Northeast Bank(US:NBN)2020-01-28 17:54Financial Data and Key Metrics Changes - For Q2 2020, the company reported a net income of $4.9 million, or $0.53 per diluted common share, with a return on average equity of 12.1% and a return on average assets of 1.7% [6][17] - The net interest margin for the quarter was 5.6%, reflecting a decrease from the linked quarter [47] - The company experienced a decrease in non-interest expense by $565,000 compared to the linked quarter, primarily due to lower sales and employee benefits expenses [18][37] Business Line Data and Key Metrics Changes - The LASG portfolio saw strong loan growth of $75.4 million, or 10% over the linked quarter, with total loans generated reaching a record $175.4 million [7][8] - The weighted average yield of LASG loans originated in the quarter was 7.4%, with 82% being variable loans [9] - The total return on purchased loans for the quarter was 10.2%, while the originated portfolio generated a return of 7.7% [14] Market Data and Key Metrics Changes - The company’s loan portfolio at the end of the quarter exceeded $1 billion, a significant increase from the average loan balance of $946 million in the second quarter [8] - The company’s deposits decreased by $47 million, or 5%, over the trailing 12-month period, but increased compared to the linked quarter to fund loan growth [31][32] Company Strategy and Development Direction - The company is focused on leveraging its capital effectively to support loan growth, with no shares repurchased in the last quarter [70][73] - Management emphasized the importance of monitoring market conditions and adjusting loan strategies accordingly, particularly in response to changes in regulations such as rent control in New York [66] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of the portfolio despite an increase in non-performing loans, attributing it to specific loans rather than a broader economic issue [66][68] - The company anticipates that it will manage its delinquency levels effectively and maintain low charge-off rates [63][66] Other Important Information - The effective tax rate for the current quarter was 28.9%, slightly up from 28.7% in the linked quarter [21][27] - The company has seen a shift in focus away from SBA originations, impacting non-interest income [22][24] Q&A Session Summary Question: Concerns about the increase in non-performing loans - Management clarified that the increase in non-performing loans was primarily due to two specific loans and emphasized the importance of charge-offs over delinquency levels [57][66] Question: Inquiry about share buybacks - Management confirmed that no shares were purchased in the last quarter and reiterated their focus on leveraging capital for loan growth [70][73] Question: Clarification on past due loans percentage increase - Management acknowledged the increase in past due loans but reassured that the underlying loans are well-secured and expected to resolve without losses [68][66]