Northeast Bancorp
Apr 23, 2014

Northeast Bancorp Reports Third Quarter Results, Announces Stock Repurchase Program and Reduction in 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 $437 thousand, or $0.04 per diluted common share, for the quarter ended March 31, 2014, compared to net income available to common shareholders of $1.7 million, or $0.16 per diluted common share, for the quarter ended March 31, 2013. Net income available to common shareholders for the nine months ended March 31, 2014 was $2.2 million, compared to $3.9 million for the nine months ended March 31, 2013.

"The timing of income realized through our loan purchasing activities affected our results this quarter, as transactional income declined to $689 thousand as compared to $4.1 million for the quarter ended March 31, 2013. As we have noted in the past, transactional income on purchased loans can vary significantly from quarter to quarter, and income not recognized currently will benefit future periods," said Richard Wayne, Chief Executive Officer. "Such fluctuations may continue to cause variability in our quarterly earnings per share, until moderated by the positive effect of growth in our balance sheet and the full leveraging of our capital."

The Board of Directors has also voted to authorize the Company to purchase up to 870,000 shares of its common stock, representing 8.3% of the Company's outstanding common shares and approximately $8.4 million based on the Company's closing stock price on April 22, 2014. The Board of Directors has also declared a cash dividend of $0.01 per share, payable on May 19, 2014 to shareholders of record as of May 5, 2014.

"We believe that our shares are undervalued, based on current market prices," said Mr. Wayne. "Our goal in implementing this stock repurchase plan is to enhance shareholder value and, coupled with a reduction in our common stock dividend, provide the Company with greater flexibility in managing its capital position as we continue to implement our growth strategy."

Repurchases under the stock repurchase program will be made in open market or in privately negotiated transactions from time to time and in such amounts as market conditions warrant. The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements, market conditions, and other corporate liquidity requirements and priorities. The stock repurchase program may be suspended or terminated at any time without prior notice, and will expire on April 23, 2016.

At March 31, 2014, total assets were $750.9 million, an increase of $80.3 million, or 12.0%, compared to June 30, 2013. The principal components of the change in the Company's balance sheet are as follows:

1. The loan portfolio grew by $78.9 million, or 18.1%, compared to June 30, 2013, principally due to net growth of $68.0 million in commercial loans purchased or originated by the Bank's Loan Acquisition and Servicing Group ("LASG") and $10.9 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 follow.

Basis for

Regulatory Condition

    Condition    

Purchased Loan Capacity at
March 31, 2014

(Dollars in millions)
Total Loans Purchased loans may not exceed 40% of total loans $ 41.1
Regulatory Capital Commercial real estate loans may not exceed 300% of total risk-based capital $ 153.6
 

An overview of the Bank's LASG portfolio follows.

      Three Months Ended March 31,
2014       2013
Purchased     Originated     Total LASG Purchased     Originated     Total LASG
(Dollars in thousands)
Loans purchased or originated during the period:
Unpaid principal balance $ 19,050 $ 11,158 $ 30,208 $ 13,971 $ 2,800 $ 16,771
Net investment basis 16,300 11,158 27,458 11,340 2,827 14,167
 
Loan returns during the period:
Yield 9.51% 5.13% 8.11% 17.76% 9.43% 16.84%
Total Return (1) 10.39% 5.13% 8.71% 22.02% 9.43% 20.64%
 
Nine Months Ended March 31,
` 2014 2013
Purchased Originated Total LASG Purchased Originated Total LASG
(Dollars in thousands)
Loans purchased or originated during the period:
Unpaid principal balance $ 53,044 $ 54,722 $ 107,766 $ 103,539 $ 15,625 $ 119,164
Net investment basis 46,267 54,722 100,989 75,553 15,652 91,205
 
Loan returns during the period:
Yield 11.17% 5.27% 9.55% 15.52% 9.55% 14.89%
Total Return (1) 11.60% 5.27% 9.87% 18.66% 9.55% 17.70%
 
Total loans as of period end:
Unpaid principal balance $ 221,597 $ 88,700 $ 310,297 $ 166,360 $ 17,871 $ 184,231
Net investment basis 184,959 88,724 273,683 130,502 17,904 148,406

(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 $78.7 million and $1.6 million, respectively, from June 30, 2013. Growth in each was tied to the Company's strategy for funding its loan growth which, through the third quarter of fiscal 2014, included a component of duration-matched funding for residential mortgages.

