Northeast Bancorp
Jan 30, 2017

Northeast Bancorp Reports Record Quarterly Results, Surpasses $1 Billion in Assets and Declares Dividend

LEWISTON, Maine, Jan. 30, 2017 (GLOBE NEWSWIRE) -- Northeast Bancorp ("Northeast" or the "Company") (NASDAQ:NBN), a Maine-based full-service financial services company and parent of Northeast Bank (the "Bank"), today reported net income of $3.1 million, or $0.35 per diluted common share, for the quarter ended December 31, 2016, compared to net income of  $1.7 million, or $0.18 per diluted common share, for the quarter ended December 31, 2015. Net income for the six months ended December 31, 2016 was $4.9 million, or $0.54 per diluted common share, compared to $3.6 million, or $0.38 per diluted common share, for the six months ended December 31, 2015.

The Board of Directors has also declared a cash dividend of $0.01 per share, payable on February 28, 2017 to shareholders of record as of February 15, 2017.

"I am very pleased with the progress we made this quarter," said Richard Wayne, President and Chief Executive Officer. "We reached a great milestone for the Company by surpassing $1 billion in assets and we also achieved record earnings of 35 cents per share.  In addition, we had solid loan volume, purchased loan transactional income and SBA gains. Our Loan Acquisition and Servicing Group produced $91.7 million of loans, our SBA Division closed $25.3 million of loans, the purchased loan portfolio yielded 13%, and the SBA gain on sale was $1.7 million. This balance sheet growth and solid income from the Loan Acquisition and Servicing Group and the SBA Division helped drive our efficiency ratio to 61.7%."

As of December 31, 2016, total assets were $1.0 billion, an increase of $26.5 million, or 2.7%, from total assets of $986.2 million as of June 30, 2016. The principal components of the change in the balance sheet follow:

1. The loan portfolio - excluding loans held for sale - has grown by $74.5 million, or 10.8%, compared to June 30, 2016, principally on the strength of $70.7 million of net growth in commercial loans purchased or originated by the Bank's Loan Acquisition and Servicing Group ("LASG") and net growth of $13.2 million in originations by the Bank's Small Business Administration and United States Department of Agriculture ("SBA") Division. This net growth was offset by a $9.4 million decrease in the Bank's Community Banking Division loan portfolio.

Loans generated by the LASG totaled $91.7 million for the quarter ended December 31, 2016. The growth in LASG loans consisted of $46.0 million of purchased loans, at an average price of 90.1% of unpaid principal balance, and $45.7 million of originated loans. SBA loans closed during the quarter totaled $25.3 million, of which $24.7 million were fully funded in the quarter. In addition, the Company sold $17.5 million of the guaranteed portion of SBA loans in the secondary market, of which $9.3 million were originated in the current quarter and $8.2 million were originated or purchased in prior quarters. Residential loan production sold in the secondary market totaled $17.7 million for the quarter.

As previously discussed in the Company's SEC filings, the Company made certain commitments to the Board of Governors of the Federal Reserve System in connection with the merger of FHB Formation LLC with and into the Company in December 2010. The Company's loan purchase and commercial real estate loan availability under these conditions follow:

Basis for
Regulatory Condition
 Condition Availability at December 31, 2016
    (Dollars in millions)
Total Loans Purchased loans may not exceed 40% of total loans $  91.5
Regulatory Capital Non-owner occupied commercial real estate loans may not exceed 300% of total capital $  146.2
      

An overview of the Bank's LASG portfolio follows:

 LASG Portfolio
 Three Months Ended December 31,
 2016 2015
 Purchased (1)OriginatedSecured Loans to 
Broker-Dealers
Total LASG PurchasedOriginatedSecured Loans to
Broker-Dealers
Total LASG
 (Dollars in thousands)
Loans purchased or originated during the period:                 
Unpaid principal balance$51,112 $45,647 $- $96,759  $40,145 $39,512 $- $79,657 
Net investment basis  46,033  45,647  -  91,680   35,855  39,512  -  75,367 
                  
