The Bank Slate


Northeast Bank in Maine to leverage PPP relationships

Northeast Bank in Portland, Maine, is planning to ramp up efforts to offer traditional Small Business Administration loans to small businesses that participated in the Paycheck Protection Program.

The $2.2 billion-asset bank disclosed in a regulatory filing that it has reached a five-year agreement with United Operations and AmLoan to market 7(a) loans to PPP participants. United will provide the marketing and servicing, while Northeast will underwrite and fund any approved loans.

Northeast will share the cost of any marketing, referral and technology agreements.

The guaranteed portion of the loans would be sold, and Northeast would collect half of the premium from those sales. AmLoan will buy a 2% participation interest in the non-guaranteed portion. Northeast will bring in interest income from keeping the non-guaranteed portion.

Northeast agreed to pay United a servicing fee equal to $100 per loan, along with a 1% per annum on the outstanding balance of the guaranteed portion of the loan, minus the fixed fee.

Northeast “has a fairly extensive customer list from PPP, and therefore this program could have meaningful upside over time, especially with current gain-on-sale premiums,” Alexander Twerdahl, an analyst at Piper Sandler, wrote in a note to clients. “We see it as another low risk way to grow TBV and look forward to tracking its progress.”

Northeast has been acting as the correspondent bank for The Loan Source, a nonbank that has been aggressively buying PPP loans made by other lenders.

Twerdahl said that, based on Northeast’s PPP activity, the customer list could include more than 100,000 small business, though some opportunities might be curtailed by non-solicitation agreements.

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