Northeast Bancorp
Jul 29, 2013

Northeast Bancorp Reports Fourth Quarter Results, Declares Dividend

LEWISTON, Maine--(BUSINESS WIRE)-- 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 $205 thousand for the quarter ended June 30, 2013, compared to $1.0 million for the quarter ended June 30, 2012. Net income for the year ended June 30, 2013 was $4.4 million, compared to $2.2 million for the year ended June 30, 2012. Net income for the year ended June 30, 2012 included $1.1 million from discontinued operations.

The current quarter included $1.4 million of expenses related to severance and the settlement of a previously disclosed lawsuit, based on a claim arising from events occurring in 2005 and 2006. Excluding these items, which the Company considers to be non-core, net operating earnings were $1.1 million or $0.11 per diluted common share. Reported net income and net operating earnings for the quarters and years ended June 30, 2013 and 2012, respectively, are set forth below:

  Reconciliation of Net Income Available to Common Shareholders (GAAP) to Net Operating Earnings (non-GAAP)1
Three Months Ended June 30,   Year Ended June 30,
2013   2012 2013   2012
(Dollars in thousands, except share and per share data)
Net income available to common shareholders (GAAP) $ 205 $ 950 $ 4,065 $ 1,771
Items excluded from operating earnings, net of tax:
Net income from discontinued operations - (10) - (1,147)
Severance 255 - 255 -
Legal settlement and related professional fees   671   -   671   -
Total after-tax items   926   (10)   926   (1,147)
Net operating earnings (non-GAAP) $ 1,131 $ 940 $ 4,991 $ 624
 
Weighted average common shares outstanding - basic 10,446,643 6,605,465 10,409,588 4,277,777
 
Reported basic earnings per share (GAAP) $ 0.02 $ 0.14 $ 0.39 $ 0.41
Items excluded from operating earnings   0.09   -   0.09   (0.26)
Net operating earnings per share (non-GAAP) $ 0.11 $ 0.14 $ 0.48 $ 0.15

1 Management believes operating earnings, which exclude non-core items, provide a more meaningful representation of the Company's performance.

The Board of Directors has declared a cash dividend of $0.09 per share, payable on August 23, 2013 to shareholders of record as of August 9, 2013.

"The growing value of our business strategy is reflected in this year's results, in which we achieved over 22% growth in our loan portfolio, and 15% deposit growth," said Richard Wayne, Chief Executive Officer. "Loan originations and acquisitions for the quarter totaled $117 million, of which $67 million was generated by our loan purchasing group, and $48 million through our residential lending division. The success of our lending efforts helped drive our net interest margin to 5.32% for the quarter," continued Wayne.

At June 30, 2013, total assets were $670.6 million, an increase of $1.4 million, or 0.2%, compared to June 30, 2012 and a decrease of $28.9 million, or 4.1%, compared to March 31, 2013. The principal components of the year-over-year and quarterly changes in the balance sheet follow:

1. The loan portfolio grew by $79.1 million, or 22.2%, compared to June 30, 2012, principally due to net growth of $116.1 million in commercial loans purchased or originated by the Bank's Loan Acquisition and Servicing Group ("LASG"), offset by net amortization and payoffs of $37.0 million in the Community Banking Division loan portfolio.

Compared to the quarter ended March 31, 2013, the Bank's LASG loan portfolio increased $57.3 million, reflecting purchases and originations of $45.8 million and $21.6 million, respectively, offset by loan payoffs and asset sales totaling $9.9 million. LASG originations during the quarter included $12.0 million secured by marketable securities and $9.6 million of loans secured by real estate. Loan payoffs and asset sales during the quarter ended June 30, 2013 resulted in $2.8 million of transactional income, compared to $4.1 million in the quarter ended March 31, 2013 and $2.5 million in the quarter ended June 30, 2012.

