NASDAQ:SHFS SHF Q3 2023 Earnings Report $2.23 +0.31 (+16.15%) Closing price 04/17/2025 03:59 PM EasternExtended Trading$3.86 +1.63 (+73.09%) As of 04/17/2025 06:24 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings History SHF EPS ResultsActual EPS-$0.40Consensus EPS N/ABeat/MissN/AOne Year Ago EPSN/ASHF Revenue ResultsActual Revenue$4.33 millionExpected RevenueN/ABeat/MissN/AYoY Revenue GrowthN/ASHF Announcement DetailsQuarterQ3 2023Date11/14/2023TimeN/AConference Call DateTuesday, November 14, 2023Conference Call Time4:30PM ETUpcoming EarningsSHF's next earnings date is estimated for Monday, May 12, 2025, based on past reporting schedules. Conference Call ResourcesConference Call AudioConference Call TranscriptPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfilePowered by SHF Q3 2023 Earnings Call TranscriptProvided by QuartrNovember 14, 2023 ShareLink copied to clipboard.There are 4 speakers on the call. Operator00:00:00Good afternoon. My name is Christa, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Safe Harbor Financial Third Quarter 2023 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. Operator00:00:31Thank you. I will now turn the conference over to Erika Kaye, Vice President. Erika, you may begin your conference. Speaker 100:00:39Thank you. Good afternoon, everyone, and welcome to the Q3 2023 earnings conference call for Safe Harbor Financial. Before we start, please note that remarks made today include forward looking statements, including statements with respect to the company's outlook and the company's expectations regarding its market opportunities and other financial operational matters. Each forward looking statement discussed on today's call is subject to risks and uncertainties that could cause actual results to differ materially from those projected in such statements. Actual results and the timing of certain events may Additional information regarding these factors appears under the heading Risk Factors in the company's filings with the Securities and Exchange Commission or the SEC, which are available at www.sec.gov and on our website at ir.shfinancial.org. Speaker 100:01:35The The forward looking statements in this call will speak only as of today's date and the company undertakes no obligation to update or revise any of these statements. Also during the call, Safe Harbor will present both GAAP and non GAAP financial measures. A reconciliation of non GAAP to GAAP measures is included in today's earnings press release, which you can find on the company's Investor Relations website or on the SEC website. Today's call is being recorded and a copy of the recording will be available on Safe Harbor's Investor Relations website. All dollar amounts expressed today are in U. Speaker 100:02:06S. Currency. Presenting today will be Sundae, Sea Fried's Chief Executive Officer and Jim Denity, Chief Financial Officer of Safe Harbor. I'll now hand the call over to Sundy. Sundy, please go ahead. Speaker 200:02:19Thank you, Erica, and welcome to our 2023 Q3 earnings call. This is a very exciting time for Safe Harbor as we continue to deposit and credit tools for cannabis related businesses or CRBs. Our 3rd quarter results speak to the strength of our fintech platform as it continues to support the cannabis industry with access to these financial services while driving new high margin revenue streams for Safe Harbor. Since going public in September 2022, Safe Harbor has demonstrated consistently strong financial results by executing a differentiated business model. However, it is important for the investment community to understand the structure of our key revenue segments. Speaker 200:03:13We earned income in the performance of primary business activities, which include onboarding due diligence fees, monthly account compliance fees based upon deposit activity, Safe Harbor programming licensing, investment income and loan activity income composed of origination fees, servicing fees and interest income. We partner with financial institutions, utilizing their balance sheets for both lending and depository activities in exchange for a fee share agreement. Our proprietary FinTech platform connects our CRB clients and the financial institutions, allowing Safe Harbor to service the CRB clients directly, while the financial institution remains the money transmitter. This fintech platform, which sits on top of the financial institution and interfaces with its core system, allows us to provide a robust and compliant cannabis infrastructure for our clients, whereby they can make payments, wires and facilitate other transactions. The Safe Harbor interface directly works with the financial institution to fulfill requests and share data between Safe Harbor and the financial institution for servicing clients and allowing Safe Harbor to manage compliance and other support services. Speaker 200:04:38Among the services, Safe Harbor provides the following. Onboarding due diligence fees, CRVs being a high risk market due to the cash intensive nature of the business require greater attention to KYC or know your customer regulations. This is a labor intensive activity requiring human resources to analyze the safety and soundness of the operation and prevent any non licensed or illicit entities from accessing the financial system. Because this often takes approximately 2 weeks, we charge our incoming clients a fee for onboarding, monthly account compliance fees based upon deposit activity. CRV accounts require additional monthly, quarterly and or annual monitoring and validation of funds to meet bank secrecy obligations. Speaker 200:05:29We charge monthly fees on accounts for this monitoring and validation, averaging over $700 per account per month. Additionally, we earn fees on depository transactions such as wire, ACH origination and other financial service transactions. Investment Income. Our financial institution agreements allow us to profit from CRB balances on deposit. The majority of our deposits remain liquid and earn overnight rates from the Federal Reserve, and we share fees on this income as part of our agreements