Investor Relations

Jan 29, 2018

Northeast Bancorp Reports Second Quarter Results and Declares Dividend

LEWISTON, Maine, Jan. 29, 2018 (GLOBE NEWSWIRE) -- Northeast Bancorp ("Northeast" or the "Company") (NASDAQ:NBN), a Maine-based full-service financial services company and parent of Northeast Bank (the "Bank"), today reported net income of $3.3 million, or $0.36 per diluted common share, for the quarter ended December 31, 2017, compared to net income of $3.1 million, or $0.35 per diluted common share, for the quarter ended December 31, 2016. Net income for the six months ended December 31, 2017 was $7.9 million, or $0.86 per diluted common share, compared to $4.9 million, or $0.54 per diluted common share, for the six months ended December 31, 2016.

On January 26, 2018, the Board of Directors declared a cash dividend of $0.01 per share, payable on February 27, 2018 to shareholders of record as of February 13, 2018.

"I am pleased to report another strong quarter," said Richard Wayne, President and Chief Executive Officer. "Our Loan Acquisition and Servicing Group produced $79.1 million of loans, including originations of $44.3 million and purchases with a recorded investment of $34.8 million, for net growth in the LASG portfolio of $20.3 million, or 3.6%, over the linked quarter. With transactional income of $1.9 million, we achieved a total return on our purchased loan portfolio of 11.0% and a net interest margin of 4.9% for the quarter."

As of December 31, 2017, total assets were $1.0 billion, a decrease of $42.4 million, or 3.9%, from total assets of $1.1 billion as of June 30, 2017. The principal components of the change in the balance sheet follow:

1.  The following table highlights the changes in the loan portfolio for the three and six months ended December 31, 2017:

 
 Loan Portfolio Changes
 Three Months Ended December 31, 2017
 December 31, 2017 Balance September 30, 2017 Balance Change ($) Change (%)
                 
 (Dollars in thousands)
LASG Purchased$244,177   $230,014    $ 14,163   6.16%
LASG Originated 346,874    340,756    6,118    1.80%
SBA 49,109   47,870    1,239   2.59%
Community Banking 134,030   140,944    (6,914)  -4.91%
Total$774,190  $759,584  $ 14,606   1.92%
                 
  Six Months Ended December 31, 2017
 December 31, 2017 Balance June 30, 2017 Balance Change ($) Change (%)
                 
 (Dollars in thousands)
LASG Purchased$244,177  $246,388  $(2,211)  -0.90%
LASG Originated 346,874    330,515   16,359   4.95%
SBA 49,109   52,965   (3,856)  -7.28%
Community Banking 134,030   149,327   (15,297)  -10.24%
Total$774,190  $779,195  $(5,005)  -0.64%
 

Loans generated by the Bank's Loan Acquisition and Servicing Group ("LASG") for the quarter ended December 31, 2017 totaled $79.1 million, which consisted of $34.8 million of purchased loans, at an average price of 91.1% of unpaid principal balance, and $44.3 million of originated loans. The Bank's Small Business Administration and United States Department of Agriculture ("SBA") Division closed and funded $4.5 million of new loans during the quarter ended December 31, 2017. In addition, the Company sold $3.4 million of the guaranteed portion of SBA loans in the secondary market, of which $1.6 million were originated in the current quarter and $1.8 million were originated in prior quarters. Residential loan production sold in the secondary market totaled $17.6 million for the quarter.

As previously discussed in the Company's SEC filings, the Company made certain commitments to the Board of Governors of the Federal Reserve System in connection with the merger of FHB Formation LLC with and into the Company in December 2010. The Company's loan purchase and commercial real estate loan availability under these conditions follow:

 
Basis for
Regulatory Condition
 Condition Availability at December 31, 2017
    (Dollars in millions)
Total Loans Purchased loans may not exceed 40% of total loans $  113.4
Regulatory Capital Non-owner occupied commercial real estate loans may not exceed 300% of total capital $   177.4
      

An overview of the Bank's LASG portfolio follows:

                                 
 LASG Portfolio
 Three Months Ended December 31,
 2017   2016
 Purchased
 Originated
 Secured Loans to
Broker-Dealers
 Total LASG
  Purchased
 Originated
 Secured Loans to
Broker-Dealers
 Total LASG
                                 
