Ladder Capital Corp
For the period ended Dec 31, 2024. Filed Feb 10, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Feb 10, 2025
LADR$8.91-2.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-02-12.
0001577670-24-000006
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-02-10.
0001577670-25-000010
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 195 previous paragraphs and 180 current paragraphs.
98 unchanged; 66 reworded; 13 added; 27 removed; 4 previous and 3 current paragraphs rearranged.
Tables are not compared: 8 previous and 8 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (13)
Current report
Activity for the year ended December 31, 2024 included fundings of $195.2 million and paydowns of $1.7 billion, which contributed to a $1.6 billion decrease in commercial mortgage loans. Activity for the year ended December 31, 2024 included securities purchases of $898.0 million, sales of $32.2 million and $276.8 million of amortization and paydowns, which contributed to a net increase in our securities portfolio of $595.3 million. Activity for the year ended December 31, 2024 included real estate investment sales of $102.3 million and acquisitions in real estate via foreclosure of $48.8 million. In addition, we purchased $10.0 billion of short-term U.S. Treasury securities during the year ended December 31, 2024, of which $10.0 billion matured during the year ended December 31, 2024.
Current report
The provision for the year ended December 31, 2024 of $13.9 million was primarily due to continued uncertainty in macroeconomic market conditions affecting commercial real estate, partially offset by a decrease in the size of our balance sheet first mortgage loans as a result of repayments. During the year ended December 31, 2024, we charged-off $5.0 million of an existing allowance related to an office property in Oakland, California. For additional information, refer to Note 3, Mortgage Loan Receivables, in the consolidated financial statements.
Current report
The increase of $1.7 million in real estate operating income was primarily attributable to operating income earned on properties acquired via foreclosure during the years ended December 31, 2023 and December 31, 2024, partially offset by sales during the same periods. Refer to Note 5, Real Estate and Related Lease Intangibles, Net, for further details.
Current report
Gain (Loss) on Real Estate, net
Current report
The increase of $16.5 million of gain on real estate, net during the year ended December 31, 2024 compared to the year ended December 31, 2023 was the result of property sales during the year ended December 31, 2024 compared to property sales during the year ended December 31, 2023. Refer to Note 5, Real Estate and Related Lease Intangibles, Net, for further detail.
Current report
The increase of $3.0 million from the year ended December 31, 2023 to December 31, 2024 was primarily due to operating expenses from properties that were acquired via foreclosure during the years ended December 31, 2023 and December 31, 2024, partially offset by the sales during the same periods. Refer to Note 5, Real Estate and Related Lease Intangibles, Net, for further detail.
Current report
(3)Presented net of unamortized debt issuance costs of $16.5 million as of December 31, 2024.
Current report
Following the date on which the Company has received an investment grade rating from at least two rating agencies, the Revolving Credit Facility will be automatically amended, the pledge of the shares of (or other ownership or equity interest in) certain subsidiaries will be terminated, and each guarantor (other than Ladder Capital Corp and any subsidiary that is a trigger guarantor) will be released and discharged from all obligations as a guarantor and/or pledgor. There is no guarantee that the Company will achieve or maintain an investment grade rating.
Current report
As of December 31, 2024, the Company had no debt outstanding with the FHLB.
Current report
During the year ended December 31, 2024, the Company repurchased $32.1 million of the 2025 Notes and $2.0 million of the 2029 Notes, recognizing a net gain on extinguishment of debt of $11 thousand and $0.2 million, respectively.
Current report
(2)On April 24, 2024, the Board authorized repurchases up to $75.0 million in aggregate.
Current report
Critical Accounting Estimates
Current report
We exclude the effects of our share of real estate depreciation and amortization. Given GAAP gains and losses on sales of real estate include the effects of previously-recognized real estate depreciation and amortization, our adjustment eliminates the portion of the GAAP gain or loss that is derived from depreciation and amortization.
Removed paragraphs (27)
Previous report
Activity for the year ended December 31, 2022 included originating and funding $1.3 billion in principal value of commercial mortgage loans, which was offset by $0.9 billion of principal repayments and $29.2 million of proceeds of sales of loans. We acquired $96.2 million of new securities, which was offset by $5.8 million of sales and $184.8 million of amortization in the portfolio, which partially contributed to a net decrease in our securities portfolio of $115.8 million during the year ended December 31, 2022. We acquired $24.8 million in real estate and received proceeds from the sale of real estate of $310.5 million as a result of the sale of eight investments.
Previous report
The provision for the year ended December 31, 2022 of $3.7 million represents an increase in the general reserve of loans held for investment of $6.5 million and an increase related to unfunded loan commitments of $0.3 million partially offset by a $3.1 million recovery of provision. The increase in provision associated with the general reserve during the year ended December 31, 2022 is primarily due to adverse changes in macroeconomic scenarios and an overall increase in the size of our balance sheet first mortgage portfolio as a result of net originations during that time.
Previous report
The decrease of $11.3 million in real estate operating income primarily relates to operating income earned on properties sold during the twelve months ended December 31, 2022 and December 31, 2023 for which there was an immaterial amount or no operating income during the current period.
Previous report
Realized Gain (Loss) on Securities
Previous report
The realized loss on securities for the year ended December 31, 2023 was $(0.3) million compared to a realized loss of $(0.1) million for December 31, 2022. For the year ended December 31, 2023, we sold $14.9 million of CMBS securities. For the year ended December 31, 2022, we sold $4.3 million of CMBS securities and $1.5 million of equity securities.
Previous report
Realized Gain (Loss) on Sale of Real Estate, Net
Previous report
There was a decrease of $107.2 million in realized gain (loss) on the sale of real estate for the year ended December 31, 2023, which was a result of one sale during the year ended December 31, 2023, as compared to eight sales during the year ended December 31, 2022. During the year ended December 31, 2023, there was a sale of one hotel property for a realized gain of $8.8 million. During the year ended December 31, 2022, there were sales of: (i) two office properties for a realized gain of $61.5 million; (ii) one warehouse property for a realized gain of $14.6 million; (iii) three apartment buildings for a combined realized gain of $29.1 million; and (iv) two retail properties for a realized gain of $10.8 million.