with our partner Financial Institutions. Speaker 200:06:06Loan activity income, our fastest growing income is from building our credit portfolio. This income consists of an origination fee on the requested credit facility, annual servicing fees for monitoring and interest income. Safe Harbor earns a spread on the difference between the interest rate and the cost of funds negotiated with our partner financial institutions, allowing for a more reasonably priced credit facility. Due to the complex nature of the cannabis businesses as well as other risk factors resulting In a higher level of monitoring, we are able to charge a premium rate compared to normal commercial lending rates. Safe Harbor Program Licensing. Speaker 200:06:48We do not actively seek to sell our IP licensing to new financial institutions in exchange for utilization of our proprietary software and IP. This provides a minor percent of revenue, but allows us to focus on the fastest growing markets, while still profiting on less desirable markets. As you can see, our business model is unique, operating at the intersection of finance and cannabis industry. Growth in each of these revenue segments speaks directly to the value and need for our specific expertise within our finely developed business lines. With that, I'd like to turn to our key growth metrics, which Clearly correlate one with another. Speaker 200:07:41Account relationships equates to an increased deposit base. Increased deposit base equates to greater lending opportunity at more favorable cost of funds. And the combination of both depository and credit services equates to long term profitable relationships together building market share, account relationships, deposit base. We hit a key milestone in the Q3 by facilitating through our partner banks over $20,000,000,000 in cannabis related funds since our inception in 2015. We remain on target to exceed $4,000,000,000 in deposits in 2023, which would represent a 31% increase over 2022. Speaker 200:08:27Our strong Quarter 3 deposit activity resulted in $2,230,000 of deposit and on boarding income, an increase of over 63% from the same period in 2022. Our average Active accounts for the quarter increased 49.6 percent to 986 from 659, excuse me, in the Q3 of 2022. Balances on deposit increased 36.5 percent to 216,900,000 dollars in the Q3 of 2023 compared to $158,900,000 in Q3 of 2022. Our increased deposit base has also had a significant impact on investment income. These rate increases Have positively affected our overall investment income, which increased 112% year over year to $1,190,000 in Q3 of 2023. Speaker 200:09:37Lending opportunities. We continue to see a strong demand for CRB Real Estate Lending and are consistently maintaining a pipeline of potential credit opportunities in excess of $100,000,000 Securing the best collateralized loans is a priority. Highlights for quarter 3 include the following examples. In July, we increased our lending and deposit relationship with a Tier 1 multi state operator by originating 3 new loans for affiliates of the MSO in the aggregate amount of $4,300,000 In September, we originated a $3,000,000 loan for a Washington based THC infused beverage company to support its national expansion. Our increased loan activity is driving a new level of growth for Safe Harbor. Speaker 200:10:27Not only are we growing the number of CRB accounts alongside lending relationships. We are growing their value as we recognize new revenue streams from newly launched services. In the Q3, we issued a total of $7,200,000 in credit facilities bringing our loan balance over $42,000,000 With present term sheet commitments issued in excess of $20,000,000 and our ongoing ability to extend highly competitive rates Due to our established banking relationships, we expect a solid Q4. As you know, we're currently operating in a rising rate environment that has seen rates go from near 0 in March of 2022 to the current federal funds rates of 5.5%. While these rate increases have been necessary to cool high inflationary measures, The rate increases have also helped to generate additional revenue for the company as we saw our loan interest income increase by almost 120 percent to $906,213 from $412,296 in Q3 of 2022. Speaker 200:11:44New credit products. I would like to now address like to discuss the new financial services that we have successfully integrated into our platform this past quarter. Early in Q3, we launched an interest bearing deposit accounts to provide depositors with the opportunity to earn interest on deposited funds. This is a first interest bearing account product broadly available to U. S. Speaker 200:12:08Cannabis businesses. In September, we launched a new line of credit products nationwide creating credit facilities for cannabis enterprises ranging from $25,000 to $1,000,000 at market lending normalized rates. With the introduction of these new financial and treasury tools, Safe Harbor is providing its ability proving its ability to play an integral part in normalizing banking for the cannabis industry to drive future cannabis finance. I would like to take a minute to discuss Our recent announcement regarding the restructuring of certain deferred consideration with AbbVaca in November of 2022. Following the closing of the initial transaction, which closed in November 2022, the cannabis industry as a whole has been impacted by ongoing legal and regulatory roadblocks. Speaker 200:13:02In order to prevent dilution of stock at the 1 year anniversary of closing, we worked with the Abbika founders and shareholders to support the long term viability of Safe Harbor by restructuring the original terms of the AbbVaca acquisition. As a result of our mutually agreed upon amended terms, we were able to reduce the over dilution by 10% while providing long term benefits to both the company and its shareholders. I'd like to thank the AbbVaca shareholders for their willingness to come to an updated agreement, and we look forward to executing on our business strategy while expanding our footprint across the U. S. SAFR Banking Act. Speaker 200:13:43Before