Northeast Bancorp
Jul 27, 2017

Northeast Bancorp Reports Record Quarterly Results and Declares Dividend

LEWISTON, Maine, July 27, 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 $4.0 million, or $0.45 per diluted common share, for the quarter ended June 30, 2017, compared to net income of  $2.2 million, or $0.24 per diluted common share, for the quarter ended June 30, 2016. Net income for the year ended June 30, 2017 was $12.3 million, or $1.38 per diluted common share, compared to $7.6 million, or $0.80 per diluted common share, for the year ended June 30, 2016.

The Board of Directors has also declared a cash dividend of $0.01 per share, payable on August 25, 2017 to shareholders of record as of August 11, 2017.

"We closed the year with a strong quarter," said Richard Wayne, President and Chief Executive Officer. "For the quarter, our earnings of $0.45 per diluted common share helped us achieve a return on equity of 13.3%, a return on assets of 1.6% and an efficiency ratio of 56.3%. These solid results were driven by continued growth in our LASG portfolio, purchased loan total return of 13.8%, and SBA gains on sale of $1.9 million. In addition to earnings growth, in the fourth quarter we generated loan volume of $152.2 million, which included $113.0 million of loans produced by the Loan Acquisition and Servicing Group, $19.0 million of loans closed by the SBA division and $20.2 million of residential and commercial community bank loans. The growth of our balance sheet and earnings compliments our growth strategy and positions us well for the future."

As of June 30, 2017, total assets were $1.1 billion, an increase of $90.7 million, or 9.2%, 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 Company originated $152.2 million of new loans during the quarter ended June 30, 2017. Loans generated by the Bank's Loan Acquisition and Servicing Group ("LASG") totaled $113.0 million, which consisted of $45.1 million of purchased loans, at an average price of 89.8% of unpaid principal balance, and $67.9 million of originated loans. The Bank's Small Business Administration and United States Department of Agriculture ("SBA") Division closed $19.0 million of new loans during the quarter, of which $18.4 million were funded. In addition, the Company sold $19.0 million of the guaranteed portion of SBA loans in the secondary market, of which $10.2 million were originated in the current quarter and $8.8 million were originated or purchased in prior quarters. Residential loan production sold in the secondary market totaled $16.5 million for the quarter. The loan portfolio, excluding both loans held for sale and the $48.0 million of secured loans to broker-dealers repaid in the prior quarter, increased by $134.8 million, or 19.5%, compared to June 30, 2016.

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 June 30, 2017
    (Dollars in millions)
Total Loans Purchased loans may not exceed 40% of total loans $  111.9
Regulatory Capital Non-owner occupied commercial real estate loans may not exceed 300% of total capital $  178.5
      

An overview of the Bank's LASG portfolio follows:

 LASG Portfolio
 Three Months Ended June 30,
 2017  2016 
 Purchased Originated Secured Loans to Broker-Dealers Total LASG PurchasedOriginatedSecured Loans to Broker-DealersTotal LASG
 (Dollars in thousands)
Loans purchased or originated during the period:                                 
Unpaid principal balance$50,202 $67,860 $  -  $118,062  $20,588 $31,826 $  -  $  52,414 
Net investment basis  45,060  67,860  -   112,920     18,754   31,826  -    50,580 
                                 
Loan returns during the period:                                
Yield (1) 13.64% 6.45% 0.00% 9.61%  10.88% 6.98% 0.51%  8.19%
Total Return (1) (2) 13.78% 6.45% 0.00% 9.68%  10.88% 6.98% 0.51%  8.19%
                   


 Year Ended June 30,
 2017 2016 
   Purchased  Originated Secured Loans to Broker-Dealers  Total LASG  PurchasedOriginatedSecured Loans to Broker-DealersTotal LASG 
 (Dollars in thousands)
Loans purchased or originated during the period:                         
Unpaid principal balance$126,713 $237,691  $  -  $364,404  $108,716 $110,578  $  -  $219,294 
Net investment basis 112,807  237,691   -   350,498    99,999  110,578   -    210,577 
                                
Loan returns during the period:                               
Yield (1) 12.24% 6.21%  0.82%  8.69%  11.37% 6.11% 0.50%  8.03%
Total Return (1) (2) 12.30% 6.21%  0.82%  8.72%  11.38% 6.10% 0.50%  8.04%
                        
                                
Total loans as of period end:                               
Unpaid principal balance$279,854 $330,515  $-  $610,369  $271,268 $174,918  $48,000  $494,186 
Net investment basis 246,388  330,515   -  576,903   239,709  174,918   48,000   462,627 
                             
(1) The yield and total return on LASG originated loans includes $385 thousand of fees related to one loan in the quarter ended June 30, 2016.
(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.
 
