Northeast Bancorp
Apr 25, 2017

Northeast Bancorp Reports Record Quarterly Results and Declares Dividend

LEWISTON, Maine, April 25, 2017 (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 $3.5 million, or $0.39 per diluted common share, for the quarter ended March 31, 2017, compared to net income of  $1.8 million, or $0.19 per diluted common share, for the quarter ended March 31, 2016. Net income for the nine months ended March 31, 2017 was $8.3 million, or $0.93 per diluted common share, compared to $5.4 million, or $0.57 per diluted common share, for the nine months ended March 31, 2016.

The Board of Directors has also declared a cash dividend of $0.01 per share, payable on May 22, 2017 to shareholders of record as of May 8, 2017.

"Our strong growth in fiscal year 2017 continued in the third quarter," said Richard Wayne, President and Chief Executive Officer. "We achieved record earnings of 39 cents per share through solid loan volume, purchased loan transactional income and SBA gains. Our Loan Acquisition and Servicing Group produced $89.7 million of loans, our SBA Division closed $22.6 million of loans, the purchased loan portfolio yielded 11.9%, and the SBA gain on sale was $951 thousand. In addition, in the current quarter, we strategically repositioned our balance sheet with the payoff of $48.0 million of secured loans to broker-dealers and the sale of a commercial loan portfolio of $18.3 million. The payoff of these lower yielding assets provides capacity for higher yielding loan growth in the future. This quarterly activity helped drive our return on equity to 12.0%, our return on assets to 1.4%, and our efficiency ratio to 59.9%."

As of March 31, 2017, total assets were $1.0 billion, an increase of $40.9 million, or 4.2%, from total assets of $986.2 million as of June 30, 2016. The principal components of the change in the balance sheet follow:

1.  Bank wide, the Company originated $125.4 million of loans during the quarter ended March 31, 2017. Loans generated by the Bank's Loan Acquisition and Servicing Group ("LASG") totaled $89.7 million, which consisted of $7.9 million of purchased loans, at an average price of 91.3% of unpaid principal balance, and $81.8 million of originated loans. The Bank's Small Business Administration and United States Department of Agriculture ("SBA") Division closed $22.6 million of new loans during the quarter, of which $16.5 million were funded. In addition, the Company sold $9.9 million of the guaranteed portion of SBA loans in the secondary market, of which $2.6 million were originated in the current quarter and $7.3 million were originated or purchased in prior quarters. Residential loan production sold in the secondary market totaled $15.5 million for the quarter.

In totality, the loan portfolio - excluding loans held for sale - increased by $49.3 million, or 7.1%, compared to June 30, 2016, and decreased by $25.2 million, or 3.3%, compared to December 31, 2016. The decrease from December 31, 2016 is primarily attributable to the payoff of $48.0 million of secured loans to broker-dealers and the sale of a commercial loan portfolio of $18.3 million which, combined, had a weighted average yield of 1.92%.

The following table highlights the changes in the loan portfolio for the three and nine months ended March 31, 2017:

 Loan Portfolio Changes
 Three months ended
March 31, 2017
  Nine months ended
March 31, 2017
 (Dollars in thousands)
LASG originations and acquisitions$89,667   $237,578 
SBA and USDA funded originations 16,549    56,853 
Community Banking Division originations 13,036    63,776 
Payoff of secured loans to broker-dealers (48,000)   (48,000)
Commercial loan portfolio sale (18,259)   (18,259)
SBA and residential loan sales (25,471)   (92,956)
Payoffs, pay-downs and amortization, net (52,732)   (149,700)
Net change$(25,210)  $49,292 

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 March 31, 2017
    (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 $172.3
      

An overview of the Bank's LASG portfolio follows:

 LASG Portfolio
 Three Months Ended March 31,
 2017
 2016
 Purchased (1)Originated Secured Loans to
Broker-Dealers
Total LASG  Purchased OriginatedSecured Loans to 
Broker-Dealers
Total LASG
 (Dollars in thousands)
Loans purchased or originated during the period:                            
Unpaid principal balance$8,609 $81,806  $- $90,415  $24,400  $27,846 $- $52,246 
Net investment basis 7,861  81,806   -  89,667   21,934  27,846  -  49,780 
                               
Loan returns during the period:                            
Yield 11.89% 6.44% 1.13% 8.68%  9.88% 5.83% 0.50% 7.15%
Total Return (2) 11.95% 6.44% 1.13 % 8.71%  9.88% 5.82% 0.50% 7.15%
                
                   
  
