Breaking Down Northeast Bank (NBN) Financial Health: Key Insights for Investors

You're looking at Northeast Bank (NBN) because the numbers are defintely screaming for attention, but you need to know if the underlying business model can sustain that heat. Honestly, the bank closed out its fiscal year 2025 with a record-breaking performance, posting $83.4 million in net income and an impressive diluted earnings per share (EPS) of $10.08, which is a massive 43% leap from the prior year. That kind of performance-driven by $2.08 billion in total loan originations and purchases for the year-is rare in regional banking, but it masks some near-term volatility, particularly around their Small Business Administration (SBA) lending engine.

While the bank's return on average equity (ROE) hit a stellar 20.7% in the fourth quarter of 2025, management has already signaled a potential short-term dip in SBA volume due to regulatory changes, which is a key risk to monitor. Still, the core asset quality remains strong, with nonperforming assets at a healthy 0.8% of total assets as of September 30, 2025. We need to break down the actual drivers of that growth-the National Lending Division and the high-margin SBA business-and map out what a 50% temporary slowdown in a key segment means for the stock's discounted valuation (DCF fair value is significantly higher than the current share price, for example). Let's dig into the details and find your next clear action.

Revenue Analysis

You're looking for a clear picture of where Northeast Bank (NBN)'s money is coming from, and the short answer is that their aggressive, yet disciplined, lending strategy is paying off handsomely. The bank's top-line growth is defintely a standout in the sector.

For the fiscal year ending June 30, 2025, Northeast Bank delivered annual revenue of $204.09 million. That's a massive jump-a 33.67% year-over-year growth rate from the prior fiscal year, which is a significant beat compared to the broader US Banks industry forecast. Here's the quick math: that kind of growth, fueled by their core business, tells you management is executing on its niche strategy.

The primary revenue source is, unsurprisingly, their core Banking segment. For a bank, that means Net Interest Income (NII)-the difference between what they earn on loans and what they pay on deposits-is the engine. Analysis for the trailing twelve months leading up to September 2025 confirms that the Banking segment contributed the entirety of the reported $204.1 million in revenue, which simplifies the segment breakdown considerably.

The real story, though, is in the components of that NII and the non-interest income streams. The bank's specialized approach to loan acquisition and origination is the key differentiator.

• National Lending Division: This is the powerhouse, focusing on purchasing discounted commercial loans and originating new ones. This activity drives the bulk of their interest income.
• Small Business Administration (SBA) Division: This division is a growing source of both interest income and non-interest income, which comes from the gain on sale of the guaranteed portion of SBA loans.

While the Net Interest Margin (NIM) did tick down slightly to 4.89% in FY 2025 from 5.16% in FY 2024, it remains strong and reflects a disciplined approach to funding costs, especially given the rising interest rate environment. This is a critical metric for a bank, and staying near the 5% mark is impressive.

We saw a clear acceleration in lending activity in the most recent quarter. For the quarter ending September 30, 2025, the bank reported revenue of $53.31 million. This revenue was supported by strong loan generation, totaling $278.4 million in originations and purchases for the quarter. Specifically, $144.6 million were purchased loans, and $133.8 million were originated loans. That level of activity is what sustains the high revenue growth rate.

What this estimate hides is the inherent volatility in non-interest income, which can fluctuate based on the timing and size of SBA loan sales. Still, the overall trend is clear: the bank's model of focusing on its National Lending and SBA niches is generating superior revenue growth. You can see more details on the bank's operational efficiency in our full post: Breaking Down Northeast Bank (NBN) Financial Health: Key Insights for Investors.

Here's a snapshot of the core revenue drivers:

Profitability Metrics

You're looking for clear signals on whether Northeast Bank (NBN) is a top-tier performer or just average, and the 2025 fiscal year data gives us a defintely strong answer: NBN is highly efficient and exceptionally profitable compared to its peers. The core takeaway is that their strategic focus on purchasing discounted loans is paying off, driving margins far above the US banking sector average.

For the fiscal year ended June 30, 2025, Northeast Bank reported total revenue of $204.1 million, a significant jump of 34% from the prior year. This revenue-a bank's equivalent of a top-line figure-is the foundation of their success. The true measure of their core lending profitability, the Net Interest Margin (NIM), was 4.89%. That's the engine of the business, showing the spread between what they earn on loans and what they pay for deposits and funding.

Here's the quick math on their operational efficiency and bottom line:

• Net Profit Margin: The bank posted a net profit margin of 41% for FY 2025. This is the percentage of revenue that turns into profit after all expenses, provisions, and taxes.
• Operating Efficiency: Their cost-to-income ratio, a key measure of operational efficiency, dropped to a lean 34.3% in FY 2025, down sharply from 41.8% in FY 2024. This means for every dollar of revenue, only about 34 cents goes toward non-interest operating expenses. That is a fantastic number.
• Net Income: The final profit, or net income, for the year was $83.4 million.

