Northeast Bancorp
Jan 29, 2015

Northeast Bancorp Reports Second Quarter Results, Declares Dividend

LEWISTON, Maine, Jan. 29, 2015 (GLOBE NEWSWIRE) -- Northeast Bancorp ("Northeast" or the "Company") (Nasdaq:NBN), a Maine-based full-service financial services company and parent of Northeast Bank (the "Bank"), today reported net income of $1.6 million, or $0.16 per diluted common share, for the quarter ended December 31, 2014, compared to net income of $1.4 million, or $0.13 per diluted common share, for the quarter ended December 31, 2013. Net income for the six months ended December 31, 2014 was $3.2 million, compared to $1.7 million for the six months ended December 31, 2013.

The Board of Directors has declared a cash dividend of $0.01 per share, payable on February 26, 2015 to shareholders of record as of February 12, 2015.

"We closed another productive quarter," said Richard Wayne, President and Chief Executive Officer. "Total loans grew by 6%, on the strength of 10% growth in our LASG loan book. Transactional income of $2.8 million produced a 13.7% return on purchased loans, contributing significantly to a 4.9% net interest margin for the period. We made significant progress in building out our new SBA lending initiative, hiring 7 new business development officers in November. And, in our continuing effort to improve returns for shareholders, we repurchased 434 thousand shares at an average price of $9.14."

At December 31, 2014, total assets were $810.0 million, an increase of $48.1 million, or 6.3%, compared to June 30, 2014. The principal components of the change in the balance sheet follow:

1. The loan portfolio - excluding loans held for sale - grew by $58.9 million, or 11.4%, compared to June 30, 2014, the result of net growth of $65.9 million in commercial loans purchased or originated by the Bank's Loan Acquisition and Servicing Group ("LASG"), offset by a $7.0 million decrease in the Bank's Community Banking Division loan portfolio.

New loans generated by the LASG totaled $68.2 million and $121.7 million for the three and six-month periods, respectively, ending December 31, 2014. The quarterly growth in LASG loans consisted of $39.7 million in purchases, at an average price of 85.7%, and $28.5 million in originations. Residential and consumer loan production sold in the secondary market totaled $26.0 million for the quarter.

As 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 and commercial real estate loan availability under these conditions follow.

Basis for
Regulatory Condition
Condition Availability at December 31,
2014
    (Dollars in millions)
Total Loans Purchased loans may not exceed 40% of total loans  $ 19.7
Regulatory Capital Commercial real estate loans may not exceed 300% of total risk-based capital  $ 132.6

An overview of the Bank's LASG portfolio follows:

  LASG Portfolio
  Three Months Ended December 31
  2014 2013
  Purchased  Originated Total LASG Purchased  Originated Total LASG
  (Dollars in thousands)
Loans purchased or originated during the period:            
Unpaid principal balance  $ 46,307  $ 28,579  $ 74,886  $ 15,663  $ 17,138  $ 32,801
Net investment basis  39,667  28,565  68,232  13,619  17,138  30,757
             
Loan returns during the period:            
Yield 13.27% 4.00% 10.17% 13.82% 5.14% 11.38%
Total Return (1) 13.72% 4.57% 10.67% 13.76% 5.14% 11.35%
             
   
  Six Months Ended December 31
  2014 2013
  Purchased  Originated Total LASG Purchased  Originated Total LASG
  (Dollars in thousands)
Loans purchased or originated during the period:            
Unpaid principal balance $ 62,425 $ 68,915 $ 131,340 $ 33,994 $ 43,564 $ 77,558
Net investment basis 52,834 68,904 121,738 29,967 43,564 73,531
             
Loan returns during the period:            
Yield 13.02% 5.08% 10.53% 12.00% 5.37% 10.35%
Total Return (1) 13.24% 5.58% 10.85% 12.20% 5.37% 10.51%
             
