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Northeast Bancorp (NBN)
NASDAQ:NBN
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Northeast Bancorp
(NASDAQ:NBN)
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Rating:65Neutral
Price Target:
$126.00
▲(13.64% Upside)
Action:DowngradedDate:02/19/26
The score is driven primarily by mixed fundamentals: strong profitability/returns are tempered by a sharp TTM revenue decline and weak, volatile cash-flow conversion. The latest earnings call was constructive on near-term earnings improvement from large, well-priced loan growth and strong capital, but highlighted meaningful funding rollover and credit-cost risks. Technicals are supportive but not strongly bullish, while valuation (low P/E and ~3.4% yield) provides a favorable offset.
Positive Factors
High profitability and returns
Consistent mid-teens ROE and mid-single-digit ROA indicate durable earnings efficiency for a regional bank. Strong reported profitability supports internal capital generation, dividend capacity, and ability to fund growth without excessive external financing, improving long-term resilience.
Strong capital and loan capacity
A healthy Tier 1 leverage ratio and tangible book provide a structural buffer against losses and enable the bank to pursue accretive loan purchases and originations. Meaningful loan capacity supports multi-quarter growth opportunities and reduces immediate capital-constraint risk.
Well-priced loan growth
Aggressive, well-priced purchases and record originations expand earning assets at attractive yields. Structural improvement in asset yields should raise net interest income over coming quarters, supporting margin recovery and durable income generation as loans fully reprice on the balance sheet.
Negative Factors
Volatile cash flow conversion
Severely weakened and inconsistent cash conversion undermines earnings quality and the bank's ability to self-fund growth or absorb shocks. Persistent FCF volatility increases dependence on wholesale funding and raises the risk that earnings are less sustainable than reported net income implies.
Funding and rollover concentration
Concentrated near-term CD maturities and reliance on brokered deposits create structural funding rollover and cost risk. If liability repricing is unfavorable, margins and liquidity could be impaired, forcing higher funding costs or slower asset growth over multiple quarters.
Rising allowances and charge-offs
Higher reserves and increasing charge-offs, driven in part by purchased loan portfolios, signal elevated credit risk and reduce near-term profitability. If purchased-asset credit performance persists worse-than-expected, it could erode capital and constrain future dividend or growth capacity.
Northeast Bancorp (NBN) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$884.57M
Dividend Yield0.04%
Average Volume (3M)82.91K
Price to Earnings (P/E)10.7
Beta (1Y)0.92
Revenue Growth33.22%
EPS Growth38.44%
CountryUS
Employees194
SectorFinancial
Sector Strength70
IndustryBanks - Regional
Share Statistics
EPS (TTM)2.47
Shares Outstanding7,977,690
10 Day Avg. Volume127,598
30 Day Avg. Volume82,908
Financial Highlights & Ratios
PEG Ratio0.25
Price to Book (P/B)1.46
Price to Sales (P/S)2.05
P/FCF Ratio13.48
Enterprise Value/Market Cap1.10
Enterprise Value/Revenue2.74
Enterprise Value/Gross Profit4.70
Enterprise Value/Ebitda7.43
Forecast
1Y Price Target
$133.00Price Target Upside19.95% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering1
EPS Forecast (FY)11.3
Revenue Forecast (FY)$225.48M
Northeast Bancorp Business Overview & Revenue Model
Company DescriptionNortheast Bank provides banking services to individual and corporate customers in Maine. The company's deposit products include demand deposit, NOW, money market, savings, certificate of deposit, and individual retirement accounts, as well as checking accounts. Its loan portfolio comprises residential mortgage loans; multi-family and other commercial real estate loans; commercial and industrial loans, such as term loans, lines of credit and equipment, and receivables financing; consumer loans comprising mobile home and overdraft, and deposit-secured loans; and small business administration loans. In addition, the company offers telephone banking, online banking and bill payment, mobile banking, cash management, and remote deposit capture services, as well as debit and credit card, ATM, electronic transfer, and check services. It operates a network of nine branches in Western, Central, and Southern Maine. Northeast Bank was founded in 1872 and is headquartered in Portland, Maine.
