nbn20180730_8k.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported):

July 30, 2018

Commission File No. 1-14588

 

NORTHEAST BANCORP

(Exact name of registrant as specified in its charter)

 

Maine

01-0425066

(State or other jurisdiction of incorporation)

(IRS Employer Identification Number)

   

500 Canal Street
Lewiston, Maine

04240

(Address of principal executive offices)

(Zip Code)

 

Registrant’s telephone number, including area code: (207) 786-3245

 

Former name or former address, if changed since last Report: N/A

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

 | | Written communications pursuant to Rule 425 under the Securities Act

 

 | | Soliciting material pursuant to Rule 14a-12 under the Exchange Act

 

 | | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act

 

 | | Pre-commencement to communications pursuant to Rule 13e-4(c) under the Exchange Act

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

 

Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

 

Item 2.02

Results of Operations and Financial Condition

 

On July 30, 2018, Northeast Bancorp, a Maine corporation (the "Company"), issued a press release announcing its earnings for the fourth quarter of fiscal 2018 and declaring the payment of a dividend. The full text of this press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

 

The information contained herein, including the exhibit attached hereto, is furnished pursuant to Item 2.02 of this Form 8-K and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Further, the information in this report (including the exhibits hereto) are not to be incorporated by reference into any of the Company's filings with the Securities and Exchange Commission, whether filed prior to or after the furnishing of these certificates, regardless of any general or specific incorporation language in such filing.

 

 

Item 9.01

Financial Statements and Exhibits

(c)

Exhibits

 

 

Exhibit No.

Description

 

99.1

Press Release dated July 30, 2018

 

 

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunder duly authorized.

 

 

 

 

 

NORTHEAST BANCORP

 

 

 

 

 

 

By:

/s/ Jean-Pierre Lapointe

 

Name:

Jean-Pierre Lapointe

 

Title:

Chief Financial Officer and Treasurer

 

Date: July 30, 2018

 

 

 

 

EXHIBIT INDEX

 

Exhibit No.

Description

 

99.1

Press Release dated July 30, 2018

 

ex_119262.htm

Exhibit 99.1

 

FOR IMMEDIATE RELEASE

 

 

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

 

 

Northeast Bancorp Reports Fourth Quarter and Fiscal Year Results and Declares Dividend

 

Lewiston, ME (July 30, 2018) ‒ 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 $4.3 million, or $0.48 per diluted common share, for the quarter ended June 30, 2018, compared to net income of $4.0 million, or $0.45 per diluted common share, for the quarter ended June 30, 2017. Net income for the year ended June 30, 2018 was $16.2 million, or $1.77 per diluted common share, compared to $12.3 million, or $1.38 per diluted common share, for the year ended June 30, 2017.

 

On July 30, 2018, the Board of Directors declared a cash dividend of $0.01 per share, payable on August 24, 2018, to shareholders of record as of August 10, 2018.

 

“We closed the year with a strong quarter,” said Richard Wayne, President and Chief Executive Officer. “For the quarter, we earned $0.48 per diluted common share, a return on equity of 13.0%, a return on assets of 1.5%, and an efficiency ratio of 57.9%. For the fiscal year, we earned $1.77 per diluted common share, compared to $1.38 for the prior fiscal year, representing an increase of 28%. For the quarter, our Loan Acquisition and Servicing Group (“LASG”) produced $119.2 million of loans, including originations of $66.6 million and purchases with a recorded investment of $52.6 million. This represents quarterly net growth in the LASG portfolio of $51.6 million, or 8.1%, and annual net growth of $111.4 million, or 19.3%.”