Loan returns during the period:
Yield 13.01% 5.89% 0.99% 8.76%  12.74% 5.69% 0.50%  8.55%
Total Return (2) 13.01% 5.89% 0.99% 8.76%  12.74% 5.69% 0.50% 8.55%


 Six Months Ended December 31,
 2016 2015
 Purchased (1)OriginatedSecured Loans to
Broker-Dealers
Total LASG PurchasedOriginatedSecured Loans to
Broker-Dealers
Total LASG
 (Dollars in thousands)
Loans purchased or originated during the period:                 
Unpaid principal balance$67,903 $88,025 $- $155,928  $63,728 $50,907 $- $114,635 
Net investment basis 59,886  88,025  -  147,911   59,311  50,907  -  110,218 
                  
Loan returns during the period:
Yield 11.71% 5.88% 0.74% 8.19%  12.41% 5.68% 0.50% 8.40%
Total Return (2) 11.73% 5.88% 0.74% 8.19%  12.43% 5.68% 0.50% 8.41%
                          
Total loans as of period end:                         
Unpaid principal balance$288,455 $231,278 $48,000 $567,733  $258,049 $155,728 $60,000 $473,777 
Net investment basis 255,048  231,278  48,000  534,326   226,014  155,728  60,000  441,742 


(1) Purchased loan balances include loans held for sale of $975 thousand.
(2) The total return on purchased loans represents scheduled accretion, accelerated accretion, gains on asset sales, and other noninterest income recorded during the period divided by the average invested balance, which includes loans held for sale, on an annualized basis.  The total return does not include the effect of purchased loan charge-offs or recoveries in the quarter.
 

2. Deposits increased by $34.2 million, or 4.2% for the quarter, attributable primarily to growth in non-maturity (demand, savings and interest checking, and money market) accounts, which increased by $20.3 million, or 4.2%, as well as an increase in time deposits of $13.8 million, or 4.3%. For the six months ended December 31, 2016, deposits increased $39.1 million, or 4.9%, due to growth in non-maturity accounts of $54.7 million, or 12.2%, offset by a decrease in time deposits of $15.6 million, or 4.4%.

3. Shareholders' equity decreased by $1.6 million from June 30, 2016, primarily due to the $6.9 million in share repurchases (representing 645,238 shares), offset by earnings of $4.9 million. Additionally, there was stock-based compensation of $483 thousand, a decrease in accumulated other comprehensive loss of $141 thousand and $181 thousand in dividends paid on common stock.

Net income increased by $1.4 million to $3.1 million for the quarter ended December 31, 2016, compared to $1.7 million for the quarter ended December 31, 2015.

1. Net interest and dividend income before provision for loan losses increased by $1.7 million for the quarter ended December 31, 2016, compared to the quarter ended December 31, 2015. The increase is primarily due to higher average balances in the total loan portfolio and higher transactional income on purchased loans.  This increase was partially offset by higher rates and volume in our deposit portfolio and the effect of the issuance of subordinated debt. 

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 months ended December 31, 2015, transactional income increased by $331 thousand and decreased by $552 thousand, 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,  
 2016  2015   
 Average Interest   Average Interest    
 Balance (1) Income Yield Balance (1) Income Yield  
 (Dollars in thousands)  
Community Banking$203,963 $  2,350 4.57% $ 217,470 $   2,604 4.75%  
SBA 41,038  574 5.55%  23,037  328 5.65%  
LASG:                 
Originated  216,353    3,210 5.89%   137,959    1,978 5.69%  
Purchased  233,502    7,659 13.01%   209,605    6,734 12.74%  
Secured Loans to Broker-Dealers 48,000  120 0.99%  60,004  75 0.50%  
Total LASG  497,855    10,989 8.76%   407,568    8,787 8.55%  
  Total$ 742,856 $  13,913 7.43% $ 648,075 $  11,719 7.17%  
                    