Previous report
Earnings from Investment in Unconsolidated Ventures
Previous report
Earnings from our investment in unconsolidated ventures totaled $0.8 million and $1.4 million for the year ended December 31, 2023 and 2022, respectively. The $0.6 million decrease in earnings from investments in unconsolidated ventures is attributable to higher interest expense due to a higher debt balance at the property as a result of a refinancing in 2023. Our maximum exposure to loss from these investments is limited to the carrying value of our investment.
Previous report
The decrease of $1.0 million from year ended December 31, 2023 to December 31, 2022 was primarily due to the absence of operating expenses for properties that were sold during the twelve months ended December 31, 2022 for which there was no operating expense during the current period.
Previous report
(3)Presented net of unamortized debt issuance costs of $11.8 million as of December 31, 2023.
Previous report
Committed Securities Facility
Previous report
We are a party to a term master repurchase agreement with a major U.S. banking institution for CMBS, totaling $100.0 million of credit capacity. As we do in the case of borrowings under committed loan facilities, we often borrow at a lower percentage of the collateral asset’s value than the maximum, leaving us with excess borrowing capacity that can be drawn upon a later date and/or applied against future margin calls so that they can be satisfied on a cashless basis. As of December 31, 2023, the Company had no borrowings outstanding, with an additional $100.0 million of committed financing available. As of December 31, 2022, the Company had $8.6 million of borrowings outstanding, and an additional $91.4 million of committed financing available.
Previous report
The Company is subject to customary affirmative covenants and negative covenants, including limitations on the incurrence of additional debt, liens, restricted payments, sales of assets and affiliate transactions. In addition, the Company is required to comply with financial covenants relating to minimum net worth, maximum leverage, minimum liquidity, and minimum fixed charge coverage, consistent with our other credit facilities. The Company’s ability to borrow is dependent on, among other things, compliance with the financial covenants. The Revolving Credit Facility contains customary events of default, including non-payment of principal or interest, fees or other amounts, failure to perform or observe covenants, cross-default to other indebtedness, the rendering of judgments against the Company or certain of our subsidiaries to pay certain amounts of money and certain events of bankruptcy or insolvency.
Previous report
On July 11, 2012, Tuebor, a consolidated subsidiary of the Company, became a member of the FHLB and subsequently drew its first secured funding advances from the FHLB. As of February 19, 2021, pursuant to a final rule adopted by the Federal Housing Finance Agency (the “FHFA”) regarding the eligibility of captive insurance companies, Tuebor’s membership in the FHLB has been terminated, although outstanding advances may remain outstanding until their scheduled maturity dates. Funding for future advance paydowns is expected to be obtained from the natural amortization and/or sales of securities collateral, or from other financing sources. There is no assurance that the FHFA or the FHLB will not take actions that could adversely impact Tuebor’s existing advances.
Previous report
During the year ended December 31, 2023, the Company repurchased $16.2 million of the 2025 Notes and recognized a net gain of $1.3 million on extinguishment of debt, $38.9 million of the 2027 Notes and recognized a net gain of $6.8 million on extinguishment of debt, and $13.1 million of the 2029 Notes and recognized a net gain of $2.6 million on extinguishment of debt.
Previous report
LIBOR Transition to SOFR
Previous report
As of December 31, 2023, all of our floating rate loans earn interest at a rate indexed to Term SOFR; and all of our floating rate debt obligations bear interest indexed to Term SOFR.
Previous report
Critical Accounting Policies and Estimates
Previous report
•Variable interest entities
Previous report
•Valuation of financial instruments
Previous report
The following is a summary of accounting policies that require more significant management estimates and judgments:
Previous report
Allowance for Loan Losses
Previous report
Acquisition of Real Estate
Previous report
Identified Intangible Assets and Liabilities
Previous report
Variable Interest Entities
Previous report
We evaluate our investments and other contractual arrangements to determine if our interests constitute variable interests in a variable interest entity (“VIE”) and if we are the primary beneficiary. There is a significant amount of judgment required to determine if an entity is considered a VIE and if we are the primary beneficiary. We first perform a qualitative analysis, which requires certain subjective decisions regarding our assessment, including, but not limited to, which interests create or absorb variability, the contractual terms, the key decision-making powers, impact on the VIE’s economic performance and related party relationships. An iterative quantitative analysis is required if our qualitative analysis proves inconclusive as to whether the entity is a VIE or we are the primary beneficiary and consolidation is required.
Reworded paragraphs (66)
Previous wording
Activity for the year ended December 31, 2023 included originating and funding $68.4 million in principal value of commercial mortgage loans and $726.7 million of principal repayments, which contributed to a net decrease in our loan portfolio of $0.8 billion. Activity for the year ended December 31, 2023 included securities purchases of $144.0 million, sales of $17.8 million and $232.1 million of amortization and paydowns, which contributed to a net decrease in our securities portfolio of $102.0 million. We acquired $87.6 million in real estate via foreclosure and received proceeds from the sale of real estate of $43.3 million as a result of the sale of one investment. In addition, we purchased $5.2 billion of short-term U.S. Treasury securities during the year ended December 31, 2023, of which $4.3 billion matured during the year ended December 31, 2023.
Current wording
Activity for the year ended December 31, 2023 included fundings of $68.4 million and paydowns of $726.7 million, which contributed to a $0.8 billion decrease in commercial mortgage loans. Activity for the year ended December 31, 2023 included securities purchases of $144.0 million, sales of $17.8 million and $232.1 million of amortization and paydowns, which contributed to a net decrease in our securities portfolio of $102.0 million. We acquired $87.6 million in real estate via foreclosure and received proceeds from the sale of real estate of $43.3 million as a result of the sale of one investment. In addition, we purchased $5.2 billion of short-term U.S. Treasury securities during the year ended December 31, 2023, of which $4.3 billion matured during the year ended December 31, 2023.
Previous wording
The $113.8 million increase in interest income was primarily attributable to increases in prevailing interest rate benchmarks on our floating rate balance sheet loan and securities portfolios partially offset by net payoffs. There was a $(0.3) billion decrease in average loan investments from $3.9 billion for the year ended December 31, 2022 to $3.6 billion for the year ended December 31, 2023. There was a $(152.6) million decrease in average securities investments from $648.1 million for the year ended December 31, 2022 to $495.5 million for the year ended December 31, 2023.
