Sachem Capital Corp. Common Shares

Greetings and welcome to the CHM Capital Court Fourth Quarter and Full Year 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Kevin Reed, ICR. Thank you, Kevin. You may begin.

Good morning, everyone, and thank you for joining Sachem Capital Corp's year-end 2022 conference call. On the call from Sachem Capital today is Chief Executive Officer John Villano, CPA, and Chief Financial Officer John Walsh. This morning, the company announces operating results for the year-ended December 31, 2022, and its financial condition as of that date. The press release is posted on the company's website. www.satriumcapitalcorp.com. In addition, the company will file its year-end report on Form 10-K with the U.S. Securities and Exchange Commission on March 31, 2023, which can be accessed on the company's website as well as the SEC's website at www.sec.gov. If you have any questions after the call or would like any additional information about the company, please visit our website. We'd like to remind everyone that this conference call may contain forward-looking statements. All statements other than statements of historical facts contained in this conference call, including statements regarding our future results of operations and financial position, strategy and plans, and our expectations for future operations are forward-looking statements. The words anticipate, estimate, expect, project, plan, speak, intend, believe, may, might, will, should, could, likely, continue, design, and the negative such terms, in other words, in terms of similar expressions, are intended to identify forward-looking statements. These forward-looking statements are based largely on the company's current expectations and projections about future events and trends that it believes may affect its financial conditions, results of operations, strategy, short-term and long-term business operations, and objectives and financial needs. These forward-looking statements are subject to several risks, uncertainties, and assumptions as described in the company's Form 10-K filed with the U.S. Securities and Exchange Commission on March 31, 2023. Because of these risks, uncertainties, and assumptions, the forward-looking events or circumstances discussed in this conference call may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. you should not rely upon forward-looking statements as predictions of future events. Although the company believes the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, level of activity, performance, or achievements. In addition, neither the company nor any person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. The company disclaims any duty to update any of these forward-looking statements. All forward-looking statements attributable to the company are expressly qualified in their entirety by the cautionary statements, as well as others made in this conference call. You should evaluate all forward-looking statements made by the company in the context of these risks and uncertainties. With that, I'll now turn the call over to John.

Thank you, and thanks to everyone for joining us today. I am very pleased to report Satrum had another year of record revenue of $52.3 million and net income attributable to common shareholders of $17.2 million, or 46 cents per share. Our 2022 revenue was an increase of almost 72% from 2021, and our net income attributable to common shareholders increased over 50%. These results, achieved through disciplined underwriting in an increasingly difficult macroeconomic backdrop, illustrate the success and scalability of our business model. During 2022, we funded approximately $300.3 million of mortgage loans, including loan modifications and construction draws. While we are very proud of this level of activity, it is necessary to acknowledge the shifting trends throughout the year. As inflation increased, the Federal Reserve commenced a series of rate hikes, resulting in a sharp rise in interest rates throughout the year. Equity markets felt the pain of higher interest rates as sources of liquidity became cautious and credit spreads widened, turning previously profitable investments into losses. Amid this environment, we remained prudent and disciplined, and our investment in new loans slowed. Uncertainty continued with a broadening banking turmoil and potential fallout. Fortunately, we have no exposure to troubled banks at this point. That said, we are cognizant and keeping a keen eye on the implications the volatility may have on property appraisals, our cost of capital, and normal loan payoff activity. Let me now turn to what I believe are the key strengths that position us to perform well in the current environment and emerge stronger than ever. First, we have a diversified mortgage portfolio across commercial, multifamily, and larger single-family fix-and-flip real estate projects. Our loan portfolio is spread across 16 states, and we continue to grow in the dynamic Southeast. In addition, in October, we acquired the business assets of Urbane New Haven, a move that was both strategic and highly synergistic. Having Urbane in-house provides us with very strong construction finance expertise, which enables Sachem to take on larger and more profitable construction loans with better quality sponsors while vertically integrating our platform to be in a better position to address any loan issues that may arise. In addition, Urbane provides us a differentiated and consistent income stream as well as downside protection should a construction loan run into difficulty. Second, our portfolio is short-term in duration. As of December 31st, 2022, approximately 17.6% of the loans in our portfolio had a term of one year or less, allowing us to reprice our capital relatively quickly, better protecting margins in a rising rate environment. Third, we have a deep experienced and cycle tested team having underwritten more than 939 million in loans through many different investment environments. With the ongoing economic uncertainty, local banks and other competitors are fearful to extend credit and have tightened lending and credit standards, turning away good borrowers and sponsors, or even withdrawing completely from the market. We believe we are well positioned to potentially gain market share in this environment with our prudent lending tactics, capital strength, and flexibility. And fourth, We have a strong balance sheet with $565.7 million in assets, including $23.7 million of cash and cash equivalents, offset with $326.9 million in total debt outstanding. Earlier this month, we further augmented our capital structure as we entered into a $45 million revolving line of credit with Needham Bank, a new relationship bank with further validates our portfolio strength and opportunistic growth strategy. This new line of credit enhances our financial flexibility and liquidity and gives us the capacity to further scale our business and execute on our growth strategy where appropriate. I would now like to turn over the call to John to touch on some key financial highlights. Then I'll talk more about our performance and strategy going forward.