Northeast Bank

Welcome to the Northeast Bank Third Quarter Fiscal Year 2026 Earnings Call. My name is Marvin, and I'll be your operator for today's call. This call is being recorded. With us today from the bank is Rick Wayne, President and Chief Executive Officer, Santino de Molino, Chief Financial Officer, and Pat Dignans, Chief Operating Officer and Chief Credit Officer. Prior to the call, an investor presentation was uploaded to the bank's website, which we'll reference in this morning's call. The presentation can be accessed at the Investors Relations sections of northeastbank.com under Events and Presentation. You may find it helpful to download this investor presentation and follow along during the call. Also, this call will be available for rebroadcast on the website for future use. At this time, all participants are listen-only mode. Later, we will conduct a question and answer session. During the question and answer session, if you have a question, please press star 11 to ask the question. To remove yourself from the queue, please press star 11 again. As a reminder, the conference is being recorded. Please note this presentation contains forward-looking statements about Northeast Bank. Forward-looking statements are based upon current expectations of Northeast Bank's management and are subject to risk and uncertainties. Actual results may differ materially from those discussed in forward-looking statements. Northeast Bank does not undertake any obligation to update any forward-looking statements. I'll now turn the call over to Wick Wayne. Mr. Wayne, you may begin.

Thank you very much, and welcome, everybody. With me this morning are Pat Dignan, our Chief Operating Officer and Chief Credit Officer, Santino Del Molino, our Chief Financial Officer, and Rebecca Rand, our Director of Accounting. The plan for this morning is I will provide an overview of the quarter. And following my presentation, Santino will provide some more granular analysis on our financial statements. And Pat will provide or generate a discussion on our loan activity for the quarter. And after all of that, we welcome any questions that you might have. Let me start off by saying it was a great quarter. It really was a great quarter. And including breaking some records in the bank's long history going back to 1872. First, originated loans for the quarter were $254 million. Incidentally, on the financial highlights page number three of the material uploaded. And that's a record beating last quarter's previous record. So, you know, that is, we were very busy. Except for the third quarter of fiscal year 21, when we had a significant amount of gains from the sale of Triple P loans, this is a record earnings quarter in the history of the bank. And along those same lines, it is a record for the most net interest income in the bank's history. And we're very proud of those records that were broken. Taking a look now at some of the other items in the financial highlights, we had a total loan volume in all areas of $345 million. I'd also point out for the year to date, which is nine months of our fiscal year, $1.56 billion, and which is an increase, and they're now going back to the quarter, an increase in loans for the quarter of $121.5 million. I want to just comment briefly on purchase loan activity, but I'm not going to say that much because Pat's going to cover this in more detail. As you are aware, no doubt, at our last call we talked about how active the market was in loan purchase activity, how much was on the market, a lot of it coming from M&A activity. And, you know, with that, you might say, well, if it is so robust, why did you only invest $25 million in the quarter? And it wasn't for a lack of work. We looked at in excess of a billion dollars. We've been in excess of a billion dollars, and unfortunately, didn't win that much compared to what we look at. So you might say that's a bad thing. A contrary view to that is that we're disciplined bidders, both in terms of asset quality and yield requirements. And some quarters we buy more than others, but we're never going to buy loans that don't meet our metrics just so we can have volume on the balance sheet. And now this is a good time to just to take a look at what's happened for nine months. For nine months on the purchase side, we've invested over $700 million. And so this was a slower quarter. And we'll keep at it every quarter there. And I don't want to say anything more about that because Pat will have a lot more to say. The margin numbers were very, very solid. The NIM was 5.15%. And the total return on purchased loans for the quarter was 9.51%, which has been, that's significantly higher than we have seen. And one thing I want to bring your attention to is on page 31 of the slide deck, which is a slide that shows how much discount we have on our balance sheet that comes in at different paces sometimes. But at the end of the Q3, for March 31, we had $154 million of interest rate discount, which typically comes in over the life of the loan. unless the loan gets paid off early, and then you recognize that earlier, and $46 million of credit mark, which doesn't run through the net interest income anymore under the new CECL rules, but that's $200 million of discount. We're confident that the $154 million will come in, and we always get a pretty good chunk of the credit mark as well that runs through the We saw that this quarter, and that's why the yield on purchase loan was so high, because we have so much transactional income, which Santino will talk about as well. We mentioned that we had $29.9 million of net income, and looking at these numbers also, very large. EPS basic of $3.59 a share and fully diluted of $3.53 for the quarter. Return on equity was 21.67%. And return on assets was 2.43%. And tangible book value per share

is now up to 66.35 a remarkable quarter and with that i will ask tino to um go over the financials awesome thanks rick as rick mentioned this was another great quarter for the bank uh we reported income of 29.9 million of three dollars and 53 cents per diluted share for the quarter and 73 $8.67 per diluted share for the year to date. As Rick mentioned, ROA came in at 2.43% for the quarter and 2.15% for the year to date, while return on equity was 21.7% for the quarter and 18.4% for the year to date. Total assets ended the quarter for the first time just above $5 billion, and loans ended the quarter at $4.4 billion, which is up about $100 million or 2% from the linked quarter. Growth this quarter was focused on our originated book. As Rick mentioned, we had record originations in that portfolio, and the portfolio itself saw growth quarter over quarter of $145 million or 11%, which is offset slightly by a decrease in our purchase portfolio of $46 million or 2%. Net interest margin was really strong this quarter, coming in at 5.15%, which is up from $4.49 in the prior quarter, resulting in net interest income of $63.1 million for the quarter to date and $160 million for the year to date. Saw great expansion in the yield on our purchase portfolio this quarter, which is driven by a combination of both accelerated accretion, $7.3 million, the certain loans within the portfolio paid down or paid off, as well as increased quarter yield expansion as a result of recent purchase activity and existing loans repricing. We also continue to see relief on the funding side of the balance sheet with our average cost of funds coming down seven basis points quarter over quarter as higher priced CDs mature and are replaced by cheaper funding. Asset quality remains strong with delinquencies, non-accruals, and classified loans all remaining relatively flat quarter over quarter. But you will note that we took two non-performing loans into Oreo during the quarter. So total NPAs stayed flat, NPLs are down a bit. The allowance for credit losses decreased this quarter from 63.8 million or a coverage ratio of 147 as of 12-31 to 60.3 million or a coverage ratio of 136 at 3-31. as performance of our PCD portfolio continued to trend positively, and we were able to release some reserves on that portfolio. This was offset by an increase in the coverage ratio on our SBA book. Net charge-offs for the quarter were $3.4 million, up slightly from $2.9 million in the linked quarter. On the expense side, we continue to be disciplined while strategically investing in our people and in technologies that will set the bank up for long-term success. Non-interest expense for the quarter was $23.6 million, up from $20.8 million in the linked quarter. This is due to increased compensation costs as we trued up our year-end bonus accrual during the period, as well as increased loan expense in relation to our small balance insured loan product with increased insurance costs there. Tax expense for the quarter came in at $13.3 million, representing an ETR of 30.9% compared to $9.4 million, or an ETR of 31% in the linked quarter. Capital remains strong. Tier 1 leverage ratio at 11.4%. Intangible book is $66.35 a share, giving us plenty of loan capacity coming into the final quarter of the fiscal year. Now I'll hand it over to Pat to talk through our loan activity during the period.