 

As of June 30, 2018, total assets were $1.2 billion, an increase of $80.9 million, or 7.5%, 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 months and year ended June 30, 2018 compared to the same periods in the prior year:

 

   

Loan Portfolio Changes

 
   

Three Months Ended June 30, 2018

 
   

June 30, 2018

Balance

   

March 31, 2018

Balance

   

 

Change ($)

   

 

Change (%)

 
   

(Dollars in thousands)

 

LASG Purchased

  $ 290,972     $ 254,700     $ 36,272       14.24 %

LASG Originated

    397,363       381,990       15,373       4.02 %

SBA

    60,156       50,583       9,573       18.93 %

Community Banking

    123,311       129,156       (5,845 )     (4.53 %)

Total

  $ 871,802     $ 816,429     $ 55,373       6.78 %

 

   

Year Ended June 30, 2018

 
   

June 30, 2018

Balance

   

June 30, 2017

Balance

   

 

Change ($)

   

 

Change (%)

 
   

(Dollars in thousands)

 

LASG Purchased

  $ 290,972     $ 246,388     $ 44,584       18.10 %

LASG Originated

    397,363       330,515       66,848       20.23 %

SBA

    60,156       52,965       7,191       13.58 %

Community Banking

    123,311       149,327       (26,016 )     (17.42 %)

Total

  $ 871,802     $ 779,195     $ 92,607       11.88 %

 

 

 

 

Loans generated by the Bank's Loan Acquisition and Servicing Group ("LASG") for the quarter ended June 30, 2018 totaled $119.2 million, which consisted of $52.6 million of purchased loans, at an average price of 93.6% of unpaid principal balance, and $66.6 million of originated loans. The Bank's Small Business Administration ("SBA") Division closed $23.9 million and funded $21.3 million of new loans during the quarter ended June 30, 2018. In addition, the Company sold $10.9 million of the guaranteed portion of SBA loans in the secondary market, of which $7.5 million were originated in the current quarter and $3.4 million were originated or purchased in prior quarters. Residential loan production sold in the secondary market totaled $10.7 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 June 30, 2018

 
         

(Dollars in millions)

 

Total Loans

 

Purchased loans may not exceed 40% of total loans

    $ 101.0  

Regulatory Capital

 

Non-owner occupied commercial real estate loans may not exceed 300% of total capital

    $ 166.3  

 

 

An overview of the Bank’s LASG portfolio follows:

 

   

LASG Portfolio

 
   

Three Months Ended June 30,

 
   

2018

   

2017

 
   

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

  $ 56,233     $ 66,588     $ -     $ 122,821     $ 50,202     $ 67,860     $ -     $ 118,062  

Net investment basis

    52,637       66,588       -       119,225       45,060       67,860       -       112,920  
                                                                 

Loan returns during the period:

                                                               

Yield

    10.87 %     7.45 %     0.00 %     8.83 %     13.64 %     6.45 %     0.00 %     9.61 %

Total Return (1)

    11.49 %     7.45 %     0.00 %     9.08 %     13.78 %     6.45 %     0.00 %     9.68 %

 

   

Twelve Months Ended June 30,

 
   

2018

   

2017

 
   

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

  $ 137,249     $ 224,546     $ -     $ 361,795     $ 126,713     $ 237,691     $ -     $ 364,404  

Net investment basis

    124,111       224,546       -       348,657       112,807       237,691       -       350,498  
                                                                 

Loan returns during the period:

                                                               

Yield

    11.35 %     6.80 %     0.00 %     8.66 %     12.24 %     6.21 %     0.82 %     8.69 %

Total Return (1)

    11.73 %     6.80 %     0.00 %     8.82 %     12.30 %     6.21 %     0.82 %     8.72 %
                                                                 

Total loans as of period end:

                                                               

Unpaid principal balance

  $ 326,855     $ 397,363     $ -     $ 724,218     $ 279,854     $ 330,515     $ -     $ 610,369  

Net investment basis

    290,972       397,363       -       688,335       246,388       330,515       -       576,903  

 

 

(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 purchased loans held for sale, 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.

 

 

 

 

 

2.

Deposits increased by $65.1 million, or 7.3%, from June 30, 2017 to June 30, 2018, attributable primarily to increases in money market accounts of $46.3 million, or 12.4%, and time deposits of $15.1 million, or 4.5%.

 

 

3.