    
  Six Months Ended December 31,  
 2016  2015   
 Average Interest   Average Interest    
 Balance (1) Income Yield Balance (1) Income Yield  
 (Dollars in thousands)  
Community Banking$204,864 $  4,754 4.60% $ 221,400 $  5,312 4.76%  
SBA 36,093  1,093 6.01%  18,289  545 5.91%  
LASG:                 
Originated  200,731    5,949 5.88%   128,267    3,673 5.68%  
Purchased  232,751    13,740 11.71%   204,995    12,829 12.41%  
Secured Loans to Broker-Dealers 48,000  180 0.74%  60,006  150 0.50%  
Total LASG  481,482    19,869 8.19%   393,268    16,652 8.40%  
  Total$ 722,439 $  25,716 7.06%  $ 632,957 $  22,509 7.05%  
 
  (1) Includes loans held for sale. 

The yield on purchased loans for the quarter ended December 31, 2016 was 13.0% as compared to 12.7% in the quarter ended December 31, 2015, primarily due to higher transactional income in the quarter. The following table details the total return on purchased loans:

 Total Return on Purchased Loans
 Three Months Ended December 31,
 2016 2015
 Income  Return (1) Income Return (1)
 (Dollars in thousands)
Regularly scheduled interest and accretion$4,716 8.01% $4,122 7.80%
Transactional income:          
Gain on loan sales - 0.00%  - 0.00%
Gain on sale of real estate owned - 0.00%  - 0.00%
Other noninterest income - 0.00%  - 0.00%
Accelerated accretion and loan fees 2,943 5.00%  2,612 4.94%
Total transactional income 2,943 5.00%  2,612 4.94%
Total$7,659 13.01% $6,734 12.74%


 Total Return on Purchased Loans
 Six Months Ended December 31,
 2016 2015
 Income Return (1) Income Return (1)
 (Dollars in thousands)
Regularly scheduled interest and accretion$9,470 8.07% $8,009  7.75%
Transactional income:         
Gain on loan sales - 0.00%  -  0.00%
Gain on sale of real estate owned 19 0.02%  22  0.02%
Other noninterest income - 0.00%  (1) 0.00%
Accelerated accretion and loan fees 4,270 3.64%  4,820  4.66%
Total transactional income 4,289 3.66%  4,841  4.68%
Total$13,759 11.73% $12,850  12.43%


(1) The total return on purchased loans represents scheduled accretion, accelerated accretion, gains on asset sales, gains on real estate owned and other noninterest income recorded during the period divided by the average invested balance, which includes loans held for sale, on an annualized basis.  The total return does not include the effect of purchased loan charge-offs or recoveries in the quarter. Total return is considered a non-GAAP financial measure.
 

2. Noninterest income increased by $1.1 million for the quarter ended December 31, 2016, compared to the quarter ended December 31, 2015, principally due to an increase in gains realized on sale of SBA loans of $1.1 million.

3. Noninterest expense increased by $760 thousand for the quarter ended December 31, 2016, compared to the quarter ended December 31, 2015, primarily due to the following:

As of December 31, 2016, nonperforming assets totaled $13.3 million, or 1.32% of total assets, as compared to $9.5 million, or 0.96% of total assets, as of June 30, 2016.  The increase primarily relates to one loan placed on non-accrual in the quarter ended December 31, 2016, as well as one loan added to other real estate owned in the quarter ended September 30, 2016.

As of December 31, 2016, past due loans totaled $21.9 million, or 2.85% of total loans, compared to $6.9 million, or 1.00% of total loans as of June 30, 2016. The increase is primarily due to the following:

As of December 31, 2016, the Company's Tier 1 Leverage Ratio was 12.6%, compared to 13.3% at June 30, 2016, and the Total Capital Ratio was 18.3%, a decrease from 20.4% at June 30, 2016. The decrease resulted primarily from loan growth and the effect of purchases under the Company's share repurchase program.