As has been discussed in more detail in the Company's SEC filings, in connection with the merger of FHB Formation LLC with and into the Company, the Company made certain commitments to the Board of Governors of the Federal Reserve System (the "Federal Reserve"), including a commitment to hold commercial real estate loans (including owner-occupied commercial real estate) to within 300% of total risk-based capital. On June 28, 2013, the Federal Reserve approved the amendment of that commitment to exclude owner-occupied commercial real estate loans. All other commitments made to the Federal Reserve in connection with the merger remain unchanged. The Company's loan purchasing capacity under these conditions follows:

Basis for Regulatory Condition   Condition  

Remaining Purchased Loan
Capacity at June 30, 2013

(Dollars in millions)
Total Loans Purchased loans may not exceed 40% of total loans $ 18.0
Regulatory Capital Commercial real estate loans may not exceed 300%

of total risk-based capital

$

172.3
 

To increase its capacity under the "Total Loans" regulatory condition, the Company will continue to hold in its portfolio, as necessary and on a duration—matched basis, residential fixed and adjustable rate loans that would otherwise be sold in the secondary market.

An overview of the LASG portfolio follows:

  LASG Portfolio Overview
Three Months Ended June 30, 2013   Year Ended June 30, 2013
Purchased   Originated   Total LASG Purchased   Originated   Total LASG
(Dollars in thousands)
Purchased or originated during the period:
Unpaid principal balance $ 51,677 $ 21,556 $ 73,233 $ 155,216 $ 37,181 $ 192,397
Net investment basis 45,783 21,556 67,339 121,336 37,208 158,544
 
Totals as of period end:
Unpaid principal balance $ 204,276 $ 38,846 $ 243,122
Net investment basis 166,786 38,879 205,665
 
Returns during the period:
Yield 17.30% 8.92% 16.21% 16.04% 9.34% 15.28%
Total Return (1) 17.53% 8.92% 16.41% 18.33% 9.34% 17.32%

(1) 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, on an annualized basis.

2. Deposits increased by $62.4 million, or 14.8%, compared to June 30, 2012 primarily due to a $69.0 million increase in deposits raised through ableBanking, the Bank's online affinity deposit platform. During the quarter ended June 30, 2013, the Bank allowed $23.5 million of maturing time deposits to run-off, in a plan to reduce excess short-term balance sheet liquidity.

3. Total borrowings decreased by $6.9 million and $56.8 million, for the quarter and year ended June 30, 2013, respectively, as the Bank did not replace maturing structured repurchase agreements and FHLB advances.

4. Stockholders' equity decreased by $5.3 million, or 4.5%, compared to June 30, 2013, primarily due to the redemption of TARP preferred stock and warrants totaling $4.3 million in the quarter ended December 31, 2012. Stockholders' equity decreased by $1.9 million, or 1.7%, compared to March 31, 2013, primarily due to unrealized losses on available-for-sale securities.

Net income decreased by $843 thousand to $205 thousand for the quarter ended June 30, 2013, compared to $1.0 million for the quarter ended June 30, 2012. Income for the quarter ended June 30, 2013 included $926 thousand of nonrecurring expenses, net of tax, relating to the settlement of a lawsuit, and compensation expense associated with the Bank's decision to exit the investment brokerage business and the resignation of a senior manager. Operating results for the quarter included the following items of significance:

1. Net interest income increased by $1.8 million, or 26.5%, to $8.5 million for the quarter compared to the quarter ended June 30, 2012, primarily due to growth in the purchased loan portfolio. This result is evident in the net interest margin, which increased to 5.32% for the quarter ended June 30, 2013, compared to 4.63% for the quarter ended June 30, 2012, and 5.07% for the quarter ended March 31, 2013.

2. 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,
2013   2012
Average   Interest   Average   Interest  
Balance Income Yield Balance Income Yield
(Dollars in thousands)
Community Banking Division $ 235,455 $ 3,376 5.75% $ 280,079 $ 4,299 6.17%
LASG:
Originated 20,723 461 8.92% 5,215 114 8.79%
Purchased   138,445   5,971 17.30%   68,352   3,440 20.24%
Total LASG   159,168   6,432 16.21%   73,567   3,554 19.43%
Total $ 394,623 $ 9,808 9.97% $ 353,646 $ 7,853 8.93%
 