Shareholders’ equity increased by $15.6 million, or 12.7%, from June 30, 2017 to June 30, 2018, primarily due to earnings of $16.2 million. Earnings were partially offset by stock option exercises which decreased additional paid-in-capital by $1.2 million. Additionally, there was stock based compensation of $870 thousand, an increase in accumulated other comprehensive loss of $129 thousand, and dividends paid on common stock of $355 thousand.

 

Net income increased by $317 thousand to $4.3 million for the quarter ended June 30, 2018, compared to net income of $4.0 million for the quarter ended June 30, 2017. 

 

 

1.

Net interest and dividend income before provision for loan losses increased by $651 thousand for the quarter ended June 30, 2018, compared to the quarter ended June 30, 2017. The increase is primarily due to higher average balances in the loan portfolio. These increases were 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 June 30,

 
   

2018

   

2017

 
   

Average

   

Interest

           

Average

   

Interest

         
   

Balance (1)

   

Income

   

Yield

   

Balance (1)

   

Income

   

Yield

 
   

(Dollars in thousands)

 

Community Banking

  $ 128,296     $ 1,630       5.10 %   $ 163,997     $ 1,949       4.77 %

SBA

    56,088       1,116       7.98 %     55,229       848       6.16 %

LASG:

                                               

Originated

    381,783       7,088       7.45 %     301,988       4,859       6.45 %

Purchased

    259,119       7,021       10.87 %     237,306       8,068       13.64 %

Total LASG

    640,902       14,109       8.83 %     539,294       12,927       9.61 %

Total

  $ 825,286     $ 16,855       8.19 %   $ 758,520     $ 15,724       8.31 %

 

 

 

   

Year Ended June 30,

 
   

2018

   

2017

 
   

Average

   

Interest

           

Average

   

Interest

         
   

Balance (1)

   

Income

   

Yield

   

Balance (1)

   

Income

   

Yield

 
   

(Dollars in thousands)

 

Community Banking

  $ 139,239     $ 6,871       4.93 %   $ 190,704     $ 9,102       4.77 %

SBA

    53,030       3,888       7.33 %     42,946       2,619       6.10 %

LASG:

                                               

Originated

    350,427       23,834       6.80 %     239,796       14,883       6.21 %

Purchased

    242,652       27,553       11.35 %     236,937       28,997       12.24 %

Secured Loans to Broker-Dealers

    -       -       0.00 %     31,085       256       0.82 %

Total LASG

    593,079       51,387       8.66 %     507,818       44,136       8.69 %

Total

  $ 785,348     $ 62,146       7.91 %   $ 741,468     $ 55,857       7.53 %

 

  (1)

Includes loans held for sale.

 

 

 

 

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 three months and year ended June 30, 2017, transactional income for the three months and year ended June 30, 2018 decreased by $1.2 million and $439 thousand, respectively. The total return on purchased loans for the three months and year ended June 30, 2018 was 11.49% and 11.73%, respectively. The decrease over the prior comparable periods was primarily due to higher accelerated accretion in the three months and year ended June 30, 2017. The following table details the total return on purchased loans:

 

 

   

Total Return on Purchased Loans

 
   

Three Months Ended June 30,

 
   

2018

   

2017

 
   

Income

   

Return (1)

   

Income

   

Return (1)

 
   

(Dollars in thousands)

 

Regularly scheduled interest and accretion

  $ 5,043       7.81 %   $ 4,588       7.76 %

Transactional income:

                               

Gain on loan sales

    402       0.62 %     -       0.00 %

Gain on sale of real estate owned

    -       0.00 %     93       0.16 %

Other noninterest income (expense)

    -       0.00 %     (10 )     -0.02 %

Accelerated accretion and loan fees

    1,978       3.06 %     3,480       5.88 %

Total transactional income

    2,380       3.68 %     3,563       6.02 %

Total

  $ 7,423       11.49 %   $ 8,151       13.78 %

 

   

Year Ended June 30,

 
   

2018

   

2017

 
   

Income

   

Return (1)

   