  1. Deposits increased by $40.4 million, or 4.8%, from March 31, 2017, attributable primarily to growth in non-maturity (demand, savings and interest checking, and money market) accounts, which increased by $24.3 million, or 4.6%, and an increase in time deposits of $16.1 million, or 5.0%. Deposits increased by $89.4 million, or 11.2%, from June 30, 2016 due to growth in non-maturity accounts of $103.5 million, or 23.0%, offset by a decrease in time deposits of $14.1 million, or 4.0%.
     
  2. Shareholders' equity increased by $6.2 million from June 30, 2016, primarily due to earnings of $12.3 million, offset by $6.9 million in share repurchases (representing 645,238 shares). Additionally, there was stock-based compensation of $945 thousand, a decrease in accumulated other comprehensive loss of $274 thousand and $357 thousand in dividends paid on common stock.

Net income increased by $1.8 million to $4.0 million for the quarter ended June 30, 2017, compared to $2.2 million for the quarter ended June 30, 2016.

  1. Net interest and dividend income before provision for loan losses increased by $3.0 million for the quarter ended June 30, 2017, compared to the quarter ended June 30, 2016. The increase is primarily due to higher transactional income on purchased loans and higher average balances in the total loan portfolio. This increase was partially offset by higher rates and volume in the deposit portfolio and the effect of the issuance of subordinated debt. 

The following table summarizes interest income and related yields recognized on the loan portfolios:

 Interest Income and Yield on Loans 
 Three Months Ended June 30, 
 2017  2016  
 Average Interest    Average Interest   
 Balance (1) Income Yield Balance (1) Income (2) Yield 
 (Dollars in thousands)  
Community Banking Division$163,997 $1,949 4.77% $212,625 $  2,589 4.90% 
SBA 55,229  848 6.16%  30,599  490 6.44% 
LASG:                
Originated 301,988  4,859 6.45%   172,678    2,996 6.98% 
Purchased 237,306  8,068 13.64%   232,610    6,294 10.88% 
Secured Loans to Broker-Dealers -  - 0.00%  54,001  68 0.51% 
Total LASG 539,294  12,927 9.61%   459,289    9,358 8.19% 
   Total$758,520 $15,724 8.31% $  702,513 $  12,437 7.12% 
   
 Year Ended June 30, 
 2017  2016  
 Average Interest   Average Interest   
 Balance (1) Income Yield Balance (1) Income (2) Yield 
 (Dollars in thousands) 
Community Banking Division$190,704 $9,102 4.77% $ 218,649 $  10,483 4.79% 
SBA 42,946  2,619 6.10%  23,786  1,448 6.09% 
LASG:                
Originated 239,796  14,883 6.21%   147,193     8,987 6.11% 
Purchased 236,937  28,997 12.24%   216,763    24,638 11.37% 
Secured Loans to Broker-Dealers  31,085  256 0.82%  58,511  293 0.50% 
Total LASG 507,818    44,136 8.69%   422,467    33,918 8.03% 
   Total$741,468 $55,857 7.53% $ 664,902 $  45,849 6.90% 
(1) Includes loans held for sale.

(2) SBA interest income includes SBA fees of $21 thousand and $33 thousand for the quarter and year ended June 30, 2016, respectively.
 

The various components of transactional income are set forth in the table below entitled "Total Return on Purchased Loans." When compared to the three months and year ended June 30, 2016, transactional income increased by $2.0 million and $2.9 million, respectively. The total return on purchased loans for the three months and year ended June 30, 2017 was 13.78% and 12.30%, respectively. The increase over the prior comparable periods was primarily due to higher average balances and transactional income in the three months and year ended June 30, 2017. The following table details the total return on purchased loans:

 Total Return on Purchased Loans
 Three Months Ended June 30,
 2017  2016 
 Income Return (1) Income Return (1)
 (Dollars in thousands)
Regularly scheduled interest and accretion$4,588  7.76% $ 4,770 8.25%
Transactional income:         
Gain on loan sales   -  0.00%    - 0.00%
Gain on sale of real estate owned 93  0.16%    - 0.00%
Other noninterest income   (10) -0.02%    1   0.00%
Accelerated accretion and loan fees   3,480  5.88%    1,524 2.63%
Total transactional income   3,563  6.02%    1,525 2.63%
   Total$  8,151  13.78% $  6,295 10.88%