Year Ended June 30,
2013 2012
Average Interest Average Interest
Balance Income Yield Balance Income Yield
(Dollars in thousands)
Community Banking Division $ 252,199 $ 14,824 5.88% $ 297,348 $ 18,047 6.07%
LASG:
Originated 14,906 1,392 9.34% 3,278 308 9.40%
Purchased   117,205   18,801 16.04%   39,022   6,379 16.35%
Total LASG   132,111   20,193 15.28%   42,300   6,687 15.81%
Total $ 384,310 $ 35,017 9.11% $ 339,648 $ 24,734 7.28%
 

The yield on purchased loans was increased by unscheduled loan payoffs, which resulted in immediate recognition of the prepaid loans' discount in interest income. The following table details the "total return" on purchased loans, which includes transactional income of $2.8 million for the quarter and $10.6 million for the year ended June 30, 2013.

  Total Return on Purchased Loans
Three Months Ended June 30,
2013   2012
Income   Return (1) Income   Return (1)
(Dollars in thousands)
Regularly scheduled interest and accretion $ 3,237 9.38% $ 1,580 9.30%
Transactional income:
Gains on loan sales 80 0.23% 649 3.82%
Gain on sale of real estate owned - 0.00% - 0.00%
Other noninterest income - 0.00% - 0.00%
Accelerated accretion and loan fees   2,734 7.92%   1,860 10.94%
Total transactional income   2,814 8.15%   2,509 14.76%
Total $ 6,051 17.53% $ 4,089 24.06%
 
Year Ended June 30,
2013 2012
Income Return (1) Income Return (1)
(Dollars in thousands)
Regularly scheduled interest and accretion $ 11,038 9.35% $ 3,762 9.64%
Transactional income:
Gains on loan sales 2,115 1.79% 868 2.22%
Gain on sale of real estate owned 684 0.58% - 0.00%
Other noninterest income 36 0.03% - 0.00%
Accelerated accretion and loan fees   7,763 6.58%   2,617 6.71%
Total transactional income   10,598 8.98%   3,485 8.93%
Total $ 21,636 18.33% $ 7,247 18.57%
 

(1) 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, on an annualized basis.

3. Noninterest income decreased by $334 thousand for the current quarter, compared to the quarter ended June 30, 2012, principally due to lower net gains on the sale of portfolio loans, which decreased by $564 thousand due to lower LASG loan sales in the quarter ended June 30, 2013. Gains on sales of residential mortgages increased to $714 thousand, up slightly compared to the June 30, 2012 quarter and an increase of 14.2% when compared to the March 31, 2013 quarter.

The Bank announced on July 2nd its intention to exit the investment brokerage business, over a transition period estimated at 60 to 90 days. For the year ended June 30, 2013, investment brokerage revenue totaled $2.9 million and contributed $267 thousand to the Company's pre-tax income, net of direct expenses.

4. Noninterest expense increased by $2.7 million for the current quarter, compared to the quarter ended June 30, 2012, principally due to the following:

At June 30, 2013, nonperforming assets were $7.0 million, or 1.0% of total assets, an increase of $42 thousand from June 30, 2012 and a decrease of $441 thousand from March 31, 2013.

At June 30, 2013, the Company's Tier 1 leverage ratio was 17.8%, a decrease from 19.9% at June 30, 2012 and an increase from 17.4% at March 31, 2013. At June 30, 2013, the Company's total risk-based capital ratio was 27.5%, a decrease from 33.3% and 30.7% at June 30, 2012 and March 31, 2013, respectively.

Investor Call Information

Richard Wayne, Chief Executive Officer of Northeast Bancorp, and Claire Bean, Chief Financial Officer of Northeast Bancorp, will host a conference call to discuss fourth quarter earnings and business outlook at 11:00 a.m. Eastern Time on Tuesday, July 30, 2013. Investors can access the call by dialing 877.878.2762 and entering the following passcode: 22872642. 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. Northeast Bank offers traditional banking services through its Community Banking Division, which operates ten full-service branches and six loan production offices that serve individuals and businesses located in western and south-central Maine, southern New Hampshire and southeastern Massachusetts. Northeast Bank's Loan Acquisition and Servicing Group purchases and originates commercial loans for the Bank's portfolio. 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 Measure

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 stockholders' equity, tangible book value per share, and net operating earnings. 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.

