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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