Press Release

Northeast Bank Reports Second Quarter Results and Declares Dividend

January 30, 2024 at 4:16 PM EST

PORTLAND, Maine, Jan. 30, 2024 (GLOBE NEWSWIRE) -- Northeast Bank (the “Bank”) (NASDAQ: NBN), a Maine-based full-service bank, today reported net income of $14.1 million, or $1.85 per diluted common share, for the quarter ended December 31, 2023, compared to net income of $11.3 million, or $1.54 per diluted common share, for the quarter ended December 31, 2022. Net income for the six months ended December 31, 2023 was $29.2 million, or $3.86 per diluted common share, compared to $19.6 million, or $2.65 per diluted common share, for the six months ended December 31, 2022. Results for the quarter and six months ended December 31, 2023 were negatively impacted by a deferred tax asset write-down of $957 thousand ($0.13 per diluted common share impact) due to a change in Massachusetts tax law regarding income tax apportionment.

The Board of Directors declared a cash dividend of $0.01 per share, payable on February 26, 2024, to shareholders of record as of February 12, 2024.

“We had another strong quarter, with continued growth in our National Lending Division purchased portfolio,” said Rick Wayne, Chief Executive Officer. “National Lending Division volume totaled $249.6 million, including $186.1 million of purchases and $63.5 million of originations. We extended our at-the-market offering, which provides the Bank with the ability to raise capital if and as needed. For the quarter, we are reporting earnings of $1.85 per diluted common share, a return on average equity of 17.4%, and a return on average assets of 1.9%.”

As of December 31, 2023, total assets were $2.97 billion, an increase of $99.0 million, or 3.5%, from total assets of $2.87 billion as of June 30, 2023.

1. The following table highlights the changes in the loan portfolio for the three and six months ended December 31, 2023:

 Loan Portfolio Changes
 Three Months Ended December 31, 2023
 December 31, 2023 Balance September 30, 2023 Balance Change ($) Change (%)
 (Dollars in thousands)
National Lending Purchased$1,646,756  $1,516,379  $130,377   8.60%
National Lending Originated 910,213   958,232   (48,019)  (5.01%)
SBA National 29,052   27,205   1,847   6.79%
Community Banking 25,038   26,394   (1,356)  (5.14%)
Total$2,611,059  $2,528,210  $82,849   3.28%
  
 Six Months Ended December 31, 2023
 December 31, 2023 Balance June 30, 2023 BalanceChange ($) Change (%)
 (Dollars in thousands)
National Lending Purchased$1,646,756  $1,480,119  $166,637   11.26%
National Lending Originated 910,213   987,832   (77,619)  (7.86%)
SBA National 29,052   24,873   4,179   16.80%
Community Banking 25,038   27,536   (2,498)  (9.07%)
Total$2,611,059  $2,520,360  $90,699   3.60%
                

Loans generated by the Bank's National Lending Division for the quarter ended December 31, 2023 totaled $249.6 million, which consisted of $186.1 million of purchased loans, at an average price of 89.5% of unpaid principal balance, and $63.5 million of originated loans.

An overview of the Bank’s National Lending Division portfolio follows:

 National Lending Portfolio
 Three Months Ended December 31,
 2023 2022
 Purchased Originated Total Purchased Originated Total
 (Dollars in thousands)
Loans purchased or originated during the period:                 
Unpaid principal balance$208,045  $63,485  $271,530  $1,152,957  $173,992  $1,326,949 
Net investment basis 186,131   63,485   249,616   995,973   173,992   1,169,965 
                  
Loan returns during the period:                 
Yield 9.19%  9.81%  9.43%  8.69%  8.50%  8.59%
Total Return on Purchased Loans (1) 9.21%  N/A   9.21%  8.69%  N/A   8.69%
                  
 Six Months Ended December 31,
 2023 2022
 Purchased Originated Total Purchased Originated Total
 (Dollars in thousands)
Loans purchased or originated during the period:                 
Unpaid principal balance$271,741  $131,528  $403,269  $1,236,815  $355,712  $1,592,527 
Net investment basis 238,477   131,528   370,005   1,073,510   355,712   1,429,222 
                  