 (Dollars in thousands)
Loans purchased or originated during the period:                                
Unpaid principal balance$38,205   $ 44,285  $   -    $   82,490    $51,112   $ 45,647  $   -    $   96,759  
Net investment basis  34,802      44,285    -     79,087     46,033      45,647    -     91,680 
                                 
Loan returns during the period:                                
Yield 11.00%  6.49%  0.00%  8.31%   13.01%  5.89%  0.99%  8.76%
Total Return (2) 11.00%  6.49%  0.00%  8.31%   13.01%  5.89%  0.99%  8.76%
                                 


 Six Months Ended December 31,
 2017
  2016
 Purchased
  Originated
 Secured Loans to
Broker-Dealers
 Total LASG
  Purchased (1)
 Originated
 Secured Loans to
Broker-Dealers
 Total LASG
                                 
 (Dollars in thousands)
Loans purchased or originated during the period:                                
Unpaid principal balance$42,523   $ 85,064  $   -    $   127,587    $67,903   $ 88,025  $   -    $   155,928  
Net investment basis  38,453      85,064    -     123,517     59,886      88,025    -     147,911 
                                   
Loan returns during the period:                                
Yield 11.65 %  6.42%  0.00%  8.58%   11.71%  5.88%  0.74%  8.19%
Total Return (2) 11.65%  6.42%  0.00%  8.58%   11.73%   5.88%  0.74%  8.19%
                                 
                                   
Total loans as of period end:                                
Unpaid principal balance$276,440  $346,874  $-  $623,314     $288,455  $231,278  $48,000  $567,733 
Net investment basis  244,177   346,874   -   591,051    255,048   231,278   48,000   534,326 
                                 
(1) Period end purchased loan balances include loans held for sale of $975 thousand at December 31, 2016.
(2) The total return on purchased loans represents scheduled accretion, accelerated accretion, gains on asset sales, and other noninterest income recorded during the period divided by the average invested balance, which includes loans held for sale, on an annualized basis.  The total return does not include the effect of purchased loan charge-offs or recoveries in the quarter.
 

2.  Deposits decreased by $41.2 million, or 4.6%, from June 30, 2017, attributable primarily to a decrease in money market accounts of $22.3 million, or 6.0%, and a decrease in time deposits of $19.4 million, or 5.8%.

3.  Shareholders' equity increased by $7.2 million, or 5.9%, from June 30, 2017, primarily due to earnings of $7.9 million, partially offset by stock option exercises which decreased additional paid-in-capital by $1.1 million and dividends paid on common stock of $177 thousand. Additionally, there was stock-based compensation of $485 thousand.

Net income increased by $204 thousand to $3.3 million for the quarter ended December 31, 2017, compared to net income of $3.1 million for the quarter ended December 31, 2016.

1.  Net interest and dividend income before provision for loan losses increased by $624 thousand for the quarter ended December 31, 2017, compared to the quarter ended December 31, 2016. The increase is primarily due to higher average balances in the total loan portfolio. This increase was partially offset by higher funding costs and higher average deposit balances.

The following table summarizes interest income and related yields recognized on the loan portfolios:

 Interest Income and Yield on Loans
 Three Months Ended December 31,
  2017
 2016
  Average
 Interest
    Average
 Interest
   
  Balance (1)
 Income
 Yield
 Balance (1)
 Income
 Yield
                        
  (Dollars in thousands)
Community Banking $141,486   $  1,753  4.92% $203,963   $  2,350  4.57%
SBA  49,457   814   6.53%  41,038   574  5.55%
LASG:                       
Originated   340,240      5,565   6.49%   216,353      3,210   5.89%
Purchased   229,732      6,369   11.00%   233,502      7,659   13.01%
Secured Loans to Broker-Dealers  -   -  0.00%  48,000   120  0.99%
Total LASG   569,972      11,934   8.31%   497,855      10,989   8.76%
Total $ 760,915   $  14,501   7.56% $ 742,856   $  13,913   7.43%
                       
                       
  Six Months Ended December 31,
  2017
 2016
  Average
 Interest
    Average
 Interest
   
  Balance (1)
 Income
 Yield
 Balance (1)
 Income
 Yield
                       
  (Dollars in thousands)
Community Banking $145,832   $  3,496  4.76% $204,864   $  4,754   4.60%
SBA  51,499   1,756  6.76%  36,093   1,093  6.01%
LASG:                      
Originated   334,507      10,831   6.42%   200,731      5,949   5.88%
Purchased   234,928      13,800   11.65%   232,751      13,740   11.71%
Secured Loans to Broker-Dealers  -   -  0.00%  48,000   180  0.74%
Total LASG   569,435      24,631   8.58%   481,482      19,869   8.19%
Total $ 766,766   $  29,883   7.73% $ 722,439   $  25,716   7.06%
                       
 (1)  Includes loans held for sale.
                       

