Yaakov Finance: How Much Headroom Really Sits Above the Bank Lines

The main article already made the broader point: at Yaakov Finance, the live bottleneck is funding flexibility, not demand. This follow-up isolates the narrower question: how much real room sat above the bank lines at year-end 2025, what actually changed right after the balance-sheet date, and how much of the tangible-equity cushion was effectively coming from the ILS 43 million subordinated shareholder loan.

That matters because two different kinds of headroom get blurred together. One is liquidity headroom, meaning unused bank lines. The other is covenant headroom, meaning the distance above the 15% tangible-equity ratio the banks require. They are related, but they are not the same thing. The first tells you how much the company can still draw. The second tells you how comfortable the banks should remain with the structure.

Year-end 2025: there was room, but not much

At year-end 2025, approved bank lines stood at ILS 2.85 billion. Against that, bank debt drawn stood at ILS 2.531 billion. That leaves direct line headroom of ILS 318.5 million. It is not zero, but it is not wide either: only about 11.2% of total approved lines, and about 12.6% above the amount already drawn.

That is the right frame for the whole discussion. When the net credit book stands at ILS 3.18 billion, ILS 318.5 million of spare line capacity is useful, but it is not a large margin for error. It buys operating room. It does not buy independence from the banking system.

The last bar is a pro forma calculation, not a separately disclosed number. Its purpose is simple: even after the ILS 100 million increase at Bank C, the buffer still lives in the low hundreds of millions, not in a range that changes the company's structural dependence on revolving bank funding.

What makes this structure workable is the asset duration of the book. ILS 860.2 million of customer credit is scheduled to mature within 30 days, and another ILS 1.683 billion within one to six months. That means almost 80% of the book is supposed to turn within half a year, and about 96.6% within a year. That is the supportive side. The less comfortable side is that the bank debt itself is shown as due within 30 days. Put differently, the book is short, but the funding is even shorter. The company depends on the banks continuing to roll the lines.

What really changed after the balance-sheet date

This is where the story gets sharper. In December 2025, Bank A increased its line to ILS 1.1 billion, and on December 31 Bank B also moved to ILS 1.1 billion. Both of those moves were already inside the year-end ILS 2.85 billion figure. They do not create new headroom after the balance-sheet date. The only line increase that truly happened after December 31 was Bank C, which moved from ILS 650 million to ILS 750 million on January 20, 2026.

That distinction matters because it is easy to read the string of financing announcements as if all of them were fresh post-balance-sheet support. They were not. Year-end 2025 already carried the higher Bank A and Bank B limits. So the after-balance-sheet improvement is smaller and more modest than the narrative flow suggests: it is an extra ILS 100 million from the same banking set-up, not a new funding source.

Bank A also shows how quickly these lines can fill up. As of the report date, Bank A's line stood at ILS 1.1 billion, and ILS 1.001 billion of it was already utilized, leaving only ILS 99 million unused there. The company does not provide the same full bank-by-bank draw detail for the other lenders at that exact date, so the precise systemwide unused-line figure cannot be reconstructed from the disclosed evidence set. What can be said with confidence is narrower and still important: Bank C added ILS 100 million of capacity, not more than that.

That is why line expansion by itself does not solve the underlying issue. The room still opens through another round of short-bank-line enlargement inside the same lender group, not through funding diversification or term extension. As long as the relationships hold and the book keeps recycling quickly, the model can keep working. If book growth keeps outrunning line growth, the apparent breathing room can narrow again fast.

The covenant cushion: the critical number is not 454, but 43

The key distinction here is between accounting equity and the equity the banks are willing to count. All three banks require a tangible-equity ratio of at least 15% of tangible balance sheet. They also impose absolute minimum equity floors of ILS 180 million or ILS 40 million, depending on the bank. Those absolute floors are not the live issue. Equity of about ILS 454 million sits well above them. The live constraint is the ratio, not the hard floor.

The disclosed ratio at December 31, 2025 is 16.33%. That is only 1.33 percentage points above the 15% threshold. Already, that reads tighter than the headline ILS 454 million equity figure would suggest. Then comes the more important point: under the banks' covenant definitions, subordinated shareholder loans are counted inside tangible equity. At the same time, the company had a ILS 43 million shareholder loan at year-end, and the liquidity table placed it in the one-to-six-month bucket.

The last two lines are analytical inferences, not separately disclosed bank-test figures. But they clarify the real economics of the covenant. Most of the cushion appears to sit inside the shareholder loan. Without that layer, the company would not look like a lender sitting comfortably far above the 15% line. It would look much closer to it.

There is also a timing issue here, not just a sizing issue. At year-end, the shareholder loan still sat inside the one-to-six-month maturity bucket. On March 9, 2026, it was repaid and replaced with a new one-year subordinated shareholder loan at prime plus 0.3%. That supports flexibility, but it also strips away one illusion: this is not a permanent cushion that organically accumulated inside retained capital. It is a support layer that the controlling shareholder had to renew in order to keep the covenant cushion comfortable.

In other words, the covenant cushion and the shareholder loan are almost the same story. As long as that loan remains in place and continues to count inside tangible equity, the company stays above the line. If that support layer disappeared, the safety margin would look materially different.

So how much room really sat above the bank lines

At year-end 2025, Yaakov Finance had two types of headroom, and both were narrower than the headline balance-sheet numbers suggest. Direct liquidity headroom stood at ILS 318.5 million. Covenant headroom above the 15% threshold appears, analytically, to have been about ILS 40.5 million. Those are different figures, but they rest on the same basic dependence: banks continuing to roll short lines, and the controlling shareholder continuing to provide a quasi-equity support layer.

That does not mean the company was on the edge of breach. It does mean its funding flexibility remained much more sensitive to financing than to demand. As long as the book stays short, customer quality holds, and the banks continue to extend lines, the model can keep functioning. But if the goal is to understand how much room really sat above the bank lines, the right place to look is not the headline ILS 454 million equity number. It is the pair of figures actually holding the structure up: ILS 318.5 million of unused lines at year-end, and ILS 43 million of shareholder support sitting inside the tangible-equity cushion.

The next filing needs to answer three precise questions: does unused line room remain in the hundreds of millions even if the book keeps growing; does the tangible-equity ratio stay above 15% without repeated renewals of shareholder support; and do line increases continue to arrive at least as fast as the book consumes them. That is where it will become clear whether the headroom is genuinely widening, or just being rolled forward.