Loan returns during the period:                 
Yield 9.10%  9.92%  9.41%  8.07%  8.19%  8.14%
Total Return on Purchased Loans (1) 9.13%  N/A   9.13%  8.07%  N/A   8.07%
                  
Total loans as of period end:                 
Unpaid principal balance$1,831,183  $910,213  $2,741,396  $1,673,158  $963,775  $2,636,933 
Net investment basis 1,646,756   910,213   2,556,969   1,483,567   963,775   2,447,342 
                  
(1) The total return on purchased loans represents scheduled accretion, accelerated accretion, gains (losses) on real estate owned, release of allowance for credit losses on purchased loans, and other noninterest income recorded during the period divided by the average invested balance on an annualized basis. The total return on purchased loans does not include the effect of purchased loan charge-offs or recoveries during the period. Total return on purchased loans is considered a non-GAAP financial measure. See reconciliation in below table entitled “Total Return on Purchased Loans.”

2. Deposits increased by $192.5 million, or 9.9%, from June 30, 2023. The increase was primarily attributable to increases in time deposits of $165.2 million, or 18.0%, and savings and interest checking deposits of $84.3 million, or 14.1%, partially offset by a decrease in money market deposits of $56.7 million, or 20.4%. The significant drivers in the change in time deposits was the increase in Community Banking Division time deposits, which increased by $111.2 million, and brokered time deposits, which increased by $97.4 million compared to June 30, 2023, partially offset by the intentional runoff of Bulletin Board time deposits of $40.4 million.

3. Federal Home Loan Bank advances decreased by $115.4 million, or 20.5%, from June 30, 2023. The decrease was primarily attributable to the increase in deposits of $192.5 million partially offset by loan growth of $90.7 million, as the Bank funded loan growth primarily through time deposits and savings and interest checking deposits.

4. Shareholders’ equity increased by $30.9 million, or 10.4%, from June 30, 2023, primarily due to net income of $29.2 million and stock-based compensation of $2.8 million, partially offset by the cancelation of common shares to cover tax obligations on restricted stock vests, which resulted in a $1.2 million decrease to shareholders’ equity, and the cumulative effect adjustment for the adoption of ASC 326 Financial Instruments – Credit Losses (more commonly known as Current Expected Credit Losses or “CECL”), which resulted in a $870 thousand decrease to shareholders’ equity on July 1, 2023.

Net income increased by $2.8 million to $14.1 million for the quarter ended December 31, 2023, compared to net income of $11.3 million for the quarter ended December 31, 2022.

1. Net interest and dividend income before provision for credit losses increased by $8.2 million to $37.0 million for the quarter ended December 31, 2023, compared to $28.8 million for the quarter ended December 31, 2022. The increase was primarily due to the following:

  • An increase in interest income earned on loans of $23.1 million, primarily due to an increase in interest income earned on the National Lending Division’s purchased and originated portfolios, due to higher average balances and rates earned on both portfolios; and
  • An increase in interest income earned on short-term investments of $1.6 million, primarily due to higher rates earned and higher average balances; partially offset by,
  • An increase in deposit interest expense of $11.3 million, due to higher interest rates and higher average balances in interest-bearing deposits; and
  • An increase in FHLB borrowings interest expense of $5.2 million, primarily due to higher average 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,
 2023 2022
 Average Interest   Average Interest  
 Balance Income Yield Balance Income Yield
 (Dollars in thousands)
Community Banking$25,559  $419   6.51% $30,920  $586   7.52%
SBA National 28,331   888   12.47%  27,757   610   8.72%
National Lending:                   
Originated 939,383   23,155   9.81%  899,562   19,274   8.50%
Purchased 1,551,038   35,849   9.19%  765,085   16,758   8.69%
Total National Lending 2,490,421   59,004   9.43%  1,664,647   36,032   8.59%
Total$2,544,311  $60,311   9.43% $1,723,324  $37,228   8.57%
                    