Income

   

Return (1)

 
   

(Dollars in thousands)

 

Regularly scheduled interest and accretion

  $ 18,752       7.73 %   $ 18,975       8.01 %

Transactional income:

                               

Gain on loan sales

    918       0.38 %     -       0.00 %

Gain on sale of real estate owned

    -       0.00 %     148       0.06 %

Other noninterest income (expense)

    -       0.00 %     (12 )     0.00 %

Accelerated accretion and loan fees

    8,801       3.62 %     10,022       4.23 %

Total transactional income

    9,719       4.00 %     10,158       4.29 %

Total

  $ 28,471       11.73 %   $ 29,133       12.30 %

 

 

(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 purchased 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 $931 thousand for the quarter ended June 30, 2018, compared to the quarter ended June 30, 2017, principally due to the following:

 

A decrease in gain on sale of SBA loans of $833 thousand, due to a lower volume of SBA loans sold in the quarter;

 

A decrease in fees for other services to customers of $161 thousand, due to lower commercial loan servicing fees; and

 

A decrease in gain on sale of residential loans of $134 thousand, due to lower volume of residential loans sold in the quarter.

 

The decreases in noninterest income were partially offset by an increase in gain on sale of other loans of $402 thousand, due to the sale of two LASG purchased loans in the quarter.

 

 

3.

Noninterest expense increased by $114 thousand for the quarter ended June 30, 2018, compared to the quarter ended June 30, 2017, primarily due to the following:

 

An increase in data processing fees of $142 thousand, primarily due to the increased cost associated with the outsourcing of data processing;

 

An increase in loan expense of $123 thousand, largely driven by higher expense related to loan acquisition and refinance activity; and

 

An increase in other noninterest expense of $43 thousand, primarily due to increased travel expense.

 

The increases in noninterest expense were partially offset by a decrease in salaries and employee benefits of $219 thousand, primarily due to lower headcount, and a decrease in incentive compensation for the quarter.

 

 

 

 

 

4.

Income tax expense decreased by $576 thousand for the quarter ended June 30, 2018, compared to the quarter ended June 30, 2017, 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 $464 thousand decrease in federal income tax expense; and

 

A decrease in income tax expense as a result of a $114 thousand income tax benefit arising from the treatment of stock options exercised under ASU 2016-09, Compensation–Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, whereby the tax effects of exercised options are treated as a discrete item in the reporting period in which they occur.

 

As of June 30, 2018, nonperforming assets totaled $14.2 million, or 1.23% of total assets, as compared to $14.6 million, or 1.25% of total assets, as of March 31, 2018, and $14.8 million, or 1.37% of total assets, as of June 30, 2017.

 

As of June 30, 2018, past due loans totaled $7.7 million, or 0.89% of total loans, as compared to $11.2 million, or 1.37% of total loans as of March 31, 2018, and $13.4 million, or 1.72% of total loans as of June 30, 2017.

 

As of June 30, 2018, the Company’s Tier 1 leverage capital ratio was 13.1%, compared to 12.8% at June 30, 2017, and the Total capital ratio was 19.3%, compared to 19.5% at June 30, 2017.

 

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 fourth quarter earnings and business outlook at 10:00 a.m. Eastern Time on Tuesday, July 31st. Investors can access the call by dialing 877.878.2762 and entering the following passcode: 5291318. 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 market via ten branches. Our Loan Acquisition and Servicing Group 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 on purchased loans, 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.

