Part I [Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) Sachem Capital Corp.'s Q2 2025 financials reflect increased assets and liabilities, improved net income from reduced credit losses, and decreased operating cash flow [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to $501.8 million, driven by cash and loans, while liabilities rose to $323.9 million due to new senior secured notes Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 (unaudited) | December 31, 2024 (audited) | | :--- | :--- | :--- | | Cash and cash equivalents | $22,474 | $18,066 | | Loans held for investment, net | $364,463 | $356,571 | | Total assets | $501,763 | $491,976 | | Notes payable, net | $227,498 | $226,526 | | Senior secured notes payable, net | $46,444 | $0 | | Total liabilities | $323,856 | $310,325 | | Total shareholders' equity | $177,907 | $181,651 | | **Total liabilities and shareholders' equity** | **$501,763** | **$491,976** | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q2 2025 revenues decreased to $10.8 million, but net income improved to $0.8 million due to a significant reduction in the provision for credit losses Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $10,775 | $15,146 | $22,217 | $31,950 | | Interest income from loans | $7,482 | $11,754 | $15,370 | $24,395 | | Provision for credit losses | $925 | $8,503 | $1,977 | $9,868 | | Total operating expenses | $9,709 | $18,263 | $20,122 | $30,793 | | Net income (loss) | $1,887 | $(3,056) | $2,791 | $1,615 | | Net income (loss) to common shareholders | $769 | $(4,124) | $556 | $(476) | | Basic and diluted EPS | $0.02 | $(0.09) | $0.01 | $(0.01) | [Condensed Consolidated Statements of Cash Flows](index=12&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow significantly decreased, while financing activities provided net cash, leading to a $4.4 million increase in cash and cash equivalents Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Category | 2025 | 2024 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $692 | $11,179 | | Net Cash (Used in) Provided by Investing Activities | $(2,658) | $27,534 | | Net Cash Provided by (Used in) Financing Activities | $6,374 | $(40,734) | | **Net Increase (Decrease) in Cash** | **$4,408** | **$(2,021)** | | Cash and cash equivalents – End of Period | $22,474 | $10,577 | [Notes to Condensed Consolidated Financial Statements](index=15&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail accounting policies, loan portfolio analysis including increased non-accrual loans, new senior secured notes, and stock-based compensation issues - The company specializes in originating, underwriting, and managing a portfolio of short-term (one to three years) first mortgage loans secured by residential or commercial real estate, primarily in the northeastern and southeastern U.S.[25](index=25&type=chunk) - As of June 30, 2025, loans held for investment on non-accrual status had an outstanding principal balance of **$119.6 million**, a significant increase from **$87.0 million** at December 31, 2024[45](index=45&type=chunk) - On June 11, 2025, an indirect subsidiary consummated a private placement of **$100.0 million** in Senior Secured Notes due 2030, with an initial draw of **$50.0 million**. The notes bear a fixed interest rate of **9.875%**[84](index=84&type=chunk) - A grant of **420,168** restricted Common Shares to CEO John L. Villano was rescinded after it was determined that this and prior grants exceeded the **100,000** share annual limit per individual under the company's equity plan[99](index=99&type=chunk)[101](index=101&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=41&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q2 2025 revenue decline due to lower originations and non-performing loans, improved net income from reduced credit losses, and bolstered liquidity [Loan Portfolio Analysis](index=42&type=section&id=Our%20Loan%20Portfolio) The loan portfolio increased to $384.7 million with a 12.72% weighted average interest rate, concentrated in Connecticut and Florida, primarily secured by residential properties Loan Portfolio Statistics | Metric | As of June 30, 2025 | As of December 31, 2024 | | :--- | :--- | :--- | | Number of loans held for investment | 135 | 157 | | Gross principal amount (in thousands) | $384,739 | $376,991 | | Weighted average contractual interest rate | 12.72% | 12.53% | Loan Portfolio by State (June 30, 2025) | State | Gross Amount (in thousands) | Percentage | | :--- | :--- | :--- | | Connecticut | $113,107 | 29.4% | | Florida | $110,822 | 28.8% | | Massachusetts | $56,213 | 14.6% | | New York | $30,519 | 7.9% | | Other | $74,478 | 19.3% | | **Total** | **$384,739** | **100.0%** | [Results of Operations](index=46&type=section&id=Results%20of%20Operations) Q2 2025 revenue decreased by 28.9% due to lower originations, but net income improved significantly to $0.8 million from reduced credit loss provisions - Q2 2025 revenue decreased by **$4.3 million (28.9%)** YoY, attributed to lower net new originations and a higher amount of nonperforming loans[133](index=133&type=chunk) - Q2 2025 operating expenses decreased by **$8.6 million (46.8%)** YoY, mainly due to a **$7.6 million** reduction