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 continuing 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; increasing 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.

IMPORTANT NOTE: Securities and Advisory Services offered through Commonwealth Financial Network, Member FINRA, SIPC, and a Registered Investment Adviser. Securities are not FDIC insured, not bank obligations or otherwise bank guaranteed and may lose value. Northeast Financial is located at 77 Middle Street, Portland, ME 04101.

NBN-F

 
NORTHEAST BANCORP AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands, except share and per share data)
  June 30,
2013   2012
Assets
Cash and due from banks $ 3,238 $ 2,538
Short-term investments   62,696   125,736
Total cash and cash equivalents 65,934 128,274
 
Available-for-sale securities, at fair value 121,597 133,264
Loans held for sale 8,594 9,882
 
Loans
Commercial real estate 264,448 180,735
Residential real estate 127,829 137,571
Construction 42 1,187
Commercial and industrial 29,720 19,612
Consumer   13,337   17,149
Total loans 435,376 356,254
Less: Allowance for loan losses   1,143   824
Loans, net 434,233 355,430
 
Premises and equipment, net 10,075 9,205
Real estate owned and other repossessed collateral, net 2,134 834
Federal Home Loan Bank and Federal Reserve Bank stock, at cost 5,721 5,473
Intangible assets, net 3,544 4,487
Bank owned life insurance 14,385 14,295
Other assets   4,422   8,052
Total assets $ 670,639 $ 669,196
 
Liabilities and Stockholders' Equity
Liabilities
Deposits
Demand $ 46,425 $ 45,323
Savings and interest checking 90,970 90,204
Money market 84,416 45,024
Time   262,812   241,637
Total deposits 484,623 422,188
 
Federal Home Loan Bank advances 28,040 43,450
Structured repurchase agreements 25,397 66,183
Short-term borrowings 625 1,209
Junior subordinated debentures issued to affiliated trusts 8,268 8,106
Capital lease obligation 1,739 1,911
Other liabilities   8,145   7,010
Total liabilities   556,837   550,057
 
Commitments and contingencies - -
 
Stockholders' equity
Preferred stock, $1.00 par value, 1,000,000 shares authorized; no shares
issued and outstanding at June 30, 2013; 4,227 shares issued and
outstanding at June 30, 2012; liquidation preference of $1,000 per share - 4
Voting common stock, $1.00 par value, 25,000,000 and 13,500,000 shares
authorized at June 30, 2013 and 2012, respectively;
9,565,680 and 9,307,127 issued and outstanding at June 30, 2013 and 2012, respectively 9,566 9,307
Non-voting common stock, $1.00 par value, 3,000,000 and 1,500,000
shares authorized at June 30, 2013 and 2012, respectively;
880,963 and 1,076,314 issued and outstanding at June 30, 2013 and 2012, respectively 881 1,076
Additional paid-in capital 92,745 96,359
Retained earnings 12,524 12,235
Accumulated other comprehensive (loss) income   (1,914)   158
Total stockholders' equity   113,802   119,139
Total liabilities and stockholders' equity $ 670,639 $ 669,196
 
 
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,
2013   2012 2013   2012
Interest and dividend income:
Interest on loans $ 9,808 $ 7,853 $ 35,017 $ 24,734
Interest on available-for-sale securities 209 417 1,138 2,019
Other interest and dividend income   105   85   388   261
Total interest and dividend income   10,122   8,355   36,543   27,014

 

Interest expense:
Deposits 1,008 878 4,098 3,426
Federal Home Loan Bank advances 217 256 967 1028
Structured repurchase agreements 136 247 651 991
Short-term borrowings 4 6 19 21
Junior subordinated debentures issued to affiliated trusts 195 195 769 751
Obligation under capital lease agreements   23   24   92   100
Total interest expense   1,583   1,606   6,596   6,317
 
