Lument Finance Trust, Inc. Fair Value Disclosure
| December 31, 2025 | |||||||||||||||||||||||
Quoted prices in active markets for identical assets Level 1 | Significant other observable inputs Level 2 | Unobservable inputs Level 3 | Balance as of December 31, 2025 | ||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Mortgage servicing rights | $ | — | $ | — | $ | 554,246 | $ | 554,246 | |||||||||||||||
| Total | $ | — | $ | — | $ | 554,246 | $ | 554,246 | |||||||||||||||
| December 31, 2024 | |||||||||||||||||||||||
Quoted prices in active markets for identical assets Level 1 | Significant other observable inputs Level 2 | Unobservable inputs Level 3 | Balance as of December 31, 2024 | ||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Mortgage servicing rights | $ | — | $ | — | $ | 649,287 | $ | 649,287 | |||||||||||||||
| Total | $ | — | $ | — | $ | 649,287 | $ | 649,287 | |||||||||||||||
| As of December 31, 2025 | |||||||||||||||||
| Valuation Technique | Unobservable Input | Range | Weighted Average | ||||||||||||||
| Discounted cash flow | Constant prepayment rate | 7.0 - 8.6% | 7.8 | % | |||||||||||||
| Discount rate | 12.0 | % | 12.0 | % | |||||||||||||
| As of December 31, 2024 | |||||||||||||||||
| Valuation Technique | Unobservable Input | Range | Weighted Average | ||||||||||||||
| Discounted cash flow | Constant prepayment rate | 7.0 - 8.6% | 7.9 | % | |||||||||||||
| Discount rate | 12.0 | % | 12.0 | % | |||||||||||||
| December 31, 2025 | |||||||||||||||||||||||
| Level in Fair Value Hierarchy | Carrying Value | Face Amount | Fair Value | ||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Cash and cash equivalents | 1 | $ | 23,112,995 | $ | 23,112,995 | $ | 23,112,995 | ||||||||||||||||
| Restricted cash | 1 | 3,505,087 | 3,505,087 | 3,505,087 | |||||||||||||||||||
| Commercial mortgage loans held-for-investment | 3 | 1,114,047,992 | 1,140,268,217 | 1,119,645,026 | |||||||||||||||||||
| Total | $ | 1,140,666,074 | $ | 1,166,886,299 | $ | 1,146,263,108 | |||||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Collateralized loan obligations | 2 | 748,433,484 | $ | 754,638,462 | $ | 756,051,842 | |||||||||||||||||
| Master repurchase agreement | 3 | 175,204,869 | 177,193,781 | 175,204,869 | |||||||||||||||||||
| Term lending agreement | 3 | 16,738,351 | 17,000,000 | 16,738,351 | |||||||||||||||||||
| Secured term loan | 3 | 47,719,278 | 47,750,000 | 47,746,394 | |||||||||||||||||||
| Total | $ | 988,095,982 | $ | 996,582,243 | $ | 995,741,456 | |||||||||||||||||
| December 31, 2024 | |||||||||||||||||||||||
| Level in Fair Value Hierarchy | Carrying Value | Face Amount | Fair Value | ||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Cash and cash equivalents | 1 | $ | 69,173,444 | $ | 69,173,444 | $ | 69,173,444 | ||||||||||||||||
| Restricted cash | 1 | 2,390,654 | 2,390,654 | 2,390,654 | |||||||||||||||||||
| Commercial mortgage loans held-for-investment | 3 | 1,048,803,078 | 1,065,563,644 | 1,061,313,204 | |||||||||||||||||||
| Total | $ | 1,120,367,176 | $ | 1,137,127,742 | $ | 1,132,877,302 | |||||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Collateralized loan obligations | 2 | $ | 828,390,189 | $ | 830,698,696 | $ | 824,857,756 | ||||||||||||||||
| Secured term loan | 3 | $ | 47,470,094 | $ | 47,750,000 | $ | 47,227,497 | ||||||||||||||||
| Total | $ | 875,860,283 | $ | 878,448,696 | $ | 872,085,253 | |||||||||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 23, 2026 | Showing above |
| 2024 | Mar 19, 2025 | |
| 2023 | Mar 15, 2024 | |
| 2022 | Mar 23, 2023 | |
| 2021 | Mar 15, 2022 | |
| 2020 | Mar 15, 2021 | |
| 2019 | Mar 16, 2020 | |
| 2018 | Mar 18, 2019 | |
| 2017 | Mar 16, 2018 | |
| 2016 | Mar 16, 2017 | |
| 2015 | Mar 23, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.