If we look at the Pre-Provision Net Revenue (PPNR) margin-a strong proxy for operating profit margin in banking that excludes credit losses and taxes-Northeast Bank's efficiency ratio suggests an operating margin around 65.7% ($204.1M Revenue - $70.0M Non-interest Expense, where $70.0M is $204.1M 34.3%). This high margin highlights their disciplined cost management and ability to scale their National Lending Division without a proportional increase in overhead.

Trend and Industry Comparison

The trend in Northeast Bank's profitability is clearly upward. The net profit margin of 41% in FY 2025 is a notable improvement over the 38.2% reported in the previous year. This margin expansion is a direct result of their strategy of acquiring discounted loans and maintaining strong net interest margins.

When you stack this up against the industry, Northeast Bank looks like a clear outlier. You can see the difference in how effectively NBN is generating returns and controlling costs:

Their operational efficiency is the real story here. A cost-to-income ratio of 34.3% is substantially better than the industry's aggregate efficiency ratio of 56.2% in the first quarter of 2025. This gap is a testament to their digital focus and tailored banking model, which keeps the expense base light while revenue grows. This kind of operating leverage is what gives them the flexibility to absorb potential credit shocks while still delivering high returns. For a deeper dive into the balance sheet, check out Breaking Down Northeast Bank (NBN) Financial Health: Key Insights for Investors.

Next Step: Finance needs to model how a 5% rise in non-interest expenses would impact this 41% net margin by Friday.

Debt vs. Equity Structure

When you look at how Northeast Bank (NBN) finances its operations, the picture is one of managed leverage, which is typical for a growth-focused regional bank. The key takeaway is that their reliance on debt financing (leverage) is slightly above the industry benchmark, but still within a manageable range for a well-capitalized institution.

As of the fiscal year ending June 30, 2025, Northeast Bank (NBN) reported a total debt of approximately $0.33 billion USD. For a bank, this debt is primarily composed of borrowings like Federal Home Loan Bank (FHLB) advances and other secured financing, not commercial paper or bonds in the same way a manufacturing company would use them. This debt is balanced against total shareholders' equity of around $513.6 million.

Here's the quick math on their capital structure:

• Total Debt (FY 2025): $330 million
• Total Equity (FY 2025): $513.6 million
• Debt-to-Equity Ratio (FY 2025): 0.69

This Debt-to-Equity (D/E) ratio of 0.69 for the 2025 fiscal year tells you that for every dollar of shareholder equity, the bank has about 69 cents of debt. To be fair, the industry average for Regional Banks is closer to 0.5753. So, Northeast Bank (NBN) is using a bit more debt to fuel its loan growth, but this is not a red flag; it's a sign of a more aggressive, but calculated, growth strategy. Their capital ratios, like the Tier 1 leverage capital ratio of 12.2% as of September 30, 2025, still show they are well-capitalized against regulatory requirements.

The company actively manages its short-term funding, primarily through Federal Home Loan Bank (FHLB) advances. For instance, in the first quarter of fiscal year 2026 (ended September 30, 2025), FHLB advances decreased by $3.4 million due to maturities and paydowns on amortizing advances. This shows a focus on paying down existing debt as it matures, rather than taking on large, new debt issuances. The bank's net debt issuance was reported as $0.00, which means they didn't issue new debt instruments to raise capital in the same way they might issue stock.

Northeast Bank (NBN) balances its funding needs by leaning into equity and retained earnings. Their shareholders' equity increased by $19.4 million in the quarter ended September 30, 2025, largely due to net income of $22.5 million. The company is funding its growth-especially in its National Lending Division-more through retained earnings and deposits than through significant new debt, which is a sign of financial health. They're growing internally, and that's defintely a good thing.

For a deeper dive into their overall performance, check out the full analysis: Breaking Down Northeast Bank (NBN) Financial Health: Key Insights for Investors

Liquidity and Solvency

You need to know if Northeast Bank (NBN) has the short-term cash to cover its obligations, and the answer is a clear yes. The bank shows a strong, well-managed liquidity profile, backed by substantial on-hand liquid assets and deep funding capacity.

For a bank, traditional liquidity ratios like the Current Ratio (current assets divided by current liabilities) are less critical than for a manufacturer, but the metrics still look solid. At the end of the fiscal third quarter (Q3) on March 31, 2025, Northeast Bank's Current Ratio was approximately 1.25, calculated from roughly $4.12 billion in current assets against $3.30 billion in current liabilities. That's a healthy buffer. The Quick Ratio (acid-test ratio) is defintely similar, since a bank's primary assets-loans and securities-are already highly liquid or held for sale.