The components of total transactional income on purchased loans are set forth in the table below entitled "Total Return on Purchased Loans." When compared to the three months ended December 31, 2016, transactional income decreased by $1.0 million. The total return on purchased loans for the three months ended December 31, 2017 was 11.0%. The decrease over the prior comparable period was primarily due to lower accelerated accretion in the three months ended December 31, 2017. When compared to the six months ended December 31, 2016, transactional income increased by $432 thousand. This increase over the prior comparable period was primarily due to higher loan fees in the six months ended December 31, 2017. The following table details the total return on purchased loans:

 Total Return on Purchased Loans
 Three Months Ended December 31,
 2017 2016
 Income Return (1) Income  Return (1)
              
 (Dollars in thousands)
Regularly scheduled interest and accretion$4,466  7.71% $4,716  8.01%
Transactional income:           
Gain on loan sales   -   0.00%    -   0.00%
Gain on sale of real estate owned   -  0.00%    -  0.00%
Other noninterest income   -    0.00%    -    0.00%
Accelerated accretion and loan fees    1,903   3.29%    2,943   5.00%
Total transactional income   1,903   3.29%    2,943   5.00%
Total $  6,369   11.00% $  7,659   13.01%
  


 Total Return on Purchased Loans
 Six Months Ended December 31,
 2017 2016
 Income Return (1) Income Return (1)
              
 (Dollars in thousands)
Regularly scheduled interest and accretion$9,079  7.67% $9,470  8.07%
Transactional income:           
Gain on loan sales   -   0.00%    -   0.00%
Gain on sale of real estate owned   -  0.00%    19  0.02%
Other noninterest income   -    0.00%    -    0.00%
Accelerated accretion and loan fees    4,721   3.98%    4,270   3.64%
Total transactional income   4,721   3.98%    4,289   3.66%
Total $  13,800   11.65% $  13,759   11.73%
 
(1) The total return on purchased loans represents scheduled accretion, accelerated accretion, gains on asset sales, gains on real estate owned and other noninterest income recorded during the period divided by the average invested balance, which includes loans held for sale, on an annualized basis.  The total return does not include the effect of purchased loan charge-offs or recoveries in the quarter. Total return is considered a non-GAAP financial measure. 
 

2.  Noninterest income decreased by $1.5 million for the quarter ended December 31, 2017, compared to the quarter ended December 31, 2016, principally due to the following:

  • A decrease in gain on sale of SBA loans of $1.4 million, due to a lower amount of SBA loans sold in the quarter; and
  • A decrease in gain on sale of residential loans held for sale of $82 thousand, due to lower volume of residential loans sold in the quarter.

3.  Noninterest expense decreased by $393 thousand for the quarter ended December 31, 2017, compared to the quarter ended December 31, 2016, primarily due to the following:

  • A decrease in other noninterest expense of $395 thousand, primarily due to a $330 thousand decrease in expense related to the quarterly valuation of SBA servicing rights; and
  • A decrease in loan expense of $179 thousand, largely driven by lower expense related to loan acquisition and refinance activity.
  • The decreases in noninterest expense were partially offset by an increase in data processing fees of $214 thousand, primarily due to the increased cost associated with outsourcing of data processing.   

4.  Income tax expense decreased by $458 thousand for the quarter ended December 31, 2017, compared to the quarter ended December 31, 2016, primarily due to the following:

  • A decrease in the federal corporate income tax rate as a result of the Tax Cuts and Jobs Act signed into law on December 22, 2017, which resulted in a $762 thousand decrease in federal income tax expense. Of this total, $328 thousand was related to the decrease in the federal corporate income tax rate for the three months ended December 31, 2017 and $434 thousand was related to income tax expense previously recorded in the three months ended September 30, 2017, to arrive at the required blended federal corporate income tax rate of 28.0% for fiscal year 2018; and
  • A decrease in income tax expense as a result of a $279 thousand income tax benefit arising from the treatment of stock options exercised or vested restricted stock awards under ASU 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, whereby the tax effects of exercised options or vested awards are treated as a discrete item in the reporting period in which they occur.
  • The decreases in income tax expense were partially offset by the impact of revaluing the deferred tax asset as a result of the change in the federal corporate income tax rate as well as the recording of current year changes in the deferred tax asset, which resulted in an increase in income tax expense of $498 thousand.