 Nine Months Ended March 31,
 2017 2016
 Purchased (1)Originated Secured Loans to 
Broker-Dealers
Total LASG Purchased  OriginatedSecured Loans to
Broker-Dealers
Total LASG
 (Dollars in thousands)
Loans purchased or originated during the period:                             
Unpaid principal balance$76,511 $169,831  $- $246,342  $88,128   $78,752 $- $166,880 
Net investment basis 67,747  169,831    -  237,578   81,245    78,752  -  159,997 
                             
Loan returns during the period:                          
Yield 11.77% 6.10%  0.82% 8.36%  11.54%   5.75% 0.50% 7.97%
Total Return (2) 11.80% 6.10%   0.82% 8.37%  11.57%   5.74% 0.50% 7.98%
                             
                              
Total loans as of period end:                            
Unpaid principal balance$268,651 $299,340  $- $567,991  $266,223   $170,085 $60,000 $496,308 
Net investment basis 237,569  299,340   -  536,909   233,650    170,085  60,000  463,735 
                   
  
(1) Purchased loan balances include loans held for sale of $973 thousand.
(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 increased by $9.9 million, or 1.2% for the quarter, attributable primarily to growth in non-maturity (demand, savings and interest checking, and money market) accounts, which increased by $24.5 million, or 4.9%, offset by a decrease in time deposits of $14.6 million, or 4.3%. For the nine months ended March 31, 2017, deposits increased $49.0 million, or 6.1%, due to growth in non-maturity accounts of $79.2 million, or 17.6%, offset by a decrease in time deposits of $30.1 million, or 8.6%.

3.  Shareholders' equity increased by $2.1 million from June 30, 2016, primarily due to earnings of $8.3 million, offset by $6.9 million in share repurchases (representing 645,238 shares). Additionally, there was stock-based compensation of $689 thousand, a decrease in accumulated other comprehensive loss of $313 thousand and $268 thousand in dividends paid on common stock.

Net income increased by $1.7 million to $3.5 million for the quarter ended March 31, 2017, compared to $1.8 million for the quarter ended March 31, 2016.

1.  Net interest and dividend income before provision for loan losses increased by $3.2 million for the quarter ended March 31, 2017, compared to the quarter ended March 31, 2016. The increase is primarily due to higher transactional income on purchased loans and higher average balances in the total loan portfolio.  This increase was partially offset by higher rates and volume in the deposit portfolio and the effect of the issuance of subordinated debt. 

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

 Interest Income and Yield on Loans 
 Three Months Ended March 31, 
 2017
 2016
 
 Average Interest   Average Interest   
 Balance (1) Income Yield Balance (1) Income Yield 
 (Dollars in thousands) 
Community Banking Division$188,748 $2,402 5.16% $219,001 $2,592 4.76% 
SBA 44,538  678 6.17%  28,193  402 5.73%  
LASG:                 
Originated 256,778  4,075 6.44%  159,976  2,317 5.83% 
Purchased 245,135  7,184 11.89%  224,710  5,518 9.88% 
Secured Loans to Broker-Dealers 27,933  78 1.13%  60,001  75 0.50% 
Total LASG 529,846  11,337 8.68%  444,687  7,910 7.15% 
Total$763,132 $14,417 7.66% $691,881 $10,904 6.34% 
                   
 Nine Months Ended March 31, 
 2017
 2016
 
 Average Interest   Average Interest   
 Balance (1) Income Yield Balance (1) Income Yield 
 (Dollars in thousands)  
Community Banking Division$199,566 $7,150 4.77% $220,582 $7,893 4.76% 
SBA 38,867  1,771 6.07%  21,590  957 5.90% 
LASG:                
Originated 219,140  10,030 6.10%  138,760  5,991 5.75% 
Purchased 236,822  20,925 11.77%  211,519  18,347 11.54% 
Secured Loans to Broker-Dealers 41,409  256 0.82%  60,004  225 0.50% 
Total LASG 497,371  31,211 8.36%  410,283  24,563 7.97% 
Total$735,804 $40,132 7.27% $652,455 $33,413 6.82% 
 
 
(1)  Includes loans held for sale.
 

