Ladder Capital(LADR) - 2025 Q2 - Quarterly Report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Form 10-Q - The document is a Quarterly Report (Form 10-Q) for the period ended June 30, 2025, filed by Ladder Capital Corp (Commission file number: 001-36299)[2] - Class A common stock, $0.001 par value, is registered on the New York Stock Exchange under the trading symbol LADR[4] Registrant Information and Filing Status - The registrant has filed all required reports during the preceding 12 months and has been subject to filing requirements for the past 90 days[5] - Ladder Capital Corp is classified as a Large accelerated filer and is not a shell company[5] Class A common stock | Class | Outstanding at July 18, 2025 | | :---------------- | :--------------------------- | | Class A common stock | 127,460,976 | | Class B common stock | — | Index to Form 10-Q Cautionary Statement Regarding Forward-Looking Statements - The report contains forward-looking statements identified by terms such as 'anticipate,' 'estimate,' 'expect,' 'project,' 'plan,' 'intend,' 'believe,' 'may,' 'might,' 'will,' 'should,' 'can have,' 'likely,' 'continue,' and 'design'[10] - Actual results may differ materially from forward-looking statements due to various factors, including market volatility, geopolitical uncertainty, changes in economic conditions, real estate market risks, interest rate changes, and regulatory compliance[11][13] - The Company assumes no obligation to update or supplement any forward-looking statements, as new risks and uncertainties arise over time[12] References to Ladder Capital Corp - References to 'Ladder,' 'Ladder Capital,' the 'Company,' 'we,' 'us,' and 'our' refer to Ladder Capital Corp and its consolidated subsidiaries, with Ladder Capital Corp acting as a holding company and general partner of Ladder Capital Finance Holdings LLLP (LCFH)[15] Part I - Financial Information Item 1. Financial Statements (Unaudited) This section presents the unaudited consolidated financial statements of Ladder Capital Corp, including balance sheets, income statements, comprehensive income statements, statements of changes in equity, and cash flow statements, along with detailed notes explaining the company's organization, significant accounting policies, and specific financial instrument details Consolidated Balance Sheets This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity at specific reporting dates | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------ | :------------ | :---------------- | | Total Assets | $4,457,474 | $4,845,073 | | Total Liabilities | $2,957,404 | $3,312,134 | | Total Equity | $1,500,070 | $1,532,939 | | Cash and cash equivalents | $134,939 | $1,323,481 | | Securities | $1,966,471 | $1,080,839 | | Debt obligations, net | $2,783,166 | $3,135,617 | - Total assets decreased by 8.0% and total liabilities decreased by 10.7% from December 31, 2024, to June 30, 2025[20] - Cash and cash equivalents saw a significant decrease of 89.8%, while securities increased by 82.0% over the six-month period[20] Consolidated Statements of Income This section details the company's financial performance over specific periods, highlighting net interest income, net income, and earnings per share | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net interest income | $21,530 | $34,317 | $41,859 | $71,457 | | Net income (loss) | $17,108 | $32,125 | $28,664 | $48,553 | | Basic EPS | $0.14 | $0.26 | $0.23 | $0.39 | | Diluted EPS | $0.14 | $0.26 | $0.23 | $0.39 | - Net interest income decreased by 37.2% for the three months ended June 30, 2025, compared to the same period in 2024, and by 41.4% for the six months ended June 30, 2025, year-over-year[23] - Net income decreased by 46.7% for the three months ended June 30, 2025, and by 40.9% for the six months ended June 30, 2025, compared to the respective prior year periods[23] Consolidated Statements of Comprehensive Income This section presents the company's comprehensive income, including net income and other comprehensive income components, reflecting changes in equity from non-owner sources | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income (loss) | $17,108 | $32,125 | $28,664 | $48,553 | | Total other comprehensive income (loss) | $1,576 | $(932) | $(773) | $3,101 | | Comprehensive income (loss) | $18,684 | $31,193 | $27,891 | $51,654 | - Total other comprehensive income (loss) improved significantly from a loss of $0.93 million in Q2 2024 to a gain of $1.58 million in Q2 2025[25] - For the six months ended June 30, 2025, total other comprehensive income (loss) was a loss of $0.77 million, a decrease from a gain of $3.10 million in the same period of 2024[25] Consolidated Statements of Changes in Equity This section outlines the changes in the company's total equity, including retained earnings, treasury stock, and additional paid-in capital over the reporting period | Metric (in thousands) | Balance, Dec 31, 2024 | Balance, Jun 30, 2025 | | :---------------------------- | :-------------------- | :-------------------- | | Total Equity | $1,532,939 | $1,500,070 | | Retained Earnings | $(206,874) | $(236,595) | | Treasury Stock | $(30,475) | $(36,584) | | Additional Paid-in Capital | $1,777,118 | $1,781,307 | - Total equity decreased by $32.87 million (2.1%) from December 31, 2024, to June 30, 2025[34] - Dividends declared for the six months ended June 30, 2025, totaled $58.825 million, contributing to the increase in retained earnings deficit[34] Consolidated Statements of Cash Flows This section reports the company's cash inflows and outflows from operating, investing, and financing activities, providing insights into liquidity and financial health | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------------------------------- | :--------------------------- | :--------------------------- | | Net cash provided by (used in) operating activities | $15,318 | $25,031 | | Net cash provided by (used in) investing activities | $(779,357) | $586,720 | | Net cash provided by (used in) financing activities | $(433,673) | $(480,213) | | Net increase (decrease) in cash, cash equivalents and restricted cash | $(1,197,712) | $131,538 | | Cash, cash equivalents and restricted cash at end of period | $148,327 | $1,207,480 | - Net cash used in investing activities significantly increased to $(779.4) million for the six months ended June 30, 2025, compared to $586.7 million provided in the same period of 2024[40] - Cash, cash equivalents, and restricted cash at period end decreased by 87.7% year-over-year, primarily driven by investing activities[41] Notes to Consolidated Financial Statements This section provides detailed notes supporting the consolidated financial statements, covering organization, accounting policies, and specific financial instrument details Note 1. Organization and Operations This note describes Ladder Capital Corp's business as an internally-managed U.S. REIT specializing in commercial real estate finance and its consolidation structure - Ladder Capital Corp is an investment grade-rated, internally-managed U.S. REIT specializing in commercial real estate finance[44] - The Company's investment activities include originating senior first mortgage loans, owning and operating commercial real estate, and investing in investment grade securities[44] - Ladder Capital Corp consolidates the financial results of Ladder Capital Finance Holdings LLLP (LCFH) and its subsidiaries, in which it holds a 100% economic interest and control[44] Note 2. Significant Accounting Policies This note details the accounting principles and methods used in preparing the consolidated financial statements, including GAAP compliance and specific accounting models - The consolidated financial statements are prepared in accordance with GAAP and include accounts of majority-owned/controlled subsidiaries and variable interest entities (VIEs) where the Company is the primary beneficiary[46][47] - The Company uses a Current Expected Credit Loss (CECL) model for estimating loan loss provisions, considering possible credit losses over the life of an instrument, with both portfolio-based and asset-specific components[50] - The Company adopted ASU 2023-07 (Segment Reporting) in Q4 2024, which did not have a material impact, and does not expect a material impact from pending ASU 2023-09 (Income Taxes) and ASU 2024-03 (Disaggregation of Income Statement Expenses)[61][62][63] Note 3. Mortgage Loan Receivables This note provides details on the company's mortgage loan portfolio, including held-for-investment and held-for-sale categories, and the allowance for credit losses | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :---------------------------------------- | :------------ | :---------------- | | Mortgage loan receivables held for investment, net | $1,541,544 | $1,538,999 | | Mortgage loan receivables held for sale | $28,347 | $26,898 | | Allowance for credit losses | $(52,166) | $(52,323) | | Non-accrual loans (amortized cost basis) | $162,264 | $76,875 | - The amortized cost basis of non-accrual loans more than doubled from $76.9 million at December 31, 2024, to $162.3 million at June 