 

 

 

 

NORTHEAST BANCORP AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Dollars in thousands, except share and per share data)

 

   

June 30, 2018

   

June 30, 2017

 

Assets

               

Cash and due from banks

  $ 3,889     $ 3,582  

Short-term investments

    153,513       159,701  

Total cash and cash equivalents

    157,402       163,283  
                 
                 

Available-for-sale securities, at fair value

    87,687       96,693  
                 

Residential real estate loans held for sale

    3,405       4,508  

SBA loans held for sale

    3,750       191  

Total loans held for sale

    7,155       4,699  
                 
                 

Loans

               

Commercial real estate

    579,450       498,004  

Commercial and industrial

    188,852       175,654  

Residential real estate

    100,256       101,168  

Consumer

    3,244       4,369  

Total loans

    871,802       779,195  

Less: Allowance for loan losses

    4,807       3,665  

Loans, net

    866,995       775,530  
                 
                 

Premises and equipment, net

    6,591       6,937  

Real estate owned and other repossessed collateral, net

    2,233       826  

Federal Home Loan Bank stock, at cost

    1,652       1,938  

Intangible assets, net

    867       1,300  

Loan servicing rights, net

    2,970       2,846  

Bank-owned life insurance

    16,620       16,179  

Other assets

    7,564       6,643  

Total assets

  $ 1,157,736     $ 1,076,874  
                 

Liabilities and Shareholders' Equity

               

Deposits

               

Demand

  $ 72,272     $ 69,827  

Savings and interest checking

    109,637       108,417  

Money market

    420,886       374,569  

Time

    352,145       337,037  

Total deposits

    954,940       889,850  
                 

Federal Home Loan Bank advances

    15,000       20,011  

Subordinated debt

    23,958       23,620  

Capital lease obligation

    605       873  

Other liabilities

    24,803       19,723  

Total liabilities

    1,019,306       954,077  
                 

Commitments and contingencies

    -       -  
                 
                 

Shareholders' equity

               

Preferred stock, $1.00 par value, 1,000,000 shares authorized; no shares issued and outstanding at June 30, 2018 and June 30, 2017

    -       -  

Voting common stock, $1.00 par value, 25,000,000 shares authorized; 8,056,527 and 7,840,460 shares issued and outstanding at June 30, 2018 and June 30, 2017, respectively

    8,057       7,841  

Non-voting common stock, $1.00 par value, 3,000,000 shares authorized; 882,314 and 991,194 shares issued and outstanding at June 30, 2018 and June 30, 2017, respectively

    882       991  

Additional paid-in capital

    77,016       77,455  

Retained earnings

    54,236       38,142  

Accumulated other comprehensive loss

    (1,761 )     (1,632 )

Total shareholders' equity

    138,430       122,797  

Total liabilities and shareholders' equity

  $ 1,157,736     $ 1,076,874  

 

 

 

 

NORTHEAST BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(Dollars in thousands, except share and per share data)

 

   

Three Months Ended June 30,

   

Year Ended June 30,

 
   

2018

   

2017

   

2018

   

2017

 

Interest and dividend income:

                               

Interest and fees on loans

  $ 16,855     $ 15,724     $ 62,146     $ 55,857  

Interest on available-for-sale securities

    298       271       1,111       1,018  

Other interest and dividend income

    819       376       2,636       1,046  

Total interest and dividend income

    17,972       16,371       65,893       57,921  
                                 

Interest expense:

                               

Deposits

    2,896       1,949       9,897       7,357  

Federal Home Loan Bank advances

    109       166       547       800  

Subordinated debt

    552       487       2,102       1,888  

Obligation under capital lease agreements

    7       12       38       51  

Total interest expense

    3,564       2,614       12,584       10,096  
                                 

Net interest and dividend income before provision for loan losses

    14,408       13,757       53,309       47,825  

Provision for loan losses

    254       389       1,410       1,594  

Net interest and dividend income after provision for loan losses

    14,154       13,368       51,899       46,231  
                                 

Noninterest income:

                               

Fees for other services to customers

    386       547       1,822       1,952  

Gain on sales of residential loans held for sale

    159       293       931       1,452  

Gain on sales of SBA loans

    1,033       1,866       2,955       5,277  

Gain on sales of other loans

    402       -       918       365  

Loss on real estate owned, other repossessed collateral and premises and equipment, net

    (138 )     (31 )     (123 )     (23 )

Bank-owned life insurance income

    109       114       441       454  

Other noninterest income

    8       101       84       219  

Total noninterest income

    1,959       2,890       7,028       9,696  
                                 

Noninterest expense:

