Good day everyone and welcome to the Northeast Bancorp Fiscal Year 2014 Fourth Quarter Earnings Results Conference Call. This call is being recorded. With us today the Company is Rick Wayne, President and Chief Executive Officer; and Claire Bean, Chief Financial Officer and COO. Earlier this morning an investor presentation was uploaded to the Company’s Web site which we will reference in this morning’s call. The presentation can be accessed at the investor relations section of northeastbank.com under events and presentation. 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 Web site 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 statement information for Northeast Bancorp. Such information constitutes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 which involves significant risks and uncertainties. Actual results may differ materially from the results discussed on the forward-looking statements. At this time, I would like to turn the call Rick Wayne. Please go ahead sir.

Good morning and thank you all for joining us today. I'm Rick Wayne, the Chief Executive Officer of Northeast Bancorp and with me is Claire Bean, our Chief Financial Officer and Chief Operating Officer. She will discuss our financial results following my comments. Following our presentation, we will be happy to answer your questions. Please turn to Slide 3. For the quarter we closed $75 million of loans, including $45 million of commercial loan purchases and originations by LASG and residential originations of $30 million. With $1.7 million of transactional income, the purchased loan portfolio generated a return of 12.2% and bank wide net interest margin of 4.75%. As discussed in last quarter’s investor call we have begun to focus on SBA lending and this quarter we originated $4.6 million of SBA loans and generated gains of $403,000 on the sales of the guaranteed portion of such loans. With respect to the stock repurchase plan announced last quarter we purchased 291,200 shares at a weighted average per share price of $9.69. This had the effect of increasing tangible book value per share by approximately $0.03 at June 30, 2014. While due to loan pay-offs the loan portfolio remained relatively flat for the quarter, it did increase by $81 million or 19% for our fiscal year. Moving on to Slides 4 and 5, of the $45 million invested by LASG for the quarter, $34 million consisted of purchased loans representing the largest volume of purchased loans in fiscal year ‘14. Since June of 2011 when LASG purchased its first loan, it has invested in aggregate of $413 million, consisting of $304 million of purchased loans and $109 million of originated loans. As of June 30th, the LASG originated and purchased portfolio outstanding total $281 million. LASG also originated $11.5 million of…

Thanks Rick and good morning everyone. Starting on Slide 12, which is the slide that shows our earnings trend over the past five quarters; and I'd start by saying that results this quarter were affected significantly by several non-recurring expense items. Those total approximately $900,000 on a pretax basis, $555,000 or $0.06 after tax. These one-time costs relate principally to the departure of two senior managers in our community banking division and the restructuring of our IT department in light of our recent core systems’ conversion. If one excludes the effect of those items, core operating earnings were $1.1 million or $0.11 for the quarter. This is essentially the same core result in the comparable fiscal ’13 quarter but it was achieved with $1.1 million less in transactional income on the purchased loans. We made up that unfavorable variance mainly through growth in earnings assets, which increased base line net interest income compared to that prior year quarter by 1.2 million. Slide 13 illustrates the amount and composition of our loan growth over the past year. As Rick, noted total loans were up $81 million or 19% year-over-year, the vast majority of that net growth coming in commercial loan purchases and originations. And looking at the quarter, at $45 million gross loan purchases and commercial originations were also strong but there was a fair amount of run-off as well, leaving the total loan portfolio essentially flat for the quarter. Slide 14 shows the composition of the net growth year-over-year. Most of it was, as you’ve heard with repurchases, which grew by $37 million and national commercial origination, which were up by a net of $39 million for the year. There was also a six month period during which we were adding much of our residential production for the portfolio and…

My first question is the loans in originating LASG that are collateralized by securities, how quickly can you make those loans and close them, should you need them to increase your capacity for purchases?

I’m sorry Alex couple you restate that one more time?

I’m sorry, can you hear me okay.

Yes, I can.

The loans that you are originating that are collateralized by securities; how quickly can those be originated and closed, should you need them to increase your capacity for purchased loans?

Really good question. When we look at those loans, I’ll explain generally the structure of those loans. They are for some on the call may not be as familiar as you. Those are loans to broker dealers secured with marketable securities with appropriate haircuts that are very much like reverse repos. They're held in a custodian. They get marked every day. And when we look at those, while there is a lot of broker dealers in the world, we’re looking at those where we can not only get the loan to the broker dealer but generally a guarantee from a very strong parent. And so we were certainly interested in doing more of them. We need to find the right combination of broker dealer, strong payer, willing to guarantee and willing to do it. Because for the broker dealer it’s a pretty small transaction. So us it’s meaningful, which is a long winded way of saying we’d like to do more of them if we can but we need to find the right structure that works from a credit perspective.

So does that mean that should you get a big pool of loan purchases that the preferred way to increase the capacity then would most likely be through residential loan originations?