As of December 31, 2017, nonperforming assets totaled $19.0 million, or 1.84% of total assets, as compared to $18.7 million, or 1.78% of total assets, as of September 30, 2017, and $14.8 million, or 1.37% of total assets, as of June 30, 2017.

As of December 31, 2017, past due loans totaled $30.0 million, or 3.87% of total loans, as compared to $12.1 million, or 1.60% of total loans as of September 30, 2017, and $13.4 million, or 1.72% of total loans as of June 30, 2017. The increase was primarily attributable to $5.3 million of loans purchased in December that were delinquent at purchase, as well as $8.8 million of loans that were 30 days past due as of December 31, 2017 and are now current.

As of December 31, 2017, the Company's Tier 1 Leverage Ratio was 13.4%, compared to 12.8% at June 30, 2017, and the Total Capital Ratio was 20.3%, compared to 19.5% at June 30, 2017. The increase in both the Tier 1 Leverage Ratio and the Total Capital Ratio resulted primarily from the increase in earnings and the net decrease in the loan portfolio.

Investor Call Information
Richard Wayne, Chief Executive Officer of Northeast Bancorp, and Jean-Pierre Lapointe, Chief Financial Officer of Northeast Bancorp, will host a conference call to discuss second quarter earnings and business outlook at 10:00 a.m. Eastern Time on Tuesday, January 30th. Investors can access the call by dialing 877.878.2762 and entering the following passcode: 3783438. The call will be available via live webcast, which can be viewed by accessing the Company's website at www.northeastbank.com and clicking on the About Us - Investor Relations section. To listen to the webcast, attendees are encouraged to visit the website at least fifteen minutes early to register, download and install any necessary audio software. Please note there will also be a slide presentation that will accompany the webcast. For those who cannot listen to the live broadcast, a replay will be available online for one year at www.northeastbank.com.

About Northeast Bancorp
Northeast Bancorp (NASDAQ:NBN) is the holding company for Northeast Bank, a full-service bank headquartered in Lewiston, Maine. We offer personal and business banking services to the Maine and New Hampshire markets via ten branches and two loan production offices. Our Loan Acquisition and Servicing Group ("LASG") purchases and originates commercial loans on a nationwide basis and our SBA Division supports the needs of growing businesses nationally. ableBanking, a division of Northeast Bank, offers online savings products to consumers nationwide. Information regarding Northeast Bank can be found at www.northeastbank.com.

Non-GAAP Financial Measures
In addition to results presented in accordance with generally accepted accounting principles ("GAAP"), this press release contains certain non-GAAP financial measures, including tangible common shareholders' equity, tangible book value per share, total return, and efficiency ratio. Northeast's management believes that the supplemental non-GAAP information is utilized by regulators and market analysts to evaluate a company's financial condition and therefore, such information is useful to investors. These disclosures should not be viewed as a substitute for financial results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names.

Forward-Looking Statements
Statements in this press release that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Although Northeast believes that these forward-looking statements are based on reasonable estimates and assumptions, they are not guarantees of future performance and are subject to known and unknown risks, uncertainties, and other factors. You should not place undue reliance on our forward-looking statements. You should exercise caution in interpreting and relying on forward-looking statements because they are subject to significant risks, uncertainties and other factors which are, in some cases, beyond the Company's control. The Company's actual results could differ materially from those projected in the forward-looking statements as a result of, among other factors, changes in interest rates and real estate values; competitive pressures from other financial institutions; the effects of weakness in general economic conditions on a national basis or in the local markets in which the Company operates, including changes which adversely affect borrowers' ability to service and repay our loans; changes in loan defaults and charge-off rates; changes in the value of securities and other assets, adequacy of loan loss reserves, or deposit levels necessitating increased borrowing to fund loans and investments; changing government regulation; operational risks including, but not limited to, cybersecurity, fraud and natural disasters; the risk that the Company may not be successful in the implementation of its business strategy; the risk that intangibles recorded in the Company's financial statements will become impaired; changes in assumptions used in making such forward-looking statements; and the other risks and uncertainties detailed in the Company's Annual Report on Form 10-K and updated by the Company's Quarterly Reports on Form 10-Q and other filings submitted to the Securities and Exchange Commission. These statements speak only as of the date of this release and the Company does not undertake any obligation to update or revise any of these forward-looking statements to reflect events or circumstances occurring after the date of this communication or to reflect the occurrence of unanticipated events.