How the Company Makes MoneyNortheast Bancorp generates revenue primarily through interest income from loans and fees associated with various banking services. The company's key revenue streams include interest earned on commercial and residential loans, which constitute a significant portion of its income. Additionally, NBN earns fee income from services such as deposit accounts, ATM transactions, and wealth management services. The bank also engages in mortgage banking, which contributes to its earnings through origination fees and servicing rights. Strategic partnerships with local businesses and community organizations further enhance its market presence and customer acquisition efforts, positively impacting its overall financial performance.
Northeast Bancorp Earnings Call Summary
Earnings Call Date:Jan 26, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Apr 27, 2026
Earnings Call Sentiment Positive
The call emphasized substantial, well‑priced loan growth (purchases at ~92.6% of UPB with ~10.8% yields and record originations at ~7.5%–7.6%), strong profitability metrics (quarterly EPS ~$2.47, ROE ~15.6%), and solid capital and loan capacity. Short‑term headwinds included a modest NIM decline (down 0.10 pp), a temporary drop in SBA gain‑on‑sale income due to the government shutdown (reducing EPS by ~ $0.50), higher allowance driven by purchased loans, and elevated near‑term funding rollover risk ( ~$1.25B of CDs maturing). Management expects the late‑quarter loan additions to be accretive to NII and earnings in coming quarters. Overall, the positives from growth, loan yields, capital strength, and pipeline opportunities outweigh the transitory challenges discussed.Q2-2026 Updates
Positive Updates
Record Quarter Loan Volume / Balance Sheet Growth
Total loan additions just under $900 million for the quarter (purchases ~ $533M and originations $252M). Ending loans were $4.4 billion, up from $3.7 billion as of September 30, and total assets ended the quarter at $4.95 billion. Management expects the larger loan book to be accretive to future net interest income.
Attractive Purchased Loan Acquisitions
Purchased portfolios totaled $575M UPB (purchase price ~$532M), implying purchases at ~92.6% of UPB. Purchased loans carried a weighted average yield to maturity of ~10.8%, providing significant future cash-on-cash yield.
Record Originations with Strong Yields
Originations were a record $252M for the quarter with a weighted average origination rate ~7.5%–7.6% and average loan size in the originated portfolio of ~$7.5M (two-thirds lender-financed, LTVs just over 50%).
Small Business / SBA & Insured Product Momentum
Small balance activity was meaningful: ~537 small-balance loans totaling ~$111M (of which ~$40M were SBA 7(a) and ~$71M were small-balance insured loans). SBA sales of $25M generated $2.1M gain on sale; management expects SBA originations to rebound to roughly $20M/month (~$50M–$60M/quarter) and sees strong demand for the insured product.
Solid Profitability and Returns
Reported net income of $20.7M for the quarter (diluted EPS ~$2.47–$2.49) and $43.3M YTD ($5.14 YTD EPS). Quarterly return on average assets 1.87% (2.0% YTD) and return on average equity 15.6% (16.6% YTD). Three‑year average ROE 17.7% and ROA 2.0%.
Strong Capital & Loan Capacity
Tier 1 leverage ratio at 12.2% and tangible book value $62.65 per share. Management noted roughly just under $1 billion of loan capacity as of December 31.
3-Year Growth Track Record
Three-year loan growth of 76%, three-year Maine deposit growth at 40.3%, three-year small business originations totaling $653M (with $448M sold). Three-year average NIM cited at 4.9%.
Pipeline and Market Opportunity
Management described an unusually full pipeline with multiple large incoming transactions driven by bank M&A (noting bank M&A was up ~45% in 2025 vs 2024), indicating a multi‑quarter opportunity set for purchases and originations.