Total loans as of period end:            
Unpaid principal balance  $ 262,445  $ 126,620  $ 389,065  $ 212,767  $ 78,828  $ 291,595
Net investment basis   $ 220,391  $ 126,563  $ 346,954  $ 177,435  $ 78,868  $ 256,303
             
(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 $37.9 million, or 6.4%, for the quarter, attributable primarily to growth in non-maturity accounts, which increased by $39.2 million, or 15.5%, for the three months ended December 31, 2014, offset in part by a decrease of $1.3 million in time deposits. For the six-month period, deposits increased by $57.4 million, or 10.0%. Growth in both periods was attributable mainly to increases in money market accounts attracted through the Bank's online-only ableBanking division.

3. Stockholders' equity decreased by $1.1 million from June 30, 2014, due principally to $4.1 million in share repurchases (representing 448,686 shares), a decrease in accumulated other comprehensive income of $358 thousand and $204 thousand in dividends paid on common stock, offset in part by earnings of $3.2 million and $298 thousand of scheduled amortization of stock-based compensation.

Net income from continuing operations increased by $169 thousand to $1.6 million for the quarter ended December 31, 2014, compared to $1.4 million for the quarter ended December 31, 2013

1. Net interest and dividend income before provision for loan losses increased by $409 thousand, or 4.5%, for the quarter ended December 31, 2014 compared to the quarter ended December 31, 2013, due primarily to higher transactional interest income from purchased loan payoffs and the positive effect of balance sheet growth. Average total interest-earning assets for the three months ended December 31, 2014 increased by $76.0 million, and average loans increased by $59.3 million, when compared to the three months ended December 31, 2013. For the six months ended December 31, 2014, average total interest-earning assets increased by $68.0 million and average loans increased by $61.3 million compared to the six months ended December 31, 2013.

The various components of transactional income are set forth in the table below entitled "Total Return on Purchased Loans." When compared to the three and six month periods ended December 31, 2013, transactional interest income increased by $515 thousand and $1.8 million, respectively. 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,
  2014 2013
  Average
Balance
Interest
Income
Yield Average
Balance
Interest
Income
Yield
  (Dollars in thousands)
Community Banking Division  $ 236,127  $ 2,899 4.87%  $ 247,057  $ 3,284 5.27%
LASG:            
Originated 105,167 1,060 4.00% 68,449 886 5.14%
Purchased 208,935 6,989 13.27% 175,469 6,112 13.82%
Total LASG 314,102 8,049 10.17% 243,918 6,998 11.38%
Total  $ 550,229  $ 10,948 7.89%  $ 490,975  $ 10,282 8.31%
             
  Six Months Ended December 31,
  2014 2013
  Average
Balance
Interest
Income
Yield Average
Balance
Interest
Income
Yield
  (Dollars in thousands)
Community Banking Division  $ 238,646  $ 5,960 4.95%  $ 244,880  $ 6,626 5.37%
LASG:            
Originated 93,751 2,399 5.08% 57,828 1,566 5.37%
Purchased 205,896 13,511 13.02% 174,318 10,547 12.00%
Total LASG 299,647 15,910 10.53% 232,146 12,113 10.35%
Total  $ 538,293  $ 21,870 8.06%  $ 477,026  $ 18,739 7.79%

The yield on purchased loans in each period shown increased primarily due to 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 ended December 31, 2014, an increase of $738 thousand from the quarter ended December 31, 2013. Additionally, total transactional income for the six months ended December 31, 2014 increased by $1.8 million, compared to the six months ended December 31, 2013. The following table summarizes the total return recognized on the purchased loan portfolio.