Net interest and dividend income before provision for loan losses 8,539 6,749 29,947 20,697
Provision for loan losses   301   312   1,122   946
Net interest and dividend income after provision for loan losses   8,238   6,437   28,825   19,751
 
Noninterest income:
Fees for other services to customers 446 347 1,648 1,383
Net securities gains - - 792 1,111
Gain on sales of loans held for sale 714 701 3,009 2,761
Gain on sales of portfolio loans 85 649 2,311 1,071
Gain (loss) recognized on real estate owned and other repossessed collateral, net 65 (25) 746 (5)
Investment commissions 687 671 2,919 2,782
Bank-owned life insurance income 119 123 718 501
Other noninterest income   14   (2)   82   72
Total noninterest income   2,130   2,464   12,225   9,676
 
Noninterest expense:
Salaries and employee benefits 5,486 4,095 19,218 15,634
Occupancy and equipment expense 1,283 1,091 4,766 3,826
Professional fees 424 477 1,634 1,708
Data processing fees 283 265 1,141 1,088
Marketing expense 361 204 1,049 691
Loan acquisition and collection expense 481 308 1,766 1,106
FDIC insurance premiums 90 118 454 482
Intangible asset amortization 208 262 943 1,198
Legal settlement expense 980 - 980 -
Other noninterest expense   622   653   2,734   2,497
Total noninterest expense   10,218   7,473   34,685   28,230
 
Income from continuing operations before income tax (benefit) expense 150 1,428 6,365 1,197
Income tax (benefit) expense   (55)   390   1,945   181
Net income from continuing operations $ 205 $ 1,038 $ 4,420 $ 1,016
 
Discontinued operations:
Income from discontinued operations $ - $ - $ - $ 186
Gain on sale of discontinued operations - 15 - 1,566
Income tax expense   -   5   -   605
Net income from discontinued operations $ - $ 10 $ - $ 1,147
 
Net income $ 205 $ 1,048 $ 4,420 $ 2,163
 
Net income available to common stockholders $ 205 $ 950 $ 4,065 $ 1,771
 
Weighted-average shares outstanding:
Basic 10,446,643 6,605,465 10,409,588 4,277,777
Diluted 10,446,643 6,607,171 10,409,588 4,291,352
Earnings per common share:
Basic:
Income from continuing operations $ 0.02 $ 0.14 $ 0.39 $ 0.15
Income from discontinued operations   0.00   0.00   0.00   0.26
Net income $ 0.02 $ 0.14 $ 0.39 $ 0.41
Diluted:
Income from continuing operations $ 0.02 $ 0.14 $ 0.39 $ 0.15
Income from discontinued operations   0.00   0.00   0.00   0.26
Net income $ 0.02 $ 0.14 $ 0.39 $ 0.41
Cash dividends declared per common share $ 0.09 $ 0.09 $ 0.36 $ 0.36
 
 
NORTHEAST BANCORP AND SUBSIDIARY
CONSOLIDATED AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS
(Unaudited)
(Dollars in thousands)
  Three Months Ended June 30,
2013   2012
  Interest   Average   Interest   Average
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
(Dollars in thousands)
Assets:
Interest-earning assets:
Investment securities (1) $ 126,272 $ 209 0.66% $ 135,306 $ 417 1.24%
Loans (2) (3) 394,623 9,808 9.97% 353,646 7,853 8.93%
Regulatory stock 5,253 33 2.52% 5,473 24 1.76%
Short-term investments (4)   118,113   72 0.24%   91,249   61 0.27%
Total interest-earning assets   644,261   10,122 6.30%   585,674   8,355 5.74%
Cash and due from banks 2,978 2,858
Other non-interest earning assets   35,982   35,449
Total assets $ 683,221 $ 623,981
 
Liabilities & Stockholders' Equity:
Interest-bearing liabilities:
NOW accounts $ 56,650 $ 38 0.27% $ 55,638 $ 43 0.31%
Money market accounts 85,585 117 0.55% 44,928 45 0.40%
Savings accounts 32,868 11 0.13% 32,472 11 0.14%
Time deposits   270,342   842 1.25%   231,805   779 1.35%
Total interest-bearing deposits 445,445 1,008 0.91% 364,843 878 0.97%
Short-term borrowings 1,697 4 0.95% 1,210 6 1.99%
Borrowed funds 58,923 376 2.56% 111,857 527 1.89%
Junior subordinated debentures   8,245   195 9.49%   8,085   195 9.70%
Total interest-bearing liabilities   514,310   1,583 1.23%   485,995   1,606 1.33%
 