Turning the discussion over to Jim, I would like to touch on the macro environment and how we believe recent legislative developments will positively impact Safe Harbor. The advancement of the Secure and Fair Enforcement Regulation, SAFR Banking Act and recent push to move cannabis from a Schedule 1 to a Schedule 3 drug under the Controlled Substances Act is reshaping the legal and Speaker 300:14:08regulatory landscape surrounding cannabis Speaker 200:14:08and is opening the door to additional surrounding cannabis and is opening the door to additional growth opportunities for Safe Harbor to serve a larger customer base. As advances are made to loosen the regulatory strangle on the cannabis industry, we believe more and more cannabis businesses and financial institutions will seek our expertise in facilitating reliable and normalized banking services to grow their businesses as these financial solutions become more readily available. The SAFR Banking Act, which passed the Senate committee vote in September, provides protections for federally regulated financial institutions that serve state sanctioned marijuana businesses, creating new opportunities to offer deposit accounts, insurance and other financial services to companies operating in the space. While this is a positive step forward toward Legalizing the Cannabis Industry. Challenges remain for financial institutions banking the cannabis companies to fulfill their BSA obligations. Speaker 200:15:11As the cannabis industry continues to mature, we believe Safe Harbor will increasingly become the go to fintech partner to CRVs and the financial institutions serving the industry. I'd now like to turn the call over to Jim to discuss our financial results as of September 30, 2023. Jim? Speaker 300:15:34Thank you, Sundy, and good afternoon, everyone. For the 3 months ended September 30, 2023, Safe Harbor reported revenue of $4,300,000 up 79% from $2,400,000 in the comparable prior year period. For the 9 months ended September 30, 2023, Safe Harbor reported total revenue of $13,100,000 an increase of 122 percent from $5,900,000 for the prior year period. In the Q3 of 2023, Revenue for deposit activity and onboarding was $2,200,000 an increase of $864,000 or 65 percent versus the comparable prior year period. For the 9 months ended September 30, 2023, revenue for deposit activity and onboarding $7,000,000 an increase of more than $2,800,000 or 67% versus the comparable prior year period. Speaker 300:16:37The increase for both the 3 month ended and the 9 month ended periods was attributable to the acquired accounts from the Abboca transaction, and increase in the total number of accounts and a higher level of deposit activity than the prior year periods. Revenue earned in the 3 months ended September 30, 2023 for investment income was $1,190,000 an increase of $627,000 or 111% versus the prior year period. For the 9 months ended September 30, 2023, investment income was $4,000,000 an increase of $3,000,000 or 300 percent versus the prior year period. The increase is attributable to higher interest rates and significantly higher deposit balances maintained by our clients with our financial institution partners. In the Q3, loan interest income grew 119% or $493,000 versus the comparable prior year period to $906,000 For the 9 months ended September 30, 2023, loan interest income grew $1,300,000 or 191 percent versus the comparable prior year period to $1,980,000 The increase in revenue was attributable to Placing a greater volume of high quality loans in both the 3 months ended and 9 months ended periods versus the prior year periods. Speaker 300:18:13Safe Harbor program income for the 3 months ended September 30, 2023 decreased by 31,000 dollars or 81% versus the prior year period to $7,000 and for the 9 months ended September 30, 2023, Safe Harbor program decreased $78,000 or 62% versus the prior year period to $48,000 The income decrease in this element of revenue has been intentional as we strategically reduce the number of financial institutions permitted to license our program. Moving down the income statement. For the 3 months ended September 30, 2023, Total operating expenses were $3,800,000 compared to $1,600,000 for the comparable prior year period. Total operating expenses includes employee compensation and benefits, professional services, rent, provisions for loan losses, sales, marketing and general and administrative expenses. The increase in operating expenses was largely driven by an increase compensation and benefit related expenses, professional services expenses and provision for loan losses. Speaker 300:19:29For the 9 months ended 30 September 2023, total operating expenses were $32,100,000 versus $4,200,000 in the prior year period. Excluding an impairment charge of $16,900,000 taken in the Q2 of 2023. Total operating expenses for the 9 months ended September 30, 2023 were $15,200,000 Apart from the impairment charges in the Q2, the higher operating expenses for both the 3 months 9 months ended 2023 compared to their respective prior year periods were attributable to increased headcount resulting from standalone operations separate from Partner Colorado Credit Union, higher compensation related expenses and stock based compensation expenses. The increase in professional service expense was largely associated with the De SPAC transaction and restructuring of De SPAC related financial instruments. The increase in loan loss expense was attributable to the higher amount of credit placed in 2023 versus 2022. Speaker 300:20:37Compared to the preceding quarters of 2023, When separating out the impairment charges, the business has reduced its overall level of operating expense as we continue to focus on expense elimination and efficiency gains throughout all elements of the business. Consequently, net loss in the Q3 of 2023 was $748,000 compared to net income of $595,000 in the comparable prior year period and for the 9 months ended September 30, 2023. The company reported a net loss of $19,800,000 compared to net income of 1 point $4,000,000 in the 9 months ended 2022. When