 Year Ended June 30,
 2017  2016 
 Income Return (1) Income Return (1)
 (Dollars in thousands)
Regularly scheduled interest and accretion$18,975  8.01% $17,382 8.02%
Transactional income:          
Gain on loan sales   -  0.00%    - 0.00%
Gain on sale of real estate owned    148  0.06%     23 0.01%
Other noninterest income (12) 0.00%     12 0.00%
Accelerated accretion and loan fees 10,022  4.23%    7,256 3.35%
Total transactional income 10,158  4.29%    7,291 3.36%
   Total$29,133  12.30% $  24,673 11.38%
             
(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.
 
  1. Noninterest income increased by $479 thousand for the quarter ended June 30, 2017, compared to the quarter ended June 30, 2016, principally due to the following:
    • An increase in gain on sale of SBA loans of $246 thousand, due to a higher volume sold in the quarter;
    • An increase in fees for other services to customers of $154 thousand, due to higher loan servicing fees on SBA loans sold; and
    • A decrease in loss recognized on real estate owned and other repossessed collateral, net of $96 thousand, due to the sale of real estate owned ("REO").
    • This net increase in noninterest income was partially offset by a lower gain on sale of residential loans held for sale of $99 thousand, due to a lower volume sold in the quarter.
       
  2. Noninterest expense decreased by $32 thousand for the quarter ended June 30, 2017, compared to the quarter ended June 30, 2016, primarily due to the following:
    • A decrease in other noninterest expense of $264 thousand, primarily due to a decrease in impairment on servicing assets as no impairment was booked in the three months ended June 30, 2017; and
    • A decrease in loan expense of $174 thousand, largely driven by lower expense related to loan acquisition and refinance activity.
    • The decreases in noninterest expense were partially offset by an increase in salaries and employee benefits of $436 thousand, primarily due to higher incentive compensation recognized in the three months ended June 30, 2017.

As of June 30, 2017, nonperforming assets totaled $14.8 million, or 1.37% of total assets, as compared to $9.5 million, or 0.96% of total assets, as of June 30, 2016.

As of June 30, 2017, past due loans totaled $13.4 million, or 1.72% of total loans, as compared to $6.9 million, or 1.00% of total loans as of June 30, 2016.

As of June 30, 2017, the Company's Tier 1 Leverage Ratio was 12.8%, compared to 13.3% at June 30, 2016, and the Total Capital Ratio was 19.5%, compared to 20.4% at June 30, 2016. The decreases 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 fourth quarter earnings and business outlook at 10:00 a.m. Eastern Time on Friday, July 28th. Investors can access the call by dialing 877.878.2762 and entering the following passcode: 58436017. 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, total return, and efficiency ratio. 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)
 June 30, 2017 June 30, 2016
Assets     
Cash and due from banks$3,582  $2,459 
Short-term investments 159,701     148,698 
  Total cash and cash equivalents 163,283      151,157 
      
       
Available-for-sale securities, at fair value 96,693   100,572 
       
Residential real estate loans held for sale 4,508   6,449 
SBA loans held for sale 191   1,070 
  Total loans held for sale  4,699   7,519 
      
      
Loans     
  Commercial real estate 498,004   426,568 
  Residential real estate 101,168     113,962 
  Commercial and industrial 175,654     145,956 
  Consumer 4,369   5,950 
  Total loans 779,195      692,436 
  Less: Allowance for loan losses 3,665     2,350 
  Loans, net 775,530     690,086 
      
      
Premises and equipment, net 6,937     7,801 
Real estate owned and other repossessed collateral, net 826     1,652 
Federal Home Loan Bank stock, at cost 1,938     2,408 
Intangible assets, net 1,300     1,732 
Servicing rights, net 2,846   1,771 
Bank owned life insurance 16,179     15,725 
Other assets 6,643   5,730 
  Total assets$1,076,874  $  986,153 
      
Liabilities and Shareholders' Equity     
Deposits     
  Demand$69,827  $66,686 
  Savings and interest checking 108,417     107,218 
  Money market 374,569     275,437 
  Time 337,037     351,091 
  Total deposits 889,850     800,432 
      
Federal Home Loan Bank advances 20,011     30,075 
Subordinated debt 23,620     23,331 
Capital lease obligation 873     1,128 
Other liabilities 19,723   14,596 
  Total liabilities 954,077     869,562 
      
