Hinde Group: Northeast Bank ($NBN) Investment Case
Introduction
In the Q3 2024 Partner Letter, Hinde Group provides an update on its investment in Northeast Bank ($NBN), expressing confidence in the bank’s strong financial performance and promising growth drivers. According to Hinde Group, recent developments, including record loan purchases and a successful partnership with Newity, emphasize Northeast Bank’s strategic positioning and potential for continued value creation.
Investment Highlight: Northeast Bank ($NBN)
Business Overview
- Maine state-chartered bank with $3.9 billion in assets and $393 million in equity.
- Led by Rick Wayne, an experienced industry veteran with a track record of value creation.
- Focuses on originating and purchasing commercial real estate loans.
Key Developments
1. Loan Purchases
- Acquired 191 loans with a $808 million unpaid principal balance in Q3 2024.
- Paid 90.7% of the unpaid principal balance, securing a net interest spread of ~4%.
- Expected to add approximately $30 million to annual net interest income.
2. Newity Partnership
- Collaboration to originate small balance SBA 7(a) loans shows accelerating traction.
- Originated 766 loans worth $82.4 million in Q3, nearly matching prior fiscal year totals.
- Partnership now contributes over 10% to Northeast Bank’s combined net interest and non-interest income.
Performance Analysis
- $NBN share price increased 26.7% in Q3 2024, contributing significantly to portfolio performance.
- Delivered a 20.8% IRR since Hinde Group’s initial investment in 2017.
Growth Opportunities
- SBA loan originations gaining momentum; Northeast Bank ranked fifth in SBA loans by principal amount as of early Q4 2024.
- Strong market positioning through competitive loan purchasing and innovative partnerships.
Risks
- Dependence on key partnerships like Newity.
- Potential market volatility impacting loan performance.
Hinde Group remains optimistic about Northeast Bank’s future, emphasizing its strong financial performance, strategic initiatives, and growth potential. The investment aligns with Hinde Group’s philosophy of identifying compelling opportunities for long-term value creation.
Click here for the full Partner Letter.
Disclaimer: The information provided in this blog post is for informational and educational purposes only and does not constitute financial, investment, or other professional advice. The content is based on a third-party investor letter and does not represent an endorsement, recommendation, or solicitation to buy or sell any particular security or investment product mentioned.
Investing involves risk, including the potential loss of principal. Past performance is not indicative of future results. Investors should carefully consider their investment objectives, risk tolerance, and financial situation before making any investment decisions.