The various components of transactional income are set forth in the table below entitled "Total Return on Purchased Loans." When compared to the three and nine months ended March 31, 2016, transactional income increased by $1.4 million and $831 thousand, respectively. The total return on purchased loans for the three and nine months ended March 31, 2017 was 11.95% and 11.80%, respectively. The increase over the prior comparable periods was primarily due to higher average balances and transactional income in the three and nine months ended March 31, 2017. The following table details the total return on purchased loans:

 Total Return on Purchased Loans
 Three Months Ended March 31,
 2017  2016 
 Income Return (1) Income Return (1)
 (Dollars in thousands)
Regularly scheduled interest and accretion$4,914 8.13% $4,606 8.25%
Transactional income: 
Gain on loan sales- 0.00% - 0.00%
Gain on sale of real estate owned36 0.06% 1 0.00%
Other noninterest income- 0.00% - 0.00%
Accelerated accretion and loan fees 2,270 3.76%  912 1.63%
Total transactional income2,306 3.82% 913 1.63%
Total$7,220 11.95% $5,519 9.88%
            
 Nine Months Ended March 31,
 2017  2016 
 Income Return (1) Income Return (1)
 (Dollars in thousands)
Regularly scheduled interest and accretion$14,383 8.09% $12,615 7.94%
Transactional income: 
Gain on loan sales- 0.00% - 0.00%
Gain on sale of real estate owned55 0.03% 23 0.01%
Other noninterest income- 0.00% 11 0.01%
Accelerated accretion and loan fees 6,542 3.68%  5,732 3.61%
Total transactional income6,597 3.71% 5,766 3.63%
Total$20,980 11.80% $18,381 11.57%
            
  
(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 increased by $273 thousand for the quarter ended March 31, 2017, compared to the quarter ended March 31, 2016, principally due to the following:

3.  Noninterest expense increased by $430 thousand for the quarter ended March 31, 2017, compared to the quarter ended March 31, 2016, primarily due to the following:

As of March 31, 2017, nonperforming assets totaled $18.6 million, or 1.81% of total assets, as compared to $13.3 million, or 1.32% of total assets, as of December 31, 2016, and $9.5 million, or 0.96% of total assets, as of June 30, 2016. The increase of $5.3 million from December 31, 2016 is primarily due to three loans placed on non-accrual totaling $4.6 million.

As of March 31, 2017, past due loans totaled $24.1 million, or 3.25% of total loans, as compared to $21.9 million, or 2.85% of total loans, as of December 31, 2016, and $6.9 million, or 1.00% of total loans as of June 30, 2016. The increase of $2.2 million from December 31, 2016 includes two loans totaling $2.1 million which were 30-59 days past due as of March 31, 2017, and have been paid current in April.

As of March 31, 2017, the Company's Tier 1 Leverage Ratio was 12.5%, compared to 13.3% at June 30, 2016, and the Total Capital Ratio was 19.3%, compared to 20.4% at June 30, 2016. The decreases resulted primarily from loan growth and the effect of purchases under the Company's share repurchase program.

Investor Call Information
Richard Wayne, Chief Executive Officer of Northeast Bancorp, and Brian Shaughnessy, Chief Financial Officer of Northeast Bancorp, will host a conference call to discuss third quarter earnings and business outlook at 10:00 a.m. Eastern Time on Wednesday, April 26th. Investors can access the call by dialing 877.878.2762 and entering the following passcode: 10568713. 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 traditional banking services through the Community Banking Division, which operates ten full-service branches that serve customers located in western, central, and southern Maine. From our Maine and Boston locations, we also lend throughout the New England area. Our Loan Acquisition and Servicing Group ("LASG") purchases and originates commercial loans on a nationwide basis. In addition, our SBA Division supports the needs of growing businesses nationally. ableBanking, a division of Northeast Bank, offers savings products to consumers online. Information regarding Northeast Bank can be found on its website 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; 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.

NBN-F

NORTHEAST BANCORP AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands, except share and per share data)
 March 31, 2017 June 30, 2016
Assets     
Cash and due from banks$3,559  $2,459 
Short-term investments 143,883   148,698 
Total cash and cash equivalents 147,442   151,157 
      
      
Available-for-sale securities, at fair value 98,865   100,572 
      
Residential real estate loans held for sale 1,424   6,449 
SBA loans held for sale 3,210   1,070 
Total loans held for sale 4,634   7,519 
      
      
Loans     
Commercial real estate 479,260    426,568 
Residential real estate 103,254   113,962 
Commercial and industrial 154,343   145,956 
Consumer 4,871   5,950 
Total loans 741,728   692,436 
Less: Allowance for loan losses 3,375   2,350 
Loans, net 738,353   690,086 
      
