Northeast Bank(US:NBN)2026-01-27 17:02Financial Data and Key Metrics Changes - The company reported net income of $20.7 million or $2.47 per diluted share for the quarter, with year-to-date net income of $43.3 million or $5.14 per diluted share [13] - Return on average assets was 1.87% for the quarter and 2% year to date, while return on average equity was 15.6% for the quarter and 16.6% year to date [13] - Net interest margin (NIM) for the quarter was 4.49%, down from 4.59% in the linked quarter, resulting in net interest income of $48.8 million for the quarter [14][15] Business Line Data and Key Metrics Changes - The company originated $252 million of loans in the national lending division, with a record quarter for originated loans [8][19] - The company purchased 152 loans in five transactions with a total balance of $576 million at a purchase price of $533 million, achieving a weighted average yield to maturity of 10.8% [19] - SBA loan originations were $39.8 million, with $25 million sold for a gain of $2.1 million [9][15] Market Data and Key Metrics Changes - The company experienced significant loan volume, with total loans on the balance sheet reaching $4.4 billion, up from $3.7 billion as of September 30th [13] - The allowance for credit losses increased from $46.7 million to $63.8 million, reflecting a coverage ratio increase from 1.24% to 1.47% [16] - The company noted that the current pipeline for loans is as full as it has ever been, with expectations of increased loan activity driven by M&A [19] Company Strategy and Development Direction - The company aims to grow its deposit base in Maine, which is seen as a less expensive and stickier source of funding compared to brokered deposits [31] - The company is focusing on expanding its small balance insured business loan program, which has seen significant demand [45] - The management is strategically investing in people and technology to set the bank up for long-term success while maintaining disciplined expense management [17] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that the SBA program was impacted by a government shutdown, but they expect a rebound in loan originations and sales moving forward [10][12] - The company anticipates a lift in net interest margin due to the downward liability repricing expected over the next two quarters [29] - Management expressed optimism about the loan growth trajectory, with expectations of significant net interest income in subsequent quarters due to a higher loan book [11][12] Other Important Information - The company reported a decrease in non-interest expense from $21.9 million to $20.8 million, attributed to lower professional fees and reduced loan acquisition costs [17] - The company has a strong capital position with a Tier 1 leverage ratio of 12.2% and a tangible book value of $62.65 per share [17] Q&A Session Summary Question: Did the company buy back stock in the fourth quarter? - The CFO clarified that the decrease in share count was due to stock compensation activity and cancellation of shares to cover taxes, with no stock buybacks [27] Question: What is the expectation for net interest margin going forward? - The CFO indicated that a lift in net interest margin is anticipated due to downward liability repricing [29] Question: How does the company view the funding mix as it grows? - Management stated that brokered deposits will likely continue to be a main source of growth, while also focusing on growing deposits in Maine [31] Question: What percentage of purchase loans does the company typically retain at maturity? - Management did not have the exact number but indicated that they try to retain many loans, especially when rates are higher [33] Question: Will there be a catch-up in SBA gain on sale income next quarter? - The CFO clarified that they expect an increase in SBA loan volume and gain on sale income next quarter, estimating around $20 million a month [40]