Good day everyone, and welcome to the Northeast Bancorp Fiscal Year 2018 First Quarter Earnings Results Conference Call. This call is being recorded. With us today from the Company are Rick Wayne, President and Chief Executive Officer; and Brian Pinheiro, Interim Chief Financial Officer and Chief Risk Officer. Earlier this morning, an investor presentation was uploaded to the Company’s website, which we will reference in this morning’s call. The presentation can be accessed at the Investor Relations section of northeastbank.com under Events & Presentations. You may find it helpful to download this investor presentation and follow along during the call. Also, this call will be available for rebroadcast on the website for future use. The question-and-answer session for this call will be conducted electronically following the presentation. Please note that this presentation contains forward-looking statements about Northeast Bancorp. Forward-looking statements are based upon current expectations of Northeast Bancorp’s management and are subject to risks and uncertainties. Actual results may differ materially from those discussed in the forward-looking statements. Northeast Bancorp, does not undertake any obligation to update any forward-looking statements. At this time, I would like to turn the call over to Rick Wayne. Please go ahead, sir.

Thank you. Good morning and thank you all for joining us today. With me on the call is Brian Pinheiro, our Chief Risk Officer and who is also serving as our Interim Chief Financial Officer. After the close of the market yesterday, we announced net income of $3.8 million or $0.42 per diluted common share for the first quarter of fiscal 2018. Earnings were positively affected by strong transactional income from LASG purchased loans and gains on the sale of SBA loans originated by our SBA Division, while keeping operating expenses in check. This quarterly activity helped drive our return on equity to 12%, our return on assets to 1.4%, our efficiency ratio to 57.1%; this is compared to a return on equity of 6%, return on assets of 0.7%, and an efficiency ratio of 74.5% in the first quarter of fiscal 2017. Turning to slide three. For the quarter, we generated $74.4 million of loans, which included $40.8 million of LASG originated loans and $3.7 million of LASG purchased loans; $7.8 million of loans in our SBA Division and $22.1 million of loans in our Community Banking Division. We generated a net gain of $1 million on the sale of $9.1 million of SBA loans. Net interest margin for the first fiscal quarter was 5.13%, and our purchase loan yield for the quarter was 12.3%, which included $2.8 million of transactional interest income. Turning to slide four. As we have discussed in the past, under a regulatory commitment made in connection with the 2010 merger, purchased loans are limited to 40% of total loans. Loan purchasing capacity has increased to $126.5 million at September 30th due to purchased loan payoffs and LASG originations. Loan purchasing capacity increases or decreases depending upon the relative amount of purchased and originated loans…

Thanks, Rick, and good morning, everyone. I’m picking it up on slide 12 to provide more information on our financial results. Net income for the quarter was $3.8 million or $0.42 per share. Diluted earnings per share were down $0.03 from the quarter ending June 30, 2017, which I will refer to as a linked quarter and up $0.23 from the comparable fiscal year 2017 quarter. These results were largely driven by purchased loan transactional interest income of $2.8 million in the current quarter compared to $3.5 million in the linked quarter and $1.3 million in the comparable fiscal year 2017 quarter, the gain on sale of SBA loans into the secondary market of $1 million in the current quarter compared to $1.9 million in the linked quarter and $700,000 in the comparable fiscal 2017 quarter and the benefit of our larger average balance sheet compared to the linked quarter in comparable fiscal year 2017 quarter. Non-interest expense for the quarter decreased by approximately $700,000 compared to the linked quarter and increased by approximately $100,000 compared to the comparable fiscal year 2017 quarter. The decrease in non-interest expense for the quarter compared to the linked quarter was as a result of increased incentive compensation recognized in the linked quarter. Turning to slide 13. Over the past year, we have seen net loan portfolio growth of approximately $38 million or $104 million, excluding the broker-dealer loan payoffs of $48 million and the sale of the Community Bank commercial loan portfolio of $18.3 million in Q3 of last fiscal year. The majority of the growth over the last 12 months comes from our LASG portfolio with approximately $339 million of purchases and originations. As shown in the chart, in the trailing 12-month period since September 30, 2016, we have closed approximately $74.6…

[Operator Instructions] Our first question comes from Alex Twerdahl with Sandler O’Neill. Your line is now open.

