Northeast Bancorp
Jan 30, 2014

Northeast Bancorp Reports Second 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 available to common shareholders of $1.4 million, or $0.13 per diluted common share, for the quarter ended December 31, 2013, compared to net income available to common shareholders of $1.3 million, or $0.12 per diluted common share, for the quarter ended December 31, 2012. Net income available to common shareholders for the six months ended December 31, 2013 was $1.7 million, compared to $2.2 million for the six months ended December 31, 2012.

The Board of Directors has declared a cash dividend of $0.09 per share, payable on February 26, 2014 to shareholders of record as of February 12, 2014.

"Leveraging our capital and operational infrastructure remains our top priority," said Richard Wayne, President and Chief Executive Officer of Northeast. "To that end, we have grown our loan portfolio by $66 million or 15% for our fiscal year to date, primarily as a result of growth in our LASG loan portfolio. The effect of steady loan growth, coupled with an increase in transactional income this quarter, increased our net interest margin to 5.16%. Looking forward, we are very excited that Jeanne Hulit, Acting Administrator of the SBA, will be joining us as President of our Community Banking Division. Jeanne's commercial banking and managerial experience is a significant complement to our team, as we continue to execute on our growth strategy."

At December 31, 2013, total assets were $732.6 million, an increase of $62.0 million, or 9.2%, compared to June 30, 2013. The principal components of the quarterly changes in the balance sheet follow:

1. The loan portfolio grew by $66.3 million, or 15.2%, compared to June 30, 2013, principally due to net growth of $50.6 million in commercial loans purchased or originated by the Bank's Loan Acquisition and Servicing Group ("LASG") and $15.7 million of net growth in loans originated by the Bank's Community Banking Division. As has been discussed in the Company's prior 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 capacity under these conditions follows.

Basis for

Regulatory Condition

    Condition    

Purchased Loan Capacity at
December 31, 2013

(Dollars in millions)
Total Loans Purchased loans may not exceed 40% of total loans $ 43.3
Regulatory Capital Commercial real estate loans may not exceed 300% of total risk-based capital $ 159.3
 

An overview of the Bank's LASG portfolio follows.

    Three Months Ended December 31,
2013     2012
Purchased     Originated     Total LASG Purchased     Originated     Total LASG
(Dollars in thousands)
Loans purchased or originated during the period:
Unpaid principal balance $ 15,663 $ 17,138 $ 32,801 $ 47,295 $ 4,026 $ 51,321
Net investment basis 13,619 17,138 30,757 32,864 4,026 36,890

Loan returns during the period:

Yield 13.82% 5.14% 11.38% 13.34% 9.72% 12.96%
Total Return (1) 13.76% 5.14% 11.35% 15.95% 9.72% 15.30%
 
Six Months Ended December 31,
2013 2012
Purchased Originated Total LASG Purchased Originated Total LASG
(Dollars in thousands)
Loans purchased or originated during the period:
Unpaid principal balance $ 33,994 $ 43,564 $ 77,558 $ 89,568 $ 12,825 $ 102,393
Net investment basis 29,967 43,564 73,531 64,213 12,825 77,038

Loan returns during the period:

Yield 12.00% 5.37% 10.35% 14.09% 9.65% 13.64%
Total Return (1) 12.20% 5.37% 10.51% 16.53% 9.65% 15.83%

Total loans as of period end:

Unpaid principal balance $ 212,767 $ 78,828 $ 291,595 $ 172,030 $ 15,937 $ 187,967
Net investment basis 177,435 78,868 256,303 133,724 15,945 149,669

(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 and borrowings increased by $51.9 million and $6.6 million, respectively, from June 30, 2013. Growth in each was tied to the Company's strategy for funding its loan growth, which includes a component of duration-matched funding for growth in longer-term assets such as residential mortgages.

