Sachem Capital Reports Revenue Growth of 33% for Q1 2021

Rhea-AI Summary

Sachem Capital Corp. (SACH) reported a strong financial performance for Q1 2021, with total revenue increasing by 32.5% to approximately $5.7 million, driven by a 56% surge in interest income. Net income remained stable at approximately $2.2 million. Despite elevated operating costs linked to increased debt, the company is strategically expanding its mortgage loan portfolio beyond Connecticut. The solid loan repayment and new funding figures signal robust market demand. A quarterly dividend of $0.12 per share was declared, highlighting commitment to shareholders.

Positive

• Interest income increased by 56% compared to the previous year.
• Total revenue rose by approximately 32.5% year-over-year.
• Achieved the highest quarterly loan repayments and new funding since reporting started.

Negative

• Net income was stable at $2.2 million, indicating potential stagnation in profitability.
• Operating costs increased significantly to $3.5 million primarily due to higher interest expenses.

Interest income increases 56% over the same period last year

Conference Call and Webcast to be held at 8:00 AM EDT on Tuesday, May 18, 2021

BRANFORD, Conn., May 14, 2021 (GLOBE NEWSWIRE) -- Sachem Capital Corp. (NYSE American: SACH) announces its financial results for the first quarter ended March 31, 2021. The company will host a conference call on May 18, 2021 at 8:00 a.m. Eastern Daylight Time to discuss in greater detail its financial condition and operating results for the first quarter of 2021.

John Villano, CPA, the company’s Chief Executive and Chief Financial Officer stated: “We continue to achieve solid financial performance and have maintained a robust loan pipeline, as evidenced by a 56% increase in interest income on our loan portfolio versus the same period last year. Even though last year’s first quarter included a significant gain on sale of investment securities, we still achieved total revenue growth of 33% versus the same period last year. Importantly, we are opportunistically expanding and diversifying the geographic footprint of our mortgage loan portfolio beyond Connecticut. Our net income decreased slightly over the same period last year, as we invested heavily in our organization to support the next phase of our growth. We also have higher interest expense due to the approximate $56 million of unsecured, unsubordinated five-year notes we raised in 2020; however, we expect to benefit from the liquidity and financial flexibility provided by these securities and our low-interest line of credit, as we prudently deploy capital, while maintaining disciplined underwriting with a conservative loan-to-value ratio. We are also targeting larger-value commercial loans with financially stable, experienced sponsors. At the same time, we continue to explore a variety of financing alternatives, which may provide us a lower cost of capital given the strength of our loan portfolio. In the first quarter of 2021, we had $30.5 million in loan repayments (compared to $55 million for all of 2020) versus $31.7 million of new funding. Both the loan repayments and new funding amounts were the highest for any quarter since Sachem started reporting quarterly financial results. Overall, we believe we are well capitalized with a solid balance sheet to take advantage of the market demand for our loan products and remain highly encouraged by the prospects for our continued growth in 2021 and beyond.”

Results of operations – three months ended March 31, 2021

Total revenue for the three months ended March 31, 2021, was approximately $5.7 million compared to approximately $4.3 million for the three months ended March 31, 2020, an increase of approximately 32.5%. For the first quarter of 2021, interest income and net origination fees were approximately $4.5 million and $517,000, respectively. In comparison, for the three months ended March 31, 2020, interest income and net origination fees were approximately $2.9 million and $511,000, respectively.

Total operating costs and expenses for the three months ended March 31, 2021 were approximately $3.5 million compared to $2.1 million for the three months ended March 30, 2020. The increase in operating costs and expenses is primarily attributable to the increase in our unsecured bond debt. The company’s largest expenses were interest and amortization of deferred financing costs in the amount of $2.5 million. In comparison, for 2020, interest and amortization of deferred financing costs were approximately $1.1 million.

Net income for the three months ended March 31, 2021 was approximately $2.2 million, or $0.10 per share, compared to $2.2 million, or $0.10 per share for the three months ended March 31, 2020.

Financial Condition

At March 31, 2021, total assets were $228.4 million compared to $226.7 million at December 31, 2020. Most of this increase was attributable to increases in the mortgage loan portfolio of $1.2 million and an increase in investment partnership of approximately $1.8 million, offset by a decrease in cash and cash equivalents and investment securities of approximately $2.1 million.

Total liabilities at March 31, 2021 were $143.8 million compared to $145.8 million at December 31, 2020. This decrease is principally due to a decrease in dividends payable of $2.7 million and mortgage payable of $768,000, offset by increases in advances from borrowers of $873,000.

Shareholders’ equity at March 31, 2021 was $84.6 million compared to $81.0 million at December 31, 2020. This increase was due primarily to net proceeds of $1.5 million from the sale of stock and net income of approximately $2.2 million.

On April 1, 2021, the Company authorized and declared a quarterly dividend of $0.12 per share to be paid to shareholders of record as of the close of trading on the NYSE American on April 12, 2021. The dividend was paid on April 16, 2021.

Investor Conference Call

The company will host a conference call on Tuesday, May 18^th, 2021 at 8:00 a.m., Eastern Daylight Time, to discuss in greater detail its financial results for the first quarter ending March 31, 2021, as well as its outlook for the balance of 2021. Interested parties can access the conference call by calling 844-369-8770 for U.S. callers, or 862-298-0840 for international callers. The call will be available via webcast at https://www.webcaster4.com/Webcast/Page/2304/41384 as well as on the company’s website at https://www.sachemcapitalcorp.com. John Villano, the company’s Chief Executive and Chief Financial Officer will lead the conference call.

The webcast will also be archived on the company’s website and a telephone replay of the call will be available approximately one hour following the call, through Tuesday, June 1, 2021, and can be accessed by calling: 877-481-4010 for U.S. callers or 919-882-2331 for international callers and entering conference ID: 41384.

About Sachem Capital Corp.

Sachem Capital Corp. specializes in originating, underwriting, funding, servicing, and managing a portfolio of first mortgage loans. It offers short-term (i.e., three years or less) secured, non­banking loans (sometimes referred to as “hard money” loans) to real estate investors to fund their acquisition, renovation, development, rehabilitation or improvement of properties located primarily in Connecticut. The company does not lend to owner occupants. The company’s primary underwriting criteria is a conservative loan to value ratio. The properties securing the company’s loans are generally classified as residential or commercial real estate and, typically, are held for resale or investment. Each loan is secured by a first mortgage lien on real estate. Each loan is also personally guaranteed by the principal(s) of the borrower, which guaranty may be collaterally secured by a pledge of the guarantor’s interest in the borrower.

FAQ

What were Sachem Capital's Q1 2021 financial results?

Sachem Capital reported total revenue of approximately $5.7 million, a 32.5% increase from Q1 2020, with net income stable at $2.2 million.

How much did Sachem Capital's interest income grow in Q1 2021?

Interest income for Q1 2021 rose by 56% compared to the same period last year.

What is the significance of the quarterly dividend declared by Sachem Capital?

The declared quarterly dividend of $0.12 per share reflects Sachem Capital's commitment to its shareholders and financial stability.

When will Sachem Capital's conference call be held?

The conference call will take place on May 18, 2021, at 8:00 AM EDT.

What factors contributed to Sachem Capital's increased operating costs?

The increase in operating costs, which reached approximately $3.5 million, was primarily due to higher interest and amortization of deferred financing costs.