For more information:

Jean-Pierre Lapointe, Chief Financial Officer
Northeast Bank, 500 Canal Street, Lewiston, ME 04240
207.786.3245 ext. 3220
www.northeastbank.com

NBN-F

 
 
NORTHEAST BANCORP AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands, except share and per share data)
 December 31, 2017 June 30, 2017
Assets     
Cash and due from banks$2,515  $3,582 
Short-term investments 125,708   159,701 
Total cash and cash equivalents 128,223   163,283 
      
      
Available-for-sale securities, at fair value 92,339   96,693 
      
Residential real estate loans held for sale 5,515   4,508 
SBA loans held for sale 818   191 
Total loans held for sale 6,333   4,699 
       
      
Loans      
Commercial real estate 493,954   498,004 
Commercial and industrial 178,840   175,654 
Residential real estate 97,593    101,168 
Consumer 3,803   4,369 
Total loans 774,190   779,195 
  Less: Allowance for loan losses 4,355   3,665 
Loans, net 769,835   775,530 
      
      
Premises and equipment, net 7,061   6,937 
Real estate owned and other repossessed collateral, net 910   826 
Federal Home Loan Bank stock, at cost 1,758   1,938 
Intangible assets, net 1,082   1,300 
Loan servicing rights, net 3,005   2,846 
Bank-owned life insurance 16,402   16,179 
Other assets 7,498   6,643 
Total assets$1,034,446  $1,076,874 
      
Liabilities and Shareholders' Equity     
Deposits     
Demand$71,054  $69,827 
Savings and interest checking 107,750   108,417 
Money market 352,237   374,569 
Time  317,613   337,037 
Total deposits 848,654   889,850 
      
Federal Home Loan Bank advances 15,000   20,011 
Subordinated debt 23,790   23,620 
Capital lease obligation 741    873  
Other liabilities 16,258   19,723 
Total liabilities 904,443   954,077 
      
Commitments and contingencies   -      -  
      
Shareholders' equity     
Preferred stock, $1.00 par value, 1,000,000 shares authorized; no shares issued and outstanding at December 31, 2017 and June 30, 2017   -      -  
Voting common stock, $1.00 par value, 25,000,000 shares authorized; 8,017,334 and 7,840,460 shares issued and outstanding at December 31, 2017 and June 30, 2017, respectively 8,017   7,841 
Non-voting common stock, $1.00 par value, 3,000,000 shares authorized; 921,939 and 991,194 shares issued and outstanding at December 31, 2017 and June 30, 2017, respectively922      991  
Additional paid-in capital  76,805   77,455 
Retained earnings  45,855   38,142 
Accumulated other comprehensive loss (1,596)  (1,632)
Total shareholders' equity 130,003   122,797 
Total liabilities and shareholders' equity$1,034,446  $1,076,874 
 


NORTHEAST BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Dollars in thousands, except share and per share data)
 Three Months Ended December 31, Six Months Ended December 31,
 2017 2016 2017 2016
Interest and dividend income:           
Interest and fees on loans$14,501 $13,913 $29,883 $25,716 
Interest on available-for-sale securities 267  247  533  486 
Other interest and dividend income  492  172  1,022  387  
Total interest and dividend income 15,260  14,332  31,438  26,589 
            
            
Interest expense:           
Deposits 2,129  1,798  4,305   3,553 
Federal Home Loan Bank advances 148  220  319   475 
Subordinated debt 517  468  1,025  927 
Obligation under capital lease agreements 9  13  21  27 
Total interest expense 2,803  2,499  5,670  4,982 
            
Net interest and dividend income before provision for loan losses 12,457  11,833  25,768  21,607 
Provision for loan losses 437  628  792  820 
Net interest and dividend income after provision for loan losses 12,020  11,205  24,976  20,787 
            