Net income from continuing operations decreased by $51 thousand to $1.4 million for the quarter ended December 31, 2013, compared to $1.5 million for the quarter ended December 31, 2012. Income for the quarter ended December 31, 2012 included $235 thousand of nonrecurring income relating to life insurance death benefits. Operating results for the current quarter included the following additional items of significance:

1. Net interest income increased by $2.0 million, or 27.8%, to $9.0 million for the quarter ended December 31, 2013 compared to the quarter ended December 31, 2012, primarily due to growth in the LASG loan portfolio. This result is evident in the net interest margin, which increased to 5.16% for the quarter ended December 31, 2013, compared to 4.28% for the quarter ended December 31, 2012. The following table summarizes interest income and related yields recognized on the loan portfolios.

    Interest Income and Yield on Loans
Three Months Ended December 31,
2013     2012
Average     Interest     Average     Interest    
Balance Income Yield Balance Income Yield
(Dollars in thousands)
Community Banking Division $ 247,057 $ 3,284 5.27% $ 257,837 $ 3,988 6.14%
LASG:
Originated 68,449 886 5.14% 13,631 334 9.72%
Purchased   175,469   6,112 13.82%   117,365   3,945 13.34%
Total LASG   243,918   6,998 11.38%   130,996   4,279 12.96%
Total $ 490,975 $ 10,282 8.31% $ 388,833 $ 8,267 8.44%
 
    Six Months Ended December 31,
2013     2012
Average     Interest     Average     Interest    
Balance Income Yield Balance Income Yield
(Dollars in thousands)
Community Banking Division $ 244,880 $ 6,626 5.37% $ 264,298 $ 7,920 5.94%
LASG:
Originated 57,828 1,566 5.37% 11,412 555 9.65%
Purchased   174,318   10,547 12.00%   100,420   7,133 14.09%
Total LASG   232,146   12,113 10.35%   111,832   7,688 13.64%
Total $ 477,026 $ 18,739 7.79% $ 376,130 $ 15,608 8.23%
 

The yield on purchased loans in each period shown 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 $2.1 million for the quarter ended December 31, 2013, an increase of $206 thousand from the quarter ended December 31, 2012. The following table summarizes the total return recognized on the purchased loan portfolio.

    Total Return on Purchased Loans
Three Months Ended December 31,
2013     2012
Income     Return (1) Income     Return (1)
(Dollars in thousands)
Regularly scheduled interest and accretion $ 4,014 9.02% $ 2,859 9.57%
Transactional income:
Gains on loan sales 11 0.02% 817 2.74%
Gain on sale of real estate owned - 0.00% - 0.00%
Other noninterest income - 0.00% - 0.00%
Accelerated accretion and loan fees   2,098 4.72%   1,086 3.64%
Total transactional income   2,109 4.74%   1,903 6.37%
Total $ 6,123 13.76% $ 4,762 15.95%
 
    Six Months Ended December 31,
2013     2012
Income     Return (1) Income     Return (1)
(Dollars in thousands)
Regularly scheduled interest and accretion $ 7,753 8.78% $ 4,770 9.32%
Transactional income:
Gains on loan sales 227 0.26% 817 1.60%
Gain on sale of real estate owned - 0.00% 473 0.92%
Other noninterest income - 0.00% 36 0.07%
Accelerated accretion and loan fees   2,794 3.16%   2,363 4.62%
Total transactional income   3,021 3.42%   3,689 7.21%
Total $ 10,774 12.20% $ 8,459 16.53%

(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. Noninterest income decreased by $1.9 million for the quarter ended December 31, 2013, compared to the quarter ended December 31, 2012, principally due to the following:

3. Noninterest expense increased by $197 thousand for the quarter ended December 31, 2013, compared to the quarter ended December 31, 2012, principally due to the following:

At December 31, 2013, nonperforming assets totaled $9.4 million, or 1.3% of total assets, as compared to $7.0 million, or 1.0% of total assets at June 30, 2013. The increase in nonperforming assets during the six months ended December 31, 2013 was mainly comprised of three purchased loan relationships.

At December 31, 2013, the Company's Tier 1 leverage ratio was 16.7%, a decrease from 17.8% at June 30, 2013, and the total risk-based capital ratio was 24.6%, a decrease from 27.5% at June 30, 2013.

