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Rick Wayne
President and CEO, Northeast Bank
Age: 68
Industry experience: 30 years
A little over a decade ago, Rick Wayne and a group of investors set out to acquire a bank. Wayne and a partner had founded a Boston-based bank in the 1980s, later named Capital Crossing Bank, but they were not involved in its day-to-day operations. After the bank, like others, experienced difficulties during the recession in the early 1990s, Wayne switched from a career as a lawyer to banking. The bank went public in 1996 and was sold about 10 years later to Lehman Brothers.
Capital Crossing Bank had specialized in buying commercial real estate loans at a discount, and Wayne and the investment group wanted to acquire a bank where they could set up a similar business. They came across Portland, Maine-based Northeast Bank, and a deal closed at the end of 2010. Northeast Bank is now both a community bank with nine Maine branches and a national lending office based in Boston. The bank was recently ranked 18th by S&P Global Market Intelligence in its annual performance assessment of banks with assets less than $3 billion.
Q: What makes Northeast Bank different from other community banks?
A: A traditional community bank is what Northeast Bank was before we got involved. They had branches within a certain geographic area; they took deposits within that area; they did lending both to individuals and to small businesses. Now our business model in generating income is we’re a commercial real estate lender, and we lend nationally. We have about a $1 billion loan portfolio, and we only have a $50 million loan portfolio in Maine. Virtually the rest of it is around the country in over 40 states, and that is the very big distinction.
And our lending is even quite interesting. We purchase loans from banks, funds, occasionally the government from banks that they close, and even more rarely from insurance companies. We also originate loans. We look for transactions that are typically too small for the big banks and in some ways too complicated for small banks – I don’t mean that in a condescending way because other banks could figure it out, but it’s not what they do. We lend money to non-bank lenders. We do some plain vanilla lending as well, and then we also lend to folks that need to have a loan closed more quickly or maybe they were going to buy a property at auction and their financing fell through or they have a chance to buy their loan from their bank at a discount – a whole range of issues. Our net interest margin, excluding PPP, is typically in the mid–5 percent range, which is a very high number.
Q: What does Northeast Bank’s Boston office do?
A: We’re legally domiciled in Maine, and we have about 110 people working in Maine. We have about 70 people in Boston, and then we have a small office in New York, where we have four people. In Boston, we have most of the executive team there, and the national lending business is run out of Boston.
Q: Why have the executive team located in Boston instead of Maine?
A: This is a very complicated business we run, and the talent pool we have running it, I’ve been able to attract in Boston. I’m sure we could attract people like that in Maine; they are smart people. Most of the folks who work in Boston – not 100 percent – worked at Capital Crossing Bank.
Q: What opportunities do you see in the near-term and what are some long-term goals?
A: In terms of opportunities, we’re going to continue to grow our national lending business. We have a lot of capital given all the money we have made this year. Over the last 10 years, we have really focused on our national lending business and less so on building our deposit base in Maine. We have brought in a lot of talent in Maine to build our retail, business and municipal deposits and our marketing talent. We’re hoping – and expect – that we will grow our deposit business in Maine by a lot where we have a relatively small share of the market.
Q: How as Northeast Bank’s approach to PPP worked for the bank?
A: This has really been just an amazing story. I’ve got to start with the cliche of “doing well by doing good.” We’re commercial real estate lenders, not lending to really small businesses. But when this opportunity came along in 2020, we did $500 million in originations, and we’re a $1.2 billion asset bank. We announced in March we had done another $1.8 billion. It’s an extraordinary accomplishment.
The second thing that we did as part of this, which has been really a big boon to us financially, we did business with a group called ACAP and the Loan Source, a non-bank SBA lender. They wanted to access the Federal Reserve’s Paycheck Protection Program Liquidity Facility, and we act as their correspondent so that they can access it using our Fed account. We share in half of the profits that they get in that activity. To date, in terms of public numbers, they have bought over $6 billion worth of loans – $4.7 billion in 2020 and over $2 billion in 2021. They buy PPP loans at a discount, we share in that, and they service all the loans and make a 65–basis–points spread on the loans. It’s been enormously profitable for us to do that.
Q: What is your outlook for community banking?
A: There’s going to continue to be consolidation in this space. Community banks serve a valuable purpose, and I think it would be good for them to continue. The problem – not for all of them but across the board – is there’s lots of competition from non-bank lenders and fintechs. I think it’s going to be harder over time to be a smaller, traditional bank, and therefore I think there will be more consolidation. I don’t include us in that group, because we’re very different.
Q: Are you looking at M&A opportunities?
A: We’re certainly not looking to be acquired. I think we have a lot of runway to keep growing our franchise. The real estate market is gigantic, and we’re just a small player, and we have capital to grow a lot. It’s not really what we’re focusing on.
Wayne’s Five Favorite Things
- His family
- His labradoodle
- Photography
- Playing golf
- Reading and traveling