            
Noninterest income:           
Fees for other services to customers 475  481  1,002  889 
Gain on sales of residential loans held for sale 255  337  545  878 
Gain on sales of SBA loans 341  1,734  1,361  2,476 
Gain on sales of other loans 21   -  21  - 
Gain (loss) on real estate owned, other repossessed collateral and premises and equipment, net   11    3    11  (11)
Bank-owned life insurance income 111  114  223  228 
Other noninterest income 14  21  23  38 
Total noninterest income 1,228  2,690  3,186  4,498 
            
Noninterest expense:            
Salaries and employee benefits 5,173  5,161  10,427  10,475 
Occupancy and equipment expense 1,150  1,252  2,260  2,481 
Professional fees 425  399  867  895 
Data processing fees 624  410  1,227  832 
Marketing expense 70  97  157  184 
Loan acquisition and collection expense 368  547  733  774 
FDIC insurance premiums 80  22  160  146 
Intangible asset amortization 109  109  218  218 
Other noninterest expense  564  959  1,228  1,577 
Total noninterest expense 8,563  8,956  17,277  17,582 
            
Income before income tax expense 4,685  4,939  10,885  7,703 
Income tax expense 1,381  1,839  2,995  2,852 
Net income $3,304 $3,100 $7,890 $4,851 
            
             
Weighted-average shares outstanding:            
Basic 8,924,495  8,831,235  8,883,003  8,968,690 
Diluted 9,168,084  8,864,618  9,129,010  8,999,062 
Earnings per common share:           
Basic$0.37 $0.35 $0.89 $0.54 
Diluted 0.36  0.35  0.86  0.54 
              
Cash dividends declared per common share$0.01 $0.01 $0.02 $0.02 
             


NORTHEAST BANCORP AND SUBSIDIARY
CONSOLIDATED AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS
(Unaudited)
(Dollars in thousands)
 Three Months Ended December 31,
 2017 2016
   Interest Average   Interest Average
 Average  Income/ Yield/ Average  Income/ Yield/
 Balance Expense Rate Balance Expense Rate
Assets:                   
Interest-earning assets:                   
Investment securities$  93,945  $  267   1.13% $  92,750  $  247   1.06%
Loans (1) (2) (3) 760,915    14,501   7.56%  742,856    13,931   7.44%
Federal Home Loan Bank stock   1,860      21   4.48%    2,398    23   3.81%
Short-term investments (4) 145,305      471   1.29%  114,276      149   0.52%
Total interest-earning assets 1,002,025    15,260   6.04%   952,280    14,350   5.98%
Cash and due from banks   2,731            2,764        
Other non-interest earning assets 33,164          35,213        
Total assets$1,037,920         $990,257        
                    
Liabilities & Shareholders' Equity:                   
Interest-bearing liabilities:                   
NOW accounts$70,287   $  52   0.29% $71,795   $  52   0.29%
Money market accounts 367,265    1,030   1.11%  312,911      753   0.95%
Savings accounts   36,872      12   0.13%    35,206      12   0.14%
Time deposits 303,246    1,035   1.35%  317,318      981   1.23%
Total interest-bearing deposits 777,670    2,129   1.09%  737,230    1,798   0.97%
Federal Home Loan Bank advances   17,719      148   3.31%    27,099      220   3.22%
Subordinated debt   23,745      517   8.64%    23,430      468   7.92%
Capital lease obligations    764      9   4.67%    1,024      13   5.04%
Total interest-bearing liabilities 819,898      2,803   1.36%  788,783    2,499   1.26%
                    
Non-interest bearing liabilities:                    
Demand deposits and escrow accounts 83,855          80,538       
Other liabilities   5,676            8,299        
Total liabilities 909,429          877,620        
Shareholders' equity 128,491          112,637        
Total liabilities and shareholders' equity$1,037,920          $990,257        
                    
Net interest income (5)    $12,457         $11,851    
                    
Interest rate spread        4.68%         4.72%
Net interest margin (6)        4.93%         4.94%
                     
(1)  Interest income and yield are stated on a fully tax-equivalent basis using the statutory tax rate.
(2)  Includes loans held for sale.
(3)  Nonaccrual loans are included in the computation of average, but unpaid interest has not been included for purposes of determining interest income.
(4)  Short term investments include FHLB overnight deposits and other interest-bearing deposits.
(5)  Includes tax exempt interest income of $18 thousand for the three months ended December 31, 2016.
(6)  Net interest margin is calculated as net interest income divided by total interest-earning assets.
 