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 second quarter earnings and business outlook at 11:00 a.m. Eastern Time on Friday, January 31, 2014. Investors can access the call by dialing 877.878.2762 and entering the following passcode: 50583197. 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 seven 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.

NBN-F

 
 
NORTHEAST BANCORP AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands, except share and per share data)
    December 31, 2013     June 30, 2013
Assets
Cash and due from banks $ 2,948 $ 3,238
Short-term investments   60,479   62,696
Total cash and cash equivalents 63,427 65,934
 
Available-for-sale securities, at fair value 114,717 121,597
Loans held for sale 6,826 8,594
 
Loans
Commercial real estate 292,802 264,448
Residential real estate 153,486 127,829
Construction - 42
Commercial and industrial 43,699 29,720
Consumer   11,722   13,337
Total loans 501,709 435,376
Less: Allowance for loan losses   1,350   1,143
Loans, net 500,359 434,233
 
Premises and equipment, net 9,624 10,075
Real estate owned and other possessed collateral, net 3,211 2,134
Federal Home Loan Bank and Federal Reserve Bank stock, at cost 5,721 5,721
Intangible assets, net 3,124 3,544
Bank owned life insurance 14,619 14,385
Other assets   10,997   4,422
Total assets $ 732,625 $ 670,639
 
Liabilities and Stockholders' Equity
Deposits
Demand $ 47,015 $ 46,425
Savings and interest checking 93,394 90,970
Money market 88,156 84,416
Time   307,957   262,812
Total deposits 536,522 484,623
 
Federal Home Loan Bank advances 42,931 28,040
Wholesale repurchase agreements 15,290 25,397
Short-term borrowings 2,468 625
Junior subordinated debentures issued to affiliated trusts 8,352 8,268
Capital lease obligation 1,650 1,739
Other liabilities   11,029   8,145
Total liabilities   618,242   556,837
 
Commitments and contingencies - -
 
Stockholders' equity
Preferred stock, $1.00 par value, 1,000,000 shares authorized; no shares
issued and outstanding at December 31, 2013 and June 30, 2013 - -
Voting common stock, $1.00 par value, 25,000,000 shares authorized;
9,551,531 and 9,565,680 shares issued and outstanding at 9,552 9,566
December 31, 2013 and June 30, 2013, respectively
Non-voting common stock, $1.00 par value, 3,000,000 shares authorized;
880,963 shares issued and outstanding at December 31, 2013 and June 30, 2013 881 881
Additional paid-in capital 93,230 92,745
Retained earnings 12,358 12,524
Accumulated other comprehensive loss   (1,638)   (1,914)
Total stockholders' equity   114,383   113,802
Total liabilities and stockholders' equity $ 732,625 $ 670,639
 
NORTHEAST BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Dollars in thousands, except share and per share data)
    Three Months Ended December 31,     Six Months Ended December 31,
2013     2012 2013     2012
Interest and dividend income:
Interest on loans $ 10,282 $ 8,267 $ 18,739 $ 15,608
Interest on available-for-sale securities 262 348 544 695
Other interest and dividend income   96   109   147   198
Total interest and dividend income   10,640   8,724   19,430   16,501
 
Interest expense:
Deposits 979 1,028 2,026 2,006
Federal Home Loan Bank advances 327 259 651 518
Wholesale repurchase agreements 98 161 192 380
Short-term borrowings 6 5 11 11
Junior subordinated debentures issued to affiliated trusts 192 191 385 384
Obligation under capital lease agreements   21   23   43   47
Total interest expense   1,623   1,667   3,308   3,346
 
Net interest and dividend income before provision for loan losses 9,017 7,057 16,122 13,155
Provision for loan losses   151   247   227   475
Net interest and dividend income after provision for loan losses   8,866   6,810   15,895   12,680
 
Noninterest income:
Fees for other services to customers 421 462 861 772
Net securities gains - - - 792
Gain on sales of loans held for sale 341 914 880 1,670
Gain on sales of portfolio loans 13 998 230 998