Current wording
The $48.7 million decrease in interest income was primarily attributable net payoffs within our loan portfolio, partially offset by an increase in income from collection of deferred interest from the resolution of a previously modified loan, and an increase in interest earned on real estate securities and short-term U.S. Treasury securities due to purchases. There was a $1.1 billion decrease in average loan investments from $3.6 billion for the year ended December 31, 2023 to $2.5 billion for the year ended December 31, 2024. There was a $151.9 million increase in average securities investments from $495.5 million for the year ended December 31, 2023 to $647.4 million for the year ended December 31, 2024.
Previous wording
The $49.5 million increase in interest expense is primarily related to higher prevailing rates on our floating rate debt and higher outstanding balances on our loan repurchase facilities. The increase in interest expense was partially offset by lower interest expense as a result of lower average spreads on secured debt and reductions in the outstanding balances of our long-term mortgage loan debt, securities repurchase financing, and FHLB borrowings as well as a reduction in expense as a result of redemptions of our Notes.
Current wording
The $23.6 million decrease in interest expense is primarily related to lower outstanding balances on our securities and loan repurchase facilities and the payoff of our FHLB borrowings as well as a reduction in expense as a result of redemptions of our Notes, partially offset by the issuance of our 2031 Notes.
Previous wording
As of December 31, 2023, the weighted average yield on our mortgage loan receivables was 9.6%, compared to 8.8% as of December 31, 2022. The weighted average yield increased as a result of increases in the prevailing interest rates. As of December 31, 2023, the weighted average interest rate on borrowings against our mortgage loan receivables was 7.5%, compared to 4.8% as of December 31, 2022. The increase in the rate on borrowings against our mortgage loan receivables from December 31, 2022 to December 31, 2023 was primarily due to the increase in prevailing interest rates. As of December 31, 2023, we had outstanding borrowings secured by our mortgage loan receivables equal to 53.1% of the carrying value of our mortgage loan receivables, compared to 43.0% as of December 31, 2022.
Current wording
As of December 31, 2024, the weighted average yield on our mortgage loan receivables was 9.3%, compared to 9.6% as of December 31, 2023. As of December 31, 2024, the weighted average interest rate on borrowings against our mortgage loan receivables was 6.4%, compared to 7.5% as of December 31, 2023. The decrease in the rate on borrowings against our mortgage loan receivables from December 31, 2023 to December 31, 2024 was primarily due to decreases in prevailing interest rates. As of December 31, 2024, we had outstanding borrowings secured by our mortgage loan receivables equal to 42.4% of the carrying value of our mortgage loan receivables, compared to 53.1% as of December 31, 2023.
Previous wording
As of December 31, 2023, the weighted average yield on our securities was 6.1%, compared to 5.2% as of December 31, 2022. The weighted average yield increased as a result of increases in the prevailing interest rates. As of December 31, 2023, the weighted average interest rate on borrowings against our securities was 5.8%, compared to 4.8% as of December 31, 2022. The increase in the rate on borrowings against our securities from December 31, 2022 to December 31, 2023 was primarily due to higher prevailing market borrowing rates as of December 31, 2023 compared to December 31, 2022. As of December 31, 2023, we had outstanding borrowings secured by our securities equal to 24.0% of the carrying value of our real estate securities, compared to 75.6% as of December 31, 2022.
Current wording
As of December 31, 2024 the weighted average yield on our securities was 6.0%, compared to 6.1% as of December 31, 2023. As of December 31, 2024, we did not have any borrowings against our securities. As of December 31, 2023, the weighted average interest rate on borrowings against our securities was 5.8%. As of December 31, 2023, we had outstanding borrowings secured by our securities equal to 24.0% of the carrying value of our real estate securities.
Previous wording
Our real estate is comprised of non-interest bearing assets; however, interest incurred on mortgage financing collateralized by such real estate is included in interest expense. As of December 31, 2023, the weighted average interest rate on mortgage borrowings against our real estate assets was 5.9%, compared to 5.5% as of December 31, 2022. As of December 31, 2023, we had outstanding borrowings secured by our real estate equal to 60.3% of the carrying value of our real estate, compared to 71.1% as of December 31, 2022.
Current wording
Our real estate is comprised of non-interest bearing assets; however, interest incurred on mortgage financing collateralized by such real estate is included in interest expense. As of December 31, 2024, the weighted average interest rate on mortgage borrowings against our real estate assets was 6.0%, compared to 5.9% as of December 31, 2023. As of December 31, 2024, we had outstanding borrowings secured by our real estate equal to 66.6% of the carrying value of our real estate, compared to 60.3% as of December 31, 2023.
Previous wording
The provision for the year ended December 31, 2023 of $25.1 million represents an increase in the general reserve of loans held for investment. The increase in the provision associated with the general reserve during the year ended December 31, 2023 was primarily due to adverse changes in macroeconomic conditions affecting commercial real estate, partially offset by a decrease in the size of our balance sheet first mortgage loans as a result of repayments.
Current wording
The provision for the year ended December 31, 2023 was $25.1 million. The increase in provision associated with the general reserve during the year ended December 31, 2023 was primarily due to adverse changes in macroeconomic market conditions affecting commercial real estate partially offset by a decrease in the size of our balance sheet first mortgage loan portfolio as a result of repayments.
Previous wording
Net result from mortgage loan receivables held for sale includes unrealized losses on loans held for sale related to lower of cost or market adjustments and realized gains and losses from the sale of loans. During the year ended December 31, 2023, we did not sell any conduit loans and recorded $0.5 million of unrealized losses on loans related to lower of cost or market adjustments on our conduit loans. During the year ended December 31, 2022, we sold two conduit loans for a net gain of $0.2 million and recorded $2.6 million of unrealized losses on loans related to lower of cost or market adjustments on our conduit loans. Income from sales of loans, net is subject to market conditions impacting timing, size and pricing and as such may vary significantly quarter to quarter.
Current wording
Net result from mortgage loan receivables held for sale includes unrealized losses on loans held for sale related to lower of cost or market adjustments and realized gains and losses from the sale of loans. During the year ended December 31, 2024, we recorded $29.8 thousand of unrealized gains on loans related to lower of cost or market adjustments on our conduit loans. During the year ended December 31, 2023, we recorded $0.5 million of unrealized losses on loans related to lower of cost or market adjustments on our conduit loans. Income from sales of loans, net is subject to market conditions impacting timing, size and pricing and as such may vary significantly quarter to quarter.