Investor Call Information
Richard Wayne, Chief Executive Officer of Northeast Bancorp, and Brian Shaughnessy, Chief Financial Officer of Northeast Bancorp, will host a conference call to discuss second quarter earnings and business outlook at 10:00 a.m. Eastern Time on Tuesday, January 31st. Investors can access the call by dialing 877.878.2762 and entering the following passcode: 49922895. The call will be available via live webcast, which can be viewed by accessing the Company's website at www.northeastbank.com and clicking on the About Us - Investor Relations section. To listen to the webcast, attendees are encouraged to visit the website at least fifteen minutes early to register, download and install any necessary audio software. Please note there will also be a slide presentation that will accompany the webcast. For those who cannot listen to the live broadcast, a replay will be available online for one year at www.northeastbank.com

About Northeast Bancorp
Northeast Bancorp (NASDAQ:NBN) is the holding company for Northeast Bank, a full-service bank headquartered in Lewiston, Maine. We offer traditional banking services through the Community Banking Division, which operates ten full-service branches that serve customers located in western, central, and southern Maine. From our Maine and Boston locations, we also lend throughout the New England area. Our Loan Acquisition and Servicing Group ("LASG") purchases and originates commercial loans on a nationwide basis. In addition, our SBA Division supports the needs of growing businesses nationally. ableBanking, a division of Northeast Bank, offers savings products to consumers online. Information regarding Northeast Bank can be found on its website at www.northeastbank.com.

Non-GAAP Financial Measures
In addition to results presented in accordance with generally accepted accounting principles ("GAAP"), this press release contains certain non-GAAP financial measures, including tangible common shareholders' equity, tangible book value per share, and total return. Northeast's management believes that the supplemental non-GAAP information is utilized by regulators and market analysts to evaluate a company's financial condition and therefore, such information is useful to investors. These disclosures should not be viewed as a substitute for financial results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names.

Forward-Looking Statements
Statements in this press release that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Although Northeast believes that these forward-looking statements are based on reasonable estimates and assumptions, they are not guarantees of future performance and are subject to known and unknown risks, uncertainties, and other factors. You should not place undue reliance on our forward-looking statements. You should exercise caution in interpreting and relying on forward-looking statements because they are subject to significant risks, uncertainties and other factors which are, in some cases, beyond the Company's control. The Company's actual results could differ materially from those projected in the forward-looking statements as a result of, among other factors, changes in interest rates and real estate values; competitive pressures from other financial institutions; the effects of weakness in general economic conditions on a national basis or in the local markets in which the Company operates, including changes which adversely affect borrowers' ability to service and repay our loans; changes in loan defaults and charge-off rates; changes in the value of securities and other assets, adequacy of loan loss reserves, or deposit levels necessitating increased borrowing to fund loans and investments; changing government regulation; the risk that the Company may not be successful in the implementation of its business strategy; the risk that intangibles recorded in the Company's financial statements will become impaired; changes in assumptions used in making such forward-looking statements; and the other risks and uncertainties detailed in the Company's Annual Report on Form 10-K and updated by the Company's Quarterly Reports on Form 10-Q and other filings submitted to the Securities and Exchange Commission. These statements speak only as of the date of this release and the Company does not undertake any obligation to update or revise any of these forward-looking statements to reflect events or circumstances occurring after the date of this communication or to reflect the occurrence of unanticipated events.

NBN-F

NORTHEAST BANCORP AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands, except share and per share data)
 December 31, 2016 June 30, 2016
Assets     
Cash and due from banks$2,586  $2,459 
Short-term investments 109,610   148,698 
Total cash and cash equivalents 112,196   151,157 
Available-for-sale securities, at fair value 90,533   100,572 
      
Residential real estate loans held for sale 5,217    6,449 
SBA loans held for sale 3,762   1,070 
Total loans held for sale 8,979   7,519 
      
      
Loans     
Commercial real estate 503,448   426,568 
Residential real estate 106,949   113,962 
Commercial and industrial 151,228   145,956 
Consumer 5,313   5,950 
 Total loans 766,938   692,436 
Less: Allowance for loan losses  3,107   2,350 
 Loans, net 763,831   690,086 
      
