Indemnification Liability

3 Months Ended

Mar. 31, 2025

Indemnification Liability

Indemnification Liability

Note 6. Indemnification Liability

As of March 31, 2025 and December 31, 2024, the Company had no indemnified loans outstanding.

As discussed in Note 8 to the unaudited condensed consolidated financial statements, and pursuant to the PCCU CAA (as defined below), PCCU used to fund loans through a third-party vendor. SHF earned the associated interest and paid PCCU a loan hosting fee at an annual rate of 0.35% of the outstanding loan principal funded and serviced by PCCU, and 0.25% of the outstanding loan principal serviced by SHF. SHF had agreed to indemnify PCCU for losses on certain PCCU loans. The indemnity liability reflected SHF management’s estimate of probable credit losses inherent under the agreement as of the balance sheet date.

As per the Amended PCCU CAA (as defined below), effective December 31, 2024, the Company no longer serves as a guarantor of credit losses to PCCU, accordingly reduced the indemnity liability on loans funded by PCCU to $0 at December 31, 2024.

The provision for credit losses (benefit) on the statements of operations consists of the following activity for the years ended March 31, 2025 and March 31, 2024:

	March 31, 2025						March 31, 2024
	Commercial real estate loans		Indemnity liability		Total		Commercial real estate loans			Indemnity liability			Total
Credit loss (benefit)	$	-	$	-	$	-	$	(1,642	)	$	(67,145	)	$	(68,787	)