Commitments and contingencies   -       -   
      
      
Shareholders' equity     
Preferred stock, $1.00 par value, 1,000,000 shares authorized; no shares issued and outstanding at June 30, 2017 and June 30, 2016   -       -   
Voting common stock, $1.00 par value, 25,000,000 shares authorized; 7,840,460 and 8,089,790 shares issued and outstanding at June 30, 2017 and June 30, 2016, respectively 7,841     8,089 
Non-voting common stock, $1.00 par value, 3,000,000 shares authorized; 991,194 and 1,227,683 shares issued and outstanding at June 30, 2017 and June 30, 2016, respectively 991     1,228 
Additional paid-in capital 77,455   83,020 
Retained earnings 38,142     26,160 
Accumulated other comprehensive loss (1,632)     (1,906)
  Total shareholders' equity 122,797     116,591 
  Total liabilities and shareholders' equity$1,076,874  $  986,153 


NORTHEAST BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Dollars in thousands, except share and per share data)
 Three Months Ended June 30, Year Ended June 30,
 2017  2016  2017  2016 
Interest and dividend income:           
  Interest and fees on loans$15,724  $12,437  $55,857  $45,849 
  Interest on available-for-sale securities 271   230   1,018   930 
  Other interest and dividend income 376   161   1,046   456 
  Total interest and dividend income 16,371   12,828   57,921   47,235 
            
Interest expense:           
  Deposits 1,949   1,671    7,357   6,027 
  Federal Home Loan Bank advances 166   253   800   1,027 
  Wholesale repurchase agreements -   -   -   67 
  Short-term borrowings -   1   -   20 
  Subordinated debt 487   175   1,888   651 
  Obligation under capital lease agreements 12    15   51   63 
  Total interest expense 2,614   2,115   10,096   7,855 
            
Net interest and dividend income before provision for loan losses 13,757   10,713   47,825   39,380 
Provision for loan losses 389   317   1,594   1,618 
Net interest and dividend income after provision for loan losses 13,368   10,396   46,231   37,762 
             
Noninterest income:           
  Fees for other services to customers 547   393   1,952   1,657 
  Gain on sales of residential loans held for sale 293   392   1,452   1,684 
  Gain on sales of SBA loans 1,866   1,620   5,277   4,178 
  Gain on sale of other loans -   -   365   - 
  Loss recognized on real estate owned and other repossessed collateral, net   (31)    (127)  (23)    (255)
  Bank-owned life insurance income 114   113   454   449 
  Other noninterest income 101   20   219   60 
  Total noninterest income 2,890   2,411   9,696   7,773 
            
Noninterest expense:           
  Salaries and employee benefits 6,028   5,592   21,706   19,548 
  Occupancy and equipment expense 1,222   1,291   5,002   5,227 
  Professional fees 401   421   1,666   1,463 
  Data processing fees 459   379   1,744   1,487 
  Marketing expense  120   85   392   285 
  Loan acquisition and collection expense 233   407   1,734   1,368 
  FDIC insurance premiums 79   135   303   489 
  Intangible asset amortization 108   108   432   477 
  Other noninterest expense 714   978   2,810   3,468 
  Total noninterest expense 9,364    9,396   35,789   33,812 
            
Income before income tax expense 6,894   3,411   20,138   11,723 
Income tax expense 2,867   1,212   7,799   4,104 
Net income4,027  $2,199  12,339  7,619 
            
            
Weighted-average shares outstanding:           
  Basic 8,823,679   9,319,522   8,898,448   9,474,999 
  Diluted 8,979,471   9,342,439   8,952,614   9,484,635 
Earnings per common share:           
            
  Basic$0.46  $0.24  $1.39  $0.80 
  Diluted 0.45   0.24     1.38     0.80 
Cash dividends declared per common share$0.01  $0.01  $0.04  $0.04 


NORTHEAST BANCORP AND SUBSIDIARY
CONSOLIDATED AVERAGE BALANCE SHEETS AND ANNUALIZED YIELDS
(Unaudited)
(Dollars in thousands)
 Three Months Ended June 30,
 2017  2016 
   Interest Average   Interest Average
 Average Income/ Yield/ Average Income/ Yield/
 Balance Expense Rate Balance Expense Rate
Assets:               
Interest-earning assets:               
Investment securities$98,033 $271 1.11% $93,289 $  230 0.99%
Loans (1) (2) (3) 758,520  15,741 8.32%    702,513    12,455 7.13%
Federal Home Loan Bank stock 1,938  19 3.93%    2,570    23 3.60%
Short-term investments (4) 137,570  357 1.04%    113,636    138 0.49%
Total interest-earning assets 996,061  16,388 6.60%  912,008    12,846 5.67%
Cash and due from banks 2,753         4,171     
Other non-interest earning assets 31,910       36,411     
Total assets$1,030,724      $  952,590     
                