      
Premises and equipment, net 7,002   7,801 
Real estate owned and other repossessed collateral, net 3,761   1,652 
Federal Home Loan Bank stock, at cost 1,938   2,408 
Intangible assets, net 1,408   1,732 
Bank owned life insurance 16,065   15,725 
Other assets 7,578   7,501 
Total assets$1,027,046  $986,153 
      
Liabilities and Shareholders' Equity     
Deposits     
Demand$72,369  $66,686 
Savings and interest checking 108,507   107,218 
Money market 347,658   275,437 
Time 320,945   351,091 
Total deposits 849,479   800,432 
      
Federal Home Loan Bank advances 20,017   30,075 
Subordinated debt 23,544   23,331 
Capital lease obligation 938   1,128 
Other liabilities 14,393   14,596 
Total liabilities 908,371   869,562 
      
Commitments and contingencies -   - 
      
      
Shareholders' equity     
Preferred stock, $1.00 par value, 1,000,000 shares authorized; no shares    
issued and outstanding at March 31, 2017 and June 30, 2016 -   - 
Voting common stock, $1.00 par value, 25,000,000 shares authorized;     
7,824,085 and 8,089,790 shares issued and outstanding at March 31, 2017 and June 30, 2016, respectively 7,824   8,089 
Non-voting common stock, $1.00 par value, 3,000,000 shares authorized;     
991,194 and 1,227,683 shares issued and outstanding at March 31, 2017 and June 30, 2016, respectively 991  1,228 
Additional paid-in capital 77,249   83,020 
Retained earnings 34,204   26,160 
Accumulated other comprehensive loss (1,593)   (1,906)
Total shareholders' equity 118,675   116,591 
Total liabilities and shareholders' equity$1,027,046  $986,153 



NORTHEAST BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Dollars in thousands, except share and per share data)
 Three Months Ended March 31, Nine Months Ended March 31,
 2017 2016
  2017 2016
Interest and dividend income:           
Interest and fees on loans$14,417 $10,904  $40,132 $33,413 
Interest on available-for-sale securities 261  236   748  700 
Other interest and dividend income 282  119    669  295 
Total interest and dividend income 14,960  11,259   41,549  34,408 
            
Interest expense:            
Deposits 1,855  1,566    5,407  4,356 
Federal Home Loan Bank advances 159  255   634  774 
Wholesale repurchase agreements -  -    -  65 
Short-term borrowings -  5   -  19 
Subordinated debt 475  164   1,401  476 
Obligation under capital lease agreements 12  15   39  49 
Total interest expense 2,501  2,005   7,481  5,739 
            
Net interest and dividend income before provision for loan losses 12,459  9,254   34,068   28,669 
Provision for loan losses 384  236   1,205  1,301 
Net interest and dividend income after provision for loan losses 12,075  9,018   32,863  27,368 
            
Noninterest income:           
Fees for other services to customers 516  428   1,405  1,264 
Gain on sales of residential loans held for sale 281  335   1,160  1,292 
Gain on sales of SBA loans 951  1,205   3,411  2,558 
Gain on sale of other loans 365  -   365  - 
Gain (loss) recognized on real estate owned and other repossessed collateral, net 20  (54)  9  (127)
Bank-owned life insurance income 113  112   341  336 
Other noninterest income 62  9   115  39 
Total noninterest income 2,308  2,035    6,806  5,362 
            
Noninterest expense:           
Salaries and employee benefits 5,203  4,846   15,678  13,956 
Occupancy and equipment expense 1,299  1,327   3,781  3,937 
Professional fees 370  348   1,265  1,042 
Data processing fees 455  394   1,286  1,109 
Marketing expense 89  64   272  200 
Loan acquisition and collection expense 728  297   1,502   961 
FDIC insurance premiums 78  125   224   354 
Intangible asset amortization 107  108   324   369 
Other noninterest expense 513  903   2,093  2,489 
Total noninterest expense 8,842  8,412   26,425  24,417 
            
Income before income tax expense 5,541  2,641   13,244  8,313 
Income tax expense 2,080  832   4,932  2,892 
Net income 3,461  1,809   8,312  5,421 
            
            
Weighted-average shares outstanding:           
Basic 8,830,442  9,456,198   8,923,280  9,526,302 
Diluted 8,893,534   9,459,611   8,963,483  9,531,747 
            
Earnings per common share:            
Basic$0.39 $0.19  $0.93 $0.57 
Diluted 0.39  0.19   0.93   0.57 
              