Previous wording
We generate fee income on the loans we originate and in which we invest, and dividend income on our FHLB stock. The $5.8 million decrease in fee and other income was primarily due to the timing of loan payoffs for the year ended December 31, 2023 as compared to the year ended December 31, 2022, partially offset by an increase in dividends from FHLB stock.
Current wording
We generate fee income on the loans we originate and in which we invest. The $9.8 million increase in fee and other income was primarily due to more payoffs of loans for the year ended December 31, 2024 as compared to the year ended December 31, 2023.
Previous wording
Net result from derivative transactions of $1.5 million is composed of a realized gain of $1.9 million and an unrealized loss of $(0.4) million for the year ended December 31, 2023, compared to a net gain of $12.4 million for the year ended December 31, 2022, which was comprised of a realized gain of $11.8 million and a $0.6 million unrealized gain resulting in a decrease of $10.9 million. The hedge positions primarily relate to fixed rate conduit loans, and securities investments. The derivative positions that generated these results were a combination of five and ten year U.S. treasury rate futures that we employed in an effort to hedge the interest rate risk primarily on the financing of our fixed rate assets and the net interest income we earn against the impact of changes in interest rates. The net gain in 2023 was primarily related to increases in interest rates during the year ended December 31, 2023. The total net result from derivative transactions is comprised of hedging interest expense, realized gains/losses related to hedge terminations and unrealized gains/losses related to changes in the fair value of asset hedges.
Current wording
Net result from derivative transactions of $5.4 million was comprised of a realized gain of $7.3 million and an unrealized loss of $1.9 million for the year ended December 31, 2024. Net result from derivative transactions of $1.5 million was comprised of a realized gain of $1.9 million and an unrealized loss of $0.4 million for the year ended December 31, 2023. The hedge positions primarily relate to fixed rate conduit loans and securities investments. The derivative positions that generated these results were a combination of five and ten year U.S. treasury rate futures that we employed in an effort to hedge the interest rate risk primarily on the financing of our fixed rate assets and the net interest income we earn against the impact of changes in interest rates. The net gain in 2024 was primarily related to changes in interest rates during the year ended December 31, 2024.
Previous wording
Gain on extinguishment of debt totaled $0.7 million for the year ended December 31, 2022. During the year ended December 31, 2022, the Company retired: (1) $4.0 million of principal of the 2025 Notes for a repurchase price of $3.7 million, recognizing a $0.3 million net gain on extinguishment of debt after recognizing $(23) thousand of unamortized debt issuance costs associated with the retired debt; (2) $1.0 million of principal of the 2027 Notes for a repurchase price of $0.8 million, recognizing a $0.2 million net gain on extinguishment of debt after recognizing $(9) thousand of unamortized debt issuance costs associated with the retired debt; and (3) $1.0 million of principal of the 2029 Notes for a repurchase price of $0.8 million, recognizing a $0.2 million net gain on extinguishment of debt after recognizing $(14) thousand of unamortized debt issuance costs associated with the retired debt.
Current wording
Gain on extinguishment of debt totaled $0.2 million for the year ended December 31, 2024. During the year ended December 31, 2024, the Company retired: (1) $32.1 million of principal of the 2025 Notes for a repurchase price of $32.0 million, recognizing an $11 thousand net gain on extinguishment of debt after recognizing $51 thousand of unamortized debt issuance costs associated with the retired debt; and (2) $2.0 million of principal of the 2029 Notes for a repurchase price of $1.8 million, recognizing a $0.2 million net gain on extinguishment of debt after recognizing $21 thousand of unamortized debt issuance costs associated with the retired debt.
Previous wording
Gain on extinguishment of debt totaled $10.7 million for the year ended December 31, 2023. During the year ended December 31, 2023, the Company retired: (1) $16.2 million of principal of the 2025 Notes for a repurchase price of $14.8 million, recognizing a $1.3 million net gain on extinguishment of debt after recognizing $(72) thousand of unamortized debt issuance costs associated with the retired debt; (2) $38.9 million of principal of the 2027 Notes for a repurchase price of $31.8 million, recognizing a $6.8 million net gain on extinguishment of debt after recognizing $(0.3) million of unamortized debt issuance costs associated with the retired debt; and (3) $13.1 million of principal of the 2029 Notes for a repurchase price of $10.3 million, recognizing a $2.6 million net gain on extinguishment of debt after recognizing $(0.2) million of unamortized debt issuance costs associated with the retired debt.
Current wording
Gain on extinguishment of debt totaled $10.7 million for the year ended December 31, 2023. During the year ended December 31, 2023, the Company retired: (1) $16.2 million of principal of the 2025 Notes for a repurchase price of $14.8 million, recognizing a $1.3 million net gain on extinguishment of debt after recognizing $(72) thousand of unamortized debt issuance costs associated with the retired debt; (2) $38.9 million of principal of the 2027 Notes for a repurchase price of $31.8 million, recognizing a $6.8 million net gain on extinguishment of debt after recognizing $0.3 million of unamortized debt issuance costs associated with the retired debt; and (3) $13.1 million of principal of the 2029 Notes for a repurchase price of $10.3 million, recognizing a $2.6 million net gain on extinguishment of debt after recognizing $0.2 million of unamortized debt issuance costs associated with the retired debt.
Previous wording
Compensation and employee benefits are comprised primarily of salaries, bonuses, equity-based compensation and other employee benefits. The decrease of $12.2 million in compensation expense is primarily due to to the timing of employee stock and bonus compensation in 2021, 2022 and 2023.
Current wording
Compensation and employee benefits are comprised primarily of salaries, bonuses, stock-based compensation and other employee benefits. The decrease of $2.9 million in compensation expense is primarily due to a decrease in bonus compensation expense for the year ended December 31, 2024 as compared year ended December 31, 2023.
Previous wording
Operating expenses are primarily comprised of professional fees, lease expense and technology expenses. The decrease during the year ended December 31, 2023 as compared to December 31, 2022 of $1.2 million was primarily related to a decrease in professional and technology expenses.
Current wording
Operating expenses are primarily comprised of professional fees, lease expense and technology expenses. The decrease during the year ended December 31, 2024 as compared to December 31, 2023 of $0.3 million was primarily related to a decrease in professional fees.
