Sachem Capital Corp. (SACH)·Q3 2025 Earnings Summary

Executive Summary

• Q3 revenue rose 11.4% sequentially to $12.0 million amid a smaller performing loan book and elevated nonaccruals; GAAP net income was $1.0 million, but after $1.1 million of preferred dividends, net loss to common was $0.12 million ($0.00 per share), sharply improved year over year from a $0.13 loss in Q3 2024 .
• Against S&P Global consensus, revenue beat ($12.0m vs $10.85m)* while EPS was a slight miss ($0.00 vs $0.01)*; the sequential lift reflected modest growth in average performing balances and steady fee generation, while nonaccrual mix and REO management kept expenses elevated .
• Liquidity and duration improved: repaid $56.3 million of unsecured retail notes at September maturity using proceeds from the new senior secured notes and other facilities, and subsequently paid off the Churchill repo line, enhancing flexibility for originations .
• Near-term catalysts: Naples mediation (Nov 7) to clear path to monetization of a concentrated nonaccrual exposure (~$50.4m; ~13.4% of portfolio), and ongoing NPL/REO resolutions with identified asset sales under contract .

What Went Well and What Went Wrong

What Went Well

• “Sequential quarterly revenue improved… credit costs moderated as reserves stepped down… [and] we efficiently repaid the September bond maturity while extending duration,” noted the CFO; revenue mix included $8.3m interest income, ~$2.0m fees, $1.1m LLC income .
• NPLs declined: gross unpaid principal fell to ~$104.1m (net ~$93m), down from ~$119.6m gross (net ~$102m) at Q2, with $2.35m collected in interest and late fees during workout processes .
• Shem Creek investments continued to deliver attractive double‑digit yields, contributing ~$1.1m in Q3 on ~$38.6m carrying value and ~$4.1m YTD revenue .

What Went Wrong

• YoY revenue declined to $12.0m from $14.8m due to materially lower net new originations over the past year and elevated nonperforming loans/REO; effective interest rate on performing loans was ~12.4% vs 12.6% last year .
• EPS missed consensus: net loss to common of $0.00/share vs $0.01 expected*, with higher G&A from REO upkeep and one‑time bonuses; compensation and benefits rose to $2.3m, including $0.4m in one‑time cash bonuses .
• Concentration risk persisted: two cross‑collateralized Naples loans (~$50.4m, ~13.4% of portfolio) remained on nonaccrual, weighing ~$450k/month on earnings pending mediation and resolution .

Financial Results

Revenue, EPS, and Net Income vs Prior Periods

Note: Net income margin calculated as Net Income / Revenue with underlying figures cited.

Actual vs Consensus (Q3 2025)

Values marked with an asterisk are retrieved from S&P Global.

Segment and Portfolio Mix

KPIs

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “Our priorities remain the same: protect principal first, then monetize value.”
• “Sequential quarterly revenue improved… credit costs moderated… [and] we efficiently repaid the September bond maturity while extending duration and keeping liquidity intact.”
• “Our pricing is firm… we are still able to earn our 12 and 2… we don’t feel the need to discount.”
• “We will continue to focus on working through our legacy REO and NPL assets while pursuing accretive growth opportunities that align with our risk management principles.”

Q&A Highlights

• Naples concentration: ~$50m (~14% of loans); “a very significant portion” of NPLs—mediation could enable asset control, sales, and potential construction of the South building .
• Charge‑offs to REO crystallized prior CECL allowances; REO management costs may recur depending on asset nature (taxes, preservation) .
• Originations/yields: New loans still priced at 12% + 2% fees; unfunded commitments ($47m) spread over 12–18 months; disbursements included both new originations and commitments .
• NPL workout expectations: Ongoing courthouse step resolutions; gaining control via REO seen as fastest way to unlock capital; post‑COVID originations not adding to NPL totals .

Estimates Context

• Q3 2025 revenue beat consensus: $12.0m actual vs $10.85m*, reflecting modest growth in average performing balances and steady fee generation; EPS missed: $0.00 vs $0.01*, with preferred dividends and REO/G&A costs weighing on common EPS .
• Forward consensus indicates stabilizing revenues: Q4 2025 revenue ~$12.16m*, Q1 2026 ~$11.44m*, with EPS modestly positive (Q4 2025: $0.006*; Q1 2026: $0.013*). Values retrieved from S&P Global.
• Given the revenue beat and ongoing credit normalization, Street models may lift near‑term revenue and reduce credit cost assumptions, but EPS adjustments will hinge on nonaccrual resolution timing and dividend policy cadence .

Key Takeaways for Investors

• Sequential top‑line improvement with revenue at $12.0m and moderating credit costs suggest the trough in earnings quality is past; focus shifts to asset monetization and disciplined originations .
• Balance sheet de‑risking—repayment of Sep notes, extension of duration via senior secured notes, and repo payoff—supports flexibility to fund high‑quality loans without dilutive equity .
• Watch Naples mediation outcome: successful resolution could remove a major earnings drag (~$450k/month), accelerate capital recycling, and reduce concentration risk .
• Origination pricing remains firm (“12 and 2”) despite rate cuts; maintaining spread discipline should support yields as funding mix stabilizes .
• REO/NPL conversion to cash is the fastest path to book value stability and dividend support; identified asset sales under contract provide near‑term visibility .
• Dividend cadence clarified; Board to address declarations in early December (Q4) and maintain quarterly schedule, a relevant input for income‑focused holders .
• Trading lens: Positive surprise on revenue vs consensus and visible de‑risking are supportive; stock likely reacts to Naples news flow and evidence of continuing NPL declines and REO monetization .

Values marked with an asterisk are retrieved from S&P Global.