(Loss) gain recognized on real estate owned and other repossessed collateral, net

 

(77) - (115) 451
Bank-owned life insurance income 116 358 234 481
Other noninterest income   21   13   34   56
Total noninterest income   835   2,745   2,124   5,220
 
Noninterest expense:
Salaries and employee benefits 4,253 3,843 8,885 7,483
Occupancy and equipment expense 1,311 1,104 2,625 2,123
Professional fees 323 399 749 822
Data processing fees 256 220 513 432
Marketing expense 103 247 139 429
Loan acquisition and collection expense 290 479 763 933
FDIC insurance premiums 117 122 227 239
Intangible asset amortization 210 265 420 530
Legal settlement recovery - - (250) -
Other noninterest expense   751   738   1,395   1,368
Total noninterest expense   7,614   7,417   15,466   14,359
 
Income from continuing operations before income tax expense 2,087 2,138 2,553 3,541
Income tax expense   676 676   832   1,121
Net income from continuing operations   1,411 1,462   1,721   2,420
 
Income from discontinued operations before tax (benefit) expense (27) 84 (12) 198
Income tax (benefit) expense   (9)   29   (4)   68
Net (loss) income from discontinued operations   (18)   55   (8)   130
Net income $ 1,393 $ 1,517 $ 1,713 $ 2,550
Net income available to common stockholders $ 1,393 $ 1,259 $ 1,713 $ 2,195
 
Weighted-average shares outstanding:
Basic 10,432,833 10,383,441 10,436,673 10,383,441
Diluted 10,432,833 10,383,441 10,436,673 10,383,441
Earnings per common share:
Basic:
Income from continuing operations $ 0.13 $ 0.11 $ 0.16 $ 0.20
Income from discontinued operations   -   0.01   -   0.01
Net Income $ 0.13 $ 0.12 $ 0.16 $ 0.21
Diluted:
Income from continuing operations $ 0.13 $ 0.11 $ 0.16 $ 0.20
Income from discontinued operations   -   0.01   -   0.01
Net Income $ 0.13 $ 0.12 $ 0.16 $ 0.21
Cash dividends declared per common share $ 0.09 $ 0.09 $ 0.18 $ 0.18
 
NORTHEAST BANCORP AND SUBSIDIARY
CONSOLIDATED AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS
(Unaudited)
(Dollars in thousands)
    Three Months Ended December 31,
2013     2012
    Interest     Average     Interest     Average
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
Assets:
Interest-earning assets:
Investment securities (1) $ 116,888 $ 262 0.89% $ 135,663 $ 348 1.02%
Loans (2) (3) 490,975 10,282 8.31% 388,833 8,267 8.44%
Regulatory stock 5,721 48 3.33% 5,473 32 2.32%
Short-term investments (4)   79,049   48 0.24%   123,850   77 0.25%
Total interest-earning assets   692,633   10,640 6.09%   653,819   8,724 5.29%
Cash and due from banks 3,053 2,922
Other non-interest earning assets   36,222   38,253
Total assets $ 731,908 $ 694,994
 
Liabilities & Stockholders' Equity:
Interest-bearing liabilities:
NOW accounts $ 58,987 $ 40 0.27% $ 54,733 $ 37 0.27%
Money market accounts 86,245 114 0.52% 52,558 66 0.50%
Savings accounts 33,540 12 0.14% 31,100 11 0.14%
Time deposits   309,790   813 1.04%   294,640   914 1.23%
Total interest-bearing deposits 488,562 979 0.80% 433,031 1,028 0.94%
Short-term borrowings 2,397 6 0.99% 1,063 5 1.87%
Borrowed funds 59,941 446 2.95% 78,782 443 2.23%
Junior subordinated debentures   8,331   192 9.14%   8,165   191 9.28%
Total interest-bearing liabilities   559,231   1,623 1.15%   521,041   1,667 1.27%
 