Previous wording
Investment related expenses are comprised primarily of custodian fees, financing costs, servicing fees related to loans and other loan related expenses. The increase during the year ended December 31, 2023 as compared to December 31, 2022 of $1.6 million was primarily attributable to an increase in loan related expenses.
Current wording
Investment related expenses are comprised primarily of custodian fees, financing costs, servicing fees related to loans and other loan related expenses. The decrease during the year ended December 31, 2024 as compared to December 31, 2023 of $1.1 million was primarily attributable to a decrease in loan related expenses as a result of a smaller loan portfolio.
Previous wording
The $2.8 million decrease during the year ended December 31, 2023 as compared to December 31, 2022 in depreciation and amortization is primarily attributable to the timing of one real estate sale and three acquisitions that occurred after December 31, 2022, and the timing of eight sales and two acquisitions during the year ended December 31, 2022.
Current wording
The $2.4 million increase in depreciation and amortization during the year ended December 31, 2024 compared to the year ended December 31, 2023 was primarily attributable to the timing of acquisitions of property via foreclosure that occurred after December 31, 2023, partially offset by the sale of one hotel property during the year ended December 31, 2023.
Previous wording
Most of our consolidated income tax provision related to the business units held in our TRSs. The decrease in expense of $0.7 million during the year ended December 31, 2023 as compared to December 31, 2022 is primarily a result of a tax reserve recognized in 2022 offset by changes in income generated by our TRSs.
Current wording
Most of our consolidated income tax provision related to the business units held in our TRSs. The decrease in expense of $0.8 million during the year ended December 31, 2024 as compared to December 31, 2023 is primarily a result of changes in income generated by our TRSs.
Previous wording
To ensure that Ladder can effectively address the funding needs of the Company on a timely basis, we maintain a diverse array of liquidity sources including: (1) cash and cash equivalents; (2) cash generated from operations; (3) proceeds from the issuance of the unsecured bonds; (4) borrowings under repurchase agreements; (5) principal repayments on investments including mortgage loans and securities; (6) borrowings under our Revolving Credit Facility; (7) proceeds from securitizations and sales of loans; (8) proceeds from the sale of securities; (9) proceeds from the sale of real estate; (10) proceeds from the issuance of CLO debt and other non-mark-to-market loan financing; and (11) proceeds from the issuance of equity capital. We use these funding sources to meet our obligations on a timely basis and have the ability to use our significant unencumbered asset base to further finance our business.
Current wording
To ensure that Ladder can effectively address the funding needs of the Company on a timely basis, we maintain a diverse array of liquidity sources including: (1) cash and cash equivalents; (2) cash generated from operations; (3) proceeds from debt financing; (4) principal repayments on investments including mortgage loans and securities; (5) proceeds from securitizations and sales of loans; (6) proceeds from the sale of securities; (7) proceeds from the sale of real estate; and (8) proceeds from the issuance of equity capital. We use these funding sources to meet our obligations on a timely basis and have the ability to use our significant unencumbered asset base to further finance our business.
Previous wording
Our principal debt financing sources include: (1) long-term senior unsecured notes in the form of corporate bonds; (2) CLO issuances; (3) committed secured funding provided by banks and other lenders; (4) long term non-recourse mortgage financing; (5) uncommitted secured funding sources, including asset repurchase agreements with a number of banks; (6) unsecured Revolving Credit Facility and (7) secured advances from the FHLB through our captive insurance company.
Current wording
Our principal debt financing sources include: (1) long-term senior unsecured notes in the form of corporate bonds; (2) an unsecured Revolving Credit Facility; (3) CLO issuances; (4) committed and uncommitted secured funding provided by banks and other lenders; and (5) long term non-recourse mortgage financing.
Previous wording
We held cash, cash equivalents and restricted cash of $1.0 billion at December 31, 2023, of which $1.0 billion was unrestricted cash and cash equivalents and $15.4 million was restricted cash. We held cash and cash equivalents of $609.1 million and restricted cash of $50.5 million as of December 31, 2022.
Current wording
We held cash and cash equivalents of $1.3 billion and restricted cash of $12.6 million as of December 31, 2024. We held cash and cash equivalents of $1.0 billion and restricted cash of $15.4 million as of December 31, 2023.
Previous wording
We experienced a net increase in cash, cash equivalents and restricted cash of $38.1 million for the year ended December 31, 2022 reflecting cash provided by operating activities of $106.7 million, cash provided by investing activities of $81.6 million and cash used in financing activities of $(150.2) million.
Current wording
We experienced a net increase in cash, cash equivalents and restricted cash of $270.1 million for the year ended December 31, 2024, reflecting cash provided by operating activities of $133.9 million, cash provided by investing activities of $932.8 million and cash used in financing activities of $(796.6) million.
Previous wording
Net cash provided by operating activities of $106.7 million was primarily driven by $29.2 million in proceeds from sale of loans and increases in net interest income and increases in net operating income on our real estate portfolio partially offset by $(61.3) million of originations of mortgage loans held for sale.
Current wording
Net cash provided by operating activities of $133.9 million was primarily driven by net interest income and net increases in operating income on our real estate portfolio.
Previous wording
Net cash provided by investing activities of $81.6 million was driven by $909.8 million of repayment from mortgage loan receivables, $310.5 million proceeds from the sale of real estate, $184.8 million in repayments on securities, and $5.8 million of proceeds from sale of securities, partially offset by $(1.2) billion of origination of mortgage loans held for investment and $(96.2) million in purchases of securities.
Current wording
Net cash provided by investing activities of $932.8 million was driven by $1.6 billion of repayment from mortgage loan receivables, $276.6 million in repayments on securities, $102.3 million in proceeds from sale of real estate and $32.2 million of proceeds from sale of securities, partially offset by $(898.0) million in purchases of securities and $(195.2) million of origination of mortgage loans held for investment.
Previous wording
Net cash used in financing activities of $(150.2) million was primarily as a result of $(107.0) million of dividend payments, $(29.5) million of capital distributed to noncontrolling interests in consolidated ventures, $(11.4) million of shares acquired to satisfy minimum federal and state tax withholdings on restricted stock, $(7.9) million purchase of treasury stock, and $(8.3) million in deferred financing cost, partially offset by net repayments of borrowings of $13.7 million.