  Total Return on Purchased Loans
  Three Months Ended December 31,
  2014 2013
  Income Return (1) Income Return (1)
  (Dollars in thousands)
Regularly scheduled interest and accretion  $ 4,376 8.31%  $ 4,014 9.02%
Transactional income:        
Gains on loan sales 194 0.37% 11 0.02%
Gain on sale of real estate owned 40 0.08%  --  0.00%
Other noninterest income  --  0.00%  --  0.00%
Accelerated accretion and loan fees  2,613 4.96% 2,098 4.72%
Total transactional income 2,847 5.41% 2,109 4.74%
Total   $ 7,223 13.72%  $ 6,123 13.76%
         
  Six Months Ended December 31,
  2014 2013  
  Income Return (1) Income Return (1)
  (Dollars in thousands)
Regularly scheduled interest and accretion  $ 8,873 8.55%  $ 7,753 8.78%
Transactional income:        
Gains on loan sales 190 0.18% 227 0.26%
Gain on sale of real estate owned 40 0.04%  --  0.00%
Other noninterest income  --  0.00%  --  0.00%
Accelerated accretion and loan fees  4,638 4.47% 2,794 3.16%
Total transactional income 4,868 4.69% 3,021 3.42%
Total   $ 13,741 13.24%  $ 10,774 12.20%
         
(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 increased by $535 thousand for the quarter ended December 31, 2014, compared to the quarter ended December 31, 2013, principally due to the following:

  • An increase of $432 thousand in gain on sales of portfolio loans, realized primarily on the sale of the guaranteed portion of SBA loans. The Company recognized $445 thousand in gains on SBA loans sold for the three months ended December 31, 2014, compared to no SBA gain for the quarter ended December 31, 2013; and
  • An increase of $106 thousand in gains realized on sale of residential loans originated for sale in the secondary market, due principally to an increase in purchase-related mortgage loan activity in the current period.

3. Noninterest expense increased by $596 thousand for the quarter ended December 31, 2014, compared to the quarter ended December 31, 2013, principally due to the following:

  • An increase of $484 thousand in salaries and employee benefits, principally due to increased employee head count and incentive compensation, offset by a decrease in group insurance expense and employee stock options expense;
  • An increase of $177 thousand in professional fees, due primarily to fees for temporary consulting services;
  • An increase of $123 thousand in loan acquisition and collection expenses, due in part to an increased level of loan purchases in the quarter ended December 31, 2014 when compared to the quarter ended December 31, 2013; and
  • A decrease of $130 thousand in occupancy and equipment expense, the result of a reduction in software maintenance and depreciation expense following the conversion of the Bank's core systems platform to an outsourced model in May 2014. The decrease in equipment expense was offset in part by higher data processing fees, which increased by $70 thousand.

4. The Company's effective tax rate for the quarter ended December 31, 2014 was 36.1%, compared to 32.4% for the quarter ended December 31, 2013. The increase in the quarter was primarily the result of a change in estimated state tax apportionment.

At December 31, 2014, nonperforming assets totaled $14.3 million, or 1.8% of total assets, as compared to $9.3 million, or 1.2% of total assets at June 30, 2014. The increase in nonperforming assets during the six months ended December 31, 2014 was mainly due to the addition of one recently-purchased loan relationship.   

At December 31, 2014, the Company's Tier 1 leverage capital ratio was 14.8%, a decrease from 15.9% at June 30, 2014, and the total risk-based capital ratio was 21.4%, a decrease from 23.7% at June 30, 2014. The decreases resulted primarily from balance sheet growth and the effect of purchases under the Company's share repurchase program in the six months ended December 31, 2014.

Investor Call Information

Richard Wayne, Chief Executive Officer of Northeast Bancorp, Claire Bean, Chief Operating Officer of Northeast Bancorp, and Brian Shaughnessy, Chief Financial Officer of Northeast Bancorp, will host a conference call to discuss second quarter earnings and business outlook at 9:00 a.m. Eastern Time on Friday, January 30, 2015. Investors can access the call by dialing 877.878.2762 and entering the following passcode: 70956761. 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 two loan production offices that serve individuals and businesses located in western and south-central Maine and southern New Hampshire. Northeast Bank's Loan Acquisition and Servicing Group purchases and originates commercial loans for the Bank's portfolio. In addition, the Small Business Lending division supports the needs of growing businesses nationally. ableBanking, a division of Northeast Bank, offers savings products to consumers online. Information regarding Northeast Bank can be found on its website at www.northeastbank.com.