Liabilities & Shareholders' Equity:               
Interest-bearing liabilities:               
NOW accounts$71,209 $ 51 0.29% $72,012 $  51 0.28%
Money market accounts 345,352  878 1.02%    254,833    573 0.90%
Savings accounts 37,863  13 0.14%    36,167    12 0.13%
Time deposits 323,399  1,007 1.25%    356,418    1,035 1.17%
  Total interest-bearing deposits 777,823  1,949 1.01%    719,430    1,671 0.93%
Short-term borrowings   -    - 0.00%  441    1 0.91%
Federal Home Loan Bank advances 20,014  166 3.33%    30,089    253 3.38%
Subordinated debt 23,579  487 8.28%    8,954    175 7.86%
Capital lease obligations 896    12 5.37%    1,149    15 5.25%
Total interest-bearing liabilities 822,312  2,614 1.28%    760,063    2,115 1.12%
                
Non-interest bearing liabilities:               
Demand deposits and escrow accounts 80,188        68,314     
Other liabilities 7,181       8,863     
Total liabilities 909,681       837,240      
Shareholders' equity 121,043         115,350     
Total liabilities and shareholders' equity$1,030,724      $  952,590     
                
  Net interest income (5)   $ 13,774      $10,731  
                
Interest rate spread      5.32%       4.55%
Net interest margin (6)      5.55%       4.73%
                
(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 $17 thousand and $18 thousand for the three months ended June 30, 2017 and June 30, 2016, respectively.
(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)
 Year Ended June 30,
 2017  2016 
   Interest Average   Interest Average
 Average Income/ Yield/ Average Income/ Yield/
 Balance Expense Rate Balance Expense Rate
Assets:                
Interest-earning assets:               
Investment securities$95,624 $  1,018 1.06% $100,503 $  930 0.93%
Loans (1) (2) (3) 741,468  55,928 7.54%     664,902   45,921 6.91%
Federal Home Loan Bank stock 2,172  90 4.14%     2,960    113 3.82%
Short-term investments (4) 133,599  956 0.72%     91,563    343 0.37%
Total interest-earning assets 972,863  57,992 5.96%     859,928   47,307 5.50%
Cash and due from banks 2,833          3,596     
Other non-interest earning assets 32,394        35,607     
Total assets$1,008,090      $   899,131     
                
Liabilities & Shareholders' Equity:               
Interest-bearing liabilities:               
NOW accounts$70,912 $204 0.29% $68,304 $182 0.27%
Money market accounts 322,011  3,120  0.97%  212,102    1,845 0.87%
Savings accounts 36,438  50 0.14%     36,062    48 0.13%
Time deposits 326,601  3,983 1.22%     349,978    3,952 1.13%
  Total interest-bearing deposits 755,962  7,357 0.97%  666,446     6,027 0.90%
Short-term borrowings   -    - 0.00%     1,634    20 1.22%
Federal Home Loan Bank advances 24,334  800 3.29 %     32,432    1,094 3.37%
Subordinated debt 23,468  1,888 8.04%    8,762    651 7.43%
Capital lease obligations 992  51 5.14%     1,242    63 5.07%
Total interest-bearing liabilities 804,756  10,096 1.25%  710,516    7,855 1.11%
                
Non-interest bearing liabilities:               
Demand deposits and escrow accounts 79,560       67,041     
Other liabilities 7,599         7,252     
Total liabilities 891,915         784,809     
Shareholders' equity 116,175         114,322     
Total liabilities and shareholders' equity$1,008,090      $  899,131     
                
  Net interest income (5)   $47,896      $  39,452  
                
Interest rate spread      4.71%       4.39%
Net interest margin (6)      4.92%       4.59%
                
(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 $71 thousand and $72 thousand for the year ended June 30, 2017 and June 30, 2016, respectively.
(6)  Net interest margin is calculated as net interest income divided by total interest-earning assets.