Current wording
Net cash used in financing activities of $(796.6) million was primarily as a result of net repayments of borrowings of $(644.8) million, $(117.7) million of dividend payments, $(8.9) million payment to satisfy minimum federal and state tax withholdings on restricted stock, $(6.5) million purchase of treasury stock, and $(18.3) million in deferred financing cost.
Previous wording
Net cash provided by operating activities of $180.6 million was primarily driven by net interest income and increases in net operating income on our real estate portfolio.
Current wording
Net cash provided by operating activities of $180.6 million was primarily driven by net interest income and net increases in operating income on our real estate portfolio.
Previous wording
As of December 31, 2023, we held unencumbered cash of $1.0 billion, unencumbered loans of $1.1 billion, unencumbered securities of $342.8 million, unencumbered real estate of $160.8 million and $394.2 million of other assets not encumbered by any portion of secured indebtedness. As of December 31, 2022, we held unencumbered cash and cash equivalents of $609.1 million, unencumbered loans of $1.7 billion, unencumbered securities of $97.5 million, unencumbered real estate of $140.3 million and $351.6 million of other assets not encumbered by any portion of secured indebtedness.
Current wording
As of December 31, 2024, we held unencumbered cash of $1.3 billion, unencumbered loans of $689.7 million, unencumbered securities of $1.1 billion, unencumbered real estate of $213.4 million and $409.1 million of other assets not encumbered by any portion of secured indebtedness. As of December 31, 2023, we held unencumbered cash and cash equivalents of $1.0 billion, unencumbered loans of $1.1 billion, unencumbered securities of $342.8 million, unencumbered real estate of $160.8 million and $394.2 million of other assets not encumbered by any portion of secured indebtedness.
Previous wording
(1)Presented net of unamortized debt issuance costs of $1.4 million and net of premiums of $1.8 million as of December 31, 2023.
Current wording
(1)Presented net of unamortized debt issuance costs of $1.1 million and net of premiums of $3.7 million as of December 31, 2024.
Previous wording
(2)Presented net of unamortized debt issuance costs of $2.1 million as of December 31, 2023.
Current wording
(2)Presented net of unamortized debt issuance costs of $0.1 million as of December 31, 2024.
Previous wording
We are a party to multiple committed loan repurchase agreement facilities, totaling $1.2 billion of credit capacity as of December 31, 2023. As of December 31, 2023, the Company had $605.0 million of borrowings outstanding, with an additional $637.0 million of committed financing available. As of December 31, 2022, the Company had $616.9 million of borrowings outstanding, with an additional $683.1 million of committed financing available. Assets pledged as collateral under these facilities are generally limited to whole mortgage loans collateralized by first liens on commercial real estate, mezzanine loans collateralized by equity interests in entities that own commercial real estate, and certain interests in such first mortgage and mezzanine loans. Our repurchase facilities include covenants covering net worth requirements, minimum liquidity levels, and maximum debt/equity ratios. We believe we were in compliance with all covenants as of December 31, 2023.
Current wording
We are a party to multiple committed loan repurchase agreement facilities, totaling $1.2 billion of credit capacity as of December 31, 2024. As of December 31, 2024, the Company had $62.7 million of borrowings outstanding, with an additional $1.1 billion of committed financing available. As of December 31, 2023, the Company had $605.0 million of borrowings outstanding, with an additional $637.0 million of committed financing available. Assets pledged as collateral under these facilities are generally limited to whole mortgage loans collateralized by first liens on commercial real estate, mezzanine loans collateralized by equity interests in entities that own commercial real estate, and certain interests in such first mortgage and mezzanine loans. Our repurchase facilities include covenants covering net worth requirements, minimum liquidity levels, and maximum debt/equity ratios. We believe we were in compliance with all covenants as of December 31, 2024.
Previous wording
We are a party to multiple master repurchase agreements with several counterparties to finance our investments in CMBS and U.S. Agency securities. The securities that served as collateral for these borrowings are highly liquid and marketable assets that are typically of relatively short duration.
Current wording
We are a party to multiple master repurchase agreements with several counterparties to finance our investments in securities. The securities that served as collateral for these borrowings are highly liquid and marketable assets that are typically of relatively short duration.
Previous wording
The Company’s revolving credit facility (“Revolving Credit Facility”) provides for an aggregate maximum borrowing amount of $323.9 million, including a $25.0 million sublimit for the issuance of letters of credit. The Revolving Credit Facility is available on a revolving basis to finance the Company’s working capital needs and for general corporate purposes. Borrowings under the Revolving Credit Facility incur interest at a fixed margin of 2.50% over the index rate, with reductions in the fixed margin upon the achievement of investment grade credit ratings. On January 25, 2024, the Company amended its Revolving Credit Facility to extend the final maturity date to January 25, 2029. As of December 31, 2023, the Company had no outstanding borrowings on the Revolving Credit Facility, but still maintains the ability to draw $323.9 million.
Current wording
The Company’s Revolving Credit Facility is available on a revolving basis to finance the Company’s working capital needs and for general corporate purposes. On January 2, 2025, the Company increased the aggregate maximum borrowing amount of the Revolving Credit Facility to $850.0 million, following the upsize to $725 million on December 20, 2024. The Revolving Credit Facility also allows the Company to enter into additional incremental revolving commitments up to an aggregate facility size of $1.25 billion subject to certain customary conditions. Borrowings under the Revolving Credit Facility bear interest at a rate equal to adjusted term SOFR plus a margin. The margin for borrowings is adjustable based on the Company’s credit rating and is between 77.5 basis points and 170 basis points. As of December 31, 2024, the Company had no outstanding borrowings on the Revolving Credit Facility.
