Northeast Bank

Welcome to the Northeast Bank first quarter fiscal year 2027 earnings call. My name is Tawanda and I will 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 Delmolino, Chief Financial Officer, and Pat Dignan, Chief Operating Officer and Chief Credit Officer. Prior to the call, Thank you. Thank you. At this time, all participants are in a 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 a question. To remove yourself from the queue, press star 11 again. As a reminder, the conference is being recorded. Please note that this presentation contains forward-looking statements about Northeast Bank. Forward-looking statements are based upon the current expectations of Northeast Bank's management and are subject to risks and assurances. Actual results may differ materially from those discussed in the forward-looking statements. Northeast Bank does not undertake any obligation to update any forward-looking statements. I would now like to turn the call over to Rick Wayne. Mr. Wayne, you may begin.

Thank you. Good morning. and welcome to our investor call for the quarter ending September 30. I'm going to provide an overview of our, this is our first fiscal quarter and after my comments, Santino will discuss our financial results and Pat will review our loan activity. At the conclusion of our comments, we will be happy to answer your I'm going to first make some comments on the financial highlights page, which is page number three in the investor deck that was posted last night. Some of the highlights I want to mention are as follows. We had quarterly net income of $29 million, return on equity of 18.65%, return on assets of 2.21%. Tangible book value continues per share continues to rise into the quarter at $73.22, representing a 22% increase over a year ago and a 58% increase over the last three years. The total return on our purchase loans in the first quarter was 9.11% or $62 million, which includes $5.9 million of recovery on credit discount on loans we purchased. Let me just pause on this point for a second and just briefly talk about our purchase loan business. which is a very, very large part of our business. We purchase loans at a discount either because there is an interest rate mark, that is to say the coupon that the customer is paying is less than what the current market rates are for interest. Think of this as And then we also buy loans where we pay a discount because it may turn out that we won't collect everything, the entire unpaid principal balance from the customer. And the credit mark is interesting because of the required accounting for it and is not as obvious as to how much that is as it was before CECL. I know that's a lot to understand, so I'll just try and put some numbers to it as it occurred in the current quarter. In the current quarter, we had about $6 million of discount due to a credit mark that were loans that wound up paying off in the quarter. It was primarily four loans, which accounted for most of it. So with respect to these four loans, we had $6 million of a credit mark, which we didn't accrete into income, then the loans paid off in full, and we earned $6 million. The way the accounting for that is now under CECL is that it runs through the allowance. And so it's not so obvious on the financial statements because it runs through the allowance along with a bunch of other matters. But that's a core part of our business. And I think it's worth highlighting that number. And I want to do that by turning to page I'm getting there.

Still getting there.