Negative Updates
Compression in Net Interest Margin
NIM declined to 4.49% from 4.59% in the linked quarter (down 0.10 percentage points). Management attributed the decline largely to timing (late-quarter purchases) and a lag in liability repricing, with ~ $1.25B of CDs maturing over the next six months at a weighted average rate of 4.05%.
Government Shutdown Impact on SBA Gains
SBA origination and sale activity was materially disrupted by the Oct 1–Nov 12 government shutdown. As a result, gain-on-sale income dropped (prior quarter gains ~ $8M vs $2M this quarter), a ~$6M reduction that management said reduced EPS by roughly $0.50 in the quarter.
Higher Allowance and Increased Net Charge-offs
Allowance for credit losses increased from $46.7M (coverage ratio 1.24% at Sept 30) to $63.8M (coverage ratio 1.47% at Dec 31), driven largely by purchased loan activity. Net charge-offs rose to $2.9M this quarter from $1.9M in the linked quarter (increase of $1.0M), including a $1.2M charge-off on a single purchased loan (previously reserved).
Funding Mix and Cost Pressure
Purchased loans were funded via brokered CDs and FHLB borrowings at a weighted average cost of funds ~3.8%. Heavy dependence on brokered deposits to fund rapid loan growth and large near‑term CD maturities (~$1.25B) represent funding‑cost and rollover risk if the liability repricing environment is unfavorable.
Timing Effects Muted Near-Term NII
A large portion of purchases and originations occurred very late in the quarter, muting net interest income for the reported period; benefits expected in subsequent quarters but present quarter income was negatively impacted by timing.
Uncertainty on Insured Loan Sale Economics
While insured small-balance loans demonstrate strong demand, the economics of selling these loans are less certain than SBA loan sales; management noted gains may be smaller and final accounting/treatment (e.g., mortgage servicing assets vs gain on sale) will depend on contract structures.
Company Guidance
Management's guidance was that earnings should improve in coming quarters as the heavy December loan additions (just under $900M total: ~$575M UPB of purchased loans at a $532M purchase price, or 92.6% of UPB, and $252M of originations at a ~7.6% average origination rate) roll on to the balance sheet (loans $4.4B, total assets $4.95B), which should drive higher net interest income and an improving NIM (was 4.49% this quarter, down from 4.59%); the bank reported NII of $48.8M for the quarter ($97M YTD), net income $20.7M (EPS ≈ $2.47), ROA 1.87% and ROE 15.6%, and expects SBA originations to normalize to roughly $20M/month (~$50–60M/quarter) with ~8–9% gain‑on‑sale, noted $1.25B of CDs maturing in the next six months at a 4.05% weighted average (recent funding cost ~3.8%), and emphasized strong capital (Tier 1 leverage 12.2%, tangible book $62.65, ~ $1B loan capacity) and a very full pipeline driven in part by bank M&A.Northeast Bancorp Financial Statement Overview
Summary
Profitability and returns are solid (mid-20% net margins, mid-30% EBIT margins; ROE mid-teens), but the latest TTM revenue decline (-56%) reduces near-term visibility. Cash flow quality is the main drag due to highly volatile operating/free cash flow and a sharp TTM FCF drop (-91.5%), raising earnings-quality concerns.Income Statement
Profitability is solid and fairly steady, with net margins around the mid‑20% range in the most recent periods and EBIT margins holding in the mid‑30% range. Revenue expanded strongly across 2023–2025 (annual reports), but the latest TTM (Trailing-Twelve-Months) shows a sharp revenue decline (-56%), signaling a meaningful near-term growth setback. Net income remains healthy in the latest periods, but the sudden revenue drop reduces visibility and pulls down the score.66