      
Premises and equipment, net 7,179   7,801 
Real estate owned and other repossessed collateral, net  3,145   1,652 
Federal Home Loan Bank stock, at cost 1,938   2,408 
Intangible assets, net 1,514   1,732 
Bank owned life insurance  15,953   15,725 
Other assets 7,391    7,501 
Total assets$1,012,659  $986,153 
      
Liabilities and Shareholders' Equity     
Deposits     
Demand$76,721  $66,686 
Savings and interest checking 107,386   107,218 
Money market 319,933   275,437 
Time 335,531    351,091 
 Total deposits 839,571   800,432 
      
Federal Home Loan Bank advances 20,024   30,075 
Subordinated debt 23,469   23,331 
Capital lease obligation 1,003   1,128 
Other liabilities 13,650   14,596 
Total liabilities 897,717   869,562 
      
Commitments and contingencies -   - 
      
Shareholders' equity     
Preferred stock, $1.00 par value, 1,000,000 shares authorized; no shares    
issued and outstanding at December 31, 2016 and June 30, 2016 -   - 
Voting common stock, $1.00 par value, 25,000,000 shares authorized;     
7,487,552 and 8,089,790 shares issued and outstanding at    
December 31, 2016 and June 30, 2016, respectively 7,487   8,089 
Non-voting common stock, $1.00 par value, 3,000,000 shares authorized;      
1,343,683 and 1,227,683 shares issued and outstanding at
December 31, 2016 and June 30, 2016, respectively
1,344  1,228 
Additional paid-in capital 77,046   83,020 
Retained earnings 30,830   26,160 
Accumulated other comprehensive loss (1,765)  (1,906)
Total shareholders' equity 114,942   116,591 
Total liabilities and shareholders' equity$1,012,659  $986,153 


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,
 2016 2015  2016  2015 
Interest and dividend income:            
Interest and fees on loans$13,913 $11,719   $25,716  $22,509 
Interest on available-for-sale securities 247  236   486   464 
Other interest and dividend income 172  80   387   176 
Total interest and dividend income 14,332  12,035   26,589   23,149 
            
Interest expense:           
Deposits 1,798  1,425   3,553   2,789 
Federal Home Loan Bank advances 220  259   475   519 
Wholesale repurchase agreements  -  -   -   67 
Short-term borrowings -  5   -   13 
Subordinated debt 468  158   927   312 
Obligation under capital lease agreements 13  16   27   33 
Total interest expense 2,499  1,863   4,982   3,733 
Net interest and dividend income before provision for loan losses 11,833  10,172   21,607   19,416 
Provision for loan losses 628  896   820   1,065 
Net interest and dividend income after provision for loan losses 11,205  9,276   20,787   18,351 
            
Noninterest income:           
Fees for other services to customers 481  428   889   836 
Gain on sales of residential loans held for sale 337  398   878   957 
Gain on sales of SBA loans 1,734  679    2,476   1,354 
Gain (loss) recognized on real estate owned and other repossessed 
  collateral, net
 3  (14)  (11)  (74)
Bank-owned life insurance income 114  112   228   224 
Other noninterest income 21  21    38   29 
Total noninterest income 2,690  1,624   4,498   3,326 
            
Noninterest expense:           
Salaries and employee benefits 5,161  4,854   10,475   9,110 
Occupancy and equipment expense 1,252  1,320   2,481   2,610 
Professional fees 399  264   895   694 
Data processing fees 410  366   832   714 
Marketing expense 97  66   184    136 
Loan acquisition and collection expense 547  219   774   663 
FDIC insurance premiums 22  116   146   229 
Intangible asset amortization 109  131   218   262 
Other noninterest expense 959  860   1,577   1,589 
Total noninterest expense 8,956  8,196   17,582   16,007 
Income before income tax expense 4,939  2,704   7,703   5,670 
Income tax expense 1,839  960   2,852   2,059 
Net income 3,100  1,744   4,851   3,611  
            
