File photo
Richard Wayne, CEO of Northeast Bank
January 26, 2023
At Northeast Bank, income flattens but record loan volume drives asset growth
Peter Van Allen
Northeast Bank, with its Pearl Street office in Portland pictured here, saw a surge in assets in the past six months.
On Wednesday, Northeast Bank (Nasdaq: NBN), based in Portland, reported that the bank’s second fiscal quarter in 2022 represented a significant milestone, said CEO Rick Wayne, although net income in the most recent quarter slipped slightly from the same period in 2021.
“Our national lending division generated a record $1.17 billion in purchases and originations for the quarter, growing the national lending portfolio by $1.04 billion, or 74.4%, over Sept. 30, 2022, and $1.21 billion, or 97.9%, over June 30, 2022,” Wayne said.
The bank deployed “significant capital into purchased loans, poising the bank for future success,” he added.
The originated yield and purchased return for the quarter was 8.5% and 8.7%, respectively.
“Additionally,” he continued, “we approved and initiated an at-the-market offering of up to $50 million of our voting common stock, which provides the bank with the ability to raise capital if and as needed.”
For the quarter ending Dec. 31, 2022, net income was $11.3 million, compared to net income of $11.4 million for the quarter ending Dec. 31, 2021, a decrease of $105,000. The bank earned $1.54 per diluted common share for the quarter, a return on average equity of 17.5%, and a return on average assets of 2.1%.
The net income for the six months ended Dec. 31, 2022 was $19.6 million, compared to $21.3 million for the six months ended Dec. 31, 2021.
Asset growth
Northeast Bank has branches in Portland, Poland, Brunswick, Augusta, Bethel and South Paris, as well as offices in Lewiston, Boston and New York City. The bank is ranked No. 8 in the 2023 Mainebiz Book of Lists, with assets of $1.58 billion as of June 30, 2022.
But with additional loans on the books, Northeast Bank said its assets as of Dec. 31, 2022, totaled $2.81 billion, an increase of $1.23 billion, or 77.5%, from June 30, 2022.
Loans generated by the national lending division for the quarter ended Dec. 31, 2022, totaled $1.17 billion, which consisted of $998.5 million of purchased loans, at an average price of 86.6% of unpaid principal balance, and $174 million of originated loans.
Deposits increased by $947.7 million, or 73.6%, from June 30, 2022, attributable to increases in time deposits of $951.1 million, or 747.1%, and savings and interest-bearing checking accounts of $140.1 million, or 23.9%, partially offset by a decrease in demand deposits of $145.5 million, or 44.2%.
The significant increase in time deposits was primarily due to the increase in brokered time deposits, which increased to $843.3 million compared to none outstanding at June 30, 2022.
The use of brokered time deposits was part of the bank’s strategy to fund the loan purchases for the short term.
Shareholders’ equity increased by $15.1 million, or 6.1%, from June 30, 2022, primarily due to net income of $19.6 million, stock-based compensation of $1.7 million and the issuance of 34,000 shares of voting common stock, adding $1.1 million to shareholders’ equity, net of issuance costs, partially offset by the repurchase of 136 thousand shares of voting common stock at a weighted average price per share of $37.99, which resulted in a $5.2 million decrease in shareholders’ equity.
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