  
 Six Months Ended December 31,
 2023 2022
 Average Interest   Average Interest  
 Balance Income Yield Balance Income Yield
 (Dollars in thousands)
Community Banking$26,355  $857   6.47% $31,904  $1,052   6.54%
SBA National 27,294   1,674   12.20%  29,267   1,340   9.08%
National Lending:                   
Originated 950,006   47,375   9.92%  857,775   35,425   8.19%
Purchased 1,520,215   69,519   9.10%  626,552   25,490   8.07%
Total National Lending 2,470,221   116,894   9.41%  1,484,327   60,915   8.14%
Total$2,523,870  $119,425   9.41% $1,545,498  $63,307   8.13%
                    

The components of total income on purchased loans are set forth in the table below entitled “Total Return on Purchased Loans.” When compared to the quarter ended December 31, 2022, transactional income decreased by $1.3 million for the quarter ended December 31, 2023, and regularly scheduled interest and accretion increased by $20.4 million primarily due to the increase in average balances. The total return on purchased loans for the quarter ended December 31, 2023 was 9.2%, an increase from 8.7% for the quarter ended December 31, 2022. The following table details the total return on purchased loans:

 Total Return on Purchased Loans
 Three Months Ended December 31,
 2023 2022
 Income Return (1) Income Return (1)
 (Dollars in thousands)
Regularly scheduled interest and accretion$33,430   8.57% $13,014   6.75%
Transactional income:           
Release of allowance for credit losses on purchased loans 46   0.02%  -   0.00%
Accelerated accretion and loan fees 2,419   0.62%  3,744   1.94%
Total transactional income 2,465   0.64%  3,744   1.94%
Total$35,895   9.21% $16,758   8.69%
                
 Six Months Ended December 31,
 2023 2022
 Income Return (1) Income Return (1)
 (Dollars in thousands)
Regularly scheduled interest and accretion$64,460   8.44% $20,688   6.55%
Transactional income:           
Release of allowance for credit losses on purchased loans 226   0.03%  -   0.00%
Accelerated accretion and loan fees 5,059   0.66%  4,802   1.52%
Total transactional income 5,285   0.69%  4,802   1.52%
Total$69,745   9.13% $25,490   8.07%
 
 
(1) The total return on purchased loans represents scheduled accretion, accelerated accretion, and gains (losses) on real estate owned, and release of allowance for credit losses on purchased loans recorded during the period divided by the average invested balance 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. The provision for credit losses for the second quarter of fiscal year 2024 was reported using the CECL methodology, whereas the second quarter of fiscal year 2023 provision for credit losses was reported using the incurred loss methodology. Provision for credit losses increased by $111 thousand to a provision of $436 thousand for the quarter ended December 31, 2023, compared to a provision of $325 thousand in the quarter ended December 31, 2022.

3. Noninterest income increased by $165 thousand for the quarter ended December 31, 2023, compared to the quarter ended December 31, 2022, principally due to the following:

  • An increase in gain on sale of Small Business Administration (“SBA”) loans of $535 thousand, due to the sale of $11.5 million in SBA loans during the quarter ended December 31, 2023 as compared to the sale of $1.1 million during the quarter ended December 31, 2022; and
  • An increase in unrealized gain on equity securities of $219 thousand; partially offset by,
  • A decrease in correspondent fee income of $566 thousand from the recognition of correspondent fees and related net servicing income.

4. Noninterest expense increased by $2.0 million for the quarter ended December 31, 2023 compared to the quarter ended December 31, 2022, primarily due to the following:

  • An increase in salaries and employee benefits expense of $1.5 million, primarily due to increases in stock compensation expense, regular compensation expense, and incentive compensation expense;
  • An increase in loan expense of $190 thousand, primarily due to increased loan collection expense;
  • An increase in deposit insurance expense of $143 thousand, primarily due to the increase in average assets and decrease in Tier 1 leverage ratio, which increased the Bank’s assessment rate; and
  • An increase in data processing fees of $131 thousand, primarily due to increased IT hardware hosted expense and IT software subscription expense.