Previous wording
The Company typically finances its real estate investments with long-term, non-recourse mortgage financing. These mortgage loans have carrying amounts of $437.8 million and $498.0 million, net of unamortized premiums of $1.8 million and $2.4 million as of December 31, 2023 and December 31, 2022, respectively, representing proceeds received upon financing greater than the contractual amounts due under these agreements. The premiums are being amortized over the remaining life of the respective debt instruments using the effective interest method. The Company recorded $0.6 million and $0.7 million and $1.4 million of premium amortization, which decreased interest expense for the years ended December 31, 2023, 2022, and 2021 respectively. These non-recourse debt agreements provide for secured financing at rates ranging from 4.39% to 9.03%, and, as of December 31, 2023, have anticipated maturity dates between 2024 - 2031, with an average term of 3.1 years. The mortgage loans are collateralized by real estate and related lease intangibles, net, of $474.7 million and $559.9 million as of December 31, 2023 and December 31, 2022, respectively. During the year ended December 31, 2023 the Company did not execute any new term debt agreements to finance properties in its real estate portfolio. During the year ended December 31, 2022, the Company executed one new term debt agreement to finance properties in its real estate portfolio.
Current wording
The Company typically finances its real estate investments with long-term, non-recourse mortgage financing. These mortgage loans have carrying amounts of $446.4 million and $437.8 million, net of unamortized premiums of $3.7 million and $1.8 million as of December 31, 2024 and December 31, 2023, respectively, representing proceeds received upon financing greater than the contractual amounts due under these agreements. The premiums are being amortized over the remaining life of the respective debt instruments using the effective interest method. The Company recorded $0.8 million and $0.6 million of premium amortization, which decreased interest expense for the years ended December 31, 2024 and 2023, respectively. These non-recourse debt agreements provide for secured financing at rates ranging from 4.39% to 8.09%, and, as of December 31, 2024, have anticipated maturity dates between 2025 and 2034, with an average term of 3.8 years. The mortgage loans are collateralized by real estate and related lease intangibles, net, of $451.9 million and $474.7 million as of December 31, 2024 and December 31, 2023, respectively. During the year ended December 31, 2024, the Company executed 16 new term debt agreements to finance properties in its real estate portfolio with a carrying amount of $81.9 million. During the year ended December 31, 2023, the Company did not execute any term debt agreements.
Previous wording
On July 13, 2021, a consolidated subsidiary of the Company completed a privately-marketed CLO transaction, which generated $498.2 million of gross proceeds to Ladder, financing $607.5 million of loans (“Contributed July 2021 Loans”) at an 82% advance rate on a matched term, non-mark-to-market and non-recourse basis. A consolidated subsidiary of the Company retained an 18% subordinate and controlling interest in the CLO. The Company retained consent rights over major decisions with respect to the servicing of the Contributed July 2021 Loans, including the right to appoint and replace the special servicer under the CLO. The CLO is a VIE and the Company was the primary beneficiary and, therefore, consolidated the VIE. Refer to Note 9, Consolidated Variable Interest Entities, for additional information.
Current wording
On July 13, 2021, a consolidated subsidiary of the Company completed a privately-marketed CLO transaction, which generated $498.2 million of gross proceeds to Ladder, financing $607.5 million of loans at an 82% advance rate on a matched term, non-mark-to-market and non-recourse basis. A consolidated subsidiary of the Company retained an 18% subordinate and controlling interest in the CLO. The Company retained consent rights over major decisions with respect to the servicing of the loans in the CLO, including the right to appoint and replace the special servicer under the CLO. The CLO is a VIE and the Company was the primary beneficiary and, therefore, consolidated the VIE. Refer to Note 9, Consolidated Variable Interest Entities for additional information.
Previous wording
On December 2, 2021, a consolidated subsidiary of the Company completed a privately-marketed CLO transaction, which generated $566.2 million of gross proceeds to Ladder, financing $729.4 million of loans (“Contributed December 2021 Loans”) at a maximum 77.6% advance rate on a matched term, non-mark-to-market and non-recourse basis. A consolidated subsidiary of the Company retained an 15.6% subordinate and controlling interest in the CLO. The Company also held two additional tranches as investments totaling 6.8% interest in the CLO. The Company retained consent rights over major decisions with respect to the servicing of the Contributed December 2021 Loans, including the right to appoint and replace the special servicer under the CLO. The CLO is a VIE and the Company was the primary beneficiary and, therefore, consolidated the VIE. Refer to Note 9, Consolidated Variable Interest Entities, for additional information.
Current wording
On December 2, 2021, a consolidated subsidiary of the Company completed a privately-marketed CLO transaction, which generated $566.2 million of gross proceeds to Ladder, financing $729.4 million of loans at a maximum 77.6% advance rate on a matched term, non-mark-to-market and non-recourse basis. A consolidated subsidiary of the Company retained an 15.6% subordinate and controlling interest in the CLO. The Company also held two additional tranches as investments totaling 6.8% interest in the CLO. The Company retained consent rights over major decisions with respect to the servicing of the loans in the CLO, including the right to appoint and replace the special servicer under the CLO. The CLO is a VIE and the Company was the primary beneficiary and, therefore, consolidated the VIE. Refer to Note 9, Consolidated Variable Interest Entities for additional information.
Previous wording
As of December 31, 2022, the Company had $1.1 billion of matched term, non-mark-to-market and non-recourse CLO debt included in debt obligations on its consolidated balance sheets. Unamortized debt issuance costs of $5.9 million were included in CLO debt as of December 31, 2022.
Current wording
As of December 31, 2024, the Company had $601.4 million of matched term, non-mark-to-market and non-recourse CLO debt included in debt obligations on its consolidated balance sheets. Unamortized debt issuance costs of $0.1 million were included in CLO debt as of December 31, 2024.
Previous wording
Tuebor is subject to state regulations which require that dividends (including dividends to the Company as its parent) may only be made with regulatory approval. However, there can be no assurance that we would obtain such approval if sought. Largely as a result of this restriction, approximately $0.8 billion of Tuebor’s member’s capital was restricted from transfer via dividend to Tuebor’s parent without prior approval of state insurance regulators at December 31, 2023. To facilitate intercompany cash funding of operations and investments, Tuebor and its parent maintain regulator-approved intercompany borrowing/lending agreements.
Current wording
Tuebor is subject to state regulations which require that dividends (including dividends to the Company as its parent) may only be made with regulatory approval. However, there can be no assurance that we would obtain such approval if sought. Largely as a result of this restriction, approximately $931.5 million of Tuebor’s member’s capital was restricted from transfer via dividend to Tuebor’s parent without prior approval of state insurance regulators at December 31, 2024. To facilitate intercompany cash funding of operations and investments, Tuebor and its parent maintain regulator-approved intercompany borrowing/lending agreements.