Net income from continuing operations decreased by $1.2 million to $437 thousand for the quarter ended March 31, 2014, compared to $1.6 million for the quarter ended March 31, 2013. Operating results for the current quarter included the following additional items of significance:

1. Net interest income before provision for loan losses decreased by $1.1 million, or 13.8%, to $7.1 million for the quarter ended March 31, 2014 compared to the quarter ended March 31, 2013, primarily due to lower transactional interest income from purchased loan payoffs. The various components of transactional income are set forth in the table below entitled "Total Return on Purchased Loans." When compared to the quarter ended March 31, 2013, transactional interest income decreased nearly $2.4 million, impacting the net interest margin, which declined to 4.08% from 5.07%. 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,
2014       2013
Average     Interest     Average     Interest    
Balance Income Yield Balance Income Yield
(Dollars in thousands)
Community Banking Division $ 249,962 $ 3,183 5.16% $ 244,397 $ 3,529 5.86%
LASG:
Originated - traditional 57,534 1,008 7.11% 16,167 376 9.43%
Originated - securities loans 25,992 48 0.75% - - 0.00%
Purchased   177,559   4,164 9.51%   130,045   5,696 17.76%
Total LASG   261,085   5,220 8.11%   146,212   6,072 16.84%
Total $ 511,047 $ 8,403 6.67% $

390,609

$ 9,601 9.97%
 
     
Nine Months Ended March 31,
2014       2013
Average     Interest     Average     Interest    
Balance Income Yield Balance Income Yield
(Dollars in thousands)
Community Banking Division $ 246,539 $ 9,809 5.30% $ 257,760 $ 11,449 5.92%
LASG:
Originated - traditional 44,631 2,513 7.50% 12,974 930 9.55%
Originated - securities loans 21,638 109 0.67% - - 0.00%
Purchased   175,383   14,711 11.17%   110,151   12,830 15.52%
Total LASG   241,652   17,333 9.55%   123,125   13,760 14.89%
Total $ 488,191 $ 27,142 7.41% $ 380,885 $ 25,209 8.82%
 

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 total transactional income of $689 thousand for the quarter ended March 31, 2014, a decrease of $3.4 million from the quarter ended March 31, 2013. The following table summarizes the total return recognized on the purchased loan portfolio.

      Total Return on Purchased Loans
Three Months Ended March 31,
2014       2013
Income     Return (1) Income     Return (1)
(Dollars in thousands)
Regularly scheduled interest and accretion $ 3,880 8.83% $ 3,043 9.40%
Transactional income:
Gains on loan sales 349 0.79% 1,218 3.76%
Gain on sale of real estate owned 56 0.13% 211 0.65%
Other noninterest income - 0.00% - 0.00%
Accelerated accretion and loan fees   284 0.65%   2,653 8.20%
Total transactional income   689 1.57%   4,082 12.61%
Total $ 4,569 10.39% $ 7,125 22.02%
 
Nine Months Ended March 31,
2014 2013
Income Return (1) Income Return (1)
(Dollars in thousands)
Regularly scheduled interest and accretion $ 11,632 8.80% $ 7,813 9.35%
Transactional income:
Gains on loan sales 576 0.44% 2,035 2.44%
Gain on sale of real estate owned 56 0.04% 684 0.82%
Other noninterest income - 0.00% 36 0.04%
Accelerated accretion and loan fees   3,079 2.33%   5,017 6.01%
Total transactional income   3,711 2.81%   7,772 9.30%
Total $ 15,343 11.60% $ 15,585 18.66%
 

(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 $1.3 million for the quarter ended March 31, 2014, compared to the quarter ended March 31, 2013, principally due to the following:

3. Noninterest expense decreased by $612 thousand for the quarter ended March 31, 2014, compared to the quarter ended March 31, 2013, principally due to the following:

At March 31, 2014, nonperforming assets totaled $9.4 million, or 1.3% of total assets, compared to $7.0 million, or 1.0% of total assets at June 30, 2013. At March 31, 2014, $1.9 million of loans on nonaccrual status were current as to principal and interest payments, compared to $887 thousand at June 30, 2013.