Non-interest bearing liabilities:
Demand deposits and escrow accounts 53,184 52,297
Other liabilities   5,677   4,717
Total liabilities 618,092 578,055
Stockholders' equity   113,816   116,939
Total liabilities and stockholders' equity $ 731,908 $ 694,994
 
Net interest income $ 9,017 $ 7,057
 
Interest rate spread 4.94% 4.02%
Net interest margin (5) 5.16% 4.28%

(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)
    Six Months Ended December 31,
2013     2012
    Interest     Average     Interest     Average
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
Assets:
Interest-earning assets:
Investment securities (1) $ 118,093 $ 544 0.91% $ 133,730 $ 695 1.03%
Loans (2) (3) 477,026 18,739 7.79% 376,130 15,608 8.23%
Regulatory stock 5,721 52 1.80% 5,473 38 1.38%
Short-term investments (4)   78,228   95 0.24%   129,997   160 0.24%
Total interest-earning assets   679,068   19,430 5.68%   645,330   16,501 5.07%
Cash and due from banks 3,045 3,049
Other non-interest earning assets   35,117   37,973
Total assets $ 717,230 $ 686,352
 
Liabilities & Stockholders' Equity:
Interest-bearing liabilities:
NOW accounts $ 59,055 $ 80 0.27% $ 55,664 $ 79 0.28%
Money market accounts 85,967 226 0.52% 49,954 119 0.47%
Savings accounts 33,733 24 0.14% 31,223 22 0.14%
Time deposits   297,090   1,696 1.13%   276,308   1,786 1.28%
Total interest-bearing deposits 475,845 2,026 0.84% 413,149 2,006 0.96%
Short-term borrowings 2,337 11 0.93% 1,157 11 1.89%
Borrowed funds 59,964 886 2.93% 89,484 945 2.09%
Junior subordinated debentures   8,309   385 9.19%   8,144   384 9.35%
Total interest-bearing liabilities   546,455   3,308 1.20%   511,934   3,346 1.30%
 
Non-interest bearing liabilities:
Demand deposits and escrow accounts 51,788 51,056
Other liabilities   5,619   5,471
Total liabilities 603,862 568,461
Stockholders' equity   113,368   117,891
Total liabilities and stockholders' equity $ 717,230 $ 686,352
 
Net interest income $ 16,122 $ 13,155
 
Interest rate spread 4.48% 3.78%
Net interest margin (5) 4.71% 4.04%

(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
SELECTED CONSOLIDATED FINANCIAL HIGHLIGHTS AND OTHER DATA
(Unaudited)
(Dollars in thousands, except share and per share data)
    Three Months Ended:
December 31, 2013     September 30, 2013     June 30, 2013     March 31, 2013     December 31, 2012
Net interest income $ 9,017 $ 7,107 $ 8,539 $ 8,253 $ 7,057
Provision for loan losses 151 77 301 346 247
Noninterest income 835 1,288 1,443 2,643 2,745
Noninterest expense 7,614 7,852 9,467 8,128 7,417
Net income from continuing operations 1,411 310 247 1,630 1,462
Net income 1,393 320 205 1,666 1,517
 
Weighted average common shares outstanding:
Basic 10,432,833 10,440,513 10,446,643 10,425,576 10,383,441
Diluted 10,432,833 10,440,513 10,446,643 10,425,576 10,383,441
Earnings per common share:
Basic $ 0.13 $ 0.03 $ 0.02 $ 0.16 $ 0.12
Diluted 0.13 0.03 0.02 0.16 0.12
Dividends per common share 0.09 0.09 0.09 0.09 0.09
 
Return on average assets 0.76% 0.18% 0.12% 0.97% 0.87%
Return on average equity 4.86% 1.12% 0.71% 5.85% 5.15%
Net interest rate spread (1) 4.94% 3.99% 5.07% 4.82% 4.02%
Net interest margin (2) 5.16% 4.24% 5.32% 5.07% 4.28%
Efficiency ratio (3) 77.28% 93.53% 94.84% 74.60% 75.67%
Noninterest expense to average total assets 4.13% 4.43% 5.56% 4.71% 4.23%
Average interest-earning assets to average
interest-bearing liabilities
123.85% 124.70% 125.27% 124.53% 125.48%
 