30, 2025[82] - The Company recorded a release of loan loss reserves of $0.1 million for the six months ended June 30, 2025, compared to a provision of $10.8 million for the same period in 2024, primarily due to a decrease in portfolio size offset by macroeconomic uncertainty[85][86] Note 4. Securities This note describes the company's investment in securities, primarily AAA-rated real estate securities, and reports realized and unrealized gains or losses | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :---------------------------------------- | :------------ | :---------------- | | Total Securities (Carrying Value) | $1,966,471 | $1,080,839 | | CMBS (Carrying Value) | $1,957,762 | $1,058,874 | | Total Debt Securities (Carrying Value) | $1,960,103 | $1,062,284 | | Realized gain (loss) on securities (6 months) | $1,029 | $75 | | Unrealized gain (loss) on securities (6 months) | $790 | $(27) | - The Company's securities portfolio, primarily AAA-rated real estate securities, increased significantly by 82.0% in carrying value from December 31, 2024, to June 30, 2025[90][93] - Realized gains on securities for the six months ended June 30, 2025, were $1.029 million, a substantial increase from $0.08 million in the prior year period[98] Note 5. Real Estate and Related Lease Intangibles, Net This note details the company's real estate holdings, including net leased properties and diversified commercial real estate, along with related lease intangibles | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :---------------------------------------- | :------------ | :---------------- | | Real estate and related lease intangibles, net | $690,186 | $670,803 | | Unencumbered real estate | $266,800 | $213,400 | | Total real estate depreciation and amortization expense (6 months) | $15,379 | $16,715 | | Net intangible assets | $52,991 | $50,618 | - The Company acquired an office portfolio in Carmel, IN for $42.4 million via foreclosure in April 2025[109][110] - A retail property in Jenks, OK was sold in March 2025 for $13.079 million, resulting in a realized gain of $3.807 million[113] Note 6. Debt Obligations, Net This note outlines the company's various debt instruments, including senior unsecured notes, repurchase facilities, and mortgage debt, and their outstanding balances | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :---------------------------------------- | :------------ | :---------------- | | Total Debt Obligations, net | $2,783,166 | $3,135,617 | | Senior Unsecured Notes (Outstanding Principal) | $2,018,458 | $2,041,557 | | Loan Repurchase Facilities (Outstanding Principal) | $62,738 | $62,738 | | Securities Repurchases (Outstanding Principal) | $294,428 | — | | Mortgage Debt (Outstanding Principal) | $419,172 | $443,733 | - Total debt obligations, net, decreased by 11.3% from December 31, 2024, to June 30, 2025[115] - Subsequent to quarter end, the Company issued $500 million of 5.50% senior notes due 2030 and redeemed in full the $285.0 million 2025 Notes[120][227][228] - The Company redeemed all outstanding obligations of LCCM 2021-FL2 (February 2025) and LCCM 2021-FL3 (June 2025), resulting in no CLO debt on the consolidated balance sheet as of June 30, 2025[124][125][355] Note 7. Derivative Instruments This note explains the company's use of derivative instruments, such as interest rate caps and futures, for managing market risk and fair value variability | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :---------------------------------------- | :------------ | :---------------- | | Total Derivatives (Fair Value Asset) | $247 | $437 | | Total Derivatives (Notional) | $115,000 | $90,000 | | Net result from derivative transactions (6 months) | $1,849 | $4,637 | - The Company primarily uses derivative instruments (caps and futures) to manage fair value variability of fixed rate assets and overall portfolio market risk[140] - Net result from derivative transactions for the six months ended June 30, 2025, was $1.849 million, a decrease from $4.637 million in the same period of 2024[142][143] Note 8. Offsetting Assets and Liabilities This note clarifies the company's accounting policy for presenting derivative assets and liabilities on a gross basis on the consolidated balance sheets - The Company's accounting policy is to record derivative asset and liability positions on a gross basis, not net, on the consolidated balance sheets[147][152] - As of June 30, 2025, gross derivative assets were $0.25 million, with $0.64 million in cash collateral posted, resulting in a net amount of $(0.39) million[148] - Gross repurchase agreement liabilities were $62.738 million as of June 30, 2025, with an equal amount of financial instruments collateral[149] Note 9. Equity This note details the company's equity structure, including common stock, share repurchase programs, dividends declared, and accumulated other comprehensive income - The board of directors authorized the repurchase of $100.0 million of Class A common stock on April 23, 2025, with $93.4 million remaining available as of June 30, 2025[153][155] - Dividends declared per share for Class A common stock were $0.23 for both March 14, 2025, and June 13, 2025, totaling $0.46 for the six months ended June 30, 2025[158] - Accumulated Other Comprehensive Income (Loss) decreased from $(4.87) million at the beginning of the period to $(5.64) million at June 30, 2025, primarily due to unrealized losses on available-for-sale securities[159] Note 10. Noncontrolling Interests This note describes the company's consolidated ventures with noncontrolling investors, detailing their ownership percentages and the assets held by these ventures - As of June 30, 2025, the Company consolidates two ventures with noncontrolling investors owning between 10.0% and 25.0% of such ventures[160] - These ventures hold a 40-building student housing portfolio in Isla Vista, CA (book value $77.3 million) and a single-tenant office building in Oakland County, MI (book value $8.5 million)[160] Note 11. Earnings Per Share This note provides a breakdown of basic and diluted earnings per share calculations, including the weighted average shares outstanding for various periods | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Basic EPS | $0.14 | $0.26 | $0.23 | $0.39 | | Diluted EPS | $0.14 | $0.26 | $0.23 | $0.39 | | Basic Weighted Average Shares Outstanding | 125,796,410 | 125,730,765 | 125,713,143 | 125,523,265 | | Diluted Weighted Average Shares Outstanding | 126,204,424 | 125,839,500 | 126,242,515 | 125,679,937 | - Basic and diluted EPS for the three months ended June 30, 2025, decreased by 46.2% to $0.14 from $0.26 in the prior year period[161] - For the six months ended June 30, 2025, basic and diluted EPS decreased by 41.0% to $0.23 from $0.39 in the prior year period[161] Note 12. Stock-Based and Other Compensation Plans This note details the company's stock-based compensation plans, including expense recognition, unrecognized costs, and shares available for future awards | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Stock-based compensation expense | $2,996 | $3,117 | $14,211 | $13,415 | - Total unrecognized compensation cost related to share-based awards was $16.0 million as of June 30, 2025, with a weighted average remaining vesting period of 25.9 months[164] - The 2023 Omnibus Incentive Plan, approved by stockholders, superseded the 2014 plan, making 3,000,000 new shares available for issuance, plus 10,253,867 shares remaining from the prior plan[166][167] Note 13. Fair Value of Financial Instruments This note explains the methodologies and inputs used to determine the fair value of financial instruments, categorizing them into a three-level hierarchy - Fair value is based on internal models, market quotations, broker/counterparty quotations, or pricing services, which are subject to significant variability based on market conditions[183] - CMBS, CMBS interest-only, GNMA interest-only, and Agency securities are measured at fair value on a recurring basis, with unrealized gains/losses recorded in other comprehensive income or current period earnings[186][191][192] - The Company did not have any Level 3 financial instruments as of June 30, 2025, or December 31, 2024, indicating high observability of inputs used in fair value measurements[205] Note 14. Income Taxes This note outlines the company's income tax status as a REIT, tax expenses for its TRSs, and the deferred tax assets and liabilities - The Company elected to be taxed as a REIT, generally exempting its income from U.S. federal, state, and local corporate income taxes, except for its Taxable REIT Subsidiaries (TRSs)[207][208] - Current income tax expense for TRSs was $1.0 million for the six months ended June 30, 2025, an increase from $0.8 million in the prior year period[208] - Net deferred tax assets (liabilities) were $(6.4) million as of June 30, 2025, compared to $(4.6) million as of December 31, 2024[209] Note 15. Related Party Transactions This note discloses any material transactions or relationships between the company and its related parties - The Company has no material related party relationships