At March 31, 2014, the Company's Tier 1 leverage ratio was 16.3%, a decrease from 17.8% at June 30, 2013, and the total risk-based capital ratio was 24.1%, 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 third quarter earnings and business outlook at 11:00 a.m. Eastern Time on Thursday, April 24, 2014. Investors can access the call by dialing 877.878.2762 and entering the following passcode: 34221296. 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 that adversely affect borrowers' ability to service and repay 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)
      March 31, 2014     June 30, 2013
Assets
Cash and due from banks $ 2,677 $ 3,238
Short-term investments   71,686   62,696
Total cash and cash equivalents 74,363 65,934
 
Available-for-sale securities, at fair value 112,732 121,597
Loans held for sale 9,827 8,594
 
Loans
Commercial real estate 299,898 264,448
Residential real estate 153,972 127,829
Construction - 42
Commercial and industrial 49,554 29,720
Consumer   10,828   13,337
Total loans 514,252 435,376
Less: Allowance for loan losses   1,345   1,143
Loans, net 512,907 434,233
 
Premises and equipment, net 9,211 10,075
Real estate owned and other possessed collateral, net 2,000 2,134
Federal Home Loan Bank and Federal Reserve Bank stock, at cost 5,721 5,721
Intangible assets, net 2,962 3,544
Bank owned life insurance 14,726 14,385
Other assets   6,444   4,422
Total assets $ 750,893 $ 670,639
 
Liabilities and Stockholders' Equity
Deposits
Demand $ 43,294 $ 46,425
Savings and interest checking 100,961 90,970
Money market 86,735 84,416
Time   332,320   262,812
Total deposits 563,310 484,623
 
Federal Home Loan Bank advances 42,878 28,040
Wholesale repurchase agreements 10,240 25,397
Short-term borrowings 2,585 625
Junior subordinated debentures issued to affiliated trusts 8,396 8,268
Capital lease obligation 1,604 1,739
Other liabilities   7,872   8,145
Total liabilities   636,885   556,837
 
Commitments and contingencies - -
 
Stockholders' equity
Preferred stock, $1.00 par value, 1,000,000 shares authorized; no shares
issued and outstanding at March 31, 2014 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
March 31, 2014 and June 30, 2013, respectively 9,552 9,566
Non-voting common stock, $1.00 par value, 3,000,000 shares authorized;
880,963 shares issued and outstanding at March 31, 2014 and June 30, 2013 881 881
Additional paid-in capital 93,371 92,745
Retained earnings 11,856 12,524
Accumulated other comprehensive loss   (1,652)   (1,914)
Total stockholders' equity   114,008   113,802
Total liabilities and stockholders' equity $ 750,893 $ 670,639
 
 
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,
2014     2013 2014     2013
Interest and dividend income:
Interest on loans $ 8,403 $ 9,601 $ 27,142 $ 25,209
Interest on available-for-sale securities 253 234 797 929
Other interest and dividend income   61   85   208   283
Total interest and dividend income   8,717   9,920   28,147   26,421
 
Interest expense:
Deposits 1,022 1,084 3,048 3,090
Federal Home Loan Bank advances 324 232 975 750
Wholesale repurchase agreements 93 135 285 515
Short-term borrowings 6 4 17 15
Junior subordinated debentures issued to affiliated trusts 140 190 525 574
Obligation under capital lease agreements   20   22   63   69
Total interest expense   1,605   1,667   4,913   5,013
 
Net interest and dividend income before provision for loan losses 7,112 8,253 23,234 21,408
Provision for loan losses   180   346   407   821
Net interest and dividend income after provision for loan losses   6,932   7,907   22,827   20,587
 