5. Income tax expense increased by $3.6 million to $8.3 million, or an effective tax rate of 37.1%, for the quarter ended December 31, 2023, compared to $4.7 million, or an effective tax rate of 29.5%, for the quarter ended December 31, 2022. The increase in income tax expense is due to an increase in pre-tax income, a decrease in tax benefits arising from the exercise of stock options of $673 thousand, and a write-down of the Bank’s deferred tax asset of $957 thousand related to a Massachusetts income tax law passed in the quarter ended December 31, 2023. The law changes the apportionment factors for Massachusetts income and requires entities to write-down any deferred tax assets to the enacted rate at which it expects to realize the deferred tax asset in the future. Excluding the deferred tax asset write-down, the effective tax rate for the quarter ended December 31, 2023 is 32.9%.

As of December 31, 2023, nonperforming assets totaled $30.8 million, or 1.18% of total assets, compared to $15.7 million, or 0.55% of total assets, as of June 30, 2023. The increase was primarily tied to one loan totaling $6.4 million which was placed on non-accrual during the six months ended December 31, 2023.

As of December 31, 2023, past due loans totaled $31.9 million, or 1.22% of total loans, compared to past due loans totaling $13.1 million, or 0.52% of total loans, as of June 30, 2023.

As of December 31, 2023, the Bank’s Tier 1 leverage capital ratio was 11.3%, compared to 10.4% at June 30, 2023, and the Total risk-based capital ratio was 13.7% at December 31, 2023, compared to 12.3% at June 30, 2023. Capital ratios increased primarily due to increased earnings and the Total risk-based capital ratio increased due to an increase in Tier 2 capital associated with the allowance for credit losses under CECL.

Investor Call Information
Rick Wayne, Chief Executive Officer, Jean-Pierre Lapointe, Chief Financial Officer, and Pat Dignan, Chief Operating Officer of Northeast Bank, will host a conference call to discuss second quarter earnings and business outlook at 10:00 a.m. Eastern Time on Wednesday, January 31st. To access the conference call by phone, please go to this link (Phone Registration), and you will be provided with dial in details. The call will be available via live webcast, which can be viewed by accessing the Bank’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 Bank
Northeast Bank (NASDAQ: NBN) is a full-service bank headquartered in Portland, Maine. We offer personal and business banking services to the Maine market via seven branches. Our National Lending Division purchases and originates commercial loans on a nationwide basis. 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 on purchased loans, and efficiency ratio. The Bank’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. We may also make forward-looking statements in other documents we file with the Federal Deposit Insurance Corporation (the “FDIC”), in our annual reports to our shareholders, in press releases and other written materials, and in oral statements made by our officers, directors or employees. You can identify forward-looking statements by the use of the words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “assume,” “outlook,” “will,” “should,” and other expressions that predict or indicate future events and trends and which do not relate to historical matters. Although the Bank 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 Bank’s control. The Bank’s actual results could differ materially from those projected in the forward-looking statements as a result of, among other factors, changes in general business and economic conditions on a national basis and in the local markets in which the Bank operates, including changes which adversely affect borrowers’ ability to service and repay loans; changes in customer behavior due to political, business and economic conditions, including inflation and concerns about liquidity; turbulence in the capital and debt markets; reductions in net interest income resulting from interest rate volatility as well as changes in the balances and mix of loans and deposits; changes in interest rates and real estate values; changes in loan collectability and increases in defaults and charge-off rates; decreases in the value of securities and other assets, adequacy of credit loss reserves, or deposit levels necessitating increased borrowing to fund loans and investments; changing government regulation; competitive pressures from other financial institutions; changes in legislation or regulation and accounting principles, policies and guidelines; cybersecurity incidents, fraud, natural disasters, and future pandemics; the risk that the Bank may not be successful in the implementation of its business strategy; the risk that intangibles recorded in the Bank’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 Bank’s Annual Report on Form 10-K and updated by our Quarterly Reports on Form 10-Q and other filings submitted to the FDIC. These statements speak only as of the date of this release and the Bank 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.

