Sachem Capital(SACH) - 2020 Q3 - Quarterly Report

Mortgage Loan Portfolio - As of September 30, 2020, the yield on the mortgage loan portfolio was 12.28%, down from 12.66% for the same period in 2019[109]. - The company had 480 mortgage loans receivable, with 18 loans restructured under a forbearance program totaling an outstanding principal balance of $5.1 million and $146,000 in deferred interest[93]. - The company initiated a forbearance program in Q2 2020, deferring approximately $200,000 of interest on 23 loans with an aggregate principal amount of $6.5 million[97]. - The loan-to-value ratio for new loans was temporarily reduced to 50% during the pandemic but was increased back to 70% as of July 1, 2020[98]. - The company expanded its loan portfolio in Florida from less than $1 million to $9.7 million by September 30, 2020[101]. - Approximately 78.1% of the mortgage loans in the portfolio had a term of one year or less as of September 30, 2020[111]. Financial Performance - Total revenue for Q3 2020 was approximately $4.3 million, representing an increase of approximately $900,000 or 26.4% compared to Q3 2019[128]. - Interest income for Q3 2020 was approximately $3.5 million, up from approximately $2.4 million in Q3 2019, while net origination fees decreased to approximately $393,000 from $497,000[128]. - Total operating costs and expenses for Q3 2020 were approximately $2.1 million, an increase of approximately $800,000 or 61.5% compared to Q3 2019, primarily due to increased interest expense[129]. - Net income for Q3 2020 was approximately $2.055 million, or $0.10 per share, compared to $2.139 million, or $0.10 per share for Q3 2019[132]. - For the nine months ended September 30, 2020, total revenue was approximately $12.9 million, an increase of approximately $3.1 million or 32% compared to the same period in 2019[133]. - Net income for the nine months ended September 30, 2020 was approximately $6.7 million, or $0.30 per share, compared to approximately $5.3 million, or $0.30 per share for the same period in 2019[138]. Cash and Investments - The company had approximately $33.1 million in cash and investments as of September 30, 2020, a decrease from $34.8 million at December 31, 2019[139]. - Net cash provided by operating activities for the nine months ended September 30, 2020 was approximately $7.4 million, a slight increase from $7.3 million in the same period of 2019[140]. - Net cash used for investing activities increased significantly to approximately $41.4 million in 2020 from $14.5 million in 2019, primarily due to higher principal disbursements for mortgages receivable[141]. - Net cash provided by financing activities rose to approximately $20.5 million in 2020 compared to $18.1 million in 2019, driven by proceeds from the Wells Fargo line of credit and the sale of fixed rate notes[142]. - The company anticipates that current cash and investment balances, along with projected cash flows from operations, will be sufficient to fund operations for the next 12 months[143]. - Long-term cash needs will be funded through proceeds from the sale of debt and/or equity securities, cash on hand, investments, and operating cash flows[144]. Debt and Capital Structure - The company’s indebtedness was approximately 50.4% of total capital at September 30, 2020, with expectations for this percentage to increase[114]. - As of September 30, 2020, the company's capital structure consisted of 49.6% equity and 50.4% debt, with total indebtedness of approximately $85.6 million[115]. - The company issued an additional $14 million of September 2025 Notes in October 2020, increasing its overall debt[115]. - In October 2020, the company sold an additional $14 million aggregate principal amount of September 2025 Notes, with an option for underwriters to purchase an additional $2.1 million[147]. - The company is not involved in any off-balance sheet transactions that could affect liquidity or capital resource availability[149]. Dividends and Shareholder Distributions - The company intends to pay regular quarterly distributions to common shareholders amounting to not less than 90% of its REIT taxable income[146]. - A dividend of $0.12 per share, totaling approximately $2.65 million, was paid to shareholders on November 4, 2020[148]. Market Competition - The company faced increased competition from private equity funds and hedge funds, although competition decreased due to COVID-19[104]. - The average yield on the portfolio is expected to continue compressing due to increased competition and borrower demands[105]. - The company is focusing on expanding its geographic footprint beyond Connecticut to Florida and Texas, while also funding larger loans[107]. Obligations - As of September 30, 2020, total contractual obligations amounted to approximately $13.35 million, including operating lease obligations and unfunded construction loans[151].