Cash dividends declared per common share$0.01 $0.01  $0.03 $0.03 
              


NORTHEAST BANCORP AND SUBSIDIARY
CONSOLIDATED AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS
(Unaudited)
(Dollars in thousands)
 Three Months Ended March 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$96,868  $261 1.09% $100,904 $236 0.94%
Loans (1) (2) (3) 763,132  14,435 7.67%  691,881  10,922 6.35%
Federal Home Loan Bank stock 1,938  24  5.02%  2,571  22 3.44%
Short-term investments (4) 128,082  258 0.82%  80,789  97 0.48%
Total interest-earning assets 990,020  14,978 6.14%  876,145  11,277 5.18%
Cash and due from banks 2,875       3,841     
Other non-interest earning assets 31,606       34,045     
Total assets$1,024,501      $914,031     
                
Liabilities & Stockholders' Equity:               
Interest-bearing liabilities:               
NOW accounts$69,773 $49 0.28% $65,985 $42 0.28%
Money market accounts 338,662  807 0.97%  223,835  491 0.88%
Savings accounts 36,940  13 0.14%  36,453  12 0.13%
Time deposits 329,442  986 1.21%  357,857  1,021 1.15%
Total interest-bearing deposits 774,817  1,855  0.97%  684,130  1,566 0.92%
Short-term borrowings -  - 0.00%  2,136  5 0.94%
Federal Home Loan Bank advances 20,021  159 3.22%   30,117  255 3.41%
Subordinated debt 23,506  475 8.20%  8,746  164 7.54%
Capital lease obligations 961  12 5.06%  1,211  15 4.98%
Total interest-bearing liabilities 819,305   2,501 1.24%  726,340  2,005 1.11%
                
Non-interest bearing liabilities:               
Demand deposits and escrow accounts 81,901       66,384     
Other liabilities 6,659        6,429     
Total liabilities 907,865       799,153     
Stockholders' equity 116,636       114,878     
Total liabilities and stockholders' equity$1,024,501      $914,031     
                
Net interest income (5)   $12,477      $9,272  
                
Interest rate spread      4.90%       4.07%
Net interest margin (6)      5.11%       4.26%
                
(1)  Interest income and yield are stated on a fully tax-equivalent basis using a 34% 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 March 31, 2017 and March 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)
 Nine Months Ended March 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$94,824 $748 1.05% $102,890 $700 0.91%
Loans (1) (2) (3) 735,804  40,185 7.28%  652,455  33,467 6.83%
Federal Home Loan Bank stock 2,250   70 4.14%  3,089  90 3.88%
Short-term investments (4) 132,280  599 0.60%  84,258  205 0.32%
Total interest-earning assets 965,158  41,602 5.74%  842,692  34,462 5.44%
Cash and due from banks 2,860       3,405     
Other non-interest earning assets 32,554        35,345     
Total assets$1,000,572      $881,442     
                
Liabilities & Stockholders' Equity:               
Interest-bearing liabilities:               
NOW accounts$70,814 $152 0.29% $67,078 $130 0.26%
Money market accounts 314,259  2,242  0.95%  197,962  1,273 0.86%
Savings accounts 35,964  37 0.14%  36,027  36 0.13%
Time deposits 327,664  2,976 1.21%  347,847  2,917 1.12%
Total interest-bearing deposits 748,701  5,407 0.96%  648,914  4,356 0.89%
Short-term borrowings -  - 0.00%  2,029  19 1.25%
Federal Home Loan Bank advances 25,768  634 3.28%   33,207  839 3.36%
Subordinated debt 23,431  1,401 7.97%  8,698  476 7.28%
Capital lease obligations 1,024  39 5.07%  1,272  49 5.13%
Total interest-bearing liabilities 798,924  7,481 1.25%  694,120  5,739 1.10%
                
Non-interest bearing liabilities:               
Demand deposits and escrow accounts 79,352       66,619     
Other liabilities 7,738       6,720     
Total liabilities 886,014       767,459     
Stockholders' equity 114,558       113,983     
Total liabilities and stockholders' equity$1,000,572      $881,442     
                
Net interest income (5)   $34,121      $28,723  
                
Interest rate spread      4.49%       4.34%
Net interest margin (6)      4.71 %       4.54%
                
(1)  Interest income and yield are stated on a fully tax-equivalent basis using a 34% 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 $53 thousand and $54 thousand for the nine months ended March 31, 2017 and March 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:
 March 31, 2017 December 31, 2016 September 30, 2016 June 30, 2016 March 31, 2016
Net interest income$12,459  $11,833  $9,775  $10,713  $9,254 
Provision for loan losses 384   628   193   317   236 
Noninterest income 2,308   2,690   1,808   2,411   2,035 
Noninterest expense 8,842   8,956   8,626   9,396   8,412 
Net income 3,461    3,100   1,751   2,199   1,809 
           