Non-GAAP Financial 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 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, 2014 June 30, 2014
Assets    
Cash and due from banks  $ 2,626  $ 3,372
Short-term investments 80,643 78,887
Total cash and cash equivalents 83,269 82,259
     
Available-for-sale securities, at fair value 107,841 113,881
Loans held for sale 5,154 11,945
     
Loans     
Commercial real estate 343,479 316,098
Residential real estate 140,019 148,634
Commercial and industrial 82,939 41,800
Consumer 8,898 9,884
Total loans 575,335 516,416
Less: Allowance for loan losses 1,664 1,367
Loans, net 573,671 515,049
     
Premises and equipment, net 8,494 9,135
Real estate owned and other possessed collateral, net 2,058 1,991
Regulatory stock, at cost 4,102 4,102
Intangible assets, net 2,466 2,798
Bank owned life insurance 15,055 14,836
Other assets 7,925 5,935
Total assets  $ 810,035  $ 761,931
     
Liabilities and Stockholders' Equity    
Deposits    
Demand  $ 51,920  $ 50,140
Savings and interest checking 95,373 98,340
Money market 144,523 83,901
Time  339,904 341,948
Total deposits 631,720 574,329
     
Federal Home Loan Bank advances 35,244 42,824
Wholesale repurchase agreements 10,117 10,199
Short-term borrowings 2,775 2,984
Junior subordinated debentures issued to affiliated trusts 8,530 8,440
Capital lease obligation 1,464 1,558
Other liabilities 9,262 9,531
Total liabilities 699,112 649,865
     
Commitments and contingencies  --   -- 
     
Stockholders' equity    
Preferred stock, $1.00 par value, 1,000,000 shares authorized; no shares issued and outstanding at December 31, 2014 and June 30, 2014  --   -- 
Voting common stock, $1.00 par value, 25,000,000 shares authorized; 8,965,424 and 9,260,331 shares issued and outstanding at December 31, 2014 and June 30, 2014, respectively 8,965 9,260
Non-voting common stock, $1.00 par value, 3,000,000 shares authorized; 880,963 shares issued and outstanding at December 31, 2014 and June 30, 2014 881 881
Additional paid-in capital  87,404 90,914
Retained earnings 15,314 12,294
Accumulated other comprehensive income (loss) (1,641) (1,283)
Total stockholders' equity 110,923 112,066
Total liabilities and stockholders' equity  $ 810,035  $ 761,931
         
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,
  2014 2013 2014 2013
Interest and dividend income:        
Interest on loans  $ 10,948  $ 10,282  $ 21,870  $ 18,739
Interest on available-for-sale securities 232 262 475 544
Other interest and dividend income  79 96 146 147
Total interest and dividend income 11,259 10,640 22,491 19,430
         
Interest expense:        
Deposits 1,281 979 2,410 2,026
Federal Home Loan Bank advances 265 327 588 651
Wholesale repurchase agreements 73 98 145 192
Short-term borrowings 7 6 16 11
Junior subordinated debentures issued to affiliated trusts 188 192 394 385
Obligation under capital lease agreements 19 21 38 43
Total interest expense 1,833 1,623 3,591 3,308
         
Net interest and dividend income before provision for loan losses 9,426 9,017 18,900 16,122
Provision for loan losses 113 151 433 227
Net interest and dividend income after provision for loan losses 9,313 8,866 18,467 15,895
         
Noninterest income:        
Fees for other services to customers 392 421 786 861
Gain on sales of loans held for sale 447 341 1,029 880
Gain on sales of portfolio loans 445 13 525 230
(Loss) gain recognized on real estate owned and other repossessed collateral, net (31) (77) (54) (115)
Bank-owned life insurance income 110 116 219 234
Other noninterest income 7 21 19 34
Total noninterest income 1,370 835 2,524 2,124
         