NBN-F

NORTHEAST BANK
BALANCE SHEETS
(Unaudited)
(Dollars in thousands, except share and per share data)
 December 31, 2023 June 30, 2023
Assets     
Cash and due from banks$2,366  $2,515 
Short-term investments 222,534   195,394 
Total cash and cash equivalents 224,900   197,909 
      
      
Available-for-sale debt securities, at fair value 53,230   53,403 
Equity securities, at fair value 6,962   6,771 
Total investment securities 60,192   60,174 
      
Loans:     
Commercial real estate 2,053,639   1,940,563 
Commercial and industrial 483,240   499,815 
Residential real estate 73,694   79,497 
Consumer 486   485 
Total loans 2,611,059   2,520,360 
Less: Allowance for credit losses 27,594   7,304 
Loans, net 2,583,465   2,513,056 
      
      
Premises and equipment, net 27,878   27,737 
Federal Home Loan Bank stock, at cost 19,665   24,644 
Loan servicing rights, net 1,212   1,530 
Bank-owned life insurance 18,596   18,364 
Other assets 33,068   26,524 
Total assets$2,968,976  $2,869,938 
      
Liabilities and Shareholders' Equity     
Deposits:     
Demand$143,442  $143,738 
Savings and interest checking 680,668   596,347 
Money market 221,226   277,939 
Time 1,084,371   919,183 
Total deposits 2,129,707   1,937,207 
      
Federal Home Loan Bank and other advances 447,191   562,615 
Lease liability 21,232   21,918 
Other liabilities 43,306   51,535 
Total liabilities 2,641,436   2,573,275 
      
Commitments and contingencies -   - 
      
      
Shareholders' equity     
Preferred stock, $1.00 par value, 1,000,000 shares authorized; no shares issued and outstanding at December 31 and June 30, 2023 -   - 
Voting common stock, $1.00 par value, 25,000,000 shares authorized; 7,804,052 and 7,668,650 shares issued and outstanding at December 31 and June 30, 2023, respectively 7,804   7,669 
Non-voting common stock, $1.00 par value, 3,000,000 shares authorized; No shares issued and outstanding at December 31 and June 30, 2023-   - 
Additional paid-in capital 44,888   42,840 
Retained earnings 275,074   246,872 
Accumulated other comprehensive loss (226)  (718)
Total shareholders' equity 327,540   296,663 
Total liabilities and shareholders' equity$2,968,976  $2,869,938 
        


NORTHEAST BANK
STATEMENTS OF INCOME
(Unaudited)
(Dollars in thousands, except share and per share data)
 Three Months Ended December 31, Six Months Ended December 31,
 2023 2022 2023 2022
Interest and dividend income:           
Interest and fees on loans$60,311  $37,228  $119,425  $63,307 
Interest on available-for-sale securities 560   270   1,043   419 
Other interest and dividend income 3,261   1,703   6,361   2,339 
Total interest and dividend income 64,132   39,201   126,829   66,065 
            
Interest expense:           
Deposits 21,175   9,896   40,433   12,698 
Federal Home Loan Bank advances 5,701   538   11,847   933 
Obligation under capital lease agreements 256   15   425   33 
Total interest expense 27,132   10,449   52,705   13,664 
            
Net interest and dividend income before provision for loan losses 37,000   28,752   74,124   52,401 
Provision for credit losses 436   325   625   1,175 
Net interest and dividend income after provision for loan losses 36,564   28,427   73,499   51,226 
            