in the provision for credit losses[134](index=134&type=chunk) - Book value per common share was **$2.54** as of June 30, 2025, a decrease of **$0.10** from **$2.64** at December 31, 2024. The decline was primarily due to dividend payments of **$7.0 million ($0.15/share)** exceeding net income of **$2.8 million ($0.06/share)** for the six-month period[140](index=140&type=chunk) [Liquidity and Capital Resources](index=48&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity improved with cash increasing to $22.5 million, bolstered by a new $50 million credit facility and a $100 million senior secured notes placement - Total assets increased by **$9.8 million (2.0%)** to **$501.8 million** in the first six months of 2025, while total liabilities increased by **$13.5 million (4.4%)** to **$323.9 million**[141](index=141&type=chunk)[142](index=142&type=chunk) - In March 2025, the company entered into a new Credit Agreement with Needham Bank for a **$50 million** revolving credit facility, replacing a prior facility[149](index=149&type=chunk) - In June 2025, the company completed a private placement of **$100 million** in Senior Secured Notes due 2030, drawing an initial **$50 million**. The company expects to draw the remaining **$50 million** in September 2025 to redeem **$56.3 million** of maturing unsecured notes[150](index=150&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=50&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, Sachem Capital Corp. is exempt from providing quantitative and qualitative market risk disclosures - The company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[156](index=156&type=chunk) [Controls and Procedures](index=50&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were ineffective due to a material weakness in stock-based compensation internal controls, with remediation ongoing - The Principal Executive Officer and Principal Financial Officer concluded that the company's disclosure controls and procedures were not effective as of June 30, 2025[157](index=157&type=chunk) - The ineffectiveness is due to a material weakness in internal control over financial reporting related to stock-based compensation, previously disclosed in the 2024 Form 10-K[157](index=157&type=chunk) - The company is actively engaged in a remediation plan, which includes strengthening review and approval processes for equity awards. These efforts were ongoing as of the end of the quarter[158](index=158&type=chunk) Part II [Exhibits](index=52&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, debt agreements, and officer certifications - Lists various agreements and corporate documents filed with the report, including the Note Purchase and Guaranty Agreement for the new Senior Secured Notes, the new Credit and Security Agreement with Needham Bank, and the 2025 Omnibus Incentive Plan[161](index=161&type=chunk)[162](index=162&type=chunk) - Includes certifications from the Chief Executive Officer and Chief Financial Officer as required under Sections 302 and 906 of the Sarbanes-Oxley Act[162](index=162&type=chunk)

Core Viewpoint - Sachem Capital Corp. reported a decline in total revenue and net loans held for investment for the second quarter of 2025, while also highlighting a significant reduction in operating expenses and a return to profitability compared to the same quarter in 2024 [2][4][6]. Financial Performance - Total revenue for the second quarter of 2025 was $10.8 million, down from $15.1 million in the same quarter of 2024, primarily due to lower net new origination and an increase in nonperforming loans [4][23]. - Net loans held for investment decreased to $364.5 million as of June 30, 2025, from $485.7 million a year earlier, reflecting a decline of $121.2 million [4][23]. - Other income increased by $0.5 million due to rental income from a project, which was not recorded in the prior year [4]. Operating Costs and Expenses - Total operating costs and expenses for the second quarter of 2025 were $9.7 million, significantly lower than $18.3 million in the same quarter of 2024, mainly due to a reduction in the provision for credit losses, which fell by $7.6 million or 89.1% [5][23]. - The decrease in operating expenses was partially offset by a rise in compensation and employee benefits by $0.5 million [5]. Net Income - Net income attributable to common shareholders for the second quarter of 2025 was $0.8 million, or $0.02 per share, compared to a net loss of $4.1 million, or $0.09 per share, in the same quarter of 2024 [6][23]. Balance Sheet - Total assets at the end of the quarter were $501.8 million, up from $492.0 million at the end of 2024, while total liabilities increased to $323.9 million from $310.3 million [7][9]. - Total shareholders' equity decreased to $177.9 million from $181.7 million at year-end 2024 [9]. Dividends - The company paid a dividend of $0.05 per share to common shareholders and $0.484375 per share to Series A Preferred Stock holders during the quarter [13][12]. Future Outlook - The company remains focused on prudent capital allocation and disciplined portfolio management to capitalize on high-quality lending opportunities as market conditions stabilize [3].