Good morning.

Good morning.

This is Jeff Kitsis on for Alex this morning. To start off with, I want to touch on NPLs. Could you give us some color on what contributed to the increase this quarter?

Yes. Jeff, as I mentioned earlier, it’s largely attributable to two loan relationships with an aggregate principal balance of $3.4 million. So, as described before, primarily loans that consist -- primarily consists of loans less than 30 days past due or loans that we recently acquired.

Got it, thanks. And also, I was wondering if you could give us an update on how the pipelines look at the end of September going into next quarter?

Let me talk about -- this is Rick, three business lines. First on, our originated loans pipeline is really strong. We had $41 million of originations in the quarter ending September 30th, there were some number of transactions that just closed that rolled into the following quarter. We are seeing a lot of traction in our origination business. In the purchase business, summer quarter was slow. If you look on page six, slide six, it was also slow -- more but slower in the first quarter of 2017 where we did $14 million as compared to $46 million in the second quarter, then down $8 million and up to $45 million. It’s a very lumpy business. We -- in our experience, as I said, summer has been slow. From what we can tell, this far into the quarter, the pipeline for purchased loans is picking up significantly, just so none of us get in trouble, I would point to that gigantic forward-looking statement, we have that going and underwrite them and bid them and win, but we are starting to see more action, which is not surprising as you get to the fourth quarter and the calendar year. Again, looking at slide number six, you can see that was a significant quarter for us and FY17. Finally, with regard to the SBA loans, we did a little bit less than $8 million in the quarter compared to about $15 million last year. One of the things and I believe we’ve talked about this in prior call, we are in the process of changing our business model for originating SBA loans. We started with a BDO model, business development officer model with BDOs in different cities around the country working locally and generating business. And after sometime, we concluded that that didn’t provide for us the best franchise value for the bank. And over the last, call it four or five months, we’ve switched to an inside sales model where all our business development officers are now paid salary and bonus, not on commission, they mostly work -- although one of them works in Boston and is part of our team. And we have now -- and we have them on the calls talking to brokers continually. And so, there is somewhat of a building process here and somewhat of a -- the summer is a slower quarter for us as well. And so, I’m reasonably optimistic, again referring you to the giant forward-looking statement that, as the quarters proceed, that volume will increase.

Got it. Thank you. That’s helpful color. And then, last thing I want to ask about is, what were the moving parts in the LASG originations? So, specifically a breakdown of loans to non-bank lenders versus SBA 504 versus other categories. I understand that slide nine touches on this to some extent but I was wondering if you could add anything else to that?

We don’t have that; I’m getting past the note. This is like a big production here we have, I got a note. It’s about half were to non-bank lenders and half were loans that were directly to the borrower.

Thank you.

And just to put that in context, I’m speaking some from memory here. So, let’s say, this will be more directionally helpful than to the penny accurate. Last year, out of the $250 million we originated, about a $160 million were to non-bank lenders. And so, that’s a little bit more than 60%. And so, this quarter, it was 50%; that can obviously change. And we have a fair amount in the pipeline setting up loan facilities with non-bank lenders. And we can provide -- it’s a hopeful point, Jeff, on our next call, we will provide a little bit more granularity on the composition of those loans. So, thank you for that suggestion.

[Operator Instructions] I’m showing no further questions at this time. Now, I will turn the call back over to Rick Wayne for closing remarks.

Thank you. And for those on the call, thank you for listening and supporting us. For those who will listen to this call later, thank you as well, we appreciate it. And we endeavor every quarter to provide better financial information and more visibility into the Company on matters that we think are important to you and matters that you bring to our attention. And with that, I wish you all a very good day. Thank you.

Ladies and gentlemen, thank you for your participation in today’s conference. This concludes the program. You may now disconnect. Everyone, have a great day.