Noninterest income:
Fees for other services to customers 385 430 1,246 1,202
Net securities gains - - - 792
Gain on sales of loans held for sale 265 625 1,145 2,295
Gain on sales of portfolio loans 373 1,228 603 2,226
Gain recognized on real estate owned and other repossessed collateral, net 165 230 50 681
Bank-owned life insurance income 108 118 342 599
Other noninterest income   12   12   46   68
Total noninterest income   1,308   2,643   3,432   7,863
 
Noninterest expense:
Salaries and employee benefits 3,759 4,687 12,624 12,170
Occupancy and equipment expense 1,450 1,218 4,075 3,341
Professional fees 366 388 1,115 1,210
Data processing fees 257 239 770 671
Marketing expense 86 249 225 678
Loan acquisition and collection expense 440 352 1,203 1,285
FDIC insurance premiums 127 125 354 364
Intangible asset amortization 162 205 582 735
Legal settlement recovery - - (250) -
Other noninterest expense   869   665   2,284   2,034
Total noninterest expense   7,516   8,128   22,982   22,488
 
Income from continuing operations before income tax expense 724 2,422 3,277 5,962
Income tax expense   287 792   1,119   1,913
Net Income from continuing operations   437 1,630   2,158   4,049
 
Income (loss) from discontinued operations before income tax expense (benefit) - 55 (12) 253
Income tax expense (benefit)   -   19   (4)   87
Net income (loss) from discontinued operations   -   36   (8)   166
Net income $ 437 $ 1,666 $ 2,150 $ 4,215
Net income available to common stockholders $ 437 $ 1,666 $ 2,150 $ 3,860
 
Weighted-average shares outstanding:
Basic 10,432,494 10,425,576 10,435,300 10,397,280
Diluted 10,432,494 10,425,576 10,435,300 10,397,280
Earnings per common share:
Basic:
Income from continuing operations $ 0.04 $ 0.16 $ 0.21 $ 0.35
Income from discontinued operations   0.00 0.00 0.00 0.02
Net Income $ 0.04 $ 0.16 $ 0.21 $ 0.37
Diluted:
Income from continuing operations $ 0.04 $ 0.16 $ 0.21 $ 0.35
Income from discontinued operations   0.00   0.00   0.00   0.02
Net Income $ 0.04 $ 0.16 $ 0.21 $ 0.37
Cash dividends declared per common share $ 0.09 $ 0.09 $ 0.27 $ 0.27
 
 
NORTHEAST BANCORP AND SUBSIDIARY
CONSOLIDATED AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS
(Unaudited)
(Dollars in thousands)
      Three Months Ended March 31,
2014       2013
    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 $ 114,925 $ 253 0.89% $ 131,006 $ 234 0.72%
Loans (1) (2) 511,047 8,403 6.67% 390,609 9,601 9.97%
Regulatory stock 5,721 16 1.13% 5,391 4 0.30%
Short-term investments (3)   75,506   45 0.24%   133,025   81 0.25%
Total interest-earning assets   707,199   8,717 5.00%   660,031   9,920 6.10%
Cash and due from banks 2,833 3,184
Other non-interest earning assets   37,366   36,694
Total assets $ 747,398 $ 699,909
 
Liabilities & Stockholders' Equity:
Interest-bearing liabilities:
NOW accounts $ 61,028 $ 40 0.27% $ 55,068 $ 36 0.27%
Money market accounts 87,352 112 0.52% 70,613 102 0.59%
Savings accounts 35,032 12 0.14% 32,464 11 0.14%
Time deposits   325,505   858 1.07%   297,555   935 1.27%
Total interest-bearing deposits 508,917 1,022 0.81% 455,700 1,084 0.96%
Short-term borrowings 2,192 6 1.11% 1,889 4 0.86%
Borrowed funds 59,399 437 2.98% 64,212 389 2.46%
Junior subordinated debentures   8,374   140 6.78%   8,205   190 9.39%
Total interest-bearing liabilities   578,782   1,605 1.12%   530,006   1,667 1.28%
 
Non-interest bearing liabilities:
Demand deposits and escrow accounts 48,361 48,426
Other liabilities   5,920   5,921
Total liabilities 633,163 584,353
Stockholders' equity   114,235   115,556
Total liabilities and stockholders' equity $ 747,398 $ 699,909
 
Net interest income $ 7,112 $ 8,253
 
Interest rate spread 3.87% 4.82%
Net interest margin (4) 4.08% 5.07%
 

(1) Includes loans held for sale.
(2) Nonaccrual loans are included in the computation of average, but unpaid interest has not been included for purposes of determining interest income.
(3) Short term investments include FHLB overnight deposits and other interest-bearing deposits.
(4) Net interest margin is calculated as net interest income divided by total interest-earning assets.