The working capital trend is best viewed through the quality of their assets and their funding base. The bank maintains a robust liquidity position, holding approximately $400 million in cash and liquid securities as of Q3 FY2025, plus access to about $1 billion in available Federal Home Loan Bank and Federal Reserve funding capacity. This is a massive safety net.

Here's the quick math on asset quality:

• Nonperforming assets were $35.6 million (or 0.8% of total assets) as of June 30, 2025.
• This improved slightly to $35.1 million (still 0.8% of total assets) by September 30, 2025.
• The nonperforming asset ratio remains low and stable, signaling good loan portfolio health.

The cash flow statements for the fiscal year ended June 30, 2025, tell a story of aggressive, profitable growth. Operating cash flow (OCF) per share was strong at $6.54 for FY2025, showing the core business generates significant cash. The high loan origination and purchase volume-totaling $2.08 billion for the year-is the primary driver of their investing cash flow, which is typically a net outflow for a growing bank as they invest in their core product (loans). Financing cash flow reflects the increase in deposits to fund that loan growth, plus the modest $0.01 per share quarterly dividend declared throughout the year.

The main liquidity strength is the combination of high capital ratios and ample funding access. The Tier 1 leverage capital ratio stood at 12.2% as of September 30, 2025, which is well above regulatory minimums. The only potential near-term risk is managing the slight 3.7% decrease in total deposits from June to September 2025, which requires a continued focus on competitive deposit pricing. But honestly, with $1 billion in committed funding available, this is a minor operational challenge, not a solvency threat. You can dive deeper into the full picture in Breaking Down Northeast Bank (NBN) Financial Health: Key Insights for Investors.

Valuation Analysis

If you're asking whether Northeast Bank (NBN) is overvalued or undervalued right now, the quick answer is that it appears to be trading in the Fair Value range, but with a clear upside based on analyst targets. The market is pricing in some near-term risks, which is why the stock has pulled back, but the underlying profitability metrics are strong. This isn't a screaming bargain, but it's defintely not expensive either.

The stock has been volatile over the past year. As of November 2025, the price is hovering around the $83.00 to $85.60 range, a significant drop from its 52-week high of $113.01. Overall, Northeast Bank's stock price has decreased by 17.08% over the last 12 months, which tells you the market is concerned about the broader banking environment, not just NBN's performance.

To get a clearer picture, let's look at the key valuation multiples for the 2025 fiscal year (FY2025):

• Price-to-Earnings (P/E): The trailing twelve months (TTM) P/E ratio is around 8.04, with the FY2025 P/E at 9.09. This is quite low compared to the broader market and suggests the stock is cheap relative to its earnings.
• Price-to-Book (P/B): The FY2025 P/B ratio is 1.54. For a bank, a P/B over 1.0 means the market values the company higher than its net assets (equity), which is a good sign. This ratio is slightly elevated compared to its 5-year average of 1.29, suggesting investors are willing to pay a premium for its strong return on equity (ROE).
• Enterprise Value-to-EBITDA (EV/EBITDA): This metric is often less useful for banks due to their unique capital structure, but the reported figure is near 0.00. This is typical for financial institutions where interest expense is a core part of the business model, making the standard EV/EBITDA calculation less meaningful than P/E or P/B.

Here's the quick math on profitability and shareholder return:

The dividend yield is a minimal 0.05% with a payout ratio of just 0.40% for FY2025. This tells you Northeast Bank is highly focused on retaining earnings to fuel loan growth, particularly in its Small Business Administration (SBA) National Division, rather than returning capital to shareholders via dividends. For a growth-oriented investor, this is a positive signal; for an income investor, it's a non-starter.

Wall Street analysts have a generally positive outlook, despite the recent stock decline. The consensus rating is split between a 'Moderate Buy' and 'Hold' from the firms tracking the stock. The average 12-month price target sits around $105.50 to $106.50. This target suggests an upside of over 26% from the current November 2025 price, which is a significant margin of safety if the bank can maintain its strong operating return on assets (ROA) and return on tangible common equity (ROTCE).

If you want a deeper dive into the operational risks and opportunities that underpin these valuations, you should check out our full report on Breaking Down Northeast Bank (NBN) Financial Health: Key Insights for Investors.

Next Step: Portfolio Manager: Model a scenario where NBN's P/E multiple contracts to 7.0 and its P/B multiple holds at 1.4 to stress-test the downside risk by the end of Q2 2026.

Risk Factors

You're looking at Northeast Bank (NBN)'s strong 2025 numbers-like the $83.4 million in net income for the fiscal year ended June 30, 2025-and wondering what could trip up this performance. Honestly, the biggest risks for a bank like Northeast Bank (NBN) are always external, but their unique business model creates specific internal pressures you need to watch.