Company Announcement - Sachem Capital Corp. will release its second quarter 2025 financial results before market open on August 5, 2025 [1] - A webcast and conference call to discuss the results will be held on August 5, 2025, at 8:00 a.m. Eastern Time [1] Webcast and Conference Call Details - A webcast of the conference call will be available on the Investors section of the Company's website [2] - Participants should register and install necessary audio software at least 15 minutes prior to the scheduled start time [2] Telephone Conference Call Participation - Domestic dial-in number: 1-844-825-9789; International dial-in number: 1-412-317-5180 [3] - Conference call playback available until August 19, 2025, with domestic playback number: 1-844-512-2921; International playback number: 1-412-317-6671 [3] - Passcode for playback: 10201468 [3] Company Overview - Sachem Capital Corp. is a mortgage REIT specializing in originating, underwriting, funding, servicing, and managing a portfolio of loans secured by first mortgages on real property [3] - The Company offers short-term secured, nonbanking loans to real estate investors for property acquisition, renovation, development, rehabilitation, or improvement [3] - Primary underwriting criteria include a conservative loan to value ratio, with loans secured by first mortgage liens on real estate and personally guaranteed by the borrower’s principal(s) [3] - The Company also engages in opportunistic real estate purchases apart from its lending activities [3]

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Core Viewpoint - Sachem Capital Corp. has successfully completed a private placement of $100 million in Senior Secured Notes, enhancing its financial flexibility and enabling the repayment of existing obligations and the origination of new loans [1][3]. Financing Details - The private placement consists of five-year Senior Secured Notes due June 11, 2030, with an interest rate of 9.875% per annum, payable quarterly [1]. - An initial draw of $50 million was made at closing, with the remaining $50 million to be drawn by May 15, 2026 [1]. - The Notes are fully guaranteed by the Company and its subsidiary, and have received an investment grade rating of A from Egan-Jones Ratings Company [1]. Use of Proceeds - The proceeds from the Notes will be utilized for repaying existing facility balances, originating new investments, and redeeming 7.75% unsecured notes maturing in September 2025 [2]. Company Overview - Sachem Capital Corp. is a mortgage REIT that specializes in originating, underwriting, funding, servicing, and managing a portfolio of loans secured by first mortgages on real property [7]. - The Company provides short-term secured, nonbanking loans to real estate investors for property acquisition, renovation, and development, with a conservative loan-to-value ratio as its primary underwriting criterion [7].

