Good day, ladies and gentlemen, and welcome to the Sachem Capital Second Quarter 2020 Conference Call. All lines have been placed on a listen-only mode, and the floor will be open for your questions and comments following the presentation. At this time, it is my pleasure to turn the floor over to your host, Mr. David Waldman of Investor Relations. Sir, the floor is yours.

Good morning, everyone, and thank you for joining Sachem Capital Corp’s second quarter 2020 conference call. On the call with us today is John Villano, CPA, Chief Executive Officer and Chief Financial Officer of Sachem Capital. Yesterday, August 10, the company announced its operating results for the quarter ended June 30, 2020 and its financial condition as of that date. The press release is posted on the company’s website, www.sachemcapitalcorp.com. In addition, the company filed its Form 10-Q with the U.S. Securities and Exchange Commission on August 10, which can also 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 contact Crescendo Communications at 212-671-1021. Before Mr. Villano reviews the company’s operating results for the second quarter of 2020 and the company’s financial condition at June 30, 2020, we would 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, seek, intend, believe, may, might, will, should, could, likely, continue, design, and the negative of such terms and 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 condition, 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 and uncertainties and assumptions, as described in the company’s quarterly report on Form 10-Q for the second quarter of 2020 filed with the U.S. Securities and Exchange Commission on August 10, 2020 as well as its annual report on Form 10-K filed on March 30, 2020. Because of these risks, uncertainties and assumptions, the forward-looking events and 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 that the expectations reflected in the forward-looking statements are reasonable, they cannot guarantee future results, level of activity, performance or achievements. In addition, neither the company nor any other 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 these 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 Villano. Please go ahead, John.

Thank you, David, and thanks to everyone for joining us today. I am pleased -- I'm very pleased to report Sachem achieved another strong quarterly performance despite the impact of COVID-19 pandemic. Specifically, revenue increased 41% to $4.3 million and net income was $2.3 million or $0.10 per share, compared to $1.1 million or $0.06 per share for the same period of 2019. As discussed on our last call, we started the year strong, deploying capital and increasing our mortgage loan portfolio. However, once COVID took hold, and we realize its potential impact on the overall business environment, we took immediate action. Specifically, we implemented new underwriting guidelines to reduce our lending risk by focusing on preservation of capital, and careful maintenance of our existing portfolio. Our guidelines include one, limiting new loan activity to the amount of income and cash received by loan payoffs. Two, reducing the LTV on new loans not to exceed 50%, down from 78%. Three, loans greater than $1 million required board review, and finally requiring interest fees reserve on large loans. We believe these steps were justified and necessary given the pervasive uncertainty in the marketplace. In hindsight, this was the right decision. And although we temporary limited our growth aspirations, we believe we have substantially mitigated the financial impact of COVID-19 on our business. Despite these steps, we continue to generate strong financial performance, as evidenced by a 41% increase in Q2 revenue and a 98% increase in net income. I'm also pleased to report that since the end of the first quarter, forbearance requests dropped from 42 at the end of the first quarter of 2020 to just 23 at the end of the second quarter. Loans with forbearance provisions dropped from an initially reported $9.2 million at March 31 2020 to…

[Operator Instructions] We'll go first to Rommel Dionisio at Aegis Capital.

John, a couple of quick questions for you. First, I wonder in a lot of moving parts, obviously in the real estate market, low interest rates, perhaps people moving out of the cities into Connecticut, but also some economic headwinds. Could you just maybe break all that down and maybe share this overall kind of property value trends that you're seeing these last few weeks? I've seen a lot of moving parts there.

So the real estate trends in Connecticut where we have 90% of our business, they have changed dramatically. Real estate has now become popular. Real estate listings are moving quickly. And this is quite different from what we were seeing in December and January of 2020. Yes, we are seeing a migration from the cities. We are seeing people take advantage of the low interest rates. Once again housing is becoming affordable. We are also seeing lower priced homes gets snapped up quickly. And this is a market that we really spend a lot of time in this and our average loan balance is somewhere in the vicinity of $250,000. So we are a direct beneficiary of the move with lower interest rates and people first time homebuyers buying property. Renters are now buying property. And as you've heard in our call, REO was down 1.3 million in the six months ended June 30. It's kind of a nice trend. And I expect there will be some headwinds at some point where prices become unreachable. As all real estate markets change, we're on the lookout. And but for right now, we're enjoying the fact that our borrowers have a lot of liquidity when it comes to selling their investments.

Okay. Just a quick follow-up if I may. You mentioned in your recent press releases a potential expansion into Florida, especially with new executive COO that you're bringing on. Could you maybe just give us a roadmap for what that might look like? Obviously, that's a region that's been pretty hard hit by COVID and, yes, just maybe be in terms of timing. I mean, could we see some of that in the second half of the year? Is it really more of a long-term goal? Thanks.