Previous wording
As of December 31, 2023, the Company had $1.6 billion of unsecured corporate bonds outstanding. These unsecured financings were comprised of $327.8 million in aggregate principal amount of 5.25% senior notes due 2025 (the “2025 Notes”), $611.9 million in aggregate principal amount of 4.25% senior notes due 2027 (the “2027 Notes”) and $635.9 million in aggregate principal of 4.75% senior notes due 2029 (the “2029 Notes,” and collectively with the 2025 Notes and the 2027 Notes, the “Notes”).
Current wording
As of December 31, 2024, the Company had $2.0 billion of unsecured corporate bonds outstanding. These unsecured financings were comprised of $295.7 million in aggregate principal amount of 5.25% senior notes due 2025 (the “2025 Notes”), $611.9 million in aggregate principal amount of 4.25% senior notes due 2027 (the “2027 Notes”) and $633.9 million in aggregate principal amount of 4.75% senior notes due 2029 and $500.0 million in aggregate principal amount of 7.00% senior notes due 2031 (the “2031 Notes”, collectively with the 2025 Notes, the 2027 Notes and the 2029 Notes, the “Notes”). The 2031 Notes were issued during the year ended December 31, 2024 with an aggregate principal balance of $500.0 million.
Previous wording
As of December 31, 2022, the Company had $1.6 billion of unsecured corporate bonds outstanding. These unsecured financings were comprised of $344.0 million in aggregate principal amount of 5.25% senior notes due 2025 (the “2025 Notes”), $650.8 million in aggregate principal amount of 4.25% senior notes due 2027 (the “2027 Notes”) and $649.0 million in aggregate principal of 4.75% senior notes due 2029 (the “2029 Notes,” and collectively with the 2025 Notes and the 2027 Notes, the “Notes”).
Current wording
As of December 31, 2023, the Company had $1.6 billion of unsecured corporate bonds outstanding. These unsecured financings were comprised of $327.8 million of the 2025 Notes, $611.9 million of the 2027 Notes and $635.9 million of the 2029 Notes.
Previous wording
LCFH issued the Notes with Ladder Capital Finance Corporation (“LCFC”), as co-issuers on a joint and several basis. LCFC is a 100% owned finance subsidiary of LCFH with no assets, operations, revenues or cash flows other than those related to the issuance, administration and repayment of the Notes. The Company and certain subsidiaries of LCFH currently guarantee the obligations under the Notes and the indenture. The Company believes it was in compliance with all covenants of the Notes as of December 31, 2023 and 2022. The Notes are presented net of unamortized debt issuance costs of $11.8 million and $15.4 million as of December 31, 2023 and December 31, 2022, respectively.
Current wording
LCFH issued the Notes with Ladder Capital Finance Corporation (“LCFC”), as co-issuers on a joint and several basis. LCFC is a 100% owned finance subsidiary of LCFH with no assets, operations, revenues or cash flows other than those related to the issuance, administration and repayment of the Notes. The Company and certain subsidiaries of LCFH currently guarantee the obligations under the Notes and the indenture. The Company believes it was in compliance with all covenants of the Notes as of
Previous wording
On July 27, 2022, the board of directors authorized the repurchase of $50.0 million of the Company’s Class A common stock from time to time without further approval. This authorization increased the remaining outstanding authorization per the August 4, 2021 authorization from $39.5 million to $50.0 million. Stock repurchases by the Company are generally made for cash in open market transactions at prevailing market prices but may also be made in privately negotiated transactions or otherwise. The timing and amount of purchases are determined based upon prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. As of December 31, 2023, the Company has a remaining amount available for repurchase of $44.3 million, which represents 3.0% in the aggregate of its outstanding Class A common stock, based on the closing price of $11.51 per share on such date. Refer to Note 10, Equity Structure and Accounts, to our consolidated financial statements included elsewhere in this Annual Report, for disclosure of the Company’s repurchase activity.
Current wording
On April 24, 2024, the board of directors authorized the repurchase of $75.0 million of the Company’s Class A common stock from time to time without further approval. This authorization increased the remaining outstanding authorization per the July 27, 2022 authorization from $43.6 million to $75.0 million. Stock repurchases by the Company are generally made for cash in open market transactions at prevailing market prices but may also be made in privately negotiated transactions or otherwise. The timing and amount of purchases are determined based upon prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. As of December 31, 2024, the Company has a remaining amount available for repurchase of $67.6 million, which represents 4.8% in the aggregate of its outstanding Class A common stock, based on the closing price of $11.19 per share on such date. Refer to Note 10, Equity, to our consolidated financial statements included elsewhere in this Annual Report, for disclosure of the Company’s repurchase activity.
Showing the first 40 of 66 pairs. Open the source sections for the rest.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
December 31, 2024 and 2023. The Notes are presented net of unamortized debt issuance costs of $16.5 million and $11.8 million as of December 31, 2024 and December 31, 2023, respectively.
Current report — wording carried from elsewhere
We include adjustments for unrealized and realized provision for loan losses and real estate impairment. For purposes of distributable earnings, management recognizes loan and real estate losses as being realized generally in the period in which the asset is sold or the Company determines a decline in value to be non-recoverable and the loss to be nearly certain.
Current report — wording carried from elsewhere
Set forth below is an unaudited reconciliation of income (loss) before taxes to distributable earnings (in thousands):
Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
Cash, Cash Equivalents and Restricted Cash
Previous report — wording carried elsewhere
As of December 31, 2022, Tuebor had $213.0 million of borrowings outstanding, with terms of 0.6 years to 1.75 years (with a weighted average of 1.25 years), interest rates of 2.74% to 4.70% (with a weighted average of 4.52%), and advance rates of 71.7% to 95.7% on eligible collateral. As of December 31, 2022, collateral for the borrowings was comprised primarily of $248.8 million of CMBS.
Previous report — wording carried elsewhere
Foreclosed assets classified as real estate and land and development are initially recorded at their estimated fair value and assets classified as held for sale are recorded at their estimated fair value less costs to sell. The excess of the carrying value of the loan over these amounts is charged-off against the reserve for loan losses. In both cases, upon acquisition, tangible and intangible assets and liabilities acquired are recorded at their relative fair values.
Previous report — wording carried elsewhere
Impairment or Disposal of Long-lived Assets