Positive
Balance Sheet
The balance sheet looks reasonably profitable, with return on equity running in the mid‑teens recently (and higher earlier), suggesting decent earnings power for a regional bank. Leverage is moderate in the latest two periods (debt roughly in line with equity in TTM (Trailing-Twelve-Months) and below equity in the latest annual), but leverage has been volatile historically (notably much higher in 2023), which adds risk. Overall asset and equity growth appear positive over time, but the variability in leverage keeps the score in the mid range.64
Positive
Cash Flow
Cash generation is the key weak spot due to volatility: operating cash flow and free cash flow swing sharply year to year, and TTM (Trailing-Twelve-Months) free cash flow is down materially (growth -91.5%) with very low operating cash flow in absolute terms versus prior periods. While free cash flow has at times closely matched net income (in several periods), the inconsistency and the latest downturn suggest weaker cash conversion reliability and potential earnings quality concerns.39
Negative
| Breakdown | TTM | Jun 2025 | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 355.23M | 351.00M | 260.51M | 179.91M | 109.78M | 146.89M |
| Gross Profit | 207.47M | 204.09M | 149.43M | 119.24M | 107.13M | 137.25M |
| EBITDA | 131.15M | 128.84M | 91.18M | 68.43M | 64.15M | 103.69M |
| Net Income | 87.18M | 83.44M | 58.23M | 44.19M | 42.16M | 71.50M |
Balance Sheet | ||||||
| Total Assets | 4.95B | 4.28B | 3.13B | 2.87B | 1.58B | 2.17B |
| Cash, Cash Equivalents and Short-Term Investments | 451.14M | 428.93M | 291.14M | 251.31M | 226.99M | 1.07B |
| Total Debt | 519.30M | 339.24M | 365.44M | 584.53M | 34.45M | 36.11M |
| Total Liabilities | 4.41B | 3.78B | 2.76B | 2.57B | 1.33B | 1.94B |
| Stockholders Equity | 536.02M | 494.29M | 376.63M | 296.66M | 248.32M | 232.39M |
Cash Flow | ||||||
| Free Cash Flow | 6.08M | 53.42M | 111.00K | 57.64M | 29.44M | 7.08M |
| Operating Cash Flow | 7.14M | 54.13M | 2.56M | 60.11M | 30.50M | 8.34M |
| Investing Cash Flow | -683.13M | -919.85M | -158.25M | -1.23B | -248.95M | 27.46M |
| Financing Cash Flow | 757.35M | 1.04B | 199.94M | 1.20B | -619.96M | 831.03M |
Northeast Bancorp Technical Analysis
Negative
110.88
Price Trends
113.14
Negative
101.80
Positive
98.94
Positive
Market Momentum
0.08
Positive
40.60
Neutral
32.40
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NBN, the sentiment is Negative. The current price of 110.88 is below the 20-day moving average (MA) of 118.61, below the 50-day MA of 113.14, and above the 200-day MA of 98.94, indicating a neutral trend. The MACD of 0.08 indicates Positive momentum. The RSI at 40.60 is Neutral, neither overbought nor oversold. The STOCH value of 32.40 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for NBN.
Northeast Bancorp Peers Comparison
UnderperformOutperform
Sector (68)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $864.94M | 17.20 | 19.19% | 0.66% | 17.98% | 14.35% | |
79 Outperform | $1.15B | 11.29 | 13.88% | 1.70% | 4.33% | -2.20% | |
70 Outperform | $942.20M | 10.71 | 9.61% | 2.59% | 4.49% | 20.44% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
65 Neutral | $884.57M | 10.70 | 19.62% | 0.04% | 33.22% | 38.44% | |
65 Neutral | $932.28M | 12.79 | 6.53% | 4.73% | 6.27% | 79.25% | |
56 Neutral | $881.02M | 17.00 | 7.21% | 1.79% | 15.37% | ― |
* Financial Sector Average
NBN
Northeast Bancorp
112.95
13.94
14.08%
CFFN
Capitol Federal Financial
7.24
1.57
27.71%
UVSP
Univest Of Pennsylvania
34.08
4.53
15.32%
ESQ
Esquire Financial Holdings
103.09
26.88
35.27%
AMAL
Amalgamated Bank
38.77
7.79
25.16%
AMTB
Amerant Bancorp
21.73
-0.62
-2.79%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.