The core challenge is balancing their aggressive loan acquisition strategy with market volatility.

External Risks: Market and Regulatory Headwinds

The near-term outlook is shaped by three external factors: industry competition, rising regulatory costs, and broader market conditions. Fierce competition is a constant, especially in their National Lending Division, which focuses on purchasing and originating commercial loans nationwide. This makes loan purchase timing uncertain and can pressure pricing, directly impacting their net interest margin (NIM), which was 4.59% for the quarter ended September 30, 2025.

Regulatory changes, particularly in Small Business Administration (SBA) rules, pose a meaningful hurdle. Plus, rising costs from the Federal Deposit Insurance Corporation (FDIC) linked to overall balance sheet growth-total assets hit $4.28 billion as of June 30, 2025-will likely pressure future non-interest expenses.

• Competition pressures loan pricing.
• FDIC costs will rise with asset growth.
• SBA rule changes could slow a key growth engine.

Internal and Operational Risks

Northeast Bank (NBN)'s strength is also its vulnerability. Their focus on purchasing discounted loans and their substantial SBA loan portfolio introduces specific credit quality risks. While the bank's overall credit health looks solid-past due loans were only $28.8 million, or 0.8% of total loans, as of September 30, 2025-analysts have flagged potential risks in SBA loan credit quality and their exposure to California real estate.

The bank's operational efficiency, which helped them post a high net profit margin of 41.4% over the last twelve months, relies heavily on their disciplined approach to loan acquisition and digital transformation. Any hiccup in technology or a misstep in their underwriting models for purchased loans could quickly erode that margin.

Here's the quick math on their loan portfolio composition as of September 30, 2025, which shows where the risk is concentrated:

Mitigation and Defensive Strategy

The good news is that management is defintely aware of these risks and has built a defensive structure. Their primary mitigation is a diversified business model and an interest rate neutral balance sheet, which is designed to generate consistent earnings regardless of the interest rate environment.

They maintain a strong capital position, with a Tier 1 leverage capital ratio of 12.2% as of September 30, 2025, which is well above the regulatory minimums and provides flexibility to absorb unexpected credit losses or capitalize on future loan purchase opportunities. This capital strength is their best buffer against market shocks.

Their strategy is simple: disciplined loan acquisition, strategic expansion in SBA and lender finance, and continuous tech investment for efficiency gains. You can read more about their core philosophy here: Mission Statement, Vision, & Core Values of Northeast Bank (NBN).

Growth Opportunities

You're looking at Northeast Bank (NBN) and seeing a regional bank that's delivered growth far exceeding its peers, largely by sticking to a high-margin, niche strategy. For the fiscal year ending June 30, 2025, the bank reported total revenue of nearly $204.1 million, a 34% jump from the prior year, and net income hit $83.4 million. That's a powerful run, but the real question is how they keep it going.

The core growth driver isn't just organic branch lending; it's the National Lending Division. This division acts as an engine, both originating new commercial loans and, crucially, purchasing discounted loans across the country. This dual-pronged strategy allowed the total loan portfolio to swell to $3.79 billion, an increase of 37.3% year-over-year, which is defintely not a small feat in a tight credit market. This focus on high-yield assets is what keeps their margins thick.

The bank is strategically positioned to continue this expansion, especially by leaning into specific, profitable niches. Here are the key initiatives driving the near-term future:

• SBA National Portfolio Surge: Activity in the Small Business Administration (SBA) loan program nearly doubled, with the portfolio exploding by 199.5% in Q4 2025. This niche generates significant non-interest income from loan sales, like the $6.8 million gain booked on sales of $107.6 million in Q4 2025.
• Digital Transformation: Planned tech investments and a focus on tailored banking services are expected to boost efficiency, helping to keep the net interest margin resilient against rising costs.
• Disciplined Loan Acquisition: The bank maintains its unique business model of purchasing loans at discounts, a strategy that immediately generates interest income and underpins their strong profitability.

Here's the quick math on what analysts are projecting for the bottom line, which shows a clear outperformance against the broader industry forecast of 7.7% annual growth:

The competitive advantage here is clear: a high-margin lending strategy combined with exceptional operational efficiency. The bank's net profit margin was 41% in FY 2025, and its cost-to-income ratio was a lean 34.3%, which is well below the sector average. Plus, asset quality is strong, with non-performing assets at a healthy 0.8% of total assets. Still, you need to watch for potential headwinds from rising peer competition and any new regulatory shifts in SBA rules, which could interrupt this growth trajectory. For a deeper dive into the company's long-term vision, review their Mission Statement, Vision, & Core Values of Northeast Bank (NBN).

Action: Monitor the bank's quarterly non-interest income from SBA loan sales; a sustained dip there signals a major pressure point on their high-growth model.