Non-interest bearing liabilities:
Demand deposits and escrow accounts 46,784 46,415
Other liabilities   6,900   2,605
Total liabilities 567,984 535,015
Stockholders' equity   115,227   88,966
Total liabilities and stockholders' equity $ 683,221 $ 623,981
 
Net interest income $ 8,539 $ 6,749
 
Interest rate spread 5.07% 4.41%

Net interest margin (5)

5.32% 4.63%
 

(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) 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,
2013   2012
  Interest   Average   Interest   Average
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
(Dollars in thousands)
Assets:
Interest-earning assets:
Investment securities (1) $ 131,199 $ 1,138 0.87% $ 138,708 $ 2,019 1.46%
Loans (2) (3) 384,310 35,017 9.11% 339,648 24,734 7.28%
Regulatory stock 5,398 75 1.39% 5,673 72 1.27%
Short-term investments (4)   127,781   313 0.24%   76,217   189 0.25%
Total interest-earning assets   648,688   36,543 5.63%   560,246   27,014 4.82%
Cash and due from banks 3,065 2,910
Other non-interest earning assets   37,206   36,803
Total assets $ 688,959 $ 599,959
 
Liabilities & Stockholders' Equity:
Interest-bearing liabilities:
NOW accounts $ 55,763 $ 153 0.27% $ 55,218 $ 213 0.39%
Money market accounts 63,931 337 0.53% 44,692 175 0.39%
Savings accounts 31,939 44 0.14% 32,799 67 0.20%
Time deposits   280,059   3,564 1.27%   223,782   2,971 1.33%
Total interest-bearing deposits 431,692 4,098 0.95% 356,491 3,426 0.96%
Short-term borrowings 1,472 19 1.29% 1,075 21 1.95%
Borrowed funds 75,633 1,710 2.26% 112,812 2,119 1.87%
Junior subordinated debentures   8,185   769 9.40%   8,028   751 9.35%
Total interest-bearing liabilities   516,982   6,596 1.28%   478,406   6,317 1.32%
 
Interest-bearing liabilities of discontinued operations (5) - 271
 
Non-interest bearing liabilities:
Demand deposits and escrow accounts 49,343 45,933
Other liabilities   5,982   3,932
Total liabilities 572,307 528,542
Stockholders' equity   116,652   71,417
Total liabilities and stockholders' equity $ 688,959 $ 599,959
 
Net interest income $ 29,947 $ 20,697
 
Interest rate spread 4.36% 3.50%
Net interest margin (6) 4.62% 3.69%
 

(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) The average balance of borrowings associated with discontinued operations has been excluded from interest expense, interest rate spread, and net interest margin.
(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, 2013   March 31, 2013   December 31, 2012   September 30, 2012   June 30, 2012
Net interest income $ 8,539 $ 8,253 $ 7,057 $ 6,098 $ 6,749
Provision for loan losses 301 346 247 228 312
Noninterest income 2,130 3,401 3,544 3,150 2,464
Noninterest expense 10,218 8,831 8,132 7,502 7,473
Net income from discontinued operations - - - - 10
Net income 205 1,666 1,517 1,034 1,048
 
Weighted average common shares outstanding:
Basic 10,446,643 10,425,576 10,383,441 10,383,441 6,605,465
Diluted 10,446,643 10,425,576 10,383,441 10,383,441 6,607,171
Earnings per common share:
Basic $ 0.02 $ 0.16 $ 0.12 $ 0.09 $ 0.14
Diluted 0.02 0.16 0.12 0.09 0.14
Dividends per common share 0.09 0.09 0.09 0.09 0.09
 