to disclose[213] Note 16. Commitments and Contingencies This note details the company's contractual obligations, including lease liabilities, unfunded loan commitments, and potential contingent liabilities - As of June 30, 2025, the Company had a $16.1 million lease liability and a $15.0 million right-of-use asset related to its operating lease of office space[214] - Unfunded commitments on mortgage loan receivables held for investment totaled $47.9 million as of June 30, 2025, with 74% requiring specific 'good news' events[218] - Operating expenses related to operating leases were $1.9 million for the six months ended June 30, 2025[215] Note 17. Segment Reporting This note provides financial information for the company's operating segments: Loans, Securities, and Real Estate, detailing their net interest income and net income - The Company operates in three reportable segments: Loans, Securities, and Real Estate, with performance measured by net income (loss)[221] Segment (6 months ended June 30, 2025) | Segment (6 months ended June 30, 2025) | Net interest income (in thousands) | Segment net income (loss) (in thousands) | | :------------------------------------- | :------------------------------- | :------------------------------------- | | Loans | $56,842 | $67,496 | | Securities | $42,193 | $44,615 | | Real Estate | $(13,046) | $2,992 | - Corporate/Other segment includes senior unsecured notes of $2.0 billion at both June 30, 2025, and December 31, 2024[226] Note 18. Subsequent Events This note discloses significant events that occurred after the reporting period but before the financial statements were issued, such as debt issuances or redemptions - Subsequent to quarter end, the Company issued $500 million in aggregate principal amount of 5.50% senior notes due 2030[227] - The Company also redeemed in full the 2025 Notes, which had an outstanding principal amount of $285.0 million as of June 30, 2025[228] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition, results of operations, and liquidity, offering a detailed analysis of performance across its loan, securities, and real estate segments, as well as its financing strategies and critical accounting estimates Overview This section provides a high-level summary of Ladder Capital's business as an investment grade-rated REIT specializing in commercial real estate finance - Ladder Capital is an investment grade-rated, internally-managed REIT, a leader in commercial real estate finance, focusing on senior secured assets[231] - Since inception (October 2008) through June 30, 2025, the Company originated $30.4 billion of commercial real estate loans, acquired $15.2 billion of investment grade-rated securities, and $2.1 billion of net leased and other real estate assets[232] - The Company has sold $16.9 billion of conduit loans into 75 CMBS securitizations, making it one of the largest non-bank contributors in the U.S.[233] Our Businesses This section details the composition of the company's investment portfolio, including mortgage loans, real estate, and CMBS investments - The Company's investment portfolio as of June 30, 2025, includes $1.6 billion in balance sheet first mortgage loans, $7.3 million in mezzanine loans, $28.3 million in conduit first mortgage loans, $592.0 million in net leased properties, $344.0 million in diversified commercial real estate, and $2.0 billion in CMBS investments[236][241][243][244][249][250][255] - The balance sheet first mortgage loan portfolio consists of 52 loans with a weighted average loan-to-value ratio of 67.1% at origination[241][242] - The real estate portfolio includes 149 single tenant net leased properties (100% leased, 7.2 years weighted average remaining lease term) and 55 diversified commercial real estate properties (98% rent collected in Q2 2025)[249][250] Our Financing Strategies This section describes the company's approach to funding its operations, including senior unsecured notes, credit facilities, and debt-to-equity targets - As of June 30, 2025, the Company had $2.0 billion of senior unsecured notes outstanding and maintained a $3.6 billion pool of unencumbered assets[262][263] - The Revolving Credit Facility's maximum borrowing amount was increased to $850.0 million, with no outstanding borrowings as of June 30, 2025[264] - The Company redeemed all outstanding CLO debt (LCCM 2021-FL2 and LCCM 2021-FL3) in February and June 2025, respectively[266][267] - The Company generally seeks to maintain a debt-to-equity ratio of approximately 3.0:1.0 or below and was in compliance with all financial covenants