Northeast Bancorp (NASDAQ:NBN) reported record fiscal 2026 earnings, with fourth-quarter net income of $34.3 million, or $4.05 per diluted share, as loan growth, purchase-loan performance and asset-quality improvements supported results.
For the fiscal year ended June 30, the bank earned $107.5 million, or $12.74 per diluted share, compared with $83.4 million in the prior fiscal year. President and Chief Executive Officer Rick Wayne said annual net income rose $24 million, or 29%, while tangible book value per share increased 22% from the prior year to $70.58.
Loan Volume Drives Balance-Sheet Growth
Total loans, including loans held for sale, rose to $4.59 billion at June 30, while total assets reached $5.2 billion. Wayne said total loans, including loans held for sale, increased $802 million, or 21%, from June 30, 2025.
Quarterly loan volume totaled $389.8 million, including a record $257.3 million of national lending originations and $94.4 million of purchased loans. For the full fiscal year, loan volume reached $1.95 billion, including $897.4 million of national lending originations and $797.3 million of purchases.
Chief Operating Officer and Chief Credit Officer Pat Dignan said the bank closed about $100 million in loan purchases during the quarter across eight transactions from banks and debt funds, at a weighted average purchase price of $0.93. The annual purchase total was about $850 million, resulting in 16% net growth in the purchase portfolio year over year.
Dignan said Northeast reviewed 37 loan pools totaling $4.4 billion during the quarter and bid on 14 pools totaling $1.9 billion. The bank won eight pools. Competition for larger pools, particularly homogeneous multifamily portfolios, remained intense from large credit funds, he said, while Northeast has been most competitive in pools with diversified collateral and geographies.
National lending originations totaled $257 million in the quarter, representing the third consecutive quarterly record, according to Dignan. The bank originated 33 loans with an average balance of $7 million, loan-to-value ratios slightly above 50%, and an average interest rate of about 7.25%. Lender finance accounted for roughly two-thirds of balances.
Margin Remains Strong Despite Lower Accretion
Chief Financial Officer Santino Delmolino said fourth-quarter net interest income before provision was $60.3 million, compared with $63.1 million in the linked quarter. The decrease primarily reflected lower accelerated accretion within the purchased-loan portfolio.
Net interest margin was 4.8% for both the quarter and full year, down from 5.15% in the prior quarter. The purchased-loan portfolio generated a 9.3% total return and an 8.6% yield during the quarter, Delmolino said. The originated portfolio yielded around SOFR plus 400 basis points.
Cost of funds declined to 3.59% from 3.62% in the prior quarter. Delmolino said he did not expect significant further relief in funding costs under the current rate environment. Northeast has approximately $300 million of brokered certificates of deposit and another $300 million of retail CDs maturing over the next 40 months. Higher brokered-CD renewal costs are expected to be offset by potential relief on retail deposits, he said.
During the question-and-answer session, Delmolino said that excluding transactional income, management expects net interest margin to remain relatively steady. He said the purchase portfolio should remain near an 8% yield, while cash is being reallocated to higher-yielding investments.
Small-Business Product Strategy Adjusted
Wayne said Northeast originated $102 million of insured small-business loans during fiscal 2026 but has not been able to sell those loans at sufficiently attractive prices. The product initially had 10% insurance coverage and an approximately 4% deductible. The bank has increased insurance protection to 25%, with a higher deductible, because it expects to retain the loans longer than initially planned.
Delmolino said the bank had $96 million of insured small-balance business loans, including held-for-sale loans, on its balance sheet. Approximately $1.6 million of loans previously classified as held for sale were transferred to the loan portfolio because of delinquency. The bank recorded a corresponding allowance and insurance receivable, with a $1.6 million provision offset by a $1.6 million gain.
Dignan said the SBA program originated 203 loans totaling just under $35 million in the quarter and about $150 million for the year. He attributed slower-than-expected SBA growth partly to six rule changes over the prior 12 months that narrowed eligibility and increased underwriting requirements. The bank remains optimistic it can reach a $20 million monthly run rate absent further changes, he said.
Credit Metrics and Capital Improved
Credit performance remained strong, according to management. Nonperforming assets improved to 67 basis points from 78 basis points in the previous quarter, while past-due loans declined to 54 basis points of total loans from 64 basis points.
The company recorded a $679,000 credit provision, compared with a $218,000 credit provision in the prior quarter. Delmolino said future provision expense will depend largely on loan volume and the resolution of purchased loans carrying individually evaluated reserves. New national lending originations carry a general allowance of roughly 45 basis points, while allowances on purchased loans are reflected in purchase price rather than provision expense.
Noninterest expense was $23.5 million, roughly flat from the prior quarter, and the efficiency ratio was 36%. Delmolino said the bank expects quarterly expenses to increase by about $1 million in the coming quarter before reaching a steadier run rate. Northeast is investing in a data warehouse and automation capabilities that management expects to support growth without substantial additional headcount.
Total shareholders’ equity increased to $604 million from $568 million in the prior quarter. The Tier 1 leverage ratio rose to 11.9%, and total risk-based capital increased to 14.7%, providing roughly $1.5 billion of loan capacity, management said.
About Northeast Bancorp (NASDAQ:NBN)
Northeast Bancorp is a Maine-based bank holding company and the parent of Northeast Bank, a state‐chartered commercial bank headquartered in Lewiston, Maine. Through its subsidiary, the company provides a variety of financial services, including personal checking and savings accounts, residential mortgage lending, small business and commercial loans, treasury management and private banking services. The bank operates a branch network spanning central and southern Maine, serving individuals, families and local businesses across the region.
Founded in 1872 as Androscoggin County Savings Bank, the institution has evolved through mutual and stock conversions, adopting the Northeast Bank name in 2001 and forming Northeast Bancorp as its mutual holding company in 2013.