Noninterest income:           
Fees for other services to customers 492   503   899   770 
Gain on sales of SBA loans 570   35   822   71 
Net unrealized gain (loss) on equity securities 230   11   72   (207)
Gain (loss) on real estate owned, other repossessed collateral and premises and equipment, net (9)  (29)  (9)  23 
Correspondent fee income 52   618   143   2,000 
Gain on termination of interest rate swap -   -   -   96 
Bank-owned life insurance income 116   110   231   219 
Other noninterest income 15   53   87   (12)
Total noninterest income 1,466   1,301   2,245   2,960 
            
Noninterest expense:           
Salaries and employee benefits 9,905   8,452   19,625   16,717 
Occupancy and equipment expense 1,101   1,200   2,206   2,052 
Professional fees 499   464   1,281   979 
Data processing fees 1,347   1,216   2,447   2,320 
Marketing expense 221   219   482   395 
Loan acquisition and collection expense 939   749   1,589   1,390 
FDIC insurance expense 287   144   644   241 
Other noninterest expense 1,370   1,260   2,784   2,243 
Total noninterest expense 15,669   13,704   31,058   26,337 
            
Income before income tax expense 22,361   16,024   44,686   27,849 
Income tax expense 8,307   4,726   15,460   8,264 
Net income$14,054  $11,298  $29,226  $19,585 
            
            
Weighted-average shares outstanding:           
Basic 7,505,109   7,256,281   7,492,310   7,305,331 
Diluted 7,590,913   7,323,402   7,572,450   7,379,790 
            
Earnings per common share:           
            
Basic$1.87  $1.56  $3.90  $2.68 
Diluted 1.85   1.54   3.86   2.65 
                
Cash dividends declared per common share$0.01  $0.01  $0.02  $0.02 
                


NORTHEAST BANK
AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS
(Unaudited)
(Dollars in thousands)
 Three Months Ended December 31,
 2023 2022
   Interest Average   Interest Average
 Average Income/ Yield/ Average Income/ Yield/
 Balance Expense Rate Balance Expense Rate
Assets:                   
Interest-earning assets:                   
Investment securities$59,797  $560   3.73% $60,402  $270   1.77%
Loans (1) (2) 2,544,311   60,311   9.43%  1,723,324   37,228   8.57%
Federal Home Loan Bank stock 21,222   468   8.77%  4,549   47   4.10%
Short-term investments (3) 206,090   2,793   5.39%  170,756   1,656   3.85%
Total interest-earning assets 2,831,420   64,132   9.01%  1,959,031   39,201   7.94%
Cash and due from banks 2,508         2,495       
Other non-interest earning assets 69,245         143,481       
Total assets$2,903,173        $2,105,007       
                    
Liabilities & Shareholders' Equity:                   
Interest-bearing liabilities:                   
NOW accounts$511,217  $5,636   4.39% $551,998  $3,575   2.57%
Money market accounts 229,154   2,009   3.49%  243,953   805   1.31%
Savings accounts 122,643   917   2.97%  124,990   356   1.13%
Time deposits 1,022,767   12,613   4.91%  621,248   5,160   3.30%
Total interest-bearing deposits 1,885,781   21,175   4.47%  1,542,189   9,896   2.55%
Federal Home Loan Bank advances 481,824   5,701   4.71%  83,560   538   2.55%
Lease liability 21,361   256   4.77%  16,679   15   0.36%
Total interest-bearing liabilities 2,388,966   27,132   4.52%  1,642,428   10,449   2.52%
                    
Non-interest bearing liabilities:                   
Demand deposits and escrow accounts 167,358         195,907       
Other liabilities 24,616         10,226       
Total liabilities 2,580,940         1,848,561       
Shareholders' equity 322,233         256,446       
Total liabilities and shareholders' equity$2,903,173        $2,105,007       
                    
Net interest income    $37,000        $28,752   
                    
Interest rate spread         4.49%          5.42%
Net interest margin (4)         5.20%          5.82%
                    
Cost of funds (5)         4.22%          2.26%
                        
(1) Interest income and yield are stated on a fully tax-equivalent basis using the statutory tax rate.
(2) Nonaccrual loans are included in the computation of average, but unpaid interest has not been included for purposes of determining interest income.  
(3) Short-term investments include FHLB overnight deposits and other interest-bearing deposits.
(4) Net interest margin is calculated as net interest income divided by total interest-earning assets.
(5) Cost of funds is calculated as total interest expense divided by total interest-bearing liabilities plus demand deposits and escrow accounts.
 


