Northeast Bank Reports Increased Net Income for Q2 2025, Declares Cash Dividend

Northeast Bank reported Q2 2025 net income of $22.4 million, a 59% increase from the previous year.

Quiver AI Summary

Northeast Bank reported a significant increase in net income for the quarter ending December 31, 2024, with earnings rising to $22.4 million, or $2.74 per diluted share, compared to $14.1 million, or $1.85 per diluted share, for the same quarter the previous year. The bank's total assets surged to $4.08 billion, up 30.4% from June 30, 2024, primarily driven by a $811.9 million increase in deposits. The National Lending Division contributed substantially with $260.4 million in loan origination and purchases, marking record origination volumes. Additionally, the bank's board declared a cash dividend of $0.01 per share, and the increase in taxable income was accompanied by substantial growth in both net interest income and noninterest income, particularly from the sale of SBA loans.

Potential Positives

• Record net income of $22.4 million for the quarter, representing a significant increase from $14.1 million the previous year.
• Substantial growth in total assets, increasing by 30.4% to $4.08 billion compared to $3.13 billion as of June 30, 2024.
• Successful origination of $246.4 million in loans during the quarter, driven by strong performance in the National Lending Division.
• Dividend declaration of $0.01 per share shows commitment to returning value to shareholders during a period of strong financial performance.

Potential Negatives

• Provision for credit losses increased significantly to $1.9 million, up from $436 thousand in the same quarter last year, indicating potential concerns about loan performance and credit quality.
• Total return on purchased loans decreased to 8.9%, down from 9.2% for the same quarter last year, suggesting reduced profitability from this segment.
• Tier 1 leverage capital ratio declined to 11.2% from 12.3% at June 30, 2024, raising concerns about the bank's capital adequacy in relation to its risk-weighted assets.

FAQ

What were Northeast Bank's Q4 2024 net income results?

Northeast Bank reported a net income of $22.4 million, or $2.74 per diluted share for Q4 2024.

How much did the total assets of Northeast Bank increase?

Total assets increased by $950.9 million, or 30.4%, reaching $4.08 billion as of December 31, 2024.

When is the next cash dividend payment for shareholders?

The next cash dividend payment is scheduled for March 4, 2025, at $0.01 per share.

What growth did the National Lending Division experience?

The National Lending Division generated $260.4 million in volume, including record originations of $246.4 million.

How did Northeast Bank perform in terms of return on equity?

The return on average equity was 21.1% for the quarter ended December 31, 2024.

Disclaimer: This is an AI-generated summary of a press release distributed by GlobeNewswire. The model used to summarize this release may make mistakes. See the full release here.

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Full Release

PORTLAND, Maine, Feb. 06, 2025 (GLOBE NEWSWIRE) -- Northeast Bank (the “Bank”) (NASDAQ: NBN), a Maine-based full-service bank, today reported net income of $22.4 million, or $2.74 per diluted common share, for the quarter ended December 31, 2024, compared to net income of $14.1 million, or $1.85 per diluted common share, for the quarter ended December 31, 2023. Net income for the six months ended December 31, 2024 was $39.5 million, or $4.85 per diluted common share, compared to $29.2 million, or $3.86 per diluted common share, for the six months ended December 31, 2023.

The Board of Directors declared a cash dividend of $0.01 per share, payable on March 4, 2025, to shareholders of record as of February 18, 2025.

Discussing these results, Rick Wayne, Chief Executive Officer, said, “Our National Lending Division generated $260.4 million in originated and purchased volume for the quarter, including record originations of $246.4 million. Our small balance SBA 7(a) program with Newity LLC as our loan service provider has continued to grow. For the quarter, we originated $100.3 million, compared to $82.4 million for the quarter ended September 30, 2024 and $13.6 million for the quarter ended December 31, 2023. During the current quarter we sold $64.5 million of the guaranteed portion of our SBA loans, generating a gain on sale of $5.6 million. Additionally, we approved and initiated an additional at-the-market (“ATM”) offering of up to $75.0 million of our voting common stock, which provides the Bank with the ability to raise capital if and as needed. We are reporting earnings of $2.74 per diluted common share, a return on average equity of 21.1%, and a return on average assets of 2.2%.”

As of December 31, 2024, total assets were $4.08 billion, an increase of $950.9 million, or 30.4%, from total assets of $3.13 billion as of June 30, 2024.

1.  The following table highlights the changes in the loan portfolio, including loans held for sale, for the six months ended December 31, 2024:

Loans generated by the Bank's National Lending Division for the quarter ended December 31, 2024 totaled $260.5 million, which consisted of $14.0 million of purchased loans at an average price of 94.8% of unpaid principal balance, and $246.4 million of originated loans.

An overview of the Bank’s National Lending Division portfolio follows:

<sup>(1) Initial net investment basis on purchased loans is the initial amortized cost basis net of initial allowance for credit losses (credit mark).