Weighted-average shares outstanding:           
Basic 8,831,235  9,559,369   8,968,690   9,560,913 
Diluted 8,864,618  9,569,585   8,999,062   9,567,138 
            
Earnings per common share:           
Basic$0.35 $0.18  $0.54  $0.38 
Diluted 0.35  0.18   0.54   0.38 
               
Cash dividends declared per common share$0.01 $0.01  $0.02  $0.02 


NORTHEAST BANCORP AND SUBSIDIARY
CONSOLIDATED AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS
(Unaudited)
(Dollars in thousands)
 Three Months Ended December 31,
 2016  2015 
   Interest Average   Interest Average
 Average Income/ Yield/ Average Income/ Yield/
 Balance Expense Rate Balance  Expense Rate
Assets:               
Interest-earning assets:               
Investment securities$  92,750 $  247 1.06 % $  105,502 $  236 0.89%
Loans (1) (2) (3)   742,856    13,931 7.44%    648,075    11,737 7.19%
Federal Home Loan Bank stock   2,398    23 3.81%    2,588    34 5.21%
Short-term investments (4)   114,276    149 0.52%    72,299    46 0.25%
Total interest-earning assets   952,280    14,350 5.98%    828,464    12,053 5.77%
Cash and due from banks   2,764         3,353     
Other non-interest earning assets   35,213         35,558     
Total assets$  990,257      $  867,375     
                
Liabilities & Stockholders' Equity:               
Interest-bearing liabilities:               
NOW accounts$71,795 $   52 0.29% $65,617 $  42 0.25%
Money market accounts   312,911    753 0.95%    199,766    429 0.85%
Savings accounts   35,206    12 0.14%    35,269    11 0.12%
Time deposits   317,318    981 1.23%    334,925    943 1.12%
  Total interest-bearing deposits   737,230    1,798 0.97%    635,577    1,425 0.89%
Short-term borrowings    -    - 0.00%    2,002    5 0.99%
Borrowed funds   27,099    220 3.22%    30,145    259 3.41%
Subordinated debt   23,430    468 7.92%    8,699     158 7.21%
Capital lease obligations   1,024    13 5.04%    1,272    16 4.99%
Total interest-bearing liabilities   788,783    2,499 1.26%     677,695    1,863 1.09%
                
Non-interest bearing liabilities:               
Demand deposits and escrow accounts  80,538         69,464     
Other liabilities   8,299         6,302     
Total liabilities   877,620         753,461      
Stockholders' equity   112,637         113,914     
Total liabilities and stockholders' equity$  990,257      $  867,375     
                
  Net interest income (5)   $11,851      $10,190  
                
Interest rate spread      4.72%       4.68%
Net interest margin (6)       4.94%       4.88%
                
(1)  Interest income and yield are stated on a fully tax-equivalent basis using a 34% tax rate.
(2)  Includes loans held for sale.
(3)  Nonaccrual loans are included in the computation of average, but unpaid interest has not been included for purposes of determining interest income.
(4)  Short term investments include FHLB overnight deposits and other interest-bearing deposits.
(5)  Includes tax exempt interest income of $18 thousand for the three months ended December 31, 2016 and December 31, 2015.
(6)  Net interest margin is calculated as net interest income divided by total interest-earning assets.


NORTHEAST BANCORP AND SUBSIDIARY
CONSOLIDATED AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS
(Unaudited)
(Dollars in thousands)
 Six Months Ended December 31,
 2016   2015 
   Interest Average   Interest Average
 Average Income/ Yield/ Average Income/ Yield/
 Balance Expense Rate Balance  Expense Rate
Assets:               
Interest-earning assets:               
Investment securities$93,825 $  486 1.03 % $103,872 $  464 0.89%
Loans (1) (2) (3)   722,439    25,752 7.07%    632,957    22,545 7.07%
Federal Home Loan Bank stock   2,403    46 3.80%    3,345    68 4.03%
Short-term investments (4)   134,334    341 0.50%    85,974    108 0.25%
Total interest-earning assets   953,001    26,625 5.54%    826,148    23,185 5.57%
Cash and due from banks   2,852         3,190     
Other non-interest earning assets   33,012         35,986     
Total assets$  988,865      $  865,324     
                