 
 
NORTHEAST BANCORP AND SUBSIDIARY
CONSOLIDATED AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS
(Unaudited)
(Dollars in thousands)
      Nine Months Ended March 31,
2014       2013
    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 $ 117,053 $ 797 0.91% $ 132,835 $ 929 0.93%
Loans (1) (2) 488,191 27,142 7.41% 380,885 25,209 8.82%
Regulatory stock 5,721 68 1.58% 5,446 42 1.03%
Short-term investments (3)   77,334   140 0.24%   130,991   241 0.25%
Total interest-earning assets   688,299   28,147 5.45%   650,157   26,421 5.41%
Cash and due from banks 2,975 3,094
Other non-interest earning assets   35,855   37,571
Total assets $ 727,129 $ 690,822
 
Liabilities & Stockholders' Equity:
Interest-bearing liabilities:
NOW accounts $ 59,703 $ 120 0.27% $ 55,468 $ 116 0.28%
Money market accounts 86,421 338 0.52% 56,739 221 0.52%
Savings accounts 34,160 35 0.14% 31,631 32 0.13%
Time deposits   306,423   2,555 1.11%   283,287   2,721 1.28%
Total interest-bearing deposits 486,707 3,048 0.83% 427,125 3,090 0.96%
Short-term borrowings 2,290 17 0.99% 1,397 15 1.43%
Borrowed funds 59,778 1,323 2.95% 81,183 1,334 2.19%
Junior subordinated debentures   8,331   525 8.39%   8,164   574 9.37%
Total interest-bearing liabilities   557,106   4,913 1.17%   517,869   5,013 1.29%
 
Non-interest bearing liabilities:
Demand deposits and escrow accounts 50,662 50,192
Other liabilities   5,718   5,636
Total liabilities 613,486 573,697
Stockholders' equity   113,643   117,125
Total liabilities and stockholders' equity $ 727,129 $ 690,822
 
Net interest income $ 23,234 $ 21,408
 
Interest rate spread 4.27% 4.12%
Net interest margin (4) 4.50% 4.39%
 

(1) Includes loans held for sale.
(2) Nonaccrual loans are included in the computation of average, but unpaid interest has not been included for purposes of determining interest income.
(3) Short term investments include FHLB overnight deposits and other interest-bearing deposits.
(4) Net interest margin is calculated as net interest income divided by total interest-earning assets.

 
 
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, 2014     December 31, 2013     September 30, 2013     June 30, 2013     March 31, 2013
Net interest income $ 7,112 $ 9,017 $ 7,107 $ 8,539 $ 8,253
Provision for loan losses 180 151 77 301 346
Noninterest income 1,308 835 1,288 1,443 2,643
Noninterest expense 7,516 7,614 7,852 9,467 8,128
Net income from continuing operations 437 1,411 310 247 1,630
Net income 437 1,393 320 205 1,666
 
Weighted average common shares outstanding:
Basic 10,432,494 10,432,833 10,440,513 10,446,643 10,425,576
Diluted 10,432,494 10,432,833 10,440,513 10,446,643 10,425,576
Earnings per common share:
Basic $ 0.04 $ 0.13 $ 0.03 $ 0.02 $ 0.16
Diluted $ 0.04 0.13 0.03 0.02 0.16
Dividends per common share 0.09 0.09 0.09 0.09 0.09
 