Company Overview - Sachem Capital Corp. is a mortgage REIT that specializes in originating, underwriting, funding, servicing, and managing a portfolio of loans secured by first mortgages on real property [3] - The company offers short-term secured, nonbanking loans to real estate investors for property acquisition, renovation, development, rehabilitation, or improvement [3] - The primary underwriting criteria of the company is a conservative loan-to-value ratio, with properties typically classified as residential or commercial real estate [3] Dividend Announcements - The Board of Directors declared a quarterly dividend of $0.05 per common share, payable on June 30, 2025, to shareholders of record as of June 16, 2025 [1] - Additionally, a quarterly dividend of $0.484375 per share was declared for holders of the 7.75% Series A Cumulative Redeemable Preferred Stock, payable on June 30, 2025, to shareholders of record as of June 15, 2025 [2]

Revenue and Income - Total revenue for Q1 2025 was $11.4 million, down 32.5% from $16.8 million in Q1 2024[4] - Net loss attributable to common shareholders for Q1 2025 was $213,000, or $0.00 per share, compared to net income of $3.6 million, or $0.08 per share in Q1 2024[6] - Net income for the three months ended March 31, 2025, was $904 million, a decrease of 80.7% compared to $4,670 million in the same period of 2024[24] Operating Costs and Expenses - Total operating costs and expenses decreased to $10.4 million in Q1 2025 from $12.5 million in Q1 2024, primarily due to reductions in interest and amortization expenses[5] Assets and Equity - Total assets as of March 31, 2025, were $491.4 million, a slight decrease from $492.0 million as of December 31, 2024[7] - Total shareholders' equity decreased to $179.3 million at March 31, 2025, from $181.7 million at year-end 2024[9] - Book value per common share decreased to $2.57 at March 31, 2025, from $2.64 at year-end 2024[9] Cash Flow and Investments - Net cash provided by operating activities decreased significantly to $191 million from $4,217 million year-over-year[24] - Net cash provided by investing activities increased to $5,747 million, up from $4,319 million in the previous year[24] - Cash and cash equivalents at the end of the period rose to $24,414 million, compared to $18,413 million at the end of the same period last year[24] - Proceeds from lines of credit amounted to $36,100 million, a substantial increase from $460 million in the prior year[24] - The company made investments totaling $4,223 million in limited liability companies, compared to $3,186 million in the same period last year[24] Dividends and Debt - The company paid a dividend of $0.05 per share to common shareholders on March 31, 2025[12] - Dividends paid on common shares decreased to $2,363 million from $5,144 million year-over-year[24] - Total indebtedness at quarter-end was $305.6 million, including $227.0 million of notes payable[8] Loan Portfolio and Capital Management - The company remains focused on managing its loan portfolio and protecting capital while seeking quality investment opportunities[3] - Principal collections on loans were $47,742 million, down from $51,398 million in the same period last year[24] Losses and Adjustments - The company reported a loss on sale of equity securities of $125 million, compared to a gain of $397 million in the previous year[24] - The total adjustments and operating changes resulted in a negative impact of $713 million, compared to a negative impact of $453 million in the previous year[24] Membership Investments - Income from preferred membership limited liability company investments increased approximately 71.7% compared to Q1 2024[4]

Core Viewpoint - Sachem Capital Corp. reported financial results for Q1 2025, indicating stability despite challenges in the real estate market, with a focus on managing its loan portfolio and capital allocation [2][3]. Financial Performance - Total revenue for Q1 2025 was $11.4 million, down from $16.8 million in Q1 2024, primarily due to fewer loan originations and an increase in nonperforming loans [3]. - Operating costs decreased to $10.4 million in Q1 2025 from $12.5 million in the same quarter last year, attributed to reductions in interest, amortization, and employee benefits [4]. - The net loss attributable to common shareholders was $213,000, or $0.00 per share, compared to a net income of $3.6 million, or $0.08 per share, in Q1 2024 [5]. Balance Sheet Overview - Total assets as of March 31, 2025, were $491.4 million, slightly down from $492.0 million at the end of 2024 [6]. - Total liabilities increased to $312.1 million from $310.3 million at year-end 2024 [6]. - Total shareholders' equity decreased to $179.3 million from $181.7 million at year-end 2024, with a book value per common share of $2.57 [8]. Dividend Information - The company paid a dividend of $0.484375 per share to Series A Preferred Stockholders and $0.05 per share to common shareholders in Q1 2025 [10][11]. - As a Real Estate Investment Trust (REIT), the company intends to distribute at least 90% of taxable income to shareholders [9]. Company Profile - Sachem Capital Corp. specializes in originating, underwriting, funding, servicing, and managing a portfolio of loans secured by first mortgages on real property, primarily offering short-term loans to real estate investors [15].