Noninterest expense:        
Salaries and employee benefits 4,737 4,253 9,270 8,865
Occupancy and equipment expense 1,181 1,311 2,384 2,601
Professional fees 458 281 766 657
Data processing fees 347 277 692 554
Marketing expense 80 103 148 139
Loan acquisition and collection expense 413 290 687 763
FDIC insurance premiums 110 117 234 227
Intangible asset amortization 166 210 331 420
Legal settlement recovery  --   --   --  (250)
Other noninterest expense 718 772 1,437 1,490
Total noninterest expense 8,210 7,614 15,949 15,466
         
Income from continuing operations before income tax expense 2,473 2,087 5,042 2,553
Income tax expense 893 676 1,818 832
Net income from continuing operations 1,580 1,411 3,224 1,721
         
Income from discontinued operations before tax (benefit) expense   --  (27)  --  (12)
Income tax (benefit) expense   --  (9)  --  (4)
Net (loss) income from discontinued operations  --  (18)  --  (8)
Net income   $ 1,580  $ 1,393  $ 3,224  $ 1,713
         
Weighted-average shares outstanding:        
Basic 10,132,349 10,432,833 10,155,598 10,436,673
Diluted 10,132,349 10,432,833 10,155,598 10,436,673
Earnings per common share:        
Basic:        
Income from continuing operations  $ 0.16  $ 0.13  $ 0.32  $ 0.16
Income from discontinued operations 0.00 0.00 0.00 0.00
Net Income  $ 0.16  $ 0.13  $ 0.32  $ 0.16
Diluted:        
Income from continuing operations  $ 0.16  $ 0.13  $ 0.32  $ 0.16
Income from discontinued operations 0.00 0.00 0.00 0.00
Net Income  $ 0.16  $ 0.13  $ 0.32  $ 0.16
Cash dividends declared per common share  $ 0.01  $ 0.09  $ 0.02  $ 0.18
             
NORTHEAST BANCORP AND SUBSIDIARY            
CONSOLIDATED AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS          
(Unaudited)            
(Dollars in thousands)            
  Three Months Ended December 31,
  2014 2013
  Average
Balance
Interest
Income/
Expense
Average
Yield/
Rate
Average
Balance
Interest
Income/
Expense
Average
Yield/
Rate
Assets:            
Interest-earning assets:            
Investment securities (1)  $ 109,498  $ 232 0.84%  $ 116,888  $ 262 0.89%
Loans (2) (3) 550,229 10,948 7.89% 490,975 10,282 8.31%
Regulatory stock 4,102 15 1.45% 5,721 48 3.33%
Short-term investments (4) 104,822 64 0.24% 79,049 48 0.24%
Total interest-earning assets 768,651 11,259 5.81% 692,633 10,640 6.09%
Cash and due from banks 2,637     3,053    
Other non-interest earning assets 32,500     36,222    
Total assets $ 803,788     $ 731,908    
             
Liabilities & Stockholders' Equity:            
Interest-bearing liabilities:            
NOW accounts  $ 62,259  $ 40 0.25%  $ 58,987  $ 40 0.27%
Money market accounts 127,394 241 0.75% 86,245 114 0.52%
Savings accounts 33,648 12 0.14% 33,540 12 0.14%
Time deposits 348,118 988 1.13% 309,790 813 1.04%
Total interest-bearing deposits 571,419 1,281 0.89% 488,562 979 0.80%
Short-term borrowings  2,869 7 0.97% 2,397 6 0.99%
Borrowed funds 45,587 357 3.11% 59,941 446 2.95%
Junior subordinated debentures 8,508 188 8.77% 8,331 192 9.14%
Total interest-bearing liabilities 628,383 1,833 1.16% 559,231 1,623 1.15%
             
Non-interest bearing liabilities:            
Demand deposits and escrow accounts 55,131     53,184    
Other liabilities 7,130     5,677    
Total liabilities 690,644     618,092    
Stockholders' equity 113,144     113,816    
Total liabilities and stockholders' equity  $ 803,788      $ 731,908    
             