                               

Salaries and employee benefits

    5,809       6,028       21,565       21,706  

Occupancy and equipment expense

    1,166       1,222       4,585       5,002  

Professional fees

    458       401       1,749       1,666  

Data processing fees

    601       459       2,447       1,744  

Marketing expense

    143       120       472       392  

Loan acquisition and collection expense

    356       233       1,354       1,734  

FDIC insurance premiums

    80       79       317       303  

Intangible asset amortization

    108       108       433       432  

Other noninterest expense

    757       714       2,808       2,810  

Total noninterest expense

    9,478       9,364       35,730       35,789  
                                 

Income before income tax expense

    6,635       6,894       23,197       20,138  

Income tax expense

    2,291       2,867       7,031       7,799  

Net income

  $ 4,344     $ 4,027     $ 16,166     $ 12,339  
                                 
                                 

Weighted-average common shares outstanding:

                               

Basic

    8,934,038       8,823,679       8,906,710       8,898,448  

Diluted

    9,116,157       8,979,471       9,129,152       8,952,614  
                                 

Earnings per common share:

                               

Basic

  $ 0.49     $ 0.46     $ 1.81     $ 1.39  

Diluted

    0.48       0.45       1.77       1.38  
                                 

Cash dividends declared per common share

  $ 0.01     $ 0.01     $ 0.04     $ 0.04  

 

 

 

 

NORTHEAST BANCORP AND SUBSIDIARY

CONSOLIDATED AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS

(Unaudited)

(Dollars in thousands)

 

   

Three Months Ended June 30,

 
   

2018

   

2017

 
           

Interest

   

Average

           

Interest

   

Average

 
   

Average

   

Income/

   

Yield/

   

Average

   

Income/

   

Yield/

 
   

Balance

   

Expense

   

Rate

   

Balance

   

Expense

   

Rate

 

Assets:

                                               

Interest-earning assets:

                                               

Investment securities

  $ 88,933     $ 298       1.34%     $ 98,033     $ 271       1.11%  

Loans (1) (2) (3)

    825,286       16,855       8.19%       758,520       15,741       8.32%  

Federal Home Loan Bank stock

    1,655       24       5.82%       1,938       19       3.93%  

Short-term investments (4)

    178,244       795       1.79%       137,570       357       1.04%  

Total interest-earning assets

    1,094,118       17,972       6.59%       996,061       16,388       6.60%  

Cash and due from banks

    2,611                       2,753                  

Other non-interest earning assets

    30,430                       31,910                  

Total assets

  $ 1,127,159                     $ 1,030,724                  
                                                 

Liabilities & Shareholders' Equity:

                                               

Interest-bearing liabilities:

                                               

NOW accounts

  $ 73,357     $ 59       0.32%     $ 71,209     $ 51       0.29%  

Money market accounts

    447,775       1,580       1.42%       345,352       878       1.02%  

Savings accounts

    37,799       14       0.15%       37,863       13       0.14%  

Time deposits

    309,362       1,243       1.61%       323,399       1,007       1.25%  

Total interest-bearing deposits

    868,293       2,896       1.34%       777,823       1,949       1.01%  

Federal Home Loan Bank advances

    15,000       109       2.91%       20,014       166       3.33%  

Subordinated debt

    23,915       552       9.26%       23,579       487       8.28%  

Capital lease obligations

    629       7       4.46%       896       12       5.37%  

Total interest-bearing liabilities

    907,837       3,564       1.57%       822,312       2,614       1.28%  
                                                 

Non-interest bearing liabilities:

                                               

Demand deposits and escrow accounts

    76,368                       80,188                  

Other liabilities

    8,654                       7,181                  

Total liabilities

    992,859                       909,681                  

Shareholders' equity

    134,300                       121,043                  

Total liabilities and shareholders' equity

  $ 1,127,159                     $ 1,030,724                  
                                                 

Net interest income (5)

          $ 14,408                     $ 13,774          
                                                 

Interest rate spread

                    5.02%                       5.32%  

Net interest margin (6)

                    5.28%                       5.55%  

 

(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 $0 and $17 thousand for the three months ended June 30, 2018 and June 30, 2017, respectively.