adjusting net income for interest, taxes and depreciation and amortization expense and further adjustments to exclude non cash, unusual and or infrequent costs, we compute an adjusted EBITDA, which management believes is a better measure to evaluate our operating performance. A reconciliation of net income to adjusted EBITDA as provided in the press release and 8 ks filed earlier today. Speaker 300:21:48Adjusted EBITDA for the quarter ended September 30, 2023 was $1,050,000 versus $1,020,000 in the comparable prior year period. And for the 9 months ended September 30, 2023, the company reported adjusted EBITDA of $2,300,000 versus $2,150,000 in the comparable prior year 9 months ended 2022. Moving to the balance sheet. At the end of September 30, 2023, the company reported cash and cash equivalents of $8,950,000 compared to $8,400,000 at the December 31, 2022. Cash used in operating activities through the Q3 of 2023 was $225,000 versus $1,970,000 in cash provided by operating activities in the comparable prior year period. Speaker 300:22:44This was mainly due to the previously cited higher than normal run rate for compensation and employee benefits in 2023, as well as a higher than normal run rate for professional service expense in 2023 associated with working through the many complex financial instruments placed at the time of the de stack in September of 2022. Turning to our liquidity. The company reported a net working capital deficit on September 30, 2023 of $9,400,000 versus $39,300,000 at December 31, 2022. Our working capital deficit of $9,400,000 includes $14,700,000 associated with the deferred consideration owed to the sellers of AbbVaca in the form of stock, common stock of the company. Excluding the stock portion of the deferred consideration, the company would have had a positive working capital of approximately $5,300,000 an increase of more than $2,800,000 over the prior sequential quarter, the period ended June 30, 2023. Speaker 300:23:54Looking ahead to the balance of 2023, We expect to report full year revenue for 2023 in the range of $16,000,000 to $16,500,000 Looking beyond the year end, the company is pursuing initiatives to catalyze higher rates of growth for the business. We are in discussions with several financial institutions to acquire their portfolio of accounts. This will bring new client depository relationships in new states and will bring relationships with additional financial institutions. These new relationships will increase the total number of accounts, total value of deposits with financial institution partners and total lending capacity. To capitalize these initiatives, the business is also in discussions with partners to invest in our company to fund these growth initiatives. Speaker 300:24:50In our discussions with our capital partners, we are mindful that the cost of capital of a few of these growth initiatives needs to be less than the return on invested capital we expect from these pursuits. We have a well developed model for this type of analysis and we rely model to help inform the purchase price of the acquired portfolio, including the cost of merger integration, Contain the cost of capital such that any project we pursue will be accretive to the income statement, balance sheet and shareholder capital and shape the business plan so that we earn the expected return model. Beyond our full year revenue guidance, we have not issued detailed guidance to date due to the transition of our company from a private to a public company. However, we do intend to provide more detailed guidance in the coming year. We believe after a year of performance and managing through the de SPAC and debt issues, we have a great ability to anticipate future revenue, operating expenses, earnings and other key metrics important to our shareholders. Speaker 300:25:58With that, I will now turn the call back to the to Sandy to the operator for any questions. Operator00:26:22Your first question comes from the line of Will Waller from M3F Incorporated. Speaker 100:26:29Please go Speaker 300:26:30ahead. Hi. You disclosed in the press release that deposit balances on average at the Financial Institution clients were about 200 and Will, I'll take that question. We haven't disclosed that in previous Calls or disclosed it publicly. But I would say the easiest way to come about is about 3 quarters of that, Anywhere from like 2 thirds to 3 quarters of that is with Partner Colorado. Speaker 300:27:18Perfect. That's exactly what I was looking for. So that's great and excellent quarter. Thanks a lot. Yes, sir. Operator00:27:34We have no questions in our queue at this time. I will now turn the call over to Sandeep Siefried for closing remarks. Speaker 200:27:43Thank you. I would like to thank everyone again for joining us on today's call and for your continued interest in Safe Harbor Financial. We have proven the strength and value of our business model, now given our strong financial institutional partnership network, which continues to grow and our success in advancing new growth initiatives to meet the needs of today's cannabis industry participants, We believe we are on a strong path for continued results. We look forward to updating with you on our next continued progress on our next quarterly conference call. Thank you and have a great day.