Net interest income    $ 9,426      $ 9,017  
             
Interest rate spread     4.65%     4.94%
Net interest margin (5)     4.87%     5.16%
             
(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,
  2014 2013
  Average 
Balance
Interest
Income/
Expense
Average
Yield/
Rate
Average
Balance
Interest
Income/
Expense
Average
Yield/
Rate
Assets:            
Interest-earning assets:            
Investment securities (1)  $ 110,874  $ 475 0.85%  $ 118,093  $ 544 0.91%
Loans (2) (3) 538,293 21,870 8.06% 477,026 18,739 7.79%
Regulatory stock 4,102 31 1.50% 5,721 52 1.80%
Short-term investments (4) 93,792 115 0.24% 78,228 95 0.24%
Total interest-earning assets 747,061 22,491 5.97% 679,068 19,430 5.68%
Cash and due from banks 2,674     3,045    
Other non-interest earning assets 33,326     35,117    
Total assets  $ 783,061      $ 717,230    
             
Liabilities & Stockholders' Equity:            
Interest-bearing liabilities:            
NOW accounts  $ 62,934  $ 81 0.26%  $ 59,055  $ 80 0.27%
Money market accounts 106,844 365 0.68% 85,967 226 0.52%
Savings accounts 34,004 23 0.13% 33,733 24 0.14%
Time deposits 344,243 1,941 1.12% 297,090 1,696 1.13%
Total interest-bearing deposits 548,025 2,410 0.87% 475,845 2,026 0.84%
Short-term borrowings  3,095 16 1.03% 2,337 11 0.93%
Borrowed funds 49,283 771 3.10% 59,964 886 2.93%
Junior subordinated debentures 8,484 394 9.21% 8,309 385 9.19%
Total interest-bearing liabilities 608,887 3,591 1.17% 546,455 3,308 1.20%
             
Non-interest bearing liabilities:            
Demand deposits and escrow accounts 54,187     51,788    
Other liabilities 7,220     5,619    
Total liabilities 670,294     603,862    
Stockholders' equity 112,767     113,368    
Total liabilities and stockholders' equity  $ 783,061      $ 717,230    
             
Net interest income    $ 18,900      $ 16,122  
             
Interest rate spread     4.80%     4.48%
Net interest margin (5)     5.02%     4.71%
             
(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, 2014 September 30, 2014 June 30, 2014 March 31, 2014 December 31, 2013
Net interest income $ 9,426 $ 9,471 $ 8,484 $ 7,112 $ 9,017
Provision for loan losses 113 320 124 180 151
Noninterest income 1,370 1,154 1,437 1,308 835
Noninterest expense 8,210 7,737 8,795 7,516 7,614
Net income from continuing operations 1,580 1,644 542 437 1,411
Net income  1,580 1,644 542 437 1,393
           
Weighted average common shares outstanding:          
Basic 10,132,349 10,180,038 10,314,197 10,432,494 10,432,833
Diluted 10,132,349 10,180,038 10,314,197 10,432,494 10,432,833
Earnings per common share:          
Basic $0.16 $0.16 $0.05 $0.04 $0.13
Diluted 0.16 0.16 0.05 0.04 0.13
Dividends per common share 0.01 0.01 0.01 0.09 0.09
           
Return on average assets 0.78% 0.85% 0.29% 0.24% 0.76%
Return on average equity 5.54% 5.80% 1.98% 1.55% 4.86%
Net interest rate spread (1)  4.65% 4.95% 4.53% 3.87% 4.94%
Net interest margin (2) 4.87% 5.18% 4.75% 4.08% 5.16%
Efficiency ratio (3) 76.05% 72.82% 88.65% 89.26% 77.28%
Noninterest expense to average total assets 4.05% 4.02% 4.69% 4.08% 4.13%
Average interest-earning assets to average 122.32% 123.09% 121.92% 122.17% 123.85%
interest-bearing liabilities          
           