NORTHEAST BANK
AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS
(Unaudited)
(Dollars in thousands)
 Six Months Ended December 31,
 2023 2022
   Interest Average   Interest Average
 Average Income/ Yield/ Average Income/ Yield/
 Balance Expense Rate Balance Expense Rate
Assets:                   
Interest-earning assets:                   
Investment securities$59,986  $1,043   3.46% $61,064  $419   1.36%
Loans (1) (2) 2,523,870   119,425   9.41%  1,545,498   63,307   8.13%
Federal Home Loan Bank stock 21,790   881   8.04%  4,069   61   2.97%
Short-term investments (3) 203,946   5,480   5.34%  156,123   2,278   2.89%
Total interest-earning assets 2,809,592   126,829   8.98%  1,766,754   66,065   7.42%
Cash and due from banks 2,500         2,514       
Other non-interest earning assets 62,753         94,831       
Total assets$2,874,845        $1,864,099       
                    
Liabilities & Shareholders' Equity:                   
Interest-bearing liabilities:                   
NOW accounts$499,331  $10,781   4.29% $522,845  $5,169   1.96%
Money market accounts 243,725   4,142   3.38%  247,304   1,211   0.97%
Savings accounts 106,820   1,477   2.75%  131,191   567   0.86%
Time deposits 999,993   24,033   4.78%  387,480   5,751   2.94%
Total interest-bearing deposits 1,849,869   40,433   4.35%  1,288,820   12,698   1.95%
Federal Home Loan Bank advances 496,169   11,847   4.75%  72,949   933   2.54%
Lease liability 21,568   425   3.92%  10,429   33   0.63%
Total interest-bearing liabilities 2,367,606   52,705   4.43%  1,372,198   13,664   1.98%
                    
Non-interest bearing liabilities:                   
Demand deposits and escrow accounts 168,348         228,800       
Other liabilities 24,842         9,118       
Total liabilities 2,560,796         1,610,116       
Shareholders' equity 314,049         253,983       
Total liabilities and shareholders' equity$2,874,845        $1,864,099       
                    
Net interest income    $74,124        $52,401   
                    
Interest rate spread         4.55%          5.44%
Net interest margin (4)         5.25%          5.88%
                    
Cost of funds (5)         4.13%          1.69%
                        
(1) Interest income and yield are stated on a fully tax-equivalent basis using the statutory tax rate.  
(2) Nonaccrual loans are included in the computation of average, but unpaid interest has not been included for purposes of determining interest income.  
(3) Short-term investments include FHLB overnight deposits and other interest-bearing deposits.
(4) Net interest margin is calculated as net interest income divided by total interest-earning assets.
(5) Cost of funds is calculated as total interest expense divided by total interest-bearing liabilities plus demand deposits and escrow accounts.
 


NORTHEAST BANK
SELECTED FINANCIAL HIGHLIGHTS AND OTHER DATA
(Unaudited)
(Dollars in thousands, except share and per share data)
 Three Months Ended
 December 31, 2023 September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022
Net interest income$37,000  $37,124  $34,155  $32,239  $28,752 
Provision for credit losses 436   190   453   676   325 
Noninterest income 1,466   779   1,112   1,188   1,301 
Noninterest expense 15,669   15,389   16,361   13,836   13,704 
Net income 14,054   15,172   12,086   12,517   11,298 
          
Weighted-average common shares outstanding:         
Basic 7,505,109   7,479,837   7,459,074   7,352,447   7,256,281 
Diluted 7,590,913   7,554,315   7,523,508   7,413,812   7,323,402 
          