NORTHEAST BANCORP AND SUBSIDIARY
CONSOLIDATED AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS
(Unaudited)
(Dollars in thousands)
 Six Months Ended December 31,
 2017 2016
   Interest Average   Interest Average
 Average  Income/ Yield/ Average  Income/ Yield/
 Balance Expense Rate Balance Expense  Rate
Assets:                    
Interest-earning assets:                   
Investment securities $94,886   $  533   1.11% $93,825   $  486   1.03%
Loans (1) (2) (3)   766,766      29,893   7.73%    722,439      25,752   7.07%
Federal Home Loan Bank stock   1,899      41   4.28%    2,403      46   3.80%
Short-term investments (4)   152,830      981   1.27%    134,334      341   0.50%
Total interest-earning assets   1,016,381      31,448   6.14%    953,001      26,625   5.54%
Cash and due from banks   2,933             2,852        
Other non-interest earning assets   32,025            33,012        
Total assets$  1,051,339         $  988,865        
                    
Liabilities & Shareholders' Equity:                   
Interest-bearing liabilities:                    
NOW accounts$69,931   $102   0.29% $71,323   $103   0.29%
Money market accounts   377,449      2,127   1.12%    302,323      1,435   0.94%
Savings accounts   36,953      25    0.13%    35,488      25   0.14%
Time deposits   307,865      2,051   1.32%    326,794      1,990   1.21%
Total interest-bearing deposits   792,198      4,305   1.08%    735,928      3,553   0.96%
Federal Home Loan Bank advances   18,863       319   3.35%    28,580      475    3.30%
Subordinated debt   23,703      1,025   8.58%    23,395      927   7.86%
Capital lease obligations   797      21   5.23%    1,056      27   5.07%
Total interest-bearing liabilities   835,561      5,670   1.35%     788,959      4,982   1.25%
                    
Non-interest bearing liabilities:                   
Demand deposits and escrow accounts 82,210          78,104        
Other liabilities   7,071            8,255        
Total liabilities   924,842            875,318        
Shareholders' equity   126,497            113,547        
Total liabilities and shareholders' equity$  1,051,339         $  988,865        
                    
Net interest income (5)    $  25,778         $  21,643    
                    
Interest rate spread         4.79%         4.29%
Net interest margin (6)        5.03%         4.51%
                    
(1)  Interest income and yield are stated on a fully tax-equivalent basis using the statutory tax rate.
(2)  Includes loans held for sale.
(3)  Nonaccrual loans are included in the computation of average, but unpaid interest has not been included for purposes of determining interest income.
(4)  Short term investments include FHLB overnight deposits and other interest-bearing deposits.
(5)  Includes tax exempt interest income of $10 thousand and $36 thousand for the six months ended December 31, 2017 and December 31, 2016, respectively.
(6)  Net interest margin is calculated as net interest income divided by total interest-earning assets.
 


NORTHEAST BANCORP AND SUBSIDIARY
SELECTED CONSOLIDATED FINANCIAL HIGHLIGHTS AND OTHER DATA
(Unaudited)
(Dollars in thousands, except share and per share data)
 Three Months Ended:
 December 31, 2017 September 30, 2017 June 30, 2017 March 31, 2017 December 31, 2016
Net interest income$   12,457  $   13,311  $   13,757  $  12,459  $  11,833 
Provision for loan losses 437   354   389     384      628  
Noninterest income 1,228   1,958   2,890     2,308      2,690  
Noninterest expense 8,563   8,714   9,364     8,842      8,956  
Net income  3,304   4,586   4,027     3,461      3,100  
          
Weighted-average common shares outstanding:         
Basic 8,924,495    8,841,511   8,823,679   8,830,442   8,831,235 
Diluted 9,168,084   9,089,936   8,979,471   8,893,534   8,864,618 
Earnings per common share:         
Basic$   0.37   $  0.52   $   0.46   $  0.39   $  0.35  
Diluted   0.36      0.50      0.45      0.39      0.35  
Dividends per common share    0.01      0.01      0.01      0.01      0.01  
          