(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)

 

   

Year Ended June 30,

 
   

2018

   

2017

 
           

Interest

   

Average

           

Interest

   

Average

 
   

Average

   

Income/

   

Yield/

   

Average

   

Income/

   

Yield/

 
   

Balance

   

Expense

   

Rate

   

Balance

   

Expense

   

Rate

 

Assets:

                                               

Interest-earning assets:

                                               

Investment securities

  $ 92,599     $ 1,111       1.20%     $ 95,624     $ 1.018       1.06%  

Loans (1) (2) (3)

    785,348       62,156       7.91%       741,468       55,928       7.54%  

Federal Home Loan Bank stock

    1,803       89       4.94%       2,172       90       4.14%  

Short-term investments (4)

    171,360       2,547       1.49%       133,599       956       0.72%  

Total interest-earning assets

    1,051,110       65,903       6.27%       972,863       57,992       5.96%  

Cash and due from banks

    2,889                       2,833                  

Other non-interest earning assets

    31,550                       32,394                  

Total assets

  $ 1,085,549                     $ 1,008,090                  
                                                 

Liabilities & Shareholders' Equity:

                                               

Interest-bearing liabilities:

                                               

NOW accounts

  $ 70,486     $ 210       0.30%     $ 70,912     $ 204       0.29%  

Money market accounts

    407,680       5,145       1.26%       322,011       3,120       0.97%  

Savings accounts

    37,514       57       0.15%       36,438       50       0.14%  

Time deposits

    311,544       4,485       1.44%       326,601       3,983       1.22%  

Total interest-bearing deposits

    827,224       9,897       1.20%       755,962       7,357       0.97%  

Federal Home Loan Bank advances

    16,947       547       3.23%       24,334       800       3.29%  

Subordinated debt

    23,787       2,102       8.84%       23,468       1,888       8.04%  

Capital lease obligations

    730       38       5.21%       992       51       5.14%  

Total interest-bearing liabilities

    868,688       12,584       1.45%       804,756       10,096       1.25%  
                                                 

Non-interest bearing liabilities:

                                               

Demand deposits and escrow accounts

    79,767                       79,560                  

Other liabilities

    7,472                       7,599                  

Total liabilities

    955,927                       891,915                  

Shareholders' equity

    129,622                       116,175                  

Total liabilities and shareholders' equity

  $ 1,085,549                     $ 1,008,090                  
                                                 

Net interest income (5)

          $ 53,319                     $ 47,896          
                                                 

Interest rate spread

                    4.82%                       4.71%  

Net interest margin (6)

                    5.07%                       4.92%  

 

(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 $71 thousand for the year ended June 30, 2018 and June 30, 2017, 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:

 
   

June 30, 2018

   

March 31, 2018

   

December 31, 2017

   

September 30, 2017

   

June 30, 2017

 

Net interest income

  $ 14,408     $ 13,134     $ 12,457     $ 13,311     $ 13,757  

Provision for loan losses

    254       364       437       354       389  

Noninterest income

    1,959       1,882       1,228       1,958       2,890  

Noninterest expense

    9,478       8,975       8,563       8,714       9,364  

Net income

    4,344       3,932       3,304       4,586       4,027  
                                         

Weighted-average common shares outstanding:

                                       

Basic

    8,934,038       8,927,544       8,924,495       8,841,511       8,823,679  

Diluted

    9,116,157       9,143,177       9,168,084       9,089,936       8,979,471  

Earnings per common share:

                                       

Basic

  $ 0.49     $ 0.44     $ 0.37     $ 0.52     $ 0.46  

Diluted

    0.48       0.43       0.36       0.50       0.45  

Dividends per common share

    0.01       0.01       0.01       0.01       0.01  
                                         

Return on average assets

    1.55 %     1.43 %     1.26 %     1.71 %     1.57 %

Return on average equity

    12.97 %     12.15 %     10.20 %     14.61 %     13.34 %

Net interest rate spread (1)

