Northeast Bank(US:NBN)2025-02-07 22:56Financial Data and Key Metrics Changes - The company reported a record net income of $22.4 million for the quarter, excluding significant income from the sale of PPP loans in Q3 2021 [11] - Base net interest income reached a record of $45.6 million for the quarter [12] - Tangible book value increased by $4.49 or 9% since September 30, with a total increase of $5.95 or 13% over the six-month period [12][13] - The loan capacity based on capital was $856 million at the end of December [14] Business Line Data and Key Metrics Changes - Loan volume for the quarter was $361 million, with $246 million in originations and $100.3 million in SBA loans originated [9][10] - The company originated 917 SBA loans with an average size of $110,000 and weighted average interest rates of 10.85% [29] - Purchase loans included 70 loans with gross balances of $14.8 million, purchased at a price of $14 million [26] Market Data and Key Metrics Changes - The average cost of deposits decreased to 4.15% from 4.34% in the prior quarter, benefiting from a rate-down environment [19] - On-balance sheet liquidity improved to $430 million, up from $379 million as of September [22] - Off-balance sheet capacity increased to over $1 billion, enhancing the ability to add loans [23] Company Strategy and Development Direction - The company aims to grow responsibly by leveraging its liquidity and capital to add quality assets at favorable rates [21] - There is optimism for loan purchasing in 2025, with a focus on both originations and purchases to maintain a balanced portfolio [28][80] - The company is actively monitoring market conditions and opportunities for larger loan purchases due to ongoing M&A activity in the industry [76][78] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the SBA lending business, noting a large pipeline and improved technology from their lending service provider [49][51] - The company is prepared for potential market disruptions and is optimistic about the volume of loan purchasing opportunities [79] - Management highlighted the importance of maintaining a healthy capital ratio while pursuing growth [24] Other Important Information - The ratio of non-performing loans to total loans declined to 84 basis points from 106 basis points [15] - Non-performing assets decreased from $37 million to $31 million, a reduction of about 16% [15][16] - The weighted average seasoning of the loan portfolio is 5.2 years, with 83% of purchased loans originated before 2021 [16] Q&A Session Summary Question: Impact of cash balances on net interest margin - Management indicated that cash balances are managed to ensure liquidity and do not directly impact net interest margin, which is driven by the composition of assets and liabilities [40][41] Question: Future volumes in the SBA business - Management is optimistic about growth in the SBA business, with a large pipeline and improved technology supporting continued volume increases [47][51] Question: Increase in FDIC costs - The increase in FDIC costs was primarily due to balance sheet growth [54] Question: Average price of shares issued - The average price for the 280,000 shares issued this quarter was $98.36 [58] Question: Outlook for expenses - Expected expenses for the upcoming quarters are projected to be between $18 million and $19 million [62] Question: Exposure to California wildfires - The company has around $1 billion in real estate in California, with no damage reported from wildfires, and all properties are insured [84][86]