as of June 30, 2025[273][278] Results of Operations This section analyzes the company's financial performance, comparing net interest income, net income, and key expenses across different reporting periods Consolidated Results of Operations (QoQ Comparison) | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended March 31, 2025 | Difference | | :---------------------------------------- | :------------------------------- | :-------------------------------- | :--------- | | Net interest income | $21,530 | $20,329 | $1,201 | | Net income (loss) | $17,108 | $11,555 | $5,553 | | Real estate operating income | $25,775 | $21,773 | $4,002 | | Compensation and employee benefits | $11,561 | $18,761 | $(7,200) | Consolidated Results of Operations (YoY Comparison) | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Difference | | :---------------------------------------- | :----------------------------- | :----------------------------- | :--------- | | Net interest income | $41,859 | $71,457 | $(29,598) | | Net income (loss) | $28,664 | $48,553 | $(19,889) | | Provision for (release of) loan loss reserves, net | $(123) | $10,823 | $(10,946) | | Compensation and employee benefits | $30,322 | $34,510 | $(4,188) | - Net interest income increased quarter-over-quarter due to increased income from securities and lower interest expense from CLO payoffs, but decreased year-over-year primarily due to net payoffs in the loan portfolio[285][304] Liquidity and Capital Resources This section discusses the company's ability to meet its financial obligations, detailing its liquidity sources, cash flow, and unencumbered assets - The Company maintains diverse liquidity sources, including cash, cash generated from operations, debt financing, principal repayments on investments, and proceeds from asset sales[327] - Cash, cash equivalents, and restricted cash decreased by $(1.2) billion for the six months ended June 30, 2025, primarily due to cash used in investing activities[335] - As of June 30, 2025, the Company held $3.6 billion in unencumbered assets, including $134.9 million in cash, $1.5 billion in loans, $1.6 billion in securities, and $266.8 million in real estate[342] Contractual Obligations as of June 30, 2025 (in thousands) | Contractual Obligations | Less than 1 Year | 1-3 Years | 3-5 Years | More than 5 Years | Total | | :---------------------- | :--------------- | :--------- | :--------- | :---------------- | :--------- | | Secured financings | $402,479 | $227,047 | $59,068 | $87,744 | $776,338 | | Senior unsecured notes | $285,049 | $599,490 | $633,919 | $500,000 | $2,018,458 | | Interest payable | $112,489 | $167,870 | $92,681 | $58,805 | $431,845 | | Other funding obligations | $349 | $12,180 | — | — | $12,529 | | Operating lease obligations | $3,469 | $4,590 | $4,789 | $7,646 | $20,494 | | Total | $803,835 | $1,011,177 | $790,457 | $654,195 | $3,259,664 | Critical Accounting Estimates This section highlights the accounting estimates that require significant judgment, such as allowance for loan losses, real estate valuation, and fair value measurements - Critical accounting estimates include Allowance for Loan Losses (CECL model), Acquisition of Real Estate, Identified Intangible Assets and Liabilities, Impairment or Disposal of Long-lived Assets, and Fair Value of Assets and Liabilities[380][381][389][390][391][394] - The CECL model for loan losses requires significant judgment, considering possible credit losses over the life of an instrument using a forward-looking econometric CRE loss forecasting tool[381] - No impairments of real estate were recorded for the six months ended June 30, 2025, or June 30, 2024[393] Reconciliation of Non-GAAP Financial Measures This section provides a reconciliation of non-GAAP financial measures, such as distributable earnings, to their most directly comparable GAAP measures - The Company uses 'distributable earnings' as a non-GAAP financial measure to evaluate operating performance and dividend-paying ability, excluding certain non-cash expenses and unrealized results[396][397] Distributable Earnings (in thousands) | Metric | June 30, 2025 | March 31, 2025 | | :---------------------- | :------------ | :------------- | | Income (loss) before taxes | $20,822 | $10,717 | | Distributable earnings | $30,925 | $25,452 | - Distributable earnings increased to $30.925 million for the three months ended June 30, 2025, from $25.452 million for the three months ended March 31, 2025[403] Item 3. Quantitative and Qualitative Disclosures about Market Risk This section details the company's