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallSHF Q3 202300:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsPress Release(8-K)Quarterly report(10-Q) SHF Earnings HeadlinesSHF Holdings announces strategic partnership with FundCannaApril 17 at 5:01 PM | markets.businessinsider.comSafe Harbor Financial and FundCanna Announce Strategic Partnership to Expand Access to Capital for Cannabis OperatorsApril 17 at 7:00 AM | globenewswire.comGet Your Bank Account “Fed Invasion” Ready with THESE 4 Simple StepsStarting as soon as a few months from now, the United States government will make a sweeping change to bank accounts nationwide. It will give them unprecedented powers to control your bank account.April 19, 2025 | Weiss Ratings (Ad)SHF Holdings Faces New Nasdaq Compliance ChallengeApril 7, 2025 | tipranks.comSafe Harbor Financial and Würk Partner to Expand Access to Cannabis Financial Services and Workforce SolutionsApril 3, 2025 | globenewswire.comSHF Holdings reports FY24 EPS ($17.43) vs. ($8.12) last yearApril 2, 2025 | markets.businessinsider.comSee More SHF Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like SHF? Sign up for Earnings360's daily newsletter to receive timely earnings updates on SHF and other key companies, straight to your email. Email Address About SHFSHF (NASDAQ:SHFS), through its subsidiaries, provides access to banking, lending, and other financial services to financial institutions serving the cannabis industry. The company, through its proprietary platform, offers access to business checking and savings accounts, cash management accounts, savings and investment options, commercial lending, courier services, remote deposit services, automated clearing house payments and origination, and wire payments. Its services allow cannabis related businesses to obtain services from financial institutions that allow them to run their business with enhanced financial insight into their business and access to resources. The company was founded in 2015 and is based in Golden, Colorado. SHF Holdings, Inc. operates as a subsidiary of Partner Colorado Credit Union.View SHF ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Archer Aviation Unveils NYC Network Ahead of Key Earnings Report3 Reasons to Like the Look of Amazon Ahead of EarningsTesla Stock Eyes Breakout With Earnings on DeckJohnson & Johnson Earnings Were More Good Than Bad—Time to Buy? 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There are 4 speakers on the call. Operator00:00:00Good afternoon. My name is Christa, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Safe Harbor Financial Third Quarter 2023 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. Operator00:00:31Thank you. I will now turn the conference over to Erika Kaye, Vice President. Erika, you may begin your conference. Speaker 100:00:39Thank you. Good afternoon, everyone, and welcome to the Q3 2023 earnings conference call for Safe Harbor Financial. Before we start, please note that remarks made today include forward looking statements, including statements with respect to the company's outlook and the company's expectations regarding its market opportunities and other financial operational matters. Each forward looking statement discussed on today's call is subject to risks and uncertainties that could cause actual results to differ materially from those projected in such statements. Actual results and the timing of certain events may Additional information regarding these factors appears under the heading Risk Factors in the company's filings with the Securities and Exchange Commission or the SEC, which are available at www.sec.gov and on our website at ir.shfinancial.org. Speaker 100:01:35The The forward looking statements in this call will speak only as of today's date and the company undertakes no obligation to update or revise any of these statements. Also during the call, Safe Harbor will present both GAAP and non GAAP financial measures. A reconciliation of non GAAP to GAAP measures is included in today's earnings press release, which you can find on the company's Investor Relations website or on the SEC website. Today's call is being recorded and a copy of the recording will be available on Safe Harbor's Investor Relations website. All dollar amounts expressed today are in U. Speaker 100:02:06S. Currency. Presenting today will be Sundae, Sea Fried's Chief Executive Officer and Jim Denity, Chief Financial Officer of Safe Harbor. I'll now hand the call over to Sundy. Sundy, please go ahead. Speaker 200:02:19Thank you, Erica, and welcome to our 2023 Q3 earnings call. This is a very exciting time for Safe Harbor as we continue to deposit and credit tools for cannabis related businesses or CRBs. Our 3rd quarter results speak to the strength of our fintech platform as it continues to support the cannabis industry with access to these financial services while driving new high margin revenue streams for Safe Harbor. Since going public in September 2022, Safe Harbor has demonstrated consistently strong financial results by executing a differentiated business model. However, it is important for the investment community to understand the structure of our key revenue segments. Speaker 200:03:13We earned income in the performance of primary business activities, which include onboarding due diligence fees, monthly account compliance fees based upon deposit activity, Safe Harbor programming licensing, investment income and loan activity income composed of origination fees, servicing fees and interest income. We partner with financial institutions, utilizing their balance sheets for both lending and depository activities in exchange for a fee share agreement. Our proprietary FinTech platform connects our CRB clients and the financial institutions, allowing Safe Harbor to service the CRB clients directly, while the financial institution remains the money transmitter. This fintech platform, which sits on top of the financial institution and interfaces with its core system, allows us to provide a robust and compliant cannabis infrastructure for our clients, whereby they can make payments, wires and facilitate other transactions. The Safe Harbor interface directly works with the financial institution to fulfill requests and share data between Safe Harbor and the financial institution for servicing clients and allowing Safe Harbor to manage compliance and other support services. Speaker 200:04:38Among the services, Safe Harbor provides the following. Onboarding due diligence fees, CRVs being a high risk market due to the cash intensive nature of the business require greater attention to KYC or know your customer regulations. This is a labor intensive activity requiring human resources to analyze the safety and soundness of the operation and prevent any non licensed or illicit entities from accessing the financial system. Because this often takes approximately 