As of:
December 31, 2013 September 30, 2013 June 30, 2013 March 31, 2013 December 31, 2012
Nonperforming loans:
Originated portfolio:
Residential real estate $ 1,895 $ 1,945 $ 2,346 $ 2,296 $ 3,512
Commercial real estate 487 471 473 631 624
Home equity 204 229 334 405 620
Commercial business 61 62 110 103 123
Consumer   259   259   136   258   166
Total originated portfolio 2,906 2,966 3,399 3,693 5,045
Total purchased portfolio   3,245   2,553   1,457   1,700   2,144
Total nonperforming loans 6,151 5,519 4,856 5,393 7,189
Real estate owned and other possessed collateral, net   3,211   3,413   2,134   2,038   2,633
Total nonperforming assets $ 9,362 $ 8,932 $ 6,990 $ 7,431 $ 9,822
 
Past due loans to total loans 1.57% 1.38% 1.68% 2.00% 2.52%
Nonperforming loans to total loans 1.23% 1.14% 1.12% 1.42% 1.83%
Nonperforming assets to total assets 1.28% 1.23% 1.04% 1.06% 1.39%
Allowance for loan losses to total loans 0.27% 0.25% 0.26% 0.27% 0.22%
Allowance for loan losses to nonperforming loans 21.95% 22.18% 23.54% 19.15% 12.17%
 
Commercial real estate loans to risk-based capital (4) 170.69% 171.30% 159.07% 184.40% 193.74%
Net loans to core deposits (5) 95.10% 93.04% 92.94% 77.72% 81.01%
Purchased loans to total loans, including held for sale 34.89% 36.29% 37.57% 33.63% 33.36%
Equity to total assets 15.61% 15.70% 16.97% 16.54% 16.31%
Tier 1 leverage capital ratio 16.66% 17.23% 17.78% 17.41% 17.44%
Total risk-based capital ratio 24.61% 25.63% 27.54% 30.71% 29.35%
 
Total stockholders' equity $ 114,383 $ 113,846 $ 113,802 $ 115,737 $ 114,931
Less: Preferred stock   -   -   -   -   -
Common stockholders' equity 114,383 113,846 113,802 115,737 114,931
Less: Intangible assets   (3,124)   (3,334)   (3,544)   (3,751)   (3,957)
Tangible common stockholders' equity (non-GAAP) $ 111,259 $ 110,512 $ 110,258 $ 111,986 $ 110,974
 
Common shares outstanding 10,432,494 10,433,550 10,446,643 10,446,643 10,383,441
Book value per common share $ 10.96 $ 10.91 $ 10.89 $ 11.08 $ 11.07
Tangible book value per share (non-GAAP) (6) 10.66 10.59 10.55 10.72 10.69
 
Reconciliation of Net Income Available to Common Shareholders (GAAP) to Net Operating Earnings (non-GAAP) (7)
Three Months Ended:
December 31, 2013 September 30, 2013 June 30, 2013 March 31, 2013 December 31, 2012
Net income available to common shareholders (GAAP) $ 1,393 $ 320 $ 205 $ 1,666 $ 1,259
Items excluded from operating earnings, net of tax:
Discontinued operations 18 (10) 42 (36) (55)
Income from life insurance death benefits - - - - (235)
Severance expense - 366 203 - -
Legal settlement expense and related professional fees   -   (165)   671   -   -
Total after-tax items   18   191   916   (36)   (320)
Net operating earnings (non-GAAP) $ 1,411 $ 511 $ 1,121 $ 1,630 $ 969
Net operating earnings per share - basic (non-GAAP) $ 0.14 $ 0.05 $ 0.11 $ 0.16 $ 0.09

(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.
(5) Core deposits include all non-maturity deposits and maturity deposits less than $250 thousand. Loans include 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.
(7) Management believes operating earnings, which exclude non-core items, provide a more meaningful representation of the Company's performance.

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

Source: Northeast Bancorp

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