Return on average assets 0.12% 0.97% 0.87% 0.61% 0.68%
Return on average equity 0.71% 5.85% 5.15% 3.45% 4.74%
Net interest rate spread (1) 5.07% 4.82% 4.02% 3.52% 4.41%
Net interest margin (2) 5.32% 5.07% 4.28% 3.80% 4.63%
Efficiency ratio (3) 95.77% 75.78% 76.71% 81.12% 81.11%
Noninterest expense to average total assets 6.00% 5.12% 4.64% 4.39% 4.82%
Average interest-earning assets to average

interest-bearing liabilities

125.27% 124.53% 125.48% 126.65% 120.51%
 
As of
Nonperforming loans: June 30, 2013 March 31, 2013 December 31, 2012 September 30, 2012 June 30, 2012
Originated portfolio:
Residential real estate $ 2,346 $ 2,296 $ 3,512 $ 3,184 $ 3,090
Commercial real estate 473 631 624 626 417
Construction - - - - -
Home equity 334 405 620 289 220
Commercial and industrial 110 103 123 133 1,008
Consumer   136   258   166   181   324
3,399 3,693 5,045 4,413 5,059
Purchased portfolio:
Residential real estate - - - - -
Commercial real estate 1,457 1,700 2,144 667 1,055
Commercial and industrial   -   -   -   -   -
  1,457   1,700   2,144   667   1,055
Total nonperforming loans 4,856 5,393 7,189 5,080 6,114
Real estate owned and other repossessed collateral   2,134   2,038   2,633   2,645   834
Total nonperforming assets $ 6,990 $ 7,431 $ 9,822 $ 7,725 $ 6,948
 
Past due loans to total loans 1.68% 2.00% 2.52% 1.65% 1.95%
Nonperforming loans to total loans 1.12% 1.42% 1.83% 1.35% 1.72%
Nonperforming assets to total assets 1.04% 1.06% 1.39% 1.15% 1.04%
Allowance for loan losses to total loans 0.26% 0.27% 0.22% 0.18% 0.23%
Allowance for loan losses to nonperforming loans 23.54% 19.15% 12.17% 13.15% 13.48%
 
Commercial real estate loans to risk-based capital (4) 159.07% 184.40% 193.74% 167.62% 148.28%
Net loans to core deposits (5) 92.94% 77.72% 81.01% 86.69% 88.29%
Purchased loans to total loans, including held for sale 37.57% 33.63% 33.36% 27.68% 23.07%
Equity to total assets 16.97% 16.54% 16.31% 17.72% 17.83%
Tier 1 leverage capital ratio 17.78% 17.41% 17.44% 18.37% 19.91%
Total risk-based capital ratio 27.54% 30.71% 29.35% 31.32% 33.34%
 
Total stockholders' equity $ 113,802 $ 115,737 $ 114,931 $ 118,857 $ 119,139
Less: Preferred stock   -   -   -   (4,227)   (4,227)
Common stockholders' equity $ 113,802 $ 115,737 114,931 114,630 114,912
Less: Intangible assets   (3,544)   (3,751)   (3,957)   (4,222)   (4,487)
Tangible common stockholders' equity (non-GAAP) $ 110,258 $ 111,986 $ 110,974 $ 110,408 $ 110,425
 
Common shares outstanding 10,446,643 10,446,643 10,383,441 10,383,441 10,383,441
Book value per common share $ 10.89 $ 11.08 $ 11.07 $ 11.04 $ 11.07
Tangible book value per share (non-GAAP) (6) $ 10.55 $ 10.72 $ 10.69 $ 10.63 $ 10.63
 

(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 those loans defined as such by regulatory guidance, including all land development and construction loans. As of June 30, 2013, commercial real estate excludes loans secured by owner-occupied properties.
(5) Core deposits includes all non-maturity deposits and maturity deposits less than $250 thousand. Net loans includes loans held-for-sale.
(6) Tangible book value per share represents total stockholders' equity less the sum of preferred stock and intangible assets divided by common shares outstanding.

Northeast Bank
Claire S. Bean, CFO & COO, 207-786-3245 ext. 3202
www.northeastbank.com

Source: Northeast Bancorp

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