PORTLAND, Maine - Northeast Bank (NASDAQ: NBN) reported an increase in quarterly net income to $17.1 million, or $2.11 per diluted common share, for the quarter ending September 30, 2024. This marks an improvement from the $15.2 million, or $2.01 per share, recorded in the same period last year. The bank's board also announced a cash dividend of $0.01 per share, set to be paid on November 26 to shareholders on record as of November 12.
The bank's National Lending Division experienced significant growth, contributing to the second largest quarterly loan volume in the bank's history. The division generated $859.8 million in loans, with $732.9 million in purchases and $126.9 million in originations. The portfolio of the National Lending Division expanded by 27.6% over the previous quarter, ending with a balance of $2,420,883 in purchased loans and $1,011,374 in originated loans.
Additionally, the bank's collaboration with Newity LLC on the small balance SBA 7(a) program has shown notable progress, with $82.4 million in originations for the quarter, a substantial increase from $40.2 million in the preceding quarter and $9.7 million in the same period the previous year. Sales of the guaranteed portion of SBA loans also rose, reaching $63.1 million compared to $26.8 million in the previous quarter.
Total assets for Northeast Bank stood at $3.94 billion as of September 30, 2024, which is a 25.8% increase from $3.13 billion on June 30, 2024. The bank's deposit base grew by $785.5 million, or 33.6%, primarily due to a surge in time deposits, while FHLB advances saw a slight decrease.
Shareholders' equity increased by $15.9 million, or 4.2%, from the previous quarter, mainly due to the reported net income and stock-based compensation, despite a decrease in the total risk-based capital ratio due to significant loan growth.
The bank's net interest and dividend income before provision for credit losses rose to $39.0 million for the quarter, up from $37.1 million in the same period last year. This was largely driven by an increase in interest income on loans and short-term investments, coupled with a reduction in FHLB borrowing interest expense.
Noninterest income saw a $3.3 million increase, mainly from the gain on the sale of SBA loans. Noninterest expense also grew by $2.3 million, attributed to higher salaries, employee benefits, and loan origination expenses.
The bank is scheduled to host a conference call to discuss its earnings and business outlook, which will be accessible via live webcast through the bank's website.
This article is based on a press release statement from Northeast Bank.
In other recent news, Northeast Bank has made notable strides in its financial performance, highlighted by a significant expansion of its loan portfolio. This expansion includes a purchase of primarily commercial real estate loans totaling an unpaid principal balance of $805 million. The bank also reported robust financial results for the fourth quarter of fiscal year 2024, with key metrics indicating a healthy return on equity of 7.46% and return on assets nearing 2%. This positive performance was primarily driven by growth in loan volume, improved margins, and robust asset quality.
Northeast Bank has also been in the spotlight of analyst firms. Piper Sandler issued an Overweight rating on the bank's stock, pointing out the bank's strong profitability and efficient business model. Despite unsuccessful attempts to acquire Signature Bank (OTC:SBNY) and Boston Private Bank, Northeast Bank has expressed interest in opportunistic acquisitions.
Among other recent developments, Northeast Bank has reported an increase in real estate transactions, contributing to investor and purchaser confidence. The bank's lender finance has also been successful, reporting no losses. These developments mark a period of growth and performance for Northeast Bank, underpinned by a forward-looking strategy that anticipates continued growth, subject to various risks and uncertainties.
InvestingPro Insights
Northeast Bank's strong quarterly performance is further supported by recent data from InvestingPro. The bank's market capitalization stands at $723.35 million, reflecting its solid position in the financial sector. With a P/E ratio of 11.51, NBN appears to be trading at an attractive valuation relative to its earnings, which aligns with the reported increase in net income.
An InvestingPro Tip highlights that NBN is "Trading at a low P/E ratio relative to near-term earnings growth," with a PEG ratio of 0.46 for the last twelve months as of Q4 2024. This suggests that the stock may be undervalued considering its growth prospects, which is particularly relevant given the bank's significant loan volume growth and expansion in the National Lending Division.
The bank's profitability is evident in its impressive operating income margin of 58.43% for the last twelve months as of Q4 2024. This robust margin underscores the efficiency of Northeast Bank's operations and its ability to generate substantial profits from its revenue streams.
Another InvestingPro Tip notes that NBN has "maintained dividend payments for 37 consecutive years," which speaks to the bank's financial stability and commitment to shareholder returns. This is consistent with the recently announced cash dividend mentioned in the article.
For investors seeking more comprehensive analysis, InvestingPro offers 11 additional tips for Northeast Bank, providing a deeper understanding of the company's financial health and market position.
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