Return on average assets 0.24% 0.76% 0.18% 0.12% 0.97%
Return on average equity 1.55% 4.86% 1.12% 0.71% 5.85%
Net interest rate spread (1) 3.87% 4.94% 3.99% 5.07% 4.82%
Net interest margin (2) 4.08% 5.16% 4.24% 5.32% 5.07%
Efficiency ratio (3) 89.26% 77.28% 93.53% 94.84% 74.60%
Noninterest expense to average total assets 4.08% 4.13% 4.43% 5.56% 4.71%
Average interest-earning assets to average
interest-bearing liabilities
122.17% 123.85% 124.70% 125.27% 124.53%
 
As of:
March 31, 2014 December 31, 2013 September 30, 2013 June 30, 2013 March 31, 2013
Nonperforming loans:
Originated portfolio:
Residential real estate $ 1,678 $ 1,895 $ 1,945 $ 2,346 $ 2,296
Commercial real estate 798 487 471 473 631
Home equity 214 204 229 334 405
Commercial business - 61 62 110 103
Consumer 152 259 259 136 258
Total originated portfolio 2,842 2,906 2,966 3,399 3,693
Total purchased portfolio 4,582 3,245 2,553 1,457 1,700
Total nonperforming loans 7,424 6,151 5,519 4,856 5,393
Real estate owned and other possessed collateral, net 2,000 3,211 3,413 2,134 2,038
Total nonperforming assets $ 9,424 $ 9,362 $ 8,932 $ 6,990 $ 7,431
 
Past due loans to total loans 1.44% 1.57% 1.38% 1.68% 2.00%
Nonperforming loans to total loans 1.44% 1.23% 1.14% 1.12% 1.42%
Nonperforming assets to total assets 1.26% 1.28% 1.23% 1.04% 1.06%
Allowance for loan losses to total loans 0.26% 0.27% 0.25% 0.26% 0.27%
Allowance for loan losses to nonperforming loans 18.12% 21.95% 22.18% 23.54% 19.15%
 
Commercial real estate loans to risk-based capital (4) 175.10% 170.69% 171.30% 159.07% 184.40%
Net loans to core deposits (5) 93.18% 95.10% 93.04% 92.94% 77.72%
Purchased loans to total loans, including held for sale 35.29% 34.89% 36.29% 37.57% 33.63%
Equity to total assets 15.18% 15.61% 15.70% 16.97% 16.54%
Tier 1 leverage capital ratio 16.28% 16.66% 17.23% 17.78% 17.41%
Total risk-based capital ratio 24.21% 24.61% 25.63% 27.54% 30.71%
 
Total stockholders' equity $ 114,008 $ 114,383 $ 113,846 $ 113,802 $ 115,737
Less: Preferred stock - - - - -
Common stockholders' equity 114,008 114,383 113,846 113,802 115,737
Less: Intangible assets (2,962) (3,124) (3,334) (3,544) (3,751)
Tangible common stockholders' equity (non-GAAP) $ 111,046 $ 111,259 $ 110,512 $ 110,258 $ 111,986
 
Common shares outstanding 10,432,494 10,432,494 10,433,550 10,446,643 10,446,643
Book value per common share $ 10.93 $ 10.96 $ 10.91 $ 10.89 $ 11.08
Tangible book value per share (non-GAAP) (6) 10.64 10.66 10.59 10.55 10.72
 
Reconciliation of Net Income Available to Common Shareholders (GAAP) to Net Operating Earnings (non-GAAP) (7)
Three Months Ended:
March 31, 2014 December 31, 2013 September 30, 2013 June 30, 2013 March 31, 2013
Net income available to common shareholders (GAAP) $ 437 $ 1,393 $ 320 $ 205 $ 1,666
Items excluded from operating earnings, net of tax:
Discontinued operations - 18 (10) 42 (36)
Severance expense 35 - 366 203 -
Legal settlement expense and related professional fees - - (165) 671 -
Total after-tax items 35 18 191 916 (36)
Net operating earnings (non-GAAP) $ 472 $ 1,411 $ 511 $ 1,121 $ 1,630
Net operating earnings per share - basic (non-GAAP) $ 0.05 $ 0.14 $ 0.05 $ 0.11 $ 0.16
 

(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, CFO & COO, 207-786-3245 ext. 3202
www.northeastbank.com

Source: Northeast Bancorp

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