Return on average assets 1.26%  1.71%  1.57%  1.37%   1.24%
Return on average equity 10.20%  14.61%  13.34%  12.03%  10.92%
Net interest rate spread (1)  4.68%  4.89%  5.32%  4.90%   4.72%
Net interest margin (2) 4.93%  5.13%  5.55%  5.11%  4.94%
Efficiency ratio (non-GAAP) (3) 62.57%  57.07%  56.25%  59.88%  61.67%
Noninterest expense to average total assets 3.27%  3.25%  3.64%  3.50%  3.59%
Average interest-earning assets to average
interest-bearing liabilities
 122.21%  121.09%   121.13%  120.84%  120.73%
          
 As of:
 December 31, 2017 September 30, 2017 June 30, 2017 March 31, 2017 December 31, 2016
Nonperforming loans:         
Originated portfolio:         
Residential real estate$   3,783  $  3,667  $   3,337   $  3,265   $  2,827  
Commercial real estate 2,537   2,409   413     420      396  
Home equity 107   58   58     48      48  
Commercial and industrial 2,555   2,629   2,600     2,636      2,659  
Consumer  147   131   103     65      48  
Total originated portfolio 9,129   8,894   6,511     6,434      5,978  
Total purchased portfolio 8,962   7,758   7,452     8,388      4,219  
Total nonperforming loans 18,091   16,652   13,963     14,822      10,197  
Real estate owned and other repossessed collateral, net 910    2,040    826      3,761      3,145  
Total nonperforming assets$   19,001   $  18,692   $   14,789  $  18,583   $  13,342  
          
Past due loans to total loans 3.87%  1.60%   1.72%  3.25%  2.85%
Nonperforming loans to total loans 2.34%  2.19%  1.79%  2.00%  1.33%
Nonperforming assets to total assets 1.84%  1.78%  1.37%  1.81%  1.32%
Allowance for loan losses to total loans  0.56%  0.53%  0.47%  0.46%  0.41%
Allowance for loan losses to nonperforming loans 24.07%  24.23%  26.25%  22.77%  30.47%
          
Commercial real estate loans to risk-based capital (4) 187.92%  166.15%  181.23%  181.83%  197.11%
Net loans to core deposits (5) 91.46%  88.68%  87.68%  87.46%   92.04%
Purchased loans to total loans, including held for sale 31.28%  30.11%  31.43%  31.87%  32.91%
Equity to total assets 12.57%  12.07%  11.40%  11.55%  11.35%
Common equity tier 1 capital ratio 16.74%  16.50%  16.00%  15.80%  14.94%
Total capital ratio  20.30%  20.04%  19.48%  19.30%   18.31%
Tier 1 leverage capital ratio 13.41%  12.77%  12.81%  12.46%  12.60%
          
Total shareholders' equity $   130,003  $  126,712  $   122,797  $  118,675  $  114,942 
Less: Preferred stock   -      -      -      -      -  
Common shareholders' equity   130,003      126,712       122,797      118,675      114,942  
Less: Intangible assets (6)   (4,087)    (4,146)    (4,146)    (3,898)    (3,856)
Tangible common shareholders' equity (non-GAAP)$   125,916  $  122,566  $   118,651  $  114,777  $  111,086 
          
Common shares outstanding 8,939,273   8,890,353     8,831,654     8,815,279      8,831,235 
Book value per common share $   14.54   $   14.25   $    13.90   $   13.46   $   13.02  
Tangible book value per share (non-GAAP) (7)   14.09      13.79      13.43      13.02      12.58  
          
(1) The net interest rate spread represents the difference between the weighted-average yield on interest-earning assets and the weighted-average cost of interest-bearing liabilities for the period.
(2) The net interest margin represents net interest income as a percent of average interest-earning assets for the period.
(3) The efficiency ratio represents noninterest expense divided by the sum of net interest income (before the loan loss provision) plus noninterest income.
(4) For purposes of calculating this ratio, commercial real estate includes all non-owner occupied commercial real estate loans defined as such by regulatory guidance, including all land development and construction loans.
(5) Core deposits include all non-maturity deposits and maturity deposits less than $250 thousand. Loans include loans held for sale.
(6) Includes the core deposit intangible asset and loan servicing rights asset.
(7) Tangible book value per share represents total shareholders' equity less the sum of preferred stock and intangible assets divided by common shares outstanding.
 

 

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Source: Northeast Bancorp

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