Weighted average common shares outstanding:         
Basic 8,830,442   8,831,235    9,106,144   9,319,522   9,456,198 
Diluted 8,893,534   8,864,618   9,133,383   9,342,439   9,459,611 
Earnings per common share:         
Basic$0.39  $0.35  $0.19  $0.24  $0.19 
Diluted 0.39   0.35   0.19   0.24   0.19 
Dividends per common share 0.01   0.01   0.01   0.01   0.01 
           
Return on average assets 1.37%  1.24%  0.70%  0.93%  0.80%
Return on average equity 12.03%  10.92%  6.07%  7.67%  6.33%
Net interest rate spread (1) 4.90%  4.72%  3.86%  4.55%  4.06%
Net interest margin (2) 5.11%  4.94%  4.07%  4.73%  4.25%
Efficiency ratio (non-GAAP) (3) 59.88%  61.67%  74.47%  71.59%  74.52%
Noninterest expense to average total assets 3.50%  3.59%  3.47%   3.97%  3.70%
Average interest-earning assets to average interest-bearing liabilities 120.84%  120.73%  120.86%   119.99%  120.62%
           
 As of:
 March 31, 2017 December 31, 2016 September 30, 2016 June 30, 2016 March 31, 2016
Nonperforming loans:         
Originated portfolio:         
Residential real estate$3,265  $2,827  $3,273  $2,613  $3,566 
Commercial real estate 420   396   361   474   602 
Home equity 48   48   48   48   - 
Commercial and industrial 2,636   2,659   347   17   2 
Consumer 65   48   121   163   216 
Total originated portfolio 6,434   5,978   4,150   3,315   4,386 
Total purchased portfolio 8,388   4,219   4,773   4,512   4,364 
Total nonperforming loans 14,822   10,197   8,923   7,827   8,750 
Real estate owned and other possessed collateral, net 3,761   3,145   3,774   1,652   690 
Total nonperforming assets$18,583  $13,342   $12,697  $9,479  $9,440 
          
Past due loans to total loans 3.25%  2.85%  1.36%  1.00%  2.52%
Nonperforming loans to total loans 2.00%  1.33%  1.24%  1.13%  1.25%
Nonperforming assets to total assets 1.81%  1.32%  1.29%  0.96%  1.02%
Allowance for loan losses to total loans 0.46%  0.41%   0.35%  0.34%  0.32%
Allowance for loan losses to nonperforming loans 22.77%  30.47%  28.08%  30.02%  25.41%
          
Commercial real estate loans to risk-based capital (4) 181.83%  197.11%  179.96%   174.12%  217.09%
Net loans to core deposits (5) 87.46%  92.04%  90.22%  87.15%  93.48%
Purchased loans to total loans, including held for sale 31.87%  32.91%  32.54%  34.25%  33.17%
Equity to total assets 11.55%  11.35%  11.32%  11.82%  12.41%
Common equity tier 1 capital ratio 15.80%  14.94%  15.34%  17.97%  17.46%
Total capital ratio 19.30%  18.31%  18.81%  20.39%  17.78%
Tier 1 leverage capital ratio 12.46%  12.60%  12.25%  13.27%  13.57%
          
Total shareholders' equity$118,675  $114,942  $111,553  $116,591  $114,526 
Less: Preferred stock -   -   -   -   - 
Common shareholders' equity 118,675   114,942   111,553   116,591   114,526 
Less: Intangible assets (6) (3,898)   (3,856)  (3,797)  (3,503)  (3,469)
Tangible common shareholders' equity (non-GAAP)$114,777  $111,086  $107,756  $113,088  $111,057 
          
Common shares outstanding 8,815,279   8,831,235   8,831,235   9,317,473   9,330,873 
Book value per common share $13.46  $13.02  $12.63  $12.51  $12.27 
Tangible book value per share (non-GAAP) (7) 13.02   12.58   12.20   12.14   11.90 
          
(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 non-interest expense divided by the sum of net interest income (before the loan loss provision) plus non-interest 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, as well as the servicing rights asset which is included in other assets in the consolidated balance sheets.
(7) 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:



Brian Shaughnessy, CFO

Northeast Bank, 500 Canal Street, Lewiston, ME 04240

207.786.3245 ext. 3220

www.northeastbank.com

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Source: Northeast Bancorp

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