Northeast Bank : First Quarter FY2024 Earnings Call Presentation

FY24 Q1

Investor Call

October 24, 2023

Forward-Looking Statement

Statements in this presentation 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, changes 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 loans; changes in customer behavior due to political, business and economic conditions, including inflation and concerns about liquidity; turbulence in the capital and debt markets; reductions in net interest income resulting from interest rate volatility as well as changes in the balances and mix of loans and deposits; changes in interest rates and real estate values; changes in loan collectability and increases in 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; changes in legislation or regulation and accounting principles, policies and guidelines; 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 FDIC. 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.

2

Financial Highlights

	Q1 FY24
Total Loan Volume	$130.3 million
National Lending:
Purchased Loans	$52.4 million invested on $63.7 million of UPB(1)
(82.2% purchase price)
Originated Loans(2)	$68.0 million
Weighted Average Rate as of 9/30/2023(3)	9.27%
Net Interest Margin	5.30%
Purchased Loan Return(4)	9.04%
Net Proceeds from Share Issuances(5)	None
Net Income	$15.2 million
EPS (Diluted)	$2.01
Return on Equity	19.73%
Return on Assets	2.12%
Tangible Book Value per Share	$39.96

1. Unpaid principal balance.
2. National Lending originations for Q1 FY24 were 82% variable rate, of which 66% were Prime-rate based and 34% were SOFR-based.
3. Q1 FY24 National Lending originations had a weighted average floor rate of 7.98%.
4. Purchased loan return for Q1 FY24 included $2.8 million of transactional income.
5. During Q2 FY23, the Bank approved an At-the-Market Offering for up to $50.0 million of voting common stock.

3

Loan Portfolio Summary

Loan Portfolio	# of Loans	Total Balance	Average Balance	WA LTV
	Dollars in thousands
National Lending Division
Purchased Loans (1)	3,458	$1,516,379	$439	46%(4)
Direct Originated Loans (2)	111	516,754	4,655	54%
Lender Finance Loans (2)	97	441,478	4,551	45%
SBA and USDA Loans (3)	518	27,205	53	78%
Community Banking Division:
Commercial Loans	104	8,233	78	43%
Residential and Consumer Loans	372	18,162	49	46%
Total	4,660	$2,528,210	$543	47%

1. Total balance of $1.52 billion is equal to unpaid principal balance of $1.69 billion, net of $177.2 million purchased loan discount.
2. LTV is calculated as the Bank's loan amount to the value of the underlying commercial real estate collateral.
3. Total loan balance of $27.2 million is comprised of $8.8 million of the guaranteed portion and $18.4 million of the unguaranteed portion of loans.
4. Reflects the Bank's basis net of allowance for credit loss reserves against the value of the underlying commercial real estate collateral.

All data as of September 30, 2023, unless otherwise noted.

4

National Lending Portfolio Roll Forward:

Trailing Three Months

	$3,000
	$2,500	$2,468.0	$68.0	$97.6	$52.3	$16.1	$2,474.6
Millions	$2,000
	$1,500
	$1,000
	$500
	$0
		Balance at	Originations	Originated Run-	Purchases	Purchased Run-	Balance at
		6/30/23		off (1)		Off (1)	9/30/2023

(1) Run-off includes scheduled amortization, principal pay downs and payoffs.	5

National Lending Activity By Trailing 5 Quarters

Millions

$1,200

$1,000		$998.5
$800
$600
$400
$181.7	$174.0
$200
$77.5				$117.1	$48.8$84.2	$52.3 $68.0
				$21.5
$0
Q1 FY23	Q2 FY23		Q3 FY23	Q4 FY23	Q1 FY24
				Purchased			Originated

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National Lending Loan Portfolio Statistics as of September 30, 2023

Investment Size(1)

$15+ Million

14%$0-$2 Million

29%

$10-15 Million

11%

$6-$10 Million	$2-$6 Million
17%
29%

Collateral Type

Retail(2)	Lender
Finance
16%
15%
	Office
	12%

Multifamily

21%

Industrial

10%

	Mixed Use
All Other	7%
7%	Other CRE
Hospitality	6%
6%

Collateral State (44 States)

	All Other
SC 2%	States
18%
TX 3%
WA 3%
NJ 4%	NY
	35%
FL 5%

CA

30%

(1)	Average investment size of $674 thousand/loan; originated average: $4.5 million/loan and purchased average: $438 thousand/loan	7
(2)	Includes traditional and non-traditional retail, such as restaurants and gas stations.