NORTHEAST BANCORP AND SUBSIDIARY
SELECTED CONSOLIDATED FINANCIAL HIGHLIGHTS AND OTHER DATA
(Unaudited)
(Dollars in thousands, except share and per share data)
 Three Months Ended:
 June 30, 2017 March 31, 2017 December 31, 2016 September 30, 2016 June 30, 2016
Net interest income$  13,757  $  12,459  $  11,833  $  9,775  $   10,713 
Provision for loan losses 389     384     628     193     317 
Noninterest income 2,890     2,308     2,690     1,808     2,411 
Noninterest expense 9,364     8,842     8,956     8,626     9,396 
Net income 4,027     3,461     3,100     1,751     2,199 
          
Weighted average common shares outstanding:         
  Basic 8,823,679   8,830,442   8,831,235   9,106,144   9,319,522 
  Diluted 8,979,471   8,893,534   8,864,618   9,133,383   9,342,439 
Earnings per common share:         
  Basic$   0.46  $  0.39  $   0.35  $  0.19  $   0.24 
  Diluted   0.45     0.39     0.35     0.19     0.24 
Dividends per common share   0.01     0.01     0.01     0.01     0.01 
          
Return on average assets 1.57%   1.37%  1.24%  0.70%  0.93%
Return on average equity 13.34%  12.03%  10.92%  6.07%  7.67%
Net interest rate spread (1) 5.32%  4.90%  4.72%  3.86%  4.55%
Net interest margin (2) 5.55%  5.11%   4.94%  4.07%  4.73%
Efficiency ratio (non-GAAP) (3) 56.25%  59.88%  61.67%  74.47%  71.59%
Noninterest expense to average total assets 3.64%  3.50%  3.59%  3.47%  3.97%
Average interest-earning assets to average
interest-bearing liabilities
 121.13%  120.84%   120.73%  120.86%  119.99%
          
 As of:
 June 30, 2017 March 31, 2017 December 31, 2016 September 30, 2016 June 30, 2016
Nonperforming loans:         
Originated portfolio:         
Residential real estate$  3,337  $   3,265  $  2,827  $  3,273  $   2,613 
Commercial real estate 413     420     396      361     474 
Home equity 58     48     48     48     48 
Commercial and industrial 2,600     2,636      2,659      347     17 
Consumer 103     65     48     121     163 
Total originated portfolio 6,511     6,434     5,978     4,150     3,315 
Total purchased portfolio 7,452     8,388     4,219     4,773     4,512 
Total nonperforming loans 13,963     14,822     10,197     8,923     7,827 
Real estate owned and other possessed collateral, net 826     3,761     3,145     3,774     1,652 
Total nonperforming assets$  14,789  $   18,583  $  13,342  $   12,697  $   9,479 
          
Past due loans to total loans 1.72%  3.25%  2.85%  1.36%  1.00%
Nonperforming loans to total loans 1.79%  2.00%  1.33%  1.24%  1.13%
Nonperforming assets to total assets  1.37%  1.81%  1.32%  1.29%  0.96%
Allowance for loan losses to total loans 0.47%  0.46%  0.41%   0.35%  0.34%
Allowance for loan losses to nonperforming loans 26.25%  22.77%  30.47%  28.08%  30.02%
          
Commercial real estate loans to risk-based capital (4) 181.23%  181.83%  197.11%  179.96%  174.12%
Net loans to core deposits (5) 87.68%  87.46%  92.04%  90.22%   87.15%
Purchased loans to total loans, including held for sale 31.43%  31.87%  32.91%  32.54%  34.25%
Equity to total assets 11.40%  11.55%  11.35%  11.32%  11.82%
Common equity tier 1 capital ratio 16.00%  15.80%  14.94%  15.34%  17.97%
Total capital ratio 19.48%  19.30%  18.31%  18.81%  20.39%
Tier 1 leverage capital ratio 12.81%  12.46%   12.60%  12.25%  13.27%
          
Total shareholders' equity$  122,797  $   118,675  $   114,942  $   111,553  $   116,591 
Less: Preferred stock   -      -      -      -      -  
Common shareholders' equity   122,797     118,675     114,942     111,553     116,591 
Less: Intangible assets (6)   (4,146)    (3,898 )    (3,856)    (3,797)    (3,503)
Tangible common shareholders' equity (non-GAAP)$  118,651  $   114,777  $   111,086  $   107,756  $   113,088 
          
Common shares outstanding 8,831,654     8,815,279     8,831,235     8,831,235     9,317,473 
Book value per common share$   13.90  $   13.46  $   13.02  $   12.63  $   12.51 
Tangible book value per share (non-GAAP) (7)   13.43     13.02     12.58     12.20     12.14 
          
(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 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 and servicing rights asset.
(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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