Northeast Bank's Record Net Income, Robust Loan Growth, and Challenges Amid SBA Loan Decline and Competitive Landscape

Northeast Bank (NBN) reported a record net income of $25.2 million in Q4 2025, excluding one-time sales. Loan originations and purchases totaled $362.6 million for the quarter and $2.1 billion for the fiscal year. The net interest margin was a strong 5.1%, with a return on purchase loans at 8.76%. However, SBA loan origination is expected to decline by up to 50% in the next quarter due to tightened eligibility requirements.

Northeast Bancorp (NBN) reported robust financial results for the fourth quarter of 2025, with net income reaching a record $25.2 million, excluding one-time sales. The company exceeded analysts' expectations, with earnings per share (EPS) of $3.00, a 16.73% surprise over the forecasted $2.57 [1]. Revenue for the quarter amounted to $62.69 million, surpassing the forecast of $56.5 million by 10.96% [1].

Loan originations and purchases totaled $362.6 million for the quarter and $2.1 billion for the fiscal year, demonstrating a strong commitment to growth. The net interest margin (NIM) was a robust 5.1%, with a return on purchase loans of 8.76% [1]. The company's strategic focus on innovation and loan portfolio diversification has positioned it as a leader in small business lending.

However, Northeast Bancorp faces temporary challenges in the SBA lending market due to regulatory changes, which may result in a decline in SBA loan origination by up to 50% in the next quarter [1]. This decline is attributed to tightened eligibility requirements, which could impact the bank's SBA lending volume.

The company's stock reacted positively to the earnings announcement, rising by 2.13% in regular trading and an additional 3.42% in premarket trading, reaching $101.00 [1]. InvestingPro analysis indicates that the stock appears undervalued based on its Fair Value calculations, with a modest P/E ratio of 11.09 and an attractive PEG ratio of 0.48 [1].

Looking ahead, Northeast Bancorp expects continued strong performance in its base business and anticipates potential large loan transactions. The bank is optimistic about exploring new lending verticals to offset any temporary reduction in SBA loan volume. The effective tax rate is projected to be between 33% and 34% [1].

References:
[1] https://www.investing.com/news/transcripts/earnings-call-transcript-northeast-bancorp-q4-2025-beats-expectations-93CH-4158199