Asset Quality Metrics

NPAs & NPLs

2.00%
1.80%
1.50%
0.94%	0.99%
1.00%
	0.82%			0.69%
				0.62%
				0.61%
				0.55%
0.50%
0.00%
6/30/21	6/30/22	6/30/23	9/30/23
			NPAs/Assets		NPLs/Loans

Classified Commercial Loans(1)

$20.0

			$14.7	$16.0
$15.0
	$11.9
Millions	$10.8
$10.0
$5.0
$0.0
6/30/21	6/30/22	6/30/23	9/30/23

Allowance for Credit Losses / Gross Loans

1.50%	0.15%

	1.13%	1.00%
1.00%		0.10%
0.70%
	0.57%	0.57%	0.05%

0.50%
0.39%
	0.29%	0.00%

NCOs / Average Loans(3)

0.07%

0.04%

0.00%

0.00%

6/30/21

6/30/22

6/30/23

9/30/23

-0.05%

-0.02%

3/31/22

ACL/Gross Loans ACL/Gross Loans Adjusted (2)

6/30/21

6/30/22

6/30/23

9/30/23

(1)	Classified loans includes commercial real estate and commercial and industrial loans risk rated under the Bank's internal loan rating system. 9/30/23
	amount reflects a $2.0 million increase in basis on loans in connection with the adoption of CECL.
(2)	Represents allowance on originated loans divided by total originated loans.	8
(3)	For periods ending 9/30, calculated as trailing twelve months of net charge-offs divided by average loans for the same period; for all other periods,

calculated as current quarter's net charge-offs (annualized) divided by average loans for the same period.

Nonperforming Assets Turnover - Quarter ended September 30, 2023

	Nonperforming	REO
	Loans
June 30, 2023 Balance:	$15,683	$0
NPL Additions:
#1	1,018	-
#2	397	-
CECL Basis Adjustment	2,290	-
Other Loans - Various	615	-
Total Additions:	4,320	-
NPL Resolutions:
#1	(1,526)	-
#2	(315)	-
Other Loans - Various	(713)	-

Total	FMV of	Notes
Collateral(1)
(Dollars in Thousands)
$15,683
1,018	960	Multifamily property in NY; $166 thousand specific
reserve
397	480	Industrial manufacturing building in MO
2,290		$2.3 million increase in basis resulting from
	adoption of CECL on July 1, 2023
615		59 loans placed on nonaccrual
4,320
(1,526)		Retail/commercial building in AZ paid off
(315)		Multifamily apartment building in CA returned to
	accrual

9 loans (totaling $377 thousand) returned to accrual

(713)

or paid off; $336 thousand in net paydowns

Total Resolutions:	(2,554)	-	(2,554)
September 30, 2023 Balance:	$17,449	$0	$17,449

1. Fair Market Value reflects the projected net proceeds from liquidation of collateral

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Allowance Allocation

	Total Loan	Total Reserves	ACL / Total	Total Reserves	ALL / Total	Total	ALL / Total
Loan Segment	Balances at	at September	Loans at	at June 30,	Loans at June	Reserves at	Loans at
	September 30,	30, 2023 September 30,	2023	30, 2023	September	September
	2023		2023			30, 2022	30, 2022
Dollars in thousands
National Lending Purchased (1)	$1,516,379	$18,046	1.19%	$1,406	0.09%	$576	0.11%
Originated Loans:
C&I (Lender Finance primarily)	450,459	1,838	0.41%	1,904	0.40%	1,707	0.44%
Commercial Real Estate	467,527	4,902	1.05%	3,410	0.73%	2,972	0.66%
SBA and USDA:
- Guaranteed	8,818	-	0.00%	-	0.00%	-	0.00%
- Unguaranteed	18,387	167	0.91%	294	1.55%	373	1.68%
1-4 Family Residential	66,212	350	0.53%	281	0.39%	259	0.40%
Consumer	428	-	0.00%	9	1.86%	11	1.66%
Total Originated Loans	1,011,831	7,257	0.72%	5,898	0.57%	5,322	0.57%
Total Loans	$2,528,210	$25,303	1.00%	$7,304	0.29%	$5,898	0.40%

1. The Bank adopted CECL on July 1, 2023. In connection with adoption, the Bank recorded an allowance for credit losses on purchased loans that required an allowance based on net collateral value, increasing the loan's basis by the same amount. Prior to July 1, 2023, under purchased loan accounting, only further declines in expected cash flows subsequent to the acquisition of a loan were recognized through a specific reserve in the allowance for loan losses.

Loan balances are net of deferred fees and costs.	10