Well I wasn’t trying to say that we couldn’t do anymore. I was just trying to make this suggestion that we can’t go from where we are by a factor of six overnight. The market is not there. We're hopeful we can do some more of those. And so we have a short-term issue and a long-term issue. The short-term issue is we will like to be able to put more of those than others on our balance sheet so they can purchase more. But long-term that’s not what we want on our balance sheet, because the yield on those are very low. So it’s transitional.

And then can you just talk about the loans that you did purchase during the quarter. The volume was much higher than we've seen over the past three quarters. Can you just talk about sort of the timing and when those loans become available for purchase and whether or not there is any way to read it further into the market for whether or not maybe this activity can maybe increase later in the year?

Well we bought -- it was a good quarter. We invested about $34 million, $35 million which brought us to $80 million for the whole year. We always say every chance we have, the business is lumpy. And the volume we saw in June, while it’s our fiscal year end, it’s not the calendar year end and typically there is more volume later in the year, but we saw almost $400 million worth. So we’re seeing a lot in the market. I would just say that there is -- a lot of what -- we see a lot but a lot of times the sellers have a different view on collateral value than we have. I don’t think you can draw a conclusion from this quarter. I think it does reinforce the point that we’ve made though that there is a real market there and it’s lumpy. $80 million of originations for a company our size is a lot.

And then just final question. Just on the SBA loans, which I guess is relatively new strategy for you guys. Could you just remind us exactly how that works and where that comes into the income statement?

Maybe I’ll explain how it works and Claire can describe where it is on the income statement. The SBA loans are loans that have a guarantee from the small business administration as the name suggests. The ones we have done last quarter, they carry a guarantee of 75% by the government and once you book those loans, there is a very efficient secondary market to sell those and the amount of the premium on the sale [indiscernible] relates to the structure how long -- what's the term of the loan and what’s the rate; whether it’s fixed or variable. And in the case of the largest chunk of those, the loan was priced at current plus two and three quarters which is the maximum price. And when we booked it we sold off the guaranteed piece and got the premium. That incidentally represented the numbers in there, the 4.6 were three loans to the one borrower and then another loan to another borrower.

Alex they come into the income statement through -- first of all the gain income which hits non-interest income. That was up $403,000 this past quarter. There is also some servicing income on the guaranteed piece that we sell off that also over time would come in to non-interest income. And then the interest income on the unguaranteed piece, just close to normal.

Thank you. Our next question comes from Marc Heilweil of Spectrum Advisory. Your line is open.

First a small question. The 100,000 share block that traded, were you involved in that trade, I don’t six weeks ago or so? Was that part of your repurchase program?

Mark, we did purchase a couple of blocks as part of this, but I can’t really offer any specifics about individual blocks.

Okay. there was a $10 -- it was $10. You can’t confirm whether that was part of it?

Well, we did say that we brought $290,000 at an average price of $9.69.

Okay. Can you talk a little about the profitability of the community bank? You’ve got a new President there. Is the community bank profitable?

We don’t actually do very detailed business line reporting at this point. We -- certainly it's on our agenda over the next year to begin to do that. I would say that certainly the community bank portfolio since the merger has declined in size. There has been net run off. And with the arrival of Jeanne Hulit and the team she is building in the community banking division, we’d expect loan balances to begin to grow instead of declining over time and that would certainly add to revenues in that division.

So the $9 million or so that were put on the books this quarter is much lower than you had expect going forward return?

We -- just want to amplify a little bit of what Claire said when we had the merger in 2010, part of normal integration issues, our initial focus in hiring and staffing up was building LASG and as mentioned in my comments, during that time period we put on over $400 million of assets. The market Maine for originated loans was that it’s very competitive and our focus initially was on residential originations which we’ve done a fair amount of, particularly going back a year and before that when the rate climate was more favorable. But we really do think of the community banking division as a great opportunity for us. And now the one we can execute on better with Jeanne’s arrival. We think it’s an important one, because there are loans, good quality borrowers there that we can spend money to increase our loan book, the deposit franchise where we have 10 branches is very valuable. We also have main loan operations, deposits operations, IT and other services that support not only the activities in the community bank, the residential loan division and also the LASG in Boston and Maine is a stable quality workforce at a cost structure that’s less expensive than in Boston. And so there is a lot about that that we like and we do expect as Claire said to grow our loan book. We’ve recently hired another senior lender in Maine and we'll probably hire one more during the year. And we’re committed to growing that loan book. But a lot of the growth occurs as we described today and before, occurs both in the loan purchasing business and in the national originations we do as well. So we like all that because between the purchases out of LASG, the national originations, the resi, the lending in Maine now starting to build an SBA practice, we have lots of different revenue sources all within our skill set. So we think that’s a good structure. So I really I just want to underscore that the community banking division is a very important part of our business plan.

Thank you. (Operator Instructions) And there are no further questions and I'll like to turn the call back over to Rick Wayne for closing remarks.

Thank you all for participating and for your good questions and supporting our bank. I wish you all a very enjoyable weekend. Thank you.

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program. You may all disconnect. Everyone have a great day.