Northeast Bank

The company reported Q4 net income of $34.3 million, or $4.05 per diluted share, with return on average equity of 23.5% and return on average assets of 2.7%. FY26 net income was a record $107.5 million, or $12.74 per diluted share, versus $83.4 million in FY25, a 29% increase. Tangible book value per share increased $12.60, or 22%, to $70.58 versus June 30, 2025. Loan volume for the quarter was $389.8 million, including record National Lending originations of $257.3 million and purchases of $94.4 million; full-year loan volume was $1.95 billion, with National Lending originations of $897.4 million and purchases of $797.3 million. Total loans including loans held for sale increased $802 million, or 21%, from June 30, 2025. Net interest income before provision was $60.3 million, and net interest margin was 4.8%, down from 5.15% in the linked quarter. Cost of funds improved to 3.59% from 3.62%. Credit provision was $679,000, compared with $218,000 in the prior quarter. Nonperforming assets improved to 67 basis points from 78 basis points, and past due loans declined to 54 basis points from 64 basis points. Noninterest expense was $23.5 million and the efficiency ratio was 36%. Looking ahead, management said margin should stay relatively steady, purchase-loan yields should hover around 8%, originated loan yields are around 7.70%, and fiscal 2027 tax rate is expected to be in the 28% to 29% range. They also said expenses may pick up by about $1 million in the coming quarter, with a steadier run rate after that.

Rick Wayne framed the quarter as another strong period for growth and profitability, emphasizing record annual earnings, record loan origination volume for the third straight quarter, and continued balance sheet expansion. He also highlighted that the company is adapting its insured small business strategy by increasing insurance protection to 25% because the loans have not been selling at attractive prices, and he said they slowed originations to avoid building that product too heavily on the balance sheet. His tone was confident, but practical, stressing that the bank wants to keep growing without compromising its business model.

Santino Delmolino focused on the earnings drivers: strong balance sheet growth, solid loan performance, disciplined expense management, and high returns on the purchased-loan book. He said total assets ended at $5.2 billion, total loans were $4.59 billion, net interest income before provision was $60.3 million, and the purchased loan portfolio delivered a 9.3% total return with an 8.6% yield. He also noted cost of funds improved to 3.59%, expenses were $23.5 million, the efficiency ratio was 36%, equity rose to $604 million, tangible book value per share was $70.58, and capital ratios improved to a 11.9% Tier 1 leverage ratio and 14.7% total risk-based capital ratio.

Analysts pressed on the competitiveness of larger loan-purchase pools, and management said they were often competing against very large credit funds bidding thinner than Northeast could justify, especially on clean multifamily pools. Management said the best opportunities are mixed pools with diverse collateral and geographies, and that many of the deals still come from M&A activity or fund wind-downs. Questions also covered margin, the insured small-balance product, expenses, tax rate, and provisioning; management said margin should stay relatively steady, expenses may rise modestly next quarter, the tax rate should normalize to about 28% to 29% in FY27, and provision should move back toward a more normal level depending on loan volume and payoffs.