  As of:
  December 31, 2014 September 30, 2014 June 30, 2014 March 31, 2014 December 31, 2013
Nonperforming loans:          
Originated portfolio:          
Residential real estate $ 2,706 $ 2,105 $ 1,743 $ 1,678 $ 1,895
Commercial real estate 1,166 721 1,162 798 487
Home equity 11 28 160 214 204
Commercial business  --   --  5  --  61
Consumer  237 145 139 152 259
Total originated portfolio 4,120 2,999 3,209 2,842 2,906
Total purchased portfolio 8,129 4,287 4,116 4,582 3,245
Total nonperforming loans 12,249 7,286 7,325 7,424 6,151
Real estate owned and other possessed collateral, net 2,058 2,115 1,991 2,000 3,211
Total nonperforming assets $ 14,307 $ 9,401 $ 9,316 $ 9,424 $ 9,362
           
Past due loans to total loans 2.64% 1.40% 1.14%    
Nonperforming loans to total loans 2.13% 1.34% 1.42%    
Nonperforming assets to total assets 1.77% 1.20% 1.22%    
Allowance for loan losses to total loans 0.29% 0.28% 0.26% 0.26% 0.27%
Allowance for loan losses to nonperforming loans 13.58% 21.12% 18.66% 18.12% 21.95%
           
Commercial real estate loans to risk-based capital (4) 190.05% 167.57% 176.98% 175.10% 170.69%
Net loans to core deposits (5) 91.79% 92.80% 92.13% 93.18% 95.10%
Purchased loans to total loans, including held for sale 37.97% 37.38% 38.51% 35.29% 34.89%
Equity to total assets 13.69% 14.48% 14.71% 15.18% 15.61%
Tier 1 leverage capital ratio 14.81% 15.89% 15.90% 16.28% 16.66%
Total risk-based capital ratio 21.44% 22.97% 23.69% 24.21% 24.61%
           
Total stockholders' equity  $ 110,923 $ 113,242 $ 112,066 $ 114,008 $ 114,383
Less: Preferred stock  --   --   --   --   -- 
Common stockholders' equity 110,923 113,242 112,066 114,008 114,383
Less: Intangible assets (2,466) (2,632) (2,798) (2,962) (3,124)
Tangible common stockholders' equity (non-GAAP) $ 108,457 $ 110,610 $ 109,268 $ 111,046 $ 111,259
           
Common shares outstanding 9,846,387 10,248,034 10,141,294 10,432,494 10,432,494
Book value per common share  $ 11.27 $ 11.05 $ 11.05 $ 10.93  
Tangible book value per share (non-GAAP) (6) 11.01 10.79 10.77 10.64 10.66
           
  Reconciliation of Net Income (GAAP) to Net Operating Earnings (non-GAAP) 
  Three Months Ended:
  December 31, 2014 September 30, 2014 June 30, 2014 March 31, 2014 December 31, 2013
Net income (GAAP) $ 1,580 $ 1,644 $ 542 $ 437 $ 1,393
Items excluded from operating earnings, net of tax:          
Discontinued operations  --   --   --   --  18
Income from life insurance death benefits 36 52 407 35  -- 
Severance expense  --   --  148 84 59
Legal settlement expense and related professional fees  --   --   --   --   -- 
Total after-tax items 36 52 555 119 77
Net operating earnings (non-GAAP) $ 1,616 $ 1,696 $ 1,097 $ 556 $ 1,470
Net operating earnings per share - basic (non-GAAP) $ 0.16 $ 0.17 $ 0.11 $ 0.05 $ 0.14
           
(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.        
CONTACT: For More Information:

         Claire S. Bean, COO

         Northeast Bank, 500 Canal Street, Lewiston, ME 04240

         207.786.3245 ext. 3202

         www.northeastbank.com

Northeast Bancorp

Source: Northeast Bancorp

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