Liabilities & Stockholders' Equity:               
Interest-bearing liabilities:               
NOW accounts$71,323 $ 103 0.29% $67,617 $88 0.26%
Money market accounts   302,323    1,435 0.94%    185,166    782 0.84%
Savings accounts   35,488    25 0.14%    35,816    23 0.13%
Time deposits   326,794    1,990 1.21%    342,896    1,896 1.10%
  Total interest-bearing deposits   735,928    3,553 0.96%    631,495    2,789 0.88%
Short-term borrowings   -    - 0.00%    1,976    13 1.31%
Borrowed funds   28,580    475 3.30%    34,734    586 3.35%
Subordinated debt   23,395    927 7.86%    8,674     312 7.14%
Capital lease obligations   1,056    27 5.07%    1,302    33 5.03%
Total interest-bearing liabilities   788,959    4,982 1.25%     678,181    3,733 1.09%
                
Non-interest bearing liabilities:               
Demand deposits and escrow accounts 78,104        66,736     
Other liabilities   8,255       6,868     
Total liabilities   875,318         751,785      
Stockholders' equity   113,547         113,539     
Total liabilities and stockholders' equity$  988,865      $  865,324     
                
  Net interest income (5)   $  21,643      $  19,452  
                
Interest rate spread      4.29%       4.48%
Net interest margin (6)       4.51%       4.67%
                
(1)  Interest income and yield are stated on a fully tax-equivalent basis using a 34% tax rate.
(2)  Includes loans held for sale.
(3)  Nonaccrual loans are included in the computation of average, but unpaid interest has not been included for purposes of determining interest income.
(4)  Short term investments include FHLB overnight deposits and other interest-bearing deposits.
(5)  Includes tax exempt interest income of $36 thousand for the six months ended December 31, 2016 and December 31, 2015.
(6)  Net interest margin is calculated as net interest income divided by total interest-earning assets.


NORTHEAST BANCORP AND SUBSIDIARY
SELECTED CONSOLIDATED FINANCIAL HIGHLIGHTS AND OTHER DATA
(Unaudited)
(Dollars in thousands, except share and per share data)
 Three Months Ended:
 December 31, 2016 September 30, 2016 June 30, 2016 March 31, 2016 December  31, 2015
Net interest income$   11,833  $   9,775  $   10,713  $   9,254  $   10,172 
Provision for loan losses   628     193     317     236     896 
Noninterest income   2,690     1,808     2,411     2,035     1,624 
Noninterest expense   8,956     8,626     9,396     8,412      8,196 
Net income   3,100     1,751     2,199     1,809     1,744 
          
Weighted average common shares outstanding:         
 Basic 8,831,235   9,106,144   9,319,522   9,456,198   9,559,369 
 Diluted 8,864,618   9,133,383   9,342,439   9,459,611   9,569,585 
Earnings per common share:         
 Basic$   0.35  $   0.19  $   0.24  $   0.19  $   0.18 
 Diluted   0.35     0.19     0.24     0.19     0.18 
Dividends per common share   0.01     0.01     0.01     0.01     0.01 
          
Return on average assets 1.24%  0.70%  0.93%  0.80%  0.80%
Return on average equity 10.92%  6.07%  7.67%  6.33%  6.07%
Net interest rate spread (1) 4.72%  3.86%  4.55%  4.06%  4.67%
Net interest margin (2) 4.94%  4.07%  4.73%  4.25%  4.87%
Efficiency ratio (3) 61.67%  74.47%  71.59%  74.52%  69.48%
Noninterest expense to average total assets 3.59%  3.47%  3.97%  3.70%   3.75%
Average interest-earning assets to average
interest-bearing liabilities
 120.73%  120.86%  119.99%  120.62%   122.48%
          