2 weeks, we charge our incoming clients a fee for onboarding, monthly account compliance fees based upon deposit activity. CRV accounts require additional monthly, quarterly and or annual monitoring and validation of funds to meet bank secrecy obligations. Speaker 200:05:29We charge monthly fees on accounts for this monitoring and validation, averaging over $700 per account per month. Additionally, we earn fees on depository transactions such as wire, ACH origination and other financial service transactions. Investment Income. Our financial institution agreements allow us to profit from CRB balances on deposit. The majority of our deposits remain liquid and earn overnight rates from the Federal Reserve, and we share fees on this income as part of our agreements with our partner Financial Institutions. Speaker 200:06:06Loan activity income, our fastest growing income is from building our credit portfolio. This income consists of an origination fee on the requested credit facility, annual servicing fees for monitoring and interest income. Safe Harbor earns a spread on the difference between the interest rate and the cost of funds negotiated with our partner financial institutions, allowing for a more reasonably priced credit facility. Due to the complex nature of the cannabis businesses as well as other risk factors resulting In a higher level of monitoring, we are able to charge a premium rate compared to normal commercial lending rates. Safe Harbor Program Licensing. Speaker 200:06:48We do not actively seek to sell our IP licensing to new financial institutions in exchange for utilization of our proprietary software and IP. This provides a minor percent of revenue, but allows us to focus on the fastest growing markets, while still profiting on less desirable markets. As you can see, our business model is unique, operating at the intersection of finance and cannabis industry. Growth in each of these revenue segments speaks directly to the value and need for our specific expertise within our finely developed business lines. With that, I'd like to turn to our key growth metrics, which Clearly correlate one with another. Speaker 200:07:41Account relationships equates to an increased deposit base. Increased deposit base equates to greater lending opportunity at more favorable cost of funds. And the combination of both depository and credit services equates to long term profitable relationships together building market share, account relationships, deposit base. We hit a key milestone in the Q3 by facilitating through our partner banks over $20,000,000,000 in cannabis related funds since our inception in 2015. We remain on target to exceed $4,000,000,000 in deposits in 2023, which would represent a 31% increase over 2022. Speaker 200:08:27Our strong Quarter 3 deposit activity resulted in $2,230,000 of deposit and on boarding income, an increase of over 63% from the same period in 2022. Our average Active accounts for the quarter increased 49.6 percent to 986 from 659, excuse me, in the Q3 of 2022. Balances on deposit increased 36.5 percent to 216,900,000 dollars in the Q3 of 2023 compared to $158,900,000 in Q3 of 2022. Our increased deposit base has also had a significant impact on investment income. These rate increases Have positively affected our overall investment income, which increased 112% year over year to $1,190,000 in Q3 of 2023. Speaker 200:09:37Lending opportunities. We continue to see a strong demand for CRB Real Estate Lending and are consistently maintaining a pipeline of potential credit opportunities in excess of $100,000,000 Securing the best collateralized loans is a priority. Highlights for quarter 3 include the following examples. In July, we increased our lending and deposit relationship with a Tier 1 multi state operator by originating 3 new loans for affiliates of the MSO in the aggregate amount of $4,300,000 In September, we originated a $3,000,000 loan for a Washington based THC infused beverage company to support its national expansion. Our increased loan activity is driving a new level of growth for Safe Harbor. Speaker 200:10:27Not only are we growing the number of CRB accounts alongside lending relationships. We are growing their value as we recognize new revenue streams from newly launched services. In the Q3, we issued a total of $7,200,000 in credit facilities bringing our loan balance over $42,000,000 With present term sheet commitments issued in excess of $20,000,000 and our ongoing ability to extend highly competitive rates Due to our established banking relationships, we expect a solid Q4. As you know, we're currently operating in a rising rate environment that has seen rates go from near 0 in March of 2022 to the current federal funds rates of 5.5%. While these rate increases have been necessary to cool high inflationary measures, The rate increases have also helped to generate additional revenue for the company as we saw our loan interest income increase by almost 120 percent to $906,213 from $412,296 in Q3 of 2022. Speaker 200:11:44New credit products. I would like to now address like to discuss the new financial services that we have successfully integrated into our platform this past quarter. Early in Q3, we launched an interest bearing deposit accounts to provide depositors with the opportunity to earn interest on deposited funds. This is a first interest bearing account product broadly available to U. S. Speaker 200:12:08Cannabis businesses. In September, we launched a new line of credit products nationwide creating credit facilities for cannabis enterprises ranging from $25,000 to $1,000,000 at market lending normalized rates. With the introduction of these new financial and treasury tools, Safe Harbor is providing its ability proving its ability to play an integral part in normalizing banking for the cannabis industry to drive future cannabis finance. I would like to take a minute to discuss Our recent announcement regarding the restructuring of certain deferred consideration with AbbVaca in November of 2022. Following the closing of the initial transaction, which closed in November 2022, the