Earnings per common share:         
Basic$1.87  $2.03  $1.62  $1.70  $1.56 
Diluted 1.85   2.01   1.61   1.69   1.54 
          
Dividends declared per common share$0.01  $0.01  $0.01  $0.01  $0.01 
          
Return on average assets 1.93%  2.12%  1.70%  1.80%  2.13%
Return on average equity 17.35%  19.73%  16.67%  18.53%  17.48%
Net interest rate spread (1) 4.49%  4.61%  4.31%  4.19%  5.42%
Net interest margin (2) 5.20%  5.30%  4.91%  4.75%  5.82%
Efficiency ratio (non-GAAP) (3) 40.73%  40.60%  46.39%  41.39%  45.60%
Noninterest expense to average total assets 2.15%  2.15%  2.30%  1.99%  2.58%
Average interest-earning assets to average interest-bearing liabilities 118.52%  118.82%  117.73%  118.20%  119.28%
          
 As of:
 December 31, 2023 September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022
Nonperforming loans:         
Originated portfolio:         
Residential real estate$2,582  $289  $280  $379  $448 
Commercial real estate 2,075   1,973   3,548   3,355   3,297 
Commercial and industrial 6,950   584   520   561   631 
Consumer -   -   -   -   8 
Total originated portfolio 11,607   2,846   4,348   4,295   4,384 
Total purchased portfolio 19,165   14,603   11,335   10,227   8,515 
Total nonperforming loans 30,772   17,449   15,683   14,522   12,899 
Real estate owned and other repossessed collateral, net -   -   -   -   - 
Total nonperforming assets$30,772  $17,449  $15,683  $14,522  $12,899 
          
Past due loans to total loans 1.22%  1.01%  0.52%  0.70%  0.74%
Nonperforming loans to total loans 1.18%  0.69%  0.62%  0.58%  0.51%
Nonperforming assets to total assets 1.04%  0.61%  0.55%  0.51%  0.46%
Allowance for credit losses to total loans 1.06%  1.00%  0.29%  0.28%  0.26%
Allowance for credit losses to nonperforming loans 89.67%  145.01%  46.57%  48.84%  49.70%
Net charge-offs (recoveries)$995  $1,536  $240  $(5) $(190)
Commercial real estate loans to total capital (4) 544.34%  546.91%  595.38%  614.90%  661.48%
Net loans to deposits 121.31%  127.24%  129.73%  117.56%  113.74%
Purchased loans to total loans 63.07%  59.98%  58.73%  58.20%  59.23%
Equity to total assets 11.03%  10.83%  10.34%  9.90%  9.38%
Common equity tier 1 capital ratio 12.63%  12.45%  12.03%  11.59%  10.84%
Total risk-based capital ratio 13.71%  13.46%  12.33%  11.89%  11.11%
Tier 1 leverage capital ratio 11.28%  10.95%  10.38%  10.06%  12.53%
          
Total shareholders’ equity$327,540  $311,569  $296,663  $283,869  $263,427 
Less: Preferred stock -   -   -   -   - 
Common shareholders’ equity 327,540   311,569   296,663   283,869   263,427 
Less: Intangible assets (5) -   -   -   -   - 
Tangible common shareholders' equity (non-GAAP)$327,540  $311,569  $296,663  $283,869  $263,427 
          
Common shares outstanding 7,804,052   7,796,691   7,668,650   7,668,650   7,511,044 
Book value per common share$41.97  $39.96  $38.69  $37.02  $35.07 
Tangible book value per share (non-GAAP) (6) 41.97   39.96   38.69   37.02   35.07 
          
(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 credit 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) Includes the loan servicing rights asset.
(6) Tangible book value per share represents total shareholders’ equity less the sum of preferred stock and intangible assets divided by common shares outstanding.
 

For More Information:
Richard Cohen, Chief Financial Officer
Northeast Bank, 27 Pearl Street, Portland, Maine 04101
207.786.3245 ext. 3249
www.northeastbank.com