We have started a move into the area and the Florida real estate market is quite robust with quite a few Northern families, Midwestern and Canadian families heading South, some in search of warmer climates, some in search of tax benefits. What we're doing in Florida is a slow and systematic expansion. We are marketing in Southern Florida. We have web advertising running. We are unbelievably selective in any loans that we accept in that area. We do have boots on the ground to review properties. We have law firms. We're beginning to build a structure there. Again, it is slow and steady. Our capital at the moment doesn't allow us to become a significant player in the Florida market just yet, and the same is true for Texas. We have boots on the ground. We have operator in that area that we trust explicitly. And, we have some loans from them in our portfolio, and we look to expand those ones to diversify our portfolio. And just again, we're looking for better sponsorship of our invested dollars. That's all.

[Operator Instructions] We'll go next to Jim Altschul at Aviation Advisors.

Couple of questions. First of all, with regard to the forbearance request, how your reflecting among the P&L and balance sheet? I mean, are you recording the full revenue according to the amount receivable? Or are you doing something? What are you doing?

Okay. So I do think, we treat our forbearance requests somewhat different than others. Because we are a commercial lender, we are not specifically required to grant 30, 60, 90 day extension. We did however provide relief to some of our borrowers when they could demonstrate the damage that they or their family property has incurred. The first thing we look for is the borrower must be current. In order to get a forbearance request, you can't be 90 days late and then ask for help. So first and foremost, our borrower has to be paying as agreed. The next thing we did was value of the property to make sure that we had the proper LTV so that we could extend credit to the borrower. And so, now if the borrower is current and we have availability to win, what we did is we modified the borrower's note. So in effect, if a borrower had requested a 90 day forbearance, we actually funded 90 days of interest. They signed legal documents. We had a formal closing. We took the 90 days of interest and we have escrowed that our balance sheet and for each 30 day period, we took that portion of the interest and we took it in as revenue. So, the final important fact here is that, our borrowers look to move these properties at some point. And we all know how banks operate. And if there is a payment deficiency or late pay, some of our borrowers will not be able to be refinanced. So we made sure we did not further complicate the COVID situation. So now when a bank calls us for a payment history, with an open heart, we could say, yeah, these payments have been made. Okay, so we're not just granting a free of -- a 90-day free deal with and it's open. It's not like an open chamber of air with no money. So these are not bad loans to be perfectly clear. These are people working through issues, they've clearly demonstrated to us the need for assistance.

I mean I didn’t say bad, I wanted to understand how you were accounting for the so -- which you would explain in very detail which I appreciate. Next question. You have a significant amount of investments on the asset side of the ledger, I guess, some of the proceeds from the notes that you have I guess, deployed it loans, I mean what type of securities or instruments are you investing?

These are -- I'll say this, because I don't have this statement in front of me. These are investments that are bomb proof. So we're earning somewhere in the range of 3.5% on our investments. These are not individual stocks. These are not any investment that would have high risk. There's some corporate bonds there's a few CDs in there. But again, it's nothing with no point, there's no margin, and that's driving for year. Right now our cash balance is somewhere in the vicinity of $15 million or $16 million from ’20, at June 30. So we're starting to work our way through it. But again, it's, we put it in a position and it is managed well, as you can see by our investment, income and gains that we've incurred on the money. But again, it's bombproof. We want to sleep at night and we're not gambling the money.

Got it. And just one other thing. I don’t want to take much of your time, but in the quarter there was an impairment charge, could you tell us a little about that please?

Sure. We actively monitor loans that are in foreclosure, that we try to get a feel for market value compared to our carrying cost in the assets. And we go through this, we will make an impairment, that impairment may be larger or smaller than what we anticipate, but we're trying to be proactive. We try to have a crystal ball but it's not that easy. The trick in this environment is -- we don't know how a property is going to come back to us. And that's really the trick and we do inspect properties in trouble foreclosure properties, fairly consistently in an effort to see and damage its garbage on the law and things like that. And, let me speak honestly and nobody gives us the property in good shape, in as good a shape as when they bought. So, we sometimes take impairment charges to really smooth earnings to anticipate potential losses, but again, we don't have a crystal ball, we try to be as accurate as we can.

And with no other questions holdings. Mr. Villano, I'll turn the conference back to you for any additional or closing comments.

First and foremost, I'd like to thank our shareholders. We're doing what we can. We have challenging times. We are good stewards of your invested dollars. We think the best that you have come. Thank you.

Ladies and gentlemen that will conclude today's conference. We appreciate your participation today. You may disconnect at this time and have a great day.