cannabis industry as a whole has been impacted by ongoing legal and regulatory roadblocks. Speaker 200:13:02In order to prevent dilution of stock at the 1 year anniversary of closing, we worked with the Abbika founders and shareholders to support the long term viability of Safe Harbor by restructuring the original terms of the AbbVaca acquisition. As a result of our mutually agreed upon amended terms, we were able to reduce the over dilution by 10% while providing long term benefits to both the company and its shareholders. I'd like to thank the AbbVaca shareholders for their willingness to come to an updated agreement, and we look forward to executing on our business strategy while expanding our footprint across the U. S. SAFR Banking Act. Speaker 200:13:43Before Turning the discussion over to Jim, I would like to touch on the macro environment and how we believe recent legislative developments will positively impact Safe Harbor. The advancement of the Secure and Fair Enforcement Regulation, SAFR Banking Act and recent push to move cannabis from a Schedule 1 to a Schedule 3 drug under the Controlled Substances Act is reshaping the legal and Speaker 300:14:08regulatory landscape surrounding cannabis Speaker 200:14:08and is opening the door to additional surrounding cannabis and is opening the door to additional growth opportunities for Safe Harbor to serve a larger customer base. As advances are made to loosen the regulatory strangle on the cannabis industry, we believe more and more cannabis businesses and financial institutions will seek our expertise in facilitating reliable and normalized banking services to grow their businesses as these financial solutions become more readily available. The SAFR Banking Act, which passed the Senate committee vote in September, provides protections for federally regulated financial institutions that serve state sanctioned marijuana businesses, creating new opportunities to offer deposit accounts, insurance and other financial services to companies operating in the space. While this is a positive step forward toward Legalizing the Cannabis Industry. Challenges remain for financial institutions banking the cannabis companies to fulfill their BSA obligations. Speaker 200:15:11As the cannabis industry continues to mature, we believe Safe Harbor will increasingly become the go to fintech partner to CRVs and the financial institutions serving the industry. I'd now like to turn the call over to Jim to discuss our financial results as of September 30, 2023. Jim? Speaker 300:15:34Thank you, Sundy, and good afternoon, everyone. For the 3 months ended September 30, 2023, Safe Harbor reported revenue of $4,300,000 up 79% from $2,400,000 in the comparable prior year period. For the 9 months ended September 30, 2023, Safe Harbor reported total revenue of $13,100,000 an increase of 122 percent from $5,900,000 for the prior year period. In the Q3 of 2023, Revenue for deposit activity and onboarding was $2,200,000 an increase of $864,000 or 65 percent versus the comparable prior year period. For the 9 months ended September 30, 2023, revenue for deposit activity and onboarding $7,000,000 an increase of more than $2,800,000 or 67% versus the comparable prior year period. Speaker 300:16:37The increase for both the 3 month ended and the 9 month ended periods was attributable to the acquired accounts from the Abboca transaction, and increase in the total number of accounts and a higher level of deposit activity than the prior year periods. Revenue earned in the 3 months ended September 30, 2023 for investment income was $1,190,000 an increase of $627,000 or 111% versus the prior year period. For the 9 months ended September 30, 2023, investment income was $4,000,000 an increase of $3,000,000 or 300 percent versus the prior year period. The increase is attributable to higher interest rates and significantly higher deposit balances maintained by our clients with our financial institution partners. In the Q3, loan interest income grew 119% or $493,000 versus the comparable prior year period to $906,000 For the 9 months ended September 30, 2023, loan interest income grew $1,300,000 or 191 percent versus the comparable prior year period to $1,980,000 The increase in revenue was attributable to Placing a greater volume of high quality loans in both the 3 months ended and 9 months ended periods versus the prior year periods. Speaker 300:18:13Safe Harbor program income for the 3 months ended September 30, 2023 decreased by 31,000 dollars or 81% versus the prior year period to $7,000 and for the 9 months ended September 30, 2023, Safe Harbor program decreased $78,000 or 62% versus the prior year period to $48,000 The income decrease in this element of revenue has been intentional as we strategically reduce the number of financial institutions permitted to license our program. Moving down the income statement. For the 3 months ended September 30, 2023, Total operating expenses were $3,800,000 compared to $1,600,000 for the comparable prior year period. Total operating expenses includes employee compensation and benefits, professional services, rent, provisions for loan losses, sales, marketing and general and administrative expenses. The increase in operating expenses was largely driven by an increase compensation and benefit related expenses, professional services expenses and provision for loan losses. Speaker 300:19:29For the 9 months ended 30 September 2023, total operating expenses were $32,100,000 versus $4,200,000 in the prior year period. Excluding an impairment charge of $16,900,000 taken in the Q2 of 2023. Total operating expenses for the 9 months ended September 30, 2023 were $15,200,000 Apart from the impairment charges in the Q2, the higher operating expenses for both the 3 months 9 months ended 2023 compared to their respective prior year periods were attributable to increased headcount resulting from standalone operations separate from Partner Colorado Credit Union, higher compensation related expenses and stock based compensation expenses. The increase in professional service expense was largely associated