    5.02 %     4.69 %     4.68 %     4.89 %     5.32 %

Net interest margin (2)

    5.28 %     4.94 %     4.93 %     5.13 %     5.55 %

Efficiency ratio (non-GAAP) (3)

    57.91 %     59.77 %     62.57 %     57.07 %     56.25 %

Noninterest expense to average total assets

    3.37 %     3.27 %     3.27 %     3.25 %     3.64 %

Average interest-earning assets to average interest-bearing liabilities

    120.52 %     120.27 %     122.21 %     121.09 %     121.13 %

 

   

As of:

 
   

June 30,2018

   

March 31, 2018

   

December 31, 2017

   

September 30, 2017

   

June 30, 2017

 

Nonperforming loans:

                                       

Originated portfolio:

                                       

Residential real estate

  $ 2,914     $ 3,116     $ 3,783     $ 3,667     $ 3,337  

Commercial real estate

    1,499       1,408       2,537       2,409       413  

Home equity

    298       255       107       58       58  

Commercial and industrial

    1,368       636       2,555       2,629       2,600  

Consumer

    134       136       147       131       103  

Total originated portfolio

    6,213       5,551       9,129       8,894       6,511  

Total purchased portfolio

    5,745       8,063       8,962       7,758       7,452  

Total nonperforming loans

    11,958       13,614       18,091       16,652       13,963  

Real estate owned and other repossessed collateral, net

    2,233       947       910       2,040       826  

Total nonperforming assets

  $ 14,191     $ 14,561     $ 19,001     $ 18,692     $ 14,789  
                                         

Past due loans to total loans

    0.89 %     1.37 %     3.87 %     1.60 %     1.72 %

Nonperforming loans to total loans

    1.37 %     1.67 %     2.34 %     2.19 %     1.79 %

Nonperforming assets to total assets

    1.23 %     1.25 %     1.84 %     1.78 %     1.37 %

Allowance for loan losses to total loans

    0.55 %     0.57 %     0.56 %     0.53 %     0.47 %

Allowance for loan losses to nonperforming loans

    40.20 %     34.46 %     24.07 %     24.23 %     26.25 %
                                         

Commercial real estate loans to risk-based capital (4)

    200.74 %     186.07 %     187.92 %     166.15 %     181.23 %

Net loans to core deposits (5)

    91.54 %     83.65 %     91.46 %     88.68 %     87.68 %

Purchased loans to total loans, including held for sale

    33.10 %     31.02 %     31.28 %     30.11 %     31.43 %

Equity to total assets

    11.96 %     11.47 %     12.57 %     12.07 %     11.40 %

Common equity tier 1 capital ratio

    16.02 %     16.48 %     16.74 %     16.50 %     16.00 %

Total capital ratio

    19.28 %     19.92 %     20.30 %     20.04 %     19.48 %

Tier 1 leverage capital ratio

    13.12 %     12.88 %     13.41 %     12.77 %     12.81 %
                                         

Total shareholders' equity

  $ 138,430     $ 133,787     $ 130,003     $ 126,712     $ 122,797  

Less: Preferred stock

    -       -       -       -       -  

Common shareholders' equity

    138,430       133,787       130,003       126,712       122,797  

Less: Intangible assets (6)

    (3,837 )     (3,973 )     (4,087 )     (4,146 )     (4,146 )

Tangible common shareholders' equity (non-GAAP)

  $ 134,593     $ 129,814     $ 125,916     $ 122,566     $ 118,651  
                                         

Common shares outstanding

    8,938,841       8,925,399       8,939,273       8,890,353       8,831,654  

Book value per common share

  $ 15.49     $ 14.99     $ 14.54     $ 14.25     $ 13.90  

Tangible book value per share (non-GAAP) (7)

    15.06       14.54       14.09       13.79       13.43  

 

(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.