(2) The total return on purchased loans represents scheduled accretion, accelerated accretion, gains (losses) on real estate owned, release of allowance for credit losses on purchased loans, and other noninterest income recorded during the period divided by the average invested balance on an annualized basis. The total return on purchased loans does not include the effect of purchased loan charge-offs or recoveries during the period. Total return on purchased loans is considered a non-GAAP financial measure. See reconciliation in below table entitled “Total Return on Purchased Loans.”</sup>

2. Deposits increased by $811.9 million, or 34.7%, from June 30, 2024. The increase was primarily attributable to increases in time deposits of $773.5 million, or 59.2%. The significant drivers in the change in time deposits were the increase in brokered time deposits, which increased by $660.5 million, and Community Banking Division time deposits, which increased by $90.5 million compared to June 30, 2024.

3. Federal Home Loan Bank (“FHLB”) advances increased by $62.6 million, or 18.1%, from June 30, 2024. The increase was attributable to one new short-term borrowing, partially offset by net paydowns on amortizing advances.

4. Shareholders’ equity increased by $67.5 million, or 17.9%, from June 30, 2024, primarily due to net income of $39.5 million and $28.1 million of net proceeds on shares issued in connection with the Bank’s ATM program.

Net income increased by $8.4 million to $22.4 million for the quarter ended December 31, 2024, compared to net income of $14.1 million for the quarter ended December 31, 2023.

1.  Net interest and dividend income before provision for credit losses increased by $11.5 million to $48.5 million for the quarter ended December 31, 2024, compared to $37.0 million for the quarter ended December 31, 2023. The increase was primarily due to the following:

• 
  An increase in interest income earned on loans of $20.2 million, primarily due to higher average balances in the National Lending Division purchased and originated and Small Business Administration (“SBA”) portfolios, partially offset by lower rates earned across the portfolio;
  


• 
  An increase in interest income earned on short-term investments of $925 thousand, due to higher average balances, partially offset by lower rates earned; and
  


• 
  A decrease in FHLB borrowings interest expense of $2.0 million, primarily due to lower average balances; partially offset by,
  


• 
  An increase in deposit interest expense of $11.6 million, primarily due to higher average balances, partially offset by lower rates on interest-bearing deposits.
  

The following table summarizes interest income and related yields recognized on the loan portfolios:

^{(1) Includes loans held for sale.}

The components of total income on purchased loans are set forth in the table below entitled “Total Return on Purchased Loans.” When compared to the quarter ended December 31, 2023, transactional income increased by $541 thousand for the quarter ended December 31, 2024, and regularly scheduled interest and accretion increased by $17.3 million primarily due to the increase in average balances. The total return on purchased loans for the quarter ended December 31, 2024 was 8.9%, a decrease from 9.2% for the quarter ended December 31, 2023. The following table details the total return on purchased loans:

^{(1) The total return on purchased loans represents scheduled accretion, accelerated accretion, and gains (losses) on real estate owned, and release of allowance for credit losses on purchased loans recorded during the period divided by the average invested balance on an annualized basis. The total return does not include the effect of purchased loan charge-offs or recoveries in the quarter. Total return is considered a non-GAAP financial measure.}

2. Provision for credit losses increased by $1.5 million to $1.9 million for the quarter ended December 31, 2024, compared to $436 thousand in the quarter ended December 31, 2023. The increase was primarily related to loan growth and increases in specific reserves on certain loans.

3. Noninterest income increased by $4.5 million for the quarter ended December 31, 2024, compared to the quarter ended December 31, 2023, primarily due to an increase in gain on sale of SBA loans of $5.0 million, due to the sale of $64.5 million in SBA loans during the quarter ended December 31, 2024 as compared to the sale of $11.5 million during the quarter ended December 31, 2023.

4. Noninterest expense increased by $3.4 million for the quarter ended December 31, 2024 compared to the quarter ended December 31, 2023, primarily due to the following:

• 
  An increase in salaries and employee benefits expense of $1.4 million, primarily due to increases in regular and stock compensation expense;
  


• 
  An increase in loan expense of $1.1 million primarily related to increased expenses in connection with the origination of SBA 7(a) loans; and
  


• 
  An increase in FDIC insurance expense of $669 thousand, due to the growth of the Bank’s asset size and an increased assessment rate.
  

5. Income tax expense increased by $2.7 million to $11.0 million, or an effective tax rate of 32.9%, for the quarter ended December 31, 2024, compared to $8.3 million, or an effective tax rate of 37.1%, for the quarter ended December 31, 2023. The decrease in effective tax rate is primarily due to a write-down of the Bank’s deferred tax asset of $957 thousand in the quarter ended December 31, 2023 as a result of a change in Massachusetts income tax law.