with the De SPAC transaction and restructuring of De SPAC related financial instruments. The increase in loan loss expense was attributable to the higher amount of credit placed in 2023 versus 2022. Speaker 300:20:37Compared to the preceding quarters of 2023, When separating out the impairment charges, the business has reduced its overall level of operating expense as we continue to focus on expense elimination and efficiency gains throughout all elements of the business. Consequently, net loss in the Q3 of 2023 was $748,000 compared to net income of $595,000 in the comparable prior year period and for the 9 months ended September 30, 2023. The company reported a net loss of $19,800,000 compared to net income of 1 point $4,000,000 in the 9 months ended 2022. When adjusting net income for interest, taxes and depreciation and amortization expense and further adjustments to exclude non cash, unusual and or infrequent costs, we compute an adjusted EBITDA, which management believes is a better measure to evaluate our operating performance. A reconciliation of net income to adjusted EBITDA as provided in the press release and 8 ks filed earlier today. Speaker 300:21:48Adjusted EBITDA for the quarter ended September 30, 2023 was $1,050,000 versus $1,020,000 in the comparable prior year period. And for the 9 months ended September 30, 2023, the company reported adjusted EBITDA of $2,300,000 versus $2,150,000 in the comparable prior year 9 months ended 2022. Moving to the balance sheet. At the end of September 30, 2023, the company reported cash and cash equivalents of $8,950,000 compared to $8,400,000 at the December 31, 2022. Cash used in operating activities through the Q3 of 2023 was $225,000 versus $1,970,000 in cash provided by operating activities in the comparable prior year period. Speaker 300:22:44This was mainly due to the previously cited higher than normal run rate for compensation and employee benefits in 2023, as well as a higher than normal run rate for professional service expense in 2023 associated with working through the many complex financial instruments placed at the time of the de stack in September of 2022. Turning to our liquidity. The company reported a net working capital deficit on September 30, 2023 of $9,400,000 versus $39,300,000 at December 31, 2022. Our working capital deficit of $9,400,000 includes $14,700,000 associated with the deferred consideration owed to the sellers of AbbVaca in the form of stock, common stock of the company. Excluding the stock portion of the deferred consideration, the company would have had a positive working capital of approximately $5,300,000 an increase of more than $2,800,000 over the prior sequential quarter, the period ended June 30, 2023. Speaker 300:23:54Looking ahead to the balance of 2023, We expect to report full year revenue for 2023 in the range of $16,000,000 to $16,500,000 Looking beyond the year end, the company is pursuing initiatives to catalyze higher rates of growth for the business. We are in discussions with several financial institutions to acquire their portfolio of accounts. This will bring new client depository relationships in new states and will bring relationships with additional financial institutions. These new relationships will increase the total number of accounts, total value of deposits with financial institution partners and total lending capacity. To capitalize these initiatives, the business is also in discussions with partners to invest in our company to fund these growth initiatives. Speaker 300:24:50In our discussions with our capital partners, we are mindful that the cost of capital of a few of these growth initiatives needs to be less than the return on invested capital we expect from these pursuits. We have a well developed model for this type of analysis and we rely model to help inform the purchase price of the acquired portfolio, including the cost of merger integration, Contain the cost of capital such that any project we pursue will be accretive to the income statement, balance sheet and shareholder capital and shape the business plan so that we earn the expected return model. Beyond our full year revenue guidance, we have not issued detailed guidance to date due to the transition of our company from a private to a public company. However, we do intend to provide more detailed guidance in the coming year. We believe after a year of performance and managing through the de SPAC and debt issues, we have a great ability to anticipate future revenue, operating expenses, earnings and other key metrics important to our shareholders. Speaker 300:25:58With that, I will now turn the call back to the to Sandy to the operator for any questions. Operator00:26:22Your first question comes from the line of Will Waller from M3F Incorporated. Speaker 100:26:29Please go Speaker 300:26:30ahead. Hi. You disclosed in the press release that deposit balances on average at the Financial Institution clients were about 200 and Will, I'll take that question. We haven't disclosed that in previous Calls or disclosed it publicly. But I would say the easiest way to come about is about 3 quarters of that, Anywhere from like 2 thirds to 3 quarters of that is with Partner Colorado. Speaker 300:27:18Perfect. That's exactly what I was looking for. So that's great and excellent quarter. Thanks a lot. Yes, sir. Operator00:27:34We have no questions in our queue at this time. I will now turn the call over to Sandeep Siefried for closing remarks. Speaker 200:27:43Thank you. I would like to thank everyone again for joining us on today's call and for your continued interest in Safe Harbor Financial. We have proven the strength and value of our business model, now given our strong financial institutional partnership network, which continues to grow and our success in advancing new growth initiatives to meet the needs of today's cannabis industry participants, We believe we are on a strong path for continued results. We look forward to updating with you on our next continued progress on our next quarterly conference call. Thank you and have a great day.Read morePowered by