
Subordinated Promissory Note		March 2031			11.0	%			500				-
Subordinated Promissory Note		March 2031			11.0	%			500				-
								$	18,674			$	13,839

(1)	Interest rate per annum, based upon actual days outstanding and a 365/366-day year.
(2)	Note automatically renews for an additional six months until notice is given by either party.
(3)	These notes were issued to the same holder and, when calculated together, yield a blended rate of 10% per annum.

Series C Preferred Equity

Series C preferred equity distributions, liquidation rights and conversion features are determined based on the undiscounted value, which was $9,501 and $9,085 as of September 30, 2026 and December 31, 2025, respectively. In addition, the Company's Board of Managers increased the number of Series C authorized preferred equity shares from 20,000 to 25,000.

The following table shows the earliest conversion options for investors in Series C preferred equity as of September 30, 2026. Amounts are presented at redeemable values, which are prior to discounts reflected in the carrying amounts:

Year Maturing		Total Amount Convertible
Currently convertible (requires notice of 12 months)		$	3,577
2027			309
2028			1,395
2029			206
2030 and thereafter			4,014
Total		$	9,501

Priority of Borrowings

The following table displays our borrowings and a ranking of priority. The lower the number, the higher the priority.

		Priority Rank		September 30, 2026				December 31, 2025
Borrowing Source
Purchase and sale agreements and other secured borrowings		1		$	26,585			$	18,431
Secured line of credit from affiliates		2			-				26
Unsecured line of credit (senior)		3			-				-
Other unsecured debt (senior subordinated)		4			2,709				1,812
Unsecured Notes through our public offering, gross (subordinated)		5			22,566				22,164
Other unsecured debt (subordinated)		5			14,281				10,901
Other unsecured debt (junior subordinated)		6			1,684				1,126
Less deferred financing fees					(278	)			(241
Total				$	67,547			$	54,219

Liquidity and Capital Resources

Our primary liquidity management objective is to meet expected cash flow needs while continuing to service our business and customers. As of September 30, 2026 and December 31, 2025, we had combined loans outstanding of 192 and 164, respectively. In addition, loans receivables, gross were $77,875 and $61,683 as of September 30, 2026 and December 31, 2025, respectively.

Unfunded commitments to extend credit, which have similar collateral, credit and market risk to our outstanding loans, were $26,309 and $23,557 as of September 30, 2026, and December 31, 2025, respectively. Outstanding letters of credit were $710 and $59 and included in the commitment value of $104,184 and $85,240 as of September 30, 2026 and December 31, 2025, respectively. For off-balance-sheet credit exposures, the estimate of expected credit losses has been presented as a liability on the balance sheet as of September 30, 2026.

We anticipate the Company's originations to be higher in 2027 due to an increase in marketing and sales efforts.

To fund our combined loans, we rely on secured debt, unsecured debt, and equity, which are described in the following table:

Source of Liquidity		As of September 30, 2026				As of December 31, 2025
Secured debt, net of deferred financing costs		$	26,575			$	18,445
Unsecured debt, net of deferred financing costs		$	40,972			$	35,774
Members' Capital		$	10,181			$	8,211
Cash and cash equivalents		$	1,613			$	3,490

As of September 30, 2026 and December 31, 2025, cash and cash equivalents were $1,613 and $3,490, respectively.

The Company has nine lines of credit with several lenders, and as of September 30, 2026, our availability to borrow against these lines of credit was $6,074, subject to certain collateral requirements. Without an additional $1,599 of collateral, our availability to borrow against these lines of credit as of September 30, 2026 was $4,475.

We anticipate equity to increase during the last three months of 2026, mostly through retained earnings. If we cannot maintain our equity, we will rely more heavily on raising additional funds through the Notes Program.

The following table shows the maturity of outstanding debt as of September 30, 2026:

Year Maturing		Total Amount Maturing				Public Offering		Other Unsecured				Secured Borrowings
2026		$	28,295			$1,323		$	1,342			$25,630
2027			10,744			6,144			3,645			955
2028			14,002			10,223			3,779			-
2029			6,869			2,814			4,055			-
2030 and thereafter			7,915			2,062			5,853			-
Total		$	67,825			$22,566		$	18,674			$26,585

Secured borrowings maturing as of December 31, 2026 significantly consists of loan purchase and sale agreements with two loan purchasers (Builder Finance and S. K. Funding) and secured lines of credit with several lenders. These secured borrowings are listed as maturing by the end of the year ended December 31, 2026 is due primarily to their related demand loan collateral.