 As of:
 December 31, 2016 September 30, 2016 June 30, 2016 March 31, 2016 December 31, 2015
Nonperforming loans:         
Originated portfolio:         
Residential real estate$   2,827  $   3,273  $   2,613  $   3,566  $   3,263 
Commercial real estate   396     361     474     602     399 
Home equity    48     48     48     -     11 
Commercial and industrial   2,659      347     17     2     2 
Consumer   48     121     163     216     204 
Total originated portfolio   5,978     4,150      3,315     4,386     3,879 
Total purchased portfolio   4,219     4,773     4,512     4,364     2,221 
Total nonperforming loans   10,197     8,923     7,827     8,750     6,100 
Real estate owned and other possessed collateral, net   3,145     3,774     1,652     690     1,238 
Total nonperforming assets$   13,342  $   12,697  $   9,479  $   9,440  $   7,338 
          
Past due loans to total loans 2.85%  1.36%  1.00%  2.52%  2.48%
Nonperforming loans to total loans 1.33%  1.24%  1.13%  1.25%  0.90%
Nonperforming assets to total assets  1.32%  1.29%  0.96%  1.02%  0.82%
Allowance for loan losses to total loans 0.41%  0.35%  0.34%   0.32%  0.31%
Allowance for loan losses to nonperforming loans 30.47%  28.08%  30.02%  25.41%  34.90%
          
Commercial real estate loans to risk-based capital (4) 197.11%  179.96%  174.12%  217.09%  204.91%
Net loans to core deposits (5) 92.04%  90.22%  87.15%  93.48%   94.37%
Purchased loans to total loans, including held for sale 32.91%  32.54%  34.25%  33.17%  32.90%
Equity to total assets 11.35%  11.32%  11.82%  12.41%  12.82%
Common equity tier 1 capital ratio 14.94%  15.34%  17.97%  17.46%  18.11%
Total capital ratio 18.31%  18.81%  20.39%  17.78%  18.43%
Tier 1 leverage capital ratio 12.60%  12.25%   13.27%  13.57%  14.31%
          
Total shareholders' equity$   114,942  $   111,553  $   116,591  $   114,526  $   114,613 
Less: Preferred stock   -      -      -      -      -  
Common shareholders' equity   114,942     111,553     116,591     114,526     114,613 
Less: Intangible assets (6)   (3,856)    (3,797 )    (3,503)    (3,469)    (3,336)
Tangible common shareholders' equity (non-GAAP)$   111,086  $   107,756  $   113,088  $   111,057  $   111,277 
          
Common shares outstanding   8,831,235     8,831,235     9,317,473     9,330,873     9,519,729 
Book value per common share$   13.02  $   12.63  $   12.51  $   12.27  $   12.04 
Tangible book value per share (non-GAAP) (7)   12.58     12.20     12.14     11.90     11.69 
          
(1) The net interest rate spread represents the difference between the weighted-average yield on interest-earning assets and the weighted-average cost of interest-bearing liabilities for the period.
(2) The net interest margin represents net interest income as a percent of average interest-earning assets for the period.
(3) The efficiency ratio represents non-interest expense divided by the sum of net interest income (before the loan loss provision) plus non-interest income.
(4) For purposes of calculating this ratio, commercial real estate includes all non-owner occupied commercial real estate loans defined as such by regulatory guidance, including all land development and construction loans.
(5) Core deposits include all non-maturity deposits and maturity deposits less than $250 thousand. Loans include loans held-for-sale.
(6) Includes the core deposit intangible asset, as well as the servicing rights asset which is included in other assets in the consolidated balance sheets.
(7) Tangible book value per share represents total shareholders' equity less the sum of preferred stock and intangible assets divided by common shares outstanding.
 
For More Information:

Brian Shaughnessy, CFO

Northeast Bank, 500 Canal Street, Lewiston, ME 04240

207.786.3245 ext. 3220

www.northeastbank.com

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Source: Northeast Bancorp

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