As of December 31, 2024, nonperforming assets totaled $31.3 million, or 0.77% of total assets, compared to $28.3 million, or 0.90% of total assets, as of June 30, 2024.

As of December 31, 2024, past due loans totaled $30.5 million, or 0.85% of total loans, compared to past due loans totaling $26.3 million, or 0.95% of total loans, as of June 30, 2024.

As of December 31, 2024, the Bank’s Tier 1 leverage capital ratio was 11.2%, compared to 12.3% at June 30, 2024, and the Total risk-based capital ratio was 13.9% at December 31, 2024, compared to 14.8% at June 30, 2024. Capital ratios decreased primarily due to the increase in risk-weighted assets and average assets from significant loan growth during the six months ended December 31, 2024, partially offset by increased retained earnings and additional capital raised under the Bank’s ATM program.

Investor Call Information




Rick Wayne, Chief Executive Officer, Richard Cohen, Chief Financial Officer, and Pat Dignan, Chief Operating Officer and Chief Credit Officer of Northeast Bank, will host a

conference call to discuss second quarter earnings and business outlook at 10:00 a.m. Eastern Time on Friday, February 7

^th

.

To access the conference call by phone, please go to this link (

Phone Registration

), and you will be provided with dial in details. The call will be available via live webcast, which can be viewed by accessing the Bank’s website at

www.northeastbank.com

and clicking on the About Us - Investor Relations section. To listen to the webcast, attendees are encouraged to visit the website at least fifteen minutes early to register, download and install any necessary audio software. Please note there will also be a slide presentation that will accompany the webcast. For those who cannot listen to the live broadcast, a replay will be available online for one year at

www.northeastbank.com

.

About Northeast Bank




Northeast Bank (NASDAQ: NBN) is a full-service bank headquartered in Portland, Maine. We offer personal and business banking services to the Maine market via seven branches. Our National Lending Division purchases and originates commercial loans on a nationwide basis. ableBanking, a division of Northeast Bank, offers online savings products to consumers nationwide. Information regarding Northeast Bank can be found at

www.northeastbank.com


.

Non-GAAP Financial Measures




In addition to results presented in accordance with generally accepted accounting principles (“GAAP”), this press release contains certain non-GAAP financial measures, including tangible common shareholders’ equity, tangible book value per share, total return on purchased loans, and efficiency ratio. The Bank’s management believes that the supplemental non-GAAP information is utilized by regulators and market analysts to evaluate a company’s financial condition and therefore, such information is useful to investors. These disclosures should not be viewed as a substitute for financial results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names.

Forward-Looking Statements




Statements in this press release that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. We may also make forward-looking statements in other documents we file with the Federal Deposit Insurance Corporation (the “FDIC”), in our annual reports to our shareholders, in press releases and other written materials, and in oral statements made by our officers, directors or employees. You can identify forward-looking statements by the use of the words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “assume,” “outlook,” “will,” “should,” and other expressions that predict or indicate future events and trends and which do not relate to historical matters. Although the Bank believes that these forward-looking statements are based on reasonable estimates and assumptions, they are not guarantees of future performance and are subject to known and unknown risks, uncertainties, contingencies, and other factors. You should not place undue reliance on our forward-looking statements. You should exercise caution in interpreting and relying on forward-looking statements because they are subject to significant risks, uncertainties and other factors which are, in some cases, beyond the Bank’s control. The Bank’s actual results could differ materially from those expressed or implied by such the forward-looking statements as a result of, among other factors, changes in interest rates and real estate values; changes in employment levels, general business and economic conditions on a national basis and in the local markets in which the Bank operates; changes in customer behavior due to changing business and economic conditions (including inflation and concerns about liquidity) or legislative or regulatory initiatives; the possibility that future credits losses are higher than currently expected due to changes in economic assumptions, customer behavior or adverse economic developments; turbulence in the capital and debt markets; competitive pressures from other financial institutions; changes in loan defaults and charge-off rates; changes in the value of securities and other assets, adequacy of credit loss reserves, or deposit levels necessitating increased borrowing to fund loans and investments; changes in legislation and regulation under the new U.S. presidential administration; operational risks including, but not limited to, cybersecurity, fraud, natural disasters, climate change and future pandemics; the risk that the Bank may not be successful in the implementation of its business strategy; the risk that intangibles recorded in the Bank’s financial statements will become impaired; changes in assumptions used in making such forward-looking statements; and the other risks and uncertainties detailed in the Bank’s Annual Report on Form 10-K, as amended by Amendment No. 1 to the Annual Report on Form 10-K/A as updated in the Bank’s Quarterly Reports on Form 10-Q and other filings submitted to the FDIC. These statements speak only as of the date of this release and the Bank does not undertake any obligation to update or revise any of these forward-looking statements to reflect events or circumstances occurring after the date of this communication or to reflect the occurrence of unanticipated events.

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