exposure to various market risks, including interest rate risk, market risk, liquidity risk, credit risk, credit spread risk, risks related to real estate, covenant risk, diversification risk, and regulatory risk, and outlines strategies for mitigation - The Company is exposed to interest rate risk, which directly impacts net income; it mitigates this risk using hedging instruments, primarily interest rate futures agreements[409] Projected Change in Net Income and Portfolio Value (12 months commencing June 30, 2025, in thousands) | Change in interest rate | Projected change in net income | Projected change in portfolio value | | :---------------------- | :----------------------------- | :---------------------------------- | | Decrease by 1.00% | $(27,526) | $(186) | | Increase by 1.00% | $28,758 | $205 | - The Company manages credit risk through deep credit fundamental analyses and ongoing asset management, with a portfolio weighted average loan-to-value of 66.9% as of June 30, 2025[417][418] - Regulatory changes include Tuebor Captive Insurance Company LLC no longer being licensed as a captive insurer (effective January 31, 2025) and LCAM redeeming both CLO Trusts, eliminating its advisory clients and regulatory assets under management as of June 30, 2025[424][425] Item 4. Controls and Procedures This section confirms the effectiveness of the company's disclosure controls and procedures as of June 30, 2025, and states that there were no material changes in internal control over financial reporting during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025, providing reasonable assurance for timely and accurate reporting[429] - There were no changes in the Company's internal control over financial reporting during the quarter ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, its internal control over financial reporting[430] Part II - Other Information Item 1. Legal Proceedings The company is not currently a party to any material legal proceedings, enforcement actions, or litigation related to regulatory compliance matters - The Company is not presently a party to any material enforcement proceedings, litigation related to regulatory compliance matters, or any other type of material litigation matters[433] Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - There have been no material changes during the three months ended June 30, 2025, to the risk factors in Item 1A in the Company's Annual Report on Form 10-K for the year ended December 31, 2024[434] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section reports no unregistered sales of equity securities and details the company's Class A common stock repurchase activity for the three months ended June 30, 2025 - There were no unregistered sales of equity securities during the period[435] Share Repurchase Activity (Three Months Ended June 30, 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :--------------------------- | :------------------------------- | :--------------------------- | | April 1, 2025 - April 30, 2025 | — | — | | May 1, 2025 - May 31, 2025 | 401,396 | $10.34 | | June 1, 2025 - June 30, 2025 | 234,094 | $10.49 | | Total | 635,490 | $10.40 | - As of June 30, 2025, $93.393 million remained available for repurchase under the board's authorization of $100.0 million[436] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities during the period - There were no defaults upon senior securities during the period[437] Item 4. Mine Safety Disclosures This item is not applicable to the company - This item is not applicable to the Company[438] Item 5. Other Information No director or officer adopted, modified, or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025 - No director or officer of the Company adopted, modified, or terminated a 'Rule 10b5-1 trading arrangement' or 'non-Rule 10b5-1 trading arrangement' during the three months ended June 30, 2025[439] Item 6. Exhibits This section lists all exhibits filed as part of the Form 10-Q, including indentures, credit agreements, certifications, and XBRL documents - Exhibits include the Indenture dated June 23, 2025, and the First Supplemental Indenture dated July 3, 2025[441] - The Amended Credit and Guaranty Agreement dated December 20, 2024, is incorporated by reference[441] - Certifications by Brian Harris (CEO) and Paul J. Miceli (CFO) pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are furnished[441] Signatures - The report was signed on July 25, 2025, by Brian Harris, Chief Executive Officer, and Paul J. Miceli, Chief Financial Officer, on behalf of Ladder Capital Corp[443]