Northeast Bank Announces Sale of Paycheck Protection Program Loans
June 25 2020 - 3:16PM
Northeast Bank (the “Bank”) (NASDAQ: NBN), a Maine-based
full-service bank, announced today that it has entered into a Loan
Purchase and Sale Agreement (the “Loan Sale Agreement”) with The
Loan Source, Inc. (“Loan Source”) and agreed to sell to Loan Source
$457.6 million of loans originated by the Bank in connection with
the Small Business Administration’s Paycheck Protection Program
(“PPP”). After amortizing previously unamortized PPP loan
origination fees, the Bank will realize a pre-tax gain of
approximately $9.8 million in the current fiscal quarter as a
result of the sale. In addition, the Bank will receive fee income
on the loans sold until such time as the loans are forgiven or
repaid.
The sale reflects originations of PPP loans by the Bank through
June 11, 2020. The Bank intends to continue to originate and sell
PPP loans to Loan Source under the terms of the Loan Sale Agreement
until the PPP is closed; however, the Bank expects PPP loan
originations to continue at lower volumes going forward.
The Bank also announced that, through June 24, 2020, Loan Source
is in the closing process of purchasing approximately $1.27 billion
in outstanding principal amount of PPP loans, including $457.6
million of PPP loans from the Bank and approximately $815.3 million
of PPP loans from lenders other than the Bank. Pursuant to the
Bank’s previously disclosed Correspondent Agreement with Loan
Source and ACAP SME, LLC (“ACAP”), the Bank will act as
correspondent for Loan Source in connection with Loan Source’s
pledge of PPP loans to the Federal Reserve Bank of Minneapolis
under the Paycheck Protection Program Liquidity Facility (the
“PPPLF”) and ACAP will act as servicer for the PPP loans pledged by
Loan Source. With respect to the approximately $815.3 million of
PPP loans purchased by Loan Source from lenders other than the
Bank, the Bank will receive correspondent fees of approximately
$2.9 million, which will be recognized over a period of
approximately two years, and will receive 50% of the net servicing
income earned over time on such loans. Loan Source has informed the
Bank that it intends to continue to purchase PPP loans and pledge
them under the PPPLF as long as the PPPLF remains operational. The
Bank expects to earn additional correspondent fees and servicing
income on pledged loans.
“Our team is proud to work closely with so many small business
owners across the nation, many of whom were in dire need of PPP
funds in order to keep their employees, and their businesses,
afloat,” said Rick Wayne, President and Chief Executive Officer.
“Our employees worked around the clock to ensure small businesses
across the country received critical relief during the global
COVID-19 pandemic. This collective effort resulted in over
4,100 loans and helped to save tens of thousands of associated
jobs.” Mr. Wayne continued, “The loan sale will result in a
significant gain in the current quarter and provide additional
liquidity for the Bank to originate and purchase loans. We expect
that the loan sale and correspondent relationship will generate
significant income going forward and are excited to partner with
Loan Source and ACAP in connection with these initiatives.”
About Northeast Bank
Northeast Bank (NASDAQ: NBN) is a full-service bank
headquartered in Portland, Maine. We offer personal and business
banking services to the Maine market via nine branches. Our Loan
Acquisition and Servicing Group purchases and originates commercial
loans on a nationwide basis. ableBanking, a division of Northeast
Bank, offers online savings products to consumers nationwide.
Information regarding Northeast Bank can be found at
www.northeastbank.com.
Forward-Looking Statements
Statements in this press release that are not historical facts
are forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, and are intended to be
covered by the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Although the Bank believes that
these forward-looking statements are based on reasonable estimates
and assumptions, they are not guarantees of future performance and
are subject to known and unknown risks, uncertainties, and other
factors. You should not place undue reliance on our forward-looking
statements. You should exercise caution in interpreting and relying
on forward-looking statements because they are subject to
significant risks, uncertainties and other factors which are, in
some cases, beyond the Bank’s control. The Bank’s actual results
could differ materially from those projected in the forward-looking
statements as a result of, among other factors, the negative
impacts and disruptions of the COVID-19 pandemic and measures taken
to contain its spread on our employees, customers, business
operations, credit quality, financial position, liquidity and
results of operations; the length and extent of the economic
contraction resulting from the COVID-19 pandemic; continued
deterioration in general business and economic conditions on a
national basis and in the local markets in which the Bank operates,
including changes which adversely affect borrowers’ ability to
service and repay our loans; changes in customer behavior due to
changing business and economic conditions or legislative or
regulatory initiatives; continued turbulence in the capital and
debt markets; changes in interest rates and real estate values;
increases in loan defaults and charge-off rates; decreases in the
value of securities and other assets, adequacy of loan loss
reserves, or deposit levels necessitating increased borrowing to
fund loans and investments; changing government regulation;
competitive pressures from other financial institutions;
operational risks including, but not limited to, cybersecurity
incidents, fraud, natural disasters and future pandemics; the risk
that the Bank may not be successful in the implementation of its
business strategy; the risk that intangibles recorded in the Bank’s
financial statements will become impaired; changes in assumptions
used in making such forward-looking statements; and the other risks
and uncertainties detailed in the Bank’s Annual Report on Form 10-K
and updated by our Quarterly Reports on Form 10-Q and other filings
submitted to the Federal Deposit Insurance Corporation. These
statements speak only as of the date of this release and the Bank
does not undertake any obligation to update or revise any of these
forward-looking statements to reflect events or circumstances
occurring after the date of this communication or to reflect the
occurrence of unanticipated events.
For More Information:Jean-Pierre Lapointe,
Chief Financial OfficerNortheast Bank, 27 Pearl Street, Portland,
ME 04101 207.786.3245 ext. 3220www.northeastbank.com
Northeast Bank (NASDAQ:NBN)
Historical Stock Chart
From May 2024 to Jun 2024
Northeast Bank (NASDAQ:NBN)
Historical Stock Chart
From Jun 2023 to Jun 2024