The following are secured facilities listed as principal maturing in 2026 with actual maturity and renewal dates:

	●	Swanson - $6,721 due October 2027 and automatically renews unless notice given;
	●	S. K. Funding - $3,500 due January 2027 and automatically renews every six months unless notice is given;
	●	S. K. Funding - $3,000 due April 2027 and automatically renews unless notice is given no less than five months prior to the end of the term;
	●	Builder Finance, Inc - $4,418 with no expiration date;
	●	Liberty Savings Bank - $5,000 no expiration date and may terminate upon 90 days of written notice; and
	●	New LOC Agreements - $2,991 generally one-month notice and nine months to reduce principal balance to zero.

Unsecured borrowings due by December 31, 2026, consist of Notes issued pursuant to the Notes Program and other unsecured debt of $1,323 and $1,342, respectively. To the extent that Notes issued pursuant to the Notes Program are not reinvested upon maturity, we will be required to fund the maturities, which we anticipate funding through the issuance of new Notes in our Notes Program. During the last twelve months, approximately 88% of our Notes Program holders reinvested upon maturity. The 36-month Note sold in our public note offerings had a mandatory early redemption option, subject to certain conditions. Historically, our other unsecured debt has renewed. For more information on other unsecured borrowings, see Note 8 - Borrowings. If other unsecured borrowings are not renewed in the future, we anticipate funding such maturity through investments in our Notes Program.

Summary of Liquidity

We have the funding available to address the loans we have today, including our unfunded commitments. We anticipate an increase in our assets during the remainder of 2027 due to an increase in our marketing efforts. We are prepared for an increase in assets through the net sources and uses (12-month liquidity) listed above as well as future capital from debt, preferred equity, and regular equity. Although our secured debt is almost entirely listed as current due because of the underlying collateral being demand notes, the vast majority of our secured debt is either contractually set to automatically renew unless notice is given or, in the case of purchase and sale agreements, has no end date as to when the purchasers will not purchase new loans (although they are never required to purchase additional loans).

Inflation, Interest Rates, and Housing Starts

Since we are in the housing industry, we are affected by factors that impact that industry. Housing starts impact our customers' ability to sell their homes. Faster sales generally mean higher effective interest rates for us, as the recognition of fees we charge is spread over a shorter period. Slower sales generally mean lower effective interest rates for us. Slower sales also are likely to increase the default rate we experience.

Housing inflation has a positive impact on our operations. When we lend initially, we are lending a percentage of a home's expected value, based on historical sales. If those estimates prove to be low (in an inflationary market), the percentage we loaned of the value decreases, reducing potential losses on defaulted loans. The opposite is true in a deflationary housing price market. It is our opinion that values are well above average in many of the housing markets in the U.S. today, and our lending against these values is having more risk than prior years. In some of our markets, prices of homes sold are dropping. This is both because some homes are selling for less and because the average home selling is smaller (more affordable). However, we anticipate significant declines in home values in some markets over the next 12 months. Our customers generally benefit from housing inflation while it is happening and are hurt by deflation as we see today. In the long run, however, the opposite is actually true. When housing inflation happens, it drives down housing affordability which inevitably leads to less demand. Housing deflation leads to higher demand eventually. In the short run, inflation is good for our customers but in the long run it is bad. Deflation is bad for our customers in the short run, but good in the long run.

Interest rates have several impacts on our business. First, rates affect housing (starts, home size, etc.). High long-term interest rates may decrease housing starts, having the effects listed above. Housing starts have been in a tight range over the last year, and generally payoffs appear stable. Higher interest rates will also affect our investors. We believe that there will be a spread between the rate our Notes yield to our investors and the rates the same investors could get on deposits at FDIC insured institutions. We also believe that the spread may need to widen if these rates rise. For instance, if we pay 7% above average CD rates when CDs are paying 0.5%, when CDs are paying 5%, we may have to have a larger than 7% difference. This may cause our lending rates, which are based on our cost of funds, to be uncompetitive. High interest rates may also increase builder defaults, as interest payments may become a higher portion of operating costs for the builder. Recent changes in the Prime rate do not significantly impact us or our customers. A rise in prime makes our rates to our customer more attractive, but our investment rate less attractive to investors. The opposite is true when the prime rate goes down. These impacts are not significant. Long term mortgage rates for our customers' customers has more of an impact as mentioned above.

Below is a chart showing three-year U.S. treasury rates and 30-year fixed mortgage rates which is provided by Federal Reserve Economic Data ("FRED"). The U.S. treasury rates are used by us here to approximate CD rates. Both the short- and long-term interest rates have risen slightly to historically normal levels.

Housing prices are also generally correlated with housing starts; therefore, increases in housing starts usually coinciding with increases in housing values, and the reverse is generally true. Looking at the chart below, housing starts have fallen back from the pandemic high; however, since then the change has remained relatively flat.

Below is a graph showing single family historical housing-starts which is provided by FRED:

Off-Balance Sheet Arrangements

As of September 30, 2026, we had no off-balance sheet transactions, nor do we currently have any such arrangements or obligations.