Northeast Bank reports record results, declares dividend
Northeast Bank (the "Bank") (NASDAQ: NBN), a Maine-based full-service bank, today reported record net income of $34.2 million, or $4.06 per diluted common share, for the quarter ended March 31, 2021, compared to net income of $1.9 million, or $0.21 per diluted common share, for the quarter ended March 31, 2020.
Net income for the nine months ended March 31, 2021 was $50.1 million, or $6.01 per diluted common share, compared to $11.5 million, or $1.25 per diluted common share, for the nine months ended March 31, 2020. Net income for the three and nine months ended March 31, 2021 included $33.0 million of net gains on the sale of Paycheck Protection Program ("PPP") loans originated and sold during the quarter ended March 31, 2021 under the current round of PPP, which had an after-tax earnings per diluted common share impact of $2.75 and $2.80, respectively.
The Board of Directors declared a cash dividend of $0.01 per share, payable on May 20, 2021, to shareholders of record as of May 6, 2021.
"We reported record results in our third fiscal quarter," said Rick Wayne, Chief Executive Officer.
"Over the past six months in anticipation of another round of PPP loans, we invested in technology, marketing and other initiatives to be able to source, underwrite and fund a significant volume of PPP loans in the event the program was reinstated. We are proud to report that our planning and investment paid off.
Through March 31, we originated $2.25 billion of PPP loans to over 22,000 borrowers with over 286,000 associated jobs. Of the $2.25 billion of originated PPP loans, we sold $2.14 billion to The Loan Source, Inc. ("Loan Source") during our third fiscal quarter, generating $33.0 million of net gains.
We anticipate selling the remaining loans plus any additional PPP originations to Loan Source in our fourth fiscal quarter. In addition, we generated $6.0 million of correspondent fee income under the arrangement with Loan Source and ACAP SME, LLC. Our national origination and purchase business remained strong, with a total of $109.2 million of originated and purchased loans during the quarter."
Mr. Wayne continued, "As a result, we are reporting earnings of $4.06 per diluted common share, a return on average equity of 71.1%, a return on average assets of 7.0%, and an efficiency ratio of 16.6% for the quarter."
As of March 31, 2021, total assets were $1.71b, an increase of $457.1m, or 36.3%, from total assets of $1.26b as of June 30, 2020.
1. Cash and short-term investments increased by $320.8 million, or 223.3%, primarily due to the timing of a large deposit account related to PPP payoff collections that is subject to significant fluctuation given the PPP activity during the quarter ended March 31, 2021. Cash and short-term investments may remain at an elevated level while PPP collections, including forgiveness amounts, continue, depending on the timing of receipts and remittances of cash amounts.
Additionally, the Bank originated $2.25 billion of loans in connection with the PPP, of which $2.14 billion were sold during the quarter ended March 31, 2021. The Bank recorded a net gain of $33.0 million from the sale of PPP loans, primarily resulting from the recognition of net deferred origination fees upon the sale of the loans.