Loan Portfolio - As of March 31, 2025, the company disbursed loans totaling $41.308 million and repaid loans amounting to $47.742 million[109] - The gross principal amount of loans held for investment was $367.860 million, with a weighted average contractual interest rate of 12.88%[109] - The loan portfolio included 143 loans, with 68 loans (47.6%) amounting to $27.410 million classified as $1,000,000 or less[112] - The primary markets for the company's loans were Connecticut (51.0%), Florida (13.3%), and New York (14.7%) as of March 31, 2025[112] - The company’s loan portfolio included loans ranging in size from $35,000 to $42.8 million[112] - Residential properties accounted for 52.4% of the aggregate gross principal amount of loans held for investment as of March 31, 2025[113] - The allowance for credit losses as of March 31, 2025, was $18.122 million, representing 4.9% of the aggregate gross principal amount[115] - The company recorded a non-performing loan reserve of $6.106 million for loans in foreclosure, representing 25.6% of the respective principal amount[115] Financial Performance - Total revenue for Q1 2025 was $11.4 million, a decrease of $5.4 million or 31.9% compared to $16.8 million in Q1 2024[119] - Total operating expenses for Q1 2025 were $10.4 million, down $2.1 million or 16.9% from $12.5 million in Q1 2024[120] - Net loss attributable to common shareholders for Q1 2025 was $0.2 million, or $0.00 per share, compared to net income of $3.6 million, or $0.08 per share, in Q1 2024[122] Balance Sheet - Total assets at March 31, 2025 were $491.4 million, a slight decrease of $0.6 million or 0.1% from $492.0 million at December 31, 2024[125] - Total liabilities increased to $312.1 million as of March 31, 2025, up $1.8 million or 0.6% from $310.3 million at December 31, 2024[126] - Total shareholders' equity decreased to $179.3 million as of March 31, 2025, down $2.3 million or 1.3% from $181.7 million at December 31, 2024[127] - Book value per common share decreased to $2.57 as of March 31, 2025, down $0.07 from $2.64 at December 31, 2024[124] Cash Flow and Financing - Cash and cash equivalents increased to $24.4 million as of March 31, 2025, up $6.0 million or 30.3% from $18.4 million at the end of Q1 2024[129] - SN Holdings borrowed $36.1 million under the new Credit Agreement as of March 31, 2025, with a principal payment of $9.9 million made on April 1, 2025[132] - The company anticipates sufficient cash flows from operations to fund its operations for the next 12 months[130] Real Estate Activities - The company may engage in opportunistic real estate purchases and investments apart from its lending activities[104] - The company owned 20 properties as of March 31, 2025, with a total carrying value of $18.865 million[116]

Company Announcement - Sachem Capital Corp. will release its first quarter 2025 financial results before market open on May 1, 2025 [1] - A webcast and conference call to discuss the results will be held on May 1, 2025, at 8:00 a.m. Eastern Time [1] Webcast and Conference Call Details - The webcast will be available on the Investors section of the Company's website, and participants are advised to register at least 15 minutes prior to the start time [2] - For the telephone conference call, domestic participants can dial 1-877-704-4453, while international participants can call 1-201-389-0920 [3] - Conference call playback will be available until May 15, 2025, with specific numbers provided for domestic and international access [3] Company Overview - Sachem Capital Corp. is a mortgage REIT that specializes in originating, underwriting, funding, servicing, and managing a portfolio of loans secured by first mortgages on real property [3] - The Company offers short-term secured, nonbanking loans to real estate investors for various property-related activities, with a focus on a conservative loan to value ratio [3] - Loans are secured by first mortgage liens on real estate and are personally guaranteed by the principal(s) of the borrower, with the Company also engaging in opportunistic real estate purchases [3]