• Loan Volume: $361 million, including $14 million invested on approximately $15 million of UPB on purchase loans.
• Loan Originations: $246 million for the quarter.
• SBA Loan Originations: $100.3 million, with $64.5 million sold.
• Gain on Sold SBA Loans: $5.6 million.
• Net Income: $22.4 million, a record quarter for earnings.
• Net Interest Income: $45.6 million, a record for the quarter.
• Tangible Book Value Increase: $4.49 or 9% since September 30.
• Nonperforming Loans Ratio: 84 basis points, down from 106 basis points.
• Nonperforming Assets: Declined from $37 million to $31 million.
• Average Cost of Deposits: 4.15%, down from 4.34% in the prior quarter.
• Liquidity Position: $430 million as of December 31, 2024.
• Leverage Ratio: 11.2% for the quarter.
• Total Capital Ratio: 13.9% at the end of the quarter.
• ATM Offering Capacity: $75 million approved, $69 million remaining.
• Loan Capacity: $856 million at the end of December.
• SBA Loan Volume: $100 million, up from $82 million in the previous quarter.
• National Real Estate Lending: $246 million closed for the quarter.

• Warning! GuruFocus has detected 5 Warning Sign with NBN.

Release Date: February 07, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Northeast Bank (NASDAQ:NBN) achieved a record net income of $22.4 million for the quarter, excluding a previous exceptional quarter.
• The bank reported a record $361 million in loan volume, with $246 million in originations and $100.3 million in SBA loans.
• Net interest income reached a record $45.6 million for the quarter.
• Tangible book value increased by 9% since the previous quarter, reflecting strong financial performance.
• The bank's liquidity position improved, with on-balance sheet liquidity at $430 million and off-balance sheet capacity over $1 billion.

Negative Points

• Purchase loan volumes were below average this quarter, indicating potential volatility in this segment.
• The bank experienced a large uptick in FDIC costs due to balance sheet growth.
• There is uncertainty in the market regarding the timing and pricing of larger loan purchases.
• The bank's cash balances have increased, which could impact net interest margin if not managed properly.
• Expenses have risen, with the quarter's expenses at $19.1 million, up from previous quarters.

Q & A Highlights

Q: How will the increase in cash balances impact the net interest margin in early 2025? A: Richard Cohen, CFO, explained that while they manage cash levels to ensure liquidity, the cash balance itself should not significantly impact the net interest margin. The margin is more influenced by the composition of assets and liabilities, and how these are repriced over time.

Q: What is the outlook for SBA loan volumes and how much growth is anticipated? A: Rick Wayne, CEO, expressed optimism about the SBA business, noting a strong pipeline and improving technology. The bank is willing to hold more of the unguaranteed portion of SBA loans on its balance sheet, expecting continued growth and a meaningful revenue stream.

Q: What caused the large increase in FDIC costs this quarter? A: Richard Cohen, CFO, attributed the increase primarily to the growth in the bank's balance sheet size.

Q: Can you provide the average price of the 280,000 shares issued this quarter? A: Richard Cohen, CFO, stated that the average price was $9,836 per share.

Q: What are the expectations for expenses moving forward? A: Rick Wayne, CEO, indicated that expenses are expected to range between $18 million and $19 million, reflecting factors such as compensation and hiring.

Q: Are there opportunities for larger loan purchases given current market disruptions? A: Patrick Dignan, COO, noted that while there is significant M&A activity and loan pools available, the timing and pricing of these opportunities remain uncertain. The bank remains optimistic about potential volume.

Q: Does Northeast Bank have exposure to California's wildfires? A: Patrick Dignan, COO, confirmed that while the bank has real estate in California, none of their properties were damaged by the wildfires, and all are insured.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.